2010
annual
report
Indonesian palm oil and Australian beef cattle
(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) AGRO MUKO
(cid:1) BENGKULU
KALIMANTAN
NEW PROJECTS
(cid:1)
(cid:1)
SAMARINDA
MALAYSIA
PROPERTY
MAJORITY HELD 70 ha
MINORITY HELD 470 ha
(cid:1)
JAKARTA
JAVA
INDONESIA
OIL-PALM PLANTATIONS
M AJORITY HELD 29,500 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 31 December 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 31 DECEMBER 2010
9,400 planted hectares of majority-held, mature
oil-palm plantations in Sumatra, Indonesia
10,900 hectares of oil palms planted on new
projects in Kalimantan and Bangka Island together
with 4,200 hectares of associated co-operative
smallholder schemes
22,000 planted hectares of minority-held (equivalent
to Group’s share of 8,100 planted hectares) mature
oil-palm and rubber plantations in Sumatra, Indonesia
31,000 hectares of cattle-backgrounding land
in southern Queensland, Australia
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 property-development premium
40% share of a substantial property-development
company, Bertam Properties, near Penang Island,
Malaysia with a land bank of some 470 hectares
Net current assets of US$31.34 million as at
31 December 2010
LAND ASSETS BY VALUE
31 DECEMBER 2010
TARGET
12%
25%
30%
63%
70%
(cid:0) INDONESIA (cid:0) AUSTRALIA (cid:0) MALAYSIA
CONTENTS
1
2
3
Existing portfolio
Summary of results
Group highlights
4 Market information
6
Chairman’s statement
Review of the 2010 results
8
11 – Indonesian palm oil
17 – Australian beef cattle
21 – Malaysian property
23 – risk management
26 Environmental, corporate and
social responsibility
28 Board of directors
29 Report of the directors
31 Statement of directors’ responsibilities
33 Corporate governance
35 Report of the board to the shareholders
on directors’ remuneration
37 Independent auditors’ report to the
members of M. P. Evans Group PLC
38 Consolidated income statement
39 Consolidated statement
of comprehensive income
40 Consolidated balance sheet
41 Consolidated statement
of changes in equity
42 Consolidated cash-flow statement
43 Notes to the consolidated accounts
67 Independent auditors’ report to the
members of M. P. Evans Group PLC,
parent-Company
68 Parent-Company balance sheet
69 Notes to the parent-Company
balance sheet
72 Subsidiary and associated undertakings
73 Analysis of land areas
74 5-year summary
75 Notice of meeting
77 Professional advisers and representatives
The map of the venue of the annual general
meeting is shown on the inside back cover
2010 ANNUAL REPORT
1
SUMMARY OF RESULTS
2010
2009
FOR THE YEAR ENDED 31 DECEMBER 2010 US$’000
US$’000
Revenue 42,091
Gross profit 22,569
Group-controlled profit before tax 19,359
Profit for the year 24,448
Equity attributable to the owners
of M. P. Evans Group PLC 307,578
Net cash generated by operating activities 19,417
US Cents
Basic earnings per 10p share – (continuing operations) 41.17
Pence
Dividend per 10p share in respect of the year 7.50
28,391
11,705
15,338
20,710
275,498
12,311
US Cents
31.92
Pence
7.00
MANAGING DIRECTOR’S STATEMENT
A substantial increase in profits was achieved in 2010.
High production of palm oil and robust prices resulted in sharply-
improved profits for both the majority-owned and the associated
companies with Indonesian palm-oil interests. Much improved rainfall
resulted in good quality and quantity of feed on Woodlands and
enabled the herd to be built up to over 10,000 head at the year end.
Stronger beef prices resulted in a significant improvement in the
results of both Woodlands and the associated company, NAPCo.
Progress, although slower than in 2009, continues to be made on
the oil-palm plantation new projects. A Malaysian investment was
sold in 2010 and it continues to be the policy to dispose of the other
Malaysian assets when suitable opportunities arise.
Philip A Fletcher, FCA
2
M. P. EVANS GROUP
Group highlights
FINANCIAL
AUSTRALIAN BEEF CATTLE
Profit for the year US$24.45 million
(2009 US$20.71 million)
Profit on both Woodlands and
associate, NAPCo
Earnings per share (continuing and
discontinued operations) US cents 41.17
(2009 US cents 34.94 cents)
Dividends for the year increased:
5.50 pence per share final (2009 – 5.00
pence), 2.00 pence interim already paid
(2009 – 2.00 pence)
Widespread rainfall in Australia in late
2010 and early 2011 has benefited
Woodlands and NAPCo properties.
Fortunate to escape widespread flooding
in Queensland
Australian beef-cattle prices
strengthened markedly in 2010
INDONESIAN PALM OIL
Plantation profits 70% higher at
US$22.36 million (2009 US$13.14 million)
MALAYSIAN PROPERTY AND
OTHER ASSET DISPOSALS
Investment in Kennedy, Burkill & Co
Berhad sold in 2010 for US$3.22 million
Palm-oil price averaged US$905 per
tonne – 2009’s US$680 per tonne
Indonesian crops of f.f.b., including
first crop from new Kalimantan project,
15% higher than in 2009; 4% lower
on associates’ estates
Group’s total planted area, including
its share of associates’ areas, increased
to 28,400 hectares (25,700 hectares
at end 2009)
Palm-oil market continues to trade
strongly in 2011, currently around
US$1,150 per tonne
Plan to dispose of remaining Malaysian
assets, with expected value of some
US$50 million, at opportune time
An excellent year with
increasing oil-palm crops
in Indonesia together with
strong prices, as well as a
marked improvement in
the Australian beef-cattle
operations
2010 ANNUAL REPORT
3
Market information
PALM OIL In the first half of 2010, palm-oil
prices hovered around US$800 per tonne before
climbing steadily during the second half to over
US$1,250 at the end of the year. After increasing
to around US$1,300 since the year end, the
price has since eased to the current level of
around US$1,150, still a historically-robust
level.
PALM-OIL PRICE US$ PER TONNE
Rotterdam c.i.f.
CROPS OF OIL-PALM FRESH FRUIT BUNCHES ‘000 TONNES
MAJORITY-OWNED ESTATES IN INDONESIA (cid:0) AND MALAYSIA (cid:0)
196
2
171
2
145
17
130
33
155
58
ASSOCIATED-COMPANY ESTATES
2010
2009
2008
2007
2006
2010
2009
2008
2007
2006
366
3
380
4
350
5
347
9
351
14
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
more recently 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 2010 of 45.9 million
tonnes and 26.8% of the global production
of vegetable oils and animal fats. Soybean oil
is the second largest with 40.1 million tonnes
and 23.3%. Palm-kernel oil accounts for
a further 5.3 million tonnes (3.1%).
(Source: Oil World).
4
M. P. EVANS GROUP
AGE PROFILE OF THE GROUP’S OIL PALMS
DISTRIBUTION OF PLANTED HECTARAGE
BY AGE INTERVAL AS AT 31 DECEMBER 2010
BEEF CATTLE Australian beef-cattle prices
moved sharply higher during 2010 as the
US herd shrank to its lowest level since 1958.
SUBSIDIARIES
Age in years
<5
6-10
11-15
16-20
21-25
>25
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
MAIN PRODUCERS OF PALM OIL – 2010
%
64
9
5
6
11
5
%
16
11
35
10
27
1
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.
EASTERN YOUNG CATTLE
INDICATOR (EYCI) – WOODLANDS
A$ per kg carcass weight
Thousand tonnes
(cid:0) INDONESIA 21,800 (47%)
(cid:0) MALAYSIA 17,320 (38%)
(cid:0) THAILAND 1,500 (3%)
(cid:0) NIGERIA 885 (2%)
(cid:0) COLOMBIA 770 (2%)
(cid:0) OTHER COUNTRIES
3,639 (8%)
TOTAL 45,914
MAIN USERS OF PALM OIL – 2010
100-DAY SHORTFED CATTLE
– NAPCo
A$ per kg carcass weight
Thousand tonnes
(cid:0) INDIA 6,713 (15%)
(cid:0) EU 5,893 (13%)
(cid:0) CHINA 5,840 (13%)
(cid:0) INDONESIA 5,213 (11%)
(cid:0) MALAYSIA 2,159 (5%)
(cid:0) PAKISTAN 1,839 (4%)
(cid:0) NIGERIA 1,331 (3%)
(cid:0) THAILAND 1,320 (3%)
(cid:0) USA 892 (2%)
(cid:0) OTHER COUNTRIES
15,045 (31%)
TOTAL 46,245
D
L
R
O
W
L
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O
:
E
C
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U
O
S
D
L
R
O
W
L
I
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:
E
C
R
U
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S
2010 ANNUAL REPORT
5
Chairman’s statement
Stronger palm-oil prices and much-
improved results at NAPCo have
contributed to another successful year
OVERALL RESULTS
I am delighted to report that the profit for the year
increased to US$24.45 million, compared with
US$20.71 million in 2009. Earnings per share
increased accordingly to 41.17 cents (2009 - 34.94
cents). The significant improvement in the result was
attributable to a number of factors, the most notable
of which were the exceptionally robust palm-oil
price, an increased crop of oil-palm fresh fruit
bunches (“f.f.b.”) and a strong Australian beef-cattle
market, buoyed by an excellent season. Offsetting
these positive factors was a biological-asset-value
decline on PT Agro Muko.
DIVIDEND
The board is pleased to recommend a final dividend
of 5.50p per share which, together with the interim
dividend of 2.00p, paid in November 2010, makes
7.50p for the year, an increase of 0.50p on last year.
A scrip-dividend alternative is, again, being offered
this year.
STRATEGIC DEVELOPMENTS
Indonesia
Since the start of the Group’s expansionary initiative
in 2005, substantial progress has been achieved in
Indonesia. New oil-palm development areas have
been secured both in East Kalimantan and on Bangka
Island. The total new areas developed by the Group
at the end of 2010 amounted to some 10,900
hectares, in addition to which some 4,200 hectares
have been developed on behalf of smallholders’
co-operatives, which will be managed by the Group
and whose fruit will be processed by the Group’s
mills. Of these total areas, 1,200 hectares were
planted during 2010 in East Kalimantan, plus 450
hectares for the co-operatives, and 450 hectares
planted on Bangka, plus 200 hectares for the co-
operatives. During the latter part of the year,
harvesting of the first plantings in East Kalimantan
commenced (harvesting on Bangka commenced in
2009) and the new palm-oil mill in Kalimantan is
scheduled to be commissioned at the end of 2011.
In the meantime, the Kalimantan fruit, like that on
Bangka, is being processed by an external mill.
Largely as a result of the development and planting
of the new project areas, and without taking account
of any further plantings, production of f.f.b. from
the Group’s majority-owned estates is forecast to
increase from the 2010 level of some 200,000 tonnes
to some 300,000 tonnes in 2012 and 500,000 tonnes
in 2015. These are very significant increases and,
subject to palm-oil prices remaining at healthy levels,
are likely to impact extremely favourably on the
Group’s revenue in the near future, and to provide
the means to maintain the Group’s continuing
development programme.
It is hoped to continue to develop and plant new
areas at a rate of approximately 3,000 hectares per
annum but this is by no means guaranteed, as agreeing
compensation terms with the local people, and settling
other land-title issues on areas which the Group plans
to develop, is increasingly complicated and time-
consuming. It continues to be hard to determine what
land areas covered by the initial permit are available
to be developed. It is currently estimated that
approximately a further 5,000 hectares are available
in East Kalimantan (plus 1,500 hectares for the
co-operatives) and a further 3,600 hectares in Bangka
(plus 2,800 hectares for the co-operatives). Management
is seeking to secure additional, environmentally-suitable
land, ideally in the vicinity of the East Kalimantan project.
Australia
Whilst the Group’s shareholding in The North Australian
Pastoral Company Pty Limited (“NAPCo”) remained
unchanged during the year, the board continues to
review any opportunities to acquire additional shares
in the company as and when they arise.
Two strategic initiatives at NAPCo are still under way.
The first is the expansion of the company’s feedlot,
Wainui. Some delays were experienced as a result
of the heavy rainfall and flooding in the latter part
of the year and in early 2011, and it is currently
6
M. P. EVANS GROUP
estimated that the work will be completed by mid-2011,
a few months behind the original schedule. The
expansion will give rise to further economies of scale
and improve the capacity to manage fluctuating
seasons by bringing cattle into the feedlot at younger
ages when conditions warrant it. The second initiative
is the continuing programme of drilling new boreholes,
principally on the company’s main breeding property,
Alexandria Station. Another five bores were drilled
during 2010. This allows more breeders to be run
on the property and has helped to lift its value.
Woodlands, like NAPCo, benefited from the significant
rainfall during 2010. Pasture improvement and new
fencing previously carried out reaped handsome
dividends, with a magnificent body of feed produced
during the year. This enabled a substantially-larger
herd to be grazed and, accordingly, it increased to
some 10,200 head at the end of 2010 from 3,700
at the end of 2009.
Notwithstanding the attractive prospects for Woodlands,
it remains the board’s intention in the longer term to
sell the property, once market conditions are more
propitious, and continue, if possible, to build on the
Group’s investment in NAPCo.
Malaysia
The Group’s divestment from Malaysia continued
in 2010 with the Group’s sale of its 20% interest in
Kennedy, Burkill & Company Berhad. The Group’s
two principal remaining interests in Malaysia are the
70-hectare Bertam Estate and its 40% share of Bertam
Properties Sdn. Berhad (“Bertam Properties”), which
are estimated to have a combined value of some
US$50 million. It is planned to sell both these interests,
in favour of continued expansion in Indonesian
palm oil and Australian cattle, as and when market
conditions are suitable.
PALM-OIL ACTIVITIES AND MARKET
After fluctuating around the US$800 per tonne mark
in the first half of 2010, palm oil staged an impressive
upsurge during the second half when it reached near-
record highs. This strength was deemed attributable
to continuing strong demand, especially from India,
China and the EU, and to a decline in production
following heavy rainfall in some parts of South East
Asia. A lower-than-expected US soybean crop also
contributed to a vegetable-oil supply imbalance.
