AI assistant
M.P. EVANS GROUP PLC Earnings Release 2021
7798_er_2022-03-22_c01eb96d-66a2-487f-9467-e9ca938a60a7.html
Earnings Release
Open in viewerOpens in your device viewer
National Storage Mechanism | Additional information 
RNS Number : 5119F
M. P. Evans Group PLC
22 March 2022
M.P.EVANS GROUP PLC
M.P.Evans Group PLC ("MP Evans", "the Group" or "the Company"), the producer of sustainable Indonesian palm oil, announces its results for the year ended 31 December 2021.
The Group's 2021 annual report is available on its website at www.mpevans.co.uk .
Highlights
Financial
− Profit for the year up by 314% to US$91.8 million (2020 US$22.2 million)
− Operating profit up by 266% to US$114.6 million (2020 US$31.3 million)
− Average mill-gate price for Group CPO up by 37% to US$810 per tonne (US$591 per tonne)
− Sustainability premia increased to US$4.3 million (2020 US$2.6 million)
− Reduction in net debt to US$5.4 million (2020 US$78.1 million)
− Basic EPS up by 296% to 115.6 pence (2020 - 29.2 pence)
− 59% increase in normal dividend for the year with proposed final dividend of 25p per share (2020 - 17p per share)
− Special dividend of 5p per share paid on Malaysian land sale
Operational
− Total crop processed up 13% to 1.4 million tonnes
− 100% of Group and scheme-smallholder crop grown to sustainability standards
− 55% of total output currently certified sustainable pending formal certification of newer mills
− Group crops up to 810,000 tonnes, a 12% increase
− Planting at youngest estate, Musi Rawas, exceeded 9,000 hectares
− Crude-palm-oil production up 15% to 313,000 tonnes
− New Group mill at Bumi Mas began production in August 2021
Group value
− Group equity value of £12.65 per share at 31 December 2021
Current trading
− Seasonal, 10%, downturn in crop in early 2022: recovery to long-term growth pathway expected as year progresses
− Significant increase in palm-oil price in same period, average mill-gate US$1,050
− Strength in price partly attributable to restricted vegetable oil supply due to tragic events in Ukraine
− Year-end net debt eliminated: net cash US$27 million by mid-March
Commenting on the results, Peter Hadsley-Chaplin, executive chairman of MP Evans, said: "2021 has been an excellent year for the Group. Crop and production have risen further in line with our long-term strategic plans, whilst the palm-oil market has gone from strength to strength. Profit and cash generation have risen sharply, with retained profit of US$91.8 million, and the Group's net debt almost wholly eliminated by the year end.
The Group recently paid a special dividend of 5p per share in relation to the completed sale of the Group's Bertam Estate in Malaysia and the board now recommends a final dividend of 25p per share, bringing total normal dividends in respect of 2021 up to 35p per share. This is a notable increase from the total of 22p paid in respect of the previous year, and marks another significant step in the Group's progressive dividend policy."
Enquiries:
| M.P.Evans Group PLC | +44 (0)20 7796 4133 on 22 March 2022 only |
| Thereafter +44 (0)1892 516333 | |
| Peter Hadsley-Chaplin, Chairman | |
| Matthew Coulson, Chief executive | |
| 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 | |
| Elfie Kent Francis Kerrigan |
An analysts' meeting will be held today at 09.30 at the offices of Hudson Sandler, 25 Charterhouse Square, London EC1M 6AE, 020 7796 4133.
Results
The Group delivered a record gross profit for the year of US$103.6 million, treble the previous year's result. This significant achievement was chiefly attributable to a further increase in crops and production and was supported by the strong palm-oil prices in the year. Production rose as the Group reaped the benefits from the maturing of its Indonesian oil-palm estates. The Group also recognised a one-off profit of US$13.9 million on disposal of its 70-hectare Bertam Estate land in Malaysia. Earnings per share were 115.6 pence, a significant increase on the 29.2 pence in 2020. This has translated into substantial cash generation, with cash generated by operating activities of US$109 million. It has supported the Group's ongoing capital investment programme, the reduction of net debt from US$78 million to US$5 million, and is supporting the Group's acquisition programme. Furthermore, it forms the basis for increasing shareholder returns.
Dividend
An interim dividend of 10p per share (2020 - 5p per share) was paid on 5 November 2021, and the board is recommending a final dividend of 25p per share (2020 - 17p per share). This represents an increase of 59% in the normal dividend for the year to a total of 35p, following a 24% increase in the previous year. In addition, the Company has already paid a 5p special dividend in February 2022 connected to the Bertam Estate land sale which completed in October 2021.
