Interim Results

RNS Number : 1641Z
M. P. Evans Group PLC
16 September 2015
 

M.P. EVANS GROUP PLC

 

 

M.P. Evans Group PLC ("M P Evans" or the "Group"), a producer of Indonesian palm oil and Australian beef cattle, announces its unaudited interim results for the six months ended 30 June 2015.

 

 

Highlights

 

Financials

·      Profit for the period, at US$15.3 million, similar to first-half 2014 (US$15.4 million)

·      Interim dividend maintained at 2.25p per 10p share

·      Indonesian plantation gross profit significantly reduced to US$8.9 million (2014 US$17.0 million) resulting from continuation of weak palm-oil prices

·      Australian cattle gross profit (Woodlands) substantially increased to US$1.6 million (2014 US$0.9 million loss) due to good rainfall and strong prices

·      Share of associates' profits US$10.6 million (2014 US$8.3 million) - Indonesian palm oil lower, Australian cattle (NAPCo) sharply higher

·      Group maintains positive cash balances and modest borrowings

 

Indonesian palm oil

·      F.f.b. crops overall 2% higher on majority-owned estates - 9% higher on new projects

·      Associated companies' f.f.b. crops 11% lower

·      Palm-oil prices averaged US$673 per tonne, 25% lower than US$895 in first-half 2014 

·      High oil-extraction rates continue, particularly in Kalimantan (25.6%)

·      Costs per tonne similar to first-half 2014, assisted by continuing strengthening of US Dollar against Indonesian Rupiah

·      El Niňo event may be under way which could negatively affect crops in 2016 and 2017

·      Since period end, palm-oil prices have fallen sharply to current level of around US$550 per tonne

·      New mill on Bangka project under construction, expected to be commissioned mid 2016

 

Australian beef cattle

·      Contracts exchanged for the conditional sale of Woodlands for approximately US$20.0 million

·      Cattle prices have been at record levels

·      Woodlands has enjoyed a favourable season with substantial rainfall - good pasture and forage crop growth

·      Despite a mixed season NAPCo's herd has increased significantly in value following strong cattle market

·      Group share of NAPCo's profit was US$7.6 million (2014 loss US$0.3 million)

 

Malaysian property

·      Group share of Bertam Properties' small loss US$0.1 million (2014 profit US$2.1 million)

·      Fewer property sales completed but considerable number of sales in process

 

 

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

 

"The first half of 2015 has proved challenging for the Group's palm-oil operations with a continuation of low palm-oil prices.  Despite a dry period in Kalimantan in the second half of 2014, the f.f.b. crop continues upwards and the board remains of the view that the long-term prospects for palm oil are promising.

 

The Group's cattle activities have enjoyed a period of generally favourable weather combined with strong prices.  In the circumstances outlined above with the palm-oil operations, it is pleasing to be able to report a similar Group profit to that achieved in the first half of 2014.  Cattle prices have remained at robust levels since the half year but palm-oil prices have weakened further. The results for the whole of 2015 are expected therefore to be lower than for 2014. 

 

The conditional sale of Woodlands for approximately US$20.0 million announced yesterday results from heightened interest in the property following the recent strength of the cattle market and is in line with the board's stated strategy."

 

16 September 2015

 

 

 

 

Enquires:

M.P. Evans Group PLC                 020 7796 4133 on 16 September 2015 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

Richard Brown

 

Hudson Sandler                           020 7796 4133

Charlie Jack

Katie Matthews

Bertie Berger

 

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 profit for the first half of 2015 was US$15.3 million, a similar overall result when compared with the US$15.4 million for the first half of 2014.  The results for the period were characterised by significantly-lower palm-oil prices resulting in lower profits from the Indonesian palm-oil plantations (both majority-owned and those of the associated companies) but markedly-improved cattle prices which produced substantially-higher profits from the beef-cattle activities.

Palm-oil prices, which weakened sharply in the second half of 2014, continued to fall a little further in the first half of 2015.  The average Rotterdam c.i.f. price in the first half of 2015 was US$673 per tonne, 25% lower compared with the US$895 for the same period in 2014.  The average for the whole of 2014 was US$821.    Notwithstanding dryness that has affected parts of Indonesia, the Group's overall crop of oil-palm fresh fruit bunches ("f.f.b.") from its majority-owned estates was, at 187,100 tonnes, 2% higher than the 183,600 tonnes harvested in the first half of 2014.  The rising trend of crops on the new projects in Kalimantan and Bangka continued.  Extraction rates in the Group's two palm-oil mills continued at high levels.

The f.f.b. crops of the two Indonesian associated companies were in line with expectations but lower than for the same period last year.  The lower palm-oil price also adversely affected the results of these companies.

Progress continues on the new Musi Rawas project in South Sumatra.  As at the date of this report, some 540 hectares have been planted of which 410 hectares relate to the Group and 130 hectares to the associated smallholders' co-operative.  Some 2,750 hectares have been compensated. 

Woodlands recorded a sharply-improved result in the first half of 2015, compared with the first half of 2014, following higher Australian cattle prices, improved weight gain and an increase in the size of the herd. 

