2015
ANNUAL REPORT
BERTAM
l SIMPANG KIRI
l MEDAN
KERASAAN
l KUALA LUMPUR
SENNAH l l BILAH
l PANGKATAN
l SINGAPORE
SUMATRA
l PADANG
BANGKA
ISLAND
l
AGRO MUKO
l
l BENGKULU
Location of the Group’s properties and
those of its associated companies
as at 31 December 2015
KALIMANTAN
l
l
SAMARINDA
NEW PROJECTS
MALAYSIA–PROPERTY
MAJORITY HELD 70 ha
MINOR ITY HELD 344 ha
l
JAKARTA
JAVA
INDONESIA–PLANTATIONS
MAJORITY HELD 25,400 ha OIL PALM
MINO RITY HELD 20,100 ha OIL PALM
AND 1,700 ha RUBBER
l DARWIN
AREA OF NAPCo
BREEDING AND
GROWING-OUT
PROPERTIES
l MOUNT ISA
AREAS OF NAPCo
BACKGROUNDING
PROPERTIES
NAPCo
FEEDLOT
BRISBANE l
SYDNEY l
MELBOURNE
l
AUSTRALIA–BEEF-CATTLE
FARMING
MINO RITY HELD 5,800,000 ha
l MAJORITY HELD HELD BY ASSOCIATED COMPANIES
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
M.P. Evans Group is committed to producing environmentally-
sustainable palm oil and adopting the highest standards of animal
welfare for its beef cattle
PORTFOLIO OF ASSETS AS AT 31 DECEMBER 2015
25,400 planted hectares of majority-held oil-palm
plantations in Indonesia plus a 60-tonne-per-hour
mill in Kalimantan and a 40-tonne-per-hour mill
in Sumatra
7,400 hectares of associated smallholder
co-operative schemes
20,000-hectare oil-palm concession in South
Sumatra – current estimate 10,000 hectares
plantable (7,000 for the Group)
21,800 planted hectares of minority-held
(of which Group’s share 8,100 hectares)
established oil-palm and rubber plantations in
Sumatra, Indonesia plus two 60-tonne-per-hour
palm-oil mills and a crumb-rubber factory
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 344 hectares
Net current assets of US$43.7 million as at
31 December 2015
LAND ASSETS BY VALUE
31 DECEMBER 2015
8%
14%
n INDONESIA
n AUSTRALIA
n MALAYSIA
78%
CONTENTS
1
Portfolio of assets
2 Group highlights
3
Summary of results
4 Managing director’s statement
6 Market information
8
Chairman’s statement
10 Strategic report, 2015
10 - Strategy
11 - Results and financial position
14 - Operations: palm oil
22 - Operations: beef cattle
25 - Operations: property
26 - Risk management
30 Environmental and social responsibility
36 Report of the directors
37 Board of directors
41 Corporate governance
45 Report of the board to the shareholders on
directors’ remuneration
48 Independent auditor’s report to the
members of M.P.Evans Group PLC
50 Consolidated income statement
51 Consolidated statement of comprehensive
income
52 Consolidated balance sheet
53 Consolidated statement of changes in
equity
54 Consolidated cash-flow statement
55 Notes to the consolidated accounts
80 Independent auditor’s report to the members
of M.P.Evans Group PLC, parent Company
82 Parent-Company balance sheet
83 Notes to the parent-Company balance sheet
87 Subsidiary and associated undertakings
88 Analysis of plantation land areas
89 5-year summary
90 Notice of meeting
92 Professional advisers and representatives
The map of the venue of the annual general
meeting is shown on the inside back cover
1
A final dividend of 8.75p per share reflects the satisfactory results
Group highlights
Group profits benefited from good results in its beef-cattle operations
in a year when palm-oil prices fell by 24%
FINANCIAL
INDONESIAN PALM OIL
Profit for the year US$25.4 million
Plantation profits lower at
(2014 US$28.3 million)
Earnings per share US cents 43.4
(2014 US cents 45.4)
Total dividend for the year maintained
US$15.1 million (2014 US$31.8 million)
as palm-oil prices weakened during year
F.f.b. crops 10% higher than 2014 despite
adverse weather conditions
at 8.75 pence per share
Extraction rates remained at very
Net cash at 31 December 2015 of
acceptable levels
US$11.5 million (2014 US$1.5 million)
Palm-oil price averaged US$622 per
AUSTRALIAN BEEF CATTLE
Sale of Woodlands completed in
November 2015
NAPCo made very substantial gain
following record cattle prices
Woodlands, prior to its sale, made good
profit as a result of the strong
cattle market
Cattle prices remain relatively strong in
early 2016 and satisfactory rainfall
received at many of NAPCo’s properties
tonne (2014 US$821) but since year
end has strengthened to around
US$720 per tonne
Progress made on the new Musi Rawas
project – over 1,000 hectares now
planted and a further 2,200 hectares
have been compensated
Group crops projected to continue rising
strongly in future years
MALAYSIAN PROPERTY
Similar profits to 2014 from two sales
of land and fewer sales of developed
properties completed than in 2014
2
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
SUMMARY OF RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2015
Revenue
Gross profit
Group-controlled profit before tax
Profit for the year
Equity attributable to the owners of M.P. Evans Group PLC
Net cash inflow generated by operating activities
Basic earnings per 10p share
Dividend per 10p share in respect of the year
2015
US$ million
2014
US$ million
72.5
15.1
6.8
25.4
300.0
20.2
90.0
31.8
24.1
28.3
291.5
29.2
US cents
US cents
43.4
Pence
8.75
45.4
Pence
8.75
3
MANAGING DIRECTOR’S STATEMENT
2015 was a year of contrast between weak palm-oil prices
and robust cattle prices
2015 was a year of contrast between weak palm-oil
prices and robust cattle prices. The Group’s cattle
property in Australia, Woodlands, was sold after a
record year’s trading. As a result of the foregoing, the
Group’s overall profit for the year was US$25.4
million, 10% lower than that recorded for 2014.
2015 was marked by the effect of the dry “El Niño”
weather conditions in the third and fourth quarters
which affected the new projects in Kalimantan and
Bangka although the established estates in Sumatra
remained largely unscathed. Notwithstanding this, the
Group crops of oil-palm fresh fruit bunches (“f.f.b.”), at
423,900 tonnes, showed a 10% increase over 2014’s
385,400 tonnes and this upward trend looks set fair to
continue for some time to come. Oil-extraction rates
remained at very acceptable levels. The associated-
company crops (Agro Muko and Kerasaan) were
similar in 2015 to the previous year.
The results of the Indonesian associated plantation
companies were similarly affected. It is pleasing to
report, however, that there has been a marked
improvement in the price since the end of the year.
Group f.f.b. crops in the first quarter of 2016 have
been ahead of the same period last year and in line
with expectations except Bangka where the 2015
El Niño event has had a negative impact.
The new Musi Rawas project in South Sumatra began
to gain some momentum in 2015 with over 1,000
hectares planted (both Group and smallholders’
co-operatives). Good progress was also made on the
infrastructure of the project.
Set against the downturn in palm-oil prices in 2015,
cattle prices in Australia were at robust levels. As a
consequence, both Woodlands (prior to its disposal)
and NAPCo achieved record results during the year.
Palm-oil prices weakened during 2015 with the
consequence that, despite the improved crops referred
to above, the gross profit from the Indonesian
operations fell sharply (by 53%) compared with 2014.
Bertam Properties had another successful year
with some 370 (2014 – 410) developed properties,
and two pieces of raw land, sold. A similar profit
was recorded.
Oil-palm nursery on new Musi Rawas project
4
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
On a personal note, I shall be stepping down from my
position as managing director at the annual general
meeting on 10 June 2016. The board has asked me to
stay on as a non-executive director and I have been
pleased to agree to this.
I joined the Group 34 years ago in 1982. Since that
time the structure of the Group has changed almost
beyond recognition as have the operating assets, now
concentrated in Indonesia and Australia. It has been a
pleasure working with my colleagues on the board,
the staff in the UK head office, our president director
in Indonesia, Chandra Sekaran, and his management
team there, the management teams in Australia and
Malaysia as well as the staff and workforces in those
countries. I should like to thank them all for their hard
work, loyalty and professionalism which made my job
considerably easier.
Philip Fletcher
Managing director
I should also like to thank the shareholders, many of
whom have held their shares for a long time, for their
support and encouragement. Peter Hadsley-Chaplin is
continuing as chairman and Tristan Price has been
appointed Group managing director. In addition,
Matthew Coulson has recently been appointed as chief
financial officer. I have full confidence that they will
manage the Group effectively and take it forward to an
exciting and prosperous future.
I look forward to continuing to work with them and
the other members of the board in my non-executive
capacity.
Philip Fletcher
Managing director
21 April 2016
5
MARKET INFORMATION
Palm oil
During 2015 the average palm-oil price (Rotterdam c.i.f.) continued on the downward path that began in
early 2014. The average crude-palm-oil (“CPO”) price in 2015 was US$622 per tonne, 24% lower than
the 2014 average price of US$821 per tonne. The price remained stable at around US$650 per tonne
during the first half of the year but then declined sharply to just under US$500 at end of August as
plentiful supplies of soybean and other vegetable oils and rising vegetable-oil stocks, adversely affected
market sentiment.
More importantly, a low world mineral-oil price reduced the demand for palm-oil based biodiesel.
However, the CPO price recovered quickly as dryness in South East Asia limited output growth, notably
in the fourth quarter, to trade at between US$550 and US$600 per tonne for the remainder of the year.
Since the beginning of 2016 the CPO price has strengthened to reach a level of US$720 per tonne.
CRUDE-PALM-OIL PRICE
US$ per tonne, Rotterdam c.i.f.
1,600
1,400
1,200
1,000
800
600
400
200
2011
2012
2013
2014
2015
2016
D
L
R
O
W
L
I
O
:
E
C
R
U
O
S
F.F.B.CROPS – ‘000 TONNES
MAJORITY-OWNED ESTATES IN INDONESIA
ASSOCIATED-COMPANY ESTATES
344
317
249
424
386
382
387
387
409
401
0
20
40
60
80
100
120
140
160
180
200
220
240
260
280
300
320
340
360
380
400
420
440
2015
2014
2013
2012
2011
2015
2014
2013
2012
2011
6
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
Beef cattle
Australian beef-cattle prices continued to rise strongly
in 2015, both for backgrounded grass-fed cattle
(Woodlands) and heavier, grain-finished cattle
(NAPCo). The strength is attributable to the continuing
reduction in the size of the Australian cattle herd, and
that in the US, coupled with sharpening demand from
Asia. Prices remain relatively firm in 2016.
Australia is one of the world’s largest beef exporters
with some 19% by weight of world exports.
Australia is well placed geographically to serve
Asia – the world’s fastest-growing beef consumer.
NAPCo (34.4% held) is one of Australia’s leading
beef-cattle companies with thirteen properties
covering an area of 5.8 million hectares.
EASTERN YOUNG CATTLE
INDICATOR (EYCI) – WOODLANDS
A$ per kg carcass weight
8.0
7.0
6.0
5.0
4.0
3.0
2.0
2011
2012
2013
2014
2015
2016
100-DAY SHORTFED CATTLE
– NAPCo
A$ per kg carcass weight
6.5
5.5
4.5
3.5
2.5
2011
2012
2013
2014
2015
2016
7
AGE PROFILE OF THE GROUP’S OIL PALMS
31 DECEMBER 2015
SUBSIDIARIES – AVERAGE AGE 8.3 YEARS
Age in years
<5
6-10
11-15
16-20
21-25
>25
<5
6-10
11-15
16-20
21-25
>25
0
10
20
30
40
50
60
ASSOCIATES – AVERAGE AGE 13.8 YEARS
Age in years
0
10
20
30
40
50
60
MAIN PRODUCERS OF PALM OIL – 2015
9
1
1
,
1
,
4
,
2
0
8
7
3
3
3
8
7
5
19,962
33,400
Thousand tonnes
n INDONESIA 33,400 (53%)
n MALAYSIA 19,962 (32%)
n THAILAND 1,833 (3%)
n COLOMBIA 1,273 (2%)
n NIGERIA 940 (2%)
n OTHER COUNTRIES
5,105 (8%)
TOTAL 62,513
MAIN USERS OF PALM OIL – 2015
7
3
7,3
19,128
0
7
1,0
1,6 8 3
2,390
4
3
2,5
7
1
9
,
2
5
,
8
5
8
9 , 2 0 6
7,2
0
0
Thousand tonnes
n INDIA 9,206 (15%)
n INDONESIA 7,337 (12%)
n EU 7,200 (12%)
n CHINA 5,858 (9%)
n MALAYSIA 2,917 (5%)
n PAKISTAN 2,534 (4%)
n NIGERIA 2,390 (4%)
n THAILAND 1,683 (3%)
n USA 1,070 (2%)
n OTHER COUNTRIES
20,733 (34%)
TOTAL 60,928
%
28
49
7
4
5
7
%
20
12
10
35
8
15
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
CHAIRMAN’S STATEMENT
The new oil-palm project in South Sumatra, Musi Rawas, began to
take on some momentum in 2015 and some 1,000 hectares were
planted by the end of the year
RESULTS
Despite the 24% decline in the price of the Group’s
principal commodity, palm oil, and chiefly as a result
of the sharp increase in the Australian cattle market,
the profit for the year declined by only 10% to
US$25.4 million, compared with US$28.3 million in
2014. Earnings per share fell by 5% to US cents 43.4
(2014 US cents 45.4).
The effects of the reduction in the palm-oil price
were also mitigated by a 10% increase in the Group’s
Indonesian f.f.b. crops to 423,900 tonnes. The higher
crop level was mainly attributable to the continuing
increase from the Group’s two new projects on Bangka
Island and in East Kalimantan, although there was a
pleasing increase too from the Group’s established
Sumatran estates.
Crop levels achieved by the Group’s two associated
Indonesian palm-oil companies were similar to last year
but their profits were significantly lower following the
palm-oil price decline. This drop in price, to an average
of US$622 per tonne from US$821 per tonne, resulted
from a number of factors, the principal of which appear
to have been the decline in the biodiesel market,
following the strong fall in the mineral-oil price, and a
build up of global vegetable-oil stocks. Fortunately,
the price has staged a partial recovery in the early part
of 2016.
With regard to the Group’s Australian operations, both
Woodlands (prior to its sale in late 2015) and the Group’s
associate, The North Australian Pastoral Company Pty
Limited (“NAPCo”), enjoyed substantially-higher profits
owing to the increasingly-strong cattle market during
2015. This strength resulted from continuing high Asian
demand for beef, assisted by the softening of the
Australian Dollar, and a tightening of the supply of
cattle following the ongoing reduction in the size of
both the Australian and US cattle herds. In Malaysia,
the Group’s share of the profit achieved by Bertam
Properties Sdn. Berhad (“Bertam Properties”) declined a
little, notwithstanding that property development and
sales continued at a healthy level. Overall, as a result of
the sharply-improved result at NAPCo, the Group’s share
of its associated companies’ profits increased by 28%.
DIVIDEND
The board recommends that the final dividend for the
year is maintained at 6.50p per share. Together with
the interim dividend of 2.25p per share paid in
November 2015 (the same as in November 2014) the
total dividend for the year is therefore maintained at
8.75p per share. A scrip-dividend alternative is again
being offered.
STRATEGY
The Group’s 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 palm-oil
development. The strategy is set out in more detail in
the strategic report on page 10.
KEY OPERATIONAL DEVELOPMENTS
As referred to above, despite some adverse weather
conditions during the year, f.f.b. crops continued their
upward trend with an overall 10% increase over 2014
with extraction rates, although a little lower than in
the previous year, remaining at impressive levels.
Good progress was made during the year with the
construction of the new mill on the Bangka project.
As at the date of this report, the mill is in the process
of being commissioned and is expected to be fully
operational by the end of the second quarter of 2016.
The new oil-palm project in South Sumatra, Musi Rawas,
began to take on some momentum in 2015 and some
1,000 hectares (relating to both the Group’s own areas
and those of the associated smallholders’ co-operatives)
were planted by the end of the year. The project is still
at a very early stage but it remains the board’s estimate
that, of the 20,000-hectare concession, the Group may
be able to plant 7,000 hectares for itself and 3,000
hectares for the smallholders’ co-operatives.
On the Bangka project, some 1,400 hectares (relating to
both the Group’s own areas and those of the associated
smallholders’ co-operatives) were planted during the
year. With over 8,300 hectares planted as at the end of
2015, the project is heading towards completion. Only
a small area (approximately 100 hectares) was planted
on the Kalimantan project. The final area to be planted
will not be committed until the flood-protection bunds
and pumping stations are completed and operational.
BIOLOGICAL ASSETS
This annual report includes the Group’s results and
financial position using the amended International
Accounting Standard 41 (“IAS41”) on biological assets.
The Group was pleased this amendment removed the
obligation to account for its oil palms at a valuation,
instead recording them in the accounts at depreciated
cost much like any other manufacturing facility.
8
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
Peter Hadsley-Chaplin
Chairman
However, the Group’s auditor has a different
interpretation to that of the board regarding the
valuation of f.f.b. still growing on the palms, which has
to be considered separately for the first time. Taking into
account their advice regarding interpretation of IAS 41,
the Group has adopted a policy for its statutory
reporting of including in its financial statements an
estimated valuation of partly-formed f.f.b. prior to
harvest, notwithstanding that different defensible
methodologies will give widely differing valuations and
that users of financial statements tend to find fair-value
information for this type of asset of limited use, not least
because of the potential for manipulation and the
degree to which assumptions vary significantly between
companies. This policy will be kept under review.
PROSPECTS
Because of the El Niño phenomenon experienced in the
second half of 2015, f.f.b. crops may well be adversely
affected, particularly on the new projects in Kalimantan
and Bangka, in the middle of 2016. It is a little early to
determine at this stage the extent of this impact.
Overall, however, the upward trend of crops is expected
to continue over the coming years.
Palm-oil prices weakened significantly in 2015 but it is
pleasing to report that there has been a marked
improvement in the first quarter of 2016. The board is
of the view that palm oil, because of its high yield and
low cost of production, is well placed to continue to
benefit from increasing demand for vegetable oil and
the outlook, therefore, remains encouraging.
In Australia, an encouraging start has been made to
2016 with significant rainfall recently received on many
of NAPCo’s properties, while cattle prices remain at
historically-strong levels. NAPCo is now the Group’s
sole Australian investment and the board has continued
to review any potential strategic opportunities with
regard to this holding.
BOARD CHANGES AND APPOINTMENT OF
CHIEF FINANCIAL OFFICER
As announced on 31 March 2016, there are a number
of changes to the board proposed to take effect from the
conclusion of the annual general meeting on 10 June
2016. I should like to add one or two comments:
Philip Fletcher
Philip, who will be stepping down as the Group
managing director, has worked for the Group for 34
years. He has played a crucial role in its leadership and
helped to effect a number of mergers within the Group.
In the last decade, he has steered the Group through
seminal strategic changes, including the switch from
irrigated cotton to beef cattle in Australia, the sale of the
majority of the Group’s Malaysian portfolio of
plantations and the substantial expansion of the Group’s
oil-palm operations in Indonesia.
I should like, on behalf of the board, to express my
thanks to him for his invaluable contribution to the
Group over so many years. I am delighted that he has
agreed to remain on the board as a non-executive
director, so that we may continue to reap the benefit of
his considerable knowledge and experience.
Tristan Price
I am delighted too that Tristan, the current Group finance
director, will be taking over as the new Group managing
director. He has played a major part in effecting the
changes that have taken place since the time he joined
the Group some ten years ago. My colleagues on the
board and I believe he is eminently qualified to lead the
Group to continuing success in the future.
Bruce Tozer
Bruce has a wealth of experience in the agribusiness
sector. My colleagues and I are very pleased that he
has agreed to join the board as an independent, non-
executive director, subject to shareholders’ approval at
the annual general meeting on 10 June 2016, and
believe that he will make a valuable contribution to the
board’s deliberations.
Matthew Coulson
I am very happy that, in addition to the proposed board
changes, Matthew Coulson, who has worked for
Deloitte LLP as an audit director, has agreed to join the
Group as chief financial officer on 1 May 2016.
ACKNOWLEDGEMENTS
First, I should like to thank Michael and Patty Wright
for their excellent management of Woodlands over the
seventeen years that the Group has owned it. We wish
them well in their future endeavours.
In addition, I should like to express the board’s
appreciation to all the Group’s managers, staff and
workers worldwide for their dedication and hard
work and for contributing to another year of progress
for the Group, despite difficult conditions in the
palm-oil market.
Peter Hadsley-Chaplin
Chairman
21 April 2016
9
STRATEGIC REPORT 2015
Strategy
The Group’s 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 palm-oil development
The Group’s principal, majority-held, activity is the
ownership, management and development of
sustainable oil-palm estates in Indonesia (together with
the management and development of smallholder
areas adjoining the new projects). The Group also has
a joint venture in the oil-palm sector in Indonesia
and a substantial minority holding in a company
operating in the beef-cattle sector in Australia. In
addition to these, in Malaysia, 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.
