ANNUAL REPORT 2009
(cid:1) BERTAM
(cid:1) KUALA LUMPUR
(cid:1) SIMPANG KIRI
(cid:1) MEDAN
KERASAAN (cid:1)
SENNAH (cid:1) (cid:1) BILAH
(cid:1) PANGKATAN
(cid:1) SINGAPORE
SUMATRA
(cid:1) PADANG
BANGKA
ISLAND
(cid:1)
(cid:1) MUKO MUKO
(cid:1) BENGKULU
KALIMANTAN
NEW PROJECTS
(cid:1)
(cid:1)
SAMARINDA
MALAYSIA
PROPERTY
MAJORITY HELD 70 ha
MINORITY HELD 507 ha
(cid:1)
JAKARTA
JAVA
INDONESIA
OIL-PALM PLANTATIONS
M AJORITY HELD 34,000 ha
M INORITY HELD 25,000 ha
AUSTRALIA
BEEF-CATTLE FARMING
MAJORITY HELD 31,000 ha
MINORITY HELD 5,800,000 ha
Location of the Group’s properties
and those of its associates as at 30 April 2010
(cid:1) DARWIN
AREA OF NAPCo
BREEDING AND
GROWING-OUT
PROPERTIES
(cid:1) MOUNT ISA
AREAS OF NAPCo
BACKGROUNDING
PROPERTIES
NAPCo
FEEDLOT
WOODLANDS AGGREGATION (cid:1)
BRISBANE (cid:1)
SYDNEY (cid:1)
MELBOURNE
(cid:1)
We are committed to producing environmentally-
sustainable palm oil and adopting the highest
standards of animal welfare for our beef cattle
EXISTING PORTFOLIO AS AT 30 APRIL 2010
10,000 hectares of majority-held, mature
oil-palm plantations in Sumatra, Indonesia
25,000 hectares of minority-held
(equivalent to Group’s share of 9,000
hectares) mature oil-palm plantations
in Sumatra, Indonesia
Estimated 24,000 hectares of majority-
held new land in Bangka and Kalimantan,
Indonesia suitable for oil-palm
development – some 10,000 hectares
(plus 4,000 hectares of smallholders’
areas) planted to date
31,000 hectares of cattle-backgrounding
land in southern Queensland, Australia
– now being marketed for sale
LAND ASSETS BY VALUE
CONTENTS
34.4% interest in a leading Australian
cattle company, NAPCo, owning
5.8 million hectares in Queensland
and Northern Territory
70 hectares of plantation land in
Peninsula Malaysia, with real-estate-
development premium
40% share of a substantial property-
development company, Bertam Properties,
near Penang Island, Malaysia with
a land bank of some 500 hectares
Net current assets of US$37 million
as at 31 December 2009
31 DECEMBER 2009
17%
30%
53%
TARGET
30%
70%
Existing portfolio
1
2 Highlights and summary of results
4 Market information
6
Chairman’s statement
Review of the 2009 results
9
12 – Indonesian palm oil
17 – Australian beef cattle
21 – Malaysian property
23 – risk management
26 Environmental, corporate and
social responsibility
28 Board of directors
29 Report of the directors
31 Statement of directors’ responsibilities
33 Corporate governance
35 Report of the board to the shareholders
on directors’ remuneration
37 Independent auditors’ report on
the Group financial statements
39 Consolidated statement
of comprehensive income
40 Consolidated balance sheet
41 Consolidated statement
of changes in equity
42 Consolidated cash-flow statement
43 Notes to the consolidated accounts
67 Independent auditors’ report on the
parent-Company financial statements
68 Parent-Company balance sheet
69 Notes to the parent-Company
balance sheet
72 Subsidiary and associated undertakings
73 Analysis of land areas
74 5-year summary
75 Notice of meeting
77 Appendix to the notice of
the annual general meeting
(cid:0) INDONESIA (cid:0) AUSTRALIA
(cid:0) MALAYSIA
38 Consolidated income statement
79 Professional advisers and representatives
The map of the venue of the annual general meeting is shown on the inside back cover
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 1
HIGHLIGHTS2 9
FINANCIAL
INDONESIAN PALM OIL
Profit for the year US$20,710,000
(2008 US$53,596,000)
Plantation profits 12% lower at
US$13,143,000 (2008 US$14,893,000)
Earnings per share
(continuing and discontinued
operations) US cents 34.94
(2008 US cents 96.26 cents)
Dividends for the year maintained:
5.00 pence per share final
(2.00 pence interim already paid)
Palm-oil price averaged US$680 per tonne
– down on 2008’s US$941 per tonne,
but still an historically-high level
Indonesian crops of f.f.b., including
first crop from new Bangka project,
18% higher than in 2008; 9% higher
on associates’ estates
SUMMARY OF RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2009
2009 2008
US$’000
US$’000
Revenue 28,391
Gross profit 11,705
Profit on ordinary activities before taxation 15,338
Profit on ordinary activities attributable to members 18,250
Shareholders’ funds 275,498
30,387
13,834
23,447
49,789
249,178
Net cash outflow from operating activities (9,809)
US Cents
(21,724)
US Cents
Basic earnings per 10p share –
(continuing and discontinued operations) 34.94
Pence
Dividend per 10p share in respect of the year 7.00
96.26
Pence
7.00
PAGE 2
Group’s total planted area, including
its share of associates’ areas, increased
to 25,700 hectares (21,500 hectares
at end 2008)
Palm-oil market trading strongly
in 2010, currently around
US$835 per tonne
First crops from Kalimantan project
expected in second half of 2010
Widespread rainfall in Australia in late
2009 and early 2010 has benefited
Woodlands and NAPCo properties
Australian beef-cattle prices continue
to strengthen in 2010
Woodlands continues to be marketed
for sale as a non-core asset
MALAYSIAN PROPERTY AND
OTHER ASSET DISPOSALS
AUSTRALIAN BEEF CATTLE
Thai rubber factory sold in 2009
Loss on both Woodlands and associate,
NAPCo, as a result of adverse weather
in Australia
Plan to dispose of remaining, Malaysian,
assets, with expected value of some
US$50 million, at opportune time
Managing director’s statement
As anticipated, profits were lower than in 2008. Crops were
higher but palm-oil prices, although at healthy levels, could not
match the unsustainable levels seen in 2008. 2008 also included
exceptional items and significant gains from Malaysian estate
disposals. Progress continues to be made on the new oil-palm
projects. The Australian cattle businesses experienced a difficult
year with adverse weather conditions but 2010 has got off to
a good start. It remains the Group’s policy to dispose of the
remaining Malaysian assets.
“Excellent progress has been made
on our new oil-palm projects”
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 3
MARKET INFORMATION
In 2009, palm-oil prices were significantly
lower than 2008’s unsustainable record levels
but nonetheless traded at a historically-robust
average of US$680 per tonne. They have
continued to trade strongly in 2010 around
US$800 per tonne.
Australian beef-cattle prices fluctuated
in response to volatile seasonal conditions
in 2009 but have surged in 2010 following
excellent widespread rainfall and lower
herd numbers worldwide.
PALM-OIL PRICE US$ PER TONNE
Rotterdam c.i.f.
AGE PROFILE OF THE GROUP’S OIL PALMS
DISTRIBUTION OF PLANTED HECTARAGE
BY AGE INTERVAL AS AT 31 DECEMBER 2009
MAIN PRODUCERS OF PALM OIL - 2009
SUBSIDIARIES
Thousand tonnes
(cid:0) INDONESIA 20,900 (46%)
(cid:0) MALAYSIA 17,566 (39%)
(cid:0) THAILAND 1,310 (3%)
(cid:0) NIGERIA 870 (2%)
(cid:0) COLOMBIA 794 (2%)
(cid:0) OTHER COUNTRIES
3,672 (8%)
Age in years
<5
6-10
11-15
16-20
21-25
>25
MAIN USERS OF PALM OIL – 2009
Thousand tonnes
(cid:0) INDIA 6,800 (15%)
(cid:0) CHINA 6,237 (13%)
(cid:0) EU 5,630 (12%)
(cid:0) INDONESIA 4,918 (11%)
(cid:0) MALAYSIA 2,364 (5%)
(cid:0) PAKISTAN 1,797 (4%)
(cid:0) NIGERIA 1,295 (3%)
(cid:0) THAILAND 1,170 (2%)
(cid:0) USA 867 (2%)
(cid:0) OTHER COUNTRIES
15,307 (33%)
PAGE 4
0%
10
20
30
40
50
60
70
ASSOCIATES
Age in years
<5
6-10
11-15
16-20
21-25
>25
%
0
10
20
30
40
50
60
70
D
L
R
O
W
L
I
O
:
E
C
R
U
O
S
D
L
R
O
W
L
I
O
:
E
C
R
U
O
S
CROP OF OIL-PALM FRESH FRUIT BUNCHES ‘000 TONNES
MAJORITY-OWNED ESTATES IN INDONESIA (cid:0) AND MALAYSIA (cid:0)
171
2
145
17
130
33
155
156
58
67
ASSOCIATED-COMPANY ESTATES
2009
2008
2007
2006
2005
2009
2008
2007
2006
2005
380
4
350
5
347
9
351
14
322
13
20
40
60
80
100
120
140
160
180
200
220
240
260
280
300
320
340
360
380
400
Palm oil is used mainly as a cooking oil
but also in margarine, shortenings (cakes,
biscuits), soap, cosmetics, lubricants and
increasingly in bio-diesel.
Palm oil has the lowest cost of production
and is the most productive of all the major
vegetable oils. Over 5.5 tonnes per hectare
per annum can be produced, compared
with around 0.5 tonnes for its main rival,
soybean oil.
Palm oil is now the world’s largest vegetable
oil, with production in 2009 of 45.4 million
tonnes and 34.1% of the global production
of major vegetable oils. Soybean oil is the
second largest with 35.9 million tonnes and
27.0%. Palm-kernel oil accounts for a further
5.3 million tonnes (4.0%).
EASTERN YOUNG CATTLE
INDICATOR (EYCI) – WOODLANDS
100-DAY SHORTFED CATTLE
– NAPCo
A$ per kg carcass weight
A$ per kg carcass weight
Australia is the world’s largest beef exporter
with some 20% of global trade.
Australia is well placed geographically to serve
Asia – the world’s fastest-growing beef consumer.
NAPCo (34.37% held) is one of Australia’s
leading beef-cattle companies with
fifteen properties covering an area of
5.8 million hectares.
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 5
CHAIRMAN’S STATEMENT
OVERALL RESULTS
As foreshadowed in the interim report, the profit for
the year, US$20,710,000, was lower than the record
US$53,596,000 achieved in 2008. Earnings per
share (continuing and discontinued operations)
fell accordingly to 34.94 cents (2008 - 96.26 cents).
It should be noted, however, that 2008 included one-
off gains from the disposal of Malaysian plantation
assets and exceptional credits mainly relating to
negative goodwill, amounting to US$28,409,000.
Fresh fruit bunches (“f.f.b.”) crops were higher but the
exceptionally robust, unsustainable, palm-oil prices
of 2008 (average US$941/tonne) were not repeated
to the same extent. Nevertheless, the average for 2009,
at US$680/tonne, was still an historically-high price.
The biological gain in the year was similar to last year’s.
It is pleasing to note that the Group’s total planted area,
including its share of the associates’ areas, increased
to 25,700 hectares from 21,500 at the end of 2008.
The Australian beef operations, both on the Group’s
own property, Woodlands, and in the associated
company, The North Australian Pastoral Company Pty
Limited (“NAPCo”), encountered another difficult year
and losses were incurred. Despite promising rainfall
in the early part of the year, hot and dry conditions
later on affected pastures and forage crops resulting
in lower weight gains. Bertam Properties Sdn. Bhd.
(“Bertam Properties”) recorded lower profits largely
because no land was sold during the year.
DIVIDEND
The board is pleased to recommend a final dividend
of 5.00p per share which, together with the interim
dividend of 2.00p paid in November 2009, makes
7.00p for the year, the same as for 2008. A scrip-
dividend alternative is being offered this year.
STRATEGIC DEVELOPMENTS
Indonesia
Further good progress was made with planting on
the new projects in 2009, with some 5,600 hectares
(including smallholder co-operative areas) in total
planted, the largest annual planting ever achieved by
the Group. A total of nearly 13,000 hectares had been
planted by the end of 2009 – all to a high standard.
PAGE 6
The Bangka project produced its first f.f.b. crop – and
the yield achieved promises well. During the second
half of 2010, f.f.b. harvesting is expected to commence
on the new Kalimantan project. The fruit will initially
be processed by an external mill and it is anticipated
that the Group’s own mill will be commissioned
towards the end of 2011.
As referred to in the 2009 interim report, in order to
facilitate both the quicker release of land for planting
and more rapid compliance with obligations in respect
of smallholder development, it has been decided to sell
(at around cost) to the smallholder co-operative schemes
significant areas of land already developed on both the
Kalimantan and Bangka projects. The total developed
land sold, or to be sold, in this way amounted to
some 3,600 hectares at 31 December 2009. The
co-operatives will all be managed by the Group for
a fee and their f.f.b. will be processed under contract
by the Group’s palm-oil mills. After the re-ordering
of the areas in this way, the Group’s planted land
at 31 December 2009 amounted to 7,250 hectares
in Kalimantan (co-operatives 2,570 hectares) and
2,030 hectares in Bangka ( co-operatives 1,000 hectares).
A routine re-evaluation has also been undertaken of
the areas available to the Group for planting on the
Kalimantan and Bangka projects. In common with all
new oil-palm projects, the ultimate plantable area, after
excising land unsuitable for planting, conservation areas
and land where no settlement can be reached with the
local population, is established with more precision as
the development progresses. In addition, the original
expectation was that significant areas outside the Group’s
allocated land would be utilised for the co-operative
schemes. This, however, has not proved to be the case
and most of the co-operatives’ land falls within the
Group’s land area. Accordingly, the expectation now
is that 17,000 hectares will be available in Kalimantan
(plus 4,000 hectares for the co-operatives) and
7,000 hectares in Bangka (plus 4,200 hectares for the
co-operatives). Since the Group’s plantable land bank
is therefore smaller than originally anticipated, a search
for suitable new land, preferably in the vicinity of the
Kalimantan project, is being actively undertaken.
The co-operatives and the revised land area are
reviewed in more detail below under “New projects”
on page 14.
“Further good progress was made with planting
on the new projects... the largest annual planting
ever achieved by the Group”
Australia
The board continues to seek opportunities to build on
its current investment in the Australian beef-cattle sector.
It has selected NAPCo as the appropriate vehicle
through which to invest in this sector and, although
no further shares were acquired in 2009 (or in 2010),
the board will review any opportunities to acquire
additional shares as and when they arise. A number
of significant strategic initiatives have recently been
introduced at NAPCo. These include the sale of a
Channel-Country property in 2009 and the decision
to expand the company’s feedlot. They also include
a continuing programme of drilling new boreholes,
thereby increasing the cattle-carrying capacity on
the company’s premier breeding station, Alexandria.
Together, these measures improve the company’s
resilience to drought. The cost to date of the Group’s
investment in NAPCo is approximately A$8 per share
which compares favourably with the company’s net
asset value which stood at A$16.46 per share at the end
of 2009. The board continues to regard NAPCo as a
sound investment with attractive prospects for growth.
With regard to Woodlands, whilst the strategic reasons
for selling the property remain valid, it will only be sold
if an acceptable offer is received. To date, there have
been significant expressions of interest but no firm offers.
The property has benefited considerably from the
welcome rainfall of the past few months, which has
brought the pastures on markedly in the newly-improved
areas. This has substantially increased the cattle-carrying
capacity. Pending a possible sale, operations at
Woodlands are proceeding on a business-as-usual basis.
PALM-OIL ACTIVITIES AND MARKET
Palm-oil prices recovered strongly in 2009. Demand
from the traditional Asian (particularly India, which
became the largest buyer during the year) and European
buyers, was at robust levels. This, combined with
drought-affected, and therefore lower, soybean crops
in South America, resulted in strong support for the
palm-oil price.
F.f.b. crops both on the majority-owned Sumatran
estates and on the estates owned by the Indonesian
associates, were markedly ahead of 2008. Good first
yields were achieved during the year on the new
Bangka project as the initial, 2006, plantings came
into maturity.
BEEF-CATTLE ACTIVITIES AND MARKET
Prices for lighter-weight cattle, such as those fattened
on Woodlands, fluctuated during 2009 in response to
seasonal conditions but on average traded around the
middle of the range of the last three years.
Prices for the grain-finished, heavier cattle, such as
those produced by NAPCo, similarly traded around,
or a little below, the range of the last three years.
Downward pressure was felt both following fallout from
the global financial crisis and from the strengthening
Australian Dollar, which affected demand from
Australia’s traditional export markets, Japan, Korea
and the United States. There was at least some
compensating demand from Japan as a result of its
continuing ban on U.S. beef from cattle greater than
21 months old following BSE concerns.
Malaysia
The programme of disposing of the Group’s Malaysian
assets has progressed well with some US$110 million
having been realised over the last four years. The plan
is to dispose of the remaining assets, with an expected
value of approximately US$50 million, as and when
acceptable prices can be obtained. The proceeds of
the sales have been, and will continue to be, utilised
in the Group’s expansion in Indonesian palm oil and
Australian cattle.
CURRENT TRADING AND PROSPECTS
Since the end of 2009, the palm-oil price has traded
around the US$800/tonne level, and is currently at
US$835. Despite the prospect of a much higher
soybean crop in South America and generally high
stocks of palm oil, continuing strong demand from the
traditional markets of China, India, Europe and
Indonesia itself, as well as the renewed strength of
crude-oil prices, has sustained palm oil. Rubber prices
have recently hit historic highs to the benefit of the
Group’s associate, PT Agro Muko.
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 7
CHAIRMAN’S STATEMENT continued
F.f.b. crops to date on the Sumatran estates (both
majority-owned and associates) have been similar
to those of last year, whilst the crop from the new
Bangka project is increasing markedly. It is too
early to predict the likely crop for the year with
any degree of accuracy.
Following some delays in reaching compensation
settlements with smallholders, 650 hectares in total
have been planted to date on the new projects.
It is expected that the rate of planting will accelerate
as the year progresses. Work continues on the mill in
Kalimantan and the earthworks are nearing completion.
Encouragingly, prices for both the lighter- and heavier-
weight cattle, produced by Woodlands and NAPCo
respectively, have moved considerably higher in the
first few months of 2010 following welcome rainfall
in many parts of Australia and a general improvement
in world beef prices. Prospects for continuing
heightened global demand appear favourable in
the short and longer term following the significant
downsizing of the cattle herd in both Australia and
the United States (Australia’s major competitor).
The decline in cattle numbers resulted from both
the drought and the poor returns experienced
following the sharp hike in grain prices in 2008.
On average, grain-fed cattle in the United States
spend significantly longer in the feedlots than in
Australia. U.S. profit margins are therefore more
sensitive to fluctuations in the price of grain, which
provides Australia with a competitive edge.
FINANCE
It is also pleasing to report that the Group has
agreed a new RM60 million (approximately
US$18.75 million at the current rate of exchange)
facility with AmBank (Malaysia) Berhad in Malaysia,
which will be used in developing the Group’s
new projects in East Kalimantan. The loan facility
with the German development bank, Deutsche
Investitions-und Entwicklungsgesellschaft mbh (DEG)
has been terminated following its withdrawal from
the Indonesian palm-oil sector, and the US$2 million
drawn down by the Group to date will shortly be
repaid. The situation remains that the Group’s
development programme will be determined by
the funding available.
BOARD CHANGES
The proposed board changes set out in the 2009 interim
report duly took place on 1 January 2010. I should
like to take this opportunity to welcome Tristan Price
as Group finance director. I should also like, on behalf
of the board, to thank Richard Robinow who has acted
as non-executive chairman since the merger with
Bertam Holdings PLC and Lendu Holdings PLC in
2005. He ably steered the Group through the initial,
post-amalgamation, period and oversaw the first
stages of the Group’s exciting expansion in Indonesia
and Australia. We are pleased that he will be staying
on in the capacity of non-executive director.
In addition to these changes, with effect from
1 July 2010, David Wilkinson, who is based in
Malaysia, will continue as an executive director, but
in a part-time capacity. He will continue to oversee
the Group’s operations in both Malaysia and Indonesia.
ACKNOWLEDGEMENTS
As foreshadowed in the 2008 annual report, the
Group took over management of the majority-owned
Sumatran estates with effect from 1 January 2010.
I should like to take the opportunity, on behalf of the
board, to thank the directors and staff (past and present)
of PT Tolan Tiga (part of the SA SIPEF NV group) for
managing the Group’s estates for a period in excess
of 25 years. The Group will continue to have close
links with the SA SIPEF NV group as fellow shareholders
of PT Agro Muko and PT Kerasaan Indonesia.
I am sure that shareholders will join my board
colleagues and me in thanking the managers, staff
and workforces in the Group’s various operations
for their hard work during what has been another
successful year.
Peter Hadsley-Chaplin
Chairman
5 May 2010
PAGE 8
REVIEW
OF THE 2009 RESULTS
In Indonesia, average palm-oil prices for
2009 were at the historically-high level of
US$680 per tonne (Rotterdam cif) although
this was 28% lower than 2008’s US$941,
which reflected the exceptionally robust
levels achieved in that year. F.f.b. crops
were 10% higher on the established
Sumatran estates and the first crops from
the new Bangka project were harvested
and sold during the year. As a result of
the above, a gross profit of US$13,143,000
was achieved, only 12% lower than last
year’s US$14,893,000.
In Australia, lower throughput of cattle,
downward pressure on valuations of the
cattle at the year-end, disappointing crops
and lower world grain prices resulted in
a loss of US$1,315,000, compared with
the loss of US$975,000 for 2008.
As a result of the above, the Group’s
gross profit for the year amounted to
US$11,705,000 compared with
US$13,834,000 for 2008.
A detailed breakdown of this is set out
in note 4 to the consolidated accounts
on pages 44 and 46. The results of the
Group’s palm-oil and cattle activities
are reviewed in more detail in the reports
on pages 12 and 17.
BEARER BIOLOGICAL-ASSET ADJUSTMENT
The palm-oil price persisted at historically-high
levels during 2009 leading to an increase of US$16,
to US$502, in the long-term average price used to
evaluate the Group’s biological assets. Whilst the
gain arising from this increase was to some extent
offset by increases in the costs of maintaining and
harvesting the Group’s palms, it nevertheless
accounted for more than half the biological gain in
the year of US$23,518,000 (2008 US$24,226,000).
The remaining biological gain was mainly due to
the recognition of plantings which took place on the
Group’s new projects, but also on 391 hectares of
replanting on its established estates. The same factors
that affected the Group’s own estates also resulted
in an increase of US$2,692,000 in the Group’s shares
of the associated companies’ profits for the year.
As referred to in the 2009 interim report, the Group
took the strategic decision during 2009 to sell land
which had already been developed to the co-operative
schemes attached to the Kalimantan and Bangka
projects. This decision is reviewed in more detail
in the section entitled “New projects” on page 14.
Indonesian regulations govern the price at which
land can be sold to co-operatives and in some
cases this is below the cost, including a share of
administrative overheads, which has been incurred
by the Group. In respect of the hectares which have
been treated in this way in 2009, the amount by
which the costs incurred to date exceed the selling
price was US$637,000. However, there are also areas
on which the selling price may well be above cost
but recognition of this will not be taken until exact
terms have been agreed and the land handed over.
At the point that bank finance is provided to the
co-operatives, the amounts due (in the meantime
treated as debtors by the Group) in respect of the land
sold or to be sold to the co-operatives (US$8,772,000
at 31 December 2009) will be repaid to the Group.
