M.P. Evans Group plc Annual Report 2020

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FY2020 Annual Report · M.P. Evans Group plc

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A N N U A L
R E P O R T

For the year ended 31 December 2020

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Profit for the year US$22.2 million
(2019 US$7.5 million)

Operating profit US$31.3 million
(2019 US$16.1 million)

Continuing EPS 37.4 US cents
(2019 – 11.6 US cents)

Proposed to increase final
dividend to 17.00p per share

A WORD
FROM THE
CHAIRMAN

“ 2020 was another record year for production
and revenue resulting in a sharp rise in profit,
which nearly trebled to US$22.2 million, and
an increase in sustainability premia. Given this
performance the board is recommending a
final dividend of 17.00p per share, an increase
of 4.25p, bringing total dividends for the year
to 22.00p per share. In view of the strong
increase in crop and production projected
for the immediate future and the prospects
for the palm-oil market, the board intends
to recommend a dividend of 30p per share in
respect of 2021. ”

Peter Hadsley-Chaplin

CONTENTS

1 Group financial highlights

REPORT OF THE DIRECTORS

OTHER INFORMATION

2 Chairman’s statement

5 Operational highlights

6 Map of estates

8 The Group’s business model

10 The palm-oil market

STRATEGIC REPORT

12 Strategy

38 Board of directors

43 Corporate governance

48 Remuneration report

FINANCIAL STATEMENTS
51 Independent auditors’ report

58 Consolidated income statement

60 Consolidated balance sheet

15 Results and financial position

62 Consolidated cash-flow statement

16 Operations: Indonesian palm oil

64 Notes to the consolidated

24 Operations: Malaysian property

accounts

92 Subsidiary and associated

undertakings

93 Analysis of Indonesian plantation

land areas

94 Analysis of Group equity value

95 Five-year summary

96 Notice of meeting

98 Professional advisers &

representatives

98 Glossary

26 Risk management

SUSTAINABILITY

31 Approach

31 Sustainable palm-oil production

33 Sustainable production benefits

34 Communities

PARENT COMPANY

86 Parent-Company balance sheet

88 Notes to the parent-Company

accounts

GROUP FINANCIAL HIGHLIGHTS

+46%

REVENUE

2020
US$ 174.5m
2019 US$ 119.3m

+197%

PROFIT FOR
THE YEAR

2020
US$ 22.2m
2019 US$ 7.5m

+104%

GROSS PROFIT

2020
US$ 34.8m
2019 US$ 17.0m

+2%

TOTAL EQUITY

2020
US$ 374.1m
2019 US$ 367.7m

+222%

BASIC EARNINGS
PER SHARE

2020
37.4 US cents
2019 – 11.6 US cents

+94%

OPERATING
PROFIT

2020
US$ 31.3m
2019 US$ 16.1m

+19%

OPERATING CASH
GENERATED

2020
US$ 49.6m
2019 US$ 41.8m

+24%

NORMAL DIVIDEND
PER SHARE

2020
22.00 pence
2019 – 17.75 pence

M.P. EVANS GROUP PLC
ANNUAL REPORT 2020

CHAIRMAN’S
STATEMENT
Another record year
for production and
revenue resulted in
a sharp increase in
profit for the year.

A rising CPO price
and continuing control
of costs saw profit
margins jump in
comparison to 2019.

Peter Hadsley-Chaplin
Chairman

COVID-19
I could not begin a review of 2020

palm kernels as well as sales of

electricity generated from the

without addressing the effect that

methane it captures. Profit for the

Covid-19 has had on the Group.

year nearly trebled to US$22.2 million.

I am able to report that the pandemic

has had little effect on the Group’s

An important element in the Group’s

operations. Once the widespread

results was the rising CPO price. The

nature of the virus became known,

CPO price at the end of December

preventative measures were quickly

2020 stood at US$1,035 per tonne, a

introduced to protect the Group’s

level last seen in July 2012. Having

employees and these measures

started the year promisingly, the CPO

remain under review and in place

price fell as the Covid-19 pandemic

as required. Staff travel has been

struck. Whilst the pandemic

restricted, the Group has controlled

resulted in a fall in world palm-oil

access to its plantations and the

consumption, world production of

majority of staff in our Jakarta office

palm oil fell even further as labour

have been put on remote working. All

shortages, dry weather and an

estates and mills operated without

increasing industry-average palm

interruption during the year. During

age took their toll. During the initial

the second quarter of the year,

months of the year, stocks of palm

Covid-19 did have a marked effect

oil acted as a buffer. Stocks then

on the price of CPO, described in the

rebounded but quickly began to fall

section “The palm-oil market” below,

as a result of the production deficit.

but the price recovered strongly in

Whilst initially the CPO price fell

the second half of the year.

sharply, it recovered strongly from
the middle of May 2020, continuing

RESULTS
Another record year for production

its rise to the end of the year. The

average cif Rotterdam price for the

and revenue resulted in a sharp

year was US$716 per tonne, US$150

increase in profit for the year. A rising

higher than in 2019. Regrettably,

CPO price and continuing control

the Group has not benefitted fully

of costs saw profit margins jump in

from this rise as the Indonesian

comparison to 2019. Operating profit

government imposed an increased

was US$31.3 million compared with

export levy in December 2020,

US$16.1 million in 2019 despite an

designed to subsidise Indonesian

adverse foreign-exchange movement

producers of biodiesel while crude-

during 2020. The Group benefitted

oil prices have been languishing. This

from an increase in the sustainability

was widely anticipated and reflected

premia it receives for its CPO and

in prices received by the Group

CHAIRMAN’S STATEMENT

from October. The structure of the

particularly pronounced at

At Bumi Mas, the Group continues its

levy means the Group receives very

Musi Rawas, where the mature

planned investment in strengthening

nearly the same ex-mill-gate price at

hectarage nearly doubled compared

roads, managing tidal water flows and

US$1,000 per tonne as for US$800 per

with 2019. High growth at Bumi Mas

building housing for workers.

tonne. This nonetheless represents a

continued as the Group’s investments

very healthy profit margin.

in that area had an increasing impact.

At Musi Rawas, planting since

The crop at Kota Bangun declined

development began has not changed

DIVIDEND
An interim dividend of 5.00p per share

slightly after it was not able to match

from the 8,000 hectares reached in

the robust growth seen in the second

the middle of 2019. This is a result

(2019 – 5.00p per share) was paid on

half of 2019. In addition, the Group

of pausing development to ensure

6 November 2020, and the board is

was able to increase its purchases

the Group complies with enhanced

recommending a final dividend of

of ffb from independent smallholders

revised standards affecting new

17.00p per share (2019 – 12.75p per

by more than 70% to reach

planting adopted by the RSPO in 2019.

share). This represents an increase

290,000 tonnes.

of 24% in the dividend in respect

of normal operations for the year,

bringing it to 22.00p per share.

The board intends to continue its

long-standing policy of maintaining

RISING CROP AND
PRODUCTION UNDERPIN
24% DIVIDEND INCREASE

In both the Group’s own areas and

those of its scheme smallholders,

planting is carried out in rigorous

compliance with RSPO standards

to ensure the fruit will be certified

as being produced sustainably. It

is anticipated that planting at Musi

or increasing the dividend where

The Group continues to pride itself

Rawas should resume in mid-2021.

possible. It believes the projected

on the level of extraction it achieves

increase in yield from its young

from its ffb. Overall, the Group’s

At the end of 2020, the Group

plantations provides a basis for

extraction rate in its own mills fell

managed 51,600 hectares of oil palm

sustained future crop growth and

to 23.1% from 23.7% in 2019. This

on behalf of itself and its scheme

enhanced dividends. Furthermore,

reflected the dramatic increase

smallholders. The effective ownership

the Group expects capital expenditure

in crop bought from independent

of planted oil palm hectarage by the

to fall substantially from 2023 as it

smallholders, which is not of the

Group’s shareholders, taking account

completes the series of investments

same quality as its own crop or

of minority-shareholder interests,

begun in 2005 and its debt to have

that of scheme smallholders. The

amounted to 37,700 hectares.

reached a peak in 2020. In light of

oil-extraction rate in its Bumi

the Group’s strong balance sheet,

Permai mill at Kota Bangun was

the marked increase in crop

particularly affected by this since

STRATEGIC DEVELOPMENTS
The Group has continued to

and production projected for

it not only processed significantly

implement its strategy to focus

the immediate future, and the
prospects for the palm-oil market,

more independent-smallholder crop
than in 2019, but also worked at very

on developing and operating
majority-held plantations to

the board intends to recommend a

high levels of capacity utilisation in

produce sustainable Indonesian palm

dividend of 30p per share in respect

the period prior to commissioning

oil. Wherever possible, the Group

of 2021.

the Rahayu mill. This led to longer

mills its own crop of ffb since this

OPERATIONAL DEVELOPMENTS
The strong projected growth of the

maintenance intervals and some

allows it to report a higher level of

unplanned stoppages. The Group’s

certified sustainable production. The

other mills maintained good rates

Group makes long-term decisions,

Group’s crop is being realised. In

of oil- and kernel-extraction. For

suited both to a long-lived plant such

2020, the total crop processed grew

the time being, the Group’s new

as the oil palm and to the thinking

by 21%, having grown at the same rate

Rahayu mill is processing exclusively

needed to make the right choices for

in 2019. The Group’s crops rose by 9%

crop bought from independent

a sustainable future.

and those of ‘scheme smallholders’

smallholders. In total, the Group

(those attached to the Group’s

produced 270,000 tonnes of CPO,

During 2020, the Group commissioned

projects) by 12%. The rise in crop was

17% more than in 2019.

its second mill at Kota Bangun,

3
3

M.P. EVANS GROUP PLC
ANNUAL REPORT 2020

CHAIRMAN’S STATEMENT continued

needed to process the increasing

add substantial value to this land

of Covid-19 are lifted, notably in

crop from the maturing plantings on

by developing it, and the Group will

Malaysia. Overall, the anticipated

this project. This brings the Group’s

reap its share of this benefit. The sale

recovery in production of the world’s

mills to four in total, with two at

proceeds will contribute to funding

major vegetable oils in 2021 is not

Kota Bangun, one at Bangka and one

the Group’s investment in expansion

expected to lead to an increase of

at Pangkatan. Construction of the

of both its hectarage and production

stock levels relative to consumption

Group’s fifth mill, at Bumi Mas, is

facilities in Indonesia.

well advanced with commissioning

expected in the middle of 2021, and

design work has started on the sixth

mill, at Musi Rawas, planned for

completion at the end of 2022. Where

the Group has spare capacity in its

mills, it buys ffb from independent

THE GROUP PROJECTS
THAT CROP FROM ITS
EXISTING AREAS WILL
RISE UNTIL 2027

smallholders. The Group is committed

to working with these smallholders

GROUP VALUATION
Continuing development of the

despite these being at the lowest

level for five years. In the longer

term, insufficient levels of replanting

in Malaysia and a reduction in new

Indonesian planting are likely to curb

growth in palm-oil production. There

is a continuing sense that consumer

and media attitudes may be shifting

to understand and acknowledge the

part that certified sustainable palm

to ensure their ffb can be certified

Group’s estates produced an increase

oil can play in the world achieving a

as fully traceable and so sustainable

in the total US Dollar value of the

sustainable future.

under the new RSPO Independent

Group’s plantations during the

Smallholder Standard.

year. At the same time, there was a

In the short term, the uncertainty

reduction in the value of Malaysian

surrounding the Covid-19 pandemic

The Group’s strategy of controlling all

property in line with a general fall in

may affect both prices for CPO and

its operations means it is best able

the sector. There was also a decline

production. However, the board

to draw on its excellent operational

in the value of the US Dollar against

remains of the view that palm oil

management team, with a proven

Sterling. Overall, the Group’s value

is well placed to benefit from an

track record of developing and

per share, based on an independent

underlying increase in global demand

improving estates in the most effective,

valuation at the end of 2020 was

for vegetable oil and, therefore, that

productive and sustainable way. This

£10.99, similar to that a year earlier.

the outlook remains positive.

has resulted in construction of roads,

permanent housing, methane capture

facilities and water-management

PROSPECTS
The Group projects that crop from

ACKNOWLEDGEMENTS
The year 2020 will be remembered as

infrastructure, in addition to its mills.

its existing areas will rise until 2027

the year of the Covid-19 pandemic.

However, the Group’s investment

before plateauing. With an average

The Group’s managers, staff and

programme to develop its existing

age of only eight years, the palms on

workers in all our operations have

projects is coming to an end. A strong
balance sheet allows the Group

the Group’s estates and those of its
scheme smallholders will significantly

risen magnificently to the challenges
that ensued, delivering continued

to plan for increasing returns to

increase their yield as they mature.

growth and development in our

shareholders as well as to acquire

Any additional areas that the Group

operations and embracing the need

incremental hectarage for planting

acquires in line with its strategy

to adapt to changed circumstances.

around its existing projects.

would push further into the future

On behalf of the whole board,

In Malaysia, the Group reached an

their productive efforts and

agreement to sell its last wholly-

After an unusual fall in world

personal commitment during these

owned Malaysian asset, the remaining

production of CPO during 2020,

challenging times.

the year of its peak-oil production.

I should like to thank them all for

70 hectares of its old Bertam Estate.

modest growth is expected in

The buyer was Bertam Properties

2021. However, to some extent, this

Peter Hadsley-Chaplin

Sdn Bhd, the joint venture in which

depends on how quickly the flow

Chairman

the Group has a 40% shareholding.

of migrant workers picks up once

23 March 2021

Bertam Properties will be able to

travel restrictions to limit the spread

OPERATIONAL HIGHLIGHTS

CHAIRMAN’S STATEMENT

INDONESIAN PALM OIL

Total crop processed up 21% to 1.2 million tonnes

Group crops up to 724,000 tonnes, a 9% increase

Crops at youngest operation, Musi Rawas, nearly trebled

100% of Group and scheme-smallholder crop grown to
sustainability standards

Crude-palm-oil production up 17% to 272,000 tonnes

New Group 40-tonne mill began production in September 2020

53% of Group CPO production certified sustainable; target 100%
once Group processes all its own crop

MALAYSIAN PROPERTY

Conditional sale agreement of Bertam Estate for US$24.9 million
announced

Margin increase and profit for the year at Bertam Properties
despite property-market headwinds

M.P. EVANS GROUP PLC

Net current assets of US$22.9 million at 31 December 2020

Group equity value of £10.99 per share at 31 December 2020

Young palms at Simpang Kiri

M.P. EVANS GROUP PLC
ANNUAL REPORT 2020

M.P. Evans aspires to the quality
of its output and management of
its plantations being regarded as
a reference point for the industry.

1 SIMPANG KIRI
Mature oil-palm estate in the province of
Aceh, near the border with North Sumatra,
which was acquired in the early 1980s. Ffb
are processed in a nearby third-party mill.

2,600 hectares

Group planted area: 2,400 hectares

Our values are an integral part of
everything we do.

INTEGRITY

The Group is a reliable partner and employer
with a reputation for keeping its word and not
tolerating any form of bribery or corruption.

TEAMWORK

We are open about our challenges and solve
them together.

EXCELLENCE

The Group aspires to the quality of its output and
management of its plantations being a reference
point for the industry.

2 KERASAAN
Mature (ex-rubber) oil-palm estate near the
town of Pematangsiantar in North Sumatra.
Ffb are processed in the neighbouring Bukit
Marajah mill, owned by the SIPEF Group -
also the majority shareholder in Kerasaan.

Planted area: 2,300 hectares

Group minority share: 38%

3 PANGKATAN GROUP
Grouping of three estates (Pangkatan,
Bilah, Sennah) whose fruit is processed in
a 40-tonne mill built on Pangkatan in 2005.
Combination of a long-established, mature
(ex-rubber) oil-palm estate (Pangkatan),
and land acquired or planted over the last
30 years (Bilah and Sennah).

7,500 hectares

Group planted area: 7,000 hectares

4 MUSI RAWAS
Located in South Sumatra province near
the town of Lubuk Linggau, the project was
started in 2012. Much had previously been
planted with smallholders’ rubber, which had
been abandoned. The Group began planting
oil palm at the end of 2014, and harvesting
started in 2017.

10,000 hectares

Group planted area: 5,500 hectares

Scheme smallholder planted area: 2,500
hectares

OPERATIONAL HIGHLIGHTS

8 BERTAM PROPERTIES AND BERTAM
ESTATE
This land was previously the Group’s Bertam
Estate, most of which was sold into Bertam
Properties, a joint venture with two Malaysian
partners. Starting in 1992, the area has been
developed into a new town. The remaining
developable land amounts to 179 hectares. In
2020, the Group signed a conditional agreement
to sell Bertam Estate to Bertam Properties.

Bertam Properties: 280 hectares
(Group minority share: 40%)

Bertam Estate: 70 hectares

7 BUMI MAS
Located in East Kalimantan, north-east
of Sangatta next to the Manubar River.
The land was acquired in 2017. It was
largely planted in 2012-14, with the first
harvesting taking place during 2015.
A 60-tonne mill is under construction
and will be commissioned in mid-2021.

9,000 hectares

Group planted area: 7,500 hectares

Scheme smallholder planted area:
1,400 hectares

5 BANGKA
Located on the island of Bangka, the land
was acquired in 2005. The first areas planted
started production during 2009. A 45-tonne
mill with composting facility and biogas plant
was commissioned in May 2016 and extended
to 60 tonnes in 2019.

12,000 hectares

Group planted area: 6,100 hectares

Scheme smallholder planted area: 3,900
hectares

6 KOTA BANGUN ESTATES
Located in East Kalimantan, close to Kota Bangun and next to
the Mahakam River, the land was acquired in 2006. The first
areas planted started production during 2010; a 60-tonne mill
was commissioned in December 2012, and a 40-tonne mill was
commissioned in September 2020.

16,000 hectares

Group planted area: 10,500 hectares

Scheme smallholder planted area: 4,600 hectares

THE GROUP’S BUSINESS MODEL

OUR MAIN RESOURCES

39,100

HECTARES OF
GROUP OIL PALM

12,500

HECTARES OF
SMALLHOLDER OIL PALM

PLANTATION LAND
The Group’s plantation land is used to grow oil

RELATIONSHIPS WITH COMMUNITIES
The Group engages with the local communities

palms and harvest them to the fullest extent.

living on and near its operations and manages

superlative smallholder schemes on their behalf.

7,200

EMPLOYEES

17%

NET GEARING

PEOPLE
The Group has more than 7,000 employees,

STABLE FUNDING
The Group has a robust capital structure with

including 200 agronomic staff, 95 engineers and

market capitalisation of more than US$493 million*,

more than 3,700 harvesters.

cash of US$27 million and prudent levels of debt.

OUTCOMES

271,700

TONNES OF
CRUDE PALM OIL

Growing production

53%

CERTIFIED
SUSTAINABLE

Sustainable
production

US$340

PER TONNE
OWN PALM PRODUCT

Low costs

22.00p

TOTAL DIVIDEND
FOR 2020

Improving returns,
rising dividends

* Based on a share price of 660p on 31 December 2020.

M.P. EVANS GROUP PLCANNUAL REPORT 2020

GROUP BUSINESS MODEL

HOW WE OPERATE

PROMOTE A PHILOSOPHY OF
ZERO WASTE
The Group turns its empty bunches into compost

and generates electricity from methane collected

FOCUS ON OUR STRENGTH AS A
PRODUCER OF SUSTAINABLE INDONESIAN
PALM OIL
The Group builds shareholder returns by

from mill effluent. It establishes and maintains

exploiting the Group’s strengths as an efficient

conservation areas and strictly adheres to

producer of sustainable Indonesian palm

environmental standards.

oil to generate increasing crop, production

and revenues.

MAINTAIN STRONGLY
INCREASING CROP
Having young plantations underpins

strong projected crop growth to the

end of the 2020s because of the way

oil palms increase yield as they

mature. New planting or acquisition

of young estates helps keep the

average age low.

CONTROL OUR
OPERATIONS
The Group makes the most of its

mature areas and maximises the

potential of new areas by being in

control of its operations. It makes

use of the expertise concentrated

in its Jakarta regional office.

MAKE SMALLHOLDER CO-OPERATIVES
A SUCCESS
The Group treats its smallholder co-operatives

DO A THOUSAND SMALL THINGS
WELL, REPEATEDLY
Even our most senior agronomic managers are

equally, planting, maintaining and harvesting

resident in our operations, controlling a system of

land to the same standard as its own areas. As

supervision and support that focuses on

a result, smallholders own a valuable asset and

high agronomic and engineering standards.

identify their own success with the

Staff in Jakarta and the UK are frequent visitors

Group’s success.

to the operations.

Producing sustainable Indonesian palm oil
to deliver strong results and growing returns
for shareholders.

THE PALM-OIL MARKET

CPO prices had already risen strongly

was overshadowed by controls on

at the end of 2019 as vegetable-oil

labour migration introduced to

stocks were depleted compared with

combat Covid-19, which deprived

previous years. However, the Covid-19

plantations of workers to maintain

pandemic then took hold and bore

fields and harvest crop. This did

down on demand and trade, leading

not affect Indonesia in the same

the price of CPO to fall sharply from

way, although its crop dipped in the

the middle of February. Whilst global

latter part of 2020 in response to

consumption did fall during the

drier weather and the likely growing

pandemic, production of palm oil fell

impact of reduced fertilising and

even further. Against a background of

investment during the period of

low stock levels, this led to a recovery

low CPO prices in 2018 and 2019.

in the palm-oil price starting in May

Demand for palm oil in Indonesia

2020, which continued strongly

nevertheless rose, mainly as a fuel.

through the rest of the year to finish

Whilst total production of palm

at US$1,035 cif Rotterdam. At the

biodiesel stagnated, a collapse in

end of 2020, world stocks of palm

palm biofuel exports was taken up

oil stood at less than two months’

by a strong increase in domestic

consumption: historically a low level.

demand funded by the Indonesian

World production of palm oil in 2020

government from an export levy

was 73.8 million tonnes, unusually

introduced at the end of 2019 and

less than the 78.8 million tonnes

then increased in December 2020 in

recorded in 2019. The combined

response to escalating CPO prices.

share of Indonesia and Malaysia in

Unsurprisingly, given the backdrop

world palm-oil production stood

of the Covid-19 pandemic, world

at 83.3%, marginally lower than in

trade in palm oil fell by some 5.2

2019. Crop in Malaysia has been

million tonnes, or 8%, in 2020

increasingly affected by its ageing

compared with 2019. China and India

stock of palms, but in 2020 this

between them accounted for more

MAIN PRODUCERS
OF PALM OIL
2020

MAIN CONSUMERS
OF PALM OIL
2020

57%

Indonesia

Malaysia

26%

20% Indonesia
11% India
9% China
27% Other Asia
13% Africa
11% EU

The year 2020 began
well for the palm-oil
market. This resulted from
expectations of modest
vegetable-oil supply
increases during the year
ahead failing to match
rising demand.

Main producers
Remaining 17% consists
of Thailand (4%), Colombia
(2%), Nigeria (2%), other
countries (9%).

Main consumers
Remaining 9% consists
of Americas (7%), other
countries (2%).

Source: Oil World.

M.P. EVANS GROUP PLCANNUAL REPORT 2020

THE PALM-OIL MARKET

PALM-KERNEL OIL
The production pattern of PKO followed that of CPO. However, in contrast to CPO, PKO had started 2020 with

good levels of global stocks and plentiful supplies of its main competitor, coconut oil. The price of PKO fell with

the onset of the Covid-19 pandemic and, having started the year at US$668 per tonne cif Rotterdam, reached a

low point of US$553 per tonne towards the end of April 2020. High stock levels persisted into the third quarter,

holding back a recovery in the price of PKO. During the last quarter, however, deep discounts of PKO to coconut

oil, in addition to shortages of coconut oil, prompted a rally which carried the price to US$1,322 per tonne at

the end of 2020. The average PKO price for the year was US$796 per tonne, compared with US$668 in 2019, an

increase lagging that of coconut oil by some margin.

than two-thirds of this reduction.

to Oil World, consumption still

to the end of the year, ending

In India, tariff barriers to palm oil

outstripped production by

even lower than in 2016, when

were increased and demand in the

1.4 million tonnes.

hospitality sector evaporated. As a

the sector had suffered from an

unusually harsh El Niño weather

result, palm oil’s share of vegetable-

A sharp reduction in import demand

pattern, and barely higher than they

oil imports to India reduced by 5%.

for palm oil was concentrated in the

had been in March 2020. The effect

After a strong increase in 2019,

first quarter of 2020. From the second

on the price of CPO was pronounced.

palm-oil consumption in China fell

quarter onwards, trade grew to the

After starting the year at US$860 per

back both as the country imported

point where world palm-oil imports

tonne it fell to a low of US$510 in the

more sunflower oil and as the supply

in the last quarter of 2020 were only

middle of May, and then recovered

of domestic soybean oil increased

4% lower than in the last quarter

strongly to the end of the year.

in step with greater production of

of 2019. At the beginning of 2020,

The average price in 2020 for CPO

soybean meal to feed its pig herd,

the abrupt fall in trade had been

cif Rotterdam was US$716 per tonne,

recovering after an outbreak of swine

absorbed by a reduction in stocks.

an increase of US$150 over the

fever. Overall, the world consumed

Whilst there was some rebuilding of

average in 2019.

