Half-year Report
11/09/2023 07:00
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RNS Number : 9146L M. P. Evans Group PLC 11 September 2023
M.P. EVANS GROUP PLC
M.P. Evans Group PLC ("M.P. Evans" or "the Group"), a producer of sustainable
Indonesian palm oil, announces its unaudited interim results for the six
months ended 30 June 2023.
highlights
§ 2% increase in total crop processed to 721,100 tonnes (2022 - 705,700
tonnes)
§ 3% increase in total production of crude palm oil to 166,200 tonnes (2022 -
160,800 tonnes)
§ 27% decrease in mill-gate CPO price to US$755 per tonne (2022 US$1,035 per
tonne)
§ 7% increase in certified sustainable production to 96,500 tonnes (2022
90,500 tonnes)
§ 26% increase in cost of Group palm product to US$535 per tonne (2022 US$425
per tonne)
§ 62% decrease in operating profit to US$23.4 million (2022 US$61.7 million)
§ 61% decrease in earnings per share to 24.8p (2022 - 63.3p)
§ Maintained interim dividend per share at 12.5p (2022 - 12.5p)
§ Maintained net cash position - 2023 net cash US$2.5 million (2022 - US$13.5
million)
POST PERIOD-END HIGHLIGHTS
§ Increase in cropping levels, with total crop processed 318,800 tonnes in
two months to August 2023
§ Agreement signed to acquire 8,350 planted hectares in East Kalimantan,
benefiting existing milling operations.
M.P. Evans chairman, Peter Hadsley-Chaplin, commented: "The Group continues to
increase output, notably from its own production facilities, following the
commissioning of the Musi Rawas mill this February. We are delighted to be
reporting further strategic increases in planted hectarage, both at Simpang
Kiri earlier this year, and the recently announced agreement to acquire over
8,000 planted hectares in East Kalimantan. These developments, along with
increasing cropping levels, put the Group in a strong position to deliver a
productive and profitable 2023 and bodes well for its longer-term prosperity."
11 September 2023
Enquiries:
M.P. Evans Group PLC Telephone: 01892 516333
Peter Hadsley-Chaplin - Executive chairman
Matthew Coulson - Chief executive
Luke Shaw - Chief financial officer
Peel Hunt LLP (Nomad and joint broker) Telephone: 020 7418 8900
Adrian Trimmings, Andrew Clark, Lalit Bose
finnCap (Joint broker) Telephone: 020 7220 0500
Tim Redfern, Harriet Ward
Hudson Sandler (Communications consultants) Telephone: 020 7796 4133
Charlie Jack, Charlotte Cobb, Francis Kerrigan
An analysts' meeting will be held today at 9:30am at the offices of Hudson
Sandler, 25 Charterhouse Square, London EC1M 6AE.
Overview
The Group has continued to deploy its strategy in the first half of 2023 as a
producer of certified sustainable palm oil. In February of this year, the
Group opened its sixth palm-oil mill, at its Musi Rawas estate in South
Sumatra and, as a result, across all operations, the Group is now processing
96% of the crop harvested from the areas it manages. In addition, the Group
continues to plant at Musi Rawas and, at the end of June 2023, reached its
target of a total planted area there of 10,000 hectares. As a result, at the
end of June 2023, the Group managed a total planted area of 56,800 hectares.
The Group remains focused on growth and, in March 2023, acquired over 2,000
additional planted hectares close to its Simpang Kiri estate in Aceh Province,
northern Sumatra. Very pleasingly, since the end of the period, it has
reached an agreement to acquire over 8,000 further planted hectares in East
Kalimantan.
