Unaudited preliminary results 2015

RNS Number : 8572U
M. P. Evans Group PLC
12 April 2016
 

 

 

M.P. EVANS GROUP PLC

M.P. Evans Group PLC ("MP Evans" or "the Group"), a producer of Indonesian palm oil and Australian beef cattle, announces its unaudited preliminary results for the year ended 31 December 2015.

 

 

Highlights

 

Financials

·            Profit for the year US$25.4 million (2014 US$28.3 million)

·            Earnings per share US cents 43.4 (2014 US cents 45.4)

·            Total dividend for the year maintained at 8.75 pence per share

·            Net cash at 31 December 2015 of US$11.5 million (2014 US$1.5 million)

 

Indonesian palm oil

·            Plantation profits lower at US$15.1 million (2014 US$31.8 million) as palm-oil prices     weakened during year

·            F.f.b. crops 10% higher than 2014 despite adverse weather conditions

·            Extraction rates remained at very acceptable levels

·            Palm-oil price averaged US$622 per tonne (2014 US$821) but since year end has               strengthened to around US$730 per tonne

·            Progress made on the new Musi Rawas project - over 1,100 hectares planted and a           further 2,200 hectares have been compensated

·            Group crops projected to continue rising strongly in future years

 

Australian beef cattle

·            NAPCo made very substantial profit following record cattle prices

·            Sale of Woodlands completed in November 2015

·            Woodlands, prior to its sale, made good profit as a result of the strong cattle market

·            Cattle prices remain relatively strong in early 2016 and satisfactory rainfall received at many of NAPCo's properties

 

Malaysian property

·            Similar profits to 2014 from two sales of land, and fewer developed properties sold than in            2014

 

 

Commenting on the results, Peter Hadsley-Chaplin, executive chairman of MP Evans, said: "It is pleasing that, in a year of significantly-lower palm-oil prices, the profit for the year fell only by 10% following much-improved profits at Woodlands and NAPCo, resulting from the surge in beef-cattle prices.   The strong cattle market provided the opportunity for the Group, in line with its strategy, successfully to sell Woodlands towards the end of 2015. In early 2016, the palm-oil market has staged a welcome recovery from the low levels of 2015 and Australian beef-cattle prices, whilst softening a little, remain at historically-strong levels."

 

Enquires:

M.P. Evans Group PLC

020 7796 4133 on 12 April 2016 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


Adrian Trimmings


George Sellar




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 OF RESULTS

Despite the 24% decline in the price of the Group's principal commodity, palm oil, and chiefly as a result of the sharp increase in the Australian cattle market, the profit for the year declined by only 10% to US$25.4 million, compared with US$28.3 million in 2014. Earnings per share fell by 4% to US cents 43.4 (2014 US cents 45.4).

 

The effects of the reduction in the palm-oil price were also mitigated by a 10% increase in the Group's Indonesian crops of oil palm fresh fruit bunches ("f.f.b.") to 423,900 tonnes.  The higher crop level was mainly attributable to the continuing increase from the Group's two new projects on Bangka Island and in East Kalimantan, although there was a pleasing increase too from the Group's established Sumatran estates.

 

Crop levels achieved on the Group's two associated Indonesian palm-oil companies were similar to last year but their profits were significantly lower following the palm-oil price decline.  This drop in price, to an average of US$622 per tonne from US$821 per tonne, resulted from a number of factors, the principal of which appears to have been the decline in the biodiesel market, following the strong fall in the mineral-oil price, and a build up of global vegetable-oil stocks.  Fortunately, the price has staged a partial recovery in the early part of 2016.

 

With regard to the Group's Australian operations, both Woodlands (prior to its sale in late 2015) and the Group's associate, The North Australian Pastoral Company Pty Limited ("NAPCo"), enjoyed substantially higher profits owing to the increasingly-strong cattle market during 2015.  This strength resulted from continuing high Asian demand for beef, assisted by the softening of the Australian Dollar, and a tightening of the supply of cattle following the ongoing reduction in both the Australian and US cattle herds.  In Malaysia, the Group's share of the profit achieved by Bertam Properties Sdn Berhad ("Bertam Properties") declined a little, notwithstanding that property development and sales continued at a healthy level.  Overall, as a result of the sharply-improved result at NAPCo, the Group's share of its associated companies' profits increased by 28%.

 

DIVIDEND

The board recommends that the final dividend for the year is maintained at 6.50p per share.  Together with the interim dividend of 2.25p per share paid in November 2015 (the same as in November 2014) the total dividend for the year is therefore maintained at 8.75 per share. A scrip-dividend alternative is again being offered.

STRATEGY

The Group's strategy is to continue to expand its oil-palm areas in Indonesia, in a sustainable and cost-effective manner, and to capitalise on the value of its Australian and Malaysian operations, using any sale proceeds to fund the continuing Indonesian palm-oil development. 

Indonesia

The total planted area of the Group's majority-held Indonesian operations extends to approximately 25,400 hectares, 1,400 of which were planted on its new projects during 2015. The planted smallholder areas adjoining the new projects amount to 7,500 hectares, 1,100 of which were planted in 2015. The estimated unplanted land bank is some 7,600 hectares, including the new Musi Rawas project, on the Group's estates and some 3,900 hectares on the adjoining smallholder areas managed by the Group. It is the board's aim for the Group's own areas to be planted at as rapid a rate as the availability of suitable land permits. In addition to the Group's existing unplanted land bank, the board seeks, in the future, to acquire further pieces of land suitable for sustainable oil-palm development located, if possible, near the Group's existing estates. The Group will also seek continually to maintain and, where possible, improve agronomic standards and productivity on its estates with a view to increasing crops of f.f.b. and production of crude palm oil ("CPO"). Furthermore, the Group will continue to work closely with its joint-venture partner, SA SIPEF NV ("SIPEF"), with regard to the two associated estates which SIPEF manages, to ensure that the highest standards are achieved.