3.6 million fewer tonnes of palm oil

stocks in the second quarter, weak

in 2020 than in 2019 but, according

global production led to stocks falling

CRUDE-PALM-OIL PRICE

US$ per tonne
cif Rotterdam

1200

1100

1000

900

800

700

600

500

400

2016

2017

2018

2019

2020

2021

STRATEGY

The Group’s strategy is to
maintain steady expansion
of its majority-owned
Indonesian palm-oil areas
in a sustainable and
cost-effective manner.

the Group aims to increase the area

to the extent that the availability

of environmentally-suitable land

permits, ensuring compliance with

enhanced RSPO standards aimed at

preventing any deforestation. Hence,

it is possible the Group may be able

The Group’s principal activity is

to plant more than the remaining

the ownership, management and

2,000 hectares referred to above.

development of sustainable oil-palm

Before taking account of any such

estates in Indonesia, together with

increase at Musi Rawas, or future

the management and development of

acquisitions, the combined Group

‘scheme smallholder’ areas attached

and scheme-smallholder areas are

to those estates. The Group’s

expected to reach 53,600 hectares

strategic goal is to produce only

when fully planted. In addition, the

certified sustainable palm oil, expand

Group owns a 38% share of the

its principal activity and to maintain

2,300-hectare Kerasaan estate in

a steady rate of growth in crops

North Sumatra which, in line with its

and in planted hectarage controlled

strategy, could potentially be sold to

by it. Majority control enables the

finance the expansion of majority-

Group to deploy its operational

held areas.

expertise to greatest effect with the

aim of generating better returns to

The Group’s strategy is to mill all of

shareholders through a sustained

the ffb it grows. The Group currently

increase in dividends.

has four palm-oil mills: at Pangkatan

in North Sumatra; in Bangka; and two

The Group designs its procedures

at Kota Bangun in East Kalimantan,

to address the risks of operating in

including the Rahayu mill which

Indonesia. The Group has confidence

began operation in September 2020.

in both the palm-oil sector and

The Group is constructing a further

Indonesia as an area of operation

two new mills, at Bumi Mas and Musi

to provide a basis for successfully

Rawas, to take maximum advantage

delivering its strategy.

of the rapidly-increasing crop in

both of these areas. Construction

The total planted area of the Group’s
majority-held Indonesian operations

work is already advanced at Bumi
Mas, where the mill is expected to

extends to 39,100 hectares. The

become operational in the middle of

scheme smallholder areas adjoining

2021. A mill site has been acquired

the new projects amount to 12,500

at Musi Rawas and design work on

planted hectares. The current

the mill at that location has begun.

estimated unplanted land bank

In addition to building these mills

is some 1,500 hectares on the

and associated composting and

Group’s land and 500 hectares on

biogas facilities, substantial further

the adjoining scheme-smallholder

investment is being made into

areas managed by the Group, at

infrastructure in these areas, such as

Musi Rawas in South Sumatra. The

housing for staff and workers, estate

intention is to plant these areas as

road networks, power and water

rapidly as possible. Furthermore,

distribution as well as workshops,

STRATEGIC
REPORT
2020

M.P. EVANS GROUP PLCANNUAL REPORT 2020

STRATEGIC REPORT
STRATEGY

stores and administrative offices.

demonstrate full compliance with

affected by the activities of the

At Bangka, a bulking site has been

Indonesian laws on smallholder

Group. The list, together with a

acquired, and the facility will

development passed long after these

summary of how the Group

be built during 2021. The Group

estates were first planted.

engages with its stakeholders, is

seeks continually to maintain and

published on the Group’s website

improve agronomic standards and

In Malaysia, in July 2020 the Group

(www.mpevans.co.uk).

productivity on its estates, including

signed a conditional agreement

investment to manage both excessive

to sell Bertam Estate, a small area

Pages 8 and 9 of this report set

rainfall and dry spells, with the

of oil-palm land with property-

out the Group’s business model

objective of increasing crops of ffb

development potential to Bertam

and how it operates. The nature of

and production of CPO. In addition,

Properties, a property-development

oil-palm plantations is that they

it has ambitions in the medium term

company in which it has a significant

by necessity require decisions to

to add to its portfolio of estates to

share. This joint-venture share will

be made for the long term. This

maintain its ability to increase crop

therefore become its last remaining

encompasses the health and well-

and future profits.

Malaysian asset. The proceeds

being of the environment in which

of this sale will be used to help

the Group operates as well as that

The Group is actively exploring the

finance the Group’s investments in

of the people living in and around

acquisition of new land. At Kota

its Indonesian plantations and it

its operations. Such considerations

Bangun, East Kalimantan, the board

will, in addition, continue to reap

are intrinsic to the Group’s way

is engaged in extending the Group’s

its share of the value added to the

of operating. Further details

area from the currently-planted

land through development. In the

demonstrating how the principles

15,200 hectares to bring the project

long term, it is the Group’s intention

of section 172 are aligned with how

size closer to the equivalent of

to dispose of its share in Bertam

the Group makes strategic decisions

two 10,000-hectare units. In Aceh,

Properties in order to help fund

concerning its operations can be

the Group is investigating the

further acquisition or development

found in the “Sustainability” section

area surrounding its Simpang Kiri

of oil-palm estates in Indonesia, and

of this report on pages 31-37.

estate to assess whether enough

so to exit from Malaysia.

suitable land could be acquired to

justify building a mill at prices that

represent an attractive return to

shareholders. The Group’s experience

‘SECTION 172’ STATEMENT:
IMPLEMENTING THE STRATEGY
In implementing its strategy, the

Prior to the travel restrictions

imposed to manage the spread of

Covid-19, the executive directors

were frequent visitors to the

is that 10,000 hectares of oil palm

board meets its obligations under

Group’s operations overseas,

with a mill able to process 60 tonnes

section 172 (1) of the Companies

during which they received regular

of ffb per hour provides a unit

Act 2016 (“section 172”) to promote

briefings from local management on

that is both big enough to deliver
economies of scale in production

the success of the company for the
benefit of its members, whilst having

engagement with local communities
and workforce grievances. During

and administration, and small

regard to wider stakeholders and the

2020 the executive directors have

enough to allow the careful scrutiny

impact of decisions over the long

undertaken regular ‘virtual visits’

by field management needed to

term. Each member of the board is

in which they discussed these and

maintain high standards. The Group’s

aware of her or his obligations under

other operational issues with field

projects in Bangka, Bumi Mas and

section 172 and due consideration is

staff and reviewed photographs,

Musi Rawas, including smallholder

given to stakeholders’ interests when

video and drone footage from its

areas, are of this size. In North

strategic decisions are taken.

operations. As previously, matters

Sumatra, the Group is promoting

of concern are relayed to the board

the formation of independent

The board reviews at least annually

where appropriate.

smallholder co-operatives that will

which organisations or individuals

provide ffb to its Pangkatan mill

it considers to have a reasonable

During the year the board approved

as well as ensure the Group can

expectation of being significantly

a revised policy on whistleblowing.

M.P. EVANS GROUP PLC
ANNUAL REPORT 2020

The policy was disseminated to the

Group’s employees in their local

language and the details of an

independent whistleblowing hotline

were widely publicised. Reports

can be made anonymously using

telephone, email, WhatsApp or a

website. In its first seven months of

operation this resulted in five

reports which have all been

investigated and the whistleblower

informed, through the independent

reporting service, of the outcome.

None was found to be serious. The

policy underlined that the Group will

protect any whistleblower raising

genuine concerns from subsequent

negative treatment.

In 2020, the board also reviewed

the Group’s policy on Modern Slavery

and its Anti-bribery and Corruption

Code of Conduct to ensure the

Group’s practices reflected its

values. These policies are intended

to benefit the company and its

members, taking into account issues

such as the Group’s employment

practices, relationships with

suppliers and customers, and its

reputation for high standards.

+104%
+46%
+17%
+14%

GROSS PROFIT

REVENUE

CRUDE PALM OIL
PRODUCTION

PALM KERNEL
PRODUCTION

Harvesting at Bangka

STRATEGIC REPORT
STRATEGIC REPORT
STRATEGY
RESULTS & FINANCIAL POSITION

RESULTS & FINANCIAL POSITION

REVENUE AND GROSS PROFIT
The Group’s revenue for 2020 was

FOREIGN EXCHANGE LOSSES
During 2020, the Indonesian Rupiah

million). The Group’s effective tax

rate was higher than the standard

US$174.5 million, 46% higher than the

weakened by a little over 1% against

UK tax rate, due in part to the higher

US$119.3 million achieved in 2019.

the US Dollar. The Group holds

Production of CPO and PK increased

monetary assets denominated

standard rate applied in Indonesia,

but also as a result of the tax cost

by 17% and 14% respectively in

in Rupiah: operating cash, other

associated with the Group’s

the year, as shown on page 18. In

receivables, and receivables from

financing structure.

addition, average prices for CPO

scheme smallholders, as described in

at mill gate rose by US$110 per

note 19 to the financial statements.

tonne, or 23%, in the year (see page

Hence, a foreign-exchange loss of

ASSOCIATED COMPANIES
The Group’s Indonesian associate,

20), which taken together with the

US$1.1 million (2019 gain of US$1.2

PT Kerasaan Indonesia (38% owned),

production increase resulted in the

million) arose during the year on the

contributed US$1.1 million (2019

higher revenue for the year.

retranslation of these balances.

US$0.8 million) to Group profit in

the year, and the Group received

The Group’s cost of production per

tonne of palm product (a combined

measure for CPO and palm kernels)

ADMINISTRATIVE EXPENSES AND
OTHER INCOME
The Group’s administrative expenses

no dividends (2019 US$0.4 million)

in the year. The Group’s Malaysian

associate, Bertam Properties Sdn

for its own mills decreased by

were US$4.6 million in the year (2019

Berhad (40% owned), contributed

US$5 per tonne in the year for the

US$3.5 million). However, in 2019

US$0.4 million (2019 US$1.1 million)

Group’s own ffb, whilst the cost per

sundry income of US$0.7 million,

to Group profit in the year, and the

tonne when including ffb purchased

predominantly relating to sales of

Group received dividends of

from scheme and independent

kernel shell, had been offset against

US$1.2 million (2019 US$0.6 million)

smallholders increased by US$40 as

administrative expenses, without

in the year.

a result of higher CPO prices pushing

which they would have been US$4.2

up the cost of purchased ffb.

million. Similarly, whilst the rise

Further details are in the costs

in the Group’s other income from

PROFIT FOR THE YEAR
As a result of the above, the Group’s

section on page 19. As a result, the

US$0.5 million to US$1.5 million in

profit for the year was US$22.2

Group achieved a gross margin of

the year was partly due to increased

million (2019 US$7.5 million).

US$187 (2019 US$127) per tonne

electricity sales from the Group’s

on sales of CPO from its own mills

biogas plants, the increase was also

during the year, and each tonne

partly due to the inclusion of sales of

of palm product achieved a gross

kernel shell.

margin of US$137 (2019 US$84).

In addition, the Group incurred a

small gross loss of US$0.8 million
(2019 US$3.7 million) at those

FINANCE COSTS
During 2020, the Group drew down
a further US$24.6 million from its

locations which do not yet have their

US$120 million credit facility. This

NET ASSETS AND BORROWING
At the end of the year, the Group’s

net assets were US$374.1 million

(2019 US$367.7 million).

Current assets exceeded current

liabilities by US$22.9 million
(2019 US$35.4 million).

own mills.

borrowing was used to support the

At the end of the year, the Group had

Group’s ongoing capital expenditure

cash and liquid resources of US$27.6

Finally, in 2020 the Group wrote off

programme. Whilst there was a

million (2019 US$27.1 million).

costs of US$1.0 million relating to

modest increase in total debt in the

As a result of the additional

land and plantings at Kota Bangun

year, financing costs fell by US$0.3

borrowing referred to under finance

and Tenera Mas which are no longer

million to US$3.4 million, reflecting

costs above, net debt increased

expected to be either developed or

the Group’s low borrowing costs.

in the year to US$78.1 million

productive. Allowing for all of the

above, the Group’s gross profit was

US$34.8 million, more than double

TAXATION
The Group tax charge for the year

(2019 US$67.4 million). At the end

of the year net gearing was 17%

(2019 – 15%); gross gearing was

the US$17.0 million in 2019.

was US$7.7 million (2019 US$7.2

22% (2019 – 20%).

Ffb arriving at Bangka mill

OPERATIONS: INDONESIAN PALM OIL

CROPS
The Group’s progressive upward

the levels that will be attained in

pumps has allowed it to manage this

time. Due to the commissioning of

increase in rainfall and is expected

trend in crops continued during 2020.

its fourth mill in September 2020,

to benefit crops in 2021 and future

The Group’s own crops rose by 9%,

the Group had additional surplus

years. Following the completion of

those of its scheme smallholders

capacity during the year. In total,

planned investment into water-

(those attached to its projects)

290,000 tonnes of ffb were purchased

management infrastructure, as

by 12%. The Group’s palms have a

from independent smallholders.

described in ‘Results and financial

young average age of only 8 years,

Taking into account purchases of

position’ above, the Group took the

meaning the Group is experiencing

outside ffb, total crop processed by

decision to write off 106 hectares

the benefits of increased yields

the Group rose by 21% to 1,207,000

of planting that now fall outside

that naturally occur as oil palms

tonnes, coincidentally matching the

the areas protected by these

mature, reaching their maximum

rate of increase in 2019.

yields at about the age of ten

investments. It remains possible that

some further small areas, now inside

years. In addition to this upward

In Kota Bangun, the relatively dry

the protected zone, may become

path in yield, some 5,300 immature

weather in the middle of 2019 did, as

plantable over the next 24 months.

hectares were declared mature

expected, adversely affect crops for

during 2020 for the Group and its

much of 2020. By the final quarter

A pronounced dry spell between

scheme smallholders. Harvesting on

of the year, however, crops began to

February and November 2019

these areas commenced and they

grow strongly and this momentum

in Bangka took its toll on crop

began contributing to total crop.
Crop nearly tripled at Musi Rawas,

was carried into the early months of
2021. The crop for 2020 followed the

during the first part of the year.
Crop accelerated noticeably from

having experienced a similar rate

usual pattern of second-half crop

September, meaning that overall

of increase in 2019. At Bumi Mas,

being greater than crops during the

the Group’s crop was only 1% less

acquired by the Group in 2017, crops

first half of the year. For the year as a

than in 2019. Taking into account

grew by 26% having started from a

whole, crop fell by 4% compared with

both the Group’s own and scheme-

higher level.

2019 as the whole region suffered

smallholder areas, Bangka’s crop

from dry weather that led to the

rose during 2020. This was also

There was again a significant

trend in long-term rainfall reaching

partly due to the increase in mature

increase in the purchases of ffb

a low point in April. Since that point,

hectarage as most of the remaining

from independent smallholders. The

the trend has reversed, resulting in

immature area, some 1,300 hectares,

Group seeks to maximise the use of

burgeoning crop in the latter part of

was brought into harvesting during

any spare capacity in its mills whilst

2020 and this augurs well for crop in

the year. For the time being, the

its own plantings continue to mature

2021. The investment that the Group

Group has spare capacity at its mill,

and so currently yield less crop than

has made in bunds, drains and

and in 2020 was able to increase

M.P. EVANS GROUP PLCANNUAL REPORT 2020the purchases of independent-

smallholder ffb beyond the high

levels recorded in 2019.

At Bumi Mas, improving field

conditions and rising standards led

to further increases in crop, which

was 26% higher than 2019 in the

Group’s areas, and 37% higher in the

scheme smallholder areas. This is an

area of high rainfall, which has led to

some delays in completing the road-

building programme in two of the

project’s four estates. Nevertheless,

a further 63 km of roads were raised

and 116 km strengthened during

2020 and the Group continued

its construction programme of

houses and estate buildings: 65

workers’ houses were built during

the year. The Group also completed

construction of a new medical centre,

at which the project has a resident

doctor, as well as a primary school

and a crêche. Following intensive

efforts by local management, it

was possible to negotiate more

favourable contracts with third-party

mills for the Group’s crop.

More than 2,500 hectares of young

areas at Musi Rawas started to come

into harvesting, a trend which will

continue over the coming years. This

contributed to crop rising strongly.
Whilst there was no new planting at

Musi Rawas, the Group has used the

pause in development to improve the

field conditions of the 8,000 hectares

that are planted.

The Group’s older estates in North

Sumatra supplying the Pangkatan

mill, produced a small increase in

crop. At Simpang Kiri, the replanting

programme carried out in recent

years, continues to produce results,

leading to a 7% increase in crop from

this estate.

STRATEGIC REPORT
OPERATIONS

2020
TONNES

INCREASE/
(DECREASE)
%

186,400

127,500

170,300

154,300

44,500

41,300

724,300

81,500

64,400

26,900

20,200

193,000

142,500

112,800

34,400

289,700

1,207,000

(4)

(1)

189

(7)

162

260

2019
TONNES

194,000

128,900

164,300

122,000

15,400

38,700

663,300

87,300

57,500

19,600

7,700

172,100

39,600

105,200

21,300

166,100

1,001,500

CROP

Own crops

Kota Bangun

Bangka

Pangkatan group

Bumi Mas

Musi Rawas

Simpang Kiri

Scheme-smallholder crops

Kota Bangun

Bangka

Bumi Mas

Musi Rawas

Independent-smallholder
crop purchased

Kota Bangun

Bangka

Pangkatan group

TOTAL CROP

CROP HISTORY
tonnes

Scheme smallholders

Group

1,000,000

800,000

600,000

400,000

200,000

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

STRATEGIC REPORT continued

PRODUCTION AND EXTRACTION RATES
GROUP AND THIRD-PARTY MILLS

2020

TONNES

96,500

69,600

46,100

212,200

37,400

13,200

8,900

59,500

271,700

19,300

16,900

10,800

47,000

8,600

2,900

1,900

13,400

60,400

2020

23.8

21.6

22.9

22.5

23.1

20.7

20.4

21.5

4.9

4.0

5.5

5.3

5.1

4.7

4.6

4.5

PRODUCTION

Crude palm oil

Kota Bangun

Bangka

Pangkatan group

Bumi Mas

Musi Rawas

Simpang Kiri

Palm kernels

Kota Bangun

Bangka

Pangkatan group

Bumi Mas

Musi Rawas

Simpang Kiri

EXTRACTION RATES

Crude palm oil

Kota Bangun – Bumi Permai

Kota Bangun – Rahayu

Bangka

Pangkatan group

Bumi Mas

Musi Rawas

Simpang Kiri

Palm kernels

Kota Bangun – Bumi Permai

Kota Bangun – Rahayu

Bangka

Pangkatan group

Bumi Mas

Musi Rawas

Simpang Kiri

PRODUCTION
A record year for crops, combined

with a further increase in ffb

2019

purchased from independent

INCREASE/
(DECREASE)

175

164

INCREASE/
(DECREASE)

(3)

—

(1)

(3)

(1)

(8)

—

(2)

(6)

(2)

(6)

TONNES

79,000

67,400

42,800

189,200

29,500

4,800

8,400

42,700

231,900

17,000

16,200

10,100

43,300

6,800

1,100

1,800

9,700

53,000

2019

24.6

—

23.1

23.7

20.9

20.6

21.8

5.3

—

5.6

5.4

4.8

4.6

4.8

smallholders, led to another record

year for Group production. CPO

production rose by 17% to 272,000

tonnes; that of palm kernels by 14%

to 60,000 tonnes. The Group does not

yet have its own mill at either Bumi

Mas, Musi Rawas, or Simpang Kiri.

Instead, it has contracts to sell ffb to

local mills based on the commodity

price for CPO and an assumed rate of

extraction. To reflect the substance

of this arrangement, oil produced

from these estates’ crops has been

included in CPO production figures

(see table).

Currently, 53% of total production is

certified sustainable palm oil (see

more in the sustainability section on

page 31). The Group has an objective

to design and implement a scheme

that will persuade independent

smallholders who supply it with

ffb to sign up to and adhere to the

RISS. All the Group’s ffb, and that of

its scheme smallholders, are grown

to the same high standards and in

a sustainable way. However, where

the Group doesn’t have its own mill,

it has no alternative other than to

sell its ffb to neighbouring third-
party mills that may not be RSPO

certified. This results in some of

the Group’s CPO not being certified

sustainable. The percentage of

certified sustainable production will

rise as the Group constructs its own

mills and works with independent

smallholders to comply with RISS.

An increase in the volume of

independent-smallholder ffb

purchased by the Group led to a

small reduction in the extraction

rates it achieved in the year.

M.P. EVANS GROUP PLCANNUAL REPORT 2020
STRATEGIC REPORT
OPERATIONS

Ffb purchased from independent

remains confident that its mills

Bangun mill, Bumi Permai, processed

smallholders is not of the same

continue to perform at a high level

ffb from the Group’s and scheme-

standard as that produced by the

compared with its peers.

smallholder areas. As noted above,

Group and its scheme smallholders

fruit from independent smallholders

since it is predominantly from dura

The Group continues to buy fruit from

yields significantly less CPO than fruit

palms, which tend to have larger

independent smallholders to utilise

from the Group’s own areas or that

kernels and less flesh from which to

spare capacity at its mills, including

of its scheme smallholders, although

squeeze CPO. Average oil extraction

the new Rahayu mill, the second

this is reflected in the price the

in the Group’s mills decreased to

mill at Kota Bangun. Indeed, after

Group pays for it. Hence, purchases of

23.1% compared with 23.7% in 2019.

commissioning, this mill exclusively

fruit from independent smallholders

The Group compares its performance

processed ffb from independent

make an acceptable profit margin

with other mills in the region and

smallholders, whilst the first Kota

notwithstanding the reduction in

COSTS
Careful management and higher volumes exerted downward pressure on unit costs. The combined cost

per tonne of palm product from the Group’s mills in 2020 was US$340 (2019 US$345). The main source of

cost pressure was from the addition of newly-mature areas, in which the quantity and weight of ffb in the

initial months of cropping are relatively low. In addition, during the first half of 2020 there was expenditure

associated with diverting harvesters at Kota Bangun to carry out field work in the face of lower crops in this

area, and enhanced levels of mill expenditure on repairs due to running the Bumi Permai mill at very high

levels of capacity utilisation in the run up to commissioning the Rahayu mill.

The Group’s policy is to include all depreciation, general charges, administrative costs and overheads, including

those of its Jakarta office, in its calculation of cost per tonne. Excluding depreciation and regional overheads

reduces the Group’s cost to some US$250 per tonne of palm product.

The Group projects increasing crop volumes in future, but is reaching a point in its development where the

benefit of this increased volume on unit costs will largely be absorbed by cost inflation in production.

Unlike the cost of production from processing the Group’s own ffb, the cost per tonne of palm product for

ffb purchased from both the Group’s smallholder co-operatives and outsiders varies with the world market

price for CPO. The Group’s aggregate total cost per tonne of palm product, including ffb from all sources, was

US$400, rather higher than the US$360 recorded in 2019. This stemmed from both the increase in proportion

of lower-yielding ffb purchased from independent smallholders and the commodity price of CPO, which rose

strongly from May 2020 to finish the year at the highest level for nearly a decade.

Other 11%

Head office
Other

4%
7%

Mill 12%

Labour
Depreciation
Other

4%
4%
4%

Field 77%

Labour
Fertiliser
Depreciation
Other

39%
11%
18%
9%

M.P. EVANS GROUP PLC
ANNUAL REPORT 2020

STRATEGIC REPORT continued

average rates of oil extraction their

produce electricity from 100% of

then rose strongly from May 2020

purchase entails. The proportion

the mill effluent rather than the

to finish the year with the highest

of ffb bought from independent

30% processed in the original pilot

prices since 2012, as described in

smallholders increased at each of the

facility, the Group’s first. The Rahayu

the section ‘The palm-oil market’

Group’s mills, significantly so in Kota

mill will initially capture methane

above. The average cif Rotterdam

Bangun and Pangkatan. The highest

and produce compost, whilst the

price for the period was US$716 per

proportion, 37%, is still at the Group’s

Group establishes whether PLN is

tonne, 27% higher than the US$566

Bangka mill, now similar to the

willing to purchase the additional

recorded in 2019. However, towards

proportion of 35% at Kota Bangun.

power that could be generated from

the end of the year the Indonesian

this resource. In Bangka, the biogas

government introduced a new export

The composting and biogas facilities

plant was designed to process all

levy in addition to the existing export

at both mills in Kota Bangun and

of the mill’s effluent and the Group

tax. The combined effect of this was

in Bangka are processing all of

has been supplying PLN with its

for the government to take most

the empty ffb and mill effluent at

surplus electricity since January 2017.

of the benefit of commodity price

these locations. The compost is

At both sites, production of power

increases between a level of about

a valuable nutrient applied in a

will increase with the volume of crop

US$800 per tonne cif Rotterdam and

carefully controlled and supervised

processed by the mills.

US$1,000 per tonne. As a result, the

manner by the Group. The biogas

Group’s ex-mill-gate price did not

plant at the Bumi Permai mill at

Construction of the Benuang mill

benefit fully from the increases in the

Kota Bangun supplies all of these

at Bumi Mas is under way, and on

cif Rotterdam price. During 2020, the

estates’ electricity needs, including

schedule to begin commissioning

Group actually received on average

running the 14 pumps that form

in mid-2021. Design work has begun

US$581 per tonne of CPO at mill gate,

an essential part of the Group’s

on the planned mill at Musi Rawas,

US$110 per tonne more than in 2019.

approach to water management

which is expected to go into service

In addition, the average sustainability

at this location. An extension to

at the end of 2022.

the existing biogas facility at the

premium received by the Group rose

slightly from US$9 to US$10 per tonne.

Bumi Permai mill began supplying

the state electricity company, PLN,

MILL-GATE PRICE
CPO prices started the year at good

For PK, the Group received US$300

with surplus electricity in July 2020.

levels, fell with the onset of the

per tonne, significantly higher than

This extension allows the Group to

Covid-19 pandemic in February but

the unusually low level of US$245

PERFORMANCE
EVALUATION
The Group uses
key performance
indicators at all levels
in the Group, both in
Indonesia and in the
UK, in assessing its
plantation operations
and directing
management effort
in supervising those
operations.

51,600

HECTARES, GROUP AND
SCHEME SMALLHOLDERS

2019: 51,600 hectares

20.0

TONNES PER HECTARE

2019: 20.5 tonnes per hectare

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.

FFB YIELD
PER HECTARE
The rate at which the Group is
able to generate ffb from its
mature planted hectarage is the
most important measure of its
agricultural efficiency.

STRATEGIC REPORT
OPERATIONS

in the previous year, following a

areas to be certified as being

crop in the second half of the year.

very significant increase in the

produced sustainably. At the end of

This weakness in crop during the

price of PK in the last quarter of

2020, planting since development

second half of the year was mirrored

the year. The Group also on average

began reached 8,000 hectares, of

in many other Indonesian estates,

received US$16 per tonne in the

which 5,500 were for the Group and

leading to the palm-oil supply

premium available for PK sold

2,500 for the scheme smallholders.

shortages described in ‘The palm-

with sustainability certificates, a

In addition, land compensation

oil market’ above. Overall, crops

noticeable increase of US$7 per

had been paid on a further 800

finished 2020 at a very similar level

tonne on 2019.

hectares in anticipation of planting

to 2019. Some 30% of Kerasaan’s

recommencing in the middle of 2021.

planting dates from the second

In total, the Group received some

During 2020, the Group received

half of the 1990’s, so a programme

US$2.6 million in sustainability

its HGU from the Indonesian

of replanting will begin in the

premia during 2020, a 34% increase

government for all of its planting

coming years.

on the US$1.9 million achieved in

on Musi Rawas.

2019. This was due to consistent

demand for oil certified by ISCC,

As a result of the pause in planting at

PERFORMANCE EVALUATION
Whilst there was only limited new

which attracts a higher premium

Musi Rawas, the Group planted only

planting in 2020, the Group still had

than oil certified by the RSPO, as well

30 new hectares, in Kota Bangun. In

significant areas of immature palms

as sales of certified oil and PK from

North Sumatra, no replanting was

from plantings that took place in

the Group’s expanded Bangka mill.

carried out in 2020.

