2013
Annual report
(cid:2) BERTAM
● SIMPANG KIRI
● MEDAN
KERASAAN (cid:2)
● KUALA LUMPUR
SENNAH ● ● BILAH
● PANGKATAN
● SINGAPORE
SUMATRA
● PADANG
KALIMANTAN
●
●
SAMARINDA
BANGKA
ISLAND
●
NEW PROJECTS
(cid:2) AGRO MUKO
●
● BENGKULU
●
JAKARTA
JAVA
INDONESIA
PLANTATIONS
MAJORITY HELD 23,300 ha OIL PALM
MINORITY HELD 20,100 ha OIL PALM
AND 1,700 ha RUBBER
Location of the Group’s properties
and those of its associated companies
as at 31 December 2013
● MAJORITY HELD
(cid:2) HELD BY ASSOCIATED
COMPANIES
MALAYSIA
PROPERTY
MAJORITY HELD 70 ha
MINORITY HELD 419 ha
● DARWIN
AREA OF NAPCo
BREEDING AND
GROWING-OUT
PROPERTIES
● MOUNT ISA
(cid:2)
AREAS OF NAPCo
BACKGROUNDING
PROPERTIES
(cid:2)
(cid:2)
NAPCo
FEEDLOT
(cid:2)
WOODLANDS AGGREGATION ●
BRISBANE ●
SYDNEY ●
AUSTRALIA
MELBOURNE
●
BEEF-CATTLE FARMING
MAJORITY HELD 31,000 ha
MINORITY HELD 5,800,000 ha
PORTFOLIO OF ASSETS AS AT 31 DECEMBER 2013
23,300 planted hectares of majority-held,
established oil-palm plantations in Indonesia
plus a 60-tonne-per-hour mill in Kalimantan and
a 40-tonne-per-hour mill in Sumatra
6,000 hectares of associated smallholder co-
operative schemes
Unplanted 20,000-hectare oil-palm concession
acquired in South Sumatra – precise plantable
area to be determined
21,800 planted hectares of minority-held (of
which Group’s share 8,000 hectares) established
oil-palm and rubber plantations in Sumatra,
Indonesia plus two 60-tonne-per-hour palm-oil
mills and a crumb-rubber factory
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 the 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
419 hectares
Net current assets of US$33.14 million as at
31 December 2013
LAND ASSETS BY VALUE
CONTENTS
1
2
3
Portfolio of assets
Group Highlights
Summary of results
4 Market information
6
Chairman’s statement
8
Strategic report 2013
12 – palm oil - Indonesia
20 – beef cattle - Australia
23 – property - Malaysia
24 – risk management
28 Environmental, corporate and
social responsibility
32 Board of directors
32 Report of the directors
35 Statement of directors’ responsibilities
37 Corporate governance
39 Report of the board to the shareholders
on directors’ remuneration
41 Independent auditor’s report to
the members of M.P. Evans Group PLC
43 Consolidated income statement
44 Consolidated statement of
comprehensive income
45 Consolidated balance sheet
46 Consolidated statement of changes
in e quity
47 Consolidated cash-flow statement
48 Notes to the consolidated accounts
72 Independent auditor’s report to the
members of M.P. Evans Group PLC
parent-Company
74 Parent-Company balance sheet
75 Notes to the parent-Company
balance sheet
78 Subsidiary and associated undertakings
79 Analysis of plantation land areas
80 5-year summary
81 Notice of meeting
84 Professional advisers and representatives
9%
16%
31 DECEMBER 2013
75%
■ INDONESIA ■ AUSTRALIA ■ MALAYSIA
The map of the venue of the annual general
meeting is shown on the inside back cover
The M.P. Evans Group is committed to
producing environmentally-sustainable
palm oil and adopting the highest standards
of animal welfare for its beef cattle
Page 1
Group Highlights
The Group was able to maintain plantation profits in a year
when the average palm-oil price fell by14%
425,000 tonnes of f.f.b. crop (23% increase) budgeted for 2014
Financial
Profit for the year US$22.87 million (2012 US$21.55 million)
Earnings per share US cents 35.96 (2012 US cents 32.51)
Dividend for the year increased by 0.25 pence to 8.25 pence (2.25 pence
interim already paid)
Indonesian palm oil
Plantation profits similar at US$24.82 million (2012 US$25.16 million)
Indonesian crops of f.f.b. 9% higher than in 2012 as crops increased 55% on
Kalimantan project, remained similar on Bangka project and were 6% lower on
established estates
Palm-oil price averaged US$856 per tonne (2012 US$998 per tonne); currently
around US$900 per tonne
1,800 hectares compensated to date on the new Musi Rawas project in South
Sumatra; planting expected to commence in late 2014
Group’s crops projected to continue rising strongly in future years
Australian beef cattle
NAPCO made a similar loss to 2012 due to very dry conditions, but helped by
newly-expanded feedlot
Woodlands broke even for the year following increased cattle weight gain
Good rainfall received in 2014 – cattle prices have strengthened
Malaysian property
Marked increase in profits by Bertam Properties due to completion of
substantially-increased number of developed properties
Page 2
Summary of results
For the year ended 31 December 2013
Revenue
Gross profit
Group-controlled profit before tax
Profit for the year
2013
US$ million
82.19
24.74
12.22
22.87
2012
US$ million
83.21
23.04
16.70
21.55
Equity attributable to the owners of M. P. Evans Group PLC
347.19
351.08
Net cash inflow generated by operating activities
Basic earnings per 10p share (continuing operations)
Dividend per 10p share in respect of the year
19.49
US cents
35.96
Pence
8.25
33.90
US cents
32.51
Pence
8.00
Managing director’s statement
(cid:3)(cid:53)(cid:48)(cid:43)(cid:46)(cid:51)(cid:53)(cid:54)(cid:52)(cid:54)(cid:39)(cid:52)(cid:50)(cid:16)(cid:53)(cid:42)(cid:33)(cid:54)(cid:30)(cid:23)(cid:21)(cid:33)(cid:54)(cid:40)(cid:52)(cid:44)(cid:44)(cid:54)(cid:46)(cid:47)(cid:54)(cid:43)(cid:52)(cid:44)(cid:39)(cid:10)(cid:49)(cid:46)(cid:44)(cid:54)(cid:43)(cid:50)(cid:46)(cid:41)(cid:53)(cid:48)
(cid:42)(cid:38)(cid:50)(cid:46)(cid:47)(cid:37)(cid:54)(cid:51)(cid:45)(cid:53)(cid:54)(cid:31)(cid:53)(cid:52)(cid:50)(cid:33)(cid:54)(cid:51)(cid:45)(cid:53)(cid:54)(cid:17)(cid:50)(cid:49)(cid:38)(cid:43)(cid:26)(cid:48)(cid:54)(cid:37)(cid:50)(cid:49)(cid:48)(cid:48)(cid:54)(cid:43)(cid:50)(cid:49)(cid:40)(cid:46)(cid:51)(cid:54)(cid:40)(cid:50)(cid:49)(cid:39)(cid:54)(cid:46)(cid:51)(cid:48)
(cid:22)(cid:47)(cid:42)(cid:49)(cid:47)(cid:53)(cid:48)(cid:46)(cid:52)(cid:47)(cid:54)(cid:49)(cid:43)(cid:53)(cid:50)(cid:52)(cid:51)(cid:46)(cid:49)(cid:47)(cid:48)(cid:54)(cid:34)(cid:52)(cid:48)(cid:54)(cid:48)(cid:46)(cid:39)(cid:46)(cid:44)(cid:52)(cid:50)(cid:54)(cid:51)(cid:49)(cid:54)(cid:51)(cid:45)(cid:52)(cid:51)(cid:54)(cid:40)(cid:49)(cid:50)
(cid:32)(cid:36)(cid:30)(cid:32)(cid:54)(cid:52)(cid:48)(cid:54)(cid:40)(cid:35)(cid:40)(cid:35)(cid:28)(cid:35)(cid:54)(cid:41)(cid:50)(cid:49)(cid:43)(cid:48)(cid:54)(cid:41)(cid:49)(cid:47)(cid:51)(cid:46)(cid:47)(cid:38)(cid:53)(cid:42)(cid:54)(cid:51)(cid:49)(cid:54)(cid:50)(cid:46)(cid:48)(cid:53)(cid:33)
(cid:43)(cid:52)(cid:50)(cid:51)(cid:46)(cid:41)(cid:38)(cid:44)(cid:52)(cid:50)(cid:44)(cid:31)(cid:54)(cid:49)(cid:47)(cid:54)(cid:51)(cid:45)(cid:53)(cid:54)(cid:47)(cid:53)(cid:34)(cid:54)(cid:13)(cid:52)(cid:44)(cid:46)(cid:39)(cid:52)(cid:47)(cid:51)(cid:52)(cid:47)(cid:54)(cid:43)(cid:50)(cid:49)(cid:25)(cid:53)(cid:41)(cid:51)(cid:35)(cid:54)(cid:54)(cid:22)(cid:47)
(cid:15)(cid:38)(cid:48)(cid:51)(cid:50)(cid:52)(cid:44)(cid:46)(cid:52)(cid:33)(cid:54)(cid:8)(cid:49)(cid:49)(cid:42)(cid:44)(cid:52)(cid:47)(cid:42)(cid:48)(cid:54)(cid:52)(cid:43)(cid:43)(cid:50)(cid:49)(cid:20)(cid:46)(cid:39)(cid:52)(cid:51)(cid:53)(cid:44)(cid:31)(cid:54)(cid:28)(cid:50)(cid:49)(cid:16)(cid:53)(cid:54)(cid:53)(cid:29)(cid:53)(cid:47)
(cid:34)(cid:45)(cid:46)(cid:44)(cid:48)(cid:51)(cid:54)(cid:2)(cid:15)(cid:19)(cid:4)(cid:49)(cid:54)(cid:50)(cid:53)(cid:41)(cid:49)(cid:50)(cid:42)(cid:53)(cid:42)(cid:54)(cid:52)(cid:54)(cid:48)(cid:46)(cid:39)(cid:46)(cid:44)(cid:52)(cid:50)(cid:54)(cid:44)(cid:49)(cid:48)(cid:48)(cid:54)(cid:51)(cid:49)(cid:54)(cid:32)(cid:36)(cid:30)(cid:32)
(cid:52)(cid:40)(cid:51)(cid:53)(cid:50)(cid:54)(cid:52)(cid:47)(cid:49)(cid:51)(cid:45)(cid:53)(cid:50)(cid:54)(cid:41)(cid:45)(cid:52)(cid:44)(cid:44)(cid:53)(cid:47)(cid:37)(cid:46)(cid:47)(cid:37)(cid:54)(cid:48)(cid:53)(cid:52)(cid:48)(cid:49)(cid:47)(cid:35)(cid:54)(cid:54)(cid:14)(cid:53)(cid:50)(cid:51)(cid:52)(cid:39)
(cid:19)(cid:50)(cid:49)(cid:43)(cid:53)(cid:50)(cid:51)(cid:46)(cid:53)(cid:48)(cid:26)(cid:54)(cid:48)(cid:52)(cid:44)(cid:53)(cid:48)(cid:54)(cid:49)(cid:40)(cid:54)(cid:42)(cid:53)(cid:29)(cid:53)(cid:44)(cid:49)(cid:43)(cid:53)(cid:42)(cid:54)(cid:43)(cid:50)(cid:49)(cid:43)(cid:53)(cid:50)(cid:51)(cid:46)(cid:53)(cid:48)(cid:54)(cid:46)(cid:47)
(cid:12)(cid:52)(cid:44)(cid:52)(cid:31)(cid:48)(cid:46)(cid:52)(cid:54)(cid:46)(cid:47)(cid:41)(cid:50)(cid:53)(cid:52)(cid:48)(cid:53)(cid:42)(cid:54)(cid:48)(cid:46)(cid:37)(cid:47)(cid:46)(cid:40)(cid:46)(cid:41)(cid:52)(cid:47)(cid:51)(cid:44)(cid:31)(cid:54)(cid:42)(cid:38)(cid:50)(cid:46)(cid:47)(cid:37)(cid:54)(cid:51)(cid:45)(cid:53)(cid:54)(cid:31)(cid:53)(cid:52)(cid:50)
(cid:50)(cid:53)(cid:48)(cid:38)(cid:44)(cid:51)(cid:46)(cid:47)(cid:37)(cid:54)(cid:46)(cid:47)(cid:54)(cid:52)(cid:54)(cid:48)(cid:38)(cid:28)(cid:48)(cid:51)(cid:52)(cid:47)(cid:51)(cid:46)(cid:52)(cid:44)(cid:54)(cid:46)(cid:39)(cid:43)(cid:50)(cid:49)(cid:29)(cid:53)(cid:39)(cid:53)(cid:47)(cid:51)(cid:54)(cid:46)(cid:47)(cid:54)(cid:46)(cid:51)(cid:48)
(cid:50)(cid:53)(cid:48)(cid:38)(cid:44)(cid:51)(cid:48)(cid:35)(cid:54)(cid:54)(cid:27)(cid:45)(cid:53)(cid:54)(cid:17)(cid:50)(cid:49)(cid:38)(cid:43)(cid:26)(cid:48)(cid:54)(cid:49)(cid:29)(cid:53)(cid:50)(cid:52)(cid:44)(cid:44)(cid:54)(cid:43)(cid:50)(cid:49)(cid:40)(cid:46)(cid:51)(cid:54)(cid:40)(cid:49)(cid:50)(cid:54)(cid:51)(cid:45)(cid:53)(cid:54)(cid:31)(cid:53)(cid:52)(cid:50)
(cid:34)(cid:52)(cid:48)(cid:54)(cid:7)(cid:21)(cid:54)(cid:45)(cid:46)(cid:37)(cid:45)(cid:53)(cid:50)(cid:54)(cid:51)(cid:45)(cid:52)(cid:47)(cid:54)(cid:46)(cid:47)(cid:54)(cid:32)(cid:36)(cid:30)(cid:32)(cid:35)
(cid:27)(cid:45)(cid:53)(cid:54)(cid:53)(cid:20)(cid:43)(cid:53)(cid:41)(cid:51)(cid:53)(cid:42)(cid:54)(cid:46)(cid:47)(cid:41)(cid:50)(cid:53)(cid:52)(cid:48)(cid:53)(cid:54)(cid:46)(cid:47)(cid:54)(cid:51)(cid:45)(cid:53)(cid:54)(cid:17)(cid:50)(cid:49)(cid:38)(cid:43)(cid:26)(cid:48)(cid:54)(cid:40)(cid:35)(cid:40)(cid:35)(cid:28)(cid:35)(cid:54)(cid:41)(cid:50)(cid:49)(cid:43)(cid:48)
(cid:46)(cid:47)(cid:54)(cid:22)(cid:47)(cid:42)(cid:49)(cid:47)(cid:53)(cid:48)(cid:46)(cid:52)(cid:54)(cid:41)(cid:49)(cid:47)(cid:51)(cid:46)(cid:47)(cid:38)(cid:53)(cid:42)(cid:54)(cid:46)(cid:47)(cid:54)(cid:32)(cid:36)(cid:30)(cid:24)(cid:54)(cid:34)(cid:46)(cid:51)(cid:45)(cid:54)(cid:24)(cid:23)(cid:23)(cid:33)(cid:32)(cid:36)(cid:36)
(cid:51)(cid:49)(cid:47)(cid:47)(cid:53)(cid:48)(cid:54)(cid:45)(cid:52)(cid:50)(cid:29)(cid:53)(cid:48)(cid:51)(cid:53)(cid:42)(cid:54)(cid:9)(cid:54)(cid:5)(cid:21)(cid:54)(cid:45)(cid:46)(cid:37)(cid:45)(cid:53)(cid:50)(cid:54)(cid:51)(cid:45)(cid:52)(cid:47)(cid:54)(cid:32)(cid:36)(cid:30)(cid:32)(cid:26)(cid:48)(cid:33)
(cid:52)(cid:44)(cid:51)(cid:45)(cid:49)(cid:38)(cid:37)(cid:45)(cid:54)(cid:48)(cid:44)(cid:46)(cid:37)(cid:45)(cid:51)(cid:44)(cid:31)(cid:54)(cid:44)(cid:53)(cid:48)(cid:48)(cid:54)(cid:51)(cid:45)(cid:52)(cid:47)(cid:54)(cid:51)(cid:45)(cid:53)(cid:54)(cid:24)(cid:18)(cid:36)(cid:33)(cid:36)(cid:36)(cid:36)(cid:54)(cid:51)(cid:49)(cid:47)(cid:47)(cid:53)(cid:48)(cid:54)
(cid:40)(cid:49)(cid:50)(cid:53)(cid:41)(cid:52)(cid:48)(cid:51)(cid:54)(cid:46)(cid:47)(cid:54)(cid:51)(cid:45)(cid:53)(cid:54)(cid:32)(cid:36)(cid:30)(cid:24)(cid:54)(cid:46)(cid:47)(cid:51)(cid:53)(cid:50)(cid:46)(cid:39)(cid:54)(cid:50)(cid:53)(cid:43)(cid:49)(cid:50)(cid:51)(cid:35)(cid:54)(cid:54)(cid:27)(cid:45)(cid:53)(cid:54)(cid:41)(cid:50)(cid:49)(cid:43)(cid:54)(cid:49)(cid:47)
(cid:51)(cid:45)(cid:53)(cid:54)(cid:13)(cid:52)(cid:44)(cid:46)(cid:39)(cid:52)(cid:47)(cid:51)(cid:52)(cid:47)(cid:54)(cid:43)(cid:50)(cid:49)(cid:25)(cid:53)(cid:41)(cid:51)(cid:54)(cid:34)(cid:52)(cid:48)(cid:54)(cid:18)(cid:18)(cid:21)(cid:54)(cid:45)(cid:46)(cid:37)(cid:45)(cid:53)(cid:50)(cid:54)(cid:51)(cid:45)(cid:52)(cid:47)
(cid:44)(cid:52)(cid:48)(cid:51)(cid:54)(cid:31)(cid:53)(cid:52)(cid:50)(cid:54)(cid:52)(cid:44)(cid:51)(cid:45)(cid:49)(cid:38)(cid:37)(cid:45)(cid:54)(cid:34)(cid:53)(cid:52)(cid:51)(cid:45)(cid:53)(cid:50)(cid:54)(cid:43)(cid:50)(cid:49)(cid:28)(cid:44)(cid:53)(cid:39)(cid:48)(cid:54)(cid:52)(cid:42)(cid:29)(cid:53)(cid:50)(cid:48)(cid:53)(cid:44)(cid:31)
(cid:52)(cid:40)(cid:40)(cid:53)(cid:41)(cid:51)(cid:53)(cid:42)(cid:54)(cid:51)(cid:45)(cid:53)(cid:54)(cid:41)(cid:50)(cid:49)(cid:43)(cid:54)(cid:49)(cid:47)(cid:54)(cid:51)(cid:45)(cid:53)(cid:54)(cid:14)(cid:52)(cid:47)(cid:37)(cid:16)(cid:52)(cid:54)(cid:43)(cid:50)(cid:49)(cid:25)(cid:53)(cid:41)(cid:51)(cid:35)(cid:54)(cid:54)(cid:27)(cid:45)(cid:53)
(cid:52)(cid:48)(cid:48)(cid:49)(cid:41)(cid:46)(cid:52)(cid:51)(cid:53)(cid:42)(cid:54)(cid:22)(cid:47)(cid:42)(cid:49)(cid:47)(cid:53)(cid:48)(cid:46)(cid:52)(cid:47)(cid:54)(cid:43)(cid:44)(cid:52)(cid:47)(cid:51)(cid:52)(cid:51)(cid:46)(cid:49)(cid:47)(cid:54)(cid:49)(cid:43)(cid:53)(cid:50)(cid:52)(cid:51)(cid:46)(cid:49)(cid:47)(cid:48)
(cid:50)(cid:53)(cid:41)(cid:49)(cid:50)(cid:42)(cid:53)(cid:42)(cid:33)(cid:54)(cid:52)(cid:48)(cid:54)(cid:53)(cid:20)(cid:43)(cid:53)(cid:41)(cid:51)(cid:53)(cid:42)(cid:33)(cid:54)(cid:44)(cid:49)(cid:34)(cid:53)(cid:50)(cid:54)(cid:41)(cid:50)(cid:49)(cid:43)(cid:48)(cid:54)(cid:52)(cid:47)(cid:42)(cid:54)(cid:51)(cid:45)(cid:53)(cid:50)(cid:53)(cid:40)(cid:49)(cid:50)(cid:53)
(cid:44)(cid:49)(cid:34)(cid:53)(cid:50)(cid:54)(cid:43)(cid:50)(cid:49)(cid:40)(cid:46)(cid:51)(cid:48)(cid:54)(cid:46)(cid:47)(cid:54)(cid:51)(cid:45)(cid:53)(cid:54)(cid:31)(cid:53)(cid:52)(cid:50)(cid:35)
(cid:27)(cid:45)(cid:53)(cid:54)(cid:47)(cid:53)(cid:34)(cid:54)(cid:12)(cid:38)(cid:48)(cid:46)(cid:54)(cid:1)(cid:52)(cid:34)(cid:52)(cid:48)(cid:54)(cid:43)(cid:50)(cid:49)(cid:25)(cid:53)(cid:41)(cid:51)(cid:54)(cid:46)(cid:47)(cid:54)(cid:11)(cid:49)(cid:38)(cid:51)(cid:45)(cid:54)(cid:11)(cid:38)(cid:39)(cid:52)(cid:51)(cid:50)(cid:52)
(cid:45)(cid:52)(cid:48)(cid:54)(cid:39)(cid:52)(cid:42)(cid:53)(cid:54)(cid:43)(cid:50)(cid:49)(cid:37)(cid:50)(cid:53)(cid:48)(cid:48)(cid:54)(cid:52)(cid:47)(cid:42)(cid:33)(cid:54)(cid:51)(cid:49)(cid:54)(cid:42)(cid:52)(cid:51)(cid:53)(cid:33)(cid:54)(cid:41)(cid:49)(cid:39)(cid:43)(cid:53)(cid:47)(cid:48)(cid:52)(cid:51)(cid:46)(cid:49)(cid:47)
(cid:51)(cid:53)(cid:50)(cid:39)(cid:48)(cid:54)(cid:45)(cid:52)(cid:29)(cid:53)(cid:54)(cid:28)(cid:53)(cid:53)(cid:47)(cid:54)(cid:52)(cid:37)(cid:50)(cid:53)(cid:53)(cid:42)(cid:54)(cid:34)(cid:46)(cid:51)(cid:45)(cid:54)(cid:38)(cid:48)(cid:53)(cid:50)(cid:48)(cid:54)(cid:49)(cid:40)(cid:54)(cid:51)(cid:45)(cid:53)(cid:54)(cid:44)(cid:52)(cid:47)(cid:42)
(cid:49)(cid:29)(cid:53)(cid:50)(cid:54)(cid:48)(cid:49)(cid:39)(cid:53)(cid:54)(cid:30)(cid:33)(cid:6)(cid:36)(cid:36)(cid:54)(cid:45)(cid:53)(cid:41)(cid:51)(cid:52)(cid:50)(cid:53)(cid:48)(cid:35)
(cid:19)(cid:44)(cid:52)(cid:47)(cid:51)(cid:46)(cid:47)(cid:37)(cid:54)(cid:46)(cid:48)(cid:54)(cid:53)(cid:20)(cid:43)(cid:53)(cid:41)(cid:51)(cid:53)(cid:42)(cid:54)(cid:51)(cid:49)
(cid:41)(cid:49)(cid:39)(cid:39)(cid:53)(cid:47)(cid:41)(cid:53)(cid:54)(cid:51)(cid:49)(cid:34)(cid:52)(cid:50)(cid:42)(cid:48)(cid:54)(cid:51)(cid:45)(cid:53)(cid:54)
(cid:53)(cid:47)(cid:42)(cid:54)(cid:49)(cid:40)(cid:54)(cid:32)(cid:36)(cid:30)(cid:23)(cid:35)
Philip A Fletcher, FCA
Page 3
Market information
<5
6-10
11-15
16-20
21-25
>25
<5
6-10
11-15
16-20
21-25
>25
Palm oil The average palm-oil price
(Rotterdam c.i.f.) was substantially lower, at
US$856 per tonne, compared with US$998 in
2012. The price hovered around US$850 per
tonne for the first three quarters of 2013 before
strengthening to over US$900 as consumption
increased and world stocks of palm oil fell. The
price strengthened further in the first quarter of
2014 on the prospect of increased usage of palm
oil for bio diesel in Indonesia before easing
slightly on the prospect of a good South
Amercian soybean crop. The current price is
around US$900.