F.f.b. crops on the Group’s majority-held Sumatran
estates, and on Bangka, at 190,300 tonnes, were
pleasingly 11% ahead of last year, while this figure
was enhanced by a further 6,100 tonnes, representing
the first fruit harvested in Kalimantan. The extraction
rate from Pangkatan’s crude-palm-oil mill also
increased – from 22.4% to 23.0% – as field-collection
and mill standards continued to improve. Crops from
the Group’s two associates declined a little, by 3%
to 317,900 tonnes for PT Agro Muko and by 7% to
48,200 tonnes for PT Kerasaan Indonesia.
BEEF-CATTLE ACTIVITIES AND MARKET
Prices for lighter-weight cattle, such as those fattened
on Woodlands, rose sharply during the course of 2010,
in response to growing demand from graziers with an
increasing abundance of good pasture following the
excellent seasonal conditions. Prices for the grain-
finished, heavier cattle, such as those produced by
NAPCo, increased markedly too, despite the strength
of the Australian Dollar which would normally reduce
demand from the company’s traditional export
markets, Japan, Korea and the USA.
As a result of both the stronger prices and the improved
weight gains derived from the much better season,
both Woodlands and NAPCo enjoyed sharply-
improved results in 2010, compared with 2009.
CURRENT TRADING AND PROSPECTS
Since the end of 2010, the palm-oil price increased to
over US$1,300 per tonne (cif Rotterdam) – close to the
all-time high of US$1,400 per tonne reached in 2008
– before easing slightly to fluctuate around the
US$1,150 mark – still a very attractive price in spite
of the export tax which continues to be imposed by the
Indonesian government. With the outlook for demand
continuing to be strong, and the supply of vegetable
oils generally remaining tight, price prospects appear
favourable for the short to medium term. With regard
to production, 2011 has got off to a good start. F.f.b.
crops on the Group’s majority-owned estates to the end
of March were 54,400 tonnes compared with 39,900
tonnes for the same period in 2010, a 36% increase.
I refer earlier to the exciting, sharp increase in the
Group’s f.f.b. crops projected in the next few years.
Cattle prices too look set to remain firm, in view of the
continuing shortage of supply, not least since the size
of the US herd has now diminished to its lowest level
since 1958. This augurs well for the growing production
on both Woodlands and the NAPCo properties.
ACKNOWLEDGEMENTS
I should like to express the board’s appreciation to the
Group’s managers, staffs and workforces in our various
operations in Indonesia, Australia and Malaysia for
their hard work and dedication, sometimes in difficult
circumstances, in what has proved to be another
successful year.
Peter Hadsley-Chaplin
Chairman
21 April 2011
2010 ANNUAL REPORT
7
Review OF THE 2010 RESULTS
The gross profit in Indonesia for 2010
amounted to US$22.36 million, 70% higher
than the US$13.14 million recorded for 2009.
Palm-oil prices in 2010 were at robust levels,
averaging US$905 per tonne (cif Rotterdam),
33% higher than the average in 2009.
F.f.b. crops were 7% higher on the mature
North Sumatran estates, 62% higher on
the Bangka project and the first crop was
also recorded on the Kalimantan project.
In Australia, the beef-cattle operations
on Woodlands achieved a gross profit of
US$0.25 million compared to 2009’s loss
of US$1.32 million. A significant expansion
of the herd and improved cattle prices, offset
by the negative effect on the cattle market of
the strength of the Australian Dollar, gave rise
to this marked improvement.
As a result of the above, the Group gross
profit amounted to US$22.57 million compared
with US$11.71 million in 2009. A detailed
breakdown of this is set out in note 4 to the
consolidated accounts on pages 47 and 48.
The results of the Group’s palm-oil and cattle
activities are reviewed in more detail in
the reports commencing on pages 11 and 17.
BEARER BIOLOGICAL-ASSET ADJUSTMENT
Following a period during the first seven months of 2010
when the palm-oil price remained stable, though at
historically-elevated levels, the price rose monotonically
for the rest of 2010 closing at a near all-time high.
The effect of this was to increase the 20-year average
price per tonne used in valuing the Group’s biological
assets by US$31 to US$533. Despite some cost
pressure and an increase in the average age of planting
on the Group’s mature estates, the increase in the
long-term average commodity price led the biological
value of plantings already in existence at the beginning
of the year to increase by US$14.46 million. Additionally,
new hectarage planted and other replanting in the
year added a further US$3.13 million, resulting in
a total biological gain for the year under review of
US$17.59 million. Similar factors affected the Group’s
share of the biological movement in its associated
companies. However, the increase in the average
age of their estates, and the associated fall in yield,
outweighed the benefits of the increased long-term
price of palm oil used in the valuation. Overall, this
resulted in a reduction in biological value, and hence
a biological loss in the income statement relating
to associated companies.
OTHER ADMINISTRATIVE EXPENSES
Other administrative expenses increased in 2010
compared with the previous year. As highlighted in
the Group’s interim report, this is due mainly to an
impairment loss on the expected sale of some land
to smallholder co-operative schemes. It had been
anticipated that the selling price of this land would
approximately cover the cost of developing it.
However, an impairment review has revealed that
this will not be so in all cases. The board has decided
to write off US$1.13 million so that the carrying value
of these pieces of land now reflect a more realistic
evaluation of what may be recovered from these
co-operatives. The board will, of course, strive to
ensure that as fair a price as possible is achieved
in these transactions.
The sale of the Group’s investment in Kennedy,
Burkill & Co Berhad for US$3.22 million yielded a
profit of US$0.75 million, although this was largely
offset by foreign-exchange losses that crystallised
on the liquidation of two Malaysian subsidiaries.
A further reduction in other administrative costs arose
from the treatment of costs arising in the Jakarta regional
office. Following the takeover of the management of
its estates in North Sumatra, the board has concluded
8
M. P. EVANS GROUP
that expenses incurred by the Jakarta regional office
should be brought into line with the long-established
policy in respect of its Sumatran estates and treated
as cost of sales rather than administrative expenses.
The effect has been to reduce other administrative
expenses in 2010 in comparison with 2009:
US$1.10 million in respect of the Jakarta office
were included under this heading in the earlier year.
ASSOCIATED COMPANIES
The Group’s share of its associated companies’
profits/(losses) for the year, including the share of
biological bearer-asset adjustment, in the Indonesian
oil-palm plantation companies, compared with last
year were as follows:
2010 2009
POST-TAX POST-TAX
POST-TAX BIOLOGICAL POST-TAX PROFIT/(LOSS) BIOLOGICAL PROFIT/(LOSS)
PROFIT BEFORE BEARER-ASSET PROFIT AFTER BEFORE BEARER-ASSET AFTER
BIOLOGICAL ADJUSTMENT BIOLOGICAL BIOLOGICAL ADJUSTMENT BIOLOGICAL
BEARER-ASSET (SEE NOTE BEARER-ASSET BEARER-ASSET (SEE NOTE BEARER-ASSET
% ADJUSTMENT BELOW) ADJUSTMENT ADJUSTMENT BELOW) ADJUSTMENT
HELD US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
PT Agro Muko 36.84* 9,029 (2,933) 6,096 5,992 2,432 8,424
PT Kerasaan Indonesia 38.00 1,745 (68) 1,677 1,399 260 1,659
Total Indonesia 10,774 (3,001) 7,773 7,391 2,692 10,083
NAPCo 34.37 2,365 — 2,365 (1,041) — (1,041)
Bertam Properties 40.00 2,987 — 2,987 984 — 984
Total 16,126 (3,001) 13,125 7,334 2,692 10,026
* 2009 31.53%
Biological-bearer-asset adjustments 2010 2009
PT KERASAAN PT KERASAAN
PT AGRO MUKO INDONESIA PT AGRO MUKO INDONESIA
US$’000 US$’000 US$’000 US$’000
Cost of sales 276 25 441 12
(Loss)/gain on biological assets (2,615) (56) 2,491 223
Planting expenditure (1,572) (60) (578) (112)
Deferred tax 978 23 78 137
(2,933) (68) 2,432 260
INDONESIA
PT Agro Muko and PT Kerasaan Indonesia benefited
from the strength of the palm-oil price during the year
although f.f.b. crops in both cases were a little lower
than in 2009. The results from PT Agro Muko’s rubber,
the crop of which was similar to last year, showed
a marked improvement following the sharp increase
in the price during the year (prices nearly doubled).
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 46% higher in
2010 than 2009.
Biological values fell during 2010, notably in PT Agro
Muko. Increases in operating costs were accentuated
by the strengthening of the Indonesian Rupiah against
the US Dollar. Furthermore, yields included in the
Piling for the new jetty in Kalimantan.
2010 ANNUAL REPORT
9
REVIEW OF 2010 RESULTS continued
valuation fell, reflecting the ageing of its palms. Together,
these negative influences on the biological valuation
outweighed the increase arising from a higher palm-oil
price, resulting overall in a biological loss of which the
Group’s share was US$3.00 million, predominantly
attributable to PT Agro Muko, whose biological value
per hectare fell by 9% in the year. The Group’s share
of the post-tax, post-biological-bearer-asset-adjustment
profit amounted to US$13.13 million, a 30.9% increase
over 2009’s US$10.03 million.
During the year, the Group acquired, at a cost of
US$7.31 million, a further 5.31% in PT Agro Muko
bringing the shareholding to 36.84%. Associated
with this purchase of shares, PT Agro Muko did not
make any dividend payments in 2009 but re-started
the programme in 2010 to coincide with the three
instalments required to be paid in connection with
the share purchase. Accordingly, the Group’s share
of dividends in 2010 amounted to US$8.84 million
(gross) compared with no dividends paid in 2009.
The Group’s share of PT Kerasaan Indonesia’s
dividends in 2010 amounted to US$1.41 million
(gross) compared with US$1.31 million (gross)
in 2009.
AUSTRALIA
NAPCo enjoyed an excellent year in 2010: many of
its properties received beneficial, consistent rainfall,
leading to good pasture growth; the herd increased in
number from some 161,000 to 195,000 head; and cattle
prices were strong. As a consequence, the Group’s share
of NAPCo’s profit for the year was US$2.37 million,
compared with a loss of US$1.04 million in 2009.
The Group’s share of NAPCo’s dividends for 2010
amounted to US$0.48 million, compared with
US$0.54 million in 2009. Dividends are likely to
remain at relatively low levels in the shorter term
as revenue is directed towards capital improvements,
such as the expansion of the company’s feedlot,
described under “Associated company – NAPCo”
on page 18.
Lush pastures on Boomarra, one of NAPCo’s breeding properties.
The company’s full post-tax result for the year was a
profit of US$7.47 million of which the Group’s share
amounted to US$2.99 million (2009 US$0.98 million).
The Group’s share of Bertam Properties’ dividends
in 2010 amounted to US$3.73 million compared
with US$5.11 million in 2009.
The results and operations of the Indonesian,
Australian and Malaysian associated companies
are reviewed in more detail in the reports on
pages 11 to 25.
DISCONTINUED OPERATIONS
There was no profit or loss arising from discontinued
operations in 2010. A profit of US$1.58 million was
recorded in 2009, arising from the sale of the Thai
rubber factory.
MALAYSIA
After no land sales in 2009, Bertam Properties
resumed such sales in 2010, selling some 27 hectares
and realising a post-tax profit of approximately
US$6.68 million (Group’s share US$2.67 million).
PROFIT FOR THE YEAR
As a result of all of the above, the Group profit for
the year amounted to US$24.45 million compared
with US$20.71 million in 2009.
10
M. P. EVANS GROUP
Palm oil
INDONESIA
CLOCKWISE FROM TOP:
Young, newly-harvested f.f.b. on
the Kalimantan project.
New development area in Kalimantan.
Nursery for cover crop in Kalimantan.
2010 ANNUAL REPORT
11
The palm-oil price began an inexorable climb
in the second half of 2010, reaching over
US$1,250 per tonne around the end of the year
MAJORITY-OWNED
SUMATRAN ESTATES
CROPS AND PRODUCTION
2010 2009
TONNES TONNES
Crops – f.f.b. – Pangkatan group 130,200 121,100
– Simpang Kiri 41,200 38,500
171,400 159,600
Production (Pangkatan mill)
– crude palm oil 30,000 27,000
– palm kernels 7,300 6,800
% %
Extraction rate – crude palm oil 23.0 22.4
– palm kernels 5.6 5.6
As the new management team got to grips with the
estates and concentrated on yield enhancement, the
overall f.f.b. crop for the year recorded another increase.
The crop for 2010 was 7% higher than in 2009.
The improvement in the extraction rate, which had
commenced in the first half of 2010, continued in the
second half, giving a rate for the whole year of 23.0%
which compares with 2009’s 22.4%.
PALM-OIL MARKET
The palm-oil price stayed around the US$800-per-
tonne mark (cif Rotterdam) for the first half of 2010
Palm-oil collection from the Pangkatan mill.
before beginning an inexorable climb in the second
half, reaching over US$1,250 per tonne around the
end of the year. The soybean crop in the US was lower
than had originally been expected. This, together
with the negative effect on crops of the heavy rainfall
associated with the “La Niña” phenomenon in
South East Asia and continuing strong demand by
the traditional buyers of palm oil in India, China and
Europe, pushed the price up to these historically-
robust levels.
OPERATING COSTS
A significant proportion of operating costs (for
example wages and salaries) are Rupiah denominated.
The marked strengthening of the Rupiah against the
US Dollar (the Group’s reporting currency) during
2010 accordingly had a negative effect on costs when
stated in US-Dollar terms. The average exchange rate
in 2010 was US$1 = Rp9,081 which compared with
Rp10,374 in 2009. This represents a weakening of the
US Dollar of some 12.5%.
REVIEW OF AGRICULTURAL OPERATIONS
The new management team has been focussing on
yield enhancement on these largely-mature estates.
A replanting programme was originally planned for
2010. However, it was decided that it would be
better to allow the new team time to find their feet
and, accordingly, no replanting was undertaken in
2010, especially in the light of the continuing good
palm-oil prices. In addition, management wanted
to concentrate on improving infrastructure on these
estates (and ultimately, therefore, yields).
Considerable effort has been expended in improving
access and drainage. Estate roads have been raised
and stoned in areas prone to flooding so that
harvesting can continue properly during wet times
of the year. Two of the estates, Bilah and Sennah, are
in low-lying areas which makes drainage particularly
important. An extensive programme of de-silting and
widening drains has been undertaken during 2010.
