Source - RNS
RNS Number : 3389K
M. P. Evans Group PLC
10 April 2018
 

 

M.P.EVANS GROUP PLC

M.P.Evans Group PLC ("MP Evans", "the Group" or "the Company"), a producer of sustainable Indonesian palm oil, announces its results for the year ended 31 December 2017.

 

The Group's 2017 annual report is available on its website at www.mpevans.co.uk/AR2017.

 

Highlights

 

Financial

·              Operating profit up 72% to US$34.0 million

·              Profit for the year US$94.4 million (2016 US$35.3 million), including profit on discontinued operations US$68.0 million

·              Continuing EPS up 83% to 40.7 US cents (2016 - 22.3 US cents)

·              Reduction in Malaysian property-development profit

·              Net current assets of US$92.4 million as at 31 December 2017

·              Proposed final dividend of 12.75p per share

Indonesian palm oil

·              Record production of crude palm oil ("CPO"): up 23% to 154,000 tonnes

·              Acquisition of new 10,000-hectare project (Bumi Mas)

·              Group crops increased 9% to 435,000 tonnes

·              Crop growth held back by flooding in East Kalimantan

·              New planting of 2,200 hectares for Group; 1,000 hectares for smallholders

·              Planting at Musi Rawas reached 5,200 hectares: more than half way to expected total

·              Sales begun of bio-electricity to Indonesian grid

Malaysian property

·              40 hectares of golf-course land released for development

·              Sale of 383 developed properties as property market slowed

Group valuation

·              Directors' estimate of Group equity value at 31 December 2017, based on independent valuation, of £10.96 per share

 

 

Commenting on the results, Peter Hadsley-Chaplin, executive chairman of MP Evans, said: "I am pleased to report a record year for crops, production and profit, with operating profit rising by 72% to US$34 million. During 2017, the Group also took a significant step forward in executing its strategy by acquiring a new 10,000-hectare project in East Kalimantan. The Group's plantings have an average age of only seven years, underpinning an upward trend in crop that is expected to last until the end of the next decade."

 

 

Enquires:

M.P.Evans Group PLC

020 7796 4133 on 10 April 2018 only


Thereafter telephone 01892 516333

Peter Hadsley-Chaplin

Chairman

Tristan Price

Chief executive

Matthew Coulson

Finance director



Peel Hunt LLP

020 7418 8900

Dan Webster


Adrian Trimmings


George Sellar




Hudson Sandler

020 7796 4133

Charlie Jack


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.

 

 

Results

 

The Group is able to report a record year for crops, production and profit. A marked increase in production of CPO in the face of very similar prices and cost of production led to an increase in operating profit to US$34.0 million, a 72% increase compared with US$19.7 million achieved in 2016. Results from discontinued operations, namely the Group's Agro Muko palm-oil joint venture, contributed another US$68.0 million to the record profit for the year. Total profit for the year amounted to US$94.4 million.

 

Dividend

 

An interim dividend of 5.00p per share (2016 - 2.25p per share) was paid on 3 November 2017. Above its previously announced intention, the board is recommending a final dividend of 12.75p per share (2016 - 12.75p per share). This brings dividends in respect of normal operations to 17.75p per share (2016 - 15.00p per share), an 18% increase.

 

The board paid a special dividend of 10.00p per share in April 2017 on completion of the sale of the Group's interest in Agro Muko; a special dividend of 5.00p per share was paid in 2016. Hence, subject to shareholder approval, total dividends in respect of 2017 will amount to 27.75p per share (2016 - 20.00p per share) resulting in dividend payments to shareholders of more than US$20 million for the year.

 

The board's intention continues to be to maintain or increase its normal dividend in future years. The board believes the anticipated increase in yield from its young plantations and the acquisition of Bumi Mas provide a basis for sustained future crop growth and, hence, enhanced dividends.

 

Palm-oil market

 

The average price of CPO was US$714 per tonne during 2017, a little higher than the US$700 in 2016. Overall, the price weakened during the year as supplies of palm oil increased in response to the recovery in crops throughout South East Asia after the El Niño. Towards the end of 2017, however, the CPO price began to recover as stocks were rebuilt and the discount to other vegetable oils increased, making CPO more attractive to buyers. The price for palm kernel oil, which directly affects the price of palm kernels sold by the Group, was exceptionally high in January 2017. This level was not maintained and, after a marked dip in the middle of the year, returned to more normal levels during the last quarter. On average, the price of palm kernels sold by the Group was very similar to that in 2016. The Group was able to continue selling its sustainable palm oil and palm kernels at a premium.

