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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| M.p. Evans Group Plc | LSE:MPE | London | Ordinary Share | GB0007538100 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -32.00 | -3.80% | 810.00 | 810.00 | 826.00 | 832.00 | 810.00 | 832.00 | 6,036 | 13:18:44 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| General Farms,primarily Crop | 326.92M | 73.06M | 1.3583 | 5.96 | 435.68M |
From Apr 2019 to Apr 2024
TIDMMPE
RNS Number : 8760A
M. P. Evans Group PLC
17 September 2018
M.P. EVANS GROUP PLC
M.P. Evans Group PLC ("MP Evans" or "the Group"), a producer of Indonesian palm oil, announces its unaudited interim results for the six months ended 30 June 2018.
highlights
-- Strong increase in crop as plantings mature and Bumi Mas enters Group -- 23% increase in crude palm oil production -- 10% reduction in average price of crude palm oil to US$663 per tonne
-- Operating profit US$10.7 million, down US$6.9 million of which US$4.1 million unrealised foreign exchange loss
-- Oil extraction remains at good levels -- 1,090 hectares of new planting, including smallholders -- Interim dividend of 5.00 pence per share (2017 - 5.00 pence per share)
Commenting on the results, the chairman of M.P. Evans, Peter Hadsley-Chaplin, said: -
"With crops 27% higher in the first half of 2018 than last year, the Group is visibly delivering the expected growth in crops as its young plantings mature and its hectarage continues to increase. Our production costs have fallen, but whilst lower CPO prices meant the increases in crops and production were not matched in the first half of 2018 by an increase in profit, the board is maintaining its interim dividend at 5.00 pence per share."
17 September 2018
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M.P. Evans Group PLC 020 7220 0500 on 17 September 2018
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Thereafter telephone 01892 516333
Peter Hadsley-Chaplin Chairman
Tristan Price Chief executive
Matthew Coulson Finance director
finnCap 020 7220 0500
Tim Redfern
Chris Raggett
Raymond Greaves
Peel Hunt LLP 020 7418 8900
Dan Webster
George Sellar
Nicole McDougall
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,25 Charterhouse Square, London. EC1M 6AE
Overview
Profit for the first half of 2018 was US$5.8 million against US$82.4 million for the first half of 2017. The main reason for the difference is that the result for 2017 included a profit of US$68.0 million relating to the disposal of the Agro Muko joint venture. Operating profit in the first half of 2018 was US$10.7 million compared with US$17.6 million in 2017, mostly reflecting an unrealised exchange rate loss as the Indonesian Rupiah weakened against the US Dollar.
A substantial growth in crop led to a 23% increase in production of crude palm oil ("CPO") and an even greater increase in production of palm kernels. However, this underlying increase in production was more than offset by a 10% fall in the commodity price of CPO and that of palm kernels, and an increase in the Group's stocks during the first half of 2018. This contrasted with a reduction in stocks during the equivalent period in 2017. Profit margins from the Group's mills remained at good levels, similar to those in 2017.
Oil-palm fresh fruit bunches ("ffb") on the Group's own areas increased by 27% to 270,700 tonnes, those in the smallholder co-operatives by 40% to 72,400 tonnes. This increase included the contribution of the Bumi Mas project acquired in December 2017. The general increase in crops throughout South East Asia resulted in some pressure on prices. The average price of CPO (cif Rotterdam) was US$663 per tonne during the first half of 2018, US$72 (or 10%) lower than in the same period in 2017.
The Group has continued to implement its strategy to focus on developing and operating majority-held plantations. At the beginning of January 2018, it took operational control of the estates at Bumi Mas acquired at the end of December 2017. The plantings here have excellent potential. However, as can occur, introduction of the Group's management led to some disruption as the workforce was required to adapt to the Group's high agronomic and operating standards. A labour dispute was successfully settled and the estate is being brought up to Group standards. This affected production during the first half of 2018, but crop is projected to rise strongly during the second half of the year. Bumi Mas is expected quickly to contribute to the anticipated acceleration of future growth in Group crops, currently led by its existing young projects in Bangka and at Kota Bangun.
In Musi Rawas, there has been continued good progress with new planting. A total of 980 hectares were planted, 690 of which were for the Group and 290 for the smallholder co-operatives. Planting has reached a conclusion in Bangka. Whilst the Group will continue opportunistically to acquire incidental hectarage, the planting on this project can now be considered complete. Also in Kota Bangun, planting of the Group's original area is all but complete, but here the Group will be able to plant a small additional area recently acquired nearby. In total, during the first half of 2018 the Group newly planted 760 hectares for itself and 330 hectares for smallholder co-operatives. At the end of June 2018, the Group operated 37,800 hectares of oil palm and a further 11,700 hectares on behalf of smallholder co-operatives attached to its projects: a total of 49,500 hectares.