OTHER ADMINISTRATIVE EXPENSES
Administrative expenses were higher in 2009,
compared with the previous year. This arose primarily
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 9
REVIEW OF THE 2009 RESULTS continued
from an increase in the provision for National
Insurance on the future exercise of share options.
The provision is based on the Company’s share
price at the balance-sheet date which was 309.50p
at 31 December 2009 compared with 198.50p at the
end of 2008. Also, the Indonesian head-office team
is increasing in size to deal with the maturing new
projects and the milling facilities which are presently
under construction.
ASSOCIATED COMPANIES
The Group’s share of its associated companies’
profits/(losses) for the year, including the share of
biological bearer-asset adjustments, compared with
last year were as follows:
2009 2008
POST-TAX POST-TAX POST-TAX POST-TAX
PROFIT/(LOSS) BIOLOGICAL PROFIT/(LOSS) PROFIT/(LOSS) BIOLOGICAL PROFIT/(LOSS)
BEFORE BEARER-ASSET AFTER BEFORE BEARER-ASSET AFTER
BIOLOGICAL ADJUSTMENTS BIOLOGICAL BIOLOGICAL ADJUSTMENTS BIOLOGICAL
BEARER-ASSET (SEE NOTE BEARER-ASSET BEARER-ASSET (SEE NOTE BEARER-ASSET
% ADJUSTMENTS BELOW) ADJUSTMENTS ADJUSTMENTS BELOW) ADJUSTMENTS
HELD US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
PT Agro Muko 31.53 5,992 2,432 8,424 8,049 361 8,410
PT Kerasaan Indonesia 38.00 1,399 260 1,659 1,588 (132) 1,456
Total Indonesia 7,391 2,692 10,083 9,637 229 9,866
NAPCo 34.37 (1,041) — (1,041) (1,264) — (1,264)
Bertam Properties Sdn. Berhad 40.00 984 — 984 3,528 — 3,528
Total 7,334 2,692 10,026 11,901 229 12,130
Biological bearer-asset adjustment 2009 2008
PT KERASAAN PT KERASAAN
PT AGRO MUKO INDONESIA PT AGRO MUKO INDONESIA
US$’000 US$’000 US$’000 US$’000
Cost of sales 441 12 172 16
Gain on biological assets 2,491 223 268 (292)
Planting expenditure (578) (112) (581) (72)
Deferred tax 78 137 502 216
2,432 260 361 (132)
INDONESIA
As with the majority-owned estates, the Indonesian
associated companies, PT Agro Muko and
PT Kerasaan Indonesia, achieved higher f.f.b. crops
but suffered from the lower average palm-oil prices.
PT Agro Muko’s rubber operations, as expected,
were less profitable than last year as an extensive
replanting programme is being undertaken, resulting
in significantly lower crops. As with palm oil, rubber
prices fell during the year. As a result of the above,
the Group’s share of the post-tax (pre-biological-
bearer-asset adjustments) results of these two associated
companies was some 23% lower in 2009 than 2008.
The valuation of biological assets increased sharply,
particularly in PT Agro Muko, as the 20-year average
palm-oil price increased and significant new areas
were planted replacing old, low-value oil-palm and
rubber areas. This was partially offset by the increased
operating cost base. The Group’s share of the post-
tax, post-biological-bearer-asset-adjustment profit
amounted to US$10,083,000, a 2% increase over
2008’s US$9,866,000.
Since the year end, the Group has purchased for cash
(US$7.31 million), another 5.31% in PT Agro Muko,
bringing the shareholding to 36.84%. Two of the
shareholders, International Finance Corporation and
Deutsche Investitions-Und Entwicklungsgesellschaft
mbh, who between them owned 14.42%, sold their
shares pro rata to the remaining three shareholders,
the SA SIPEF NV Group, PT Austindo Nusantara
PAGE 10
Jaya and the Group. As a result of this transaction,
PT Agro Muko is now owned as to 47.29% by
the SA SIPEF NV Group, 15.87% by PT Austindo
Nusantara Jaya and 36.84% by the Group. More
details of the transaction are set out in note 35,
“Post-balance-sheet events”, on page 66.
Arising from the above-mentioned transaction, it was
decided that PT Agro Muko would suspend dividend
payments during 2009 but would re-start such payments
after the transaction had been completed in 2010.
Accordingly, the Group received a dividend of
US$4.42 million (gross) in April 2010 on its 36.84%
holding. The Group’s 31.53% share of dividends
from PT Agro Muko in 2008 was US$5.68 million
(gross). The Group’s share of PT Kerasaan Indonesia’s
dividends in 2009 amounted to US$1.31 million (gross),
compared with US$1.52 million (gross) in 2008.
AUSTRALIA
NAPCo incurred a loss in 2010 which was largely
attributable to the significantly-reduced number of
cattle sold at below-average prices and weights.
These factors, in turn, stemmed from the effects of
the poor season suffered in 2008.
Prospects for 2010, however, are substantially more
encouraging. As on Woodlands, all the NAPCo
properties have in recent months benefited from
excellent rainfall and consequent good pasture growth.
This should help both towards an improvement in
the results for 2010 and towards the rebuilding of
the herd after it had to be downsized in 2008.
The Group’s share of NAPCo’s dividends for 2009
amounted to US$542,000, compared with US$604,000
in 2008. Dividends are likely to remain at relatively
low levels in the short term as revenue is directed
towards the capital improvements described under
“Associated company – NAPCo” on page 18.
MALAYSIA
Unlike the last few years, Bertam Properties did not
sell any pieces of land in 2009, although a number
of likely sales are now in the pipeline. Property
development continued successfully during the year
although profits were down on 2008. The Group’s
share of Bertam Properties’ dividends in 2009 amounted
to US$5.11 million, compared with US$10.41 million
in 2008.
The results and operations of the Indonesian, Australian
and Malaysian associated companies are reviewed
in more detail in the reports on pages 12 to 25.
DISCONTINUED OPERATIONS
The Thai rubber-manufacturing operations were sold
during 2009 for RM7.85 million (approximately
US$2.20 million), realising a gain of US$1.56 million.
PROFIT FOR THE YEAR
As a result of all of the above, the Group profit for
the year amounted to US$20,710,000, compared
with US$53,596,000 in 2008.
“The Group’s plantation profit for the year ...
may be regarded as more than satisfactory”
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 11
INDONESIAN
Palm oil
Clockwise from top:
Truck with f.f.b. on weighbridge.
Recently – harvested f.f.b.
Harvesting of mature, very tall,
oil-palms.
“Pleasing first yields from
the Bangka project”
PAGE 12
OPERATING COSTS
As the price of mineral oil fell back during 2009,
so too did that for two of the major plantation costs,
fertiliser and fuel. However, owing to the deferral,
because of wet weather, of some fertiliser applications
from late 2008 into early 2009, upkeep costs, in
US-Dollar terms, remained similar to those in 2008.
MANAGEMENT
The Group’s Indonesian management company,
PT Evans Indonesia, took over the management of
the North Sumatran, majority-owned estates with
effect from 1 January 2010. A general manager based
on Pangkatan Estate has, together with a small team,
been appointed to look after these estates.
REVIEW OF AGRICULTURAL OPERATIONS
Significant replantings have been undertaken over
the last six or so years. These are starting to mature
and, looking forward, an increasing yield pattern for
the North Sumatran estates is expected. A replanting
programme was budgeted for 2009 but it has been
decided that it will be deferred for a year to enable
the new management team to settle into its new role
and to allow work on the estate infrastructure, mainly
roads, to be undertaken. With continuing strong
palm-oil prices, the areas which were scheduled
for replanting remain profitable and cash positive.
Tractor with rotary slasher maintaining harvesters’ paths.
REVIEW OF OPERATIONS continued
MAJORITY-OWNED
SUMATRAN ESTATES
CROPS AND PRODUCTION
2009 2008
US$ US$
Crops – f.f.b. – Pangkatan group 121,100 106,000
– Simpang Kiri 38,500 38,700
159,600 144,700
Production
(Pangkatan mill) – crude palm oil 27,000 22,300
– palm kernels 6,800 6,100
% %
Extraction rate
– crude palm oil 22.41 21.06
– palm kernels 5.62 5.79
As significant young plantings matured, f.f.b. crops
continued their improvement of last year and were some
10% higher than in 2008. The extraction rate achieved
at the Pangkatan mill also continued its marked
improvement in 2009. Management has focussed
attention on field and mill standards and the improvement
has continued into 2010 with extraction rates in excess
of 23% pleasingly having been achieved.
PALM-OIL MARKET
Having briefly reached the very high level of
US$1,400 per tonne (Rotterdam cif) in early 2008,
the palm-oil price declined steadily during the
remainder of that year. At the beginning of 2009,
it stood at around US$525 but during the rest of the
year it was, as can be seen from the graph on page 4,
mainly on an upward trend, with one brief but
significant reversal in the third quarter. Overall,
the price spent the majority of the year in the US$650
to US$800 range, an historically robust level.
Demand continued from the traditional major markets
of China, India, Europe and Indonesia with India
being particularly predominant. Production of palm
oil worldwide increased in 2009 but soybean oil
production was lower, as were soybean crushings.
The mineral-oil price strengthened as the year
progressed and this, combined with the upcoming
mandatory requirements in some South East Asian
countries for blending road fuel with bio diesel, kept
strong support under the price of palm oil. The price
has held up well in the first part of 2010 and is
currently around US$830 per tonne.
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 13
REVIEW OF OPERATIONS continued
NEW PROJECTS
Further good progress was made during 2009 with
over 5,600 hectares in total planted in Kalimantan
and Bangka, the largest area ever planted by the
Group in one year. The quality of planting continues
at a high standard.
The area developed during the year could have
been even greater had it not been for the slow pace
in obtaining the release of land experienced by the
management team in Jakarta. The main reasons for
this are twofold. First, it is a very time-consuming
process identifying the location and then agreeing
with village representatives the number of hectares
which the Group is prepared to manage and develop
(and in the early stages, finance), for the co-operative
schemes. These co-operatives are owned by the
eligible members of the various villages within or
close to the project land. Second, in respect of the
Group’s own areas, agreeing compensation terms
with the local people for any cultivation they may
have undertaken on this Government-owned land
is also a very lengthy process. The areas are, in most
cases, very small so a great number of people are
involved in these negotiations. The Group is at pains,
F.f.b. being transported to nearby mill.
in the areas it is developing, to establish friendly
relations with the local population, many of whom
will in due course work and live on the plantations.
Negotiations are conducted in a fair and transparent
manner and detailed records are maintained so that
any future disputes can be resolved quickly and openly.
Against this background, management decided that,
in order to hasten agreement between the numerous
parties, the best way forward would be to allow areas
that had already been developed (and initially been
regarded as land belonging to the Group) to be
transferred at around cost to the co-operative schemes.
The area involved in both East Kalimantan and Bangka
at 31 December 2009 was approximately 3,600
hectares. The details of the various areas are set out
in the table on page 73.
When the Group’s development areas were initially
agreed in East Kalimantan and Bangka, it was difficult to
establish what exact land area would be available for
development by the Group in its own right. The total
areas over which the Group was granted an initial
permit (an “izin lokasi”) amounted to approximately
40,000 hectares in Kalimantan and 17,000 hectares
on Bangka. The initial estimate of the land which
would be available to the Group was 24,000 hectares
in East Kalimantan and 12,000 hectares in Bangka.
However, whereas it was initially expected that a
considerable amount of land outside the project area
would be made available for the co-operative schemes,
PAGE 14
this has latterly not proved to be the case to the
extent expected. In addition, when areas on which
it has proved impossible to agree compensation
terms, conservation areas and land which has proved
unsuitable for planting are excluded, the available
land has proved to be less than originally anticipated.
This is very common in new plantation ventures as
it is notoriously difficult to establish exactly what area
of land will be available to the investor until all of
the lengthy negotiations have been completed and
the land extensively surveyed. The latest estimate of
the area of land that can be developed by the Group
in its own right is 17,000 hectares in East Kalimantan
and 7,000 hectares in Bangka. The co-operative-
owned areas, which the Group will manage for a
fee and whose f.f.b. will be processed on commercial
terms, are expected to amount to some 4,000 hectares
in East Kalimantan and 4,200 hectares in Bangka.
The Group has stepped-up its search for further land
and it is hoped that areas in the vicinity of the existing
projects can be found.
EAST KALIMANTAN
4,770 hectares were planted during the year, of
which 1,200 related to the co-operative schemes.
As at 31 December 2009, the total area planted
amounted to 9,830 hectares of which 7,256 were
owned by the Group and 2,574 by the co-operative
schemes. The 2007 plantings will mature during 2010
and the first f.f.b. crops will be sold to outside mills
until such time as the construction of the Group’s
own mill has been completed.
Work is already well advanced on the earthworks
in preparation for both the mill and for the bulking
tanks and jetty on the Mahakam River. The construction
of the 60-tonne mill is expected to start in October
and to be completed towards the end of 2011.
Some 530 hectares have been planted so far in 2010.
It is expected that the pace of planting will accelerate
as the year progresses.
BANGKA
2009 2008
TONNES TONNES
F.f.b. crop
11,700 —
The first 1,200 hectares, to be planted on the project
came into maturity during the course of 2009 and
achieved a pleasing yield of 8 tonnes per hectare
which is more than satisfactory, given their young
age. As would be expected at this early stage in their
development, a loss was incurred. The f.f.b. were, and
continue to be, sold to a nearby mill until such time
as the Group’s own mill is built. The decision on this
Crude-palm-oil storage tanks at the Pangkatan mill.
will relate to the area already planted and the likely
prospect and timing of further plantings.
Planting progress so far in 2010 has been slow.
Only some 110 hectares in total have been planted
but it is hoped that the pace of development will
soon accelerate.
ASSOCIATED-COMPANY ESTATES
Crops and production from the estates owned by
PT Agro Muko (31.53%) and PT Kerasaan Indonesia
(38.00% owned) were as follows:
2009 2008
US$ US$
F.f.b. crops – PT Agro Muko – own 328,200 300,600
– outgrowers 23,000 13,500
351,200 314,100
– PT Kerasaan Indonesia 52,000 49,800
403,200 363,900
Production (PT Agro Muko) – crude palm oil 79,400 68,000
– palm kernels 18,200 15,400
% %
Extraction rate – crude palm oil 22.63 21.66
– palm kernels 5.19 4.90
TONNES TONNES
Rubber crops (PT Agro Muko) – own 1,221 1,498
– outgrowers — 332
After a sharp, short-term downturn in its f.f.b. crop
in the first half of 2009, PT Agro Muko’s crop picked
up markedly in the second half and, for the full year,
was some 9% ahead of 2008. However, the lower
average palm-oil and palm-kernel prices for the year
reduced profits compared with the previous year.
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 15
REVIEW OF OPERATIONS continued
During the period in which the programme is under
way of planting rubber in areas near to the crumb
factory and replanting ex-rubber areas with oil palms
in the inland, higher-rainfall areas, there will be
markedly lower rubber crops. Accordingly, the crop
in the year amounted to 1,221,000 kg compared with
1,498,000 kg in 2008. This, combined with selling
prices substantially below those of the previous year,
resulted in a marked fall off in profits. Since the year end,
rubber prices have recovered to record levels.
The estates owned by PT Agro Muko are now virtually
fully planted. Over the next few years, attention will
be focussed, as referred to above, on concentrating
rubber plantings around the crumb-rubber factory
on areas, some of which are currently under older
oil palms. At the same time, the rubber areas on the
hillier, high-rainfall areas inland will be replanted
with oil palms to which they are more suited.
Kerasaan Estate’s f.f.b. crop recovered during 2009
but lower palm-oil and palm-kernel prices resulted
in lower profits. This is a fully-developed, mature
estate and the replanting of approximately 5%
of the area each year is under way.
PERFORMANCE EVALUATION
MATURE PLANTATION AND MILL OPERATIONS
Management monitors and assesses the efficiency
of operations with regard to crops and production
by means of performance indicators. The assessment
of crops is measured for each year’s planting on
each estate in terms of yield per hectare. The yield
per hectare on each individual estate, indeed on
each year’s planting on each estate, is recorded and
monitored. Yields can vary widely because of factors
such as soil type, terrain, sunshine hours, rainfall,
distribution of rainfall and the fertility cycle of the
palms. Because of this, monitoring is not carried out
on a Group basis but rather takes into account the
conditions on each estate. Factors which are under
management’s control are husbandry standards,
fertiliser application, the quality of infrastructure
(estate roads, drains, for example) and these are
monitored by management on the ground and,
in some cases, independently verified and advised
upon. Decisions, such as when and how to replant,
are taken based on local conditions.
With regard to mill production, the key performance
indicator is the extraction rate of palm oil and palm
kernels per tonne of f.f.b. Again, extraction rates vary
according to factors such as the type and quality of
planting material, the age profile of plantings, rainfall,
etc. Rates of up to 25% for palm oil and over 5.5%
for palm kernels can be achieved in some parts of
Indonesia although in the Labuhan Batu area, where
the Pangkatan mill is located, 23% and 5% respectively
is more likely to be the level. A proportion of the f.f.b.
coming into Pangkatan from Sennah Estate is of a low
standard and, as a consequence, the mill’s composite
palm-oil extraction rate has been around 22%.
As referred to above, under “Crops and production”,
the extraction rate has shown a promising
improvement in 2009. This is expected to improve
in time as Sennah Estate’s oil-palm areas are
replanted and the new areas on Pangkatan and
Bilah Estates mature. All of these aforementioned
areas have been replanted with modern, high-quality
hybrid material.
MATURE PLANTATION AND MILL COSTS
Management monitors and assesses the efficiency
of plantation operations in terms of cost by means of
performance indicators which identify field costs per
hectare and per kilogramme of f.f.b. and factory costs
per tonne of palm products (palm oil plus palm
kernels). A significant proportion of costs both in the
field and in the factory are fixed and therefore vary
little with different levels of throughput. Field costs
also vary from estate to estate depending upon
such factors as terrain and rainfall pattern and the
performance indicators are monitored by management
for each individual estate.
NEW PROJECTS
Management monitors and assesses the performance
of the development of the new projects by means
of performance indicators which identify the area
to be planted in a given year and also the cost per
hectare of that planting. Programmes for planting are
set, with sufficient planting material in place in the
previous year. This type of activity is normally
undertaken by contractors and management monitors
the progress achieved on the contracted areas.
As with other plantation activities, costs per hectare
are determined by such factors as the weather pattern,
the soil type and the terrain. They are monitored by
management for each individual estate.
PAGE 16
AUSTRALIAN
Beef cattle
Top and bottom left:
NAPCo cattle with
abundant feed.
Bottom right:
Beneficial floodwater in
the Channel-Country.
“Encouragingly, 2010 has started well,
with abundant rain. Pastures are looking
in first-class order”
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 17
REVIEW OF OPERATIONS continued
MAJORITY-OWNED OPERATIONS
WOODLANDS
The rain in the early part of 2009 promised well but
unusually hot and dry weather later on prevented
pasture and crop growth to the extent hoped for.
As a result, cattle weight gains were disappointing
and the turnover of the Group’s own cattle was well
down, at some 1,250 head, compared with the
approximately 2,750 in 2008, although over 3,000
head of cattle on agistment from NAPCo were turned
off during the year. The market value per kg ascribed
to the herd at the end of the year was some 17%
lower than at the beginning of the year, resulting
in a considerably lower cattle-trading profit than
the previous year. As can be observed from the
graph of the Eastern Young Cattle Indicator (“EYCI”)
on page 5, prices dropped sharply right at the end
of December before a welcome recovery in January
2010. This reduction in the stock valuation will have
a corresponding positive influence on the cattle
trading results in 2010.
The weather pattern again had an adverse effect on the
wheat and sorghum crops in 2009 and disappointing
yields were achieved. Indeed, a decision has been taken
not to continue with grain crops but to concentrate
on forage crops and further upgrading the pastures.
The Group’s focus will now, until the property is sold,
be fully on cattle fattening to which it is felt the property
is best suited.
Encouragingly, 2010 has started well, with abundant
rain. Pastures are looking in first-class order and the
forage crops are being planted into a good profile
of moisture. The promising pasture conditions have
enabled 4,000 good-quality cattle to be purchased
so far this year and, as at the date of this report,
the herd consists of 7,600 head. The intention is,
if circumstances permit, to maintain the herd at
around 8,000 head at any one time.
As referred to in the 2008 annual report, the board
took the strategic decision to sell the property in order
to concentrate on the Group’s investment in NAPCo.
Despite some interest during the last year or so,
no sale has yet been concluded but the plan remains
to sell it, although only at an acceptable price.
ASSOCIATED COMPANY –
NAPCo (34.37% OWNED)
A loss after tax was incurred, of which the Group’s
share amounted to US$1,041,000. This compares with
its share of NAPCo’s loss last year of US$1,264,000.
The loss was largely attributable to the low number
of cattle sold. Many young cattle had been sold in
NAPCo PROPERTIES
PAGE 18
CATTLE SALES AND BRANDINGS
(cid:0) SALES
(cid:0) BRANDINGS
(cid:0) CLOSING STOCK
40,337
44,090
2009
2008
96,552
67,599
2007
49,725
65,510
2006
41,868
2005
2004
2003
57,408
56,309
49,619
49,010
51,727
50,019
53,768
160,622
162,336
198,262
184,309
171,145
183,364
184,971
‘000 HEAD
20
40
60
80
100
120
140
160
180
200
Third, a large breeder property in a safer rainfall area
is being sought. This will provide greater economies
of scale than exists with some of the smaller breeder
properties, freeing them up for more suitable use
as growing-out properties.
Lush pasture on NAPCO backgrounding property.
NAPCo breeder cow with twin calves.
the previous year as a result of the drought conditions
and were therefore unavailable to be fattened in 2009.
The need to hold back heifers to replace breeder cows
which had also been sold down in 2008 further reduced
the number of cattle available for sale. In addition, the
cattle sold in 2009 were at lighter-than-usual weights;
again, a direct result of 2008’s poor season.
At the end of 2009, the herd stood at 161,000 head,
a small overall decrease from the end of 2008
(162,000 head). Over the next three years or so,
it is planned to build the number back up to around
200,000 head.
With regard to beef-market conditions, the global
recession continued to affect demand from Australia’s
traditional export markets, Japan, Korea and the
United States during 2009. This was compounded
by the steady increase in the value of the Australian
Dollar. However, Australia was at least fortunate in
that Japan maintained its ban on U.S. beef from cattle
greater than 21 months old following BSE concerns.
Some significant strategic initiatives were introduced
in 2009 to improve the company’s ability to manage
drought. First, following the sale in 2007 of Connemara,
another of the company’s Channel Country properties,
Roxborough Station, was sold. These two properties had
been the poorest performers in recent years. Second,
the decision was taken to double the size of the
company’s feedlot. The feedlot expansion will give rise
to further economies of scale but, more importantly,
will improve the business as a whole by helping to
compensate for the uncertainty of the seasons
experienced by the company’s growing-out properties.
Even in poor seasons, the young weaner cattle will be
able to be moved on down the “fattening chain” rather
than having to be held back on the breeder properties.
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 19
REVIEW OF OPERATIONS continued
In addition to the new strategic measures referred to
above, the programme of drilling new bore holes on
the company’s premier breeding property, Alexandria
Station, continues apace. This allows more breeders
to be run on the property and has helped to lift its
value. Whilst, in line with a general tapering off in
Australia’s pastoral-property values, some of the NAPCo
properties have declined in value in the past year or
so, the compensating gain in the value of Alexandria
resulted in the company’s property portfolio as a
whole being valued at a similar amount at the end
of 2009 to that at the end of 2008.