Palm oil is used mainly as a cooking oil
but also in margarine, shortenings (cakes,
biscuits), soap, cosmetics, lubricants and
more recently in bio-diesel.
Palm oil has the lowest cost of production
and is the most productive of all the major
vegetable oils. More than 5.5 tonnes per
hectare per annum can be produced,
compared with around 0.5 tonnes for its
main rival, soybean oil.
Palm oil is the world’s largest vegetable oil,
with production in 2013 of 56.2 million
tonnes and 36% of the global production of
the major vegetable oils. Soybean oil is the
second largest with 42.6 million tonnes and
27%. Palm-kernel oil accounts for a further
6.2 million tonnes (4%).
SOURCE: OIL WORLD
Beef cattle Australian beef-cattle
prices fell in the first half of 2013, both for
backgrounded cattle destined for feedlot
“finishing” (Woodlands) and heavier, grain-
finished, cattle (NAPCo). The weakening
Australian Dollar improved prices in the second
half, especially for the NAPCo cattle. This trend
has continued in 2014.
Australia is one of the world’s largest beef
exporters with some 17% of global trade.
Australia is well placed geographically to
serve Asia – the world’s fastest-growing beef
consumer.
NAPCo (34.37% held) is one of Australia’s
leading beef-cattle companies with fifteen
properties covering an area of 5.8 million
hectares.
Page 4
AGE PROFILE OF THE GROUP’S OIL PALMS
DISTRIBUTION OF PLANTED HECTARAGE
BY AGE INTERVAL AS AT 31 DECEMBER 2013
SUBSIDIARIES – AVERAGE AGE 7.6 YEARS
Age in years
0
10
20
30
40
50
60
70
ASSOCIATES – AVERAGE AGE 13.5 YEARS
Age in years
0
10
20
30
40
50
60
70
%
39
40
4
6
7
4
%
16
15
18
27
22
2
EASTERN YOUNG CATTLE
INDICATOR (EYCI) – WOODLANDS
A$ per kg carcass weight
CROPS OF OIL-PALM FRESH FRUIT BUNCHES ‘000 TONNES
MAJORITY-OWNED ESTATES IN INDONESIA
344
317
249
196
171
ASSOCIATED-COMPANY ESTATES
20
40
60
80
100
120
140
160
180
200
220
240
260
280
300
320
340
360
380
400
420
387
409
401
366
380
2013
2012
2011
2010
2009
2013
2012
2011
2010
2009
PALM-OIL PRICE
US$ per tonne, Rotterdam c.i.f.
100-DAY GRAIN-FED CATTLE
– NAPCo
A$ per kg carcass weight
MAIN PRODUCERS OF PALM OIL – 2013
4
4
4
4
4
,
,
,
,
,
3
6
3
3
3
6
4
6
6
6
0
5
0
0
0
1
9
9
9
9
9
9
9
9
9
,
7
7
7
7
0
3
3
3
3
4
2
4
6
4
4
4
01,6
01,9
01,6
01,6
01,6
0
7
0
0
0
0
0
0
0
0
6
5
5
5
5
1
8
8
8
8
9 , 2
8 , 7
8 , 7
8 , 7
8 , 7
1
1
1
1
1
Thousand tonnes
■ INDONESIA 28,400 (50%)
■ MALAYSIA 19,216 (34%)
■ THAILAND 1,970 (4%)
■ COLOMBIA 1,042 (2%)
■ NIGERIA 960 (2%)
■ OTHER COUNTRIES
4,645 (8%)
TOTAL 56,233
28,400
26,500
26,500
26,500
26,500
MAIN USERS OF PALM OIL – 2013
1
8,8
6
7
0
5
1 ,2
1,5 6 1
1,892
5
8
2,1
3
5
3
,
2
5
4
8,3
6
,
2
6
9
7 , 9 1 3
6,6
5
5
Thousand tonnes
■ INDIA 8,345 (15%)
■ INDONESIA 7,913 (14%)
■ EU 6,655 (12%)
■ CHINA 6,269 (11%)
■ MALAYSIA 2,353 (4%)
■ PAKISTAN 2,185 (4%)
■ NIGERIA 1,892 (3%)
■ THAILAND 1,561 (3%)
■ USA 1,250 (2%)
■ OTHER COUNTRIES
18,867 (33%)
TOTAL 57,290
D
L
R
O
W
L
I
O
:
E
C
R
U
O
S
D
L
R
O
W
L
I
O
:
E
C
R
U
O
S
Page 5
Chairman’s statement
RESULTS
I am pleased to report that the Group has delivered a
solid performance resulting in a 6% increase in profit
for the year to US$22.87 million in 2013, compared
with US$21.55 million in 2012. Earnings per share
rose accordingly to US cents 35.96 (2012 US cents
32.51). The improved profit was achieved largely as a
result of a 9% increase in the Group’s Indonesian
crops of oil palm fresh fruit bunches (“f.f.b.”), to
344,200 tonnes, in spite of a 14% decline in the
average palm-oil price to US$856 per tonne in 2013.
The higher crop level stemmed, in turn, from a
significant (expected) increase in crop from the young
oil-palm areas on the new Kalimantan project. The
reduced profits of the Group’s two associated oil-palm
companies following similar, or lower, crops, coupled
with the effects of the weaker palm-oil price, also
impacted the results. A fall in the Indonesian Rupiah
against the US Dollar, notably towards the end of the
year, was a benefit in reducing the Group’s
Indonesian costs but gave rise to a large exchange
loss that affected the reported results for the year.
In Australia, Woodlands broke even and a slightly-
increased loss was recorded at The North Australian
Pastoral Company Pty Limited (“NAPCo”) following a
very dry and challenging season and similar, or lower,
cattle prices. With regard to the Group’s “residual”
Malaysian property-development activities, a marked
improvement in the result was achieved at Bertam
Properties Sdn. Berhad (“Bertam Properties”) further to
an increase in the number of completed sales of
developed properties. The Group’s share of Bertam
Properties’ improved result more than offset the oil-
palm associates’ lower results and a 7% improvement
in the associates’ results as a whole was therefore
achieved.
DIVIDEND
Taking account of the increased profit, the board is
recommending a final dividend for the year of 6.00p
per share, a 0.25p per share increase compared with
the 5.75p in respect of 2012. Together with the
interim dividend of 2.25p per share paid in November
2013 (the same as the interim dividend paid in
November 2012), the total dividend for the year is
therefore 8.25p per share. A scrip-dividend alternative
is again being offered.
STRATEGY
The Group’s core strategy is to continue to expand its
oil-palm areas in Indonesia, in a sustainable and cost-
effective manner, and to capitalise on the value of its
Australian and Malaysian operations, using any sale
proceeds to fund the continuing Indonesian
development. The strategy is set out in more detail in
the strategic report on page 8.
KEY OPERATIONAL DEVELOPMENTS
In Indonesia, in addition to the increased f.f.b. crop
levels referred to above, there was a commendable
improvement, once again, in the palm-oil extraction
rates achieved from the Group’s two mills, on the
Kalimantan project and on Pangkatan Estate.
Encouraging progress was made on Musi Rawas,
the Group’s new project in South Sumatra, with
compensation terms agreed to date with the users of
the land over some 1,800 hectares. A nursery has
been established and it is intended to commence
planting at the end of 2014. It is currently estimated
that, of the 20,000-hectare concession, some 10,000
hectares will be plantable, of which 7,000 hectares
will accrue to the Group and 3,000 hectares to a
smallholders’ cooperative which will be managed by
the Group.
During the year, the Group’s new plantings amounted
to 700 hectares (in addition to 400 hectares for the
smallholder areas). It is anticipated that this level will
be improved upon in future years, not least as a result
of the areas being opened up on Musi Rawas.
Another significant, and welcome, development
during the year was the successful completion of the
Indonesian Sustainable Palm Oil (“ISPO”) audit at
Pangkatan Mill, which had already, in 2012, achieved
certification from the Roundtable for Sustainable Palm
Oil (“RSPO”). RSPO certification is expected at the
Kalimantan mill shortly and the ISPO audit is also due
to take place in 2014.
Page 6
In Australia, given the high cost of purchasing young
cattle, the board took the decision to make use of the
available capacity on Woodlands and to introduce a
significant number of third-party cattle, in return for a
fee related to the amount of weight gained.
At NAPCo, as a drought-resistance measure, the
recently-expanded feedlot facilitated the retention of
significantly more young cattle than would have been
possible in former years. As reported on page 8 of the
strategic review, the prospective sale process of a
majority holding in NAPCo, including the Group’s
34.37% share, drew to a close in 2013 but the board
will continue to consider any opportunities that may
arise in relation to its holding.
PROSPECTS
The board’s current estimate is that the Group’s
Indonesian f.f.b. crop for 2014 will be 425,000
tonnes, compared with 344,200 tonnes in 2013. If
this level is achieved, the Group will remain broadly
on track to achieve its targeted 500,000 tonnes in
2015. Crops will continue to rise substantially after
2015 but the level will at least partly depend upon the
rate of future plantings. The outlook remains positive
for the palm-oil price in the light of the significant
increases scheduled in Indonesia’s usage of palm-oil
for bio diesel and as demand for vegetable oils
globally appears likely to continue to grow.
Recent significant rainfall both on Woodlands and
across most of the NAPCo properties represents a
welcome relief to the extremely dry conditions
suffered in 2013. Australian beef-cattle prices have
recently increased, partly in response to the rainfall
and partly as export demand continues to grow,
especially in Asia, helped by the weakening of the
Australian Dollar. As with palm oil, price prospects
appear favourable.
NEW STRATEGIC REPORT AND CORPORATE
GOVERNANCE
Companies Act 2006, and provides details of the
Group’s strategy, results, operations and current
trading. The board continues to take a keen interest in
ensuring the Group’s corporate governance
encourages decision-making that delivers the best
value to shareholders through the growth and
profitability of the Group’s operations. In making the
changes to the format of the annual report described
above, the strategic report sets out the Group’s core
strategy and this has also been placed on the website.
A review of the way in which the board’s sub-
committees work and their terms of reference is
currently under way. New terms of reference will be
placed on the Group’s website once they are agreed.
In a further initiative to clarify the way in which the
board operates, a summary of non-executive
directors’ letters of appointment will be placed on the
website before the annual general meeting.
KONRAD LEGG
Konrad Legg has elected to retire as a director at the
forthcoming annual general meeting. He has served
with distinction on this and other Group boards since
the 1970’s, bringing his extensive agribusiness
experience to bear on the board’s deliberations.
Notwithstanding his unusual length of service, he has
retained his independent approach throughout and
proved time and again to be an invaluable
contributor. I am sure that shareholders will join me
in thanking him and wishing him well for the future.
ACKNOWLEDGEMENTS
I should like to take the opportunity to thank the
Group’s managers, staff and workers worldwide for
their loyalty and hard work and for helping to achieve
the Group’s improved result for the year.
Shareholders will note the new “Strategic report
2013” which replaces the former “Review” and which
begins on page 8, immediately after this statement.
This adheres to the recent changes required by the
Peter Hadsley-Chaplin
Chairman
24 April 2014
The new Musi Rawas project in Sumatra
is progressing well and I’m pleased to announce
a final dividend of 6p per share
Page 7
Strategic report 2013
Strategy
The Group’s core strategy is to continue to expand
its oil-palm areas in Indonesia, in a sustainable and
cost-effective manner, and to capitalise on the value
of its Australian and Malaysian operations, using
any sale proceeds to fund the continuing Indonesian
development.
As shareholders are aware, the Group’s two
principal, majority-held, activities are the
ownership, management and, where appropriate,
development of sustainable oil-palm estates in
Indonesia (together with the management and
development of smallholder areas adjoining the
new projects) and the ownership and management
of beef-cattle operations in Australia. The Group
also owns significant minority holdings in
companies operating in the same two (oil-palm and
beef-cattle) sectors. In addition to these, as a tertiary
“residual” activity, the Group owns a small oil-palm
estate with property-development potential and a
significant minority share of a property-development
company operating on one of the Group’s former
estates. Both of these are located on the mainland of
Peninsular Malaysia, near Penang Island.
The total planted area of the Group’s majority-held
Indonesian operations extends to approximately
23,300 hectares, 700 of which were planted on its
new projects during 2013. The planted smallholder
areas adjoining the new projects amount to 6,000
hectares, 400 of which were planted in 2013. The
estimated unplanted land bank is some 9,700
hectares, including the new Musi Rawas project, on
the Group’s estates and some 5,400 hectares on the
adjoining smallholder areas managed by the Group.
It is the board’s aim for the Group’s own areas to be
planted at as rapid a rate as the availability of
suitable land permits. In addition to the Group’s
existing unplanted landbank, the board seeks, in the
future, to acquire further pieces of land suitable for
sustainable oil-palm development located, if
possible, near the Group’s existing estates. The
extent of any such further acquisitions of land will
depend upon available funding. The Group will also
seek continually to maintain and, where possible,
improve agronomic standards and productivity on
its estates leading, ideally, to increased crops of oil-
palm fresh fruit bunches (“f.f.b.”) and, where
relevant, crude palm oil (“CPO”). Furthermore, the
Group will continue to work closely with its joint-
venture partner, SA SIPEF NV, with regard to the two
associated estates which SIPEF manages, to ensure
that the highest standards are maintained.
In Australia, on the Group’s beef-cattle property,
Woodlands, it is aimed to maximise the kilograms of
beef produced either for the Group’s own cattle or
for those owned by third parties, who remunerate
the Group at a rate linked to average weight gain.
Productivity has been, and, where appropriate, will
continue to be, improved through the enhancement
of waters and fencing and the upgrading of
paddocks. With regard to NAPCo, the aim is to
maximise productivity in breeding and fattening
cattle. Productivity has in recent years been
enhanced both on the principal breeding stations by
the sinking of a significant number of new bore
holes (thereby providing drinking water for the
cattle) and in the grain-finishing feedlot by
expansion of the facilities. This has helped to render
the operations not only more productive but also
more resistant to the effects of drought. The strategy
is for more bore holes to be sunk in the future.
Notwithstanding the continued improvement
measures in place at Woodlands, it remains the
board’s longer-term intention to dispose of this
property as and when a suitable opportunity arises.
In 2013, the majority shareholders in NAPCo
undertook a strategic review. Following this, they
indicated their willingness to sell part or all of their
holding, and M.P.Evans also indicated its willingness
to sell its holding in conjunction with them. The
review, and prospective sale process, drew to a
close in late 2013 but the Group’s board will
continue to consider any opportunities that arise in
relation to its holding.
In Malaysia, the aim is for Bertam Properties to
continue to capitalise on the value of its land, either
by the development and sale of housing, retail and
other units or through the outright sale of raw land.
The Group will continue to reap the benefit of this
development and sale activity until eventually, in
some five to ten years’ time, the project is fully
developed, or until an acceptable offer is received
to acquire the Group’s 40% share. It is also the
Group’s long-term intention to dispose of its
adjacent estate and therefore, as a consequence,
ultimately to exit Malaysia entirely.
Page 8
Results and financial position
GROSS PROFIT FROM AGRICULTURAL ACTIVITIES
Revenue was sustained at US$82.19 million (2012
US$83.21 million) due to continued strong growth
in f.f.b. crops both from the Group’s own areas and
from shareholder cooperative schemes attached to
the Group’s projects, combined with excellent
extraction rates. Revenue was only marginally lower
than in the previous year, despite a 14% fall in the
average benchmark price of CPO. At the same time,
greater throughput in the Group’s new Kalimantan
mill led to a reduction in unit costs which more than
offset the increases in the local costs of operating in
Indonesia. Overall, this enabled the Group to
maintain the gross sales margin of its Indonesian
operations.
As anticipated, 2013 was the year in which the
Group’s Kalimantan project achieved a gross profit,
amounting to US$1.55 million, before the bearer-
biological-asset adjustment. The contribution from
this project is now expected to increase markedly in
the coming years as CPO and palm kernel (“PK”)
production accelerates.
A much-improved cattle-trading result at Woodlands
brought the operation to just below a break-even
position, recording a farm loss of US$0.09 million
(2012 loss US$2.19 million). The property was able
to produce a significant increase in weight gain per
day, so total weight gain was somewhat better than
that achieved in 2012 even though the herd size
was smaller. More importantly, whilst cattle prices
again fell against the background of a severe
drought in northern Australia, the fall was less than
in previous years, thereby reducing its negative
impact on Woodlands’ results.
As a result of the above, the Group’s gross profit
amounted to US$24.74 million (2012 US$23.04
million). A detailed analysis is given in note 4 to the
accounts on pages 52 and 53. The Group’s palm-oil
and cattle operations are reviewed in more detail in
the section on operations below, commencing on
page 12.
BEARER-BIOLOGICAL-ASSET ADJUSTMENT
The price of CPO strengthened significantly in the
last quarter of 2013 and remains at a good level.
This led to an increase in the 20-year average price
per tonne of CPO used in the valuation of the
Group’s biological assets to US$626 (2012
US$602). This was one of two main factors behind a
biological gain of US$9.06 million (2012 US$11.91
million). The other, as highlighted in the 2012
annual report, was the absence of further cost
increases flowing from the drive during 2010-13 to
improve field standards in the mature estates.
The value of new planting added during the year
contributed US$2.88 million (2012 US$3.29
million) towards the reported biological gain.
Overall, the effect on profit of all the components of
the bearer-biological-asset adjustment amounted to
US$6.04 million (2012 US$3.26 million).
FOREIGN-EXCHANGE LOSSES
The Group reported markedly-higher foreign-
exchange losses in the year under review than in the
previous year, with losses amounting to US$8.32
million (2012 loss US$1.76 million). This represents
losses arising from a ‘mark-to-market’ exercise
carried out at the year end which significantly
reduced, in US-Dollar terms, bank balances held in
Indonesian Rupiahs and amounts recoverable from
the Group’s smallholder cooperative schemes
denominated in Indonesian Rupiahs, following the
notable depreciation of the Rupiah against the US
Dollar. The Group expects that, in due course, these
losses will be offset by using bank balances and
repayments made by the co-operatives to meet
Rupiah-denominated expenses and investment
outlays. In addition, there was some CPO stock on
hand at the year end which likewise suffered an
exchange loss due to the Rupiah’s depreciation
against the US Dollar. Furthermore, since foreign-
exchange losses are allowable against Indonesian
corporation tax liabilities, the Group’s tax charge for
the year is unusually low.
OTHER ADMINISTRATIVE EXPENSES
Other administrative expenses of US$4.44 million
were similar to those in the previous year (US$4.29
million). The beneficial absence of an exceptional
cost borne in 2012 – a provision against the value
of the beef-cattle operation at Woodlands – offset an
increase in wages and salaries of US$0.49 million.
This increase reflects the annual increment in
salaries and, as reported in the report of the board to
the shareholders on directors’ remuneration on page
39, both bonuses paid to the executive directors in
2013 in respect of 2012 and bonuses accrued in
respect of 2013 and paid after the end of the year.
ASSOCIATED COMPANIES
The Group’s share of its associated companies’
profits, including the share of the Indonesian
Page 9
Strategic report 2013
CONTINUED
companies’ biological-bearer-asset adjustments,
compared with last year, was as follows:
2013 2012
POST-TAX POST-TAX POST-TAX POST-TAX)
PROFIT/(LOSS) PROFIT/(LOSS) PROFIT/(LOSS) PROFIT/(LOSS)
BEFORE BIOLOGICAL- BIOLOGICAL- AFTER BIOLOGICAL- BEFORE BIOLOGICAL- BIOLOGICAL- AFTER BIOLOGICAL-
BEARER-ASSET BEARER-ASSET BEARER-ASSET BEARER-ASSET BEARER-ASSET BEARER-ASSET
% ADJUSTMENT ADJUSTMENT ADJUSTMENT ADJUSTMENT ADJUSTMENT ADJUSTMENT
HELD US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Agro Muko 36.84 6,949 1,661 8,610 12,015 (26) 11,989
Kerasaan 38.00 955 62 1,017 1,246 6 1,252
Total Indonesia 7,904 1,723 9,627 13,261 (20) 13,241
NAPCo 34.37 (2,429) — (2,429) (2,012) — (2,012)
Bertam Properties 40.00 4,396 — 4,396 (347) — (347)
Total 9,871 1,723 11,594 10,902 (20) 10,882
The results of the Indonesian, Australian and
Malaysian associated companies are described below
and reviewed in more detail on pages 12 to 23.