During the early part of the year, as was the case for many Indonesian
producers, the Group experienced a relatively low-cropping period in several
of its estates, and this had an impact on the crop harvested from both the
Group's majority-owned areas, as well as that from its associated scheme
smallholders. As the year has progressed, crops have improved, markedly so
towards the end of the first half and moving into the beginning of the second
half of 2023. The Group has continued to work hard to secure additional crop
from independent suppliers to be processed in its mills, particularly as Group
milling capacity has continued to increase this year. Total Group production
of crude palm oil ("CPO") increased in the first half of the year by 3% to
166,200 tonnes. Encouragingly, production from the Group's own mills rose by
13% to 159,100 tonnes following the commissioning of the Musi Rawas mill
during the period.
By historic standards, CPO pricing remained robust in the first half of 2023,
with an average cif Rotterdam price in the period of US$986 per tonne. This is
8% higher than the 5-year average of US$917 and 20% higher than the 10-year
average of US$820. However, prices were exceptionally high in the first half
of 2022, in response to the war in Ukraine and consequential concerns over
vegetable-oil supplies, and at that time the average was US$1,622 per tonne.
The Group received, at mill-gate, an average price of US$755 per tonne for its
output in the first half of 2023, and this was 27% lower than the US$1,035 per
tonne received in the first half of 2022.
Total production costs per tonne of CPO fell during the first half of the
year, as the Group was able to purchase crop from independent suppliers at a
lower price, resulting in a total cost per tonne of US$574 (2022 US$598), but
the cost of production from the Group's own areas increased to US$535 per
tonne (2022 US$425) as the Group continued to experience cost inflation,
notably in fertiliser inputs. Inflationary pressures are starting to abate,
and this effect, combined with rising production, is expected to exert
downward pressure on the Group's own cost per tonne in the second half of the
year.
The lower CPO price environment for the first half of the year resulted in
lower margins, but the Group has continued to be cash generative, with cash
from operating activities of US$20.4 million to June 2023. The continuing cash
generation combined with the Group's very strong opening position in 2023
(gross cash of US$82.5 million) has enabled it to fund the acquisition of the
additional hectarage at Simpang Kiri, continue to reduce the Group's remaining
debt, and at the same time return over US$25 million to shareholders through a
combination of dividends and share buybacks.
Post balance-sheet event
On 7 September 2023, the Group announced that it had signed a conditional
agreement to acquire a further 8,350 planted hectares in East Kalimantan
(including 1,686 scheme-smallholder hectares), for a price of US$60 million,
representing US$9,000 per planted Group-owned hectare. The crop from the
majority of these planted hectares will be available to supply the Group's
existing mills at Kota Bangun, increasing the utilisation and efficiency of
the milling operations there. Like the purchase at Simpang Kiri in March 2023,
this acquisition is fully aligned with the Group's long-standing strategy to
add additional planted hectarage around its existing operations.
Dividends
Given the Group's continuing ability to generate profits and cash, and in
light of the strategic progress made in the first half, and moving into the
second half of 2023, the board is maintaining the interim dividend at 12.5p
per share (2022 - 12.5p per share).
The Group has an unbroken track record over more than thirty years, of at
least maintaining, or whenever possible increasing, ordinary dividends. The
board believes that the ongoing trend of increasing yields from the Group's
estates, combined with the increasing milling capacity, forms a firm
foundation for continuing strong cash flows, which in turn supports the
Group's progressive dividend policy.