The weather at the end of 2009 and following on
into 2010 has been most promising. All the NAPCo
properties have received widespread, beneficial
rainfall and there has been welcome flooding of the
river systems running through the Channel-Country
growing-out properties. With the resultant pasture
growth, there is more than sufficient feed for the
company’s herd and it is planned to acquire
additional cattle for fattening and onward sale.
Prospects for the beef-cattle market globally appear
favourable too, both in the short and longer term.
Part of the NAPCo herd.
Despite the maintenance of the strength of the Australian
Dollar, Australian-cattle prices have improved. Low
herd numbers in both Australia and the United States
are likely to lead to further price increases as demand
for beef returns to more normal levels.
PERFORMANCE EVALUATION
Management monitors and assesses the efficiency
of operations with regard to cattle fattening by means
of performance indicators. This assessment involves
the establishment of weight gain per beast per day.
Depending upon the weather and pasture/forage-crop
conditions, management would generally aim for
0.6 kg per day for grass-fed steers and 1.00 kg per day
for forage-crop-fed steers.
The ability to maximise the weight gain in any one
year will be determined by the amount of rainfall.
This, in turn, determines both the quality of the
existing pastures and what areas of forage crops can
be planted. Whilst rainfall is clearly not a factor under
management’s control, the area of forage crops that
can be both planted and brought ahead to a state that
can sustain cattle is crucial to the operations of the
company. The area planted, and the cost, is therefore
a performance indicator that is under constant review
by management.
PAGE 20
MA LAYSIA N
Property
Right and above:
New housing on the
Bertam Properties project.
“It remains the Group’s intention to dispose of its
remaining Malaysian assets at an opportune time”
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 21
REVIEW OF OPERATIONS continued
MAJORITY-OWNED OPERATIONS
BERTAM ESTATE
The only remaining, majority-owned, activity in,
or managed from, Malaysia is the small, 70-hectare,
Bertam Estate.
Bertam Estate’s crops were as follows:
2009 2008
TONNES TONNES
F.f.b.
1,700 2,100
It is intended that this estate will be sold when it is
deemed that market conditions are suitable. In the view
of the board, based on recent independent advice,
the value of this land is in excess of US$13 million.
THAI RUBBER MANUFACTURING
The wholly-owned subsidiary company owning the
Thai rubber factory, Supara Co. Limited, was sold
in July 2009 for RM7.85 million (approximately
US$2.20 million). The profit on the sale of the
company (US$1,555,000) and the net profit for the
year up to the date of disposal (US$23,000) have
been included under “Discontinued operations”.
New houses on the Bertam Properties project.
ASSOCIATED COMPANY –
BERTAM PROPERTIES (40% OWNED)
Unlike in recent years, no land sales were concluded
during 2009. However, a number of sales are in the
process of being finalised and the results from these,
at least in part where deferred terms have been agreed,
are likely to be recognised in 2010.
Although at a lower level than in the previous year,
development activities continued successfully in
2009, resulting in a pre-tax profit of US$3.70 million
(Group share US$1.48 million) compared with
US$5.36 million (Group share US$2.14 million)
in 2008.
The remaining plantation activities resulted in an
f.f.b. crop of 3,900 tonnes compared with 2008’s
4,800 tonnes. The combination of lower crops and
a weaker palm-oil price resulted in lower profits
from this activity.
Bertam Properties’ 507 hectares at the year end
remain a valuable piece of real estate. It is the
intention to continue the programme of disposals
(at acceptable prices) and the development of
housing and other projects. In line with the Group’s
stated strategy of divesting the Malaysian assets and
reinvesting in Indonesian palm oil and Australian
cattle, it remains the Group’s long-term intention
to dispose of this investment at an opportune time.
PAGE 22
RISK MANAGEMENT
The board reviews risk management
on an annual basis. Set out below is the
board’s evaluation of the areas of potential
risk and the steps taken, where possible,
to mitigate that risk.
INDONESIA
COUNTRY
The Group relies heavily on political stability in
Indonesia, given the substantial investments that have
been made, and will continue to be made in greater
measure, in the country. Although the Group has not
encountered any security problems over the years,
except to a minor extent for a period at Simpang Kiri
Estate in Aceh, there have been outbreaks of social
unrest in the country, particularly during the monetary
crisis of 1997/98. These problems have, however,
tended to be restricted to the larger towns and cities.
Indonesia has recently benefited from a period of
political stability, economic growth and exchange-
rate stability, indeed strength, under the presidency
of Mr Susilo Bambang Yudhoyono. The parliamentary
elections in 2009, in which Mr Yudhoyono’s party
substantially increased its share of the vote, were
conducted in a peaceful and orderly fashion. The
presidential election was held in July and, as expected,
Mr Yudhoyono was comfortably re-elected.
Security of land tenure is a concern to plantation
operators. The Group holds its land under 25 or
30-year renewable leases (HGU’s) which have, to date,
been renewed when falling due without problem.
PALM-OIL AND KERNEL SELLING PRICES
The Group relies on its ability to sell its palm oil,
palm kernels and f.f.b. through a world market over
which it has no control. The price of palm oil is
determined both by disposable income around the
world generated by economic activity and by the supply,
pricing and demand for competing vegetable oils.
These factors can result in fluctuations in the price.
Palm oil is a permanent tree crop with f.f.b. being
harvested every day of the year. Palm oil and palm
kernels are sold on a weekly basis by open tender and
f.f.b. are sold on a day-by-day basis under contract
at a price derived from the quoted world price. Over
a year, by selling on a “spot” basis, an average price
is therefore achieved although forward contracts are
from time to time entered into when conditions are
deemed appropriate.
As with any commodity, over-supply does occur
in the vegetable-oil market which exerts downward
pressure on prices. The competing oils, the main ones
of which are soybean, oilseed rape and sunflower, are
annual crops and producers tend to react to low prices
by switching to other crops which has, in the past,
quickly reduced oversupply and restored upward
pressure on prices as demand returns.
The board is satisfied that the fundamental structure
of the vegetable-oil market, and particularly the
palm-oil market, is sound. Continuing strong demand
from the fast-developing economies, such as China
and India, as well as from more established markets
in Europe, for vegetable oil for human consumption
has supported prices. In addition to this, the strength
of the mineral-oil price in 2008, following concerns
about dwindling supply and global warming, focussed
attention on vegetable oil as a bio-fuel. Many bio-fuel
processing plants have been set up around the world
and the demand for feedstock (vegetable oil) for
these plants has had, and may continue to have,
an underpinning effect on vegetable-oil prices.
Increasingly, there is evidence of the food industry,
particularly in the US, moving away from the use
of unhealthy, hydrogenated oils (trans fats) and, as
a consequence, a new and growing demand for palm
oil has evolved. Palm oil is the vegetable oil with the
highest production in the world and is the lowest cost
and the most productive, by a wide margin, in terms
of yield per hectare.
EXCHANGE RATES
Palm oil is a US-Dollar-denominated commodity and
a significant proportion of revenue costs in Indonesia
(such as fertiliser and fuel) and development costs
(such as heavy machinery and fuel) are US-Dollar
related. Adverse movements in the Rupiah against the
US Dollar can have a negative effect on other revenue
costs in US-Dollar terms. The board has taken the
view that these risks are part of the business and feels
that adopting hedging mechanisms to counter the
negative effects of exchange movements are both
difficult to achieve and would not be cost effective.
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 23
RISK MANAGEMENT continued
WEATHER AND NATURAL DISASTERS
Oil palms rely on regular sunshine and rainfall but
these patterns can vary and extremes such as unusual
dry periods or, conversely, heavy rainfall leading in
some locations to flooding, can occur. Dry periods,
in particular, will affect yields in the short and
medium terms but any deficits so caused tend to
be made up at a later date. Where appropriate,
bunding is built around flood-prone areas and
drainage constructed and adapted either to evacuate
surplus water or to maintain water levels in areas
quick to dry out. As far as possible, insurance cover
for natural disasters is purchased.
Whilst a remarkably hardy plant, the oil palm can
be subject to attack from such pests as caterpillars
and other insects. Proper management and husbandry
should identify and prevent these attacks from
becoming widespread.
ENVIRONMENTAL
Concerns about global warming and particularly the
destruction of tropical rainforest are subjects which
have received, and are continuing to receive, close
scrutiny in the media. The palm-oil industry, unfairly
in many cases, is closely associated with cutting down
rainforest and destroying the habitat of endangered
species such as the orang-utan, elephant, tiger and
rhinoceros. The Group is therefore likely to receive
attention from the many organisations connected with
climate change and South East Asian tropical rainforests.
The estates in Sumatra are all long established.
Management follows industry best-practice guidelines
and abides by Indonesian law with regard to such
matters as fertiliser application and health and safety.
With regard to the mill at Pangkatan, the Group has
installed a composting system which utilises both
the empty fruit bunches (after the fruit has been
removed from them) and the liquid effluent from
the mill. The resulting nutritious compost is applied
in the field and reduces the requirement for inorganic
fertiliser. No effluent reaches external water courses.
The Group is a member of the Round Table on
Sustainable Palm Oil (“RSPO”). The RSPO has instituted
strict guidelines which members must abide by in order
to be able to state that they are producing sustainable
palm oil. The Group endorses the General Principles
which have so far been produced and is actively
preparing to make an application for RSPO certification
for its palm-oil production both on its mature estates
and on the new projects.
PAGE 24
With regard to the new projects on Bangka and
Kalimantan, the Group has a clear policy that only
heavily degraded land will be acquired and developed.
It is the board’s policy to have an environmental-
impact assessment undertaken by an independent
consultant for any new project. The study undertaken
for the new land in Kalimantan has been made public
on the Group’s website. Implicit in these studies is the
requirement to abide by riparian buffer zones and
nature-conservation areas and to compensate people
cultivating parts of the land to be developed in an
open and fair way.
DEVELOPMENT OF NEW PROJECTS
There are a number of operational risks associated
with the development of new land into an oil-palm-
plantation project. These cover a wide range, from
delays caused by the inability to agree appropriate
compensation terms with local people, to weather
disruptions, to unavailability of suitable contractors.
The Group aims to mitigate these risks by ensuring
that there is a strong, professional management team
on the ground that is able, as far as is practicable,
to anticipate such problems and take pre-emptive
steps to avoid difficulties.
AUSTRALIA
WEATHER
Rainfall is of crucial importance to cattle farming
in Australia and is unpredictable. The level of rainfall
will determine the ability of existing pastures to be
maintained and of management to plant forage and
grain crops. In turn, the quality and quantity of feed
will determine the carrying capacity of the property.
Clearly, management is not in a position to control
rainfall but the board has taken the view that
acceptance of this risk is part of the business.
CATTLE PRICES
The price that the Group achieves for the sale of its
fattened cattle is substantially determined by a world
market over which the Group has no control. The
price of live cattle and beef is determined by economic
activity around the world, giving the wherewithal for
demand for red meat to be created. This activity
fluctuates, as does the beef price. Australia is a high-
quality, efficient producer free of BSE and foot-and-
mouth disease, whose markets are mainly in South
US DOLLAR -V- INDONESIAN RUPIAH
US$1 = Indonesian Rupiah
US DOLLAR -V- AUSTRALIAN DOLLAR
US$1 = A$
US DOLLAR -V- MALAYSIAN RINGGIT
US$1 = RM
STERLING -V- US DOLLAR
£1 = US$
East Asia and the United States, with its principal
competitors being South America and the United
States itself. The board accepts price fluctuation
as a risk of the business and has concluded that the
structure of the Australian cattle industry is sound
and that its proximity to its main markets in South East
Asia gives the business a competitive advantage over
its rivals.
EXCHANGE RATES
The movement of the Australian Dollar and Malaysian
Ringgit against the US Dollar has an effect in US-Dollar
terms when Australian and Malaysian earnings and
assets are translated. The board accepts this risk as
part of the business and has concluded that adopting
hedging mechanisms to counter the negative effects
of exchange movements is both difficult to achieve
and would not be cost effective.
MALAYSIA
EXCHANGE RATES
With the remainder of the Malaysian assets in the
process of being sold or available for sale, adverse
exchange movements will reduce the value of these
disposals in US-Dollar terms. Given the uncertainty
of the timing of the asset disposals, it would be difficult
to adopt hedging mechanisms to counter exchange
movements and this would be unlikely to be cost
effective. When funds are raised from asset sales,
it is the board’s policy to keep the funds on deposit
chiefly in US Dollars but partly in Sterling and Ringgits.
GENERAL
SECURITY OF LIQUID FUNDS
With the onset of the recent worldwide banking crisis,
the board is concerned to ensure that the Group’s
liquid funds, which are in excess of US$33 million
worldwide at the date of this report, are deposited
in a secure environment and not at risk of loss. The
Group’s policy is, and has been for many years, only
to deposit funds either with banks with a high rating
from reputable rating agencies or with banks that are
majority owned by sovereign governments.
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 25
ENVIRONMENTAL, CORPORATE AND
SOCIAL RESPONSIBILITY
The Group is committed to producing
environmentally-sustainable palm oil
The Group is a member of the Roundtable
for Sustainable Palm Oil (“RSPO”).
The membership covers a wide variety
of interests from plantation owners to
non-governmental organisations to
supermarkets. The Group endorses the
General Principles which have been
adopted by the RSPO in relation to
environmental, social and ethical
plantation practices. The Group has
set in motion the process to obtain RSPO
certification for its oil-palm plantations
The Group ensures that any new
plantation development is undertaken
only in heavily degraded areas which
will not be suitable habitats for orang-utans.
Full environmental-impact assessments
are conducted on new project areas by
internationally-recognised, independent
environmental consultants. The assessment
of the Kalimantan project has been
posted on the Group’s website,
www.mpevans.co.uk
At the Group’s Pangkatan palm-oil mill,
liquid effluent is applied to empty bunches
to create nutritious compost which,
in turn, is applied in the field, reducing
the requirement for inorganic fertilisers.
No effluent reaches rivers or water courses
A company’s success
is measured not solely by
its financial performance
but also by its social
and environmental
performance
PAGE 26
In Australia, besides its commitment to
the health and safety of its employees,
the Group adopts the highest standards
of animal welfare in relation to its cattle.
Through NAPCo, which has won
a number of environmental awards,
it is also involved in the preservation,
and rehabilitation, of indigenous flora
and fauna
The Group gives priority to the health and
safety of its employees and those affected
by its activities
The Group undertakes to train and
motivate its workforce, to help employees
build on skill levels and to extend their
education and qualifications
In Indonesia, the Group provides, inter
alia, medical care, free housing, clean
water and sanitation to its workforce as
well as kindergartens and school transport
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 27
3
1
6
4
2
7
5
BOARD OF DIRECTORS
1
Peter E Hadsley-Chaplin, MA MBA
CHAIRMAN
Appointed a director in 1989. Former executive
chairman of Bertam Holdings PLC and Lendu
Holdings PLC. A director of The North Australian
Pastoral Company Pty Limited. Former chairman
of The Association of the International Rubber
Trade. Prior to joining the Group in 1988 he was
a commodity broker with C Czarnikow Limited.
(Age 52)
2
Philip A Fletcher, FCA
MANAGING DIRECTOR
Appointed a director in 1987, managing director
in 1991 and executive chairman between 1999
and 2005. Former executive director of Bertam
Holdings PLC and Lendu Holdings PLC. Joined
the Group in 1982 after his initial career in
accountancy with KPMG in London and Sydney
and in industry with the Rio Tinto plc group.
(Age 60)
PAGE 28
3
O David Wilkinson, BSC
EXECUTIVE
Appointed a director in 2005. Based in
S.E. Asia, overseeing the development of
the new Indonesian projects whilst continuing
to oversee the mature plantation operations
in North Sumatra and the remaining Malaysian
operations. Former executive director of
Bertam Holdings PLC. Formerly a planter
with Harrisons Malaysian Plantations Berhad
(now Sime Derby Berhad) before involvement
in the retail and property-development sectors
in Malaysia. (Age 51)
4
Tristan R J Price, MA MSC FCA
FINANCE DIRECTOR
Appointed a director in 2010. Qualified
as a Chartered Accountant with Coopers &
Lybrand. Worked in the Diplomatic Service,
and as an economist at the Organisation for
Economic Co-operation and Development
(OECD). Prior to joining the Group, was
head of financial planning and policy at
the Foreign & Commonwealth Office.
(Age 43)
Konrad P Legg
5
SENIOR INDEPENDENT NON-EXECUTIVE
Appointed a director in 1987. Chairman of
Coburg Group PLC. A former non-executive
director of Lendu Holdings PLC. Chairman
of the audit and remuneration committees.
(Age 66)
6
Richard M Robinow
INDEPENDENT NON-EXECUTIVE
Appointed a director in 1999 and
chairman from 2005 to 2009. Chairman
of R.E.A. Holdings PLC and a non-executive
director of the Belgian plantation group,
SA SIPEF NV. Member of the audit and
remuneration committees. (Age 64)
7
J Derek Shaw, FRAgS
INDEPENDENT NON-EXECUTIVE
Appointed a director in 2005. A director of
The North Australian Pastoral Company Pty
Limited. Former chairman of Linden Foods
Limited and former chairman and founder
of the Australian cotton producer, Colly
Farms Cotton Limited. Former non-executive
deputy chairman of Lendu Holdings PLC.
Member of the audit and remuneration
committees. (Age 69)
REPORT OF THE
DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2009
PRINCIPAL ACTIVITIES
At 31 December 2009, the Company, through its
subsidiary and associated undertakings, has interests
in oil-palm and rubber plantations in Indonesia, beef-
cattle operations in Australia and oil-palm plantations
and property development in West Malaysia.
REVIEW OF BUSINESS AND FUTURE DEVELOPMENTS
A review of the year and future prospects (including
the principal risks and uncertainties facing the Company)
is included in the chairman’s statement on pages 6 to 8
and in the review of operations on pages 9 to 25 and
is incorporated in this report by reference.
RESULTS AND DIVIDEND
Details of the profit for the year are given in the
consolidated income statement on page 38.
An interim dividend of 2.00p (2008 - 2.00p) per share
was paid on 4 November 2009. The board recommends
a final dividend of 5.00p (2008 - 5.00p) per share.
This dividend will be paid on or after 25 June 2010
to those shareholders on the register at the close of
business on 7 May 2010. This final dividend is not
provided for in the 2009 financial statements.
SHARE CAPITAL
The Company has one class of share. Details of the
issued share capital of the Company is as follows:
SHARES OF 10P EACH
Issued (fully-paid and voting) capital
at 1 January 2009 52,211,585
Share options exercised
1 May 2009 10,800
5 May 2009 10,000
26 May 2009 10,000
6 November 2009 10,000
7 December 2009 3,000
15 December 2009 930
16 December 2009 15,000
Issued (fully-paid and voting) capital
at 31 December 2009 52,271,315
Share options exercised
18 January 2010 7,000
29 January 2010 956,100
Issued (fully-paid and voting) capital
at 30 April 2010 53,234,415
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 29
REPORT OF THE DIRECTORS continued
DIRECTORS AND DIRECTORS’ INTERESTS
The present membership of the board is set out on
pages 28 and 29. Mr Tristan Price was appointed
to the board on 1 January 2010. All other directors
served throughout the year. Messrs Price and Legg
will retire from the board at the forthcoming annual
general meeting in accordance with the articles of
association and, being eligible, offer themselves for
re-election. Mr Price has a service contract with the
Company the details of which are summarised in the
report of the board to the shareholders on directors’
remuneration on page 35.
The directors serving at the end of the year, together
with their interests at the beginning and end of the
year, in the shares of 10p each in the Company, were
as follows:
AT 31 DECEMBER 2009 BENEFICIAL NON- OPTIONS
BENEFICIAL
R M Robinow 42,086 — —
P A Fletcher 585,953 51,361 1,108,235
P E Hadsley-Chaplin 848,865 57,237 1,150,000
O D Wilkinson — — 78,496
K P Legg 584,389 22,412 —
J D Shaw 655,747 — —
AT 1 JANUARY 2009
R M Robinow 42,086 — —
P A Fletcher 578,453 51,361 1,108,235
P E Hadsley-Chaplin 841,365 91,279 1,150,000
O D Wilkinson — — 138,226
K P Legg 584,389 22,412 —
J D Shaw 655,747 — —
Further details of the directors’ interests in share
options are disclosed in the report of the board to the
shareholders on directors’ remuneration, on page 35.
None of the directors holds any beneficial interest in,
or holds options to buy shares in, any subsidiary
undertaking of the Company as at the date of this report.
No director has had a material interest in any contract
of significance in relation to the business of the
Company, or any of its subsidiary undertakings,
during the financial year or had such an interest at the
end of the financial year other than as disclosed as a
related-party transaction on page 66.
As permitted by the Company’s articles of association,
there was throughout the year to 31 December 2009,
and is at the date of this report, a qualifying indemnity
provision, as defined in section 236 of the Companies
Act 2006 in force for the benefit of the directors.
PAGE 30
SUBSTANTIAL INTERESTS
The following substantial interests have been disclosed
to the Company as at the date of this report:
SHARES %
Direct interests
Alcatel Bell Pensioenfonds VZW 5,793,497 10.88
JPMorgan Fleming Mercantile
Investment Trust Plc 3,517,103 6.61
M M Hadsley-Chaplin 2,642,254 4.96
Indirect interest
Invesco Limited 3,098,331 5.82
Aberdeen Asset Management PLC 2,658,946 5.00
AUTHORITY TO ALLOT SHARES
At the annual general meeting a general authority is
being sought, under resolution 5, for the directors to
allot shares up to a maximum nominal amount of
£1,774,303, which represents 33.33% of the Company’s
issued share capital. The Company does not currently
hold any shares as treasury shares within the meaning
of section 724 of the Companies Act 2006. It is also
proposed, under resolution 7, to empower the directors
to allot equity securities for cash pursuant to this general
authority (and to sell any treasury shares which it may
acquire for cash) otherwise than in accordance with
shareholders’ statutory pre-emption rights so as to deal
with practical problems arising in connection with rights
issues or otherwise up to an aggregate nominal amount
of £532,344, representing 10% of the Company’s
issued share capital. Prior to 2009, the latter limit had
been fixed at 5% of the Company’s issued share capital
but, in accordance with the current guidelines of the
National Association of Pension Funds, the board is
again seeking shareholders’ approval for an increased
10% limit so as to be able to raise funds at short
notice, where appropriate, from the issue of new
share capital for the purpose of taking advantage of
investment opportunities that may arise. The directors do
not have any present intention of using the authorities
sought under resolutions 5 and 7. These authorities
will lapse on 30 June 2011 or, if earlier, the date of
the Company’s next annual general meeting.
AUTHORITY TO PAY SCRIP DIVIDENDS
At the annual general meeting a general authority
is being sought, under resolution 6, for the directors
to offer shareholders the choice of taking new fully-
paid shares in the Company instead of cash dividends,
subject to the terms of the Company’s articles of
association, at any time in the five years from the
date of the annual general meeting. The directors
have decided to offer a scrip-dividend alternative
in respect of the final dividend for the year ended
31 December 2009 and also to make a scrip-dividend-
mandate arrangement available to enable shareholders
to elect to receive all future dividends automatically
in the form of shares, should the directors decide
to make a scrip-dividend alternative available in
respect of such future dividends. Further details
of these scrip-dividend arrangements are contained
in the accompanying circular.
AUTHORITY TO MAKE MARKET PURCHASES OF SHARES
The directors propose to seek authority under
resolution 8 for the Company to purchase its own shares
on the AIM Market of the London Stock Exchange until
30 June 2011 or, if earlier, the date of the Company’s
next annual general meeting. The authority will give
the directors flexibility to purchase the Company’s
shares as and when they consider it appropriate.
