A N N U A L
R E P O R T
For the year ended 31 December 2021
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Profit for the year US$91.8
million (2020 US$22.2 million)
Continuing EPS 115.6 pence
(2020 – 29.2 pence)
Operating profit US$114.6
million (2020 US$31.3 million)
Proposed to increase final
dividend to 25p per share
FROM THE CHAIRMAN
“ 2021 has been an excellent year for the Group. Crop and
production have risen further in line with our long-term plans,
whilst the palm-oil market has gone from strength to strength.
Profit and cash generation have increased sharply, with retained
profit of US$91.8 million, and the Group’s net debt almost fully
eliminated by the year end. The board recently recommended a special dividend
of 5p per share in relation to the completed sale of the Group’s Bertam Estate in
Malaysia and now recommends a final dividend of 25p per share, bringing total
normal dividends in respect of 2021 up to 35p per share. This is a notable increase
from the total of 22p paid in respect of the previous year, and marks another
significant step in the Group’s progressive dividend policy. ”
Peter Hadsley-Chaplin
REPORT OF THE DIRECTORS
OTHER INFORMATION
38 Board of directors
44 Corporate governance
94 Subsidiary and associated
undertakings
50 Directors’ remuneration report
95 Analysis of Indonesian plantation
land areas
96 Analysis of Group equity value
97 Five-year summary
98 Notice of meeting
100 Professional advisers &
representatives
100 Glossary
CONTENTS
1 Group financial highlights
2 Chairman’s statement
5 Operational highlights
6 Map of estates
8 The palm-oil market
10 The Group’s business model
FINANCIAL STATEMENTS
53 Independent auditors’ report
STRATEGIC REPORT
60 Consolidated income statement
12 Strategy
62 Consolidated balance sheet
16 Results and financial position
64 Consolidated cash-flow
18 Operations: Indonesian palm oil
26 Operations: Malaysian property
27 Risk management
statement
66 Notes to the consolidated
accounts
SUSTAINABILITY
32 Approach
32 Sustainable palm-oil production
33 Sustainable production benefits
34 Communities
PARENT COMPANY
88 Parent-Company balance sheet
90 Notes to the parent-Company
accounts
GROUP FINANCIAL HIGHLIGHTS
GROUP FINANCIAL HIGHLIGHTS
+58%
REVENUE
+198%
GROSS PROFIT
2021
US$ 276.6m
2020 US$ 174.5m
2021
US$ 103.6m
2020 US$ 34.8m
+266%
OPERATING
PROFIT
2021
US$ 114.6m
2020 US$ 31.3m
+314%
PROFIT FOR
THE YEAR
2021
US$ 91.8m
2020 US$ 22.2m
+19%
TOTAL EQUITY
+120%
OPERATING
CASH GENERATED
2021
US$ 445.0m
2020 US$ 374.1m
2021
US$ 109.2m
2020 US$ 49.6m
+296%
+59%
BASIC EARNINGS
PER SHARE
NORMAL DIVIDEND
PER SHARE
2021
115.6 pence
2020 – 29.2 pence
2021
35.0 pence
2020 – 22.0 pence
Front cover image: Fresh fruit bunches on the Kota Bangun project being transported to
the Bumi Permai mill and power lines transmitting green electricity from its biogas plant
11
M.P. EVANS GROUP PLC
ANNUAL REPORT 2021
CHAIRMAN’S
STATEMENT
The Group achieved
a substantial increase
in profitability in the
year, underpinned by
further rises in crop
and production.
CPO prices increased
to near record levels,
resulting in average
mill-gate prices for
the Group’s CPO of
US$810 per tonne.
2
2
on the US$2.6 million in 2020. In
addition, the Group produced its
highest ever volume of renewable
electricity in 2021 from the biogas
facilities attached to its palm-oil
mills. This green electricity not only
powers many of our own operations,
substantially reducing the Group’s
use of diesel generators, but surplus
electricity is sold for domestic energy
supply. The Group generated
22,600 MWh at its biogas facilities
in the year.
The crude palm oil (“CPO”) market
remained strong throughout 2021,
with the cif Rotterdam price staying
above US$1,000 for almost the
entire year in a range between
US$950 and US$1,425, averaging just
under US$1,200. Even with the
higher Indonesian export levy in place
throughout 2021, the Group achieved
an average mill-gate price of US$810
per tonne for the CPO sold from its
mills, US$220 higher than for the
previous year.
THE GROUP
PRODUCED AND SOLD
MORE CERTIFIED
SUSTAINABLE PALM
OIL THAN EVER BEFORE
DURING 2021
Earnings per share were 115.6 pence, a
significant increase on the 29.2 pence
in 2020. This has translated into
substantial cash generation, with cash
generated by operating activities of
Peter Hadsley-Chaplin
Chairman
RESULTS
I am delighted to report a record gross
profit for the year of US$103.6 million,
treble the previous year’s result. This
significant achievement was chiefly
attributable to a further increase
in crops and production and was
supported by the strong palm-oil
prices in the year. Production rose as
the Group benefits from the maturing
of its Indonesian oil-palm estates and
substantial expansion in Indonesia,
reaping the rewards from the strategic
shift away from Malaysia that took
place some 15 to 20 years ago. The
Group also recognised a one-off profit
of US$13.9 million on disposal of its
70-hectare Bertam Estate land in
Malaysia to its joint-venture company,
Bertam Properties Sdn Bhd (“Bertam
Properties”). This represents 60% of
the total profit from the transaction,
but under the accounting rules, as a
40% shareholder in Bertam Properties,
the Group will recognise the
remaining profit as Bertam Properties
develops and sells that land.
The Group produced and sold
US$109 million. It has supported the
more certified sustainable palm oil
Group’s ongoing capital investment
than ever before during 2021, and
programme, the reduction of net
sustainability premia per tonne
debt from US$78 million to US$5
available for certified production
million, and is supporting the Group’s
increased. Overall, the Group received
acquisition programme. Furthermore,
US$4.3 million of sustainability
it forms the basis for increasing
income in the year, a marked increase
shareholder returns.
M.P. EVANS GROUP PLCANNUAL REPORT 2021 CHAIRMAN’S STATEMENT
DIVIDEND
An interim dividend of 10p per share
OPERATIONAL DEVELOPMENTS
Crop increased at all the Group’s
Musi Rawas, have now been
completed, and we expect that
(2020 – 5p per share) was paid on
estates during 2021, with an overall
mill to begin operations around
5 November 2021, and the board is
rise of 12% to 809,700 tonnes.
the end of this year.
recommending a final dividend of
Similarly, crop from associated
25p per share (2020 – 17p per share).
scheme-smallholder areas, attached
This represents an increase of 59%
to some of the Group’s estates,
in the normal dividend for the
year to a total of 35p, following
a 24% increase in the previous
year. In addition, the Company has
already paid a 5p special dividend
in February 2022 connected to the
Bertam Estate land sale which
completed in October 2021.
The board intends, wherever possible,
to continue the Group’s long-term
trend of increasing dividends, which
have accelerated in recent years
as shown in the chart on page
15. The board believes that the
projected increases in both crop and
production form a sound basis for
further dividend increases. Debt has
fallen substantially in 2021 as cash
generation has increased.
COVID-19
The Group has continued to
manage the challenges of Covid-19,
particularly around its Indonesian
operating locations. There has been
little impact on the Group’s business
and preventative measures remain
in place, and the Group continues to
adjust its response as required. Steps
taken have included social distancing,
additional hygiene requirements
and changes to working patterns
increased across the board, by a
total of 19% to 229,300 tonnes. The
Group, seeking to maximise the
utilisation of its milling capacity,
also purchased 327,200 tonnes
from outside suppliers, 13% more
than in 2020, resulting in total crop
processed of 1,366,200 tonnes (2020
– 1,207,000 tonnes). These increases
are in line with the Group’s plans and
demonstrate the continuing benefits
of the Group’s long-term investment
in its Indonesian oil-palm projects.
THE BOARD INTENDS,
WHEREVER POSSIBLE,
TO CONTINUE THE
GROUP’S LONG-TERM
TREND OF INCREASING
DIVIDENDS
The average extraction rate achieved
by the Group’s mills has increased
in the year, from 23.1% in 2020,
to 23.3%. The main reason is a
particularly strong performance at
the Bangka mill, where the extraction
rate increased by almost 1%. This
reflects the excellent work by both
the estate and mill teams working
together, helped by a reduction in
the proportion of outside supply,
which is not of the same quality
as that harvested from the Group’s
own areas. Also of note is the rate of
22.5% achieved at the Rahayu mill at
Kota Bangun from almost exclusively
outside supply, and 22.8% at Bumi
Mas in only the first few months
of operation.
Planting restarted in the middle of
the year at the Musi Rawas project,
once the RSPO had formally confirmed
that the Group continued to
operate in compliance with all of
Over the last two years, the Group
their requirements, as revised and
has made significant progress
enhanced. Since the restart, the
towards increasing its own milling
Group has planted a further
capacity. Our second mill at Kota
935 hectares for itself and the
Bangun, the Group’s fourth, began
scheme smallholders bringing the
operations in September 2020,
total planted area there to just over
and the Group enjoyed a full year
9,000 hectares. It remains the Group’s
of its productive capacity in 2021.
intention to plant a minimum total of
The Group’s fifth palm-oil mill was
10,000 hectares at Musi Rawas.
commissioned at Bumi Mas in
where appropriate. The Group has
August 2021, less than a year later,
played its part in the distribution
a creditable result reflecting the
STRATEGIC DEVELOPMENTS
The Group is committed to acting
of vaccinations, with estate clinics
operating as vaccine hubs. By the
hard work and dedication of our
responsibly at all times, whilst
engineering team, particularly given
striving for excellence in all its
end of the year, 91% of the Group’s
some of the additional management
operations. It is focused on growth
workforce had received a vaccination,
challenges of overseeing construction
for the long term, and delivering
with 63% being double jabbed. All
and working with contractors whilst
increasing yield to its shareholders.
estates and mills operated without
complying with Covid-19 restrictions.
Further information can be found
interruption throughout the year.
The foundations for the sixth mill, at
on page 15.
3
3
M.P. EVANS GROUP PLC
ANNUAL REPORT 2021
CHAIRMAN’S STATEMENT continued
The Group’s strategy continues
the increasing strength of the Group
dramatically in recent years and will
to centre on the development,
balance sheet.
increase again once the Musi Rawas
maintenance and expansion of
sustainable oil-palm plantations
in Indonesia, providing investment
SHARE BUYBACK AUTHORITY
Given the recent discount of the
for the long term, supporting the
Group’s share price below the
establishment of well-run smallholder
independent valuation, and the
schemes for the benefit of the local
Group’s strongly cash generative
community, and providing high-quality
nature, the directors are seeking
working environments for the Group’s
authority to reinstate a programme of
workforce. The Group’s objective
share buybacks at the 2022 AGM.
is to achieve continual growth in
sustainable output, by increasing its
own certified milling capacity and at
the same time maximising the volume
of sustainably sourced crop to process
through those mills. In 2021, 55%
of palm oil produced by the Group
was certified sustainable. The Group
THE GROUP’S VALUE
PER SHARE INCREASED
DURING THE YEAR
TO £12.65
continues to target 100% sustainable
certification, once it is able to process
PROSPECTS
As explained in more detail in
mill has been completed.
The world continues to need vegetable
oil, and the board believes that palm
oil, and in particular sustainably
produced palm oil has a significant
part to play in satisfying that demand.
The palm-oil market has continued to
rise into early 2022, not least following
the tragic events in Ukraine and the
resultant impact on global vegetable
oil supplies.
BOARD CHANGES
On 31 July 2021, Tristan Price left the
Group after fifteen years, the last
five of which were spent as chief
executive. Throughout that time, he
played a central role in delivering
the Group’s strategy. Amongst his
many achievements, Tristan led the
development of the Group’s policies
on corporate governance and, notably,
sustainability. The board would
like to thank him for his valuable
contribution and wishes him well in
the future.
‘current trading and prospects’ on
page 25, total crop processed was
10% lower than last year in the first
two months of 2022, mainly due
to crop seasonality. However, the
Group expects the long-term trend of
increasing crop to reassert itself as
the year progresses. The lower crops
all its own crop.
The Group’s long-term strategic aim
remains to exit from Malaysia, and
during the year the Group completed
the sale of its final remaining
wholly owned Malaysian asset, the
70-hectare Bertam Estate land, to
its 40%-owned joint venture Bertam
Properties. Bertam Properties has
already drawn up plans to use the
land for residential development,
and the Group will enjoy its share of
any profits arising on development of
this land and sale of the properties
constructed on it.
in the early part of the year were more
On 1 August 2021, K Chandra Sekaran
than compensated for by increased
joined the board as an executive
prices, and the Group has continued
director. Chandra joined the Group
to be highly cash generative. Having
in 2008 as president director of its
started the year with net debt of US$5
Indonesian operations. He is one of
million, by mid-March 2022, the Group
had reached a net cash position of
the most respected individuals in the
industry and has been responsible
US$27 million.
GROUP VALUATION
The Group’s value per share increased
The Group expects that both its crop
and its milling capacity will continue
during the year to £12.65, based on
to increase in the coming years. Group
an independent valuation at the
plantings remain relatively young by
end of the year, and allowing for the
industry standards, with an average
Group’s other assets and liabilities, as
age of some 9 years, with growth built
for the on-the-ground success of the
Group’s sustainable Indonesian palm-
oil expansion. The board is delighted
to welcome Chandra as an executive
director, who brings with him a wealth
of knowledge and experience of the
plantation industry.
shown on page 96. This reflected the
in at least until the second half of
On 1 January 2022, Matthew Coulson
ongoing development of the estates
the decade. The Group is focused on
was appointed chief executive.
as areas continued to mature and
extending that crop growth through
Matthew joined the Group in 2016
crops increased, supported by the
the acquisition of additional planted
as CFO and was promoted to finance
strength of the market, along with
hectarage. Milling capacity has grown
director in 2017. During that time he
4
4
M.P. EVANS GROUP PLCANNUAL REPORT 2021 was responsible for leading all aspects of the
Group’s finance function, from treasury and
financing through to governance and control.
The board welcomes Matthew into his new
role, with his significant experience of the
Group. The Group is at an advanced stage in
recruiting a new CFO.
On 28 January 2022, the Group announced
that Dr Darian McBain will be stepping down
as a non-executive director with effect from
31 March 2022 as she has taken up a new
full-time role in Singapore. Darian joined the
Group at the start of 2020 and has made a
significant contribution to the board over
the past two years. In particular, Darian’s
experience across all aspects of sustainability
has helped the Group to continue to develop
and move forward in this area. We wish her
well in her new role. A process of recruiting
a new non-executive director with suitable
sustainability experience is under way.
Jock Green-Armytage will have served as an
independent non-executive director for a
period of nine years by the time of the 2022
AGM. Whilst he will no longer be deemed
independent within corporate governance
guidelines, he is being proposed for
re-election for a short additional term as part
of the Company’s transition arrangements for
a new board appointment.
ACKNOWLEDGEMENTS
This year has been one of both substantial
challenge and substantial achievement for
the management, staff and workers at
M.P. Evans. Despite having to continue working
within the constraints imposed by Covid-19,
the Group has developed and flourished
during the year. On behalf of the board,
I would like to record here my thanks to
everyone in the Group for playing their part in
our exciting journey, and we look forward to
another successful year in 2022.
Peter Hadsley-Chaplin
Chairman
22 March 2022
CHAIRMAN’S STATEMENT
OPERATIONAL HIGHLIGHTS
INDONESIAN PALM OIL
• Total crop processed up 13% to 1.4 million tonnes
• Group crops up to 810,000 tonnes, a 12% increase
•
Increasing demand for sustainable production
resulted in increase in sustainability income to
US$4.3 million
• 100% of Group and scheme-smallholder crop grown
to sustainability standards
• CPO production up 15% to 313,000 tonnes
• New Group mill at Bumi Mas began production in
August 2021
• 55% of Group CPO production certified sustainable;
target 100% once Group processes all its own crop
MALAYSIAN PROPERTY
• Sale of Bertam Estate completed in year with
US$13.9 million profit recorded
•
Improved trading at Bertam Properties achieving
profit of US$2.6 million in year
M.P. EVANS GROUP PLC
• Net current assets up to US$72.3 million
at 31 December 2021
• Group equity value increased to £12.65 per share
at 31 December 2021
Young palms at Simpang Kiri
55
M.P. EVANS GROUP PLC
ANNUAL REPORT 2021
M.P. Evans is a responsible
producer of sustainable
Indonesian palm oil,
striving for excellence
in its operations, with
a focus on continuing
growth and offering an
increasing yield.
6
6
1
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
2
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: 2,200 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
3
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: 6,300 hectares
Scheme smallholder planted area: 2,800
hectares
4
M.P. EVANS GROUP PLCANNUAL REPORT 2021 OPERATIONAL HIGHLIGHTS
8
7
8 BERTAM PROPERTIES
This land was previously the Group’s Bertam
Estate, all of which has now been sold to Bertam
Properties, a joint venture with two Malaysian
partners. Starting in 1992, the area has been
developed into a new town. Following the sale of
the last 70 hectares of Bertam Estate into Bertam
Properties in 2021, the remaining developable
area is 214 hectares.
Bertam Properties: 318 hectares
(Group minority share: 40%)
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 was commissioned in
August 2021.
9,000 hectares
Group planted area: 7,500 hectares
Scheme smallholder planted area:
1,400 hectares
1
Medan
2
8
3
Sumatra
Malaysia
Kuala Lumpur
Singapore
5
Bangka
Island
4
Indonesia
Jakarta
7
6
Kalimantan
Samarinda
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
5
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
6
77
THE PALM-OIL MARKET
Palm-oil prices
were on an upward
trend for most of
2021, reaching record
highs in the early
part of 2022.
The CPO price followed an upward
In 2021, world production of palm oil
pattern for the majority of the year,
was 76.0 million tonnes, up from the
ending at US$1,305 per tonne cif
depressed level of 73.8 million
Rotterdam. Since the year end, prices
tonnes achieved in 2020 as the
increased dramatically, reaching
Covid-19 pandemic made itself felt,
record highs, and by early March
particularly as it related to labour
2022 had climbed to over US$1,900
controls in Malaysia. Indonesia and
per tonne following the recent tragic
Malaysia once again accounted
events in Ukraine. Furthermore,
for 83% of world production, but
recent prices have been supported by
with a noticeable shift towards
low stocks and smaller than expected
Indonesia, as production in Malaysia
production.
fell by 1 million tonnes in the year,
symptomatic of both continuing
The price of soybean oil also followed
labour control issues, and a lack
an increasing trend in the year, partly
of long-term investment. The total
following the same movements as
area planted to oil palm in Malaysia
other major vegetable oils, but also
reduced for the first time in 2020.
reflecting subdued supply. Parts of
In Indonesia, there has been a
South America recently suffered from
slowing in the increase of both new
substantial drought, expected to
plantings and total planted hectarage
further restrict soybean-oil supplies.
coming to maturity, a reflection
In addition, the recent tragic conflict
of the Indonesian government’s
in Ukraine, an area of significant
commitment to sustainable
vegetable-oil production, is likely to
development through more stringent
diminish market supplies.
controls over releasing land for
The Group does not receive the full
production growth in both countries
benefit of the high quoted CPO prices.
in 2022, but these factors will have a
cultivation. Oil World forecasts
Its net mill-gate price is received
long-term impact.
on a tender basis, which is after
adjustments to take account of the
Demand for palm oil increased in the
Indonesian export tax and levy, as
year, with consumption once again
well as transport and insurance costs.
higher than production, and stocks
Over the course of 2021, the average
remaining tight for most of the year.
mill-gate price received for the
Group’s CPO was US$810 per tonne,
However, stocks recovered to some
degree, as the increase in production
37% higher than the US$591 per
was greater than the increase in
tonne in 2020. During the first two
consumption in the year. As the year
months of 2022, the Group’s average
progressed, consumption may have
mill-gate price when selling its CPO
been held back by high prices,
has been approximately US$1,050 per
although some countries have reduced
tonne. As announced on 18 March
import taxes to ease the burden
2022, the Indonesian government
on consumers. Palm oil continues
has increased its export levy by up to
to be the dominant vegetable oil,
US$200 per tonne. Nonetheless,
accounting for approximately 38% of
mill-gate prices of over US$1,050 are
the world market.
still being achieved by the Group.