Results for the period
Crops and production
Details of the Group's crops, production extraction rates and average selling
prices for the first half of 2023 are shown in the following table:
6 months ended 6 months ended Year ended
30 June Increase/ 30 June 31 December
2023 (decrease) 2022 2022
Tonnes % Tonnes Tonnes
Own crops
Kota Bangun 110,900 4 106,200 219,400
Bangka 57,900 (30) 82,900 167,200
Pangkatan group 78,200 (13) 89,900 192,500
Bumi Mas 75,200 (6) 80,000 166,700
Musi Rawas 61,600 26 49,000 107,600
Simpang Kiri 24,300 8 22,400 52,000
408,100 (5) 430,400 905,400
Scheme-smallholder crops
Kota Bangun 46,500 6 44,000 91,000
Bangka 34,500 (22) 44,400 91,200
Pangkatan Group 700 75 400 900
Bumi Mas 13,400 - 13,400 30,600
Musi Rawas 29,800 23 24,200 52,000
124,900 (1) 126,400 265,700
Independent crops purchased
Kota Bangun 66,300 (30) 95,200 191,700
Bangka 48,100 89 25,500 62,800
Pangkatan group 29,400 137 12,400 39,100
Bumi Mas 30,500 93 15,800 47,000
Musi Rawas 13,800 - - -
188,100 26 148,900 340,600
721,100 2 705,700 1,511,700
Production
Crude palm oil
Kota Bangun 51,200 (8) 55,400 112,800
Bangka 31,700 (13) 36,600 75,100
Pangkatan group 24,300 2 23,800 53,300
Bumi Mas 28,000 12 25,100 56,200
Musi Rawas 23,900 - - -
159,100 13 140,900 297,400
Musi Rawas 1,600 (89) 14,900 32,600
Simpang Kiri 5,500 10 5,000 11,700
7,100 (64) 19,900 44,300
166,200 3 160,800 341,700
Palm kernels
Kota Bangun 10,900 (11) 12,200 23,800
Bangka 7,900 (10) 8,800 18,400
Pangkatan group 5,300 (4) 5,500 12,200
Bumi Mas 4,700 12 4,200 9,600
Musi Rawas 4,300 - - -
33,100 8 30,700 64,000
Musi Rawas 400 (88) 3,400 7,500
Simpang Kiri 1,100 10 1,000 2,300
1,500 (66) 4,400 9,800
34,600 (1) 35,100 73,800
Extraction rate % % %
Crude palm oil
Group mills
Kota Bangun - Bumi Permai 23.9 3 23.3 23.3
Kota Bangun - Rahayu 21.3 - 21.4 21.2
Bangka 22.6 (5) 23.9 23.4
Pangkatan group 22.4 (3) 23.2 22.9
Bumi Mas 23.5 2 23.1 23.0
Musi Rawas 24.6 - - -
23.1 - 23.1 22.9
Third party mills
Musi Rawas 20.5 - 20.4 20.4
Simpang Kiri 22.5 - 22.5 22.5
Palm kernels
Group mills
Kota Bangun - Bumi Permai 5.4 2 5.3 5.1
Kota Bangun - Rahayu 4.2 (2) 4.3 4.2
Bangka 5.6 (5) 5.9 5.7
Pangkatan group 4.9 (8) 5.3 5.2
Bumi Mas 4.0 5 3.8 3.9
Musi Rawas 4.4 - - -
4.8 (6) 5.1 4.9
Third party mills
Musi Rawas 4.7 - 4.7 4.7
Simpang Kiri 4.5 - 4.5 4.5
Average selling prices US$ US$
CPO (cif Rotterdam) 986 (39) 1,622 1,345
CPO - Group mill gate 755 (27) 1,035 854
Palm-kernel oil 915 (54) 1,968 1,073
Palm kernels - Group mill gate 410 (51) 830 611
Mill-gate prices
CPO prices were exceptionally high during the first half of 2022, as commodity
markets responded to the outbreak of war between Russia and Ukraine, and there
were particular concerns over global vegetable-oil shortages. During that
period, CPO prices (cif Rotterdam) peaked at almost US$2,000 per tonne, and
the average was US$1,622 per tonne. Prices have stabilised since then, and in
the first half of 2023, the average price was US$986 per tonne, 39% lower. The
Group does not receive the cif Rotterdam price when selling its output, but
rather a 'mill-gate' price based on regular sales tenders. These prices are
lower to take account of freight and insurance costs, but also to allow for
export taxes and levies imposed by the Indonesian government. These are
charged using graduated scales, and the Group benefited from lower taxes and
levies in the first half of 2023. As a result, the reduction in mill-gate
price was smaller than the reduction in the cif Rotterdam reference price, and
the Group achieved an average mill-gate price of US$755 per tonne in the
period to June 2023, 27% lower than in the first half of 2022.
