Half-year Report

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 

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 

22,400 

52,000 


408,100 

(5)

430,400 

905,400 

Scheme-smallholder crops





Kota Bangun

46,500 

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 

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 

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 

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 

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 

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 

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 

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 

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 CO2 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 CO2 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 

176,600 

Independent crops purchased

267,100 

37 

195,600 


1,039,900 

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

134,469 

170,282 

326,917 

Cost of sales


(111,331)

(105,516)

(217,707)

Gross profit

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

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

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

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 

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

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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