Australia

In Australia, with regard to Woodlands, it was the board's aim, after substantial improvements had been made to the property, to dispose of it once a suitable opportunity arose.  Following the strong cattle market in 2015, an acceptable offer to purchase the property was received and completion duly took place in November 2015. Woodlands is shown as a discontinued operation. This now leaves NAPCo as the Group's sole investment in Australia.   The board has continued to review any potential strategic opportunities with regard to this holding.

Malaysia

In Malaysia, the aim is for Bertam Properties to continue to capitalise on the value of its land, either by the development and sale of housing, retail and other units or through the outright sale of raw land. The Group will continue to reap the benefit of this development and sale activity until, in an estimated five to ten years' time, the project is fully developed, or until an acceptable offer is received to acquire the Group's 40% share. It is also the Group's long-term intention to dispose of its adjacent estate and therefore, as a consequence, ultimately to exit from Malaysia entirely.

PALM-OIL AND BEEF-CATTLE MARKETS

2015 was a year in which palm-oil prices fell throughout most of the year.  Ample supplies of soybean, sunflower and rapeseed oil exerted downward pressure on palm-oil prices during 2015, as did the weakness of world mineral-oil prices.  The low mineral-oil price made palm-oil-based biodiesel uneconomic and production in Indonesia dropped sharply.  Consumption of palm oil in Indonesia was accordingly curbed markedly and, as a result, more was diverted to export markets, contributing further to downward price pressure.  Growth in the world production of palm oil continued, albeit at a slightly lower pace than in 2014.  The dry period experienced in parts of Indonesia in the middle of 2015 began to have an effect on production in the last quarter and there is likely to be a further impact in 2016 which may provide support for palm-oil prices.  The discount of palm-oil prices to soybean oil widened during the year from around US$100 per tonne to over US$130.  This improved competiveness led to a sharp increase in exports of palm oil, notably to India. Palm-kernel-oil prices largely followed palm oil but were quite volatile in the last quarter of the year due to the tension between low CPO prices and high coconut-oil prices.

 

Australian beef-cattle prices continued to rise strongly in 2015, both for backgrounded grass-fed cattle (Woodlands) and heavier, grain-finished cattle (NAPCo).  The strength is attributable to the continuing reduction in the size of the Australian cattle herd, and that in the US, coupled with sharpening demand from Asia.  Prices remain relatively firm in 2016.

Biological Assets

This year, the Group's results and financial position use the amended International Accounting Standard 41 ("IAS41") on biological assets (see note 9). The Group was pleased this amendment removed the obligation to account for its oil palms at a valuation, instead recording them in the accounts at depreciated cost much like any other manufacturing facility.  However, the Group's auditor has a different interpretation to that of the board regarding the valuation of f.f.b. still growing on the palms, which has to be considered separately for the first time. Taking into account their advice regarding interpretation of IAS 41, the Group has adopted a policy for its statutory reporting of including in its financial statements an estimated valuation of partly-formed f.f.b. prior to harvest, notwithstanding that different defensible methodologies will give widely differing valuations and that users of financial statements tend to find fair-value information for this type of asset of limited use, not least because of the potential for manipulation and the degree to which assumptions vary significantly between companies. This policy will be kept under review.

 

REVIEW OF OPERATIONS

Indonesia

Majority-owned estates

Crops and production

Despite some difficult weather conditions experienced in parts of Indonesia, the upward trend of crops continued.  The overall Group f.f.b. crop for 2015 amounted to 423,900 tonnes, an increase of 10% over the 385,400 tonnes harvested in 2014. 

 

The crop in Kalimantan continued to increase.  The first half of 2015 was adversely affected by the dry period in the second half of the previous year, resulting in only a modest improvement in the crop when compared with the first half of 2014.  The crop was expected to increase markedly in the second half of 2015, which it did, but another acute dry period, an El Niño phenomenon, restricted the expected increase.  As a result, the crop for the full year was 164,500 tonnes, 3% higher than the 160,200 tonnes recorded in 2014, a more modest increase than had been experienced in earlier years.  It is likely that the 2015 El Niño event may impact negatively on the crop in the middle of 2016.

 

The 2015 crop on the Bangka project recovered from the drought-affected years of 2013 and 2014 and, at 66,300 tonnes, was in line with expectations and was 55% higher than the 42,700 tonnes recorded in 2014.  The El Niño phenomenon also affected Bangka during 2015 and, as in Kalimantan, the effects of this may well be felt during 2016. 

 

Crops in 2015 on the established Sumatran estates, at 193,100 tonnes, returned to their 2013 levels after the drought-affected 2014 (182,500 tonnes).  Fortunately, the El Niño conditions did not seem to affect the Group's Sumatran estates in the same way that other parts of Indonesia were affected.

Although slightly lower than in the previous year, oil-extraction rates continued at very acceptable levels in 2015.  The Kalimantan mill continued to achieve rates of over 25%.  The average rate in 2015, at 25.1% was slightly lower than 2014's 25.6% partly due to weather conditions and partly due to a marked increase in third-party fruit purchased.  The average rate in the mill on Pangkatan Estate fell, as expected, since, unlike in 2014, third-party fruit was purchased from other estates - see further comment below under "Sumatra - established estates".

