Final Results
19/03/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240319:nRSS2995Ha&default-theme=true
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 (http://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/ 2022
(decrease)
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 2 905,400
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 5 265,700
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 7 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 2 75,100
Pangkatan group 54,500 2 53,300
Bumi Mas 56,800 4 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 2 23,800
Bangka 19,000 3 18,400
Pangkatan group 12,400 2 12,200
Bumi Mas 10,300 7 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 9 73,800
Extraction rates - crude palm oil % % %
Group mills
Kota Bangun - Bumi Permai 24.4 5 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 4 23.0
Musi Rawas 24.1 - -
23.4 2 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 8 5.1
Kota Bangun - Rahayu 4.3 2 4.2
Bangka 5.7 - 5.7
Pangkatan group 5.2 - 5.2
Bumi Mas 4.2 8 3.9
Musi Rawas 4.5 - -
5.0 2 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
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 (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR JPMFTMTJBBLI