Indonesia
PT Agro Muko is entering a phase of replanting in
which it is expected the crop will fall slightly. This was
the case in 2013 where PT Agro Muko’s own crop fell
by 6% and, combined with disappointing extraction
rates and lower prices (see the section on operations
below on page 18), this resulted in lower revenues and
profits. The Group’s share of results before the bearer-
biological-asset adjustment amounted to US$6.95
million (2012 US$12.02 million), a fall of 42% on the
previous year. The programme of replanting of rubber
areas continued in 2013, but the year did see a small
increase in the volume of rubber tapped. Despite the
increase in volume, PT Agro Muko’s rubber profits
nonetheless fell sharply due to lower rubber prices.
PT Kerasaan Indonesia maintained its crop as estate
management brought under control the leaf-pest
attack described in the 2012 annual report. This
estate’s results were nevertheless lower than in the
previous year due to the fall in the price of CPO. As a
result of the above, the Group’s combined share of the
post-tax, pre-bearer-biological-asset-adjustment profit
of these two associated companies in 2013 was
US$7.90 million, 40% lower than the US$13.26
million recorded in 2012.
As with the Group’s own areas, the valuation of
biological assets in the associated plantation
companies benefited from the increase in the long-
term CPO price used in the valuation. In PT
Kerasaan Indonesia, this gain was counterbalanced
by the costs of replanting. In PT Agro Muko, the
benefit of the rise in the long-term price of CPO
Page 10
across its much larger hectarage outweighed the
costs of replanting and increases in general
expenses and overheads.
The Group’s share of the post-tax, post-biological-
bearer-asset-adjustment profit of the Indonesian
associates amounted to US$9.63 million (2012
US$13.24 million), a reduction of some 27%.
The Group received gross dividends of US$5.16
million from PT Agro Muko in 2013 (2012 US$9.21
million, gross). Gross dividends from PT Kerasaan
Indonesia were US$0.57 million (2012 US$1.03
million, gross).
Australia
The severe drought which affected much of
Australia during 2013 adversely affected NAPCo’s
operations and results. It was possible substantially
to maintain the breeding herd by using the capacity
of the recently-expanded Wainui feedlot to absorb
young “weaner” cattle earlier than they would
normally be admitted, although overall herd
numbers fell by some 9,500 head. Increasingly-dry
conditions resulted in modest weight gains and, in
addition to the slight fall in herd size, this led to
another significant reduction in the year-end
valuation of NAPCo’s herd. As a result of this, the
Group’s share of NAPCo’s loss in 2013 amounted to
US$2.43 million (2012 US$2.01 million). The
Group’s share of NAPCo’s gross dividends
amounted to US$0.55 million (2012 US$0.93
million gross).
Malaysia
As noted in the 2012 annual report, partially-
completed development-property sales that were
not brought to book in 2012 under the accounting
standard IFRIC 15 are reflected in the 2013 results of
Bertam Properties. Property-development revenue
increased from RM 5.15 million in 2012 to
RM 144.77 million in 2013, generating a profit after
tax of RM 35.34 million (2012 loss RM 4.58
million). In US-Dollar terms, the Group’s share of
this profit was US$4.49 million (2012 loss US$0.59
million). The sale of one small piece of land (0.13
hectares) and profits from the residual agricultural
activity balanced the small loss from its golf
operation. Overall, the Group’s share of Bertam
Properties’ profit for the year amounted to US$4.40
million (2012 loss US$0.35 million). The Group’s
share of Bertam Properties’ dividends amounted to
US$3.49 million (2012 US$2.59 million).
PROFIT FOR THE YEAR
As a result of all the above, the Group profit for the
year amounted to US$22.87 million, an increase of
US$1.32 million (6%) compared with the US$21.55
million reported for 2012. This rise in reported profit
led to an increase of 11% in basic earnings per
share to US cents 35.96 (2012 US cents 32.51).
NET ASSETS AND BORROWING
At the end of 2013, the net assets shown in the
Group’s balance sheet amounted to US$371.29
million. Current assets exceeded current liabilities
by US$33.14 million and the Group had cash
balances of US$56.35 million (US$19.70 million of
which had been pledged as security). During the
year, a US$10.00 million revolving credit was
drawn to make working capital available to finance
the Group’s increasing volumes of business. In
addition, a loan of US$6.80 million was drawn
under an 8-year term-loan facility to help finance
the Group’s ongoing investment in its new projects
in Indonesia. These new loans brought the Group to
a gearing ratio of 15% at the end of 2013 (2012 -
13%), although net debt stood at only US$10.14
million.
During 2014 two of the Group’s borrowing facilities
come to the end of their terms (see note 24).
Discussions are already well advanced with the
lenders on extending one of these facilities and
partially replacing the other.
Page 11
Operations
Palm oil
PALM OIL MARKET
During 2013, the palm-oil price moved within an
unusually-tight band with the high point some
US$920/tonne and the low point around
US$820/tonne (Rotterdam c.i.f.). In previous years,
the band has averaged more than US$400/tonne. As
reported in Oil World, world stocks and production
were high at the beginning of 2013, keeping
downward pressure on the price. However, as a
result of large supplies of palm oil and clear price
competitiveness against other vegetable oils (when it
traded, for example, at an unusually-high discount
of up to some US$275/tonne to soybean oil rather
than the more normal US$100 to US$150),
consumption increased and stocks fell. The price
differential reduced in the second half to around
US$50/tonne at the same time as world production
of palm oil fell back. As a result of this, the palm-oil
price recovered in the last quarter, although upward
pressure on the price was restrained by high
soybean crops in the US and above-average
soybean plantings in South America. See the chart
of palm-oil prices on page 5.
MAJORITY-OWNED ESTATES
CROPS AND PRODUCTION
As set out in the table below, the overall Group f.f.b.
crop of 344,200 tonnes was 9% higher in 2013 than
the 317,000 tonnes harvested in 2012. As expected,
the main contributor was the sharply-increased crop
on the new Kalimantan project. Set against this,
weather-related problems beset the Bangka project,
resulting in a small reduction in the crop whilst the
established estates in Sumatra experienced a
downturn in crops, a phenomenon experienced by
other plantations in their locality. As a result of the
above, the Group crop of 350,000 tonnes forecast
in the 2013 interim report was not achieved by a
small margin. The improvement in the extraction
rates on both of the Group’s palm-oil mills, in
Group broadly on track
to achieve targeted f.f.b.
crops of 500,000 tonnes
in 2015 with extraction
rates improving
LEFT TO RIGHT BELOW
Senior staff on Bangka project: (l to r) Yudi Hudaya
(estate manager), Sugeng Wahyono (group manager),
Luhut Hisar Gultom (senior manager)
Preparing ground for construction of houses, Simpang
Kiri Estate
Page 12
Kalimantan and Sumatra, continued in 2013.
Details of crops, production and extraction rates for
2013, with comparative figures for 2012, are set out
below:-
2013 INCREASE 2012
TONNES % TONNES
Crops
Own crops
Pangkatan group 148,800 157,000
Simpang Kiri 46,600 51,300
195,400 (6) 208,300
Kalimantan 114,500 55 73,700
Bangka 34,300 (2) 35,000
344,200 9 317,000
Smallholder co-operative crops
Kalimantan 42,400 42 29,800
Bangka 18,300 (7) 19,700
60,700 23 49,500
Outside crop purchased
Kalimantan 34,400 (43) 60,100
Production
Crude palm oil
Kalimantan 47,400 39,500
Pangkatan 35,500 35,900
82,900 10 75,400
Palm kernels
Kalimantan 7,800 6,100
Pangkatan 8,600 8,700
16,400 11 14,800
Extraction rates % %
Crude palm oil
Kalimantan 24.8 24.1
Pangkatan 23.9 23.1
Palm kernels
Kalimantan 4.1 3.7
Pangkatan 5.8 5.6
Maturing palms on Kalimantan project
RIGHT New workers’ housing, Simpang Kiri Estate
REVIEW OF OPERATIONS
Sumatra – established estates
The f.f.b. crops from Pangkatan, Bilah and Sennah
Estates (see the map on the inside front cover) are
processed by the mill on Pangkatan Estate. Due to
replanting undertaken in 2013, there was a smaller
productive area (by 250 hectares) on these three
estates than in 2012. The composite average yield in
2013, at 24.39 tonnes per hectare (2012 – 24.73
tonnes) for these estates, was virtually identical to
the previous year but, because of the smaller
mature area, the overall crop was slightly down on
last year. The crop from Simpang Kiri Estate was
lower than in 2012 as the estate experienced a
low-cropping period.
These established estates in Sumatra continue to be
well managed and, overall, average yields have
improved markedly over the last few years.
Generally, yields in the areas where these estates are
located in Sumatra experienced a downturn in 2013.
In the long term, crops on these estates are expected
to increase as new higher-yielding seedlings are
planted, replacing older palms whose yield pattern
is deteriorating. Given the age profiles of the estates,
there will be a sustained period of replanting over
the next eight or so years meaning that, in the short
term, total crops are likely to remain at around
current levels until the newly-planted areas mature
and yields start increasing again. During 2013,
248 hectares were replanted on Pangkatan Estate
and 133 hectares on Simpang Kiri Estate. The
present plan is to replant, on average, some 450
hectares per annum over the next eight or so years.
The benefits of applying compost from Pangkatan
Mill in the field continue to be felt. Not only does
the presence of nutrients in the compost reduce the
need to use expensive inorganic fertiliser (thereby
achieving a cost saving) but also the compost
improves the structure of the soil. In the same way,
land application (pumping surplus liquid mill
Page 13
Operations Palm oil
CONTINUED
cLOCKWISE FROM TOP LEFT Oil-palm nursery with mature palms behind. Harvesting f.f.b. in Kalimantan. Young palms on the Agro Muko joint venture
effluent into trenches between the palms, in this case
over an area of some 85 hectares) provides nutrients
and reduces the need for inorganic fertiliser.
circumstances outlined above, extraction rates
at the levels that have been achieved are
commendable.
Production of crude palm oil at Pangkatan Mill at
35,500 tonnes, was similar to 2012’s 35,900 tonnes,
despite the lower f.f.b. throughput in 2013. It is
pleasing to report continued improvement in the oil-
extraction rate achieved in 2013 by the mill. Close
monitoring by field management of fruit ripeness
and bunch quality and by mill management of oil
losses and general engineering standards has
resulted in these high extraction rates. Although the
weight harvested is at acceptable levels, some of the
fruit received by Pangkatan Mill from Sennah Estate
is not of the highest quality because of low-quality
plantings which were on the estate, and known
about, when it was acquired some 12 years ago.
This has a negative effect on the extraction rate.
These lower-quality areas will be replanted over the
next five or so years and this will, in time, have a
beneficial effect on the extraction rate. In the
Management is considering the financial feasibility
of capturing methane from Pangkatan Mill’s effluent
pond to burn and then generate and sell electricity.
The methane would be “scrubbed” and then used as
fuel in a gas engine, similar to the one successfully
installed on the Kalimantan project. The electricity
generated should then be able to be sold to the
Government electricity board (PLN).
Pangkatan Mill was accredited by the Round Table
on Sustainable Palm Oil (“RSPO”) in 2012.
The annual “surveillance” audit was successfully
completed in 2013 and, during the year, credits for
both CPO and palm kernels were sold through a
marketing platform. The mandatorily-required
Indonesian Sustainable Palm Oil (“ISPO”) audit was
also successfully completed in 2013 and
certification has been received in 2014.
Page 14
A nursery has been created and it is the intention
to commence planting at the end of 2014.
The area covered by the Group’s permit extends to
20,000 hectares but it is impossible at this stage to
predict exactly how much of this will be available
for planting. The board currently estimates that
approximately half this area, 10,000 hectares, will
be plantable. Much will depend upon the Group’s
ability to agree acceptable terms with the users
of the land. The Group has undertaken to
develop 30% of the planted land for smallholder
cooperatives, the members of which are those who
have sold their rights to the land to the Group.
Kalimantan
The planned substantial increase in f.f.b. crops
continued in 2013 with 114,500 tonnes harvested,
55% more than 2012’s 73,700 tonnes. This increase
was despite some unusually-extensive flooding
experienced during the year which at times
restricted harvesting.
The mill continued to purchase f.f.b. both from the
smallholders’ cooperatives and from third-party
estates. The cooperatives’ crops are increasing in a
similar fashion to those on the Group’s areas.
As expected, the purchases from third parties fell
compared with 2012 as some of the the suppliers of
f.f.b. not only built their own mills but also
competed to buy f.f.b. in the area themselves. Such
purchases have proved to be very beneficial to the
Group during the early days of the operation of the
new mill.
New planting was at modest levels in 2013 with
127 hectares planted for the Group and 3 hectares
for the smallholders’ cooperatives. The total planted
area at the end of the year amounted to 9,809
hectares for the Group and 4,005 for the
smallholders’ cooperatives. The project is nearing
the end of the planting programme and, as normally
happens in these circumstances, completing the
final small areas takes longer, is more complicated
and becomes more expensive. The latest estimate is
that approximately a further 800 hectares may be
able to be planted on the Group’s own areas,
bringing the total to some 10,600 hectares. With
regard to the smallholders’ areas, it is possible that
a further 400 or so hectares may be able to be
planted, bringing the total to around 4,400 hectares.
The potential combined area may ultimately
therefore amount to around 15,000 hectares.
Included in the Group’s estimate of unplanted but
plantable land, both its own and that of smallholder
Page 15
Holding tank and CPO-delivery trucks, Kalimantan
Pangkatan Mill’s CPO qualifies as fully segregated
as it is derived solely from RSPO-accredited
plantations (Pangkatan, Bilah and Sennah Estates).
However, the relatively modest volume involved
makes it difficult to sell it under this description.
As this market develops, it may become possible
to sell fully-segregated CPO, which commands a
greater price premium, more easily.
Pangkatan Mill is in the process of preparing to
apply for International Sustainability and Carbon
Certification (“ISCC”). This should allow CPO to be
sold to European power generators at premiums to
world prices.
Sumatra – Musi Rawas project
Progress has been made on the Musi Rawas project
in South Sumatra. As at the date of this report,
compensation terms have been agreed with the
users of the land over some 1,800 hectares. A team,
led by an experienced senior group manager, has
been installed in an office in a nearby town.
Operations Palm oil
CONTINUED
cooperatives, are 800 hectares which, being near the
Mahakam River, are prone to flooding, sometimes
for prolonged periods. Management is actively
reviewing whether it is financially feasible for these
areas to be flood-protected by means of constructing
bunds and installing pumping equipment. The land
is of good quality and yields are likely to be high if
the flood water can be kept out.
In addition, there are approximately 900 hectares
which have already been planted but which are also
prone to flooding. The yields from these areas could
be substantially improved if the flood water was
controlled. Bunding and pumps would involve a
substantial investment which the board is actively
considering.
As the areas being planted reduce, management is
concentrating on the maximisation of yields and
attempting to bring field standards up to the highest
level. The bulking complex on the side of the
Mahakam River has been working well, both
dispatching CPO and kernels and receiving bulk
items, such as fertilisers, all by barge. The third
bulking tank, of 5,000 tonnes capacity, was
completed during the year and, together with the
other, 3,000-tonne, tank is rented out to third
parties. The Group uses the third, 5,000-tonne, tank
for its own purposes.
The CPO mill has continued to improve its oil-
extraction rate and achieved 24.8% in 2013.
Echoing earlier comments about the good extraction
rate also achieved by Pangkatan Mill in Sumatra,
it is the close monitoring by field management of
fruit ripeness and bunch quality and by mill
management of oil losses and general engineering
standards that has resulted in this high percentage.
Given that the age profile of the project’s oil palms
is still very young and also that a significant weight
of f.f.b. was purchased from nearby, third-party
plantations from which it is more difficult to control
ripeness standards, the extraction rate achieved has
been commendable.
The application of compost derived from waste
products from the mill (empty fruit bunches and
liquid effluent) continues to operate successfully.
Good levels of nutrients (particularly potassium) are
being recorded in the compost which reduces the
requirement for expensive inorganic fertiliser. As at
Page 16
Pangkatan Mill, surplus effluent is pumped into
trenches between the palms, in this case over an
area of approximately 90 hectares.
The RSPO audit of the Kalimantan project mill took
place at the end of 2013. The independent auditors
recommended to RSPO that accreditation be
granted and the official certification is expected
shortly. ISPO and ISCC audits are expected to
commence during the course of 2014.
Bangka
The 2013 crops both from the Group’s own areas
and from the smallholders’ cooperatives were
unexpectedly lower than for 2012. The climate on
Bangka Island is prone to mid-year dry periods
which can, but does not necessarily, lead to a
downturn in crops some 20 to 24 months later.
There was such a dry period in 2011 which appears
to have been responsible for the downturn in 2013.
At the other end of the spectrum, there was
exceptionally heavy rain around the end of 2013
leading to some localised flooding. Crops normally
more than recover after a “down” period and, as far
as can be assessed at this early stage in the year, this
recovery is expected to occur in 2014/15.
The planted area at the end of 2013 amounted in
total to 6,052 hectares of which 4,083 related to the
Group’s areas and 1,969 to the smallholders’
cooperatives. Although higher than the previous
year, progress on planting was a little disappointing
at 972 hectares in total, of which 584 related to the
Group and 388 to the cooperatives. As has been
mentioned in previous annual reports, the Group is
competing with tin-mining interests on the land.
However, management is confident that the
goodwill, which has clearly been engendered with
local people through the creation and management
of first-class oil-palm areas owned by the
cooperatives, has resulted and will continue, long
term, to result in strong support for the project.
It should be stressed that this is a slow process but
it is still expected that potentially the project will
ultimately extend to some 10,000 hectares, of
which 6,000 will relate to the Group and 4,000 to
the smallholders.
It has been decided to proceed with the
construction of the mill on the project with a view
to commissioning it in 2016. The exact format of the
mill is currently in the process of being decided
but it is likely to start off with a 45-tonne line,
extendable at a later date by another 15-tonne line
depending upon circumstances.
Oil-palm nursery, Musi Rawas
OPERATING COSTS
As areas mature, costs which hitherto had been
capitalised (or added to the cost of planting) are
then treated as revenue costs. In projects, such as
Kalimantan and Bangka, with a young age profile
and with new plantings becoming mature,
significant costs become recognised in this way
each year. However, as crop production increases
the fixed-cost element of the Group’s costs per
kilogram reduces. As foreshadowed in the 2012
annual report, there were significant cost pressures
in Indonesia during 2013, particularly with regard to
basic wages. These levels are determined annually
by the Governments of the various individual
provinces and increases reached as high as 49%, in
that case in East Kalimantan. Most of the Group’s
workforce earn well above the minimum wage
although this amount does form the basis for wage
calculations and substantial increases do therefore
impact on overall wage costs.
The US Dollar strengthened sharply against the
Indonesian Rupiah during the year. This had the
effect of reducing in US-Dollar terms those costs
which are denominated in Rupiahs. The most
significant such cost, and indeed the biggest single
cost, is wages and salaries.
The Group determines its costs as the cost per tonne
of “palm products” (palm oil plus palm kernels).
Costs include virtually all costs incurred in
Indonesia including depreciation and regional-
head-office overheads. The overall Group cost per
tonne including both the established, mature
projects in Sumatra and the new project in
Kalimantan was US$460 in 2013 (2012 US$500).
The cost per tonne for the Sumatran estates was
US$270 (2012 US$290) whilst the higher costs on
the new Kalimantan project continue to fall
markedly as production increases.
ENVIRONMENTAL AND SOCIAL FACTORS
Reference has been made earlier in the report to the
Group’s commitment to producing environmentally-
sustainable palm oil. Pangkatan Mill is already
RSPO-accredited and the Kalimantan Mill is in the
process of achieving this. The two mills are also at
various stages in the process of ISPO and ISCC
accreditation. The Bangka project, although not yet
in a position to become RSPO accredited until its
mill is in operation and it is selling CPO, already
adheres to the RSPO “Principles and Criteria”. The
Group’s environmental and social activities and
policies are set out in more detail in the section
Page 17
Operations Palm oil
CONTINUED
entitled “Environmental, corporate and social
responsibility” on pages 28 to 31.
ASSOCIATED-COMPANY ESTATES
CROPS AND PRODUCTION
PT Agro Muko’s f.f.b. crop was, as expected, lower
(345,800 tonnes) than the record achieved in 2012
(367,400 tonnes). Crop levels over recent years
have benefited from infrastructural improvements.
However, the project started in the late 1980’s and
the large, early plantings are now becoming ready
for replanting. Accordingly, the enhanced replanting
programme will reduce the productive areas and,
until the crops start coming through from the new
plantings, the overall crop is likely to remain at, or
possibly slightly below, current levels in the short
term.
The rubber crop, at 1,440 tonnes, was 7% higher
than that for 2012 (1,340 tonnes). The extensive
replanting programme undertaken over the last few
years is resulting in increasing cropping levels and
this upward trend is expected to continue.
Details of crops, production and extraction rates for
2013, with comparative figures for 2012, are set out
below:-
INCREASE
2013 (DECREASE) 2012
TONNES % TONNES
F.f.b. crops
PT Agro Muko
- own 345,800 (6) 367,400
- outgrowers 8,600 — 8,600
354,400 (6) 376,000
PT Kerasaan Indonesia 41,200 — 41,200
395,600 (5) 417,200
Production (PT Agro Muko)
Crude palm oil 79,700 (8) 87,100
Palm kernels 18,400 (7) 19,700
Extraction rates % %
Crude palm oil 22.5 23.2
Palm kernels 5.2 5.2
Rubber crops TONNES TONNES
PT Agro Muko - own 1,440 7 1,340
Page 18
REVIEW OF OPERATIONS
2013 was an unusually wet year, resulting in lower
extraction rates in the two mills. Combined with the
lower f.f.b. crop, this resulted in CPO production of
79,700 tonnes, 8% lower than the 87,100 tonnes
achieved in 2012.
