Source - LSE Regulatory
RNS Number : 2995H
M. P. Evans Group PLC
19 March 2024
 

M.P. EVANS GROUP PLC

 

FINAL RESULTS 2023

 

M.P. Evans Group PLC ("M.P. Evans", "the Group" or "the Company"), a producer of sustainable Indonesian palm oil, announces its results for the year ended 31 December 2023.

 

The Group's 2023 annual report is available on its website at www.mpevans.co.uk.

 

HIGHLIGHTS

 

Operational

 

-      Total crop processed up 7% to 1.6 million tonnes (2022 - 1.5 million tonnes)

-      95% of total crop processed in Group mills, with six Group mills operational for almost entire year

-      CPO production in Group mills up 22% to 362,100 tonnes (2022 - 297,400 tonnes)

-      All six Group mills producing certified output by end of 2023

-      Further increase in sustainable crude palm oil ("CPO"), up to 233,400 tonnes (2022 - 218,300 tonnes)

-      Acquisition of more than 10,000 planted hectares during the year

-      Planting at Musi Rawas estate passes 10,000-hectare target

 

Financial

 

-      Results affected by lower CPO price environment when compared to exceptionally high prices during 2022

-      Average mill-gate price for Group CPO US$729 per tonne (2022 US$854 per tonne)

-      Revenue for the year US$307.4 million (2022 US$326.9 million)

-      Operating profit US$75.3 million (2022 US$101.6 million)

-      Operating cash generation US$107.0 million (2022 US$129.5 million)

-      Earnings per share 78.1 pence (2022 - 108.0 pence)

-      Dividend for the year 45p per share (2022 - 42.5p per share) with proposed final dividend of 32.5p per share (2022 - 30p per share)

 

Commenting on the results, Peter Hadsley-Chaplin, chairman of M.P. Evans, said: "The Group has made further significant progress in delivering its strategy in 2023. We increased the amount of crop that was processed and, importantly, almost all that crop is processed in a Group mill now that our sixth mill is up and running. We have secured a substantial increase in planted hectarage during the year, which will support our continuing growth, and we remain focused on opportunities for further sustainable development, both at our existing estates and as we continue to review additional acquisition prospects.

 

Profit and cash generation remain strong and form a sound foundation for the board's proposal to increase the final dividend for 2023 to 32.5p per share. This brings total dividends for the year up to 45p per share, another step forward in the Group's long-standing progressive approach to shareholder returns."

 

Enquiries:

 

M.P. Evans Group PLC

+44 (0)1892 516333

Peter Hadsley-Chaplin

Executive chairman

Matthew Coulson

Chief executive

Luke Shaw

Chief financial officer

 

 

Cavendish Capital Markets Limited (Nomad and sole broker)

+44 (0)20 7220 0500

Matt Goode, George Lawson (corporate finance)


Tim Redfern, Harriet Ward (equity capital markets)




Hudson Sandler (Financial PR)

+44 (0)20 7796 4133

Charlie Jack, Charlotte Cobb, Francis Kerrigan


 

A presentation for analysts will be held today at 9.30am at the offices of Hudson Sandler at 25 Charterhouse Square, London, EC1M 6AE.

 

CHAIRMAN'S STATEMENT

 

Results

 

The Group achieved a commendable gross profit of US$78.5 million in 2023, a gross margin of 26%. This was, inevitably, lower than the record highs seen in the previous year, caused by the exceptionally strong palm-oil price environment prevailing, particularly during the first half of 2022. However, the Group was able, yet again, to increase both crop and production during the course of the year and this, combined with a stable pricing environment, at healthy levels by historic standards, enabled the Group to deliver another strong result.

 

Earnings per share were 78.1p, lower than the 108.0p recorded in 2022. The higher crop and production in the year was more than offset by the lower price environment when compared to the exceptional circumstances in the previous period. However, Group operations continue to be significantly cash generative and, over the course of 2023, net operating cash of US$83.6 million was produced. The Group has successfully deployed funds on strategic acquisitions during the year, with a focus on long-term growth. Notwithstanding this, the Group continues to recognise the importance of progressive dividends.