 

Details of crops, production and extraction rates for 2015, with comparative figures for 2014, are set out below:- 

 



2015

Increase

2014



Tonnes

%

Tonnes

F.f.b. crops





Own crops





                  Pangkatan group

148,900


140,400

                  Simpang Kiri

44,200


42,100



193,100

6

182,500

                  Kalimantan

164,500

3

160,200

                  Bangka

66,300

55

42,700



423,900

10

385,400

Smallholder co-operative crops




                  Kalimantan

70,400

9

64,500

                  Bangka

30,300

36

22,200



100,700

16

86,700

Outside crop purchased




                  Kalimantan

21,400

37

15,600

                  Pangkatan

16,300

-

-

Production





Crude palm oil





                  Kalimantan

64,300

5

61,500

                  Pangkatan

37,900

13

33,500



102,200

8

95,000

Palm kernels





                  Kalimantan

11,000

9

10,100

                  Pangkatan

9,600

16

8,300



20,600

12

18,400

Extraction rates


%


%

Crude palm oil





                  Kalimantan

25.1


25.6

                  Pangkatan

23.0


23.9

Palm kernels





                  Kalimantan

4.3


4.2

                  Pangkatan

5.8


5.9

Sumatra - established estates

The four established estates in Sumatra continue to be well run at low cost and are improving year by year.   As referred to above, the El Niño phenomenon largely left the established estates unaffected and crops for the whole year were slightly ahead of expectations.  Crops in 2014 were affected by dry weather, particularly in the second half of that year and this effect continued into the first half of 2015.  However, unlike in 2014 when the crop in the second half of the year was similar to that in the first half, in 2015 more normal conditions returned and the crop in the second half was significantly higher than in the first.

 

Two of the established estates, Bilah and Simpang Kiri, having been set up in the 1980's are now reaching the stage when significant areas need to be replanted.  Yields on the older areas are falling and the replanting programme is now well under way.  This programme will continue for the next six or seven years and crops are expected to remain, in total, at around, or possibly slightly lower than, current levels until the replantings mature and yields again start to accelerate.  During 2015, 230 hectares were replanted on Bilah Estate, 159 hectares on Sennah Estate and 176 hectares on Simpang Kiri Estate, totalling 565 hectares.  Over the next few years, the programme is to replant between 350 and 600 hectares each year.  Only high-quality planting material (seeds) is used. 

 

The oil-extraction rate achieved by Pangkatan Mill (which processes the f.f.b. from Pangkatan, Bilah and Sennah Estates) continued during 2015 at an acceptable average rate of 23.0%.  This was lower than the 23.9% in 2014 but f.f.b. were purchased from outside sources in 2015.  This provided useful utilisation in the mill, thereby reducing fixed costs per tonne in a year when palm-oil prices were at lower levels than had been experienced in recent years.

 

During the year, close coordination on the Group's own areas between the mill and the field ensured that fruit of the optimum quality and ripeness was delivered to the mill for processing.  High standards continue to be required in the mill with regard to extraction rates, oil quality and the minimisation of oil losses.

 

Management has been unable to agree terms on which to sell electricity to the Indonesian Government electricity board (PLN).  Investment in plant to capture methane and burn it in a gas engine will not be made until acceptable terms can be agreed.

 

During the year, credits for both CPO and palm kernels were sold through a marketing platform with those for palm-kernel oil (and therefore for palm kernels) remaining stronger than CPO.  Premia were, at various points in the year, received from buyers of RSPO-accredited oil and also for good-quality CPO with low levels of free fatty acid ("f.f.a.").  Management is reviewing possibilities with regard to improving the premia available from selling accredited oil.

Sumatra - Musi Rawas Project

The planting programme began to gain some momentum during 2015.  During the year, some 1,030 hectares were planted, of which 750 related to the Group and 280 to the smallholders' co-operatives. Compensation terms on a further 2,200 hectares had been agreed and paid by the end of the year.

 

Good progress was made during the year with the infrastructure on the project such as roads and buildings, including housing for staff and workers, offices and storage facilities.  A full management team is in place and the workforce is drawn from the local community on a contract basis at this early stage of the development of the project.  As the project matures, workers will be taken on on a permanent, full-time basis as and when required.  The soil, the land (largely flat with low undulations) and rainfall are ideal for oil-palm cultivation.

 

The board continues to estimate that 10,000 hectares (7,000 for the Group and 3,000 for the smallholders' co-operatives) might ultimately be able to be planted although it is very difficult at this early stage to be certain what will be available.  Much will depend upon the Group's ability to agree acceptable terms with the occupants of the land.  The Group has undertaken to develop 30% of the planted land for the smallholders' co-operatives. The members of the co-operatives will be those who have agreed to sell their rights on the land to the Group.

Kalimantan

The f.f.b. crop was 3% higher at 164,500 tonnes (2014 - 160,200 tonnes).  Although the crop trend is still upwards, the increase was more modest in 2015 compared with earlier years due to adverse (dry) weather conditions both in the second half of 2014 and in the second half of 2015.

 

Reversing the trend of recent years, f.f.b. purchased from third parties increased in 2015 to 21,400 tonnes from 15,600 tonnes in 2014.  This provided useful extra income at a time when the Group's own crop was negatively affected by an acute dry period.  The increase in the purchase of third-party fruit inevitably reduced the overall extraction rate to a minor extent but the lower extraction rate achieved from bought-in fruit is reflected in the price paid for it. Close coordination continues between the mill and field management on the Group's own estates. Good-quality fruit of the correct ripeness is delivered from the field and high standards are maintained in the mill to obtain good extraction rates, minimum oil losses and good-quality oil.