8
M.P. EVANS GROUP PLCANNUAL REPORT 2021
THE PALM-OIL MARKET
MAIN PRODUCERS OF PALM OIL
2021
MAIN CONSUMERS OF PALM OIL
2021
59%
Indonesia
Malaysia
24%
Main producing
countries
Remaining 17%
consists of
Thailand (4%)
Colombia (2%)
Nigeria (2%)
Other countries (9%)
22% Indonesia
11% India
9% China
24% Other Asia
13% Africa
10% EU
Main consuming
countries
Remaining 11%
consists of
Americas (7%)
Other countries (4%)
Source: Oil World 2021 data
CRUDE-PALM-OIL PRICE
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
US$ per tonne
cif Rotterdam
2017
2017
2017
2018
2018
2018
2019
2019
2019
2020
2020
2020
2021
2021
2021
2022
2022
2022
PALM-KERNEL OIL
Palm-kernel oil (“PKO”) is derived from the Group’s secondary product, palm kernels. The Group sells its PK to
independent crushing facilities, and the price it receives is correlated to the market for PKO. The price of PKO
itself can be connected to the price of coconut oil, because of its use in similar end products such as personal
care and cosmetic items, and often sells at a discount to it.
To a large extent, the production of PKO follows the production of CPO. The PKO price started the year at
US$1,322 per tonne cif Rotterdam (significantly higher than the average in the previous year of US$796 per
tonne). As the year progressed, export demand for PKO increased, including from Europe, whilst, similarly to CPO,
supply from Malaysia remained restricted due to the ongoing labour shortage. There was a continuing shortage
of coconut oil following a typhoon in the Philippines in 2020, compounded by further typhoon damage in
December 2021. Unusually, for some of the year, PKO traded at a premium to coconut oil, and the price increased
during the year to reach US$1,842 per tonne cif Rotterdam by the end of 2021.
Prices achieved for the Group’s PK also increased during the year, and averaged US$533 per tonne, 69% higher
than the US$316 per tonne in 2020.
9
THE GROUP’S BUSINESS MODEL
OUR MAIN RESOURCES
39,800
HECTARES OF
GROUP OIL PALM
12,800
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.
8,200
EMPLOYEES
1%
NET GEARING
PEOPLE
The Group’s employees include 210 agronomic staff,
STABLE FUNDING
The Group has a robust capital structure with
105 engineers and more than 4,200 harvesters.
market capitalisation of more than US$615 million*,
cash of US$66 million and low levels of debt.
OUTCOMES
312,900
TONNES OF
CRUDE PALM OIL
Growing production
55%
CERTIFIED
SUSTAINABLE
Sustainable
production
US$350
PER TONNE
OWN PALM PRODUCT
Low costs
35p
NORMAL DIVIDEND
FOR 2021
Improving returns,
rising dividends
10
* Based on a share price of 834p on 31 December 2021.
M.P. EVANS GROUP PLCANNUAL REPORT 2021
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.
We regard sustainable
production as indivisible from
operational control.
MAKE SMALLHOLDER CO-OPERATIVES
A SUCCESS
The Group treats its smallholder co-operatives
ENSURE BEST PRACTICE IN
EVERYTHING WE DO
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
as a growing and flourishing Company
for the benefit of all its stakeholders.
11
STRATEGY
The Group’s principal activity is
total of 10,000 hectares will be
the ownership, management and
planted at Musi Rawas, although
development of sustainable oil-palm
depending on land availability and
estates in Indonesia, together with
planting costs, this may ultimately
the management and development
extend to 11,000 – 12,000 hectares
of ‘scheme-smallholder’ areas
in total. Once planting at Musi
attached to those estates. The
Rawas is complete, and excluding
Group’s objective is to continue
any additional hectarage from
increasing both its own crop and
acquisitions, the combined Group
that from its scheme smallholders,
and scheme-smallholder area will
whilst also increasing its own milling
therefore be 53,600 – 55,600
capacity. Ultimately, the Group’s
planted hectares.
strategic goal is to produce only
certified sustainable palm oil, and
to maintain a steady rate of growth
in crops and in planted hectarage
controlled by it. Milling its own crop
and that of its scheme smallholders
in its own mills enables the Group
to deploy its operational expertise
to greatest effect with the aim of
generating stronger returns, allowing
shareholders to receive sustained
increases in dividends.
The Group continues to invest in its
milling capacity, and at the end of
2021 had five operational palm-oil
mills. The Group’s first mill was built
in 2005 to support its mature estates
at Pangkatan in North Sumatra,
and this was followed by mills at
the Group’s newer projects in Kota
Bangun and Bangka. Given the scale
of operations at Kota Bangun, a
second mill was developed there,
entering service in 2020. The Group’s
The Group designs its procedures
fifth mill was completed during 2021
to address the risks of operating in
at Bumi Mas, and started processing
Indonesia. The Group has confidence
the increasing crop there, as well as
in both the palm-oil sector and
starting to take in independent crop
Indonesia as an area of operation
at the end of the year. Construction
to provide a basis for successfully
work has already started on the
delivering its strategy.
Group’s sixth mill, being built at Musi
The total planted area of the Group’s
majority-held Indonesian operations
increased to 39,800 hectares in
2021. The scheme-smallholder areas
adjoining the new projects amount to
12,800 planted hectares. The Group
is continuing to plant at its youngest
project, Musi Rawas in South
Rawas, and this is expected to start
processing Group crop around the
end of 2022. Alongside development
of the core milling facility, the
Group also constructs composting
and biogas facilities as part of
its sustainability and zero-waste
commitment.
Sumatra, working in compliance with
Substantial further investment
the latest RSPO standards which,
is made into infrastructure in all
inter alia, ensure zero deforestation.
Group estates, such as housing
Total planted hectarage there,
and related amenities for staff and
including majority-owned and
workers, estate road networks, power
scheme-smallholder areas, reached
and water distribution as well as
9,000 hectares at the end of the year.
workshops, stores and administrative
The Group expects that a minimum
offices. At Bangka, a new CPO bulking
STRATEGIC
REPORT
2021
The Group’s strategy
is to maintain steady
expansion of its
majority-owned
Indonesian palm-oil
areas in a sustainable
and cost-effective
manner.
12
M.P. EVANS GROUP PLCANNUAL REPORT 2021
STRATEGIC REPORT
STRATEGY
The new Samarinda office
facility was opened during 2021, and
mill to process the larger combined
estates to maintain its ability to
in Samarinda in East Kalimantan
crop. The Group’s experience is that
increase crop and future profits.
a new regional office supporting
10,000 hectares of oil palm with a
both the Kota Bangun and Bumi
mill able to process 60 tonnes of ffb
Mas projects was completed and
per hour provides a unit that is both
opened during the year. The Group
big enough to deliver economies
seeks to maintain and continually
improve agronomic standards and
productivity on its estates, including
investment to manage both excessive
rainfall and dry spells, with the
objective of increasing crops of ffb
and production of CPO.
The Group is actively exploring the
acquisition of new land. At Kota
Bangun, East Kalimantan, the board
is engaged in extending the Group’s
area from the currently-planted
of scale in production and
administration, and small enough
to allow the careful scrutiny by field
management needed to maintain
high standards. The Group’s projects
in Bangka, Bumi Mas and Musi
Rawas, including smallholder areas,
are of this size. In North Sumatra, the
Group is promoting the formation
of independent smallholder co-
operatives that will provide ffb to
its Pangkatan mill as well as ensure
In Malaysia, the sale of the Group’s
Bertam Estate, a small area of
oil-palm land with property-
development potential, to Bertam
Properties, a property-development
company in which the Group has a
significant share, completed during
the year. This joint-venture share has
therefore become its last remaining
Malaysian asset. The proceeds of this
sale will be used to help finance the
Group’s investments in its Indonesian
plantations and it will, in addition,
continue to reap its share of the
value added to the land through
development. In the long term, it
15,200 hectares to bring the project
the Group can demonstrate full
is the Group’s intention to dispose
size closer to the equivalent of
compliance with Indonesian laws on
of its share in Bertam Properties,
two 10,000-hectare units. Similarly
smallholder development passed
currently valued at approximately
in Aceh, the Group is assessing a
long after these estates were first
US$48 million, in order to help fund
potential acquisition of new land
planted. In addition, it has ambitions
further acquisition or development
close to its Simpang Kiri estate which,
in the medium term to add to its
of oil-palm estates in Indonesia, and
if acquired, may justify building a
portfolio of larger 10,000-hectare
so to exit from Malaysia.
13
STRATEGIC REPORT continued
‘SECTION 172’ STATEMENT:
IMPLEMENTING THE STRATEGY
In implementing its strategy, the
board meets its obligations under
section 172 (1) of the Companies
Act 2016 (“section 172”) to promote
the success of the company for the
benefit of its members, whilst having
regard to wider stakeholders and the
impact of decisions over the long
term. Each member of the board
is aware of their obligations under
section 172 and due consideration is
given to stakeholders’ interests when
strategic decisions are taken.
The board reviews at least annually
which organisations or individuals
it considers to have a reasonable
expectation of being significantly
affected by or which may affect
the activities of the Group. The list,
together with a summary of how the
Group engages with its stakeholders,
is published on the Group’s website
(www.mpevans.co.uk).
Pages 10 and 11 of this report set
out the Group’s business model and
how it operates and, in addition,
the Group’s core strategic pillars
are shown on page 15. The nature
of oil-palm plantations is that they
by necessity require decisions to
be made for the long term. This
encompasses the health and well-
being of the environment in which
the Group operates, as well as that
of the people living in and around
its operations. Such considerations
are intrinsic to the Group’s way
of operating. Further details
demonstrating how the principles
of section 172 are aligned with how
the Group makes strategic decisions
concerning its operations can be
found in the “Sustainability” section
of this report on pages 32-37.
Prior to the travel restrictions
on the Group’s operations is already
imposed to manage the spread of
an identified risk but during its
Covid-19, the executive directors
discussions on strategy the board
were frequent visitors to the Group’s
resolved to carry out further work
operations overseas, during which
on carbon emissions, and related
they received regular briefings
disclosure and its exposure to
from local management on matters
climate change. The board, through
including engagement with local
media articles and discussions with
communities and workforce
its professional communications
grievances. Throughout 2021 the
advisers, regularly informs itself on
executive directors continued to
public sentiment in relation to the
undertake regular ‘virtual visits’ in
palm-oil industry and its products,
which they discussed these and
taking note of concerns around
other operational issues with field
industry practices and environmental
staff and reviewed photographs,
impacts linked to deforestation. The
video and drone footage from its
board responded to these concerns
operations. As previously, matters
by reaffirming its commitment
of concern are relayed to the board
to operating to the highest of
where appropriate. This frequent
standards and in accordance with
contact between UK executives and
the requirements of the RSPO,
operational managers of various
designed to provide assurance of
seniority builds relationships of
industry good practice that protects
trust between the workforce and the
environments and communities. The
board, a link further strengthened by
interests of the Group’s employees
the Group board appointment of
were considered in the context of
K Chandra Sekaran, president
future strategy. With his extensive
director in Indonesia during 2021.
operational experience, including
In addition, non-executive directors
oversight of human resources,
would, in normal circumstances, be
K Chandra Sekaran was able to
invited to visit operations once every
contribute valuable insight into the
two years, enabling them to meet
discussion. The board responded
employees in Indonesia.
to this by recognising the value of
its existing management expertise
and skilled workforce as one of the
bases on which to continue to focus
on the production of sustainable
Indonesian palm oil and that new
project acquisitions should, where
possible, be incremental and take
account of staff resource, including
the need to invest in recruitment, to
ensure maintenance of the Group’s
high operational standards.
The board dedicated time in 2021
to reviewing the Group’s long-term
strategy. In doing this, the board
first assessed and agreed the main
economic, social and environmental
assumptions over the next 10 years,
within which to frame its discussions.
It considered the impact, both
in terms of risk and opportunity,
of the increasing disclosure and
accountability expectations for
carbon emissions, environmental
and social indicators within its
operations and supply chains. The
potential impact of climate change
14
M.P. EVANS GROUP PLCANNUAL REPORT 2021
STRATEGIC REPORT
STRATEGY
STRATEGY PILLARS
M.P. Evans is a responsible producer of sustainable Indonesian palm oil, striving for
excellence in all its operations, with a focus on continuing growth and offering an
increasing yield.
The Group maintains conservation areas and
does not plant near water courses
Morning briefing for workers to direct their
work safely and efficiently
Acting responsibly is at the heart of what we do and
Excellence comes from investing for the long term.
who we are. We are active members of the RSPO,
Our investment is not only in plantation assets
we do not deforest, and are good stewards of the
but also in our employees, including in their
land we cultivate. We provide housing along with
training and development. In this way, we are
medical, educational and leisure facilities for our
consistently able to deliver both high yields and
workers and their families.
high oil-extraction rates from our estates and mills.
Responsibility
Growth
Strategy
pillars
Excellence
Yield
GROWTH IN CROPS PROCESSED (‘000 TONNES)
GROWTH IN DIVIDENDS (PENCE)
Group
Scheme smallholders
Independent
1,400
1,200
1,000
8,00
600
400
200
0
Normal dividends
40
35
30
25
20
15
10
5
0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
We seek to grow and develop the business. Growth
The Group’s investment strategy has already led
continues to come from the increasing maturity
to a significant improvement in shareholder
of the Group’s young estates, from the ongoing
returns. In line with its growth programme, the
focus on improving yields, and from the planned
Group plans to deliver ever-increasing returns to
acquisition and sustainable development of new
shareholders.
areas of land.
15
M.P. EVANS GROUP PLC
ANNUAL REPORT 2021
RESULTS &
FINANCIAL
POSITION
16
16
REVENUE AND GROSS PROFIT
The Group’s revenue for the year
achieved a gross profit of US$345
for each tonne of CPO sold from
was US$276.6 million, an increase
its mills in the year, and a blended
of over US$100 million or 58% from
average gross profit of US$296 for
the previous year. Production of
every tonne of palm product sold. In
CPO and PK were higher by 15% and
addition, the Group recorded a gross
11% respectively, as shown on page
profit of US$12.6 million (2020 – loss
20, although sales increases were
of US$0.8 million) when selling crop
slightly lower, resulting in an increase
for processing in outside mills.
in inventory carried forward for
sale in 2022. Sales prices increased
significantly, with the average mill-
gate sales price for CPO sold from the
Group’s mills increasing by US$219, or
37%, to US$810 per tonne, whilst the
average selling price for palm kernels
increased by 69%, from US$316 per
tonne in 2020 to US$533 in 2021.
Allowing for the above, the Group’s
gross profit was US$103.6 million,
almost treble the US$34.8 million
recorded in 2020.
PROFIT ON SALE OF LAND
In October 2021, the Group completed
the disposal of the 70 hectares
of land in Malaysia owned by
Owing to the nature of the milling
its subsidiary company, Bertam
process which results in the
Consolidated Rubber Company
production of both CPO and PK, the
Limited. The land was purchased
Group records cost of production as
by Bertam Properties Sdn Bhd,
a combined measure, being the cost
the Group’s 40%-owned Malaysian
to produce a tonne of palm product
associate. Whilst the total profit
(either CPO or PK). The cost per
expected to be achieved on the
tonne, taking account of crop from
transaction is US$23.3 million, in
the Group’s own areas, increased
accordance with the accounting rules,
marginally from US$340 to US$350 in
40% of the profit has been deferred,
the year. The cost when considering
with US$13.9 million recognised in the
all sources of ffb supplied to the
2021 income statement.
Group’s mills, increased more
markedly as the cost to purchase
crop from scheme smallholders and
independent suppliers is connected
to the CPO market price. The
combined cost per tonne was US$465
ADMINISTRATIVE EXPENSES AND
OTHER INCOME
The Group’s administrative expenses
for 2021 were US$5.4 million
(2020 US$4.6 million). The increase
(2020 US$400). As a result, the Group
related in the main to additional
+198%
GROSS PROFIT
+58%
REVENUE
2021
US$ 103.6m
2020 US$ 34.8m
2021
US$ 276.6m
2020 US$ 174.5m
M.P. EVANS GROUP PLCANNUAL REPORT 2021
STRATEGIC REPORT
RESULTS & FINANCIAL POSITION
administrative staff costs in the
contributed US$1.5 million
year, combined with additional
(2020 US$1.1 million) to Group profit
expenditure on necessary
in the year, and the Group received
professional fees. The Group recorded
dividends of US$1.2 million
other income of US$1.4 million,
(2020 no dividends) in the year.
similar to the US$1.5 million in the
The Group’s Malaysian associate,
previous year, relating to the sale of
Bertam Properties Sdn Bhd (40%
electricity from the Group’s biogas
facilities and the sale of surplus
kernel shells. Although the amount
of electricity generated continued
to increase, the rates offered by the
local generating company were lower
than in the previous year.
FINANCE COSTS
The Group’s finance costs fell
from US$3.4 million in 2020 to
US$2.7 million in 2021. Whilst the
Group has continued to carry some
debt on its balance sheet, the gross
amount has reduced throughout the
year, and the Group has continued to
benefit from low borrowing costs.
TAXATION
The Group tax charge for the year
was US$23.2 million (2020 US$7.7
million). Whilst the total tax charge
has increased significantly, this
reflects the rising profitability, and
the Group’s commitment to paying
its fair share of corporate taxes to
match the profits it generates.
owned) contributed US$1.0 million
(2020 US$0.4 million) to Group
profit in the year, and the Group
received dividends of US$1.2 million
(2020 US$1.2 million) in the year.
PROFIT FOR THE YEAR
As a result of the above, the Group’s
profit for the year was US$91.8
million (2020 US$22.2 million).
NET ASSETS AND BORROWING
At the end of the year, the Group’s
net assets had increased to
US$445.0 million (2020 US$374.1
million). Current assets exceeded
current liabilities by US$72.3 million
(2020 US$22.9 million).
At the end of the year, the Group
had cash and liquid resources of
US$65.6 million (2020 US$27.6
million). As a result of the significant
cash generation in the year, net debt
had reduced from US$78.1 million at
the start of the year to US$5.4 million
by the end of the year. At the end of
ASSOCIATED COMPANIES
The Group’s Indonesian associate,
the year, net gearing was 1%
(2020 – 17%); gross gearing was
PT Kerasaan Indonesia (38% owned)
14% (2020 – 22%).