The road-stoning and drainage programmes will
continue in 2011.
It is anticipated that, as a result of the work referred
to above, yields should increase in the years to come.
12
M. P. EVANS GROUP
Loading recently-harvested f.f.b. on Bilah Estate.
NEW PROJECTS
Some 2,300 hectares were planted during 2010 of
which approximately 630 related to the co-operative
schemes. The quality of planting continues at a high
level. This area was, however, less than had originally
been anticipated. Agreeing terms with local people in
respect of areas to be developed by the co-operatives
and also agreeing compensation for land that the
Group wants to develop in its own right continues
to be time-consuming. Management goes to great
lengths to ensure that such negotiations are carried
out in a fair and transparent manner and all aspects
of these negotiations are meticulously documented
so that there is a basis for resolving any future
disputes by reference to recorded facts.
As referred to in the 2009 annual report, it is notoriously
difficult to determine in advance what area will be
available for planting (either by the Group or on behalf
of co-operatives) out of the total area covered by the
initial permit (izin lokasi). Much depends upon the
success of negotiations with local people and the
satisfactory resolution of land-title issues. The board’s
latest broad estimate is that 13,500 hectares in total
(including what has already been planted) will be able
to be planted in Kalimantan (plus 4,500 hectares for
the co-operatives) and 6,000 hectares on Bangka (plus
4,000 hectares for the co-operatives). Management
has already set in train applications to the Indonesian
authorities to obtain the ultimate title document, the
hak guna usaha (“HGU”), in respect of some 17,400
hectares (including 3,500 hectares for the co-operatives) in
Kalimantan and 7,200 hectares (including 3,200 hectares
for the co-operatives) in Bangka. Additional HGU’s
will be applied for when final planting areas are known.
EAST KALIMANTAN
2010 2009
TONNES TONNES
F.f.b. crop
6,100 —
The first plantings on the project, in 2007, were
harvested for the first time in 2010. Initial yields and
fruit quality have been most encouraging. Until the
new mill on the project is in operation (expected to
be completed by the end of 2011 – see below), the
fruit is being temporarily sold to a third-party mill.
Management is focussing on ensuring that the
necessary infrastructure (roads, harvesters’ paths etc.)
is in place and up to standard and that upkeep of the
planted areas is at an acceptable level. The project
promises to be a first-class plantation, having, as it
does, good soils, rainfall and terrain.
1,650 hectares were planted during 2010 of which
450 related to the co-operative schemes. As at
31 December 2010, 11,500 hectares had been
planted, of which 3,000 hectares relate to the co-
operative schemes.
2010 ANNUAL REPORT
13
REVIEW OF OPERATIONS continued
New mill building taking shape on the Kalimantan project.
The construction of the mill on the project and of the
bulking-station complex on the Mahakam River is now
well under way. They are expected to be completed
around the end of the year. The mill is rated at
60 tonnes per hour and has been designed to a high
specification. One feature of interest is that methane
from the effluent-settlement pond will be captured,
cleaned and used as fuel for a biogas engine which
will, in turn, generate electricity for nearby plantation
buildings and workers’ villages. 30% of the methane
will, at this stage, be captured but it is hoped that,
at some point in the future, there will be commercial
justification to utilise the remaining 70% in the same
way. The mill effluent will be utilised by pumping it
onto the fibrous bunches from which the fruitlets have
been removed, thereby creating a nutritious compost.
This will, after approximately a 45-day period during
which it will break down, be applied to the field and
it is anticipated that the need for inorganic fertiliser
will be reduced.
Planting progress to date in 2011 has been slow,
with only some 60 hectares planted. However, it is
expected that the rate of planting will pick up in the
remainder of the year.
BANGKA
2010 2009
TONNES TONNES
F.f.b. crop
18,900 11,700
The f.f.b. crop from the 2006 and 2007 plantings is,
as would be expected, increasing markedly. Given
that some of the soil is sandy and therefore not of the
highest quality, the yields per hectare (16 tonnes for
the 2006 planting and 9 tonnes for the 2007 planting)
14
M. P. EVANS GROUP
have been most encouraging. With the strong palm-
oil prices experienced in 2010, the Bangka project
recorded a small profit, a commendable achievement
so early in its development. The f.f.b. are still being
processed by a third-party mill and a decision on the
timing of the construction of a mill will be taken
shortly, depending upon the continuing estimated
planting programme.
Approximately 650 hectares were planted during
2010, of which 185 related to the co-operatives.
As at 31 December 2010, 3,650 hectares in total
had been planted, of which 1,250 hectares related
to the co-operatives. Planting progress has also been
slower than desired to date in 2011, with 60 hectares
Young palms in Kalimantan.
planted to date. This has primarily arisen because, as
a result of robust tin prices, there has been intense
competition for contractors from tin miners on Bangka
Island with a consequent sharp increase in prices.
The situation has been exacerbated by temporary
fuel shortages. It is hoped that planting progress will
increase in the remaining part of the year.
ASSOCIATED-COMPANY ESTATES
Crops and production from the estates owned by
PT Agro Muko (36.84%) and PT Kerasaan Indonesia
(38.00% owned) were as follows:
2010 2009
TONNES TONNES
F.f.b. crops – PT Agro Muko – own 317,900 328,200
– outgrowers 16,100 23,000
334,000 351,200
– PT Kerasaan Indonesia 48,200 52,000
382,200 403,200
Production (PT Agro Muko) – crude palm oil 75,800 79,400
– palm kernels 17,100 18,200
% %
Extraction rate – crude palm oil 22.7 22.6
– palm kernels 5.1 5.2
TONNES TONNES
Rubber crops (PT Agro Muko) – own 1,189 1,221
PT Agro Muko’s f.f.b. crop was some 3% lower than
the previous year as the effects were felt of re-aligning
the oil-palm and rubber areas so that the new rubber
areas will be concentrated around the existing rubber
factory. As with the majority-owned estates, the
company benefited from the strength of the palm-oil
price. The replanting of some of the rubber areas into
oil palm was delayed in the light of the unusually
strong rubber price. As a result, the rubber crop for
the year, 1,189,000 kg, was only slightly lower than
that for 2009 (1,221,000 kg). World rubber prices
have benefited from strong demand from the
automotive business in China and India and a
reduction in rubber production because of the
effect of La Niña on the weather in South East Asia.
A reduction is expected in the company’s rubber crop
in the next couple of years until the new plantings
start to yield. The programme will continue for the
next two or three years of replanting with rubber
some existing oil-palm areas near the rubber factory.
At the same time, some existing rubber areas which
are not close to the rubber factory will be replanted
with oil palms.
Kerasaan Estate’s f.f.b. crop fell back during the year
by some 7% compared with 2009. However, the
healthy palm-oil price resulted in increased profits
for the year.
F.f.b. on the loading ramp before processing
at the Pangkatan mill.
2010 ANNUAL REPORT
15
REVIEW OF OPERATIONS continued
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. Key factors which are
under management’s control are husbandry standards,
fertiliser application and the quality of infrastructure
(estate roads, drains, for example). 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.
Harvesting of mature, tall, oil palms on Pangkatan Estate.
With regard to mill production, the key performance
indicators are the extraction rate of palm oil and palm
kernels per tonne of f.f.b., oil losses and dirt and
moisture content. 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 until 2010 been below 23%.
However, as referred to above, under “Crops and
production”, the extraction rate has shown another
promising improvement in 2010 to just over 23%.
This should 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. Oil losses,
dirt and moisture content are expressed in terms
of percentages and actual achievement against
maximum standards are monitored by management.
MATURE PLANTATION AND MILL COSTS
Management monitors and assesses the efficiency of
plantation operations in terms of cost by means of key
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 key
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
key 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.
16
M. P. EVANS GROUP
Beef cattle
AUSTRALIA
Cattle mustering on Monkira, one
of NAPCo’s Channel Country properties.
TOP:
BOTTOM LEFT AND RIGHT:
Cattle on Cungelella,
one of NAPCo’s fattening properties.
2010 ANNUAL REPORT
17
Australian beef cattle benefited from good rains
in the early part of the year which enabled cattle
numbers to be increased
MAJORITY-OWNED OPERATIONS
WOODLANDS
The property received good rains during the year.
This, combined with the extensive pasture development
that has taken place over the last few years, resulted
in abundant feed and enabled the programme of
stocking the property to go ahead unabated. Forage
oats were grown but, because of the good pasture,
it was deemed unnecessary to cultivate forage
sorghum during the year. At the end of 2010, the
herd consisted of some 10,200 head compared
with 3,700 at the end of 2009. 2,200 head were
sold during the year compared with 1,250 in 2009.
Cattle prices were on an upward trend during 2010
and the valuation per kg at the end of the year
was approximately 30% higher than at the
end of 2009 notwithstanding the strength of the
Australian Dollar.
2011 has started well with continuing and extensive
rainfall. Fortunately, Woodlands was not affected by
the devastating floods that extended over large parts
of Queensland in the early part of the year. Cattle
prices have recently hit record highs.
the top crust of the soil, opening it up to the
air and also allows the soil to retain moisture.
It is estimated that this will increase the carrying
capacity significantly.
Although the prospects for Woodlands appear
positive, it remains the board’s longer-term intention
to dispose of this property and to focus on building
on the Company’s holding in NAPCo. The decision
will be taken to place Woodlands on the market
again as and when market conditions are suitable.
ASSOCIATED COMPANY – NAPCo
(34.37% OWNED)
RESULTS FOR THE YEAR
A profit after tax was achieved, of which the Group’s
share amounted to US$2.37 million. This compares with
its share of NAPCo’s loss last year of US$1.04 million.
HERD STATISTICS
At the end of 2010 the company’s cattle herd
stood at some 195,300 head, a significant increase
compared with the end of 2009 (160,600 head).
Pasture development continues on the property.
A programme of subsoil cultivation has been under
way for some time and will continue. This breaks
The increased herd number resulted from a combination
of factors. First, brandings of 62,000 head were significantly
higher than the previous year’s total (44,000).
Pasture improvement on Woodlands.
Woodlands cattle grazing on forage oats.
18
M. P. EVANS GROUP
Secondly, only 36,800 cattle were sold during the
year, which was partly the result of the deliberate
strategy to increase the company’s herd size after the
very poor 2008 season, but which also reflected an
inability to sell as many cattle as planned because of
disruptions arising from rainfall throughout the year.
Finally, given NAPCo’s temporarily-reduced herd
numbers and the abundant season, the opportunity
was taken to purchase approximately 14,000 cattle
during the course of the year, for both grass and grain
finishing. The majority of these cattle will be sold in
2011. Subject to seasonal conditions and prices, it is
intended to purchase cattle for fattening again in 2011.
SEASONAL CONDITIONS
All the company’s properties enjoyed an excellent
start to 2010, with the Channel Country in particular
benefiting from widespread rain in late November of
the preceding year, which gave a strong initial boost
to pasture growth. 2010 was remarkable not just for
the very high rainfall received across the growing and
backgrounding sectors of the business, but also
because rain fell on at least some properties in every
month of the year.
Contrary to the usual pattern, the western grower
properties enjoyed significantly higher rainfall than
the breeder properties, allowing them ultimately to
accommodate all of the year’s weaner crop (the first
time this has occurred for some years) as well as the
purchased cattle noted above. On some Channel
CATTLE SALES AND BRANDINGS
(cid:0) SALES (cid:0) BRANDINGS (cid:0) CLOSING STOCK
2010
36,844
61,456
40,337
44,090
2009
2008
96,552
67,599
2007
49,725
65,510
2006
41,868
57,408
2005
2004
56,309
49,619
49,010
51,727
160,622
162,336
195,342
198,262
184,309
171,145
183,364
‘000 HEAD
20
40
60
80
100
120
140
160
180
200
Country properties the season was described as
“the best in a decade”.
The farm attached to the Wainui feedlot also enjoyed
an excellent start to 2010, which benefited the summer
NAPCo PROPERTIES
2010 ANNUAL REPORT
19
REVIEW OF OPERATIONS continued
sorghum crop, although ongoing rain significantly
affected the quality of winter crops due to difficulties
in harvesting these on time. For the first time in
several years, Wainui storage tanks were able to
capture significant water volumes via overland flows
and pumping from a local creek.
PROPERTY DEVELOPMENT
Expansion of the Wainui feedlot progressed
satisfactorily during 2010, albeit more slowly than
previously envisaged. Following the planning and
design process, significant earthworks commenced
in the second half of the year. Although it was originally
hoped that commissioning of the new feedlot would
occur by the end of 2010, this is now expected to
occur (subject to no further significant rain delays)
in mid 2011.
The development programme of new watering points
on Alexandria continued in 2010 with a further five
successful bores drilled and equipped.
BEEF-MARKET CONDITIONS
Despite a very strong Australian Dollar throughout
2010, export beef prices to NAPCo’s major customers
(Japan, United States and Korea) all improved
progressively through the year. Strong seasonal
conditions in Australia saw graziers retain stock to
add weight, while at the same time competing with
meat processors and feedlotters to buy additional
stock to rebuild herd numbers. The only market to be
negatively affected during the year was the live export
market, when the Indonesian government chose to
enforce stringent protocols concerning maximum cattle
weights. Affected producers then needed to offload
cattle heavier than 350 kilograms into other markets,
which provided the company with the opportunity to
purchase some of these cattle at reasonable prices.
Domestically, despite tighter supply and subsequent
higher prices, beef retained its market share of protein
Beneficial flooding on Glenormiston.
sales, while still commanding higher prices due to the
limited volumes available. The Eastern Young Cattle
Index (“EYCI”), which is a useful benchmark for young
cattle prices in eastern Australia over a range of classes,
finished 2010 approximately 27% higher than it started.
In 2011, the EYCI has reached an all-time high,
supported by good conditions and supply constraints
due to Queensland’s flood-affected infrastructure.
Australia’s main competitor in international markets,
the United States, has experienced a significant
reduction in herd size in recent years due to drought
and the impact of higher US corn prices (the majority
of US cattle are grain finished). Currently at its lowest
level since 1958, the US herd will produce fewer
cattle to compete with Australia’s exports in coming
years. Providing demand can be sustained, this augurs
well for beef prices during this period.