A methane-capture plant attached to one of the
palm-oil mills was commissioned at the end of
2013. The methane is captured from the liquid mill
effluent, scrubbed and then either used as fuel for
one of the boilers in the mill (which drives a turbine
to produce electricity) or as fuel for the driers in the
rubber factory.
The extensive programme to stone the estate roads
continues and, as at the end of 2013, was
approximately 60% complete. The benefits of
accessibility during wet periods and costs reduced
by using trucks to collect f.f.b. (rather than double-
handling with tractors and trailers and then trucks)
have already been felt.
Kerasaan Estate’s f.f.b. crop, at 41,200 tonnes, was
identical to that for 2012. The leaf-pest problems
suffered by the estate over the last two or so years
have largely been resolved and the crop is expected
to start increasing again. Yields have also been
adversely affected by the root disease, ganoderma.
Strict agricultural practices have been instituted
such as de-boling when affected palms are
identified and ploughing and planting on a different
line when areas are replanted.
PERFORMANCE EVALUATION
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 budgeted, 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 year’s planting
on each estate. Key factors which are under
management’s control are husbandry standards,
fertiliser application, harvester numbers and
productivity, 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.
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.
Management monitors and assesses the performance
of the development of the new plantings 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. A budget for planting
programmes is set, with sufficient planting material
already 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.
These are monitored by management for each
individual 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., and
the percentage of free fatty acids, oil losses, dirt and
moisture. 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. Oil
losses, dirt and moisture content are expressed in
terms of percentages and actual achievement
against maximum permitted levels is monitored by
management.
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 kilogram of f.f.b. and factory
costs per tonne of palm products (combined palm oil
and palm kernels). A significant proportion of costs
CURRENT TRADING AND PROSPECTS
F.f.b. crops harvested on the majority-owned estates
amounted to 88,400 tonnes for the first three
months of 2014 compared with 78,700 tonnes for
the same period last year. The rising trend on the
two new projects continued with 45,400 tonnes
harvested, 25% higher than the 36,200 tonnes
recorded in the same period in 2013. This was
despite a short period of acute flooding experienced
in Kalimantan in the early part of the year. As
expected, the crop on the established Sumatran
estates at 43,000 tonnes was similar to the 42,500
tonnes for the same period in 2013. Although too
early in the year to determine with precision what
the crop for the whole year will be, the board’s
current estimate is that the outturn will be
approximately 425,000 tonnes. If this is achieved,
the Group will remain broadly on track to reach its
target of 500,000 tonnes in 2015. Crops will
continue to rise substantially after 2015 but the level
will at least partly depend upon the future rate of
plantings. F.f.b. crops from the associated
companies were a little higher than for the same
period last year.
With world stocks having fallen substantially by the
end of 2013 and with the prospect of significant
usage of palm oil for bio-diesel in Indonesia, the
palm-oil price strengthened in the first part of 2014
and is currently trading at around US$900/tonne
(Rotterdam c.i.f). These positive factors supporting
the price are limited to some extent by the unusually
large areas of soybeans that have been planted in
the current season in South America.
Oil-palm seedlings, Musi Rawas
Page 19
Operations
Beef cattle
Prospects for Australian
beef are looking more
favourable as export
demand grows
THE BEEF MARKET
Prices for both the lighter-weight cattle, produced by
Woodlands, and the heavier, grain-finished cattle
produced by NAPCo, broadly fell during the first half
of the year, largely as a result of the dry conditions
experienced across much of Australia. However, the
continuing decline in the value of the Australian
Dollar had a more positive impact on prices in the
second half, especially for NAPCo’s heavier-weight
cattle, which are more closely linked to the export
market. By the year end, prices for lighter-weight
cattle continued to trade at below their end-2012
levels, whilst prices for the heavier, grain-finished
cattle were similar to their end-2012 levels.
MAJORITY-OWNED OPERATIONS
WOODLANDS
The Woodlands cattle aggregation fell just short of
breaking even on its cattle operations. In addition to
cattle trading profits of US$1.41 million (2012
US$0.20 million), Woodlands gained income of
US$0.52 million (2012 US$nil) from fattening third
parties’ cattle for a fee per kilogram of weight gained
(”agistment”). Given the high cost of purchasing
young cattle for the property, the board took a
decision to make use of the available capacity at
Woodlands by introducing significant numbers of
agisted cattle in place of its own herd. At the
beginning of the year the herd consisted of 5,562 of
Woodlands’ own cattle; to this were added 7,349
cattle on agistment as Woodlands sold 4,872 of its
own cattle, and by the year end all but 676 of the
3,837 year-end herd on Woodlands were agisted
cattle.
Heifers on Goldsborough
Young heifers at NAPCo’s Wainui feedlot
Page 20
Total weight gained by the cattle on Woodlands,
both its own herd and the agisted cattle, increased
during 2013 by 45% to 1.46 million kilograms.
Pleasingly, despite the well-publicised adverse
weather conditions, average weight gain per cattle
day for the year was 0.55 kilograms, just a little
short of the 0.60 kilogram-per-day target referred to
below. The cattle gained weight at a significantly-
higher rate in the first half of the year, benefiting
from good early rains, before the drought conditions
experienced in much of Australia limited their
ability to find the nutrition they needed to grow
from the drying pastures.
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 aims for 0.60 kg per
day for grass-fed steers and 1.00 kg per day for
forage-crop- fed steers.
The ability to maximise the weight gain in any one
year will be determined by the amount of rainfall.
This, in turn, determines both the quality of the
existing pastures and what areas of forage crops can
be planted. Whilst rainfall is clearly not a factor
under management’s control, the area of forage
crops that can be both planted and brought ahead
to a state that can sustain cattle is crucial to the
operations of the company. The area planted, and
the cost, is therefore a performance indicator that is
under constant review by management.
NAPCo’s newly-expanded Wainui feedlot
NAPCo PROPERTIES
ASSOCIATED COMPANY - NAPCo
RESULTS FOR THE YEAR
Following an extremely dry season, the company
recorded a loss of US$7.07 million, of which the
Group’s share amounted to US$2.43 million. This
compares with a loss in 2012, of which the Group’s
share amounted to US$2.01 million. NAPCo’s loss
incorporated a decrease in the valuation of the
cattle herd of US$7.17 million, the valuation per
head falling by A$6 to A$636 compared with the
Page 21
Operations Beef cattle
CONTINUED
CATTLE SALES AND BRANDINGS
■ SALES ■ BRANDINGS ■ CLOSING STOCK
2013
2012
2011
64,017
58,638
59,489
62,506
57,155
54,695
2010
36,844
61,456
40,337
44,090
2008
2008
96,552
67,599
2007
49,725
65,510
187,795
197,309
197,590
195,342
198,262
160,622
162,336
‘000 HEAD
20
40
60
80
100
120
140
160
180
200
Walking young heifers on Gordon Downs
previous year end. This overall reduction resulted
both from a decreased herd size (by 9,514 head)
and from lower average weight per head.
SEASONAL CONDITIONS
2013 was the most challenging season experienced
by the company, and indeed all of Northern
Australia, since 2008. While rainstorms, finally,
provided important relief to many of the company’s
properties in December 2013, the benefits were
short lived as hot and dry conditions returned.
However, since the year end, many of the properties
have received some further welcome rainfall.
COMPANY OPERATIONS
During 2013, the herd reduced in size to 187,795
head from 197,309 head at the start of the year. A
total of 58,638 calves were branded during the year,
some 4,000 fewer than in 2012, mainly due to the
very poor season. Hot, dry conditions in early 2013
impacted on the prospective survival of recently-
born calves so, towards the end of the year, as it had
become too hot to continue the process of weaning
calves off their mothers, the branding of many calves
was delayed until 2014. A total of 64,017 cattle were
sold during 2013, over 4,500 more than in 2012,
and the highest number since the 2008 drought.
The recently-expanded Wainui feedlot facilitated
the retention of significantly more young cattle than
would have been possible in previous years. In
2014, brandings are expected to be approximately
the same as in 2013 and cattle sales potentially
higher, given the current mixed season. There may
therefore be a further reduction in the herd size in
2014. This would, however, be offset by any
increase in prices, especially for grain-finished
cattle. The recent price increase and the positive
price outlook are described respectively in “The
beef market” section of this report on page 20 and
under “Current trading and prospects” below.
CURRENT TRADING AND PROSPECTS
Significant rainfall both on Woodlands and across
most of the NAPCo properties represents a welcome
relief to the extremely dry conditions suffered in
2013. Australian beef-cattle prices have recently
increased, partly in response to the rainfall and
partly as export demand continues to grow,
especially in Asia, helped by the weakening of the
Australian Dollar. As with palm oil, price prospects
appear favourable.
Page 22
Operations
Property
Successfully-completed
house sales and a number of
land sales are in train
MALAYSIAN PROPERTY
MAJORITY-OWNED OPERATIONS
BERTAM ESTATE
It is intended that Bertam Estate will be sold when
the board deems that market conditions are suitable.
Based on independent advice, the land is estimated
to be worth more than US$13.5 million. In the
meantime, the Group continues to harvest the
65 hectares of mature oil palms on the estate.
This yielded a small crop of 1,400 tonnes in
2013 (2012 – 1,600 tonnes). No replanting has
taken place since 1997.
ASSOCIATED COMPANY –
BERTAM PROPERTIES
The Penang property market continued to be buoyant
during much of 2013. Unlike in 2012, Bertam
Properties recorded the completion of sales of a
substantially-increased number of development
properties, more than 500, during 2013 (2012 – 200).
Accordingly, the profit arising from these sales could be
recognised during the year and, after taxation,
amounted to US$11.22 million (2012 loss US$1.48
million), of which the Group’s share amounted to
US$4.49 million (2012 loss US$0.59 million). The sale
of a modest area of raw land was completed during the
year and further sales are currently in process. These
are expected to complete within the next year or so.
Plantation activities continue to shrink as the land
available for agriculture is given over to property
development. At the end of 2013, 139 hectares
(2012 – 147 hectares) of oil palms remained. The
f.f.b. crop fell by 23% to 1,700 tonnes (2012 –
2,200 tonnes) and profits fell because of this and
also because of lower CPO prices.
At the end of 2013, Bertam Properties owned 419
hectares, including 143 hectares covered by the golf
course and 25 hectares already under development,
leaving 251 hectares undeveloped. This remains a
very valuable asset. The Group’s investment in
Bertam Properties is estimated to be worth in excess
of US$30 million.
CENTRE Example of Bertam Properties’ residential development
LEFT Bertam Properties’ Penang Golf Resort
Page 23
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 appropriate, to mitigate that risk.
INDONESIA COUNTRY RISK
The Group relies on the continuing ability to
acquire and enforce property rights in Indonesia.
The country has recently benefited from a period of
political stability, economic growth and relative
exchange-rate stability. The board perceives a very
low risk of, for example, nationalisation or 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 difficulty. A variation on this risk is that
the Group may ultimately fail to obtain good title to
the land on which it has developed its new projects.
To date, the Group has obtained all the necessary
licences for these projects short of the ultimate
lease, the HGU. These include a valid right to
develop the land (izin lokasi) and operating licences
(izin usaha pertambangan). The Group has taken
responsibility for the process of compensating
smallholders and ensuring full and prompt payment
of relevant government taxes. Both are important
activities that are assessed during the final
application for an HGU. Where other companies
have been granted licences which potentially
conflict with those held by the Group, swift and
determined legal action has been taken to defend
the Group’s position.
Operations in Indonesia are deemed to be at high
risk from the threat of bribery and corruption.
The Group has introduced a policy on bribery
and corruption, completed a risk assessment and
conducted training of senior management in
Indonesia and Malaysia. It has approached all of its
business partners and submitted questionnaires on
their respective anti-bribery and corruption activities
and policies. The Group has employed external
advisers to ensure that its actions carry the
maximum prospect of preventing bribery and
corruption in its operations.
SUPERVISION OF OPERATIONS
Geographical distance between the UK head office
and operations located in Indonesia, Australia and
Page 24
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, including the operations of associated
companies. The Group has seats on the boards of its
three major associated companies and regularly
attends those companies’ board meetings, as well as
maintaining a dialogue with those companies’ chief
executives and senior management.
At the Group’s regional office in Jakarta, the local
president director has put together a team of senior
managers (agricultural, engineering, legal,
procurement 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, Kalimantan and Bangka. Additionally,
independent scrutiny of agricultural operations is
provided by a UK-based consultant.
The Group uses its Kalimantan training school to
instil the Group’s systems and high standards into
new and existing staff covering, agriculture,
engineering, finance and protection of the
environment.
PROTECTION OF THE ENVIRONMENT
Concerns about global warming and particularly the
destruction of tropical rainforest have received, and
continue 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 orangutan, 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 Group is a member of the Round Table on
Sustainable Palm Oil (“RSPO”). The RSPO has strict
guidelines which members must abide by in order
to be able to state that they are producing
sustainable palm oil, including the protection of
forested areas. The Group endorses the “Principles
and Criteria” which have been adopted by the
membership. The Group has specialist RSPO
officers, supported by external consultants, working
to ensure the Group complies with RSPO best
practice. RSPO accreditation has been granted to its
North Sumatran mill on Pangkatan Estate, and is
expected in early 2014 for the new Kalimantan mill.
The Group is also complying with the requirement
to achieve certification as Indonesian Sustainable
Palm Oil (“ISPO”).
As evidenced by its new projects in Kalimantan and
on Bangka Island, the Group has a clear policy that
only heavily-degraded land will be acquired and
developed. An environmental-impact assessment is
undertaken by an independent consultant for any
new project. 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 fair and transparent way.
With regard to both its mills, the Group has installed
composting systems which utilise both the “empty”
fruit bunches (i.e. 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. Since the middle of 2012, at the mill in
Kalimantan, methane has been captured from the
mill effluent before it is used for composting, and
used in a bio-gas engine to generate electricity for
workers’ villages on the project.
Management follows industry best-practice guidelines
and abides by Indonesian law with regard to such
matters as fertiliser application and health and safety.
RELATIONSHIP WITH LOCAL POPULATIONS
A breakdown in relations could significantly disrupt
the Group’s operations, for example through strikes,
or lead ultimately to a stop in production should
villagers pursue their case by blocking roads in
order to prevent f.f.b., a perishable crop, from
reaching the mill to be processed.
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 and village heads.
Smallholder co-operative schemes (KKPA) are being
developed alongside the Group’s areas and
managed by the Group. Staff members have been
appointed to deal with compensation 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.
RELATIONSHIP WITH LOCAL PARTNERS
A breakdown in relations with a local partner could
affect relations with the local populations where the
Group is located, with a detrimental effect on
operations. The board recognises the importance of
building and maintaining a good relationship with
the minority partners and fellow shareholders in its
Indonesian plantation projects but inevitably
disagreements do sometimes arise. The executive
directors endeavour to maintain regular and open
contact, both formal and informal, with the Group’s
partners to discuss current and future issues affecting
the Group’s operations. Where disputes do arise, the
Group seeks to negotiate a mutually-acceptable
settlement.
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 term 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.
Whilst a remarkably hardy plant, the oil palm can
be subject to attack from such pests as caterpillars
and other insects, and certain diseases. The practice
of proper management and husbandry instilled by
the Group in its field staff is designed to identify and
prevent these attacks from becoming widespread.
Appropriate agronomic measures are taken where
any outbreaks occur. Senior agricultural staff are
kept up to date with current research in this area, for
example by attending relevant conferences.
Page 25
Risk management
CONTINUED
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.
Investment is made in pumps, pipes, dams and
water tanks to ensure drinking water is available in
all areas. The board has taken the view that
acceptance of this risk is part of the business.
COMMODITY-PRICE FLUCTUATION
The price of crude palm oil, palm kernels and beef
determines the Group’s revenue and earnings.
Fluctuations in the price directly affect the Group’s
reported earnings and its ability to generate cash
inflows from its operations.
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. 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 fortnightly
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.
Given this, the directors have taken the view that in
the long run it is not generally cost effective to sell
forward contracts for the delivery of CPO,
particularly since the presence of Indonesian export
tax increases the risk in such contracts since it is
determined and levied at the time of delivery, not at
the time at which the contracted is agreed.
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. 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.
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, as has
demand for vegetable oils as a bio-fuel. 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.
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 Asia and the United States, with its
principal competitors being South America and the
United States itself. The board accepts price
fluctuation as a risk of the business and has
concluded that the structure of the Australian cattle
industry is sound and that its proximity to its main
markets in South East Asia gives it a competitive
advantage over its rivals.
EXCHANGE-RATE FLUCTUATION
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 Indonesian Rupiah against the US Dollar can
have a negative effect on other revenue costs in
US-Dollar terms. 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 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.
Page 26
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$1 = RM
£1 = US$
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$50
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
an acceptable credit rating from reputable rating
agencies or with banks that are majority owned by
sovereign governments.
Approved by the board of directors
and signed on its behalf
Philip Fletcher
Managing director
24 April 2014
Page 27
Environmental, corporate and
social responsibility
SUSTAINABILITY CERTIFICATION
ROUNDTABLE ON SUSTAINABLE PALM OIL (“RSPO”)
The Group is a member of the 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.
Pangkatan Mill was granted accreditation to the RSPO in
October 2012. The crude palm oil from the mill is
therefore recognised as having been derived from a
sustainable source. The three estates that send f.f.b. to the
mill, namely Pangkatan, Bilah and Sennah Estates, are
covered by this accreditation. The annual “surveillance”
audit was successfully completed in 2013.
The RSPO audit took place on the Kalimantan project
at the end of 2013. It is expected that certification will
be achieved in early 2014.
The associated companies, PT Kerasaan Indonesia
and PT Agro Muko, received RSPO accreditation in
2010 and 2011 respectively.
The Group aims to adopt high standards
in respect of environmental, corporate and
social responsibility in its palm-oil and
beef-cattle operations.
The Group is committed to producing
environmentally-sustainable palm oil.
In Australia, besides its commitment to
the health and safety of its employees, the
Group adopts high 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.
INDONESIAN SUSTAINABLE PALM OIL (“ISPO”)
The mandatorily-required ISPO certification, the
requirements of which are similar in most respects to
those of the RSPO, was received in respect of
Pangkatan Mill in early 2014 – see picture above of
(left) Abdul Aziz Muhshi (manager RSPO) and (right)
Bambang Sumantri (group manager) receiving ISPO
certificates on behalf of the Group. The ISPO audit of
the Kalimantan project is expected to take place
during the course of 2014.
Page 28
AGRONOMIC POLICIES
The following policies in respect of plantation
management have been adopted:-
NEW LAND
The Group ensures that any new plantation
development is undertaken only in heavily-degraded
areas which will not be suitable habitats for
orangutans or other major endangered mammals.
In accordance with RSPO rules, land will only be
planted that has been independently certified as not
having high conservation value (“HCV”) and has been
subject to an independent social-impact assessment.
ZERO BURNING
On new plantings or replantings, no burning is
allowed. Vegetation or old palms/trees are stacked in
interrows between the new planting lines and allowed
to rot down.
CONSERVATION AREAS
On new projects, well-marked conservation areas
are set aside in areas designated as having HCV status.
Ongoing programmes of planting jungle trees and
other plants are undertaken. Areas alongside river
banks (riparian reserves) are set aside as conservation
areas both to prevent leaching of fertilisers into water
courses and to provide wildlife corridors.
LEGUMES
Leguminous cover crops are planted. These serve to
fix nitrogen in the soil, prevent erosion and provide
nutritious leaf litter.
TERRACING AND SOIL EROSION
In areas with slopes above 12%, contour terraces are
dug. This prevents soil erosion and retains water for
palms on the terraces. Slopes of more than 25% are
not planted.
INTEGRATED PEST MANAGEMENT (“IPM”)
The Group adopts IPM to control pests on its
plantations.
Beneficial “host” plants are planted alongside estate
roads to attract predators (insects) of leaf pests. The
predators feed on leaf pest larva thus reducing the
need for chemical spraying. Barn owls are, where
possible, introduced and bred to control rats, thus
obviating the need for chemical baits.
Page 29
Environmental, corporate and social responsibility
CONTINUED
MILL EFFLUENT, COMPOST AND POWER GENERATION
(ZERO-WASTE CONCEPT)
At the palm-oil mill in Kalimantan, methane is
captured from part of the mill effluent and is utilised to
fuel a biogas engine. This engine, in turn, generates
electricity for office compounds and housing in
workers’ villages in the vicinity of the mill. This gives
rise to a significant reduction in the use of diesel for
the generators which would otherwise have been
needed to provide this electricity. Surplus effluent
(which can occur during very rainy periods) is applied
in the field. This acts as a beneficial organic fertiliser.
The effluent from which methane has been captured
is then applied to the empty fruit bunches to create
nutritious compost. The balance of the effluent which
has not been utilised for methane capture is
immediately applied to the empty fruit bunches to
create compost. The compost, in turn, is applied in
the field, reducing the requirement for inorganic
fertilisers. Because the effluent is used quickly the
production of methane is minimal. No effluent is
discharged into rivers or water courses. Similarly,
Pangkatan Mill’s liquid effluent is applied to empty
bunches to create compost. Management is
considering the commercial feasibility of capturing
methane from the effluent pond to burn and then
generate and sell electricity in a similar way to that
described above at the Kalimantan mill.
HEALTH AND SAFETY
The Group gives priority to the health and safety of
its employees and those affected by its activities.
Medical care is provided on the plantations in
polyclinics which are manned on a daily basis by
trained employees and, in addition, doctors visit these
clinics once or twice a week. The Group pays for
hospital treatment if this is required.
Sprayers apply chemicals in the field. They are
provided with appropriate protective clothing and
masks, showering facilities are available (and required
to be used) and the sprayers are subject to regular
medical checks.
Page 30
FACILITIES
The Group provides good-quality housing for its
employees, together with clean, potable, water and
proper sanitation.