+37%
CRUDE PALM OIL
SALE PRICE
+69%
PALM KERNEL
SALE PRICE
2021
US$ 810 per tonne
2020 US$ 591 per tonne
2021
US$ 533 per tonne
2020 US$ 316 per tonne
Harvesting at Bumi Mas
1717
OPERATIONS: INDONESIAN PALM OIL
CROPS
The crop processed by the Group is
made up of three component parts:
the Group’s own crops harvested
from its majority-owned areas, the
they do so, yield from the Group’s
Bangka fell by 31% as the continuing
planted area increases. Oil palms
increase in the Group’s own crop
reach their maximum yield at the
combined with scheme-smallholder
age of around ten years. The average
crops used up a greater proportion
age of the Group’s plantings is
of the available milling capacity.
scheme-smallholder crops harvested
nine years, but within that average,
A similar amount of independent
from areas owned by community-
owned smallholder co-operatives
attached to some of the Group’s
estates, but managed by the Group
on behalf of the smallholder co-
operatives, and independent crops
purchased in from third-party
suppliers to utilise spare capacity in
Group mills. The majority of crop is
processed in Group mills, with a small
part currently being processed by
third-party mills where Group milling
facilities have not yet been built.
The total crop processed by the
Group increased in the year to
1,366,200 tonnes (2020 – 1,207,000)
with increases in each of the three
crop components. This was in line
with the Group’s growth plans and
reflected the ongoing benefits of the
long-term investment in Indonesian
oil palm.
some of the Group’s estates are
crop was taken into the Pangkatan
notably younger, such as Bumi Mas,
mill as in the previous year, and
and especially Musi Rawas where
the Group started to take a small
planting remains ongoing. The crop
amount of independent crop into
from scheme smallholders increased
the new mill at Bumi Mas following
by 19% in the year, from 193,000
the completion of its commissioning
tonnes to 229,300 tonnes, a more
period.
rapid increase than for the Group’s
own areas. This reflects the fact
that scheme-smallholder areas are
typically attached to the Group’s
newer projects where crop yields are
increasing more rapidly as younger
areas mature.
In Kota Bangun, after suffering the
effect of dry conditions on crop
for much of 2020, rains returned,
and crop grew strongly in the latter
part of that year and into early
2021. However, the rains somewhat
persisted creating some challenging
The Group continued to purchase
conditions in the latter part of
a greater amount of independent
the year. Unusually, crop in Kota
crop, up to 327,200 tonnes in the
Bangun was higher in the first half
year from 289,700 tonnes in 2020.
than in the second half of the year.
Its focus is on maximising the use of
Despite the high rainfall, thanks to
any spare capacity in its mills whilst
the significant investment made by
its own plantings continue to mature.
the Group in its water management
The amount of independent crop
and water defence systems on its
purchased in Kota Bangun increased
estates at Kota Bangun, the Group’s
The Group’s own crop increased by
by almost half, as the Group had two
own crop increased by 4% in the
12%, from 724,300 tonnes to 809,700
mills operational there throughout
year, and that of its associated
tonnes. The Group’s palms are
the year. By contrast, the amount
scheme smallholders by 6%. The
continuing to mature and, as
of independent crop purchased in
Group continues to invest in estate
18
M.P. EVANS GROUP PLCANNUAL REPORT 2021 STRATEGIC REPORT
OPERATIONS
infrastructure to ensure that crops can
CROP
be harvested and sent for mill processing
efficiently. During the year, having taken full
account of those areas protected by the
Group’s water management systems, the
Group took the decision to write off a small,
planted area of 66 hectares.
The crop in Bangka was particularly strong
in the first half of 2021, as it had been
rebounding from the effects of an earlier
dry spell. Inevitably this was not expected to
last throughout the whole year, and crop in
the second half of the year was lower than
that for the first half. Despite this, crop for
the full year was up by 19% for the Group’s
own areas, and 25% for the associated
scheme smallholders. All of this increased
crop was processed in the Group’s own
Bangka mill, reducing the amount of spare
capacity available for ffb purchased from
independent suppliers.
The Group’s Bumi Mas development
continued to produce a higher crop in 2021,
with an overall increase of 8% from the
Group’s own areas and those of scheme
smallholders compared to last year. This
reflects the ongoing increases in maturity
and is an impressive yield of 23 tonnes per
mature hectare despite the estate’s young
average overall age of only seven years. Bumi
Mas continued to be an area of intensive
investment for the Group, not just on the
new palm-oil mill which opened during the
year. The Group continued its investment
in estate infrastructure, to ensure that ffb
can be sent efficiently to the new mill, along
with the development of more new housing
and other estate facilities for the workforce
there, including community stores and a new
secondary school.
At Musi Rawas, more than 2,100 hectares
came into maturity during the year and had
their initial harvesting. This brought the
total mature hectarage for the Group and
scheme smallholders to 7,300. The increase
in maturity resulted in total crop reaching
above 100,000 tonnes for the first time,
2020
TONNES
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
2021
TONNES
INCREASE/
(DECREASE)
%
4
19
5
7
56
19
12
6
25
11
60
19
48
(31)
4
—
13
13
Own crops
Kota Bangun
Bangka
Pangkatan group
Bumi Mas
Musi Rawas
Simpang Kiri
Scheme-smallholder crops
Kota Bangun
Bangka
Bumi Mas
Musi Rawas
Independent crops
purchased
Kota Bangun
Bangka
Pangkatan group
Bumi Mas
194,300
152,300
179,000
165,700
69,400
49,000
809,700
86,300
80,800
29,900
32,300
229,300
210,600
78,200
35,900
2,500
327,200
TOTAL CROP
1,366,200
CROP HISTORY
tonnes
Scheme smallholders
Group
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
19
STRATEGIC REPORT continued
PRODUCTION AND EXTRACTION RATES
GROUP AND THIRD-PARTY MILLS
PRODUCTION
Crude palm oil
Kota Bangun
Bangka
Pangkatan group
Bumi Mas with mill
Bumi Mas pre mill
Musi Rawas
Simpang Kiri
Palm kernels
Kota Bangun
Bangka
Pangkatan group
Bumi Mas with mill
Bumi Mas pre mill
Musi Rawas
Simpang Kiri
EXTRACTION RATES
Crude palm oil
Kota Bangun – Bumi Permai
Kota Bangun – Rahayu
Bumi Mas
Bangka
Pangkatan group
Bumi Mas
Musi Rawas
Simpang Kiri
Palm kernels
Kota Bangun – Bumi Permai
Kota Bangun – Rahayu
Bumi Mas
Bangka
Pangkatan group
Bumi Mas
Musi Rawas
Simpang Kiri
2021
TONNES
114,400
74,200
48,600
20,800
258,000
23,100
20,800
11,000
54,900
312,900
22,700
17,800
11,300
3,400
55,200
5,000
4,700
2,200
11,900
67,100
%
23.8
22.5
22.8
23.8
22.6
23.3
21.6
20.4
22.5
4.9
4.2
3.7
5.7
5.3
5.0
4.7
4.6
4.5
INCREASE/
(DECREASE)
2020
and this will only increase further
in the coming years as the ongoing
plantings come into maturity.
The replanting programme
%
TONNES
continued in both the Pangkatan
19
7
5
—
22
(38)
58
24
(8)
15
18
5
5
—
17
(42)
62
16
(11)
11
%
—
4
—
4
—
1
4
—
5
—
5
—
4
—
(2)
—
—
—
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
%
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
group’s estates and at Simpang
Kiri during 2021. The Pangkatan
estates continued to deliver high
yields, whilst at Simpang Kiri, even
though the replanting programme
has reduced the average age of
the estate, the improved quality of
planting and the better planting
materials available continued to be
clear in the results, with crop up by
19% in the year to 49,000 tonnes.
PRODUCTION
The Group is committed to increasing
its CPO and PK production capacity
as much as possible. The Group’s
crops and those of its scheme
smallholders are of a high standard,
and the Group seeks to maximise the
margins available to it by milling that
crop and selling the oil and kernels
for itself. The Group’s second mill at
its Kota Bangun project, the Rahayu
mill, was open throughout 2021, and
the Group commissioned its fifth
oil-palm mill, at its Bumi Mas estate,
in the third quarter of the year to
process the increasing crop in that
location. As a result, by the end of
2021, the Group was processing its
own crop in all locations other than
at Musi Rawas and Simpang Kiri.
Development of the Musi Rawas mill
is already under way, with completion
expected around the end of 2022.
The continuation of the rising crops
from the Group’s own areas in the
year, combined with the increases
from both scheme-smallholder areas
and purchases of independent crop,
led to another record year for Group
production. CPO production was
up 15% to 312,900 tonnes, and PK
production up 11% to 67,100 tonnes.
20
M.P. EVANS GROUP PLCANNUAL REPORT 2021 STRATEGIC REPORT
OPERATIONS
Where the Group does not yet have
All of the Group’s oil-palm mills are
total output was certified as
its own production facilities
accredited as certified sustainable
sustainable palm oil. The Group
(Musi Rawas, Simpang Kiri, and at
producers as soon as possible after
expects this figure to increase as
Bumi Mas for some of 2021), the
commissioning, although there
the mill-building and certification
Group sells its ffb to local mills based
can be a time lag after opening to
programme continues, but also as
on the CPO commodity price and an
complete the necessary independent
mill capacity is taken up more by
assumed rate of extraction. To reflect
audit and approval checks. All of the
the Group’s own crop and that of
the substance of these arrangements,
Group’s ffb, and that of its scheme
its scheme smallholders: this was
CPO and PK produced from these
smallholders, are grown to the same
evident in Bangka in 2021 where the
estates’ crops has been included in
high standards and in a sustainable
certified sustainable output rose from
the production figures (see table).
way. During 2021, 55% of the Group’s
63% to 75%.
COSTS
The Group incurs different production
costs depending on the source of the crop
for processing in its mills. Typically, the
lowest production cost comes from the crop
harvested from the Group’s majority-owned
areas. The Group focuses careful attention
on cost control on its estates, and over
recent years has benefitted from higher
volumes exerting a downward pressure on
unit costs. Production costs are higher when
the Group purchases crop for processing, and
more markedly so at times of high prices as
purchase costs are linked by formula to the
CPO price. Production costs are also higher
Other 15%
Head office
Other
7%
8%
Mill 11%
Labour
Depreciation
Other
3%
5%
3%
Field 74%
Labour
Fertiliser
Depreciation
Other
36%
10%
18%
10%
for independent crop, reflecting the lower extraction rates achieved on outside crop compared to the higher
quality ffb harvested from areas managed by the Group.
The Group’s policy has always been to include all depreciation, general charges, administrative costs and
overheads, including those of its Jakarta office, in its calculation of cost per tonne. The Group implemented a
change in overhead analysis at the start of 2021 at which time certain UK head office costs were also included in
cost per tonne. As a result, the cost of palm product from Group mills for its own crops increased marginally to
US$350 per tonne (2020 US$340). Actual unit costs incurred by the Group were much the same year on year, even
allowing for the introduction of the Group’s new Bumi Mas mill in the third quarter. If depreciation and allocated
overheads are excluded, the cost per tonne reduces to some US$250 per tonne, the same as in 2020.
The Group’s total cost of production in its mills, allowing for crop from all sources, was US$465, higher than the
US$400 for the previous year, pushed up by the increase in the cost of crop purchases in the year as CPO prices
increased. However, purchasing crop to utilise spare capacity in Group mills remains worthwhile even at higher
purchase costs, given the higher CPO sales prices that the Group is able to achieve.
The Group expects to keep its own cost of production well controlled as volumes continue to increase. However,
particularly at a time of high commodity prices, the Group is subject to inflationary pressures, most notably in
some of its key inputs including both fertiliser and fuel, along with expectations of increasing wage levels. The
Group continues to monitor these, particularly in light of the situation in Ukraine, but expects both higher CPO
prices and higher production to act as mitigating factors.
21
M.P. EVANS GROUP PLC
ANNUAL REPORT 2021
STRATEGIC REPORT continued
The Group continues to purchase ffb
Wherever possible, the Group
The Group stores CPO production
from independent suppliers in order
develops fully integrated milling
in bulking facilities ready for
to maximise the capacity utilisation
facilities, including both composting
customer collection and has storage
of its milling facilities and expects
and biogas. The Group’s mills at
facilities either attached to or near
the volume of purchases to increase
Kota Bangun (both Bumi Permai
its mills. During 2021 as part of
in the short term as its milling
and Rahayu) and the mill at Bangka
the development of the new mill at
capacity continues to grow. Supplies
were built with these facilities, and
Bumi Mas, a bulking facility was built
purchased from independent sources
the compost produced is a valuable
with river frontage a short distance
tend to be of noticeably lower
organic fertiliser which is applied
from the mill to facilitate easy
quality than ffb grown and harvested
to the Group’s productive areas.
dispatch by barge. Also, in Bangka,
either from the Group’s own areas
Similarly, the biogas facilities provide
prior to 2021, the Group had been
or from those belonging to scheme
a source of renewable energy,
renting a separate facility a short
smallholders, which are planted and
providing power for the estates,
distance away from the estate and
managed by the Group to the same
including the, at times, significant
mill, enabling the Group’s output to
high standards as majority-owned
requirement to power the pumps
be stored in advance of bulk sale
hectarage. As a result, introducing
installed at Kota Bangun as part of
and onward transportation. During
independent crop to Group milling
that project’s water management
the year, the Group completed the
facilities has the effect of reducing
system. In both locations, surplus
construction of its own bulking
the overall oil and kernel extraction
power is generated and sold to the
facility, and the first shipment was
rates achieved. However, whilst not
state electricity company. After the
made just before the end of the year.
achieving the same margins as on
Group had developed the new Bumi
its own ffb, management are
Mas mill on a fully integrated basis
confident that purchasing
and commissioned it in the second
MILL-GATE PRICE
CPO prices per tonne, expressed in
independent crop continues to be
half of 2021, the biogas facility began
cif Rotterdam terms, started the year
a profitable enterprise. The cost of
supplying all of the estate’s power
at a little over US$1,000 and were on
purchase of independent supplies,
needs before the end of the year. The
a generally increasing trend through
along with its quality, remains under
Group is in discussion with the state
the year, finishing at US$1,305. More
constant review.
electricity company regarding the
details are provided in the ‘palm-oil
supply of excess power.
market’ section of this report.
PERFORMANCE
EVALUATION
The Group uses key
performance indicators
at all levels, both in
Indonesia and in the
UK, in assessing its
plantation operations
and directing
management effort
in supervising those
operations.
52,600
HECTARES, GROUP AND
SCHEME SMALLHOLDERS
2020: 51,600 hectares
21.1
TONNES PER HECTARE
2020: 20.0 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.
22
22
M.P. EVANS GROUP PLCANNUAL REPORT 2021 STRATEGIC REPORT
OPERATIONS
The average cif Rotterdam price for
US$316 achieved in 2020.
environmental standards published
the year was US$1,195, 67% higher
than the US$716 recorded in 2020.
At the end of 2020, the Indonesian
government changed the basis upon
which its export levy is charged
on CPO, which is in addition to the
existing export tax. Whilst the levy
and tax are not paid directly by the
Group, they significantly influence
the amount buyers are willing to
tender for the Group’s mill-gate
sales. Following the change, as
both the levy and the tax are now
based on graduated scales, the gap
between cif Rotterdam and mill-gate
prices widens at higher CPO prices,
as was the case throughout 2021.
However, the Group still achieved
an average CPO mill-gate price of
US$810 per tonne during the year,
37% higher than the US$591 in 2020.
Included in the sales figures above,
the Group received US$4.3 million
in sustainability premia, significantly
higher than the US$2.6 million
achieved in the previous year. CPO
and PK were sold in the year with
both RSPO and ISCC certifications
dependent on demand and where
the best premia could be achieved.
The average premia for CPO when
sold as certified oil was US$17.40
by the RSPO and being applied
retrospectively. By the end of the
year, the Group had planted almost
1,000 hectares since the restart,
bringing the total planted area to
just over 9,000 hectares, of which
6,300 were for the Group and 2,800
were for scheme smallholders. The
Group remains confident that the
total planted area at Musi Rawas will
reach a minimum of 10,000 hectares.
per tonne (2020 US$13.30) and PK
Elsewhere, the Group undertook
premia increased substantially in the
replanting at some of its mature
year, reaching approximately US$85
estates, replanting 302 hectares
per tonne by year end, resulting in an
at its Bilah estate (part of the
average when sold as certified during
Pangkatan group) in North Sumatra,
the year of US$55.20 per tonne (2020
and 184 hectares in Simpang Kiri. In
US$25.20).
addition, 16 newly-acquired hectares
at Bangka were replanted during
PLANTING
The Group was able to restart its
the year.
Prices for palm kernels were
planting programme at its Musi
stable for much of the year before
Rawas project in the second half
increasing markedly in the last
of 2021. Planting had previously
ASSOCIATED COMPANY:
KERASAAN
The crop at Kerasaan increased
quarter. Overall, the Group received
been paused whilst the Group
to 55,200 tonnes in the year (2020
an average of US$533 per tonne
demonstrated to the RSPO that it
– 54,800 tonnes), and the growth
for PK sales, 69% higher than the
was in full compliance with updated
pattern was consistent with that
1,039,000
TONNES
23.3%
US$350
OIL-EXTRACTION RATE
PER TONNE PALM PRODUCT
2020: 917,300 tonnes
2020: 23.1%
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.
2020: US$340 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.
2323
STRATEGIC REPORT continued
observed at the Group’s mature
the year, the Group stood at 52,600
depending on both the performance
North Sumatran estates. Given
hectares planted for itself and its
of the mill itself and the type and
the age profile of the plantings at
scheme smallholders.
Kerasaan, with the oldest areas
dating from the second half of the
1990s, a replanting programme
started in the year. During the course
of 2021, 102 hectares were replanted,
and there are plans in place for
further replanting in 2022.
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.
The Group was able to restart
its planting programme at its
youngest project, Musi Rawas,
in the second half of 2021. All
planting is conducted in accordance
with the most recent RSPO
planting requirements, and the
Group remains committed to the
highest sustainability standards.
Management monitors areas to
be planted, new planting, and the
cost per hectare of development.
The Group ensures that sufficient
planting material is available to fulfil
its planned planting programme. The
majority of initial planting work is
undertaken by contractors, under the
supervision of Group management.
The crop yield per hectare is
monitored carefully by management.
For each year of planting on each
estate it is budgeted, reported and
reviewed. The yield per hectare can
be significantly different as a result
of a number of agronomic factors
including soil, weather, and the
natural yield cycle. However, the most
important determining factor in yield
is the age of the palm. In 2021, the
average yield per mature hectare
across all of the Group’s plantings,
including scheme smallholders,
increased to 21.1 tonnes. This
reflected the increasing maturity of
the Group’s plantings on its younger
projects, even with 3,800 hectares
becoming mature during the course
of 2021 and therefore having a
comparatively low yield. Local
estate management are responsible
for field standards, fertiliser
application, harvester numbers
and productivity and the quality
of estate infrastructure, including
estate roads and drains. These are
monitored by senior management,
with independent advice sought if
required. Overall, the combined crop
from the Group’s own areas and from
the associated scheme smallholders
was 1,039,000 tonnes.
quality of the ffb that is supplied
to the mill for processing. Mill
throughput is also measured daily
as an efficiency indicator. An average
oil-extraction rate of 23.3% was
achieved across all the Group’s
mills in 2021. This was both slightly
higher than the rate achieved in the
previous year and compares well
with industry norms. The Group’s
engineering team continues to
supervise mill construction. This
work is undertaken by independent
contractors, but under careful
supervision based on agreed tenders,
budgets and timetables.