The North Australia Pastoral Company Pty Limited ("NAPCo") also recorded a substantially-better result which was largely attributable to the marked increase in the price of cattle.  Cattle prices have continued to rise since the period end.  The Group's board will continue to consider any opportunities that may arise in relation to its holding.

The board has declared an interim dividend of 2.25p per share which is the same as the previous year.  The dividend will be paid on or after 3 November 2015 to shareholders on the register at the close of business on 25 September 2015.  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 13 October 2015.

SALE OF WOODLANDS

As announced on 15 September 2015, contracts have been exchanged in relation to the conditional sale of Woodlands for AS$28.0 million (approximately US---$20.0 million). The sale is conditional upon various regulatory approvals, which are all expected to be received within approximately three months. The sale is for the property alone, and both the cattle and the plant and equipment on the property, which are estimated to have a combined value of over A$10 million, will be sold separately. The board determined some time ago, for strategic reasons, to sell Woodlands, but significant interest in the property has developed only in recent months further to the sharp strengthening of the cattle market.

 

THE PALM-OIL AND BEEF-CATTLE MARKETS

The average palm-oil price for the first half of 2015 was US$673 per tonne (Rotterdam c.i.f.), 25% lower than the US$895 recorded for the first half of 2014.  The price remained within the relatively tight range of US$630 to US$680 during the period.  General weakness in commodity markets, following uncertainties about the strength of the economy in China, are thought to have impacted on the palm-oil price as well as the existence of plentiful supplies of competing soybean oil. 

Low mineral-oil prices have meant that the production of bio-diesel, utilising palm oil, in Indonesia has fallen some way below the mandated 15%.  The US$50 per tonne export levy was introduced in July and it is hoped that the utilisation of the proceeds of this levy in subsidising bio-diesel production may have a beneficial effect on palm-oil prices in due course.   In the meantime, however, palm-oil prices have weakened further since the half year.  As referred to above, and depending on the extent of the effect of the El Niño phenomenon, it is possible that palm-oil production may be adversely affected in 2016 and 2017 in which case this is likely to impact beneficially on palm-oil prices. 

 

Prices for the grass-fed, lighter-weight cattle produced by Woodlands and the grain-finished, heavier cattle produced by NAPCo moved sharply higher during the period.  This resulted from an increase in both domestic and export demand, aided by the continued weakening of the Australian Dollar.

RESULTS FOR THE PERIOD

 

Majority-owned operations

 

Indonesia

F.f.b. crops from the new projects in Kalimantan and Bangka continued their upward trend in the first half of 2015, when compared with the same period in 2014.  The crop in Kalimantan, at 72,300 tonnes, was somewhat less than originally expected following a dry period in the second half of 2014.  The increase over the crop in the first half of 2014 (69,300 tonnes) was, as a consequence, a modest 2% but it is expected that there will be an increase in the last quarter of 2015.  The crop on the Bangka project, at 31,300 tonnes, was slightly ahead of expectations and 23% ahead of the first half of 2014, as the young areas increase their yields.  The f.f.b. purchased from third parties in Kalimantan, at 10,500 tonnes, was 59% ahead of the 6,600 tonnes processed in the same period in 2014 and proved a useful contribution in a period when the Group's own production was restricted by adverse weather.

The crop from the established estates in Sumatra, at 83,500 tonnes, was in line with expectations although 6% lower than the 88,900 tonnes harvested in the first half of 2014.  The accelerating replanting programme will, in the short term, restrict the overall annual crops from these estates to approximately the level achieved in 2014 of around 180,000 tonnes.  As in most previous years, the crop in the second half of 2015 is expected to be higher than that in the first half.

Extraction rates continued at the very satisfactory levels achieved in recent years.  In Kalimantan, the average rate for the first half of 2015 was 25.6% which was in line with the rate for the whole of 2014 and slightly ahead of that for the first half of 2014.  Pangkatan Mill achieved 23.2% which was slightly lower than that for the whole of 2014 and for the first half of that year.  As referred to in the 2014 annual report, the mill started purchasing f.f.b. from third parties in its locality in the first half of 2015.  The extraction rate achieved from such f.f.b. will inevitably be lower than that from the Group's own f.f.b. so a slight reduction in the overall extraction rate was to be expected.

As referred to above under "Palm-oil and beef-cattle markets", palm-oil prices, having fallen sharply in the second half of 2014, remained at these lower levels in the first half of 2015 before weakening further since 30 June 2015.  Palm-kernel oil, and therefore the palm kernels that the Group sells, fell similarly.

Cost per tonne of palm products (palm oil plus palm kernels) at US$425 was similar in the first half of 2015 to that for the first half of the previous year.  Local inflation of costs was offset by the further strengthening of the US Dollar against the Indonesian Rupiah.  It is anticipated that the cost per tonne should reduce in the second half of the year as palm-oil production increases.

As a result of the above, gross profit from the Indonesian palm-oil operations amounted to US$8.9 million for the first half of 2015, a 48% decrease compared with the US$17.0 million for the same period in 2014.