PLANTING
Essentially all of the Group’s

new planting is at Musi Rawas.

ASSOCIATED COMPANY:
KERASAAN
Crops at Kerasaan were 54,800

2017-19. Management monitors areas

to be planted, new planting, and the

cost per hectare of development.

The Group ensures that it has

sufficient planting material to

Development here remains paused

tonnes (2019 – 54,200 tonnes). Ffb

fulfil its planned programme of

whilst the Group provides the

crops grew strongly in the first half

new planting. A high proportion

RSPO with the material it needs to

of the year before falling month on

of planting work is undertaken

permit the Group to continue its

month for the remainder of the year.

by contractors, and management

new planting programme. This is

This resulted in the unusual pattern

monitors the progress achieved on

necessary for the ffb from these

of crop in the first half exceeding

the contracted areas.

917,300

TONNES

23.1%

US$340

OIL-EXTRACTION RATE

PER TONNE PALM PRODUCT

2019: 835,400 tonnes

2019: 23.7%

FFB CROP
The volume of ffb crop is the
primary determinant of the
Group’s ability to generate
CPO and PK for sale.

EXTRACTION RATES
The rate at which the Group is
able to convert its ffb into CPO
and PK, quantified as oil- and
kernel-extraction rates, is the
most important measure of its
processing efficiency.

2019: US$345 per tonne
palm product

COST PER TONNE OF
PALM PRODUCT
The Group’s long-term
profitability depends on its
success in minimising the
unit cost of production that is
summarised in this measure.

STRATEGIC REPORT continued

Planting costs are monitored by

throughput; and the percentage

management for each individual

of free fatty acids, oil losses, dirt

estate. The cost per hectare of a

and moisture. Extraction rates vary

particular planting is influenced by

according to factors including the

factors such as the weather pattern,

type and quality of planting material,

the soil type and terrain. Ultimately,

the age profile of plantings, and

total planted hectarage determines

rainfall. Throughput is monitored

future crop. At the end of 2020, the

on a daily basis. Oil losses, dirt and

Group stood at 51,600 hectares

moisture content are expressed in

planted for itself and its scheme

terms of percentages and actual

smallholders.

achievement against maximum

permitted levels is monitored

The crop yield per hectare on each

by management. An average oil-

year’s planting on each estate is

extraction rate of 23.1% in 2020,

budgeted, recorded and monitored.

whilst lower than in 2019, compares

Yields can vary widely because of

favourably with industry norms and

factors such as soil type, terrain,

with mills operating in the same

sunshine hours, rainfall, distribution

areas as the Group. Mill construction

of rainfall and the fertility cycle of

and associated infrastructure

the palms. The most important factor

is undertaken by contractors.

is a palm’s age. The Group’s average

Management monitors carefully

yield of 20.0 tonnes per hectare

progress achieved against budget

reflects the young average age of its

and agreed timetables.

palms. This yield is a little lower than

in 2019, reflecting the addition of

Management monitors and assesses

5,300 newly-mature hectares during

the efficiency of plantation costs by

the course of 2020. Monitoring of

means of performance indicators

performance takes into account the

which identify field costs per hectare

conditions on each year’s planting

and per kilogram of ffb, and mill

on each estate. Local management

costs per tonne of palm product.

is responsible for field standards,

A significant proportion of costs

fertiliser application, harvester

both in the field and in the mill

numbers and productivity, and the

are fixed and therefore vary little

quality of infrastructure (estate roads

with different levels of utilisation.

and drains, for example). These are
monitored by senior management

Field costs also vary from estate to
estate depending upon such factors

on the ground and, in some cases,

as terrain and rainfall pattern, so

independent verification and advice

the performance indicators are

is sought. Decisions, such as when

monitored by management for each

and how to replant, are taken based

individual estate. The projected

on local conditions. Overall, the

increase in crop bears down on

Group achieved total crop from its

the US$340 per tonne it currently

own areas and those of its scheme

costs the Group to produce palm

smallholders of 917,300 tonnes.

product, but the Group is reaching a

The key indicators of mill

be absorbed by normal inflation of

point where this benefit will largely

performance are: the extraction

production costs.

rate of palm oil and palm kernels;

M.P. EVANS GROUP PLCANNUAL REPORT 2020STRATEGIC REPORT
OPERATIONS

CURRENT TRADING AND PROSPECTS

Crop in the first two months of 2021 is ahead of 2020 in all regions except

North Sumatra, which lagged the good levels seen last year. The increase was

particularly pronounced at Musi Rawas in South Sumatra, where yield on the

young palms is improving and new areas are being brought into first harvesting.

Compared with last year, the Group has also purchased significantly more ffb

from independent smallholders. At the end of February, total crop processed

was 217,000 tonnes, 20% more than the 180,000 tonnes processed during the

first two months of 2020. The details are set out in the following table:

2 MONTHS ENDED
28 FEB 2021
TONNES

INCREASE
%

2 MONTHS ENDED
29 FEB 2020
TONNES

Own crops

Smallholder crops

Outside crops purchased

124,200

38,300

54,400

216,900

107,100

27,500

45,600

180,200

Crop is rising due to the young

2020 may have been boosted

average age of its palms across the

by trade brought forward from

Group, an average of 8 years. This is

January in order to avoid potentially

a consequence of the development

higher levies on exports in 2021.

of its projects in Bangka and East

Nevertheless, stocks of palm oil were

Kalimantan over the last ten years,

at low levels at the end of 2020. A

the acquisition of Bumi Mas and the

recovery in palm-oil production is

development of Musi Rawas. The

expected in 2021, although the extent

upward trend in crop is expected to

of this may be limited by continuing

last until 2027 before plateauing. This

labour shortages arising from travel

would be further augmented by the

restrictions imposed to control

acquisition or development of new

the spread of Covid-19. The path of

project areas.

consumption will be affected by the

speed of recovery of the hospitality

As reported in the section ‘The

sector, notably in India, which is

palm-oil market’ on page 10, the

a significant consumer of palm

price of CPO climbed in the second

oil. In the longer term, insufficient

half of 2020, ending the year at a

levels of replanting in Malaysia

price of US$1,035 cif Rotterdam. This

and a reduction in new Indonesian

strong level carried over into 2021.

planting are likely to curb growth in

In the first two months of the year

production.

it has mainly stood above US$1,000

per tonne, and indeed from the

Notwithstanding the uncertainties

beginning of February 2021 climbed

surrounding Covid-19, the board is of

further to reach US$1,100 per tonne.

the view that palm oil, because of its

The price was influenced by higher

high yield and low cost of production,

export levies introduced in Indonesia,

is well placed to benefit from

as described in the section ‘Mill-gate

increasing demand for vegetable oil

price’ above. It is also likely that

and hence that the outlook remains

exports from Indonesia in December

encouraging.

M.P. EVANS GROUP PLC
ANNUAL REPORT 2020

OPERATIONS: MALAYSIAN PROPERTY

MAJORITY-OWNED:
BERTAM ESTATE
In July 2020, the Group announced

physical presence in Malaysia, with

there was a reduction in the high-

administrative and agricultural advice

end properties that had accounted

and work being carried out by its

for the majority of sales in 2019.

a conditional agreement to sell its

agent, Straits Estates Sdn Berhad, and

Bank finance remained available for

70-hectare Bertam Estate to Bertam

other external service providers.

this mid-cost category of property.

Properties, its associated property-

development company, for 99.9

million Malaysian Ringgit (US$24.9

million at the year-end exchange

ASSOCIATED COMPANY:
BERTAM PROPERTIES
During 2020, Bertam Properties

Notwithstanding the change in mix

of property sold, the gross sales

margin increased from 21% to 23%.

There was overall, however, a sharp

rate). The sale consideration is being

continued to focus on reducing

decrease in property-development

paid in cash over a three-year period

its stock of unsold properties,

turnover from 104 million Malaysian

ending in July 2023. Of the total,

including through the use of

Ringgit in 2019 to 60 million

60% (US$14.9 million) is receivable

innovative digital marketing, and

Malaysian Ringgit in 2020 resulting in

in cash once all sale conditions are

took a very disciplined approach

a modest profit for the year.

satisfied, including approval by the

to commencing new development.

Malaysian Estate Land Board. The

This tactic successfully generated

At the end of 2020, Bertam

Group expects this to be before the

a cash inflow to the operation at a

Properties owned 152 hectares of

end of the third quarter of 2021.

time of uncertainty in the Malaysian

development land, including 24

The sale proceeds will contribute to
funding the Group’s investment in

property market, where transactions
fell by some 30% compared with

hectares already under development,
and a 103-hectare golf course. The

expansion of both its hectarage and

2019 despite a government Home

newly redesigned 18-hole course

production facilities in Indonesia.

Ownership Campaign, which gave

at the Penang Golf Resort had

Bertam Properties will be able to

exemptions for stamp duty, future

opened at the end of 2019, but from

add substantial value to this land by

capital gains tax and removed loan-

mid-March to mid-May 2020 the

developing it, and the Group will reap

to-value limits for lending.

its share of this benefit.

playing of golf was stopped with the

introduction of measures to combat

As a result of the continuing initiative

the spread of Covid-19. Playing

In the meantime, residual oil-

to clear its stock, Bertam Properties

resumed in mid-May 2020, but the

palm operations on 65 hectares of

sold 237 properties in 2020. This

capacity of the course was reduced

cultivated land yielded a crop in 2020

was significantly fewer than the 461

through the requirement for buggies

of 900 tonnes (2019 – 1,100 tonnes).

sold in 2019, but Bertam Properties

to be single occupancy until mid-

The Group has three junior employees

was able to increase the number

June from when twin sharing was

on Bertam Estate. It has no other

of terraced properties sold whilst

allowed for the rest of the year. The

STRATEGIC REPORT
OPERATIONS

Bertam Properties residential development

Bertam Properties show home

Abdullah Fahim mosque, and part of
the new town, at Bertam Properties

new course has been well received

by members and, despite being

closed for nearly two months, playing

numbers compared well with 2020.

The remaining development land

at Bertam Properties continues to

be a valuable asset whose value

has appreciated as development

in the project is completed and

the new town attracts residents

and businesses to an area that

is designated by the Malaysian

government as a ‘hub’ for education.

Not taking account of the land

occupied by the Penang Golf Resort,

at the end of 2020 Bertam Properties

had 128 hectares remaining on

which development had not been

started. Acquisition of the 70

hectares of Bertam Estate land

(described in the preceding section)

will therefore significantly increase

Bertam Properties’ landbank and its

ability to exploit the value generated

by its completed development.

Whilst there may be some short-term

downward pressure on the property

market as a result of the uncertainty

referred to above, the board expects

the value of this land to continue to

appreciate in the longer term.

RISK MANAGEMENT

The Group regularly considers its principal risks. They are reviewed and assessed by the
audit committee at least annually and reported to the board for approval.

The 2020 review concluded that the principal risks reported in the 2019 annual report remain risks to the Group, and

that no new principal risks have been identified. Set out below is the board’s evaluation of the principal areas of

potential risk. Risks have been classified as being either specific to the Group or of a general nature. The risk to the

Group is described, along with the steps taken to mitigate that risk. The board regards the principal risk to the Group to

be a reduction in the commodity price for CPO.

PRINCIPAL RISKS

High

COVID-19

ENVIRONMENTAL
PROTECTION

CPO PRICE
FLUCTUATION

Impact on

business

RELATIONS
WITH LOCAL
PARTNERS

COUNTRY RISK

EXTREME
WEATHER

SUPERVISION OF
OPERATIONS

PESTS AND
DISEASE

Low

RELATIONS WITH
LOCAL POPULATION

EXCHANGE RATE
MOVEMENT

High

Likelihood

SPECIFIC RISKS

CORONAVIRUS COVID-19

Demand for the Group’s products

varies to some extent with the
health of the global economy, and

its ability to harvest and process

its ffb fully and efficiently relies on

having a healthy workforce.

The Group assesses that Covid-19,

including any emerging variants,

can affect it principally in two ways:

indirectly through the demand

for CPO and PK, and directly

through affecting the health, and

hence capacity, of its workforce.

As set out in the general risk on

notwithstanding shorter-term

Monitoring of the workforce for

disruption arising from the spread

symptoms of the virus has been

of Covid-19, the Group believes

established. Travel by the Group’s

there will be continuing strong
demand from the fast-developing

staff has been restricted. Movement
on the Group’s estates has been

economies, such as India, China and

restricted and, as far as possible,

Indonesia itself, as well as from more

access reduced to external visitors.

established markets in Europe, for

The Group has plans to isolate

vegetable oil for human consumption

individual divisions or estates,

and demand for vegetable oils as a

including stopping all harvesting

biofuel.

Whilst the future impact on human

health of Covid-19 remains uncertain,

the Group established precautionary

measures to prevent the spread of

and production should this become

warranted or is imposed by the

Indonesian authorities. Remote

working arrangements are in place in

both the Jakarta and UK offices.

any infection, which remain under

 Read more in the chairman’s

commodity-price fluctuation below,

review and in place as required.

statement on page 2

M.P. EVANS GROUP PLCANNUAL REPORT 2020STRATEGIC REPORT
RISK MANAGEMENT

INDONESIA COUNTRY RISK

The Group’s strategy is based

on maintaining control over its

plantation assets and identifying

opportunities to expand by

acquisition of additional plantation

areas.

The Group relies on the continuing

ability to acquire and enforce

property rights in Indonesia. The

country has benefitted from a period

of political stability and economic

growth. There is a tendency for

nationalist sentiment to increase

during presidential elections,

although there was no sign of

this in the lead-up to the 2019

date been renewed without

difficulty when falling due. The

Group has already obtained the

HGU for nearly all of the land it

has developed since it began its

expansion in 2005. Where the Group

has not yet received the HGU, it has

obtained the necessary licences

for these projects, including a valid

right to develop the land (izin lokasi)

and operating licences (izin usaha

perusahan). The Group’s experience

has been that renewal of HGUs has

been straightforward, even where

changes in applicable regulations

have occurred since the HGUs were

originally issued.

SUPERVISION OF OPERATIONS

The business model explains how

the Group controls and supervises

its operations using expert staff. The

Group also uses key performance

indicators (KPIs) to monitor

plantation operations.

Geographical distance between

the UK head office and its

operations located in Indonesia

and Malaysia puts a premium on

strong supervision of the Group’s

operations. Regular written reporting

from all its operating companies

is supplemented with routine

communication and, prior to 2020,

In all its new project areas, the Group

frequent visits by the executive

Presidential election. In any case,

compensates smallholders and

directors to all areas of the Group’s

given Indonesia’s significant need for

ensures full and prompt payment

operations, including the operations

infrastructure development and to

of relevant government taxes. Both

of associated companies. Since the

attract inward investment, the board

are important activities that are

onset of the Covid-19 pandemic, the

continues to perceive a low risk of,

assessed during the final application

Group has undertaken a series of

for example, nationalisation or the

for an HGU. Where other companies

‘virtual visits’ in which discussion

imposition of exchange controls, and

have been granted licences which

takes place by video conference,

the attendant risk that the Group

potentially conflict with those held

including a review of written reports,

will be unable to extract profits

by the Group, swift and determined

photographs and video and drone

from its subsidiaries and associated

legal action has been taken to

companies in Indonesia.

defend the Group’s position.

A 2014 law mandated the Indonesian

Operations in Indonesia are deemed

government to prioritise domestic

to be at high risk from the threat of

investment, protect local customary

bribery and corruption. The Group

rights, empower local farmers and set

has a robust policy on bribery

a cap on foreign investment at some

point in the future. No further action

has ensued. The board continues

to monitor the situation and will,

if necessary, liaise with other

and corruption, completes risk
assessments and conducts training

of senior management and staff in

Indonesia and Malaysia. It requires

all its business partners to complete

plantation companies and industry

questionnaires on their respective

bodies to lobby the government not

anti-bribery and anti-corruption

footage. During this time local senior

management have continued regular

visits to the Group’s operations. In

order to strengthen its controls, the

Group has put in place an integrated

operations and accounting software

system which staff can access from

the UK as well as Indonesia and
Malaysia. The Group has seats on

the board of its large Malaysian

associated company, Bertam

Properties, and regularly attends

its board meetings, as well as

maintaining a dialogue with its chief

executive and senior management.

to enact such proposals.

Security of land tenure is a matter of

fundamental concern to plantation

operators. The Group holds land in

its established estates under 25- or

30-year leases (HGUs) which are

legally renewable, and which have to

activities and policies. The Group has

employed external advisers to ensure

its actions carry the maximum

At the Group’s regional office in

prospect of preventing bribery and

Jakarta, the local president director

corruption in its operations.

 Read more in the strategic
report on pages 12 to 23

has a team of senior managers

(agricultural, engineering, legal,

procurement, marketing, finance,

human resources, internal audit,

M.P. EVANS GROUP PLC
ANNUAL REPORT 2020

STRATEGIC REPORT continued

health and safety and sustainability)

local people collectively and through

with extensive experience and

their representatives: the local

expertise, well qualified to confront

mayor and village heads. Smallholder

PROTECTION OF THE
ENVIRONMENT

the problems that arise on developing

co-operative schemes are being

and mature estates. Senior

developed alongside the Group’s

agronomic managers are resident in

areas and managed by the Group.

Sumatra (also covering Bangka and

Staff members have been appointed

Sustainable production is a priority

for the Group. Further information

is included in the section on

sustainability and in the business

Musi Rawas) and Kalimantan.

to deal with compensation for losing

model.

The Group uses its Kalimantan

training school to instil the Group’s

systems and high standards into

new and existing staff, covering

agriculture, engineering, finance,

health and safety, modern slavery,

anti bribery, and social and

environmental topics.

 See the business model on

pages 8 to 9

 Read more in the KPIs on

pages 20 to 21

RELATIONSHIP WITH LOCAL
POPULATIONS

The Group’s business model

the use of land and crops, and to

explain the basis and workings of

the schemes and to gain the support

of the villages surrounding the

Group’s project areas. This is a time-

consuming but effective process.

 See the business model on

pages 8 to 9

RELATIONSHIP WITH LOCAL
PARTNERS

As set out in the business model, the

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 some cases, is

closely associated with cutting down

rainforest and destroying the habitat

of endangered species. The Group

may therefore receive attention from

the many organisations connected

with climate change and South East

Asian tropical rainforests.

Group’s strength is as a producer of

The Group is a member of the RSPO.

sustainable Indonesian palm oil. The

The RSPO has strict guidelines

Group seeks to have a local partner

by which members must abide in

in each subsidiary with at least 5%

order to be able to state that they

of the equity.

includes making smallholder co-

A breakdown in relations with a

operatives a success. Smallholder

local partner could affect relations

areas are planted, maintained and

with the local populations where

harvested to the same standard

the Group is operating, with a

as the Group’s own areas.

detrimental effect on operations. The

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

and were revised in 2019 to tighten

the definition of ‘forested areas’. The

Group has specialist RSPO officers,

supported by external consultants,

working to ensure the Group

complies with RSPO best practice. All

of its mills have been accredited by

the RSPO. Additionally, the Group’s

Pangkatan mill in North Sumatra, the

Bumi Permai mill in East Kalimantan

and mill in Bangka are certified

under the strict requirements of ISCC.

board recognises the importance

of building and maintaining a good

relationship with the minority
partners and fellow shareholders in

its Indonesian plantation projects.

The executive directors endeavour

to maintain regular and open

contact, both formal and informal,

with the Group’s partners to discuss

current and future issues affecting

the Group’s operations. Where any

differences do arise, the Group seeks

The Group has a clear policy that

to negotiate a mutually acceptable

only heavily degraded land will

settlement.

 The Group’s business model

is on pages 8 to 9

be acquired and developed. As

required under RSPO principles,

high-conservation-value and

high-carbon-stock assessments

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 cause disruption by blocking

roads in order to prevent ffb, 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

STRATEGIC REPORT
RISK MANAGEMENT

are undertaken by an independent

sustainable palm-oil production

consultant for any new project.

and how it seeks to achieve a

GENERAL RISKS

These studies cover the requirement

positive economic and social impact

to maintain riparian-buffer zones

on communities in and around

and nature-conservation areas and

its areas of operation. The report

to compensate people cultivating

also contained detailed annexes

land to be developed in a fair and

of numerical information on the

transparent way.

Group’s activities that are relevant to

The Group has a policy of ‘zero

sustainability.

waste’. It has installed composting

 Read more about

systems at its mills which utilise

sustainability: pages 31 to 37

both the “empty” fruit bunches (i.e.

after the fruit has been removed

 See the business model on

from them) and the liquid effluent

pages 8 to 9

COMMODITY-PRICE
FLUCTUATION

Sales of CPO and PK take place

based on a world market over which

the Group has no control. This has

been considered as part of the

Group’s assessment of viability.

The prices of CPO and PK determine

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.

from the mill. The resulting compost

is tested for its nutrient value and

applied in the field, reducing the

requirement for inorganic fertiliser.

No effluent is discharged into

external water courses. At the mills

in Kalimantan and Bangka, methane

is captured from the mill effluent

before the effluent is used for

composting; the methane is used in a

biogas engine to generate electricity.

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. Health and safety

inspections are carried out 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

and followed up.

The Group published its first self-

standing sustainability report in

January 2020 (available on the

Group’s website at www.mpevans.

co.uk). The report set out the Group’s

actions to protect the environment.

It demonstrates the benefits of

PESTS AND DISEASE

The Group projects a sustained

The Group relies on its ability to sell

increase in crop. Productivity would

its palm oil, palm kernels and ffb

be affected if palms were impacted

into a world market over which it has

by pests or disease.

Whilst a remarkably hardy plant, the

oil palm can be subject to attack

from such pests as caterpillars and

other insects, and certain diseases.

no control. Palm oil is a permanent

tree crop with ffb being harvested

every day of the year. CPO and PK are

sold weekly, or at least fortnightly,

by open tender. Ffb are sold on a

day-by-day basis under contract

The practice of proper management

at a price derived from the quoted

and husbandry instilled by the

world price. Over a year, by selling

Group in its field staff is designed to

‘spot’ the Group obtains the average

identify and prevent these attacks

commodity price for CPO. Given this,

from becoming widespread.

the directors have taken the view

Appropriate agronomic measures are

taken where any outbreaks occur.

Senior agriculture staff are kept
up to date with current research in

this area, for example by attending

relevant conferences.

 More detail about our
strategy is on page 12

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 a

progressive Indonesian export tax

increases risk in such contracts given

the tax is determined and levied at

the time of delivery, not at the time

at which the contract is agreed.

The price of palm oil fluctuates,

determined both by disposable

income around the world

generated by economic activity

and by the supply, pricing and

demand for competing vegetable

oils. The Group’s ability to collect

STRATEGIC REPORT continued

sustainability premia helps to

in particular, will affect yields in the

Dollar has an effect in US-Dollar

mitigate the effect of falling prices.

short and medium term but any

terms when Malaysian assets are

As with any commodity, over supply

deficits so caused tend to be made

translated into US Dollars.

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 is both difficult to

achieve and would not be cost

effective. Surplus cash balances are

largely held in US Dollars.

 Note 31, containing further
details, is on pages 84 to 85

Approved by the board of directors

and signed on its behalf

Tristan Price

Chief executive

23 March 2021

does occur in the vegetable-oil

up at a later date. Where appropriate,

market which exerts downward

bunding is built around flood-prone

pressure on prices. The competing

areas and drainage constructed and

oils, the main ones of which are

adapted either to evacuate surplus

soybean, oilseed rape and sunflower,

water or to maintain water levels in

are annual crops and producers tend

areas quick to dry out. The Group

to react to low prices by switching to

acknowledges that climate change

other crops which has, in the past,

could lead to increasing disruption

quickly reduced over supply and

of existing patterns of rainfall and

restored upward pressure on prices.

sunshine.

The board is satisfied that the

The board has taken the view that

fundamental structure of the

acceptance of weather risk, including

vegetable-oil market, and particularly

that caused by climate change, and

the palm-oil market, is sound.

that of natural disasters, is part

Continuing strong demand from the

of the business. It is mitigated by

fast-developing economies, such

the geographical diversity of its

as India, China and Indonesia itself,

operations.

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.

 Assessment of viability
report is on page 46

WEATHER AND NATURAL
DISASTERS

The Group projects a sustained

increase in crop. Adverse weather

events may temporarily slow the

rate of increase in crop.

 More detail about our
strategy is on page 12

EXCHANGE-RATE FLUCTUATION

The Group’s functional currency

is the US Dollar. Risks associated

with changes in exchange rates

have been assessed by the board,

as set out in note 31 to the financial

statements.

Palm oil is a US-Dollar-denominated

commodity and a significant

proportion of direct costs in

Indonesia (such as fertiliser and

fuel) and development costs (such

as heavy machinery and fuel) are

US-Dollar related. Hence, adverse

movements in the Indonesian

Rupiah against the US Dollar can

Oil palms rely on regular sunshine

have a negative effect both on other

and rainfall but these patterns can

revenue costs in US-Dollar terms

vary and extremes such as unusual

and when Rupiah-denominated

dry periods or, conversely, heavy

assets are translated into US Dollars.

rainfall leading in some locations

Similarly, the movement of the

to flooding, can occur. Dry periods,

Malaysian Ringgit against the US

3030

M.P. EVANS GROUP PLCANNUAL REPORT 2020

SUSTAINABILITY

SUSTAINABILITY
APPROACH

APPROACH

The Group’s operational
and financial success in
producing crude palm oil
comes from taking the
right decisions for the long
term.

The Group makes long-term

decisions investing in land, the

environment, its workforce and

the communities in and around

its operations. This approach is

well suited to a robust long-term

asset such as oil palm and aligns

• protecting the environment;

is working to provide disclosures in

• demonstrating the benefits of

sustainable palm-oil production;

• having a positive economic
and social impact on local

communities.

full compliance with GRI Standards in

future sustainability reports.

The cornerstone of the Group’s

commitment to sustainability is

its membership of the Roundtable

on Sustainable Palm Oil. Palm oil

The Group publishes a wide range

is a global commodity and the

of information showing its approach

Group believes the way to make

to sustainability, including a

meaningful progress is for the

separate sustainability report. This

industry to commit to a system of

annual report should be read in

transparent global rules against

conjunction with the sustainability

which performance is rigorously

report, both of which are available to

and independently verified. Three of

download from www.mpevans.co.uk.

the Group’s four existing mills have

Information for the sustainability

been certified. Group policy is for

report was prepared based on

any new mills, including the Rahayu

completely with the thinking required

standards published by the Global

mill commissioned in September

to make decisions that will lead to a

Reporting Initiative (“GRI”). The

2020, to achieve RSPO certification

sustainable future for the economy,

society and the environment.

report sets out the Group’s strategy,

as soon as practically possible

policies and practices, as well as

after commencing operation. In the

its performance over 24 months to

meantime, all the estates that will in

The Group has three priority themes

establish a benchmark for future

in guiding its operational approach

reporting and to set expectations

due course supply Group mills, once

they are built, already comply with

to sustainability:

with regard to the future. The Group

RSPO standards.