The total planted area of the Group’s majority-held
Indonesian operations extends to approximately
25,400 hectares, 1,400 of which were planted on its
new projects during 2015. The planted smallholder
areas adjoining the new projects amount to 7,400
hectares, 1,100 of which were planted in 2015. The
estimated unplanted land bank is some 7,600
hectares, including the new Musi Rawas project, on
the Group’s estates and some 4,000 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 land bank, 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 Group will also seek
continually to maintain and, where possible, improve
agronomic standards and productivity on its estates
with a view to increasing crops of f.f.b. and production
of CPO. Furthermore, the Group will continue to work
closely with its joint-venture partner, SA SIPEF NV
(“SIPEF”), with regard to the two associated estates
which SIPEF manages, to ensure that the highest
standards are achieved.
In Australia, with regard to Woodlands, it was the
board’s aim, after substantial improvements had been
made to the property, to dispose of it once a suitable
opportunity arose. Following the strong cattle market
in 2015, an acceptable offer to purchase the property
was received and completion duly took place in
November 2015. Woodlands is shown as a
discontinued operation. This now leaves NAPCo as
the Group’s sole investment in Australia. The board has
continued to review any potential strategic
opportunities with regard to this 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, in an estimated
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 from
Malaysia entirely.
10
Fleet of CPO tankers at Kalimantan mill
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
Results and financial position
GROSS PROFIT FROM AGRICULTURAL ACTIVITIES
Despite increased f.f.b. crops in Indonesia from both
the Group’s own areas and the associated
smallholder co-operatives, the marked weakening of
palm-oil prices during 2015 resulted in revenues
19% lower, at US$72.5 million compared with
US$90.0 million in 2014. The average palm-oil price
(Rotterdam c.i.f.) in 2015 was US$622 per tonne,
US$199 (24%) lower than the average in 2014 of
US$821. The cost of production of palm product
(CPO and palm kernels) continued to fall, partly as a
result of higher utilisation in the two mills
(Kalimantan and Pangkatan) and partly as a result of
the continuing strengthening of the US Dollar against
the Indonesian Rupiah. A strengthening US Dollar
has the effect of reducing local, Rupiah-based,
operating costs in US Dollar terms. The combined
operating cost of the two mills was US$350 per tonne
of palm product compared with US$370 in 2014.
As a result of the lower palm-oil prices in 2015 the
Indonesian gross-profit margin fell in 2015 to 20.8%
compared with the 35.4% achieved in 2014.
Commencement of the operation of the new Bangka
Mill is expected to improve the margin from the
Bangka project.
The gross margin has been particularly badly affected
on the Group’s new projects, notably in Kalimantan
where the relatively high level of field maintenance
and fertilizer cost magnified the loss of margin due to
the lower CPO price compared with the established
estates in North Sumatra.
As a result of the above, the Group’s gross profit on
continuing activities amounted to US$15.1 million
(2014 US$31.8 million). A detailed analysis is given
in note 4 to the consolidated accounts on pages 60
and 61. The Group’s palm-oil and beef-cattle
operations are reviewed in more detail in the section
on operations below, commencing on pages 14 and
22 respectively.
historical cost rather than as a ‘biological asset’
valued on the basis of discounted projected future
cash flows. This new measurement is consistent with
the way in which the Group reported prior to the
adoption of IAS41 and reflects the board’s view that
investing in a plantation is similar to constructing a
factory but where the machinery is biological rather
than mechanical. All of the Group’s financial
statements since the adoption of IFRS have presented
audited figures both including and excluding the
oil-palm bearer-biological-asset adjustment. The
Group retains its plantations which remain as
productive as previously but, since the biological
valuations produced under IAS41 exceeded the cost
of those plantations, the effect of adopting the
amendment is to reduce the Group’s reported
book value of net assets at 31 December 2014 by
US$88.5 million to US$311.8 million.
The amended IAS41 also covers growing f.f.b. before
they are harvested. Inclusion in the financial
statements is required “when, and only when, they
are reliably measurable”. The standard presumes the
value of growing bunches is always measurable at
the point of harvest. It also encourages those
encountering practical difficulty in measuring crop,
such as growing f.f.b., to consider whether they are
exempt from estimating their value, noting that
clearly-unreliable measurement justifies their
exclusion from the financial statements. In common
with universal industry practice, f.f.b. prior to harvest
have never been included in any of the Group’s
internal reporting and are not incorporated in the
board’s decision making. The board is also aware that
different defensible methodologies will give widely
differing valuations and that users of financial
statements tend to find fair-value information for this
type of asset of limited use, not least because of the
potential for manipulation and the degree to which
assumptions vary significantly between companies.
BIOLOGICAL ASSETS
The International Accounting Standards Board
(“IASB”) issued an amendment to International
Accounting Standard 41 Biological Assets (“IAS41”)
in June 2014 which was endorsed by the European
Union in November 2015. As foreshadowed in the
2014 annual report, the Group has adopted this
amendment with effect from 1 January 2015 (see
notes 3(c), 3(j) and 3(s)(i)). From the beginning of
2015, palms have been accounted for at depreciated
Taking into account the advice of its auditor
regarding interpretation of IAS 41, the Group has
adopted a policy for its statutory reporting of
including in its financial statements an estimated
valuation of partly-formed f.f.b. prior to harvest
(see notes 3(j) and 3(s)(i)). The effect of this has been
to reduce profit in the year by US$0.2 million
(2014 US$0.4 million loss) and increase current and
net assets by US$0.9 million at 31 December 2015
(2014 US$1.1 million).
11
STRATEGIC REPORT 2015 CONTINUED
FOREIGN-EXCHANGE LOSSES
A significant foreign-exchange loss was incurred on
the Group’s cash and other current assets held in
Indonesian Rupiahs and Malaysian Ringgits as these
two currencies depreciated against the US Dollar.
As well as US$10.4 million of cash denominated in
Rupiahs and Ringgits at the end of 2015, the Group
balance sheet included US$14.9 million recoverable
from the smallholder co-operative schemes attached
to its new projects that is denominated in Indonesian
Rupiahs and so gives rise to exchange differences.
OTHER ADMINISTRATIVE EXPENSES
Other administrative expenses of US$2.8 million
were US$1.8 million lower than the US$4.6 million
reported in 2014. Most of this fall is due to the
reversal in 2015 of US$1.0 million of provisions
recorded some years ago against the possibility that
tax credits arising in the Group’s operating
subsidiaries would prove to be not recoverable. Also,
during the period under review Sterling depreciated
by some 7% against the US Dollar, reducing the
reported cost of the Group’s UK head-office
operation in US Dollar terms.
ASSOCIATED COMPANIES
Indonesia
As has been mentioned in previous annual reports,
due to the enhanced replanting programme, the f.f.b.
crop of PT Agro Muko (“Agro Muko”) is expected to
remain at, or possibly slightly below, the levels that
have been achieved over the last two or three years.
This has again been the case in 2015. Crops are
expected to increase in the future as the areas recently
replanted, and to be replanted over the next few years,
mature and begin their upward yield trend. The oil
and kernel-extraction rates improved slightly and, as a
result, CPO production in 2015 was marginally ahead
of that in 2014. The weakening palm-oil prices in
2015 referred to above which negatively affected the
Group’s own majority-owned operations had a similar
impact on the results of Agro Muko.
Agro Muko’s rubber crop improved in line with
expectations but the rubber market proved to be very
weak during 2015. This was due to increasing supply
from Vietnam and Africa and a fall off in demand,
particularly from China, as the price of synthetic
rubber fell in line with the mineral-oil price.
As a result of the weak palm-oil and rubber markets,
the Group’s share of Agro Muko’s post-tax results in
2015 amounted to US$5.1 million compared with
US$9.9 million in 2014.
The f.f.b. crop of PT Kerasaan Indonesia (“Kerasaan”)
was virtually identical to that for 2014. As a result
of the weakness of the palm-oil market in 2015
referred to above, the Group’s share of the results in
2015 was US$0.7 million which compares with
US$1.1 million in 2014. The Group’s combined
share of the post-tax results in 2015 of these two
associated companies accordingly amounted to
US$5.8 million (2014 US$11.0 million). In 2015,
the Group received gross dividends of US$5.5 million
from Agro Muko (2014 US$9.2 million) and
US$0.6 million from Kerasaan (2014 US$0.9 million).
Australia
Despite indifferent weather conditions during the
year, in terms of head of cattle, NAPCo’s sales and
closing herd were similar to those in 2014. The
significant improvement in NAPCO’s results
compared with the previous year arose from much
higher cattle prices: at the end of 2015 the price for
NAPCo’s cattle was some 30% higher than it had
been at the beginning of the year following good
export demand and restricted domestic supply.
Furthermore, average cattle weights for steers were
very similar at the end of 2015 to where they stood a
year earlier, and those for heifers were only a little
lower. The combination of these effects led to a
significant increase in the valuation of NAPCo’s
cattle, which very positively affected its profit for the
year. As a result of these factors, the Group’s share of
NAPCo’s profit rose to US$11.0 million (2014
US$1.5 million). The Group’s share of NAPCo’s gross
dividends was US$0.5 million (2014 US$0.4 million).
12
Malaysia
Property-development revenues fell by 9% during
2015, reflecting a similar reduction in the number of
properties sold. However, Bertam Properties was able
to maintain its gross-profit margin on these sales and
lower overheads incurred in 2015 than in the
previous year resulted in a US$6.2 million profit on
this activity: a 20% reduction, although only a 4%
fall in local-currency terms.
Unlike in 2014, when there were no such sales, two
pieces of land were sold in 2015 at a profit of
US$1.0 million. The remaining, residual, plantation
operation and the golf club returned small losses.
Overall, the Group’s share of Bertam Properties’
profit for the year amounted to US$2.8 million
(2014 US$2.9 million). Its share of Bertam
Properties’ gross dividends was US$0.9 million
(2014 US$1.2 million).
PROFIT FOR THE YEAR
As a result of all of the above, the Group’s profit for
the year amounted to US$25.4 million, a reduction of
US$2.9 million compared with the US$28.3 million
reported in 2014.
NET ASSETS AND BORROWING
At the end of 2015, the Group’s net assets amounted
to US$321.6 million (2014 US$311.8 million).
Current assets exceeded current liabilities by
US$43.7 million, a significant increase over the
US$28.6 million reported at the end of 2014 owing
to a reduction in the Group’s short-term borrowings
at the end of the year following the sale of the
Woodlands cattle operation.
At 31 December 2015, the Group had cash balances
of US$44.2 million (of which US$18.4 million had
been pledged as security). At this date, the Group’s
gearing ratio was 9.2% and it held a net-cash balance
of US$11.5 million (2014 US$1.5 million).
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
Harvesting f.f.b.
NAPCo’s Alexandria station following beneficial rain
CPO tanks at Kalimantan bulking station
13
OPERATIONS
Palm oil
Growth in the world production of palm oil continued, albeit at
a slightly lower pace than in 2014
PALM-OIL MARKET
2015 was a year in which palm-oil prices fell
throughout most of the year. Ample supplies of
soybean, sunflower and rapeseed oil exerted
downward pressure on palm-oil prices during 2015,
as did the weakness of world mineral-oil prices. The
low mineral-oil price made palm-oil-based biodiesel
uneconomic and production in Indonesia dropped
sharply. Consumption of palm oil in Indonesia was
accordingly curbed markedly and, as a result, more
was diverted to export markets, contributing further to
downward price pressure.
Growth in world production of palm oil continued,
albeit at a slightly lower pace than in 2014. The dry
period experienced in parts of Indonesia in the
middle of 2015 began to have an effect on production
in the last quarter and there is likely to be a further
impact in 2016 which may provide support for
palm-oil prices.
The discount of palm-oil prices to soybean oil widened
during the year from around US$100 per tonne to over
US$130. This improved competiveness led to a sharp
increase in exports of palm oil, notably to India.
Palm-kernel-oil prices largely followed palm oil but
were quite volatile in the last quarter of the year due
to the tension between low CPO prices and high
coconut-oil prices.
MAJORITY-OWNED ESTATES
CROPS AND PRODUCTION
Despite some difficult weather conditions experienced
in parts of Indonesia, the upward trend of crops
continued. The overall Group f.f.b. crop for 2015
amounted to 423,900 tonnes, an increase of 10%
over the 385,400 tonnes harvested in 2014.
The crop in Kalimantan continued to increase.
The first half of 2015 was adversely affected by the dry
period in the second half of the previous year, resulting
in only a modest improvement in the crop when
compared with the first half of 2014. The crop was
expected to increase markedly in the second half of
2015 which it did but another acute dry period, an
El Niño phenomenon, restricted the expected increase.
As a result, the crop for the full year was 164,500
tonnes, 3% higher than the 160,200 tonnes recorded
in 2014, a more modest increase than had been
experienced in earlier years. It is likely that the 2015
El Niño event may impact negatively on the crop in
the middle of 2016.
The 2015 crop on the Bangka project recovered from
the drought-affected years of 2013 and 2014 and, at
66,300 tonnes, was in line with expectations and was
55% higher than the 42,700 tonnes recorded in 2014.
The El Niño phenomenon also affected Bangka during
2015 and, as in Kalimantan, the effects of this may
well be felt during 2016.
Crops in 2015 on the established Sumatran estates, at
193,100 tonnes, returned to their 2013 levels after the
drought-affected 2014 (182,500 tonnes). Fortunately,
the El Niño conditions did not seem to affect the
Group’s Sumatran estates in the same way that other
parts of Indonesia were affected.
Although slightly lower than in the previous year, oil-
extraction rates continued at very acceptable levels in
2015. The Kalimantan mill continued to achieve rates
of over 25%. The average rate in 2015, at 25.1% was
slightly lower than 2014’s 25.6% partly due to weather
conditions and partly due to a marked increase in
third-party fruit purchased. The average rate in the mill
on Pangkatan Estate fell, as expected, since, in 2014,
third-party fruit was purchased from other estates -
see further comment below under “Sumatra -
established estates”.
14
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
Maturing oil palms on Bangka
Details of crops, production and extraction rates for 2015,
with comparative figures for 2014, are set out below:-
REVIEW OF OPERATIONS
2015 INCREASE 2014
TONNES % TONNES
Crops
Own crops
Pangkatan group 148,900 140,400
Simpang Kiri 44,200 42,100
193,100 6 182,500
Kalimantan 164,500 3 160,200
Bangka 66,300 55 42,700
423,900 10 385,400
Smallholder co-operative crops
Kalimantan 70,400 9 64,500
Bangka 30,300 36 22,200
100,700 16 86,700
Outside crop purchased
Kalimantan 21,400 37 15,600
Pangkatan 16,300 — —
Production
Crude palm oil
Kalimantan 64,300 5 61,500
Pangkatan 37,900 13 33,500
102,200 8 95,000
Palm kernels
Kalimantan 11,000 9 10,100
Pangkatan 9,600 16 8,300
20,600 12 18,400
Extraction rates % %
Crude palm oil
Kalimantan 25.1 25.6
Pangkatan 23.0 23.9
Palm kernels
Kalimantan 4.3 4.2
Pangkatan 5.8 5.9
Sumatra – established estates
The four established estates in Sumatra continue to be
well run at low cost and are improving year by year.
Their location can be seen on the map on the inside
front cover. As referred to above, the El Niño
phenomenon largely left the established estates
unaffected and crops for the whole year were slightly
ahead of expectations. Crops in 2014 were affected
by dry weather, particularly in the second half of that
year and this effect continued into the first half of
2015. However, unlike in 2014 when the crop in the
second half of the year was similar to that in the first
half, in 2015 more normal conditions returned and the
crop in the second half was significantly higher than in
the first.
Reference has been made in previous annual reports
to two of the established estates, Bilah and Simpang
Kiri, having been set up in the 1980’s and now
reaching the stage when significant areas need to be
replanted. Yields on the older areas are falling and the
replanting programme is now well under way.
This programme will continue for the next six or seven
years and crops are expected to remain, in total, at, or
around, current levels until the replantings mature and
yields again start to accelerate. During 2015, 230
hectares were replanted on Bilah Estate, 159 hectares
on Sennah Estate and 176 hectares on Simpang Kiri
Estate, totalling 565 hectares. Over the next few years,
the programme is to replant between 350 and 600
hectares each year. Only high-quality planting
material (seeds) is used.
The oil-extraction rate achieved by Pangkatan Mill
(which processes the f.f.b. from Pangkatan, Bilah
and Sennah Estates) continued during 2015 at an
acceptable average rate of 23.0%. This was lower than
the 23.9% in 2014 but, as foreshadowed in previous
15
OPERATIONS Palm oil CONTINUED
annual and interim reports, f.f.b. were purchased from
outside sources in 2015. The mill has surplus capacity
but, as there is fierce competition in the area of the
mill for f.f.b., it was decided to seek to purchase fruit
only during the period of peak production, which is
mainly in the third quarter of the year. Inevitably,
despite attempts to ensure that purchased fruit is of
an adequate standard, it is unlikely to reach the high
standards achieved on the Group’s estates and
therefore the overall extraction rate falls. This,
however, is taken into account in the price paid to
the suppliers of fruit. During 2015, 16,300 tonnes
of outside f.f.b. were purchased. This provided useful
utilisation in the mill, thereby reducing fixed costs per
tonne in a year when palm-oil prices were at lower
levels than had been experienced in recent years.
During the year, close co-ordination on the Group’s
own areas between the mill and the field ensured that
fruit of the optimum quality and ripeness was
delivered to the mill for processing. High standards
continue to be required in the mill with regard to
extraction rates, oil quality and the minimisation of
oil losses.
The low-quality planting material on part of Sennah
Estate which was known about when the estate was
purchased in 2002 has held back, to a minor extent,
the overall extraction rate in Pangkatan Mill. These
areas are in the process of being planted with modern,
high-yielding seeds and the programme is expected to
be completed by 2018. Once these areas mature and
start producing fruit, the overall extraction rate in
Pangkatan Mill is expected to improve.
Management has been unable to agree terms on
which to sell electricity to the Indonesian Government
electricity board (PLN). Investment in plant to capture
methane and burn it in a gas engine will not be made
until acceptable terms can be agreed.
Pangkatan Mill has been accredited by the
International Round Table on Sustainable Palm Oil
(RSPO), Indonesian Sustainable Palm Oil (ISPO) and
International Sustainability and Carbon Certification
(ISCC). Successful “surveillance” audits were carried
out for all three during 2015. Because purchases
were made from third-party, uncertified sources
during the year, only the proportion of production
that relates to the Group’s own certified areas can
be regarded as certified and sold as such under the
“mass-balance” system.
During the year, credits for both CPO and palm
kernels were sold through a marketing platform with
those for palm-kernel oil (and therefore for palm
kernels) remaining stronger than CPO. Premia were,
at various points in the year, received from buyers of
RSPO-accredited oil and also for good-quality CPO
with low levels of free fatty acid (“f.f.a.”). Management
is reviewing possibilities with regard to improving the
premia available from selling accredited oil.
Sumatra – Musi Rawas project
The planting programme began to gain some
momentum during 2015. During the year, some
1,030 hectares were planted, of which 750 related to
the Group and 280 to the smallholders’ co-operatives.
Compensation terms on a further 2,200 hectares had
been agreed and paid by the end of the year.
Good progress was made during the year with the
infrastructure on the project such as roads and
buildings, including housing for staff and workers,
offices and storage facilities. A full management
team is in place and the workforce is drawn from the
local community on a contract basis at this early
stage of the development of the project. As the
project matures, workers will be taken on on a
permanent, full-time basis as and when required.
The soil, the land (largely flat with low undulations)
and rainfall are ideal for oil-palm cultivation.
The board continues to estimate that 10,000 hectares
(7,000 for the Group and 3,000 for the smallholders’
co-operatives) might ultimately be able to be planted
although it is very difficult at this early stage to be
certain what will be available. Much will depend
upon the Group’s ability to agree acceptable terms
with the occupants of the land. The Group has
undertaken to develop 30% of the planted land for
the smallholders’ co-operatives. The members of the
co-operatives will be those who have agreed to sell
their rights on the land to the Group.
Kalimantan
As referred to above under “Crops and production”,
the f.f.b. crop was 3% higher at 164,500 tonnes
(2014 -160,200 tonnes). Although the crop trend is
still upwards, the increase was more modest in 2015
compared with earlier years due to adverse (dry)
weather conditions both in the second half of 2014
and in the second half of 2015.
16
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
Close co-ordination continues between the mill and field
management on the Group’s own estates
Reversing the trend of recent years, f.f.b. purchased
from third parties increased in 2015 to 21,400 tonnes
from 15,600 tonnes in 2014. This provided useful
extra income at a time when the Group’s own crop
was negatively affected by an acute dry period. The
increase in the purchase of third-party fruit inevitably
reduced the overall extraction rate to a minor extent
but the lower extraction rate achieved from bought-in
fruit is reflected in the price paid for it. Close co-
ordination continues between the mill and field
management on the Group’s own estates. Good-
quality fruit of the correct ripeness is delivered from
the field and high standards are maintained in the mill
to obtain good extraction rates, minimum oil losses
and good-quality oil.
The project is nearing completion and most of the
remaining plantable land is in the area behind the
flood-protection bunds currently under construction.