Very little planting was undertaken on the Kalimantan project in the first half of 2015.  As at 30 June 2015, some 13,960 hectares had been planted of which 9,790 relate to the Group and 4,170 to the smallholders' co-operatives.  The only remaining land to be planted is to be protected by the proposed flood-protection bunds.  Official clearances, which have now been received, are required before the construction of the bunds and pump stations can commence.  Work is now getting under way on these and planting behind the bunds is expected to start in early 2016.  The board's estimate remains that some 15,000 hectares in total will ultimately be able to be planted, of which 10,600 hectares relate to the Group and 4,400 to the smallholders' co-operatives.

On the Bangka project, 580 hectares were planted in the first half of 2015, of which 350 hectares relate to the Group and 230 to the smallholders' co-operatives.  As at 30 June 2015, 7,450 hectares had been planted, of which 5,070 relate to the Group and 2,380 to the smallholders' co-operatives.  The board's estimate remains that 10,000 hectares in total will ultimately be able to be planted, of which 6,000 relate to the Group.

The 45-tonne-per-hour palm-oil mill currently under construction on the Bangka project is progressing well and is on schedule.  The mill is expected to be commissioned in mid-2016.

 

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

                                          2015  (decrease)      2014         2014

                                        Tonnes           %    Tonnes       Tonnes

Crops      

Own crops   

 Pangkatan group                        61,700                67,400      140,400

 Simpang Kiri                           21,800                21,500       42,100

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

                                        83,500         (6)    88,900      182,500

 

 Kalimantan                             72,300          4     69,300      160,200

 Bangka                                 31,300         23     25,400       42,700

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

                                       187,100          2    183,600      385,400

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

 

Smallholder co-operative crops

  Kalimantan                            32,200         23     26,100       64,500

  Bangka                                14,600          5     13,900       22,200

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

                                        46,800         17     40,000       86,700

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

Outside crop purchased

  Kalimantan                            10,500         59      6,600       15,600

  Pangkatan                              3,500          -          -            -

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

                                        14,000        112      6,600       15,600

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

 

Production

Crude palm oil

  Kalimantan                            29,500         14     25,900       61,500

  Pangkatan                             15,100         (6)    16,000       33,500

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

                                        44,600          6     41,900       95,000

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

 

Palm kernels

  Kalimantan                             4,900         29     3,800       10,100

  Pangkatan                              3,800         (5)    4,000        8,300

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

                                         8,700         12     7,800       18,400

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

 

Extraction rates                             %                     %            %

Crude palm oil

  Kalimantan                              25.6                  25.4         25.6

  Pangkatan                               23.2                  23.8         23.9

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

 

                                             %                     %            % 
Palm kernels   

  Kalimantan                               4.3                   3.7          4.2

  Pangkatan                                5.8                   5.9          5.9

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

 

Selling prices                             US$                   US$          US$

Rotterdam c.i.f. - average per tonne

Crude Palm oil                             673        (25)       895          821

Palm-kernel oil                            948        (25)     1,270        1,007

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

 

Australia

Woodlands enjoyed a favourable season in the first half, with substantial rainfall received in both January and April.  This enabled good pasture growth as well as the planting of a significant area of forage oats.  The additional feed supply in turn afforded the opportunity to purchase more cattle and, accordingly, by the end of the period, the herd had risen to 7,300 head, compared with 5,500 head at the beginning of the period.  The increased number of cattle, in addition to improved weight gain and the considerable increase in price during the period, gave rise to a markedly-improved farm profit of US$1.6 million, compared with a loss of US$0.9 million for the same period in 2014.

 

Gross profit

As a result of all of the above, the gross profit for the first half of 2015 was US$10.5 million, a reduction of 35% compared with the US$16.1 million recorded for the same period in 2014.  An analysis of the gross profit/(loss) between the various activities and between the countries in which the Group operates is set out in note 3.

 

Foreign-exchange difference

The Group principally incurs foreign-exchange differences on monetary Rupiah assets and liabilities held in Indonesia. During the period under review the Indonesian Rupiah depreciated by 6.7% against the US Dollar generating a significant US$4.0 million, unrealised, exchange loss on cash balances, recoverable tax and loans made to the co-operative schemes attached to the Group's new projects.  These are allowable against corporation tax liabilities.

 

Other administrative expenses

Some significant expenditures incurred in the first half of 2014 were not repeated in 2015: the impairment of the land at Woodlands in Australia, a provision against tax deemed not to be recoverable and expenditure on staff bonuses. Additionally, some of the provision against irrecoverable tax made in 2014 was credited back against other administrative expenses in 2015, further widening the difference between expenditure recorded in the first half of the two years. Other administrative expenses excluding exceptional items increased by 1% compared with the equivalent period in 2014.

 

Biological assets

The International Accounting Standards Board ("IASB") issued an amendment to its standard on biological assets in 2014 which the Group expects the European Union to endorse before the end of 2015. As explained in the 2014 annual report, the Group intends to adopt this amendment with effect from 1 January 2015 (see note 5) and so has applied it to these interim financial statements. From the beginning of 2015, palms will be accounted for at depreciated historical cost rather than as a 'biological asset' valued on the basis of discounted projected future cash flows. This new measurement is consistent with the way in which the Group reported prior to the adoption of IFRS and reflects the board's view that investing in a plantation is similar to constructing a factory in which the machinery is biological rather than mechanical. All of the Group's financial statements since the adoption of IFRS have presented audited figures both including and excluding the oil-palm biological-asset adjustment. The Group retains its plantations which remain as productive as previously but, since the biological valuations produced under IAS41 exceeded the cost of those plantations, the effect of adopting the amendment is to reduce the Group's book net assets at 31 December 2014 by US$89.7 million to US$310.7 million.

