TIDMMPE
RNS Number : 5845T
M. P. Evans Group PLC
21 March 2023
M.P. EVANS GROUP PLC
M.P.Evans Group PLC ("MP Evans", "the Group" or "the Company"),
producer of sustainable Indonesian palm oil, announces its results
for the year ended 31 December 2022.
The Group's 2022 annual report is available on its website at
www.mpevans.co.uk .
Highlights
Financial
- Gross profit for the year up by 5% to US$109.2 million (2021
US$103.6 million)
- Operating profit down by 11%* to US$101.6 million (2021
US$114.6 million)
- Average mill-gate price for Group crude palm oil ("CPO") up by
5% to US$854 per tonne (2021 US$810 per tonne)
- Sustainability premia increased to US$7.5 million (2021 US$4.3
million)
- Operating cash generation up by 21% to US$132.2 million (2021
US$109.2 million)
- Net cash at year end US$33.5 million (2021 net debt of US$5.4
million)
- Basic EPS down by 7%* to 108.0 pence (2021 - 115.6 pence)
- 21% increase in normal dividend for the year to 42.5p per
share (2021 - 35p per share) with proposed final dividend of 30p
per share (2021 final dividend 25p per share)
*2021 results benefited from one-off gain on land sale of
US$13.9 million
Operational
- Total crop processed up 11% to 1.5 million tonnes
- 100% of Group and scheme-smallholder crop grown to
sustainability standards
- 64% of total output currently certified sustainable, up from
55% in 2021
- Group crops up to 905,000 tonnes, a 12% increase
- Planting at youngest estate, Musi Rawas, approaching
10,000-hectare target
- Crude-palm-oil production up 9% to 342,000 tonnes
Post year end
- Group's sixth palm-oil mill, at Musi Rawas, started production
in February 2023
- Further 2,100 planted hectares acquired close to Simpang Kiri
estate in March 2023
Commenting on the results, Peter Hadsley-Chaplin, executive
chairman of MP Evans , said: "The Group has produced another set of
excellent operational and financial results. Crop and production
have increased once again and, as we celebrate our 150-year
anniversary, we have also reached the milestone of processing 1.5
million tonnes of fresh fruit bunches. The Group remains focused on
long-term and sustainable growth, and has both acquired further
planted hectarage and started production at another Group palm-oil
mill since the end of the year.
Profit and cash generation have remained strong, the Group has
eliminated net debt, and now has net funds in place to support
continued investment and shareholder returns. The board is
recommending a final dividend of 30p per share, bringing total
dividends for the year to 42.5p per share, up more than 20% from
the 35p normal dividends paid in respect of the previous year, and
a further step forward in the Group's long-standing progressive
dividend policy."
Enquiries:
M.P. Evans Group PLC +44 (0)20 7796 4133 on 21 March
2023 only
Thereafter +44 (0)1892 516333
Peter Hadsley-Chaplin, Chairman
Matthew Coulson, Chief executive
Luke Shaw, Chief financial officer
Peel Hunt LLP (Nomad and joint
broker) +44 (0)20 7418 8900
Dan Webster, Andrew Clark, Lalit
Bose
finnCap (Joint broker) +44 (0)20 7220 0500
Tim Redfern, Harriet Ward
Hudson Sandler (Financial PR) +44 (0)20 7796 4133
Charlie Jack, Francis Kerrigan,
Amelia Craddock
An analysts' meeting will be held today at 9.30am at the offices
of Hudson Sandler, 25 Charterhouse Square, London EC1M 6AE, 020
7796 4133.
Results
The Group achieved a gross profit of US$109.2 million, higher
than the US$103.6 million recorded in 2021, representing an
all-time record. Average palm-oil prices were particularly strong
once again in 2022 and these, combined with an increase in
production, offset some inflationary cost pressures, most notable
in the fertiliser inputs required to maintain healthy and
productive palms across our estates. Earnings per share were
108.0p, a little lower than the 115.6p in 2021, which benefited
from the one-off profit of US$13.9 million from the sale of
non-core land in Malaysia. The Group has continued to be
significantly cash generative, with net operating cash generated of
US$102.3 million in the year, enabling the Group to continue with
capital investment, eliminate net debt, and prioritise progressive
shareholder returns.