Cost control is central to the
success of the Group’s operations,
and management monitors the
efficiency of both its plantation and
its milling operations by reviewing
their unit costs, in comparison
to agreed budgets, and as well
as benchmarking against other
operating units. A significant
proportion of costs in both the field
and the mill are fixed and so vary
little with levels of utilisation. Field
costs in particular can vary from
location to location depending on
local conditions, including terrain,
weather conditions, infrastructure
and age of plantings. As a result,
costs are monitored on an individual
In addition to new planting on
Mill management monitor the
estate basis. Increasing crops help to
its younger estates, the Group
performance of each of the Group’s
keep unit costs down, and the Group
undertakes a replanting programme
oil-palm mills, and as part of their
achieved a cost of US$350 per tonne
on its more mature estates to ensure
monitoring will regularly record
for production from its own areas
that those estates remain at their
and review the percentages of free
in 2021. The Group acknowledges
maximum potential productivity over
fatty acids, dirt and moisture in
the inflationary pressures on its
the long term. Replanting took place
mill output, as well as oil losses at
cost base, particularly in 2022, but
in the year in the Pangkatan group
various stages of the production
continues to work on keeping its unit
and at Simpang Kiri. At the end of
process. Extraction rates can vary
costs as low as possible.
24
M.P. EVANS GROUP PLCANNUAL REPORT 2021 STRATEGIC REPORT
OPERATIONS
CURRENT TRADING AND PROSPECTS
Crops in the early part of 2021 were particularly strong, not just for the Group’s estates,
but across Indonesia. As reported in last year’s annual report, total crops processed for
the first two months of 2021 were 20% higher than in the same period in 2020. This was
particularly evident in Bangka where crop was surging in the early part of the year, and
the impact was still evident at mid-year when total crop processed was 24% higher than
the previous year. Somewhat unusually, the total crop processed in 2021 was slightly
higher in the first half of the year than in the second half.
As a result of a reversal of this seasonal effect, the Group is reporting lower crops
processed in the first two months of 2022. Total crop processed was 196,200 tonnes,
down by 10%. However, as the year progresses and the seasonality is less pronounced
over a longer reporting period, the board expects the Group’s long-term trend of
increasing crop to reassert itself given both the increasing maturity profile of the
Group’s estates and the increased milling capacity.
The details are set out in the following table:
Own crops
Smallholder crops
Outside crops purchased
2 MONTHS ENDED
28 FEB 2022
TONNES
DECREASE
%
2 MONTHS ENDED
28 FEB 2021
TONNES
116,900
35,000
44,300
196,200
(6)
(9)
(19)
(10)
124,200
38,300
54,400
216,900
As reported above, CPO prices were on a largely upward trend in 2021, and cif
Rotterdam prices averaged US$1,195 per tonne for the year, whilst the Group’s average
mill-gate prices for its sales were US$810 per tonne. The market has strengthened
further in early 2022, with cif Rotterdam prices recently reaching historic highs of over
US$1,900 per tonne, no doubt at least partly in response to the distressing events in
Ukraine and the consequent impact on global vegetable oil supplies. During the first
two months of the year, the Group’s average tender price when selling its CPO has been
approximately US$1,050 per tonne. As announced on 18 March 2022, the Indonesian
government has increased its export levy by up to US$200 per tonne. Nonetheless,
mill-gate prices of over US$1,050 are still being achieved by the Group.
Palm kernel pricing has also followed an upward trend, and the Group has achieved
PK selling prices of over US$900 per tonne in the early part of the year. The Group has
continued to be highly cash generative in the early part of 2022, and by mid-March had
reached a net cash position of US$27 million.
The ongoing investment at Musi Rawas is progressing well in the early part of 2022. New
planting is continuing, and development of the palm-oil mill there remains on schedule
in support of the Group’s strategic aims.
The board remains firmly of the view that sustainable palm oil, as a high yielding and
low-cost product, will continue to offer attractive returns, and that the prospects for the
Group remain bright.
25
M.P. EVANS GROUP PLC
ANNUAL REPORT 2021
OPERATIONS: MALAYSIAN PROPERTY
MAJORITY-OWNED:
BERTAM ESTATE
ASSOCIATED COMPANY:
BERTAM PROPERTIES
The sale, previously announced,
Results at the Group’s 40%-owned
Bertam Properties was able to
of the Group’s 70-hectare Bertam
associate, Bertam Properties,
secure bank financing in support
Estate to Bertam Properties,
improved significantly in 2021
of its acquisition of Bertam Estate
completed in October 2021. The
compared to the previous year.
from the Group, adding to its
total agreed consideration was
Whilst conditions in the Malaysian
existing portfolio of development
US$24.9 million, of which 60% had
property market continued to be
land. As a result of the acquisition,
been received by the end of 2021,
challenging overall, the type and
at the end of 2021, Bertam
with the remaining amount due
location of Bertam Properties’
Properties’ land area available for
by July 2023. Proceeds are being
developments was appealing to
development had increased to 191
used to invest in the ongoing
buyers, and revenue from property-
hectares, along with 23 hectares
development of the Group’s
development activities increased
already under development, and
Indonesian oil-palm projects.
by 32% to 79 million Malaysian
the 103-hectare golf course. The
Having completed this transaction,
Ringgit, recovering a large amount
Bertam Properties land continues
the Group has made another
of the ground lost in the previous
to be a valuable asset whose value
step towards its strategic plan to
year. Similarly, profitability at
has increased as development of
exit Malaysia. The Group’s only
Bertam Properties increased in the
the projects has progressed and
subsidiary with a presence in
year, with gross profit up by 43%
the new town has attracted more
Malaysia, Bertam Consolidated
to 25 million Malaysian Ringgit.
residents and businesses.
Rubber Company Limited, has no
Bertam Properties continued to
remaining activities other than as
pay dividends to its shareholders,
a holding company for the Group’s
and the Group received a dividend
investment in Bertam Properties.
of US$1.2 million in 2021.
Newly built houses on the Bertam Properties project
26
26
M.P. EVANS GROUP PLCANNUAL REPORT 2021
STRATEGIC REPORT
RISK MANAGEMENT
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 2021 review concluded that the principal risks reported in the 2020 annual report remain current 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
ENVIRONMENTAL
PROTECTION
CPO PRICE
FLUCTUATION
Impact on
business
RELATIONS
WITH LOCAL
PARTNERS
COVID-19
EXTREME
WEATHER
SUPERVISION OF
OPERATIONS
COUNTRY RISK
PESTS AND
DISEASE
Low
Low
EXCHANGE RATE
MOVEMENT
Likelihood
RELATIONS WITH
LOCAL POPULATION
High
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
commodity-price fluctuation below,
notwithstanding shorter-term
supports vaccination programmes
disruption arising from the spread
and facilitates vaccinations for its
of Covid-19, the Group believes
workforce as much as possible.
there will be continuing strong
demand from the fast-developing
Monitoring of the workforce for
symptoms of the virus is in place and
economies, such as India, China and
the Group has implemented isolation
Indonesia itself, as well as from more
protocols to minimise the spread of
established markets in Europe, for
any infection. Travel by Group staff is
vegetable oil for human consumption
monitored carefully, as is movement
and demand for vegetable oils as a
on Group estates. The Group is
biofuel.
The Group continues to monitor
the impact of Covid-19 and has
established precautionary measures
to prevent the spread of any
infection, which remain under review
and in place as required. The Group
able to put in place remote working
arrangements in both the Jakarta and
UK offices if required.
Read more in the chairman’s
statement on page 3
27
STRATEGIC REPORT continued
INDONESIA COUNTRY RISK
The Group’s strategy is based
on maintaining control over its
falling due. The Group has already
obtained the HGUs for nearly all the
land it has developed since it began
its expansion in 2005. Where the
SUPERVISION OF OPERATIONS
The business model explains how
the Group controls and supervises
plantation assets and identifying
Group has not yet received the HGU, it
its operations using expert staff. The
opportunities to expand by
acquisition of additional
plantation areas.
has obtained the necessary licences
for these projects, including a valid
Group also uses key performance
indicators (KPIs) to monitor
right to develop the land (izin lokasi)
plantation operations.
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
presidential election. In any case,
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.
In all its new project areas, the Group
compensates smallholders and
ensures full and prompt payment
of relevant government taxes. Both
given Indonesia’s significant need for
are important activities that are
infrastructure development and to
assessed during the final application
attract inward investment, the board
for an HGU. Where other companies
continues to perceive a low risk of,
for example, nationalisation or the
have been granted licences which
potentially conflict with those held by
imposition of exchange controls, and
the Group, swift and determined legal
the attendant risk that the Group
will be unable to extract profits
from its subsidiaries and associated
companies in Indonesia.
action has been taken to defend the
Group’s position.
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,
frequent visits by the executive
directors to all areas of the Group’s
operations, including the operations
of associated companies. Since the
onset of the Covid-19 pandemic,
the Group has undertaken a series
of ‘virtual visits’ in which discussion
takes place by video conference,
including a review of written reports,
photographs, video and drone
Operations in Indonesia are deemed
footage. During this time local senior
to be at high risk from the threat of
management have continued regular
A 2014 law mandated the Indonesian
bribery and corruption. The Group
visits to the Group’s operations. The
government to prioritise domestic
investment, protect local customary
has a robust policy on bribery
and corruption, completes risk
Group has an integrated operations
and accounting software system
rights, empower local farmers and set
assessments and conducts training
which staff can access from the UK, as
a cap on foreign investment at some
point in the future. No further action
of senior management and staff in all
locations. It requires all its business
well as Indonesia and Malaysia. The
Group has seats on the board of its
has ensued. The board continues
partners to complete questionnaires
large Malaysian associated company,
to monitor the situation and will, if
on their respective anti-bribery
Bertam Properties, and regularly
necessary, liaise with other plantation
and anti-corruption activities and
attends its board meetings, as well as
companies and industry bodies to
policies. The Group has experienced
maintaining a dialogue with its chief
lobby the government not to enact
and expert local staff employed at its
executive and senior management.
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 date
been renewed without difficulty when
Jakarta head office, and in addition
has employed external advisers to
ensure its actions carry the maximum
prospect of preventing bribery and
corruption in its operations.
Read more in the strategic
report on pages 12 to 25
At the Group’s regional office
in Jakarta, the local president
director has a team of senior
staff (agricultural, engineering,
legal, procurement, marketing,
finance, human resources, internal
audit, health and safety, ICT, and
sustainability) with extensive
28
M.P. EVANS GROUP PLCANNUAL REPORT 2021 STRATEGIC REPORT
RISK MANAGEMENT
experience and expertise, well
to negotiate a mutually acceptable
Mas mills in East Kalimantan and
qualified to confront the problems
settlement.
that arise on developing and mature
mill in Bangka are certified under the
strict requirements of ISCC.
estates. Senior agronomic managers
The Group’s business model
are resident in Sumatra (also
covering Bangka and Musi Rawas)
and Kalimantan.
The Group uses its Kalimantan
pages 10 to 11
PROTECTION OF THE
ENVIRONMENT
The Group has a clear policy
that it will acquire and develop
only heavily degraded land. As
required under RSPO principles,
high-conservation-value and
training school to instil the Group’s
Sustainable production is a priority
high-carbon-stock assessments
systems and high standards into
new and existing staff, covering
agriculture, engineering, finance,
health and safety, ICT, modern
slavery, anti bribery, and social and
environmental topics.
See the business model on
pages 10 to 11
Read more in the KPIs on
pages 22 to 24
RELATIONSHIP WITH LOCAL
PARTNERS
As set out in the business model, the
Group’s strength is as a producer of
sustainable Indonesian palm oil. The
Group seeks to have a local partner
in each subsidiary with at least 5%
of the equity.
A breakdown in relations with a
local partner could affect relations
with the local populations where
the Group is operating, with a
detrimental effect on operations. The
board recognises the importance
of building and maintaining a good
relationship with the minority
partners and fellow shareholders in
its Indonesian plantation projects.
The executive directors endeavour
for the Group. Further information
are undertaken by an independent
is included in the section on
consultant for any new project.
sustainability and in the business
These studies cover the requirement
model.
Concerns about climate change and
the destruction of tropical rainforest
have received, and continue to
receive, close scrutiny in the media.
to maintain riparian-buffer zones
and nature-conservation areas and
to compensate people cultivating
land to be developed in a fair and
transparent way.
The palm-oil industry, unfairly in
The Group has a policy of ‘zero
some cases, is closely associated
waste’. It has installed composting
with cutting down rainforest,
systems at its mills which utilise
reducing biodiversity and destroying
both the “empty” fruit bunches (i.e.
the habitat. The Group may therefore
after the fruit has been removed
receive attention from the many
from them) and the liquid effluent
organisations connected with climate
from the mill. The resulting compost
change and South East Asian tropical
is tested for its nutrient value and
rainforests.
The Group is a member of the RSPO.
The RSPO has strict guidelines
by which members must abide in
order to be able to state that they
are producing sustainable palm oil,
including the protection of forested
areas. The Group endorses the
“Principles and Criteria” which have
been adopted by the membership
and were revised in 2019 to tighten
applied in the field, reducing the
requirement for inorganic fertiliser,
which is particularly beneficial at
times of high fertiliser costs. 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.
the definition of ‘forested areas’. The
Management follows industry best-
Group has specialist RSPO officers,
practice guidelines and abides by
supported by external consultants,
Indonesian law with regard to such
working to ensure the Group
matters as fertiliser application and
complies with RSPO best practice. All
health and safety. Any accidents are
to maintain regular and open
its mills have either been accredited
thoroughly investigated by senior
contact, both formal and informal,
by the RSPO, or in the case of its
head-office staff. Health and safety
with the Group’s partners to discuss
newest mills, are working towards
inspections are carried out annually.
current and future issues affecting
receiving certification. Additionally,
The managers of all the Group’s
the Group’s operations. Where any
the Group’s Pangkatan mill in North
estates and mills hold a monthly
differences do arise, the Group seeks
Sumatra, the Bumi Permai and Bumi
meeting with key staff to review
29
STRATEGIC REPORT continued
health and safety. These meetings
Particular attention is paid to the
are minuted and actions identified
Group’s relationship with the local
GENERAL RISKS
and followed up.
The Group published a 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 sustainable palm-
oil production and how it seeks to
achieve a positive economic and
social impact on communities in
and around its areas of operation.
The report also contains detailed
annexes of numerical information
on the Group’s activities that are
relevant to sustainability. Updated
numerical information is also
provided on the Group’s website.
Read more about
sustainability: pages 32
to 37
population where development
is taking place. On each of the
projects, there has been extensive
communication not only with
local government officials but also
with local people collectively and
through their representatives: the
local mayor and village heads.
Smallholder co-operative schemes
are developed alongside the Group’s
areas and managed by the Group.
Staff members have been appointed
to deal with compensation for losing
the use of land and crops, and to
explain the basis and workings of
the schemes and to gain the support
of the villages surrounding the
Group’s project areas. This is a time-
consuming but effective process.
PESTS AND DISEASE
The Group projects a sustained
increase in crop. Productivity would
See the business model on
be affected if palms were impacted
pages 10 to 11
by pests or disease.
RELATIONSHIP WITH LOCAL
POPULATIONS
The Group’s business model
includes making smallholder
co-operatives a success. Smallholder
areas are planted, maintained and
harvested to the same high standard
as the Group’s own areas.
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.
Whilst a remarkably hardy plant, the
oil palm can be subject to attack
from such pests as caterpillars and
other insects, and certain diseases.
The practice of proper management
and husbandry instilled by the
Group in its field staff is designed
to identify and prevent these
attacks from becoming widespread.
Appropriate agronomic measures are
taken where any outbreaks occur.
Senior 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 to 15
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.
The Group relies on its ability to sell
its palm oil, palm kernels and ffb
into a world market over which it has
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
at a price derived from the quoted
world price. Over a year, by selling
‘spot’ the Group obtains the average
commodity price for CPO. Given this,
the directors have taken the view
that in the long run it is not generally
cost-effective to sell forward
contracts for the delivery of CPO,
particularly since the presence of 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 mill-gate price received for the
Group’s production is influenced
significantly by export taxes and
levies charged by the Indonesian
government combined with
any other action taken by them
30
M.P. EVANS GROUP PLCANNUAL REPORT 2021 STRATEGIC REPORT
RISK MANAGEMENT
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
have a negative effect both on other
revenue costs in US-Dollar terms
and when Rupiah-denominated
assets are translated into US Dollars.
Similarly, the movement of the
Malaysian Ringgit against the US
Dollar has an effect in US-Dollar
terms when Malaysian assets are
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
which may include support for
the domestic biofuel industry or
setting obligations for domestic
consumption. The Group employs a
dedicated marketing team to monitor
developments and to negotiate
sales tenders and other supply
agreements.
The price of palm oil fluctuates,
determined both by disposable
income around the world
generated by economic activity
and by the supply, pricing and
Assessment of viability
report is on page 48
WEATHER AND NATURAL
DISASTERS
The Group projects a sustained
increase in crop. Adverse weather
events may temporarily slow the
rate of increase in crop.
Oil palms rely on regular sunshine
and rainfall, but these patterns can
demand for competing vegetable
vary and extremes such as unusual
oils. The Group’s ability to collect
dry periods or, conversely, heavy
sustainability premia helps to
rainfall leading in some locations to
mitigate the effect of falling prices.
flooding, can occur. The Group’s Kota
As with any commodity, over supply
Bangun estates are located in close
does occur in the vegetable-oil
market which exerts downward
proximity to the Mahakam river, and
can be affected by it. Dry periods,
pressure on prices. The competing
in particular, will affect yields in the
oils, the main ones of which are
short and medium term but any
soybean, oilseed rape and sunflower,
deficits so caused tend to be made
are annual crops and producers tend
up at a later date. Where appropriate,
to react to low prices by switching to
bunding is built around flood-prone
other crops which has, in the past,
areas and drainage and other water
quickly reduced over supply and
management systems constructed
restored upward pressure on prices.
and adapted either to evacuate
The board is satisfied that the
fundamental structure of the
vegetable-oil market, and particularly
the palm-oil market, is sound.
Continuing strong demand from the
fast-developing economies, such
as India, China and Indonesia itself,
surplus water or to maintain water
levels in areas quick to dry out. The
Group acknowledges that climate
change could lead to increasing
disruption of existing patterns of
rainfall and sunshine.
The board has taken the view that
Dollars.
as well as from more established
acceptance of weather risk, including
markets in Europe, for vegetable
oil for human consumption, has
that caused by climate change, and
that of natural disasters is part
supported prices, as has demand
of the business. It is mitigated by
for vegetable oils as a biofuel. Palm
the geographical diversity of its
oil is the vegetable oil with the
operations.
Note 31, containing further
details, is on pages 86 to 87
highest production in the world,
has the lowest cost and is the most
productive, by a wide margin, in
terms of yield per hectare.
More detail about our
strategy is on page 12 to 15
Approved by the board of directors
and signed on its behalf
Matthew Coulson
Chief executive
22 March 2022
31
SUSTAINABILITY
APPROACH
The Group is committed to
the production of certified
sustainable palm oil, and
has sustainability at the
core of its strategic and
operational decision-
making.
including information in the annual
time, and as a result three of the
report, analysis on the website
Group’s five existing mills have been
(www.mpevans.co.uk), and further
RSPO certified. The Group’s newest
documentation in the Group
mills, at Rahayu in Kota Bangun
sustainability report, available
and at Bumi Mas, are both working
for download from the website.
towards their certification, which the
Information on the website is regularly
Group expects to receive during the
updated and refreshed. In addition,
course of 2022. In the meantime, all
the Group participates in the annual
the estates that will in due course
SPOTT assessment undertaken by the
supply Group mills, once they are
Zoological Society of London (“ZSL”),
built, already comply with RSPO
The development of oil-palm estates,
and in the analysis published at the
standards and mill accreditation will
and the subsequent production
of palm oil, requires careful and
considered long-term planning.