 

IAS41 requires preparers of accounts to recognise the value of growing crop prior to harvest "when, and only when, the fair value or cost of the asset can be measured reliably". It is the considered view of the board, supported by the opinion of the Tropical Growers' Association, that the stock of growing fresh fruit bunches cannot be measured reliably. The Group recognises growing bunches at the point of harvest and so has not recognised crop growing on the Group's palms prior to harvest as an asset (see note 5).

 

Associated companies

 

Indonesia

Crops and production for associated companies:-

 

                                      6 months                 6 months        Year

                                         ended                    ended       ended

                                       30 June   (Decrease)/    30 June 31 December

                                          2015     Increase        2014        2014

                                        Tonnes             %     Tonnes      Tonnes

F.f.b. crops

PT Agro Muko

  - own                                153,700           (12)   174,800     344,900

  - outgrowers                           4,700                    4,200       8,500

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

                                       158,400           (11)   179,000     353,400

 

PT Kerasaan Indonesia                   18,700           (11)    21,100      42,000

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

                                       177,100           (11)   200,100     395,400

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

 

Production (PT Agro Muko)

  Crude palm oil                        35,700           (11)    40,200      79,400

  Palm kernels                           8,400            (9)     9,200      18,500

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

 

                                             %                        %           %

Extraction rates

  Crude palm oil                          22.5                     22.5        22.5

  Palm kernels                             5.3                      5.2         5.2

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

 

                                        Tonnes                   Tonnes      Tonnes

Rubber crops

  PT Agro Muko - own                       928             7        868       1,520

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

PT Agro Muko's f.f.b. crop, at 153,700 tonnes, whilst a little below expectations in the first half of 2015 was 12% lower than the 174,800 tonnes for the same period in 2014.  The accelerated replanting programme which is planned over the next five years is expected to result in crops for the year slightly lower than that achieved in 2014 and is estimated to continue at this level over this five-year period before yields start to increase again.  The rubber crop was ahead of expectations in the first half of 2015 and, at 928 tonnes, 7% higher than the 868 tonnes recorded for the same period last year.  The sharply-lower palm-oil prices referred to above and similarly-lower rubber prices resulted in significantly-lower profits and the Group's share, US$2.7 million, was 54% lower than the US$6.0 million recorded for the first half of 2014.

Kerasaan Estate's f.f.b. crop of 18,700 tonnes was ahead of expectations for the first half of 2015 but was 11% lower than the 21,100 tonnes harvested in the first half of last year.  This, combined with the lower palm-oil prices, resulted in markedly-lower profits and the Group's share amounted to US$0.3 million for the first half of the year compared with US$0.6 million for the same period in 2014, a 46% reduction.

 

Australia

The Group's share of NAPCo's post-tax profit for the period was US$7.6 million, compared with a loss of US$0.3 million for the same period in 2014.  The most significant contribution to the improved result was an increase in the value of the cattle herd which, in turn, was largely a function of the substantial increase in the cattle price.  Also contributing to the improved result was the containment of expenditure.  Most notable were borrowing costs (down 14% owing to lower interest rates), cattle transport costs (down 12% as a result of lower fuel costs and fewer cattle sold) and supplementary feeding costs (down 18% owing to better seasonal conditions on the breeder properties). 

 

Malaysia

The Group's share of Bertam Properties' result for the first half of 2015 comprised a small loss of US$0.1 million, compared with a profit of US$2.1 million for the first half of 2014.   The lower result was primarily a function of timing as many fewer property sales were completed, and hence their profits recognised, in the first half of 2015, compared with a year ago.  A considerable number of sales are in process and the profits from many of these are likely to be recognised in the second half of 2015.

 

CURRENT TRADING AND PROSPECTS

Since 30 June 2015, palm-oil prices have fallen sharply to the current level of around US$550 per tonne, the lowest experienced for a number of years. Recent turbulence on world stock markets emanating from concerns about the Chinese economy have spilled over into commodity markets - palm oil and other vegetable oils have been no exception to this.  According to Oil World, bio-diesel production has been at low levels resulting in higher exports of palm oil by Indonesia.  As these quantities have not been immediately consumed, some therefore have been added to existing stocks in the importing countries and this has contributed to the price weakness.

Despite the current weakness in the price, the board remains confident that the fundamentals of the palm-oil market remain encouraging.  Vegetable oil is a basic foodstuff and increasing demand from a growing world population looks likely to continue.  Palm oil delivers by far the highest yield per hectare of all the vegetable oils and has the lowest cost of production.  It is therefore well placed, long term, to benefit from the likely future increase in demand.

F.f.b. crops on the Kalimantan project and on the established Sumatran estates are expected, as in most previous years, to be higher in the second half of the year than in the first.  The Kalimantan project is currently experiencing an acute dry period which may delay the upturn in crop expected to occur towards the end of the year. The weather pattern in Bangka tends to be different and the second-half crop is likely to be slightly lower than that for the first half.  As referred to earlier, it is not clear as to how severe the effects of the current El Niño phenomenon will be.  If there is an effect, there will be a continuing impact into 2016 and possibly 2017.