The board will only exercise the power of purchase
when satisfied that it is in the best interests of the
Company so to do and all such purchases will be
market purchases made through the AIM Market of
the London Stock Exchange. The directors would only
consider making purchases if they believed that the
earnings or net assets per share of the Company
would be improved by such purchases. Companies
are now allowed to hold their own shares which have
been purchased in this way in treasury rather than
having to cancel them. The directors would, therefore,
consider holding the Company’s own shares which
had been purchased by the Company as treasury shares
as this would give the Company the flexibility of being
able to sell such shares quickly and effectively where
it considers it in the interests of shareholders to do so.
Whilst any such shares are held in treasury, no
dividends will be payable on them and they will
not carry any voting rights.
Resolution 8 set out in the notice of the annual general
meeting will accordingly be proposed to authorise the
purchase of up to a maximum of 5,323,441 shares, on
the AIM Market of the London Stock Exchange,
representing 10% of the Company’s current issued
share capital. The maximum price which may be paid
for a share on any exercise of the authority will be
restricted to 5% above the average of the middle-
market quotations for such shares as derived from the
Daily Official List of the London Stock Exchange for
the five business days before the purchase is made.
The maximum number of shares and the price range
are stated for the purpose of compliance with
statutory requirements in seeking this authority and
should not be taken as an indication of the level of
purchases, or the prices thereof, that the Company
would intend to make.
The authority conferred by resolution 8 will lapse on
30 June 2011 or, if earlier, the date of the Company’s
next Annual General Meeting.
As at the date of this report there were options to
subscribe for 1,593,631 shares outstanding under the
executive share-option schemes. If all of the options
were exercised, the resulting number of shares would
represent (a) 2.91% of the enlarged issued share capital
at that date; and (b) if the proposed authority to
purchase shares was exercised in full 3.22% of the
enlarged issued equity share capital at that date
(excluding any share capital which may be purchased
and held in treasury).
ADOPTION OF NEW ARTICLES OF ASSOCIATION
It is proposed that the Company adopts new articles
of association. The proposed changes from the
Company’s current articles of association reflect the
final implementation of the Companies Act 2006 and
include an increase in the aggregate remuneration
payable to the non-executive directors from a sum not
exceeding £75,000 to a sum not exceeding £150,000.
This figure has remained unchanged since 1994.
An explanation of the main changes between the
current articles of association and the new articles
of association is set out in the appendix to the annual
report on pages 77 and 78.
PAYMENTS TO SUPPLIERS
It is the Group’s normal practice to make payments
to suppliers in line with agreed terms, provided that
the supplier has performed in accordance with the
relevant terms and conditions. The Group’s average
creditor days calculated as at 31 December 2009
amounted to 23 days (2008 - 26 days).
FINANCIAL INSTRUMENTS
Details of the Group’s financial instruments, and the
board’s policy with regard to their use, are given in
note 33 to the consolidated accounts on page 65.
CHARITABLE AND POLITICAL DONATIONS
The Group made cash donations for charitable
purposes in the year of US$2,407 (2008 US$2,911).
Of this US$150 was donated to an Indonesian
earthquake appeal with the balance being donated
to various UK based charities.
No political donations were made during the year
(2008 nil).
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the annual
report and the financial statements in accordance with
applicable law and regulations.
The directors are required to prepare financial statements
for the Group in accordance with International
Financial Reporting Standards (“IFRS”) as adopted by
the European Union (“EU”). Company law requires
the directors to prepare such financial statements in
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 31
REPORT OF THE DIRECTORS continued
accordance with IFRS and the Companies Act 2006
and the AIM Rules for companies.
International Accounting Standard 1 requires that
financial statements present fairly for each financial
year the Group’s financial position, financial
performance and cash flows. This requires the faithful
representation of the effects of transactions, other events
and conditions in accordance with the definitions and
recognition criteria for assets, liabilities, income and
expenses set out in the International Accounting
Standards Board’s “Framework for the Preparation
and Presentation of Financial Statements”. In virtually
all circumstances, a fair presentation will be achieved
by compliance with all applicable IFRSs. Directors
are also required to:
properly select and apply accounting policies;
present information, including accounting policies,
in a manner that provides relevant, reliable,
comparable and understandable information; and
provide additional disclosures when compliance
with the specific requirements in IFRSs is
insufficient to enable users to understand the
impact of particular transactions, other events and
conditions on the entity’s financial position and
financial performance.
The directors have elected to prepare the parent-
Company financial statements in accordance with
United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and
applicable law). The parent-Company financial
statements are required by law to give a true and fair
view of the state of affairs of the Company. In preparing
these financial statements, the directors are required to:
select suitable accounting policies and then apply
them consistently;
make judgments and estimates that are reasonable
and prudent;
state whether applicable UK Accounting Standards
have been followed; and
prepare the financial statements on the going-
concern basis unless it is inappropriate to presume
that the Company will continue in business.
The directors are responsible for keeping proper
accounting records that disclose, with reasonable
accuracy at any time, the financial position of the
Company and enable them to ensure that the financial
statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and
other irregularities.
The directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Group’s website. Legislation in the
PAGE 32
United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
POST-BALANCE-SHEET EVENTS
On 18 March 2010 the Group contracted to acquire
a further 5.31% of its Indonesian associated plantation
company, PT Agro Muko. The cost of this investment
was US$7.31 million and the holding in PT Agro Muko
has increased from 31.53% to 36.84%.
In March 2010 the Group agreed a 4½-year loan
facility of 60 million Ringgit with AmBank (Malaysia)
Berhad, a regional bank based in Malaysia.
GOING CONCERN
After having made appropriate enquiries, the directors
have a reasonable expectation that the Group and the
Company have adequate resources to continue their
established activities for the foreseeable future, being
a period of at least 12 months from the date of the
approval of the accounts. Accordingly, they continue
to adopt the going-concern basis in preparing these
financial statements.
DISCLOSURE OF INFORMATION TO AUDITORS
Each of the persons who is a director at the date of
approval of this report confirms that:
so far as he is aware, there is no relevant audit
information of which the Company’s auditors are
unaware; and
he has taken all the steps that he ought to have
taken as a director in order to make himself aware
of any relevant audit information and to establish
that the Company’s auditors are aware of that
information.
This confirmation is given and should be interpreted
in accordance with the provisions of section 418(2)
of the Companies Act 2006.
INDEPENDENT AUDITORS
On 10 August 2009 PricewaterhouseCoopers LLP
were appointed by the board as auditors to the
Company following the resignation of Deloitte LLP.
PricewaterhouseCoopers LLP have expressed their
willingness to continue in office and a resolution to
re-appoint them will be proposed at the forthcoming
annual general meeting.
Approved by the board of directors
and signed on its behalf
J F Elliott Secretary
5 May 2010
CORPORATE GOVERNANCE
The board recognises the importance of a sound system
of internal control and of continuing to conduct the
Group’s affairs according to good corporate-
governance principles. An explanation of how the
Group has applied the principles appears below.
1 DIRECTORS
The details of the Company’s board, together with
the audit and remuneration committees, are set out
on pages 28 and 29. The board comprises an executive
chairman, three further executive directors and three
non-executive directors, one of whom chairs the audit
and remuneration committees. This structure is
designed to ensure that there is a clear balance of
responsibilities between the executive and the non-
executive functions. The board meets at least
quarterly and is provided with information which
includes executive operating reports, management
accounts and budgets. Each director retires and must
seek re-election at least every three years.
The board considers Messrs Robinow, Legg and
Shaw to be independent, notwithstanding their
length of service and their shareholdings, on account
of the nature and extent of their relationships with
the Company.
The board reserves to itself a range of key decisions
to ensure it retains proper direction and control of
the Company, whilst delegating authority to individual
directors who are responsible for the day-to-day
management of the business. All major and strategic
decisions of the Company are made in the United
Kingdom. The executive and non-executive directors
have discussions on an informal yet frequent basis to
discuss progress against budget and business issues.
2 DIRECTORS’ REMUNERATION AND APPOINTMENT
As set out in the report on page 35, the remuneration
of the executive directors is determined by the
remuneration committee whilst that of the non-
executives is determined by the whole board.
The committee met four times during 2009 and
each meeting was attended by all the members
with the exception of Mr Robinow being absent
from one meeting.
The Company does not currently have a nominations
committee. Owing to the size of the board, it is
considered inappropriate to establish such a committee
at this time. Any new appointments to the board are
discussed at a full board meeting and each member of
the board is given the opportunity to meet the individual
concerned prior to an appointment being made.
3 RELATIONS WITH SHAREHOLDERS
The Company attaches importance to effective
communications with its institutional and private
shareholders. All shareholders have at least twenty-
one clear days’ notice of the annual general meeting
at which all of the directors, including the chairman
of the committees, are normally available for questions.
Comments and questions from shareholders are
encouraged at the meeting.
4 ACCOUNTABILITY AND AUDIT
a) Financial reporting
A detailed review of the performance and financial
position of the Group is included in the chairman’s
statement and the review of operations. The board
uses these and the report of the directors to present
a balanced and understandable assessment of
the Group’s position and prospects. The directors’
responsibility for the financial statements is described
on pages 31 and 32.
b) Risk management
The directors acknowledge their responsibilities for
the Group’s system of risk management. Such a system
can provide reasonable, but not absolute, assurance
against material misstatement or loss. A review of
the process of risk identification, evaluation and
management is carried out regularly and presented
to the board for discussion and approval.
The review process considers the control environment
and the major business risks faced by the Group.
Such risks include, but are not limited to:
the effect of palm-oil price fluctuations on
profitability;
the effect of beef-cattle price fluctuations on
profitability;
the effect of exchange-rate fluctuations on
profitability and assets;
political instability and social unrest in Indonesia;
weather and natural disasters;
environmental damage; and
security of liquid funds.
Important control procedures, in addition to the day-
to-day supervision of holding-company business, include
regular executive visits to the areas of operation of the
Group and of its associates, comparison of operating
performance and monthly management accounts with
plans and budgets, application of authorisation limits,
internal audit of subsidiary undertakings and frequent
communication with local management.
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 33
CORPORATE GOVERNANCE continued
c) Going-concern basis
The Group’s operations are funded through a
combination of long-term equity capital, cash
resources, project finance and overdrafts.
The board has undertaken a recent review of
the Group’s current financial position, forecasts,
associated risks and sensitivities. This review was
conducted in the light of the board’s current plans
for the development of the Group’s business
which incorporates the planned future planting
expenditure in Indonesia noted in the review
of operations on pages 13 to 16. The forecasts
indicate that the Group will have sufficient
resources to meet its obligations as they fall
due with the use of existing facilities.
The board has concluded that, given the current
level of cash resources in the Group, the level
of existing borrowings and the new facility
agreed in April 2010, the Group is expected
to be able to continue in operational existence
for the foreseeable future, being a period of at
least 12 months from the date of the approval
of the accounts. As a result, the board has
concluded that the going-concern basis continues
to be appropriate in preparing the financial
statements.
5 AUDIT COMMITTEE
The audit committee is formally constituted with written
terms of reference and is chaired by Mr K P Legg; the
other members are Messrs R M Robinow and J D Shaw.
All served throughout the year. The executive directors
are not members of the committee but can be invited to
attend its meetings. The auditors of the Group may also
attend part or all of each meeting and they have direct
access to the committee for independent discussions,
without the presence of the executive directors.
The committee met four times during 2009 and each
meeting was attended by all of the members with the
exception of Mr Shaw being absent from one meeting.
The audit committee may examine any matters relating
to the financial affairs of the Group or the Group’s
audit; this includes reviews of the annual accounts
and announcements, accounting policies, compliance
with accounting standards, the appointment and
fees of auditors and such other related matters as
the board may require.
During 2009, the audit committee led an exercise
to invite tenders for the Group audit. This exercise
took 16 weeks and, following a thorough evaluation
of four firms invited to tender, the audit committee
decided to appoint PricewaterhouseCoopers LLP
as the Group auditors.
The Group’s auditors have not provided non-audit services.
PAGE 34
REPORT OF THE BOARD TO THE SHAREHOLDERS
ON DIRECTORS’ REMUNERATION
The remuneration committee keeps under review the
remuneration and terms of employment of the executive
directors and recommends such remuneration and terms,
and changes therein, to the board. The committee
comprises all of the non-executive directors and is
chaired by Mr K P Legg.
SERVICE CONTRACTS
All of the executive directors have service contracts.
Messrs Hadsley-Chaplin, Fletcher and Price have service
contracts with the Company. Mr Wilkinson’s contract
is with a wholly-owned subsidiary undertaking.
These contracts continue until terminated by either
party giving not less than one year’s notice in writing
but not, in any event, beyond their normal retirement
dates. The non-executive directors do not have
service contracts or provisions for pre-determined
compensation on termination of their appointment.
REMUNERATION POLICY
EXECUTIVE DIRECTORS
The remuneration of Messrs Hadsley-Chaplin, Fletcher
and Price is determined by the remuneration committee
in accordance with both the level of responsibility
undertaken and equivalent remuneration of executives
of a similar standing in the U.K., where their
responsibilities are undertaken. The committee has
sanctioned appropriate incentives by means of share
options with a view to aligning the interests of these
three executives with those of the shareholders. In
addition, with effect from 1 January 2010, they may
qualify for a discretionary bonus of up to a maximum
of 6% of salary.
Mr Wilkinson’s remuneration is determined by the
committee in accordance with both the level of
responsibility undertaken and equivalent remuneration
of executives of a similar standing in S.E. Asia, where
his responsibilities are undertaken and where he resides.
He participates in a discretionary-bonus scheme related
to the committee’s evaluation both of his performance
and of the progress achieved during the year in disposing
of the Group’s Malaysian assets, and with regard to its
new and existing Indonesian projects. Mr Wilkinson also
participates in the executive share-option schemes.
NON-EXECUTIVE DIRECTORS
The fees of the non-executive directors are determined
by the board. The total amount of directors’ remuneration
for the year ended 31 December 2009 was as follows:
2009 2008
US$ US$
Emoluments 966,714 1,103,662
Gains on exercise
of share options 128,406 188,173
Group money-purchase
pension contributions 116,978 164,786
1,212,098 1,456,621
The details of the remuneration of the directors for the year ended 31 December 2009 are set out below:
SALARY BONUS PENSION BENEFITS TOTAL TOTAL
AND FEES COSTS IN KIND
2009 2009 2009 2009 2009 2008
US$ US$ US$ US$ US$ US$
Executive directors
P E Hadsley-Chaplin 246,359 — 43,113 31,289 320,761 362,574
P A Fletcher 246,359 — 43,113 64,434 353,906 400,002
O D Wilkinson 181,375 57,497 30,752 7,983 277,607 358,605
674,093 57,497 116,978 103,706 952,274 1,121,181
Non-executive directors
R M Robinow 46,683 — — — 46,683 52,464
K P Legg 38,052 — — — 38,052 42,339
J D Shaw 46,683 — — — 46,683 52,464
131,418 — — — 131,418 147,267
Total 805,511 57,497 116,978 103,706 1,083,692 1,268,448
NOTES
1.
In addition to the above, the gain in respect of options
exercised during the year amounted to:
Notes continue on next page.
2009 2008
US$ US$
P E Hadsley-Chaplin — 63,510
O D Wilkinson 128,406 124,663
128,406 188,173
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 35
REPORT OF THE BOARD TO THE SHAREHOLDERS ON DIRECTORS’ REMUNERATION continued
2. Apart from the discretionary bonus paid to Mr Wilkinson referred to above, no performance-related bonuses were awarded to the
directors during the year.
3. The pension costs for Messrs Hadsley-Chaplin and Fletcher set out above are the contributions made by the Company to company-
sponsored Self-Invested Personal Pensions (“SIPPs”) as described below. The pension costs for Mr Wilkinson are contributions made
by a subsidiary undertaking to the Employees’ Provident Fund in Malaysia.
4. No long-term incentives, other than the share options described below, have been awarded to directors.
5.
Fees for Mr K P Legg were paid to a third party.
EXECUTIVE SHARE-OPTION SCHEMES
The executive directors are members of executive
share-option schemes which were established in
2001 under which options to subscribe for shares in
the Company may be granted to selected employees.
As at 31 December 2009 options over 2,336,731
(2008 - 2,396,461) shares which were granted to
the executive directors between 17 July 2001 and
2 February 2005 remain outstanding. During the year
59,730 (2008 - 71,250) options granted to directors
were exercised and none (2008 – none) lapsed.
No performance criteria are attached to the options
and no options are held by the non-executive directors.
At 31 December 2009 the middle-market quotation
for the Company’s shares, as derived from the London
Stock Exchange Daily Official List, was 309.5p, as
compared with the high and low quotations for the
year of 365p and 198.5p respectively.
The details of the options held over shares of the
Company by the executive directors during the
year ended 31 December 2009 are set out in the
table below:
Number of shares under option
MARKET
BALANCE AT BALANCE AT EXERCISE PRICE WHEN DATE FROM
1 JANUARY EXERCISED 31 DECEMBER PRICE EXERCISED DATE WHICH NORMALLY EXPIRY
2009 IN THE YEAR 2009 PENCE PENCE OF GRANT FIRST EXERCISABLE DATE
P A Fletcher 200,000 — 200,000 96.50 — 1 May 2002 1 May 2005 1 May 2012
200,000 — 200,000 126.50 — 2 May 2003 2 May 2006 2 May 2013
358,600 — 358,600 85.05 — 2 Feb 2005* 2 Feb 2005 17 July 2011
179,300 — 179,300 101.78 — 2 Feb 2005* 1 May 2005 1 May 2012
143,440 — 143,440 138.04 — 2 Feb 2005* 2 May 2006 2 May 2013
26,895 — 26,895 158.95 — 2 Feb 2005* 4 May 2007 4 May 2014
1,108,235 — 1,108,235
P E Hadsley-Chaplin 41,765 — 41,765 75.50 — 17 July 2001 17 July 2004 17 July 2011
200,000 — 200,000 96.50 — 1 May 2002 1 May 2005 1 May 2012
200,000 — 200,000 126.50 — 2 May 2003 2 May 2006 2 May 2013
358,600 — 358,600 85.05 — 2 Feb 2005* 2 Feb 2005 17 July 2011
179,300 — 179,300 101.78 — 2 Feb 2005* 1 May 2005 1 May 2012
143,440 — 143,440 138.04 — 2 Feb 2005* 2 May 2006 2 May 2013
26,895 — 26,895 158.95 — 2 Feb 2005* 4 May 2007 4 May 2014
1,150,000 — 1,150,000
O D Wilkinson 3,750 3,750 — 126.50 324.00 — — —
10,800 10,800 — 101.78 306.50 — — —
6,250 6,250 — 101.78 324.00 — — —
10,000 10,000 — 101.78 330.50 — — —
10,000 10,000 — 101.78 300.00 — — —
3,000 3,000 — 101.78 310.00 — — —
930 930 — 101.78 294.25 — — —
26,258 15,000 11,258 101.78 293.50 2 Feb 2005* 1 May 2005 1 May 2012
53,790 — 53,790 138.04 — 2 Feb 2005* 2 May 2006 2 May 2013
13,448 — 13,448 158.95 — 2 Feb 2005* 4 May 2007 4 May 2014
138,226 59,730 78,496
Total 2,396,461 59,730 2,336,731
* Transferred from Bertam Holdings PLC executive share-option scheme in 2005.
PENSIONS
The Company sponsors SIPPs for the UK executive
directors. Contributions made by the Company to
the SIPPs and to a life-assurance company give the
executives a pension at retirement, a pension to a
spouse payable on death and life-assurance cover
based on a multiple of salary. The members contribute
a minimum of 5% of their pensionable salary to their
SIPPs. No element of a director’s remuneration
package, other than basic salary, is pensionable.
Approved by the board of directors
and signed on its behalf
J F Elliott Secretary
5 May 2010
PAGE 36
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF M. P. EVANS GROUP PLC
We have audited the Group financial statements
of M.P. Evans Group PLC for the year ended
31 December 2009 which comprise the consolidated
income statement, the consolidated statement of
comprehensive income, the consolidated balance
sheet, the consolidated statement of changes in
equity, the consolidated cash-flow statement and the
related notes. The financial-reporting framework that
has been applied in their preparation is applicable
law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS
AND AUDITORS
As explained more fully in the directors’ responsibilities
statement set out on pages 31 and 32, the directors
are responsible for the preparation of the financial
statements and for being satisfied that they give a
true and fair view. Our responsibility is to audit the
financial statements in accordance with applicable
law and International Standards on Auditing
(UK and Ireland). Those standards require us to
comply with the Auditing Practices Board’s Ethical
Standards for Auditors.
This report, including the opinions, has been
prepared for, and only for, the Company’s members
as a body in accordance with chapter 3 of part 16
of the Companies Act 2006 and for no other purpose.
We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other
person to whom this report is shown or into whose
hands it may come save where expressly agreed by
our prior consent in writing.
SCOPE OF THE AUDIT OF THE FINANCIAL
STATEMENTS
An audit involves obtaining evidence about the
amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the
financial statements are free from material misstatement,
whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are
appropriate to the Group’s circumstances and have
been consistently applied and adequately disclosed;
the reasonableness of significant accounting estimates
made by the directors; and the overall presentation
of the financial statements.
OPINION ON FINANCIAL STATEMENTS
In our opinion the Group financial statements:
give a true and fair view of the state of the Group’s
affairs as at 31 December 2009 and of its profit
and cash flows for the year then ended;
have been properly prepared in accordance with
IFRSs as adopted by the European Union; and
have been prepared in accordance with the
requirements of the Companies Act 2006.
OPINION ON OTHER MATTER PRESCRIBED
BY THE COMPANIES ACT 2006
In our opinion the information given in the directors’
report for the financial year for which the Group
financial statements are prepared is consistent with
the Group financial statements.
MATTERS ON WHICH WE ARE REQUIRED
TO REPORT BY EXCEPTION
We have nothing to report in respect of the following
matters where the Companies Act 2006 requires us
to report to you if, in our opinion:
certain disclosures of directors’ remuneration
specified by law are not made; or
we have not received all the information and
explanations we require for our audit.
OTHER MATTER
We have reported separately on the parent-Company
financial statements of M.P.Evans Group PLC for the
year ended 31 December 2009.