The increase in palm-kernel prices had been even more marked than the CPO
price increase in the first half of 2022, and so the Group similarly
experienced a reduction in the average price achieved for its PK sales during
the period to June 2023. The average price for PK sales to June 2023 was
US$410 per tonne, a little less than half the US$830 for the first half of
2022.
Sustainability
Being a producer of certified sustainable CPO and PK remains a core part of
the Group's strategy, and brings with it a significant financial benefit. In
the first half of the year, the Group's sustainability income was US$3.2
million, similar to the US$3.3 million achieved in the first half of 2022. 71%
of the output from the Group's certified mills was available for sale with
sustainability credits, with a small part of these sales being held over to
the second half of the year. In the first half of the year, the Group produced
96,500 tonnes of certified sustainable CPO, up by 7% from the 90,500 tonnes
produced in the first half of 2022. The average premia for CPO when sold as
certified oil was US$16.00 (2022 US$17.50), slightly lower than the previous
period in response to lower underlying CPO prices. Demand for certified PK
remained strong with average premia increasing to US$108.80 (2022 US$87.20).
As reported in the 2022 annual report, the Group has started to follow the
guidelines laid down by the Taskforce on Climate-related Financial Disclosures
("TCFD") to determine its greenhouse gas emissions. The Group set 2021 as its
baseline year for reporting, and in that year calculated a total of 2.72
million tonnes of CO(2) equivalent emissions, including both direct (scope 1
and 2) and indirect (scope 3) emissions. At the time of publishing the 2022
annual reporting, scope 3 emissions for 2022 were still being collated, but
the Group can now report a 2022 total of 2.38 million tonnes of CO(2)
equivalents, a 12% reduction from the previous year. The fall in emissions is
mainly as a result of opening the Group's fifth palm-oil mill in 2022,
reducing scope 3 emissions from processing Group crop in outside mills. The
Group can expect a further reduction from this source of emissions in 2023 due
to the opening of the Group's sixth mill.
The Group is scheduled to be publishing a detailed, standalone, TCFD report in
September 2023, a copy of which will be available on the Group's website. In
addition, a separate report on wider environmental, sustainability and
governance ("ESG") matters will be published later this year, and will also be
available on the Group website.
Costs
The cost per tonne of palm product produced from the Group's own areas
increased in the first half of the year to US$535 per tonne (2022 US$425 per
tonne). There were three main reasons for this. Firstly, as already mentioned,
the first part of the year was a relatively low-cropping period in several
parts of Indonesia and, whilst some of the Group's costs vary with production,
there are also significant fixed costs, and these led to an increase in unit
costs in the first half, by approximately US$50 per tonne. Secondly, the Group
continued to feel the effects of inflation, particularly in relation to
fertiliser, which is one of the largest external costs on Group estates. Total
expenditure on fertiliser doubled in the first half of the year, adding
approximately US$50 per tonne to unit costs. Finally, the Group added another
new mill during the first half of the year, and cost of production is
inevitably higher than other mills at the start of production.
Moving into the second half of the year, unit costs are expected to fall as
production increases, and also as fertiliser costs start to fall. The Group
has already secured its fertiliser supplies for the remainder of 2023 at a
lower cost than those applied in the first half.
The Group purchases ffb to process in its mills, both from its associated
scheme smallholders and from independent suppliers. The price paid to purchase
crop is linked to the CPO commodity price, and so the Group was able to secure
ffb in the first half of 2023 at a lower price than in the same period in
2022. This helped to reduce the Group's overall cost of production to US$574
per tonne (2022 US$598 per tonne).
Planting
The Group continued to plant at its Musi Rawas estate in South Sumatra in the
first half of 2023, and as the planted hectarage there continues to mature,
the crop available for processing in the Group's new mill will increase.