Dividends
The board proposes to pay an interim dividend of 5.00 pence per share. It has previously announced its intention to increase or at least to maintain the level of normal dividends. Hence, barring unforeseen circumstances, shareholders can expect to receive total dividends of at least 17.75 pence per share in respect of the current year. The board believes the anticipated increase in yield from its young plantations, as well as the addition of Bumi Mas, is the basis for sustained future crop and revenue growth.
The palm-oil market
The CPO price (cif Rotterdam) closed the year 2017 at US$674 per tonne. The price then continued to move in a corridor between US$650 and US$700 per tonne for the first quarter of 2018. However, a rebound in production of palm oil in South East Asia and plentiful supply amongst all the world's major vegetable oils led to a weakening of future price expectations. Excepting a rally during the first part of May, the CPO price then fell from US$669 per tonne at the beginning of the second quarter to US$610 per tonne at the end of June. On average, the price of CPO during the first half of 2018 was US$663 per tonne compared with US$735 during the first half of 2017: a 10% fall. Notwithstanding significantly increased production, the low price of CPO and a pronounced discount to soybean oil led to palm-oil stocks falling by some 5% during the period. Since June 2018, the CPO price has further weakened before recovering to around US$560 per tonne.
During the first half of 2018, the price of palm kernels was much lower than during the equivalent period in 2017. This price movement reflects the unusual conditions for palm kernels - low stocks and a shortage of its main competitor, coconut oil - that persisted throughout much of 2017, notably in the early months of that year. The price of palm kernels fell sharply from March 2018 as supplies increased with the burgeoning global ffb crop.
Results for the period
Crops
The acceleration in the Group's crop growth that began in 2017 has continued into 2018, gathering momentum from the first to the second quarter of the year. In the first half, crops from the Group's own estates increased by 19%, in addition to which the Group added, for the first time, crops from Bumi Mas with the result that its own crop increased in total by 27% to 270,700 tonnes compared with 213,800 tonnes in the first half of 2017.
Performance has been strong across the Group's estates (see table below). As well as adding the crop from Bumi Mas, the Group has begun harvesting in its Musi Rawas project in South Sumatra. The only area in which crop has fallen is Simpang Kiri, where the Group is coming to the end of a planned replanting programme. This sacrifices crop in the short term in order to reduce the time to when the Group can benefit from the crop of younger palms from better seeds. The Group does not have a mill at Simpang Kiri, so is freed from the consideration of having to maintain mill throughput during a period of replanting.
As described in the 2017 annual report, a rebound in crop was anticipated in 2018 in the estates at Kota Bangun in East Kalimantan, which had suffered from an unusual combination of conditions in 2017 which were not expected to persist. Crop from these estates increased by 22% compared with the first half of 2017, demonstrating that the final echoes of the 2015-16 El Niño have died away. There is potential to improve on this result. The dramatic increase in crop put pressure on harvesting capacity and the availability of vehicles to transport crop from the field to the mill. The Group plans to construct more bunds (earthen embankments) to protect the estates from the Mahakam river when in flood, and manage the flow of water through the estate from neighbouring higher ground.
Crops in Bangka have continued to rise on the back of excellent rainfall, but this area is prone to intermittent dry spells and so crop here may prove to be more volatile in future than that in the Group's other areas. Crop from Bumi Mas was below potential during the first half of 2018, as the Group took operational control of the estate and began to introduce new operating procedures and new staff and management.
The level of crop from the smallholder co-operatives attached to the Group's projects rose even more strongly than crops in the Group's own areas: the 72,400 tonnes from these areas was 40% ahead of those in 2017. In addition to the increase in crops processed by the Group from its own areas and those of the smallholder co-operatives, the Group was able to maintain the significant volume of ffb bought in from third parties, notably in Bangka. This mill was designed to handle the Group's and smallholder co-operatives' crop at the point these plantings reach peak yield; until then the mill has spare capacity, which is being profitably used by buying in ffb from third parties.
Crop on the Group's 38%-owned associated-company estate, Kerasaan, was 21,600 tonnes during the first half of 2018, similar to that in the previous year.