Kindergartens are provided for very young children,
as is transport for older children to nearby
government schools. In remote locations, where
schools are not available, the Group assists by
providing land and some buildings so that
government schools can operate on the plantations.
TRAINING
The Group undertakes to train and motivate its staff
and workforce, to help employees build their skill
levels and to extend their education and qualifications.
It has built a first-class residential training facility
on its project in East Kalimantan.
SMALLHOLDER SCHEMES
On the new projects the Group has entered into
arrangements with local people to provide land
planted with oil palms. This is done by means of
cooperatives (KKPA’s) whose members are eligible
families in the villages which are in, or next to, the
areas being developed. In the early stages, the Group
provides the finance on loan to plant these areas and,
once the land titles have been received, facilitates the
KKPA’s obtaining bank finance, whereupon the initial
loans provided by the Group are largely repaid. The
remaining amounts due to the Group are repaid out of
KKPA profits. The land is planted to the same high
standard as the Group’s areas. The bank loans are
guaranteed by the Group and any funding required in
excess of that provided as bank loans is also provided
by the Group.
There is a contractual arrangement for the f.f.b. from
the KKPA’s to be purchased by the Group in
accordance with a formula set by the Indonesian
Government. The KKPA’s are maintained and
managed under the supervision of the Group. This
has been a successful way of engendering goodwill
with local people, as well as providing them with a
tangible and remunerative business which is owned
by them.
COMPENSATION IN RESPECT OF LAND
ACQUIRED
When acquiring new land for development, the
Group negotiates compensation terms with local
people in a fair and transparent manner. Transactions
are meticulously recorded and witnessed.
Page 31
Board of directors
Peter E Hadsley-Chaplin, MA MBA
Philip A Fletcher, FCA
Tristan R J Price, MA MSC FCA
CHAIRMAN
Appointed a director in 1989,
chairman in 2010. 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.
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.
FINANCE DIRECTOR
Appointed a director in 2010.
Qualified as a Chartered Accountant
with Coopers & Lybrand. Worked in
the UK Diplomatic Service, and as
an economist at the Organisation for
Economic Co-operation and
Development (OECD). Prior to
joining the Group, he was head of
financial planning and policy at the
Foreign & Commonwealth Office.
Report of the directors
FOR THE YEAR ENDED 31 DECEMBER 2013
The directors present the audited consolidated
financial statements of M.P.Evans Group PLC for
the year ended 31 December 2013.
PRINCIPAL ACTIVITIES
At 31 December 2013, the Company, through its
subsidiary and associated undertakings, operates oil-
palm and rubber plantations in Indonesia, beef-cattle
operations in Australia, 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
(pages 6 and 7) and in the strategic report (pages 8 to
27) 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 43.
An interim dividend of 2.25p (2012 - 2.25p) per share
was paid on 4 November 2013. The board
recommends a final dividend of 6.00p (2012 - 5.75p)
per share. This dividend will be paid on or after
19 June 2014 to those shareholders on the register at
the close of business on 25 April 2014. This final
dividend is not provided for in the 2013 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 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 (contact details on page 84)
without delay. Any such elections or revocations will
not be effective unless they have been sent in
accordance with the Company’s instructions and
Page 32
Konrad P Legg
SENIOR INDEPENDENT
NON-EXECUTIVE DIRECTOR
Appointed a director in 1987.
Director of Coburg Group PLC.
A former non-executive director
of Lendu Holdings PLC.
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.
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.
Jock Green-Armytage
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Appointed a director and
chairman of the audit and
remuneration committees in
2013. Formerly a director of
Rowe Evans Investments PLC
from 1989 to 1994. Currently
chairman of JZ International
Limited and chairman or director
of many of its investee companies
and previously chief executive of
The Guthrie Corporation Plc and
chairman of Amec Plc.
received by the Company’s registrars no later than
5:00 p.m. on 29 May 2014.
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 available
on the Company’s website
(www.mpevans.co.uk/en/investors/dividends) 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 2013 54,871,402
Share options exercised
18 June 2013 53,790
Shares issued in lieu of a cash dividend
20 June 2013 51,560
4 November 2013 58,124
Issued (fully-paid and voting) capital
at 31 December 2013 55,034,876
Page 33
Report of the directors
CONTINUED
DIRECTORS AND DIRECTORS’ INTERESTS
SUBSTANTIAL INTERESTS
The present membership of the board, all of whom
served throughout the year is detailed on pages 32 and
33. Konrad Legg, Richard Robinow and Derek Shaw
will retire from the board at the forthcoming annual
general meeting in accordance with the articles of
association and, being eligible, Richard Robinow and
Derek Shaw 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
year, in the shares of 10p each in the Company, were
as follows:-
NON-
AT 31 DECEMBER 2013 BENEFICIAL BENEFICIAL OPTIONS
P E Hadsley-Chaplin 1,561,717 25,000 —
P A Fletcher 1,128,171 — —
T R J Price — — 250,000
K P Legg 610,377 — —
R M Robinow 96,147 — —
J D Shaw 435,065 — —
J M Green-Armytage — — —
AT 1 JANUARY 2013
P E Hadsley-Chaplin 1,311,717 25,000 26,895
P A Fletcher 978,171 51,361 26,895
T R J Price — — 200,000
K P Legg 604,139 — —
R M Robinow 96,147 — —
J D Shaw 490,747 — —
Further details of the directors’ interests in share
options are disclosed in the report of the board to the
shareholders on directors’ remuneration, on page 40.
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 2013,
and is at the date of this report, a qualifying third-
party indemnity provision, as defined in section 236
of the Companies Act 2006, in force for the benefit of
the directors.
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 10.53
JP Morgan Fleming Mercantile
Investment Trust Plc 3,464,957 6.30
Montanarro Asset Management 1,982,894 3.60
M M Hadsley-Chaplin 1,892,254 3.44
Indirect interests
Aberdeen Asset Management PLC 8,837,770 16.06
Invesco Limited 2,056,436 3.74
AUTHORITY TO ALLOT SHARES
At the annual general meeting a general authority is
being sought, under resolution 6, for the directors to
allot shares up to a maximum nominal amount of
£1,834,496, which represents 33.33% of the
Company’s issued share capital as at the date of this
report. The Company does not currently hold any
shares as treasury shares within the meaning of
section 724 of the Companies Act 2006. It is also
proposed, under resolution 7, to empower the
directors to allot equity securities for cash pursuant to
this general authority (and to sell any treasury shares
which it may acquire for cash) otherwise than in
accordance with shareholders’ statutory pre-emption
rights so as to deal with practical problems arising in
connection with rights issues or otherwise up to an
aggregate nominal amount of £275,174, representing
5% of the Company’s issued share capital as at the
date of this report. The directors do not have any
present intention of using the authorities sought under
resolutions 6 and 7. These authorities will lapse on
30 June 2015 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 8 for the Company to purchase its own
shares on the AIM Market of the London Stock
Exchange until 30 June 2015 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
Page 34
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 so to do. Whilst any such shares are held
in treasury, no dividends will be payable on them and
they will not carry any voting rights.
Resolution 8 set out in the notice of the annual
general meeting will accordingly be proposed to
authorise the purchase of up to a maximum of
5,503,488 shares, on the AIM Market of the London
Stock Exchange, representing 10% of the Company’s
current issued share capital. The maximum price
which may be paid for a share on any exercise of the
authority will be restricted to 5% above the average of
the middle-market quotations for such shares as
derived from the Daily Official List of the London
Stock Exchange for the five business days before the
purchase is made. The maximum number of shares
and the price range are stated for the purpose of
compliance with statutory requirements in seeking
this authority and should not be taken as an
indication of the level of purchases, or the prices
thereof, that the Company would intend to make.
The authority conferred by resolution 8 will lapse on
30 June 2015 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 350,000 shares outstanding under the
executive share-option schemes. If all of the options
were exercised, the resulting number of shares would
represent (a) 0.63% of the enlarged issued share
capital at that date; and (b) 0.70% of the enlarged
issued equity share capital at that date if the proposed
authority to purchase shares was exercised in full
(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 2013
amounted to 31 days (2012 - 41 days).
FINANCIAL INSTRUMENTS
Details of the Group’s financial instruments, and the
board’s policy with regard to their use, are given in
note 32 to the consolidated financial statements on
pages 70 and 71.
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 (IFRS’s) as adopted by
the European Union and the parent-Company
financial statement in accordance with United
Kingdom Generally Accepted Accounting Practices
(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 IFRS’s as adopted by the
European Union and applicable United Kingdom
accounting standards have been followed, subject
to any material departures disclosed and explained
in the Group’s and parent-Company’s 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 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.
Page 35
Report of the directors
CONTINUED
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.
GOING CONCERN
The board’s conclusions on adopting the going-
concern basis for preparing the financial statements
are set out in the report on corporate governance on
page 38 and are incorporated in this report by
reference.
POST-BALANCE-SHEET EVENTS
There have been no post-balance-sheet events.
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 reasonable steps that he ought to
have taken as a director in order to make himself
aware of any relevant audit information and to
establish that the Company's auditors are aware of
that information.
This confirmation is given and should be interpreted
in accordance with the provisions of section 418(2) of
the Companies Act 2006.
INDEPENDENT AUDITORS
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.
Approved by the board of directors
and signed on its behalf
Claire Hayes
Secretary
24 April 2014
Page 36
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 is set out
below.
1 DIRECTORS
The details of the Company’s board, together with the
audit and remuneration committees, are set out on
pages 32 and 33. The board comprises an executive
chairman, two further executive directors and four
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. All of the executive directors
and non-executive directors attended each of the five
full board meetings held in 2013, with the exception
of Konrad Legg and Tristan Price who were unable to
attend the meeting on 10 September 2013. Each
executive director, and non-executive director with
less than nine years’ tenure, retires and must seek
re-election at least every three years. Thereafter,
non-executive directors will offer themselves for
re-election at each year’s annual general meeting.
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 other business
issues.
2 INDEPENDENCE AND RE-ELECTION OF LONG-
SERVING DIRECTORS
The board considers Derek Shaw, Konrad Legg and
Richard Robinow to be independent, notwithstanding
their length of service.
3 DIRECTORS’ REMUNERATION AND APPOINTMENT
As set out in the report on page 39, 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 three times during 2013 and each
meeting was attended by all the members with the
exception of Konrad Legg who was unable to attend
the meeting on 10 September 2013.
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.
4 RELATIONS WITH SHAREHOLDERS
The Company attaches importance to effective
communications with its institutional and private
shareholders. All shareholders have at least 21 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
invited at the meeting. The annual report, interim
report and analysts’ presentations are all available on
the Group’s website (www.mpevans.co.uk) and
through an “app” that is available for users to
download for free. The executive directors regularly
meet analysts who either follow the Group or who
may be interested in doing so. There is also regular
contact with institutional investors. Presentations are
made explaining the Group’s strategy, results and
operational developments.
5 ACCOUNTABILITY
a) Financial reporting
A detailed review of the performance and financial
position of the Group is included in the chairman’s
statement and the strategic report. The board uses
these and the report of the directors to present a
balanced and understandable assessment of the
Group’s position and prospects. The directors’
responsibility for the financial statements is described
on pages 35 and 36 of the report of the directors.
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 24 to 27.
The review process considers the control environment
and the major business risks faced by the Group.
Such risks include, but are not limited to:-
Page 37
Corporate governance
CONTINUED
• the risks of operating in Indonesia;
• the geographical distance between the head office
and area of operation;
• protection of the environment;
• the relationship with local populations where the
Group has operations;
• the relationship with local partners;
• weather and natural disasters;
• commodity-price fluctuation;
• exchange-rate fluctuation; and
• security of liquid funds.
Important control procedures, in addition to the day-
to-day supervisi on 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.
c) Going-concern basis
The Group's operations are funded through a
combination of long-term equity capital, cash
resources, long-term loans and overdraft.
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 strategic report on pages 8 to
19. The forecasts indicate that the Group will have
sufficient resources to meet its obligations as they fall
due on the basis that facilities expiring during the
course of 2014 will be renewed (see note 24 on page
64). Discussions with the banks extending the facilities
are already well advanced, and the directors have
taken the view that it is reasonable to expect these
discussions will successfully conclude with agreement
for new facilities on terms acceptable to the Group.
The board has concluded that, given the current level
of cash resources in the Group, the level of existing
borrowings and the facilities agreed in April 2010,
March 2011 and March 2013, and the likelihood that
these will be renewed when they reach the end of
their term, as well as its ability to manage capital
expenditure, 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 financial statements. As a
result, the board has concluded that the going-
concern basis continues to be appropriate in
preparing the financial statements.
6 AUDIT COMMITTEE
The audit committee is formally constituted with
written terms of reference and is chaired by Jock
Green-Armytage; the other members are Konrad Legg,
Richard Robinow and Derek 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 2013 and
each meeting was attended by all of the members
and the external auditor.
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 provided only audit
services, other than a small amount of tax advice in
the UK, Malaysia and Australia.
The audit committee meets the external auditor to
consider audit planning and the results of the external
audit. The committee specifically considered the
scope of the Group auditor’s engagement and agreed
the significant risks for the audit of the 2013 results.
The external auditor performs minimal services for the
Group other than the external audit, and so the board
does not consider there to be a risk that the provision
of non-audit services may compromise the external
auditor’s independence.
Page 38
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 Jock Green-Armytage.
SERVICE CONTRACTS
All of the executive directors have service contracts
with the Company. 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 the executive directors 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 primarily undertaken. The
committee takes note of surveys by executive-
remuneration specialists employed by UK Chartered
Accountancy firms summarising average executive
remuneration across AIM companies, and executive
remuneration levels in other London-listed and
European plantation companies.
The committee has sanctioned appropriate incentives
by means of share options with a view to aligning
the interests of the executive directors with those of
the shareholders. Non-pensionable bonuses may be
awarded annually in arrears at the discretion of the
committee, taking account of the performance of the
Group during the period and other targeted
objectives. Bonuses do not exceed six months’ salary.
NON-EXECUTIVE DIRECTORS
The fees of the non-executive directors are
determined by the board.
TOTAL DIRECTORS’ REMUNERATION
The total amount of directors’ remuneration for the
year ended 31 December 2013 was as follows:-
Executive directors
P E Hadsley-Chaplin
P A Fletcher
T R J Price
Non-executive directors
K P Legg
R M Robinow
J D Shaw
J M Green-Armytage
TOTAL
SALARY BONUS BENEFITS SALARY IN LIEU PENSION REMUNERATION
AND FEES IN KIND OF PENSION COSTS 2013
£ £ £ £ £ £
TOTAL
REMUNERATION
2012
£
132,300 30,000 19,934 20,345 — 202,579 186,963
220,500 50,000 45,296 33,908 — 349,704 317,008
165,000 40,000 20,158 — 20,625 245,783 216,936
517,800 120,000 85,388 54,253 20,625 798,066 720,907
26,500 — — — — 26,500 27,650
24,500 — — — — 24,500 23,750
35,000 — — — — 35,000 33,950
15,952 — — — — 15,952 —
101,952 — — — — 101,952 85,350
Total
619,752 120,000 85,388 54,253 20,625 900,018 806,257
Gains on exercise of share options
P E Hadsley-Chaplin
P A Fletcher
Total
Grand total
98,449 1,203,616
98,449 1,193,606
196,898 2,397,222
1,096,916 3,203,479
NOTES 1. The pension costs for Mr T R J Price set out above are the contributions made by the Company to a Company-sponsored
Self-Invested Personal Pension (“SIPP”) as described below. Pension contributions for Mr P E Hadsley-Chaplin and
Mr P A Fletcher ceased on 29 February 2012 and salaries in lieu of pension (net of employer’s National Insurance
contributions) have been paid from 1 March 2012 onwards.
2. The total remuneration of the executive directors for the year ended 31 December 2012 has been restated to take account of
bonuses totalling £88,000 paid after the publication of the 2012 annual report in respect of the financial year ended 31 December
2012. The bonuses paid were Mr P E Hadsley-Chaplin - £21,000, Mr P A Fletcher - £35,000 and Mr T R J Price - £32,000.
3. No long-term incentives, other than the share options described below, have been awarded to directors.
Page 39
Report of the board to the shareholders on directors’ remuneration
CONTINUED
EXECUTIVE SHARE-OPTION SCHEMES
granted to directors were exercised and none (2012 -
The executive directors are members of executive
none) lapsed.
share-option schemes which were established in
No performance criteria are attached to the options
2001 and 2012 under which options to subscribe for
and no options are held by the non-executive directors.
shares in the Company may be granted to selected
At 31 December 2013 the middle-market quotation for
employees. No further options can be granted under
the Company’s shares, as derived from the London
the schemes established in 2001. As at 31 December
Stock Exchange Daily Official List, was 470p, as
2013, options over 250,000 (2012 - 253,790) shares
compared with the high and low quotations for the
granted to executive directors remain outstanding.
year of 540p and 450p respectively.
These were granted to the executive directors
between 16 November 2007 and 17 January 2013.
During the year, 53,790 (2012 - 686,880) options
Details of the options held over shares of the Company
by the executive directors during the year ended
31 December 2013 are set out in the table below:-
Number of shares under option
BALANCE AT BALANCE AT MARKET DATE FROM
1 JANUARY GRANTED EXERCISED 31 DECEMBER EXERCISE PRICE WHEN DATE OF WHICH NORMALLY EXPIRY
2013 IN THE YEAR IN THE YEAR 2013 PRICE EXERCISED OF GRANT FIRST EXERCISABLE DATE
P E Hadsley-Chaplin 26,895 — 26,895 — 158.95p 525.00p 2 Feb 2005 4 May 2007 4 May 2014
P A Fletcher 26,895 — 26,895 — 158.95p 525.00p 2 Feb 2005 4 May 2007 4 May 2014
T R J Price 75,000* — — 75,000 385.00p — 16 Nov 2007 16 Nov 2010 16 Nov 2017
75,000* — — 75,000 159.50p — 24 Nov 2008 24 Nov 2011 24 Nov 2018
50,000 — — 50,000 483.21p — 19 Jun 2012 19 Jun 2015 19 Jun 2022
— 5,750 — 5,750 520.00p — 17 Jan 2013 17 Jan 2016 17 Jan 2023
— 44,250 — 44,250 510.00p — 17 Jan 2013 17 Jan 2016 17 Jan 2023
200,000 50,000 — 250,000
Total 253,790 50,000 53,790 250,000
* Held at appointment on 1 January 2010
PENSIONS
The Company sponsors self-invested personal
pensions (“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 whislt in the employment of the company
and life-assurance cover based on a multiple of salary.
The members contribute a minimum of 5% of their
pensionable salary to their SIPP. No element of a
salary, is pensionable. Individuals may elect to cease
contributions to the SIPP, in which case they receive
an additional salary paid in lieu of the employer’s
pension contributions. No contributions or equivalent
salary will be paid to directors beyond the age of 65.
Approved by the board of directors and signed on its
behalf
Claire Hayes
Secretary
director’s remuneration package, other than basic
24 April 2014
Page 40
Independent auditor’s report
TO THE MEMBERS OF M.P.EVANS GROUP PLC
REPORT ON THE GROUP FINANCIAL STATEMENTS
OUR OPINION
In our opinion the financial statements, defined below:
give a true and fair view of the state of the Group’s
affairs as at 31 December 2013 and of its profit
and cash flows for the year then ended;
have been properly prepared in accordance with
International Financial Reporting Standards (IFRS’s)
as adopted by the European Union; and
have been prepared in accordance with the
requirements of the Companies Act 2006.
This opinion is to be read in the context of what we
say in the remainder of this report.
WHAT WE HAVE AUDITED
The Group financial statements (the “financial
statements”), which are prepared by M.P. Evans
Group PLC, comprise:
Consolidated balance sheet as at 31 December
2013;
Consolidated income statement and consolidated
statement of comprehensive income for the year
then ended;
Consolidated cash-flow statement for the year then
ended;
Consolidated statement of changes in equity for the
year then ended; and
the notes to the financial statements, which
include a summary of significant accounting
policies and other explanatory information.
The financial reporting framework that has been
applied in their preparation is applicable law and
IFRS’s as adopted by the European Union.
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.
In addition, we read all the financial and non-
financial information in the annual report to identify
material inconsistencies with the audited financial
statements and to identify any information that is
apparently materially incorrect based on, or
materially inconsistent with, the knowledge acquired
by us in the course of performing the audit.
If we become aware of any apparent material
misstatements or inconsistencies we consider the
implications for our report.
OPINION ON OTHER MATTER PRESCRIBED BY THE
COMPANIES ACT 2006
In our opinion the information given in the strategic
report and the report of the directors for the financial
year for which the financial statements are prepared is
consistent with the financial statements.
OTHER MATTERS ON WHICH WE ARE REQUIRED TO
REPORT BY EXCEPTION
Adequacy of information and explanations received
Under the Companies Act 2006 we are required to
report to you if, in our opinion, we have not received
all the information and explanations we require for
our audit. We have no exceptions to report arising
from this responsibility.
WHAT AN AUDIT OF FINANCIAL STATEMENTS
INVOLVES
DIRECTORS’ REMUNERATION
We conducted our audit in accordance with
International Standards on Auditing (UK and Ireland)
(“ISA’s (UK & Ireland)”). An audit involves obtaining
evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable
Under the Companies Act 2006 we are required to
report to you if, in our opinion, certain disclosures of
directors’ remuneration specified by law are not
made. We have no exceptions to report arising from
this responsibility.
Page 41
Independent auditor’s report
CONTINUED
OTHER INFORMATION IN THE ANNUAL REPORT
Practices Board’s Ethical Standards for Auditors.
Under ISA’s (UK & Ireland) we are required to report
to you if, in our opinion, information in the annual
report is:
materially inconsistent with the information in the
audited financial statements; or
apparently materially incorrect based on, or
materially inconsistent with, our knowledge of the
Group acquired in the course of performing our
audit; or
is otherwise misleading.
We have no exceptions to report arising from this
responsibility.
RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS
AND THE AUDIT
Our responsibilities and those of the directors
As explained more fully in the statement of directors’
responsibilities, 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 ISA’s (UK & Ireland). Those
standards require us to comply with the Auditing
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.