SUSTAINABLE PALM-OIL PRODUCTION

Concerns about global warming and particularly the destruction of the tropical rainforest have rightly received,

and continue to receive, close scrutiny. The palm-oil industry is one of those associated with cutting down
tropical rainforest and destroying the habitat of endangered species. Oil-palm plantations do not require land

that was previously forest. The Group believes there is plentiful land available to grow sustainable palm oil

that does not require rainforest destruction and that sustainable palm oil can be an important contributor to

building global sustainable agriculture.

In order to protect the environment, the Group minimises the emission of greenhouse gases and has strict

policies to prevent it from being responsible for any deforestation. The sustainability report sets out the

Group’s activity in capturing methane and generating biogas, preventing any burning of land for subsequent

cultivation, the identification and protection of conservation and high-carbon-stock areas, and promoting

biodiversity. The Group has a ‘zero-waste’ approach in which all of the waste from our mills is converted into

either biogas or compost which we use to reduce application of inorganic fertilisers. Not only is this good for

the environment; it also reduces the Group’s costs.

APPROACH continued

HOW TO PRODUCE CERTIFIED SUSTAINABLE PALM OIL

Start nursery

Negotiate with
local community
over land
compensation

Submit planting
plan to RSPO for
approval

Submit studies to
RSPO for independent
approval

Receive

operating
license

Obtain permission
from government
for agricultural
development

Conduct high-
conservation-value
and carbon stock
studies

M.P. EVANS GROUP PLCANNUAL REPORT 2020
Planting declared
mature

Begin
planting

Build mill

Apply to RSPO for
certification

Full RSPO
audit

The Group produces
certified sustainable
palm oil in all its
palm-oil mills.

SUSTAINABILITY
APPROACH

DEMONSTRATING
THE BENEFITS
OF SUSTAINABLE
PALM-OIL
PRODUCTION

Just 19% of all palm oil is currently

RSPO certified. The Group believes

this should increase across the

industry until most, if not all,

palm oil produced is certified as

sustainable. For this to happen the

industry needs to ensure that ffb

are traceable. The biggest challenge

is persuading independent

smallholders, who account for

40% of all ffb supply, to adopt

sustainability standards. If this

can be done, the amount of

certified sustainable palm oil

produced will increase significantly.

The Group is working to persuade

independent smallholders from

which it buys ffb to commit to

producing their crop in line with the

RSPO Independent Smallholders

Standard (see case study on page

36), which includes mapping where

the fruit is harvested. Already all

the ffb produced in our own estates

and those of the Group’s scheme

smallholders are fully traceable.

The Group has long-standing

policies and operating procedures

to manage and monitor water

carefully and prevent pollution of

air, land and water. The sustainability

report sets out how the Group

certifies its production and how it

plans to achieve full traceability

of all the ffb it processes, as well

as how it manages water and

agricultural chemicals.

M.P. EVANS GROUP PLC
ANNUAL REPORT 2020

APPROACH continued

COMMUNITIES
Doing the right thing
for the long term
naturally includes doing
the right thing both for
the environment and
for the communities that
live on and around the
Group’s operations.

SUSTAINABLY CERTIFIED CPO OUTPUT
FROM GROUP MILLS

2020

69%

2019

79%

TOTAL ELECTRICITY GENERATED
(MWH)

2020

2019

25,921

20,069

CO2 EMISSIONS
(TONNES CO2 EQUIVALENT PER TONNE CPO)

2020

2019

2.6

2.0

WOMEN IN THE PERMANENT WORKFORCE

2020

28%

2019

26%

INJURIES PER YEAR
PER 100 WORKERS

2020

2019

3.8

Palm-oil estates are often in remote

very significantly less than those

rural locations and are likely to be

achieved by commercial operators.

the largest source of income in the

If those commercial operations can

area, supporting both families and

share information and techniques

the entire community. The estate

with smallholders in co-operative

and the local communities are to

schemes and those in the wider

an extent mutually dependent.

community, they can help them to

improve their yields. Improving the

The Group believes it is in its

productivity of their land can help

interests to act both responsibly

improve living standards and relieve

and ethically. It works hard to
engender goodwill with communities

pressure for further deforestation.

to secure a committed and skilled

The sustainability report sets out

workforce and to maintain efficient

how the Group runs award-winning

operations. Palm-oil estates can

smallholder co-operative schemes

act as beacons demonstrating the

alongside its estates, promotes

value of good governance and

gender equality, works to improve the

responsible development by setting

education and health of its workforce

high standards in how they treat staff

and the communities where it

and workers and in how they work in

operates and how it is vigilant for

4.8

partnership with local communities.

any sign of modern slavery amongst

Yields from independent

the firms from which it buys goods

smallholder areas are commonly

and services.

SUSTAINABILITY
COMMUNITIES

CASE STUDY

SAFE WORKING INITIATIVE

In order to improve the health and
safety of its workforce, the Group has
been conducting a pilot project in
Kota Bangun.

This project aims to measure workplace injuries more

accurately to help direct effective prevention. It has

therefore focussed on the most severe workplace

injuries. The Group monitors the number of the days

since the last fatality in its operations: there were no

fatalities in 2020.

As the project progressed, it became clear that nearly

80% of field injuries were related to harvesting, the

majority of these being individuals either struck

by a falling palm frond or a work tool. The Group

immediately responded by running additional training

for harvesters to draw attention to these risks and

emphasising how to work safely. This training was then

repeated as part of an ongoing programme.

It also emerged that some workers were delaying

treatment for minor injuries, worsening their impact.

The Group is considering what measures are needed to

resolve this, and ensure that all employees receive

appropriate medical attention as soon as required.

By the second half of 2020, the pilot programme was

having a measurably positive effect. The lessons

learned will be extended to all of the Group’s

operations.

Additional training for harvesters is drawing attention
to risks and emphasising how to work safely.

COMMUNITIES continued

CASE STUDY

TRACING PURCHASES FROM INDEPENDENT SMALLHOLDERS

The RSPO introduced a new standard for independent smallholders in November
2019, the RISS, which the Group contributed to writing.

The Group is now running a

pilot project in its Bangka

estates to establish how best to

generate enthusiasm amongst

independent smallholders to

achieve qualification.

At the end of 2020, 208 smallholders collectively operating more than

1,200 hectares of land had committed to the scheme. An application

had been lodged with the RSPO for a co-operative to register under

RISS and the Group had started to deliver training in agronomy to

the independent smallholders to help them increase the yield from

their palms. In order to support this objective, the Group has begun to

deliver training on agronomy, which will be supplemented by in-field

visits and advice starting in the middle of 2021.

The Group aims to encourage

independent smallholders with at

least 3,500 hectares of oil palm to

become members of the scheme,

and so help it achieve full traceability

of all the crop processed at the

Bangka mill.

Given its experience and progress to

date, it aims to achieve this by 2025.

2020 SUSTAINABILTY REPORT

Setting out the Group’s strategy, policies and practices

In January 2020, the Group published its first sustainability report
covering our activities for the two years up to June 2019.

To read online please visit www.mpevans.co.uk
Or ring 01892 516 333 to obtain a copy

M.P. EVANS GROUP PLCANNUAL REPORT 2020

SUSTAINABILITY
COMMUNITIES

SUPPORTING OUR COMMUNITIES

SHOP

32 co-operative stores

SCHOOL

5 nursery schools
3 primary schools
684 pupils
51 teachers

22 football pitches
22 volleyball courts
11 tennis courts
2 swimming pools

50 mosques
47 imams
5 churches
4 preachers

8 doctors
18 nurses and midwives
11 clinics
36,000 patient treatments in 2020

14 community halls

COMMUNITY HALL

M.P. EVANS GROUP PLC
ANNUAL REPORT 2020

REPORT
OF THE
DIRECTORS

BOARD OF DIRECTORS

Peter Hadsley-Chaplin

Tristan Price

Matthew Coulson

EXECUTIVE CHAIRMAN

CHIEF EXECUTIVE

FINANCE DIRECTOR

Appointed a director in
1989, chairman in 2010.
Former executive chairman
of Bertam Holdings PLC
and Lendu Holdings
PLC. 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 2010, chief executive
in June 2016. Previously
worked as a senior UK
diplomat, as an economist
at the Organisation for
Economic Co-operation
and Development
(OECD) and at the
Treuhandanstalt (East
German privatisation
agency).

Appointed a director in
2017. Joined the Group as
chief finance officer in 2016
with previous experience
as an audit director of
Deloitte LLP, including
work on companies in the
agricultural sector and in
the technical policy team.

REPORT OF THE DIRECTORS

Jock Green-Armytage

Philip Fletcher

Bruce Tozer

Dr Darian McBain

SENIOR INDEPENDENT
NON-EXECUTIVE DIRECTOR

NON-EXECUTIVE
DIRECTOR

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.

Retired as managing
director in June 2016,
having been appointed
director in 1987 and
managing director in 1991.
He was executive chairman
between 1999 and 2005.
Former executive director
of Bertam Holdings PLC
and Lendu Holdings PLC.
Joined the Group in 1982
after an initial career in
accountancy with KPMG in
London and Sydney and in
industry with the Rio Tinto
plc group. Member of the
audit committee.

Appointed a director in
2016. Has held senior
roles at Rabobank
International, JP Morgan,
and Credit Agricole.
Member of the advisory
board of Generation
10, a data analytics and
commodity logistics
software company.
Member of the audit and
remuneration committees.

Appointed a director in
2020. Global Director of
Corporate Affairs and
Sustainability at Thai
Union. A leading academic
in the field of integrated
sustainability analysis.
She has won awards for
furthering sustainability and
ethics in business. Board
member of not-for-profit
organisation Be Slavery
Free. She has previously
worked with WWF, focusing
on the palm-oil industry.
Member of the audit and
remuneration committees.

REPORT OF THE DIRECTORS continued

The directors present the audited consolidated and

meeting in accordance with the articles of association

parent-Company financial statements of M.P. Evans

and, being eligible, will offer themselves for re-election.

Group PLC for the year ended 31 December 2020.

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 2 to

4) and in the strategic report (pages 12 to 30) 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 58.

An interim dividend of 5.00p (2019 – 5.00p) per share in

respect of 2020 was paid on 6 November 2020. The board

recommends a final dividend of 17.00p (2019 – 12.75p)

per share. This dividend will be paid on or after 18 June

2021 to those shareholders on the register at the close

of business on 23 April 2021. This final dividend is not

provided for in the 2020 financial statements.

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)
at 1 January 2020

Issued in respect of options

Bought back and cancelled

Issued (fully-paid and voting)
at 31 December 2020

SHARES OF
10P EACH

54,461,220

182,320

153,287

54,490,253

During the year, the Company bought back and cancelled

153,287 (2019 – 266,652) 10p shares for a total cost of

US$1,155,000 (2019 US$2,286,000), representing 0.3%

(2019 – 0.5%) of the Company’s issued share capital.

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

OPTIONS

At 31 December 2020

P E Hadsley-Chaplin

1,561,717

T R J Price

M H Coulson

J M Green-Armytage

P A Fletcher

B C J Tozer

D M McBain

At 1 January 2020

58,500

5,900

—

1,048,171

—

P E Hadsley-Chaplin

1,561,717

T R J Price

M H Coulson

J M Green-Armytage

P A Fletcher

B C J Tozer

D M McBain

50,000

1,500

—

1,048,171

—

167,489

29,763

—

161,678

22,490

—

Further details of the directors’ interests in share options

are disclosed in the directors’ remuneration report, on

pages 48 to 50.

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.

DIRECTORS AND DIRECTORS’ INTERESTS

The present membership of the board is detailed on

pages 38 and 39. All of these directors served throughout

the year and up to the date of signing of these financial

As permitted by the Company’s articles of association,

there was throughout the year to 31 December 2020,

and is at the date of this report, a qualifying third-

party indemnity provision, as defined in section 234

of the Companies Act 2006 in force for the benefit of

statements. Peter Hadsley-Chaplin and Philip Fletcher will

the directors.

retire from the board at the forthcoming annual general

M.P. EVANS GROUP PLCANNUAL REPORT 2020
KL-Kepong
International Ltd

Nokia Bell
Pensioenfonds ofp

Standard Life
Aberdeen Plc

Canaccord Genuity
Wealth Management

Chelverton Asset
Management

REPORT OF THE DIRECTORS

SIGNIFICANT INTERESTS
As far as the Company is aware, the significant interests

factors, or 3 tonnes per full-time equivalent employee.

The Company intends to replace its gas boiler with a

in the Company as at the date of this report are:

more energy efficient model when appropriate.

NATURE

Direct

12,084,565

22.18

Direct

5,750,000

10.55

STATEMENT OF DIRECTORS’ RESPONSIBILITIES
IN RESPECT OF THE FINANCIAL STATEMENTS
The directors are responsible for preparing the annual

report and the financial statements in accordance with

applicable law and regulations.

MM Hadsley-Chaplin

Direct

1,928,254

Indirect

3,803,494

6.98

3.54

Indirect

1,700,000

3.12

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

Indirect

1,700,000

3.12

Standards (IFRSs) as adopted by the European Union and

OUTSTANDING OPTIONS TO SUBSCRIBE
As at the date of this report, there were options to

the Company financial statements in accordance with

United Kingdom Generally Accepted Accounting Practices

(United Kingdom Accounting Standards, comprising

subscribe for 175,000 shares outstanding under the

Financial Reporting Standard 101 ‘Reduced Disclosure

executive share-option scheme, and options to subscribe

Framework’ (“FRS101”) and applicable law). Under

for 135,912 shares outstanding under the 2017 long-term

company law the directors must not approve the financial

incentive scheme. If all of the options were exercised, the

statements unless they are satisfied that they give a true

resulting number of shares would represent 0.57% of the

and fair view of the state of affairs of the Group and

enlarged issued share capital at that date.

PAYMENTS TO SUPPLIERS
It is the Group’s normal practice to make payments to

suppliers in line with agreed terms, provided that the

supplier has performed in accordance with the relevant

the Company and of the profit or loss of the Group and

Company for that period. In preparing these financial

statements, the directors are required to:

• select suitable accounting policies and then apply

them consistently;

terms and conditions. The Group’s average creditor days

• make judgements and accounting estimates that are

calculated as at 31 December 2020 amounted to 49 days

reasonable and prudent;

(2019 – 50 days).

FINANCIAL INSTRUMENTS
Details of the Group’s financial instruments, and the

board’s policy with regard to their use, are given in note

31 to the consolidated accounts on pages 84 and 85.

• state whether 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; and

SUBSIDIARY COMPANIES
Details of the Group’s subsidiary companies, including

• prepare the financial statements on the going-concern

basis unless it is inappropriate to presume that the

their country of operation, are given on page 92.

Company will continue in business.

ENERGY USE
During the year, the company used 86MWh of electricity

The directors are responsible for keeping adequate

accounting records that are sufficient to show and explain

and gas in its Tunbridge Wells head office, giving rise

the Group’s and the Company’s transactions and disclose

to 20 tonnes of CO2 equivalent emissions calculated

with reasonable accuracy at any time the financial

in accordance with government published conversion

position of the Company and the Group and enable them

REPORT OF THE DIRECTORS continued

to ensure that the financial statements and the directors’

remuneration report comply with the Companies Act

GOING CONCERN
The Group’s operations are funded through a

2006. They are also responsible for safeguarding the

combination of cash resources, loan finance, and long-

assets of the Company and the Group, and hence for

term equity. The board has undertaken a recent review of

taking reasonable steps for the prevention and detection

the Group’s financial position, including forecasts, risks

of fraud and other irregularities.

and sensitivities (including an assessment of the impact

of Covid-19). The review has considered the Group’s

The directors are responsible for the maintenance

plans for further development in Indonesia, along with

and integrity of the Company’s website. Legislation in

the required funding for that development. Based on

the United Kingdom governing the preparation and

that review, the board has concluded that the Group is

dissemination of financial statements may differ from

expected to be able to continue in operational existence

legislation in other jurisdictions.

for the foreseeable future, being at least the next 12

months from the date of approval of these financial

In the case of each director in office at the date the

statements. As a result, the board has concluded that

report of the directors is approved:

the going-concern basis continues to be appropriate in

• so far as the director is aware, there is no relevant
audit information of which the Group and parent-

Company’s auditors are unaware; and

preparing the financial statements.

INDEPENDENT AUDITORS
The auditors, BDO LLP have expressed their willingness

•

they have taken all the steps that they ought to have

to continue in office and a resolution to re-appoint them

taken as a director in order to make themselves aware

will be proposed at the forthcoming annual general

of any relevant audit information and to establish that

meeting.

the Group and parent-Company’s auditors are aware of

that information.

Approved by the board of directors and signed

by its order

Katya Merrick

Company secretary

23 March 2021

M.P. EVANS GROUP PLCANNUAL REPORT 2020REPORT OF THE DIRECTORS
CORPORATE GOVERNANCE

CORPORATE GOVERNANCE

The Group’s recognised corporate governance code is the Quoted Companies Alliance’s 2018 Corporate Governance

Code (“QCA Code”). The board is committed to following the principles set out in the QCA Code, to review, disclose and

report on the corporate-governance structures and processes operated by the Group and to develop these further to

continue to meet the appropriate standards. An explanation of how the Group has applied the principles, including an

index of corporate governance disclosures, is included on the Group’s website (www.mpevans.co.uk).

The chairman’s statement on corporate governance is set out below.

The board recognises the importance of a sound

internally, led by me and supported by the company

system of corporate governance and internal control.

secretary. Its design drew on an independent framework

In some respects, the Group’s corporate governance is

and recommended questions assessing the nature

more developed than required under the QCA Code, the

and performance of the board and its committees.

Group’s recognised corporate governance code.

The board conducted a second evaluation of itself at

the end of 2020 using the same framework to enable

The board is made up of three executive directors

a comparison of the findings. A consolidated report of

and four non-executives. This structure is designed to

these assessments was considered by the board and

ensure that there is a clear balance of responsibilities

actions in response to it were agreed, as referred to in

between the executive and the non-executive functions.

more detail in the corporate governance report.

As chairman I am primarily responsible for setting the

Group’s strategy in conjunction with the board, and

Effective risk management and acknowledging the

for ensuring the effective operation of the board. This

role that stakeholders play in our Group’s operations,

includes making sure the board continues to develop

are central to our success. We believe compliance

its corporate governance in response to changes in

with the QCA Code provides a valuable support in

official standards and public expectations through

strengthening our ability to grow and so deliver returns

full and timely discussion at board meetings. Board

to our shareholders that also benefits our wider

evaluation and a review of corporate governance

stakeholders. The Group sees ethical behaviour as a

takes place at least every two years, although the

competitive advantage to building trust with suppliers

corporate governance information on our website is

and attracting and retaining high-performing staff. This

reviewed annually and was last updated on 15 May 2020

too is emphasised in the QCA Code. Finally, the Group

following a review.

operates in a sector where timelines are long and

hence where there is a premium on boards in which

A good system of corporate governance is of no use

shareholders can place their long-term trust.

without a board whose members continue to develop

their skills and capabilities. Our board members

In October 2020, the board reviewed and strengthened

have extensive experience and remain professionally

the processes the Group has in place to identify and

active and motivated to broaden their knowledge. All

record operational and regional risk. There have been

directors have the opportunity to attend seminars

no other significant changes to the Group’s corporate

and formal training courses; they keep in touch with

governance framework during the year other than

relevant developments through discussion amongst

formally designating certain risk functions to the audit

their business and professional contacts; and they read

committee to reflect work which it had already been

relevant trade and other professional publications. This

carrying out, as well as to give the audit committee

activity is recorded by the Group’s company secretary,

oversight over the Group’s updated whistleblowing

who advises directors of appropriate seminars and

policy.

training opportunities.

The board first conducted a formal evaluation of itself

Chairman

during the first quarter of 2019. This was conducted

23 March 2021

Peter Hadsley-Chaplin

CORPORATE GOVERNANCE continued

OPERATION OF THE BOARD
Directors

subject to periodic review, most recently in December

2020. All major and strategic decisions of the Company

Details of the Company’s board, together with those of

are made in the United Kingdom. The executive and non-

the audit and remuneration committees, are set out on

executive directors discuss progress against budgets and

pages 38 and 39. The board comprises an executive

other business issues, both during board meetings and at

chairman, working on a part-time basis, two further

other times.

full-time executive directors and four non-executive

directors, one of whom chairs the audit and remuneration

The board has access to independent professional advice

committees. The maximum number of directors permitted

at the Group’s expense when the board deems it necessary

under the articles of association is eight.

in order for them to carry out their responsibilities.

Currently, the board retains Peel Hunt LLP as the

This structure is designed to ensure that there is a clear

Company’s nominated adviser. The board additionally

balance of responsibilities between the executive and

receives advice from independent professionals on legal

the non-executive functions. Non-executive directors

matters, corporate public relations, taxation, and valuation

are expected to contribute two to three days’ service

of the Group’s property assets. The company secretary

per month to the Company, including attendance at

provides support on matters of corporate governance.

board meetings and the AGM. The board meets at least

quarterly and is provided with information at least

Independence and re-election of long-serving directors

monthly. It receives operating summaries, executive

During the year, the board has sought to maintain a

operating reports, management accounts and budgets.

balance of executive and non-executive directors.

All of the executive directors and non-executive directors

A description of the roles and responsibilities of the

attended each of the eight full board meetings held in

directors is set out on pages 38 and 39. More than half of

2020, with the exception of Peter Hadsley-Chaplin who

the directors were non-executive and, in accordance with

was unable to attend the meeting held on 26 March 2020

the QCA Code, at least two of the non-executives serving

owing to illness and Bruce Tozer who recused himself

during 2020 were independent.

from a meeting held on 4 June 2020.

The board is satisfied that its composition covers a

The board as a whole is collectively responsible for the

broad range of relevant skills and experience to enable

success of the Company. The personal attributes of each

effective formulation and execution of the Group’s

of the directors facilitates rigorous but constructive

strategy. Jock Green-Armytage, who has chaired FTSE-

debate, informed and considered decision making and

listed companies, brings significant industry knowledge

effective monitoring of progress in achieving the Group’s

as well as experience in both corporate finance and

strategic objectives. The board as a whole actively

corporate governance. Bruce Tozer’s background is in

engages in reviewing and developing Group policies.

commodity finance, environmental markets, and agri-

It promotes a culture founded on its values of integrity,
teamwork and excellence. Members of the board lead

business project finance, including palm oil, contributing
insight from the finance sector. Philip Fletcher, as former

by example during their frequent interactions with staff.

managing director and finance director of the Group,

Remuneration of all staff rewards those who display

has extensive specific knowledge of both the sector,

these behaviours; access to the Group’s long-term

operations in Indonesia and the evolution of the Group.

incentive scheme is likewise offered to senior staff who

As well as general corporate experience through her

qualify on grounds of length of service and promote the

directorships and in a major South-East-Asian-based

Group’s values. The Group dismisses staff found to have

global seafood producer, Darian McBain has a special

breached the value of integrity.

interest and experience in sustainable food production

and environmental, social and governance issues.

The board reserves to itself a range of key decisions

(which can be found at www.mpevans.co.uk) to ensure

The board has an executive chairman, Peter Hadsley-

it retains proper direction and control of the Company,

Chaplin. Given the time that he has served the Company

whilst delegating authority to individual executive

both as a director and chairman, as well as the size of

directors who are responsible for the day-to-day
management of the business. The board’s objectives are

his shareholding in the Company, he is not considered
independent.

M.P. EVANS GROUP PLCANNUAL REPORT 2020
REPORT OF THE DIRECTORS
CORPORATE GOVERNANCE

Each director retires and must seek re-election at least

The results of these questionnaires were analysed by the

every three years. Non-executive directors who have

company secretary. As the questionnaires replicated the

served on the board continuously for a period of nine

first evaluation, progress against focus areas previously

years or more will offer themselves for re-election at each

identified could be assessed. Whilst no category covered

year’s annual general meeting.

in the questionnaires returned a low score, the board

assessed its best performing area to be the conduct of

Directors’ remuneration and appointment

its board meetings and its work on strategy, whereas

As set out in the report on pages 48 to 50, the

feedback indicated a case for reviewing the role and

remuneration of the executive directors is determined

responsibilities of the remuneration committee. The

by the remuneration committee whilst that of the

full board discussed the outcome of the evaluation

non-executives is determined by the whole board. The

and agreed some actions in response to it, including:

committee, which during the course of 2020 comprised

recommending more detailed work on risk by the board

Jock Green-Armytage, Bruce Tozer and Darian McBain,

as a whole; a review of the terms of reference of the

met three times and all meetings were attended by all

remuneration committee; and succession planning.

members of the committee.

Relations with shareholders

The Company does not currently have a nominations

The board attaches great importance to communications

committee. Any new appointments to the board are

with both institutional and private shareholders. The

discussed at a full board meeting, taking into account

executive directors regularly engage with shareholders,

the current skills and experience of the board and that

doing so through digital technology whilst Covid-19

of the candidate. Each member of the board is given the

restrictions persist, to update them on the progress of

opportunity to meet the individual concerned before an

the Group and discuss any areas of concern that they

appointment is made.

Succession planning

may have. Any significant issues raised by major

shareholders are discussed by the board as a whole.

Whilst this is not always possible with smaller

The chairman maintains a strong individual relationship

shareholders, the chairman personally responds to

with all the directors and any changes to the board are

communications received from individuals.

managed collaboratively and with minimal cost and

disruption to the Group. It is considered that the board

Due to the global Covid-19 pandemic and with public

would be robust to any unplanned retirements and be

health considerations paramount, it was not possible

able to recruit suitable, well-qualified, candidates within a

for shareholders to attend the AGM in person in 2020.

reasonable time period. Any recruitment of new members

Instead the AGM was held with the minimum number of

to the board takes into account the board’s assessment

members (in this case the chairman and chief executive)

of its composition and the skills and experience required

and legally permissible persons present in the room

in the board successfully to formulate and execute Group
strategy. The board is due to review its approach to

required to convene a valid meeting. All other directors
joined the meeting by video-link. The proceedings

succession planning in 2021.