The board intends, wherever possible, to continue the Group's long-term trend of increasing dividends, which have accelerated in recent years. The board believes that the projected increases in both crop and production form a sound basis for further dividend increases. Debt fell substantially in 2021 as cash generation increased.
Palm-oil market
The CPO price followed an upward pattern for the majority of the year, ending at US$1,305 per tonne cif Rotterdam in response to recovering demand for palm oil combined with some continuing restrictions on supply, particularly relating to labour controls in Malaysia. 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 2021, the average mill-gate price received for the Group's CPO was US$810 per tonne, 37% higher than the US$591 per tonne in 2020.
Prices for palm kernels also increased in 2021, reflecting stronger demand for palm-kernel oil and an ongoing shortage of coconut oil. The Group's palm kernels sold for an average price of US$533 per tonne in the year, 69% higher than the US$316 per tonne in 2020.
Strategic developments
The Group acts responsibly at all times, whilst striving for excellence in all its operations. It is focused on growth for the long term, and delivering increasing yield to its shareholders. The Group's strategy continues to centre on the development, maintenance and expansion of sustainable oil-palm plantations in Indonesia, providing investment for the long term, supporting the establishment of well-run smallholder schemes for the benefit of the local community, and providing high-quality working environments for the Group's workforce.
The Group continues to invest in its milling capacity, and at the end of 2021 had five operational palm-oil mills. The Group's fifth mill was completed during 2021 at Bumi Mas, and started processing the increasing crop there, as well as taking in independent crop at the end of the year. Construction work has already begun on the Group's sixth mill, being built at Musi Rawas, which is expected to start processing Group crop around the end of 2022. Alongside development of the core milling facility, the Group also constructs composting and biogas facilities as part of its sustainability and zero-waste commitment.
The Group is actively exploring the acquisition of new land. At Kota Bangun, East Kalimantan, the board is engaged in extending the Group's area from the currently-planted 15,200 hectares to bring the project size closer to the equivalent of two 10,000-hectare units. Similarly in Aceh, the Group is assessing a potential acquisition of new land close to its Simpang Kiri estate which, if acquired, may justify building a mill to process the larger combined crop.
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. Certified sustainable CPO production increased to 173,600 tonnes in 2021 representing 55% (2020 - 143,900 tonnes representing 53%) of total output. The Group continues to target 100% certified production, and will see the proportion of its certified output increase both as newly constructed mills achieve accreditation as certified producers, and as additional milling capacity is introduced.
The Group received US$4.3 million in sustainability premia during 2021, significantly higher than the US$2.6 million achieved in the previous year. CPO and PK were sold in the year with both RSPO and ISCC certifications dependent on demand and where the best premia could be achieved. The average premium for CPO when sold as certified oil was US$17.40 per tonne (2020 US$13.30) and PK premia increased substantially in the year, reaching approximately US$85 per tonne by year end, resulting in an average when sold as certified during the year of US$55.20 per tonne (2020 US$25.20).
Operational developments
Crop increased at all the Group's estates during 2021, with an overall rise of 12% to 809,700 tonnes. Similarly, crop from associated scheme-smallholder areas, attached to some of the Group's estates, rose across the board, by a total of 19% to 229,300 tonnes. To maximise the utilisation of its milling capacity, the Group also purchased 327,200 tonnes from outside suppliers, 13% more than in 2020, resulting in total crop processed of 1,366,200 tonnes (2020 - 1,207,000 tonnes). These increases are in line with the Group's plans and demonstrate the continuing benefits of the Group's long-term investment in its Indonesian oil-palm projects.