 

The project is nearing completion and most of the remaining plantable land is in the area behind the flood-protection bunds currently under construction.  Accordingly, as the bund-building programme is currently under way, planting during the year was minimal. Official clearances were received during 2015 and work commenced on the earthworks and on the construction of the pumping stations.  The first two phases of this project, totalling five kilometres, are nearing completion. The dry period in the second half of the year referred to above, whilst having an adverse effect on the crop, was beneficial in terms of allowing work to proceed on the flood-protection bunds and the pumping stations. Good progress was made during the year and construction is expected to be completed during 2016.  Once completed, it is expected that over 800 hectares will be able to be planted and also some 1,000 hectares that have already been planted but are prone to regular flooding will be able to be upgraded and, where necessary, infilled.  Once protected in this way, the yields from these areas are expected to be good.  Electricity for the powerful pumps will be provided by the gas engine fuelled by methane captured from the liquid mill effluent. 

 

At the end of 2015 some 14,010 hectares had been planted of which 9,770 hectares relate to the Group and 4,240 hectares to the smallholders' co-operatives.  The board's estimation remains that, ultimately, some 15,000 hectares will be planted of which 10,600 hectares will relate to the Group and 4,400 hectares to the smallholders' co-operatives.

 

The gas engine running on methane captured from the liquid mill effluent referred to above is operating well.  Most of the electricity requirements on the project and in the mill are now being provided from the stream-driven generators in the mill and from the gas engine. This has enabled some diesel-powered generators to be stood down and moved to other locations.  A second palm-oil mill is scheduled to be constructed on the project and it is estimated that this will be commissioned in 2018.  It is the intention to capture methane from the liquid effluent and operate a gas engine in that mill as well.  Electricity surplus to the project's requirements is likely to be generated and it is hoped that acceptable terms can be agreed with the Indonesian Government electricity board (PLN) to sell the electricity into the grid.

 

At the moment, only 30% of the liquid effluent is utilised from the existing mill for the generation of electricity.  Consideration is being given to expanding this to 100% with a view to the resultant surplus electricity being sold to PLN. Investment in methane capture and electricity generation in either location will not proceed, however, unless acceptable terms can be agreed in advance with PLN.

Bangka

The 55% increase in the crop in 2015 to 66,300 tonnes (2014 - 42,700 tonnes) reflected the recovery from the drought-affected years of 2014 (particularly in the first half) and 2013 as well as the increasing yields from the young areas.  Unfortunately, the El Niño conditions referred to above also had an effect on the weather in 2015 and another acute dry period was experienced in the second half of the year.  It is possible that this may affect crops in 2016. Bangka Island normally has a dry period in the middle of the year but the El Niño phenomenon in 2015 extended this dry period into the fourth quarter of the year. 

 

As has occurred in dry periods in previous years, rat damage increases as rats feed on fruitlets to access moisture.  Prevention through improved baiting, however, reduced the effect of this damage in 2015.

The Bangka project is beginning to approach the end of the planting programme.  As at the end of 2015 the Group's planted areas amounted to 5,410 hectares with those relating to the smallholders' cooperatives amounting to 2,910 hectares.  The total planted was therefore 8,320 hectares.  During the year, 680 hectares of the Group's own areas and 760 hectares of the smallholders' co-operative areas, totalling 1,440 hectares, were planted.  The board's estimate remains that 10,000 hectares will ultimately be planted, of which 6,000 will relate to the Group and 4,000 to the co-operatives.

 

The project's new mill is approaching completion and commissioning is expected to be concluded in mid-2016.  The 45-tonnes-per-hour mill (expandable at a later date to 60 tonnes) is expected to cost approximately US$15 million, including the composting facility.  Methane will be captured from the liquid effluent, "scrubbed" and then used as fuel in a gas engine which will generate electricity for the project.  Surplus electricity will be sold into the national grid.  The cost of the methane-capture plant and the gas engine will be approximately US$2 million.  As at the Kalimantan and Pangkatan mills, the liquid effluent will be sprayed on to the bunches from which the fruitlets have been removed (empty fruit bunches) for processing into palm oil and for recovering the palm kernels.  The resulting nutritious compost is then applied in the field.  As a result of this process, all liquid effluent is utilised and used in the palm-oil process and no effluent reaches rivers or water tables.

 

The current arrangements for selling the project's f.f.b. are to sell it to a nearby mill owned by another company.  It is anticipated that, when the project's new mill is operational, the sale of the CPO and palm kernels, less manufacturing costs, will be significantly more profitable than selling f.f.b.

Operating costs

The cost of production of palm products (CPO and palm kernels) continued to fall, partly as a result of higher utilisation in the two mills (Kalimantan and Pangkatan) and partly as a result of the continuing strengthening of the US Dollar against the Indonesian Rupiah.  A strengthening US Dollar has the effect of reducing local, Rupiah-based, operating costs in US Dollar terms.  The combined operating cost of the two mills was US$350 per tonne of palm product compared with US$370 in 2014.  As a result of the lower palm-oil prices in 2015 the Indonesian gross-profit margin fell in 2015 to 20.8% compared with the 35.4% achieved in 2014.  Commencement of the operation of the new Bangka Mill is expected to improve the margin from the Bangka project.

 

The gross margin has been particularly badly affected on the Group's new projects, notably in Kalimantan where the relatively high level of field maintenance and fertilizer cost magnified the loss of margin due to the lower CPO price compared with the established estates in North Sumatra.

Australia

Woodlands

Following improvements in both 2014 and 2013, profit from cattle trading grew strongly in 2015 to reach US$4.5 million (2014 US$2.0 million). This increase arose from the sale of the whole Woodlands herd at a time of very strong cattle prices prior to the disposal of the operation. Given the improving prospects for the beef-cattle market, the board increased the size of the Woodlands herd. The herd had grown to more than 8,100 head by the time the board took the decision, in line with its strategy, to sell the property. The sale was completed in November 2015 .