During the first half of 2023 the Group planted a total of 362 further
Group-owned hectares. As a result, the Group has achieved its objective of
planting a total of 10,000 hectares at Musi Rawas. Further planting will take
place when further areas become available.
New land
The Group's long-standing strategy has been to continue to increase its
planted hectarage, both through further planting at existing properties, and
by acquiring additional planted land. In March 2023, the Group was successful
in acquiring 2,100 planted hectares adjacent to its Simpang Kiri estate in
Aceh Province, northern Sumatra. The purchase cost was US$7,000 per planted
hectare, and the Group has already embarked upon a replanting programme in
some areas to work towards bringing the newly acquired land up to Group
standards.
In addition, after the end of the period, the Group announced that it had
signed a conditional agreement for the acquisition of a further 8,350 planted
hectares, inclusive of 1,686 scheme-smallholder hectares, in East Kalimantan,
for a price of US$9,000 per planted Group-owned hectare. In accordance with
the Group's strategy of maximising the utilisation of its existing milling
capacity, the crop from the majority of these hectares will be sent for
processing to the Group mills at Kota Bangun.
Associated companies
The Group's 40%-held Malaysian property joint venture, Bertam Properties Sdn
Berhad ("Bertam Properties") again traded profitably in the first half of 2023
as it continues to develop high-quality and affordable homes within its market
in Malaysia. The Group's share of Bertam Properties' profit in the period was
US$0.2 million (2022 US$0.1 million). The Group's 38%-owned Indonesian
oil-palm associate, PT Kerasaan Indonesia saw a reduction in profits in the
first half of the year, primarily as a result of the lower CPO price
environment. The Group's share of their profit in the period was US$0.6
million (2022 US$1.1 million).
Result
Overall, the Group recorded revenue of US$134.5 million for the first half of
2023, a reduction of 21% on the same period in 2022, primarily due to the
lower mill-gate price for Group sales of both CPO and PK. The lower price
environment had a consequential effect on margins, with the Group achieving a
gross margin in the period to June 2023 of 17% (2022 - 38%) and a gross profit
of US$23.1 million (2022 US$64.8 million). There was a small foreign exchange
gain of US$0.6 million in the first half (2022 loss of US$1.9 million) as the
Indonesian Rupiah strengthened slightly against the US Dollar, whilst
administrative expenses increased in the period due to the phasing of certain
expenditure including professional fees and travel, with visits to Indonesia
only restarting in the second half of 2022, and a board trip taking place in
the first half of 2023. Other income, at US$1.2 million, was higher than in
the prior year as the Group was able to command higher prices for its empty
kernel shells, a by-product from the milling process. Finance costs increased
to US$1.7 million (2022 US$1.2 million) as interest rates on the Group's
remaining debt were higher during the period. The profit for the period was
US$17.8 million (2022 US$48.2 million) and earnings per share were 24.8p (2022
- 63.3p).
CURRENT TRADING AND PROSPECTS
The total crop processed in the two months to 31 August 2023 was 318,800
tonnes, an increase of 18% from the 270,700 tonnes processed in the same
period of 2022. This brings the total for the year to date to 1,039,900 tonnes
as shown in the following table:
8 months ended 8 months ended
31 August 31 August
2023 Decrease 2022
Tonnes % Tonnes
Own crops 593,700 (2) 604,200
Scheme-smallholder crops 179,100 1 176,600
Independent crops purchased 267,100 37 195,600
1,039,900 7 976,400
During the two months to August 2023, the crops harvested from the Group's
majority-owned areas and from its associated scheme-smallholder areas were
significantly higher than in the first half of the year, averaging 119,900
tonnes, 35% higher than the 88,800-tonne average in the first half of the
year. As a result, crop from majority-owned areas continued to reduce the gap
to prior-year amounts, and is expected to go beyond prior-year levels in the
coming months, as has crop from scheme-smallholder areas. Crop from
independent suppliers continues to be significantly in excess of prior-year
levels.