Accordingly, as the bund-building programme is
currently under way, planting during the year was
minimal. Official clearances were received during
2015 and work commenced on the earthworks and on
the construction of the pumping stations. The first two
phases of this project, totalling five kilometres, are
nearing completion. The dry period in the second half
of the year referred to above, whilst having an adverse
effect on the crop, was beneficial in terms of allowing
work to proceed on the flood-protection bunds and
the pumping stations. Good progress was made during
the year and construction is expected to be completed
during 2016. Once completed, it is expected that over
800 hectares will be able to be planted and also some
1,000 hectares that have already been planted but are
prone to regular flooding will be able to be upgraded
and, where necessary, infilled. Once protected in this
way, the yields from these areas are expected to be
good. Electricity for the powerful pumps will be
provided by the gas engine fuelled by methane
captured from the liquid mill effluent.
At the end of 2015 some 14,010 hectares had been
planted of which 9,770 hectares relate to the Group
and 4,240 hectares to the smallholders’ co-operatives.
The board’s estimation remains that, ultimately, some
15,000 hectares will be planted of which 10,600
hectares will relate to the Group and 4,400 hectares
to the smallholders’ co-operatives.
As referred to in the 2014 annual report, an
experienced senior agriculturist has been appointed
with a view to raising husbandry standards in the field.
Now that the project is maturing, assistance is being
Directors’ and senior managers’ site visit in Musi Rawas
17
OPERATIONS Palm oil CONTINUED
experienced in the second half of the year. It is
possible that this may affect crops in 2016. Bangka
Island normally has a dry period in the middle of the
year but the El Niño phenomenon in 2015 extended
this dry period into the fourth quarter of the year.
As has occurred in dry periods in previous years,
rodent damage increases as rats feed on fruitlets to
access moisture. Prevention through improved
baiting, however, reduced the effect of this damage
in 2015.
The Bangka project is beginning to approach the end
of the planting programme. As at the end of 2015 the
Group’s planted areas amounted to 5,410 hectares
with those relating to the smallholders’ cooperatives
amounting to 2,910 hectares. The total planted was
therefore 8,320 hectares. During the year, 680
hectares of the Group’s own areas and 760 hectares of
the smallholders’ co-operative areas, totalling 1,440
hectares, were planted. The board’s estimate remains
that 10,000 hectares will ultimately be planted, of
which 6,000 will relate to the Group and 4,000 to the
co-operatives.
The project’s new mill is approaching completion
and commissioning is expected to be concluded in
mid-2016. The 45-tonnes-per-hour mill (expandable
at a later date to 60 tonnes) is expected to cost
approximately US$15 million, including the
composting facility. Methane will be captured from
the liquid effluent, “scrubbed” and then used as fuel in
a gas engine which will generate electricity for the
project. Surplus electricity will be sold into the
national grid. The cost of the methane-capture plant
and the gas engine will be approximately US$2
million. As at the Kalimantan and Pangkatan mills, the
liquid effluent will be sprayed on to the bunches from
which the fruitlets have been removed (empty fruit
bunches) for processing into palm oil and for
recovering the palm kernels. The resulting nutritious
compost is then applied in the field. As a result of this
process, all liquid effluent is utilised and used in the
palm-oil process and no effluent reaches rivers or
water tables.
The current arrangements for selling the project’s f.f.b.
are to sell it to a nearby mill owned by another
company. It is anticipated that, when the project’s
new mill is operational, the sale of the CPO and palm
kernels, less manufacturing costs, will be significantly
more profitable than selling f.f.b.
Young oil-palm seedlings
provided to senior management by training the staff
and providing regular reports on where improvements
in agricultural practice and administration are needed.
This process continued during 2015.
The gas engine running on methane captured from the
liquid mill effluent referred to above is operating well.
Most of the electricity requirements on the project
and in the mill are now being provided from the
steam-driven generators in the mill and from the gas
engine. This has enabled some diesel-powered
generators to be stood down and moved to other
locations. A second palm-oil mill is scheduled to be
constructed on the project and it is estimated that this
will be commissioned in 2018. It is the intention to
capture methane from the liquid effluent and operate a
gas engine in that mill as well. Electricity surplus to
the project’s requirements is likely to be generated and
it is hoped that acceptable terms can be agreed with
the Indonesian Government electricity board (PLN) to
sell the electricity into the grid.
At the moment, only 30% of the liquid effluent is
utilised from the existing mill for the generation of
electricity. Consideration is being given to expanding
this to 100% with a view to the resultant surplus
electricity being sold to PLN. Investment in methane
capture and electricity generation in either location
will not proceed, however, unless acceptable terms
can be agreed in advance with PLN.
Bangka
The 55% increase in the crop in 2015 to 66,300
tonnes (2014 – 42,700 tonnes) reflected the recovery
from the drought-affected years of 2014 (particularly in
the first half) and 2013 as well as the increasing yields
from the young areas. Unfortunately, the El Niño
conditions referred to above also had an effect on the
weather in 2015 and another acute dry period was
18
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
ENVIRONMENTAL AND SOCIAL FACTORS
Reference has been made above to the Group’s
commitment to producing environmentally-sustainable
palm oil. The Kalimantan and Pangkatan mills are
already RSPO accredited. During 2015, “surveillance”
audits were successfully conducted for both.
Pangkatan Mill is also ISPO and ISCC accredited and,
again, surveillance audits were successfully conducted
for these two in 2015. The Kalimantan mill is in the
process of seeking accreditation for ISPO and ISCC.
The Bangka project already adheres to the RSPO
“Principles and Criteria”. The accreditation process
will not be able to commence until the new mill is
operational and CPO and palm kernels are being sold.
The ISPO and ISCC accreditation process will also
commence once the mill is operational.
The Group’s environmental and social activities and
policies are set out in more detail in the section
entitled “Environmental and social responsibility” on
pages 30 to 35.
ASSOCIATED COMPANY ESTATES
CROPS AND PRODUCTION
Agro Muko’s f.f.b. crop in 2015 was, at 340,500 tonnes,
1% lower than the 344,900 tonnes recorded in 2014.
The El Niño phenomenon had some effect on rainfall
in the year, reducing it in the third quarter, but more
normal levels returned in the fourth quarter. As
referred to in previous annual and interim reports, an
enhanced replanting programme is under way as the
early plantings at the start of the project in the late
1980’s and early 1990’s are now becoming due for
replacement. This programme will extend over the
next five or so years during which time overall crops
are likely to remain at the levels harvested in 2015 or
possibly a little lower. Once, however, these new and
young plantings mature, the overall crop is expected to
move on to an upward trend again.
Oil-extraction rates improved a little and management
continues to concentrate its efforts on further
improvement. One of the mills, Bunga Tanjung, is
operating below its optimal capacity. This has arisen
because the mill was constructed on the basis that
Agro Muko had an obligation to process smallholders’
f.f.b. However, because of the rapid expansion of oil-
palm planting in the area, several mills without
surrounding plantation areas were constructed.
These mills are able to offer very competitive rates to
suppliers of f.f.b. which Agro Muko is not able to
match. Recently, however, the SIPEF group, which is
a co-investor in Agro Muko and also manages it, has
started the development of oil-palm areas in the
vicinity of the existing Agro Muko estates. The
project, including associated smallholder areas,
amounts to some 2,000 hectares. It is the intention
that that f.f.b. from these areas will be purchased on a
commercial basis and processed by Bunga Tanjung
Mill. The first deliveries, of some 2,700 tonnes, were
made in 2015.
The rubber crop continued its upward trend with
1,650 tonnes tapped in 2015, 9% higher than the
1,520 tonnes for 2014. The rubber is now all
concentrated on one estate, Sungei Jerinjing, and the
young age profile should result in increasing crops
for the foreseeable future. The crumb-rubber factory
has been under utilised but this has been improved
by buying lower-grade rubber from one of SIPEF’s
estates near Palembang on commercial terms.
Kerasaan Estates’s f.f.b. crop, at 41,600 tonnes,
was virtually identical to the 42,000 recorded
in 2014.
Details of crops, production and extraction rates
for 2015, with comparative figures for 2014, are set
out below:-
2015 INCREASE/ 2014
TONNES (DECREASE) TONNES
%
F.f.b. crops
PT Agro Muko
- own 340,500 (1) 344,900
- outgrowers 12,700 49 8,500
353,200 0 353,400
PT Kerasaan Indonesia 41,600 (1) 42,000
394,800 0 395,400
Production (PT Agro Muko)
Crude palm oil 80,300 1 79,400
Palm kernels 18,800 2 18,500
Extraction rates % %
Crude palm oil 22.7 22.5
Palm kernels 5.3 5.2
Rubber crops TONNES TONNES
PT Agro Muko - own 1,650 9 1,520
19
OPERATIONS Palm oil CONTINUED
PLANTATION PERFORMANCE INDICATORS
The principal performance indicators considered by the board in assessing the
Group’s plantation operations are as follows:
PLANTED HECTARAGE
Planting new hectarage
and replanting
hectarage that has
reached the end of
its economic life
determines the
Group’s capacity to
produce crop growth
in the future.
F.F.B. CROP
The volume of f.f.b.
crop is the primary
determinant of the
Group’s ability to
generate CPO and
palm kernels for sale.
F.F.B. YIELD
PER HECTARE
The rate at which
the Group is able to
generate f.f.b. from its
planted hectarage is
the most important
measure of its
agricultural efficiency.
CPO AND PK
EXTRACTION RATES
COST PER TONNE OF
PALM PRODUCTS
The rate at which the
Group is able to
convert its f.f.b. into
CPO and palm-kernel,
quantified as oil and
kernel-extraction rates,
is the most important
measure of its
processing efficiency.
The Group’s long-term
profitability depends
on its success in
minimising costs of
production that are
summarised in this
measure.
REVIEW OF OPERATIONS
Management has continued its programme of raising
agricultural standards. Retaining workers, particularly
harvesters, has proved difficult in the past but the
expansion of house building and extending permanent
contracts has gone some way to improving the
situation. The number of harvesters has increased
which has improved yields. Recent replantings have
continued to be carried out to a high standard.
The capture of methane has been reviewed and it has
been decided to stop burning it in the boilers and trying
to use it in the dryers in the rubber factory. Instead,
active consideration is being given to burning the methane
in a gas engine and selling the resulting electricity (to
the extent that it is not required by Agro Muko) into the
grid if acceptable terms can be agreed with PLN.
The substantial road-stoning programme continues.
The improvement in the quality of the roads allows
access during wet periods and reduces costs by
enabling trucks to pick up f.f.b. in the field rather than
double handling using tractors and trailers which then
have to offload into trucks before the fruit is then
transported to the mill.
One of the two Agro Muko mills is ISCC accredited
(following the installation of the methane-capture
plant) which enables buyers to choose between selling
Agro Muko’s CPO either into the food sector (when
accredited CPO is required) or into the green-energy /
biodiesel sector.
Kerasaan Estate is a well-run estate but concern
continues about the incidence of the fungal disease,
ganoderma. Tight standard operating procedures are
enforced covering land preparation before replanting
and action to be taken in the event that palms are
found to be infected. It is hoped that strict adherence
to these rules can minimise the impact of this fungus.
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.
Management monitors and assesses the performance
of the development of the new plantings by means of
performance indicators which identify the area to be
planted in a given year and also the cost per hectare of
that planting. 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.
20
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
Pressing station, new Bangka mill
Propagating cover crop
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 f.f.a.,
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. Oil losses, dirt and moisture content are expressed
in terms of percentages and actual achievement
against maximum permitted levels are monitored by
management.
PLANTATION AND MILL COSTS
Management monitors and assesses the efficiency of
plantation operations in terms of cost by means of
performance indicators which identify field costs per
hectare and per kilogram of f.f.b. and factory costs per
tonne of palm products. A significant proportion of
costs both in the field and in the factory are fixed and
therefore vary little with different levels of utilisation.
Field costs also vary from estate to estate depending
upon such factors as terrain and rainfall pattern and
the performance indicators are monitored by
management for each individual estate.
CURRENT TRADING AND PROSPECTS
The Group’s f.f.b. crops have been in line with
expectations so far in 2016 with the exception of
Bangka where the downturn following the El Niño
phenomenon in the third and fourth quarters of 2015
appears to be having its effect. The crops in
Kalimantan are also expected, as a result of El Niño, to
be negatively impacted in the middle of 2016 and,
although not obviously affected by El Niño in 2015,
the crops in Sumatra appear to be heading for a
downward trend in the middle of 2016. Overall,
Group crops were 3% higher at 87,000 tonnes for the
first three months of 2016, compared with 84,800
tonnes for the same period in 2015. Crops in Sumatra
and Kalimantan were similar or higher, whilst on
Bangka the El Niño effect referred to above resulted in
a lower outturn. The details are set out in the following
table:-
3 MONTHS ENDED INCREASE/ 3 MONTHS ENDED
31 MARCH 2016 (DECREASE) 31 MARCH 2015
TONNES % TONNES
Sumatra 36,300 0 36,200
Kalimantan 38,200 9 35,100
Bangka 12,500 (7) 13,500
87,000 3 84,800
The associated companies’ f.f.b. crops have overall
been slightly higher in the first quarter of 2016
compared with the same period last year.
Because of the El Niño effect in the second half of 2015,
world production is expected to stagnate or fall in the
first half of 2016. As a result, palm-oil prices have
strengthened in the first part of 2016 and, as at the date
of this report, at US$720 per tonne (Rotterdam c.i.f.),
are 26% higher than the level at 31 December 2015
(US$573). Rubber prices have also improved in the
first quarter of 2016.
In Indonesia the application of funds generated by the
palm-oil export levy in subsidising biodiesel production
and a higher government biodiesel mandate are
expected by Oil World to increase biodiesel production.
The continuing wide price premium of palm oil over
mineral oil is likely, however, to mean that biodiesel
production will not reach its full potential.
Since the end of 2015 the Indonesian Rupiah has
strengthened from US$ 1=Rp 13,785 to the current
level of approximately Rp 13,100. A weaker US
Dollar increases Rupiah costs incurred when translated
into US Dollars.
21
OPERATIONS
Beef cattle
NAPCo achieved a record profit in 2015, of which the Group’s share
amounted to US$11.0 million (2014 US$1.5 million)
AUSTRALIAN BEEF-CATTLE MARKET
Australian beef-cattle prices continued to rise strongly
in 2015, for both backgrounded grass-fed cattle
(Woodlands) and heavier, grain-finished cattle (NAPCo).
This strength was attributable to the continuing
reduction in the size of the Australian cattle herd, and
that in the US, coupled with sharpening demand from
Asia. Prices remain relatively firm in 2016.
MAJORITY-OWNED OPERATIONS
WOODLANDS
Following improvements in both 2014 and 2013, profit
from cattle trading grew strongly in 2015 to reach
US$4.5 million (2014 US$2.0 million). This increase
arose from the sale of the whole Woodlands herd at a
time of very strong cattle prices prior to the disposal of
the operation. As noted in the 2014 annual report,
given the improving prospects for the beef-cattle
market, the board increased the size of the Woodlands
herd. The herd had grown to more than 8,100 head by
the time the board took the decision, in line with its
strategy, to sell the property. The sale was completed
in November 2015 (see note 11 on page 64).
Good rainfall on Woodlands, spread throughout the
year, resulted in good pastures and ample fodder
crops. Despite the large numbers of cattle coming onto
the property, which lose weight as they recover from
their inward journey, weight gained per cattle day rose
from the low levels experienced in 2014 to reach
0.55 kg per day (2014 – 0.22 kg per day), with weight
Michael and Patty Wright, and Derek Shaw, on Woodlands
22
gain slightly higher in the second half of the year than
in the first half. Total weight gained by the Woodlands
herd was 78% higher in 2015 than in the previous
year. This improvement in operational performance
was further strengthened by an increase in cattle
prices: in Australian Dollar terms the price achieved
for cattle sales in 2015 rose by 83% compared with
2014. Hence, a combination of improved weight gain
and higher prices delivered a farm profit of
US$2.7 million (2014 US$0.2 million).
NAPCO PROPERTIES
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
Heifers on NAPCo’s Boomarra station
ASSOCIATED COMPANY - NAPCO
RESULTS FOR THE YEAR
NAPCo achieved a record profit in 2015, of which
the Group’s share amounted to US$11.0 million
(2014 US$1.5 million). The substantially-improved
profit arose principally as a result of the record cattle
prices achieved during the year.
SEASONAL CONDITIONS
After a below-average season in the previous year,
2015 started with over 70% of Queensland (where the
majority of NAPCO’s properties are located) still
drought declared. However, good rainfall was
received early in the year on the breeder properties in
the Northern Territory, and, a little later, on the
backgrounding (grass-fattening) properties in
Queensland. The Channel Country properties, in
Queensland, unfortunately missed out on significant
rainfall, or beneficial flooding, throughout the year.
Overall, seasonal conditions proved better in 2015
than in 2014.
COMPANY OPERATIONS
Both sales and closing stock numbers were similar in
2015 to those recorded in the previous year. Given
the continuing decline in the size of the Australian
herd, a trend which is forecast to continue in 2016,
simply maintaining cattle numbers was a sound
achievement. Company brandings of some 56,900
head were significantly higher than the 50,700 head
recorded in 2014.
23
OPERATIONS Beef cattle CONTINUED
BEEF-CATTLE PERFORMANCE INDICATORS
The principal performance indicators considered by the board in assessing the
Group’s beef cattle operations are as follows:
TOTAL HERD
WEIGHT GAIN
The aggregate increase
in cattle weight during
their time on the
property is the primary
indicator of the
property’s output.
HERD SIZE
Herd size constrains the maximum total weight
gain it is possible for the operation to
accumulate during a given period, though herd
size must be matched to the property’s capacity
(itself a function of rainfall).
WEIGHT GAIN PER
CATTLE DAY
The speed with which
cattle, on average, put
on weight during their
time on the property is
an important factor in
determining total
weight gains.
NAPCo CATTLE SALES AND BRANDINGS
SALES BRANDINGS CLOSING STOCK
56,366
56,884
57,998
50,731
64,017
58,638
59,489
62,506
57,155
54,695
36,844
61,456
40,337
44,090
177,978
177,775
187,795
197,309
197,590
195,342
67,599
96,552
160,622
162,336
0
20
40
60
80
100
‘000 HEAD
120
140
160
180
200
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, which
depends on the weather and pasture/forage-crop
conditions.
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.
CURRENT TRADING AND PROSPECTS
Welcome rainfall has been received in early 2016
on many of the NAPCo properties and, unlike in 2015,
beneficial flooding has also occurred in the river
systems which flow through the company’s
Channel Country properties. Cattle prices have eased
a little but remain above historical averages and the
outlook for Australian beef appears to be positive.
2015
2014
2013
2012
2011
2010
2009
2008
24
OPERATIONS
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
Property
The Group’s 40% investment in Bertam Properties is currently
estimated to be worth in excess of US$30 million
The Bertam Properties project
MALAYSIAN PROPERTY
MAJORITY-OWNED OPERATIONS
BERTAM ESTATE
It is the board’s intention to sell Bertam Estate
(70 hectares) when market conditions are deemed
suitable. The land is estimated, based on independent
advice, to have a value of approximately US$16 million.
In the meantime, the minor oil-palm operations on the
remaining 65 hectares of cultivated land continued with
1,800 tonnes (2014 – 1,400 tonnes) of f.f.b. harvested.
No replanting has been undertaken since 1997.
ASSOCIATED COMPANY –
BERTAM PROPERTIES
The Penang property market experienced a slowdown
in 2015 with the residential market proving to be more
resilient than the commercial sector. Bertam Properties
completed the sale of some 370 developed properties
in 2015 compared with approximately 410 in 2014.
As a result, the profit after tax from these sales
amounted to US$6.2 million (Group share
US$2.5 million) compared with a profit of US$7.7
million (Group share US$3.1 million) in the previous
year. The sale of two pieces of raw land were also
completed during the year realising a profit after tax
of US$1.0 million (Group share US$0.4 million).
The Group’s share of Bertam Properties’ profit in 2015
amounted to US$2.8 million (2014 US$2.9 million).
The oil-palm plantation activities continued on the
small remaining area of agricultural land of
107 hectares (2014 – 115 hectares). 1,800 tonnes of
f.f.b. were harvested compared with 1,400 tonnes in
2014 and, because of the weakness of palm-oil prices
during the year, a small loss was incurred compared
with 2014’s modest profit.
As at the end of 2015, Bertam Properties owned
344 hectares of land. This included 143 hectares of
the golf course and 39 hectares currently under
development, leaving 162 hectares undeveloped.
This remaining area continues to be a very valuable
asset. The Group’s 40% investment in Bertam
Properties is currently estimated to be worth in excess
of US$30 million.
25
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 and economic growth. There was an increase
in nationalist sentiment during the 2014 presidential
election but, given Indonesia’s significant need for
infrastructure development and to attract inward
investment, the board continues to perceive a 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.
In 2014 a draft plantation law was tabled in the
Indonesian House of Representatives which included a
provision to restrict foreign ownership of plantations in
Indonesia to 30%. This was not enacted, but a
modified version was subsequently passed in
September 2014 that did not include this restriction.
The new law mandated the Government to prioritise
domestic investment, protect local customary rights,
empower local farmers and to set a cap on foreign
investment at some point in the future. The board
continues to monitor the situation closely and will, if
necessary, liaise with other non-Indonesian plantation
companies and industry bodies in lobbying the
government to argue against similar proposals being
enacted in future. The board has already been
considering the merits of a partial listing in Jakarta of
its Indonesian business, partly to mitigate this risk.