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 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.
20
M. P. EVANS GROUP
Property
MALAYSIA
CLOCKWISE FROM TOP:
Bertam Properties golf course
and housing development.
Bertam Properties housing development.
Bertam Properties sales office.
2010 ANNUAL REPORT
21
REVIEW OF OPERATIONS continued
One of the premium houses constructed by Bertam Properties.
MAJORITY-OWNED OPERATIONS
BERTAM ESTATE
The only remaining, majority-owned, activity in
Malaysia is the small, 70-hectare, Bertam Estate.
Bertam Estate’s crops were as follows:
2010 2009
TONNES TONNES
F.f.b.
1,600 1,700
Bertam Properties new housing development.
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.
ASSOCIATED COMPANY
BERTAM PROPERTIES (40% OWNED)
The property market on the mainland near Penang
Island remained reasonably robust during 2010 and
Bertam Properties enjoyed an improved year, largely
due to a resumption of land sales in 2010 after a
pause in 2009. The residual plantation activities are
now quite modest as the land area diminishes. The
f.f.b. crop amounted to 2,900 tonnes compared with
3,900 tonnes in 2009. Strong oil-palm prices resulted
in a slightly higher profit in 2010 despite the lower
crop. The Group’s share of Bertam Properties’ 2010
post-tax profit amounted to US$2.99 million
compared with 2009’s US$0.98 million.
Bertam Properties’ 473 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.
22
M. P. EVANS GROUP
Risk management
The board reviews risk management
on an annual basis. Set out below is the
board’s evaluation of the principal 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. The country has recently
benefited from a period of political stability, economic
growth and exchange-rate stability, indeed strength.
The board perceives a very low risk of the imposition
of exchange controls, and the attendant risk that
the Group will be unable to extract profits from its
subsidiaries and associated companies in Indonesia.
Security of land tenure is a matter of fundamental
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 problems.
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 India, China and
Indonesia itself, 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 (and indeed the current strength
of the price), 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
hydrogenated oils which give rise to unhealthy trans
fatty acids 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 has the lowest cost and is 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.
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. Where practical,
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.
2010 ANNUAL REPORT
23
RISK MANAGEMENT continued
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 is discharged into 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 Principles
and Criteria which have been adopted by the
membership 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. An RSPO audit of the North Sumatran estates
is expected to take place in the second half of 2011 and
accreditation is hoped for later in the year. A project
can only be accredited if it is producing crude palm
oil. Accordingly, the RSPO audit of the new project
in Kalimantan is expected to take place in mid-2012
after the anticipated commissioning in late 2011 of
the mill which is currently under construction.
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 a
transparent 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.
These together affect the rate at which the Group is
able to plant and so, in turn, its future growth. 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. Particular attention is paid to the
Group’s relationship with the local populations where
development is taking place. On each of the projects
there has been extensive communication not only with
local government officials but also with local people
collectively and through their representatives: the
local mayor (bupati) and village heads (kepala desa).
Smallholder cooperative schemes (KKPA) are being
developed alongside the Group’s areas and managed
by the Group. Staff members have been appointed
to deal with compensation (ganti rugi) for loss of land
and crops, and to explain the basis and workings
of the KKPA schemes and to gain the support of
the villages surrounding the Group’s project areas.
This is a time-consuming process.
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 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 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
24
M. P. EVANS GROUP
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.
from reputable rating agencies or with banks that are
majority owned by sovereign governments.
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$55 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
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.
SUPERVISION OF OPERATIONS
Geographical distance between the UK head office
and operations located in Indonesia, Australia and
Malaysia puts a premium on strong supervision of the
Group’s operations. Regular written reporting from all
operating companies is supplemented with routine
telephone contact and frequent visits by the executive
directors to all areas of the Group’s operations. At the
Group’s regional office in Jakarta, the local president
director has put together a team of senior managers
(agricultural, engineering and finance) with extensive
experience and expertise, well qualified to confront
the problems that arise on new and existing plantation
projects. Senior regional managers are now resident
in Sumatra and Samarinda. Additionally, independent
scrutiny of agricultural operations is provided by an
independent UK-based consultant.
A new training school has been erected in Kalimantan.
This is now being used to instil the Group’s systems
and high standards into new and existing staff.
US DOLLAR -V- INDONESIAN RUPIAH
US DOLLAR -V- AUSTRALIAN DOLLAR
US$1 = Indonesian Rupiah
US$1 = A$
US DOLLAR -V- MALAYSIAN RINGGIT
STERLING -V- US DOLLAR
US$1 = RM
£1 = US$
2010 ANNUAL REPORT
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
Principles and Criteria 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.
26
M. P. EVANS GROUP
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.
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.
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 is discharged into rivers or water
courses. At the mill currently under
construction in Kalimantan, methane will
be captured from part of the mill effluent
and will be utilised to fuel a biogas engine.
This engine will, in turn, generate electricity
for office compounds and housing in workers’
villages in the vicinity of the mill. This will
give rise to a significant reduction in the
use of diesel for the generators which would
otherwise have been needed to generate
this electricity.
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.
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.
2010 ANNUAL REPORT
27
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 53)
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 61)
28
M. P. EVANS GROUP
1
2
3
4
5
6
7
3
O David Wilkinson, BSC
EXECUTIVE DIRECTOR
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 52)
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 44)
5
Konrad P Legg
SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR
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 67)
6
Richard M Robinow
INDEPENDENT NON-EXECUTIVE DIRECTOR
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 65)
7
J Derek Shaw, FRAgS
INDEPENDENT NON-EXECUTIVE DIRECTOR
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 70)
Report of the directors
FOR THE YEAR ENDED 31 DECEMBER 2010
PRINCIPAL ACTIVITIES
At 31 December 2010, 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 and
7 and in the review of results and operations on pages
8 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 (2009 - 2.00p) per share
was paid on 4 November 2010. The board recommends
a final dividend of 5.50p (2009 - 5.00p) per share.
This dividend will be paid on or after 17 June 2011
to those shareholders on the register at the close of
business on 3 May 2011. This final dividend is not
provided for in the 2010 financial statements.
SCRIP-DIVIDEND SCHEME
The board has decided to make the scrip dividend
option available for the final dividend. Shareholders
who have previously elected to receive their dividends
in this manner will therefore automatically receive
this dividend as scrip. Forms of election will be
dispatched to remaining shareholders under separate
cover. Shareholders who now wish to make an
election to receive this and future dividends as scrip,
or who wish to revoke a previous election, should
contact the Company’s registrars without delay.
Any such elections or revocations will not be
effective unless they have been sent in accordance
with the Company’s instructions and received by
the Company’s registrars no later than 5:00 p.m.
on 26 May 2011.
The Company will accept partial scrip elections for
this dividend, subject to such terms and conditions as
it or its registrar may require, but will not carry forward
partial election instructions for future payments.
To calculate the basis of the allotments the Company
will use the average of the middle-market quotations
of the Company’s shares for the five business days
commencing on the ex-dividend date for the dividend
as derived from the London Stock Exchange Daily
Official List. The scrip-dividend scheme is conditional
on the directors allotting the necessary new shares for
the purposes of section 551 of the Companies Act 2006
and the admission of the new shares allotted to trading
on the AIM market of the London Stock Exchange.
The scrip-dividend scheme is operated with the
authority of the resolution passed at the Company’s
annual general meeting in 2010 (which is valid for
five years). The scheme is subject to the terms and
conditions set out in the circular to shareholders dated
14 May 2010 and may be amended, suspended or
terminated at the discretion of the board without notice.
SHARE CAPITAL
The Company has one class of share. Details of the
issued share capital of the Company are as follows:
SHARES OF 10P EACH
Issued (fully-paid and voting) capital
at 1 January 2010 52,271,315
Share options exercised
18 January 2010 7,000
29 January 2010 956,100
3 June 2010 5,000
4 October 2010 8,000
Shares issued in lieu of a cash dividend
25 June 2010 76,753
4 November 2010 33,287
Issued (fully-paid and voting) capital
at 31 December 2010 and 21 April 2011 53,357,455
DIRECTORS AND DIRECTORS’ INTERESTS
The present membership of the board, all of whom
served throughout the year, is detailed on page 28.
Messrs Wilkinson, Legg, Robinow and Shaw 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.
The directors serving at the end of the year, together
with their interests at the beginning and end of the
2010 ANNUAL REPORT
29
REPORT OF THE DIRECTORS continued
year, in the shares of 10p each in the Company,
were as follows:
NON-
AT 31 DECEMBER 2010 BENEFICIAL BENEFICIAL OPTIONS
P E Hadsley-Chaplin 1,067,112 25,000 670,000
P A Fletcher 739,300 51,361 632,135
O D Wilkinson — — 63,496
T R J Price
(appointed 01/01/2010) — — 150,000
K P Legg 591,591 22,412 —
R M Robinow 42,086 — —
J D Shaw 610,747 — —
AT 1 JANUARY 2010
P E Hadsley-Chaplin 848,865 57,237 1,150,000
P A Fletcher 585,953 51,361 1,108,235
O D Wilkinson — — 78,496
T R J Price
(appointed 01/01/2010) — — 150,000
K P Legg 584,389 22,412 —
R M Robinow 42,086 — —
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 pages 35 and 36.
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.
As permitted by the Company’s articles of association,
there was throughout the year to 31 December 2010
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.
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 10.86
JP Morgan Fleming Mercantile
Investment Trust Plc 3,517,103 6.59
M M Hadsley-Chaplin 2,642,254 4.95
Indirect interests
Aberdeen Asset Management PLC 5,431,563 10.18
Invesco Limited 2,568,264 4.81
AUTHORITY TO ALLOT SHARES
At the annual general meeting a general authority is
being sought, under resolution 8, for the directors to
allot shares up to a maximum nominal amount of
£1,778,404, 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 9, 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 £533,575, 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 8 and 9. These authorities
will lapse on 30 June 2012 or, if earlier, the date of
the Company’s next annual general meeting.
AUTHORITY TO MAKE MARKET PURCHASES OF SHARES
The directors propose to seek authority under
resolution 10 for the Company to purchase its own
shares on the AIM Market of the London Stock Exchange
until 30 June 2012 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. The directors would 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.
30
M. P. EVANS GROUP
Whilst any such shares are held in treasury, no
dividends will be payable on them and they will not
carry any voting rights.
Resolution 10 set out in the notice of the annual general
meeting will accordingly be proposed to authorise the
purchase of up to a maximum of 5,335,745 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 10 will lapse on
30 June 2012 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 1,580,631 shares outstanding under the
executive share-option schemes. If all of the options
were exercised, the resulting number of shares would
represent (a) 2.88% of the enlarged issued share capital
at that date; and (b) if the proposed authority to purchase
shares was exercised in full 3.19% of the enlarged issued
equity share capital at that date (excluding any share
capital which may be purchased and held in treasury).
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 2010
amounted to 32 days (2009 – 23 days).
FINANCIAL INSTRUMENTS
Details of the Group’s financial instruments, and
the board’s policy with regard to their use, are
given in note 30 to the consolidated accounts on
pages 64 and 65.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the annual
report and the financial statements in accordance
with applicable law and regulations.
Company law requires the directors to prepare
financial statements for each financial year. Under
that law the directors have prepared the Group
financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted
by the European Union and the parent-Company
financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards and
applicable law). Under company law the directors
must not approve the financial statements unless
they are satisfied that they give a true and fair view
of the state of affairs of the Group and the Company
and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors
are required to:
select suitable accounting policies and then apply
them consistently;
make judgements and accounting estimates that
are reasonable and prudent;
state whether applicable IFRSs as adopted by the
European Union and applicable UK accounting
standards have been followed, subject to any
material departures disclosed and explained
in the Group and parent-Company financial
statements respectively;
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 adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose
with reasonable accuracy at any time the financial
position of the Company and the Group 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 the Group 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 Company’s website. Legislation
in the United Kingdom governing the preparation
and dissemination of financial statements may differ
from legislation in other jurisdictions.
POST-BALANCE-SHEET EVENTS
There are no post-balance-sheet events.
2010 ANNUAL REPORT
31
REPORT OF THE DIRECTORS continued
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.
This confirmation is given and should be interpreted
in accordance with the provisions of section 418(2)
of the Companies Act 2006.
INDEPENDENT AUDITORS
The auditors, 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.
DISCLOSURE OF INFORMATION TO AUDITORS
Each person 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.
Approved by the board of directors
and signed on its behalf
J F Elliott Secretary
21 April 2011
32
M. P. EVANS GROUP
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
page 28. 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 Legg, Robinow 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 2010 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 page 31.
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. In summary
this is reported on pages 23 to 25.
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.
2010 ANNUAL REPORT
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 planting expenditure in Indonesia
on the areas noted in the review of operations on
pages 11 to 22. 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 facilities agreed
in April 2010 and March 2011, 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 twice during
2010 and each meeting was attended by all
of the members.
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.
The Group’s auditors have not provided
non-audit services.
34
M. P. EVANS GROUP
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.
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, for the year commencing 1 January 2010,
they qualified 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 2010 was as follows:
2010 2009
US$ US$
Emoluments 1,070,936 966,714
Gains on exercise
of share options 3,932,063 128,406
Group money-purchase
pension contributions 133,856 116,978
5,136,855 1,212,098
The details of the remuneration of the directors for the year ended 31 December 2010 are set out below:
SALARY PENSION BENEFITS TOTAL TOTAL
AND FEES BONUS COSTS IN KIND 2010 2009
US$ US$ US$ US$ US$ US$
Executive directors
P E Hadsley-Chaplin 152,955 9,420 26,767 31,472 220,614 320,761
P A Fletcher 254,925 15,700 44,612 62,678 377,915 353,906
O D Wilkinson 157,819 59,183 41,233 7,265 265,500 277,607
T R J Price (appointed 01/01/2010) 169,950 10,205 21,244 19,703 221,102 —
735,649 94,508 133,856 121,118 1,085,131 952,274
Non-executive directors
K P Legg 38,780 — — — 38,780 38,052
R M Robinow 33,295 — — — 33,295 46,683
J D Shaw 47,586 — — — 47,586 46,683
119,661 — — — 119,661 131,418
Total 855,310 94,508 133,856 121,118 1,204,792 1,083,692
NOTES
1.