 

Good rainfall on Woodlands, spread throughout the year, resulted in good pastures and ample fodder crops. Despite the large numbers of cattle coming onto the property, which lose weight as they recover from their inward journey, weight gained per cattle day rose from the low levels experienced in 2014 to reach 0.55 kg per day (2014 - 0.22 kg per day), with weight gain slightly higher in the second half of the year than in the first half. Total weight gained by the Woodlands herd was 78% higher in 2015 than in the previous year. This improvement in operational performance was further strengthened by an increase in cattle prices: in Australian Dollar terms the price achieved for cattle sales in 2015 rose by 83% compared with 2014. Hence, a combination of improved weight gain and higher prices delivered a farm profit of US$2.7 million (2014 US$0.2 million).

 

Associated companies

Indonesia

Due to the enhanced replanting programme, the f.f.b. crop of PT Agro Muko ("Agro Muko") is expected to remain at, or possibly slightly below, the levels that have been achieved over the last two or three years.  This has again been the case in 2015.  Crops are expected to increase in the future as the areas recently replanted, and to be replanted over the next few years, mature and begin their upward yield trend.  The oil and kernel-extraction rates improved slightly and, as a result, CPO production in 2015 was marginally ahead of that in 2014.  The weakening palm-oil prices in 2015 referred to above which negatively affected the Group's own majority-owned operations had a similar impact on the results of Agro Muko.

 

Agro Muko's rubber crop improved in line with expectations but the rubber market proved to be very weak during 2015.  This was due to increasing supply from Vietnam and Africa and a fall off in demand, particularly from China, as the price of synthetic rubber fell in line with the mineral-oil price.  As a result of the weak palm-oil and rubber markets, the Group's share of Agro Muko's post-tax results in 2015 amounted to US$5.1 million compared with US$9.9 million in 2014.

 

The f.f.b. crop of PT Kerasaan Indonesia ("Kerasaan") was virtually identical to that for 2014.  As a result of the weakness of the palm-oil market in 2015 referred to above, the Group's share of the results in 2015 was US$0.7 million which compares with US$1.1 million in 2014.  The Group's combined share of the post-tax results in 2015 of these two associated companies accordingly amounted to US$5.8 million (2014 US$11.0 million).  In 2015, the Group received gross dividends of US$5.5 million from Agro Muko (2014 US$9.2 million) and US$0.6 million from Kerasaan (2014 US$0.9 million).

 



2015

Tonnes

Increase /

(decrease)

%

2014

Tonnes

F.f.b. crops





PT Agro Muko





-       own

340,500

(1)

344,900

-       outgrowers

12,700

49

8,500



353,200

-

353,400

PT Kerasaan Indonesia

41,600

(1)

42,000



394,800

-

395,400

Production (PT Agro Muko)




                  Crude palm oil

80,300

1

79,400

                  Palm kernels

18,800

2

18,500

Extraction rates

%


%

                  Crude palm oil

22.7


22.5

                  Palm kernels

5.3


5.2






Rubber crops


Tonnes


Tonnes

PT Agro Muko - own                    


1,650

9

1,520

                



Australia

NAPCo achieved a record profit in 2015, of which the Group's share amounted to US$11.0 million (2014 US$1.5 million).  The substantially-improved profit arose principally as a result of the record cattle prices achieved during the year.  After a below-average season in the previous year, 2015 started with over 70% of Queensland (where the majority of NAPCO's properties are located) still drought declared.  However, good rainfall was received early in the year on the breeder properties in the Northern Territory, and, a little later, on the backgrounding (grass-fattening) properties in Queensland.  The Channel Country properties, in Queensland, unfortunately missed out on significant rainfall, or beneficial flooding, throughout the year.  Overall, seasonal conditions proved better in 2015 than in 2014.  Both sales and closing stock numbers were similar in 2015 to those recorded in the previous year.  Given the continuing decline in the size of the Australian herd, a trend which is forecast to continue in 2016, simply maintaining cattle numbers was a sound achievement.  Company brandings of some 56,900 head were significantly higher than the 50,700 head recorded in 2014.

Malaysia

The Penang property market experienced a slowdown in 2015 with the residential market proving to be more resilient than the commercial sector.  Bertam Properties completed the sale of some 370 developed properties in 2015 compared with approximately 410 in 2014.  As a result, the profit after tax from these sales amounted to US$6.2 million (Group share US$2.5 million) compared with a profit of US$7.7 million (Group share US$3.1 million) in the previous year.  The sale of two pieces of raw land were also completed during the year realising a profit after tax of US$1.0 million (Group share US$0.4 million).  The oil-palm plantation activities continued on the small remaining area of agricultural land of 107 hectares (2014 - 115 hectares).  1,800 tonnes of f.f.b. were harvested compared with 1,400 tonnes in 2014 and, because of the weakness of palm-oil prices during the year, a small loss was incurred compared with 2014's modest profit.   

 

The Group's share of Bertam Properties' profit  in 2015 amounted to US$2.8 million (2014 US$2.9 million).  As at the end of 2015, Bertam Properties owned 344 hectares of land.  This included 143 hectares of the golf course and 39 hectares currently under development, leaving 162 hectares undeveloped.  This remaining area continues to be a very valuable asset.  The Group's 40% investment in Bertam Properties is currently estimated to be worth in excess of US$30 million.

Profit for the year

As a result of all of the above, the Group's profit for the year amounted to US$25.4 million, a reduction of US$2.9 million compared with the US$28.3 million reported in 2014.