The US Dollar appears to be continuing to strengthen against the Indonesian Rupiah.  This has a beneficial effect when the Rupiah costs are translated into US Dollars.

Since the period end, Woodlands has continued to enjoy a good season, whilst conditions across NAPCo's portfolio of properties have been mixed.   Cattle prices in Australia have continued to surge, following continued strong export demand, the relatively weak Australian Dollar and a continuing decline in the size of the Australian and US cattle herds. As referred to above, the sale of Woodlands is expected to be completed before the end of the year.

Notwithstanding the strength of the cattle market, unless there is a recovery in palm-oil prices, the results for the whole of 2015 are expected to be lower than for 2014.

 

 

Unaudited consolidated income statement

FOR THE SIX MONTHS ENDED 30 JUNE 2015

 

 

                                    

                                             

                                     30 June 2015

                                          US$'000

 

Revenue                                    39,241

 

Cost of sales                             (28,778)

                                           ------

Gross profit                               10,463

 

Foreign-exchange loss                      (3,997)

Other administrative expenses                (857)

Other income                                  309

                                           ------

Group operating profit before interest

 and tax                                    5,918

 

Finance income                                505

Finance costs                                (921)

                                           ------

Group-controlled profit before taxation     5,502

 

Tax on profit on ordinary activities         (812)

                                           ------

Group-controlled profit after tax           4,690

 

Share of associated companies' profit

 after tax                                 10,602

                                           ------

Profit for the period                      15,292

                                           ======

 

Attributable to:

Owners of M.P. Evans Group PLC             14,683

Non-controlling interests                     609

                                           ------

                                           15,292

                                           ======

 

                                         US Cents

 

Basic earnings per 10p share                26.53

                                           ======

 

Diluted earnings per 10p share              26.50

                                           ======

 

 

 

Unaudited consolidated income statement

FOR THE SIX MONTHS ENDED 30 JUNE 2014

 

                                                                     Previously

                                       Result for                -reported

                                   6 months ended     Biological   result for 6

                                     30 June 2014     bearer-asset months ended

                                       adjustment     adjustment   30 June 2014

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

 

Revenue                                    47,514              -         47,514

 

Cost of sales                             (31,408)         1,291        (30,117)

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

Gross profit                               16,106          1,291         17,397

 

Gain on biological assets (note 5)              -          4,286          4,286

Planting expenditure                            -          1,926          1,926

Foreign-exchange gain                         662             -             662

Other administrative expenses              (4,168)            -          (4,168)

Other income                                  356             -             356

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

Group operating profit before interest

 and tax                                   12,956          3,651         16,607

 

Finance income                                848              -            848

Finance costs                              (1,849)          (214)        (2,063)

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

Group-controlled profit before taxation    11,955          3,437         15,392

Tax on profit on ordinary activities       (4,921)          (923)        (5,844)

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

Group-controlled profit after tax           7,034          2,514          9,548

 

Share of associated companies' profit

 after tax                                  8,347          1,138          9,485

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

Profit for the period                      15,381          3,652         19,033

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

 

Attributable to:

Owners of M.P. Evans Group PLC             13,575          3,303         16,878

Non-controlling interests                   1,806            349          2,155

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

                                           15,381          3,652         19,033

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

 

                                         US Cents                      US Cents

 

Basic earnings per 10p share                24.74                         30.76

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

 

Diluted earnings per 10p share              24.71                         30.72

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

 

Consolidated income statement

FOR THE YEAR ENDED 31 DECEMBER 2014
                                                                          

                                                         Previously

                                                                      -reported

                                      Result for     Biological      result for

                                    year ended 31   bearer-asset  year ended 31

                                    December 2014     adjustment  December 2014

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

 

Revenue                                    90,922              -         90,922

Cost of sales                             (58,987)         3,959        (55,028)

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

Gross profit                               31,935          3,959         35,894

 

Gain on biological assets                       -         15,144         15,144

Planting expenditure                            -         (6,314)        (6,314)

Foreign-exchange losses                    (2,379)             -         (2,379)

Other administrative expenses              (5,870)             -         (5,870)

Other income                                  448              -            448

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

Group operating profit before interest

 and tax                                   24,134         12,789         36,923

 

Finance income                              1,650             -           1,650

Finance costs                              (3,310)          (403)        (3,713)

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

Group-controlled profit before taxation    22,474         12,386         34,860

 

Tax on profit on ordinary activities       (9,095)        (2,923)       (12,018)

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

Group-controlled profit after tax          13,379          9,463         22,842

 

 

 

Share of associated companies' profit

 after tax                                 15,308         (1,052)        14,256

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

Profit for the period                      28,687          8,411         37,098

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

 

Attributable to:

Owners of M.P. Evans Group PLC             25,395          8,281         33,676

Non-controlling interests                   3,292            130          3,422

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

                                           28,687          8,411         37,098

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

 

                                         US Cents                      US Cents

 

Basic earnings per 10p share                46.04                         61.05

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

 

Diluted earnings per 10p share              45.98                         60.97

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



 

 