The Group was delighted to report, in September 2023, that it had signed a
conditional agreement for the acquisition of a further 8,350 planted hectares
in East Kalimantan. Once this transaction has been completed, the Group will
have total planted hectarage under management of over 65,000 hectares, an
increase of more than 10,000 hectares in less than 12 months. All of the new
planted hectarage in East Kalimantan is relatively young, with planting having
started in 2017 and an average age of 5 years. The Group can look forward to
increasing yields as the palms mature in the coming years. The majority of the
new hectarage will supply crop to the Group's existing mills at Kota Bangun,
increasing the utilisation and efficiency of the operations there.
Since the end of the end of the first half, CPO has traded between US$930 and
US$1,055 per tonne cif Rotterdam, not dissimilar to the average for the first
half of the year of US$986 per tonne. Mill-gate prices have also been similar
to those in the first half of the year, and the Group has received recent
pricing between US$700-740 per tonne for its CPO output.
The board remains firmly of the view that, with the Group's increased
hectarage and prospects for continued increases in crop and production, as a
producer of sustainable palm oil, the Group is in a strong position to
continue to deliver healthy cash flows, and attractive shareholder returns.
UNAUDITED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2023
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2023 2022 2022
Note US$'000 US$'000 US$'000
Continuing operations
Revenue 3 134,469 170,282 326,917
Cost of sales (111,331) (105,516) (217,707)
Gross profit 3 23,138 64,766 109,210
Gain/(loss) on biological assets 1,025 233 (1,431)
Foreign-exchange gains/(losses) 582 (1,864) (3,444)
Other administrative expenses (2,590) (2,290) (4,614)
Other income 1,223 856 1,865
Operating profit 23,378 61,701 101,586
Finance income 600 679 1,395
Finance costs (1,683) (1,154) (2,731)
Profit before taxation 22,295 61,226 100,250
Tax on profit on ordinary activities (5,267) (14,218) (24,073)
Profit after tax 17,028 47,008 76,177
Share of associated companies' profit after tax 3 786 1,197 2,184
Profit for the period 17,814 48,205 78,361
Attributable to:
Owners of M.P. Evans Group PLC 16,586 45,004 73,060
Non-controlling interests 1,228 3,201 5,301
17,814 48,205 78,361
US cents US cents US cents
Continuing operations
Basic earnings per 10p share 30.8 82.3 133.9
Diluted earnings per 10p share 30.7 82.0 133.4
Pence Pence Pence
Basic earnings per 10p share
Continuing operations 24.8 63.3 108.0
UNAUDITED CONSOLIDATED BALANCE SHEET
As at 30 June 2023
30 June 30 June 31 December
2023 2022 2022
Note US$'000 US$'000 US$'000
Non-current assets
Goodwill 11,767 11,767 11,767
Other intangible assets 1,077 1,139 1,167
Property, plant and equipment 427,936 403,578 411,658
Investments in associates 11,654 13,440 11,795
Investments 58 61 61
Deferred-tax asset 1,020 1,246 989
Trade and other receivables 9,232 15,226 9,146
462,744 446,457 446,583
Current assets
Biological assets 4,114 4,753 3,089
Inventories 28,567 36,109 23,112
Trade and other receivables 29,905 26,931 32,681
Current-tax asset 5,740 2,673 2,290
Cash and cash equivalents 42,882 69,977 82,503
111,208 140,443 143,675
Total assets 573,952 586,900 590,258
Current liabilities
Borrowings 19,001 16,130 17,364
Trade and other payables 29,080 30,727 24,410
Current-tax liabilities 294 5,335 4,455
48,375 52,192 46,229
Net current assets 62,833 88,251 97,446
Non-current liabilities
Borrowings 21,364 40,366 31,675
Deferred-tax liability 13,478 12,391 13,538
Retirement-benefit obligations 11,199 12,803 9,972
46,041 65,560 55,185
Total liabilities 94,416 117,752 101,414
Net assets 479,536 469,148 488,844
Equity
Share capital 6 9,124 9,228 9,179
Other reserves 54,642 57,630 54,543
Retained earnings 397,605 386,796 407,460
Equity attributable to the
owners of M.P. Evans Group PLC 461,371 453,654 471,182
Non-controlling interests 18,165 15,494 17,662
