TIDMMPE
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 GBP10.96 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 6 149,100
Simpang Kiri 38,900 4 37,400
-------- -------------------- --------
434,500 9 399,300
-------- -------------------- --------
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 4 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 6 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 8 5.0
Pangkatan group 5.7 2 5.6
Simpang Kiri 4.9 4 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 GBP11 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 2016
US$'000 US$'000
Continuing operations
Revenue 116,536 83,864
Cost of sales (80,290) (59,480)
----------- -----------
Gross profit 36,246 24,384
Gain on biological assets 47 683
Foreign-exchange gains/(losses) 365 (658)
Other administrative expenses (3,068) (4,931)
Other income 360 258
----------- -----------
Operating profit 33,950 19,736
Finance income 2,147 868
Finance costs (1,027) (1,389)
----------- -----------
Profit before tax 35,070 19,215
Tax on profit on ordinary activities (11,244) (7,547)
----------- -----------
Profit after tax 23,826 11,668
Share of associated companies' profit
after tax 2,590 4,763
----------- -----------
Profit for the year from continuing
operations 26,416 16,431
Profit for the year from discontinued
operations 68,018 18,823
----------- -----------
Profit for the year 94,434 35,254
----------- -----------
Attributable to:
Owners of M.P.Evans Group PLC 90,514 31,273
Non-controlling interests 3,920 3,981
----------- -----------
94,434 35,254
----------- -----------
US cents US cents
Continuing operations
Basic earnings per 10p share 40.7 22.3
Diluted earnings per 10p share 40.5 22.3
Continuing and discontinued operations
Basic earnings per 10p share 163.8 56.1
Diluted earnings per 10p share 163.0 56.0
CONSOLIDATED BALANCE SHEET
As at 31 December 2017
2017 2016
US$'000 US$'000
Non-current assets
Goodwill 12,228 1,157
Property, plant and equipment 321,558 201,789
Investments in associates 20,467 18,392
Investments 53 66
Deferred-tax asset 12,280 15,386
Trade and other receivables 5,465 2,889
--------- ---------
372,051 239,679
--------- ---------
Current assets
Biological assets 1,843 1,576
Inventories 10,462 13,436
Trade and other receivables 34,368 19,026
Current-tax asset 4,614 3,440
Current-asset investments 6,913 14,262
Cash and cash equivalents 113,910 91,405
Assets classified as held for sale - 31,751
--------- ---------
172,110 174,896
--------- ---------
Total assets 544,161 414,575
--------- ---------
Current liabilities
Borrowings 9,159 9,519
Trade and other payables 65,194 19,232
Current-tax liability 5,317 14,590
--------- ---------
79,670 43,341
--------- ---------
Net current assets 92,440 131,555
--------- ---------
Non-current liabilities
Borrowings 30,285 20,810
Deferred-tax liability 11,813 526
Retirement-benefit obligations 8,434 5,675
--------- ---------
50,532 27,011
--------- ---------
Total liabilities 130,202 70,352
--------- ---------
Net assets 413,959 344,223
--------- ---------
Equity
Share capital 9,255 9,366
Other reserves 51,346 49,669
Retained earnings 323,397 261,964
--------- ---------
Equity attributable to the owners
of M.P.Evans Group PLC 383,998 320,999
Non-controlling interests 29,961 23,224
--------- ---------
Total equity 413,959 344,223
--------- ---------
CONSOLIDATED CASH-FLOW STATEMENT
For the year ended 31 December 2017
2017 2016
US$'000 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$9.8 million.
2017 2016
Ex-dividend date 19 April 20 April
2018 2017
Record date 20 April 21 April
2018 2017
Dividend payable on or after 22 June 23 June
2018 2017
2. Basic and diluted earnings per share
The calculation of earnings per 10p share is based on:-
2017 2017 2016 2016
Number Number
of of
US$'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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