Unaudited consolidated balance sheet

AT 30 JUNE 2015

 

                                     30 June 2015

                                          US$'000

Non-current assets

Goodwill                                    1,157

Property, plant and equipment             197,014

Investment in associates                   96,419

Investments                                    89

Deferred-tax asset                         15,924

                                          -------

                                          310,603

                                          -------

Current assets

Biological assets                           6,835

Inventories                                 6,670

Trade and other receivables                15,689

Current-tax asset                           2,544

Cash and cash equivalents                  38,878*

                                          -------

                                           70,616

                                          -------

 

Total assets                              381,219

                                          -------

 

Current liabilities

Borrowings                                 31,072

Trade and other payables                   14,934

Current-tax liabilities                     1,443

                                          -------

                                           47,449

                                          -------

 

                                          -------

Net current assets                         23,167

                                          -------

 

Non-current liabilities

Borrowings                                 11,765

Deferred-tax liability                        139

Retirement-benefit obligations              3,958

                                          -------

                                           15,862

                                          -------

 

Total liabilities                          63,311

                                          =======

 

                                          -------

Net assets                                317,908

                                          =======

 

Equity

Share capital (note 6)                      9,349

Other reserves                             73,550

Profit and loss account                   214,257

                                          -------

Equity attributable to owners of

 M.P. Evans Group PLC                     297,156

 

Non-controlling interests                  20,752

                                          -------

Total equity                              317,908

                                          =======

 

Of this balance US$19.6 million has been pledged as security against bank loans



 

Unaudited consolidated balance sheet

AT 30 JUNE 2014

                                                                          

                                                                     

                                                                      

                                                      Biological     Previously

                                                    bearer-asset      -reported

                                     30 June 2014     adjustment   30 June 2014

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

Non-current assets

Goodwill                                    1,157              -          1,157

Biological assets (note 5)                      -        152,680        152,680

Property, plant and equipment             190,519        (76,863)       113,656

Investment in associates                  102,354         28,473        130,827

Investments                                   104              -            104

Deferred-tax asset                         13,707              -         13,707

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

                                          307,841        104,290        412,131

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

Current assets

Biological assets                           2,450              -          2,450

Inventories                                 9,325           (416)         8,909

Trade and other receivables                11,492              -         11,492

Current-tax asset                           2,729              -          2,729

Cash and cash equivalents                  50,931              -         50,931

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

                                           76,927           (416)        76,511

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

 

Total assets                              384,768        103,874        488,642

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

 

Current liabilities

Borrowings                                 31,375              -         31,375

Trade and other payables                   13,599              -         13,599

Current-tax liabilities                       901              -            901

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

                                           45,875              -         45,875

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

 

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

Net current assets                         31,052           (416)        30,636

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

 

Non-current liabilities

Borrowings                                 27,352              -         27,352

Deferred-tax liability                      2,942         18,983         21,925

Retirement-benefit obligations              3,430              -          3,430

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

                                           33,724         18,983         52,707

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

 

Total liabilities                          79,599         18,983         98,582

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

 

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

Net assets                                305,169         84,891        390,060

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

 

Equity

Share capital (note 6)                      9,290              -          9,290

Other reserves                             81,464         28,473        109,937

Profit and loss account                   196,648         47,929        244,577

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

Equity attributable to owners of

 M.P. Evans Group PLC                     287,402         76,402        363,804

 

Non-controlling interests                  17,767          8,489         26,256

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

Total equity                              305,169         84,891        390,060

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

 

 

 

Consolidated balance sheet

AT 31 DECEMBER  2014

 

                                          

                                                      Biological     Previously

                                                    bearer-asset   -reported 31

                                 31 December 2014     adjustment  December 2014

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

Non-current assets

Goodwill                                    1,157              -          1,157

Biological assets (note 5)                      -        163,538        163,538

Property, plant and equipment             191,584        (79,601)       111,983

Investments in associates                  94,333         26,284        120,617

Investments                                    96              -             96

Deferred-tax asset                         14,137              -         14,137

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

                                          301,307        110,221        411,528

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

Current assets

Biological assets                           4,440              -          4,440

Inventories                                 6,879            415          7,294

Trade and other receivables                13,220              -         13,220

Current-tax asset                           2,029              -          2,029

Cash and cash equivalents                  48,042              -         48,042

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

                                           74,610            415         75,025

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

 

Total assets                              375,917        110,636        486,553

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

Current liabilities

Borrowings                                 32,424              -         32,424

Trade and other payables                   12,555              -         12,555

Current-tax liabilities                     2,202              -          2,202

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

                                           47,181              -         47,181

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

 

Net current assets                         27,429            415         27,844

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

Non-current liabilities

Borrowings                                 14,103              -         14,103

Deferred-tax liability                        199         20,984         21,183

Retirement-benefit obligations              3,765              -          3,765

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

                                           18,067         20,984         39,051

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

 

 

Total liabilities                          65,248         20,984         86,232

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

 

Net assets                                310,669         89,652        400,321

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

Equity

Share capital (note 6)                      9,302              -          9,302

Other reserves                             69,258         26,284         95,542

Profit and loss account                   211,966         55,098        267,064

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

Equity attributable to owners

 of M.P. Evans Group PLC                  290,526         81,382        371,908

 