Board performance evaluation

were broadcast via a live webcast which was available

for shareholders to watch for a month following the

meeting. Whilst shareholders were not able to vote at

The board undertook its second performance evaluation

the meeting, the members present voted to reflect the

during the last quarter of 2020. As previously, this was an

proxy votes cast ahead of the meeting. Shareholders

internal evaluation drawing on material purchased from a

were encouraged to, and did, raise questions before the

professional adviser. Each director was asked to complete

AGM and where appropriate these were addressed at the

the questionnaires for the Group bodies of which they

meeting by members of the board. In this way the board

were a member. Separate questionnaires were distributed

sought to create an environment in which shareholders

and completed by the:
• whole board;
• audit committee;
• remuneration committee;
• non-executive directors.

were able to express their voting preferences and engage

with the board to the fullest extent possible under the

circumstances.

During 2020 the executive directors took part in a number

CORPORATE GOVERNANCE continued

of online presentations, including an event hosted

internal audit of subsidiary undertakings and frequent

through the Investor Meet Company platform. This was

communication with local management. Internal audit

a live webinar available to existing and prospective

is subject to periodic external review. During 2020, as a

shareholders, providing an opportunity for questions

result of Covid-19 travel restrictions, physical visits by the

to be posed to the directors after the presentation. The

executive team were not possible. Instead, supervision

board acknowledges the important role that technology

of operations has been maintained through a series

is able to play in facilitating shareholder engagement

of ‘virtual visits’ using digital technology. Executive

and intends to host additional online events in future,

directors have engaged in discussion with field managers,

including those specifically providing a forum for

reviewing detailed operational reports, photographs and

engaging with greater numbers of shareholders.

video and drone footage of the operations. Under normal

Such events would be in addition to its AGM, as and

circumstances, non-executive board members take part in

when permitted, which the board continues to value

a visit to the Group’s operations every two years.

highly as an opportunity to meet and get to know

shareholders in person.

Going concern

The board uses the Group’s website (www.mpevans.

concern status of the Group, and further information is

co.uk) to make available details of the AGMs, the results

included in the directors’ report on page 42.

The board has assessed and concluded on the going-

of the votes cast at those meetings, and reports and

presentations given at meetings with investors.

Viability

ACCOUNTABILITY
Financial reporting

The board considers the Group’s longer-term viability

on a regular basis. In order to do this, both short-term

budgets and longer-term projections are prepared and

A detailed review of the performance and financial

reviewed by the board. Due to the long-term nature of

position of the Group is included in the chairman’s

the industry within which the Group operates, the board

statement and the strategic report. The board uses these

has concluded that projections should be prepared, and

and the report of the directors to present a balanced and

therefore viability considered, over a 10-year period.

understandable assessment of the Group’s position and

At the year end, the Group held cash and other liquid

prospects. The directors’ responsibility for the financial

funds of US$27.6 million. Furthermore, as disclosed

statements is described on pages 41 and 42 of the report

in note 22, at the year end the Group had available

of the directors.

Risk management

undrawn finance facilities of up to US$10.0 million. The

Group’s plans for further development of its Indonesian

operations have been taken into consideration, as set out

The directors acknowledge their responsibilities for the

in the strategic report, including development of existing

Group’s system of risk management. Such a system can

projects, investment in new hectarage, and appropriate

provide reasonable, but not absolute, assurance against
material misstatement or loss. A review of the process of

financing where necessary.

risk identification, evaluation and management is carried

Principal areas of risk, and their mitigation, are included

out by the audit committee. The committee considers

in the section on risk management on pages 26 to 30.

the Group’s principal risks, and a summary is presented

As noted, whilst legislative changes in Indonesia could

to the board for discussion and approval. The review

adversely impact on the viability of the Group in its

process considers the control environment and the major

current form, the board monitors the situation carefully

business risks faced by the Group. In summary, this is

and considers the risk to be low. Financially, the main risk

reported on pages 26 to 30.

to the Group’s results is commodity-price fluctuation, and

as has been demonstrated, the Group is able to continue

Important control procedures, in addition to the day-to-

delivering returns even during periods of lower crude-

day supervision of parent-Company business, include

palm-oil prices.

regular executive visits to the areas of operation of the

Group and of its associates, comparison of operating

The Group’s prospects remain sound, in particular given

performance and monthly management accounts with
plans and budgets, application of authorisation limits,

the young average age of its palms, at a little over 8 years.
An upward trend in crop is expected to last until towards

M.P. EVANS GROUP PLCANNUAL REPORT 2020REPORT OF THE DIRECTORS
CORPORATE GOVERNANCE

the end of the decade. Given these prospects and the

the accounting for the conditional sale of land by a

resources available to the Group, the board intends,

Group company.

where possible, to maintain or increase, normal dividends

in future years from their current levels.

Auditors

In light of the above, the board has not identified any

in 2019. The audit partner changes at least every five

significant concerns regarding the Group’s longer-term

years in accordance with professional and regulatory

The auditors were appointed, following a tender exercise,

viability.

standards in order to protect independence and

objectivity, with Anna Draper the audit partner for the

AUDIT COMMITTEE REPORT
The audit committee is formally constituted with written

2020 audit.

terms of reference (which are available on the Company’s

The audit committee meets the external auditors to

website www.mpevans.co.uk) and is chaired by Jock

consider audit planning and the results of the external

Green-Armytage. The other members are Philip Fletcher,

audit. The committee specifically considered the scope

Bruce Tozer and Darian McBain. The executive directors

of the Group auditors’ engagement and agreed the

are not members of the committee but can be invited to

significant risks for the audit of the 2020 results. The

attend its meetings. The auditors of the Group may also

external auditors have provided only audit services during

attend part or all of each meeting and they have direct

the current year. Accordingly, the board does not consider

access to the committee for independent discussions,

there to be a risk that the provision of non-audit services

without the presence of the executive directors. The

may compromise the external auditors’ independence.

committee met four times during 2020 and each meeting

was attended by all of the members. The external

To assess the effectiveness of the auditors, the committee

auditors attended two of the meetings.

will review their fulfilment of the agreed audit plan and

variations from it, and the auditors’ report on issues

The audit committee may examine any matters relating

arising during the course of the audit.

to the financial affairs of the Group or the Group’s

audit; this includes reviews of the annual accounts and

Financial reporting and review of financial statements

announcements, accounting policies, compliance with

The committee is able to ensure it has a full

accounting standards, reviewing the Group’s principal

understanding of business performance through its

risks, the appointment of and fees of auditors and such

receipt of regular financial and operational reporting,

other related matters as the board may require.

its review of the budget and long-term plan and its

discussion of key accounting policies and judgements. It

During the year the audit committee has:
• reviewed the Group’s external financial reporting,

has specifically addressed the:
• accounting treatment for the sale of land by a Group

including receiving a report from the external auditors
on the audit work they have performed;

company;

• Group’s equity valuation, as disclosed in the annual

• reviewed the effectiveness of the Group’s internal

report; and

controls, including a review of the main findings of the

• ongoing validity of key judgements in the financial

internal-audit team in Indonesia;

statements.

• assessed critical accounting judgements and key

estimates made during the year;

After reviewing presentations and reports from

• considered and approved the Group’s risk analysis;
• reviewed the quality and effectiveness of the external

audit;

management and consulting with the auditors, the audit

committee is satisfied that the financial statements

properly present the critical judgements and key

• reviewed a report on management‘s response to

estimates for both the amounts reported and relevant

Covid-19;

disclosures. The committee is also satisfied that the

• reviewed and strengthened the Group’s process for

significant assumptions used for determining the value of

risk identification; and

assets and liabilities have been appropriately scrutinised,

• considered and approved the method and timing of

challenged and are sufficiently robust.

REMUNERATION REPORT

REMUNERATION COMMITTEE
The remuneration committee, which is formally

The long-term incentive for executive directors is

through the award of fully-paid share options under the

constituted with written terms of reference (available on

deferred-bonus policy described above. No additional

the Company’s website at www.mpevans.co.uk), keeps

performance criteria attach to the deferred-bonus

under review the remuneration and terms of employment

awards since the original bonus will have been

of the executive directors and recommends such

performance related.

remuneration and terms to the board. The committee

comprised Jock Green-Armytage, Bruce Tozer and

In respect of senior staff who are not directors, the Group

Darian McBain throughout 2020, and is chaired by

aims annually to grant options in a limited number of

Jock Green-Armytage.

fully-paid shares which vest after three years subject to

continued employment by the Group. This is designed to

SERVICE CONTRACTS
All of the executive directors have service contracts with

retain valued individuals in a growing and competitive

sector. No performance criteria attach to these awards.

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

EXECUTIVE DIRECTORS
When determining the remuneration of the executive

contracts or provisions for pre-determined compensation

directors, the remuneration committee considers the pay

on termination of their appointment.

and conditions across the Group, particularly those of the

REMUNERATION POLICY
The Group’s remuneration committee recognises

senior management of the operations in Indonesia.

The Group aims to provide remuneration packages

for the directors and senior management which are a

that the Group’s success depends, in part, on the

fair reward for their contribution to the business, having

performance of the directors and senior management

regard to the complexity of the Group’s operations and

and the importance of ensuring that employees are

the need to attract, retain and motivate high-quality

incentivised. Its philosophy is to offer a transparent and

senior management. Remuneration packages are

simple remuneration package to the executive directors,

designed to be broadly comparable with those offered

comprising a salary and a bonus related to current

by similar businesses, such as European plantation and

results and personal performance (including significant

AIM-listed companies.

additional contribution in terms of time and expertise).

Half of the bonus is payable in cash and half is deferred

Non-pensionable bonuses may be awarded annually in

into an award of options on fully-paid shares which

arrears at the discretion of the committee, taking account

vest three years after their grant, subject to continued

of the Group’s performance during the period and other

employment by the Group. This structure for remuneration

targeted objectives. Bonuses do not exceed twelve

is designed to be easily understood by both executives

months’ salary, half payable in cash and half deferred

and shareholders. It aims to encourage the executive
directors to work collegiately, focus their efforts on

into an award of fully-paid shares which vest three years
after their grant, subject to continued employment by the

making decisions that are in the Group’s best long-term

Group (as described above). The bonuses for 2020 took

interests, and, to some extent, share in the benefits that

into account the record level of crop and production in

accrue to shareholders from a higher future share price.

2020; the Group’s response to the Covid-19 pandemic,

with low levels of confirmed cases and minimal

LONG-TERM INCENTIVE SCHEME
The long-term incentive scheme established in 2017

disruption to operations; successful commissioning of

the Rahayu mill in Kota Bangun in September 2020;

governs the grant of both deferred-bonus awards to

publication of the Group’s first sustainability report and

executive directors and annual awards of fully-paid

emphasis on sustainability work; and signing a contract

shares to senior staff other than directors. The award of

for the sale of the Group’s remaining land assets in

fully-paid shares has the advantage of being substantially

Malaysia in furtherance of the board’s strategy. The

less dilutive than market-priced share options, whilst

absolute value of these measures was assessed, as was

continuing to provide an adequate level of incentive to

their outturn against budget.

the recipient.

M.P. EVANS GROUP PLCANNUAL REPORT 2020REPORT OF THE DIRECTORS
DIRECTORS’ REMUNERATION REPORT

TOTAL DIRECTORS’ REMUNERATION FOR THE YEAR ENDED 31 DECEMBER 2020

SALARY
AND FEES
£

BONUS
PAID
£

1BONUS
DEFERRED
£

OTHER
BENEFITS
£

SALARY
IN LIEU OF
PENSION
£

2 PENSION
COSTS
£

3 GAIN ON
EXERCISE
OF SHARE
OPTIONS
£

TOTAL
REMUNERATION
2020
£

TOTAL
REMUNERATION
2019
£

Executive directors

P E Hadsley-Chaplin 187,250

54,615

—

28,082

28,795

—

T R J Price

M H Coulson

311,850

90,956

46,791

29,421

5,500

106,256

219,650

64,065

30,065

19,294

5,500

54,165

298,742

681,730

456,804

272,165

490,929

345,711

718,750

209,636

155,021

104,938

77,510

11,000

160,421

1,437,276

1,108,805

Non-executive directors

J M Green-Armytage

41,100

R M Robinow

P A Fletcher

B C Tozer

D M McBain

—

35,200

35.200

146,700

—

41,100

—

35,200

39,700

34,000

—

146,700

141,700

Total

865,450

209,636

155,021

104,938

77,510

11,000

160,421

1,583,976

1,250,505

1. In line with Group remuneration policy, half of the bonuses for the year to Mr T R J Price and Mr M H Coulson (being 7 months’

salary) have been deferred into an award of options over fully-paid shares of equal value which vest after three years subject to
continued employment by the Group.

2. The pension costs for Mr T R J Price and Mr M H Coulson are the contributions made by the Company to Company-sponsored self-

invested personal pensions.

3. The gain on share options includes amounts already reported in previous years as remuneration under ‘Bonus deferred’. The

difference between the amount previously reported and that included in 2020 was £(17,344) in respect of Mr T R J Price, a negative
figure since the Group’s share price when the options were exercised was lower than when the bonus was awarded.”

The annual ratio for total remuneration of the chief executive in relation to the median of the Group’s UK payroll

excluding this individual was 5.9 in 2020 (2019 – 3.9). The equivalent ratio for the percentage increase in annual total

remuneration was 4.9 (2019 – 0.2).

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

unless the share price on the exercise date exceeds the

share price on the date the options were granted. On

31 December 2020, options over 125,000 (2019 – 125,000)
shares granted to him under this scheme remained

and motivate high-quality non-executive directors

outstanding. During the year, no options were exercised

and the level of fees paid for similar roles in

(2019 - none) and none (2019 - none) lapsed.

equivalent companies.

EXECUTIVE SHARE-OPTION SCHEME
During 2020, the chief executive was a member of the

The chief executive and finance director are members

of the long-term incentive scheme established in 2017

described above, under which half of any discretionary

executive share-option scheme which was established in

bonus is deferred into options over fully-paid shares.

2012. Options granted under this scheme give the chief

Under this arrangement options on 37,764 fully-paid

executive the right to purchase shares on a future date

shares were awarded in 2020 (2019 – 14,098), representing

at the market price of the shares on the date that the

half of the bonus awarded to these individuals.

options are granted. As such, the value of any option is

closely tied to the performance of the Group as reflected

No options are held by either the chairman or non-

in its share price. There will be no gain on exercise

executive directors.

M.P. EVANS GROUP PLC
ANNUAL REPORT 2020

DIRECTORS’ REMUNERATION REPORT continued

OPTIONS HELD OVER SHARES OF THE COMPANY BY THE EXECUTIVE DIRECTORS
DURING THE YEAR ENDED 31 DECEMBER 2020

BALANCE
AT 1 JAN
2020

GRANTED
IN THE
YEAR

EXERCISED
IN THE
YEAR

BALANCE
AT 31 DEC
2020

EXERCISE
PRICE
PENCE

DATE FROM
WHICH
NORMALLY
EXERCISABLE

DATE OF
GRANT

EXPIRY
DATE

Executive share-option scheme

T R J Price

Total

50,000

5,750

44,250

25,000

125,000

Long-term incentive scheme

T R J Price

M H Coulson

Total

16,347

12,059

8,272

—

36,678

8,333

8,331

5,826

—

22,490

59,168

—

7,890

14,268

22,158

—

5,557

10,049

15,606

37,764

—

50,000

5,750

44,250

25,000

125,000

16,347

—

16,347

8,333

—

8,333

24,680

—

12,059

8,272

7,890

14,268

42,489

—

8,331

5,826

5,557

10,049

29,763

72,252

483.21

520.00

510.00

410.50

19 Jun 12

19 Jun 15

19 Jun 22

17 Jan 13

17 Jan 16

17 Jan 23

17 Jan 13

17 Jan 16

17 Jan 23

13 Jun 16

13 Jun 19

13 Jun 26

0.00

8 Jun 17

3 Apr 20

2 Apr 27

12 Jan 18

12 Jan 21

11 Jan 28

11 Jan 19

11 Jan 22

10 Jan 29

9 Jan 20

9 Jan 23

9 Jan 30

22 Dec 20

22 Dec 23

21 Dec 30

8 Jun 17

3 Apr 20

2 Apr 27

12 Jan 18

12 Jan 21

11 Jan 28

11 Jan 19

11 Jan 22

10 Jan 29

9 Jan 20

9 Jan 23

9 Jan 30

22 Dec 20

22 Dec 23

21 Dec 30

At 31 December 2020 the middle-market quotation for

assurance cover based on a multiple of salary.

the Company’s shares, as derived from the London Stock

No element of a director’s remuneration package, other

Exchange Daily Official List, was 660p, as compared with

than basic salary, is pensionable. Individuals may elect

the high and low quotations for the year of 724p and 400p

to forgo contributions to the SIPP, in which case they

respectively.

receive an additional salary paid in lieu of the employer’s

pension contributions at the same cost to the Company.

PENSIONS
The Company sponsors self-invested personal pensions

Approved by the board of directors and

(“SIPPs”) for the UK executive directors. Contributions

signed by its order

made by the Company to the SIPPs and to a life-

assurance company give the executives a pension at

Katya Merrick

retirement, a pension to a spouse payable on death

Company secretary

whilst in the employment of the Company, and life-

23 March 2021

INDEPENDENT AUDITORS’ REPORT

To the members of M.P. Evans Group PLC

OPINION
In our opinion:

• the financial statements give a true and fair view of

the state of the Group’s and of the parent-Company’s

affairs as at 31 December 2020 and of the Group’s

profit for the year then ended;

Our responsibilities under those standards are further

described in the Auditors’ responsibilities for the audit of

the financial statements section of our report. We believe

that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

Independence

•

the Group financial statements have been properly

We remain independent of the Group and the parent

prepared in accordance with international accounting

Company in accordance with the ethical requirements

standards in conformity with the requirements of the

that are relevant to our audit of the financial statements

Companies Act 2006;

•

the parent-Company financial statements have been

properly prepared in accordance with United Kingdom

Generally Accepted Accounting Practice; and

•

the financial statements have been prepared in

in the UK, including the FRC’s Ethical Standard as applied

to listed entities, and we have fulfilled our other ethical

responsibilities in accordance with these requirements.

CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded

accordance with the requirements of the Companies

that the directors’ use of the going concern basis of

Act 2006.

accounting in the preparation of the financial statements

is appropriate. Our evaluation of the directors’ assessment

We have audited the financial statements of M.P. Evans

of the Group and the parent Company’s ability to continue

Group PLC (the ‘parent Company’) and its subsidiaries

to adopt the going concern basis of accounting included:

(the ‘Group’) for the year ended 31 December 2020

which comprise the consolidated income statement,

consolidated statement of comprehensive income,

consolidated and parent Company balance sheets,

• a review of management’s assessment of going

concern and consideration of the key assumptions

used in the forecasts.

consolidated and parent Company statements of changes

in equity, consolidated cash flow statement and notes

• an assessment of the appropriateness and accuracy of
cash flow forecasts used by management by reference

to the financial statements, including a summary of

to current cash reserves, available finance and related

significant accounting policies.

covenants, forecast production and CPO price estimates.

The financial reporting framework that has been applied

in the preparation of the Group financial statements is

applicable law and international accounting standards

in conformity with the requirements of the Companies

Act 2006. The financial reporting framework that has

been applied in the preparation of the parent-Company

financial statements is applicable law and United

Kingdom Accounting Standards, including Financial

Reporting Standard 101 Reduced Disclosure Framework

(United Kingdom Generally Accepted Accounting Practice).

• a review of disclosures on going concern in the Group

financial statements with reference to regulator

publications and examples of best practice.

Based on the work we have performed, we have not

identified any material uncertainties relating to events

or conditions that, individually or collectively, may cast

significant doubt on the Group and parent Company’s

ability to continue as a going concern for a period of at

least twelve months from when the financial statements

are authorised for issue.

BASIS FOR OPINION
We conducted our audit in accordance with International

Standards on Auditing (UK) (ISAs (UK)) and applicable law.

Our responsibilities and the responsibilities of the

directors with respect to going concern are described in

the relevant sections of this report.

INDEPENDENT AUDITORS’ REPORT continued

OVERVIEW

COVERAGE

KEY AUDIT MATTERS

90% (2019 – 79%) of
Group profit before tax

86% (2019 – 100%) of
Group revenue

72% (2019 – 94%) of
Group total assets

Valuation of biological assets

Identification of prior period errors

2020

2019

 



Identification of prior period errors is no longer
considered to be a key audit matter because the
impact was correctly recorded by management in
the prior year and no such instances have been
discovered during this year’s audit process.

MATERIALITY

Group financial
statements as a whole

US$1,400,000
(2019 US$639,000)
based on 5%
(2019 – 5%) of profit
before tax

AN OVERVIEW OF THE SCOPE OF OUR AUDIT
The Group financial statements are a consolidation of

As part of the audit strategy, senior members of the Group

audit team attended a sample of the board’s remote

twenty one companies consisting of the parent Company,

quarterly review meetings with estate management.

three UK-incorporated subsidiary companies, thirteen

Indonesian subsidiary companies, one Singapore-

Our involvement with component auditors

incorporated company and three associate entities.

For the work performed by component auditors, we

The majority of the Group’s operations are located

determined the level of involvement needed in order to

in Indonesia with the head office and main group

be able to conclude whether sufficient appropriate audit

accounting function located in the United Kingdom.

evidence has been obtained as a basis for our opinion on

the Group financial statements as a whole. In light of the

Our Group audit was scoped by obtaining an understanding

travel restrictions caused by the Covid-19 pandemic, the

of the Group and its environment, including the Group’s

group team was unable to travel to Indonesia, but were

system of internal control and assessing the risks of

able to communicate effectively with component auditors

material misstatement at the Group level. We also

and local management remotely, in order to direct the

addressed the risk of management override of internal

component auditor’s work and review and evaluate the

controls, including assessing whether there was evidence

results of their work as necessary. Our involvement with

of bias by the directors that may have represented a risk

component auditors included the following:

of material misstatement.

Based on our assessment, we identified seven

(2019 nine) operating plantation companies which, in

our view, required an audit of their complete financial
information due to their financial significance to the

Group (“significant components”). The audit procedures

for these components were performed by the component

auditors who were members of the BDO International

network. It was considered appropriate to perform audit

procedures on specific audit areas where their balance

was material to the Group for a further nine (2019 five

and one associate entity) companies (“material but not

significant components”). Where these components were

located overseas, the audit procedures were performed

by the component auditors whilst the audit procedures

for components located in the UK were performed by the

Group audit team. For the other components that were not

identified as being significant to the Group, we performed

analytical review procedures at a Group level.

• As part of our audit planning, the senior statutory
auditor and other senior members of the Group

audit team held remote planning meetings via

video conference with the Indonesian component

team where we discussed the Group and local risks
identified and agreed the testing approach.

• Senior members of the Group audit team performed a
remote review of the component team audit files for

the Indonesian operating units using our global audit

tool and requested the component auditors to perform

any further procedures required.

• At the completion stage senior members of the Group
audit team attended the clearance meeting with local

audit and local management teams and reviewed

component audit teams’ reporting, addressing risks

and specific procedures raised. We held discussions

with component and group management to discuss

the findings from our audit, including local

adjustments raised.

M.P. EVANS GROUP PLCANNUAL REPORT 2020
INDEPENDENT AUDITORS’ REPORT

KEY AUDIT MATTERS
Key audit matters are those matters that, in our

effect on: the overall audit strategy, the allocation of

resources in the audit, and directing the efforts of the

professional judgement, were of most significance in

engagement team. These matters were addressed in

our audit of the financial statements of the current

the context of our audit of the financial statements as a

period and include the most significant assessed risks

whole, and in forming our opinion thereon, and we do not

of material misstatement (whether or not due to fraud)

provide a separate opinion on these matters.

that we identified, including those which had the greatest

KEY AUDIT MATTER

HOW THE SCOPE OF OUR AUDIT ADDRESSED THE
KEY AUDIT MATTER

Valuation of biological assets (note

Our audit work included, but was not restricted to, the following:

3 and 17)

Management exercise significant

judgement in determining the

method to be applied in determining

fair value as well as in the

underlying assumptions used in

We assessed the key inputs and assumptions in the calculation being:

• production data – agreed to post-year-end internal production reports.
A test of control was performed over the preparation and approval of

the daily production report along with performing analytical reviews and

investigating any variances against prior year production trends;

the calculation. These assumptions

• average growth rate – agreed to externally published research papers;

include the estimation of the weight

of unharvested ffb at the balance

sheet date (based on post-year-

end production figures and average

growth rates), selling price and

costs to sell. We identified this as a

significant risk due to the inherent

uncertainty around the future

estimates.

• selling price – agreed to sales price achieved in December 2020 by agreeing

a sample of December sales to supporting documents;

• costs to sell – agreed to internal cost data for December 2020 and verified
by the component audit team by agreeing a sample of costs to supporting

documents.

We checked the mathematical accuracy of the model.

We considered the valuation model applied and determined it to be

appropriate for the purpose of this valuation in accordance with IAS 41.

Key observations: we consider the judgements and estimates made by

management when assessing the valuation of biological assets to be

reasonable.

INDEPENDENT AUDITORS’ REPORT continued

OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning

we use a lower materiality level, performance materiality,

to determine the extent of testing needed. Importantly,

and performing our audit, and in evaluating the effect

misstatements below these levels will not necessarily be

of misstatements. We consider materiality to be the

evaluated as immaterial as we also take account of the

magnitude by which misstatements, including omissions,

nature of identified misstatements, and the particular

could influence the economic decisions of reasonable

circumstances of their occurrence, when evaluating their

users that are taken on the basis of the financial

effect on the financial statements as a whole.

statements.