 

Dividend

 

An interim dividend of 12.5p per share (2022 - 12.5p per share) was paid on 3 November 2023 and the board is recommending a final dividend of 32.5p per share (2022 - 30p per share). The total figure of 45p per share represents, once again, an increase in the normal, annual dividend payable to shareholders and continues the Group's unbroken track record, which can be traced back for more than thirty years, of maintaining or increasing normal dividends. The continuing increase in dividend distributions indicates the board's ongoing confidence in the long-term prospects for the Group. Both crop and production increased in 2023 in accordance with the Group's expectations and, in particular, with an increased proportion of production coming from Group milling facilities. The anticipated trend of further increases, supported by the investments made in the year, forms a sound basis for the proposed dividend.

 

Share buyback

 

In addition to dividend distributions, during 2023, the Group operated a share-buyback programme, deploying a total of US$9.7 million (2022 US$4.9 million) to purchase, and subsequently cancel, 991,198 (2022 - 495,365) of the Company's 10p shares. This represented 1.8% (2022 - 0.9%) of the issued share capital. This served to enhance earnings per share and the programme has continued in 2024.

 

Strategic developments

 

During the course of 2023, the Group successfully deployed its long-standing strategy to be a responsible producer of certified sustainable Indonesian palm oil. The Group developed and expanded its operations in several ways during the year in furtherance of its growth strategy, with continuing investment in its existing estates, and by acquiring further planted hectarage to support its longer-term ambitions.

 

The planted area at the Group's existing estates continued to increase in 2023, and the initial target of 10,000 planted hectares at the Musi Rawas estate in South Sumatra was achieved by the middle of the year. By the year end, 10,300 hectares had been planted there, and the management team is confident that they can work towards an expanded total area of 11,000 planted hectares by the end of 2024. The increased hectarage at Musi Rawas will, as it matures, provide additional crop to the newly opened Group mill on site, which began operation in February 2023. This is the Group's sixth palm-oil mill, representing a substantial strategic investment in recent years. As a result of this investment, 95% of the Group's 1.6 million tonnes of total crop were processed in Group mills in 2023.

 

The Group has also increased its total planted hectarage through acquisition during the year, making good use of its accumulated funds and financial strength to make strategic investments, securing additional planted areas close to its existing estates. In March 2023, the Group acquired 2,100 planted hectares close to its Simpang Kiri estate in Aceh Province of northern Sumatra and, in November 2023, the Group acquired a further 8,350 planted hectares in East Kalimantan, near to the Group's existing Kota Bangun property. In both cases, the acquisition cost was below US$10,000 per planted, Group-owned, hectare. Whilst, on acquisition, the properties were not of the same high standards as existing Group areas, management are confident that they will be able to improve yields and add substantial value over time.

 

Sustainability

 

As a responsible producer of certified sustainable palm oil, the Group is committed to obtaining accreditation for its mills as soon as possible once they have been commissioned. By the end of the year, all six of the Group's mills had been certified to sell CPO as sustainable in accordance with the requirements of the International Sustainability and Carbon Certification ("ISCC") scheme and, as a result, was in receipt of sustainability credits at all its milling locations. As a long-standing member of the RSPO, the Group also seeks to obtain RSPO certification at all mills. At the end of 2023, four mills had obtained accreditation, and since the end of the year, confirmation of accreditation has been received for a fifth mill. The Group is aiming to complete the RSPO audit and certification process at its final mill during 2024.

 

The Group is committed to increasing the amount of sustainability-based disclosures it provides and, over the course of the last year, has published separate TCFD and ESG reports. The Group has published a carbon balance sheet, and measured carbon intensity based on emissions per tonne of CPO produced. Targets have been set for carbon reduction, with an ultimate objective of achieving net zero by 2050 and, by 2023, the Group has achieved a 19% reduction in total emissions from its baseline year of 2021. Carbon intensity has reduced from 8.9 in 2021 to 5.9 in 2023.