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 without difficulty
when falling due. 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 compensates smallholders
and ensures 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 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
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,
marketing, finance, human resources, internal audit and
sustainability) 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 (also covering
Bangka and Musi Rawas) and Kalimantan.
The Group uses its Kalimantan training school to instil
26
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
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
was granted to its North Sumatran mill on Pangkatan
Estate in 2015 and in 2014 for the new Kalimantan
mill. The Group is also complying with the
requirement to achieve certification as Indonesian
Sustainable Palm Oil (“ISPO”) and International
Sustainability Carbon Certification (“ISCC”).
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 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. A similar system is under construction at
the Group’s new mill in Bangka, expected to be
commissioned in mid-2016.
Management follows industry best-practice guidelines
and abides by Indonesian law with regard to such
matters as fertiliser application and health and safety.
Any accidents are thoroughly investigated by senior
head office staff. During 2015, the Group underwent
an independent health & safety inspection in all its
areas of operation, an exercise it intends to repeat
annually. The managers of all of the Group’s estates
and mills hold a monthly meeting with key staff to
review health and safety. These meetings are minuted
and actions identified.
RELATIONSHIP WITH LOCAL POPULATIONS
A breakdown in relations could significantly disrupt
the Group’s operations, for example through strikes,
or lead ultimately to a stoppage 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 population 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 losing the use 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 operating, 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,
27
RISK MANAGEMENT CONTINUED
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.
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
weather risk is part of the business.
COMMODITY-PRICE FLUCTUATION
The price of CPO, 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 contract
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 biofuel. Palm oil is the vegetable oil
with the highest production in the world, has the
lowest cost and is the most productive, by a wide
margin, in terms of yield per hectare.
The price that the Group’s associated company,
NAPCo, achieves for the sale of its fattened cattle is
substantially determined by a world market over which
the company 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.
28
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
US DOLLAR - V - INDONESIAN RUPIAH
US DOLLAR - V - AUSTRALIAN DOLLAR
US$1 = Indonesian Rupiah
US$1 = A$
16,000
14,000
12,000
10,000
8,000
2011
2012
2013
2014
2015
2016
1.6
1.4
1.2
1.0
0.8
2011
2012
2013
2014
2015
2016
US DOLLAR - V - MALAYSIAN RINGGIT
STERLING - V - US DOLLAR
US$1 = RM
£1 = US$
4.8
4.4
4.0
3.6
3.2
2.8
2011
2012
2013
2014
2015
2016
1.8
1.7
1.6
1.5
1.4
1.3
2011
2012
2013
2014
2015
2016
EXCHANGE-RATE FLUCTUATION
SECURITY OF LIQUID FUNDS
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.
The board is concerned to ensure that the Group’s
liquid funds, which are in the order of US$44 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
21 April 2016
29
Environmental &
social responsibility
The Group produces environmentally-
sustainable palm oil in all its palm-oil mills
and at its joint venture in Bengkulu
province
Smallholder co-operative schemes
attached to the Group’s new projects have
been developed and are operated to the
same high standards applied to the
Group’s own areas
To ensure its high environmental
standards are maintained, the Group
regularly monitors air and water quality
on all its estates
The Group has 1,500 hectares of
conservation areas, with another
2,200 hectares at its joint venture in
Bengkulu province
In Australia, NAPCo has won a number of
environmental awards and is involved in
the preservation, and rehabilitation, of
indigenous flora and fauna
30
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
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 and supermarkets.
The Group endorses the “Principles and Criteria”
which have been adopted by the RSPO in relation to
environmental, social and ethical plantation practices.
The Pangkatan mill was granted accreditation to the
RSPO in October 2012. The CPO 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
2014. The RSPO audit took place on the Kalimantan
project at the end of 2013 and certification was
received in 2014.
Preliminary work is being done on the Bangka
project to facilitate speedy certification of the
mill once it is commissioned, expected to be in
mid-2016. It is hoped the final audit for RSPO
certification can take place before the end
of 2016.
The associated companies, PT Agro Muko and
PT Kerasaan Indonesia, received RSPO accreditation
in 2011 and 2010 respectively.
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 and is expected
in respect of the Kalimantan mill by the end of
2016. It is hoped the final certification audit of
the new Bangka mill will take place before the
end of 2016.
31
ENVIRONMENTAL & SOCIAL RESPONSIBILITY CONTINUED
Electricity from biogas is distributed on the Kalimantan project
Beneficial host plants
AGRONOMIC POLICIES
TERRACING AND SOIL EROSION
The following policies in respect of plantation
management have been adopted:-
NEW LAND
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. The Group ensures that any new
plantation development is undertaken only in
heavily-degraded areas which will not be suitable
habitats for major endangered species.
ZERO BURNING
For new plantings or replantings, no burning is
allowed. Vegetation or old palms/trees are chipped
and stacked in inter-rows 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.
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 larvae 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.
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
applied to the empty fruit bunches, which break down
into nutritious compost. The balance of the effluent
which has not been utilised for methane capture is
32
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
Conservation areas are clearly marked
New ambulance for the Kalimantan project
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.
Methane capture and generation of electricity has
been integrated into the planning for and construction
of the Group’s mill on Bangka.
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 staffed on a daily basis by trained
employees and, in addition, doctors visit these clinics
once or twice a week.
Medical care is provided on the plantations in polyclinics which are
staffed on a daily basis by trained employees
Recently-opened polyclinic in Kalimantan, where the Group now employs a full-time doctor
33
ENVIRONMENTAL & SOCIAL RESPONSIBILITY CONTINUED
Kindergartens are provided for very young children, as is transport
for older children to nearby government schools
On its Kalimantan project, the Group employs a full-
time doctor. The Group pays for hospital treatment if
this is required. During 2015, independent health and
safety inspections were carried out on the Group’s
North Sumatran and Kalimantan estates.
The managers of all of the Group’s estates and mills
hold a monthly meeting with key staff to review health
and safety.
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.
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, as well as paying for some teaching staff, 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 on 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 which conducts
residential induction courses for the Group’s
agricultural staff as well courses covering subjects as
diverse as accounting, people management,
harvesting, first aid, anti-bribery-and-corruption
training and environmental standards.
34
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
The Group has built a first-class residential training facility
on its project in East Kalimantan
The Group gives priority to the health and safety of its employees
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
co-operatives (“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,
answerable to a committee elected from members of
the KKPA. 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.
Sprayers wear protective clothing
35
REPORT OF THE DIRECTORS
The directors present the audited consolidated financial statements
of M.P. Evans Group PLC for the year ended 31 December 2015
PRINCIPAL ACTIVITIES
At 31 December 2015, 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 8 and 9) and in the strategic report (pages 10
to 29) 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 50.
An interim dividend of 2.25p (2014 – 2.25p) per
share was paid on 3 November 2015. The board
recommends a final dividend of 6.50p (2014 – 6.50p)
per share. This dividend will be paid on or after 21
June 2016 to those shareholders on the register at the
close of business on 22 April 2016. This final dividend
is not provided for in the 2015 financial statements.
SCRIP-DIVIDEND SCHEME
The Company currently operates a scrip-dividend
scheme with the authority of the resolution passed
at the Company’s annual general meeting in 2015
(which is valid for three years). The scheme will
continue to be operated in accordance with 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.
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 92)
without delay. Any such elections or revocations will
not be effective unless they have been sent in
accordance with the Company’s instructions and
received by the Company’s registrars no later than
5:00 p.m. on 31 May 2016.
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.
SHARE CAPITAL
The Company has one class of share. Details of
the issued share capital of the Company are as
follows:-
Issued (fully-paid and voting) capital
at 1 January 2015
Shares issued in lieu of a cash dividend
18 June 2015
3 November 2015
SHARES OF 10P EACH
55,327,395
304,355
68,694
Issued (fully-paid and voting) capital
at 31 December 2015
55,700,444
36
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
Board of directors
Peter E Hadsley-Chaplin, MA MBA
EXECUTIVE CHAIRMAN
Philip A Fletcher, FCA
MANAGING DIRECTOR
Tristan R J Price, MA MSC FCA
FINANCE DIRECTOR
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.
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.
Appointed a director in 2010.
Qualified as a Chartered Accountant
with Coopers and Lybrand. Worked
in the UK Diplomatic Service, and
as an economist at the Organisation
for Economic Co-operation and
Development (OECD).
Jock M Green-Armytage
SENIOR INDEPENDENT
NON-EXECUTIVE DIRECTOR
Richard M Robinow
INDEPENDENT
NON-EXECUTIVE DIRECTOR
J Derek Shaw, FRAgS
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. Previously chief executive
of The Guthrie Corporation PLC and
chairman of AMEC PLC.
Appointed a director in 1999 and
chairman from 2005 to 2009.
A non-executive director of R.E.A.
Holdings PLC (having previously
been chairman) and a former director
of the Belgian plantation group,
SA SIPEF NV. Member of the audit
and remuneration committees.
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.
37
REPORT OF THE DIRECTORS CONTINUED
DIRECTORS AND DIRECTORS’ INTERESTS
SUBSTANTIAL INTERESTS
The present membership of the board is detailed on
page 37. All of the directors served throughout the
year. Richard Robinow, Derek Shaw, Philip Fletcher
and Tristan Price will retire from the board at the
forthcoming annual general meeting in accordance
with the articles of association and, being eligible, will
offer themselves for re-election. Bruce Tozer will offer
himself for election as a non-executive director.
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:-
BENEFICIAL
NON-
BENEFICIAL
OPTIONS
AT 31 DECEMBER 2015
P E Hadsley-Chaplin
P A Fletcher
T R J Price
R M Robinow
J D Shaw
J M Green-Armytage
AT 1 JANUARY 2015
1,561,717
1,128,171
—
96,147
353,065
—
25,000
—
—
—
—
—
P E Hadsley-Chaplin
1,561,717
25,000
P A Fletcher
T R J Price
R M Robinow
J D Shaw
J M Green-Armytage
1,128,171
—
96,147
394,065
—
—
—
—
—
—
—
—
250,000
—
—
—
—
—
250,000
—
—
—
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 47.
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 2015
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.
Direct interests
Alcatel Bell Pensioenfonds VZW
5,793,497
10.40
SHARES
%
JP Morgan Asset Management
Holdings Inc
Montanaro Asset Management
M M Hadsley-Chaplin
Indirect interests
2,819,546
1,982,894
1,892,254
5.06
3.56
3.40
Aberdeen Asset Managers Limited
FIL Limited
8,836,122
5,239,222
15.86
9.40
AUTHORITY TO ALLOT SHARES
At the annual general meeting a general authority is
being sought, under resolution 9, for the directors to
allot shares up to a maximum nominal amount of
£1,856,681, 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 10, 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
£278,502, 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 9 and 10. These
authorities will lapse on 30 June 2017 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 11 for the Company to purchase its own
shares on the AIM market of the London Stock
Exchange until 30 June 2017 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
38
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
the Company so to do and all such purchases will be
market purchases made through the AIM market of the
London Stock Exchange. The directors would only
consider making purchases if they believed that the
earnings or net assets per share of the Company would
be improved by such purchases. The directors would
consider holding the Company’s own shares which
had been purchased by the Company as treasury
shares as this would give the Company the flexibility of
being able to sell such shares quickly and effectively
where it considers it in the interests of shareholders 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 11 set out in the notice of the annual
general meeting will accordingly be proposed to
authorise the purchase of up to a maximum of
5,570,044 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 11 will lapse on
30 June 2017 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 370,000 shares outstanding under the
executive share-option schemes. If all of the options
were exercised, the resulting number of shares would
represent (a) 0.66% of the enlarged issued share
capital at that date; and (b) 0.73% 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
relevant terms and conditions. The Group’s average
creditor days calculated as at 31 December 2015
amounted to 42 days (2014 - 36 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 75 and 76.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the annual
report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare
financial statements for each financial year. Under that
law the directors have prepared the Group financial
statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the
European Union and the Company financial statement
in accordance with United Kingdom Generally-
Accepted Accounting Practices (United Kingdom
Accounting Standards, comprising Financial Reporting
Standard 101 ‘Reduced Disclosure Framework’
(“FRS101”) and applicable law). Under company law
the directors must not approve the financial statements
unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and the
Company and of the profit or loss of the Group for that
period. In preparing these financial statements, the
directors are required to:
select suitable accounting policies and then apply
them consistently;
make judgements and accounting estimates that are
reasonable and prudent;
state whether applicable IFRSs as adopted by the
European Union and applicable United Kingdom
accounting standards, including FRS101, have been
followed, subject to any material departures
disclosed and explained in the Group’s and
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.
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
The directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose with
39
REPORT OF THE DIRECTORS CONTINUED
reasonable accuracy at any time the financial position
of the Company and the Group and enable them to
ensure that the financial statements and the directors’
remuneration report comply with the Companies
Act 2006 and, as regards the Group financial
statements, article 4 of the IAS Regulation. They are
also responsible for safeguarding the assets of the
Company and the Group and hence for taking
reasonable steps for the prevention and detection of
fraud and other irregularities.
The directors are responsible for the maintenance and
integrity of the Company’s website. Legislation in the
United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
The directors consider that the annual report and
accounts, taken as a whole, is fair, balanced and
understandable, and provides the information
necessary for shareholders to assess the Company’s
performance, business model and strategy.
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 43 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
Company secretary
21 April 2016
40
CORPORATE GOVERNANCE
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
The board recognises the importance of a sound
system of corporate governance and internal control
and the board seeks to follow the principles set out in
the Corporate Governance Code for Small and
Mid-Size Quoted Companies 2013 published by the
Quoted Companies Alliance (“QCA”) as far as they are
relevant to the Group and its context. It should be
noted that the Group is not required to comply with
this Code but it is nonetheless the board's intention to
disclose and report on the corporate-governance
structures and processes operated by the Group and
to develop these further to meet the appropriate
standards. An explanation of how the Group has
applied the principles is set out below.
DIRECTORS
The details of the Company’s board, together with the
audit and remuneration committees, are set out on
page 37. The board comprises an executive chairman,
two further executive directors and three non-
executive directors, one of whom chairs the audit and
remuneration committees.
Philip Fletcher will stand down as managing director
at the annual general meeting and will offer himself for
re-election as a non-executive director. The current
finance director, Tristan Price, will replace Philip Fletcher
as managing director and a new finance director will be
appointed in due course. Bruce Tozer will offer himself
for election as a new non-executive director. Following
these changes, the board will comprise an executive
chairman, one executive director and five non-executive
directors. The maximum number of directors
permitted under the articles of association is eight.
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 2015, with the exception
of Jock Green-Armytage who was unable to attend the
meeting on 10 September 2015. 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
executive 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.
The board has an executive chairman, Peter Hadsley-
Chaplin. Given the current structure and composition
of the board, the role that Peter Hadsley-Chaplin
performs (which is not that of chief executive officer),
the size of the Group, the size of the shareholdings
which the directors hold in the Company and the
active dialogue with institutional shareholders that
takes place throughout the year, the board considers
that a non-executive chairman would not provide any
further benefit to the Company.
The board has access to independent professional
advice at the Group’s expense when the board deems
it necessary in order for them to carry out their
responsibilities. Currently, the board retains Peel Hunt
as the Company’s nominated adviser and Hudson
Sandler for advice regarding corporate public
relations. It additionally receives advice from
independent professionals on the valuation of its
property assets in Australia and Malaysia.
INDEPENDENCE AND RE-ELECTION OF
LONG-SERVING DIRECTORS
During the year the board has had a balance of
executive and non-executive directors. A description
of the roles and responsibilities of the directors is set
out on page 37 and the terms and conditions of the
non-executive directors are available on the website
(www.mpevans.co.uk/mpevans/en/aboutus/board/
non-executive-directors). Half of the directors are
non-executive, two of whom (Richard Robinow and
Derek Shaw) have served for more than nine years.
The board considers that Richard Robinow,
Derek Shaw and Jock Green-Armytage have valuable
experience in the palm-oil and cattle industries and
that all act in the best interests of the Company and
the Group, free from any conflicts or undue influence.
As such, the board is satisfied that Richard Robinow,
Derek Shaw and Jock Green-Armytage are
41
CORPORATE GOVERNANCE CONTINUED
independent and that the Group should continue to
benefit from their experience and knowledge.
The board acknowledges that Philip Fletcher will
not be independent if he is appointed as a non-
executive director.
DIRECTORS’ REMUNERATION AND APPOINTMENT
As set out in the report on page 45, 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 twice during 2015 and both
meetings were attended by all the members.
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.
RELATIONS WITH SHAREHOLDERS
The board attaches great importance to
communications with both institutional and private
shareholders. The board actively meets with major
shareholders to update them on the progress of the
Group and discuss any areas of concern that they
may have. Any issues raised by major shareholders
are discussed by the board as a whole.
This is not always possible with private shareholders
but the annual general meeting provides an
opportunity for private shareholders to raise any issues
and discuss the development of the business.
The board uses the Group’s website to set out details of
the annual general meeting and the results of the votes
cast at those meetings and contains the reports and
presentations given at meetings with investors:
www.mpevans.co.uk/mpevans/en/investors/reports
and
www.mpevans.co.uk/mpevans/en/investors/governance/agm
These are also available through an “app” that is
available for users to download free of charge.
ACCOUNTABILITY
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 39 and 40 of the report of the directors.
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 and
presented to the board for discussion and approval.
In summary this is reported on pages 26 to 29.
The review process considers the control environment
and the major business risks faced by the Group.
Such risks include, but are not limited to:-
the risks of operating in Indonesia;
the geographical distance between the head office
and areas 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 supervision of holding-Company business,
include regular executive visits to the areas of
operation of the Group and of its associates,
comparison of operating performance and monthly
management accounts with plans and budgets,
application of authorisation limits, internal audit of
subsidiary undertakings and frequent communication
with local management.
42
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
Going-concern basis
The Group's operations are funded through a
combination of long-term equity capital, cash
resources, long-term loans and an 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 15
to 19. The forecasts indicate that the Group will have
sufficient resources to meet its obligations as they fall
due (see note 24 on page 70). Discussions on putting
in place further term loans are well advanced, and the
directors have taken the view that it is reasonable to
expect these discussions will successfully conclude
with agreements 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 under negotiation, 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.
AUDIT COMMITTEE
The audit committee is formally constituted with
written terms of reference (which are available on the
Company’s website www.mpevans.co.uk) and is
chaired by Jock Green-Armytage; the other members
are 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 three times during 2015 and each
meeting was attended by all of the members.
The external auditors attended two of the meetings.
The audit committee may examine any matters relating
to the financial affairs of the Group or the Group’s
audit; this includes reviews of the annual accounts and
announcements, accounting policies, compliance with
accounting standards, the appointment and fees of
auditors and such other related matters as the board
may require.
During the year the audit committee has:
reviewed the financial statements, having received
a report from the external auditors on their review
and audit;
reviewed the effectiveness of the Group’s internal
controls, including a review of the main findings of
the internal-audit team in Indonesia;
considered the Group’s accounting policies, notably
its response to an amendment by the IASB to IAS 41
and which standard to adopt for the Company
accounts under new UK-GAAP;
considered and approved the Group’s risk analysis;
considered the points made by the external auditors
on their review of the effectiveness of internal
controls; and
agreed the fees and terms of appointment of the
external auditors, reviewed their quality and
effectiveness and discussed the key risks to be
addressed during their audit.
Auditors
The auditors were first appointed, following a tender
exercise, in 2009. The audit partner changes every five
years in accordance with professional and regulatory
standards in order to protect independence and
objectivity, with Tim McAllister currently the audit
partner for the 2015 audit. Current policy is to tender
the external audit at least every ten years.
The audit committee meets the external auditors to
consider audit planning and the results of the
external audit. The committee specifically considered
the scope of the Group auditors’ engagement and
agreed the significant risks for the audit of the 2015
results. The external auditors have provided only audit
services, other than some tax advice in the UK,
Malaysia and Australia. Accordingly, the board does
not consider there to be a risk that the provision of
non-audit services may compromise the external
auditors’ independence.
43
CORPORATE GOVERNANCE CONTINUED
To assess the effectiveness of the auditors, the
committee reviewed their fulfilment of the agreed
audit plan and variations from it, and the auditor’s
report on issues arising during the course of the audit.
Financial reporting and review of financial
statements
The committee is able to ensure it has a full
understanding of business performance through its
receipt of regular financial and operational reporting;
its review of the budget and long-term plan and its
discussion of key accounting policies and judgements.
It has specifically addressed:
the Group’s response to the IASB’s amendment of
IAS 41: Biological assets, which permits entities to
account for plantation assets at depreciated cost
rather than at ‘biological valuation’. The committee
concluded that depreciated historical cost should
be used and that for internal reporting and decision-
making f.f.b. should be recognised at harvest. For
the purposes of statutory reporting, taking into
account the advice of its auditor regarding
interpretation of IAS 41, the Group has adopted a
policy of including an estimated valuation of partly-
formed f.f.b. prior to harvest. Out of the wide range
of possible assumptions, the committee has adopted
the assumption that ‘measurable’ value in f.f.b. is
related to oil content, which accrues exponentially
in the four weeks prior to harvest; and
the adoption of FRS101 for the Company accounts
under new UK-GAAP.