CURRENT TRADING AND PROSPECTS

Indonesia

The Group's f.f.b. crops have been in line with expectations so far in 2016 with the exception of Bangka where the downturn following the El Niño phenomenon in the third and fourth quarters of 2015 appears to be having its effect.  The crops in Kalimantan are also expected, as a result of El Niño, to be negatively impacted in the middle of 2016 and, although not obviously affected by El Niño in 2015, the crops in Sumatra appear to be heading for a downward trend in the middle of 2016. Overall, Group crops were 3 per cent higher at 87,000 tonnes for the first three months of 2016, compared with 84,800 tonnes for the same period in 2015. Crops in Sumatra and Kalimantan were similar or higher, whilst on Bangka the El Niño effect referred to above resulted in a lower outturn. The details are set out in the following table:-

 



 

3 months ended

 31 March 2016

Tonnes

 

Increase /

(decrease)

%

 

3 months ended 31 March 2015 Tonnes

F.f.b. crops





Sumatra


36,300

-

36,200

Kalimantan


38,200

9

35,100

Bangka


12,500

(7)

13,500



87,000

3

84,800

 

The associated companies' f.f.b. crops have overall been slightly higher in the first quarter of 2016 compared with the same period last year.

 

Because of the El Niño effect in the second half of 2015, world production is expected to stagnate or fall in the first half of 2016.  As a result, palm-oil prices have strengthened in the first part of 2016 and, as at the date of this report, at US$730 per tonne (c.i.f. Rotterdam), are 27% higher than the level at 31 December 2015 (US$573).   Rubber prices have also improved in the first quarter of 2016. In Indonesia the application of funds generated by the palm-oil export levy in subsidising biodiesel production and a higher government biodiesel mandate are expected by Oil World to increase biodiesel production.  The continuing wide price premium of palm oil over mineral oil is likely, however, to mean that biodiesel production will not reach its full potential.  Since the end of 2015 the Indonesian Rupiah has strengthened from US$ 1=Rp 13,785 to the current level of approximately Rp 13,100.  A weaker US Dollar increases Rupiah costs incurred when translated into US Dollars.

Australia

Welcome rainfall has been received in early 2016 on many of the NAPCo properties and, unlike in 2015, modest beneficial flooding has also occurred in the river systems which flow through the company's Channel Country properties.  Cattle prices have eased a little but remain above historical averages, and the outlook for Australian beef continues to appear positive.

 

Peter Hadsley-Chaplin

Chairman

 

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2015

 


 

Year ended 31

December 2015

US$'000

Year ended 31 December 2014

(restated)*

US$'000




Continuing operations



    Revenue

72,528

89,956

    Cost of sales

(57,469)

(58,189)

    Gross profit

15,059

31,767

    Loss on biological assets

(232)

(424)

    Foreign-exchange losses

(5,320)

(2,379)

    Other administrative expenses

(2,768)

(4,596)

    Other income

380

448

    Operating profit

7,119

24,816

    Finance income

894

1,600

    Finance costs

(1,244)

(2,354)

    Group-controlled profit before tax

6,769

24,062

    Tax on profit on ordinary activities

(2,401)

(9,095)

    Group-controlled profit after tax

4,368

14,967

    Share of associated companies' profit after tax

19,531

15,308

    Profit for the year on continuing operations

23,899

30,275

Profit/(loss) for the year from discontinued operations

1,496

(2,012)

Profit for the year

25,395

28,263

Attributable to:



Owners of M.P. Evans Group PLC

24,084

25,065

Non-controlling interests

1,311

3,198


25,395

28,263


 

US CENTS

 

 

US CENTS

Continuing operations



    Basic earnings per 10p share

40.70

49.08

    Diluted earnings per 10p share

40.66

49.02

Continuing and discontinued operations



    Basic earnings per 10p share

43.39

45.44

    Diluted earnings per 10p share

43.35

45.38




 

* Restated for the early adoption of amended IAS 16, 'Property, plant and equipment', and IAS 41, 'Agriculture' in relation to bearer plants (see note 9).

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2015


 

2015

US$'000

2014

(restated)*

US$'000

Other comprehensive expense



Items that may be reclassified to income statement:



Exchange loss on translation of foreign operations

(10,402)

(4,060)

Release of deferred profit on sale of land

(263)

(458)

Items that will not be reclassified to income statement:



Release of deferred tax

-

2,460

Other comprehensive income/(expense)

232

(635)

Other comprehensive expense for the year

(10,433)

(2,693)

Profit for the year

25,395

28,263

Total comprehensive income

14,962

25,570

 

Attributable to:



Owners of M.P. Evans Group PLC

13,630

21,483

Non-controlling interests

1,332

4,087


14,962

25,570

 

* Restated for the early adoption of amended IAS 16, 'Property, plant and equipment', and IAS 41, 'Agriculture' in relation to bearer plants (see note 9).

CONSOLIDATED BALANCE SHEET

At 31 December 2015


 

 

 

31 December 2015

US$'000

 

 

 

31 December 2014

(restated)*

US$'000

 

 

 

 

1 January 2014

(restated)*

US$'000

Non-current assets




Goodwill

1,157

1,157

1,157

Property, plant and equipment

185,902

191,584

185,471

Investments in associates

97,586

94,333

95,521

Investments

78

96

102

Deferred-tax asset

17,076

14,137

14,996


301,799

301,307

297,247

Current assets




Biological assets

893

5,564

2,143

Inventories

8,000

6,879

8,267

Trade and other receivables

18,316

13,220

12,345

Current-tax asset

3,155

2,029

2,201

Cash and cash equivalents

44,214

48,042

56,348


74,578

75,734

81,304

Total assets

376,377

377,041

378,551

Current liabilities




Borrowings

13,453

32,424

31,710

Trade and other payables

15,209

12,555

10,311

Current-tax liability

2,206

2,202

4,313


30,868

47,181

46,334

Net current assets

43,710

28,553

34,970

Non-current liabilities




Borrowings

19,222

14,103

34,780

Deferred-tax liability

429

199

2,903

Retirement-benefit obligations

4,233

3,765

2,933


23,884

18,067

40,616

Total liabilities

54,752

65,248

86,950

Net assets

321,625

311,793

291,601

Equity




Share capital

9,360

9,302

9,253

Other reserves

76,226

69,258

75,212

Retained earnings

214,423

212,949

190,939

Equity attributable to the owners of




  M.P. Evans Group PLC

300,009

291,509

275,404

Non-controlling interests

21,616

20,284

16,197

Total equity

321,625

311,793

291,601

 