The Group has a long-standing
commitment to operate at high
standards in all aspects of ESG,
whether relating to environmental
or social matters, as detailed in this
section of the report, or whether
relating to corporate governance, as
shown on pages 44 to 49.
end of 2021, the Group increased its
help the percentage of the Group’s
score to 76.3% and was ranked 18th
sustainable output to increase.
out of 100 companies assessed by ZSL.
The Group has a dedicated
The cornerstone of the Group’s
sustainability team working across
commitment to sustainability is its
Indonesia. The team is led by a
membership of the RSPO. Palm oil is
sustainability manager based in
a global commodity and the Group
the Jakarta office, supported by a
believes the way to make meaningful
team of field staff resident on the
progress is for the industry to commit
Group’s estates. The sustainability
to a system of transparent global
team implement policy, monitor
rules against which performance is
performance and ensure that the
The Group publishes a wide range
rigorously and independently verified.
Group continues to conduct its
of information demonstrating
Given how thorough it is, the initial
business in accordance with the high
its approach to sustainability,
RSPO accreditation process can take
standards that have been set.
SUSTAINABLE PALM-OIL PRODUCTION
Concerns about global warming
that sustainable palm oil can be an
capturing methane and generating
and particularly the destruction
important contributor to building
biogas, preventing any burning of
of 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
global sustainable agriculture. The
land for subsequent cultivation,
Indonesian government takes an
the identification and protection of
increasingly robust approach to the
conservation and high-carbon-stock
illegal felling of rainforest.
In order to protect the environment,
the Group minimises the emission
of greenhouse gases and has strict
areas, and promoting biodiversity. The
Group has a ‘zero-waste’ approach in
which all mill waste is converted into
either biogas or compost which we
policies to prevent it from being
use to reduce application of inorganic
responsible for any deforestation.
fertilisers. Not only is this good for
sustainable palm oil that does not
The Group’s sustainability report
the environment; it also reduces the
require rainforest destruction and
sets out the Group’s activity in
Group’s costs.
32
M.P. EVANS GROUP PLCANNUAL REPORT 2021 SUSTAINABILITY
APPROACH
BUMI MAS
Mill opened 2021
Capacity 60tph
Certified output
11,200t CPO
KOTA BANGUN ESTATES
Mills opened 2012 and 2020
Capacity 100tph
Certified output
66,300t CPO
GROUP SUSTAINABLE PRODUCTION
SIMPANG KIRI
Future mill
subject to
expansion
PANGKATAN
Mill opened 2005
Capacity 40tph
Certified output
40,500t CPO
40tph
60tph
60tph
40tph
60tph
60tph
MUSI RAWAS
Mill under development
Capacity 60tph
BANGKA
Mill opened 2016
Capacity 60tph
Certified output
55,600t CPO
1-0027-06-100-00
DEMONSTRATING THE BENEFITS OF
SUSTAINABLE PALM-OIL PRODUCTION
Just 19% of global palm oil production
of certified sustainable palm oil
The Group has long-standing policies
is currently RSPO certified. The Group
produced will increase significantly.
and operating procedures to manage
believes this should increase across
The Group is working with independent
and monitor water carefully and
the industry until most, if not all,
smallholders from whom it buys ffb to
prevent pollution of air, land and
palm oil produced is certified as
encourage them to produce their crop
water. The sustainability report
sustainable. For this to happen the
in line with the RSPO Independent
sets out how the Group certifies
industry needs to ensure that ffb are
Smallholders Standard (RISS), which
its production and how it plans to
traceable. The biggest challenge is
includes mapping where the fruit is
achieve full traceability of all the ffb it
persuading independent smallholders,
harvested. Already all the ffb produced
processes, as well as how it manages
who account for 40% of all ffb supply,
in our own estates and those of the
water and agricultural chemicals.
to adopt sustainability standards.
Group’s scheme smallholders are
If this can be achieved, the amount
fully traceable.
33
M.P. EVANS GROUP PLC
ANNUAL REPORT 2021
APPROACH continued
COMMUNITIES
The Group takes an active interest in the welfare of the communities living on and
around its operations promoting trust and mutual support.
M.P. Evans’ staff distributing booklets
to independent-smallholder farmers
under the Group’s RISS project
on Bangka to guide them on best
agronomic practice
Over the last twenty years, the
formation of smallholder co-
estates, it is often one of the largest,
Group has expanded dramatically
operatives under which members of
if not the largest, employer in the
in Indonesia, investing over half
the local community become owners
area, providing a valuable source
a billion US dollars in its oil-
palm projects. In each of its key
development areas, whether in East
Kalimantan, in Sumatra or on Bangka
Island, the Group has always worked
carefully and sensitively with local
communities.
of a proportion of the area being
of income helping to raise living
developed. The Group also provided
the initial funding for the planting
and development of those areas.
By the end of 2021, smallholder
standards. During the course of 2021,
the Group increased its permanent
workforce to over 8,000, with its
economic impact felt far more widely.
co-operatives owned 12,800 planted
The Group is committed to providing
hectares attached to Group areas, a
high-quality facilities for the
Alongside each of its new estates,
very valuable asset. Given the remote
communities living on its estates
the Group has supported the
nature of some of the Group’s
(see page 37 for details).
34
M.P. EVANS GROUP PLCANNUAL REPORT 2021 CASE STUDY
COMMUNITY STORES
The Group has supported the formation
of community stores on some of its
more remote locations, saving estate
communities time and money.
The Bumi Mas estate is in a relatively remote location,
situated on the Eastern coast of Borneo. Whilst the
Group has been successful in attracting a high-quality
workforce and has been investing a significant amount
in upgrading the quality of estate housing and other
facilities, the community feedback was that accessing
basic provisions was challenging. It required a long
journey, and prices were often very high.
As part of the Group’s commitment to its workforce and
the community living on its estates, four community
stores have been built at Bumi Mas. The Group uses
its bulk purchasing power to acquire key provisions
for those stores, and savings are passed along. Typical
savings are approximately 20-25% for basic items such
as rice, eggs, sugar and nappies. The combination of
both saved travel time and saved costs has resulted in
extremely positive feedback from the estate community.
Following the success of the community stores in Bumi
Mas, a similar project started on the Group’s larger
Kota Bangun estate, and by the end of 2021 five
community stores had been opened, with a plan to
open two more during 2022. The Group will assess
the potential for community stores to be developed at
Bangka and Musi Rawas.
SUSTAINABILITY
COMMUNITIES
Bumi Mas
community
stores
35
COMMUNITIES continued
CASE STUDY
COVID-19 VACCINES
The medical clinics, located on the Group’s estates, have been an essential part of
administering Covid-19 vaccines to estate communities.
The distribution of Covid-19 vaccines has
increased throughout Indonesia during the
course of 2021, and the Group has been
committed to playing its part in supporting
the vaccination effort. By the end of the year,
91% of the Group’s workforce had received a
vaccination, and 63% were double jabbed.
The vaccination effort on Group estates was
co-ordinated from the Group’s medical clinics
and led by 9 doctors and 23 other trained
medical staff employed by the Group and
working in those facilities. Vaccinations were
made available to both Group workers, their
family members, and any others who were
living or working on the Group’s estates during
the year.
Vaccine being administered at Musi Rawas
During the year, a total of 6,900 vaccination doses were administered in the Group’s clinics, and the programme is
continuing into 2022.
Clinic on the Kota Bangun project
36
M.P. EVANS GROUP PLCANNUAL REPORT 2021
COMMITMENT TO THE GROUP’S ESTATE COMMUNITIES
SUSTAINABILITY
COMMUNITIES
HOUSING
Developing high-quality housing is a core part
EDUCATION
The Group offers crèche facilities for young
of the commitment to our workforce and their
children and has developed both primary and
families. During 2021 the Group built 290 new
secondary schools on its estates, most recently
housing units, and approximately 15,000 people
opening a new school at Bumi Mas. School buses
live on the Group’s oil-palm estates.
are provided by the Group.
RECREATION
The Group supports and encourages a wide range
HEALTH
There are 11 medical facilities at Group estates,
of sporting activities on its estates. Infrastructure
and in addition to the significant vaccination
is in place to enable participation by both our
work done in 2021 (see case study), the doctors
workforce and the wider community, with sports
and medical staff employed by the Group offer
programmes in place for young people through
support and care, with 39,000 consultations
to more senior age groups.
completed in 2021.
RELIGION
Religion plays an important part in community
COMMUNITY
The Group has provided both community halls
life on Group estates, and this is supported by
and estate clubhouses. During 2021, the Kota
the Group through the provision of mosques
Bangun estate clubhouse was completed, and
and churches, as well as employing imams and
the Group aims to develop more facilities as
preachers.
other estates mature.
37
M.P. EVANS GROUP PLC
ANNUAL REPORT 2021
REPORT
OF THE
DIRECTORS
38
38
BOARD OF DIRECTORS
Peter Hadsley-Chaplin
Matthew Coulson
K Chandra Sekaran
EXECUTIVE CHAIRMAN
CHIEF EXECUTIVE
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 chief executive
in 2022 having been
finance director since 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.
EXECUTIVE DIRECTOR, ASIA.
PRESIDENT DIRECTOR,
PT EVANS INDONESIA
Appointed a director in
2021. Took up position of PT
Evans Indonesia’s president-
director in 2008. Began
working in Indonesia in 1995,
with experience in Sumatra
and Kalimantan and latterly
as a chief operating officer
for Sinarmas Plantations.
Began career with Harrisons
and Crosfield (later known
as Golden Hope Plantations
and today part of the Sime
Darby group). Has a profound
understanding of the
Indonesian plantation industry,
plantation network and the
social issues related to it.
M.P. EVANS GROUP PLCANNUAL REPORT 2021 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
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.
Currently Chief Sustainability
Officer, Monetary Authority
of Singapore. Formerly
Global Director of Corporate
Affairs and Sustainability
at Thai Union. A leading
academic in the field of
integrated sustainability
analysis. She has previously
worked with WWF, focusing
on the palm-oil industry.
Member of the audit and
remuneration committees.
Dr McBain is stepping down
from the board on
31 March 2022.
3939
REPORT OF THE DIRECTORS continued
The directors present the audited consolidated and
parent-Company financial statements of M.P. Evans
Group PLC for the year ended 31 December 2021.
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 5) and
in the strategic report (pages 12 to 31) 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 60.
An interim dividend of 10p (2020 – 5p) per share in
respect of 2021 was paid on 5 November 2021 and
a special dividend of 5p per share was paid on
11 February 2022 in respect of the sale of the Group’s
remaining Bertam Estate land. The board recommends
a final dividend of 25p (2020 – 17p) per share. This
dividend will be paid on or after 17 June 2022 to those
shareholders on the register at the close of business on
29 April 2022. This final dividend is not provided for in
the 2021 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 2021
Issued in respect of options
Issued (fully-paid and voting)
at 31 December 2021
SHARES OF
10P EACH
54,490,253
206,000
54,696,253
The Company did not operate a share buyback scheme
during the year. In the prior year, 153,287 of the Company’s
10p shares, representing 0.3% of the issued share capital
at that time, were bought back and cancelled, for a total
cost of US$1,155,000.
DIRECTORS AND DIRECTORS’ INTERESTS
The present membership of the board is detailed on
pages 38 and 39. All of these directors, except for
K Chandra Sekaran, who joined the board on 1 August 2021,
served throughout the year and up to the date of signing
of these financial statements. K Chandra Sekaran will
offer himself for election at the forthcoming annual
general meeting. In addition, Tristan Price served as a
director from the start of the year up to his resignation on
31 July 2021. Jock Green-Armytage and Philip Fletcher will
retire from the board at the forthcoming annual general
meeting in accordance with the articles of association
and, being eligible, will offer themselves for re-election.
The directors serving at the end of the year, together
with their interests at the beginning, or later date of
appointment, and end of the year in the shares of 10p
each in the Company were as follows:
BENEFICIAL
OPTIONS
At 31 December 2021
P E Hadsley-Chaplin
M H Coulson
K Chandra Sekaran
J M Green-Armytage
P A Fletcher
B C J Tozer
D M McBain
At 1 January 2021
P E Hadsley-Chaplin
M H Coulson
K Chandra Sekaran
J M Green-Armytage
P A Fletcher
B C J Tozer
D M McBain
1,561,717
13,900
123,181
–
1,048,171
–
–
1,561,717
5,900
123,181
–
1,048,171
–
–
–
35,180
59,000
–
–
–
–
–
29,763
59,000
–
–
–
–
Further details of the directors’ interests in share options
are disclosed in the directors’ remuneration report, on
pages 50 to 52.
None of the directors holds any beneficial interest
in, or holds options to buy shares in, any subsidiary
undertaking of the Company as at the date of this report.
No director has had a material interest in any contract
of significance in relation to the business of the
Company, or any of its subsidiary undertakings, during the
financial year or had such an interest at the end of the
financial year.
As permitted by the Company’s articles of association,
there was throughout the year to 31 December 2021,
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 the directors
40
M.P. EVANS GROUP PLCANNUAL REPORT 2021
REPORT OF THE DIRECTORS
SIGNIFICANT INTERESTS
As far as the Company is aware, the significant interests
in the Company as at the date of this report are:
NATURE
SHARES
%
KL-Kepong International Ltd
Direct
12,695,357
23.21
Nokia Bell Pensioenfonds
ofp
Direct
5,750,000
10.51
Abrdn plc
Indirect
3,294,658
MM Hadsley-Chaplin
Direct
1,928,254
6.02
3.53
Chelverton Asset
Management
Canaccord Genuity Wealth
Management
Schroder Investment
Management
Indirect
1,730,374
3.16
Indirect
1,700,000
3.11
Indirect
1,673,442
3.06
Resolution 9 set out in the notice of the annual general
meeting will accordingly be proposed to authorise the
purchase of up to a maximum of 5,469,625 shares, on the
AIM market of the London Stock Exchange, representing
10% of the Company’s current issued share capital.
The maximum price which may be paid for a share on
any exercise of the authority will be restricted to 5%
above the average of the middle-market quotations for
such shares as derived from the Daily Official List of
the London Stock Exchange for the five business days
before the purchase is made. The maximum number of
shares and the price range are stated for the purpose
of compliance with statutory requirements in seeking
this authority and should not be taken as an indication
of the level of purchases, or the prices thereof, that the
Company would intend to make.
OUTSTANDING OPTIONS TO SUBSCRIBE
As at the date of this report, there were options to
subscribe for 50,000 shares outstanding under the
executive share-option scheme, and options to subscribe
for 127,204 shares outstanding under the 2017 long-term
incentive scheme. If all of the options were exercised, the
resulting number of shares would represent 0.32% of the
enlarged issued share capital at that date.
AUTHORITY TO MAKE MARKET PURCHASES
OF SHARES
The directors propose to seek authority under resolution
9 for the Company to purchase its own shares on the
AIM market of the London Stock Exchange until 30 June
2023 or, if earlier, the date of the Company’s 2023 annual
general meeting. The authority will give the directors
flexibility to purchase the Company’s shares as and
when they consider it appropriate. The board will only
exercise the power of purchase when satisfied that it is in
the best interests of the Company so to do and all such
purchases will be market purchases made through the
AIM market of the London Stock Exchange. The directors
would only consider making purchases if they believed
that the earnings or net assets per share of the Company
would be improved by such purchases. The directors
would consider holding the Company’s own shares which
had been purchased by the Company as treasury shares
as this would give the Company the flexibility of being
able to sell such shares quickly and effectively where
it considers it in the interests of shareholders so to do.
Whilst any such shares are held in treasury, no dividends
will be payable on them and they will not carry any
voting rights.
The authority conferred by resolution 9 will lapse on
30 June 2023 or, if earlier, the date of the Company’s 2023
annual general meeting.
PAYMENTS TO SUPPLIERS
It is the Group’s normal practice to make payments to
suppliers in line with agreed terms, provided that the
supplier has performed in accordance with the relevant
terms and conditions. The Group’s average creditor days
calculated as at 31 December 2021 amounted to 50 days
(2020 – 49 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 86 and 87.
SUBSIDIARY COMPANIES
Details of the Group’s subsidiary companies, including
their country of operation, are given on page 94.
ENERGY USE
During the year, the Company used 71MWh (2020 -
86MWh) of electricity and gas in its Tunbridge Wells head
office, giving rise to 15 tonnes (2020 – 20 tonnes) of
CO2 equivalent emissions calculated in accordance with
government published conversion factors, or 2 tonnes
(2020 – 3 tonnes) per full-time equivalent employee.
During the year the very old gas boiler at the Tunbridge
Wells head office was replaced with a significantly more
energy-efficient boiler which is expected to result in
decreased CO2 emissions. The methodology for this
calculation uses the 2021 Government conversion factor
41
REPORT OF THE DIRECTORS continued
guidelines applied to the gas and electricity meter
readings.
taking reasonable steps for the prevention and detection
of fraud and other irregularities.
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.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the
The directors are responsible for the maintenance
and integrity of the Company’s website. Legislation in
the United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
In the case of each director in office at the date the
report of the directors is approved:
directors have prepared the Group financial statements
in accordance with UK-adopted International Accounting
• so far as the director is aware, there is no relevant
audit information of which the Group and parent-
Standards and the Company financial statements in
Company’s auditors are unaware; and
accordance with United Kingdom Generally Accepted
Accounting Practices (United Kingdom Accounting
Standards, comprising Financial Reporting Standard
101 ‘Reduced Disclosure Framework’ (“FRS101”) and
applicable law). Under company law the directors must
not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the Group and the Company and of the profit
or loss of the Group and Company for that period. In
preparing these financial statements, the directors are
required to:
•
they have taken all the steps that they ought to have
taken as a director in order to make themselves aware
of any relevant audit information and to establish that
the Group and parent-Company’s auditors are aware of
that information.
GOING CONCERN
The Group’s operations are funded through a
combination of cash resources, loan finance, and long-
term equity. The board has undertaken a recent review of
the Group’s financial position, including forecasts, risks
• select suitable accounting policies and then apply
and sensitivities (including an assessment of the impact
them consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
of Covid-19). The review has considered the Group’s
plans for further development in Indonesia, along with
the required funding for that development. Based on
that review, the board has concluded that the Group is
• state whether UK-adopted International Accounting
expected to be able to continue in operational existence
Standards and applicable United Kingdom accounting
for the foreseeable future, being at least the next 12
standards, including FRS101, have been followed,
months from the date of approval of these financial
subject to any material departures disclosed and
statements. As a result, the board has concluded that
explained in the Group’s and Company’s financial
statements respectively; and
the going-concern basis continues to be appropriate in
preparing the financial statements.
• prepare the financial statements on the going-concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The directors are responsible for keeping adequate
INDEPENDENT AUDITORS
The auditors, BDO LLP have expressed their willingness
to continue in office and a resolution to re-appoint them
will be proposed at the forthcoming annual general
accounting records that are sufficient to show and explain
meeting.
the Group’s and the Company’s transactions and disclose
with reasonable accuracy at any time the financial
position of the Company and the Group and enable them
to ensure that the financial statements and the directors’
remuneration report comply with the Companies Act
2006. They are also responsible for safeguarding the
assets of the Company and the Group, and hence for
Approved by the board of directors and signed by
its order.