Non-controlling interests                  20,143          8,270         28,413

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

Total equity                              310,669         89,652        400,321

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

 

 

 

 

 

 

Unaudited consolidated cash-flow statement

FOR THE SIX MONTHS ENDED 30 JUNE 2015

 

                                         6 months       6 months           Year

                                            ended          ended          ended

                                          30 June        30 June    31 December

                                             2015           2014           2014

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

 

Net cash generated by operating           -------        -------        -------

 activities (note 7)                        7,876        14,939          29,106

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

Investing activities

Interest received                             505           848           1,650

Sale of shares to non-controlling interest      -              -            926

Proceeds on disposal of property, plant

 and equipment                                319            58             415

Purchase of property, plant and equipment (11,977)       (8,147)        (18,986)

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

Net cash used by investing activities     (11,153)       (7,241)        (15,995)

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

 

 

Financing activities

 

Dividends paid to Company

 shareholders (note 4)                     (3,665)       (3,995)         (5,462)

Repayment of borrowings                    (2,580)       (9,039)        (17,262)

Short-term loan reclassified as

 long-term loan                                 -         1,264               -

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

Net cash used by financing activities      (6,245)      (11,770)        (22,724)

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

 

Net decrease in cash and cash

 equivalents                               (9,522)       (4,072)         (9,613)

 

Net cash and cash equivalents at          

 1 January                                 15,618        24,638          24,638

 

Effect of foreign-exchange rates on cash

 and cash equivalents                       1,710        (1,010)            593

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

Net cash and cash equivalents at       

 period end                                 7,806        19,556          15,618

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

 

 

Notes to the interim statements

FOR THE SIX MONTHS ENDED 30 JUNE 2015

 

 

1.     STATUTORY INFORMATION

The financial information for the six-month periods ended 30 June 2015 and 2014 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 2014 is abridged from the statutory accounts. The 31 December 2014 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, save for the amendments to IAS 16 and IAS 41 issued by the IASB on 30 June 2014 which have been applied by the Group in advance of their anticipated endorsement by the EU during the fourth quarter of 2015, and with those parts of the Companies Act 2006 applicable to companies preparing accounts under IFRS.

 

Other than changes arising from the adoption of the amendments to IAS 16 and IAS 41 (see note 5 below), the accounting policies of the Group follow those set out in the annual financial statements at 31 December 2014.

 

3.     SEGMENT INFORMATION

The Group's reportable segments follow three areas of activity.  These are distinguished by location and product:  plantation crops (predominantly palm oil) in Indonesia, with a residual balance in Malaysia; cattle in Australia, and property development in Malaysia.

6 months to 30 June 2015

                                                                       Share of

                                                           Gross     associates

                                         Revenue    profit/(loss) profit/(loss)

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

Plantation -Indonesia                      37,938          8,869             -

  Associate:  Agro Muko                         -              -          2,724

  Associate:  Kerasaan                          -              -            348

Plantation - Malaysia                          68            (23)             -

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

Plantation                                 38,006          8,846          3,072

Cattle - Australia                          1,211          1,593              -

  Associate: NAPCo                              -              -          7,598

Property - Malaysia                             -              -              -

  Associate:  Bertam Properties                 -              -           (68)

Other                                          24             24              -

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

                                           39,241         10,463         10,602

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

6 months to 30 June 2014

                                                                       Share of

                                                           Gross     associates

                                          Revenue   profit/(loss) profit/(loss)

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

Plantation -Indonesia                      46,516         17,026            -

  Associate:  Agro Muko                         -              -          5,950

  Associate:  Kerasaan                          -              -            648

Plantation - Malaysia                          81            (40)             -

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

Plantation                                 46,597         16,986          6,598

Cattle - Australia                            893           (904)              -

  Associate: NAPCo                              -              -           (347)

Property - Malaysia                             -              -              -

  Associate:  Bertam Properties                 -              -          2,096

Other                                          24             24              -

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

                                           47,514         16,106          8,347

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

Year to 31 December 2014

                                                                       Share of

                                                           Gross     associates

                                         Revenue    profit/(loss)        profit

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

Plantation -Indonesia                      89,786         31,813              -

  Associate:  Agro Muko                         -              -          9,856

  Associate:  Kerasaan                          -              -          1,093

Plantation - Malaysia                         124            (92)             -

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

Plantation                                 89,910         31,721         10,949

Cattle - Australia                            966            168              -

  Associate: NAPCo                              -              -          1,454

Property - Malaysia                             -              -              -

  Associate:  Bertam Properties                 -              -          2,905

Other                                          46             46              -

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

                                           90,922         31,935         15,308

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

 

 

4.     DIVIDENDS

 

                                      6 months       6 months           Year

                                         ended          ended          ended

                                       30 June        30 June    31 December

                                          2015           2014           2014

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

2013 final dividend - 6.00

 per 10p share                               -          5,647          5,647

2014 interim dividend - 2.25p

 per 10p share                               -              -          1,994

2014 final dividend - 6.50p

 per 10p share                           5,646              -              -

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

                                         5,646          5,647          7,641

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

Subsequent to 30 June 2015, the board has declared an interim dividend of 2.25p per 10p share.  The dividend will be paid on or after 3 November 2015 to those shareholders on the register at the close of business on 25 September 2015.