 

Operational developments

 

The total crop processed by the Group increased in the year to 1,622,900 tonnes (2022 - 1,511,700 tonnes), an increase of 7%. This was consistent with the Group's expectations, with the largest part of the increase coming from independent purchases following the opening of the Musi Rawas mill in the early part of the year.

 

 


2023 

Increase/

(decrease)


2022 


Tonnes 

%

Tonnes 

Crop

 

 

 

Own crops




                Kota Bangun

249,100 

14 

219,400 

                Bangka

138,200 

(17)

167,200 

                Pangkatan group

185,000 

(4)

192,500 

                Bumi Mas

156,400 

(6)

166,700 

                Musi Rawas

128,900 

20 

107,600 

                Simpang Kiri

64,500 

24 

52,000 

                Nusantara

800 


922,900 

905,400 

Scheme-smallholder crops




                Kota Bangun

100,400 

10 

91,000 

                Bangka

85,200 

(7)

91,200 

                Pangkatan group

2,600 

189 

900 

                Bumi Mas

29,700 

(3)

30,600 

                Musi Rawas

60,200 

16 

52,000 

                Simpang Kiri

300 

                Nusantara

100 


278,500 

265,700 

Independent crop purchased




                Kota Bangun

132,000 

(31)

191,700 

                Bangka

108,600 

73 

62,800 

                Pangkatan group

52,600 

35 

39,100 

                Bumi Mas

59,500 

27 

47,000 

                Musi Rawas

68,800 


421,500 

24 

340,600 

Total crop

1,622,900 

1,511,700 

 

The Group is committed to increasing its CPO and PK production capacity as much as possible, and opened its sixth palm-oil mill in 2023. As a result, 95% of the 1.6 million tonnes of total crop was processed in a Group mill, resulting in a 22% increase in output from Group mills to 362,100 tonnes. With the benefit of more crop being processed in Group mills, total production increased by 11%, more than the 7% increase in crop processed.

 

 

 

Increase/

 

 

2023 

(decrease)

2022 


 

 

 

Production - crude palm oil

Tonnes 

%

Tonnes 

Group mills




                Kota Bangun

112,000 

(1)

112,800 

                Bangka

76,800 

75,100 

                Pangkatan group

54,500 

53,300 

                Bumi Mas

56,800 

56,200 

                Musi Rawas

60,200 


362,100 

22 

297,400 

Third-party mills




                Musi Rawas

1,600 

(95)

32,600 

                Simpang Kiri

14,600 

25 

11,700 

                Nusantara

200 

               

16,400 

(63)

44,300 


378,500 

11 

341,700 

Production - palm kernels




Group mills




                Kota Bangun

24,200 

23,800 

                Bangka

19,000 

18,400 

                Pangkatan group

12,400 

12,200 

                Bumi Mas

10,300 

9,600 

                Musi Rawas

11,400 


77,300 

21 

64,000 

Third-party mills




                Musi Rawas

400 

(95)

7,500 

                Simpang Kiri

2,900 

26 

2,300 


3,300 

(66)

9,800 


80,600 

73,800 





Extraction rates - crude palm oil

%

%

Group mills

 


 

                Kota Bangun - Bumi Permai

24.4 

23.3 

                Kota Bangun - Rahayu

21.3 

21.2 

                Bangka

23.1 

(1)

23.4 

                Pangkatan group

22.7 

(1)

22.9 

                Bumi Mas

23.9 

23.0 

                Musi Rawas

24.1 


23.4 

22.9 

Third-party mills




                Musi Rawas

20.5 

20.4 

                Simpang Kiri

22.5 

22.5 

                Nusantara

20.0 

Extraction rates - palm kernels




Group mills




                Kota Bangun - Bumi Permai

5.5 

5.1 

                Kota Bangun - Rahayu

4.3 

4.2 

                Bangka

5.7 

5.7 

                Pangkatan group

5.2 

5.2 

                Bumi Mas

4.2 

3.9 

                Musi Rawas

4.5 


5.0 

4.9 

                Musi Rawas

4.7 

4.7 

                Simpang Kiri

4.5 

4.5 

                Nusantara

4.5 

 

Planting continued throughout the year at Musi Rawas in South Sumatra. The initial target of 10,000 planted hectares was achieved by the middle of the year and, by the year end, the Group had planted a total of 690 hectares to bring the total planted area up to 10,332 hectares. Planting is continuing in 2024, with a revised target of 11,000 hectares.