In addition to the above, the gain in respect of options
exercised during the year amounted to:
Notes continue on next page.
2010 2009
US$ US$
P A Fletcher 1,919,928 —
P E Hadsley-Chaplin 1,949,792 —
O D Wilkinson 62,343 128,406
3,932,063 128,406
2010 ANNUAL REPORT
35
REPORT OF THE BOARD TO THE SHAREHOLDERS ON DIRECTORS’ REMUNERATION continued
2. The pension costs for Messrs Hadsley-Chaplin, Fletcher and Price set out above are the contributions made by the Company
to a 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.
3. No long-term incentives, other than the share options described below, have been awarded to directors.
4.
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 2010 options over 1,515,631
(2009 - 2,336,731) shares granted to executive
directors remain outstanding. These were granted
to the executive directors between 17 July 2001 and
2 February 2005, except that options over 150,000 shares
were granted to Mr T R J Price between 16 November
2007 and 24 November 2008. During the year 971,100
(2009 - 59,730) options granted to directors were
exercised and none (2009 none) lapsed.
No performance criteria are attached to the options
and no options are held by the non-executive
directors. At 31 December 2010 the middle-market
quotation for the Company’s shares, as derived from
the London Stock Exchange Daily Official List, was
500.5p, as compared with the high and low quotations
for the year of 500.5p and 311.5p respectively.
The details of the options held over shares of the
Company by the executive directors during the year
ended 31 December 2010 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
2010 IN THE YEAR 2010 PENCE PENCE OF GRANT FIRST EXERCISABLE DATE
P A Fletcher 200,000 117,500 82,500 96.50 340 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 — 85.05 340 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
1,108,235 476,100 632,135
P E Hadsley-Chaplin 41,765 41,765 — 75.50 340 17 July 2001 17 July 2004 17 July 2011
200,000 79,635 120,365 96.50 340 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 — 85.05 340 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
1,150,000 480,000 670,000
O D Wilkinson 7,000 7,000 — 101.78 341 2 Feb 2005* 1 May 2005 1 May 2012
4,258 4,258 — 101.78 399 2 Feb 2005* 1 May 2005 1 May 2012
53,790 3,742 50,048 138,04 399 2 Feb 2005* 2 May 2006 2 May 2013
13,448 — 13,448 158.95 — 2 Feb 2005* 4 May 2007 4 May 2014
78,496 15,000 63,496
T R J Price** 75,000 — 75,000 385.00 — 16 Nov 2007 16 Nov 2010 16 Nov 2017
75,000 — 75,000 159.50 — 24 Nov 2008 24 Nov 2011 24 Nov 2018
150,000 — 150,000
Total 2,486,731 971,100 1,515,631
* Transferred from Bertam Holdings PLC executive share-option scheme in 2005.
** Held on appointment.
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 directors’-remuneration
package, other than basic salary, is pensionable.
Approved by the board of directors
and signed on its behalf
J F Elliott Secretary
21 April 2011
36
M. P. EVANS GROUP
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 2010 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 statement of directors’
responsibilities 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 and
express an opinion on 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 2010 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 report
of the directors 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 2010.
Simon O’Brien (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors,
London
21 April 2011
2010 ANNUAL REPORT
37
Consolidated income statement
FOR THE YEAR ENDED 31 DECEMBER 2010
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 * 2010 ADJUSTMENT * ADJUSTMENT * 2009
NOTE US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Continuing operations
Revenue 4 42,091 — 42,091 28,391 — 28,391
Cost of sales (20,533) 1,011 (19,522) (17,167) 481 (16,686)
Gross profit 4 21,558 1,011 22,569 11,224 481 11,705
Gain/(loss) on biological assets 13 — 17,589 17,589 (637) 23,518 22,881
Planting expenditure — (15,204) (15,204) — (15,154) (15,154)
Foreign-exchange gains 739 — 739 1,460 — 1,460
Other administrative expenses (5,616) — (5,616) (5,177) — (5,177)
Other income 218 — 218 226 — 226
Operating profit 16,899 3,396 20,295 7,096 8,845 15,941
Finance income 6 711 — 711 623 — 623
Finance costs 7 (1,647) — (1,647) (1,226) — (1,226)
Group-controlled profit
before tax 8 15,963 3,396 19,359 6,493 8,845 15,338
Tax on profit on
ordinary activities 9 (7,459) (577) (8,036) (5,654) (578) (6,232)
Group-controlled
profit after tax 8,504 2,819 11,323 839 8,267 9,106
Share of associated companies’
profit after tax 4, 15 16,126 (3,001) 13,125 7,334 2,692 10,026
Profit after tax on
continuing operations 24,630 (182) 24,448 8,173 10,959 19,132
Discontinued operations — — — 1,578 — 1,578
Profit for the year 24,630 (182) 24,448 9,751 10,959 20,710
Attributable to:
Owners of M. P. Evans Group PLC 21,636 271 21,907 8,076 10,174 18,250
Minority interests 2,994 (453) 2,541 1,675 785 2,460
24,630 (182) 24,448 9,751 10,959 20,710
US CENTS US CENTS
Basic earnings per 10p share 11
Continuing operations 41.17 31.92
Discontinued operations — 3.02
Continuing and discontinued
operations 41.17 34.94
Diluted earnings per 10p share 11
Continuing operations 40.52 31.01
Discontinued operations — 2.93
Continuing and discontinued
operations 40.52 33.94
* Non-statutory column (see note 13)
38
M. P. EVANS GROUP
Consolidated statement
of comprehensive income
FOR THE YEAR ENDED 31 DECEMBER 2010
2010 2009
US$’000 US$’000
Other comprehensive income
Unrealised share of movements in associated undertakings’ reserves — 876
Previously unrealised profit on sale of land to associated undertaking released
to the consolidated income statement on sale of that land by the associate (327) (33)
Exchange differences on translation of foreign operations 14,203 11,805
Other comprehensive gain for the year 13,876 12,648
Profit for the year 24,448 20,710
Total comprehensive income 38,324 33,358
Attributable to:
Owners of M. P. Evans Group PLC 35,777 32,194
Minority interests 2,547 1,164
38,324 33,358
2010 ANNUAL REPORT
39
Consolidated balance sheet
AT 31 DECEMBER 2010
BEFORE BEFORE
BIOLOGICAL BIOLOGICAL BIOLOGICAL BIOLOGICAL
BEARER-ASSET BEARER-ASSET 31 DECEMBER BEARER-ASSET BEARER-ASSET 31 DECEMBER
ADJUSTMENT * ADJUSTMENT * 2010 ADJUSTMENT * ADJUSTMENT * 2009
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
12
13
14
15
16
23
17
18
19
20
1,157
—
— 110,862
(52,416)
22,803
—
—
120,476
106,776
149
808
1,157
110,862
68,060
129,579
149
808
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
229,366
81,249
310,615
191,364
79,807
271,171
7,991
7,921
24,388
1,962
35,399
77,661
7,991
—
—
7,921
— 24,388
—
1,962
— 35,399
— 77,661
2,650
8,454
14,852
3,030
38,081
67,067
2,650
—
—
8,454
— 14,852
—
3,030
— 38,081
— 67,067
Total assets
4
307,027
81,249
388,276
258,431
79,807
338,238
Current liabilities
Borrowings
Trade and other payables
Current-tax liability
20, 22
21
Net current assets
Non-current liabilities
Borrowings
Deferred-tax liability
Retirement-benefit obligations
22
23
24
35,430
8,278
2,611
46,319
31,342
—
3,178
1,840
5,018
— 35,430
8,278
—
2,611
—
— 46,319
— 31,342
—
14,597
—
—
17,775
1,840
14,597
19,615
22,297
7,516
632
30,445
36,622
2,011
2,796
1,251
6,058
— 22,297
7,516
—
632
—
— 30,445
— 36,622
—
14,020
—
2,011
16,816
1,251
14,020
20,078
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 13)
4
51,337
14,597
65,934
36,503
14,020
50,523
255,690
66,652
322,342
221,928
65,787
287,715
25
27
27
8,987
82,250
157,149
—
22,803
36,389
8,987
105,053
193,538
8,821
70,610
138,188
—
22,702
35,177
8,821
93,312
173,365
248,386
59,192
307,578
217,619
57,879
275,498
28
7,304
7,460
14,764
4,309
7,908
12,217
255,690
66,652
322,342
221,928
65,787
287,715
These financial statements were approved by the board of directors on 21 April 2011 and signed on its behalf
Tristan Price Philip Fletcher
Directors
40
M. P. EVANS GROUP
Consolidated statement
of changes in equity
FOR THE YEAR ENDED 31 DECEMBER 2010
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 2010
—
—
—
—
—
—
166
—
1,727
—
—
—
166
1,727
—
553
553
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 13,125
—
8,782
21,907
2,541
24,448
— 10,237
496
2,584
13,870
6
13,876
— 22,362
496
11,366
35,777
2,547
38,324
—
—
— (14,455)
58
—
—
—
—
—
1,893
—
1,893
8,799
(5,656)
— (5,656)
8
66
—
66
58
(14,455)
—
8,807
(3,697)
— (3,697)
8,821
19,770
11,975
3,896
1,056
540
57,664
(1,589) 173,365 275,498
12,217 287,715
At 31 December 2010
8,987
21,497
12,528
3,896
1,056
598
66,571
(1,093) 193,538 307,578
14,764 322,342
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
2010 ANNUAL REPORT
41
Consolidated cash-flow statement
FOR THE YEAR ENDED 31 DECEMBER 2010
YEAR ENDED YEAR ENDED
31 DECEMBER 31 DECEMBER
2010 2009
NOTE US$’000 US$’000
Net cash generated by operating activities* 29 19,417 12,311
Investing activities
Interest received 7 711 623
Proceeds on disposal of assets 690 2,914
Proceeds on disposal of investments 3,255 —
Purchase of property, plant and equipment 14 (9,920) (9,333)
Planting expenditure (15,204) (15,154)
Investment in associated undertaking (7,310) —
Net cash used by investing activities (27,778) (20,950)
Financing activities
Dividends paid to Company shareholders 10, 25 (5,064) (6,033)
Repayment of borrowings (2,011) 10
Proceeds on issue of shares 25 1,301 99
Dividend paid to minorities 28 — (1,144)
Net cash used by financing activities (5,774) (7,068)
Net decrease in cash and cash equivalents (14,135) (15,707)
Net cash and cash equivalents at 1 January 20 15,784 37,486
Effect of foreign-exchange rates on cash and cash equivalents (1,680) (5,995)
Net cash and cash equivalents at 31 December 20 (31) 15,784
* In order better to represent cash flows occurring in the Group’s activities, the board has changed the classification of planting
expenditure from an operating cost to an investment activity similar to the purchase of property, plant and equipment.
Furthermore, given the operating nature of the Group’s associated undertakings, it has included dividends from these
companies within operating cash flow. These reclassifications have been applied to the comparative figures shown for 2009.
42
M. P. EVANS GROUP
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2010
NOTE 1 General information
M.P. Evans Group PLC is incorporated in the United Kingdom under the Companies Act 2006 and listed on the London Stock
Exchange’s Alternative Investment Market (“AIM”). The address of its registered office is given on page 77. The nature of the
Group’s operations and its principal activities is set out in note 4 and in the review of operations on pages 11 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 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 2010 of US$3,558,000
(2009 loss US$3,454,000).
NOTE 2 Adoption of new and revised accounting standards
(a) New standards adopted by the Group
IFRS 3 (revised), “Business combinations”, and consequential amendments to IAS 27, “Consolidated and separate
financial statements”, IAS 28, “Investments in associates”, and IAS 31, “Interests in joint ventures”, are effective
prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after 1 July 2009.
IFRS 3 (revised) continues to apply the acquisition method to business combinations, but with some significant changes, for
example, the change in the treatment of acquisition-related expenses discussed in the basis of preparation section. Further,
any revisions to contingent cash consideration in the period following the acquisition will be recorded in the income statement.
As the Group has adopted IFRS 3 (revised), it is also required to adopt IAS 27 (revised), “Consolidated and separate
financial statements”. IAS 27 (revised) requires the effects of all transactions with non-controlling interests to be recorded
in equity if there is no change in control. Such transactions will no longer result in either goodwill or in a gain or a loss
being recognised. The standard also specifies the accounting when control is lost. Any remaining interest in the entity
is re-measured to fair value, and a gain or loss is recognised in the income statement.
(b) Amended standards and interpretations mandatory for the first time for the financial year beginning 1 January 2010
Amendments to existing standards:-
Amendment to IFRS 2, “Share-based Payments“ (effective 1 January 2010).
Amendment to IFRS 3 (Revised), “Business Combinations” (effective 1 July 2010).
Amendment to IFRS 5, “Non-current Assets Held for Sale and Discontinued Operations” (effective 1 January 2010).
Amendment to IFRS 8, “Operating Segments” (effective 1 January 2010).
Amendment to IAS 1, “Presentation of Financial Statements” (effective 1 January 2010).
Amendment to IAS 7, “Statement of Cash Flows“ (effective 1 January 2010).
Amendment to IAS 17, “Leases” (effective 1 January 2010).
Amendment to IAS 27, “Consolidated and Separate Financial Statements” (effective 1 February 2010).
Amendment to IAS 36, “Impairment of Assets” (effective 1 January 2010).
Amendment to IAS 32, “Financial Instruments: Presentation” (effective 1 February 2010).
Amendment to IAS 39, “Financial Instruments: Recognition and Measurement” (effective 1 January 2010).
International Financial Reporting Interpretations Committee (“IFRIC”) interpretations IFRIC 19, “Extinguishing Financial
Liabilities with Equity Instruments” (effective 1 July 2010).
The above amendments and interpretations are either not currently relevant for the Group (although they may affect
the accounting for future transactions and events) or have not had a significant impact on the Group and its disclosures.
(c) New standards, amended standards or interpretations issued, but not effective for the financial year beginning
1 January 2010 and not adopted early:
New IFRS standard:-
IFRS 9, “Financial Instruments” (effective 1 January 2013).
Amendments to existing standards:-
Amendment to IAS 24, “Related-Party Disclosures” (effective 1 January 2011).