David A. Snell (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors,
London
5 May 2010
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 37
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2009
RESULT BEFORE RESULT BEFORE
BIOLOGICAL BIOLOGICAL YEAR ENDED BIOLOGICAL BIOLOGICAL YEAR ENDED
BEARER-ASSET BEARER-ASSET 31 DECEMBER BEARER-ASSET BEARER-ASSET 31 DECEMBER
ADJUSTMENT * ADJUSTMENT * 2009 ADJUSTMENT * ADJUSTMENT * 2008
NOTE US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Continuing operations
Revenue 4 28,391 — 28,391 30,387 — 30,387
Cost of sales (17,167) 481 (16,686) (16,759) 206 (16,553)
Gross profit 4 11,224 481 11,705 13,628 206 13,834
Gain on biological assets 15 (637) 23,518 22,881 — 24,226 24,226
Planting expenditure — (15,154) (15,154) — (13,283) (13,283)
Foreign-exchange gains 1,460 — 1,460 44 — 44
Other administrative expenses (5,177) — (5,177) (4,182) — (4,182)
Other income 226 — 226 283 — 283
Operating profit 7,096 8,845 15,941 9,773 11,149 20,922
Exceptional credit 6 — — — 3,900 — 3,900
Profit on continuing operations
before interest and tax 7,096 8,845 15,941 13,673 11,149 24,822
Finance income 7 623 — 623 1,012 — 1,012
Finance costs 8 (1,226) — (1,226) (2,387) — (2,387)
Group-controlled profit
before tax 9 6,493 8,845 15,338 12,298 11,149 23,447
Tax on profit on
ordinary activities 10 (5,654) (578) (6,232) (4,181) (2,309) (6,490)
Group-controlled
profit after tax 839 8,267 9,106 8,117 8,840 16,957
Share of associated companies’
profit after tax 4 7,334 2,692 10,026 11,901 229 12,130
Profit after tax on
continuing operations 8,173 10,959 19,132 20,018 9,069 29,087
Discontinued operations 11 1,578 — 1,578 29,895 (5,386) 24,509
Profit for the year 9,751 10,959 20,710 49,913 3,683 53,596
Attributable to:
Owners of M. P. Evans Group PLC 8,076 10,174 18,250 47,885 1,904 49,789
Minority interests 1,675 785 2,460 2,028 1,779 3,807
9,751 10,959 20,710 49,913 3,683 53,596
US CENTS US CENTS
Basic earnings per 10p share 13
Continuing operations 31.92 48.88
Discontinued operations 3.02 47.38
Continuing and discontinued
operations 34.94 96.26
Diluted earnings per 10p share 13
Continuing operations 31.01 47.30
Discontinued operations 2.93 45.86
Continuing and discontinued
operations 33.94 93.16
* Non-statutory column (see note 15)
PAGE 38
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2009
2009 2008
US$’000 US$’000
Other comprehensive income
Unrealised share of movements in associated undertakings’ reserves 876 1,321
Previously unrealised profit on sale of land to associated undertaking released
to the consolidated income statement on sale of that land by the associate (33) (193)
Exchange differences on translation of foreign operations 11,805 (20,208)
Other — 416
Other comprehensive gain/(loss) for the year 12,648 (18,664)
Profit for the year 20,710 53,596
Total comprehensive income 33,358 34,932
Attributable to:
Owners of M. P. Evans Group PLC 32,194 31,125
Minority interests 1,164 3,807
33,358 34,932
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 39
CONSOLIDATED BALANCE SHEET
AT 31 DECEMBER 2009
BEFORE BEFORE
BIOLOGICAL BIOLOGICAL BIOLOGICAL BIOLOGICAL
BEARER-ASSET BEARER-ASSET 31 DECEMBER BEARER-ASSET BEARER-ASSET 31 DECEMBER
ADJUSTMENT * ADJUSTMENT * 2009 ADJUSTMENT * ADJUSTMENT * 2008
NOTE US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Non-current assets
Goodwill
Biological assets
Property, plant and equipment
Investments in associates
Investments
Deferred tax asset
Current assets
Biological assets
Inventories
Trade and other receivables
Current tax asset
Cash and cash equivalents
Assets held for sale
14
15
16
17
18
25
19
20
21
22
11
1,157
—
— 93,480
(36,375)
22,702
—
—
96,307
89,885
2,642
1,373
1,157
93,480
59,932
112,587
2,642
1,373
1,157
—
— 78,779
(30,519)
20,010
—
—
77,973
78,234
2,679
2,334
1,157
78,779
47,454
98,244
2,679
2,334
191,364
79,807
271,171
162,377
68,270
230,647
2,650
8,454
14,852
3,030
38,081
—
67,067
2,650
—
—
8,454
— 14,852
3,030
—
— 38,081
—
—
— 67,067
1,872
10,292
5,176
933
56,472
275
75,020
—
1,872
— 10,292
5,176
—
933
—
— 56,472
275
—
— 75,020
Total assets
4
258,431
79,807
338,238
237,397
68,270
305,667
Current liabilities
Borrowings
Trade and other payables
Current tax liabilities
Liabilities related to assets
held for sale
Net current assets
Non-current liabilities
Borrowings
Deferred tax liability
Retirement-benefit obligations
Total liabilities
Net assets
Equity
Share capital
Other reserves
Retained earnings
Equity attributable to the owners
of M.P. Evans Group PLC
Minority interests
Total equity
* Non-statutory column (see note 15)
24
23
11
24
25
26
22,297
7,516
632
— 22,297
7,516
—
632
—
—
—
—
30,445
36,622
2,011
2,796
1,251
6,058
— 30,445
— 36,622
—
14,020
—
2,011
16,816
1,251
14,020
20,078
18,986
5,238
1,510
109
25,843
49,177
2,018
1,612
1,377
5,007
— 18,986
5,238
—
1,510
—
—
109
— 25,843
— 49,177
—
13,442
—
2,018
15,054
1,377
13,442
18,449
4
36,503
14,020
50,523
30,850
13,442
44,292
221,928
65,787
287,715
206,547
54,828
261,375
27
29
29
8,821
70,610
138,188
—
22,702
35,177
8,821
93,312
173,365
8,812
60,111
133,846
—
20,010
26,399
8,812
80,121
160,245
217,619
57,879
275,498
202,769
46,409
249,178
30
4,309
7,908
12,217
3,778
8,419
12,197
221,928
65,787
287,715
206,547
54,828
261,375
These financial statements were approved by the board of directors on 5 May 2010 and signed on its behalf
Tristan Price Philip Fletcher
Directors
PAGE 40
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2009
SHARE- CAPITAL- SHARE- SHARE OF FOREIGN-
SHARE PREMIUM REVALUATION REDEMPTION MERGER OPTION ASSOCIATES’ EXCHANGE RETAINED MINORITY TOTAL
CAPITAL ACCOUNT RESERVE RESERVE RESERVE RESERVE RESERVES RESERVE EARNINGS TOTAL INTERESTS EQUITY
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Profit for the year
Other comprehensive
income for the year
Total comprehensive
income for the year
Issue of share capital
Dividends
Credit to equity for
equity-settled share-
based payments
Transactions
with owners
Balance at
1 January 2009
—
—
—
9
—
—
9
—
—
—
90
—
—
90
—
1,695
1,695
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 10,026
—
8,224
18,250
2,460
20,710
— 11,468
(3,148)
3,929
13,944
(1,296)
12,648
— 21,494
(3,148)
12,153
32,194
1,164
33,358
—
—
— (6,966)
26
—
26
(6,966)
—
—
—
—
—
933
99
—
99
(6,033)
(1,144)
(7,177)
34
60
—
60
967
(5,874)
(1,144)
(7,018)
8,812
19,680
10,280
3,896
1,056
514
43,136
1,559 160,245 249,178
12,197 261,375
At 31 December 2009
8,821
19,770
11,975
3,896
1,056
540
57,664
(1,589) 173,365 275,498
12,217 287,715
Profit for the year
Other comprehensive
income for the year
Total comprehensive
income for the year
Issue of share capital
Dividends
Acquisitions of
shares from minority
Credit to equity for
equity-settled share-
based payments
Transactions
with owners
Balance at
1 January 2008
—
—
—
(6,694)
—
(6,694)
—
—
—
84
—
—
—
1,328
—
—
—
84
1,328
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 12,130
— 37,659
49,789
3,807
53,596
— (9,165)
1,699
(4,504)
(18,664)
— (18,664)
—
—
2,965
1,699
33,155
31,125
3,807
34,932
—
—
—
1,412
—
1,412
— (17,266)
— 10,447
(6,819)
(1,085)
(7,904)
—
31
—
—
—
—
—
— (2,472)
(2,472)
17
48
—
48
31
(17,266)
— 10,464
(5,359)
(3,557)
(8,916)
8,728
18,352
16,974
3,896
1,056
483
57,437
(140) 116,626 223,412
11,947 235,359
At 31 December 2008
8,812
19,680
10,280
3,896
1,056
514
43,136
1,559 160,245 249,178
12,197 261,375
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 41
CONSOLIDATED CASH-FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2009
YEAR ENDED YEAR ENDED
31 DECEMBER 31 DECEMBER
2009 2008
NOTE US$’000 US$’000
Net cash outflow from operating activities 32 (9,809)* (21,724)*
Investing activities
Interest received 7 623 1,267
Dividends from associated undertakings 17 6,966 17,266
Dividends from trading investments — 283
Proceeds on disposal of assets held for sale 2,914 50,570
Purchase of property, plant and equipment 16 (9,333) (3,688)
Investment in subsidiary undertaking — (2,616)
Investment in associated undertaking — (5,475)
Disposal of subsidiary — 145
Net cash from investing activities 1,170 57,752
Financing activities
Dividends paid to Company shareholders 12 (6,033) (6,819)
Repayment of borrowings 10 —
Proceeds on issue of shares 99 280
Dividend paid to minorities 30 (1,144) (1,070)
Net cash used by financing activities (7,068) (7,609)
Net (decrease)/increase in cash and cash equivalents (15,707) 28,419
Net cash and cash equivalents at beginning of the year 37,486 7,374
Effect of foreign-exchange rates on cash and cash equivalents (5,995) 1,693
Net cash and cash equivalents at end of the year 22 15,784 37,486
* Including expenditure on new planting of US$15,154,000 (2008 US$13,283,000).
PAGE 42
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2009
NOTE 1 General information
M.P. Evans Group PLC is incorporated in the United Kingdom under the Companies Act 2006. The address of its registered
office is given on page 79. The nature of the Group’s operations and its principal activities are set out in note 4 and in the
review of operations on pages 9 to 25. The Group is domiciled in the UK.
The functional currency of M.P. Evans Group PLC, determined under IAS 21, is the US dollar. Likewise, the functional currency
of subsidiaries operating in the palm-oil sector is the US dollar. The functional currency of Group companies operating in the
beef-cattle and property-development sectors is the local currency.
As permitted by section 230 of the Companies Act 2006, the Company has elected not to present its own profit and loss
account for the year. M. P. Evans Group PLC reported a loss for the financial year ended 31 December 2009 of US$3,454,000
(2008 profit US$27,843,000).
NOTE 2 Adoption of new and revised accounting standards
The adoption of IAS 1 (revised 2007) Presentation of financial statements has introduced some changes to the format and
presentation of the financial statements. Furthermore, the amendments to IFRS7 Financial Instrument Disclosures, amplify
information about the Group’s liquidity risk. In accordance with transitional relief offered in the standard, the Group has
not provided comparative information in line with the new disclosure.
In the current year, the following new and revised standards have been adopted but have not affected the amounts reported
in these financial statements:
IFRS2 (amended)
IFRS7 (amended)
IFRS8
IAS20 (amended)
IAS23 (revised 2007)
IAS32 (amended)
IAS38
IAS39 (amended)
IAS40 (amended)
IFRIC15
IFRIC16
IFRIC18
Share-based payments: vesting conditions and cancellations
Financial instruments: disclosures
Operating segments
Accounting for government grants
Borrowing costs
Financial instruments: presentation
Intangible assets
Financial instruments: recognition and measurement
Investment property
Agreements for the construction of real estate
Hedges of a net investment in a foreign operation
Transfers of assets from customers
At the date of authorisation of these financial statements the following new and revised standards and interpretations,
which were in issue but not yet effective, have not been applied in these financial statements:
IFRS1 (amended)
IFRS3 (revised 2008)
IAS27 (amended)
IAS27 (revised 2008)
IAS28 (revised 2008)
IFRIC17
Improvements to IFRS: (April 2009)
Share-based payment
Business combinations
Cost of an investment in a subsidiary, jointly-controlled entity or associate
Consolidated and separate financial statements
Investments in associates
Distribution of non-cash assets to owners
The directors do not anticipate that adoption of these standards and interpretations in future periods will have a material
impact on the financial statements.
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 43
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2009
NOTE 3 Accounting policies
(a) Accounting convention and basis of presentation
These financial statements have been prepared under the historical-cost convention, as modified by the valuation of biological
assets and available-for-sale investments, and comply with International Financial Reporting Standards (IFRSs) adopted by the
European Union. The Group financial statements therefore comply with the AIM Rules.
(b) Going concern
The financial statements have been prepared on a going-concern basis. The directors have conducted a review of projected
cash flows from operations, investing and financing, concluding that the Group has sufficient funds projected to carry on its
business and its planned investment programme in the medium term. Furthermore, the Group has control over its main cash
expenditure, investment in its new plantations, which it can manage according to the resources available.
(c) Basis of consolidation
The Group financial statements consolidate the financial statements of the Company and all of its subsidiary and associated
undertakings. The Group treats as subsidiaries those entities in which it has the power to determine financial and operating
policies. All subsidiary and associated undertakings prepare their financial statements to 31 December.
Where necessary, the financial statements of subsidiary and associated companies are adjusted prior to consolidation to bring
them into line with the Group’s accounting policies. All intra-Group transactions, balances, income and expenses are
eliminated on consolidation. The results of subsidiaries acquired or disposed of during the year are included in the consolidated
income statement from or up to the effective point of acquisition or disposal.
Minority interests in the net assets of subsidiaries are separately identified. They consist of minority interests at the date of
business combination, and the minority’s share of subsequent changes in equity.
(d) Revenue
Revenue represents the invoiced value of crops, livestock and produce sold during the year, excluding sales taxes. Income,
other than for crops (see note 3i (iii)), is recognised at the point of delivery. Revenue and costs in respect of construction
contracts are recognised in proportion to the independently-measured stage of contract completion at the balance-sheet date.
Investment income is taken into account by reference to the date on which it is declared payable.
(e) Operating profit and exceptional items
The Group separately identifies gains and losses arising from significant asset disposals outside the ordinary course of business,
gains and losses arising from acquisition and disposal of shares in subsidiary and associated undertakings, and restructuring
costs as exceptional items. Exceptional items are excluded from operating profit.
(f) Retirement benefits
The Group operates a defined-contribution pension scheme. The pension charge represents the contributions payable by the
Group under the rules of the scheme. In Indonesia, as required by law, a lump sum is paid to employees on retirement or on
leaving the Group’s employment. This terminal benefit is accrued by the Group and charged in the income statement on the
basis of individuals’ service at the balance-sheet date.
(g) Share-based payments
The Group issues equity-settled, share-based payments to certain employees. Such share-based payments are measured at fair
value (excluding the effect of any non-market-based vesting conditions) at the date of grant. The fair value determined at the
grant date of the equity-settled, share-based payments is expensed on a straight-line basis over the vesting period, based on the
Group’s estimate of shares that will eventually vest. Fair value is measured by use of the Black-Scholes model, based on
management’s best estimates. At each balance-sheet date, the Group estimates the number of options it expects to vest. Any
changes from the previous estimate are recognised in the income statement.
(h) Goodwill
Goodwill arising on acquisition, representing any excess of the fair value of the consideration given over the fair value of the
identifiable assets and liabilities acquired, is ascribed to an operating subsidiary and capitalised, with provision being made for
any impairment. Goodwill is tested for impairment at least annually but, once made, provisions are not reversed. “Negative
goodwill”, where the fair value of the assets acquired exceeds the fair value of the consideration given, is taken to the income
statement during the period in which it arises.
Goodwill arising on acquisitions before the IFRS transition date has been retained at the amount determined under UK-GAAP
and is subjected to impairment testing at least annually. Negative goodwill on the acquisition of shares in the Group’s
Australian associated undertaking was eliminated on transition to IFRS.
(i) Biological assets
Biological gain or loss is measured in accordance with IAS 41 on two groups of bearer assets (oil-palm and rubber plantations),
and two consumer biological assets (beef cattle and grain crops). The Group’s only interest in rubber is through its associate
company, PT Agro-Muko. Bearer assets, the Group’s plantations, are non-current assets. Consumer biological assets are classified
as current assets since the Group generally sells or consumes these assets within one year of the balance-sheet date.
(i)
Plantation
The Group has valued its biological assets on the basis of the discounted net present value of cash flows arising in
producing f.f.b. from oil palms, or latex from rubber trees. It values its biological assets on the basis of discounted cash
PAGE 44
NOTE 3 Accounting policies CONTINUED
flows covering the assets’ expected 25-year economic life. Areas are included in the valuation once they are planted.
The valuation assumes that the concessions granted to exploit the land on which the biological assets are planted will be
renewed when they expire. No account is taken in the valuation of future replanting. The Group estimates the future sales
value of its crop production using a long-term (20-year) average price. Costs associated with the planting of the Group’s
estates are shown as planting expenditure on the face of the income statement.
(ii) Beef cattle
Cattle are recorded as assets at the year end at fair value less selling costs, taking into account the location of the cattle.
The herd comprises breeding and non-breeding cattle. The breeding cattle comprise cows and bulls. The non-breeding
cattle comprise steers and heifers mainly between the age of 9 and 36 months that will be grown and sold on as either
grain-fed or grass-fed cattle. Bulls are included in the balance sheet at a directors’ valuation based on recent purchases
and current market data. All other cattle are valued at average weight multiplied by market price per kilogram.
(iii) Crops
The Group recognises revenue on grain crops at fair value at the point of harvest. The cost of forage crops is released
to the income statement over the period during which they are consumed.
(iv) Deferred tax
Deferred tax is recognised at the relevant local rate on the difference between the cost of biological assets and their
carrying value determined under IAS 41.
Within the consolidated income statement and balance sheet additional, non-statutory, columns have been inserted to show
the impact of the recognition of the valuation of biological bearer assets. The biological-bearer-asset-adjustment column shows
the impact of recording the valuation of the Group’s biological bearer assets, as well as its share of the equivalent asset
recognised by associates, and the related deferred taxation.
(j) Property, plant and equipment
Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes all expenditure incurred in
acquiring the asset. Leasehold land in Indonesia is held on 25 and 30-year leases and is not depreciated as the leases can be
renewed without significant cost. Perpetual-leasehold land in Malaysia and freehold land in Australia is treated in the same way.
Property, plant and equipment, other than construction in progress which is not depreciated, are written off over their estimated
useful lives at rates which vary between 3% and 50% per annum. Estimated useful lives are reviewed at each balance-sheet date.
The Group follows transitional arrangements made available under IFRS1 “First-time Adoption of International Financial Reporting
Standards”. The fair value of Indonesian leases (hak guna usaha) held by the Group on 1 January 2006 are taken to be their
deemed cost. These long-term renewable leases are not depreciated.
(k) Investments in associated companies
Undertakings over which the Group exerts significant influence via shareholdings and its membership on the board are treated
as associated undertakings. Investments in associated undertakings are held in the consolidated financial statements at fair
value under the equity method of accounting. The consolidated income statement includes the Group’s share of the profit or
loss on ordinary activities after taxation based on audited financial statements for the year ended 31 December 2009. In the
consolidated balance sheet, the investments in the associated undertakings are shown as the Group share of net assets at the
balance-sheet date, as adjusted for any associated goodwill.
(l) Non-current assets held for sale
The Group treats assets as held for sale once the sale is considered highly probable and is expected to complete within 12 months
of the balance-sheet date. They are valued at the lower of fair value, and carrying value less costs to sell.
(m) Inventories
Inventories are valued at the lower of cost and net realisable value. In the case of palm oil and rubber, cost represents the weighted-
average cost of production, including appropriate overheads. Other inventories are valued on the basis of first in, first out.
(n) Taxation
The tax charge for the year comprises tax currently receivable and payable, and deferred tax. The Group’s current tax asset
or liability is calculated using tax rates that have been enacted or substantively enacted by the balance-sheet date.
Deferred tax is accounted for using the balance-sheet-liability method, calculated at the tax rates that are expected to apply
in the period when the liability is settled or the asset is realised. Liabilities are generally recognised for all taxable temporary
differences; deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Deferred tax is not provided on initial recognition of goodwill.
The Group recognises deferred-tax liabilities arising from taxable temporary differences on investments in subsidiaries and associates,
except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference
will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance-sheet date.
Deferred tax assets and liabilities are offset when there is a legally-enforceable right to set off current tax assets against current
tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 45
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2009
NOTE 3 Accounting policies CONTINUED
(o) Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet at fair value when the Group becomes
a party to the contractual provisions of the instrument.
AVAILABLE-FOR-SALE FINANCIAL ASSETS – the Group’s investments in unlisted shares (other than associated undertakings) are
classified as available for sale and stated at fair value, with gains and losses recognised directly in equity. Fair value is the
directors’ estimate of sales proceeds less costs to sell at the balance-sheet date.
TRADE AND OTHER RECEIVABLES – these represent amounts due from customers in the normal course of business, are not interest
bearing, and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts,
which are charged to the income statement.
CASH AND CASH EQUIVALENTS – these include cash at hand and deposits held with banks with original maturities of three months
or less.
BANK BORROWINGS – interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs.
Finance charges are accounted for on an accruals basis in the income statement using the effective-interest-rate method.
TRADE AND OTHER PAYABLES – these are initially measured at fair value, and are subsequently measured at amortised cost, using
the effective-interest-rate method.
EQUITY INSTRUMENTS – equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
(p) Foreign currencies
As set out in note 1, the functional currency of the parent Company and of subsidiaries operating in the palm-oil sector is the
US Dollar. The functional currency of Group companies operating in the cattle and property-development sectors is the local
currency. Where relevant, results of all Group companies are translated for the purposes of consolidation into the Group’s
presentational currency, the US Dollar. The monetary assets and liabilities of the Group’s foreign operations are translated at
exchange rates on the balance-sheet date. Items in the income statement are translated at the average exchange rate for the period.
Exchange differences are recognised as a profit or loss of the period in which they arise except for exchange differences on
monetary items payable to foreign operations where settlement is neither planned nor likely to occur, in which case the
difference is recognised initially in other comprehensive income.
(q) Segmental reporting
Operating segments are consistent with the internal reporting provided to the chief operating decision-maker. The chief
operating decision-maker, which is responsible for allocating resources and assessing performance of the operating segments,
is the board.
(r) Critical accounting judgements and key sources of estimation uncertainty
The preparation of consolidated financial statements under IFRS requires the Group to make estimates and assumptions that
affect the application of policies and reported amounts. Estimates and judgements are continually evaluated and are based
on historical experience and other factors including expectations of future events that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates. The estimates and assumptions which have the most significant
impact on the carrying amount of assets and liabilities are discussed below.
(i) Valuation of biological assets
The key assumptions underlying the valuation of the biological assets are set out in note 15. These assumptions are
reviewed at least annually. Sensitivity analysis on the impact of a variation in the palm-oil price and discount rate used
in the valuation is also shown in note 15.
(ii) Leasehold land in Indonesia
The directors have concluded that leasehold land in Indonesia should not be depreciated. Further information on this
policy is included in note 3(j).
(iii) Deferred tax on unremitted earnings
The Group’s subsidiaries and associated undertakings hold a significant level of unremitted earnings. The directors have
concluded that no deferred tax liability should be recognised in relation to these balances given the ability of the Group
to control the remittance of these earnings and the Group’s operational plans for the relevant entity. Further information
on the level of these reserves is disclosed in note 25.
(iv) Assets held for sale
The directors review the fair value of the Group’s available-for-sale investments to confirm that such assets are recorded
at a value that does not exceed the fair value of the asset.
(v) Goodwill arising on acquisition of subsidiaries and associates
On acquisition of shares in subsidiary companies or associated undertakings, the directors compare the fair value of the
consideration given for the shares with the fair value of the assets acquired, including the estimation of the fair value of
property, plant and equipment, intangible fixed assets and biological assets. This comparison is used to establish the value
of goodwill, or, the excess of fair value of the identifiable assets and liabilities acquired over their cost.
PAGE 46
NOTE 4 Segment information
The Group’s reportable segments follow the three areas of activity set out in the review of operations. These are distinguished by location
and product: plantation crops (predominantly palm oil) in Indonesia, with a residual balance in Malaysia; cattle in Australia, and property
development in Malaysia. As described in note 11, during the year the Group disposed of its rubber-manufacturing operation in Thailand.