After reviewing the presentations and reports from
management and consulting with the auditors, the
audit committee is satisfied that the financial
statements appropriately address the critical
judgements and key estimates, for both the amounts
reported and disclosures. The committee is also
satisfied that the significant assumptions used for
determining the value of assets and liabilities have
been appropriately scrutinised, challenged and are
sufficiently robust.
44
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 to the board. The committee comprises
all of the non-executive directors and is chaired by
Jock Green-Armytage.
with the Company’s external advisers. Given the
nature of the business of the Group and the open
dialogue with investors, the board does not feel that a
formal appraisal process is currently appropriate but
will continue to review this position.
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.
BOARD AND PERFORMANCE EVALUATION
Whilst the board does not undertake any formal
appraisal process for the directors, there is a close
working relationship between the board as a whole
and the executive and non-executive directors and
TOTAL DIRECTORS’ REMUNERATION
SUCCESSION PLANNING
The chairman maintains a strong individual
relationship with all the directors and any changes to
the board are managed collaboratively and with
minimal cost and disruption to the Group. Philip
Fletcher will stand down as managing director at the
annual general meeting and will offer himself for
election as a non-executive director. The current
finance director, Tristan Price, will replace him as
managing director and a chief financial officer has
been appointed. It is intended to appoint a new
finance director in due course. It is considered that
the board would be robust to any unplanned
retirements and be able to recruit suitable, well-
qualified, candidates within a reasonable time period.
The total amount of directors’ remuneration for the year ended December 2015 was as follows:-
BENEFITS
IN KIND
£
SALARY
IN LIEU OF
PENSION
£
TOTAL
PENSION REMUNERATION
2015
£
COSTS
£
TOTAL
REMUNERATION
2014
£
SALARY
AND FEES
£
160,000
266,500
200,000
BONUS
£
36,000
60,000
45,000
26,049
39,411
25,484
24,605
40,982
—
—
—
25,000
626,500
141,000
90,944
65,587
25,000
30,000
43,000
35,000
—
108,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
246,654
406,893
295,484
949,031
30,000
43,000
35,000
—
230,040
395,240
272,722
898,002
27,500
39,250
32,000
11,881
108,000
110,631
Executive directors
P E Hadsley-Chaplin
P A Fletcher
T R J Price
Non-executive directors
R M Robinow
J D Shaw
J M Green-Armytage
K P Legg
Total
734,500
141,000
90,944
65,587
25,000
1,057,031
1,008,633
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”). 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. No long-term incentives, other than the share options described below, have been awarded to directors.
3. Directors’ remuneration includes any bonus in respect of the year even where this is paid after the year end. Previously,
bonuses have been reported in the year in which they were paid. Total remuneration for 2014 has been increased by
£21,000 compared with that previously reported to reflect this change (P E Hadsley-Chaplin £6,000, P A Fletcher £10,000
and T R J Price £5,000).
45
REPORT OF THE BOARD TO THE SHAREHOLDERS ON
DIRECTORS’ REMUNERATION CONTINUED
REMUNERATION POLICY
The remuneration committee’s philosophy is to offer a
transparent and simple remuneration package to the
executive directors, comprising a salary, a bonus
related to current results and personal performance,
and share options. This structure for remuneration is
designed to be easily understood by both executives
and shareholders. It aims to encourage the executive
directors to work collegiately, focus their efforts on
making the decisions that are in the Group’s best
long-term interests, and, to some extent, share in the
benefits that accrue to shareholders from a higher
future share price. It avoids the need for complex
performance measures and the risk that targets
encourage behaviour that sacrifices long-term growth
potential in favour of short-term results.
Executive directors
The Group’s policy on remuneration recognises that
the success of the Group depends, in part, on the
performance of the directors and senior management
and recognises the importance of ensuring that
employees are incentivised. When determining the
remuneration of the executive directors, the
remuneration committee considers the pay and
conditions across the Group, particularly those of the
senior management of the operations in Indonesia.
It is the Group’s policy to provide remuneration
packages for the directors and senior management
which are a fair reward for their contribution to the
business, having regard to the complexity of the
Group’s operations and the need to attract, retain and
motivate high-quality senior management. In addition,
remuneration packages are designed to ensure
retention in the long term and to be broadly
comparable with those offered by similar businesses.
In reaching its decisions, the remuneration committee
reviews remuneration in other European plantation
and AIM-listed companies.
Non-pensionable bonuses may be awarded annually
in arrears at the discretion of the committee, taking
account of the Group’s performance during the period
and other targeted objectives. Bonuses do not exceed
six months’ salary.
The committee has put in place long-term incentives
by means of options to purchase shares, with a view to
aligning the interests of the executive directors with
those of the shareholders. Executive directors are given
the option to purchase shares on a future date at the
market price on the date that the options are granted.
Non-executive directors
The fees of the non-executive directors are determined
by the board having regard to the complexity of the
Group’s operations and the need to attract, retain and
motivate high-quality non-executive directors and the
level of fees paid for similar roles in equivalent
companies.
EXECUTIVE SHARE-OPTION SCHEMES
The executive directors are members of executive
share-option schemes which were established in 2001
and 2012 under which options to subscribe for shares
in the Company may be granted to selected
employees. No further options can be granted under
the schemes established in 2001. As at 31 December
2015, options over 250,000 (2014 – 250,000) shares
granted to executive directors remain outstanding.
These were granted to the executive directors between
16 November 2007 and 17 January 2013. During the
year, no options (2014 – none) granted to directors
were exercised and none (2014 – none) lapsed.
No performance criteria are attached to the options
and no options are held by the non-executive
directors. However, options grant the executive
director the right to purchase shares on a future date at
the market price of the shares on the date that the
options are granted. As such, the value of any option
is closely tied to the performance of the Group as
reflected in its share price. These options are of no
value if the share price on the exercise date is lower
than that on the date that the options were granted.
At 31 December 2015 the middle-market quotation for
the Company’s shares, as derived from the London
Stock Exchange Daily Official List, was 390.00p, as
compared with the high and low quotations for the
year of 438.50p and 345.50p respectively.
Details of the options held over shares of the Company
by the executive directors during the year ended
31 December 2015 are set out in the table overleaf:-
46
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
Number of shares under option
BALANCE AT GRANTED EXERCISED
IN THE
YEAR
1 JANUARY
2015
IN THE
YEAR
BALANCE AT
31 DECEMBER
2015
EXERCISE
PRICE
MARKET
PRICE WHEN
EXERCISED
DATE FROM
WHICH
DATE OF NORMALLY
OF GRANT EXERCISABLE
P E Hadsley-
Chaplin
P A Fletcher
T R J Price
Total
—
—
75,000*
75,000*
50,000
5,750
44,250
250,000
250,000
—
—
—
—
—
—
—
—
—
* Held at appointment on 1 January 2010
—
—
—
—
—
—
—
—
—
—
—
—
—
75,000 385.00p
75,000 159.50p
50,000 483.21p
5,750 520.00p
44,250 510.00p
250,000
250,000
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
whilst in the employment of the Company and
life-assurance cover based on a multiple of salary.
No element of a director’s remuneration package,
other than basic 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 at the same cost
to the Company.
Approved by the board of directors and signed on its
behalf
Claire Hayes
Company secretary
21 April 2016
EXPIRY
DATE
—
—
—
—
—
—
—
—
— 16 Nov 07 16 Nov 10 16 Nov 17
— 24 Nov 08 24 Nov 11 24 Nov 18
19 Jun 22
— 19 Jun 12
17 Jan 23
— 17 Jan 13
19 Jun 15
17 Jan 16
— 17 Jan 13
17 Jan 16
17 Jan 23
47
INDEPENDENT AUDITORS’ REPORT
To the members of M.P. Evans Group PLC
REPORT ON THE GROUP FINANCIAL
STATEMENTS
OUR OPINION
In our opinion, M.P.Evans Group PLC’s Group
financial statements (the “financial statements”):
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.
give a true and fair view of the state of the Group’s
affairs as at 31 December 2015 and of its profit and
cash flows for the year then ended;
OTHER MATTERS ON WHICH WE ARE REQUIRED TO
REPORT BY EXCEPTION
have been properly prepared in accordance with
Adequacy of information and explanations received
International Financial Reporting Standards
(“IFRSs”) as adopted by the European Union; and
have been prepared in accordance with the
requirements of the Companies Act 2006.
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 WE HAVE AUDITED
The financial statements, included within the annual
report, comprise:
the consolidated balance sheet as at
31 December 2015;
the consolidated income statement and
consolidated statement of comprehensive income
for the year then ended:
the consolidated statement of changes in equity for
the year then ended;
the consolidated cash-flow statement for the year
then ended;
the notes to the financial statements, which include
a summary of significant accounting policies and
other explanatory information.
Certain required disclosures have been presented
elsewhere in the annual report, rather than in the notes
to the financial statements. These are cross-referenced
from the financial statements and are identified as
audited.
The financial reporting framework that has been
applied in the preparation of the financial statements
is IFRSs as adopted by the European Union, and
applicable law.
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.
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.
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 set out on pages 39 and 40, the
directors are responsible for the preparation of the
financial statements and for being satisfied that they
give a true and fair view.
Our responsibility is to audit and express an opinion on
the financial statements in accordance with applicable
law and International Standards on Auditing (UK and
Ireland) (“ISAs (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 parent 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.
48
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (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 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.
We primarily focus our work in these areas by
assessing the directors’ judgements against available
evidence, forming our own judgements, and
evaluating the disclosures in the financial statements.
We test and examine information, using sampling and
other auditing techniques, to the extent we consider
necessary to provide a reasonable basis for us to draw
conclusions. We obtain audit evidence through testing
the effectiveness of controls, substantive procedures or
a combination of both.
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.
OTHER MATTER
We have reported separately on the parent-Company
financial statements of M.P.Evans Group PLC for the
year ended 31 December 2015.
Timothy McAllister (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
21 April 2016
49
CONSOLIDATED
INCOME STATEMENT
For the year ended 31 December 2015
Continuing operations
Revenue
Cost of sales
Gross profit
Loss on biological assets
Foreign-exchange losses
Other administrative expenses
Other income
Operating profit
Finance income
Finance costs
Group-controlled profit before tax
Tax on profit on ordinary activities
Group-controlled profit after tax
Share of associated companies’ profit after tax
Profit for the year on continuing operations
Profit/(loss) for the year from discontinued operations
Profit for the year
Attributable to:
Owners of M.P.Evans Group PLC
Non-controlling interests
Continuing operations
Basic earnings per 10p share
Diluted earnings per 10p share
Continuing and discontinued operations
Basic earnings per 10p share
Diluted earnings per 10p share
YEAR ENDED
31 DECEMBER
2015
NOTE
US$’000
YEAR ENDED
31 DECEMBER
2014
(RESTATED)*
US$’000
4
4
17
4
4
4
4,6
4,7
8
4,9
4,15
30
12
12
12
12
72,528
(57,469)
15,059
(232)
(5,320)
(2,768)
380
7,119
894
(1,244)
6,769
(2,401)
4,368
19,531
23,899
1,496
25,395
24,084
1,311
25,395
89,956
(58,189)
31,767
(424)
(2,379)
(4,596)
448
24,816
1,600
(2,354)
24,062
(9,095)
14,967
15,308
30,275
(2,012)
28,263
25,065
3,198
28,263
US CENTS
US CENTS
40.70
40.66
43.39
43.35
49.08
49.02
45.44
45.38
* Restated for the early adoption of amended IAS 16, ‘Property, plant and equipment’ and IAS 41, ‘Agriculture’ in relation to bearer
plants (see note 33).
50
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
For the year ended 31 December 2015
Other comprehensive income
Items that may be reclassified to the income statement
Exchange loss on translation of foreign operations
Release of deferred profit on sale of land
Items that will not be reclassified to the income statement
Release of deferred tax
Other comprehensive income/(expense)
Other comprehensive expense for the year
Profit for the year
Total comprehensive income
Attributable to:
Owners of M.P.Evans Group PLC
Non-controlling interests
YEAR ENDED
31 DECEMBER
2015
US$’000
YEAR ENDED
31 DECEMBER
2014
(RESTATED)*
US$’000
(10,402)
(263)
—
232
(10,433)
25,395
14,962
13,630
1,332
14,962
(4,060)
(506)
2,460
(587)
(2,693)
28,263
25,570
21,483
4,087
25,570
* Restated for the early adoption of amended IAS 16, ‘Property, plant and equipment’ and IAS 41, ‘Agriculture’ in relation to bearer
plants (see note 33).
51
CONSOLIDATED
BALANCE SHEET
As at 31 December 2015
Non-current assets
Goodwill
Property, plant and equipment
Investments in associates
Investments
Deferred-tax asset
Current assets
Biological assets
Inventories
Trade and other receivables
Current-tax asset
Cash and cash equivalents
Total assets
Current liabilities
Borrowings
Trade and other payables
Current-tax liability
Net current assets
Non-current liabilities
Borrowings
Deferred-tax liability
Retirement-benefit obligations
Total liabilities
Net assets
Equity
Share capital
Other reserves
Retained earnings
Equity attributable to the owners of M.P.Evans Group PLC
Non-controlling interests
Total equity
31 DECEMBER
2015
NOTE
US$’000
31 DECEMBER
2014
(RESTATED)*
US$’000
31 DECEMBER
2013
(RESTATED)*
US$’000
13
14
15
16
25
17
18
19
20,23
4
22
21
22
25
26
4
27
29
29
30
1,157
185,902
97,586
78
17,076
301,799
893
8,000
18,316
3,155
44,214
74,578
1,157
191,584
94,333
96
14,137
301,307
5,564
6,879
13,220
2,029
48,042
75,734
1,157
185,471
95,521
102
14,996
297,247
2,143
8,267
12,345
2,201
56,348
81,304
376,377
377,041
378,551
13,453
15,209
2,206
30,868
43,710
19,222
429
4,233
23,884
54,752
32,424
12,555
2,202
47,181
28,553
14,103
199
3,765
18,067
65,248
31,710
10,311
4,313
46,334
34,970
34,780
2,903
2,933
40,616
86,950
321,625
311,793
291,601
9,360
76,226
214,423
300,009
21,616
321,625
9,302
69,258
212,949
291,509
20,284
311,793
9,253
75,212
190,939
275,404
16,197
291,601
* Restated for the early adoption of amended IAS 16, ‘Property, plant and equipment’ and IAS 41 ‘Agriculture’ in relation to bearer
plants (see note 33).
The financial statements of pages 50 to 79 were approved by the board of directors on 21 April 2016 and signed
on its behalf by
Tristan Price
Director
Philip Fletcher
Director
52
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
For the year ended 31 December 2015
NON-CON-
SHARE OTHER RETAINED TROLLING TOTAL
CAPITAL RESERVES EARNINGS TOTAL INTERESTS EQUITY
NOTE US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Profit for the year — 19,531 4,553 24,084 1,311 25,395
Other comprehensive
(expense)/income for the year — (7,312) (3,142) (10,454) 21 (10,433)
Total comprehensive income for the year — 12,219 1,411 13,630 1,332 14,962
Issue of share capital 27,29 58 2,308 — 2,366 — 2,366
Dividends 10,15,31 — (7,637) 63 (7,574) — (7,574)
Credit to equity for equity-settled
share-based payments 28 — 78 — 78 — 78
Transactions with owners 58 (5,251) 63 (5,130) — (5,130)
At 1 January 2015 9,302 69,258 212,949 291,509 20,284 311,793
At 31 December 2015 29,30 9,360 76,226 214,423 300,009 21,616 321,625
Profit for the year — 15,308 9,757 25,065 3,198 28,263
Other comprehensive
(expense)/income for the year — (11,734) 8,152 (3,582) 889 (2,693)
Total comprehensive income for the year — 3,574 17,909 21,483 4,087 25,570
Issue of share capital 27,29 49 2,130 — 2,179 — 2,179
Dividends 10,15,31 — (11,742) 4,101 (7,641) — (7,641)
Credit to equity for equity-settled
share-based payments 28 — 84 — 84 — 84
Transactions with owners 49 (9,528) 4,101 (5,378) — (5,378)
At 1 January 2014 9,253 102,548 235,390 347,191 24,101 371,292
Adjustment on change in
accounting policy 2(a)(i) (27,336) (44,451) (71,787) (7,904) (79,691)
At 1 January 2014 (restated*) 9,253 75,212 190,939 275,404 16,197 291,601
At 31 December 2014 (restated*) 29,30 9,302 69,258 212,949 291,509 20,284 311,793
* Restated for the early adoption of amended IAS 16, ‘Property, plant and equipment’ and IAS 41, ‘Agriculture’ in relation to bearer
plants (see note 33).
53
CONSOLIDATED
CASH-FLOW STATEMENT
For the year ended 31 December 2015
Net cash generated by operating activities
Investing activities
Purchase of property, plant and equipment
Interest received
Proceeds on disposal of property, plant and equipment
Sale of shares to non-controlling interest
Net cash used by investing activities
Financing activities
Loan drawdown
Repayment of borrowings
Proceeds on issue of shares
Dividends paid to Company shareholders
Dividend paid to non-controlling interest
Net cash used by financing activities
Net decrease in cash and cash equivalents
Net cash and cash equivalents at 1 January
Effect of foreign-exchange rates on cash and cash equivalents
Net cash and cash equivalents at 31 December
YEAR ENDED
31 DECEMBER
2015
NOTE
US$’000
YEAR ENDED
31 DECEMBER
2014
(RESTATED)*
US$’000
31
14
6
30
23
23
27
30
20
20,231
29,156
(28,419)
894
21,127
—
(20,556)
1,600
1,985
926
(6,398)
(16,045)
18,571
(30,449)
—
(5,208)
—
(17,086)
(3,253)
48,042
(575)
44,214
—
(16,548)
—
(5,462)
—
(22,010)
(8,899)
56,348
593
48,042
* Restated for the early adoption of amended IAS 16, ‘Property, plant and equipment’ and IAS 41, ‘Agriculture’ in relation to bearer
plants (see note 33).
54
NOTES
TO THE CONSOLIDATED ACCOUNTS
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
For the year ended 31 December 2015
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 92. The nature of the
Group’s operations and its principal activities are set out in note 4 and in the strategic report on pages 10 to 25. The Group is
domiciled in the UK.
The functional currency of M.P.Evans Group PLC, determined under IAS 21, is the US Dollar. Likewise, the functional currency
of subsidiaries operating in the palm-oil sector is the US Dollar. The functional currency of Group companies operating in the
beef-cattle and property-development sectors is the local currency.
As permitted by section 408 of the Companies Act 2006, the Company has elected not to present its own income statement for
the year. M.P.Evans Group PLC reported a profit of US$57,958,000 for the financial year ended 31 December 2015 (2014
US$36,754,000). The Company’s separate financial statements are set out on pages 82 to 86.
By virtue of Section 479A of the Companies Act 2006, the following subsidiaries are exempt from the requirement to have an
audit and prepare individual accounts: Lendu (UK) Limited; Sungkai Estates Limited; Supara Investments Limited; and The
Singapore Para Rubber Estates, Limited.
NOTE 2
Adoption of new and revised accounting standards
(a) New and amended standards adopted by the Group
i) Amendments to IAS 16, ‘Property, plant and equipment’ and IAS 41, ‘Biological assets’ (see notes 3(c), 3(s)(i) and 33)
on pages 56, 59 and 77 to 79.
(b) New standards, amendments and interpretations issued but not effective for the year beginning 1 January 2015 and not
adopted early:
i)
ii)
iii)
IFRS 9, 'Financial instruments' (effective 1 January 2018, not yet endorsed by the EU) replaces the guidance in IAS 39
on the classification and measurement of financial assets and liabilities. The Group has not yet assessed the impact of
this on the consolidated financial statements.
IFRS 15, 'Revenue from contracts with customers' (effective 1 January 2018, not yet endorsed by the EU). This affects
the point at which revenue is recognised and is not expected to have a material impact on the Group’s results.
IFRS 16, ‘Leases' (effective 1 January 2019 or when applying IFRS 15, not yet endorsed by the EU). The new standard
requires lessees to recognise nearly all leases on the balance sheet, reflecting both their right to use an asset and the
associated liability for payments. This is not expected to have a material impact on the Group’s results or financial position.
iv) Amendment to IAS 16,'Property, plant and equipment' and IAS 38,'Intangible assets', on depreciation and amortisation
(effective 1 January 2016) clarified that depreciation should not be based on measures of revenue. This is not expected
to have a material impact on the Group’s results or financial position.
v) Amendments to IAS 27, 'Separate financial statements' on equity accounting (effective 1 January 2016) allow entities to
use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate
financial statements. This is not expected to have a material impact on the Group’s results or financial position.
vi) Amendments to IFRS 10, 'Consolidated financial statements' and IAS 28,'Investments in associates and joint ventures'
on applying a consolidation exemption (effective 1 January 2016, not yet endorsed by the EU) clarifies the application
of the consolidation exception for investment entities and their subsidiaries. This is not expected to have a material
impact on the Group’s results or financial position.
vii) Annual improvements (2014) effective 1 January 2016 affecting IFRS 5, ‘Non-current assets held for sale and
discontinued operations’ regarding methods of disposal; IFRS 7, ‘Financial instruments: Disclosures’, (with
consequential amendments to IFRS 1) regarding servicing contracts; IAS 19, ‘Employee benefits’ regarding discount
rates; and IAS 34, ‘Interim financial reporting’ regarding disclosure of information. None are expected to have a
material impact on the Group’s results or financial position.
viii) Amendments to IAS 12,'Income taxes' on recognition of deferred tax assets for unrealised losses (effective 1 January
2017, not yet endorsed by the EU) clarifies how to account for deferred tax assets related to debt instruments measured
at fair value. The Group has not yet assessed the impact of this on the consolidated financial statements.
ix) Amendments to IAS 7, Statement of cash flows (effective 1 January 2017, not yet endorsed by the EU) to enable
users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes
arising from cash flows and non-cash changes. The Group has not yet assessed the impact of this on the consolidated
financial statements.