 

Strategic developments

 

In 2017, the Group consolidated its position as the producer of a single commodity in a single country: Indonesian palm oil. It continues to be the Group's strategic objective to expand its production of sustainable palm oil, in a controlled fashion, from its own operations and those of its associated smallholder co-operatives. Following the successful disposal, in 2016, of its Australian cattle business and, in March 2017, of its share of the substantial Agro Muko palm-oil joint venture, the Group was able to announce, in August 2017, the acquisition of a new 10,000-hectare oil-palm project, PT Bumi Mas Agro ("Bumi Mas").  This was completed in December 2017. The Bumi Mas plantation consists mainly of young oil palms that will quickly contribute to the Group's crop, crude palm oil ("CPO") production and cash inflow. In Malaysia, 40 hectares of valuable land from the golf course on the Bertam Properties Sdn Berhad project were approved for property development.

 

A strong balance sheet enables the Group to continue searching for environmentally-suitable plantation land to acquire, in line with its strategy. The Group regards areas of around 10,000 hectares as being an efficient size but will only expand at a rate that does not compromise its ability to deliver the operational excellence for which it has become known. Acquisition of a new project would further increase future projected crop and CPO growth that even now does not reach a peak until nearly the end of the next decade. In addition, the Group continues to negotiate for smaller pieces of land to add to its existing plantations at Kota Bangun in East Kalimantan, with a view to increasing this project from its current total of 15,100 hectares towards 20,000 hectares.

 

The strategy exploits the Group's excellent operational management team and proven track record of estate development and improvement. Even without a new acquisition, growth in crop from land already planted, or available to plant, for the Group or its smallholders, underlies its commitment to deliver good and improving results for shareholders.

 

Operational developments

 

The Group's crops increased by 9% during 2017; those of its smallholder co-operatives by a similar amount. This reflected strong growth in crops during the first half of the year as the palms recovered from the extreme dryness experienced in 2015-16, a consequence of an 'El Niño' weather pattern in South East Asia. As typically occurs, the El Niño gave way to a period of high rainfall and, in some cases, temporary flooding. On the Group's Kota Bangun estates, this meant the upturn in crops during the first half of 2017 was not maintained and this area recorded a small reduction in crop for the year as a whole compared with 2016. There were no such flooding issues on Bangka Island where crops increased by nearly half during the year. Especially noteworthy is the strong increase in crops bought in from third parties, notably on Bangka Island, enabling the Group to make profitable use of spare capacity in its mills. The Pangkatan group benefited from less extreme variation in weather and an increase in yield from recent replantings. Details of crops for 2017, with comparative figures for 2016, are set out below:-

 



2017 

Increase/(decrease) 

2016 



Tonnes 

Tonnes 

Ffb crops





Own crop





Kota Bangun, East Kalimantan

147,600 

(3)

151,700 

Bangka              

90,200 

48 

61,100 

Musi Rawas


400 

Pangkatan group

157,400 

149,100 

Simpang Kiri

38,900 

37,400 



434,500 

399,300 

Smallholder co-operative crops




Kota Bangun, East Kalimantan

60,500 

(10)

67,400 

Bangka

40,800 

63 

25,000 



101,300 

10 

92,400 

Outside crop purchased




Kota Bangun, East Kalimantan

16,800 

(18)

20,500 

    Bangka 

85,400 

260 

23,700 

Pangkatan group

16,100 

106 

7,800 



118,300 

128 

52,000 

Total crop


654,100 

20 

543,700 

 

Extraction of crude palm oil and palm kernels from fresh fruit bunches ("ffb") continued at good levels. There was a small fall in extraction of CPO in Kalimantan, to 24.7%. The Group monitors carefully the performance of its mills against others and this dip was experienced by all other operators in the region, a consequence of high rainfall that followed the El Niño. A similar small reduction was experienced in the Pangkatan mill and in Bangka, although in the latter's case this is attributable to processing very high levels of third-party ffb, which is not of the same quality as that produced by the Group or its smallholder co-operatives. In respect of extraction rates, the Group continues to perform at a high level in comparison with its peers.

 

The Group is able to report a record year for CPO production, which reached 154,000 tonnes. The significant increase over the previous record of 126,000 tonnes, achieved in 2016, was due in part to the purchase of substantial quantities of ffb from third parties in Bangka. This used spare capacity in its mill which is temporarily available until the Group's own estates reach their maximum yields. Overall, the Group processed 20% more crop in 2017 than in the previous year. Whilst the Group does not have its own mill at Simpang Kiri, it has a contract to sell its ffb to a local mill based on the commodity price for CPO and an assumed rate of extraction. To reflect the substance of this arrangement, oil produced from Simpang Kiri's crop has been included in CPO production, and the comparative figure for 2016 has been amended to bring it in line with the new presentation. Details of production for 2017, with comparative figures for 2016, are set out below:-

 



2017 

Increase/(decrease) 

2016 



Tonnes 

Tonnes 

Production





Crude palm oil





Kota Bangun, East Kalimantan

55,600 

(7)