In order to reduce to an appropriately low level the

materiality for the financial statements as a whole and

probability that any misstatements exceed materiality,

performance materiality as follows:

Based on our professional judgement, we determined

Group financial statements

Parent-Company financial statements

2020
US$

2019
US$

2020
US$

2019
US$

Materiality

1,400,000

639,000

1,330,000

575,000

Basis for determining materiality

5% of
profit
before tax

2% of total assets
restricted to 95% of
Group materiality

2% of total assets
restricted to 90% of
Group materiality

Performance materiality

980,000

447,000

Basis for determining performance materiality

70%

931,000

70%

431,250

75%

Parent-Company materiality was increased to 95% of

Group materiality (2019 - 90%) due to this being our

OTHER INFORMATION
The directors are responsible for the other information.

second year audit with performance in this entity

The other information comprises the information

considered to be highly predictable. Performance

included in the annual report other than the financial

materiality was revised to 70% of materiality (2019 - 75%)

statements and our auditor’s report thereon. Our opinion

to bring this in line with Group performance materiality.

on the financial statements does not cover the other

Component materiality

information and, except to the extent otherwise explicitly

stated in our report, we do not express any form of

We set materiality for each component of the Group

assurance conclusion thereon. Our responsibility is to

based on a percentage of between 57% (2019 - 83%)

read the other information and, in doing so, consider

and 15% (2019 - 4%) of Group materiality dependent
on the size and our assessment of the risk of material

whether the other information is materially inconsistent
with the financial statements or our knowledge obtained

misstatement of that component. Component materiality

in the course of the audit, or otherwise appears to

ranged from US$800,000 to US$216,000. In the audit

be materially misstated. If we identify such material

of each component, we further applied performance

inconsistencies or apparent material misstatements,

materiality levels of 70% of the component materiality

we are required to determine whether this gives rise

to our testing to ensure that the risk of errors exceeding

to a material misstatement in the financial statements

component materiality was appropriately mitigated.

themselves. If, based on the work we have performed, we

Reporting threshold

We agreed with the audit committee that we would

conclude that there is a material misstatement of this

other information, we are required to report that fact.

report to them all individual audit differences in

We have nothing to report in this regard.

excess of US$28,000 (2019 US$13,000), being 2% of

materiality. We also agreed to report differences below

this threshold that, in our view, warranted reporting on

qualitative grounds.

M.P. EVANS GROUP PLCANNUAL REPORT 2020INDEPENDENT AUDITORS’ REPORT

OTHER COMPANIES ACT 2006 REPORTING
Based on the responsibilities described below and our work performed during the course of the audit, we are required

by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.

Strategic report

In our opinion, based on the work undertaken in the course of the audit:

and directors’

report

•

the information given in the strategic report and the directors’ report for the financial year for

which the financial statements are prepared is consistent with the financial statements; and

•

the strategic report and the directors’ report have been prepared in accordance with applicable

legal requirements.

In the light of the knowledge and understanding of the Group and parent Company and its

environment obtained in the course of the audit, we have not identified material misstatements in

the strategic report or the directors’ report.

Matters on

which we

are required

to report by

exception

We have nothing to report in respect of the following matters in relation to which the Companies

Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent Company, or returns adequate

for our audit have not been received from branches not visited by us; or

•

the parent-Company financial statements are not in agreement with the accounting records and

returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

RESPONSIBILITIES OF DIRECTORS
As explained more fully in the statement of directors’

responsibility, the directors are responsible for the

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT
OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance

preparation of the financial statements and for being

about whether the financial statements as a whole are

satisfied that they give a true and fair view, and for

free from material misstatement, whether due to fraud

such internal control as the directors determine is

or error, and to issue an auditor’s report that includes

necessary to enable the preparation of financial

our opinion. Reasonable assurance is a high level of

statements that are free from material misstatement,
whether due to fraud or error.

assurance, but is not a guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material

misstatement when it exists. Misstatements can arise

In preparing the financial statements, the directors are

from fraud or error and are considered material

responsible for assessing the Group’s and the parent

if, individually or in the aggregate, they could

Company’s ability to continue as a going concern,

reasonably be expected to influence the economic

disclosing, as applicable, matters related to going concern

decisions of users taken on the basis of these

and using the going concern basis of accounting unless

financial statements.

the directors either intend to liquidate the Group or

the parent Company or to cease operations, or have no

realistic alternative but to do so.

M.P. EVANS GROUP PLC
ANNUAL REPORT 2020

INDEPENDENT AUDITORS’ REPORT continued

Extent to which the audit was capable of detecting

Our audit procedures were designed to respond to risks

irregularities, including fraud

of material misstatement in the financial statements,

Irregularities, including fraud, are instances of non-

recognising that the risk of not detecting a material

compliance with laws and regulations. We design

misstatement due to fraud is higher than the risk of

procedures in line with our responsibilities, outlined

not detecting one resulting from error, as fraud may

above, to detect material misstatements in respect

involve deliberate concealment by, for example, forgery,

of irregularities, including fraud. The extent to which

misrepresentations or through collusion. There are

our procedures are capable of detecting irregularities,

inherent limitations in the audit procedures performed

including fraud is detailed below:

and the further removed non-compliance with laws and

• We gained an understanding of the legal and

regulatory framework applicable to the Group and the

industry in which it operates, and considered the risk

of acts by the Group that were contrary to applicable

laws and regulations, including fraud.

• We considered the Group’s compliance with laws and
regulations that have a direct impact on the financial

statements including, but not limited to, UK company

law, UK tax legislation, AIM Rules, Indonesian tax law,

Indonesian Sustainable Palm Oil (ISPO) standard and

regulations is from the events and transactions reflected

in the financial statements, the less likely we are to

become aware of it.

A further description of our responsibilities is available

on the Financial Reporting Council’s website at: www.frc.

org.uk/auditorsresponsibilities. This description forms

part of our auditor’s report.

USE OF OUR REPORT
This report is made solely to the parent-Company’s

Indonesian land laws and we considered the extent to

members, as a body, in accordance with Chapter 3 of

which non-compliance might have a material effect on

Part 16 of the Companies Act 2006. Our audit work has

the Group financial statements.

• We designed audit procedures at both the Group and
significant component levels to identify instances of

non-compliance with such laws and regulations. Our

procedures included reviewing the financial statement

disclosures and agreeing to underlying supporting

documentation where necessary. We reviewed internal

audit reports throughout the year and subsequent to

the year-end and we reviewed minutes of all board

and committee meetings held during and subsequent

to the year for any indicators of non-compliance and

made enquiries of management and of the directors

as to the risks of non-compliance and any instances
thereof.

• We addressed the risk of management override of
internal controls, including testing journal entries

processed during and subsequent to the year and

evaluating whether there was evidence of bias by

the directors that represented a risk of material

misstatement due to fraud.

been undertaken so that we might state to the parent-

Company’s members those matters we are required to

state to them in an auditor’s report and for no other

purpose. To the fullest extent permitted by law, we do

not accept or assume responsibility to anyone other than

the parent Company and the parent-Company’s members

as a body, for our audit work, for this report, or for the

opinions we have formed.

Anna Draper (Senior Statutory Auditor)

for and on behalf of BDO LLP, Statutory Auditor

Gatwick
United Kingdom

23 March 2021

BDO LLP is a limited liability partnership registered in

England and Wales (with registered number OC305127)

INDEPENDENT AUDITORS’ REPORT

Visit to Bumi Permai mill

CONS0LIDATED INCOME STATEMENT
For the year ended 31 December 2020

Continuing operations

Revenue

Cost of sales

Gross profit

Gain on biological assets

Foreign-exchange (losses)/gains

Other administrative expenses

Other income

Operating profit

Finance income

Finance costs

Profit before tax

Tax on profit on ordinary activities

Profit after tax

Share of associated companies’ profit after tax

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

Basic earnings per 10p share

Continuing operations

Note

2020
US$’000

2019
US$’000

174,510

(139,755)

119,341

(102,297)

34,755

682

(1,068)

(4,587)

1,539

31,321

527

(3,408)

28,440

(7,692)

20,748

1,421

22,169

20,371

1,798

22,169

17,044

927

1,161

(3,466)

458

16,124

403

(3,747)

12,780

(7,183)

5,597

1,873

7,470

6,333

1,137

7,470

US cents

37.4

37.3

11.6

11.5

Pence

29.2

9.0

M.P. EVANS GROUP PLCANNUAL REPORT 2020CONS0LIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2020

FINANCIAL STATEMENTS

Other comprehensive income (net of tax)

Items that may be reclassified to the income statement

Exchange gain on translation of foreign operations

Items that will not be reclassified to the income statement

Remeasurement of retirement-benefit obligations

Other comprehensive (expense)/income for the year

Profit for the year

Total comprehensive income

Attributable to:

Owners of M.P. Evans Group PLC

Non-controlling interests

2020
US$’000

2019
US$’000

313

390

(2,502)

(2,189)

22,169

19,980

18,337

1,643

19,980

696

1,086

7,470

8,556

7,370

1,186

8,556

CONS0LIDATED BALANCE SHEET
As at 31 December 2020

COMPANY NUMBER: 1555042

Note

2020
US$’000

2019
US$’000

Non-current assets

Goodwill

Other intangible assets

Property, plant and equipment

Investments in associates

Investments

Deferred-tax asset

Trade and other receivables

Current assets

Biological assets

Inventories

Trade and other receivables

Current-tax asset

Current-asset investments

Cash and cash equivalents

Total assets

Current liabilities

Borrowings

Trade and other payables

Current-tax liability

Net current assets

Non-current liabilities

Borrowings

Trade and other payables

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

11,767

1,381

390,642

22,154

5,046

10,917

441,974

2,749

11,617

48,620

3,968

334

27,222

94,510

11,767

1,433

368,744

21,553

5,284

11,555

420,402

2,067

11,072

45,117

4,245

1,160

25,947

89,608

536,484

510,010

39,605

26,039

6,003

71,647

22,863

66,079

10,529

14,051

90,697

162,344

374,140

9,204

55,090

300,117

364,411

9,729

374,140

28,337

22,215

3,657

54,209

35,399

66,137

265

12,312

9,401

88,115

142,324

367,686

9,200

55,385

294,139

358,724

8,962

367,686

The financial statements on pages 58 to 85 were approved by the board of directors on 23 March 2021 and signed on its

behalf by

Tristan Price
Chief executive

Matthew Coulson
Finance director

M.P. EVANS GROUP PLCANNUAL REPORT 2020

FINANCIAL STATEMENTS

CONS0LIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2020

SHARE
CAPITAL
US$’000

OTHER
RESERVES
US$’000

RETAINED
EARNINGS
US$’000

Note

NON-
CONTROLLING
INTERESTS
US$’000

TOTAL
US$’000

TOTAL
EQUITY
US$’000

Profit for the year

Other comprehensive
income/(expense) for
the year

Total comprehensive income
for the year

Issue of share capital

Share buy-backs

Dividends paid

Dividends from associates

Credit to equity for
equity-settled share-based
payments

Transactions with owners

At 1 January 2020

At 31 December 2020

Profit for the year

Other comprehensive
income for the year

Total comprehensive income
for the year

Issue of share capital

Share buy-backs

Dividends paid

Dividends from associates

Credit to equity for
equity-settled share-based
payments

Reclassification

Acquisition

Transactions with owners

At 1 January 2019

At 31 December 2019

—

(19)

—

9,200

9,204

—

(34)

—

(28)

9,228

9,200

1,421

18,950

20,371

1,798

22,169

168

(2,201)

(2,033)

(156)

(2,189)

1,589

16,749

18,338

1,642

19,980

(23)

—

(1,190)

(690)

(1,884)

55,385

55,090

—

(1,155)

(12,105)

1,190

1,299

(10,771)

294,139

300,117

—

(1,155)

(12,105)

—

609

(12,651)

358,724

364,411

—

(875)

—

(875)

8,962

9,729

—

(1,155)

(12,980)

—

609

(13,526)

367,686

374,140

1,873

4,460

6,333

1,137

7,470

128

909

1,037

1,086

2,001

5,369

7,370

1,186

8,556

212

—

(1,036)

592

—

(198)

53,582

55,385

—

(2,286)

(12,364)

1,036

(2,056)

(9,834)

(25,453)

314,223

294,139

218

(2,286)

(12,364)

—

643

(2,056)

(9,834)

(25,679)

377,033

358,724

—

2,056

(15,583)

(13,527)

21,303

8,962

218

(2,286)

(12,364)

—

643

—

(25,417)

(39,206)

398,336

367,686

M.P. EVANS GROUP PLC
ANNUAL REPORT 2020

CONS0LIDATED CASH-FLOW STATEMENT
For the year ended 31 December 2020

Note

Net cash generated by operating activities

Investing activities

Purchase of property, plant and equipment

Purchase of intangible assets

Interest received

Decrease in bank deposits treated as current-asset investments

Decrease in receivables from smallholder co-operatives

Proceeds on disposal of property, plant and equipment

Loan to related party

Net cash used by investing activities

Financing activities

New borrowings

Repayment of borrowings

Lease liability payments

Dividends paid to Company shareholders

Dividends paid to non-controlling interest

Purchase of non-controlling interests

Exercise of Company share options

Buy-back of Company shares

Net cash (used)/generated by financing activities

Net increase in cash and cash equivalents

Net cash and cash equivalents at 1 January

Effect of foreign-exchange rates on cash and cash equivalents

Cash and cash equivalents at 31 December

2020
US$’000

39,598

2019
US$’000

32,002

(41,409)

(46,531)

(113)

108

826

3,886

732

—

(35,970)

24,581

(13,307)

(209)

(12,105)

(89)

—

(1,155)

(2,284)

1,344

25,947

(69)

27,222

(721)

210

1,342

4,690

489

(11,747)

(52,268)

110,419

(46,134)

(167)

(12,364)

—

(25,417)

218

(2,286)

24,269

4,003

21,626

318

25,947

FINANCIAL STATEMENTS

CONSTRUCTION WORK UPDATE

The Group’s strategy is to mill all of the ffb it grows, and its construction
programme is timed to take maximum advantage of the Group’s increasing crop.

The Rahayu mill at Kota Bangun,

which was opened in 2020

CPO storage tanks at
new Rahayu mill

Construction work is

already advanced on

the Group’s fifth mill

at Bumi Mas, and this

mill is expected to

become operational

in the middle of 2021.

6363

NOTES TO THE CONSOLIDATED ACCOUNTS
For the year ended 31 December 2020

1 General information

M.P. Evans Group PLC is a public limited company incorporated in the United Kingdom under the Companies Act 2006 and listed
on the London Stock Exchange’s Alternative Investment Market (“AIM”). The Company is registered in England and Wales, and the
address of its registered office is given on page 98. The nature of the Group’s operations and its principal activities are set out in
note 4 and in the strategic report on pages 12 to 30. 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, reflecting the primary economic environment in which the Group
operates. The presentational currency for the Group accounts is also the US Dollar.

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 loss for the year of US$4,518,000 (2019 US$3,485,000). The Company’s separate financial
statements are set out on pages 86 to 91.

By virtue of Section 479A of the Companies Act 2006, the Company’s subsidiary Bertam Consolidated Rubber Company Limited is
exempt from the requirement to have an audit and prepare individual accounts. Details of all subsidiary companies are shown on
page 92.

2 Adoption of new and revised accounting standards

(a) New and amended standards adopted by the Group

There have been a number of new and amended standards issued by the International Accounting Standards Board (“IASB”)
that became effective for the first time during the year ended 31 December 2020. The Group has assessed each of them, and
concluded that the following standards and amendments have not had a material impact on the Group’s results or financial
position.

Amendments to references in the conceptual framework in IFRS Standards
IFRS 3 (amendments) Definition of a business
IAS 1 and IAS 8 (amendments) Definition of material
IFRS 9, IAS 39 and IFRS 7 (amendments) Interest rate benchmark reform

(b) New standards, amendments and interpretations issued but not effective for the year beginning 1 January 2020 and

not adopted early
At the date of authorisation of these financial statements, a number of new and revised IFRSs have been issued by the
IASB but are not yet effective, as listed below. The directors have performed an initial review of each of the new and revised
standards and, based on the Group’s current operations and accounting policies, are of the view that their adoption will not
lead to any material change in the Group’s financial reporting.

IFRS 17 Insurance contracts
IAS 1 (amendments) Classification of liabilities as current or non-current
IFRS 3 (amendments) Reference to the conceptual framework
IAS 16 (amendments) Proceeds before intended use
IAS 37 (amendments) Cost of fulfilling a contract
Annual improvements to IFRS Standards 2018-2020

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 in conformity with the
requirements of 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’s 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, including risks and sensitivities (including an assessment of the impact
of Covid-19), 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 report of the
directors on page 42.

M.P. EVANS GROUP PLCANNUAL REPORT 2020

3 Accounting policies continued

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 power over the
investee, has the rights or exposure to variable returns, and has the ability to affect those returns. 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 or associated companies acquired or disposed of
during the year are included in the consolidated income statement from or up to the effective point of gaining or losing either
control or significant influence as appropriate.

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.

On disposal of a subsidiary or associated company, the gain or loss on disposal is calculated as the difference between the
fair value of the proceeds received and the Group’s consolidated carrying value of the assets and liabilities of the subsidiary
or associated undertaking, including goodwill where relevant. If required by IFRS 5, results (including comparative amounts) of
the disposed of subsidiary or associated undertaking are included within discontinued operations.

(d) Revenue

Revenue represents the fair value of crops and produce sold during the year, excluding sales taxes. Income is recognised at
the point of delivery, which is deemed to be the point at which the performance obligation is satisfied.

(e) Retirement benefits

In the UK, 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 based on an annual actuarial review using the
projected unit credit method, and charged to the income statement on the basis of individuals’ service at the balance-sheet
date. Remeasurement by the actuary is included in equity, whilst all other movements in the liability, other than benefits paid,
are recognised in profit or loss.

(f ) Share-based payments

In the UK, 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 exercise
period for market-priced options and at the start of the exercise period for options issued under the long-term incentive
scheme; dividend yield is the latest annual dividend divided by the share price on the date the options are granted; share-
price volatility is assessed as the average standard deviation over one year using share prices since 1 January 1993. 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.

(g) 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 identifiable net 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 net 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 provisions, once made, are not reversed. Inputs to the fair
value measurement of goodwill fall into ‘Levels 2 and 3’ in the IFRS categories.

(h) Biological assets

For internal reporting and decision-making, the Group’s policy is to recognise fresh fruit bunches (“ffb”) at the point of harvest.
For the purposes of statutory reporting, the Group’s policy is to include an estimate of the fair value of ffb prior to harvest as a
biological asset in the Group’s financial statements (see note 17). The impact of initial valuations and subsequent changes in
value are included in the Group’s income statement. The valuation falls into the IFRS category ‘Level 3’, since sales of ffb prior
to harvest are never transacted.

NOTES TO THE CONSOLIDATED ACCOUNTS continued

3 Accounting policies continued

Biological assets continued
Deferred tax is recognised at the relevant local rate on the difference between the estimated cost of biological assets and
their carrying value determined under IAS 41.

Intangible assets
Intangible assets (other than goodwill) are stated at historical cost less amortisation. Software is written off over its estimated
useful life on a straight-line basis at 10% per annum. Estimated useful lives are reviewed at each balance-sheet date.

(j) Property, plant and equipment

Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes all expenditure incurred
in acquiring the asset, including directly-attributable borrowing costs. Leasehold land in Indonesia is held on 25- or 30-year
leases and initial costs are 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,
once they reach maturity, over 20 years.

Land and buildings, plant, equipment and vehicles, are written off over their estimated useful lives on a straight line basis at
rates which vary between 0% 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, as in the case of the UK office, no provision is made
for depreciation.

Construction in progress is measured at cost and is not depreciated. Depreciation commences once assets are complete and
available for use.

(k) Leases

All leases are accounted for by recognising a right-of-use asset and a lease liability, except for leases of low value assets and
leases with a duration of 12 months or less. Lease liabilities are measured at the present value of lease payments over the
term of the lease, and the right-of-use asset is measured at a corresponding amount. The asset is depreciated on a straight-
line basis over the lease term, and the lease payments are allocated to the lease liability and the interest implicit in the lease.

(l) Investments in associated companies

Undertakings over which the Group has the ability to exert significant influence, but not control, 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 information for the year
ended 31 December 2020. 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.

(m) Inventories

Inventories are valued at the lower of cost and net realisable value. In the case of palm oil, cost represents the weighted-
average cost of production, including appropriate overheads. Other inventories are valued on the basis of first in, first out.
Young seedlings are included within nurseries as part of inventory, and their cost is transferred to immature planting within
property, plant and equipment when they are planted out in the field.

(n) Taxation

The tax charge for the year comprises current and deferred tax. The Group’s current-tax asset or liability is calculated using tax
rates that have been enacted or substantively enacted by the balance-sheet date.

Deferred tax is accounted for using the balance-sheet-liability method, calculated at the tax rates that are expected to apply
in the period when the liability is settled or the asset is realised. Liabilities are generally recognised for all taxable temporary
differences; deferred-tax assets are recognised if it is probable that taxable profits will be available against which deductible
temporary differences can be utilised. Deferred tax is not provided for on initial recognition of goodwill.

The Group recognises deferred-tax liabilities arising from taxable temporary differences on investments in subsidiaries and
associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future. The carrying amount of deferred-tax assets is reviewed at each
balance-sheet date.

Deferred-tax assets and liabilities are offset when there is a legally-enforceable right to set off current-tax assets against
current-tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to
settle its current-tax assets and liabilities on a net basis.

M.P. EVANS GROUP PLCANNUAL REPORT 2020

FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS

3 Accounting policies continued

(o) Financial instruments

Financial assets and financial liabilities are initially recognised on the Group’s balance sheet at fair value when the Group
becomes a party to the contractual provisions of the instrument, and, other than the Group’s investments in unlisted shares,
are carried at amortised cost.

Financial assets at fair value through profit or loss – the Group’s investments in unlisted shares (other than associated
undertakings) are classified as fair value through profit or loss and stated at fair value, with gains and losses recognised
directly in the income statement. Fair value is the directors’ estimate of sales proceeds at the balance-sheet date.

Trade and other receivables – these represent both amounts due from customers in the normal course of business,
recoverable VAT, and financing made available to related parties and smallholder co-operatives. Balances are initially stated
at their fair value, and subsequently measured at amortised cost, using the effective-interest-rate method, as reduced by
appropriate allowances for estimated expected credit losses, 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.

Current-asset investments – these include bank deposits with original maturities of between three and twelve months.

Bank borrowings – interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs.
Finance charges are accounted for on an accruals basis in the income statement using the effective-interest-rate method.

Trade and other payables – these are initially measured at fair value, and are subsequently measured at amortised cost, using
the effective-interest-rate method.

Equity instruments – equity instruments issued by the Company are recorded at the proceeds received, net of direct issue
costs.

(p) Foreign currencies

As set out in note 1, the functional currency of the parent Company and of subsidiaries operating in the palm-oil sector is the
US Dollar. The functional currency of Group companies operating in the property-development sector is the local currency,
the Malaysian Ringgit. 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. In addition, exchange differences arising from translating
the results of Group companies that do not have the US Dollar as their functional currency are also recognised in other
comprehensive income.

(q) Segmental reporting

Operating segments are consistent with the internal reporting provided to the chief operating-decision maker. The chief
operating-decision maker, which is responsible for allocating resources and assessing performance of the operating segments,
is the board of directors. The Group’s reportable operating segments are included in note 4.

(r) Critical accounting judgements and key sources of estimation uncertainty

The preparation of consolidated financial statements under IFRS requires the Group to make estimates and assumptions that
affect how its policies are applied and hence the amounts reported in the financial statements. Estimates and judgements are
periodically evaluated. They 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 estimates.

The critical judgements and key estimates which have the most significant impact on the carrying amount of assets and
liabilities are identified below and discussed further in the relevant notes to the accounts.

Critical judgements
• Deferred tax on unremitted earnings (note 23); and
• Depreciation of leasehold land (note 14).

Carrying value of deferred-tax assets relating to losses (note 23);

Key estimates
•
• Determination of retirement-benefit obligations (note 24);
•
•

Carrying value of goodwill (note 13); and
Valuation of biological assets – growing produce (note 17).

NOTES TO THE CONSOLIDATED ACCOUNTS continued

4 Segment information

The Group’s reportable segments are distinguished by location and activity: palm-oil plantations in Indonesia and property
development in Malaysia. The ‘other’ segment relates in the main to the Group’s UK head office.

PLANTATION
INDONESIA
US$’000

PROPERTY
MALAYSIA
US$’000

OTHER
US$’000

TOTAL
US$’000

2020

Continuing operations

Revenue

Gross profit/(loss)

Gain on biological assets

Foreign-exchange loss

Other administrative expenses

Other income

Operating profit

Finance income

Finance costs

Profit before tax

Tax

Profit after tax

174,458

34,851

682

(761)

(554)

1,518

(316)

(6,377)

—

(96)

—

(307)

(4,033)

438

(3,092)

(1,315)

Share of associated companies’ profit after tax

1,070

351

—

Profit for the year

Consolidated total assets

Non-current assets

Current assets

Investments in associates

Consolidated total liabilities

Liabilities

Other information

Additions to property, plant and equipment

Additions to intangible assets

Depreciation

Amortisation

407,763

84,481

5,003

—

17,151

12,057

10,029

—

58,592

41,392

113

17,755

165

—

103,752

162,344

—

41,409

113

17,776

165

174,510*

34,755

682

(1,068)

(4,587)

1,539

31,321

527

(3,408)

28,440

(7,692)

20,748

1,421

22,169

419,820

94,510

22,154

536,484

* US$66.5 million of revenue (38.1%) was from sales to 2 customers (20.9% and 17.2% respectively).

M.P. EVANS GROUP PLCANNUAL REPORT 2020FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS

PLANTATION
INDONESIA
US$’000

PROPERTY
MALAYSIA
US$’000

OTHER
US$’000

TOTAL
US$’000

119,250

17,100

927

1,121

(44)

458

201

(589)

(6,471)

—

4 Segment information continued

2019

Continuing operations

Revenue

Gross profit/(loss)

Gain on biological assets

Foreign-exchange gain

Other administrative expenses

Other income

Operating profit

Finance income

Finance costs

Profit before tax

Tax

Profit after tax

Share of associated companies’ profit after tax

799

1,074

Profit for the year

Consolidated total assets

Non-current assets

Current assets

Investments in associates

Consolidated total liabilities

Liabilities

Other information

Additions to property, plant and equipment

Additions to intangible assets

Depreciation

Amortisation

386,154

75,697

3,933

465,784

53,334

47,155

721

15,318

112

—

17,620

—

* US$85.5 million of revenue (71.7%) was from sales to 4 customers (27.0%,17.8%,14.0% and 12.9% respectively).

5 Employees

Employee costs during the year

Wages and salaries

Social security costs

Current service cost of retirement benefit (see note 24)

Other pension costs

Share-based payment charge

(56)

—

(3,422)

—

202

(3,158)

(712)

—

12,057

14,549

—

26,606

119,341*

17,044

927

1,161

(3,466)

458

16,124

403

(3,747)

12,780

(7,183)

5,597

1,873

7,470

398,211

90,246

21,553

510,010

88,990

142,324

—

47,163

721

15,340

112

2020
US$’000

20,465

2,086

1,392

182

591

2019
US$’000

19,133

1,801

1,457

114

643

24,716

23,148

NOTES TO THE CONSOLIDATED ACCOUNTS continued

5 Employees continued

Average monthly number of persons employed (including executive directors)

Estate manual

Local management

United Kingdom head office

2020
Number

2019
Number

7,078

7,183

6,010

6,108

Details of directors’ remuneration required by the Companies Act 2006 are shown within the directors’ remuneration
report on page 49 and form part of these audited financial statements.