55
NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED
NOTE 3
Accounting policies
(a) Accounting convention and basis of presentation
The consolidated financial statements of M.P.Evans Group PLC have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) and IFRS Interpretations Committee (“IFRS IC”) interpretations as adopted by the
European Union, and the Companies Act 2006 as applicable to companies reporting under IFRS. They have been prepared
under the historical cost convention, as modified by the valuation of biological assets and available-for-sale financial assets.
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 43.
(c) Change in accounting policy
The Group has adopted the revised International Accounting Standards 16, ‘Property, plant and equipment’ and IAS 41,
‘Agriculture’ in these financial statements. Comparative amounts have been restated to bring them in line with this change
in accounting policy (see note 33).
(d) 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.
(e) 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.
(f) 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. These are included within operating profit.
(g) 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.
(h) 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 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
56
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
NOTE 3
continued
Accounting policies CONTINUED
(h) Share-based payments (continued)
volatility is assessed as the average standard deviation over one year using share prices since 1 January 1993. 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.
(i) Goodwill
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.
Goodwill arising on acquisition 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.
(j) Biological assets
Cattle at the Group’s Woodlands operation (sold in November 2015) are classified as current consumer-biological 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 cost of forage crops is charged to the income statement over the period during which they are consumed. 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.
For internal reporting and decision making, the Group’s policy is to recognise f.f.b. at the point of harvest.
For the purposes of statutory reporting, taking into account advice from the Group’s auditor on the interpretation of IAS 41,
the Group’s policy is to include an estimate of the value of f.f.b. prior to harvest as a biological asset in the Group’s
financial statements (see note 17). The valuation falls into the IFRS category ‘Level 3’, since f.f.b. prior to harvest are never
transacted. This policy will be kept under review.
(k) 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 is classified as freehold land, which is not
depreciated. Oil-palm plantings are recognised at cost and depreciated over 20 years.
Buildings, plant, equipment and vehicles 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. Where the board judges the residual
value of an asset to exceed its carrying value, no provision is made for depreciation.
Construction in-progress is measured at cost and is not depreciated.
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 at
transition to IFRS is taken to be their deemed cost.
(l)
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 2015. 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.
57
NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED
NOTE 3
continued
Accounting policies CONTINUED
(m) 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.
(n) 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.
(o) 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 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 the temporary
difference will not reverse in the foreseeable future. The carrying amount of deferred-tax assets is reviewed at each
balance-sheet date.
Deferred-tax assets and liabilities are offset when there is a legally-enforceable right to set off current-tax assets against
current-tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to
settle its current-tax assets and liabilities on a net basis.
(p) 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.
(q) 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 in 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’.
58
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
NOTE 3
continued
Accounting policies CONTINUED
(r) 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.
(s) 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
Oil palms are harvested continuously, and so at any given time each individual palm will be at a different point in its
production cycle depending on its age, innate productivity, past production, rainfall, terrain, climate and husbandry. It
is not feasible to undertake a census of each individual palm: the Group’s own operations contain upward of three
million palms. Even if it were possible to conduct a census, there is no accepted method within the industry for
gauging the time until harvest of an observable growing bunch. Hence it is impossible to measure directly the volume
of growing f.f.b..
An alternative to direct measurement is to estimate the volume of growing f.f.b. indirectly. This can be done by
attributing an assumed percentage of full ripeness at the measurement date to crop actually harvested in future months.
This necessitates further assumptions about percentage ripeness. Female flowers that become f.f.b. appear some 22
months prior to harvest, though bunches become visible only some five to six months prior to harvesting. By
assumption, a decreasing percentage can be applied to future crop to synthesise an assumed volume of growing
bunches at the measurement date.
The Group has investigated a range of different assumptions for indirectly estimating the equivalent of tonnage-at-
harvest of its growing f.f.b.. These deliver a valuation ranging from US$1.1 million to US$13.2 million at 31 December
2014. In the board’s view, the wide range of estimates generated by the Group’s initial exploration of the valuation
possibilities support its conclusion that there is no measure of growing f.f.b. prior to harvest widely accepted in the
industry, in the sense that reasonable persons would tend to arrive at substantially the same value for the asset being
measured. Given there is no one self-evidently correct methodology and that different defensible methodologies will
give widely differing answers, f.f.b. prior to harvest continue to be excluded from internal reporting and are not used in
decision making; rather, for both these purposes f.f.b. are recognised at the point of harvest.
The Group’s auditors have a different interpretation to that of the board regarding f.f.b. prior to harvest, and on their
advice that reliable measurement constitutes an ability to construct an estimation methodology capable of being
applied consistently from year to year, the Group’s policy for statutory reporting is to include an estimate of f.f.b. prior
to harvest in its financial statements. This estimate is based on the assumption that ‘measurable’ value in f.f.b. is related
to oil content, which accrues exponentially in the four weeks prior to harvest (see note 17).
(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(k).
(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.
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.
59
NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED
NOTE 4
Segment information
The Group’s reportable segments follow the three areas of activity set out in the strategic report 2015. 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.
PLANTATION
INDONESIA
US$’000
PLANTATION
MALAYSIA
US$’000
TOTAL
US$’000
CATTLE
AUSTRALIA
US$’000
PROPERTY
MALAYSIA
US$’000
OTHER
UK
US$’000
TOTAL
US$’000
2015
Continuing operations
Revenue
Gross profit/(loss)
72,381
15,084
Loss on biological assets
Foreign-exchange (loss)/gain
Other administrative gains/(expenses)
Other income
(232)
(5,311)
289
373
Operating profit
Finance income
Finance costs
863
(788)
101
(71)
—
(116)
221
7
17
—
72,482
15,013
(232)
(5,427)
510
380
880
(788)
(1,260)
(26)
(1,286)
—
—
—
—
(19)
—
4
—
—
—
—
—
—
—
—
—
—
—
46
46
72,528*
15,059
—
107
(3,259)
—
10
(456)
(1,115)
(232)
(5,320)
(2,768)
380
7,119
894
(1,244)
6,769
(2,401)
4,368
Group-controlled profit before tax
Tax
Group-controlled profit after tax
Share of associated companies’
profit after tax
Profit for the year for continuing
operations
Profit for the year on discontinued
operations
Profit for the year
Consolidated total assets
Assets
Investments in associates
Consolidated total liabilities
Liabilities
Other information
Additions to non-current assets
Depreciation
Retirement-benefit obligations
5,804
—
5,804
10,977
2,750
—
19,531
—
—
—
1,496
—
—
23,899
1,496
25,395
263,621
30,352
293,973
768
—
768
264,389
30,352
294,741
2,150
52,164
54,314
—
15,070
15,070
12,252
—
12,252
278,791
97,586
376,377
31,917
47
31,964
3,213
28,126
9,594
1,016
—
10
—
28,126
9,604
1,016
227
220
—
—
—
—
—
19,575
54,752
66
45
—
28,419
9,869
1,016
* US$34.5 million of revenue (47.6%) was from sales of CPO and f.f.b. to four customers (14.2%, 12.0%, 10.8% and 10.6% respectively).
60
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
NOTE 4
continued
Segment information CONTINUED
PLANTATION
INDONESIA
US$’000
PLANTATION
MALAYSIA
US$’000
TOTAL
US$’000
CATTLE
AUSTRALIA
US$’000
PROPERTY
MALAYSIA
US$’000
OTHER
UK
US$’000
TOTAL
US$’000
2014 (restated)*
Continuing operations
Revenue
Gross profit/(loss)
89,786
31,813
(424)
Loss on biological assets
Foreign-exchange (loss)/gain
(2,074)
Other administrative (expenses)/gains (1,356)
448
Other income
Operating profit
Finance income
Finance costs
1,259
(1,758)
124
(92)
—
(354)
396
—
322
(266)
89,910
31,721
(424)
(2,428)
(960)
448
1,581
(2,024)
—
—
—
—
(20)
—
9
—
(7,066)
(557)
(7,623)
(25)
—
—
—
—
—
—
—
—
—
46
46
—
49
(3,616)
—
10
(330)
(1,447)
89,956*
31,767
(424)
(2,379)
(4,596)
448
24,816
1,600
(2,354)
24,062
(9,095)
14,967
Group-controlled profit before tax
Tax
Group-controlled profit after tax
Share of associated companies’
profit after tax
Profit for the year for continuing
operations
Loss for the year on discontinued
operations
Profit for the year
Consolidated total assets
Assets
Investments in associates
Consolidated total liabilities
Liabilities
Other information
Additions to non-current assets
Depreciation
Retirement-benefit obligations
10,949
—
10,949
1,454
2,905
—
15,308
—
—
—
(2,012)
—
—
30,275
(2,012)
28,263
238,167
30,643
268,810
1,052
-
1,052
239,219
30,643
269,862
29,003
47,147
76,150
—
16,543
16,543
14,486
—
14,486
282,708
94,333
377,041
35,890
68
35,958
18,236
20,496
8,984
1,178
—
12
—
20,496
8,996
1,178
57
355
—
—
—
—
—
11,054
65,248
3
37
—
20,556
9,388
1,178
* US$42.3 million of revenue (47.0%) was from sales of CPO to three customers (19.0%, 17.1% and 10.9% respectively).
61
NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED
NOTE 5
Employees
Employee costs during the year
Wages and salaries
Social-security costs
Current-service cost of retirement benefit (see note 26)
Other pension costs
Share-based-payment charge
Average monthly number of persons employed (including executive directors)
Estate manual
Local management
United Kingdom head office
2015
US$’000
2014
US$’000
11,743
1,405
942
130
78
14,298
12,583
894
620
169
84
14,350
NUMBER
NUMBER
3,404
72
7
3,483
2,141
71
7
2,219
Details of directors’ remuneration required by the Companies Act 2006 are shown within the report of the board to the
shareholders on directors’ remuneration on pages 45 to 47 and form part of these audited financial statements.
NOTE 6
Finance income
Interest receivable on bank deposits
NOTE 7
Finance costs
Interest payable on bank loans and overdrafts
NOTE 8 Group-controlled profit before tax
Profit before tax is stated after charging
Depreciation of property, plant and equipment
Auditors’ remuneration
Employee costs (note 5)
The analysis of auditors’ remuneration is as follows:-
Fees payable to the Company’s auditor and their associates for services to the Group*
Audit of UK parent Company
Audit of consolidated financial statements
Total audit services
Audit of overseas subsidiaries
Total fees payable
2015
US$’000
894
2015
US$’000
1,244
2015
US$’000
9,869
343
14,298
20
94
114
186
300
2014
US$’000
1,600
2014
US$’000
2,354
2014
(RESTATED)
US$’000
9,388
356
14,350
20
96
116
172
288
* In addition to the above, fees of US$43,000 (2014 US$68,000) were payable to other firms for the audit of subsidiary companies.
62
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
NOTE 9
Tax on profit on ordinary activities
United Kingdom corporation tax charge for the year
Relief for overseas taxation
Overseas taxation
Adjustments in respect of prior years
Total current tax
Deferred taxation – origination and reversal of temporary differences (see note 25)
2015
US$’000
480
(480)
—
7,001
26
7,027
(4,626)
2,401
2014
(RESTATED)
US$’000
413
(413)
—
8,152
—
8,152
943
9,095
The standard rate of tax for the year, based on the United Kingdom standard rate of corporation tax, was 20.25%
(2014 – 21.49%). The standard rate of Indonesian tax was 25% for the current year (2014 – 25%). The actual tax charge is
higher (higher also in 2014) than the standard rate for the reasons set out in the following reconciliation:-
Profit on ordinary activities before tax
Tax on profit on ordinary activities at the standard rate
Factors affecting the charge for the year
Withholding tax on overseas dividends and interest
Unrelieved losses
Expenses not deductible for tax purposes
Unrealised Indonesian exchange differences not included in Group profit
Utilisation of losses brought forward
Lower rate applicable to disposals of fixed assets
Biological assets
Other exchange differences
Adjustments to valuation of investments
Other differences
Total actual amount of tax
NOTE 10 Dividends paid and proposed
2015 interim dividend – 2.25p per 10p share (2014 interim dividend – 2.25p)
2014 final dividend – 6.50p per 10p share (2013 final dividend – 6.00p)
2015
US$’000
6,769
1,371
635
1,677
6
(1,349)
(46)
(263)
47
(392)
(102)
817
2,401
2015
US$’000
1,928
5,646
7,574
2014
US$’000
24,062
5,171
1,059
1,474
21
47
(56)
(99)
91
115
51
1,221
9,095
2014
US$’000
1,994
5,647
7,641
Following the year end, the board has proposed a final dividend for 2015 of 6.50p per 10p share, amounting to
US$5.10 million. Shareholders will again have the option to elect to receive the dividend in shares rather than in cash.
Further information is published in the report of the directors on page 36. The dividend will be paid on or after 21 June 2016 to
those shareholders on the register at the close of business on 22 April 2016.
63
NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED
NOTE 11 Discontinued operations
The Group completed the sale of its wholly-owned cattle property in Australia, Woodlands, in November 2015. This has been
reported in these financial statements as a discontinued operation. The financial information relating to the discontinued
operation for the period up to the date of disposal is set out below.
Revenue
Expenses
Profit/(loss) before income tax
Loss on disposal of property
Profit/(loss) from discontinued operation
Net cash inflow/(outflow) from operating activities
Net cash inflow from investing activities
Net cash outflow from financing activities
Net increase/(decrease) in cash generated by discontinued operations
NOTE 12 Basic and diluted earnings per share
The calculation of earnings per 10p share is based on:
2015
US$’000
11,259
(9,355)
1,904
(408)
1,496
2015
US$’000
1,904
20,862
(16,058)
6,708
2014
US$’000
966
(2,978)
(2,012)
—
(2,012)
2014
US$’000
(4,133)
4
(5,487)
(9,616)
Profit for the year attributable to the owners of
M.P.Evans Group PLC
Average number of shares in issue
Diluted average number of shares in issue*
2015
NUMBER
OF SHARES
2015
US$’000
24,084
2014
NUMBER
OF SHARES
2014
US$’000
25,065
55,501,745
55,557,477
55,163,657
55,235,438
* The difference between the number of shares in issue and the diluted number of shares relates to unexercised share options held by directors
and key employees of the Group.
Basic earnings per share
From continuing operations attributable to equity holders of the company
From discontinued operation
Total basic earnings per share attributable to equity holders of the company
Diluted earnings per share
From continuing operations attributable to equity holders of the company
From discontinued operation
Total diluted earnings per share attributable to equity holders of the company
2015
US CENTS
2014
(RESTATED)
US CENTS
40.70
2.69
43.39
40.66
2.69
43.35
49.08
(3.64)
45.44
49.02
(3.64)
45.38
64
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
NOTE 13 Goodwill
At 1 January and 31 December
2015
US$’000
1,157
2014
US$’000
1,157
Goodwill is carried at cost. The directors have tested goodwill for impairment, concluding that the carrying amounts are
recoverable. Goodwill has arisen in respect of the Group’s projects in Indonesia in Kalimantan and on Bangka Island. The directors
consider the fair value of these investments to exceed their carrying value by a significant margin. Given this, and the size of the
goodwill balance, the directors do not consider it necessary to provide further detailed disclosures regarding impairment.
NOTE 14 Property, plant and equipment
FREEHOLD
LAND
US$’000
LEASEHOLD
LAND
US$’000
PLANTING
US$’000
BUILDINGS
US$’000
PLANT,
EQUIPMENT
& VEHICLES
US$’000
CON-
STRUCTION
IN PROGRESS
US$’000
TOTAL
US$’000
Cost or valuation
At 1 January 2015
Additions
Re-classification
Exchange differences
Disposals
At 31 December 2015
Accumulated depreciation
At 1 January 2015
Charge for the year
Exchange differences
Disposals
At 31 December 2015
Net book value at 31 December 2015
Cost or valuation
At 1 January 2014 (restated)
Additions
Re-classification
Exchange differences
Disposals
At 31 December 2014 (restated)
Accumulated depreciation
At 1 January 2014 (restated)
Charge for the year
Exchange differences
Disposals
Impairment
At 31 December 2014 (restated)
Net book value at
3,682
—
—
(3,682)
—
—
26,008
—
—
(1,921)
—
24,087
2,566
—
—
—
1,116
3,682
24,087
151
—
(2,234)
(22,004)
30,773
3,024
—
(44)
—
93,493
8,121
—
—
(238)
—
33,753
101,376
215
18
—
—
233
13,892
4,122
—
(196)
17,818
52,803
451
3,911
(456)
(3,594)
53,115
10,866
2,910
(128)
(975)
12,673
34,300
1,861
—
(283)
(3,194)
32,684
18,030
2,819
(231)
(2,603)
18,015
2,813
14,811
(3,911)
—
—
238,269
28,419
—
(3,017)
(29,030)
13,713
234,641
—
—
—
—
—
46,685
9,869
(359)
(7,456)
48,739
33,520
83,558
40,442
14,669
13,713
185,902
28,185
2,604
—
(16)
—
30,773
201
14
—
—
—
215
87,406
8,639
—
—
(2,552)
93,493
11,254
3,620
—
(982)
—
13,892
44,030
—
9,403
(355)
(275)
52,803
8,382
2,678
(88)
(106)
—
10,866
32,642
2,367
—
(364)
(345)
34,300
15,667
3,076
(330)
(383)
—
18,030
5,270
6,946
(9,403)
—
—
223,541
20,556
—
(2,656)
(3,172)
2,813
238,269
—
—
—
—
—
—
38,070
9,388
(418)
(1,471)
1,116
46,685
31 December 2014 (restated)
20,405
30,558
79,601
41,937
16,270
2,813
191,584
Net book value at
1 January 2014 (restated)
23,442
27,984
76,152
35,648
16,975
5,270
185,471
As at 31 December 2015, the Group had entered into contractual commitments for the acquisition of property, plant and
equipment of US$9,108,000 (2014 US$2,267,000).
Depreciation is charged to cost of sales, other than US$45,000 (2014 US$37,000) charged to other administrative expenses.
65
NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED
NOTE 15
Investments in associates
Details of the Group’s subsidiary and associated undertakings are given on page 87. The Group’s associated companies are
all unlisted.
Share of net assets
At 1 January
Exchange differences
Profit for the year
Dividends received
At 31 December
Goodwill
At 1 January and 31 December
Carrying value
At 31 December
At valuation
Unlisted (directors’ valuation)
SHARE OF
NET ASSETS
2015
US$’000
93,332
(8,641)
19,531
(7,637)
96,585
SHARE OF
NET ASSETS
2014
(RESTATED)
US$’000
94,519
(4,753)
15,308
(11,742)
93,332
1,001
1,001
97,586
94,333
212,000
202,000
The Group’s aggregate share of the summarised results of its associated undertakings is shown below:-
AGRO MUKO
(36.84%)
US$’000
KERASAAN
(38.00%)
US$’000
NAPCO
(34.37%)
US$’000
BERTAM
PROPERTIES
(40.00%)
US$’000
2015
Revenue
Profit after tax
Non-current assets
Current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Goodwill
Carrying value at 31 December
2014 (restated)
Revenue
Profit after tax
Non-current assets
Current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Goodwill
Carrying value at 31 December
18,640
5,105
22,759
9,227
31,986
(2,359)
(2,079)
(4,438)
27,548
735
28,283
25,596
9,856
21,226
12,067
33,293
(3,339)
(1,985)
(5,324)
27,969
735
28,704
2,230
699
1,660
853
2,513
(287)
(157)
(444)
2,069
—
2,069
2,943
1,093
1,398
1,077
2,475
(380)
(156)
(536)
1,939
—
1,939
33,730
10,977
84,466
15,155
99,621
(3,334)
(44,389)
(47,723)
51,898
266
52,164
24,835
1,454
86,453
11,619
98,072
(5,405)
(45,786)
(51,191)
46,881
266
47,147
12,209
2,750
8,238
11,234
19,472
(2,738)
(1,664)
(4,402)
15,070
—
15,070
15,084
2,905
11,197
13,238
24,435
(5,734)
(2,158)
(7,892)
16,543
—
16,543
TOTAL
US$’000
66,809
19,531
117,123
36,469
153,592
(8,718)
(48,289)
(57,007)
96,585
1,001
97,586
68,458
15,308
120,274
38,001
158,275
(14,858)
(50,085)
(64,943)
93,332
1,001
94,333
66
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
NOTE 16
Investments
Other available-for-sale financial investments (unlisted)
At 1 January
Exchange differences
At 31 December
2015
US$’000
2014
US$’000
96
(18)
78
102
(6)
96
The directors have reviewed the fair value of the Group’s available-for-sale investments and concluded that their realisable
market value equals their carrying value.