Dividend
An interim dividend of 12.5p per share (2021 - 10p per share)
was paid on 4 November 2022, and the board is recommending a final
dividend of 30p per share (2021 - 25p per share). This represents
another year of increasing normal dividends, up by 7.5p from 2021,
and a substantial increase of 93% from the amount paid two years
ago.
Dividends have accelerated in recent years as the Group's
operational cash flows have strengthened due to the increasing
maturity of the Group's operations. The Group has an unbroken track
record, spanning more than thirty years, of maintaining or
increasing dividends, and the anticipated trend of increasing crop
and production forms a sound basis for further dividend
increases.
150-year anniversary
During 2023 the Group is proud to be marking its 150-year
anniversary, having traced its origins back to the early 1870s. The
Group is holding several celebratory events, both in Indonesia and
in the UK during the year, including an AGM at Mansion House in
London followed by a celebratory lunch, to which shareholders are
invited. Places for the lunch are limited and registration is
required. Further information is included in the investor pages of
the Group's website.
Palm-oil market
CPO prices were at historically high levels in the first half of
2022, reaching a peak of almost US$2,000 per tonne cif Rotterdam
following the outbreak of war between Ukraine and Russia, and
concern over reductions in sunflower oil supplies from Ukraine.
Pricing moderated somewhat in the second half of the year, but palm
oil was attractive given the, at times, wide discount to soya oil
of up to US$400 per tonne. The Group does not receive the full
benefit of the high quoted CPO prices. Its net mill-gate price is
received on a tender basis, which is after adjustments to take
account of the Indonesian export tax and levy, as well as transport
and insurance costs. Over the course of 2022, the average mill-gate
price received for the Group's CPO was US$854 per tonne, 5% higher
than the US$810 per tonne in 2021.
Prices for palm kernels also increased in 2022, particularly in
the early part of the year, following a similar pattern to CPO
pricing. The Group's palm kernels sold for an average price of
US$611 per tonne in the year, 15% higher than the US$533 per tonne
in 2021.
Strategic developments
During 2022, the Group continued to execute its principal
activity, being the responsible ownership, management and
development of sustainable oil-palm estates in Indonesia. Alongside
its own projects, the Group also manages and develops
scheme-smallholder areas attached to those estates. The Group's
objective is to continue increasing both its own crop and that from
its scheme smallholders, whilst also increasing its own milling
capacity, thereby increasing its output of certified sustainable
palm oil. As Group areas mature, its strategy is to increase the
planted hectarage controlled by it. Milling its own crop and that
of its scheme smallholders in its own mills enables the Group to
deploy its operational expertise to greatest effect with the aim of
generating stronger returns, allowing shareholders to receive
sustained increases in dividends.
Throughout the course of 2022, the Group had five operational
palm-oil mills, with a sixth under construction at Musi Rawas. The
mill at Musi Rawas opened in February 2023 and will now process all
of the crop from that estate and start to take in additional crop
from independent suppliers to maximise its utilisation. All the
Group's palm-oil mills are accredited as certified sustainable
producers as soon as possible after commissioning, although it can
take time to complete the necessary independent audit and approval
checks. All of the Group's ffb, and that of its scheme
smallholders, are grown to the same high standards and in a
sustainable way.
Following the year end, the Group has been successful in
acquiring an additional 2,100 planted hectares close to its estate
at Simpang Kiri in Aceh Province in northern Sumatra. This is in
line with the Group's strategy of continuing to increase its
planted area through the acquisition of further hectarage,
initially within the vicinity of its existing projects. It is
likely that, in time, the Group will build a further palm-oil mill
to process the fruit from this enlarged estate. After the
acquisition at Simpang Kiri, the Group remains committed to its
growth strategy, and a number of further projects remain under
review.