| 2021 | Increase/ (decrease) |
2020 | |
| Tonnes | % | Tonnes | |
| Crop | |||
| Own crops | |||
| Kota Bangun | 194,300 | 4 | 186,400 |
| Bangka | 152,300 | 19 | 127,500 |
| Pangkatan group | 179,000 | 5 | 170,300 |
| Bumi Mas | 165,700 | 7 | 154,300 |
| Musi Rawas | 69,400 | 56 | 44,500 |
| Simpang Kiri | 49,000 | 19 | 41,300 |
| 809,700 | 12 | 724,300 | |
| Scheme-smallholder crops | |||
| Kota Bangun | 86,300 | 6 | 81,500 |
| Bangka | 80,800 | 25 | 64,400 |
| Bumi Mas | 29,900 | 11 | 26,900 |
| Musi Rawas | 32,300 | 60 | 20,200 |
| 229,300 | 19 | 193,000 | |
| Independent-smallholder crop purchased | |||
| Kota Bangun | 210,600 | 48 | 142,500 |
| Bangka | 78,200 | (31) | 112,800 |
| Pangkatan group | 35,900 | 4 | 34,400 |
| Bumi Mas | 2,500 | - | - |
| 327,200 | 13 | 289,700 | |
| Total crop | 1,366,200 | 13 | 1,207,000 |
The average extraction rate achieved by the Group's mills has increased in the year, from 23.1% in 2020, to 23.3%. The main reason is a particularly strong performance at the Bangka mill, where the extraction rate increased by almost 1%. This reflects the excellent work achieved by both the estate and mill teams working together, helped by a reduction in the proportion of outside supply, which is not of the same quality as that harvested from the Group's own areas. Also of note is the rate of 22.5% achieved at the Rahayu mill at Kota Bangun from almost exclusively outside supply, and 22.8% at Bumi Mas in only the first few months of operation.
| Increase/ | |||
| 2021 | (decrease) | 2020 | |
| Production | Tonnes | % | Tonnes |
| Crude palm oil | |||
| Kota Bangun | 114,400 | 19 | 96,500 |
| Bangka | 74,200 | 7 | 69,600 |
| Pangkatan group | 48,600 | 5 | 46,100 |
| Bumi Mas with mill | 20,800 | - | - |
| 258,000 | 22 | 212,200 | |
| Bumi Mas pre mill | 23,100 | (38) | 37,400 |
| Musi Rawas | 20,800 | 58 | 13,200 |
| Simpang Kiri | 11,000 | 24 | 8,900 |
| 54,900 | (8) | 59,500 | |
| 312,900 | 15 | 271,700 | |
| Palm kernels | |||
| Kota Bangun | 22,700 | 18 | 19,300 |
| Bangka | 17,800 | 5 | 16,900 |
| Pangkatan group | 11,300 | 5 | 10,800 |
| Bumi Mas with mill | 3,400 | - | - |
| 55,200 | 17 | 47,000 | |
| Bumi Mas pre mill | 5,000 | (42) | 8,600 |
| Musi Rawas | 4,700 | 62 | 2,900 |
| Simpang Kiri | 2,200 | 16 | 1,900 |
| 11,900 | (11) | 13,400 | |
| 67,100 | 11 | 60,400 | |
| Extraction rates | % | % | % |
| Crude palm oil | |||
| Kota Bangun - Bumi Permai | 23.8 | - | 23.8 |
| Kota Bangun - Rahayu | 22.5 | 4 | 21.6 |
| Bumi Mas | 22.8 | - | - |
| Bangka | 23.8 | 4 | 22.9 |
| Pangkatan group | 22.6 | - | 22.5 |
| 23.3 | 1 | 23.1 | |
| Bumi Mas | 21.6 | 4 | 20.7 |
| Musi Rawas | 20.4 | - | 20.4 |
| Simpang Kiri | 22.5 | 5 | 21.5 |
| Palm kernels | |||
| Kota Bangun - Bumi Permai | 4.9 | - | 4.9 |
| Kota Bangun - Rahayu | 4.2 | 5 | 4.0 |
| Bumi Mas | 3.7 | - | - |
| Bangka | 5.7 | 4 | 5.5 |
| Pangkatan group | 5.3 | - | 5.3 |
| 5.0 | (2) | 5.1 | |
| Bumi Mas | 4.7 | - | 4.7 |
| Musi Rawas | 4.6 | - | 4.6 |
| Simpang Kiri | 4.5 | - | 4.5 |
Planting restarted in the middle of the year at the Musi Rawas project, once the RSPO had formally confirmed that the Group continued to operate in compliance with all of their requirements, as revised and enhanced. Since the restart, the Group has planted a further 935 hectares for itself and the scheme smallholders bringing the total planted area to just over 9,000 hectares. It remains the Group's intention to plant a minimum total of 10,000 hectares at Musi Rawas.
At the end of 2021, the Group managed 52,600 hectares of oil palm on behalf of itself and its scheme smallholders. The effective ownership of planted oil palm hectarage by the Group's shareholders, taking account of minority-shareholder interests, amounted to 38,300 hectares.