Katya Merrick
Company secretary
22 March 2022
42
M.P. EVANS GROUP PLCANNUAL REPORT 2021 REPORT OF THE DIRECTORS
CORPORATE GOVERNANCE
Water conservation area at Bangka
4343
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
The board continues to pay high
Shareholders will be aware that 2021
regard to corporate governance and
saw changes to the executive team
internal control in all aspects of the
with the resignation of Tristan Price
organisation. It adopted the QCA Code
as chief executive after 15 years
in 2018 and understands and applies
of excellent service to the Group.
the clear principles set out in the QCA
The board, led by me with support
Code, recognising the importance of
from its advisors and the company
having a strong framework within
secretary, took time to consider
which to develop ever better corporate
board composition, linking this
governance practice, often beyond the
to its own discussions around the
requirements of the QCA Code.
Group’s strategy that had taken place
The board is made up of three
executive directors and four
non-executives. This structure is
designed to ensure that there is
a clear balance of responsibilities
between the executive and the non-
chairman’s statement on corporate
executive functions. As chairman, I
governance is set out here.
am primarily responsible for setting
the Group’s strategy in conjunction
with the board, and for ensuring
the effective operation of the board.
This includes ensuring the board
continues to develop its corporate
governance in response to changes
in official standards and public
expectations through full and timely
discussion at board meetings and
the development and communication
within the organisation of appropriate
policies. A flexible timetable has
been implemented to ensure regular
review by the board of its corporate
governance compliance, structures
and tools. Board evaluation is
now being conducted annually.
Where possible individual policies
and frameworks, such as terms of
during the year. Given the Group’s
continued focus on its Indonesian
oil-palm estates and the production
of sustainable CPO, the board
strongly supported the appointment
of its long-serving and industry-
leading head of operations in
Indonesia, K Chandra Sekaran, as an
executive director, bringing first class
operational knowledge to the board
as well as strengthening the link
between the board and the Group’s
workforce in Indonesia. The board
agreed that in Matthew Coulson,
Group finance director from February
2017 until 31 December 2021 and
with a track record since joining
the Group in 2016 of consistently
rising to challenges with reassuring
measure and formidable skill, it had a
natural successor for the role of chief
executive, a role he took on from the
start of 2022. This followed a period
since the end of July 2021, in which
the chief executive’s responsibilities
were carried out jointly by Matthew
and myself.
reference for board committees,
A good system of corporate
risk identification and policies on
governance is of no use without a
whistleblowing and modern slavery
board whose members continue to
are also being reviewed annually to
develop their skills and capabilities.
ensure that they remain appropriate.
Between them, our board members
The corporate governance
have extensive experience in the
information on our website is updated
key areas pertinent to execution of
annually and was last reviewed in
the Group’s strategy, and remain
September 2021.
professionally active, motivated,
44
M.P. EVANS GROUP PLCANNUAL REPORT 2021 REPORT OF THE DIRECTORS
CORPORATE GOVERNANCE
OPERATION OF THE BOARD
Directors
Details of the Company’s board,
together with those of the audit and
remuneration committees, are set
out on pages 38 and 39. For the first
seven months of the year, the board
comprised an executive chairman,
working on a part-time basis, two
and willing to broaden and deepen
feedback on a range of suggested
their knowledge. All directors have
topics. As hoped, this yielded more
the opportunity to attend seminars
detailed insights, highlighting areas
and formal training courses in
the board felt most strongly about.
person or on-line; they keep in
Further details can be found in the
touch with relevant developments
corporate governance report.
through discussion amongst their
business and professional peers;
and they read relevant trade and
other professional publications as
well as relevant media articles to
understand public sentiment. This
activity is recorded by the Group’s
company secretary, who advises
directors of appropriate seminars
and training opportunities. During
the year the board received training
on the AIM regulatory regime and
Effective risk management and
acknowledging the role that
stakeholders play in our Group’s
further full-time executive directors
operations, are central to our
and four non-executive directors.
success. In February 2021, following
For the last five months of the year
the strengthening of its internal
the executive chairman was working
risk identification process in 2020,
on a full-time basis. The audit
and also in response to feedback
and remuneration committees are
from the 2020 board evaluation the
chaired by the senior independent
board dedicated a meeting to risk
non-executive director. The maximum
reporting.
on antibribery and corruption (this
We believe compliance with the QCA
training was mandatory throughout
Code provides a valuable support
the organisation to all members of
in strengthening our ability to
staff at supervisor level and above).
grow and so deliver returns to our
They also received briefing notes on
shareholders that also benefit our
topics including s172 obligations and
wider stakeholders. The Group sees
succession planning. Some members
ethical behaviour as a competitive
attended in-house sustainability
advantage to building trust with
training sessions led by the Group’s
suppliers and attracting and
head of sustainability in Indonesia.
retaining high-performing staff. This
The focus for training in the year
too is emphasised in the QCA Code.
ahead will be around climate change.
The Group operates in a sector where
It is essential the board remains up
timelines are long and hence where
to date on the emerging regulatory
there is a premium on boards in
framework in response to investor
which shareholders can place their
concerns around climate change
long-term trust.
and understands the risks and
opportunities this presents to the
business.
My colleagues on the board and
I are committed to ensuring that
the Group’s corporate governance
The board started its programme
structures are robust and are
of self-evaluation in 2019. The first
keeping these under frequent review.
two evaluations were facilitated via
There have been no significant
a professional online platform using
changes to the Group’s corporate
suites of recommended questions
governance framework during
for the board and its committees.
the year.
This provided a valuable start. For
the self-assessment exercise at the
Peter Hadsley-Chaplin
end of 2021, board members were
Chairman
invited to provide non-prescriptive
22 March 2022
number of directors permitted under
the articles of association is eight.
This structure is designed to
ensure that there is a clear balance
of responsibilities between the
executive and the non-executive
functions. Non-executive directors
are expected to contribute two to
three days’ service per month to
the Company, including attendance
at board meetings and the AGM.
The board meets at least quarterly
and is provided with information at
least monthly. It receives operating
summaries, executive operating
reports, management accounts and
budgets. Of the executive directors
and non-executive directors serving
throughout the whole year, all
attended each of the ten full board
meetings held in 2021. Tristan Price
who served as chief executive until
31 July 2021 attended all but one
of the six full board meetings which
took place from the beginning of the
year until that date, and K Chandra
Sekaran, who joined the board as an
executive director on 1 August 2021,
attended all of the four full board
meetings from that date until the end
of the year.
45
CORPORATE GOVERNANCE continued
The board as a whole is collectively
responsible for the success of the
Company. The personal attributes
of each of the directors facilitates
rigorous but constructive debate,
informed and considered decision
making and effective monitoring of
progress in achieving the Group’s
strategic objectives. The board as a
whole actively engages in reviewing
and developing Group policies. It
promotes a culture founded on its
values of integrity, teamwork and
excellence. Members of the board
lead by example during their frequent
interactions with staff and the clear
policies which are discussed, set by
the board with input from stakeholders
where appropriate, and promulgated
throughout the workforce, including
training and refresher training on
key areas such as antibribery and
corruption. Remuneration of all staff
rewards those who display these
behaviours; access to the Group’s
long-term incentive scheme is likewise
offered to senior staff who qualify
on grounds of length of service and
who promote the Group’s values. The
Group dismisses staff found to have
breached the value of integrity.
The board reserves to itself a range
of key decisions (which can be found
at www.mpevans.co.uk) to ensure it
retains proper direction and control
of the Company, whilst delegating
authority to individual executive
directors who are responsible for
the day-to-day management of the
business. The board’s objectives
are subject to periodic review, most
recently in December 2021. All
major and strategic decisions of the
Company are made in the United
Kingdom. The executive and non-
executive directors discuss progress
against budgets and other business
issues, both during board meetings
and at other times.
The board has access to independent
professional advice at the Group’s
expense when the board deems it
necessary in order for them to carry
out their responsibilities. Currently,
the board retains Peel Hunt LLP as
the Company’s nominated adviser.
The board additionally receives advice
from independent professionals
on legal matters, corporate public
relations, taxation, and valuation
of the Group’s property assets. The
company secretary provides support
on matters of corporate governance.
Independence and re-election of
long-serving directors
During the year, the board has sought
to maintain a balance of executive and
non-executive directors. A description
of the roles and responsibilities of
the directors is set out on pages 38
and 39. More than half of the directors
were non-executive and, in accordance
with the QCA Code, at least two of
the non-executives serving during
2021 were independent. The board
acknowledges that Philip Fletcher is
not independent. However, the depth
of his understanding of the Group,
coupled with his commitment and
track record of conducting his role
with an independent mindset enables
him to bring significant value to the
board and its audit committee.
The board is satisfied that its
composition covers a broad range
of relevant skills and experience to
enable effective formulation and
execution of the Group’s strategy.
Jock Green-Armytage, who has
chaired FTSE-listed companies, brings
significant industry knowledge as
well as experience in both corporate
finance and corporate governance.
Bruce Tozer’s background is in
commodity finance, environmental
markets, and agri-business project
finance, including palm oil, contributing
insight from the finance sector. Philip
Fletcher, as former managing director
and finance director of the Group with
a background in accountancy, has
extensive specific knowledge of both
the sector, operations in Indonesia
and the evolution of the Group. As
well as general corporate experience
through her directorships and in a
major South-East-Asian-based global
seafood producer, Darian McBain
has a special interest and experience
in sustainable food production
and environment, social and
governance issues.
The composition of the board was
enhanced during the year by the
appointment of K Chandra Sekaran as
an executive board member. K Chandra
Sekaran, as head of the Group’s
Indonesian subsidiary, PT Evans since
2008, has a profound knowledge of
operations and the sector and brings
the board even closer to its operations
and workforce in Indonesia.
The board has an executive chairman,
Peter Hadsley-Chaplin. Given the
time that he has served the Company
both as a director and chairman, as
well as the size of his shareholding
in the Company, he is not considered
independent. However, Peter has a
long track record of being effective
in this role and building strong
relationships with shareholders
as well as presiding over a well-
functioning board. The perceived
governance concern around having
an executive chairman is mitigated by
having a senior independent non-
executive director.
Each director retires and must seek
re-election at least every three years.
Non-executive directors who have
served on the board continuously for a
period of nine years or more will offer
themselves for re-election at each
year’s annual general meeting.
46
M.P. EVANS GROUP PLCANNUAL REPORT 2021 REPORT OF THE DIRECTORS
CORPORATE GOVERNANCE
appropriate candidates. Each member
Covid-19 restrictions persisted
of the board is given the opportunity
during the year, to update them
to meet the individual concerned
on the progress of the Group and
before an appointment is made.
discuss any areas of concern that
Jock Green-Armytage will have served
as an independent non-executive
director for a period of nine years by
the time of the 2022 AGM. Whilst he
will no longer be deemed independent
within corporate governance
guidelines, he is being proposed for
re-election for a short additional term
as part of the Company’s transition
arrangements for a new board
appointment.
Directors’ remuneration
As set out in the report on pages 50 to
52, the remuneration of the executive
directors is determined by the
remuneration committee whilst that
of the non-executives is determined
by the whole board. The committee,
which during the course of 2021
comprised Jock Green-Armytage, Bruce
Tozer and Darian McBain, met six times
and all meetings were attended by all
members of the committee.
Succession planning
It is considered that the board
would be robust to any unplanned
retirements and be able to recruit
suitable, well-qualified, candidates
within a reasonable time period. The
board has committed to regular review
of succession planning.
Board performance evaluation
The board undertook a performance
evaluation of itself and its committees
during the year which took a less
prescriptive form than in previous
years. Board members were invited
to provide anonymous feedback to
the company secretary by way of
free comments within topic areas
including board composition and
structure, skills, areas of responsibility,
conduct of meetings, decision-making,
committees, culture, risk management,
The Company does not currently
stakeholder engagement, board
have a nominations committee.
evaluation and effectiveness of
The chairman maintains a strong
the chair. As previously, this was
individual relationship with all the
an internal evaluation, and the
directors and any changes to the
comments, which revealed significant
board are managed collaboratively.
consensus among board members,
The board reviewed succession
were compiled into a report by the
planning during the year, including the
company secretary, forming the basis
merits of establishing a nominations
of a board discussion led by the
committee, and remained of the
chairman. This resulted in a number of
view that it, led by the chairman,
agreed areas of focus, which included
is competent to deal with any new
board composition and succession
appointments to the board. Any new
planning, recommendations in
appointments are discussed at a full
connection with the remuneration and
board meeting, taking into account
audit committees and ongoing work
an assessment of the skills and
on risk and board evaluation.
they 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 shareholders, the
chairman aims personally to respond
to communications received from
individuals.
The 2021 AGM, whilst open to
shareholders, was again held in
Tunbridge Wells with the board’s
recommendation that shareholders
did not attend in person due to the
ongoing Covid-19 situation. The
AGM was held with the minimum
number of members (in this case
the chairman and chief executive)
required to convene a valid meeting.
All other directors joined the meeting
by video-link. The proceedings were
broadcast via a live webcast which was
available for shareholders to watch
for a month following the meeting
via the Group’s website. Voting was
determined by poll taking account
of the proxy instructions received
from shareholders. Shareholders
were encouraged to, and did, raise
questions before the AGM and where
appropriate these were addressed at
the meeting by members of the board.
In this way the board sought to create
an environment in which shareholders
were able to vote by proxy and engage
with the board to the fullest extent
possible under the circumstances.
experience required for the board to
During 2021, the executive directors
successfully formulate and execute
Relations with shareholders and AGM
took part in a number of online
Group strategy, the current skills and
The board attaches great importance
presentations, including two events
experience of board members and
to communications with both
hosted through the Investor Meet
those of the candidate, as well as
institutional and private shareholders.
Company platform. These were live
feedback from the board evaluation
The executive directors regularly
webinars following, respectively,
process. Professional consultants may
engage with shareholders, doing so
the announcement of the 2020
be engaged to assist in identifying
through digital technology whilst
results and interim results for 2021,
47
CORPORATE GOVERNANCE continued
available to existing and prospective
shareholders, and providing an
opportunity for questions to be posed
to the directors after the presentation.
The board acknowledges the
important role that technology
can play in facilitating shareholder
engagement and will continue
to host additional online events,
including those specifically providing
a forum for engaging with greater
numbers of smaller shareholders.
Such events would be in addition to
its physical AGM, which the board
continues to value highly as an
opportunity to meet and get to know
shareholders in person.
The board uses the Group’s website
(www.mpevans.co.uk) to make
available details of the AGMs,
the results of the votes cast at
those meetings, and reports and
presentations given at meetings with
investors.
ACCOUNTABILITY
Financial reporting
A detailed review of the performance
and financial position of the Group is
included in the chairman’s statement
and the strategic report. The board
uses these and the report of the
directors to present a balanced and
understandable assessment of the
Group’s position and prospects.
The directors’ responsibility for the
financial statements is described on
page 42 of the report of the directors.
Risk management
The directors acknowledge their
responsibilities for the Group’s
system of risk management. Such
a system can provide reasonable,
but not absolute, assurance
against material misstatement or
loss. A review of the process of
risk identification, evaluation and
management is carried out by the
audit committee. The committee
considers the Group’s principal risks,
and a summary is presented to the
board for discussion and approval.
The review process considers the
control environment and the major
business risks faced by the Group. In
summary, this is reported on pages
27 to 31.
Important control procedures,
in addition to the day-to-day
supervision of parent-Company
business, include regular executive
visits to the areas of operation of
the Group and of its associates,
comparison of operating performance
and monthly management accounts
with plans and budgets, application
of authorisation limits, internal
audit of subsidiary undertakings
and frequent communication with
local management. Internal audit is
subject to periodic external review.
During 2021, as a result of Covid-19
travel restrictions, physical visits by
the executive team were still not
possible. Instead, supervision of
operations has been maintained
through a series of ‘virtual visits’
using digital technology. During these
visits executive directors, and from
time-to-time non-executive directors,
have engaged in discussion with
field managers, reviewing detailed
operational reports, photographs
and video and drone footage of
the operations. Under normal
circumstances, non-executive board
members take part in a visit to the
Group’s operations every two years.
Going concern
The board has assessed and
concluded on the going-concern
status of the Group, and further
information is included in the
directors’ report on page 42.
Viability
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
reviewed by the board. Due to the
long-term nature of the industry
within which the Group operates, the
board has concluded that projections
should be prepared, and therefore
viability considered, over a 10-year
period.
At the year end, the Group held a
cash balance of over US$65 million.
Furthermore, as disclosed in note
22, at the year end the Group had
available undrawn finance facilities
of up to US$20 million. The Group’s
plans for further development of its
Indonesian operations have been
taken into consideration, as set out
in the strategic report, including
development of existing projects,
investment in new hectarage,
and appropriate financing where
necessary.
Principal areas of risk, and their
mitigation, are included in the section
on risk management on pages 27
to 31. As noted, whilst legislative
changes in Indonesia could adversely
impact on the viability of the Group in
its current form, the board monitors
the situation carefully and considers
the risk to be low. Financially, the
main risk to the Group’s results is
commodity-price fluctuation, and as
has been demonstrated, the Group
is able to continue delivering returns
even during periods of lower crude-
palm-oil prices.
The Group’s prospects remain sound,
in particular given the young average
age of its palms, at approximately
9 years. An upward trend in crop
is expected to last until towards
the end of the decade. Given these
48
M.P. EVANS GROUP PLCANNUAL REPORT 2021 prospects and the resources available
to the Group, the board intends, where
possible, to maintain or increase,
normal dividends in future years from
their current levels.
In light of the above, the board has
not identified any significant concerns
regarding the Group’s longer-term
viability.
AUDIT COMMITTEE REPORT
The audit committee is formally
constituted with written terms of
reference (which are available on the
Company’s website www.mpevans.
co.uk) and is chaired by Jock Green-
Armytage. The other members are
Philip Fletcher, Bruce Tozer and Darian
McBain. The executive directors
are not members of the committee
but can be invited to attend its
meetings. The auditors of the Group
may also attend part or all of each
meeting and they have direct access
to the committee for independent
discussions, without the presence
of the executive directors. The
committee met four times during 2021
and each meeting was attended by all
of the members. The external auditors
attended two of the meetings.
The audit committee may examine
any matters relating to the financial
affairs of the Group or the Group’s
audit; this includes reviews of the
annual accounts and announcements,
accounting policies, compliance with
accounting standards, reviewing
the Group’s principal risks, the
appointment of and fees of auditors
and such other related matters as the
board may require.
During the year the audit committee
has:
• Reviewed the Group’s external
financial reporting, including
receiving a report from the external
auditors on the audit work they
have performed;
• Assessed critical accounting
judgements and key estimates
made during the year;
• Considered and approved the
Group’s risk analysis;
• Reviewed the quality and
effectiveness of the external audit
and considered points arising
from it;
• Considered and agreed a response
to the government’s consultation
on ‘restoring trust in audit and
corporate governance’;
• Reviewed the Group’s
whistleblower policy and
implementation, including
assessment of briefings of reports
made to the independent hotline;
• Reviewed and strengthened
the Group’s process for risk
identification; and
• Considered and approved the
key accounting considerations
external auditors have provided only
audit services during the current
year. Accordingly, the board does not
consider there to be a risk that the
provision of non-audit services may
compromise the external auditors’
independence.
To assess the effectiveness of the
auditors, the committee will review
their fulfilment of the agreed audit
plan and variations from it, and the
auditors’ report on issues arising
during the course of the audit.