Sustainability
The Group is committed to the production of certified
sustainable palm oil, and sustainability is at the core of its
strategic and operational decision-making. All the Group's estates
are developed and managed sustainably, but independent
certification enabling the sale of the Group's production as
sustainable palm oil is awarded to the Group's mills. Certified
sustainable sales rose significantly in 2022 to almost two thirds
of the total, an increase of approximately 50,000 tonnes from the
previous year. As the Group continues to grow, by adding milling
capacity, maximising the yield from its existing areas and seeking
additional sustainably managed areas to provide further Group crop
for those mills, its ambition is to continue elevating its
sustainable output towards 100%.
The Group received sustainability premia of US$7.5 million (2021
US$4.3 million), another increase reflecting both the demand for
certified sustainable production and the Group's ability to deliver
more of its own certified output. CPO and palm kernels ("PK") are
sold with both RSPO and ISCC certifications depending on demand and
where the best premia can be achieved. The average premia for CPO
when sold as certified oil was US$16.90 per tonne (2021 US$17.40),
whilst demand for sustainable PK was particularly strong in 2022
following high demand for sustainably sourced cosmetic products,
with average premia for PK sold as certified up to US$91.80 per
tonne (2021 US$55.20).
Operational developments
The total crop processed by the Group increased in the year to
1,511,700 tonnes (2021 - 1,366,200 tonnes), an overall increase of
11%. This was in line with the Group's growth plans, and a result
of both the long-term investment made by the Group in Indonesian
oil palm and the commitment to operational excellence by the
Group's agronomic management teams.
Increase/
2022 (decrease) 2021
Tonnes % Tonnes
Crop
Own crops
Kota Bangun 219,400 13 194,300
Bangka 167,200 10 152,300
Pangkatan group 192,500 8 179,000
Bumi Mas 166,700 1 165,700
Musi Rawas 107,600 55 69,400
Simpang Kiri 52,000 6 49,000
-------------------------------- ---------- ----------
905,400 12 809,700
-------------------------------- ---------- ----------
Scheme-smallholder crops
Kota Bangun 91,000 5 86,300
Bangka 91,200 13 80,800
Pangkatan group 900 - -
Bumi Mas 30,600 2 29,900
Musi Rawas 52,000 61 32,300
-------------------------------- ---------- ----------
265,700 16 229,300
-------------------------------- ---------- ----------
Independent crop purchased
Kota Bangun 191,700 (9) 210,600
Bangka 62,800 (20) 78,200
Pangkatan group 39,100 9 35,900
Bumi Mas 47,000 1,780 2,500
340,600 4 327,200
-------------------------------- ---------- ----------
Total crop 1,511,700 11 1,366,200
-------------------------------- ---------- ----------
The Group is committed to increasing its CPO and PK production
capacity as much as possible. The Group's crops and those of its
scheme smallholders are of a high standard, and the Group seeks to
maximise the margins available to it by milling that crop and
selling the oil and kernels for itself. With the benefit of having
five Group mills operational throughout the year, total CPO
production increased by 9% to 341,700 tonnes, and PK production was
up by 10% to 73,800 tonnes.