6 months ended 6 months ended Year ended
30 June Increase/ 30 June 31 December
2018 (decrease) 2017 2017
Tonnes % Tonnes Tonnes
------------------------------ ----------- ---------- --------------- ------------
Crop
Own crop
Kota Bangun 101,200 22 83,200 147,600
Bangka 65,900 51 43,700 90,200
Pangkatan group 69,900 4 67,000 157,400
Bumi Mas 17,000 - - -
Musi Rawas 1,400 - - 400
Simpang Kiri 15,300 (23) 19,900 38,900
270,700 27 213,800 434,500
----------- --------------- ------------
Smallholder co-operative
crops
Kota Bangun 42,000 26 33,400 60,500
Bangka 27,800 51 18,400 40,800
Bumi Mas 2,600 - - -
----------- --------------- ------------
72,400 40 51,800 101,300
----------- --------------- ------------
Outside crop purchased
Kota Bangun 5,900 (20) 7,400 16,800
Bangka 40,900 5 39,000 85,400
Pangkatan group 6,000 25 4,800 16,100
52,800 3 51,200 118,300
395,900 25 316,800 654,100
----------- --------------- ------------
Production
The Group produced 91,900 tonnes of CPO during the first six months of 2018, 23% higher than the 74,900 tonnes during the equivalent period in 2017. The increase in production lagged that of the increase in crop as a result of slightly lower oil-extraction in the mill in Kota Bangun, which suffered from operational challenges as it sought to process burgeoning crop, notably during the second quarter of 2018. These are being addressed and the mill's performance has started to improve. The Group monitors the performance of its mills against those of mills operating nearby, and the Kota Bangun mill continues to perform at a high level compared with its peers. This now includes its improved rate of kernel extraction. The 23.0% oil-extraction rate at the Bangka mill continues to be of note given the very high proportion of third-party ffb processed during the period, which is of a significantly lower quality than the ffb produced under the Group's control. Unlike in 2017, the timing of dispatches from its bulking facilities meant the Group increased its stock of CPO and palm kernels. As a result, not all production was converted into revenue during the first half of the 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 2017 has been amended to bring it in line with the new presentation. A similar presentation has been adopted for the early crop in Bumi Mas and Musi Rawas, which is being sold to third-party mills prior to the Group building its own mills in these locations.
Currently, 81% of the Group's production is certified sustainable palm oil. This percentage will rise as the Group constructs its own mills and works with third-party smallholders wanting to supply it with ffb to achieve Roundtable for Sustainable Palm Oil ("RSPO") certification. Before the end of 2023, the Group anticipates that all of its production, other than from Simpang Kiri, will be certified sustainable.
Crops, production and selling-price details for the estates controlled by the Group are as follows:-
6 months ended 6 months ended Year ended
30 June Increase/ 30 June 31 December
2018 (decrease) 2017 2017
Tonnes % Tonnes Tonnes
--------------------------- ------------ ---------- --------------- ------------
Production
Crude palm oil
Group mills
Kota Bangun 35,700 17 30,600 55,600
Bangka 31,000 34 23,200 50,000
Pangkatan group 17,500 5 16,700 39,800
------------ --------------- ------------
84,200 19 70,500 145,400
------------ --------------- ------------
Third-party mills
Bumi Mas 4,000 - - -
Musi Rawas 300 - - -
Simpang Kiri 3,400 (23) 4,400 8,600
------------ --------------- ------------
7,700 75 4,400 8,600
------------ --------------- ------------
91,900 23 74,900 154,000
------------ --------------- ------------
Palm kernels
Group mills
Kota Bangun 7,400 40 5,300 10,100
Bangka 7,700 43 5,400 11,700
Pangkatan group 4,300 8 4,000 9,800
------------ --------------- ------------
19,400 32 14,700 31,600
------------ --------------- ------------
Third-party mills
Bumi Mas 900 - - -
Musi Rawas 100 - - -
Simpang Kiri 800 (11) 900 1,900
------------ --------------- ------------
1,800 100 900 1,900
------------ --------------- ------------
21,200 36 15,600 33,500
------------ --------------- ------------
Extraction rate % % %
Crude palm oil
Kota Bangun 24.0 (3) 24.7 24.7
Bangka 23.0 (1) 23.2 23.1
Pangkatan group 23.1 (1) 23.3 22.9
Bumi Mas 20.4 - - -
Musi Rawas 18.0 - - -
Simpang Kiri 22.3 - 22.3 22.3
------------ --------------- ------------
Palm kernels
Kota Bangun 5.0 16 4.3 4.5
Bangka 5.8 7 5.4 5.4
Pangkatan group 5.6 - 5.6 5.7
Bumi Mas 4.5 - - -
Musi Rawas 4.8 - - -
Simpang Kiri 5.0 4 4.8 4.9
Average selling prices US$ US$ US$
Crude palm oil (cif
Rotterdam) 663 (10) 735 714
Palm-kernel oil 1,030 (20) 1,286 1,246
--------------------------- ------------ ---------- --------------- ------------
Costs
The cost per tonne of palm product (CPO and palm kernels) produced from the Group's estates was US$350, lower than the US$380 in the first half of 2017. The cost of palm product from ffb both supplied by smallholders attached to the Group's projects and bought in from independent smallholders is higher than this since it is pegged to, and so varies with, the commodity price of CPO. Generally, production from areas controlled by the Group is less costly than ffb bought from smallholders, even at the current low level of CPO prices. The reason for this is that, as noted in previous reports, the Group expects unit costs to fall as the young palms on its new projects mature and so crop volume and average bunch weight rise, irrespective of the CPO price. The Group's ability to convert ffb to palm oil and kernels at a diminishing cost per tonne demonstrates its position as an efficient low-cost operator.