NOTE 17 Current biological assets
The figures in respect of f.f.b. prior to harvest are based on the market price of f.f.b. in each of the Group’s locations on
31 December less the cost of harvesting and transport to mill. The market price is applied to a weight of f.f.b.. This weight
derives from the assumption that value accrues exponentially to f.f.b. from the increase in oil content in the four weeks prior
to harvest: in terms of tonnage at any given month end, equivalent to 32.3615% of the following month’s crop.
The chosen valuation methodology determines the value presented for f.f.b. prior to harvest; different defensible valuation
methods will give widely differing answers (see note 3s(i)). Changes to the assumed tonnage will have a directly equivalent
proportional effect on the reported valuation.
The Group completed the sale of its Woodlands cattle operation in November 2015. Hence, there was no cattle on hand at
31 December 2015.
F.f.b. prior to harvest
Loss in fair value
Livestock
Gain in fair value
Increase due to purchases
Decrease due to disposal and reclassification
Foreign-exchange loss
Change in carrying value of biological assets
At 1 January
At 31 December
F.f.b. prior to harvest
Livestock
NOTE 18
Inventories
Processed produce for sale
Estate stores
Nurseries
2015
US$’000
2014
(RESTATED)
US$’000
(232)
(424)
4,578
2,675
(11,207)
(485)
(4,671)
5,564
893
893
—
893
1,545
3,044
(694)
(49)
3,422
2,142
5,564
1,124
4,440
5,564
2015
US$’000
3,701
2,846
1,453
8,000
2014
(RESTATED)
US$’000
2,760
2,422
1,697
6,879
67
NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED
NOTE 19 Trade and other receivables
Trade receivables
Receivable from smallholder co-operatives
Other receivables
Prepayments and accrued income
Trade and other receivables analysed by currency of receivable:
Indonesian Rupiah
US Dollar
Sterling
Australian Dollar
Malaysian Ringgit
2015
US$’000
687
14,913
1,461
1,255
18,316
17,187
865
158
98
8
18,316
2014
US$’000
1,116
10,258
508
1,338
13,220
12,144
865
132
71
8
13,220
Sales of palm oil are made for cash payment in advance of delivery. The Group makes full provision against invoices
outstanding for more than 30 days. At 31 December 2015 there was no provision for impairment of trade receivables
(2014 US$nil). The directors consider the carrying amount of trade and other receivables approximate their fair value.
NOTE 20 Cash and cash equivalents
Cash and cash equivalents
2015
US$’000
44,214
2014
US$’000
48,042
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three
months or less. The carrying value of these assets approximates their fair value. Of this balance, US$ 18.4 million (2014
US$20.1 million) has been pledged as security against bank loans.
Cash and cash equivalents
Bank overdrafts and loans (see note 22)
Cash net of short-term borrowings
NOTE 21 Trade and other payables
Trade payables
Amounts owed to associated undertakings
Other payables
2015
US$’000
44,214
(13,453)
30,761
2014
US$’000
48,042
(32,424)
15,618
2015
US$’000
8,963
27
6,219
2014
US$’000
4,286
44
8,225
15,209
12,555
The average credit period taken for trade purchases is 42 days (2014 –36 days). The Group has processes in place to ensure
payables are settled within the agreed terms.
68
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
NOTE 22 Borrowings
Secured borrowing at amortised cost
Bank loans
Total borrowings
Amount due for settlement within 12 months
Due for settlement in one to two years
Due for settlement in two to five years
Bank loans from lenders in Malaysia are secured on the assets of Bertam Estate.
Analysis of borrowings by currency:
31 December 2015
Bank loans
31 December 2014
Bank loans
Facilities drawn during the year
2015
US$’000
2014
US$’000
32,675
46,527
13,453
8,956
10,266
32,675
32,424
4,677
9,426
46,527
US DOLLARS
US$’000
AUSTRALIAN
DOLLARS
US$’000
TOTAL
US$’000
29,104
3,571
32,675
28,494
18,033
46,527
In the UK, a revolving credit facility of US$10 million was repaid and a 5-year term loan for the same amount was drawn in its
place. Two additional revolving credit facilities were drawn in the amount of US$5 million and US$3.6 million (equivalent to
A$5 million).
Undrawn borrowing facilities
At 31 December 2015, the Group had no undrawn loan facilities.
Interest rates
The weighted-average interest rate paid during the year was as follows:-
Bank loans
2015
%
4.1
2014
%
6.3
69
NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED
NOTE 23 Net debt
Cash and cash equivalents
Secured borrowing
Indonesia
Australia
UK
Net cash position
Net debt reconciliation
At 1 January
Repayment of borrowings
Loans drawn down
Net change in cash and cash equivalents
Difference on foreign exchange
At 31 December
2015
US$’000
44,214
14,104
—
18,571
32,675
11,539
1,515
30,449
(18,571)
(3,253)
1,399
11,539
2014
US$’000
48,042
18,494
18,033
10,000
46,527
1,515
(10,142)
16,548
—
(8,899)
4,008
1,515
NOTE 24 Maturity of financial liabilities
The table below shows the anticipated cash outflows relating to the Group’s financial liabilities based on the period remaining
between the balance-sheet and contractual-maturity dates. Where borrowings carry a floating rate of interest, an estimate of
future interest payments has been made by applying the interest rate in force at the balance-sheet date. Similarly, where
liabilities are denominated in foreign currencies, the exchange rate at the balance-sheet date has been applied to all related
future cash flows.
2015
Trade and other payables
Amounts owed to associated undertakings
Short-term borrowings*
Term loans
2014
Trade and other payables
Amounts owed to associated undertakings
Short-term borrowings*
Term loans
0-1 YEAR
US$’000
1-2 YEARS
US$’000
2-5 YEARS
US$’000
15,182
27
8,888
5,136
29,233
12,511
44
29,233
4,622
46,410
—
—
—
9,408
9,408
—
—
—
5,168
5,168
—
—
—
10,749
10,749
—
—
—
10,911
10,911
* Short-term borrowings are shown as being fully repaid at their contractual expiry date. The Group expects these loans to be renewed.
Discussions are well advanced on drawing on three additional facilities, together amounting to US$19.1 million, to support the Group’s
investment in its new mill on Bangka and planting on its new projects.
70
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
NOTE 25 Deferred tax
The following are the major deferred-tax liabilities and assets recognised by the Group and movements thereon:-
At 1 January 2015
(Charge)/credit to income statement
Exchange differences
At 31 December 2015
At 1 January 2014 (restated)
(Charge)/credit to income statement
Transfer from revaluation reserve
Exchange differences
At 31 December 2014 (restated)
ACCELERATED TAX
DEPRECIATION
US$’000
REVALUATION
OF LAND
US$’000
RETIREMENT-
BENEFIT
OBLIGATIONS
US$’000
OTHER TIMING
DIFFERENCES
US$’000
(3,776)
(562)
388
(3,950)
(3,411)
(477)
—
113
(3,775)
—
—
—
—
(2,679)
—
2,460
219
—
883
269
(94)
1,058
734
172
—
(23)
883
16,830
4,919
(2,210)
19,539
17,449
(638)
—
19
16,830
TOTAL
US$’000
13,937
4,626
(1,916)
16,647
12,093
(943)
2,460
328
13,938
Certain deferred-tax assets and liabilities have been offset. The following is the analysis of deferred-tax balances (after offset) for
financial reporting purposes:
To be recovered after more than 12 months:
Deferred-tax assets
Deferred-tax liabilities
2015
US$’000
2014
(RESTATED)
US$’000
17,076
(429)
16,647
14,137
(199)
13,938
At the balance-sheet date, the Group had unused tax losses of US$97,760,000 (2014 US$84,129,000) available for offset
against future profits. A deferred-tax asset has been recognised in respect of US$78,059,000 (2014 US$65,529,000) of such
losses. No deferred-tax asset has been recognised in respect of the remaining US$19,701,000 (2014 US$18,600,000) due to
the unpredictability of future profit streams.
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$269,806,000 (2014 US$303,618,000). 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$79,566,000 (2014 US$75,049,000). 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$304,000 (2014 US$323,000). No asset has been recognised in
respect of these differences due to the unpredictability of future profit streams.
71
NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED
NOTE 26 Retirement-benefit obligations
The Group’s only obligation relates to an unfunded, non-contributory, post-employment statutory benefit scheme in Indonesia.
A lump sum is paid to employees on retirement or on leaving the Group’s employment. This terminal benefit is accrued by the
Group and charged in the income statement on the basis of individuals’ service at the balance-sheet date. Retirement is
assumed at the earlier of age 55 years or 30 years’ service. No allowance is made for mortality or internal promotion.
The main assumptions used to assess the Group’s liabilities are:
Discount rate
Salary increase per annum
Reconciliation of scheme liabilities:
Current-service cost
Past-service cost
Interest cost
Actuarial (loss)/gain
less: Benefits paid out
Movement in the year
At 1 January
Exchange differences
At 31 December
NOTE 27 Share capital
At 1 January 2015
Issued during the year
At 31 December 2015
At 1 January 2014
Issued during the year
At 31 December 2014
2015
%
9.00
8.00
2014
%
8.50
8.00
2015
US$’000
2014
US$’000
942
86
300
(312)
1,016
(145)
871
3,765
(403)
4,233
620
48
259
251
1,178
(255)
923
2,933
(91)
3,765
AUTHORISED
NUMBER
ALLOTTED,
FULLY PAID
AND VOTING
NUMBER
AUTHORISED
£’000
ALLOTTED
FULLY PAID
AND VOTING
US$’000
87,000,000
—
55,327,395
373,049
87,000,000
55,700,444
87,000,000
—
55,034,876
292,519
87,000,000
55,327,395
8,700
—
8,700
8,700
—
8,700
9,302
58
9,360
9,253
49
9,302
During the year, no 10p shares were issued as the result of the exercise of share options (2014 – nil). In addition, a further
373,049 shares (2014 – 292,519 shares) were issued to shareholders who elected to take scrip in lieu of cash dividends. There
were no cash receipts by the Company in respect of allotments in 2015 (2014 US$nil).
72
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
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:-
At 1 January
Granted during the year
Exercised during the year
At 31 December
Exercisable at the end of the year
2015
WEIGHTED-
AVERAGE
EXERCISE PRICE
(IN BRITISH
PENCE)
375.4
412.5
—
355.1
343.7
NUMBER
OF SHARE
OPTIONS
350,000
20,000
—
370,000
280,000
2014
WEIGHTED-
AVERAGE
EXERCISE PRICE
(IN BRITISH
PENCE)
375.4
—
—
375.4
287.9
NUMBER
OF SHARE
OPTIONS
350,000
—
—
350,000
200,000
No options were exercised in 2015, nor in 2014. The options outstanding at 31 December 2015 had a weighted-average
remaining contractual life of 4.7 years and exercise prices in the range 159.5p to 520.0p. The Group recognised total expenses
of US$78,000 related to equity-settled share based payments (2014 US$84,000). Details of the directors’ share options are set
out in the report of the board to the shareholders on directors’ remuneration on pages 46 and 47.
NOTE 29 Reserves
SHARE-
PREMIUM
ACCOUNT
US$’000
REVALU-
CAPITAL-
ATION REDEMPTION
RESERVE
US$’000
RESERVE1
US$’000
MERGER
RESERVE
US$’000
SHARE-
SHARE OF
OPTION ASSOCIATES’
RESERVES
RESERVE
US$’000
US$’000
FOREIGN-
EXCHANGE
RESERVE
US$’000
TOTAL
US$’000
RETAINED
EARNINGS
US$’000
28,195
—
2,792
(30)
4,087
—
766
—
448
—
32,259
(7,378)
711
359
69,258
(7,049)
212,949
(3,353)
At 1 January 2015
(restated)
Exchange differences
Release of deferred profit
on sale of land
Retirement-benefit
obligations
Issue of shares
Share-based payments
Dividends from
associated undertakings
Profit for the financial
year
Dividends paid
(see note 10)
—
(263)
—
2,308
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
At 31 December 2015
30,503
2,499
4,087
766
—
—
—
78
—
—
—
—
—
(7,637)
—
—
—
—
—
(263)
—
2,308
78
—
211
—
—
(7,637)
7,637
— 19,531
— 19,531
4,553
—
526
—
—
—
(7,574)
36,775
1,070
76,226
214,423
73
NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED
NOTE 29
continued
Reserves CONTINUED
SHARE-
PREMIUM
ACCOUNT
US$’000
REVALU-
CAPITAL-
ATION REDEMPTION
RESERVE
US$’000
RESERVE1
US$’000
MERGER
RESERVE
US$’000
SHARE-
SHARE OF
OPTION ASSOCIATES’
RESERVES
RESERVE
US$’000
US$’000
FOREIGN-
EXCHANGE
RESERVE
US$’000
TOTAL
US$’000
RETAINED
EARNINGS
US$’000
At 1 January 2014
(restated)
Exchange differences
Release of deferred profit
on sale of land
Retirement-benefit
obligations
Issue of shares
Share-based payments
Statutory Indonesian
reserve
Liquidation of dormant
subsidiary
Transfer to retained
earnings2
Release of deferred tax
Dividends from
associated undertakings
Sale of shares to minority
Profit for the financial
year
Dividends paid
(see note 10)
At 31 December 2014
26,065
—
9,513
(524)
3,896
—
1,056
—
364
—
32,986
(4,293)
1,332
(621)
75,212
(5,438)
190,939
1,301
—
(506)
—
2,130
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(8,151)
2,460
—
—
—
—
—
—
—
—
191
—
—
—
—
—
—
—
—
—
—
—
—
(290)
—
—
—
—
—
—
—
—
—
84
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(506)
—
—
2,130
84
(183)
—
—
191
(191)
(290)
—
(8,151)
2,460
8,151
—
— (11,742)
—
—
— (11,742)
—
—
11,742
(926)
— 15,308
— 15,308
9,757
—
—
—
—
(7,641)
(restated)
28,195
2,792
4,087
766
448
32,259
711
69,258
212,949
1. The revaluation reserve relates to the revaluation surplus recognised under UK GAAP. On transition to IFRS, the Group elected to treat the
revalued amount of non-current assets as their deemed cost.
2. This amount had been treated as non-distributable since it arose on the disposal of some properties in Australia. On further investigation it was
established that under IFRS this amount is distributable and was therefore transferred to retained earnings.
NOTE 30 Non-controlling interests
At 1 January
Share of profit in the year
Dividends paid
Share of retirement-benefit credit/(debit) charged to other comprehensive income
Transfer on sale of non-controlling interest by the Group
At 31 December
2015
US$’000
20,284
1,311
—
21
—
21,616
2014
(RESTATED)
US$’000
16,197
3,198
—
(37)
926
20,284
74
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
NOTE 31 Note to the consolidated cash-flow statement
Profit for the year
Discontinued operations
Share of associated companies’ profit after tax
Tax charge
Finance costs
Finance income
Operating profit
Biological gain
Disposal of property, plant and equipment
Release of deferred profit
Depreciation of property, plant and equipment
Retirement-benefit obligations
Share-based payments
Discontinued operations
Dividends from associated companies
Operating cash flows before movements in working capital
Decrease/(increase) in inventories
Increase in receivables
Increase in payables
Cash generated by operating activities
Income tax paid
Interest paid
Net cash generated by operating activities
2015
US$’000
25,395
(1,496)
(19,531)
2,401
1,244
(894)
7,119
(4,346)
438
(263)
9,869
871
78
1,496
7,637
22,899
7,399
(5,228)
2,676
27,746
(6,271)
(1,244)
20,231
2014
(RESTATED)
US$’000
28,263
2,012
(15,308)
9,095
2,354
(1,600)
24,816
(1,121)
833
(506)
9,388
923
84
(2,012)
11,742
44,147
(1,018)
(974)
2,265
44,420
(12,910)
(2,354)
29,156
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 cash net of short-term borrowings of US$30,761,000 (2014 US$15,618,000) as shown in note 20 and
equity attributable to the owners of the parent Company of US$300,009,000 (2014 US$291,509,000). 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.
75
NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED
NOTE 32
continued
Financial instruments CONTINUED
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:
US Dollar
Indonesian Rupiah
Australian Dollar
Malaysian Ringgit
Sterling
2015
US$’000
31,374
9,856
2,051
533
400
44,214
2014
US$’000
30,790
15,597
465
832
358
48,042
The currency profile of the Group’s monetary liabilities, excluding trade and other payables, is shown in note 22.
The Group is exposed to changes in foreign-currency exchange rates. This is in relation to the impact of movements on its non-
US Dollar monetary assets, but also in relation to the consolidation of its non-US Dollar-functional-currency subsidiary and
associated undertakings. The most significant sensitivities arise in respect of movements in the Australian Dollar and Malaysian
Ringgit. Management estimates that a 10% weakening of the US Dollar against these currencies would have the following
impact on the result and net assets of its two relevant associated undertakings:
Australian Dollar
Result for the year
Net assets
Malaysian Ringgit
Result for the year
Net assets
Interest-rate risk
2015
US$’000
1,003
4,718
287
1,941
2014
US$’000
(51)
3,078
413
2,266
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 term loans, denominated in US Dollars, carry interest charged at a monthly variable rate related to US Dollar LIBOR; the
revolving credits, denominated in US Dollars and Australian Dollars, carry interest at a floating rate.
The Group’s net position means it is not materially exposed to changes in interest rates on its 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, and loans extended to the smallholder co-operative schemes
attached to the Group’s new projects. 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.
76
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
NOTE 33 Reconciliation of change in accounting policy
As a result of a change in the Group’s accounting policy referred to in note 2(a)(i), prior-year financial information has had to be
restated. The following tables show the adjustment made to each individual line item. As permitted under transitional rules in
IFRS, the effect of the change in accounting policy on the current period is not disclosed.
Balance sheet
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
Total assets
Current liabilities
Borrowings
Trade and other payables
Current-tax liability
Net current assets
Non-current liabilities
Borrowings
Deferred-tax liability
Retirement-benefit obligations
Total liabilities
Net assets
Equity
Share capital
Other reserves
Retained earnings
Equity attributable to the owners of M.P.Evans Group PLC
Non-controlling interests
Total equity
PREVIOUSLY
REPORTED
31 DECEMBER
2014
US$’000
ADOPTION OF
AMENDED IAS 16
AND IAS 41
US$’000
31 DECEMBER
2014
(RESTATED)
US$’000
1,157
163,538
111,983
120,617
96
14,137
411,528
4,440
7,294
13,220
2,029
48,042
75,025
—
(163,538)
79,601
(26,284)
—
—
(110,221)
1,124
(415)
—
—
—
709
1,157
—
191,584
94,333
96
14,137
301,307
5,564
6,879
13,220
2,029
48,042
75,734
486,553
(109,512)
377,041
32,424
12,555
2,202
47,181
27,844
14,103
21,183
3,765
39,051
86,232
400,321
9,302
95,542
267,064
371,908
28,413
400,321
—
—
—
—
709
—
(20,984)
—
(20,984)
(20,984)
(88,528)
—
(26,284)
(54,115)
(80,399)
(8,129)
(88,528)
32,424
12,555
2,202
47,181
28,553
14,103
199
3,765
18,067
65,248
311,793
9,302
69,258
212,949
291,509
20,284
311,793
77
NOTES TO THE CONSOLIDATED ACCOUNTS CONTINUED
NOTE 33
continued
Reconciliation of change in accounting policy CONTINUED
Balance sheet
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
Total assets
Current liabilities
Borrowings
Trade and other payables
Current-tax liability
Net current assets
Non-current liabilities
Borrowings
Deferred-tax liability
Retirement-benefit obligations
Total liabilities
Net assets
Equity
Share capital
Other reserves
Retained earnings
Equity attributable to the owners of M.P.Evans Group PLC
Non-controlling interests
Total equity
PREVIOUSLY
REPORTED
31 DECEMBER
2013
US$’000
ADOPTION OF
AMENDED IAS 16
AND IAS 41
US$’000
1,157
148,394
109,319
122,856
102
14,996
396,824
594
7,990
12,345
2,201
56,348
79,478
—
(148,394)
76,152
(27,335)
—
—
(99,577)
1,549
277
—
—
—
1,826
1 JANUARY
2014
(RESTATED)
US$’000
1,157
—
185,471
95,521
102
14,996
297,247
2,143
8,267
12,345
2,201
56,348
81,304
476,302
(97,751)
378,551
31,710
10,311
4,313
46,334
33,144
34,780
20,963
2,933
58,676
105,010
371,292
9,253
102,548
235,390
347,191
24,101
371,292
—
—
—
—
1,826
—
(18,060)
—
(18,060)
(18,060)
(79,691)
—
(27,336)
(44,451)
(71,787)
(7,904)
(79,691)
31,710
10,311
4,313
46,334
34,970
34,780
2,903
2,933
40,616
86,950
291,601
9,253
75,212
190,939
275,404
16,197
291,601
78
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
PREVIOUSLY
REPORTED
RESULT FOR
YEAR ENDED
31 DECEMBER
2014
US$’000
ADOPTION OF
AMENDED IAS 16
AND IAS 41
US$’000
YEAR ENDED
31 DECEMBER
2014
(RESTATED)
US$’000
89,956
(54,230)
35,726
15,144
(6,314)
(2,379)
(4,596)
448
38,029
1,600
(2,757)
36,872
(12,018)
24,854
14,256
39,110
(2,012)
37,098
—
(3,959)
(3,959)
(15,568)
6,314
—
—
—
(13,213)
—
403
(12,810)
2,923
(9,887)
1,052
(8,835)
—
(8,835)
89,956
(58,189)
31,767
(424)
—
(2,379)
(4,596)
448
24,816
1,600
(2,354)
24,062
(9,095)
14,967
15,308
30,275
(2,012)
28,263
NOTE 33
continued
Reconciliation of change in accounting policy CONTINUED
Income statement
Continuing operations
Revenue
Cost of sales
Gross profit
Gain/(loss) on biological assets
Planting expenditure
Foreign-exchange losses
Other administrative expenses
Other income
Operating profit
Finance income
Finance costs
Group-controlled profit before tax
Tax on profit on ordinary activities
Group-controlled profit after tax
Share of associated companies’ profit after tax
Profit after tax and before discontinued operations
Discontinued operations
Profit for the year
Cash flow
Cash flow from operating, investing and financing activities is unaffected by this change of accounting policy.