OTHER MATTER
We have reported separately on the parent-Company
financial statements of M.P. Evans Group PLC for the
year ended 31 December 2013.
Simon O’Brien (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors,
London
24 April 2014
Page 42
Consolidated income statement
FOR THE YEAR ENDED 31 DECEMBER 2013
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 * 2013 ADJUSTMENT * ADJUSTMENT * 2012
NOTE US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Revenue 4 82,186 — 82,186 83,213 — 83,213
Cost of sales (60,749) 3,298 (57,451) (62,893) 2,715 (60,178)
Gross profit 4 21,437 3,298 24,735 20,320 2,715 23,035
Gain on biological assets 13 — 9,059 9,059 — 11,907 11,907
Planting expenditure — (6,265) (6,265) — (9,784) (9,784)
Foreign-exchange losses 4 (8,322) — (8,322) (1,761) — (1,761)
Other administrative expenses 4 (4,444) — (4,444) (4,292) — (4,292)
Other income 4 8 — 8 17 — 17
Operating profit 8,679 6,092 14,771 14,284 4,838 19,122
Finance income 4,6 972 — 972 1,338 — 1,338
Finance costs 4,7 (3,121) (399) (3,520) (3,437) (323) (3,760)
Group-controlled profit before tax 8 6,530 5,693 12,223 12,185 4,515 16,700
Tax on profit on ordinary activities 4,9 435 (1,381) (946) (4,791) (1,239) (6,030)
Group-controlled profit after tax 6,965 4,312 11,277 7,394 3,276 10,670
Share of associated companies’
profit/(loss) after tax 4, 15 9,871 1,723 11,594 10,902 (20) 10,882
Profit for the year 16,836 6,035 22,871 18,296 3,256 21,552
Attributable to:
Owners of M. P. Evans Group PLC 14,438 5,315 19,753 15,070 2,615 17,685
Non-controlling interests 30 2,398 720 3,118 3,226 641 3,867
16,836 6,035 22,871 18,296 3,256 21,552
US CENTS US CENTS US CENTS US CENTS
Basic earnings per 10p share 11 26.28 35.96 27.70 32.51
Diluted earnings per 10p share 11 26.24 35.90 27.65 32.44
* Non-statutory column (see note 13)
Page 43
Consolidated statement of
comprehensive income
FOR THE YEAR ENDED 31 DECEMBER 2013
2013 2012
US$’000 US$’000
Other comprehensive (expense)/income
Exchange differences on translation of foreign operations (11,785) 295
Previously unrealised profit on sale of land to associated undertaking
released to the consolidated income statement on sale of that land
by the associate to a third party (323) (137)
Other comprehensive income/(expense) 806 (192)
Other comprehensive expense (net of tax) for the year (11,302) (34)
Profit for the year 22,871 21,552
Total comprehensive income 11,569 21,518
Attributable to:
Owners of M. P. Evans Group PLC 8,327 17,651
Non-controlling interests 3,242 3,867
11,569 21,518
Page 44
Consolidated balance sheet
At 31 DECEMBER 2013
BEFORE BEFORE
BIOLOGICAL BIOLOGICAL BIOLOGICAL BIOLOGICAL
BEARER-ASSET BEARER-ASSET 31 DECEMBER BEARER-ASSET BEARER-ASSET 31 DECEMBER
ADJUSTMENT * ADJUSTMENT * 2013 ADJUSTMENT * ADJUSTMENT * 2012
NOTE US$’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
25
17
18
19
20,23
1,157
—
— 148,394
1,157
148,394
(76,152) 109,319
122,856
27,335
—
102
— 14,996
185,471
95,521
102
14,996
1,157
—
— 139,335
(72,617)
25,613
—
—
179,979
105,130
109
6,454
1,157
139,335
107,362
130,743
109
6,454
297,247
99,577
396,824
292,829
92,331
385,160
594
8,267
12,345
2,201
56,348
79,755
—
(277)
594
7,990
— 12,345
—
2,201
— 56,348
(277)
79,478
4,594
9,664
14,325
1,477
54,757
84,817
—
(447)
4,594
9,217
— 14,325
—
1,477
— 54,757
(447)
84,370
Total assets
4
377,002
99,300
476,302
377,646
91,884
469,530
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
25
26
31,710
10,311
4,313
46,334
33,421
34,780
2,903
2,933
— 31,710
10,311
—
4,313
—
— 46,334
(277)
33,144
— 34,780
20,963
2,933
18,060
—
25,458
14,797
1,541
41,796
43,021
31,423
2,514
4,230
— 25,458
— 14,797
1,541
—
— 41,796
(447)
42,574
— 31,423
19,193
4,230
16,679
—
Total liabilities
Net assets
Equity
Share capital
Other reserves
Retained earnings
40,616
18,060
58,676
38,167
16,679
54,846
4
86,950
18,060
105,010
79,963
16,679
96,642
290,052
81,240
371,292
297,683
75,205
372,888
27
29
29
9,253
75,212
189,626
—
27,336
45,764
9,253
102,548
235,390
9,227
83,133
191,734
—
25,613
41,376
9,227
108,746
233,110
Equity attributable to the owners
of M.P. Evans Group PLC
274,091
73,100
347,191
284,094
66,989
351,083
Non-controlling interests
30
15,961
8,140
24,101
13,589
8,216
21,805
Total equity
290,052
81,240
371,292
297,683
75,205
372,888
* Non-statutory column (see note 13)
The financial statements on pages 43 to 71 were approved by the board of directors
on 24 April 2014 and signed on its behalf
Tristan Price Philip Fletcher
Directors
Page 45
Consolidated statement
of changes in equity
FOR THE YEAR ENDED 31 DECEMBER 2013
NON-
SHARE OTHER RETAINED CONTROLLING TOTAL
CAPITAL RESERVES EARNINGS TOTAL INTERESTS EQUITY
NOTE US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Profit for the year
Other comprehensive (expense)/income
for the year
Total comprehensive income for the year
Issue of share capital
Dividends
Credit to equity for equity-settled
share-based payments
Movement in non-controlling interests
Transactions with owners
At 1 January 2013
—
—
—
26
—
—
—
26
11,594
8,159
19,753
3,118
22,871
(9,005)
(2,421)
(11,426)
124
(11,302)
2,589
5,738
8,327
3,242
11,569
928
—
954
—
954
(9,764)
2,977
(6,787)
(896)
(7,683)
49
—
33
82
—
82
(6,468)
(6,468)
(50)
(6,518)
(8,787)
(3,458)
(12,219)
(946)
(13,165)
9,227
108,746
233,110
351,083
21,805
372,888
10, 30
28
At 31 December 2013
27, 29, 30
9,253
102,548
235,390
347,191
24,101
371,292
Profit for the year
Other comprehensive (expense)/income
for the year
— 10,882
6,803
17,685
3,867
21,552
—
(187)
153
(34)
—
(34)
Total comprehensive income for the year
— 10,695
6,956
17,651
3,867
21,518
Issue of share capital
Dividends
134
2,162
—
2,296
10, 30
— (13,755)
6,893
(6,862)
(Debit)/credit to equity for equity-settled
share-based payments
28
—
(309)
332
23
Transactions with owners
134
(11,902)
7,225
(4,543)
—
—
—
—
2,296
(6,862)
23
(4,543)
At 1 January 2012
9,093
109,953
218,929
337,975
17,938
355,913
At 31 December 2012
27, 29, 30
9,227
108,746
233,110
351,083
21,805
372,888
Page 46
Consolidated cash-flow statement
FOR THE YEAR ENDED 31 DECEMBER 2013
YEAR ENDED YEAR ENDED
31 DECEMBER 31 DECEMBER
2013 2012
NOTE US$’000 US$’000
Net cash generated by operating activities 31 19,494 33,897
Investing activities
Interest received 6 972 1,338
Sale of shares to non-controlling interest 30 498 —
Proceeds on disposal of assets 358 239
Purchase of property, plant and equipment 14 (12,261) (18,540)
Purchase of shares from non-controlling interest (7,100) —
Planting expenditure (6,265) (9,784)
Net cash used by investing activities (23,798) (26,747)
Financing activities
Loan drawdown 22 6,800 310
Proceeds on issue of shares 27 131 1,586
Dividends paid to Company shareholders (5,964) (6,151)
Repayment of borrowings (2,318) (1,323)
Dividend paid to non-controlling interests 30 (896) —
Net cash used by financing activities (2,247) (5,578)
Net (decrease)/increase in cash and cash equivalents (6,551) 1,572
Net cash and cash equivalents at 1 January 29,299 27,500
Effect of foreign-exchange rates on cash and cash equivalents 1,890 227
Net cash and cash equivalents at 31 December 20 24,638 29,299
Page 47
Notes TO THE CONSOLIDATED ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2013
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 84. The nature of the
Group’s operations and its principal activities is set out in note 4 and in the strategic report on pages 8 to 27. 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.
NOTE 2 Adoption of new and revised accounting standards
(a) New and amended standards adopted by the Group
The following standards, which had no material impact on the Group, have been adopted by the Group for the first time
for the financial year beginning on 1 January 2013:
Amendment to IFRS 7, ‘Financial instruments: Disclosures’, on offsetting assets and liabilities. This amendment includes
new disclosures to facilitate comparison between those entities that prepare IFRS financial statements and those that
prepare financial statements in accordance with US GAAP.
IFRS13 ‘Fair Value Measurement’. This standard provides a single source of fair value measurement and disclosure
requirements for use across IFRS. The implementation of this standard did not lead to a significant change in the fair value
measurement applied by the Group although it has led to some enhanced disclosure in these financial statements.
(b) New standards, amendments and interpretations issued but not effective for the year beginning 1 January 2013 and not
adopted early.
The following accounting standards are effective for accounting periods beginning on or after 1 January 2014 and have not
yet been adopted by the Group:
IFRS 10 'Consolidated financial statements' (effective 1 January 2014). This standard builds on existing principles by
identifying the concept of control as the determining factor in whether an entity should be included within the
consolidated financial statements. The standard provides additional guidance to assist in determining control where this is
difficult to assess. This new standard is not expected to have a material impact on the consolidation of subsidiaries.
IFRS 11 'Joint arrangements' (effective 1 January 2014). This standard provides for a more realistic reflection of joint
arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form. There are two types
of joint arrangements: joint operations and joint ventures. Proportional consolidation of joint ventures is no longer allowed.
The standard is not expected to have a material impact on the consolidated financial information since the Group has
historically applied the equity method to account for its joint-venture interests.
IFRS 12 'Disclosure of interests in other entities' (effective 1 January 2014). This standard includes the disclosure
requirements for all forms of interests in other entities, including joint arrangements, associates, special-purpose vehicles
and other off-balance-sheet vehicles. The Group has not yet assessed the impact of IFRS 12 on the consolidated financial
information.
IFRS 9 ‘Financial Instruments’. The standard addresses the classification, measurement and recognition of financial
instruments (effective 1 January 2015). This is the first part of a new standard on classification and measurement of
financial assets that will replace IAS 39. IFRS 9 has two measurement categories: amortised cost and fair value. All equity
instruments are measured at fair value. A debt instrument is at amortised cost only if the entity is holding it to collect
contractual cash flows and the cash flows represent principal and interest. Otherwise it is at fair value through profit or
loss. Amortised cost accounting will also be applicable for most financial liabilities, with separate accounting for
embedded derivatives. The main change is that in cases where the fair-value option is taken for financial liabilities, the part
of a fair-value change due to an entity's own credit risk is recorded in other comprehensive income rather than the income
statement, unless this creates an accounting mismatch. The Group has not yet assessed the impact of IFRS 9 on its
consolidated financial information.
There are no other IFRS’s or IFRIC interpretations which are not yet effective that would be expected to have a material
impact on the Group.
Page 48
NOTE 3 Accounting policies
(a) Accounting convention and basis of presentation
These financial statements have been prepared consistently 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 (IFRS’s)
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 projected funds 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. Further details
are given in the corporate governance section on page 38.
(c) Basis of consolidation
The Group financial statements consolidate the financial statements of the Company and all of its subsidiaries, and equity
accounts for its 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 or equity
accounting 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.
Non-controlling interests in the net assets of subsidiaries are separately identified. They consist of non-controlling interests at
the date of business combination, and the non-controlling interest’s share of subsequent changes in equity.
(d) Revenue
Revenue represents the 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 sale of the developed
property is fully completed. 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 unfunded but the expense 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 application of the Black-Scholes model, using
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 in 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 oil palms), 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. In applying the
‘fair value hierarchy’ in IFRS 13 the Group has concluded that the valuation of its beef cattle falls into Level 1 since there is an
active local market for beef cattle of varying ages and weights. The valuation of its bearer biological assets falls into Level 3
since there is no active market in plantation assets and where sales do take place these are typically private transactions where
information about the sale is not made publicly available.
Page 49
Notes to the consolidated accounts
CONTINUED
NOTE 3 Accounting policies CONTINUED
(i)
Plantation
The Group has valued its biological assets at the discounted net present value of cash flows arising in producing crops over
the assets’ expected 25-year economic life using actual and budgeted management information about the expected crop,
and the fieldwork, harvesting, general and overhead costs on each of its estates. 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 CPO production using a long-term (20-year) average price. The cost of planting the Group’s
estates is 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 an estimated weight multiplied by market price per kilogram.
(iii) Crops
The cost of forage crops is charged 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 associated
companies, and the related deferred taxation.
(j) Property, plant and equipment
Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes all expenditure incurred in
acquiring the asset. Leasehold land in Indonesia is held on 25 or 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 are classified as freehold
land, which is not depreciated. Buildings and 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 is taken to be
their deemed cost.
(k) Investments in associated companies
Undertakings over which the Group has the ability to exert significant influence through shareholdings and board membership
are treated as associated undertakings. Investments in associated undertakings are held in the consolidated financial statements
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 2013. 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 and investments held for sale
The Group treats assets, including investments, 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 current 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.
Page 50
NOTE 3 Accounting policies CONTINUED
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.
(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 bank deposits 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 25.
(iv) Investments
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.
Page 51
Notes to the consolidated accounts
CONTINUED
NOTE 3 Accounting policies CONTINUED
(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.
NOTE 4 Segment information
The Group’s reportable segments follow the three areas of activity set out in the strategic report 2013. These are distinguished by
location and product: plantation crops (predominantly palm oil) in Indonesia, with a residual balance in Malaysia; cattle in Australia;
and property development in Malaysia.
2013 PLANTATION CATTLE PROPERTY OTHER TOTAL
INDONESIA MALAYSIA TOTAL AUSTRALIA MALAYSIA UK
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Revenue 76,479 203 76,682 5,458 — 46 82,186*
Gross profit/(loss) 24,820 (41) 24,779 (90) — 46 24,735
Gain on biological assets 9,059 — 9,059 — — — 9,059
Planting expenditure (6,265) — (6,265) — — — (6,265)
Foreign-exchange (loss)/gain (8,349) 46 (8,303) — — (19) (8,322)
Other administrative expenses (1,361) 232 (1,129) (66) — (3,249) (4,444)
Other income — 8 8 — — — 8
Operating profit 14,771
Finance income 824 56 880 84 — 8 972
Finance costs (2,181) (79) (2,260) (1,155) — (105) (3,520)
Group-controlled profit before tax 12,223
Tax 417 (21) 396 — — (1,342) (946)
Group-controlled profit after tax 11,277
Share of associated companies’
profit/(loss) after tax 9,627 — 9,627 (2,429) 4,396 — 11,594
Profit for the year 22,871
Consolidated total assets
Assets 299,886 6,091 305,977 33,325 — 14,144 353,446
Investments in associates 56,627 — 56,627 50,254 15,975 — 122,856
356,513 6,091 362,604 83,579 15,975 14,144 476,302
Consolidated total liabilities
Liabilities 54,120 16,364 70,484 23,351 — 11,175 105,010
Other information
Additions to non-current assets 11,912 — 11,912 232 — 117 12,261
Depreciation 4,876 15 4,891 387 — 34 5,312
Retirement-benefit obligations (64) — (64) — — — (64)
* Revenue of US$16.16 million was from sales of crude palm oil to PT Karyaindah Alam Sejahtera.
Page 52
NOTE 4 Segment information CONTINUED
2012 PLANTATION CATTLE PROPERTY OTHER TOTAL
INDONESIA MALAYSIA TOTAL AUSTRALIA MALAYSIA
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Revenue 76,814 292 77,106 6,061 — 46 83,213*
Gross profit/(loss) 25,155 27 25,182 (2,193) — 46 23,035
Gain on biological assets 11,907 — 11,907 — — — 11,907
Planting expenditure (9,784) — (9,784) — — — (9,784)
Foreign-exchange loss (1,555) (18) (1,573) — — (188) (1,761)
Other administrative expenses (1,185) 80 (1,105) (354) — (2,833) (4,292)
Other income — 17 17 — — — 17
Operating profit 19,122
Finance income 1,198 73 1,271 45 — 22 1,338
Finance costs (2,135) — (2,135) (1,625) — — (3,760)
Group-controlled profit before tax 16,700
Tax (4,595) 4 (4,591) — — (1,439) (6,030)
Group-controlled profit after tax 10,670
Share of associated companies’
profit/(loss) after tax 13,241 — 13,241 (2,012) (347) — 10,882
Profit for the year 21,552
Consolidated total assets
Assets 271,869 9,142 281,011 41,777 — 15,999 338,787
Investments in associates 52,733 — 52,733 61,817 16,193 — 130,743
324,602 9,142 333,744 103,594 16,193 15,999 469,530
Consolidated total liabilities
Liabilities 48,949 18,551 67,500 28,117 — 1,025 96,642
Other information
Additions to non-current assets 18,417 1 18,418 120 — 2 18,540
Depreciation 4,734 14 4,748 445 — 18 5,211
Retirement-benefit obligations 1,585 — 1,585 — — — 1,585
* Revenue of US$13.62 million was from sales of crude palm oil to PT Pacific Palmindo Industries; and US$8.57 million was
from sales of crude palm oil and palm kernels to PT Salim Ivomas Pratama.
Page 53
Notes to the consolidated accounts
CONTINUED
NOTE 5 Employees
2013 2012
US$’000 US$’000
Employee costs during the year
Wages and salaries 10,807 10,650
Social-security costs 873 551
Current-service cost of retirement benefit (see note 26) 922 1,183
Other pension costs 109 236
12,711 12,620
NUMBER NUMBER
Average number of persons employed (including executive directors)
Estate manual 1,735 1,488
Local management 60 66
United Kingdom head office 7 7
1,802 1,561
Employee costs and average number of persons employed represent only permanent employees of the Group. This differs from
disclosure made in previous years where casual labour was included in both costs and average numbers employed.
Details of directors’ remuneration required by the Companies Act 2006 are shown within the report of the board to the
shareholders on directors’ remuneration on pages 39 and 40 and form part of these audited financial statements.
NOTE 6 Finance income
2013 2012
US$’000 US$’000
Interest receivable on bank deposits 972 1,338
NOTE 7 Finance costs
Interest payable on bank loans and overdrafts 3,520 3,760
Interest capitalised into the cost of property, plant and equipment — —
Page 54
NOTE 8 Group-controlled profit before tax
2013 2012
US$’000 US$’000
Profit before tax is stated after charging
Depreciation of property, plant and equipment 5,312 5,211
Auditors’ remuneration 338 313
Employee costs (note 5) 12,711 12,620
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 95 90
Total audit services 115 110
Audit of overseas subsidiaries 153 135
Total fees payable 268 245
* In addition to the above, fees of US$70,000 (2012 US$68,000) were payable to other firms for the audit of subsidiary
companies.
NOTE 9 Tax on profit on ordinary activities
United Kingdom corporation tax charge for the year 384 370
Relief for overseas taxation (384) (370)
— —
Overseas taxation 10,881 8,821
Adjustments in respect of prior years 18 (5)
Total current tax 10,899 8,816
Deferred taxation – origination and reversal of temporary differences (see note 25) (9,953) (2,786)
946 6,030
The standard rate of tax for the year, based on the United Kingdom standard rate of corporation tax, was 23.25% (2012 – 24.50%).
The standard rate of Indonesian tax was 25.00% for the current year (2012 – 25.00%). The actual tax charge is lower than the
standard rate for the reasons set out in the following reconciliation:-
Page 55
Notes to the consolidated accounts
CONTINUED
NOTE 9 Tax on profit on ordinary activities CONTINUED
2013 2012
US$’000 US$’000
Profit on ordinary activities before tax 12,223 16,700
Tax on profit on ordinary activities at the standard rate 2,842 4,092
Factors affecting the charge for the year
Withholding tax on overseas dividends and interest 960 1,070
Unrelieved losses 1,512 2,593
Expenses not deductible for tax purposes 78 64
Unrealised Indonesian exchange differences not included in Group profit (4,412) (1,083)
Utilisation of losses brought forward (184) (23)
Lower rate applicable to disposals of fixed assets (75) (43)
Biological assets 57 134
Other exchange differences (701) 157
Profits subject to lower rate of tax — (239)
Adjustments to valuation of investments 160 (272)
Other differences 709 (420)
Total actual amount of tax 946 6,030
NOTE 10 Dividends paid and proposed
2013 interim dividend – 2.25p per 10p share (2012 interim dividend – 2.25p) 1,991 1,985
2012 final dividend – 5.75p per 10p share (2011 final dividend – 5.75p) 4,796 4,877
6,787 6,862
Following the year end, the board has proposed a final dividend for 2013 of 6.00p per 10p share, amounting to US$5.50
million. Shareholders will again have the option to elect to receive the dividend in shares rather than in cash. Further
information is published in the report of the directors on pages 32 and 33. The dividend will be paid on or after 19 June 2014
to those shareholders on the register at the close of business on 25 April 2014.
NOTE 11 Basic and diluted earnings per share
The calculation of earnings per 10p share is based on:
2013 2013 2012 2012
NUMBER OF NUMBER OF
US$’000 SHARES US$’000 SHARES
Profit for the year attributable to the
owners of M.P. Evans Group PLC 19,753 17,685
Average number of shares in issue 54,936,947 54,406,455
Diluted average number of shares in issue* 55,025,655 54,509,339
* The difference between the number of shares in issue and the diluted number of shares relates to unexercised share options
held by directors and key employees of the Group.