 

The Group acquired 2,100 planted hectares at Simpang Kiri in early 2023, and has made significant progress since the acquisition in improving the quality of those areas. As part of its investment for the long term, the Group expects to replant approximately half of the acquired area. During 2023, 300 hectares were replanted, and the Group has invested in sufficient nursery material to replant the remainder. Management expects to complete the remaining replanting during 2024 and 2025.

 

In addition to the acquisition at Simpang Kiri, the Group acquired 8,350 planted hectares in East Kalimantan towards the end of 2023. The Group expects to have the opportunity for further planting alongside the acquired areas, and is working with environmental consultants to review what may be achievable.

 

In its more mature Pangkatan plantations in North Sumatra, the Group has continued its replanting programme, and 170 hectares were replanted during the year. Furthermore, the Group has continued to work in North Sumatra to support the formation of new co-operative schemes, and more members joined those schemes during the year. A further 200 hectares were replanted, bringing the total area included in the North Sumatran smallholder schemes up to 1,350 hectares.

 

Current trading and prospects

 

The total crop processed by the Group for the first two months of 2024 was 245,700 tonnes, an increase of 16% from the same period in 2023. Whilst the Group had experienced a relatively low-cropping period in the early months of 2023, the current year has started more strongly, and almost all Group locations are ahead of the prior year. The Group may experience some delayed effect of the extended dry-weather, El Niño-type, conditions, that were seen in the latter part of 2023, on cropping levels in the second half of 2024. However, the Group's geographic diversity across Sumatra and East Kalimantan helps to mitigate against this risk.

 

Independent crop purchases are a little lower than in the same period of 2023. This is partly a reflection of the Group being able to increase mill utilisation with its own crop and that from associated scheme smallholders, but also a sign of increasing competition for independent ffb in some locations.

 

 

2 months ended 

Increase/ 

2 months ended 

 

29 February 2024 

(decrease) 

28 February 2023 

 

Tonnes 

Tonnes 

Own crops

143,600 

23 

116,300 

Smallholder crop

43,200 

23 

35,100 

Outside crop purchased

58,900 

(4)

61,300 


245,700 

16 

212,700 

 

As reported above, CPO prices were relatively stable during 2023, with the Group achieving an average mill-gate price of US$729 per tonne. This price stability has continued into the early part of 2024, with some price strengthening as the period continued. In early March, the Group has achieved some tender prices of a little over US$800 per tonne.

 

The Group continues to make progress on the integration of the estates in East Kalimantan acquired towards the end of 2023. On acquisition, some of the planted area had been neglected and was not immediately available for harvest. Whilst work remains ongoing, significant progress has been made on clearing those areas and bringing them into harvest. In addition, the Group is working with external consultants to assess the potential to plant additional hectarage in the acquired areas.

 

Since the year end, the Group's sustainability team have continued to work on securing Group certifications and, in February 2024, the Musi Rawas mill received its certification for the production of RSPO-certified palm oil.

 

The board continues to be firmly of the view that sustainable palm oil, as a high-yield and low-cost product, will continue to offer attractive returns, and that the prospects for the Group remain very positive.

 

Board and senior management changes

 

As already reported in both the 2022 annual report and the 2023 interim report, there were a number of changes to board and senior management appointments over the course of 2023. We were pleased to welcome Lee Yuan Zhang on 1 February 2023 as a non-executive director and, on 1 August 2023, Luke Shaw was promoted to the board as its chief financial officer. In addition, Philip Fletcher retired from the board on 31 July 2023, having worked with the Group for over 40 years, and everyone at M.P Evans sends their best wishes to Philip in his retirement.