Mill-gate price
As noted above in the section 'The palm-oil market', the average cif Rotterdam price for the period was US$663 per tonne, significantly lower than it had been during the first half of 2017. Consequently, during the first half of 2018, the Group actually received on average US$564 per tonne of CPO, US$37 less than in the first half of 2017. During this time, however, the average sustainability premium rose a little from US$5 to US$7 per tonne. For palm kernels, the Group received US$435 per tonne, compared with US$490 in the previous year, reflecting a halving of the premia available for kernels sold with 'sustainability' certificates issued by the RSPO as well as the declining price of palm-kernel oil.
Planting
New planting determines the Group's capacity to produce crop growth in the future. Steady progress has been maintained on planting the Group's project in Musi Rawas. At the end of June 2018, planting since development began reached 6,100 hectares, of which 4,300 were for the Group and 1,800 for the smallholder co-operatives. A further 1,400 hectares were ready for planting and in addition 3,300 hectares had been surveyed, which is a necessary precursor to the land being available for planting. The Group would typically expect more than two-thirds of this last figure eventually to be planted. In Bangka, 110 hectares were planted in the first half bringing planting on this project to a conclusion. In North Sumatra, 260 hectares were replanted.
The situation in respect of planting on behalf of smallholder co-operatives is similar to that of the Group: a total of 330 hectares were planted. Of these, 290 hectares were in Musi Rawas and 40 in Bangka. Altogether, therefore, the Group newly planted 1,090 hectares for itself and its smallholders. In the Group's own areas and in those of its associated smallholder co-operatives, planting is rigorously carried out in compliance with RSPO standards to ensure that it is sustainable.
In Bangka, the Group's smallholder co-operatives have received land lease certificates ('HGUs') for 1,810 hectares.
New land
The Group is exploring the acquisition of additional hectarage close to its existing projects to bring them to an optimal size. The Group's experience is that 10,000 hectares of oil palm with a 60-tonne mill provides a unit which is both big enough to provide economies of scale in production and administration, and small enough to allow the careful scrutiny by field management needed to maintain high standards. The Group's projects in Bangka and Musi Rawas, including smallholder areas, are of this size and the board is actively seeking to extend the Kalimantan project from the current 15,000 hectares to the equivalent of two 10,000-hectare units. More widely, given the relative scarcity of good plantation land, the board remains open to any opportunities that may arise to acquire high-quality developed, or partially-developed, plantations of an optimal size and in a suitable location that meet its operational and sustainability criteria. The Group has zero net gearing and the strength of its balance sheet allows orderly expansion of this kind in line with its strategy.
Gross profit
As a result of the operational outcomes described above, gross profit for the first half of 2018 was US$14.6 million, US$2.6 million lower than the US$17.2 million recorded for the same period in 2017. Profit from continuing operations for the period was US$5.8 million, US$8.5 million lower than that recorded for the first half of 2017. This reduction took account of both a movement in exchange rate loss of US$4.1 million and a deferred-tax write-off of US$2.7 million due to the expiry of historical Indonesian corporate income tax losses.
Associated company: Malaysia
The Group's share of the loss arising in Bertam Properties Sdn. Berhad ("Bertam Properties") was US$0.1 million compared with a profit for the equivalent period in 2017 of US$0.8 million. The result for 2018 reflects a slowdown in the Malaysian property market that predated recent elections. The figure for 2017 has been restated following the adoption of the mandatory accounting standard IFRS15, resulting in an increase of reported profit of US$1.0 million. This arises from recognising the profit from development in stages during construction rather than delaying recognition of the whole profit until a property is sold (see note 3).
CURRENT TRADING AND PROSPECTS
Since the end of June, CPO has largely traded between US$565 and US$595 per tonne. The price was slightly stronger than this in the first two weeks of July and slightly weaker in the last two weeks of August, before reaching a level of US$560 per tonne at the beginning of September. The price in forward markets suggests a gradual increase in price though the remainder of the year.