Group valuation
The Group's value per share increased during the year to £12.65, based on an independent valuation at the end of the year, and allowing for the Group's other assets and liabilities. This reflected the ongoing development of the estates as areas continued to mature and crops increased, supported by the strength of the market, along with the increasing strength of the Group balance sheet.
Share buyback authority
Given the recent discount of the Group's share price below the independent valuation, and the Group's strongly cash generative nature, the directors are seeking authority to reinstate a programme of share buybacks at the forthcoming AGM.
Current trading and prospects
Total crop processed was 10% lower than last year in the first two months of 2022, mainly due to crop seasonality. However, the Group expects the long-term trend of increasing crop to reassert itself as the year progresses. The lower crops in the early part of the year were more than compensated for by higher prices, and the Group has continued to be highly cash generative. Having started the year with net debt of US$5 million, by mid-March 2022, the Group had reached a net cash position of US$27 million.
| 2 months ended | 2 months ended | ||
| 28 February 2022 | Decrease | 28 February 2021 | |
| Tonnes | % | Tonnes | |
| Own crops | 116,900 | (6) | 124,200 |
| Smallholder crop | 35,000 | (9) | 38,300 |
| Outside crop purchased | 44,300 | (19) | 54,400 |
| 196,200 | (10) | 216,900 |
As reported above, CPO prices were on a largely upward trend in 2021, and cif Rotterdam prices averaged US$1,195 per tonne for the year, whilst the Group's average mill-gate prices for its sales were US$810 per tonne. The market has strengthened further in early 2022, with cif Rotterdam prices recently reaching historic highs of over US$1,900 per tonne, partly in response to the distressing events in Ukraine and the consequent pressure on global vegetable oil supplies. During the first two months of the year, the Group's average tender price when selling its CPO has been approximately US$1,050 per tonne. As announced on 18 March 2022, the Indonesian government has increased its export levy by up to US$200 per tonne. Nonetheless, strong mill-gate prices of over US$1,050 are still being achieved by the Group.
The ongoing investment at Musi Rawas has progressed well in the early part of 2022. New planting is continuing, and development of the palm-oil mill there remains on schedule in support of the Group's strategic aims. The Group continues to pursue new acquisition opportunities.
The board remains firmly of the view that sustainable palm oil, as a high yielding and low-cost product, will continue to offer attractive returns, and that prospects for the Group remain bright.
Peter Hadsley-Chaplin
Chairman
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2021
| 2021 | 2020 | |
| US$'000 | US$'000 | |
| Continuing operations | ||
| Revenue | 276,592 | 174,510 |
| Cost of sales | (172,979) | (139,755) |
| Gross profit | 103,613 | 34,755 |
| Gain on biological assets | 1,771 | 682 |
| Profit on sale of land | 13,946 | - |
| Foreign-exchange loss | (820) | (1,068) |
| Other administrative expenses | (5,380) | (4,587) |
| Other income | 1,426 | 1,539 |
| Operating profit | 114,556 | 31,321 |
| Finance income | 645 | 527 |
| Finance costs | (2,699) | (3,408) |
| Profit before tax | 112,502 | 28,440 |
| Tax on profit on ordinary activities | (23,228) | (7,692) |
| Profit after tax | 89,274 | 20,748 |
| Share of associated companies' profit after tax | 2,508 | 1,421 |
| Profit for the year | 91,782 | 22,169 |
| Attributable to: | ||
| Owners of M.P. Evans Group PLC | 86,406 | 20,371 |
| Non-controlling interests | 5,376 | 1,798 |
| 91,782 | 22,169 | |
| US cents | US cents | |
| Continuing operations | ||
| Basic earnings per 10p share | 158.4 | 37.4 |
| Diluted earnings per 10p share | 157.9 | 37.3 |
| Pence | Pence | |
| Basic earnings per 10p share | ||
| Continuing operations | 115.6 | 29.2 |
CONSOLIDATED BALANCE SHEET
As at 31 December 2021
| Company number: 1555042 | ||
| 2021 | 2020 | |
| US$'000 | US$'000 | |
| Non-current assets | ||
| Goodwill | 11,767 | 11,767 |
| Other intangible assets | 1,222 | 1,381 |