2009 PLANTATION CATTLE PROPERTY MANUFACTURING OTHER TOTAL
INDONESIA MALAYSIA TOTAL AUSTRALIA MALAYSIA THAILAND
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Total revenue 25,554 561 26,115 2,231 — 806 45 29,197
Total gross profit 13,143 (168) 12,975 (1,315) — (50) 45 11,655
Continuing operations
Revenue 25,554 561 26,115 2,231 — — 45 28,391
Gross profit/(loss) 13,143 (168) 12,975 (1,315) — — 45 11,705
Gain on biological assets 22,881 — 22,881 — — — — 22,881
Planting expenditure (15,154) — ( 15,154) — — — — ( 15,154)
Foreign-exchange gains 316
Other administrative expenses (1,902) (172) (2,074) (51) — — (3,052) (5,177)
Other income — 29 29 — — — 197 226
Operating profit 15,941
Exceptional charge — — — — — — — —
Profit before interest 15,941
Finance income 250 171 421 11 — — 191 623
Finance costs (85) — (85) (1,141) — — — (1,226)
Group-controlled profit before tax 15,338
Tax (5,008) (6) (5,014) (511) — — (707) (6,232)
Group-controlled profit after tax 9,106
Share of associated companies’
profit/(loss) after tax 10,083 — 10,083 (1,041) 984 — — 10,026
Discontinued operations:
Revenue — — — — — 806 — 806
Gross losss — — — — — (50) — (50)
Other income and expenses — 1,555 1,555 — — 73 — 1,628
1,578
Profit after tax 20,710
Minority interests (2,460)
18,250
Assets 161,328 5,816 167,144 34,893 — — 22,128 224,165
Interest in associates 42,866 — 42,866 51,157 18,564 — — 112,587
204,194 5,816 210,010 86,050 18,564 — 22,128 336,752
Unallocated assets 1,486
Consolidated total assets 338,238
Liabilities 21,473 306 21,779 25,164 — — 3,580 50,523
Unallocated liabilities —
Consolidated total liabilities 50,523
Other information
Additions to non-current assets 8,793 25 8,818 507 — — 8 9,333
Depreciation and amortisation 2,069 77 2,146 323 — — 48 2,517
Retirement-benefit obligations (249) — (249) — — — — (249)
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 47
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2009
NOTE 4 Segment information CONTINUED
2008 PLANTATION CATTLE PROPERTY MANUFACTURING OTHER TOTAL
INDONESIA MALAYSIA TOTAL AUSTRALIA MALAYSIA THAILAND
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Total revenue 25,205 3,624 28,829 4,504 — 5,916 48 39,297
Total gross profit 14,893 2,197 17,090 (975) — 357 48 16,520
Continuing operations
Revenue 25,205 630 25,835 4,504 — — 48 30,387
Gross profit/(loss) 14,893 (132) 14,761 (975) — — 48 13,834
Gain/(loss) on biological assets 24,416 (190) 24,226 — — — — 24,226
Planting expenditure (13,283) — (13,283) — — — — (13,283)
Foreign-exchange gains 44
Other administrative expenses (2,344) (86) (2,430) (120) — — (1,632) (4,182)
Other income — 68 68 — — — 215 283
Group operating profit 20,922
Exceptional credit — 193 193 3,707 — — — 3,900
Profit before interest 24,822
Finance income 314 164 478 7 — — 527 1,012
Finance costs (352) — (352) (2,035) — — — (2,387)
Group-controlled profit before tax 23,447
Tax (5,538) (967) (6,505) (183) — — 198 (6,490)
Group-controlled profit after tax 16,957
Share of associated companies’
profit after tax 9,866 — 9,866 (1,264) 3,528 — — 12,130
Discontinued operations:
Revenue — 2,994 2,994 — — 5,916 — 8,910
Gross profit — 2,329 2,329 — — 357 — 2,686
Other income and expenses 21,934 21,934 (111) — 21,823
24,509
Profit after tax 53,596
Minority interests (3,807)
49,789
Assets 127,695 14,009 141,704 27,857 — 1,020 — 170,581
Interest in associates 34,314 — 34,314 41,352 22,578 — — 98,244
162,009 14,009 176,018 69,209 22,578 1,020 — 268,825
Unallocated assets 36,842
Consolidated total assets 305,667
Liabilities 20,911 1,275 22,186 17,761 — 109 — 40,056
Unallocated liabilities 4,236
Consolidated total liabilities 44,292
Other information
Additions to non-current assets 2,718 82 2,800 856 — — 32 3,688
Depreciation and amortisation 1,553 94 1,647 322 — 40 49 2,058
Retirement-benefit obligations 331 — 331 — — — — 331
PAGE 48
NOTE 5 Employees
2009 2008
US$’000 US$’000
Employee costs during the year
Wages and salaries 7,071 5,635
Social-security costs 299 178
Retirement-benefit obligations (see note 26) (249) 331
Other pension costs 110 176
7,231 6,320
NUMBER NUMBER
Average number of persons employed (including executive directors)
Estate manual 1,321 1,267
Local management 89 145
United Kingdom head office 6 6
1,416 1,418
Details of directors’ remuneration required by the Companies Act 2006 are shown within the report of the board to the
shareholders on directors’ remuneration on pages 35 and 36 and form part of these audited financial statements.
NOTE 6 Exceptional credit
2009 2008
US$’000 US$’000
Continuing operations
Credit on purchase of shares in associated undertaking (see note 3h) — 3,707
Previously unrealised profit on sale of land to associated undertaking released
through the income statement on sale of that land to a third party — 193
Total exceptional credit — 3,900
There was no material impact on the tax charge resulting from the exceptional credit in 2008.
NOTE 7 Finance income
Interest receivable on bank deposits 623 1,012
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 49
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2009
NOTE 8 Finance costs
2009 2008
US$’000 US$’000
Interest payable on bank loans and overdrafts 1,226 2,057
Diminution in value of investment — 330
1,226 2,387
NOTE 9 Group-controlled profit before taxation
Profit before tax is stated after charging
Depreciation of property, plant and equipment 2,517 2,058
Auditors’ remuneration 266 427
Staff costs (note 5) 7,231 6,320
The analysis of auditors’ remuneration is as follows:
Fees payable to the Company’s auditor and their associates for services to the Group: *
Audit of UK parent Company 20 20
Audit of consolidated financial statements 79 188
Total audit services 99 208
Audit of overseas subsidiaries 102 114
Total fees payable 201 322
* In addition to the above, fees of US$65,000 (2008 US$105,000) were payable to other firms for the audit of subsidiary companies.
NOTE 10 Tax on profit on ordinary activities
United Kingdom corporation tax charge for the year 2,643 5,314
Relief for overseas taxation (2,643) (5,314)
— —
Overseas taxation 4,188 5,420
Adjustments in respect of prior years (229) 1
Total current tax 3,959 5,421
Deferred taxation – origination and reversal of timing differences (see note 25) 2,273 1,069
6,232 6,490
The standard rate of tax for the year, based on the United Kingdom standard rate of corporation tax, is 28% (2008 – 28.5%).
The standard rate of Indonesian tax is 28% for the current year (2008 – 30%). The actual tax charge is higher (2008 lower)
than the standard rate for the reasons set out in the following reconciliation.
PAGE 50
NOTE 10 Tax on profit on ordinary activities CONTINUED
2009 2009 2008 2008
CONTINUING DISCONTINUED CONTINUING DISCONTINUED
US$’000 US$’000 US$’000 US$’000
Profit on ordinary activities before tax 15,338 1,590 23,447 25,724
Tax on profit on ordinary activities at standard rate 4,295 445 6,681 7,330
Factors affecting the charge for period:
Non-taxable gain — (435) (1,056) —
Expenses not deductible for tax purposes 114 2 492 116
Deferred tax asset on Australian losses written back 774 — — —
Unrelieved losses 875 — 757 —
Utilisation of losses brought forward (380) — — —
Unrealised Indonesian exchange gains
not included in group profit 2,145 — — —
Other exchange differences (72) — (366) 695
Withholding tax on overseas dividends 571 — 880 —
Lower rate applicable to disposals of fixed assets (9) — — (6,661)
Biological assets (1,899) — (868) —
Other differences (182) — (30) (265)
Total actual amount of current tax 6,232 12 6,490 1,215
The Group tax charge incurred on discontinued operations is set out in note 11.
NOTE 11 Discontinued operations and assets held for sale
In September 2008, an agreement was made to dispose of the Group’s Thai rubber-manufacturing subsidiary, Supara Company
Limited. This is treated as held-for-sale at 31 December 2008, and the sale completed on 30 July 2009. The sale of land, planting
and buildings of the Malaysian plantations, Perhentian Tinggi and Sungei Kruit Estates, was agreed during 2007 and completed
during 2008. The results of discontinued operations are shown below.
2009 2008
US$’000 US$’000 US$’000 US$’000
Revenue 806 8,910
Other income and expenses (771) (6,639)
Profit before tax 35 2,271
Attributable tax expense (12) (1,100)
23 1,171
Gain on asset disposals by discontinued operations 1,555 23,453
Attributable tax expense — (115)
1,555 23,338
1,578 24,509
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 51
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2009
NOTE 11 Discontinued operations and assets held for sale CONTINUED
The effect of discontinued operations on segment results is shown in note 4. There were no assets classified as held for
sale at the balance-sheet date:
2009 2008
US$’000 US$’000
Leasehold land, non-depreciable — 65
Buildings — 196
Plant, equipment and vehicles — 14
— 275
Trade and other payables — (109)
— 166
During the year, discontinued operations contributed US$ nil to the Group’s net operating cash flows (2008 US$3.1 million),
contributed US$2.2 million in respect of investing activities (2008 US$40.0 million) and made no payments in respect of
financing activities (2008 US$ nil).
NOTE 12 Dividends paid and proposed
2009 interim dividend – 2.00p per 10p share (2008 interim dividend – 2.00p) 1,724 1,675
2008 final dividend – 5.00p per 10p share (2007 final dividend – 5.00p) 4,309 5,144
6,033 6,819
Following the year end, the board has proposed a final dividend for 2009 of 5.00p per 10p share, amounting to US$4,086,000.
If confirmed at the annual general meeting, shareholders will have the option to elect to receive the dividend in shares rather
than in cash. The dividend will be paid on or after 25 June 2010 to those shareholders on the register at the close of business
on 7 May 2010.
NOTE 13 Basic and diluted earnings per share
The calculation of earnings per 10p share is based on:
2009 2009 2008 2008
NUMBER OF NUMBER OF
US$’000 SHARES US$’000 SHARES
Profit for the year attributable to the
owners of M.P. Evans Group PLC
Continuing operations 16,672 25,280
Discontinued operations 1,578 24,509
Continuing and discontinued operations 18,250 49,789
Average number of shares in issue 52,233,610 51,721,726
Diluted average number of shares in issue* 53,771,958 53,446,285
* The difference between the number of shares in issue and the diluted number of shares relates to unexercised share options
held by directors and key employees of the Group.
PAGE 52
NOTE 14 Goodwill
2009 2008
US$’000 US$’000
At 1 January 1,157 1,008
Additions — 149
At 31 December 1,157 1,157
The directors have tested goodwill for impairment, concluding that the carrying amounts are recoverable. The goodwill has
arisen in respect of the Group’s new plantation projects in Indonesia on Bangka Island and in Kalimantan. Given the size of the
goodwill balance, the directors do not consider it necessary to provide detailed disclosures regarding the impairment review.
NOTE 15 Biological assets
Non-current biological assets comprise plantation bearer assets. The Group values these plantation assets using a discounted cash
flow over the expected 25-year economic life of the asset. The discount rate used in this valuation is 14%. The price of the crop
(oil-palm fresh fruit bunches) is taken to be the 20-year average based on historic selling prices or, where the plantation has its
own mill, an inference based on the widely-quoted commodity price for crude palm oil delivered c.i.f. Rotterdam. The directors
have concluded that using a 20-year average provides the best estimate of the prices to be achieved over the valuation period.
Assumptions
The long-term average price and exchange rate used in determining the valuations were as follows:
31 DECEMBER 31 DECEMBER
2009 2008
Price of crude palm oil (US$/t, c.i.f Rotterdam) 502 486
Exchange rate (Rupiah per US dollar) 9,400 10,950
Sensitivity in valuation of plantation assets
A change of US$25 in the price assumption for palm oil has the following effect on the valuation of plantation assets:
-US$ 25 c.i.f. +US$ 25 c.i.f.
US$’000 US$’000
Subsidiaries (11,766) 11,766
Associated companies (11,721) 11,721
(23,487) 23,487
A change of 1% in the discount rate has the following effect on the valuation of plantation assets:
-1% +1%
US$’000 US$’000
Subsidiaries 8,162 (7,310)
Associated companies 5,475 (5,034)
13,637 (12,344)
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 53
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2009
NOTE 15 Biological assets CONTINUED
2009 2008
PLANTATION PLANTATION
Non-current biological assets US$’000 US$’000
Gain in fair value:
Initial recognition 11,090 6,054
Current period 12,428 18,172
Total gain in fair value* 23,518 24,226
Decreases due to disposal and reclassification (8,817) —
Change in carrying value of biological assets 14,701 24,226
Brought forward at 1 January 78,779 54,553
Carried forward at 31 December 93,480 78,779
* Of the total gain in fair value, US$23,518,000 (2008 US$24,226,000) relates to continuing operations.
2009 2008
Oil-palm planting and crop MATURE IMMATURE TOTAL MATURE IMMATURE TOTAL
Planted area (hectares)
Subsidiary companies 9,509 9,148 18,657 7,678 8,924 16,602
Associated undertakings (Group share) 5,859 585 6,444 5,594 757 6,351
15,368 9,733 25,101 13,272 9,681 22,953
2009 2008
Crop (f.f.b) – tonnes 173,057 161,538
Fair value of crop (US$’000) 15,218 13,324
The only restrictions over biological assets are described in note 3(i). The Group’s financial risk-management strategy
for agricultural activity is described in the review of operations on pages 23 to 25.
Presentation
In the balance sheet, the adjustment column shows that the recognition of the biological-asset valuation replaces depreciated-
historical-planting costs of US$36,375,000 (2008 US$30,519,000) which, prior to the adoption of IFRS, were included in
the carrying value of property, plant and equipment. These costs are now replaced by the biological bearer-asset adjustment
which, including the Group’s share of the asset recognised by associates, together with the related deferred tax, amounts
to US$102,162,000 (2008 US$85,347,000).
PAGE 54
NOTE 16 Property, plant and equipment
LEASEHOLD PLANT,
FREEHOLD LAND – NON- EQUIPMENT CONSTRUCTION
LAND DEPRECIABLE BUILDINGS AND VEHICLES IN PROGRESS TOTAL
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Cost or valuation
At 1 January 2009 19,959 12,095 15,046 8,857 143 56,100
Additions — 4,943 1,884 2,056 450 9,333
Exchange differences 5,754 6 900 568 — 7,228
Disposals — (734) (276) (274) (123) (1,407)
At 31 December 2009 25,713 16,310 17,554 11,207 470 71,254
Accumulated depreciation
At 1 January 2009 — 112 4,413 4,121 — 8,646
Charge for the year — 304 983 1,230 — 2,517
Exchange differences — — 96 252 — 348
Disposals — (62) (12) (115) — (189)
At 31 December 2009 — 354 5,480 5,488 — 11,322
Net book value
At 31 December 2009 25,713 15,956 12,074 5,719 470 59,932
Cost or valuation
At 1 January 2008 24,889 11,802 15,677 8,215 95 60,678
Transfers — — 95 — (95) —
Additions 117 911 744 1,773 143 3,688
Exchange differences (5,047) (19) (706) (493) — (6,265)
Reclassified as held for sale (see note 11) — (65) (673) (472) — (1,210)
Reclassified to current assets — (534) — — — (534)
Disposals — — (91) (166) — (257)
At 31 December 2008 19,959 12,095 15,046 8,857 143 56,100
Accumulated depreciation
At 1 January 2008 — — 4,101 3,934 — 8,035
Charge for the year — 112 919 1,027 — 2,058
Exchange differences — — (89) (215) — (304)
Reclassified as held for sale (see note 11) — — (477) (458) — (935)
Disposals — — (41) (167) — (208)
At 31 December 2008 — 112 4,413 4,121 — 8,646
Net book value
At 31 December 2008 19,959 11,983 10,633 4,736 143 47,454
Net book value
At 1 January 2008 24,889 11,802 11,576 4,281 95 52,643
As at 31 December 2009, the Group had entered into contractual commitments for the acquisition of property, plant & equipment
amounting to US$611,000 (2008 US$3,062,000).
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 55
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2009
NOTE 17 Investments in associates
Details of the principal subsidiary and associated undertakings are given on page 72.
SHARE OF NET SHARE OF NET
ASSETS UNLISTED ASSETS UNLISTED
2009 2008
US$’000 US$’000
Share of net assets
At 1 January 97,363 106,429
Exchange differences 10,674 (15,300)
Purchases — 6,342
Share of reserves 609 5,028
Profit for the year 10,026 12,130
Net dividends received (6,966) (17,266)
At 31 December 111,706 97,363
Positive goodwill
At 1 January 881 615
Additions — 266
At 31 December 881 881
Net book value
At 31 December 112,587 98,244
At valuation
Unlisted (directors’ valuation) 162,000 130,000
The Group’s aggregate share of the summarised results of its associated undertakings is shown below:
THE NORTH BERTAM
PT AGRO PT KERASAAN AUSTRALIAN PASTORAL PROPERTIES
MUKO INDONESIA COMPANY PTY LIMITED SDN. BHD.
(31.53%) (38.00%) (34.37%) (40.00%) TOTAL
US$’000 US$’000 US$’000 US$’000 US$’000
2009
Revenue 16,541 3,040 11,031 6,920 37,532
Profit/(loss) after tax 8,423 1,660 (1,041) 984 10,026
Assets 39,961 5,524 90,327 23,299 159,111
Liabilities (2,307) (312) (39,170) (4,735) (46,524)
Net assets 37,654 5,212 51,157 18,564 112,587
2008
Revenue 21,745 3,554 19,570 10,158 55,027
Profit/(loss) after tax 8,410 1,456 (1,264) 3,528 12,130
Assets 32,026 5,314 72,509 28,029 137,878
Liabilities (2,687) (339) (31,157) (5,451) (39,634)
Net assets 29,339 4,975 41,352 22,578 98,244
PAGE 56
NOTE 18 Investments
2009 2008
Other available-for-sale financial investments (unlisted) US$’000 US$’000
At 1 January 2,679 3,101
Exchange differences 3 (92)
Disposal of investment (40) —
Provision for diminution in value of investment — (330)
At 31 December * 2,642 2,679
* The directors have reviewed the fair values of the Group’s available-for-sale investments. Previously, at 31 December 2008, they
concluded provision should be made for the diminution of the value of the investment in Asia Green Environmental Sdn. Bhd.
This investment was sold in October 2009, realising a profit over carrying value of US$103,000.
The Group continues to hold 20% of Kennedy, Burkill & Company Berhad, a company incorporated in Malaysia. Its net
assets at 31 December 2009 and its results for the year then ended were US$14,998,000 and US$445,000. This was
accounted for as trade investments, not using the equity method.
NOTE 19 Current biological assets
2009 2008
LIVESTOCK CROPS TOTAL LIVESTOCK CROPS TOTAL
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Gain in fair value – initial recognition — 726 726 — 801 801
Increase due to purchases 1,314 — 1,314 1,000 — 1,000
Decreases due to disposal and reclassification (841) (801) (1,642) (1,349) (1,057) (2,406)
Net exchange differences 380 — 380 (416) — (416)
Change in carrying value of biological assets 853 (75) 778 (765) (256) (1,021)
Brought forward at 1 January 1,071 801 1,872 1,836 1,057 2,893
Carried forward at 31 December 1,924 726 2,650 1,071 801 1,872
Livestock
Head sold (number)
Subsidiary 1,252 2,777
Cattle revenue (US$’000)
Subsidiary 970 2,300
Grain crops
Crops harvested (tonnes)
Subsidiary 6,643 9,617
Crop revenue (US$’000)
Subsidiary 883 2,039
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 57
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2009
NOTE 20 Inventories
2009 2008
US$’000 US$’000
Processed produce for sale 2,647 3,119
Estate stores 452 1,100
Nurseries 5,355 6,073
8,454 10,292
NOTE 21 Trade and other receivables
Trade receivables 613 2,093
Other receivables 5,853 2,119
Prepayments and accrued income 8,386 964
14,852 5,176
Sales of palm oil are generally made for cash payment in advance of delivery. The Group makes full provision against
invoices outstanding for more than 30 days. At 31 December 2009 there was no provision for impairment of trade
receivables (2008 US$ nil). The directors consider the carrying amount of trade and other receivables approximates
their fair value.
NOTE 22 Cash and cash equivalents
Cash and cash equivalents 38,081 56,472
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three
months or less. The carrying value of these assets approximates their fair value.
Cash and cash equivalent 38,081 56,472
Bank overdrafts (see note 24) (22,297) (18,986)
Net cash 15,784 37,486
NOTE 23 Trade and other payables
Trade payables 4,339 3,061
Amounts owed to associated undertakings 205 118
Other payables 2,972 2,059
7,516 5,238
The average credit period taken for trade purchases is 23 days. The Group has processes in place to ensure payables are paid
within the agreed terms.
PAGE 58
NOTE 24 Borrowings
2009 2008
US$’000 US$’000
Secured borrowing at amortised cost
Bank overdrafts 22,297 18,986
Bank loans 2,011 2,018
24,308 21,004
Total borrowings
Amount due for settlement within 12 months 24,308 18,986
Due in more than five years — 2,018
Borrowings on bank overdraft are treasury bills which are payable within one year but can be rolled over within the limits
of the facility. They are secured on the assets of the Woodlands cattle aggregation.
Analysis of borrowings by currency:
AUSTRALIAN
DOLLARS US DOLLARS TOTAL
US$’000 US$’000 US$’000
31 December 2009
Bank overdrafts 22,297 — 22,297
Bank loans — 2,011 2,011
22,297 2,011 24,308
31 December 2008
Bank overdrafts 18,986 — 18,986
Bank loans — 2,018 2,018
18,986 2,018 21,004
The other principal features of the Group’s borrowings are as follows:
(i) Bank overdrafts are repayable on demand. Overdrafts of US$23.7 million (2008 US$19 million) have been secured by
a charge over certain Group assets in Australia.
(ii) The Group has one outstanding bank loan provided by Deutsche Investitions – und Entwicklungsgesellschaft (DEG),
secured on the assets of the subsidiary developing the Group’s estate on Bangka Island. This Group has arranged, in
consultation with the lender, to repay this loan early, in May 2010.
2009 2008
US$’000 US$’000
More than five years — 2,018
Undrawn borrowing facilities
At 31 December 2009, the Group had available US$ nil (2008 US$17.8 million) of undrawn committed borrowing facilities in
respect of which all conditions precedent had been met in addition to an undrawn overdraft facility of A$500,000 (2008
A$500,000).
Interest rates
The weighted-average interest rates paid during the year were as follows:
2009 2008
% %
Bank overdrafts 4.5 8.0
Bank loans 5.7 7.3
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 59
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2009
NOTE 25 Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon:
ACCELERATED RETIREMENT- OTHER
TAX REVALUATION BIOLOGICAL BENEFIT TIMING
DEPRECIATION OF LAND ASSETS OBLIGATIONS DIFFERENCES TOTAL
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
At 1 January 2009 559 2,567 13,442 (390) (3,458) 12,720
(Credit)/charge to income (10) — 578 135 1,569 2,272
Exchange differences 131 740 — (51) (369) 451
At 31 December 2009 680 3,307 14,020 (306) (2,258) 15,443
At 1 January 2008 482 3,220 11,133 (415) (2,388) 12,032
Charge/(credit) to income 148 — 2,309 (40) (1,348) 1,069
Exchange differences (71) (653) — 65 278 (381)
At 31 December 2008 559 2,567 13,442 (390) (3,458) 12,720
Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances
(after offset) for financial reporting purposes:
2009 2008
US$’000 US$’000
Deferred tax assets
To be recovered within 12 months — —
To be recovered after 12 months (1,373) (2,334)
(1,373) (2,334)
Deferred tax liabilities 16,816 15,054
15,443 12,720
At the balance-sheet date, the Group had unused tax losses of US$21,218,000 (2008 US$20,983,000) available for offset
against future profits. A deferred tax asset has been recognised in respect of US$9,074,000 (2008 US$13,999,000) of such
losses. No deferred tax asset has been recognised in respect of the remaining US$11,514,000 (2008 US$6,984,000) due
to the unpredictability of future profit streams. These losses may be carried forward indefinitely.