Total equity 479,536 469,148 488,844
UNAUDITED STATEMENT OF CHANGES IN CONSOLIDATED EQUITY
For the six months ended 30 June 2023
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
US$'000 US$'000 US$'000
Profit for the period 17,814 48,205 78,361
Other comprehensive expense for the period (1,352) (1,459) (542)
Total comprehensive income for the period 16,462 46,746 77,819
Issue of share capital - 191 191
Share buybacks (5,129) (798) (4,902)
Dividends paid (20,760) (22,121) (29,732)
Credit to equity for equity-settled share-based payments 119 82 420
Transactions with owners (25,770) (22,646) (34,023)
At 1 January 488,844 445,048 445,048
Balance at period end 479,536 469,148 488,844
UNAUDITED CONSOLIDATED CASH-FLOW STATEMENT
For the six months ended 30 June 2023
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Note US$'000 US$'000 US$'000
Net cash generated by operating activities 7 20,411 50,642 102,288
Investing activities
Purchase of property, plant and equipment (23,824) (13,920) (33,714)
Purchase of intangible assets - - (116)
Interest received 227 405 622
(Increase)/decrease in receivables from smallholder
co-operatives (2,973) 3,943 1,714
Proceeds on disposal of property, plant and equipment 66 137 3,055
Net cash used by investing activities (26,504) (9,435) (28,439)
Financing activities
Repayment of borrowings (8,674) (14,552) (22,009)
Lease liability payments - (38) (38)
Dividends paid to Company shareholders (20,035) (20,889) (28,500)
Dividends paid to non-controlling interest (72) (123) (124)
Issue of Company shares - - 191
Buyback of Company shares (5,129) (798) (4,902)
Net cash used by financing activities (33,910) (36,400) (55,382)
Net (decrease)/increase in cash and cash equivalents (40,003) 4,807 18,467
Cash and cash equivalents at 1 January 82,503 65,609 65,609
Effect of foreign-exchange rates on cash and cash
equivalents 382 (439) (1,573)
Net cash and cash equivalents at period end 42,882 69,977 82,503
NOTES TO THE INTERIM STATEMENTS
For the six months ended 30 June 2023
Note 1 General information
The financial information for the six-month periods ended 30 June 2023 and
2022 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
2022 is abridged from the statutory accounts. The 31 December 2022 statutory
accounts have been reported on by the Group's auditors for that year, BDO 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), 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 2022. The Group has made a number of
critical accounting judgements and key estimates in the preparation of this
interim report, and they remain consistent with those set out in note 3(r) to
the 2022 annual financial statements.
Note 3 Segment information
The Group's reportable segments are distinguished by location and product:
Indonesian oil-palm plantation products in Indonesia and Malaysian property
development.
Plantation Property
Indonesia Malaysia Other Total
US$'000 US$'000 US$'000 US$'000
6 months ended 30 June 2023
Revenue 134,469 - - 134,469
Gross profit 23,138 - - 23,138
Share of associated companies' profit after tax 545 241 - 786
6 months ended 30 June 2022
Revenue 170,282 - - 170,282
Gross profit 64,766 - - 64,766
Share of associated companies' profit after tax 1,108 89 - 1,197
Year ended 31 December 2022
Revenue 326,872 - 45 326,917
Gross profit 109,165 - 45 109,210
Share of associated companies' profit after tax 1,677 507 - 2,184
Note 4 Dividends
6 months ended 6 months ended Year ended
30 June 30 June 31 December
2023 2022 2022
US$'000 US$'000 US$'000
2021 final dividend - 25p per 10p share - 17,227 17,227
2021 special dividend - 5p per 10p share - 3,662 3,662
2022 interim dividend - 12.5p per 10p share - - 7,611
2022 final dividend - 30p per 10p share 20,035 - -
20,035 20,889 28,500
Subsequent to 30 June 2023, the board has declared an interim dividend of
12.5p per 10p share. The dividend will be paid on or after 3 November 2023 to
those shareholders on the register at the close of business on 13 October
2023.