| Property, plant and equipment | 401,005 | 390,642 |
| Investments in associates | 13,242 | 22,154 |
| Investments | 65 | 67 |
| Deferred-tax asset | 3,602 | 5,046 |
| Trade and other receivables | 16,618 | 10,917 |
| 447,521 | 441,974 | |
| Current assets | ||
| Biological assets | 4,520 | 2,749 |
| Inventories | 21,754 | 11,617 |
| Trade and other receivables | 41,892 | 48,620 |
| Current-tax asset | 2,522 | 3,968 |
| Current-asset investments | - | 334 |
| Cash and cash equivalents | 65,609 | 27,222 |
| 136,297 | 94,510 | |
| Total assets | 583,818 | 536,484 |
| Current liabilities | ||
| Borrowings | 20,531 | 39,605 |
| Trade and other payables | 31,200 | 26,039 |
| Current-tax liability | 12,219 | 6,003 |
| 63,950 | 71,647 | |
| Net current assets | 72,347 | 22,863 |
| Non-current liabilities | ||
| Borrowings | 50,517 | 66,079 |
| Trade and other payables | - | 38 |
| Deferred-tax liability | 11,417 | 10,529 |
| Retirement-benefit obligations | 12,886 | 14,051 |
| 74,820 | 90,697 | |
| Total liabilities | 138,770 | 162,344 |
| Net assets | 445,048 | 374,140 |
| Equity | ||
| Share capital | 9,232 | 9,204 |
| Other reserves | 55,467 | 55,090 |
| Retained earnings | 366,825 | 300,117 |
| Equity attributable to the owners of | ||
| M.P. Evans Group PLC | 431,524 | 364,411 |
| Non-controlling interests | 13,524 | 9,729 |
| Total equity | 445,048 | 374,140 |
CONSOLIDATED CASH-FLOW STATEMENT
For the year ended 31 December 2021
| 2021 | 2020 | |
| US$'000 | US$'000 | |
| Net cash generated by operating activities | 92,272 | 39,598 |
| Investing activities | ||
| Purchase of property, plant and equipment | (32,510) | (41,409) |
| Purchase of intangible assets | (8) | (113) |
| Interest received | 316 | 108 |
| Decrease in bank deposits treated as current-asset | ||
| investments | 334 | 826 |
| Decrease in receivables from smallholder co-operatives | 17,630 | 3,886 |
| Proceeds on disposal of property, plant and equipment | 15,125 | 732 |
| Net cash from/(used by) investing activities | 887 | (35,970) |
| Financing activities | ||
| New borrowings | - | 24,581 |
| Repayment of borrowings | (34,636) | (13,307) |
| Lease liability payments | (218) | (209) |
| Dividends paid to Company shareholders | (20,527) | (12,105) |
| Dividends paid to non-controlling interest | (1,64) | (89) |
| Issue of Company shares | 827 | - |
| Buy-back of Company shares | - | (1,155) |
| Net cash used by financing activities | (54,718) | (2,284) |
| Net increase in cash and cash equivalents | 38,441 | 1,344 |
| Net cash and cash equivalents at 1 January | 27,222 | 25,947 |
| Effect of foreign-exchange rates on cash and cash | ||
| equivalents | (54) | (69) |
| Cash and cash equivalents at 31 December | 65,609 | 27,222 |
Notes
1. Dividends paid and proposed
| US$'000 | US$'000 | |
| 2021 interim dividend - 10p per 10p share (2020 interim dividend 5.00p) | 7,377 | ,511 |
| 2020 final dividend - 17p per 10p share (2019 final dividend 12.75p) | 13,150 | 8,594 |
| 20,527 | 12,105 |
Following the year end, the board has proposed a final dividend for 2021 of 25p per 10p share, amounting to US$18.0 million.
| 2021 | 2020 | |
| Ex-dividend date | 28 April 2022 | 22 April 2021 |
| Record date | 29 April 2022 | 23 April 2021 |
| Dividend payable on or after | 17 June 2022 | 18 June 2021 |
2. Basic and diluted earnings per share
The calculation of earnings per 10p share is based on:-
| 2021 | 2020 | |||
| 2021 | Number | 2020 | Number | |
| US$'000 | of shares | US$'000 | of shares | |
| Profit for the year attributable to the owners | ||||
| of M.P. Evans Group PLC | 86,406 | 20,371 | ||
| Average number of shares in issue | 54,564,864 | 54,478,518 | ||
| Diluted average number of shares in issue* | 54,710,139 | 54,667,409 |
*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 2021 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 2021 annual report is available on the Group's website and will be despatched to shareholders on or before 31 March 2022. Printed copies of the Group's 2021 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 10 June 2022.
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 [email protected] or visit 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.
END
FR JBMRTMTTTBJT