Increase/
2022 (decrease) 2021
Production Tonnes % Tonnes
Crude palm oil
Kota Bangun 112,800 (1) 114,400
Bangka 75,100 1 74,200
Pangkatan group 53,300 10 48,600
Bumi Mas with mill 56,200 170 20,800
------------------------------------------ -------- --------
297,400 15 258,000
------------------------------------------ -------- --------
Bumi Mas pre mill - - 23,100
Musi Rawas 32,600 57 20,800
Simpang Kiri 11,700 6 11,000
------------------------------------------ -------- --------
44,300 (19) 54,900
341,700 9 312,900
------------------------------------------ -------- --------
Palm kernels
Kota Bangun 23,800 5 22,700
Bangka 18,400 3 17,800
Pangkatan group 12,200 8 11,300
Bumi Mas with mill 9,600 182 3,400
------------------------------------------ -------- --------
64,000 16 55,200
------------------------------------------ -------- --------
Bumi Mas pre mill - - 5,000
Musi Rawas 7,500 60 4,700
Simpang Kiri 2,300 5 2,200
------------------------------------------ -------- --------
9,800 (18) 11,900
------------------------------------------ -------- --------
73,800 10 67,100
------------------------------------------ -------- --------
Extraction rates % % %
Crude palm oil
Kota Bangun - Bumi Permai 23.2 (2) 23.8
Kota Bangun - Rahayu 21.2 (6) 22.5
Bangka 23.4 (2) 23.8
Pangkatan group 22.9 1 22.6
Bumi Mas 23.0 1 22.8
22.9 (2) 23.3
------------------------------------------ -------- --------
Bumi Mas - - 21.6
Musi Rawas 20.4 - 20.4
Simpang Kiri 22.5 - 22.5
------------------------------------------ -------- --------
Palm kernels
Kota Bangun - Bumi Permai 5.1 4 4.9
Kota Bangun - Rahayu 4.2 - 4.2
Bangka 5.7 - 5.7
Pangkatan group 5.2 (2) 5.3
Bumi Mas 3.9 5 3.7
4.9 (2) 5.0
------------------------------------------ -------- --------
Bumi Mas - - 4.7
Musi Rawas 4.67 2 4.6
Simpang Kiri 4.5 - 4.5
------------------------------------------ -------- --------
At Musi Rawas, planting continued throughout 2022. All planting
is performed in compliance with the environmental standards
published by the RSPO. The Group planted 585 hectares at Musi Rawas
in 2022, bringing the total planted area there to 9,600 hectares,
and the Group expects to achieve its initial target of achieving a
total planted area of 10,000 hectares during 2023.
In North Sumatra and Aceh, the Group has made significant
progress during the year on the formation of new co-operative
schemes and financing replanting of areas of oil palm for members
of those schemes. By the end of 2022, a total of 1,147 hectares had
been replanted as part of these schemes, both at Pangkatan and
Simpang Kiri. In addition, 64 hectares of the Group's own oil palm
were replanted at Pangkatan during the year.
At the end of 2022, the Group managed 54,100 hectares of planted
oil palm from its own and associated scheme-smallholder areas, 93%
of which were mature and in harvest, and the average yield per
mature planted hectare had increased to 23 tonnes.
Group valuation
An independent valuation of the Group's plantations was
performed at the end of the year, valuing the Group's planted areas
at an average of US$20,700 per hectare. After allowing for other
Group assets and liabilities, this equity value per share had
increased during the year to GBP14.98 per share. The Group did
benefit, in sterling terms, from a weaker year-end exchange rate
when compared to the position at the end of 2021, accounting for
GBP1.58 of the increase.
Current trading and prospects
The Group has made a positive start to 2023, and total crop
processed in the first two months of the year was 213,000 tonnes,
8% higher than in the first two months of 2022. The benefits of the
significant investment made by the Group in its Indonesian estates
continue to be felt, and, barring any unforeseen circumstances, the
long-term trend of increasing crop is expected to continue as the
Group moves further into 2023. The new mill at Musi Rawas began
processing Group crop in February 2023, and after a short period of
stabilisation, will soon start to take in crop from outside
suppliers, only adding further to the Group's ability to process
crop and increase production.
2 months ended Increase/ 2 months ended
28 February (decrease) 28 February 2022
2023
Tonnes % Tonnes
------------------------ --------------- ----------- ----------------
Own crops 116,300 (1) 116,900
Smallholder crop 35,100 - 35,000
Outside crop purchased 61,300 38 44,300
212,700 8 196,200
------------------------ --------------- ----------- ----------------
CPO pricing remained stable in the early part of 2023, and the
Group enjoyed mill-gate prices in a relatively narrow band around
US$750 per tonne, similar to those achieved in the latter part of
2022, although sales prices have increased above US$800 per tonne
for recent contracts. Whilst these are lower than the unusually
high prices seen in the early part of 2022, the Group remains
confident that, at these price levels, it will be able to deliver
further significant profits and cash generation.