60,000 

Bangka

50,000 

137 

21,100 

Pangkatan group

39,800 

10 

36,200 

Simpang Kiri

8,600 

8,300 


154,000 

23 

125,600 

Palm kernels





Kota Bangun, East Kalimantan

10,100 

(8)

11,000 

Bangka

11,700 

154 

4,600 

Pangkatan group

9,800 

11 

8,800 

Simpang Kiri

1,900 

1,800 



33,500 

28 

26,200 

Extraction rates


%

%

%

Crude palm oil





Kota Bangun, East Kalimantan

24.7 

(1)

25.0 

Bangka

23.1 

(1)

23.3 

Pangkatan group

22.9 

(1)

23.1 

Simpang Kiri

22.3 

22.3 

Palm kernels





Kota Bangun, East Kalimantan

4.5 

(2)

4.6 

Bangka

5.4 

5.0 

Pangkatan group

5.7 

5.6 

Simpang Kiri

4.9 

4.7 

 

The mills at Kota Bangun in East Kalimantan and in Bangka continue to produce bio-electricity from methane and also valuable compost from empty bunches and mill effluent, which the Group uses in its operations. For the first time, in 2017, the Group began selling surplus power to the Indonesian state electricity company.

 

The year saw good progress on planting. In total, the Group planted 2,200 hectares for itself and 1,000 hectares for its smallholder co-operatives during the year. Planting in South Sumatra at Musi Rawas has built up good momentum. This area accounted for 90% of the Group's new planting in the year as the estates at Kota Bangun and Bangka are now essentially fully planted. The project at Musi Rawas reached 5,200 planted hectares, including smallholders, by the end of 2017. This is more than half way to the expected total of 10,000 hectares. In North Sumatra, the accelerated replanting programme referred to in previous reports continues. At the end of 2017, including the purchase of Bumi Mas, the Group's share of subsidiaries' land had increased by 37% to stand at 33,000 hectares.

As noted in the Group's interim report, high levels of rainfall in East Kalimantan led to the northern bund on the Kota Bangun estates being overrun. This made it difficult to harvest low-lying areas. The bund has been repaired and is being strengthened to prevent future breaches. Some 580 hectares of planting carried out in 2016 behind the bund had to be replaced, delaying by 12 months the point at which it will come into harvesting.

 

Group valuation

 

Continuing development of the Group's Indonesian plantations has enhanced their US Dollar value during the year. Notwithstanding a decline in value of the US Dollar against Sterling, the Group's equity valuation remains at approximately £11 per share, based on an independent valuation of the Group's properties performed at the end of 2017.

 

Prospects

 

The board expects crops to continue rising, notably from its projects in East Kalimantan, Bangka Island and South Sumatra. The average age of the Group's palms following the purchase of Bumi Mas is now seven years. This young average age is expected to give rise to increasing crops as the palms mature from the Group's existing plantings and new planting on land it already controls, a trend that should last for another decade.

 

World production of CPO grew strongly in 2017 as the most recent El Niño receded, putting some pressure on prices and leading to an accumulation of stocks. In the longer term, insufficient levels of replanting in Malaysia and Indonesia are likely to curb growth in production. In the short term, uncertainty about the world trading regime may lead to greater commodity-price volatility. However, the board remains of the view that palm oil is well placed to benefit from rising global demand for vegetable oil and, therefore, that the outlook remains positive.

 

 

Peter Hadsley-Chaplin

Chairman

 


CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2017


2017 

US$'000 

2016 

US$'000 

Continuing operations



    Revenue

116,536 

83,864 

    Cost of sales

(80,290)

(59,480)

    Gross profit

36,246 

24,384 

    Gain on biological assets

47 

683 

    Foreign-exchange gains/(losses)

365 

(658)

    Other administrative expenses

(3,068)

(4,931)

    Other income

360 

258 

    Operating profit

33,950 

19,736 

    Finance income

2,147 

868 

    Finance costs

(1,027)

(1,389)

    Profit before tax

35,070 

19,215 

    Tax on profit on ordinary activities

(11,244)

(7,547)

    Profit after tax

23,826 

11,668 

    Share of associated companies' profit after tax

2,590 

4,763 

Profit for the year from continuing operations

26,416 

16,431 

Profit for the year from discontinued operations

68,018 

18,823 

Profit for the year

94,434 

35,254 




Attributable to:



Owners of M.P.Evans Group PLC

90,514 

31,273 

Non-controlling interests

3,920 

3,981 


94,434 

35,254 


 

US cents 

 

US cents 

Continuing operations



    Basic earnings per 10p share

40.7 

22.3 

    Diluted earnings per 10p share

40.5 

22.3 

Continuing and discontinued operations



    Basic earnings per 10p share

163.8 

56.1 

    Diluted earnings per 10p share

163.0 

56.0 




 