Annual improvements to IFRSs 2011 affecting:
IFRS 7, “Financial Instruments: Disclosures” (effective 1 January 2011).
IAS 1, “Presentation of Financial Statements” (effective 1 January 2011).
IAS 34, “Interim Financial Reporting”.
IFRIC interpretations:-
IFRIC 14, “The Limit on a Defined-Benefit Asset, Minimum Funding Requirements and their Interaction”
(effective 1 January 2011).
It is considered that the above standards, amendments and interpretations will not have a significant effect on the results
or net assets of the Group but may impact the level of disclosure to be made in the financial statements.
2010 ANNUAL REPORT
43
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2010
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 estates and mills, which it can manage according to the resources available. As set out in note 22, the
directors believe the loan classified as a current liability will provide financing in line with its agreed terms ending in 2014.
Subsequent to the year end, the Group has signed an arrangement with an Indonesian bank for a US$21 million term facility.
(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
is recognised at the point of delivery. Revenue in respect of construction contracts is recognised at the point the development
is sold. 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. However, these are included within 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 to 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 “Agriculture” on two groups of bearer assets (oil-palm and rubber
plantations), and one consumer biological asset (beef cattle). The Group’s only interest in rubber is through its associated 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 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
44
M. P. EVANS GROUP
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 re-planting. The Group estimates the future sales
value of its crop production using a long-term (20-year) average price. Costs associated with 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 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 recognising biological-bearer assets. The biological-bearer-asset adjustment column shows the impact
of introducing 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 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 through shareholdings and board membership 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 2010.
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.
2010 ANNUAL REPORT
45
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2010
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
presentation 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 13. 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 13.
(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 23.
(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 an 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.
46
M. P. EVANS GROUP
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;
property development in Malaysia.
2010 PLANTATION CATTLE PROPERTY OTHER TOTAL
INDONESIA MALAYSIA TOTAL AUSTRALIA MALAYSIA
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Total revenue 39,162 698 39,860 2,184 — 47 42,091
Total gross profit/(loss) 22,362 (91) 22,271 251 — 47 22,569
Continuing operations
Revenue 39,162 698 39,860 2,184 — 47 42,091
Gross profit/(loss) 22,362 (91) 22,271 251 — 47 22,569
Gain on biological assets 17,589 — 17,589 — — — 17,589
Planting expenditure (15,204) — (15,204) — — — (15,204)
Foreign-exchange gains 739
Other administrative expenses (2,900) 207 (2,693) (172) — (2,751) (5,616)
Other income — 218 218 — — — 218
Operating profit 20,295
Finance income 625 26 651 19 — 41 711
Finance costs — — — (1,647) — — (1,647)
Group-controlled profit before tax 19,359
Tax (6,645) (10) (6,655) (52) — (1,329) (8,036)
Group-controlled profit after tax 11,323
Share of associated companies’
profit after tax 7,773 2,987 10,760 2,365 — — 13,125
Profit after tax 24,448
Minority interests (2,541)
21,907
Assets 205,535 5,095 210,630 44,769 — 3,298 258,697
Investments in associates 49,345 — 49,345 60,379 19,855 — 129,579
254,880 5,095 259,975 105,148 19,855 3,298 388,276
Unallocated assets —
Consolidated total assets 388,276
Liabilities 23,233 10,342 33,575 28,738 — 3,621 65,934
Unallocated liabilities —
Consolidated total liabilities 65,934
Other information
Additions to non-current assets 9,303 24 9,327 547 — 46 9,920
Depreciation and amortisation 2,136 37 2,173 379 — 33 2,585
Retirement-benefit obligations 529 — 529 — — — 529
2010 ANNUAL REPORT
47
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2010
NOTE 4 Segment information CONTINUED
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 1,460
Other administrative expenses (1,902) (172) (2,074) (51) — — (3,052) (5,177)
Other income — 29 29 — — — 197 226
Operating profit 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
Investments 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)
* The Group’s Thai rubber factory was sold in 2009.
48
M. P. EVANS GROUP
NOTE 5 Employees
2010 2009
US$’000 US$’000
Employee costs during the year
Wages and salaries 7,979 7,071
Social-security costs 359 299
Retirement-benefit obligations (see note 24) 529 (249)
Other pension costs 208 110
9,075 7,231
NUMBER NUMBER
Average number of persons employed (including executive directors)
Estate manual 1,334 1,189
Local management 68 89
United Kingdom head office 6 6
1,408 1,284
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 Finance income
2010 2009
US$’000 US$’000
Interest receivable on bank deposits 711 623
NOTE 7 Finance costs
Interest payable on bank loans and overdrafts 1,647 1,226
2010 ANNUAL REPORT
49
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2010
NOTE 8 Group-controlled profit before tax
TOTAL TOTAL
2010 2009
US$’000 US$’000
Profit before tax is stated after charging
Depreciation of property, plant and equipment 2,585 2,517
Auditors’ remuneration 288 266
Employee costs (note 5) 9,075 7,231
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 74 79
Total audit services 94 99
Audit of overseas subsidiaries 125 102
Total fees payable 219 201
* In addition to the above, fees of US$69,000 (2009 US$65,000) were payable to other firms for the audit of subsidiary companies.
NOTE 9 Tax on profit on ordinary activities
United Kingdom corporation tax charge for the year 303 2,643
Relief for overseas taxation (303) (2,643)
— —
Overseas taxation 6,865 4,188
Adjustments in respect of prior years 9 (229)
Total current tax 6,874 3,959
Deferred taxation – origination and reversal of timing differences (see note 23) 1,162 2,273
8,036 6,232
The standard rate of tax for the year, based on the United Kingdom standard rate of corporation tax, was 28% (2009 – 28%).
The standard rate of Indonesian tax was 25% for the current year (2009 – 28%). The actual tax charge is higher than the standard
rate for the reasons set out in the following reconciliation.
50
M. P. EVANS GROUP
NOTE 9 Tax on profit on ordinary activities CONTINUED
2010 2009 2009
CONTINUING DISCONTINUED
OPERATIONS OPERATIONS
US$’000 US$’000 US$’000
Profit on ordinary activities before tax 19,359 15,338 1,590
Tax on profit on ordinary activities at standard rate 5,421 4,295 445
Factors affecting the charge for the year:
Non-taxable gain — — (435)
Expenses not deductible for tax purposes 96 114 2
Deferred-tax asset on Australian losses written back — 774 —
Unrelieved losses 108 875 —
Utilisation of losses brought forward (17) (380) —
Unrealised Indonesian exchange gains not included in Group profit 913 2,145 —
Other exchange differences 656 (72) —
Withholding tax on overseas dividends from associated companies 1,079 571 —
Lower rate applicable to disposals of fixed assets (301) (9) —
Biological assets (374) (1,899) —
Other differences 455 (182) —
Total actual amount of current tax 8,036 6,232 12
NOTE 10 Dividends paid and proposed
2010 2009
US$’000 US$’000
2010 interim dividend – 2.00p per 10p share (2009 interim dividend – 2.00p) 1,663 1,724
2009 final dividend – 5.00p per 10p share (2008 final dividend – 5.00p) 3,993 4,309
5,656 6,033
Following the year end, the board has proposed a final dividend for 2010 of 5.50p per 10p share, amounting to
US$4.78 million. Shareholders will again have the option to elect to receive the dividend in shares rather than in cash.
Further information is published in the directors report on page 29. The dividend will be paid on or after 17 June 2011
to those shareholders on the register at the close of business on 3 May 2011.
2010 ANNUAL REPORT
51
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2010
NOTE 11 Basic and diluted earnings per share
The calculation of earnings per 10p share is based on:
2010 2010 2009 2009
NUMBER OF NUMBER OF
US$’000 SHARES US$’000 SHARES
Profit for the year attributable to the
owners of M.P. Evans Group PLC
Continuing operations 21,907 16,672
Discontinued operations — 1,578
Continuing and discontinued operations 21,907 18,250
Average number of shares in issue 53,206,617 52,233,610
Diluted average number of shares in issue* 54,059,915 53,771,958
* The difference between the number of shares in issue and the diluted number of shares relates to unexercised share options
held by directors and key employees of the Group.
NOTE 12 Goodwill
2010 2009
US$’000 US$’000
At 1 January and 31 December 1,157 1,157
The directors have tested goodwill for impairment, concluding that the carrying amounts are recoverable. The goodwill has
arisen in respect of the Group’s new plantation projects in Indonesia on Bangka Island and in Kalimantan. Given the size of the
goodwill balance, the directors do not consider it necessary to provide detailed disclosures regarding the impairment review.
52
M. P. EVANS GROUP
NOTE 13 Biological assets
Non-current biological assets comprise plantation bearer assets. The Group values these plantation assets using a discounted cash
flow over the expected 25-year economic life of the asset. The discount rate used in this valuation is 14%. The price of the crop
(oil-palm fresh fruit bunches) is taken to be the 20-year average based on historical selling prices or, where the plantation has its
own mill, an inference based on the widely-quoted commodity price for crude palm oil delivered c.i.f. Rotterdam. The directors
have concluded that using a 20-year average provides the best estimate of the prices to be achieved over the valuation period.
Assumptions
The long-term average price and exchange rate used in determining the valuations were as follows:
31 DECEMBER 31 DECEMBER
2010 2009
Price of crude palm oil (US$/t, c.i.f Rotterdam) 533 502
Exchange rate (Rupiah per US$) 8,891 9,400
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 +US$ 25
US$’000 US$’000
Subsidiaries (19,628) 19,628
Associated companies (10,848) 10,848
(30,476) 30,476
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 9,013 (8,095)
Associated companies 2,154 (1,982)
11,167 (10,077)
2010 ANNUAL REPORT
53
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2010
NOTE 13 Biological assets CONTINUED
2010 2009
Non-current biological assets US$’000 US$’000
Gain in fair value:
Initial recognition 3,131 11,090
Current period 14,458 12,428
Total gain* 17,589 23,518
Decreases due to disposal and reclassification (207) (8,817)
Change in carrying value of biological assets 17,382 14,701
At 1 January 93,480 78,779
At 31 December 110,862 93,480
* All of the gain in fair value relates to continuing operations.
2010 2009
Oil-palm planting and crop MATURE IMMATURE TOTAL MATURE IMMATURE TOTAL
Planted area (hectares)
Subsidiary companies 12,101 8,196 20,297 9,509 9,148 18,657
Associated undertakings (Group share) 6,879 660 7,539 5,859 585 6,444
18,980 8,856 27,836 15,368 9,733 25,101
2010 2009
Crop (f.f.b.) – tonnes 198,034 173,057
Fair value of crop (US$’000) 18,830 15,218
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$52,416,000 (2009 US$36,375,000) 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$119,068 (2009 US$102,162,000).
54
M. P. EVANS GROUP
NOTE 14 Property, plant and equipment
PLANT,
FREEHOLD LEASEHOLD EQUIPMENT CONSTRUCTION
LAND LAND BUILDINGS AND VEHICLES IN PROGRESS TOTAL
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Cost or valuation
At 1 January 2010 25,713 16,310 17,554 11,207 470 71,254
Additions 52 893 1,451 1,623 5,901 9,920
Re-classification — — (5,100) 5,100 — —
Exchange differences 3,411 27 587 443 — 4,468
Disposals — (1,993) (24) (1,276) (727) (4,020)
At 31 December 2010 29,176 15,237 14,468 17,097 5,644 81,622
Accumulated depreciation
At 1 January 2010 — 354 5,480 5,488 — 11,322
Charge for the year — 4 675 1,906 — 2,585
Re-classification — — (2,841) 2,841 — —
Exchange differences — — 85 250 — 335
Disposals — — (6) (674) — (680)
At 31 December 2010 — 358 3,393 9,811 — 13,562
Net book value
At 31 December 2010 29,176 14,879 11,075 7,286 5,644 68,060
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
Net book value
At 1 January 2009 19,959 11,983 10,633 4,736 143 47,454
As at 31 December 2010, the Group had entered into contractual commitments for the acquisition of property, plant and
equipment of US$1,227,000 (2009 US$611,000).
2010 ANNUAL REPORT
55
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2010
NOTE 15 Investments in associates
Details of the principal subsidiary and associated undertakings are given on page 72. Associated companies are all unlisted.
SHARE OF SHARE OF
NET ASSETS NET ASSETS
2010 2009
US$’000 US$’000
Share of net assets
At 1 January 111,706 97,363
Exchange differences 11,011 10,674
Acquisitions 7,190 —
Share of reserves — 609
Profit for the year 13,125 10,026
Net dividends received (14,454) (6,966)
At 31 December 128,578 111,706
Goodwill
At 1 January 881 881
Acquisition 120 —
At 31 December 1,001 881
Carrying value
At 31 December 129,579 112,587
At valuation
Unlisted (directors’ valuation) 184,000 162,000
The Group’s aggregate share of the summarised results of its associated undertakings is shown below:
THE NORTH BERTAM
PT AGRO PT KERASAAN AUSTRALIAN PASTORAL PROPERTIES
MUKO INDONESIA COMPANY PTY LIMITED SDN. BHD.
(36.84%*) (38.00%) (34.37%) (40.00%) TOTAL
US$’000 US$’000 US$’000 US$’000 US$’000
2010
Revenue 23,275 3,720 13,405 8,484 48,884
Profit after tax 6,096 1,677 2,365 2,987 13,125
Assets 46,774 5,726 112,328 24,903 189,731
Liabilities (2,873) (282) (51,949) (5,048) (60,152)
Net assets 43,901 5,444 60,379 19,855 129,579
2009
Revenue 16,541 3,040 11,031 6,920 37,532
Profit/(loss) after tax 8,424 1,659 (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
* 2009 – 31.53%
56
M. P. EVANS GROUP
NOTE 16 Investments
2010 2009
Other available-for-sale financial investments (unlisted) US$’000 US$’000
At 1 January 2,642 2,679
Exchange differences 15 3
Disposal of investment (2,508) (40)
At 31 December * 149 2,642
* The directors have reviewed the fair values of the Group’s available-for-sale investments and concluded that their realisable
market value exceeds their carrying value.