* Restated for the early adoption of amended IAS 16, 'Property, plant and equipment', and IAS 41, 'Agriculture' in relation to bearer plants (see note 9).

CONSOLIDATED CASH-FLOW STATEMENT

For the year ended 31 December 2015


 

Year ended

31 December 2015

US$'000

Year ended

 31 December 2014

(restated)*

US$'000




Net cash generated by operating activities

20,231

29,156

 




 

Investing activities



 

Purchase of property, plant and equipment

(28,419)

(20,556)

 

Interest received

894

1,600

 

Proceeds on disposal of property, plant and equipment

21,127

1,985

 

Sale of shares to non-controlling interest

-

926

 

Net cash used by investing activities

(6,398)

(16,045)

 




 

Financing activities



 

Loan drawdown

18,571

-

 

Repayment of borrowings

(30,449)

(16,548)

 

Proceeds on issue of shares

-

-

 

Dividends paid to Company shareholders

(5,208)

(5,462)

 

Dividend paid to non-controlling interest

-

-

 

Net cash used by financing activities

(17,086)

(22,010)

 




 

Net decrease in cash and cash equivalents

(3,253)

(8,899)

 




 

Cash and cash equivalents at 1 January

48,042

56,348

 

Effect of foreign-exchange rates on cash and cash equivalents

(575)

593

 

Cash and cash equivalents at 31 December

44,214

48,042

 

 

* Restated for the early adoption of amended IAS 16, 'Property, plant and equipment', and IAS 41, 'Agriculture' in relation to bearer plants (see note 9).

 

 

NOTES

1.             Dividends paid and proposed


2015

2014




2015 interim dividend - 2.25p per 10p share (2014 interim dividend - 2.25p)

1,928

1,994

2014 final dividend - 6.50p per 10p share (2013 final dividend - 6.00p)

5,646

5,647


7,574

7,641

 

Following the year end, the board has proposed a final dividend for 2015 of 6.50p per 10p share amounting to US$5.1 million. Shareholders will again have the option to elect to receive the dividend in shares rather than in cash. The calculation period will be 21 April to 27 April 2016. The dividend will be paid on or after 21 June 2016 to those shareholders on the register at the close of business on 22 April 2016, as follows:


2015

2014

Ex-dividend date

21 April 2016

23 April 2015

Record date

22 April 2016

24 April 2015

Final date for receipt of election instruction

31 May 2016

28 May 2015

Definitive share certificates posted

20 June 2016

 17 June 2015

First day of dealing in the new shares

21 June 2016

18 June 2015

Dividend payable on or after

21 June 2016

18 June 2015

2.             Tax on profit on ordinary activities


2015

2014

(restated)


US$'000

US$'000




United Kingdom corporation tax charge for the year

480

413

Relief for overseas taxation

(480)

(413)


-

-




Overseas taxation

7,001

8,152

Adjustments in respect of prior years

26

-

Total current tax

7,027

8,152

Deferred taxation - origination and reversal of temporary differences

(4,626)

943


2,401

9,095

3.             Basic and diluted earnings per share

The calculation of earnings per 10p share is based on:-


2015

2015

2014

2014



Number of


Number of


US$'000

shares

US$'000

shares






Profit for the year attributable to the owners of M.P. Evans Group PLC

 

24,084


 

25,065


Average number of shares in issue


55,501,745


55,163,657

Diluted average number of shares in issue*


55,557,477


55,235,438

 

* The difference between the number of shares in issue and the diluted number of shares relates to unexercised share options held by directors and key employees of the Group.

4.             Biological assets

The International Accounting Standards Board ("IASB") issued an amendment to International Accounting Standard 41 Biological Assets ("IAS41") in June 2014 which was endorsed by the European Union on 24 November 2015. As foreshadowed in the 2014 annual report, the Group has adopted this amendment with effect from 1 January 2015 (see note 9). From the beginning of 2015, palms have been 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 IAS41 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 bearer-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 reported book value of net assets at 31 December 2014 by US$88.5 million to US$311.8 million.

5.             Financial information

The information in this preliminary results announcement has been prepared on the basis of the accounting policies which have been set out in the Group accounts for the year ended 31 December 2014 and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. No standards or amendments to existing standards adopted with effect from 1 January 2014 have had a material impact on the Group other than the adoption of the amended standards IAS 16 'Property, plant and equipment' and IAS 41 'Agriculture' set out in Note 9. Full accounts of M.P. Evans Group PLC for the year ended 31 December 2014, which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, have been reported on by the Company's auditors and delivered to the Registrar of Companies.  The report of the auditors was unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under section 498(2) or (3) of the Companies Act 2006.


The statutory accounts for the year ended 31 December 2015 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement. The auditors anticipate issuing an unmodified opinion.

6.             International financial reporting standards

This announcement is based on the Group's financial statements which are being prepared in accordance with International Financial Reporting Standards ("IFRS"), as adopted for use in the EU.