 

Also, on 31 July 2023, K Chandra Sekaran retired as president director of PT Evans Indonesia, the Group's Indonesian management company, and at the same time transitioned from an executive to a non-executive role on the Group board. Chandra is also continuing in a part-time advisory role at PT Evans. Following Chandra's retirement, Ravichandran Krisnapillay, who had previously been serving as director of operations, was promoted to president director of the Group's Indonesian operations with effect from 1 August 2023.

 

Turning to my own role, I have, for some time, served as the Group's executive chairman. Whilst relatively unusual to have a chairman serve in an executive capacity, the approach taken by the Group has received the support of our shareholders, and I have received the unanimous support of my board colleagues and senior management, enabling me to fulfil this role to the best of my abilities. In addition, as a board, we operate within the corporate governance requirements of the QCA Code. With a well-established strategy, a strong executive team in place both in the UK and in Indonesia, and in discussion with my board colleagues, I have concluded that the time is right for me to transition my role from that of an executive chairman to a non-executive chairman. Whilst my new role will naturally be a less hands-on one, I nonetheless plan to maintain my strong and close links with my colleagues, with our shareholders, principal advisers and other key stakeholders. Steps are already in place to begin this transition, which will officially be effective from 1 July 2024.

 

Summary

 

The Group has delivered on its stated strategy once again in 2023. Group-managed hectarage has increased by 20%, which bodes well for its long-term prosperity, and crop and production continue to increase, with almost all production coming from our own mills. We continue to prioritise our commitment to being a responsible producer and demonstrate this commitment in everything that we do. None of our achievements would be possible without the hard work, loyalty and dedication of the many thousands who are employed by the Group, whether in the head offices in the UK and Jakarta, or in the estates across Indonesia. On behalf of the board, I would like to thank all of them, and we look forward together to the Group's exciting future.

 

Peter Hadsley-Chaplin

Chairman

 

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2023


2023 

2022 


US$'000 

US$'000 

Continuing operations

 


    Revenue

307,368 

326,917 

    Cost of sales

(228,915)

(217,707)

    Gross profit

78,453 

109,210 

    Gain/(loss) on biological assets

551 

(1,431)

    Foreign-exchange loss

(1,188)

(3,444)

    Other administrative expenses

(5,443)

(4,614)

    Other income

2,923 

1,865 

    Operating profit

75,296 

101,586 

    Finance income

1,348 

1,395 

    Finance costs

(3,810)

(2,731)

    Profit before tax

72,834 

100,250 

    Tax on profit on ordinary activities

(18,826)

(24,073)

    Profit after tax

54,008 

76,177 

    Share of associated companies' profit after tax

2,390 

2,184 

Profit for the year

56,398 

78,361 

 



Attributable to:



Owners of M.P. Evans Group PLC

52,487 

73,060 

Non-controlling interests

3,911 

5,301 

 

56,398 

78,361 





US cents 

US cents 

Continuing operations



    Basic earnings per 10p share

97.6 

133.9 

    Diluted earnings per 10p share

97.2 

133.4 

 



 

Pence 

Pence 

Basic earnings per 10p share



    Continuing operations

78.1 

108.0 

 

 

CONSOLIDATED BALANCE SHEET

As at 31 December 2023

 

Company number: 1555042

 

 

 

2023 

2022 

 

US$'000 

US$'000 

Non-current assets



Goodwill

17,083 

11,767 

Other intangible assets

1,012 

1,167 

Property, plant and equipment

486,915 

411,658 

Investments in associates

10,003 

11,795 

Investments

59 

61 

Deferred-tax asset

1,138 

989 

Trade and other receivables

8,875 

9,146 


525,085 

446,583 

Current assets



Biological assets

3,788 

3,089 

Inventories

24,155 

23,112 

Trade and other receivables

23,853 

32,681 

Current-tax asset

8,673 

2,290 

Current-asset investments

270 

Cash and cash equivalents

39,324 

82,503 

 

100,063 

143,675 

Total assets

625,148 

590,258 

 