NOTE 17 Current biological assets
2010 2009
LIVESTOCK CROPS TOTAL LIVESTOCK CROPS TOTAL
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Gain in fair value – initial recognition 2,869 — 2,869 — 726 726
Increase due to purchases 5,131 — 5,131 1,314 — 1,314
Decreases due to disposal and reclassification (2,188) (726) (2,914) (841) (801) (1,642)
Net exchange differences 255 — 255 380 — 380
Change in carrying value of biological assets 6,067 (726) 5,341 853 (75) 778
At 1 January 1,924 726 2,650 1,071 801 1,872
At 31 December 7,991 — 7,991 1,924 726 2,650
Livestock
Head sold (number)
Subsidiary 2,181 1,252
Cattle revenue (US$’000)
Subsidiary 2,184 970
Grain crops
Crops harvested (tonnes)
Subsidiary — 6,643
Crop revenue (US$’000)
Subsidiary — 883
NOTE 18 Inventories
2010 2009
US$’000 US$’000
Processed produce for sale 2,216 2,647
Estate stores 925 452
Nurseries 4,780 5,355
7,921 8,454
2010 ANNUAL REPORT
57
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2010
NOTE 19 Trade and other receivables
2010 2009
US$’000 US$’000
Trade receivables 1,635 613
Other receivables 8,446 5,853
Prepayments and accrued income 14,307 8,386
24,388 14,852
Trade and other receivables analysed by currency of receivable:
Indonesian Rupiah 22,775 13,529
Malaysian Ringitt 1,292 548
Australian Dollar 216 715
Sterling 55 60
US Dollar 50 —
24,388 14,852
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 2010, there was no provision for impairment of trade receivables
(2009 US$ nil). The directors consider the carrying amount of trade and other receivables approximates their fair value.
NOTE 20 Cash and cash equivalents
Cash and cash equivalents 35,399 38,081
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 equivalents 35,399 38,081
Bank overdrafts and loans (see note 22) (35,430) (22,297)
Net cash (31) 15,784
NOTE 21 Trade and other payables
Trade payables 4,508 4,339
Amounts owed to associated undertakings 133 205
Other payables 3,637 2,972
8,278 7,516
The average credit period taken for trade purchases is 32 days. The Group has processes in place to ensure payables are paid
within the agreed terms.
58
M. P. EVANS GROUP
NOTE 22 Borrowings
2010 2009
US$’000 US$’000
Secured borrowing at amortised cost
Bank overdrafts 25,255 22,297
Bank loans 10,175 2,011
35,430 24,308
Total borrowings
Amount due for settlement within 12 months 25,255 24,308
Due for settlement in one to five years* 10,175 —
35,430 24,308
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.
* These loans are structured as long-term loans with an agreed repayment schedule. However, the legal agreement gives
the bank the right to terminate the loan and consequently, despite the commercial substance of the agreement, it has been
classified as a current liability.
Analysis of borrowings by currency:
AUSTRALIAN MALAYSIAN
US DOLLARS DOLLARS RINGITT TOTAL
US$’000 US$’000 US$’000 US$’000
31 December 2010
Bank overdrafts — 25,255 — 25,255
Bank loans — — 10,175 10,175
— 25,255 10,175 35,430
31 December 2009
Bank overdrafts — 22,297 — 22,297
Bank loans 2,011 — — 2,011
2,011 22,297 — 24,308
Undrawn borrowing facilities
At 31 December 2010, the Group had available MYR18.75 million (2009 US$ nil) 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 (2009 A$500,000).
Interest rates
The weighted-average interest rates paid during the year were as follows:
2010 2009
% %
Bank overdrafts 4.7 4.5
Bank loans 7.0 5.7
2010 ANNUAL REPORT
59
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2010
NOTE 23 Deferred tax
The following are the major deferred-tax liabilities and assets recognised by the Group and movements thereon:
ACCELERATED RETIREMENT- OTHER
TAX REVALUATION BIOLOGICAL BENEFIT TIMING
DEPRECIATION OF LAND ASSETS OBLIGATIONS DIFFERENCES TOTAL
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
At 1 January 2010 680 3,307 14,020 (306) (2,258) 15,443
Charge/(credit) to income 1,574 — 577 (139) (850) 1,162
Exchange differences 89 439 — (15) (151) 362
At 31 December 2010 2,343 3,746 14,597 (460) (3,259) 16,967
At 1 January 2009 559 2,567 13,442 (390) (3,458) 12,720
(Credit)/charge to income (10) — 578 135 1,569 2,272
Exchange differences 131 740 — (51) (369) 451
At 31 December 2009 680 3,307 14,020 (306) (2,258) 15,443
Certain deferred-tax assets and liabilities have been offset. The following is the analysis of the deferred-tax balances
(after offset) for financial reporting purposes:
2010 2009
US$’000 US$’000
Deferred-tax assets
To be recovered within 12 months — —
To be recovered after 12 months (808) (1,373)
(808) (1,373)
Deferred-tax liabilities 17,775 16,816
16,967 15,443
At the balance-sheet date, the Group had unused tax losses of US$16,417,000 (2009 US$21,218,000) available for offset
against future profits. A deferred-tax asset has been recognised in respect of US$8,316,000 (2009 US$9,074,000) of such
losses. No deferred-tax asset has been recognised in respect of the remaining US$8,074,000 (2009 US$11,514,000)
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$209,560,000 (2009 US$171,205,000). 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$86,226,000 (2009 US$34,961,000). 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$17,236,000 (2009 US$7,047,000). No asset has been
recognised in respect of these differences due to the unpredictability of future profit streams.
60
M. P. EVANS GROUP
NOTE 24 Retirement-benefit obligations
The Group’s only obligation relates to an unfunded, non-contributory, post-employment benefit scheme in Indonesia.
A lump sum is paid to employees on retirement or on leaving the Group’s employment. This terminal benefit is accrued
by the Group and charged in the income statement on the basis of individuals’ service at the balance-sheet date. Retirement
is assumed at the earlier of age 55 years or 30 years’ service. No allowance is made for mortality or internal promotion.
The main assumptions used to assess the Group’s liability are:
2010 2009
% %
Discount rate 8.75 10.50
Salary increase per annum 8.00 8.00
US$’000 US$’000
Reconciliation of scheme liabilities:
Current-service cost 444 193
Interest cost 125 168
Actuarial gains (40) (3)
Difference on settlement — (607)
529 (249)
Less: Benefits paid out — (68)
Movement in the year 529 (317)
At 1 January 1,251 1,377
Exchange differences 60 191
At 31 December 1,840 1,251
NOTE 25 Called-up share capital
ALLOTTED, FULLY ALLOTTED, FULLY
AUTHORISED PAID AND VOTING AUTHORISED PAID AND VOTING
NUMBER NUMBER £’000 US$’000
Shares of 10p each
At 1 January 2010 87,000,000 52,271,315 8,700 8,821
Issued during the year — 1,086,140 — 166
At 31 December 2010 87,000,000 53,357,455 8,700 8,987
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
During the year 976,100 (2009 - 59,730) 10p shares were issued as a result of the exercise of share options. In addition,
a further 110,040 shares were issued to shareholders who elected to take scrip in lieu of the cash dividends. Total cash
benefits received by the Company in respect of these allotments amounted to US$1,301,000 (2009 US$99,675).
2010 ANNUAL REPORT
61
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2010
NOTE 26 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:
2010 2009
WEIGHTED-AVERAGE WEIGHTED-AVERAGE
NUMBER OF EXERCISE PRICE NUMBER OF EXERCISE PRICE
SHARE OPTIONS (IN BRITISH PENCE) SHARE OPTIONS (IN BRITISH PENCE)
Outstanding at the beginning of the period 2,556,731 120.8 2,566,461 116.2
Granted during the period — — 50,000 335.0
Exercised during the period (976,100) 87.6 (59,730) 103.3
Outstanding at the end of the period 1,580,631 141.3 2,556,731 120.8
Exercisable at the end of the period 1,455,631 2,356,731
The weighted-average share price at the date of exercise for share options exercised during the period was 340p (2009 – 309p).
The options outstanding at 31 December 2010 had a weighted-average remaining contractual life of 2.7 years and exercise
prices in the range 96.5p to 385.0p. The Group recognised total expenses of US$66,000 related to equity-settled share-based
payment transactions (2009 US$60,000).
There were no options granted in the year. In 2009, the fair value of options granted in the year was established using the
Black Scholes valuation model using the following inputs:
2010 2009
Share price at issue (pence per share) — 335.0
Volatility (%) — 20.7
Dividend yield (%) — 2.1
Expected option life (years) — 7.0
Annual risk-free interest rate (%) — 3.1
Details of the directors’ share options are set out in the report of the board to the shareholders on directors’ remuneration on
pages 35 and 36.
NOTE 27 Reserves
SHARE- CAPITAL- SHARE- SHARE OF FOREIGN-
PREMIUM REVALUATION REDEMPTION MERGER OPTION ASSOCIATES’ EXCHANGE RETAINED
ACCOUNT RESERVE RESERVE RESERVE RESERVE RESERVES RESERVE TOTAL EARNINGS
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
At 1 January 2010 19,770 11,975 3,896 1,056 540 57,664 (1,589) 93,312 173,365
Exchange differences — 1,039 — — — 10,236 496 11,771 2,432
Issue of shares 1,727 — — — — — — 1,727 —
Share-based payments — — — — 58 — — 58 8
Other — (486) — — — — — (486) 117
Transfer on acquisition
of minority — — — — — — — — 36
Dividends from
associated undertakings — — — — — (14,454) — (14,454) 14,454
Profit for the
financial year — — — — — 13,125 — 13,125 8,782
Dividend paid
(see note 10) — — — — — — — — (5,656)
At 31 December 2010 21,497 12,528 3,896 1,056 598 66,571 (1,093) 105,053 193,538
62
M. P. EVANS GROUP
NOTE 27 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$’000
At 1 January 2009 19,680 10,280 3,896 1,056 514 43,136 1,559 80,121 160,245
Exchange differences — 1,728 — — — 10,592 (3,148) 9,172 2,633
Issue of shares 90 — — — — — — 90 —
Share-based payments — — — — 26 — — 26 34
Other — (33) — — — — — (33) —
Unrealised share of
movements in associated
undertakings’ reserves — — — — — 876 — 876 —
Transfer on acquisition
of minority — — — — — — — — 1,296
Dividends from
associated undertakings — — — — — (6,966) — (6,966) 6,966
Profit for the
financial year — — — — — 10,026 — 10,026 8,224
Dividend paid
(see note 10) — — — — — — — — (6,033)
At 31 December 2009 19,770 11,975 3,896 1,056 540 57,664 (1,589) 93,312 173,365
The revaluation reserve relates to the revaluation surplus recognised under UK GAAP. On transition to IFRS, the Group elected
to treat the revalued amount of the fixed assets as their deemed cost.
NOTE 28 Minority interests
2010 2009
US$’000 US$’000
At 1 January 12,217 12,197
Share of profit in the year 2,541 2,460
Dividends paid — (1,144)
Transfer on sale to Group 6 (1,296)
At 31 December 14,764 12,217
2010 ANNUAL REPORT
63
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2010
NOTE 29 Note to the consolidated cash-flow statement
2010 2009
US$’000 US$’000
Operating profit – continuing operations 20,295 15,941
– discontinued operations — 35
Biological gain (20,251) (22,014)
Planting expenditure 15,204 15,154
Disposal of non-current assets 1,903 —
Write down of land to be sold to smallholders’ cooperative schemes 1,350 —
Release of deferred profit (326) —
Depreciation of property, plant and equipment 2,585 2,517
Retirement-benefit obligations 529 358
Share-based payments 66 60
Dividends from associated companies 14,454 6,966
Operating cash flows before movements in working capital 35,809 19,017
Increase/(decrease) in inventories (622) 2,505
Increase in receivables (10,760) (3,212)
Increase in payables 515 1,731
Cash used in operating activities 24,942 20,041
Income tax paid (3,878) (6,504)
Interest paid (1,647) (1,226)
Net cash from operating activities 19,417 12,311
NOTE 30 Financial instruments
Capital-risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising
returns to shareholders. The capital structure of the Group consists of debt, (see note 22), cash and cash equivalents and equity
attributable to owners of the parent, comprising issued capital, reserves and retained earnings. The Group is not subject to any
externally-imposed capital requirements.
The Group’s board continues to monitor the capital structure based on the funding requirements of the Group. At the balance-
sheet date the Group had net cash of US$(31,000) (2009 US$15,784,000) being the net of cash and cash equivalents as shown
in note 20, and equity attributable to the owners of the parent of US$307,578,000 (2009 US$275,498,000). The board intends
to fund its continuing Indonesian expansion by a combination of the Group’s cash resources, disposal of its remaining
Malaysian interests and by securing additional borrowings.
Categories of financial instruments
All of the Group’s financial assets are classified as loans and receivables, with the exception of its other investments shown
in note 16 which are classified as available-for-sale financial assets. All of the Group’s financial liabilities are measured at
amortised cost.
In the opinion of the directors, there was no significant difference between the carrying values and estimated fair values
of the Group’s primary financial assets and liabilities at either the current, or preceding, financial year end.
Financial-risk-management objectives
The main risks arising from the Group’s financial instruments are foreign-currency risk, interest-rate risk, credit risk and
liquidity risk. The board reviews and agrees the policies for managing these risks. The policies and the impact of these risks
on the Group’s balance sheet at the end of the financial year are summarised below.
Foreign-currency risk
The majority of the Group’s operations are undertaken in Indonesia, Malaysia and Australia. The Group does not have
transactional currency exposures arising from sales or purchases by an operating unit but the Group’s balance sheet can
be significantly affected by movements in exchange rates. Whilst the Group’s trading takes place in local currencies in
South East Asia, relevant commodity prices are determined in US Dollars by a world market which reduces the Group’s
currency risk. The Group has a no hedging policy and does not make use of forward-currency contracts.
64
M. P. EVANS GROUP
NOTE 30 Financial instruments CONTINUED
The currency profile of the Group’s monetary assets, excluding trade and other receivables, are as follows:
2010 2009
US$’000 US$’000
US Dollar 18,446 30,542
Indonesian Rupiah 12,040 2,458
Malaysian Ringgit 2,924 3,892
Sterling 1,191 555
Australian Dollar 798 634
35,399 38,081
The currency profile of the Group’s monetary liabilities, excluding trade and other payables, is shown in note 22.