The Group's crops continue to increase as a result of their young average age and the increasing maturity of the palms on the projects in Bangka and Kalimantan. The average age of the Group's palms is now 7 years. Bumi Mas is already adding to the Group's production and, following resolution of the operational disruption that occurred during the first half of 2018, this contribution is expected to increase. The Group's crops doubled between 2010 and 2016 and, given the young age and size of the Group's planted hectarage, it is anticipated crops will double again between 2016 and 2020.
The increasing maturity of all the Group's newer projects and good progress on planting in South Sumatra provide the basis for considerable future crop growth, and hence rising revenue, even without the acquisition of any further hectarage. The Group anticipates increasing production of certified sustainable palm oil as it completes the development of its new projects. The board remains confident that the fundamentals of the palm-oil market continue to be encouraging. Vegetable oil is a basic foodstuff and increasing demand from a growing world population looks likely to persist. Palm oil delivers by far the highest yield per hectare of all the vegetable oils and has the lowest cost of production. It is therefore well placed, long term, to benefit from the likely future increase in demand.
UNAUDITED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHSED 30 JUNE 2018
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2018 *2017 *2017
Note US$'000 US$'000 US$'000
------------------------------------------ ---- --------- --------- ------------
Continuing operations
Revenue 4 53,784 57,505 116,536
Cost of sales (39,188) (40,294) (80,290)
------------------------------------------ ---- --------- --------- ------------
Gross profit 4 14,596 17,211 36,246
Gain on biological assets 85 255 47
Foreign-exchange (losses)/gains (2,612) 1,471 365
Other administrative expenses (1,697) (1,445) (3,068)
Other income 329 129 360
------------------------------------------ ---- --------- --------- ------------
Operating profit 10,701 17,621 33,950
Finance income 288 894 2,147
Finance costs (904) (514) (1,027)
------------------------------------------ ---- --------- --------- ------------
Group-controlled profit before taxation 10,085 18,001 35,070
Tax on profit on ordinary activities (4,500) (4,807) (11,244)
------------------------------------------ ---- --------- --------- ------------
Group-controlled profit after tax 5,585 13,194 23,826
Share of associated companies' profit
after tax 4 225 1,159 3,205
------------------------------------------ ---- --------- --------- ------------
Profit for the period from continuing
operations 5,810 14,353 27,031
Profit for the period from discontinued
operations 9 - 68,018 68,018
------------------------------------------ ---- --------- --------- ------------
Profit for the period 5,810 82,371 95,049
------------------------------------------ ---- --------- --------- ------------
Attributable to:
Owners of M.P.Evans Group PLC 4,976 80,587 91,129
Non-controlling interests 834 1,784 3,920
------------------------------------------ ---- --------- --------- ------------
5,810 82,371 95,049
US cents US cents US cents
------------------------------------------ ---- --------- --------- ------------
Continuing operations
Basic earnings per 10p share 9.1 22.7 41.8
Diluted earnings per 10p share 9.0 22.6 41.6
------------------------------------------ ---- --------- --------- ------------
Continuing and discontinued operations
Basic earnings per 10p share 9.1 145.3 164.9
Diluted earnings per 10p share 9.0 144.8 164.1
------------------------------------------ ---- --------- --------- ------------
Pence Pence Pence
------------------------------------------ ---- --------- --------- ------------
Basic earnings per 10p share
Continuing operations 6.6 18.0 32.4
Continuing and discontinued operations 6.6 115.3 127.8
------------------------------------------ ---- --------- --------- ------------
* restated for the introduction of IFRS15 - see note 3
UNAUDITED CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2018
30 June 30 June 31 December
2018 *2017 *2017
Note US$'000 US$'000 US$'000
-------------------------------- ---- -------- -------- ------------
Non-current assets
Goodwill 11,767 1,157 12,228
Property, plant and equipment 327,967 212,015 321,558
Investments in associates 23,786 22,338 23,503
Investments 53 50 53
Deferred-tax asset 10,004 12,960 12,280
Trade and other receivables 6,740 3,817 5,465
-------------------------------- ---- -------- -------- ------------
380,317 252,337 375,087
-------------------------------- ---- -------- -------- ------------
Current assets
Biological assets 1,928 1,831 1,843
Inventories 13,249 11,294 10,462
Trade and other receivables 37,378 20,815 34,368
Current-tax asset 3,982 4,396 4,614
Current-asset investments 6,255 14,326 6,913
Cash and cash equivalents 35,111 148,542 113,910
97,903 201,204 172,110
-------------------------------- ---- -------- -------- ------------
Total assets 478,220 453,541 547,197
-------------------------------- ---- -------- -------- ------------
Current liabilities
Borrowings 8,727 6,500 9,159
Trade and other payables 13,700 11,071 65,194
Current-tax liabilities 1,341 1,023 5,317
-------------------------------- ---- -------- -------- ------------