Current liabilities



Borrowings

21,009 

17,364 

Trade and other payables

27,547 

24,410 

Current-tax liability

6,279 

4,455 

 

54,835 

46,229 

Net current assets

45,228 

97,446 

Non-current liabilities



Borrowings

33,413 

31,675 

Deferred-tax liability

19,398 

13,538 

Retirement-benefit obligations

12,429 

9,972 

 

65,240 

55,185 

Total liabilities

120,075 

101,414 

Net assets

505,073 

488,844 

 



Equity



Share capital

9,062 

9,179 

Other reserves

53,263 

54,543 

Retained earnings

422,748 

407,460 

Equity attributable to the owners of



  M.P. Evans Group PLC

485,073 

471,182 

Non-controlling interests

20,000 

17,662 

Total equity

505,073 

488,844 

 

 

CONSOLIDATED CASH-FLOW STATEMENT

For the year ended 31 December 2023

 

 

2023 

2022 

 

US$'000 

US$'000 

Net cash generated by operating activities

83,642 

102,288 

 



Investing activities



Acquisition of subsidiaries, net of cash acquired

(34,516)

Purchase of property, plant and equipment

(38,282)

(33,714)

Purchase of intangible assets

(25)

(116)

Interest received

600 

622 

(Increase)/decrease in receivables from smallholder

co-operatives

 

(6,161)

 

1,714 

Bank deposits treated as current-asset investments

(266)

Proceeds on disposal of property, plant and equipment

6,997 

3,055 

Net cash used by investing activities

(71,653)

(28,439)

 



Financing activities



Repayment of borrowings

(17,405)

(22,009)

Lease liability payments

(38)

Dividends paid to Company shareholders

(28,188)

(28,500)

Dividends paid to non-controlling interest

(155)

(124)

Issue of Company shares

191 

Buyback of Company shares

(9,678)

(4,902)

Net cash used by financing activities

(55,426)

(55,382)

 



Net (decrease)/increase in cash and cash equivalents

(43,437)

18,467 

 



Net cash and cash equivalents at 1 January

82,503 

65,609 

Effect of foreign-exchange rates on cash and cash



equivalents

258 

(1,573)

Cash and cash equivalents at 31 December

39,324 

82,503 

 

 

Notes

 

1.    Dividends paid and proposed


2023 

2022 


US$'000 

US$'000 

2023 interim dividend - 12.5p per 10p share (2022 interim dividend 12.5p)

 

8,153 

 

7,611 

2022 final dividend - 30p per 10p share (2021 final dividend 25p)

20,035 

17,227 

2021 special dividend - 5p per 10p share

3,662 


28,188 

28,500 

 

Following the year end, the board has proposed a final dividend for 2023 of 32.5p per 10p share, amounting to US$17.3 million.


2023 

2022 

Ex-dividend date

25 April 2024

27 April 2023

Record date

26 April 2024

28 April 2023

Dividend payable on or after

19 June 2024

16 June 2023

 

2.    Basic and diluted earnings per share

 

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


 

2023 

 

2022 


2023 

Number 

2022 

Number 


US$'000 

of shares 

US$'000 

of shares 

Profit for the year attributable to the owners





  of M.P. Evans Group PLC

52,487 


73,060 


Average number of shares in issue


53,753,331 


54,579,591 

Diluted average number of shares in issue*


53,981,990 


54,754,110 

 

*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 435 of the Companies Act 2006. The statutory accounts for the financial year ended 31 December 2023 have been reported on by the Group's auditors, BDO 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 Accounting Standards

 

This announcement is based on the Group's financial statements which were prepared in accordance with UK-adopted International Accounting Standards.

 

5.    Distribution timetable

 

The Group's 2023 annual report is available on the Group's website and will be despatched to shareholders on or before 5 April 2024. Printed copies of the Group's 2023 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 14 June 2024.

 

 

 

By order of the board

Katya Merrick

Company secretary

 

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M.P. Evans Group PLC (MPE)

-4.00p (-0.46%)
delayed 16:30PM