Since the year end, the Group has announced the acquisition of
2,100 planted hectares close to its Simpang Kiri project in Aceh
Province, northern Sumatra, bringing the total planted area,
including that of associated scheme smallholders, to 4,800
hectares. Although the existing area at Simpang Kiri has been both
highly productive and profitable for many years, it has not been
worthwhile to construct our own mill there, and Group crop has been
sent for outside processing. Whilst some of the newly acquired
hectarage will require a certain amount of replanting and
rehabilitation, as crop from the combined area increases, this is
likely, in time, to warrant the construction of an additional Group
mill. At that point all of the Group's estates would have their own
mills.
Palm oil continues to be, by volume of supply and consumption,
the largest of the vegetable oils produced globally and of the
major vegetable oils is the most efficient to produce when measured
by tonnes of oil per hectare of land. The board is of the belief
that sustainably produced palm oil will continue to be in demand
for the foreseeable future, and that Group prospects therefore
remain positive.
Peter Hadsley-Chaplin
Chairman
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2022
2022 2021
US$'000 US$'000
----------------------------------------- ---------- ----------
Continuing operations
Revenue 326,917 276,592
Cost of sales (217,707) (172,979)
----------------------------------------- ---------- ----------
Gross profit 109,210 103,613
(Loss)/gain on biological assets (1,431) 1,771
Profit on sale of land - 13,946
Foreign-exchange loss (3,444) (820)
Other administrative expenses (4,614) (5,380)
Other income 1,865 1,426
----------------------------------------- ---------- ----------
Operating profit 101,586 114,556
Finance income 1,395 645
Finance costs (2,731) (2,699)
----------------------------------------- ---------- ----------
Profit before tax 100,250 112,502
Tax on profit on ordinary activities (24,073) (23,228)
----------------------------------------- ---------- ----------
Profit after tax 76,177 89,274
Share of associated companies'
profit after tax 2,184 2,508
----------------------------------------- ---------- ----------
Profit for the year 78,361 91,782
----------------------------------------- ---------- ----------
Attributable to:
Owners of M.P. Evans Group PLC 73,060 86,406
Non-controlling interests 5,301 5,376
----------------------------------------- ---------- ----------
78,361 91,782
----------------------------------------- ---------- ----------
US cents US cents
----------------------------------------- ---------- ----------
Continuing operations
Basic earnings per 10p share 133.9 158.4
Diluted earnings per 10p share 133.4 157.9
----------------------------------------- ---------- ----------
Pence Pence
----------------------------------------- ---------- ----------
Basic earnings per 10p share
Continuing operations 108.0 115.6
----------------------------------------- ---------- ----------
CONSOLIDATED BALANCE SHEET
As at 31 December 2022
Company number: 1555042
2022 2021
US$'000 US$'000
-------------------------------- -------- -------
Non-current assets
Goodwill 11,767 11,767
Other intangible assets 1,167 1,222
Property, plant and equipment 411,658 401,005
Investments in associates 11,795 13,242
Investments 61 65
Deferred-tax asset 989 3,602
Trade and other receivables 9,146 16,618
-------------------------------- -------- -------
446,583 447,521
-------------------------------- -------- -------
Current assets
Biological assets 3,089 4,520
Inventories 23,112 21,754
Trade and other receivables 32,681 41,892
Current-tax asset 2,290 2,522
Cash and cash equivalents 82,503 65,609
143,675 136,297
-------------------------------- -------- -------
Total assets 590,258 583,818
-------------------------------- -------- -------
Current liabilities
Borrowings 17,364 20,531
Trade and other payables 24,410 31,200
Current-tax liability 4,455 12,219
-------------------------------- -------- -------
46,229 63,950
-------------------------------- -------- -------
Net current assets 97,446 72,347
-------------------------------- -------- -------