23,768 18,594 79,670
-------------------------------- ---- -------- -------- ------------
Net current assets 74,135 182,610 92,440
-------------------------------- ---- -------- -------- ------------
Non-current liabilities
Borrowings 26,144 19,290 30,285
Deferred-tax liability 11,325 487 11,813
Retirement-benefit obligations 8,715 6,541 8,434
-------------------------------- ---- -------- -------- ------------
46,184 26,318 50,532
-------------------------------- ---- -------- -------- ------------
Total liabilities 69,952 44,912 130,202
-------------------------------- ---- -------- -------- ------------
Net assets 408,268 408,629 416,995
-------------------------------- ---- -------- -------- ------------
Equity
Share capital 7 9,241 9,302 9,255
Other reserves 55,244 53,364 54,382
Retained earnings 316,909 320,955 323,397
-------------------------------- ---- -------- -------- ------------
Equity attributable to the
owners of M.P.Evans Group PLC 381,394 383,621 387,034
Non-controlling interests 26,874 25,008 29,961
-------------------------------- ---- -------- -------- ------------
Total equity 408,268 408,629 416,995
-------------------------------- ---- -------- -------- ------------
* restated for the introduction of IFRS15 - see note 3
UNAUDITED STATEMENT OF CHANGES IN CONSOLIDATED TOTAL EQUITY
FOR THE SIX MONTHSED 30 JUNE 2018
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2018 *2017 *2017
Note US$'000 US$'000 US$'000
------------------------------------------ ---- --------- --------- ------------
Profit for the period 5,810 82,371 95,049
Other comprehensive gain for the
period 10 587 1,047
------------------------------------------ ---- --------- --------- ------------
Total comprehensive income for the
period 5,820 82,958 96,096
------------------------------------------ ---- --------- --------- ------------
Issue of share capital 159 119 506
Purchase of own shares (1,790) (4,766) (9,188)
Dividends - Company shareholders 5 (9,221) (16,334) (19,995)
Dividends - non-controlling interests (3,578) - -
Credit to equity for equity-settled
share-based payments 226 8 229
Group reconstruction - - (52)
Minority interest arising on acquisition (343) - 2,755
------------------------------------------ ---- --------- --------- ------------
Transactions with owners (14,547) (20,973) (25,745)
------------------------------------------ ---- --------- --------- ------------
Balance at 1 January 416,995 346,644 346,644
------------------------------------------ ---- --------- --------- ------------
Balance at period end 408,268 408,629 416,995
------------------------------------------ ---- --------- --------- ------------
* restated for the introduction of IFRS15 - see note 3
UNAUDITED CONSOLIDATED CASH-FLOW STATEMENT
FOR THE SIX MONTHSED 30 JUNE 2018
6 months 6 months Year
ended ended Ended
30 June 30 June 31 December
2018 2017 2017
Note US$'000 US$'000 US$'000
---------------------------------------- ---- --------- --------- ------------
Net cash generated/(used) by operating
activities 8 2,147 (2,000) 20,723
---------------------------------------- ---- --------- --------- ------------
Investing activities
Purchase of property, plant and
equipment (13,908) (16,287) (29,533)
Interest received 288 894 2,147
Proceeds on disposal of property,
plant and equipment 446 267 67
Purchase of subsidiary undertaking (49,167) - (39,589)
Disposal of associated undertaking - 99,769 99,769
---------------------------------------- ---- --------- --------- ------------
Net cash (used)/generated by investing
activities (62,341) 84,643 32,861
---------------------------------------- ---- --------- --------- ------------
Financing activities
Repayment of borrowings (4,414) (4,573) (9,552)
Decrease/(increase) in current-asset
investment bank deposits 658 (64) 7,349
Dividends paid to Company shareholders (9,221) (16,334) (19,995)
Dividends paid to non-controlling (3,578) - -
interests
Exercise of Company share options 159 119 506
Buyback of Company shares (1,790) (4,766) (9,188)
---------------------------------------- ---- --------- --------- ------------
Net cash used by financing activities (18,186) (25,618) (30,880)
---------------------------------------- ---- --------- --------- ------------ Net (decrease)/increase in cash and cash equivalents (78,380) 57,025 22,704 Cash and cash equivalents at 1 January 113,910 91,405 91,405 Effect of foreign-exchange rates on cash and cash equivalents (419) 112 (199) Net cash and cash equivalents at period end 35,111 148,542 113,910 ---------------------------------------- ---- --------- --------- ------------
NOTES TO THE INTERIM STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2018
Note 1 General information
The financial information for the six-month periods ended 30 June 2018 and 2017 has been neither audited nor reviewed by the Group's auditors and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The financial information for the year ended 31 December 2017 is abridged from the statutory accounts. The 31 December 2017 statutory accounts have been reported on by the Group's auditors, PricewaterhouseCoopers LLP, and have been filed with the Registrar of Companies. The report of the auditors thereon was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006, nor did it contain any matters to which the auditors drew attention without qualifying their audit report.