Page 56
NOTE 12 Goodwill
2013 2011
US$’000 US$’000
At 1 January and 31 December 1,157 1,157
Goodwill is carried at cost. The directors have tested goodwill for impairment, concluding that the carrying amounts are
recoverable. Goodwill has arisen in respect of the Group’s projects in Indonesia in Kalimantan and on Bangka Island. The directors
consider the fair value of these investments to exceed their carrying value by a significant margin. Given this, and the size of the
goodwill balance, the directors do not consider it necessary to provide further detailed disclosures regarding impairment.
NOTE 13 Biological assets
Non-current biological assets comprise plantation bearer assets. The Group values these plantation assets using a discounted cash
flow over the expected 25-year economic life of the asset. The discount rate used in this valuation is 14%. The price of the f.f.b.
crop is taken to be the 20-year average based on historical selling prices or, where the plantation has its own mill, an inference
based on the widely-quoted commodity price for CPO delivered c.i.f. Rotterdam. The directors have concluded that using a 20-
year average provides the best estimate of the prices to be achieved over the valuation period.
Assumptions
The long-term average price and exchange rate used in determining the valuations were as follows:
31 DECEMBER 31 DECEMBER
2013 2012
Price of CPO (US$/tonne, Rotterdam c.i.f.) 626 602
Exchange rate (Rupiah per US$) 12,189 9,670
Sensitivity in valuation of plantation assets
A change of US$25 in the price assumption for CPO has the following effect on the valuation of plantation assets:
-US$ 25 +US$ 25
US$’000 US$’000
Subsidiaries (17,630) 17,630
Associated companies (12,492) 12,492
(30,122) 30,122
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 10,128 (9,134)
Associated companies 6,071 (5,582)
16,199 (14,716)
Page 57
Notes to the consolidated accounts
CONTINUED
NOTE 13 Biological assets CONTINUED
2013 2012
Non-current biological assets US$’000 US$’000
Gain in fair value:
Initial recognition 2,882 3,289
Current period 6,177 8,618
Total gain 9,059 11,907
At 1 January 139,335 127,428
At 31 December 148,394 139,335
2013 2012
F.f.b. crop (Tonnes) 345,600 318,600
Fair value of crop (US$’000) 41,365 34,022
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 strategic report 2013 on pages 24 to 27.
Presentation
In the balance sheet, the adjustment column shows that recognition of the biological-asset valuation replaces depreciated-
historical-planting costs of US$76,152,000 (2012 US$72,617,000) 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$157,392,000 (2012 US$147,822,000).
Page 58
NOTE 14 Property, plant and equipment
PLANT,
FREEHOLD LEASEHOLD EQUIPMENT CONSTRUCTION
LAND LAND BUILDINGS AND VEHICLES IN PROGRESS TOTAL
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Cost or valuation
At 1 January 2013 29,863 25,831 37,879 31,279 5,257 130,109
Additions 45 2,560 28 2,504 7,124 12,261
Re-classification — — 7,111 — (7,111) —
Exchange differences (3,900) (18) (720) (455) — (5,093)
Disposals — (188) (268) (686) — (1,142)
At 31 December 2013 26,008 28,185 44,030 32,642 5,270 136,135
Accumulated depreciation
At 1 January 2013 2,566 380 6,240 13,561 — 22,747
Charge for the year — 9 2,336 2,967 — 5,312
Exchange differences — — (142) (318) — (460)
Disposals — (188) (52) (543) — (783)
At 31 December 2013 2,566 201 8,382 15,667 — 26,816
Net book value
at 31 December 2013 23,442 27,984 35,648 16,975 5,270 109,319
Cost or valuation
At 1 January 2012 29,202 18,610 31,134 29,717 2,814 111,477
Additions 53 7,212 3,208 2,116 5,951 18,540
Re-classification — — 3,479 — (3,479) —
Exchange differences 608 9 114 72 — 803
Disposals — — (56) (626) (29) (711)
At 31 December 2012 29,863 25,831 37,879 31,279 5,257 130,109
Accumulated depreciation
At 1 January 2012 — 370 4,310 10,767 — 15,447
Charge for the year — 10 1,959 3,242 — 5,211
Exchange differences — — 21 48 — 69
Disposals — — (50) (496) — (546)
Provision for impairment 2,566 — — — — 2,566
At 31 December 2012 2,566 380 6,240 13,561 — 22,747
Net book value
at 31 December 2012 27,297 25,451 31,639 17,718 5,257 107,362
Net book value
at 1 January 2012 29,202 18,240 26,824 18,950 2,814 96,030
As at 31 December 2013, the Group had entered into contractual commitments for the acquisition of property, plant and
equipment of US$6,891,000 (2012 US$4,787,000).
Depreciation is charged to cost of sales, other than US$34,000 (2012 US$18,000) charged to other administrative expenses.
Page 59
Notes to the consolidated accounts
CONTINUED
NOTE 15 Investments in associates
Details of the principal subsidiary and associated undertakings are given on page 78.
The Group’s associated companies are all unlisted.
SHARE OF SHARE OF
NET ASSETS NET ASSETS
2013 2012
US$’000 US$’000
Share of net assets
At 1 January 129,742 130,658
Exchange differences (9,717) 1,957
Profit for the year 11,594 10,882
Net dividends received (9,764) (13,755)
At 31 December 121,855 129,742
Goodwill
At 1 January and 31 December 1,001 1,001
Carrying value
At 31 December 122,856 130,743
At valuation
Unlisted (directors’ valuation) 205,000 221,000
The Group’s aggregate share of the summarised results of its associated undertakings is shown below:-
AGRO BERTAM
MUKO KERASAAN NAPCo PROPERTIES
(36.84%) (38.00%) (34.37%) (40.00%) TOTAL
US$’000 US$’000 US$’000 US$’000 US$’000
2013
Revenue 21,946 2,293 22,713 18,927 65,879
Profit/(loss) after tax 8,610 1,017 (2,429) 4,396 11,594
Assets 51,782 6,741 133,135 24,330 215,988
Liabilities (1,695) (200) (82,882) (8,355) (93,132)
Net assets 50,087 6,541 50,253 15,975 122,856
2012
Revenue 34,669 3,193 24,079 1,925 63,866
Profit/(loss) after tax 11,989 1,252 (2,012) (347) 10,882
Assets 51,152 6,401 121,424 23,416 202,393
Liabilities (4,491) (328) (59,608) (7,223) (71,650)
Net assets 46,661 6,073 61,816 16,193 130,743
Page 60
NOTE 16 Investments
2013 2012
Other available-for-sale financial investments (unlisted) US$’000 US$’000
At 1 January 109 145
Exchange differences (7) 5
Revaluation of investments — (41)
At 31 December 102 109
The directors have reviewed the fair values of the Group’s available-for-sale investments and concluded that their realisable
market value equals their carrying value.
NOTE 17 Current biological assets
2013 2012
Livestock US$’000 US$’000
Gain in fair value 1,005 146
Increase due to purchases — 426
Decreases due to disposal and reclassification (4,349) (6,061)
Net exchange differences (656) 205
Change in carrying value of biological assets (4,000) (5,284)
At 1 January 4,594 9,878
At 31 December 594 4,594
Head sold (number) 4,872 5,278
Cattle revenue (US$’000) 4,349 6,061
NOTE 18 Inventories
2013 2012
US$’000 US$’000
Processed produce for sale 2,327 3,160
Estate stores 2,538 3,013
Nurseries 3,125 3,044
7,990 9,217
Page 61
Notes to the consolidated accounts
CONTINUED
NOTE 19 Trade and other receivables
2013 2012
US$’000 US$’000
Trade receivables 905 1,072
Receivables from smallholder cooperatives 6,483 2,426
Other receivables 1,094 3,773
Prepayments and accrued income 3,863 7,054
12,345 14,325
Trade and other receivables analysed by currency of receivable:
Indonesian Rupiah 10,915 12,515
US Dollar 1,049 884
Australian Dollar 252 192
Malaysian Ringgit 74 582
Sterling 55 152
12,345 14,325
Sales of palm oil are generally made for cash payment in advance of delivery. The Group makes full provision against invoices
outstanding for more than 30 days. At 31 December 2013 there was no provision for impairment of trade receivables (2012
US$nil). The directors consider the carrying amount of trade and other receivables approximate their fair value.
NOTE 20 Cash and cash equivalents
Cash and cash equivalents 56,348 54,757
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. Of this balance, US$19.70 million (2012
US$19.60 million) has been pledged as security against bank loans.
Cash and cash equivalents 56,348 54,757
Bank overdrafts and loans (see note 22) (31,710) (25,458)
Net cash 24,638 29,299
NOTE 21 Trade and other payables
Trade payables 3,368 7,537
Amounts owed to associated undertakings 50 63
Other payables 6,893 7,197
10,311 14,797
The average credit period taken for trade purchases is 30 days (2012 - 41 days). The Group has processes in place to ensure
payables are settled within the agreed terms.
Page 62
NOTE 22 Borrowings
2013 2012
US$’000 US$’000
Secured borrowing at amortised cost
Bank Treasury Bill facility 20,453 25,458
Bank loans 46,037 31,423
66,490 56,881
Total borrowings
Amount due for settlement within 12 months 31,710 25,458
Due for settlement in one to five years 34,780 31,423
66,490 56,881
Borrowings on the bank Treasury Bill facility are treasury bills which are payable within one year but can be rolled over within
the limits of the facility. They are secured on the assets of the Woodlands cattle aggregation. Bank loans in Malaysia and
Indonesia are secured, respectively, on Bertam Estate and the Kalimantan palm-oil mill.
Analysis of borrowings by currency:
AUSTRALIAN MALAYSIAN
US DOLLARS DOLLARS RINGGIT TOTAL
US$’000 US$’000 US$’000 US$’000
31 December 2013
Bank Treasury Bill facility — 20,453 — 20,453
Bank loans 29,751 — 16,286 46,037
29,751 20,453 16,286 66,490
31 December 2012
Bank Treasury Bill facility — 25,458 — 25,458
Bank loans 12,986 — 18,437 31,423
12,986 25,458 18,437 56,881
Facilities drawn during the year
During the year, a loan of US$6.8 million was drawn in Indonesia. In the UK, use was made of a US$10 million revolving-
credit facility which is treated as an overdraft.
Undrawn borrowing facilities
At 31 December 2013, the Group had available US$1.15 million of a US$20.95 million loan facility with an Indonesian lender.
The Group had no available undrawn facility in Malaysia (2012 MYR2.96 million). There is an undrawn overdraft facility of
A$500,000 (2012 A$500,000) from an Australian lender.
Interest rates
The weighted-average interest rates paid during the year were as follows:-
2013 2012
% %
Bank Treasury Bill facility 5.0 6.0
Bank loans 5.9 6.0
Page 63
Notes to the consolidated accounts
CONTINUED
NOTE 23 Net debt
2013 2012
US$’000 US$’000
Cash at bank 56,348 54,757
Secured borrowing
Indonesia 19,751 12,986
Australia 20,453 25,458
Malaysia 16,286 18,437
UK 10,000 —
66,490 56,881
Net debt (10,142) (2,124)
NOTE 24 Maturity of financial liabilities
The table below shows the anticipated cash outflows relating to the Group’s financial liabilities based on the period remaining
between the balance-sheet and contractual-maturity dates. Where borrowings carry a floating rate of interest an estimate of future
interest payments has been made by applying the interest rate in force at the balance-sheet date. Similarly, where liabilities are
denominated in foreign currencies, the exchange rate at the balance-sheet date has been applied to all related future cash flows.
0-1 YEAR 1-2 YEARS 2-5 YEARS OVER 5 YEARS
US$’000 US$’000 US$’000 US$’000
2013
Trade and other payables 10,261 — — —
Amounts owed to associated undertakings 50 — — —
Short-term borrowings* 31,165 — — —
Term loans 17,841 1,916 21,368 —
59,317 1,916 21,368 —
2012
Trade and other payables 14,734 — — —
Amounts owed to associated undertakings 63 — — —
Short-term borrowings* 21,071 — — —
Term loans 1,991 19,631 13,931 —
37,859 19,631 13,931 —
* Short-term borrowings are shown as being fully repaid at their contractual expiry date. The Group expects these loans to be
renewed: discussions are already well advanced with lenders on extending one of these facilities (Australia) and partially
replacing the other (Malaysia).
Page 64
NOTE 25 Deferred tax
The following are the major deferred-tax liabilities and assets recognised by the Group and movements thereon:
ACCELERATED RETIREMENT- OTHER
TAX REVALUATION BIOLOGICAL BENEFIT TIMING
DEPRECIATION OF LAND ASSETS OBLIGATIONS DIFFERENCES TOTAL
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
At 1 January 2013 3,874 3,126 16,679 (1,058) (9,882) 12,739
Charge/(credit) to
income statement 361 — 1,381 123 (11,818) (9,953)
Exchange differences (824) (447) — 201 4,251 3,181
At 31 December 2013 3,411 2,679 18,060 (734) (17,449) 5,967
At 1 January 2012 3,118 3,746 15,440 (741) (5,718) 15,845
Charge/(credit) to
income statement 895 — 1,239 (375) (4,545) (2,786)
Credit to revaluation reserve — (698) — — — (698)
Exchange differences (139) 78 — 58 381 378
At 31 December 2012 3,874 3,126 16,679 (1,058) (9,882) 12,739
Certain deferred-tax assets and liabilities have been offset. The following is the analysis of deferred-tax balances (after offset) for
financial reporting purposes:
2013 2012
US$’000 US$’000
To be recovered after more than 12 months
Deferred-tax assets (14,996) (6,454)
Deferred-tax liabilities 20,963 19,193
5,967 12,739
At the balance-sheet date, the Group had unused tax losses of US$81,858,000 (2012 US$45,596,000) available for offset
against future profits. A deferred-tax asset has been recognised in respect of US$66,273,000 (2012 US$34,674,000) of such
losses. No deferred-tax asset has been recognised in respect of the remaining US$15,585,000 (2012 US$10,922,000) 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$295,438,000 (2012 US$264,557,000). 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$75,129,000 (2012 US$82,032,000). 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$604,000 (2012 US$944,000). No asset has been recognised in
respect of these differences due to the unpredictability of future profit streams.
Page 65
Notes to the consolidated accounts
CONTINUED
NOTE 26 Retirement-benefit obligations
The Group’s only obligation relates to an unfunded, non-contributory, post-employment statutory benefit scheme in Indonesia.
A lump sum is paid to employees on retirement or on leaving the Group’s employment. This terminal benefit is accrued by the
Group and charged in the income statement on the basis of individuals’ service at the balance-sheet date. Retirement is
assumed at the earlier of age 55 years or 30 years’ service. No allowance is made for mortality or internal promotion.
2013 2012
The main assumptions used to assess the Group’s liability are: % %
Discount rate 9.00 7.00
Salary increase per annum 8.00 8.00
Reconciliation of scheme liabilities: US$’000 US$’000
Current-service cost 922 1,183
Past-service cost 29 —
Interest cost 223 237
Actuarial gains (1,238) (7)
Difference on settlement — (40)
Prior-year adjustment — 212
(64) 1,585
Less: Benefits paid out (232) (85)
Movement in the year (296) 1,500
At 1 January 4,230 2,963
Exchange differences (1,001) (233)
At 31 December 2,933 4,230
NOTE 27 Share capital
Shares of 10p each ALLOTTED, FULLY ALLOTTED, FULLY
AUTHORISED PAID AND VOTING AUTHORISED PAID AND VOTING
NUMBER NUMBER £’000 US$’000
At 1 January 2013 87,000,000 54,871,402 8,700 9,227
Issued during the year — 163,474 — 26
At 31 December 2013 87,000,000 55,034,876 8,700 9,253
At 1 January 2012 87,000,000 54,021,901 8,700 9,093
Issued during the year — 849,501 — 134
At 31 December 2012 87,000,000 54,871,402 8,700 9,227
During the year 53,790 (2012 - 760,376) 10p shares were issued as a result of the exercise of share options. In addition, a
further 109,684 shares (2012 - 89,125 shares) were issued to shareholders who elected to take scrip in lieu of cash dividends.
Total cash benefits received by the Company in respect of these allotments amounted to US$131,000 (2012 US$1,586,000).
Page 66
NOTE 28 Share-based payments
The Company has a share-option scheme for directors and selected employees of the Group. Options are exercisable at a price
equal to the quoted market price of the Company’s shares on the date of grant. The vesting period is three years. If the options
remain unexercised after a period of ten years from the date of grant, the options lapse. 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:-
2013 2012
WEIGHTED-AVERAGE WEIGHTED-AVERAGE
NUMBER OF EXERCISE PRICE NUMBER OF EXERCISE PRICE
SHARE OPTIONS (IN BRITISH PENCE) SHARE OPTIONS (IN BRITISH PENCE)
At 1 January 333,790 314.0 1,014,166 164.3
Granted during the year 70,000 502.3 80,000 483.2
Exercised during the year (53,790) 159.0 (760,376) 132.2
At 31 December 350,000 375.4 333,790 314.0
Exercisable at the end of the year 200,000 287.9 253,790 260.6
The weighted-average share price at the date of exercise for share options exercised during the period was 527p (2012 – 503p).
The options outstanding at 31 December 2013 had a weighted-average remaining contractual life of 6.4 years and exercise
prices in the range 159.5p to 520.0p. The Group recognised total expenses of US$82,000 related to equity-settled share-based
payment transactions (2012 US$23,000). The expense in respect of options granted during the year was assessed using the
Black-Scholes option-pricing model assuming that: options are exercised in the middle of the vesting period; dividend yield is
the latest annual dividend divided by the share price on the date the options are granted; share-price volatility is assessed as the
average standard deviation over one year using share prices since 1 January 1993.
Details of the directors’ share options are set out in the report of the board to the shareholders on directors’ remuneration on
page 40.
NOTE 29 Reserves
SHARE- CAPITAL- SHARE- SHARE OF FOREIGN-
PREMIUM REVALUATION REDEMPTION MERGER OPTION ASSOCIATES’ EXCHANGE RETAINED
ACCOUNT RESERVE RESERVE RESERVE RESERVE RESERVES RESERVE TOTAL EARNINGS
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
At 1 January 2013 25,137 10,892 3,896 1,056 315 67,683 (233) 108,746 233,110
Exchange differences — (1,056) — — — (9,191) 1,565 (8,682) (3,104)
Transfer from
non-controlling interests — — — — — — — — (84)
Release of deferred profit
on sale of land — (323) — — — — — (323) —
Retirement-benefit
obligations — — — — — — — — 767
Issue of shares 928 — — — — — — 928 —
Share-based payments — — — — 49 — — 49 33
Dividends from associated
undertakings — — — — — (9,764) — (9,764) 9,764
Purchase of
non-controlling interests — — — — — — — — (6,468)
Profit for the financial year — — — — — 11,594 — 11,594 8,159
Dividends paid
(see note 10) — — — — — — — — (6,787)
At 31 December 2013 26,065 9,513 3,896 1,056 364 60,322 1,332 102,548 235,390
Page 67
Notes to the consolidated accounts
CONTINUED
NOTE 29 Reserves CONTINUED
SHARE- CAPITAL- SHARE- SHARE OF FOREIGN-
PREMIUM REVALUATION REDEMPTION MERGER OPTION ASSOCIATES’ EXCHANGE RETAINED
ACCOUNT RESERVE RESERVE RESERVE RESERVE RESERVES RESERVE TOTAL EARNINGS
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
At 1 January 2012 22,974 12,468 3,896 1,056 624 68,871 64 109,953 218,929
Exchange differences — 29 — — — 1,685 (297) 1,417 (1,981)
Transfer from
revaluation reserve — (2,326) — — — — — (2,326) 2,326
Deferred tax on land —
impairment — 721 — — — — — 721 —
Retirement-benefit
obligations — — — — — — — — (192)
Issue of shares 2,163 — — — — — — 2,163 —
Share-based payments — — — — (309) — — (309) 332
Dividends from
associated undertakings — — — — — (13,755) — (13,755) 13,755
Profit for the
financial year — — — — — 10,882 — 10,882 6,803
Dividend paid
(see note 10) — — — — — — — — (6,862)
At 31 December 2012 25,137 10,892 3,896 1,056 315 67,683 (233) 108,746 233,110
The revaluation reserve relates to the revaluation surplus recognised under UK GAAP. On transition to IFRS, the Group elected
to treat the revalued amount of non-current assets as their deemed cost.
NOTE 30 Non-controlling interests
2013 2012
US$’000 US$’000
At 1 January 21,805 17,938
Share of profit in the year 3,118 3,867
Dividends paid (896) —
Share of retirement-benefit credit
charged to other comprehensive income 124 —
Transfer on sale of non-controlling interest by the Group 498 —
Transfer on sale of non-controlling interest to the Group (548) —
At 31 December 24,101 21,805
During the year the Group disposed of a non-controlling interest to a new partner in its Musi Rawas project. At the same time, it
successfully negotiated to reduce the non-controlling interest in its existing Kalimantan project.
Page 68
NOTE 31 Note to the consolidated cash-flow statement
2013 2012
US$’000 US$’000
Profit for the year 22,871 21,552
Share of associated companies’ profit after tax (11,594) (10,882)
Tax charge 946 6,030
Finance costs 3,520 3,760
Finance income (972) (1,338)
Operating profit 14,771 19,122
Biological gain (10,064) (12,053)
Planting expenditure 6,265 9,784
Disposal of non-current assets 1 207
Release of deferred profit (323) (137)
Depreciation of property, plant and equipment 5,312 5,211
Retirement-benefit obligations 892 1,500
Share-based payments 82 23
Dividends from associated companies 9,764 13,755
Operating cash flows before movements in working capital 26,700 37,412
Decrease in inventories 5,444 5,025
Decrease in receivables 1,917 164
Decrease in payables (4,458) (45)
Cash generated by operating activities 29,603 42,556
Income tax paid (6,589) (4,899)
Interest paid (3,520) (3,760)
Net cash generated by operating activities 19,494 33,897
Page 69
Notes to the consolidated accounts
CONTINUED
NOTE 32 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 the owners of the parent-Company, 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$24,638,000 (2012 US$29,299,000) as shown in note 20, and equity attributable to
the owners of the parent-Company of US$347,191,000 (2012 US$351,083,000). The board intends to fund its continuing
Indonesian expansion by a combination of the Group’s cash resources, disposal of its remaining Malaysian interests and by
securing additional borrowing.
