Acquisition
07/09/2023 07:00
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RNS Number : 6174L M. P. Evans Group PLC 07 September 2023
M. P. EVANS GROUP PLC
("THE GROUP")
ACQUISITION OF 8,350 PLANTED HECTARES
M.P. Evans Group PLC, a producer of sustainable Indonesian palm oil, is
pleased to announce that its wholly-owned subsidiary, P.T. Evans Indonesia,
has signed a conditional agreement to acquire the entire issued share capital
of two Indonesian companies, P.T. Agro Bumi Kaltim ("ABK") and P.T. Nusantara
Agro Sentosa ("NAS"), for a total consideration of US$60 million, subject to
the completion of legal and regulatory formalities in Indonesia, which the
Group expects to be finalised before the end of 2023.
The acquisition is in line with the Group's established strategy of increasing
the planted hectarage close to its existing operations. ABK and NAS both own
oil-palm plantations in East Kalimantan, and between them manage a total
planted area of 8,350 hectares. This is made up of 4,973 hectares at ABK and
3,377 hectares at NAS, comprising a total of 6,664 hectares under direct
ownership and 1,686 hectares managed on behalf of associated smallholder
co-operatives., and following the completion of this transaction, it is
expected that all the crop from ABK will be sent to the Group's Kota Bangun
estate for processing in Group mills. The crop from NAS will be sent to an
external mill. The majority of the planted area at ABK and NAS is made up of
young palms, with almost 90% planted between 2017-2019, and the Group expects
yields from these young areas to increase as the palms continue to mature.
The Group is acquiring ABK and NAS from PT Palma Serasih Tbk, a listed
Indonesian company with subsidiaries operating in the oil-palm sector, which
has other plantation interests in East Kalimantan. The acquisition, the price
of which is on a cash and debt-free basis, will be funded from existing
resources, plus a final adjustment to allow for working capital on completion.
The purchase price equates to US$9,000 per Group-owned planted hectare.
The most recent audited accounts for the companies being acquired are for the
year ended 31 December 2022. They show that, as estates with relatively young
plantings, ABK made a loss after tax in the year of US$3.0 million and NAS a
loss of US$2.6 million. The Group expects that results from ABK and NAS will
improve as the areas mature, and as management work to improve agronomic
standards on both estates. The Group also expects to see benefits for the Kota
Bangun milling facilities, as the reliance on outside crop suppliers starts to
fall.
As a priority after acquisition, the Group will work to include the acquired
areas as part of its registration with the Roundtable on Sustainable Palm Oil
(the "RSPO"), in accordance with its continuing commitment to increase the
proportion of its output that is certifiably sustainable. Anticipated costs
associated with this were taken into consideration when determining the
purchase price.
The Group's chairman, Peter Hadsley-Chaplin, commented:
"The addition of the estates at ABK and NAS to the Group portfolio is a great
achievement and will bring our total area under management to over 65,000
hectares. We have been very keen to acquire more hectares close to Kota Bangun
for some time, and having the ABK estate supplying its crop to our existing
mills will further enhance our operational efficiencies. With more hectares
delivering more crop, we will be able to continue to increase our output,
supporting the Group's ambition to deliver progressive returns."
This announcement contains inside information as defined in Article 7 of the
Market Abuse Regulation No. 596/2014.
Enquiries:
M.P. Evans Group PLC Telephone: +44 (0) 1892 516333
Peter Hadsley-Chaplin, chairman
Matthew Coulson, chief executive
Luke Shaw, chief financial officer
Peel Hunt LLP (Nomad and joint broker) Telephone: +44 (0) 20 7418 8900
Adrian Trimmings, Andrew Clark, Lalit Bose
finnCap (Joint broker) Telephone: +44 (0) 20 7220 0500
Tim Redfern, Harriet Ward
Hudson Sandler Telephone: +44 (0) 20 7796 4133
Charlie Jack, Charlotte Cobb, Francis Kerrigan
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