Note 2 Accounting policies
The consolidated financial results have been prepared in accordance with International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board (IASB) as adopted by the EU, and with those parts of the Companies Act 2006 applicable to companies preparing accounts under IFRS.
The accounting policies of the Group follow those set out in the annual financial statements at 31 December 2017, with the exception of the Group's accounting policy for revenue which has been revised from 1 January 2018 upon adoption of IFRS15 'Revenue from contracts with customers'. Further details are given in note 3.
Note 3 Revenue and prior period adjustment
Prior to adoption of IFRS15, the Group's accounting policy was to account for revenue from the sale of crops and produce at the point of delivery. This continues to be the case following the adoption of the new standard.
The Group's accounting policy for recognising revenue, and therefore its share of profit, from its property associate, has been updated. Previously, revenue from construction contracts on developed property was recognised at full completion of a sale. From 1 January 2018, this continues to be the case for commercial properties. However, in accordance with the five-step model in IFRS15, for certain residential properties revenue is recognised proportionately over the contract period. A prior period adjustment has been made to reflect this change in accounting policy using the retrospective method. The impact of the change has been to increase the Group's investment in associates and associated reserves at 1 January 2017 by US$2.4 million, and increase the Group's share of associated companies' profit after tax by US$1.0 million and US$0.6 million for the periods ending 30 June 2017 and 31 December 2017 respectively. The corresponding increases in basic earnings per share were 1.9c and 1.1c. Opening reserves at 1 January 2018 have increased by US$3.0 million.
Note 4 Segment information
The Group's reportable segments are distinguished by location and product: palm oil plantation crops in Indonesia and property development in Malaysia
Plantation Property
Indonesia Malaysia Other Total
US$'000 US$'000 US$'000 US$'000
-------------------------------- ---------- --------- -------- --------
6 months ended 30 June 2018
Revenue 53,740 - 44 53,784
Gross profit/(loss) 14,633 - (37) 14,596
-------------------------------- ---------- --------- -------- --------
Share of associated companies'
profit after tax
Kerasaan 344 - - 344
Bertam Properties - (119) - (119)
-------------------------------- ---------- --------- -------- --------
344 (119) - 225
-------------------------------- ---------- --------- -------- --------
6 months ended 30 June 2017
Revenue 57,451 - 54 57,505
Gross profit/(loss) 17,231 - (20) 17,211
-------------------------------- ---------- --------- -------- --------
Share of associated companies'
profit after tax
Kerasaan 405 - - 405
Bertam Properties* - 754 - 754
-------------------------------- ---------- --------- -------- --------
405 754 - 1,159
-------------------------------- ---------- --------- -------- --------
Year ended 31 December 2017
Revenue 116,393 - 143 116,536
Gross profit/(loss) 36,256 - (10) 36,246
-------------------------------- ---------- --------- -------- --------
Share of associated companies'
profit after tax
Kerasaan 1,189 - - 1,189
Bertam Properties* - 2,016 - 2,016
-------------------------------- ---------- --------- -------- --------
1,189 2,016 - 3,205
-------------------------------- ---------- --------- -------- --------
* restated for the introduction of IFRS15 - see note 3
Note 5 Dividends
6 months ended 6 months ended Year ended
30 June 30 June 31 December
2018 2017 2017
US$'000 US$'000 US$'000
------------------------------ --------------- --------------- ------------
2016 final dividend 12.75p
per 10p share - 9,179 9,180
2017 special dividend 10.00p
per 10p share - 7,155 7,155
2017 interim dividend 5.00p
per 10p share - - 3,660
2017 final dividend 12.75p 9,221 - -
per 10p share
------------------------------ --------------- --------------- ------------
9,221 16,334 19,995
------------------------------ --------------- --------------- ------------
Subsequent to 30 June 2018, the board has declared an interim dividend of 5.00 p per 10p share. The dividend will be paid on or after 2 November 2018 to those shareholders on the register at the close of business on 19 October 2018.