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 13 October 2015.

 

TIMETABLE

Ex dividend date                                                  24/09/2015

Record date                                                       25/09/2015

Calculation period                                  24/09/2015 to 30/09/2015

Last day for scrip elections                                      13/10/2015

Payment date                                                      03/11/2015

 

 

 

5.     BIOLOGICAL ASSETS

On 30 June 2014 IASB issued an amendment to its standard on biological assets, with consequential changes also made to its standard on property, plant and equipment. Adoption of the IASB amendments by the EU is timetabled for the fourth quarter of 2015 so, as permitted under the amendments, the Group intends to adopt their provisions with effect from 1 January 2015, accounting for its plantation assets at depreciated historical cost.

 

Since it began reporting under IFRS, and hence recognising biological assets in its financial statements, the Group has continuously published audited figures showing what its results would have been without the application of IAS 41 to its "bearer assets", mainly oil palms. These figures (the first column in the Group's three column presentation) showed what the Group's results would have been both prior to the application of IAS 41 and now what they would be after the adoption of the amendments to IAS 41. At 31 December 2014 the Group's net assets would have been US$310.7 million as against US$400.3 million and reported profit for the year then ended US$28.7 million rather than US$37.1 million.

 

IFRS allows preparers of accounts to recognise the value of growing crop prior to harvest "when, and only when, the fair value or cost of the asset can be measured reliably". It is the considered view of the board, supported by the opinion of the Tropical Growers' Association, that the stock of growing fresh fruit bunches cannot be measured reliably. Hence, crop growing on the Group's palms prior to harvest has not been recognised as an asset.

 

6.     SHARE CAPITAL

 

                                       30 June        30 June    31 December

                                          2015           2014           2014

Number of shares of 10p each

At 1 January                        55,327,395     55,034,876     55,034,876

Issued                                 304,355        217,060        292,519

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

At period end                       55,631,750     55,251,936     55,327,395

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

 

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

 

At 1 January                             9,302          9,253          9,253

Issued                                      47             37             49

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

At period end                            9,349          9,290          9,302

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

 

No share options were exercised in the period or in 2014, and accordingly there were no cash proceeds.  In addition, 304,355 shares were issued in lieu of the 2014 final dividend paid on 18th June 2015 (2014 - 217,060).

 

 

7.     ANALYSIS OF MOVEMENTS IN CASH FLOW

 

                                      6 months       6 months           Year

                                         ended          ended          ended

                                       30 June        30 June    31 December

                                          2015           2014           2014

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

 

Profit for the period                   15,292         15,381         28,687

Share of associated companies' profit

 after tax                             (10,602)        (8,347)       (15,308)

Tax charge                                 812          4,921          9,095

Finance costs                              921          1,849          3,310

Finance income                            (505)          (848)        (1,650)

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

Operating profit                         5,918         12,956         24,134

 

Biological gain                         (2,040)        (2,529)        (1,545)

Disposal of non-current assets            (195)            (3)           833

Release of deferred profit on sale

 of land                                   (95)          (458)          (506)

Depreciation of property, plant

 and equipment                           4,929          4,712          9,388

Retirement-benefit obligations             458            453            923

Share-based payments                        60             63             84

Dividends from associated companies      4,335          5,259         11,742

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

Operating cash flows before

 movements in working capital           13,370         20,453         45,053

 

Increase in inventories                   (430)          (312)        (1,018)

(Decrease)/increase in receivables      (2,562)           894           (974)

Increase/(decrease) in payables          2,393          3,275          2,265

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

Cash generated by operating activities  12,771         24,310         45,326

 

Income tax paid                         (3,974)        (7,522)       (12,909)

Interest paid                             (921)        (1,849)        (3,311)

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

Net cash generated by operating

 activities                              7,876         14,939         29,106

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

 

8.   POST-BALANCE-SHEET EVENT: SALE OF WOODLANDS

On 15 September the Group entered into a contract for the sale of Woodlands, its wholly-owned Australian cattle-fattening property. The sale is conditional on regulatory approvals, including that of the Australian Foreign Investment Review Board, which are all expected to be received within approximately three months from the date of contract.  The sale is for the property alone: both the cattle and plant and equipment on the property will be sold separately. The board determined some time ago, for strategic reasons, to sell Woodlands. Interest in the property developed from the middle of 2015 in line with a significant strengthening of the cattle market. Woodlands is the only operating unit appearing under 'Cattle-Australia' in the Group's segmental reporting (see note 3).

 

9.     EXCHANGE RATES

 

                                       30 June        30 June    31 December

                                          2015           2014           2014

 

US$1 = Indonesian Rupiah

 - average                              12,962         11,726         11,864

 - period end                           13,332         11,969         12,440

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

US$1 = Australian Dollar

 - average                                1.28           1.09           1.11

 - period end                             1.30           1.06           1.22

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

US$1 = Malaysian Ringgit

 - average                                3.64           3.27           3.27

 - period end                             3.77           3.21           3.50

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

£1 = US Dollar

 - average                                1.52           1.67           1.65

 - period end                             1.57           1.71           1.56

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

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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