Financial reporting and review of
financial statements
The committee is able to ensure it
has a full understanding of business
performance through its receipt of
regular financial and operational
reporting, its review of the budget
and long-term plan and its discussion
of key accounting policies and
judgements. It has specifically
addressed the:
• Accounting treatment for the sale
following completion of the sale of
of land by a Group company;
land by a Group company.
Auditors
The auditors were appointed, following
a tender exercise, in 2019. The audit
partner changes at least every five
years in accordance with professional
and regulatory standards in order to
protect independence and objectivity.
Anna Draper was the audit partner for
the 2021 audit.
The audit committee meets the
external auditors to consider audit
planning and the results of the
external audit. The committee
specifically considered the scope
of the Group auditors’ engagement
and agreed the significant risks for
the audit of the 2021 results. The
• Group’s equity valuation, as
disclosed in the annual report; and
• Ongoing validity of key judgements
in the financial statements.
After reviewing presentations and
reports from management and
consulting with the auditors, the
audit committee is satisfied that
the financial statements properly
present the critical judgements and
key estimates for both the amounts
reported and relevant disclosures.
The committee is also satisfied that
the significant assumptions used for
determining the value of assets and
liabilities have been appropriately
scrutinised, challenged and are
sufficiently robust.
49
REMUNERATION REPORT
REMUNERATION COMMITTEE
The remuneration committee, which is formally constituted
with written terms of reference (available on the
Company’s website at www.mpevans.co.uk), keeps under
review the remuneration and terms of employment of the
executive directors and recommends such remuneration
and terms to the board. The committee comprised
Jock Green-Armytage, Bruce Tozer and Darian McBain
throughout 2021, and is chaired by Jock Green-Armytage.
SERVICE CONTRACTS
All of the UK executive directors have service contracts with
the Company. These contracts continue until terminated
by either party giving not less than one year’s notice in
writing. The executive director based overseas has a service
contract with a subsidiary company with a notice period
of less than one year. The non-executive directors do not
have service contracts or provisions for pre-determined
compensation on termination of their appointment.
REMUNERATION POLICY
The Group’s remuneration committee recognises
that the Group’s success depends, in part, on the
performance of the directors and senior management,
and the importance of ensuring that employees are
incentivised. Its philosophy is to offer a transparent and
simple remuneration package to the executive directors,
comprising a salary and a bonus related to current
results and personal performance (including significant
additional contribution in terms of time and expertise).
For the UK executive directors, half of the bonus is
payable in cash and half is deferred into an award of
options on fully-paid shares which vest three years after
their grant, subject to continued employment by the
Group. This structure for remuneration is designed to be
easily understood by both executives and shareholders.
It aims to encourage the executive directors to work
collegiately, focus their efforts on making decisions that
are in the Group’s best long-term interests, and, to some
extent, share in the benefits that accrue to shareholders
from a higher future share price.
LONG-TERM INCENTIVE SCHEME
The long-term incentive scheme established in 2017
governs the grant of both deferred-bonus awards to UK-
based executive directors and annual awards of fully-paid
shares to senior staff other than those directors. The
award of fully-paid shares has the advantage of being
substantially less dilutive than market-priced share
options, whilst continuing to provide an adequate level of
incentive to the recipient.
The long-term incentive for UK-based executive directors
is through the award of fully-paid share options under
the deferred-bonus policy described above. No additional
performance criteria attach to the deferred-bonus awards
since the original bonus will have been performance
related.
In respect of senior staff who are not UK-based executive
directors, the Group aims annually to grant options in a
limited number of fully-paid shares which vest after three
years subject to continued employment by the Group.
This is designed to retain valued individuals in a growing
and competitive sector. No performance criteria attach to
these awards.
EXECUTIVE DIRECTORS
When determining the remuneration of the executive
directors, the remuneration committee considers the pay
and conditions across the Group, particularly those of
the senior management of the operations in Indonesia.
The Group aims to provide remuneration packages for the
directors and senior management which are a fair reward
for their contribution to the business, having regard
to the complexity of the Group’s operations and the
need to attract, retain and motivate high-quality senior
management. Remuneration packages are designed to
be broadly comparable with those offered by similar
businesses, such as European plantation and AIM-listed
companies.
Non-pensionable bonuses may be awarded annually in
arrears at the discretion of the committee, taking account
of the Group’s performance during the period and other
targeted objectives. Bonuses do not exceed twelve months’
salary, half payable in cash and half deferred into an
award of fully-paid shares which vest three years after
their grant, subject to continued employment by the Group
(as described above). The bonuses for 2021 took into
account, inter alia, the record level of crop and production
in 2021; the Group’s response to the Covid-19 pandemic,
with low levels of confirmed cases, successful vaccination
programmes and minimal disruption to operations;
successful commissioning of the Group’s fifth mill in
Bumi Mas; and completion of the sale of the Group’s
remaining land assets in Malaysia in furtherance of the
board’s strategy. The absolute value of these measures was
assessed, as was their outturn against budget.
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
50
M.P. EVANS GROUP PLCANNUAL REPORT 2021 REPORT OF THE DIRECTORS
DIRECTORS’ REMUNERATION REPORT
TOTAL DIRECTORS’ REMUNERATION FOR THE YEAR ENDED 31 DECEMBER 2021
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
2021
£
TOTAL
REMUNERATION
2020
£
Executive directors
P E Hadsley-Chaplin
246,329
123,165
493,686
–
T R J Price4
M H Coulson
K Chandra Sekaran
198,062
–
–
–
–
230,958
115,479
115,479
32,690
21,854
–
–
27,896
37,880
41,170
18,530
–
2,333
4,000
–
–
81,284
56,155
–
435,270
637,003
576,615
198,062
298,742
681,730
456,804
–
1,169,035
238,644
115,479
101,756
78,264
6,333
137,439
1,846,950
1,437,276
Non-executive directors
J M Green-Armytage
P A Fletcher
B C Tozer
D M McBain
42,350
36,250
36,250
36,250
151,100
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
42,350
36,250
36,250
36,250
41,100
35,200
35,200
35,200
151,100
146,700
Total
1,320,135
238,644
115,479
101,756
78,264
6,333
137,439
1,998,050
1,583,976
1. In line with the Group remuneration policy, half of the bonus for the year to Mr M H Coulson (being 12 months’ salary) has
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”.
4. The salary and fees for Mr T R J Price include an amount paid to him in lieu of notice upon his resignation during the year.
The annual ratio for total remuneration of the former chief executive in relation to the median of the Group’s UK payroll
excluding this individual was 5.3 in 2021 (2020 – 5.9). The equivalent ratio for the percentage increase in annual total
remuneration was 1.4 (2020 – 4.9).
and motivate high-quality non-executive directors and
the level of fees paid for similar roles in equivalent
companies. The aggregate amount authorised (excluding
any fees for chairing of committees) under the Company’s
Articles of Association for non-executive director fees
has, since 2010, been limited to £150,000. Since that
time, non-executive directors have typically received
inflationary annual increases, and the total in 2021 is now
close to that limit. It is proposed, as a resolution at the
forthcoming annual general meeting, to increase this limit
to £250,000.
EXECUTIVE SHARE-OPTION SCHEME
During 2021 Tristan Price, whilst chief executive, and
K Chandra Sekaran who was appointed as an executive
member of the board, were members of the executive
share-option scheme which was established in 2012.
Options granted under this scheme gave Tristan Price
and K Chandra Sekaran the right to purchase shares on
a future date at the market price of the shares on the
date that the options were granted. As such, the value
of any option is closely tied to the performance of the
Group as reflected in its share price. There will be no gain
on exercise unless the share price on the exercise date
exceeds the share price on the date the options were
granted. On 31 December 2021, options over no shares
(2020 – 125,000) granted to Tristan Price under this scheme
remained outstanding. During the year, 125,000 options
were exercised by him (2020 - none) and none (2020 -
none) lapsed. On 31 December 2021 options over 50,000
shares granted to K Chandra Sekaran under this scheme
remained outstanding.
During the year, Matthew Coulson was a member of the
long-term incentive scheme established in 2017 described
above, under which half of any discretionary bonus is
deferred into options over fully-paid shares. Under this
arrangement options on 13,748 fully-paid shares were
awarded in 2021 (2020 – 37,764), representing half of the
bonus awarded to Matthew Coulson.
51
M.P. EVANS GROUP PLC
ANNUAL REPORT 2021
DIRECTORS’ REMUNERATION REPORT continued
OPTIONS HELD OVER SHARES OF THE COMPANY BY THE EXECUTIVE DIRECTORS
DURING THE YEAR ENDED 31 DECEMBER 2021
BALANCE
AT 1 JAN
2021*
GRANTED
IN THE
YEAR
EXERCISED
IN THE
YEAR
BALANCE
AT 31 DEC
2021
EXERCISE
PRICE
PENCE
DATE FROM
WHICH
NORMALLY
EXERCISABLE
DATE OF
GRANT
EXPIRY
DATE
Executive share-option scheme
T R J Price
K Chandra Sekaran
Total
50,000
5,750
44,250
25,000
125,000
30,000
20,000
50,000
175,000
Long-term incentive scheme
T R J Price
M H Coulson
K Chandra Sekaran
12,059
8,272
7,890
14,268
42,489
8,331
5,826
5,557
10,049
–
29,763
3,000
3,000
3,000
9,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
13,748
13,748
—
—
—
—
50,000
5,750
44,250
25,000
125,000
—
—
—
125,000
12,059
8,272
7,890
14,268
42,489
8,331
—
—
—
—
8,331
—
—
—
—
—
—
—
—
—
30,000
20,000
50,000
50,000
—
—
—
—
—
—
5,826
5,557
10,049
13,748
35,180
3,000
3,000
3,000
9,000
Total
81,252
13,748
50,820
44,180
* Or later date of appointment
483.21
520.00
510.00
410.50
483.21
412.50
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
19 Jun 12
19 Jun 15
19 Jun 22
27 Apr 15
27 Apr 18
27 Apr 25
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
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
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
14 Dec 21
14 Dec 24
13 Dec 31
1 Jul 19
1 Jul 20
1 Jul 21
1 Jul 22
1 Jul 23
1 Jul 24
30 Jun 29
30 Jun 30
30 Jun 31
No options are held by either the chairman or
non-executive directors.
At 31 December 2021 the middle-market quotation for
the Company’s shares, as derived from the London Stock
Exchange Daily Official List, was 834p, as compared with
the high and low quotations for the year of 908p and
577.50p respectively.
whilst in the employment of the Company, and life-
assurance cover based on a multiple of salary. No
element of a director’s remuneration package, other than
basic salary, is pensionable. Individuals may elect to forgo
contributions to the SIPP, in which case they receive an
additional salary paid in lieu of the employer’s pension
contributions at the same cost to the Company.
PENSIONS
The Company sponsors self-invested personal pensions
(“SIPPs”) for the UK executive directors. Contributions
made by the Company to the SIPPs and to a life-
assurance company give the executives a pension at
retirement, a pension to a spouse payable on death
Approved by the board of directors and
signed by its order.
Katya Merrick
Company secretary
22 March 2022
52
M.P. EVANS GROUP PLCANNUAL REPORT 2021 INDEPENDENT AUDITORS’ REPORT
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 2021 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK-adopted International
Accounting Standards;
• 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 accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of M.P. Evans Group PLC (the ‘parent Company’) and its subsidiaries (the
‘Group’) for the year ended 31 December 2021 which comprise the consolidated income statement, consolidated
statement of comprehensive income, consolidated and parent Company balance sheets, consolidated and parent
Company statements of changes in equity, consolidated cash flow statement and notes to the consolidated and parent-
Company accounts, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group financial statements is
applicable law and UK-adopted international accounting standards. 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).
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
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
We remain independent of the Group and the parent Company in accordance with the ethical requirements that are
relevant to our audit of the financial statements 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 that the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group
and the parent Company’s ability to continue to adopt the going concern basis of accounting included:
• a review of the directors’ assessment of going concern including the potential impact of Covid-19, the conflict in
Ukraine and consideration of the key assumptions used in the forecasts including: comparing the CPO price used
to historical data and price forecasts; corroborating the historically achieved oil-extraction rate to supporting
documentation and considering the reasonableness of forecast extraction rates for each estate; considering forecast
production by comparing to historical results along with taking into account the age of planted areas in each estate.
• consideration of the directors’ sensitivity analysis along with performing further sensitivities on the revenue and
gross profit margin assumptions.
53
INDEPENDENT AUDITORS’ REPORT continued
• an assessment of the appropriateness and accuracy of cash flow forecasts used by management by comparing prior
year forecasts to current year actuals.
• a review of whether the disclosures are appropriate for the circumstances of the entity and provide sufficient
information about the Group and its subsidiaries and the directors’ consideration of their ability to continue as a
going concern.
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.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
OVERVIEW
COVERAGE
KEY AUDIT MATTERS
MATERIALITY
78% (2020 – 90%) of
Group profit before tax
84% (2020 – 86%) of
Group revenue
77% (2020 – 72%) of
Group total assets
Valuation of biological assets
2021
2020
Group financial statements
as a whole
US$4,900,000 (2020 US$1,400,000)
based on 5% of adjusted profit
before tax (2020 - 5% of profit
before tax).
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
The Group financial statements are a consolidation of twenty one companies consisting of the parent Company,
three UK-incorporated subsidiary companies, thirteen Indonesian subsidiary companies, one Singapore-incorporated
company and three associate entities. The majority of the Group’s operations are located in Indonesia with the head
office and main group accounting function located in the United Kingdom.
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s
system of internal control and assessing the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including assessing whether there was evidence of bias
by the directors that may have represented a risk of material misstatement.
Based on our assessment, we identified five (2020 seven) 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 seven (2020 nine) 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 the Group level.
As part of the audit strategy, senior members of the Group audit team attended a number of the board’s remote
quarterly review meetings with estate management.
Our involvement with component auditors
For the work performed by component auditors, we determined the level of involvement needed in order to be able
to conclude whether sufficient appropriate audit evidence has been obtained as a basis for our opinion on the Group
financial statements as a whole. In light of the travel restrictions caused by the Covid-19 pandemic, the group team
was unable to travel to Indonesia, but were able to communicate effectively with component auditors and local
54
M.P. EVANS GROUP PLCANNUAL REPORT 2021
INDEPENDENT AUDITORS’ REPORT
management remotely, in order to direct the component auditor’s work and review and evaluate the results of their
work as necessary. Our involvement with component auditors included the following:
• 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.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
KEY AUDIT MATTER
HOW THE SCOPE OF OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Valuation of biological assets
Our audit work included, but was not restricted to, the following:
(note 3 and 17)
We considered the valuation model applied by reference to industry research and
Management exercise
determined it to be appropriate for the purpose of this valuation in accordance with
significant judgement in
IAS 41.
determining the method to
be applied in determining
fair value of biological
assets as well as in the
underlying assumptions
used in the calculation.
These assumptions include
the estimation of the weight
of unharvested fresh fruit
bunches (“ffb”) at the balance
sheet date (based on post-
year-end production figures
and average growth rates),
selling price, harvesting and
transport costs. We identified
this as a significant risk due
to the inherent uncertainty
around the future estimates.
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 review procedures and investigating any
variances against prior year production trends;
• average growth rate – agreed to externally published research papers;
• selling price – agreed to sales price achieved in December 2021 by agreeing a
sample of December sales to supporting documents;
• costs to sell – agreed to internal cost data for December 2021 and verified
by the component audit team by agreeing a sample of costs to supporting
documentation.
We considered the appropriateness of the financial statement disclosures against the
requirements of the accounting standards.
We checked the mathematical accuracy of the model.
Key observations: we consider the judgements and estimates made by management
when assessing the valuation of biological assets to be reasonable and that the
disclosures in the financial statements are appropriate and in accordance with
relevant accounting standards.
55
INDEPENDENT AUDITORS’ REPORT continued
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a
lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements
below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial
statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and
performance materiality as follows:
Group financial statements
Parent-Company financial statements
2021
US$
2020
US$
2021
US$
2020
US$
Materiality
4,900,000
1,400,000
2,838,000
1,330,000
Basis for determining materiality
5% of adjusted
profit before tax
5% of profit
before tax
2% of total assets
95% of Group
materiality
Rationale for benchmark
applied
We consider profit to be a key
performance measure to a user for
the purpose of evaluating financial
performance
Calculated as 2% of total assets
restricted to 95% of Group materiality
due to aggregation risk
Performance materiality
3,430,000
980,000
1,986,600
931,000
Basis for determining performance
materiality
70% of
materiality
70% of
materiality
70% of
materiality
70% of
materiality
Rationale for benchmark
applied
70% of materiality based on our experience and knowledge of the Group and parent
Company, Group structure, planned testing approach and history of errors
Materiality for 2021 was based on 5% adjusted profit before tax to exclude the profit on sale of Malaysian land which is
non-recurring in nature.
Component materiality
We set materiality for each component of the Group based on a percentage of between 82% and 20% (2020 between
57% and 15%) of Group materiality dependent on the size and our assessment of the risk of material misstatement of
that component. Component materiality ranged from US$4,000,000 to US$1,000,000 (2020 US$800,000 to US$216,000).
In the audit of each component, we further applied performance materiality levels of 70% of the component
materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the audit committee that we would report to them all individual audit differences in excess of
US$98,000 (2020 US$28,000), being 2% of materiality. We also agreed to report differences below this threshold that, in
our view, warranted reporting on qualitative grounds.
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information included in
the annual report other than the financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or our
56
M.P. EVANS GROUP PLCANNUAL REPORT 2021 INDEPENDENT AUDITORS’ REPORT
knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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 preparation of
the financial statements and for being satisfied that they give a true and fair view, and for
such internal control as the directors determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the parent Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless 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.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of 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 from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
57
M.P. EVANS GROUP PLC
ANNUAL REPORT 2021
INDEPENDENT AUDITORS’ REPORT continued
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
• 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, and the component auditors
considered compliance with Indonesian tax law, Indonesian Sustainable Palm Oil (ISPO) standard and Indonesian
land laws, and we considered the extent to which non-compliance might have a material effect on 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 end by assessing journals posted by super users, journals with no description
and revenue journals. We then evaluated whether there was evidence of bias by the directors that represented a risk
of material misstatement due to fraud.
• We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team
members, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout
the audit. We also instructed and reviewed the work performed by the component team in this regard.”