Note 6 Acquisition of subsidiary
On 22 December 2017, the Group acquired 100% of Sunrich Plantations Pte Ltd ("Sunrich"), which in turn owns 95% of the issued share capital of PT Bumi Mas Agro. Provisional fair values were recognised in the 2017 annual report in respect of the identifiable assets acquired and liabilities assumed. These provisional amounts have since been updated as set out in the table below:
Provisional Updated
at 31 December at 30 June
2017 Adjustment 2018
US$'000 US$'000 US$'000
-------------------------------- --------------- ----------- -----------
Property, plant and equipment 102,353 5 102,358
Deferred-tax asset 1,333 (348) 985
Current assets 8,731 - 8,731
Current liabilities (5,336) - (5,336)
Bank borrowings (18,667) - (18,667)
Shareholder loans (32,658) (6,514) (39,172)
Deferred-tax liability (11,071) 461 (10,610)
Retirement-benefit obligations (665) - (665)
Minority interest (2,755) 343 (2,412)
-------------------------------- --------------- ----------- -----------
Total identifiable assets 41,265 (6,053) 35,212
Goodwill 11,071 (461) 10,610
-------------------------------- --------------- ----------- -----------
52,336 (6,514) 45,822
-------------------------------- --------------- ----------- -----------
Satisfied by:
Cash 7,442 (6,514) 928
Deferred consideration 44,894 - 44,894
-------------------------------- --------------- ----------- -----------
52,336 (6,514) 45,822
-------------------------------- --------------- ----------- -----------
Whilst the total amount allocated as payment for the equity of Sunrich reduced by US$6.5 million, the total consideration for the purchase did not change as there was a corresponding increase in the amount allocated to settle loans from the former shareholders.
Note 7 Share capital
30 June 30 June 31 December 30 June 30 June 31 December
2018 2017 2017 2018 2017 2017
Number Number Number US$'000 US$'000 US$'000
-------------- ----------- ----------- ------------ -------- -------- ------------
Shares of 10p each
At 1 January 54,883,451 55,739,719 55,739,719 9,255 9,366 9,366
Issued 75,000 20,000 95,000 10 2 13
Redeemed (174,464) (523,552) (951,268) (24) (66) (124)
-------------- ----------- ----------- ------------ -------- -------- ------------
At period
end 54,783,987 55,236,167 54,883,451 9,241 9,302 9,255
-------------- ----------- ----------- ------------ -------- -------- ------------
During the period, as a result of the exercise of share options, the Company issued 75,000 10p shares for US$159,000 cash consideration. In addition, the Company bought back and cancelled 174,464 10p shares for a total cost of US$1,790,000.
Note 8 Analysis of movements in cash flow
6 months ended 6 months ended Year ended
30 June 30 June 31 December
2018 2017 2017
US$'000 US$'000 US$'000
-------------------------------------- ----------------- --------------- ------------
Operating profit 10,701 17,621 33,950
Biological gain (85) (255) (47)
Disposal of property, plant
and equipment (7) 39 600
Release of deferred profit (148) (20) (135)
Depreciation of property, plant
and equipment 7,070 5,764 11,472
Impairment of investments - 19 20
Retirement-benefit obligation 937 815 1,865
Share-based payments 226 8 229
Dividends from associated companies - 379 2,240
-------------------------------------- ----------------- --------------- ------------
Operating cash flows before
movements
in working capital 18,694 24,370 50,194
(Increase)/decrease in inventories (2,787) 2,142 4,586
Increase in receivables (4,285) (2,718) (7,258)
Decrease in payables (2,628) (8,337) (6,369)
-------------------------------------- ----------------- --------------- ------------
Cash generated by operating
activities 8,994 15,457 41,153
Income tax paid (5,943) (16,943) (19,403)
Interest paid (904) (514) (1,027)
-------------------------------------- ----------------- --------------- ------------
Net cash generated/(used) by operating
activities 2,147 (2,000) 20,723
------------------------------------------- ------------ --------------- ------------
Note 9 Discontinued operations
6 months ended 6 months ended Year ended
30 June 30 June 31 December
2018 2017 2017
US$'000 US$'000 US$'000
---------------------------- ---------------- --------------- ------------
Agro Muko
Share of profit after tax - 1,622 1,622
Profit on disposal - 66,396 66,396
- 68,018 68,018
--------------------------------------------- --------------- ------------
On 17 March 2017, the Group completed the sale of its 36.84% interest in PT Agro Muko. Total sale proceeds were US$99.8 million, and the Group recorded a profit on disposal of US$66.4 million.
Note 10 Exchange rates
30 June 30 June 31 December
2018 2017 2017
------------------------ ------------------------ ------- -------- ------------
US$1=Indonesian Rupiah * average 13,766 13,330 13,382
* period end 14,330 13,319 13,568
------------------------------------------------- ------- -------- ------------
US$1=Malaysian Ringgit * average 3.94 4.39 4.30
* period end 4.04 4.29 4.05
------------------------------------------------- ------- -------- ------------
GBP1=US Dollar * average 1.38 1.26 1.29
* period end 1.32 1.30 1.35
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR SFMFILFASEFU
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