Note 5 Acquisition
On 6 March 2023, the Group acquired 100% of the shares in two Indonesian
companies, PT Teunggulon Raya and PT Dharma Agung for gross consideration of
US$15.5 million. The companies have 2,100 hectares planted with oil palm, and
all of the planted areas are fully titled, with long leaseholds already
established. The planted land is close to the Group's Simpang Kiri estate in
Aceh province, northern Sumatra.
The transaction has been treated as an asset acquisition, based on the
concentration test guidelines in IFRS 3. Net consideration of US$11.0 million
was paid, made up of assets acquired of US$15.5 million and liabilities
assumed of US$4.5 million. Of the assets acquired, US$15.0 million related
to the planted hectarage.
Note 6 Share capital
30 June 30 June 31 December 30 June 30 June 31 December
2023 2022 2022 2023 2022 2022
Number Number Number US$'000 US$'000 US$'000
Shares of 10p each
At 1 January 54,230,888 54,696,253 54,696,253 9,179 9,232 9,232
Issued 50,000 30,000 30,000 6 4 4
Redeemed (492,792) (69,604) (495,365) (61) (8) (57)
At period end 53,788,096 54,656,649 54,230,888 9,124 9,228 9,179
Note 7 Analysis of movements in cash flow
6 months ended 6 months ended Year ended
30 June 30 June 31 December
2023 2022 2022
US$'000 US$'000 US$'000
Operating profit 23,378 61,701 101,586
Biological (gain)/loss (1,025) (233) 1,431
Disposal of property, plant and equipment 1 242 845
Release of deferred profit (36) (16) (40)
Depreciation of property, plant and equipment 11,840 10,968 21,931
Amortisation of intangible assets 90 83 171
Retirement-benefit obligation 115 (83) (586)
Share-based payments 119 272 420
Dividends from associated companies - - 2,656
Operating cash flows before movements
in working capital 34,482 72,934 128,414
Increase in inventories (5,455) (14,355) (1,358)
Decrease in receivables 5,005 11,575 11,864
Increase/(decrease) in payables 1,107 (435) (6,752)
Cash generated by operating activities 35,139 69,719 132,168
Income tax paid (13,045) (17,923) (27,149)
Interest paid (1,683) (1,154) (2,731)
Net cash generated by operating activities 20,411 50,642 102,288
Note 8 Exchange rates
30 June 30 June 31 December
2023 2022 2022
US$1=Indonesian Rupiah - average 15,053 14,452 14,853
- period end 14,993 14,898 15,568
US$1=Malaysian Ringgit - average 4.46 4.27 4.40
- period end 4.67 4.41 4.41
£1=US Dollar - average 1.24 1.30 1.24
- period end 1.27 1.21 1.20
Note 9 Post balance-sheet event
On 7 September 2023, the Group announced that it had signed a conditional
agreement to acquire a further 8,350 planted hectares in East Kalimantan
(inclusive of 1,686 scheme-smallholder hectares), for a price of US$60
million, representing US$9,000 per planted Group-owned hectare. The crop from
the majority of these planted hectares will be available to supply the Group's
existing mills at Kota Bangun, increasing the utilisation and efficiency of
the milling operations there. Like the purchase at Simpang Kiri in March 2023,
this acquisition is fully aligned with the Group's long-standing strategy to
add additional planted hectarage around its existing operations.
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