Categories of financial instruments
All of the Group’s financial assets are classified as loans and receivables, with the exception of its other investments shown in
note 16 which are classified as available-for-sale financial assets. All of the Group’s financial liabilities are measured at
amortised cost.
In the opinion of the directors, there was no significant difference between the carrying values and estimated fair values of the
Group’s primary financial assets and liabilities at either the current, or preceding, financial year end.
Financial-risk-management objectives
The main risks arising from the Group’s financial instruments are foreign-currency, interest-rate, credit and liquidity. The board
reviews and agrees the policies for managing these risks. The policies and the impact of these risks on the Group’s balance
sheet at the end of the financial year are summarised below.
Foreign-currency risk
The majority of the Group’s operations are undertaken in Indonesia, Australia and Malaysia. The Group does not have transactional
currency exposures arising from sales or purchases by its operating units but the Group’s balance sheet can be significantly affected
by movements in exchange rates. Whilst the Group’s trading takes place in local currencies in South East Asia, relevant commodity
prices are determined in US Dollars in a world market which reduces the Group’s currency risk. The Group has a policy not to
hedge exchange-rate fluctuation and does not make use of forward-currency contracts.
The currency profile of the Group’s monetary assets, excluding trade and other receivables (the currency profile of which is given in
note 19), are as follows:
2013 2012
US$’000 US$’000
US Dollar 31,243 35,692
Indonesian Rupiah 15,620 11,641
Australian Dollar 5,143 4,349
Malaysian Ringgit 4,085 2,103
Sterling 257 972
56,348 54,757
The currency profile of the Group’s monetary liabilities, excluding trade and other payables, is shown in note 22 on page 63.
Page 70
NOTE 32 Financial instruments CONTINUED
The Group is exposed to changes in foreign-currency exchange rates. This is in relation to the impact of movements on its
non-US Dollar monetary assets, but also in relation to the consolidation of its non-US Dollar-functional-currency subsidiary and
associated undertakings. The most significant sensitivities arise in respect of movements in the Australian Dollar and Malaysian
Ringgit. Management estimates that a 10% weakening of the US Dollar against these currencies would have the following
impact on the result and net assets of its two relevant associated undertakings:
2013 2012
US$’000 US$’000
Australian Dollar
Result for the year (331) (692)
Net assets 3,443 4,525
Malaysian Ringgit
Result for the year 852 (176)
Net assets 2,743 2,450
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 to banks who have a credit rating of at least A minus.
The Group’s only financial liabilities other than short-term trade and other payables are the borrowings referred to in note 22.
The bank Treasury Bill facility is denominated in Australian Dollars and interest is charged at a variable rate linked to the
Australian base rate. The loans, denominated in Malaysian Ringgit and US Dollars, carry interest 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 10% 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, and through actively
monitoring 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 eight years. The maturity profile for financial liabilities is shown in note 24.
NOTE 33 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 page 39. The directors’ participation in the executive share-option scheme is
disclosed on page 40.
The Group received dividends from its associated companies during the year. These are set out in note 15 on page 60.
Page 71
Independent auditor’s report
TO THE MEMBERS OF M.P.EVANS GROUP PLC, PARENT-COMPANY
REPORT ON THE PARENT-COMPANY FINANCIAL STATEMENTS
OUR OPINION
In our opinion the financial statements, defined
below:
give a true and fair view of the state of the parent-
Company’s affairs as at 31 December 2013;
have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting
Practice; and
have been prepared in accordance with the
requirements of the Companies Act 2006.
This opinion is to be read in the context of what we
say in the remainder of this report.
WHAT WE HAVE AUDITED
The parent-Company financial statements (the
“financial statements”), which are prepared by
M.P. Evans Group PLC, comprise:
parent-Company balance sheet as at
31 December 2013; and
the notes to the financial statements, which
include a summary of significant accounting
policies and other explanatory information.
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).
In applying the financial-reporting framework the
directors have made a number of subjective
judgements, for example in respect of significant
accounting estimates. In making such estimates, they
have made assumptions and considered future events.
WHAT AN AUDIT OF FINANCIAL STATEMENTS
INVOLVES
We conducted our audit in accordance with
International Standards on Auditing (UK and Ireland)
(“ISA’s (UK & Ireland)”). 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.
In addition, we read all the financial and non-
financial information in the annual report to identify
material inconsistencies with the audited financial
statements and to identify any information that is
apparently materially incorrect based on, or
materially inconsistent with, the knowledge acquired
by us in the course of performing the audit.
If we become aware of any apparent material
misstatements or inconsistencies we consider the
implications for our report.
OPINION ON OTHER MATTER PRESCRIBED BY THE
COMPANIES ACT 2006
In our opinion the information given in the strategic
report and the report of the directors for the financial
year for which the financial statements are prepared is
consistent with the financial statements.
OTHER MATTERS ON WHICH WE ARE REQUIRED TO
REPORT BY EXCEPTION
Adequacy of accounting records and information
and explanations received
Under the Companies Act 2006 we are required to
report to you if, in our opinion:
we have not received all the information and
explanations we require for our audit; or
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 financial statements are not in agreement with
the accounting records and returns.
We have no exceptions to report arising from this
responsibility.
DIRECTORS’ REMUNERATION
Under the Companies Act 2006 we are required to
report to you if, in our opinion, certain disclosures of
directors’ remuneration specified by law are not
made. We have no exceptions to report arising from
this responsibility.
Page 72
OTHER INFORMATION IN THE ANNUAL REPORT
Under ISA’s (UK & Ireland) we are required to report
to you if, in our opinion, information in the annual
report is:
materially inconsistent with the information in the
audited financial statements; or
apparently materially incorrect based on, or
materially inconsistent with, our knowledge of the
company acquired in the course of performing our
audit; or
is otherwise misleading.
We have no exceptions to report arising from this
responsibility.
RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS
AND THE AUDIT
Our responsibilities and those of the directors
As explained more fully in the statement of directors’
responsibilities, 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 ISA’s (UK & 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.
OTHER MATTER
We have reported separately on the Group financial
statements of M.P. Evans Group PLC for the year
ended 31 December 2013.
Simon O’Brien (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors,
London
24 April 2014
Page 73
Parent-Company balance sheet
AT 31 DECEMBER 2013
2013 2012
NOTE US$’000 US$’000 US$’000 US$’000
Fixed assets
Tangible fixed assets (iv) 947 864
Investments (v) 31,494 31,494
32,441 32,358
Current assets
Debtors (vi) 60,322 56,854
Cash at bank and in hand 11,135 13,542
71,457 70,396
Creditors – amounts falling due
within one year (vii) (49,289) (40,125)
Net current assets 22,168 30,271
Total assets less current liabilities 54,609 62,629
Capital and reserves
Called-up share capital (viii) 9,253 9,227
Other reserves (ix) 31,759 30,782
Profit and loss account (ix) 13,597 22,620
(x) 54,609 62,629
The financial statements on pages 74 to 77 were approved by the board of directors
on 24 April 2014 and signed on its behalf by:
Tristan Price Philip Fletcher
Directors
Page 74
Notes TO THE PARENT-COMPANY BALANCE SHEET
FOR THE YEAR ENDED 31 DECEMBER 2013
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
consistently 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
The Company has not included a cash-flow statement as part of its financial statements since 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
Tangible fixed assets are stated at the historic purchase cost less accumulated depreciation. 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%.
Fixed-asset investments
Fixed-asset investments in subsidiaries are shown at cost less provision for impairment.
Debtors
These represent amounts due from Group companies in the normal course of business, are repayable on demand, unsecured
and are not interest bearing. They are stated at their nominal value.
Cash at bank and in hand
These include cash in hand and deposits held with banks with original maturities of three months or less.
Creditors
These are measured at amortised cost.
NOTE ii
Profit for the year
As permitted by section 408 of the Companies Act 2006, the Company has elected not to present its own profit and loss
account for the year. M.P. Evans Group PLC reported a loss for the year ended 31 December 2013 of US$2,269,000 (2012
profit US$10,201,000).
The auditors’ remuneration for audit and other services was US$20,000 (2012 - US$20,000).
NOTE iii Employees
2013 2012
US$’000 US$’000
Employee costs during the year
Wages and salaries 1,607 1,189
Social security costs 231 163
Pension costs 73 81
1,911 1,433
As reported in the report of the board to the shareholders on directors’ remuneration on page 39, wages and salary costs include
bonuses paid to the directors in respect of 2012 and 2013.
NUMBER NUMBER
Average monthly number of persons employed
Staff 4 4
Directors 3 3
7 7
Page 75
Notes to the parent-Company balance sheet
CONTINUED
NOTE iv Tangible assets
PLANT, EQUIPMENT
BUILDINGS AND VEHICLES TOTAL
US$’000 US$’000 US$’000
Cost
At 1 January 2013 834 247 1,081
Additions — 117 117
Disposals — (138) (138)
At 31 December 2013 834 226 1,060
Accumulated depreciation
At 1 January 2013 — 217 217
Charge for the year — 34 34
Disposals — (138) (138)
At 31 December 2013 — 113 113
Net book value
At 31 December 2013 834 113 947
Net book value
At 31 December 2012 834 30 864
NOTE v
Investments
Subsidiary undertakings US$’000
At 1 January 2013 45,190
Provision for impairment b/f and c/f (13,696)
At 31 December 2013 31,494
At 31 December 2012 31,494
The following companies are the principal direct subsidiary companies of M. P. Evans Group PLC:
COUNTRY OF HOLDING
OPERATION %
M.P. Evans & Co. Limited UK 100
Sungkai Holdings Limited UK 100
Bertam (UK) Limited UK, Australia 100
Sungkai Estates Limited UK 100
The Singapore Para Rubber Estates, Limited UK 100
Holdings are all of ordinary shares. Further information on the activity of the Group subsidiaries is given on page 78.
The directors believe the carrying value of investments is supported by their underlying net assets.
NOTE vi Debtors
2013 2012
US$’000 US$’000
Amounts owed by subsidiary undertakings 60,268 56,701
Other debtors 27 81
Prepayments and accrued income 27 72
60,322 56,854
Page 76
NOTE vii Creditors – amounts falling due within one year
2013 2012
US$’000 US$’000
Amounts owed to subsidiary undertakings 38,179 39,171
Bank loan 10,000 —
Other creditors 1,110 954
49,289 40,125
NOTE viii Called-up share capital
See note 27 to the consolidated financial statements on page 66.
NOTE ix Reserves
SHARE- CAPITAL- PROFIT
PREMIUM REDEMPTION MERGER OTHER AND LOSS
ACCOUNT RESERVE RESERVE RESERVES TOTAL ACCOUNT
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
At 1 January 2013 25,137 3,896 1,434 315 30,782 22,620
Issue of shares 928 — — — 928 —
Share-based payments — — — 49 49 33
Loss for the financial year — — — — — (2,269)
Dividends* — — — — — (6,787)
At 31 December 2013 26,065 3,896 1,434 364 31,759 13,597
* See note 10 to the consolidated financial statements on page 56.
NOTE x Reconciliation of movement in shareholders’ funds
2013 2012
US$’000 US$’000
(Loss)/profit for the financial year (2,269) 10,201
Dividends declared (6,787) (6,862)
(9,056) 3,339
Issue of shares 954 2,296
Share-based payments 82 23
Net (decrease)/increase in shareholders’ funds (8,020) 5,658
At 1 January 62,629 56,971
At 31 December 54,609 62,629
Page 77
Subsidiary and associated
undertakings
SUBSIDIARY UNDERTAKINGS
The Group has taken the exemption under section 410 of Companies Act 2006 to disclose only the details of its principal subsidiaries.
A full list of its subsidiaries will be annexed to its next annual return, which is publicly available at Companies House
(www.companieshouse.gov.uk). Details of the principal subsidiary undertakings as at 31 December 2013 are as follows:-
% OF SHARES COUNTRY OF COUNTRY OF
NAME OF SUBSIDIARY HELD INCORPORATION OPERATION FIELD OF ACTIVITY
PT Bilah Plantindo 80 Indonesia Indonesia Production of crude palm oil
and palm kernels
PT Pangkatan Indonesia 80 Indonesia Indonesia Production of crude palm oil
and palm kernels
PT Sembada Sennah Maju 80 Indonesia Indonesia Production of crude palm oil
and palm kernels
PT Simpang Kiri Plantation Indonesia 80 Indonesia Indonesia Production of crude palm oil
and palm kernels
PT Gunung Pelawan Lestari 90 Indonesia Indonesia Production of crude palm oil
and palm kernels
PT Prima Mitrajaya Mandiri 92.5 Indonesia Indonesia Production of crude palm oil
and palm kernels
PT Teguh Jayaprima Abadi 92.5 Indonesia Indonesia Production of crude palm oil
and palm kernels
PT Evans Lestari 80 Indonesia Indonesia Production of crude palm oil
and palm kernels
PT Evans Indonesia 100 Indonesia Indonesia Provision of management and
consultancy services
Gubbagunyah Partnership 100 Australia Australia Beef-cattle farming
Bertam Consolidated Rubber 100 England Malaysia Property development and
Company Limited and Wales production of oil-palm f.f.b.
Bertam (U.K.) Limited 100 England United Kingdom Beef-cattle farming
and Wales and Australia
The shareholdings in the above companies represent ordinary shares except for Gubbagunyah Partnership, which is a partnership and
so has no class of share.
ASSOCIATED UNDERTAKINGS
Details of the associated undertakings as at 31 December 2013 are as follows:-
ISSUED, FULLY-PAID % COUNTRY OF COUNTRY OF
SHARE CAPITAL HELD INCORPORATION OPERATION FIELD OF ACTIVITY
Unlisted
PT Agro Muko Rp54.578.70m 36.84 Indonesia Indonesia Production of crude 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. RM60.00m 40.00 Malaysia Malaysia Property development
Page 78
Analysis of plantation land areas
AT 31 DECEMBER 2013
The information in the following pages does not form part of the audited financial statements.
INFRASTRUCTURE/ COOPERATIVE
TOTAL CONSERVATION SCHEMES
MATURE IMMATURE PLANTED AREAS TOTAL PLANTED
HA HA HA HA HA HA
Subsidiaries – oil palm
Pangkatan 1,959 468 2,427 159 2,586 —
Bilah 2,461 395 2,856 105 2,961 —
Sennah 1,681 – 1,681 132 1,813 —
Total Pangkatan group 6,101 863 6,964 396 7,360 —
Simpang Kiri 2,242 247 2,489 165 2,654 —
Total Sumatra 8,343 1,110 9,453 561 10,014 —
East Kalimantan 8,377 1,432 9,809 3,252 13,061* 4,005*
Bangka 2,424 1,659 4,083 577 4,660* 1,969*
Total new Indonesian projects** 10,801 3,091 13,892 3,829 17,721 5,974
Total Indonesia 19,144 4,201 23,345 4,390 27,735 5,974
Total Malaysia - Bertam Estate 65 — 65 5 70 —
Total majority owned 19,209 4,201 23,410 4,395 27,805 5,974
Group share of subsidiaries’ land 16,879 3,741 20,620 4,062 24,682
Associates
Agro Muko - oil palm 16,033 1,763 17,796 3,056 20,852 620
- rubber 947 707 1,654 446 2,100 —
16,980 2,470 19,450 3,502 22,952 620
Kerasaan - oil palm 1,816 501 2,317 46 2,363 —
Total associates 18,796 2,971 21,767 3,548 25,315 620
Group share of associates’ land 6,946 1,100 8,046 1,307 9,353
Memorandum:
Subsidiaries’ land and Group
share of associates’ land 26,155 5,301 31,456 5,702 37,158
Group share of subsidiaries’ land and
share of associates’ land 23,825 4,841 28,666 5,369 34,035
NOTES
* The currently-estimated total plantable area for Group ownership is 10,600 hectares in East Kalimantan and 6,000
hectares on Bangka; for the cooperatives 4,400 hectares in East Kalimantan and 4,000 hectares on Bangka.
** In 2012, the Group acquired a concession in South Sumatra over a gross area of 20,000 hectares. It is not yet clear
how much will be plantable but the board has made an initial estimate that 10,000 hectares may be able to be
planted of which 7,000 hectares would relate to the Group and 3,000 hectares to the smallholders’ cooperative.
Page 79
5-year summary
2013 2012 2011 2010 2009
TONNES TONNES TONNES TONNES TONNES
Production
Crude palm oil 82,900 75,400 35,600 30,000 27,000
Palm kernels 16,400 14,800 8,700 7,300 6,800
Crops
Oil-palm fresh fruit bunches (“f.f.b.”)
Indonesian majority-owned estates 344,200 317,000 249,300 196,400 171,300
Indonesian associated-company estates 387,000 408,600 401,200 366,100 380,300
US$ US$ US$ US$ US$
Average sale prices
Crude palm oil – Rotterdam c.i.f. per tonne 856 998 1,123 905 680
Exchange rates
US$1 = Indonesian Rupiah – average 10,449 9,355 8,763 9,081 10,374
– year end 12,189 9,670 9,068 8,991 9,400
US$1 = Australian Dollar – average 1.04 0.97 0.97 1.09 1.28
– year end 1.12 0.96 0.98 0.98 1.11
US$1 = Malaysian Ringgit – average 3.15 3.09 3.06 3.22 3.52
– year end 3.28 3.06 3.17 3.08 3.42
£1 = US Dollar – average 1.56 1.59 1.60 1.55 1.57
– year end 1.66 1.63 1.56 1.57 1.61
US$’000 US$’000 US$’000 US$’000 US$’000
Revenue 82,186 83,213 57,756 42,091 28,391
Gross profit 24,735 23,035 25,919 21,887 11,705
Group-controlled profit before tax 12,223 16,700 24,350 19,359 15,338
US CENTS US CENTS US CENTS US CENTS US CENTS
Basic earnings per share – continuing 35.96 32.51 66.39 41.17 31.92
– continuing
and discontinued 35.96 32.51 66.39 41.17 34.94
PENCE PENCE PENCE PENCE PENCE
Dividend per share 8.25 8.00 8.00 7.50 7.00
US$’000 US$’000 US$’000 US$’000 US$’000
Equity attributable to the owners of
M. P. Evans Group PLC 347,191 351,083 337,975 307,578 275,498
Net cash generated by operating activities 19,494 33,897 48,339 19,417 12,311
Page 80
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 5 June 2014 at 12 noon for the
following purposes:-
AS ORDINARY BUSINESS
1 To receive and consider the report of the directors
and the audited consolidated financial statements
for the year ended 31 December 2013.
RESOLUTION ON FORM OF PROXY No 1
2 To re-elect Mr R M Robinow as a director.
RESOLUTION ON FORM OF PROXY No 2
3 To re-elect Mr J D Shaw as a director.
RESOLUTION ON FORM OF PROXY No 3
4 To declare a final dividend.
RESOLUTION ON FORM OF PROXY No 4
5 To re-appoint PricewaterhouseCoopers LLP as
auditors and to authorise the directors to determine
their remuneration.
RESOLUTION ON FORM OF PROXY No 5
AS SPECIAL BUSINESS
To consider and, if thought fit, pass the following
resolutions, of which resolution 6 will be proposed as
an ordinary resolution and resolutions 7 and 8 will be
proposed as special resolutions:-
6. 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 2015 and, for that
period, the Section 551 Amount is £1,834,496.
RESOLUTION ON FORM OF PROXY No 6
7. 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 2015 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 £275,174
(the section 561 amount).
RESOLUTION ON FORM OF PROXY No 7
8. That the Company is hereby generally and
unconditionally authorised to make market
purchases (within the meaning of section 693 of the
Companies Act 2006) of shares of 10p each in the
capital of the Company provided that:-
(a)
(b)
(c)
(d)
the maximum number of shares hereby
authorised to be purchased is 5,503,488;
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 2015
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
By order of the board
Claire Hayes
Company Secretary
24 April 2014
Page 81
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 or her 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 6ZZ no later than 12 noon on 3 June 2014 (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 3 June 2014 (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 24 April 2014, the Company's issued share capital
consisted of 55,034,876 shares carrying one vote each.
Therefore the total number of voting rights in the Company
as at that date was 55,034,876.
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.
Page 82
Notes
Page 83
Professional advisers
and representatives
SECRETARY AND REGISTERED OFFICE
Claire Hayes
3 Clanricarde Gardens
Tunbridge Wells
Kent TN1 1HQ
Tel: 01892 516333
Fax: 01892 518639
www.mpevans.co.uk
Company number: 1555042
INDONESIAN REGIONAL OFFICE
P.T. Evans Indonesia
Gedung Graha Aktiva, Suite 1001
Jl HR Rasuna Said Blok X-1 Kav 03
Jakarta 12950
MANAGING AGENT IN MALAYSIA
Straits Estates Sdn. Berhad
Loke Mansion
147 Lorong Kelawei
10250 Penang
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
PRINCIPAL BANKERS
AmBank Group
55 Jalan Raja Chulan
50200 Kuala Lumpur
Malaysia
Bank CIMB Niaga
Graha CIMB Niaga Lt.11
Jalan Jend. Sudirman Kav.58
Jakarta 12190
Indonesia
Commonwealth Bank of Australia
PO Box 2856,Toowoomba
Queensland 4350
Australia
HSBC Bank Malaysia Berhad
1 Leboh Downing
10300 Pulau Pinang
Malaysia
HSBC Bank PLC
105 Mount Pleasant
Tunbridge Wells
Kent TN1 1QP
NOMINATED ADVISER AND BROKER
Peel Hunt LLP
Moor House
120 London Wall
London EC2Y 5ET
SOLICITORS
Hogan Lovells International LLP
Atlantic House
Holborn Viaduct
London EC1A 2FG
Designed and printed
by Michael R. Dalby Limited
28 Quebec Way, Canada Water
London SE16 7LF
020 7394 1112
email: mrd@mrdltd.plus.com
Page 84
VENUE OF ANNUAL
GENERAL MEETING
on Thursday, 5 June 2014 at 12 noon
Tallow Chandlers’ Hall
4 Dowgate Hill
London EC4R 2SH
www.mpevans.co.uk