The Group is exposed to changes in foreign-currency exchange rates. This is in relation to the impact of movements on its
non-US Dollar monetary assets, but 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 502 (487)
Net assets 5,294 4,410
Malaysian Ringgit
Result for the year 958 (671)
Net assets 2,839 2,755
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 22.
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 Malaysian Ringgit and interest is charged at a floating rate related 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 five years. 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 22.
2010 ANNUAL REPORT
65
NOTES TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2010
NOTE 31 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 during the year. The Group undertook the following transactions
with related parties:
2010 2009
US$’000 US$’000
Agistment revenue on livestock belonging to
The North Australian Pastoral Company Pty Limited — 378
66
M. P. EVANS GROUP
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 2010 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
United Kingdom accounting standards (United
Kingdom Generally Accepted Accounting Practice –
“UK-GAAP”).
RESPECTIVE RESPONSIBILITIES OF DIRECTORS
AND AUDITORS
As explained more fully in the statement of directors’
responsibilities 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 and
express an opinion on 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 2010;
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 report
of the directors 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 2010.
Simon O’Brien (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors,
London
21 April 2011
2010 ANNUAL REPORT
67
Parent-Company balance sheet
AT 31 DECEMBER 2010
2010 2009
NOTE US$’000 US$’000 US$’000 US$’000
Fixed assets
Tangible fixed assets (iv) 895 883
Investments (v) 44,210 44,210
45,105 45,093
Current assets
Debtors (vi) 53,989 41,579
Cash at bank and in hand 2,139 19,723
56,128 61,302
Total assets 101,233 106,395
Creditors – amounts falling due
within one year (vii) (54,456) (52,363)
Net current assets 1,672 8,939
Total assets less current liabilities 46,777 54,032
Capital and reserves
Called-up share capital (viii) 8,987 8,821
Other reserves (ix) 27,425 25,640
Profit and loss account retained earnings (ix) 10,365 19,571
46,777 54,032
These financial statements were approved by the board of directors on 21 April 2011 and signed on its behalf
Tristan Price Philip Fletcher
Directors
68
M. P. EVANS GROUP
NOTES TO THE PARENT-COMPANY BALANCE SHEET
FOR THE YEAR ENDED 31 DECEMBER 2010
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 on a going-
concern basis 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.
Cash-flow statement
As permitted by Financial Reporting Standard No. 1 (Revised) “Cash-flow statements” the Company has not included a cash-flow
statement as part of its financial statements because the consolidated financial statements of the Group, of which the Company
is a member, include a cash-flow statement and are publicly available.
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 Company’s balance sheet at fair value when the Company 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
Loss 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 2010 of US$3,558,000
(2009 loss US$3,454,000).
The auditors’ remuneration for audit and other services was US$20,000 (2009: US$20,000).
NOTE iii Employees
2010 2009
US$’000 US$’000
Employee costs during year
Wages and salaries 902 981
Social security costs 115 130
Pension costs 129 142
1,146 1,253
NUMBER NUMBER
Average number of persons employed
Staff 3 4
Directors 3 2
6 6
NOTE iv Tangible assets
PLANT, EQUIPMENT
BUILDINGS AND VEHICLES TOTAL
US$’000 US$’000 US$’000
Cost
At 1 January 2010 834 587 1,421
Additions — 45 45
At 31 December 2010 834 632 1,466
2010 ANNUAL REPORT
69
NOTES TO THE PARENT-COMPANY BALANCE SHEET
FOR THE YEAR ENDED 31 DECEMBER 2010
NOTE iv Tangible assets CONTINUED
PLANT, EQUIPMENT
BUILDINGS AND VEHICLES TOTAL
US$’000 US$’000 US$’000
Accumulated depreciation
At 1 January 2010 — 538 538
Charge for the year — 33 33
At 31 December 2010 — 571 571
Net book value
At 31 December 2010 834 61 895
Net book value
At 31 December 2009 834 49 883
NOTE v Investments
PROVISIONS NET BOOK
AT COST FOR IMPAIRMENT VALUE
Subsidiary undertakings US$’000 US$’000 US$’000
At 1 January and 31 December 2010 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
2010 2009
US$’000 US$’000
Amounts owed by subsidiary undertakings 53,934 41,519
Other debtors 28 27
Prepayments and accrued income 27 33
53,989 41,579
70
M. P. EVANS GROUP
NOTE vii Creditors – amounts falling due within one year
2010 2009
US$’000 US$’000
Amounts owed to subsidiary undertakings 52,633 50,676
Other creditors 1,823 1,687
54,456 52,363
NOTE viii Called-up share capital
See note 25 to the consolidated financial statements on page 61.
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
At 1 January 2010 19,770 3,896 1,434 540 25,640 19,571
Issue of shares 1,727 — — — 1,727 —
Share-based payments — — — 58 58 8
Loss for the financial year — — — — — (3,558)
Dividend* — — — — — (5,656)
At 31 December 2010 21,497 3,896 1,434 598 27,425 10,365
* See note 10 to the consolidated financial statements on page 51.
NOTE x Reconciliation of movement in shareholders’ funds
2010 2009
US$’000 US$’000
Loss for the financial year (3,558) (3,454)
Dividends paid (5,656) (6,033)
(9,214) (9,487)
Issue of shares 1,893 99
Share-based payments 66 60
Net reduction in shareholders’ funds (7,255) (9,328)
Shareholders’ funds at 1 January 54,032 63,360
Shareholders’ funds at 31 December 46,777 54,032
2010 ANNUAL REPORT
71
Subsidiary and associated
undertakings
SUBSIDIARY UNDERTAKINGS
Details of the principal subsidiary undertakings as at 31 December 2010 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 is a partnership and so has
no class of share.
All of the above subsidiaries are held through intermediate holding companies with the exception of that marked * which is held
directly by M. P. Evans Group PLC.
ASSOCIATED UNDERTAKINGS
Details of the associated undertakings as at 31 December 2010 are as follows:
ISSUED, FULLY-PAID % COUNTRY OF COUNTRY OF
SHARE CAPITAL HELD INCORPORATION OPERATION FIELD OF ACTIVITY
Unlisted
PT Agro Muko Rp54.58m 36.84 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. MYR60.00m 40.00 Malaysia Malaysia Property development
The shareholdings in the above companies represent shares. The investments in associated undertakings are held by
subsidiary undertakings of M. P. Evans Group PLC.
72
M. P. EVANS GROUP
Analysis of land areas
AT 31 DECEMBER 2010
The information in the following pages does not form part of the audited financial statements.
UNPLANTED &
CONSERVATION GROUP CO-OPERATIVE
OWNERSHIP MATURE IMMATURE PLANTED AREAS COMPANIES SCHEMES TOTAL
% HA HA HA HA HA HA HA
PLANTATION
Subsidiaries – oil palm
Pangkatan
Bilah
Sennah
Simpang Kiri
Bangka
East Kalimantan
Bertam
80.00
80.00
80.00
80.00
90.00
92.50
100.00
2,345
2,520
1,290
2,370
1,308
2,203
65
110
262
373
91
1,116
6,244
—
2,455
2,782
1,663
2,461
2,424
8,447
65
131
179
150
193
5,076
10,553
5
2,586
2,961
1,813
2,654
7,500*
19,000*
70
—
—
—
—
4,000
4,500
—
2,586
2,961
1,813
2,654
11,500
23,500
70
Total subsidiaries
12,101
8,196
20,297
16,287
36,584
8,500
45,084
Associates
Agro Muko – oil palm
Agro Muko – rubber
36.84
36.84
Kerasaan – oil palm
38.00
16,518
981
17,499
2,090
1,559
638
2,197
225
18,077
1,619
19,696
2,315
3,239
—
3,239
47
21,316
1,619
22,935
2,362
Total associates
19,589
2,422
22,011
3,286
25,297
—
—
—
22,935
2,362
25,297
CATTLE
Subsidiary
Woodlands
Associate
NAPCo
100.00
34.37
PROPERTY DEVELOPMENT
31,000
5,800,000
Associate
Bertam Properties
Sdn. Berhad
40.00
166
—
307
473
* Estimated area, of which the currently-estimated total plantable area is 13,500 hectares
in East Kalimantan and 6,000 hectares on Bangka.
2010 ANNUAL REPORT
73
5-year summary
2010 2009 2008 2007 2006
TONNES TONNES TONNES TONNES TONNES
Production
Palm oil 30,000 27,000 22,300 19,500 24,000
Palm kernels 7,300 6,800 6,100 5,400 6,000
Crops
Oil-palm fresh fruit bunches (“f.f.b.”)
Majority-owned estates – Indonesia 196,400 171,300 144,700 129,900 155,000
– Malaysia 1,600 1,700 16,800 32,600 58,300
198,000 173,000 161,500 162,500 213,300
Associated-company estates 366,100 384,200 355,200 355,800 364,600
US$ US$ US$ US$ US$
Average sale prices
Palm oil – Rotterdam c.i.f. per tonne 905 680 941 781 475
Exchange rates
US$1 = Indonesian Rupiah – average 9,081 10,374 9,657 9,140 9,167
– year end 8,991 9,400 10,950 9,419 8,994
US$1 = Australian Dollar – average 1.09 1.28 1.20 1.20 1.33
– year end 0.98 1.11 1.43 1.14 1.27
US$1 = Malaysian Ringgit – average 3.22 3.52 3.33 3.44 3.67
– year end 3.08 3.42 3.46 3.31 3.53
£1 = US Dollar – average 1.55 1.57 1.85 2.00 1.84
– year end 1.57 1.61 1.44 1.99 1.96
US$’000 US$’000 US$’000 US$’000 US$’000
Revenue 42,091 28,391 30,387 21,265 20,425
Gross profit 22,569 11,705 13,834 10,619 6,345
Group-controlled profit before taxation 19,359 15,338 23,447 17,286 8,211
US CENTS US CENTS US CENTS US CENTS US CENTS
Basic earnings per share – continuing 41.17 31.92 48.88 70.94 32.71
– continuing
and discontinued 41.17 34.94 96.26 82.32 49.75
PENCE PENCE PENCE PENCE PENCE
Dividend per share 7.50 7.00 7.00 7.00 6.50
US$’000 US$’000 US$’000 US$’000 US$’000
Equity attributable to the owners of
M. P. Evans Group PLC 307,578 275,498 249,178 223,412 183,695
Net cash generated by operating activities 19,417 12,311 8,825 15,182 3,906
74
M. P. EVANS GROUP
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 10 June 2011 at 12 noon for the
following purposes:
9
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 2010.
RESOLUTION ON FORM OF PROXY No 1
2 To re-elect Mr O D Wilkinson as a director.
RESOLUTION ON FORM OF PROXY No 2
3 To re-elect Mr K P Legg as a director.
RESOLUTION ON FORM OF PROXY No 3
4 To re-elect Mr R M Robinow as a director.
RESOLUTION ON FORM OF PROXY No 4
5 To re-elect Mr J D Shaw as a director.
RESOLUTION ON FORM OF PROXY No 5
6 To declare a final dividend
RESOLUTION ON FORM OF PROXY No 6
7 To re-appoint PricewaterhouseCoopers LLP as
auditors and to authorise the directors to determine
their remuneration.
RESOLUTION ON FORM OF PROXY No 7
AS SPECIAL BUSINESS
To consider and, if thought fit, pass the following
resolutions, of which resolution 8 will be proposed
as an ordinary resolution and resolutions 9 and 10
will be proposed as special resolutions:
8 That, in substitution for all existing unexercised
authorities, the authority conferred on the
directors by article 7.2 of the Company’s articles
of association be renewed (unless previously
renewed, varied or revoked) for a period ending
on the earlier of the date of the Company’s next
annual general meeting and 30 June 2012 and, for
that period, the Section 551 Amount is £1,778,404.
That, in substitution for all existing unexercised
authorities, the authority conferred on the directors
by article 7.3 of the Company’s articles of
association be renewed and extended (unless
previously renewed, varied or revoked) for a
period ending on the earlier of the date of the
Company’s next annual general meeting and
30 June 2012 so that the directors are authorised to
allot shares pursuant to article 7.2 of the Company’s
articles of association and to sell treasury shares
for that period in an aggregate amount of up to
£533,575 (the section 561 amount).
RESOLUTION ON FORM OF PROXY No 9
10 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)
(b)
(c)
(d)
the maximum number of shares hereby
authorised to be purchased is 5,335,745;
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
the authority hereby conferred shall expire
at the conclusion of the next annual general
meeting of the Company or on 30 June 2012
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.
RESOLUTION ON FORM OF PROXY No 8
RESOLUTION ON FORM OF PROXY No 10
By order of the board
J F Elliott
Company Secretary
21 April 2011
2010 ANNUAL REPORT
75
NOTICE OF MEETING continued
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 8 June 2011
(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 8 June 2011 (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 2011, the Company’s issued share capital
consisted of 53,357,455 shares carrying one vote each.
Therefore the total number of voting rights in the Company
as at that date was 53,357,455.
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,
Bridgwater 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.
76
M. P. EVANS GROUP
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
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
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 Internasional Indonesia
Graha Irama
Jalan H. R. Rasuna Said
Blok X-1 KAV. 1-2
Jakarta 12950
Indonesia
Commonwealth Bank of Australia
PO Box 2856
Toowoomba
Queensland 4350
Australia
HSBC Bank Malaysia Berhad
1 Leboh Downing
10300 Pulau Pinang
Malaysia
AmBank Group
55 Jalan Raja Chulan
50200 Kuala Lumpur
Malaysia
NOMINATED ADVISER AND BROKER
Panmure Gordon (UK) Limited
Moorgate Hall
155 Moorgate
London EC2M 6XB
SOLICITORS
Hogan Lovells International LLP
Atlantic House
Holborn Viaduct
London EC1A 2FG
2010 ANNUAL REPORT
77
NOTES
78
M. P. EVANS GROUP
NOTES
2010 ANNUAL REPORT
79
NOTES
80
M. P. EVANS GROUP
VENUE OF ANNUAL
GENERAL MEETING
on Friday 10 June 2011 at 12 noon
Tallow Chandlers’ Hall
4 Dowgate Hill
London EC4R 2SH
www.mpevans.co.uk