6 Finance income

Interest receivable on bank deposits

Interest receivable on related party loans

7 Finance costs

Interest payable on bank loans and overdrafts

8 Profit before tax

Profit before tax is stated after charging:

Depreciation of property, plant and equipment

Amortisation of intangible assets

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

Audit of overseas subsidiaries

Total audit services

Taxation advisory services

Total non-audit services

2020
US$’000

108

419

527

2020
US$’000

3,408

2019
US$’000

210

193

403

2019
US$’000

3,747

2020
US$’000

2019
US$’000

17,776

15,340

165

318

112

341

24,716

23,148

146

121

292

—

132

158

315

—

* In addition to the above, US$26,000 (2019 US$26,000) were payable to other firms for the audit of subsidiary companies.

M.P. EVANS GROUP PLCANNUAL REPORT 2020FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS

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 23)

2020
US$’000

2019
US$’000

862

(862)

—

8,533

—

8,533

(841)

7,692

637

(637)

—

6,548

—

6,548

635

7,183

The standard rate of tax for the year, based on the United Kingdom standard rate of corporation tax, was 19% (2019 – 19%).
The standard rate of Indonesian tax was 22% (2019 – 25%). The actual tax charge is higher than the standard rate for the reasons
set out in the reconciliation below.

Profit on ordinary activities before tax

Tax on profit on ordinary activities at the standard rate

Factors affecting the charge for the year

Profits taxed at higher standard tax rate

Expenses not deductible

Losses no longer available

Adjustment to deferred tax on fair value recognition

Unrealised Indonesian exchange differences not included in Group profit

Withholding tax on overseas dividends and interest

Adjustment relating to intercompany loan relationships

Utilisation of losses brought forward

Unrelieved losses

Other differences

Total tax charge

2020
US$’000

28,440

5,404

1,132

1,342

696

(2,122)

—

454

335

(24)

239

236

2019
US$’000

12,780

2,428

1,553

—

2,467

223

(27)

296

169

7,692

7,183

In addition to the above, the Group recognised a tax credit of US$0.7 million (2019 US$0.2 million cost) on retirement benefit
obligation remeasurement losses (2019 gains), recorded in other comprehensive income.

10 Dividends paid and proposed

2020 interim dividend – 5.00p per 10p share (2019 interim dividend 5.00p)

2019 final dividend – 12.75p per 10p share (2018 final dividend 12.75p)

2020
US$’000

3,511

8,594

12,105

2019
US$’000

3,519

8,845

12,364

Following the year end, the board has proposed a final dividend for 2020 of 17.00p per 10p share, amounting to US$13.0 million.
The dividend will be paid on or after 18 June 2021 to shareholders on the register at the close of business on 23 April 2021.

NOTES TO THE CONSOLIDATED ACCOUNTS continued

11 Basic and diluted earnings per share

The calculation of earnings per 10p share is based on:

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*

2020
US$’000

20,371

2020
NUMBER OF
SHARES

54,478,518

54,667,409

2019
US$’000

6,333

2019
NUMBER OF
SHARES

54,599,417

54,875,441

* 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.

12 Acquisition

In 2019, the Group effectively acquired a further 2,200 planted hectares by purchasing additional shareholdings in its own
operating subsidiaries from one of its minority partners. The acquisition cost was US$25.4 million, funded by taking on additional
debt. Further details are in the 2019 annual report.

13 Intangible assets

Cost

At 1 January 2020

Additions

At 31 December 2020

Accumulated amortisation

At 1 January 2020

Charge for the year

At 31 December 2020

GOODWILL
US$’000

SOFTWARE
US$’000

11,767

—

11,767

—

1,552

113

1,665

119

165

284

TOTAL
US$’000

13,319

113

13,432

119

165

284

Net book value at 31 December 2020

11,767

1,381

13,148

Cost

At 1 January 2019

Transfer from property, plant and equipment

Additions

At 31 December 2019

Accumulated amortisation

At 1 January 2019

Transfer from property, plant and equipment

Charge for the year

At 31 December 2019

11,767

—

831

721

11,767

831

721

11,767

1,552

13,319

—

112

119

—

112

119

Net book value at 31 December 2019

11,767

1,433

13,200

Goodwill is carried at cost. Of the balance above, US$10.6 million relates to the Group’s project at Bumi Mas, with the remainder
relating to the Group’s projects at Kota Bangun, Bangka, and at Sennah Estate (part of the Pangkatan group).

Key estimate
A review for goodwill impairment has been undertaken by comparing the carrying value of the relevant cash generating
units with fair value less cost of disposal. Fair value less cost of disposal has been obtained by reference to independent
valuations of the Group’s property assets conducted at the end of 2020 (see page 94). These valuations used a 30-year
forecast period, to reflect the long-term nature and growth profile of the asset, pre-tax discount rates of 16-19% (2019
– 16-19%), and a mill-gate price for CPO of US$620 (2019 US$560 rising over three years to US$610). A decrease in
any of the CPO price, yield or extraction assumptions of 5-10% would result in a range between no impairment and an
impairment charge of US$4.6 million against the goodwill relating to Bumi Mas.

M.P. EVANS GROUP PLCANNUAL REPORT 2020FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS

14 Property, plant and equipment

LEASEHOLD
LAND
US$’000

PLANTING
US$’000

BUILDINGS
US$’000

PLANT
EQUIPMENT
& VEHICLES
US$’000

CON-
STRUCTION
IN PROGRESS
US$’000

Cost or valuation

At 1 January 2020

Additions

Re-classification

Exchange differences

Disposals

106,083

204,212

83,095

4,248

6,417

—

(202)

—

(860)

—

16,919

(881)

At 31 December 2020

110,133

209,769

99,136

Accumulated depreciation

At 1 January 2020

Charge for the year

Exchange differences

Disposals

At 31 December 2020

129

—

146

Net book value at 31 December 2020

109,987

39,206

8,301

—

47,507

162,262

27,352

5,478

(498)

32,335

66,801

51,202

4,037

8,901

(1,444)

62,697

27,961

3,980

—

(1,149)

30,792

31,905

TOTAL
US$’000

463,392

41,409

—

(3,387)

18,800

26,707

(25,820)

—

19,687

501,422

—

19,687

94,648

17,776

(1,647)

110,780

390,642

At 31 December 2019

106,083

204,212

83,095

Cost or valuation

At 1 January 2019

Transfer to intangible assets

Additions

Re-classification

Exchange differences

Disposals

Accumulated depreciation

At 1 January 2019

Transfer to intangible assets

Charge for the year

Exchange differences

Disposals

At 31 December 2019

101,339

189,227

73,068

48,621

7,495

419,750

—

4,742

—

15,246

—

(261)

—

632

10,262

(869)

(831)

3,920

1,056

—

(1,564)

51,202

—

22,623

(11,318)

—

(831)

47,163

—

(2,694)

18,800

463,392

112

32,231

23,452

25,730

—

129

—

7,234

—

(259)

39,206

165,006

—

4,601

(703)

27,352

55,743

(7)

3,488

—

(1,250)

27,961

23,241

—

81,525

(7)

15,340

(2,212)

94,648

18,800

368,744

Net book value at 31 December 2019

105,954

Included in planting is immature planting with a cost of US$21,540,000 (2019 US$36,349,000) which is not depreciated.

Critical judgement
Included in leasehold land is land in Indonesia which is not being depreciated. Land is held on 25- or 30-year leases,
and as those leases can be renewed without significant cost and the Group has previous experience of successful lease
renewals, the directors have concluded that the land should not be depreciated. The carrying value of the land at the end
of the year is US$109,608,000 (2019 US$105,428,000).

As at 31 December 2020, the Group had entered into contractual commitments for the acquisition of property, plant and
equipment of US$ 13,299,000 (2019 US$8,135,000).

Depreciation is charged to cost of sales, other than US$18,000 (2019 US$20,000) charged to other administrative expenses.

At 31 December 2020, the Group accounted for one right-of-use asset (2019 – one asset) as a lease under IFRS 16. The net book
value of the asset was US$0.3 million (2019 US$0.5 million). The lease has a three-year term with fixed payments and the lease
liability is included in note 21.

NOTES TO THE CONSOLIDATED ACCOUNTS continued

15 Investments in associates

Details of the Group’s subsidiary and associated undertakings are given on page 92. The Group’s associated companies are both
unlisted.

Share of net assets

At 1 January

Exchange differences

Profit for the year

Dividends received

At 31 December

Unrealised profit - deferral on land sales to associate

2020
US$’000

24,057

312

1,421

(1,190)

24,600

(2,446)

22,154

2019
US$’000

23,020

200

1,873

(1,036)

24,057

(2,504)

21,553

The summarised results of the Group’s associated undertakings and the Group’s aggregate share of their summarised results are
shown below:

2020

KERASAAN
US$’000

BERTAM
PROPERTIES
US$’000

TOTAL
US$’000

KERASAAN
US$’000

BERTAM
PROPERTIES
US$’000

2019

TOTAL
US$’000

Total

Revenue

Profit after tax

Non-current assets

Current assets

Current liabilities

Non-current liabilities

Net assets

Group share

Revenue

Profit after tax

Non-current assets

Current assets

Current liabilities

Non-current liabilities

Carrying value at 31 December

16 Investments

6,693

2,815

4,232

10,409

(874)

(602)

13,165

(38%)

2,543

1,070

1,608

3,955

(332)

(228)

5,003

15,234

878

26,511

29,127

(2,422)

(4,223)

48,993

(40%)

6,093

351

10,604

11,651

(969)

(1,689)

19,597

5,659

2,102

4,371

8,071

(1,503)

(589)

10,350

(38%)

2,150

799

1,661

3,067

(571)

(224)

3,933

26,201

2,687

28,422

30,073

(3,946)

(4,240)

50,309

(40%)

10,480

1,074

11,369

12,029

(1,578)

(1,696)

20,124

8,636

1,421

12,212

15,606

(1,301)

(1,917)

24,600

12,630

1,873

13,030

15,096

(2,149)

(1,920)

24,057

Financial assets at fair value through profit or loss (unlisted)

At 1 January

Revaluation gain

Exchange differences

At 31 December

2020
US$’000

2019
US$’000

—

M.P. EVANS GROUP PLCANNUAL REPORT 2020FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS

17 Current biological assets

Ffb prior to harvest

2020
US$’000

2,749

2019
US$’000

2,067

Oil palms are harvested continuously, many times throughout the year, and, at any given time, each palm will be at a different
point in its production cycle. It is not possible to undertake a full census of all palms, and so it is necessary to measure the
volume of growing ffb indirectly. The gain or loss shown in the consolidated income statement represents the net movement in
the fair value of ffb prior to harvest during the year.

Key estimate
The estimation in respect of ffb prior to harvest is based on the market price of ffb 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 ffb. This weight
derives from the assumption that value accrues exponentially to ffb 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% of the following month’s crop.

The chosen valuation methodology determines the value presented for ffb prior to harvest. Changes to the assumed
tonnage will have a directly equivalent proportional effect on the reported valuation. Different defensible valuation
methods will give widely differing answers. Changes to both tonnage and methodology lead to a range of valuations
between US$2.4 million and US$23.1 million. The Group has never included ffb prior to harvest in its internal reporting
and decision-making.

18 Inventories

Processed produce for sale

Estate stores

Nurseries

2020
US$’000

5,356

4,665

1,596

11,617

2019
US$’000

6,760

2,925

1,387

11,072

NOTES TO THE CONSOLIDATED ACCOUNTS continued

19 Trade and other receivables

Current assets

Trade receivables

Receivable from smallholder co-operatives

Loans to related parties

Other receivables

Prepayments and accrued income

Non-current assets

Costs to be allocated to smallholder co-operatives

Loans to related parties

Trade and other receivables analysed by currency of receivable:

Indonesian Rupiah

US Dollar

Sterling

Malaysian Ringgit

2020
US$’000

3,283

25,364

656

17,284

2,033

48,620

—

10,917

47,700

11,727

2019
US$’000

3,032

29,250

385

10,117

2,333

45,117

—

11,555

44,061

12,207

400

59,537

56,672

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 2020 there was no provision for impairment of trade receivables (2019 US$nil).
The directors consider that the carrying amount of trade and other receivables approximates their fair value.

The Group makes finance available to its associated smallholder co-operatives, both during the immature stage of initial
plantings, and as working capital facilities for mature areas. It also provides financial guarantees for some bank loans provided to
its associated smallholders. All balances due from smallholders, including those for immature areas, are repayable on demand.
However, the Group may allow a longer period of finance at its discretion. At an early stage in the development of a new project,
costs are incurred but not yet allocated to a specific smallholder, awaiting the completion of further development.

The Group’s expected credit loss on its trade and other receivables and financial guarantees is not material. The Group applies
the simplified approach in IFRS 9 in determining expected credit losses on trade receivables, taking account of their similar risk
characteristics and the Group’s experience. In assessing expected credit losses on non-trade receivables and financial guarantees
under IFRS 9, the Group considers the long-standing relationship with its stakeholders, the ongoing trading of its associated
smallholders, and its ability to continue to recover balances in a planned and controlled manner.

Given the above, receivables from smallholders have been classified as current assets with the exception of those balances not
yet allocated to a specific smallholder co-operative which are expected to take greater than 12 months to recover. An analysis of
the balance is as follows:

Immature areas - allocated

Mature areas

Current asset

Non-current asset – immature areas – not allocated

2020
US$’000

6,232

19,132

25,364

—

25,364

2019
US$’000

9,679

19,571

29,250

—

29,250

During the previous year, the Group made finance available to enable its new minority partner to acquire a 5% interest in a
number of the Group’s Indonesian subsidiary companies. The balance is repayable on demand. However, the Group, at its
discretion, anticipates recovering the balance over a longer period based on profit distribution from the subsidiary companies,
and has classified the majority of the balance as non-current accordingly. At the end of the year, the balance outstanding on the
related party loans was US$11,573,000 (2019 US$11,940,000).

M.P. EVANS GROUP PLCANNUAL REPORT 202020 Cash and other liquid resources

Cash and cash equivalents

Current-asset investments

FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS

2020
US$’000

27,222

334

27,556

2019
US$’000

25,947

1,160

27,107

Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three
months or less. Current-asset investments are bank deposits with a maturity of twelve months or less, which have been pledged
as security against bank loans. The carrying value of these assets approximates their fair value.

21 Trade and other payables

Current liabilities

Trade payables

Amounts owed to associated undertakings

Lease liabilities

Other payables

Non-current liabilities

Lease liabilities (due in 1-2 years)

2020
US$’000

2019
US$’000

15,302

14,024

—

218

10,519

26,039

200

7,973

22,215

265

The average credit period taken for trade purchases is 49 days (2019 – 50 days). The Group has processes in place to ensure
payables are settled within the agreed terms. The amounts above also reflect the Group’s anticipated cash outflows for these
financial liabilities.

NOTES TO THE CONSOLIDATED ACCOUNTS continued

22 Borrowings

Secured borrowing at amortised cost

Bank loans

Total borrowings

Amount due for settlement within one year

Due for settlement in one to two years

Due for settlement in two to five years

Due for settlement after five years

Amount due for settlement after one year

Analysis of borrowings by currency:

US Dollar

Indonesian Rupiah

Analysis of anticipated cash outflows:

Within one year

Due within one to two years

Due within two to five years

Due after five years

2020
US$’000

2019
US$’000

105,684

94,474

39,605

15,541

50,538

—

66,079

105,684

102,809

2,875

105,684

42,000

17,372

52,538

—

28,337

11,006

49,159

5,972

66,137

94,474

91,005

3,469

94,474

32,083

13,985

53,765

6,007

Bank loans from lenders in Malaysia are secured on the assets of Bertam Estate. Bank loans in Indonesia are secured against
certain assets within subsidiary companies, comprising share certificates, land titles and fixed assets. The net book value of
property, plant and equipment used as security for bank loans is US$137.5 million (2019 US$145.2 million). At the year end, the
Group had undrawn available credit facilities of US$10 million (2019 US$34.6 million).

The weighted-average interest rate paid on bank loans in the year was 3.0% (2019 – 5.0%).

The analysis of anticipated cash outflows above is based on interest and exchange rates in force at the balance-sheet date.

111,910

105,840

23 Deferred tax

The following are the major deferred-tax liabilities and assets recognised by the Group and movements thereon:

ACCELERATED
TAX
DEPRECIATION
US$’000

RETIREMENT-
BENEFIT
OBLIGATIONS
US$’000

OTHER TIMING
DIFFERENCES
US$’000

(6,804)

(1,289)

—

(8,093)

(5,786)

(796)

(222)

(6,804)

2,102

284

704

3,090

2,061

(32)

2,102

(2,326)

1,846

—

(480)

(2,588)

193

(2,326)

TOTAL
US$’000

(7,028)

841

704

(5,483)

(6,313)

(635)

(80)

(7,028)

At 1 January 2020

(Charge)/credit to income statement

Credit to other comprehensive income

At 31 December 2020

At 1 January 2019

(Charge)/credit to income statement

Exchange differences

At 31 December 2019

M.P. EVANS GROUP PLCANNUAL REPORT 2020

FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS

23 Deferred tax continued

Other timing differences relate to losses, with the exception of the deferred tax liability of US$8.5 million (2019 US$10.6 million)
that arose in 2017 on the acquisition of PT Bumi Mas Agro. Certain deferred-tax assets and liabilities have been offset. The
following is the analysis of deferred-tax balances (after offset) for financial reporting purposes:

Deferred-tax assets

Deferred-tax liabilities

2020
US$’000

5,046

(10,529)

(5,483)

2019
US$’000

5,284

(12,312)

(7,028)

Critical judgement
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$359,651,000 (2019 US$336,152,000). 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$25,511,000 (2019 US$18,009,000). No
liability has been recognised in respect of these differences because the reversal would not give rise to an additional tax
liability as the dividends would not be taxed on receipt.

Key estimate
At the balance-sheet date, the Group had unused tax losses of US$49,160,000 (2019 US$57,939,000) available for
offset against future profits. The directors have reviewed estimates of future profits and a deferred-tax asset has been
recognised in respect of US$36,395,000 (2019 US$31,590,000) of such losses. No deferred-tax asset has been recognised
in respect of the remaining US$12,764,000 (2019 US$26,349,000) due to the unpredictability of future profit streams and
due to the 5-year time limit on utilisation of tax losses in Indonesia. In the normal course of business, both in the UK and
Indonesia, the Group has a number of matters under discussion with local tax authorities. The Group is satisfied, based
on external tax advice, that appropriate tax treatments have been applied. The likely impact of any change in treatment
would be to restrict the availability of the Group’s unused tax losses.

The directors have considered the sensitivity of the deferred-tax asset recognised in respect of losses to changes in
estimated future profits, particularly with regard to changes in the price of CPO. If CPO prices were to fall by 10% from
those initially estimated, then the deferred-tax asset would be reduced by approximately US$0.2 million.

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$1,818,000 (2019 US$2,730,000). No asset has been
recognised in respect of these differences due to the unpredictability of future profit streams.

NOTES TO THE CONSOLIDATED ACCOUNTS continued

24 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 based on an annual actuarial review 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. Standard Indonesian mortality
assumptions are used, and no allowance is made for internal promotion. A range of different discount rates are used for each of
the Indonesian subsidiary companies, based on actuarial advice.

The main assumptions used to assess the Group’s liabilities are:

Discount rate

Salary increase per annum

Reconciliation of scheme liabilities:

Current-service cost

Interest cost

Actuarial loss/(gain)

Less: Benefits paid out

Movement in the year

At 1 January

Exchange differences

At 31 December

2020
%

6.00-8.00

7.00

2020
US$’000

1,392

661

3,247

5,300

(594)

4,706

9,401

(56)

14,051

2019
%

7.55

8.00

2019
US$’000

1,457

676

(928)

1,205

(384)

821

8,251

329

9,401

Key estimate
The main assumptions used to assess the Group’s liabilities are shown in the table above. Changing one of them by 1%
in either direction would have the effect of increasing or decreasing the Group’s liabilities by between US$1.5 million and
US$1.8 million.

M.P. EVANS GROUP PLCANNUAL REPORT 2020
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS

AUTHORISED
NUMBER

ALLOTTED,
FULLY PAID
AND VOTING
NUMBER

AUTHORISED
£’000

ALLOTTED,
FULLY PAID
AND VOTING
US$’000

87,000,000

54,461,220

8,700

—

182,320

(153,287)

—

87,000,000

54,490,253

8,700

87,000,000

54,677,872

8,700

—

50,000

(266,652)

—

87,000,000

54,461,220

8,700

9,200

(19)

9,204

9,228

(34)

9,200

25 Share capital

At 1 January 2020

Issued

Redeemed

At 31 December 2020

At 1 January 2019

Issued

Redeemed

At 31 December 2019

During the year, in anticipation of the exercise of share options, the Company issued 182,320 10p shares for US$23,000 cash
consideration. In addition, the Company bought back and cancelled 153,287 10p shares for a total cost of US$1,155,000 (an
average of 589 pence per share).

26 Share-based payments

The Group has equity-settled share-option schemes in place for directors and selected employees of the Group. Under the
scheme established in 2012, options are exercisable at a price equal to the quoted market price of the Company’s shares on the
date of grant. Under the Group’s long-term incentive scheme established in 2017, options are exercisable at nil cost. For both
schemes, the vesting period is three years and if the options remain unexercised after a period of ten years from the date of
grant, the options lapse. Options may be 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

2020
NUMBER
OF SHARE
OPTIONS

398,868

71,714

(144,180)

326,402

175,000

2020
WEIGHTED-
AVERAGE
EXERCISE PRICE
(PENCE)

207.4

0.0

253.5

472.7

2019
NUMBER
OF SHARE
OPTIONS

407,320

41,548

(50,000)

398,868

175,000

2019
WEIGHTED-
AVERAGE
EXERCISE PRICE
(PENCE)

244.2

0.0

335.0

207.4

472.7

The weighted-average share price at the date of exercise for share options exercised during the year was 0p. The options
outstanding at 31 December 2020 had a weighted-average remaining contractual life of 5.3 years and exercise prices in the
range of nil to 520p. The Group recognised total expenses of US$609,000 related to equity-settled share-based payments
(2019 US$643,000). Details of the directors’ share options are set out in the directors’ remuneration report on pages 48 to 50.

NOTES TO THE CONSOLIDATED ACCOUNTS continued

27 Reserves

SHARE-
PREMIUM
ACCOUNT
US$’000

REVALU-
ATION
RESERVE
US$’000

CAPITAL-
REDEMPTION
RESERVE
US$’000

MERGER
RESERVE
US$’000

TREASURY
SHARES
US$’000

SHARE-
OPTION
RESERVE
US$’000

SHARE OF
ASSOCIATES’
RESERVES
US$’000

FOREIGN-
EXCHANGE
RESERVE
US$’000

TOTAL
US$’000

RETAINED
EARNINGS
US$’000

1,780

16,414

55,385

294,139

1,421

—

1,421

18,950

211

(46)

168

145

31,582

550

4,282

766

—

(23)

—

(1,190)

—

(2,346)

(23)

—

(1,155)

—

(12,105)

(1,190)

1,190

(690)

1,299

(708)

—

31,582

553

4,301

766

(5)

1,072

16,856

(35)

55,090

300,117

31,370

549

4,248

766

—

212

—

31,582

550

4,282

766

—

1,188

15,434

53,582

314,223

—

592

—

1,873

—

1,873

4,460

143

(16)

128

262

—

(1,036)

—

647

212

—

(2,286)

—

(12,364)

(1,036)

1,036

592

—

(9,834)

(2,056)

1,780

16,414

55,385

294,139

At 1 January
2020

Profit for the
financial year

Exchange
differences

Retirement-
benefit
obligations

Issue of
shares

Share
buy-back

Dividends
paid

Dividends from
associates

Share-based
payments

At 31 December
2020

At 1 January
2019

Profit for the
financial year

Exchange
differences

Retirement-
benefit
obligations

Issue of
shares

Share
buy-back

Dividends
paid

Dividends from
associates

Share-based
payments

Acquired from
minority

Reclassification

At 31 December
2019

M.P. EVANS GROUP PLCANNUAL REPORT 2020FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS

28 Non-controlling interests

At 1 January

Share of profit in the year

Dividends paid

Reclassification

Share of retirement benefit (debited)/credited to other comprehensive income

Minority acquisition

At 31 December

2020
US$’000

8,962

1,798

(875)

—

(156)

—

9,729

2019
US$’000

21,303

1,137

—

2,056

(15,583)

8,962

In accordance with Indonesian law, the Group is required to have a minority partner in each of its plantation operations. The
minority share of profit for the year and Group equity, allocated by operation, is shown in the following table:

PROFIT
US$’000

259

1,085

514

(130)

1,798

2020
EQUITY
US$’000

1,784

3,488

2,918

1,853

(247)

(67)

9,729

Kota Bangun

Bangka

Pangkatan group

Bumi Mas

Musi Rawas

Simpang Kiri

29 Note to the consolidated cash-flow statement

Operating profit

Biological gain

Disposal of property, plant and equipment

Release of deferred profit

Depreciation of property, plant and equipment

Amortisation of intangible assets

Remeasurement of investment

Retirement-benefit obligations

Share-based payments

Dividends from associated companies

Operating cash flows before movements in working capital

(Increase)/decrease in inventories

Increase in receivables

Increase in payables

Cash generated by operating activities

Income tax paid

Interest paid

Net cash generated by operating activities

PROFIT
US$’000

512

885

(128)

(288)

1,137

2020
US$’000

31,321

(682)

1,008

(58)

17,776

165

—

2,148

609

1,646

53,933

(545)

(7,574)

3,806

49,620

(6,614)

(3,408)

39,598

2019
EQUITY
US$’000

1,747

2,473

2,777

1,935

(24)

8,962

2019
US$’000

16,124

(927)

(7)

(204)

15,340

112

(1)

1,846

643

580

33,506

1,811

(545)

6,986

41,758

(6,009)

(3,747)

32,002

NOTES TO THE CONSOLIDATED ACCOUNTS continued

30 Analysis of movements in net debt

CASH AND
CASH
EQUIVALENTS
US$’000

CURRENT-ASSET
INVESTMENTS
US$’000

BORROWINGS
DUE WITHIN
ONE YEAR
US$’000

BORROWINGS
DUE AFTER
ONE YEAR
US$’000

TOTAL
US$’000

At 1 January 2020

25,947

1,160

(28,337)

(66,137)

(67,367)

Net increase in cash and cash
equivalents

New borrowings

Repayment of borrowings

Change in deposits

Reclassification

Foreign-exchange movements

At 31 December 2020

1,344

—

(69)

27,222

—

(826)

—

334

—

(10,000)

13,307

—

(14,639)

(39,605)

—

(14,581)

—

14,639

—

(66,079)

1,344

(24,581)

13,307

(826)

—

(5)

(78,128)

At 1 January 2019

21,626

2,502

(20,883)

(9,173)

(5,928)

Net increase in cash and cash
equivalents

New borrowings

Repayment of borrowings

Change in deposits

Reclassification

Foreign-exchange movements

At 31 December 2019

31 Financial instruments

4,003

—

318

25,947

—

(1,342)

—

1,160

—

(35,000)

46,134

—

(18,455)

(133)

(28,337)

—

4,003

(75,419)

(110,419)

—

18,455

—

(66,137)

46,134

(1,342)

—

185

(67,367)

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, current-
asset investments and equity attributable to the owners of the parent Company, comprising issued capital, reserves and retained
earnings. The Group is not subject to any externally-imposed capital requirements.