Non-current liabilities
Borrowings 31,675 50,517
Deferred-tax liability 13,538 11,417
Retirement-benefit obligations 9,972 12,886
55,185 74,820
-------------------------------- -------- -------
Total liabilities 101,414 138,770
-------------------------------- -------- -------
Net assets 488,844 445,048
-------------------------------- -------- -------
Equity
Share capital 9,179 9,232
Other reserves 54,543 55,467
Retained earnings 407,460 366,825
-------------------------------- -------- -------
Equity attributable to the
owners of
M.P. Evans Group PLC 471,182 431,524
Non-controlling interests 17,662 13,524
-------------------------------- -------- -------
Total equity 488,844 445,048
-------------------------------- -------- -------
CONSOLIDATED CASH-FLOW STATEMENT
For the year ended 31 December 2022
2022 2021
US$'000 US$'000
---------------------------------------- --------- --------
Net cash generated by operating
activities 102,288 92,272
---------------------------------------- --------- --------
Investing activities
Purchase of property, plant
and equipment (33,714) (32,510)
Purchase of intangible assets (116) (8)
Interest received 622 316
Decrease in bank deposits treated
as current-asset
investments - 334
Decrease in receivables from
smallholder co-operatives 1,714 17,630
Proceeds on disposal of property,
plant and equipment 3,055 15,125
Net cash (used by)/from investing
activities (28,439) 887
---------------------------------------- --------- --------
Financing activities
Repayment of borrowings (22,009) (34,636)
Lease liability payments (38) (218)
Dividends paid to Company shareholders (28,500) (20,527)
Dividends paid to non-controlling
interest (124) (164)
Issue of Company shares 191 827
Buyback of Company shares (4,902) -
---------------------------------------- --------- --------
Net cash used by financing
activities (55,382) (54,718)
---------------------------------------- --------- --------
Net increase in cash and cash
equivalents 18,467 38,441
Net cash and cash equivalents
at 1 January 65,609 27,222
Effect of foreign-exchange rates
on cash and cash
equivalents (1,573) (54)
---------------------------------------- --------- --------
Cash and cash equivalents at
31 December 82,503 65,609
---------------------------------------- --------- --------
Notes
1. Dividends paid and proposed
US$'000 US$'000
--------------------------------------------- -------- --------
2022 interim dividend - 12.5p per 10p share
(2021 interim dividend 10p) 7,611 7,377
2021 special dividend - 5p per 10p share 3,662 -
2021 final dividend - 25p per 10p share
(2020 final dividend 17p) 17,227 13,150
--------------------------------------------- -------- --------
28,500 20,527
--------------------------------------------- -------- --------
Following the year end, the board has proposed a final dividend
for 2022 of 30p per 10p share, amounting to US$19.4 million.
2022 2021
Ex-dividend date 27 April 28 April
2022 2022
Record date 28 April 29 April
2022 2022
Dividend payable on or after 16 June 2022 17 June 2022
2. Basic and diluted earnings per share
The calculation of earnings per 10p share is based on:-
2022 2021
2022 Number 2021 Number
US$'000 of shares US$'000 of shares
---------------------------------- -------- ----------- -------- -----------
Profit for the year attributable
to the owners
of M.P. Evans Group PLC 73,060 86,406
Average number of shares
in issue 54,579,591 54,564,864
Diluted average number of
shares in issue* 54,754,110 54,710,139
---------------------------------- -------- ----------- -------- -----------
*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 2022
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 2022 annual report is available on the Group's
website and will be despatched to shareholders on or before 31
March 2023. Printed copies of the Group's 2022 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 9 June 2023.
By order of the board
Katya Merrick
Company secretary
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FR JMMRTMTATBMJ
(END) Dow Jones Newswires
March 21, 2023 03:00 ET (07:00 GMT)
Grafico Azioni MP Evans (AQSE:MPE.GB)
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