NOTE 34 Related-party transactions
Remuneration of key management personnel
The remuneration of the directors, who are the key management personnel of the Group, is set out in the report of the board to
the shareholders on directors’ remuneration on page 45. The directors’ participation in the executive share-option scheme is
disclosed on page 47.
The Group received dividends from its associated companies during the year. These are set out in note 15 on page 66.
79
INDEPENDENT AUDITORS’ REPORT
To the members of M.P. Evans Group PLC parent-Company
REPORT ON THE PARENT-COMPANY
FINANCIAL STATEMENTS
OTHER MATTERS ON WHICH WE ARE REQUIRED TO
REPORT BY EXCEPTION
OUR OPINION
In our opinion, M.P.Evans Group PLC’s parent-
Company financial statements (“financial statements”):
give a true and fair view of the state of the parent-
Company’s affairs as at 31 December 2015;
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.
WHAT WE HAVE AUDITED
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.
The financial statements, included within the annual
report, comprise:
We have no exceptions to report arising from this
responsibility.
the parent-Company balance sheet as at
31 December 2015; and
the notes to the financial statements, which include
a summary of significant accounting policies and
other explanatory information.
Certain required disclosures have been presented
elsewhere in the annual report, rather than in the notes
to the financial statements. These are cross-referenced
from the financial statements and are identified as
audited.
The financial reporting framework that has been
applied in the preparation of the financial statements is
United Kingdom Accounting Standards, comprising
FRS 101 “Reduced Disclosure Framework”, and
applicable law (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.
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.
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.
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 set out on pages 39 and 40, the
directors are responsible for the preparation of the
financial statements and for being satisfied that they
give a true and fair view.
Our responsibility is to audit and express an opinion on
the financial statements in accordance with applicable
law and International Standards on Auditing (UK and
Ireland) (“ISAs (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 parent-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
80
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
person to whom this report is shown or into whose
hands it may come save where expressly agreed by our
prior consent in writing.
conclusions. We obtain audit evidence through testing
the effectiveness of controls, substantive procedures or
a combination of both.
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (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.
We primarily focus our work in these areas by
assessing the directors’ judgements against available
evidence, forming our own judgements, and
evaluating the disclosures in the financial statements.
We test and examine information, using sampling and
other auditing techniques, to the extent we consider
necessary to provide a reasonable basis for us to draw
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.
OTHER MATTER
We have reported separately on the Group financial
statements of M.P.Evans Group PLC for the year ended
31 December 2015.
Timothy McAllister (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
21 April 2016
81
PARENT-COMPANY
BALANCE SHEET
At 31 December 2015
Non-current assets
Property, plant and equipment
Investments in subsidiaries
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Net current assets
Non-current liabilities
Borrowings
Total liabilities
Net assets
Equity
Share capital
Other reserves
Retained earnings
Total equity
NOTE
2015
US$’000
2014
US$’000
iv
v
vi
vii
vii
ix
ix
x
934
31,494
32,428
161,772
434
162,206
194,634
46,025
116,181
9,796
55,821
138,813
9,360
36,359
93,094
138,813
913
31,494
32,407
94,716
7,545
102,261
134,668
48,683
53,578
—
48,683
85,985
9,302
33,973
42,710
85,985
The financial statements of pages 82 to 86 were approved by the board of directors on 21 April 2016 and signed
on its behalf by
Tristan Price
Director
Philip Fletcher
Director
82
NOTES
TO THE PARENT-COMPANY BALANCE SHEET
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
For the year ended 31 December 2015
NOTE i
Significant accounting policies
Basis of accounting
The financial statements of the Company are presented as required by the Companies Act 2006. The financial statements have
been prepared in accordance with Financial Reporting Standard 101, ‘Reduced Disclosure Framework’ (“FRS 101”). The
financial statements have been prepared on a going concern basis under the historical cost convention, 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.
The following exemptions from the requirements of IFRS have been applied in the preparation of these financial statements, in
accordance with FRS 101:
Paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share-based payment’;
IFRS 7, ‘Financial Instruments: Disclosures’;
IAS 7, ‘Statement of cash flows’;
Paragraph 38 of IAS 1, ‘Presentation of financial statements’ comparative information requirements in respect of IAS 16
paragraph 73(e) – A reconciliation showing the carrying amounts of property, plant and equipment at the beginning and
end of the period need not be presented for prior periods;
Paragraph 30 and 31 of IAS 8 ‘Accounting policies, changes in accounting estimates and errors’ (requirement for the
disclosure of information when an entity has not applied a new IFRS that has been issued but is not yet effective);
Paragraph 17 of IAS 24, ‘Related party disclosures’ (key management compensation) and the requirements in IAS 24,
‘Related party disclosures’ to disclose related party transactions entered into between two or more members of a group.
The transition to FRS 101 has not materially affected the reported financial position and financial performance of the Company.
The comparative figures in respect of 2014 are unchanged from those previously reported. Pursuant to Section 408 of the
Companies Act 2006 the Company’s own income statement and statement of other comprehensive income are not presented
separately in the Company financial statements, but they have been approved by the Board.
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.
Property, plant and equipment
Property, plant and equipment are stated at the historic purchase cost less accumulated depreciation. Plant, equipment and
vehicles are depreciated over their estimated useful lives at 25%. Estimated useful lives are reviewed at each balance-sheet
date. Where the board judges the residual value of an asset to exceed its carrying value, no provision is made for depreciation.
Investments in subsidiaries
Investments in subsidiaries are shown at cost less provision for impairment.
Trade and other receivables
These represent amounts due from Group companies in the normal course of business, are repayable on demand, unsecured
and are not interest bearing. These are measured at amortised cost.
Cash and cash equivalent
These include cash in hand and deposits held with banks with original maturities of three months or less.
Trade and other payables
These are measured at amortised cost.
83
NOTES TO THE PARENT-COMPANY BALANCE SHEET CONTINUED
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 profit for the year ended 31 December 2015 of US$57,958,000 (2014
profit US$36,754,000).
The auditors’ remuneration for audit and other services was US$20,000 (2014 US$20,000).
NOTE iii
Employees
Employee costs during the year
Wages and salaries
Social-security costs
Pension costs
Shared-based payments
2015
US$’000
1,678
231
76
78
2,063
2014
US$’000
1,946
221
80
84
2,331
As recorded in the report of the board to the shareholders on directors’ remuneration on page 45, wages and salary costs
include bonuses paid to the directors in respect of 2015 and 2014.
Average monthly number of persons employed
Staff
Directors
NOTE iv
Property, plant and equipment
Cost
At 1 January 2015
Additions
Disposals
At 31 December 2015
Accumulated depreciation
At 1 January 2015
Charge for the year
Disposals
At 31 December 2015
Net book value at 31 December 2015
Net book value at 31 December 2014
NUMBER
NUMBER
4
3
7
4
3
7
BUILDINGS
US$’000
PLANT,
EQUIPMENT
& VEHICLES
US$’000
834
—
—
834
—
—
—
—
834
834
229
66
(38)
257
150
45
(38)
157
100
79
TOTAL
US$’000
1,063
66
(38)
1,091
150
45
(38)
157
934
913
84
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
NOTE v
Investments in subsidiaries
Subsidiary undertakings
At 1 January and 31 December 2015
At 1 January and 31 December 2014
US$’000
31,494
31,494
The following companies are the principal direct subsidiary companies of M.P.Evans Group PLC:
M.P.Evans & Co. Limited
Sungkai Holdings Limited
Bertam (UK) Limited
COUNTRY OF
OPERATION
HOLDING
%
UK
UK
UK, Australia
100
100
100
Holdings are all of ordinary shares. The directors believe the carrying value of investments is supported by their underlying net
assets. Details of all subsidiary companies are shown on page 87.
NOTE vi
Trade and other receivables
Amounts owed by subsidiary undertakings
Other debtors
Prepayments and accrued income
NOTE vii Trade and other payables
Amounts owed to subsidiary undertakings
Borrowings
Other creditors
NOTE viii Called-up share capital
See note 27 to the consolidated financial statements on page 72.
2015
US$’000
161,613
31
128
161,772
2015
US$’000
36,308
8,775
942
46,025
2014
US$’000
94,585
76
55
94,716
2014
US$’000
37,692
10,000
991
48,683
85
NOTES TO THE PARENT-COMPANY BALANCE SHEET CONTINUED
NOTE ix
Reserves
At 1 January 2015
Issue of shares
Share-based payments
Profit for the financial year
Dividends*
At 31 December 2015
SHARE-
PREMIUM
ACCOUNT
US$’000
28,195
2,308
—
—
—
30,503
CAPITAL-
REDEMPTION
RESERVE
US$’000
3,896
—
—
—
—
MERGER
RESERVE
US$’000
1,434
—
—
—
—
3,896
1,434
OTHER
RESERVES
US$’000
448
—
78
—
—
526
* See note 10 to the consolidated financial statements on page 63.
NOTE x
Reconciliation of movement in shareholders’ funds
Profit for the financial year
Dividends declared
Issue of shares
Share-based payments
Net increase in shareholders’ funds
At 1 January
At 31 December
TOTAL
US$’000
33,973
2,308
78
—
—
36,359
2015
US$’000
57,958
(7,574)
50,384
2,366
78
52,828
85,985
138,813
RETAINED
EARNINGS
US$’000
42,710
—
—
57,958
(7,574)
93,094
2014
US$’000
36,754
(7,641)
29,113
2,179
84
31,376
54,609
85,985
86
SUBSIDIARY AND ASSOCIATED
UNDERTAKINGS
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
SUBSIDIARY UNDERTAKINGS
Details of the Group’s subsidiary undertakings as at 31 December 2015 are as follows:-
NAME OF SUBSIDIARY
% OF
SHARES HELD
COUNTRY OF
INCORPORATION
COUNTRY OF
OPERATION
FIELD OF ACTIVITY
PT Pangkatan Indonesia
PT Bilah Plantido
PT Sembada Sennah Maju
80
80
80
Indonesia
Indonesia
Indonesia
PT Simpang Kiri Plantation Indonesia 80
Indonesia
PT Prima Mitrajaya Mandiri
PT Teguh Jayaprima Abadi
PT Gunung Pelawan Lestari
PT Evans Lestari
95
95
90
80
Indonesia
Indonesia
Indonesia
Indonesia
PT Evans Indonesia
100
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Production of crude palm oil and palm kernels
Production of crude palm oil and palm kernels
Production of crude palm oil and palm kernels
Production of crude palm oil and palm kernels
Production of crude palm oil and palm kernels
Production of crude palm oil and palm kernels
Production of crude palm oil and palm kernels
Production of crude palm oil and palm kernels
Provision of agronomic and management-
consultancy services
Gubbagunyah Partnership
100 Australia
Australia
Beef-cattle farming – discontinued
November 2015
Bertam Consolidated Rubber
100
England & Wales Malaysia
Property development and production of oil-
Company Limited
palm f.f.b.
Bertam (U.K.) Limited
100
England & Wales United Kingdom Beef-cattle farming
& Australia
M.P.Evans & Co. Limited
100
England & Wales United Kingdom Holding company
Lendu Australia Pty. Ltd
100 Australia
Australia
Beef-cattle farming
Sungkai Holdings Limited
100
England & Wales United Kingdom Holding company
Lendu (U.K.) Limited
100
England & Wales United Kingdom Dormant
Sungkai Estates Limited
100
England & Wales United Kingdom Dormant
Supara Investments Limited
100
England & Wales United Kingdom Dormant
The Singapore Para Rubber
Estates, Limited
100
England & Wales United Kingdom Dormant
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 2015 are as follows:-
ISSUED, FULLY-PAID
SHARE CAPITAL
% COUNTRY OF
COUNTRY OF
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
87
ANALYSIS OF
PLANTATION LAND AREAS
As at 31 December 2015
The information in the following pages does not form part of the audited financial statements.
OWNERSHIP
%
MATURE
HA
IMMATURE
HA
INFRA-
STRUCTURE/
TOTAL CONSERVATION
AREAS
HA
PLANTED
HA
CO-OPERATIVE
SCHEMES
PLANTED
HA
TOTAL
HA
Subsidiaries – oil palm
Pangkatan
Bilah
Sennah
Total Pangkatan group
Simpang Kiri
Total Sumatra
East Kalimantan
Bangka
Musi Rawas
80.00
80.00
80.00
80.00
95.00
90.00
95.00
Total new Indonesian projects
Total Indonesia
Total Malaysia – Bertam Estate
100.00
Total subsidiaries
Group share of subsidiaries’ land
Associates
Agro Muko
– oil palm
– rubber
36.84
36.84
Kerasaan
– oil palm
38.00
Total associates
Group share of associates’ land
Memorandum:
Group share of subsidiaries’ land
2,177
2,490
1,462
6,129
2,002
8,131
9,321
3,089
—
12,410
20,541
65
20,606
18,206
15,622
1,068
16,690
1,648
18,338
6,774
256
366
219
841
418
1,259
451
2,320
795
3,566
4,825
—
4,825
4,278
2,197
638
2,835
659
3,494
1,294
2,433
2,856
1,681
6,970
2,420
9,390
9,772
5,409
795
15,976
25,366
65
25,431
22,484
17,819
1,706
19,525
2,307
21,832
8,068
153
100
132
385
131
516
4,289
1,255
78
5,622
6,138
5
2,586
2,956
1,813
7,355
2,551
9,906
14,061 1
6,664 1
873 2
21,598
31,504
70
6,143
31,574
5,697
28,181
3,033
394
3,427
56
3,483
1,283
20,852
2,100
22,952
2,363
25,315
9,351
4,240
2,911
234
7,385
7,385
—
7,385
—
669
—
669
—
669
and share of associates’ land
24,980
5,572
30,552
6,980
37,532
Subsidiaries’ land and Group
share of associates’ land
27,380
6,119
33,499
7,426
40,925
Notes:
1 The currently-estimated total plantable area for Group ownership is 10,600 hectares in East Kalimantan and 6,000 hectares on
Bangka; for the co-operatives 4,400 hectares in East Kalimantan and 4,000 hectares on Bangka.
2 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 it may be possible to plant 10,000 hectares, of which 7,000
hectares would relate to the Group and 3,000 hectares to the smallholders’ co-operatives.
88
5-YEAR SUMMARY*
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
Production
Crude palm oil
Palm kernels
Crops
2015
TONNES
2014
TONNES
2013
TONNES
2012
TONNES
2011
TONNES
102,200
20,600
95,000
18,400
82,900
16,400
75,400
14,800
35,600
8,700
Oil-palm fresh fruit bunches (“f.f.b.”)
Indonesian majority-owned estates
Indonesian associated company estates
423,900
382,100
385,500
386,900
344,200
387,000
317,000
408,600
249,300
401,200
Average sale prices
Crude palm oil – Rotterdam c.i.f. per tonne
US$
622
US$
821
US$
856
US$
998
9,355
9,670
0.97
0.96
3.09
3.06
1.59
1.63
US$’000
83,213
23,035
12,185
US$
1,123
8,763
9,068
0.97
0.98
3.06
3.17
1.60
1.56
US$’000
57,756
25,919
21,038
Exchange rates
US$1 = Indonesian Rupiah
– average
– year end
US$1 = Australian Dollar
– average
– year end
US$1 = Malaysian Ringgit
– average
– year end
£1 = US Dollar
– average
– year end
Revenue
Gross profit
Group-controlled profit before tax
Basic earnings per share
Dividend per share
13,390
13,795
11,864
12,440
10,449
12,189
1.33
1.37
3.91
4.29
1.53
1.47
US$’000
72,528
15,059
6,769
1.11
1.22
3.27
3.50
1.65
1.56
US$’000
89,956
31,767
24,062
1.04
1.12
3.15
3.28
1.56
1.66
US$’000
82,186
24,735
6,530
US CENTS
US CENTS
US CENTS
US CENTS
US CENTS
43.39
PENCE
8.75
45.44
PENCE
8.75
26.28
PENCE
8.25
27.70
PENCE
8.00
56.71
PENCE
8.00
US$’000
US$’000
US$’000
US$’000
US$’000
Equity attributable to the owners of
M.P.Evans Group PLC
Net cash generated by operating activities
300,009
20,231
291,509
29,156
274,091
19,494
284,094
33,897
273,600
48,339
* Figures have been adjusted retrospectively to reflect the adoption of the amendment to International Accounting Standards 16
and 41 (see note 2(a)(i)).
89
NOTICE OF MEETING
NOTICE IS HEREBY GIVEN that the annual general meeting of M.P.Evans Group PLC will be held at Tallow
Chandlers’ Hall, 4 Dowgate Hill, London EC4R 2SH on 10 June 2016 at 12 noon for the following purposes:-
AS ORDINARY BUSINESS
1
2
3
4
5
6
7
8
To receive and consider the report of the directors and the audited consolidated financial
statements for the year ended 31 December 2015.
To re-elect Mr T R J Price as a director.
To re-elect Mr P A Fletcher as a director.
To re-elect Mr R M Robinow as a director.
To re-elect Mr J D Shaw as a director.
To elect Mr B C Tozer as a director.
To declare a final dividend.
To re-appoint PricewaterhouseCoopers LLP as auditors and to authorise the directors to
determine their remuneration.
RESOLUTION ON
FORM OF PROXY
No 1
No 2
No 3
No 4
No 5
No 6
No 7
No 8
AS SPECIAL BUSINESS
To consider and, if thought fit, pass the following resolutions, of which resolution 9 will be proposed as an
ordinary resolution and resolutions 10 and 11 will be proposed as special resolutions:-
9
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 2017 and, for that period, the Section 551 Amount is £1,856,681.
RESOLUTION ON
FORM OF PROXY
No 9
10 That, in substitution for all existing unexercised authorities, the authority conferred on the directors by
No 10
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 2017 so that the directors are authorised to allot shares pursuant to article 7.3 of the
Company’s articles of association and to sell treasury shares for that period in an aggregate amount of up
to £278,502 (the Section 561 Amount).
11 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:-
No 11
a)
b)
c)
d)
the maximum number of shares hereby authorised to be purchased is 5,570,044
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 2017 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.
By order of the board
Claire Hayes
Company Secretary
21 April 2016
90
M.P. EVANS GROUP PLC 2015 ANNUAL REPORT
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 8 June 2016 (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
4
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.
Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, the Company has specified that only those
shareholders registered on the register of members of the Company at 11.00 p.m. on 8 June 2016 (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 21 April 2016, the Company's issued share capital consisted of 55,700,444 shares carrying one vote each. Therefore the
total number of voting rights in the Company as at that date was 55,700,444.
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 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.
91
PROFESSIONAL ADVISERS
& REPRESENTATIVES
SECRETARY AND REGISTERED OFFICE
PRINCIPAL BANKERS
Claire Hayes
3 Clanricarde Gardens
Tunbridge Wells
Kent TN1 1HQ
Tel: 01892 516333
Email: claire.hayes@mpevans.co.uk
www.mpevans.co.uk
Company number: 1555042
INDONESIAN REGIONAL OFFICE
PT Evans Indonesia
Gedung Graha Aktiva, Suite 1001
Jl HR Rasuna Said Blok X-1 Kav 03
Jakarta 12950
Bank CIMB Niaga
Graha CIMB Niaga Lt.11
Jalan Jend. Sudirman Kav.58
Jakarta 12190
Indonesia
AmBank Group
55 Jalan Raja Chulan
50200 Kuala Lumpur
Malaysia
HSBC Bank PLC
105 Mount Pleasant Road
Tunbridge Wells
Kent TN1 1QP
MANAGING AGENT IN MALAYSIA
NOMINATED ADVISER AND BROKER
Straits Estates Sdn. Berhad
Loke Mansion
147 Lorong Kelawei
10250 Penang
Peel Hunt LLP
Moor House
120 London Wall
London EC2Y 5ET
INDEPENDENT AUDITORS
SOLICITORS
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
1 Embankment Place
London WC2N 6RH
Hogan Lovells International LLP
Atlantic House
Holborn Viaduct
London EC1A 2FG
REGISTRARS
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Tel: 0370 7071176
Fax: 0370 7036101
www.computershare.com
92
Venue of annual general meeting
On 10 June 2016 at noon
Tallow Chandlers’ Hall
4 Dowgate Hill
London EC4R 2SH
www.mpevans.co.uk