The Group’s board continues to monitor the capital structure based on the funding requirements of the Group. At the balance-
sheet date the Group had net debt of US$78,128,000 (2019 US$67,367,000) and equity attributable to the owners of the parent
Company of US$364,111,000 (2019 US$358,724,000). The board intends to fund its continuing Indonesian expansion by a
combination of the Group’s cash and other liquid resources, debt finance, and considering the sale of further non-core assets
where appropriate.

Categories of financial instruments
All of the Group’s financial assets (other than cash and other liquid resources) are classified as held at amortised cost, with the
exception of its other investments shown in note 16, which are classified as financial assets at fair value through profit or loss.
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 majority of the Group’s main risks arising from the Group’s financial instruments are foreign-currency, interest-rate, credit and
liquidity. The board reviews and agrees the policies for managing these risks. The policies and the impact of these risks on the
Group’s balance sheet at the end of the financial year are summarised below.

Foreign-currency risk
The majority of the Group’s operations are undertaken in Indonesia and Malaysia. The Group does not have significant
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
makes limited use of forward-currency contracts; there were no contracts open at 31 December 2020.

M.P. EVANS GROUP PLCANNUAL REPORT 2020FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS

31 Financial instruments continued

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

Sterling

Malaysian Ringgit

2020
US$’00

14,575

12,086

178

717

2019
US$’000

13,304

13,493

152

158

27,556

27,107

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 and in relation to the consolidation of its non-US Dollar-functional-currency subsidiary and associated
undertakings. The most significant sensitivity arises in respect of movements in the Indonesian Rupiah. Management estimates
that a 10% weakening of the US Dollar against the Indonesian Rupiah would result in a fall in profit for the year and net assets of
US$5.7 million (2019 US$5.4 million).

Interest-rate risk
In order to optimise the income received on its cash deposits, the Group continuously reviews the terms of these deposits to take
advantage of the best market rates. UK funds are passed 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. Group borrowings
are at variable rates of interest linked to LIBOR, and so is exposed to changes in underlying interest rates. Based on current
borrowing, management estimates that for every 1% decrease or increase in interest rates, Group profit for the year and net
assets would increase or decrease by US$0.9 million (2019 US$0.8 million).

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 ten years. The maturity profile for financial liabilities is shown in note 22.

32 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 directors’ remuneration
report on page 49. The directors’ participation in the executive share-option schemes and long-term incentive scheme is disclosed
on page 50.

On 20 July 2020, the Group announced the disposal of 70 hectares of land owned by its wholly-owned subsidiary Bertam
Consolidated Rubber Company Limited to Bertam Properties Sdn Berhad, its 40%-owned associated company. The agreed sales
price was RM99.9 million (US$24.9 million). The transaction was subject to certain sale conditions being met, and these are
expected to be completed during 2021, at which point the Group will record the transaction.

The Group received dividends from its associated companies during the year. These are set out in note 15.

The Group continued to make finance available to one of its minority partners during the year. This is set out in note 19.

PARENT-COMPANY BALANCE SHEET
As at 31 December 2020

COMPANY NUMBER: 1555042

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

vii

viii

2020
US$’000

857

15,799

16,656

147,684

389

148,073

164,729

5,873

142,200

—

5,873

2019
US$’000

858

15,799

16,657

162,225

5,375

167,600

184,257

8,232

159,368

—

8,232

158,856

176,025

9,204

38,193

111,459

158,856

9,200

38,887

127,938

176,025

The Company recorded a loss for the year of US$4,518,000 (2019 loss US$3,485,000).

The financial statements on pages 86 to 91 were approved by the board of directors on 23 March 2021 and signed on its

behalf by

Tristan Price

Chief executive

Matthew Coulson

Finance director

M.P. EVANS GROUP PLCANNUAL REPORT 2020

PARENT-COMPANY
FINANCIAL STATEMENTS

PARENT-COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2020

Loss for the year

Total comprehensive expense for the year

Issue of share capital

Dividends

Share buy-back

Credit to equity for equity-settled
share-based payments

Transactions with owners

At 1 January 2020

At 31 December 2020

Loss for the year

Total comprehensive expense for the year

Issue of share capital

Dividends

Share buy-back

Credit to equity for equity-settled
share-based payments

Transactions with owners

At 1 January 2019

At 31 December 2019

SHARE
CAPITAL
US$’000

—

(19)

—

9,200

9,204

—

(34)

—

(28)

9,228

9,200

OTHER
RESERVES
US$’000

—

(23)

—

(690)

(694)

38,887

38,193

—

212

—

592

838

38,049

38,887

RETAINED
EARNINGS
US$’000

(4,518)

—

(12,105)

(1,155)

1,299

(11,961)

127,938

111,459

(3,485)

—

(12,364)

(2,286)

(14,599)

146,022

127,938

TOTAL
US$’000

(4,518)

—

(12,105)

(1,155)

609

(12,651)

176,025

158,856

(3,485)

218

(12,364)

(2,286)

643

(13,789)

193,299

176,025

NOTES TO THE PARENT-COMPANY ACCOUNTS
For the year ended 31 December 2020

i Significant accounting policies

Basis of accounting
M.P. Evans Group PLC is a public limited company incorporated in the United Kingdom and registered in England and Wales, and
the address of its registered office is given on page 98. The Group’s principal activities are shown in the strategic report on page
12. 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 Company is domiciled in the UK.

The principal accounting policies have been consistently applied and are summarised below. The directors have concluded
that the functional currency is the US Dollar, reflecting the primary economic environment in which the Company operates. The
presentational currency for the Company accounts is also the US Dollar.

As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation
to share-based payment, financial instruments, capital management, presentation of comparative information in relation to
certain assets, and certain related party transactions.

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.

The Company has assessed the impact of new and revised accounting standards as described in note 2 to the consolidated
financial statements, and has concluded that none have a material impact on the Company’s results or financial position.

Going concern
The financial statements have been prepared on a going-concern basis. The directors have conducted a review of projected cash
flows, concluding that the Company has sufficient projected funds to continue its business in the medium term. Further details
are given in the report of the directors on page 46.

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, reduced by appropriate allowances for expected credit losses.

Cash and cash-equivalents
These include cash in hand and deposits held with banks with original maturities of three months or less.

Trade and other payables
Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost. Borrowings are
recorded at the proceeds received, net of direct issue costs.

Critical accounting judgements and key sources of estimation uncertainty
The critical judgements and accounting estimates relevant to the consolidated financial statements are shown in note 3 to the
consolidated financial statements on page 67. The directors have concluded that there are no critical judgements and accounting
estimates in the preparation of the parent-Company accounts.

M.P. EVANS GROUP PLCANNUAL REPORT 2020PARENT-COMPANY
NOTES TO THE PARENT-COMPANY ACCOUNTS

ii Result for the year

As permitted by section 408 of the Companies Act 2006, the Company has elected not to present its own profit and loss
account for the year. M.P. Evans Group PLC reported a loss for the year ended 31 December 2020 of US$4,518,000 (2019 loss
US$3,485,000). The Company’s main source of income is dividends from subsidiary companies.

The auditors’ remuneration for audit services was US$25,000 (2019 US$25,000).

iii Employees

Employee costs during the year

Wages and salaries

Social security costs

Pension costs

Share-based payments

2020
US$’000

2019
US$’000

1,868

229

245

2,390

1,608

208

219

2,090

As recorded in the directors’ remuneration report on page 49, wages and salary costs include bonuses paid to the directors in
respect of 2020 and 2019.

Average monthly number of persons employed

Staff

Directors

iv Property, plant and equipment

Cost

At 1 January 2020

Additions

Disposals

At 31 December 2020

Accumulated depreciation

At 1 January 2020

Charge for the year

Disposals

At 31 December 2020

Net book value at 31 December 2020

Net book value at 31 December 2019

2020
NUMBER

2019
NUMBER

LAND AND
BUILDINGS
US$’000

PLANT,
EQUIPMENT
& VEHICLES
US$’000

834

—

834

—

834

176

(69)

124

152

(69)

101

TOTAL
US$’000

1,010

(69)

958

152

(69)

101

857

858

NOTES TO THE PARENT-COMPANY ACCOUNTS continued

Investments in subsidiaries

Subsidiary undertakings

At 1 January and 31 December 2020

The following companies are the principal direct subsidiary companies of M.P. Evans Group PLC:

M.P. Evans & Co. Limited

Sungkai Holdings Limited

US$’000

15,799

HOLDING
%

100

COUNTRY OF
OPERATION

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 92.

vi Trade and other receivables

Amounts owed by subsidiary undertakings

Other debtors

Prepayments and accrued income

vii Trade and other payables

Borrowings

Other creditors

viii Called-up share capital

See note 25 to the consolidated financial statements.

2020
US$’000

2019
US$’000

147,598

161,681

445

147,684

162,225

2020
US$’000

5,000

873

5,873

2019
US$’000

7,449

783

8,232

M.P. EVANS GROUP PLCANNUAL REPORT 2020PARENT-COMPANY
NOTES TO THE PARENT-COMPANY ACCOUNTS

ix Reserves

SHARE-
PREMIUM
ACCOUNT
US$’000

CAPITAL-
REDEMPTION
RESERVE
US$’000

MERGER
RESERVE
US$’000

TREASURY
SHARES
US$’000

OTHER
RESERVES
US$’000

TOTAL
US$’000

RETAINED
EARNINGS
US$’000

At 1 January 2020

31,582

4,091

1,434

Issue of shares

Share buy-back

Share-based payments

Loss for the year

Dividends*

—

At 31 December 2020

31,582

4,110

1,434

At 1 January 2019

Issue of shares

Share buy-back

Share-based payments

Loss for the year

Dividends*

31,370

212

—

4,057

1,434

—

At 31 December 2019

31,582

4,091

1,434

* See note 10 to the consolidated financial statements.

—

(23)

—

(5)

—

1,780

38,887

127,938

—

(708)

—

(23)

(690)

—

(1,155)

1,299

(4,518)

(12,105)

1,072

38,193

111,459

1,188

38,049

146,022

—

592

—

212

592

—

(2,286)

(3,485)

(12,364)

1,780

38,887

127,938

SUBSIDIARY AND ASSOCIATED UNDERTAKINGS
As at 31 December 2020

SUBSIDIARY UNDERTAKINGS
Details of the Group’s subsidiary undertakings as at 31 December 2020 are as follows:

% OF
SHARES
HELD

COUNTRY OF
INCORPORATION

COUNTRY OF
OPERATION

FIELD OF ACTIVITY

NAME OF SUBSIDIARY

PT Prima Mitrajaya Mandiri

PT Teguh Jayaprima Abadi

PT Perkebunan Tenera Muarawis

PT Bumi Mas Agro

PT Gunung Pelawan Lestari

PT Evans Lestari

PT Pangkatan Indonesia

PT Bilah Plantindo

PT Sembada Sennah Maju

PT Simpang Kiri Plantation Indonesia

Indonesia

PT Evans Indonesia

100

Indonesia

Production of CPO and PK

Provision of agronomic and
management-consultancy services

Production of oil-palm ffb and
property development

Bertam Consolidated Rubber
Company Limited

M.P. Evans & Co. Limited*

Sungkai Holdings Limited*

Sunrich Plantations Pte Ltd

PT Surya Makmur

PT Aceh Timor Indonesia

100

England and Wales

Malaysia

100

England and Wales

United Kingdom

Holding company

England and Wales

United Kingdom

Holding company

Singapore

Indonesia

Singapore

Indonesia

Holding company

The shareholdings in the above companies represent ordinary shares. Other than the companies marked *, all shareholdings are
held indirectly.

The registered offices for all Indonesian companies is Graha Aktiva, Suite 1001, Jl HR Rasuna Said Blok X-1 Kav 03, Jakarta 12950
Indonesia, for Sunrich Plantations Pte Ltd is 50 Raffles Place #06-00, Singapore Land Tower, Singapore 048623, and for all UK
companies is the Group’s registered office as shown on page 98.

ASSOCIATED UNDERTAKINGS
Details of the associated undertakings as at 31 December 2020 are as follows:

UNLISTED

ISSUED,
FULLY-PAID
SHARE CAPITAL

%
HELD

COUNTRY OF
INCORPORATION

COUNTRY OF
OPERATION

FIELD OF ACTIVITY

PT Kerasaan Indonesia

Rp 138.07m

Bertam Properties Sdn. Berhad.

RM 60.00m

Indonesia

Malaysia

Indonesia

Production of CPO and PK

Malaysia

Property development

The registered office of PT Kerasaan Indonesia is Forum Nine Building, 10th Floor, Suite 1-11 Jl.Imam Bonjol No.9, Medan-20112, North
Sumatra, Indonesia and the registered office of Bertam Properties Sdn. Berhad is 1st Floor, Standard Chartered Bank Chambers, Lebuh
Pantai, 10300 Pulau Pinang, Malaysia.

M.P. EVANS GROUP PLCANNUAL REPORT 2020OTHER INFORMATION

ANALYSIS OF INDONESIAN PLANTATION LAND AREAS
As at 31 December 2020

The information on pages 93 to 98 does not form part of the audited financial statements.

PLANTED HECTARAGE

Subsidiaries – oil palm

Kota Bangun

Bumi Mas

Bangka

Musi Rawas3

Pangkatan group

Simpang Kiri

Total

Group share of subsidiaries’ land

Associates – oil palm

Kerasaan

Group share of associates’ land

Memorandum:

Group share of subsidiaries’ land and
share of associates’ land

Subsidiaries’ land and Group share of
associates’ land

Notes

GROUP

SCHEME SMALLHOLDERS

OWNERSHIP
%

MATURE
HA

IMMATURE
HA

TOTAL1
HA

MATURE
HA

IMMATURE
HA

TOTAL2
HA

10,106

6,938

5,929

3,569

6,404

1,930

34,876

32,836

442

555

206

1,968

565

518

4,254

4,031

10,548

7,493

6,135

5,537

6,969

2,448

39,130

36,867

4,421

1,247

3,808

1,595

227

191

942

4,648

1,438

3,881

2,537

11,071

1,433

12,504

2,215

842

102

2,317

881

33,678

4,070

37,748

35,718

4,293

40,011

1. All of the Group’s areas other than at Kota Bangun have a final land license, as does all of the associate’s area at Kerasaan. At Kota

Bangun the Group has HGUs covering 10,800 hectares; the Group is in the process of obtaining an HGU for the remaining 1,300
hectares and for the time being holds the necessary operating and development licences.

2. All the scheme smallholder areas at Bangka and Musi Rawas have an HGU. At Kota Bangun and Bumi Mas, the Group is assisting the

co-operatives to obtain HGUs, for which the necessary operating and development licences are held.

3. The board’s current estimate is 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 smallholder co-operatives.

ANALYSIS OF GROUP EQUITY VALUE
As at 31 December 2020

The information in the following table provides a directors’ estimate of the Group equity value at 31 December 2020

utilising, except where indicated, an independent valuation of the Group’s properties performed at the end of 2020.

OWNERSHIP
%

PLANTED
AREA
HA

TOTAL MARKET
VALUE
US$’000

MARKET VALUE
PER PLANTED
HECTARE
US$

MARKET VALUE
ATTRIBUTABLE
TO GROUP
US$’000

INDONESIAN OIL PALM
PLANTATIONS

Group

Kota Bangun1

Bumi Mas

Bangka1

Musi Rawas

Pangkatan group1

Simpang Kiri

Smallholders

Kota Bangun

Bumi Mas

Bangka

Musi Rawas

Associates

Kerasaan2

Total Indonesia

MALAYSIAN PROPERTY
Bertam Estate3

Bertam Properties

Total Malaysia

Net debt4

Other assets and liabilities5

Total equity value

Equity value (£ per share6)

Notes

10,548

7,493

6,135

5,537

6,969

2,448

39,130

4,648

1,438

3,881

2,537

12,504

236,400

131,000

127,600

103,600

119,800

29,900

748,300

30,000

7,400

17,400

16,600

71,400

22,400

17,500

20,800

18,700

17,200

12,200

19,100

6,500

5,100

4,500

6,500

5,700

2,317

33,100

14,300

100

n/a

224,580

124,450

114,840

98,420

113,810

28,405

704,505

28,500

7,030

15,660

15,770

66,960

12,578

784,043

22,370

41,972

64,342

(79,056)

50,805

820,134

10.99

1. Market value per planted hectare includes value of mills on the related estates.

2. The Group’s only oil-palm associate, Kerasaan, was not included in the independent valuation at 31 December 2020. The value in the

table above has been carried forward from the independent valuation performed at 31 December 2019.

3. Bertam Estate has been included based on the estimated post-tax proceeds from the agreed sale to Bertam Properties.

4. Net debt is taken as cash and other liquid resources less borrowings from the 31 December 2020 balance sheet, attributable to the

owners of M.P. Evans Group PLC.

5. Other assets and liabilities are taken as net assets minus plantation and property-related assets, minus net cash from the

31 December 2020 balance sheet, attributable to the owners of M.P. Evans Group PLC.

6. Amount per share is calculated using the year-end exchange rate and year-end shares in issue (see note 25).

M.P. EVANS GROUP PLCANNUAL REPORT 2020OTHER INFORMATION

FIVE-YEAR SUMMARY

Production

Crude palm oil

Palm kernels

Crops

2020
Tonnes

2019
Tonnes

2018
Tonnes

2017
Tonnes

2016
Tonnes

271,700

60,400

231,900

53,000

192,500

43,500

154,000

33,500

125,600

26,200

Oil-palm fresh fruit bunches

Own crops

Scheme-smallholder crops

Independent-smallholder crop purchased

724,300

193,000

289,700

663,300

172,100

166,100

1,207,000

1,001,500

Indonesian associated-company estates

54,800

54,200

Average sale prices

Crude palm oil – cif Rotterdam per tonne

Exchange rates

US$1 = Indonesian Rupiah – average

– year end

US$1 = Malaysian Ringgit – average

– year end

£1 = US Dollar – average

– year end

US$

716

14,541

14,050

4.20

4.02

1.28

1.37

US$

566

14,142

13,883

4.14

4.09

1.28

1.32

573,000

149,600

106,500

829,100

51,700

US$

598

14,234

14,380

4.04

4.13

1.34

1.27

434,500

101,300

118,300

654,100

50,000

US$

714

13,382

13,568

4.30

4.05

1.29

1.35

Revenue

Gross profit

Profit before tax

US$’000

174,510

34,755

28,440

119,341

17,044

12,780

108,553

26,525

18,348

116,536

36,246

35,070

399,300

92,400

52,000

543,700

384,000

US$

700

13,303

13,473

4.14

4.49

1.35

1.24

US$’000

83,864

24,384

19,215

Basic earnings per share

37.4

11.6

9.9

164.9

56.1

US cents

Dividends per share:

Normal

Special

Total

PENCE

22.00

—

22.00

17.75

—

17.75

—

17.75

10.00

27.75

15.00

5.00

20.00

US$’000

Equity attributable to the owners of
M.P. Evans Group PLC

Net cash generated by operating activities

364,111

39,598

358,724

32,002

377,033

21,297

387,034

20,723

323,400

22,888

NOTICE OF MEETING

In view of the ongoing Covid-19 situation and the uncertainty regarding restrictions on travel and public gatherings, the
directors have decided that the AGM will again be held at our head office in Tunbridge Wells this year, with a live webcast of
proceedings available to shareholders via the internet. With the health and safety of our shareholders and staff of paramount
concern and given the limited scope for social distancing at the venue, it is with regret that the directors are asking
shareholders to consider refraining from attending the meeting in person. Instead, the directors strongly urge shareholders to
submit proxy votes appointing the chairman as their proxy as described below. The chairman of the meeting has determined
that this year voting on all resolutions will be by way of poll. Shareholders are also encouraged to submit questions in
advance of the meeting so that the directors may respond to them during the meeting. Shareholders are advised to check the
AGM page of our website www.mpevans.co.uk for any updates concerning AGM arrangements.

NOTICE IS HEREBY GIVEN that the annual general meeting of M.P. Evans Group PLC will be held at 3 Clanricarde Gardens,
Tunbridge Wells, TN1 1HQ on Thursday 10 June 2021 at 12:00 for the following purposes:

AS ORDINARY BUSINESS

To receive and consider the report of the directors and the audited consolidated financial statements
for the year ended 31 December 2020.

To receive and consider the directors’ remuneration report as set out in the annual report and accounts
for the financial year ended 31 December 2020.

To re-elect Philip Fletcher as a director.

To re-elect Peter Hadsley-Chaplin as a director.

To declare a final dividend.

To appoint BDO 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

By order of the board

Katya Merrick
Company secretary
23 March 2021

M.P. EVANS GROUP PLCANNUAL REPORT 2020OTHER INFORMATION

NOTES
Please note that due to the on-going Covid-19 pandemic the notes below are to be construed as subject to any government restriction
or regulation that may be in force at the time the AGM is held. The directors may refuse entry to the meeting on health and safety or
other grounds, including if attendance would result in an inability to practice social distancing in compliance with any government
restrictions that may then be in force:

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 (but subject to the restrictions
stated above). 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 2021 (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). Alternatively,
you may appoint a proxy electronically.

If you wish to submit your form of proxy via the internet, you will need your Control Number, Shareholder Reference Number
(“SRN”) and Personal Identification Number (“PIN”) which are printed on the Form of Proxy. To appoint a proxy via the internet
you should log on to the Computershare website at www.investorcentre.co.uk/eproxy. You will be asked to agree to the terms
and conditions for electronic proxy appointment. It is important that you read these terms and conditions as they set out the
basis on which proxy appointment via the internet shall take place. This electronic address is provided only for the purpose of
communications relating to electronic appointment of proxies. When appointing a proxy consideration should be given to the
possibility of restrictions on travel and public gatherings. You are strongly encouraged to appoint the chairman of the meeting as
your proxy to ensure that your votes can be cast in a poll.

3) The right to appoint a proxy does not apply to persons whose shares are held on their behalf by another person and who have
been nominated to receive communications from the Company in accordance with section 146 of the Companies Act 2006
(“nominated persons”). Nominated persons may have a right under an agreement with the registered shareholder who holds the
shares on their behalf to be appointed (or to have someone else appointed) as a proxy. Alternatively, if nominated persons do not
have such a right, or do not wish to exercise it, they may have a right under such an agreement to give instructions to the person
holding the shares as to the exercise of voting rights.

4) Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, the Company has specified that only those

shareholders registered on the register of members of the Company at 11.00 p.m. on 8 June 2021 (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 23 March 2021, the Company’s issued share capital consisted of 54,490,253 shares carrying one vote each. Therefore the

total number of voting rights in the Company as at that date was 54,490,253.

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) Save as provided below, 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.

9) Members have the right to require notice of a resolution to be moved or a matter to be included in the business of the meeting.

10) Given the limited room for physical attendance at the meeting as stated above, members are invited to send any questions which
they may have on matters concerning the business of the meeting by post to the Company’s registered office (marked for the
attention of the company secretary) or by email to katya.merrick@mpevans.co.uk. Questions should be received by the company
secretary by 09:30 on 10 June 2021. The Company will endeavour to respond to such requests but no answer need be given if: (i)
to do so would involve the disclosure of confidential information, (ii) the answer has already been given on a website in the form
of an answer to a question; or (iii) it is undesirable in the interests of the Company that the question be answered.

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.

M.P. EVANS GROUP PLC
ANNUAL REPORT 2020

PROFESSIONAL ADVISERS & REPRESENTATIVES

SECRETARY AND REGISTERED OFFICE
Katya Merrick

M.P. Evans Group PLC

3 Clanricarde Gardens, Tunbridge Wells, Kent TN1 1HQ

Company number: 1555042

t +44 (0)1892 516 333

PRINCIPAL BANKERS
OCBC Bank

18 Jalan Tun Perak, 50050 Kuala Lumpur, Malaysia

AmBank Group

55 Jalan Raja Chulan, 50200 Kuala Lumpur, Malaysia

e katya.merrick@mpevans.co.uk

NatWest

w www.mpevans.co.uk

89 Mount Pleasant Road, Tunbridge Wells, Kent TN1 1QJ

INDONESIAN REGIONAL OFFICE
PT Evans Indonesia

Gedung Graha Aktiva, Suite 1001,

Jl HR Rasuna Said Blok X-1 Kav 03, Jakarta 12950

NOMINATED ADVISER AND JOINT BROKER
Peel Hunt LLP

7th Floor, 100 Liverpool Street, London EC2M 2AT

MANAGING AGENT IN MALAYSIA
Straits Estates Sdn. Berhad

JOINT BROKER
finnCap

Loke Mansion, 147 Lorong Kelawei, 10250 Penang

1 Bartholomew Close, London EC1A 7BL

INDEPENDENT AUDITORS
BDO LLP

SOLICITORS
Hogan Lovells International LLP

2 City Place, Beehive Ring Road, Gatwick,

Atlantic House, 50 Holborn Viaduct, London EC1A 2FG

West Sussex RH6 0PA

REGISTRARS
Computershare Investor Services PLC

PUBLIC RELATIONS ADVISERS
Hudson Sandler LLP

The Pavilions, Bridgwater Road, Bristol BS99 6ZZ

25 Charterhouse Square, London EC1M 6AE

t +44 (0)3707 071 176

w www.computershare.com

GLOSSARY

CPO

PKO

Crude palm oil

Palm-kernel oil

RSPO

Round Table for Sustainable Palm Oil

Fresh fruit bunches

Palm kernels

RSPO’s Independent Smallholder Standard

International Sustainability & Carbon Certification

Hak guna usaha: land lease granted by Indonesian government

Ffb

RISS

ISCC

HGU

3 Clanricarde Gardens
Tunbridge Wells
Kent TN1 1HQ
United Kingdom

t +44 (0)1892 516 333
e enquiries@mpevans.co.uk
w mpevans.co.uk