At the balance-sheet date, the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries
for which deferred tax liabilities have not been recognised was US$171,205,000 (2008 US$148,751,000). No liability has
been recognised in respect of these differences because either the Group is in a position to control the timing of the reversal
of the temporary differences, or such a reversal would not give rise to an additional tax liability.
At the balance-sheet date, the aggregate amount of temporary differences associated with undistributed earnings of associates
for which deferred tax liabilities have not been recognised was US$34,961,000 (2008 US$23,946,000). No liability has been
recognised in respect of these differences because either the Group is in a position to control the timing of the reversal of the
temporary differences or such a reversal would not give rise to an additional tax liability.
At the balance-sheet date, the aggregate amount of temporary differences associated with outstanding executive share options
for which deferred tax assets have not been recognised was US$7,047,000 (2008 US$3,027,000). No asset has been recognised
in respect of these differences due to the unpredictability of future profit streams.
PAGE 60
NOTE 26 Retirement-benefit obligations
The Group’s only obligation relates to an unfunded, non-contributory, post-employment benefit scheme in Indonesia.
A lump sum is paid to employees on retirement or on leaving the Group’s employment. This terminal benefit is accrued
by the Group and charged in the income statement on the basis of individuals’ service at the balance-sheet date. Retirement
is assumed at the earlier of age 55 years or 30 years’ service. No allowance is made for mortality or internal promotion.
The main assumptions used to assess the Group’s liability are:
2009 2008
% %
Discount rate 10.5 12.0
Salary increase per annum 8.0 8.0
US$’000 US$’000
Reconciliation of scheme liabilities:
Current-service cost 193 146
Interest cost 168 143
Actuarial gains and losses (3) 42
Difference on settlement (607) —
(249) 331
Less: Benefits paid out (68) (111)
Movement in the year (317) 220
Brought forward at 1 January 1,377 1,375
Exchange differences 191 (218)
Carried forward at 31 December 1,251 1,377
NOTE 27 Called-up share capital
ALLOTTED, FULLY ALLOTTED, FULLY
AUTHORISED PAID AND VOTING AUTHORISED PAID AND VOTING
NUMBER NUMBER £’000 US$’000
Shares of 10p each
At 1 January 2009 87,000,000 52,211,585 8,700 8,812
Issued during the year — 59,730 — 9
At 31 December 2009 87,000,000 52,271,315 8,700 8,821
At 1 January 2008 87,000,000 51,690,758 8,700 8,728
Issued during the year — 520,827 — 84
At 31 December 2008 87,000,000 52,211,585 8,700 8,812
During the year, 59,730 (2008 - 131,250) 10p shares were issued as a result of the exercise of share options. Total cash
proceeds received by the Company were US$99,675 (2008 US$280,445).
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 61
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2009
NOTE 28 Share-based payments
The Company has a share-option scheme for directors and selected employees of the Group. Options are exercisable at a price
equal to the quoted market price of the Company’s shares on the date of grant. The vesting period is three years. If the options
remain unexercised after a period of ten years from the date of grant, the options expire. Options are forfeited if the employee
leaves the Group before the options vest. Details of the share options outstanding during the year are as follows:
2009 2008
WEIGHTED-AVERAGE WEIGHTED-AVERAGE
NUMBER OF EXERCISE PRICE NUMBER OF EXERCISE PRICE
SHARE OPTIONS (IN BRITISH PENCE) SHARE OPTIONS (IN BRITISH PENCE)
Outstanding at beginning of period 2,566,461 116.2 2,622,711 113.9
Granted during the period 50,000 335.0 75,000 159.5
Exercised during the period (59,730) 103.3 (131,250) 95.4
Outstanding at the end of the period 2,556,731 120.8 2,566,461 116.2
Exercisable at the end of the period 2,356,731 2,416,461
The weighted-average share price at the date of exercise for share options exercised during the period was 309p (2008 – 244p).
The options outstanding at 31 December 2009 had a weighted-average remaining contractual life of 3.1 years and exercise
prices in the range 75.5p to 385.0p. The Group recognised total expenses of US$60,000 related to equity-settled share-based
payment transactions (2008 US$49,000).
The fair value of options granted in the year was established using the Black Scholes valuation model using the following inputs:
2009 2008
Share price at issue (pence per share) 335.0 159.5
Volatility (%) 20.7 21.7
Dividend yield (%) 2.1 4.4
Expected option life (years) 7.0 7.0
Annual risk-free interest rate (%) 3.1 3.5
The details of the directors’ share options are set out in the report of the board to the shareholders on directors’ remuneration
on page 36.
NOTE 29 Reserves
SHARE- CAPITAL- SHARE- SHARE OF FOREIGN-
PREMIUM REVALUATION REDEMPTION MERGER OPTION ASSOCIATES’ EXCHANGE RETAINED
ACCOUNT RESERVE RESERVE RESERVE RESERVE RESERVES RESERVE TOTAL EARNINGS
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
At 1 January 2009 19,680 10,280 3,896 1,056 514 43,136 1,559 80,121 160,245
Exchange differences — 1,728 — — — 10,592 (3,148) 9,172 2,633
Issue of shares 90 — — — — — — 90 —
Share-based payments — — — — 26 — — 26 34
Other — (33) — — — — — (33) —
Unrealised share of
movements in associated
undertakings’ reserves — — — — — 876 — 876 —
Transfer on acquisition
of minority — — — — — — — — 1,296
Dividends from
associated undertakings — — — — — (6,966) — (6,966) 6,966
Profit for the
financial year — — — — — 10,026 — 10,026 8,224
Dividend paid
(see note 12) — — — — — — — — (6,033)
At 31 December 2009 19,770 11,975 3,896 1,056 540 57,664 (1,589) 93,312 173,365
PAGE 62
NOTE 29 Reserves CONTINUED
SHARE- CAPITAL- SHARE- SHARE OF FOREIGN-
PREMIUM REVALUATION REDEMPTION MERGER OPTION ASSOCIATES’ EXCHANGE RETAINED
ACCOUNT RESERVE RESERVE RESERVE RESERVE RESERVES RESERVE TOTAL EARNINGS
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
At 1 January 2008 18,352 16,974 3,896 1,056 483 57,437 (140) 98,058 116,626
Exchange differences — (1,532) — — — (14,193) 1,699 (14,026) (6,182)
Issue of shares 1,328 — — — — — — 1,328 —
Share-based payments — — — — 31 — — 31 17
Other — — — — — — — — 150
Released to income
statement — (5,162) — — — — — (5,162) 4,969
Unrealised share
of movements
in associated
undertakings’ reserves — — — — — 1,321 — 1,321 —
Dividends from
associated
undertakings — — — — — (17,266) — (17,266) 17,266
Goodwill on acquisition
of associate — — — — — 3,707 — 3,707 (3,441)
Profit for the
financial year — — — — — 12,130 — 12,130 37,659
Dividend paid
(see note 12) — — — — — — — — (6,819)
At 31 December 2008 19,680 10,280 3,896 1,056 514 43,136 1,559 80,121 160,245
The revaluation reserve relates to the revaluation surplus recognised under UK GAAP. On transition to IFRS, the Group elected
to treat the revalued amount of the fixed assets as their deemed cost.
NOTE 30 Minority interests
2009 2008
US$’000 US$’000
Opening balance 1 January 12,197 11,947
Share of profit in the year 2,460 3,807
Dividends paid (1,144) (1,085)
Sale of subsidiary — (2,472)
Transfer on sale to Group (1,296) —
Closing balance 31 December 12,217 12,197
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 63
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2009
NOTE 31 Disposal of subsidiary
On 30 July 2009, the Group disposed of its wholly-owned subsidiary Supara Company Limited for a cash consideration
of US$2,231,000.
SUPARA COMPANY LIMITED
US$’000
Property , plant and equipment 265
Net current assets 1,680
Net assets at date of disposal 1,945
Gain on disposal 1,555
Total consideration 2,692
Satisfied by:
Cash and cash equivalents 2,231
Cancellation of debts receivable from the Group 461
2,692
Net cash inflow arising on disposal:
Consideration received in cash 2,231
Less: cash and cash equivalent disposed of 461
2,692
NOTE 32 Note to the consolidated cash-flow statement
2009 2008
US$’000 US$’000
Operating profit – continuing operations 15,941 20,639
– discontinued operations 35 1,943
Biological gain (22,014) (23,205)
Goodwill — (3,441)
Depreciation of property, plant and equipment 2,517 2,058
Impairment — 422
Retirement-benefit obligations 358 220
Share-based payments 60 49
Operating cash flows before movements in working capital (3,103) (1,316)
Decrease/(increase) in inventories 2,505 (861)
Increase in receivables (3,212) (165)
Increase/(decrease) in payables 1,731 (7,858)
Cash used in operating activities (2,079) (10,200)
Income tax paid (6,504) (9,467)
Interest paid (1,226) (2,057)
Net cash from operating activities (9,809) (21,724)
PAGE 64
NOTE 33 Financial instruments
Capital-risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising
the return to shareholders. The capital structure of the Group consists of debt, (see note 24), cash and cash equivalents and
equity attributable to the owners of the parent, comprising issued capital, reserves and retained earnings. The Group is not
subject to any externally-imposed capital requirements.
The Group’s board continues to monitor the capital structure based on the funding requirements of the Group. At the balance-
sheet date the Group had net funds of US$15,784,000 (2008 US$37,486,000) being the net of cash and cash equivalents as
shown in note 22, and equity attributable to the owners of the parent of US$275,498,000 (2008 US$249,178,000). The board
intends to fund the planned Indonesian expansion by a combination of the Group’s cash resources, disposal of its remaining
Malaysian interests and by securing additional borrowings.
Categories of financial instruments
All of the Group’s financial assets are classified as loans and receivables, with the exception of its other investments shown
in note 18 which are classified as available-for-sale financial assets. All of the Group’s financial liabilities are measured at
amortised cost.
In the opinion of the directors, there was no significant difference between the carrying values and estimated fair values
of the Group’s primary financial assets and liabilities at either the current, or preceding, financial year end.
Financial-risk-management objectives
The main risks arising from the Group’s financial instruments are foreign-currency risk, interest-rate risk, credit risk and liquidity
risk. The board reviews and agrees the policies for managing these risks. The policies and the impact of these risks on the
Group’s balance sheet at the end of the financial year are summarised below.
Foreign-currency risk
The majority of the Group’s operations are undertaken in Indonesia, Malaysia and Australia. The Group does not have
transactional currency exposures arising from sales or purchases by an operating unit but the Group’s balance sheet can be
significantly affected by movements in exchange rates. Whilst the Group’s trading takes place in local currencies in South East
Asia, relevant commodity prices are determined in US Dollars by a world market which reduces the Group’s currency risk.
The Group has a no hedging policy and does not make use of forward-currency contracts.
The currency profile of the Group’s monetary assets, excluding trade and other receivables, are as follows:
2009 2008
US$’000 US$’000
US Dollar 30,542 37,818
Malaysian Ringgit 3,892 11,346
Sterling 555 5,896
Australian Dollar 634 910
Indonesian Rupiah 2,458 328
Thai Baht — 174
38,081 56,472
The currency profile of the Group’s monetary liabilities, excluding trade and other payables, is shown in note 24.
The Group is exposed to changes in foreign-currency exchange rates, both in relation to the impact of movements on its
non-US Dollar monetary assets and also in relation to the consolidation of its non-US Dollar functional currency subsidiary
and associated undertakings. The most significant sensitivities arise in respect of movements in the Australian Dollar and
Malaysian Ringgit. Management estimates that a 10% weakening of the US Dollar against these currencies would have the
following impact on the result and net assets of its two relevant associated undertakings:
Australian Dollar
Result for the year (487) (377)
Net assets (4,410) (3,738)
Malaysian Ringgit
Result for the year (671) (1,288)
Net assets (2,755) (7,287)
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 65
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2009
NOTE 33 Financial instruments CONTINUED
Interest-rate risk
In order to optimise the income received on its cash deposits the Group continuously reviews the terms of these deposits
to take advantage of the best market rates. UK funds are passed through a broker with banks who have a credit rating
of at least AA minus.
The Group’s only financial liabilities other than short-term trade and other payables are the borrowings referred to in note 24.
The overdraft is denominated in Australian Dollars and interest is charged at a variable rate linked to the Australian base rate.
The loan is denominated in US Dollars and interest is charged at a floating rate linked to US Dollar LIBOR.
The Group’s net position means it is not materially exposed to changes in interest rates on its floating-rate financial assets
and liabilities.
Credit risk
The Group’s credit risk on cash deposits is described above. Regarding trade receivables, the Group performs a credit
evaluation before extending credit to customers. The Group does not have any significant concentrations of credit risk
(defined by management as more than 5% of gross monetary assets), other than in relation to bank deposits which
management seeks to mitigate through the use of banks with high credit ratings.
The Group’s maximum exposure to credit risk is represented by the carrying amount of financial assets in the financial statements.
Liquidity risk
The Group manages liquidity risk by maintaining adequate cash reserves and banking facilities through active monitoring
of the Group’s forecast and actual cash flows.
All of the Group’s monetary financial assets and liabilities have a maturity profile of less than one year. Certain of the Group’s
short-term borrowings are made under longer-term facility agreements. The maturity profile for those financial liabilities is
shown in note 24.
NOTE 34 Related-party transactions
Remuneration of key management personnel
The remuneration of the directors, who are the key management personnel of the Group, is set out in the report of the board
to the shareholders on directors’ remuneration on pages 35 and 36. The directors’ participation in the executive share-option
scheme is disclosed on page 36.
Transactions with related parties
No director had an interest in any transaction with the Group at any time during the year. The Group undertook the following
transactions with related parties:
2009 2008
US$’000 US$’000
Agistment revenue on livestock belonging to
The North Australian Pastoral Company Pty Limited 378 165
NOTE 35 Post-balance-sheet events
Purchase of shares in associated undertaking
On 18 March 2010 the Group contracted to acquire a further 5.31% of its Indonesian associated plantation company, PT Agro
Muko. The cost of this investment was US$7.31 million and the holding in PT Agro Muko increased from 31.53% to 36.84%.
New financing facility
In March 2010 the Group agreed a 4½-year loan facility of 60 million Ringgit with AmBank (Malaysia) Berhad, a regional bank
based in Malaysia.
PAGE 66
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF M. P. EVANS GROUP PLC
We have audited the parent-Company financial
statements of M. P. Evans Group PLC for the year
ended 31 December 2009 which comprise the
Company balance sheet and the related notes.
The financial-reporting framework that has been
applied in their preparation is applicable law and
UK Generally-Accepted Accounting Principles
(“UK GAAP”), as adopted by the European Union and
as applied in accordance with the Companies Act 2006.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS
AND AUDITORS
As explained more fully in the directors’
responsibilities statement set out on page 31,
the directors are responsible for the preparation
of the financial statements and for being satisfied
that they give a true and fair view. Our responsibility
is to audit the financial statements in accordance
with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require
us to comply with the Auditing Practices Board’s
Ethical Standards for Auditors.
This report, including the opinions, has been
prepared for, and only for, the Company’s members
as a body in accordance with chapter 3 of part 16
of the Companies Act 2006 and for no other purpose.
We do not, in giving these opinions, accept or
assume responsibility for any other purpose or to
any other person to whom this report is shown or
into whose hands it may come save where expressly
agreed by our prior consent in writing.
SCOPE OF THE AUDIT OF THE FINANCIAL
STATEMENTS
An audit involves obtaining evidence about the
amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the
financial statements are free from material misstatement,
whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are
appropriate to the parent company’s circumstances
and have been consistently applied and adequately
disclosed; the reasonableness of significant
accounting estimates made by the directors; and the
overall presentation of the financial statements.
OPINION ON FINANCIAL STATEMENTS
In our opinion the parent-Company financial statements:
give a true and fair view of the state of the
Company’s affairs as at 31 December 2009 and
of its loss for the year then ended;
have been properly prepared in accordance
with UK GAAP; and
have been prepared in accordance with the
requirements of the Companies Act 2006.
OPINION ON OTHER MATTER PRESCRIBED
BY THE COMPANIES ACT 2006
In our opinion the information given in the directors’
report for the financial year for which the parent-
Company financial statements are prepared is consistent
with the parent-Company financial statements.
MATTERS ON WHICH WE ARE REQUIRED
TO REPORT BY EXCEPTION
We have nothing to report in respect of the following
matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
adequate accounting records have not been kept
by the parent Company, or returns adequate for
our audit have not been received from branches
not visited by us; or
the parent-Company financial statements are
not in agreement with the accounting records
and returns; or
certain disclosures of directors’ remuneration
specified by law are not made; or
we have not received all the information and
explanations we require for our audit.
OTHER MATTER
We have reported separately on the Group financial
statements of M.P. Evans Group PLC for the year
ended 31 December 2009
David A. Snell (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors,
London
5 May 2010
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 67
PARENT-COMPANY BALANCE SHEET
AT 31 DECEMBER 2009
2009 2008
NOTE US$’000 US$’000 US$’000 US$’000
Fixed assets
Tangible fixed assets (iv) 883 922
Investments (v) 44,210 44,199
45,093 45,121
Current assets
Debtors (vi) 41,579 67,010
Cash at bank and in hand 19,723 33,721
61,302 100,731
Total assets 106,395 145,852
Creditors – amounts falling due
within one year (vii) (52,363) (82,492)
Net current assets 8,939 18,239
Total assets less current liabilities 54,032 63,360
Capital and reserves
Called-up share capital (viii) 8,821 8,812
Other reserves (ix) 25,640 25,524
Profit and loss account retained earnings (ix) 19,571 29,024
54,032 63,360
These financial statements were approved by the board of directors on 5 May 2010 and signed on its behalf
Tristan Price Philip Fletcher
Directors
PAGE 68
NOTES TO THE PARENT-COMPANY BALANCE SHEET
FOR THE YEAR ENDED 31 DECEMBER 2009
NOTE i Significant accounting policies
Basis of accounting
The financial statements of the Company are presented as required by the Companies Act 2006. They have been prepared
under the historical-cost convention and in accordance with applicable accounting standards in the United Kingdom.
The principal accounting policies are summarised below. The directors have concluded that the functional currency is the US Dollar.
Tangible fixed assets
Freehold property is not depreciated as the charge would be immaterial, but is tested for impairment. Plant, equipment and
vehicles are depreciated over their estimated useful lives at 25%.
Investments
Fixed-asset investments in subsidiaries are shown at cost less provision for impairment.
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet at fair value when the Group becomes
a party to the contractual provisions of the instrument.
TRADE AND OTHER RECEIVABLES – these represent amounts due from customers in the normal course of business, are not interest
bearing, and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts,
which are charged to the income statement.
CASH AND CASH EQUIVALENTS – these include cash at hand and deposits held with banks with original maturities of three months or less.
TRADE AND OTHER PAYABLES – these are initially measured at fair value, and are subsequently measured at amortised cost, using
the effective-interest-rate method.
NOTE ii Profit for the year
As permitted by section 408 of the Companies Act 2006, the Company has elected not to present its own profit and loss
account for the year. M.P.Evans Group PLC reported a loss for the financial year ended 31 December 2009 of US$3,454,000
(2008 profit US$27,843,000).
The auditors’ remuneration for audit and other services is disclosed in note 9 to the consolidated financial statements.
NOTE iii Employees
2009 2008
US$’000 US$’000
Employee costs during year
Wages and salaries 981 1,113
Social security costs 130 138
Pension costs 142 161
1,253 1,412
NUMBER NUMBER
Average number of persons employed
Staff 4 4
Directors 2 2
6 6
NOTE iv Tangible assets
PLANT, EQUIPMENT
BUILDINGS AND VEHICLES TOTAL
US$’000 US$’000 US$’000
Cost
At 1 January 2009 834 578 1,412
Additions — 9 9
Disposals — — —
At 31 December 2009 834 587 1,421
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 69
NOTES TO THE PARENT-COMPANY BALANCE SHEET
FOR THE YEAR ENDED 31 DECEMBER 2009
NOTE iv Tangible assets CONTINUED
PLANT, EQUIPMENT
BUILDINGS AND VEHICLES TOTAL
US$’000 US$’000 US$’000
Accumulated depreciation
At 1 January 2009 — 490 490
Disposals — — —
Charge for the year — 48 48
At 31 December 2009 — 538 538
Net book value
At 31 December 2009 834 49 883
Net book value
At 31 December 2008 834 88 922
NOTE v Investments
PROVISIONS NET BOOK
AT COST FOR IMPAIRMENT VALUE
Subsidiary undertakings US$’000 US$’000 US$’000
At 1 January 2009 57,895 13,696 44,199
Additions 11 — 11
At 31 December 2009 57,906 13,696 44,210
The following companies are the principal direct subsidiary companies of M. P. Evans Group PLC:
COUNTRY OF HOLDING
OPERATION %
M.P. Evans & Co. Limited UK 100
Sungkai Holdings Limited UK 100
Bertam (UK) Limited UK, Australia 100
Sungkai Estates Limited UK 100
The Singapore Para Rubber Estates, Limited UK 100
Further information on the principal subsidiaries of the Group is given on page 72.
NOTE vi Debtors
2009 2008
US$’000 US$’000
Amounts owed by subsidiary undertakings 41,519 66,966
Other debtors 27 19
Prepayments and accrued income 33 25
41,579 67,010
PAGE 70
NOTE vii Creditors – amounts falling due within one year
2009 2008
US$’000 US$’000
Amounts owed to subsidiary undertakings 50,676 81,394
Other creditors 1,687 1,098
52,363 82,492
NOTE viii Called-up share capital
See note 27 to the consolidated financial statements.
NOTE ix Reserves
SHARE- CAPITAL- PROFIT
PREMIUM REDEMPTION MERGER OTHER AND LOSS
ACCOUNT RESERVE RESERVE RESERVES TOTAL ACCOUNT
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Issue of shares 19,680 3,896 1,434 514 25,524 29,024
Issue of shares 90 — — — 90 —
Share-based payments — — — 26 26 34
Loss for the financial year — — — — — (3,454)
Dividend (see note 12) — — — — — (6,033)
At 31 December 2009 19,770 3,896 1,434 540 25,640 19,571
NOTE x Reconciliation of movements in shareholders’ funds
2009 2008
US$’000 US$’000
(Loss)/profit for the financial year (3,454) 27,843
Dividends paid (6,033) (6,819)
(9,487) 21,024
Issue of shares 99 1,412
Share-based payments 60 48
Net (reduction in)/addition to shareholders’ funds (9,328) 22,484
Opening shareholders’ funds 63,360 40,876
Closing shareholders’ funds 54,032 63,360
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 71
SUBSIDIARY AND ASSOCIATED UNDERTAKINGS
SUBSIDIARY UNDERTAKINGS
Details of the principal subsidiary undertakings as at 31 December 2009 are as follows:
% OF SHARES
AND VOTING COUNTRY OF COUNTRY OF
NAME OF SUBSIDIARY RIGHTS HELD INCORPORATION OPERATION FIELD OF ACTIVITY
PT Bilah Plantindo 80 Indonesia Indonesia Production of oil palm f.f.b.