CONSOLIDATED BALANCE SHEET

As at 31 December 2017


2017 

 US$'000 

2016 

US$'000 

Non-current assets



Goodwill

12,228 

1,157 

Property, plant and equipment

321,558 

201,789 

Investments in associates

20,467 

18,392 

Investments

53 

66 

Deferred-tax asset

12,280 

15,386 

Trade and other receivables

5,465 

2,889 


372,051 

239,679 

Current assets



Biological assets

1,843 

1,576 

Inventories

10,462 

13,436 

Trade and other receivables

34,368 

19,026 

Current-tax asset

4,614 

3,440 

Current-asset investments

6,913 

14,262 

Cash and cash equivalents

113,910 

91,405 

Assets classified as held for sale

31,751 


172,110 

174,896 

Total assets

544,161 

414,575 




Current liabilities



Borrowings

9,159 

9,519 

Trade and other payables

65,194 

19,232 

Current-tax liability

5,317 

14,590 


79,670 

43,341 

Net current assets

92,440 

131,555 




Non-current liabilities



Borrowings

30,285 

20,810 

Deferred-tax liability

11,813 

526 

Retirement-benefit obligations

8,434 

5,675 


50,532 

27,011 

Total liabilities

130,202 

70,352 

Net assets

413,959 

344,223 




Equity



Share capital

9,255 

9,366 

Other reserves

51,346 

49,669 

Retained earnings

323,397 

261,964 

Equity attributable to the owners of M.P.Evans Group PLC

383,998 

320,999 

Non-controlling interests

29,961 

23,224 

Total equity

413,959 

344,223 

 

 

CONSOLIDATED CASH-FLOW STATEMENT

For the year ended 31 December 2017


2017 

US$'000 

2016 

US$'000 




Net cash generated by operating activities

20,723 

22,888 




Investing activities



Purchase of property, plant and equipment

(29,533)

(26,847)

Interest received

2,147 

868 

Proceeds on disposal of property, plant and equipment

67 

155 

Purchase of subsidiary undertaking

(39,589)

Disposal of associated undertaking

99,769 

79,720 

Net cash generated by investing activities

32,861 

53,896 




Financing activities



New borrowings

11,486 

Repayment of borrowings

(9,552)

(14,073)

Decrease in bank deposits treated as current-asset investments

7,349 

4,141 

Dividends paid to Company shareholders

(19,995)

(9,802)

Dividends paid to non-controlling interest

- 

(2,375)

Exercise of Company share options

506 

Buy-back of Company shares

(9,188)

Net cash used by financing activities

(30,880)

(10,623)




Net increase in cash and cash equivalents

22,704 

66,161 




Net cash and cash equivalents at 1 January

91,405 

25,811 

Effect of foreign-exchange rates on cash and cash equivalents

(199)

(567)

Cash and cash equivalents at 31 December

113,910 

91,405 

 

 

NOTES

 

1.             Dividends paid and proposed


2017 

2016 


US$'000 

US$'000 




2017 interim dividend - 5.00p per 10p share (2016 interim dividend - 2.25p)

3,660 

1,528 

2017 special dividend - 10.00p per 10p share (2016 - 5.00p share)

7,155 

3,653 

2016 final dividend - 12.75p per 10p share (2015 final dividend - 6.50p)

9,180 

4,852 


19,995 

10,033 

 

Following the year end, the board has proposed a final dividend for 2017 of 12.75p per 10p share, amounting to US$9.8 million. 


2017 

2016 

Ex-dividend date

19 April 2018 

20 April 2017 

Record date

20 April 2018 

21 April 2017 

Dividend payable on or after

22 June 2018 

23 June 2017 

 

2.             Basic and diluted earnings per share

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


2017 

2017 

2016 

2016 



Number of 


Number of 


US$'000 

Shares 

US$'000 

Shares 






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

 

90,514 



31,273 


Average number of shares in issue


55,255,776 


55,721,155 

Diluted average number of shares in issue*


55,545,708 


55,799,844 

 

* 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.

 

3.             Financial information

The financial information has been derived from the Company's audited accounts but does not itself constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.The statutory accounts for the financial year ended 31 December 2017 have been reported on by the Group's auditors, PricewaterhouseCoopers LLP, and will be 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.

 

4.             International Financial Reporting Standards
This announcement is based on the Group's financial statements which were prepared in accordance with International Financial Reporting Standards ("IFRS"), as adopted by the European Union.

 

5.             Distribution timetable

The Group's 2017 annual report is available on the Group's website and will be despatched to shareholders before 16 April 2018. Printed copies of the Group's 2017 annual report will be available from the Company, 3 Clanricarde Gardens, Tunbridge Wells, Kent TN1 1HQ. The annual general meeting will be held on Friday 15 June 2018.

 

 

By order of the board

Katya Merrick

Company Secretary


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