 

Whilst the financial information included in this announcement has been prepared in accordance with the recognition and measurement criteria of IFRS, this announcement does not itself contain sufficient information to comply with IFRS. The Group expects to publish full financial statements that comply with IFRS on or after 21 April 2016.

7.             Timetable

The report and financial statements will be available on the Group's website on or after 21 April 2016 and despatched to shareholders shortly thereafter. The annual general meeting will be held on 10 June 2016.

8.             Distribution

Copies of the full report and financial statements for the year ended 31 December 2015 will be available from the Company, 3 Clanricarde Gardens, Tunbridge Wells, Kent TN1 1HQ.

9.             Reconciliation of change in accounting policy

As a result of a change in the Group's accounting policy referred to above, prior year financial information has had to be restated. The following tables show the adjustment made to each individual line item. As permitted under transitional rules in IFRS, the effect of the change in accounting policy on the current period is not disclosed.

 

Balance sheet

 


Previously reported

31 December 2014  US$'000

Adoption of

amended IAS 16 and IAS 41

US$'000

31 December 2014

(restated)

US$'000

Non-current assets




Goodwill

1,157

-

1,157

Biological assets

163,538

(163,538)

-

Property, plant and equipment

111,983

79,601

191,584

Investments in associates

120,617

(26,284)

94,333

Investments

96

-

96

Deferred-tax asset

14,137

-

14,137


411,528

(110,221)

301,307

Current assets




Biological assets

4,440

1,124

5,564

Inventories

7,294

(415)

6,879

Trade and other receivables

13,220

-

13,220

Current-tax asset

2,029

-

2,029

Cash and cash equivalents

48,042

-

48,042


75,025

709

75,734

Total assets

486,553

(109,512)

377,041

Current liabilities




Borrowings

32,424

-

32,424

Trade and other payables

12,555

-

12,555

Current-tax liability

2,202

-

2,202


47,181

-

47,181

Net current assets

27,844

709

28,553

Non-current liabilities




Borrowings

14,103

-

14,103

Deferred-tax liability

21,183

(20,984)

199

Retirement-benefit obligations

3,765

-

3,765


39,051

(20,984)

18,067

Total liabilities

86,232

(20,984)

65,248

Net assets

400,321

(88,528)

311,793

Equity




Share capital

9,302

-

9,302

Other reserves

95,542

(26,284)

69,258

Retained earnings

267,064

(54,115)

212,949

Equity attributable to the owners of




  M.P. Evans Group PLC

371,908

(80,399)

291,509

Non-controlling interests

28,413

(8,129)

20,284

Total equity

400,321

(88,528)

311,793





 


Previously reported

31 December 2013

  US$'000

 

Adoption of

amended IAS 16 and IAS 41

US$'000

 

 

 

1 January 2014

US$'000

Non-current assets




Goodwill

1,157

-

1,157

Biological assets

148,394

(148,394)

-

Property, plant and equipment

109,319

76,152

185,471

Investments in associates

122,856

(27,335)

95,521

Investments

102

-

102

Deferred-tax asset

14,996

-

14,996


396,824

(99,577)

297,247

Current assets




Biological assets

594

1,549

2,143

Inventories

7,990

277

8,267

Trade and other receivables

12,345

-

12,345

Current-tax asset

2,201

-

2,201

Cash and cash equivalents

56,348

-

56,348


79,478

1,826

81,304

Total assets

476,302

(97,751)

378,551

Current liabilities




Borrowings

31,710

-

31,710

Trade and other payables

10,311

-

10,311

Current-tax liability

4,313

-

4,313


46,334

-

46,334

Net current assets

33,144

1,826

34,970

Non-current liabilities




Borrowings

34,780

-

34,780

Deferred-tax liability

20,963

(18,060)

2,903

Retirement-benefit obligations

2,933

-

2,933


58,676

(18,060)

40,616

Total liabilities

105,010

(18,060)

86,950

Net assets

371,292

(79,691)

291,601

Equity




Share capital

9,253

-

9,253

Other reserves

102,548

(27,336)

75,212

Retained earnings

235,390

(44,451)

190,939

Equity attributable to the owners of




  M.P. Evans Group PLC

347,191

(71,787)

275,404

Non-controlling interests

24,101

(7,904)

16,197

Total equity

371,292

(79,691)

291,601

 

Income statement

 


Previously reported result for year ended

31 December 2014 

US$'000

 

 

Adoption of

amended IAS 16 and IAS 41

US$'000

 

 

Year ended 31 December 2014

restated

US$'000





Continuing operations




Revenue

89,956

-

89,956

Cost of sales

(54,230)

(3,959)

(58,189)

Gross profit

35,726

(3,959)

31,767

Gain/(loss) on biological assets

15,144

(15,568)

(424)

Planting expenditure

(6,314)

6,314

-

Foreign-exchange losses

(2,379)

-

(2,379)

Other administrative expenses

(4,596)

-

(4,596)

Other income

448

-

448

Operating profit

38,029

(13,213)

24,816

Finance income

1,600

-

1,600

Finance costs

(2,757)

403

(2,354)

Group-controlled profit before tax

36,872

(12,810)

24,062

Tax on profit on ordinary activities

(12,018)

2,923

(9,095)

Group-controlled profit after tax

24,854

(9,887)

14,967

Share of associated companies' profit after tax

 

14,256

 

1,052

 

15,308

Profit after tax on continuing operations

39,110

(8,835)

30,275

Loss for the year on discontinued operations

(2,012)

-

(2,012)

Profit for the year

37,098

(8,835)

28,263

 

 

Cash flow

Cash flow from operating, investing and financing activities is unaffected by this change of accounting policy.

 

 

 

By order of the boad

Mrs Claire Hayes

Secretary


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