PT Pangkatan Indonesia 80 Indonesia Indonesia Production of crude palm oil
and palm kernels
PT Sembada Sennah Maju 80 Indonesia Indonesia Production of oil palm f.f.b.
PT Simpang Kiri Plantation 80 Indonesia Indonesia Production of oil palm f.f.b.
Indonesia
PT Gunung Pelawan Lestari 90 Indonesia Indonesia In the process of development
into an oil-palm plantation
PT Prima Mitrajaya Mandiri 92.5 Indonesia Indonesia In the process of development
into an oil-palm plantation
PT Teguh Jayaprima Abadi 92.5 Indonesia Indonesia In the process of development
into an oil-palm plantation
PT Evans Indonesia 100 Indonesia Indonesia Provision of consultancy services
Gubbagunyah Partnership 100 Australia Australia Beef-cattle farming
Bertam Consolidated Rubber 100 England Malaysia Production of oil palm f.f.b.
Company Limited and Wales and holding of investments
Bertam (U.K.) Limited* 100 England United Kingdom Investment holding company
and Wales and Australia
The shareholdings in the above companies represent shares except Gubbagunyah Partnership which has no class of share.
All of the above subsidiaries are held through intermediary holding companies with the exception of those marked * which are held
directly by M. P. Evans Group PLC.
ASSOCIATED UNDERTAKINGS
Details of the associated undertakings as at 31 December 2009 are as follows:
ISSUED, FULLY-PAID % COUNTRY OF COUNTRY OF
SHARE CAPITAL HELD INCORPORATION OPERATION FIELD OF ACTIVITY
Unlisted
PT Agro Muko Rp54.58m 31.53 Indonesia Indonesia Production of palm oil,
palm kernels and rubber
PT Kerasaan Indonesia Rp138.07m 38.00 Indonesia Indonesia Production of oil palm f.f.b.
The North Australian Pastoral A$16.80m 34.37 Australia Australia Beef-cattle farming
Company Pty Limited
Bertam Properties Sdn. Berhad. Rp60.00m 40.00 Malaysia Malaysia Property development
The shareholdings in the above companies represent shares. The investments in associated undertakings are held by
subsidiary undertakings.
PAGE 72
ANALYSIS OF LAND AREAS
AT 31 DECEMBER 2009
The information in the following pages does not form part of the audited financial statements.
UNPLANTED &
CONSERVATION GROUP CO-OPERATIVE
OWNERSHIP MATURE IMMATURE AREAS COMPANIES SCHEMES TOTAL
% HA HA HA HA HA HA
PLANTATION
Subsidiaries
– oil palm
Pangkatan
Bilah
Sennah
Simpang Kiri
Bangka
East Kalimantan
Bertam
Total subsidiaries
Associates
80.00
80.00
80.00
80.00
90.00
92.50
100.00
Agro Muko – oil palm
Agro Muko – rubber
31.53
31.53
Kerasaan – oil palm
38.00
Total associates
Total land
2,250
2,410
1,290
2,287
1,207
—
65
9,509
16,326
1,288
17,614
2,044
19,658
205
372
323
174
818
7,256
—
9,148
1,529
552
2,081
271
2,352
Total effective ownership – Indonesia
Of which: oil palm
15,774
15,368
9,907
9,733
19,305
19,305
—
—
—
—
4,176
4,060
—
8,236
—
—
—
—
—
2,586
2,961
1,813
2,654
12,026
23,060
70
45,170
21,074
1,840
22,914
2,362
25,276
8,236
70,466
131
179
200
193
5,825
11,744
5
2,586
2,961
1,813
2,654
7,850 *
19,000 *
70
18,277
36,934
3,219
—
3,219
47
3,266
21,074
1,840
22,914
2,362
25,276
62,210
44,986
44,906
31,000
34.37
—
—
— 5,800,000
100.00
CATTLE
Subsidiary
Woodlands
Associate
NAPCo
PROPERTY DEVELOPMENT
Associate
Bertam Properties Sdn. Berhad 40.00
177
—
330
507
* Estimated area, of which the currently-estimated total plantable area is 17,000 hectares
in East Kalimantan and 7,000 hectares on Bangka.
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 73
5-YEAR SUMMARY
2009 2008 2007 2006 2005
TONNES TONNES TONNES TONNES TONNES
Production
Palm oil 27,000 22,300 19,500 24,000 21,600
Palm kernels 6,800 6,100 5,400 6,000 5,000
Crops
Oil palm fresh fruit bunches (“f.f.b.”)
Majority-owned estates – Indonesia 171,300 144,700 129,000 155,000 156,200
– Malaysia 1,700 16,800 32,600 58,300 66,500
173,000 161,500 162,500 213,300 222,700
Associated-company estates 384,200 355,200 355,800 364,600 334,900
US$ US$ US$ US$ US$
Average sale prices
Palm oil – Rotterdam c.i.f. per tonne 680 941 781 475 420
Exchange rates
US$1 = Indonesian Rupiah – average 10,374 9,657 9,140 9,167 9,712
– year end 9,400 10,950 9,419 8,994 9,840
US$1 = Australian Dollar – average 1.28 1.20 1.20 1.33 1.31
– year end 1.11 1.43 1.14 1.27 1.36
US$1 = Malaysian Ringgit – average 3.52 3.33 3.44 3.67 3.79
– year end 3.42 3.46 3.31 3.53 3.78
£1 = US Dollar – average 1.57 1.85 2.00 1.84 1.82
– year end 1.61 1.44 1.99 1.96 1.72
US$’000 US$’000 US$’000 US$’000 £’000
Revenue 28,391 30,387 21,265 20,425 12,182
Gross profit 11,705 13,834 10,619 6,345 5,082
Group-controlled profit before taxation 15,338 23,447 17,286 8,211 7,482
US CENTS US CENTS US CENTS US CENTS PENCE
Basic earnings per share – continuing 31.92 48.88 70.94 32.71 8.67
– continuing
and discontinued 34.94 96.26 82.32 49.75 —
PENCE PENCE PENCE PENCE PENCE
Dividend per share 7.00 7.00 7.00 6.50 6.25
US$’000 US$’000 US$’000 US$’000 £’000
Equity attributable to members of
M. P. Evans Group PLC 275,498 249,178 223,412 183,695 70,970
Net cash (outflow)/inflow from
operating activities (9,809) (21,724) (4,850) (9,234) 5,499
* The figures for 2005 have not been restated following the adoption of IFRS, and hence reflect the Group’s result
expressed under UK-GAAP.
PAGE 74
NOTICE OF MEETING
NOTICE IS HEREBY GIVEN that the annual general meeting
of M.P. Evans Group PLC will be held at Tallow Chandlers’
Hall, 4 Dowgate Hill, London EC4R 2SH on 11 June 2010
at 12 noon for the following purposes:
AS ORDINARY BUSINESS
1 To receive and consider the report of the directors and
the audited consolidated financial statements for the
year ended 31 December 2009.
RESOLUTION ON FORM OF PROXY No 1
7 That the directors are empowered for the purposes of
section 570 of the Companies Act 2006 to:
(a) allot equity securities (within the meaning of section
560 of that Act) for cash pursuant to the authority
conferred by resolution 6; and
(b) sell equity securities (within the meaning of section
560 of that Act) for cash which before the sale were
held by the Company as treasury shares
as if section 561 of that Act did not apply to that
allotment or sale on the following terms:
2 To re-elect Mr T R J Price as a director.
RESOLUTION ON FORM OF PROXY No 2
(a)
this power is limited to the allotment or sale of equity
securities:
3 To re-elect Mr K P Legg as a director.
(i)
RESOLUTION ON FORM OF PROXY No 3
4 To re-appoint PricewaterhouseCoopers LLP as auditors and
to authorise the directors to determine their remuneration.
RESOLUTION ON FORM OF PROXY No 4
in connection with a rights or other issue
in favour of shareholders where the equity
securities respectively attributable to the interests
of all shareholders (other than the Company)
are proportionate (as nearly as may be) to the
respective numbers of shares held by them
but the directors may make such exclusions
or other arrangements as they judge necessary
or expedient to deal with fractional entitlements
or legal or practical problems under the laws
in any territory or the requirements of a
regulatory body or stock exchange or other
authority in any territory; and
(ii) otherwise than under paragraph (i), up to a total
nominal value of £532,344;
(b) This power expires (unless previously renewed, varied
or revoked) on the earlier of the date of the Company’s
next annual general meeting and 30 June 2011;
(c) before this power expires, the directors may make
an offer or agreement which would or might require
equity securities to be allotted or sold after it expires
and the directors may allot or sell equity securities
in pursuance of such an offer or agreement as if this
power had not expired; and
(d)
this power is in substitution of all unexercised existing
powers given for the purposes of section 570 of that Act.
RESOLUTION ON FORM OF PROXY No 7
8 That the Company is hereby generally and
unconditionally authorised to make market purchases
(within the meaning of section 693 of the Companies
Act 2006) of shares of 10p each in the capital of the
Company provided that:
(a)
the maximum number of shares hereby authorised
to be purchased is 5,323,441;
(b)
(c)
the minimum price which may be paid for each
share is 10p (exclusive of expenses);
the maximum price (exclusive of expenses) which
may be paid for each share is an amount equal to
105% of the average of the middle-market quotations
for such shares as derived from the Daily Official List
of the London Stock Exchange for the five business
days immediately preceding the day of purchase; and
AS SPECIAL BUSINESS
To consider and, if thought fit, pass the following resolutions,
of which resolution 5 will be proposed as an ordinary
resolution and resolutions 6, 7, 8, and 9 will be proposed
as special resolutions:
5 That, in substitution for all existing unexercised authorities,
the directors are generally and unconditionally authorised
to exercise all the Company’s powers to allot shares or
to grant rights to subscribe for, or to convert any security
into shares in the Company (within the meaning of
section 551 of the Companies Act 2006) up to a total
nominal amount of £1,774,303 on the following terms:
(a)
this authority expires (unless previously renewed,
varied or revoked) on the earlier of the date of
the Company’s next annual general meeting and
30 June 2011; and
(b) before this authority expires, the directors may make
an offer or agreement which would or might require
shares in the Company to be allotted or rights to be
granted after it expires and the directors may allot
shares in the Company in pursuance of such an offer
or agreement as if this authority had not expired.
RESOLUTION ON FORM OF PROXY No 5
6 That the directors be generally and unconditionally
authorised to exercise the power contained in the articles
of association of the Company as from time to time varied
so that, to the extent and in the manner announced and
determined by the directors, shareholders will be entitled
to elect to receive an allotment of additional shares
credited as fully paid in lieu of any cash dividend (or part
thereof) paid by the directors or declared by the Company
provided that this resolution shall expire at the end of the
fifth annual general meeting of the Company after the
date on which this resolution is passed.
RESOLUTION ON FORM OF PROXY No 6
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 75
NOTICE OF MEETING continued
(d)
the authority hereby conferred shall expire at the
conclusion of the next annual general meeting of the
Company or on 30 June 2011 whichever shall be the
earlier save that the Company may, before the expiry
of this authority, make a contract of purchase which
will or may be executed wholly or partly after such
expiry and may make a purchase of shares pursuant
to any such contract.
of identification by the chairman of the meeting be
adopted as the articles of association of the Company
in substitution for the existing articles of association.
RESOLUTION ON FORM OF PROXY No 9
RESOLUTION ON FORM OF PROXY No 8
AS ORDINARY BUSINESS
9
That the articles of association in the form of those
produced to the meeting and signed for the purpose
10 To declare a final dividend.
RESOLUTION ON FORM OF PROXY No 10
By order of the board
J F Elliott
Company Secretary
5 May 2010
NOTES
1 A member of the Company entitled to attend, speak and
vote at the meeting convened by this notice may appoint
a proxy to exercise all or any of his rights to attend, speak
and vote at the meeting on his or her behalf. A proxy
need not be a member of the Company. Appointment of
a proxy will not subsequently preclude a member from
attending and voting at the meeting in person if he or she
so wishes. A member may appoint more than one proxy
provided that each proxy is appointed to exercise the
rights attached to different shares held by the member.
The form of proxy contains instructions on how to appoint
more than one proxy.
2 A form of proxy for use at the meeting is enclosed. Please
return the form of proxy as soon as possible. To be valid, it
must be received by post or (during normal business hours
only) by hand at the office of the registrars, Computershare
Investor Services PLC, at The Pavilions, Bridgwater Road,
Bristol, BS99 6ZY no later than 12 noon on 9 June 2010
(or, if the meeting is adjourned, no later than 48 hours
before the time for holding the adjourned meeting, or, if
a poll is taken otherwise than at or on the same day as the
meeting at which it is demanded, no later than 24 hours
before the time appointed for the taking of the poll).
3 The right to appoint a proxy does not apply to persons
whose shares are held on their behalf by another person
and who have been nominated to receive communications
from the Company in accordance with section 146 of the
Companies Act 2006 (“nominated persons”). Nominated
persons may have a right under an agreement with the
registered shareholder who holds the shares on their behalf
to be appointed (or to have someone else appointed) as a
proxy. Alternatively, if nominated persons do not have such
a right, or do not wish to exercise it, they may have a right
under such an agreement to give instructions to the person
holding the shares as to the exercise of voting rights.
4 Pursuant to regulation 41 of the Uncertificated Securities
Regulations 2001, the Company has specified that only those
shareholders registered on the register of members of the
Company at 11.00 p.m. on 9 June 2010 (or, if the meeting
is adjourned, 48 hours before the time of the adjourned
meeting) shall be entitled to attend and vote at the meeting
in respect of the number of shares registered in their
name at that time. Changes to the register of members
after that time will be disregarded in determining the
rights of any person to attend and vote at the meeting.
5 As at 30 April 2010, the Company’s issued share capital
consisted of 53,234,415 shares carrying one vote each.
Therefore the total number of voting rights in the Company
as at that date was 53,234,415.
6 Copies of the directors’ service contracts and terms and
conditions of appointment will be available for inspection
at the registered office of the Company during normal
business hours and at the place of the meeting from
15 minutes prior to the meeting until its conclusion.
7 Any corporation which is a member can appoint one or
more corporate representatives who may exercise on its
behalf all of its powers as a member, but powers purported
to be exercised by more than one authorised representative
in respect of the same shares will be treated as not exercised.
8 Members who wish to communicate with the Company
in relation to the meeting should do so using the following
means: by writing to the Registrars at The Pavilions,
Bridgewater Road, Bristol BS99 6ZZ. No other methods
of communication will be accepted. In particular, no
person may use any electronic address to communicate
with the Company for any purposes other than those
expressly stated in the relevant document.
Any addressee of this notice who has sold or transferred
all of the shares of the Company held by him or her should
pass the annual report of which this notice forms part
(including the form of proxy enclosed herewith) to the
person through whom the sale was effected for transmission
to the transferee or purchaser.
PAGE 76
APPENDIX TO THE NOTICE OF
THE ANNUAL GENERAL MEETING
EXPLANATION OF THE PROPOSED AMENDMENTS TO THE COMPANY’S ARTICLES OF ASSOCIATION
INTRODUCTION
It is proposed to adopt new articles of association (“New
Articles”), principally to reflect the final implementation of
the Companies Act 2006 (as amended and together with the
regulations made under it, the “CA 2006”), which took effect
on 1 October 2009. It is also proposed to make some other
updating changes, such as increasing the maximum amount
of non-executive directors’ remuneration.
As the proposed changes affect various provisions in the
Company’s existing articles of association (“Current Articles”),
it is considered more practical to seek to replace the Current
Articles in full rather than to seek approval for numerous
individual amendments. The principal changes introduced
in the New Articles are described below. Changes which
are of a minor, technical or clarifying nature have not been
separately noted.
The numbering in the New Articles is different from the
numbering in the Current Articles. The number identifying
each article principally affected by the amendment
corresponds to the numbering in the New Articles (unless
otherwise indicated).
GENERAL
Generally the opportunity has been taken to bring clearer
language into the New Articles and in some areas to conform
the language of the New Articles with that used in the model
articles for public companies produced by the Department
for Business, Innovation and Skills.
THE COMPANY’S OBJECTS AND STATEMENT OF
SHAREHOLDERS’ LIMITED LIABILITY (ARTICLE 3)
The provisions regulating the operations of the Company were
until 1 October 2009 set out in the Company’s memorandum
and articles of association. The Company’s memorandum
contains, among other things, the objects clause setting
out the scope of the activities the Company is authorised
to undertake, which was drafted to give a wide scope.
The CA 2006 significantly reduces the constitutional
significance of a company’s memorandum. The CA 2006
provides that a memorandum will record only the names
of subscribers and the number of shares each subscriber
has agreed to take in the company. Under the CA 2006
the objects clause and all other provisions which were
previously contained in an existing company’s memorandum,
were, with effect from 1 October 2009, deemed to be
contained in a company’s articles of association, but the
company can remove these provisions by special resolution.
Further the CA 2006 states that unless a company’s articles
provide otherwise, a company’s objects are unrestricted.
This abolishes the need for companies to have objects clauses.
For this reason the Company is proposing to remove its
objects clause together with all other provisions of its
memorandum which, by virtue of the CA 2006, are to be
treated as forming part of the Current Articles.
AUTHORISED SHARE CAPITAL AND UNISSUED SHARES
(ARTICLE 4 OF THE CURRENT ARTICLES)
The CA 2006 abolishes the requirement for a company to
have an authorised share capital and the New Articles reflect
this. Directors will still be limited as to the number of shares
they can at any time allot because allotment authority
continues to be required under the CA 2006, save in respect
of employee share schemes.
REDEEMABLE SHARES (ARTICLE 4.2)
Until 1 October 2009, if a company wished to issue
redeemable shares, it was required to include in its articles
the terms and manner of redemption. The CA 2006 enables
directors to determine such matters instead provided they
are so authorised by the articles. The New Articles contain
such an authorisation. The Company has no plans to issue
redeemable shares but if it did so the directors would need
shareholders’ authority to issue new shares in the usual way.
SUSPENSION OF REGISTRATION OF SHARE TRANSFERS
(ARTICLE 37 OF THE CURRENT ARTICLES)
The Current Articles permit the directors to suspend the
registration of transfers. Under the CA 2006 share transfers
must be registered as soon as practicable. The power in the
Current Articles to suspend the registration of transfers is
inconsistent with this requirement. Accordingly, this power
has been removed in the New Articles.
AUTHORITY TO PURCHASE OWN SHARES, CONSOLIDATE
AND SUB-DIVIDE SHARES, AND REDUCE SHARE CAPITAL
(ARTICLE 49 OF THE CURRENT ARTICLES AND ARTICLE 6)
Under the old law a company required specific enabling
provisions in its articles to purchase its own shares, to
consolidate or sub-divide its shares and to reduce its share
capital or other undistributable reserves, as well as shareholder
authority to take the relevant action. The Current Articles
include these enabling provisions. Under the CA 2006
a company only requires shareholder authority to do any
of these things and it is no longer necessary for articles
to contain enabling provisions. Accordingly the relevant
enabling provisions have been removed in the New Articles.
The New Articles also permit the Company to retain the
proceeds of the sale of fractional share entitlements arising
on a consolidation, rather than paying them to members,
up to a maximum amount of £5.00 (or such other amount
as the board may determine) per member.
VOTING BY PROXIES ON A SHOW OF HANDS (ARTICLE 75)
The CA 2006 provides that each proxy appointed by a
member has one vote on a show of hands unless the proxy
is appointed by more than one member, in which case the
proxy has one vote for and one vote against if the proxy has
been instructed by one or more members to vote for the
resolution and by one or more members to vote against
the resolution. The New Articles state that a proxy
representing two or more members has a vote for and
a vote against a resolution.
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 77
APPENDIX continued
CHAIRMAN’S CASTING VOTE (ARTICLE 73 OF THE
CURRENT ARTICLES)
The New Articles remove the provision giving the chairman a
casting vote in the event of an equality of votes, in accordance
with current practice.
VOTING BY CORPORATE REPRESENTATIVES (ARTICLE 75)
The CA 2006 enables multiple representatives appointed
by the same corporate member to vote in different ways
on a show of hands and a poll. The New Articles contain
provisions which reflect this.
REMUNERATION OF NON-EXECUTIVE DIRECTORS
(ARTICLE 101)
The New Articles increase the aggregate remuneration
payable to the non-executive directors from a sum not
exceeding £75,000 to a sum not exceeding £150,000.
This figure has remained unchanged since 1994.
USE OF SEALS (ARTICLE 134)
The New Articles provide an alternative option for execution
of documents (other than share certificates). Under the
New Articles, when the seal is affixed to a document it may
be signed by one authorised person in the presence of a
witness, whereas the Current Articles require signature by
either a director and the secretary or two directors or such
other person or persons as the directors may approve. This
reflects the new formalities for execution of documents laid
down in the CA 2006.
GIVING NOTICE IN THE EVENT OF A POSTAL STRIKE
(ARTICLE 173)
The Current Articles provide that in the event of a postal strike,
the Company can convene a general meeting by putting the
notice of meeting in two national daily newspapers. Following
changes made by the CA 2006, there is now some doubt as
to whether companies will be able to use this route in the
future, and so the New Articles enable to Company to decide,
in the event of curtailment of postal services, that it need
only send notices electronically to those shareholders who
have agreed that the Company can communicate with them
in this way. To try to ensure that all shareholders (including
those who have not yet agreed to electronic communication)
receive information about the meeting, the Company must
also advertise the notice in a national daily newspaper and
on its website, and as under the Current Articles, must send
confirmatory copies of the notice by post to those who did
not receive it electronically, if it again becomes practicable
to do so.
COPY OF THE NEW ARTICLES
A copy of the New Articles is available for inspection
at the Company’s registered office.
PAGE 78
PROFESSIONAL ADVISERS
AND REPRESENTATIVES
SECRETARY AND REGISTERED OFFICE
John F Elliott
3 Clanricarde Gardens
Tunbridge Wells
Kent TN1 1HQ
Tel: 01892 516333
Fax: 01892 518639
www.mpevans.co.uk
Company number: 1555042
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
1 Embankment Place
London WC2N 6RH
REGISTRARS
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Tel: 08707 071176
Fax: 08707 036101
www.computershare.com
Email: www.investorcentre.co.uk/contactus
MANAGING AGENTS IN INDONESIA
P.T. Evans Indonesia
Gedung Graha Aktiva Suite 1001
Jl HR Rasuna Said Blok X-1 Kav 03
Jakarta 12950
PRINCIPAL BANKERS
HSBC Bank PLC
105 Mount Pleasant
Tunbridge Wells
Kent TN1 1QP
Bank Mandiri (Persero)
Plaza Mandiri
Kav. 36-38 Jln. Jend. Gatot Subroto
Jakarta 12190
Indonesia
HSBC Bank Malaysia Berhad
1 Leboh Downing
10300 Pulau Pinang
Malaysia
Commonwealth Bank of Australia
PO Box 2856
Toowoomba
Queensland 4350
Australia
NOMINATED ADVISER AND BROKER
Panmure Gordon (UK) Limited
Moorgate Hall
155 Moorgate
London EC2M 6XB
SOLICITORS
Lovells LLP
Atlantic House
Holborn Viaduct
London EC1A 2FG
Designed, typeset and printed
by Michael R. Dalby Limited
28 Quebec Way, Canada Water
London SE16 7LF
020 7394 1112
email: mrd@mrdltd.plus.com
M. P. EVANS GROUP ANNUAL REPORT 2009
PAGE 79
NOTES
PAGE 80
VENUE OF ANNUAL
GENERAL MEETING
on Friday 11 June 2010 at 12 noon
Tallow Chandlers’ Hall
4 Dowgate Hill
London EC4R 2SH
www.mpevans.co.uk