Our audit procedures were designed to respond to risks of material misstatement in the financial statements,
recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or
through collusion. There are inherent limitations in the audit procedures performed and the further removed non-
compliance with laws 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 members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has 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
22 March 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127)
58
M.P. EVANS GROUP PLCANNUAL REPORT 2021 INDEPENDENT AUDITORS’ REPORT
Kota Bangun nursery
5959
CONS0LIDATED INCOME STATEMENT
For the year ended 31 December 2021
Note
2021
US$’000
2020
US$’000
Continuing operations
Revenue
Cost of sales
Gross profit
Gain on biological assets
Profit on sale of land
Foreign-exchange losses
Other administrative expenses
Other income
Operating profit
Finance income
Finance costs
Profit before tax
Tax on profit on ordinary activities
Profit after tax
Share of associated companies’ profit after tax
Profit for the year
Attributable to:
Owners of M.P. Evans Group PLC
Non-controlling interests
Continuing operations
Basic earnings per 10p share
Diluted earnings per 10p share
Basic earnings per 10p share
Continuing operations
276,592
(172,979)
103,613
1,771
13,946
(820)
(5,380)
1,426
114,556
645
(2,699)
112,502
(23,228)
89,274
2,508
91,782
86,406
5,376
91,782
174,510
(139,755)
34,755
682
—
(1,068)
(4,587)
1,539
31,321
527
(3,408)
28,440
(7,692)
20,748
1,421
22,169
20,371
1,798
22,169
US cents
US cents
158.4
157.9
37.4
37.3
Pence
Pence
115.6
29.2
6
7
8
9
28
11
11
60
M.P. EVANS GROUP PLCANNUAL REPORT 2021 FINANCIAL STATEMENTS
CONS0LIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2021
Other comprehensive income (net of tax)
Items that may be reclassified to the income statement
Exchange (loss)/gain on translation of foreign operations
(780)
313
2021
US$’000
2020
US$’000
Items that will not be reclassified to the income statement
Remeasurement of retirement-benefit obligations
Other comprehensive expense for the year
Profit for the year
Total comprehensive income
Attributable to:
Owners of M.P. Evans Group PLC
Non-controlling interests
814
34
91,782
91,816
86,380
5,436
91,816
(2,502)
(2,189)
22,169
19,980
18,337
1,643
19,980
61
CONS0LIDATED BALANCE SHEET
As at 31 December 2021
COMPANY NUMBER: 1555042
Note
2021
US$’000
2020
US$’000
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investments in associates
Investments
Deferred-tax asset
Trade and other receivables
Current assets
Biological assets
Inventories
Trade and other receivables
Current-tax asset
Current-asset investments
Cash and cash equivalents
Total assets
Current liabilities
Borrowings
Trade and other payables
Current-tax liability
Net current assets
Non-current liabilities
Borrowings
Trade and other payables
Deferred-tax liability
Retirement-benefit obligations
Total liabilities
Net assets
Equity
Share capital
Other reserves
Retained earnings
Equity attributable to the owners of M.P. Evans Group PLC
Non-controlling interests
Total equity
13
13
14
15
16
23
19
17
18
19
20
20
22
21
22
21
23
24
25
27
27
28
11,767
1,222
401,005
13,242
65
3,602
16,618
447,521
4,520
21,754
41,892
2,522
—
65,609
136,297
583,818
20,531
31,200
12,219
63,950
72,347
50,517
—
11,417
12,886
74,820
138,770
445,048
9,232
55,467
366,825
431,524
13,524
445,048
11,767
1,381
390,642
22,154
67
5,046
10,917
441,974
2,749
11,617
48,620
3,968
334
27,222
94,510
536,484
39,605
26,039
6,003
71,647
22,863
66,079
38
10,529
14,051
90,697
162,344
374,140
9,204
55,090
300,117
364,411
9,729
374,140
The financial statements on pages 60 to 87 were approved by the board of directors on 22 March 2022 and signed
on its behalf by
Peter Hadsley-Chaplin
Executive chairman
Matthew Coulson
Chief executive
62
M.P. EVANS GROUP PLCANNUAL REPORT 2021
FINANCIAL STATEMENTS
CONS0LIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
SHARE
CAPITAL
US$’000
OTHER
RESERVES
US$’000
RETAINED
EARNINGS
US$’000
Note
NON-
CONTROLLING
INTERESTS
US$’000
TOTAL
US$’000
TOTAL
EQUITY
US$’000
—
2,508
83,898
86,406
5,376
91,782
25
10
15
26
25
10
15
26
—
—
28
—
—
—
28
9,204
9,232
—
—
—
23
(19)
—
—
—
4
9,200
9,204
(404)
378
(26)
60
34
2,104
84,276
86,380
5,436
91,816
799
—
—
827
—
827
(20,527)
(20,527)
(1,641)
(22,168)
(2,424)
2,424
—
(102)
(1,727)
55,090
55,467
535
(17,568)
300,117
366,825
433
(19,267)
364,411
431,524
—
—
(1,641)
9,729
13,524
—
433
(20,908)
374,140
445,048
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)
19
—
(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
Profit for the year
Other comprehensive
(expense)/income for
the year
Total comprehensive income
for the year
Issue of share capital
Dividends paid
Dividends from associates
Credit to equity for
equity-settled share-based
payments
Transactions with owners
At 1 January 2021
At 31 December 2021
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
63
CONS0LIDATED CASH-FLOW STATEMENT
For the year ended 31 December 2021
Note
29
14
13
6
30
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
Net cash from/(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
Issue of Company shares
Buy-back of Company shares
Net cash used 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
20
2021
US$’000
92,272
2020
US$’000
39,598
(32,510)
(41,409)
(8)
316
334
17,630
15,125
887
—
(34,636)
(218)
(20,527)
(164)
827
—
(54,718)
38,441
27,222
(54)
65,609
(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
64
M.P. EVANS GROUP PLCANNUAL REPORT 2021 FINANCIAL STATEMENTS
New housing at Bumi Mas
65
NOTES TO THE CONSOLIDATED ACCOUNTS
For the year ended 31 December 2021
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 100. 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 25. The Group is domiciled in the UK.
The functional currency of M.P. Evans Group PLC, determined under IAS 21, is the US Dollar. Likewise, the functional currency of
subsidiaries operating in the palm-oil sector is the US Dollar, 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$3,492,000 (2020 loss US$4,518,000). The Company’s separate
financial statements are set out on pages 88 to 93.
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 94.
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 2021. 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.
IFRS 16 (amendments) Covid-19-related rent concessions
IFRS 4 (amendments) Applying IFRS 9 Financial Instruments with IFRS 4
Interest rate benchmark reform – phase 2 (amendments to various standards)
(b) New standards, amendments and interpretations issued but not effective for the year beginning 1 January 2021 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 (amendments) Deferral of application and other amendments
IAS 1 (amendments) Classification of liabilities as current or non-current
IAS 1 (amendments) Disclosure of accounting policies
IFRS 3 (amendments) Reference to the conceptual framework
IAS 8 (amendments) Definition of accounting estimates
IAS 16 (amendments) Proceeds before intended use
IAS 37 (amendments) Cost of fulfilling a contract
IAS 12 (amendments) Deferred tax arising from a single transaction
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 UK-adopted
International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies
reporting under IFRS. On 31 December 2020, IFRS as adopted by the European Union at that date was brought into the UK law
and became UK-adopted international accounting standards, with future changes being subject to endorsement by the UK
Endorsement Board. The group transitioned to UK-adopted international accounting standards in its consolidated financial
statements on 1 January 2021. There was no impact or changes in accounting from the transition. 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 considering in detail the period up to the end of 2023, 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.
66
M.P. EVANS GROUP PLCANNUAL REPORT 2021
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS
3 Accounting policies continued
(c) Basis of consolidation
The Group financial statements consolidate the financial statements of the Company and all of its subsidiaries, and equity
accounts for its associated undertakings. The Group treats as subsidiaries those entities in which it has 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
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.
67
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.
(i)
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 2021. 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 less any profits deferred on sales made to associated companies.
(m) Inventories
Inventories are valued at the lower end 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.
68
M.P. EVANS GROUP PLCANNUAL REPORT 2021
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).
69
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
2021
Continuing operations
Revenue
Gross profit
Gain on biological assets
Profit on sale of land
Foreign-exchange (loss)/gain
Other administrative expenses
Other income
Operating profit
Finance income
Finance costs
Profit before tax
Tax
Profit after tax
276,485
103,605
1,771
—
(966)
(325)
1,405
292
(280)
(21,161)
—
—
—
—
—
—
—
—
—
—
107
8
—
13,946
146
(5,055)
21
353
(2,419)
(2,067)
Share of associated companies’ profit after tax
1,460
1,048
—
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
416,748
107,438
5,247
58,202
32,510
8
20,627
167
—
—
7,995
17,531
28,859
—
—
—
—
—
—
80,568
138,770
—
—
14
—
32,510
8
20,641
167
276,592*
103,613
1,771
13,946
(820)
(5,380)
1,426
114,556
645
(2,699)
112,502
(23,228)
89,274
2,508
91,782
434,279
136,297
13,242
583,818
* US$94.1 million of revenue (34.0%) was from sales to 3 customers (12.4%, 11.2%, and 10.4% respectively).
70
M.P. EVANS GROUP PLCANNUAL REPORT 2021 FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS
PLANTATION
INDONESIA
US$’000
PROPERTY
MALAYSIA
US$’000
OTHER
US$’000
TOTAL
US$’000
174,458
34,851
682
(761)
(554)
1,518
89
(316)
(6,377)
—
—
—
—
—
—
—
—
—
52
(96)
—
(307)
(4,033)
21
438
(3,092)
(1,315)
407,763
84,481
5,003
—
—
17,151
12,057
10,029
—
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
58,592
41,392
113
17,755
165
—
—
—
—
—
103,752
162,344
17
—
21
—
41,409
113
17,776
165
4 Segment information continued
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
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
Share of associated companies’ profit after tax
1,070
351
—
* US$66.5 million of revenue (38.1%) was from sales to 2 customers (20.9% and 17.2% respectively).
5 Employees
Employee costs during the year
Wages and salaries
Social security costs
Current service cost of retirement benefit (see note 24)
Other pension costs
Share-based payment charge
2021
US$’000
35,092
2,857
2,347
491
433
2020
US$’000
20,465
2,086
1,392
182
591
41,220
24,716
71
NOTES TO THE CONSOLIDATED ACCOUNTS continued
5 Employees continued
Average monthly number of people employed (including executive directors)
Estate manual
Local management
United Kingdom head office
2021
Number
2020
Number
8,115
105
8
8,228
7,078
98
7
7,183
Details of directors’ remuneration required by the Companies Act 2006 are shown within the directors’ remuneration
report on page 51 and form part of these audited financial statements.
6 Finance income
Interest receivable on bank deposits
Interest receivable on related party loans
7 Finance costs
Interest payable on bank loans and overdrafts
8 Profit before tax
Profit before tax is stated after charging:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Auditors’ remuneration
Employee costs (note 5)
The analysis of auditors’ remuneration is as follows:
Audit of UK parent Company
Audit of consolidated financial statements
Audit of overseas subsidiaries
Total audit services
Taxation advisory services
Total non-audit services
2021
US$’000
316
329
645
2021
US$’000
2,699
2020
US$’000
108
419
527
2020
US$’000
3,408
2021
US$’000
2020
US$’000
20,641
17,776
167
363
165
318
41,220
24,716
27
150
160
337
—
—
25
146
121
292
—
—
* In addition to the above, US$26,000 (2020 US$26,000) were payable to other firms for the audit for the subsidiary companies.
72
M.P. EVANS GROUP PLCANNUAL REPORT 2021 FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS
9 Tax on profit on ordinary activities
United Kingdom corporation tax charge for the year
Relief for overseas taxation
Overseas taxation
Adjustments in respect of prior years
Total current tax
Deferred taxation – origination and reversal of temporary differences (see note 23)
2021
US$’000
508
(508)
—
21,124
—
21,124
2,104
23,228
2020
US$’000
862
(862)
—
8,533
—
8,533
(841)
7,692
The standard rate of tax for the year, based on the United Kingdom standard rate of corporation tax, was 19% (2020 – 19%). It is
due to increase to 25% in April 2023. The standard rate of Indonesian tax was 22% (2020 – 22%). The actual tax charge is higher
than the standard rate for the reasons set out in the reconciliation below.
Profit on ordinary activities before tax
Tax on profit on ordinary activities at the standard rate
Factors affecting the charge for the year
Profits taxed at higher standard tax rate
Expenses not deductible
(Reinstatement of losses)/losses no longer available
Adjustment to deferred tax on fair value recognition
Lower rate on fixed asset disposals
Withholding tax on overseas dividends and interest
Adjustment relating to intercompany loan relationships
Utilisation of losses brought forward
Unrelieved losses
Other differences
Total tax charge
2021
US$’000
112,502
21,375
2,886
918
(1,003)
—
(1,352)
122
335
(254)
533
(332)
2020
US$’000
28,440
5,404
1,132
1,342
696
(2,122)
—
454
335
(24)
239
236
23,228
7,692
In addition to the above, the Group recognised a tax charge of US$0.2 million (2020 US$0.7 million credit) on retirement benefit
obligation remeasurement gains (2020 losses), recorded in other comprehensive income.
10 Dividends paid and proposed
2021 interim dividend –10p per 10p share (2020 interim dividend 5.00p)
2020 final dividend –17p per 10p share (2019 final dividend 12.75p)
2021
US$’000
7,377
13,150
20,527
2020
US$’000
3,511
8,594
12,105
Following the year end, the board has proposed a final dividend for 2021 of 25p per 10p share, amounting to US$18.0 million.
The dividend will be paid on or after 17 June 2022 to shareholders on the register at the close of business on 29 April 2022.
73
NOTES TO THE CONSOLIDATED ACCOUNTS continued
11 Basic and diluted earnings per share
The calculation of earnings per 10p share is based on:
Profit for the year attributable to the owners of
M.P. Evans Group PLC
Average number of shares in issue
Diluted average number of shares in issue*
2021
US$’000
86,406
2021
NUMBER OF
SHARES
54,564,864
54,710,139
2020
US$’000
20,371
2020
NUMBER OF
SHARES
54,478,518
54,667,409
* 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 Disposal
As announced on 15 October 2021, the Group completed 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 total sale consideration is 99.9 million Malaysian Ringgit, or US$24.0 million based on the year-end exchange rate. In
accordance with the agreement, 60% of the consideration had been received before the end of the year, with 10% due in January
2022 and the remainder in July 2023. These amounts are included in current and non-current receivables respectively in note 19.
An initial profit on disposal of US$13.9 million has been recognised. However, accounting standards require that 40% of the profit
on disposal be deferred and recognised at the point when Bertam Properties has developed and sold the land. The deferred profit
has been deducted from the carrying value of the associated company, as shown in note 15.
13 Intangible assets
Cost
At 1 January 2021
Additions
At 31 December 2021
Accumulated amortisation
At 1 January 2021
Charge for the year
At 31 December 2021
GOODWILL
US$’000
SOFTWARE
US$’000
11,767
—
11,767
—
—
—
1,665
8
1,673
284
167
451
TOTAL
US$’000
13,432
8
13,440
284
167
451
Net book value at 31 December 2021
11,767
1,222
12,989
Cost
At 1 January 2020
Additions
At 31 December 2020
Accumulated amortisation
At 1 January 2020
Charge for the year
At 31 December 2020
11,767
—
11,767
—
—
—
1,552
113
1,665
119
165
284
13,319
113
13,432
119
165
284
Net book value at 31 December 2020
11,767
1,381
13,148
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).
74
M.P. EVANS GROUP PLCANNUAL REPORT 2021 FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS
13 Intangible assets continued
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 2021 (see page 96). These valuations used a 30-year
forecast period, to reflect the nature and growth profile of the asset, and its long-term resilience to variations in climate
and weather patterns, pre-tax discount rates of 16-19% (2020 – 16-19%), and a mill-gate price for CPO of US$666 for
two years before reverting to US$642 as a long-term average (2020 US$620). A decrease in any of the CPO price, yield or
extraction assumptions of up to 10% would not result in any impairment (2020 impairment of up to US$4.6 million) of
the goodwill relating to Bumi Mas.
PLANT
EQUIPMENT
& VEHICLES
US$’000
CON-
STRUCTION
IN PROGRESS
US$’000
14 Property, plant and equipment
Cost or valuation
At 1 January 2021
Additions
Re-classification
Exchange differences
Disposals
LEASEHOLD
LAND
US$’000
110,133
1,724
504
(7)
(447)
PLANTING
US$’000
BUILDINGS
US$’000
209,769
4,017
—
—
(906)
99,136
—
16,560
(17)
(902)
At 31 December 2021
111,907
212,880
114,777
Accumulated depreciation
At 1 January 2021
Charge for the year
Exchange differences
Disposals
At 31 December 2021
146
19
—
(10)
155
Net book value at 31 December 2021
111,752
47,507
9,270
—
(632)
56,145
156,735
32,335
6,353
(6)
(708)
37,974
76,803
Cost or valuation
At 1 January 2020
Additions
Re-classification
Exchange differences
Disposals
106,083
204,212
83,095
4,248
6,417
—
4
(202)
—
—
(860)
—
16,919
3
(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
17
—
—
146
Net book value at 31 December 2020
109,987
39,206
8,301
—
—
47,507
162,262
27,352
5,478
3
(498)
32,335
66,801
62,697
4,514
11,874
(2)
(1,461)
77,622
30,792
4,999
(2)
(1,140)
34,649
42,973
51,202
4,037
8,901
1
(1,444)
62,697
27,961
3,980
—
(1,149)
30,792
31,905
Included in planting is immature planting with a cost of US$9,381,000 (2020 US$21,540,000).
TOTAL
US$’000
501,422
32,510
—
(26)
(3,978)
19,687
22,255
(28,938)
—
(262)
12,742
529,928
—
—
—
—
—
12,742
18,800
26,707
(25,820)
—
—
110,780
20,641
(8)
(2,490)
128,923
401,005
463,392
41,409
—
8
(3,387)
19,687
501,422
—
—
—
—
—
19,687
94,648
17,776
3
(1,647)
110,780
390,642
75
NOTES TO THE CONSOLIDATED ACCOUNTS continued
14 Property, plant and equipment continued
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$110,983,000 (2020 US$109,608,000).
As at 31 December 2021, the Group had entered into contractual commitments for the acquisition of property, plant and
equipment of US$16,847,000 (2020 US$13,299,000).
Depreciation and amortisation is charged to cost of sales, other than US$11,000 (2020 US$18,000) charged to other administrative
expenses.
At 31 December 2021, the Group accounted for one right-of-use asset (2020 – one asset) as a lease under IFRS 16. The net book
value of the asset was US$nil (2020 US$0.3 million). The lease has a three-year term with fixed payments and the lease liability is
included in note 21.
15 Investments in associates
Details of the Group’s subsidiary and associated undertakings are given on page 94. The Group’s associated companies are both
unlisted.
Share of net assets
At 1 January
Exchange differences
Profit for the year
Dividends received
At 31 December
Unrealised profit - deferral on land sales to associate
2021
US$’000
24,600
(703)
2,508
(2,424)
23,981
(10,739)
13,242
2020
US$’000
24,057
312
1,421
(1,190)
24,600
(2,446)
22,154
The summarised results of the Group’s associated undertakings and the Group’s aggregate share of their summarised results are
shown below:
2021
KERASAAN
US$’000
BERTAM
PROPERTIES
US$’000
TOTAL
US$’000
KERASAAN
US$’000
BERTAM
PROPERTIES
US$’000
2020
TOTAL
US$’000
Total
Revenue
Profit after tax
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Group share
Revenue
Profit after tax
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Carrying value at 31 December
8,676
3,843
4,291
11,846
(1,585)
(743)
13,809
(38%)
3,297
1,460
1,631
4,501
(603)
(282)
5,247
20,256
2,620
50,053
27,702
(9,027)
(21,894)
46,834
(40%)
8,102
1,048
20,021
11,081
(3,612)
(8,756)
18,734
6,693
2,815
4,232
10,409
(874)
(602)
13,165
(38%)
2,543
1,070
1,608
3,955
(332)
(228)
5,003
15,234
878
26,511
29,127
(2,422)
(4,223)
48,993
(40%)
6,093
351
10,604
11,651
(969)
(1,689)
19,597
11,399
2,508
21,652
15,582
(4,215)
(9,038)
23,981
8,636
1,421
12,212
15,606
(1,301)
(1,917)
24,600
76
M.P. EVANS GROUP PLCANNUAL REPORT 2021 16 Investments
Financial assets at fair value through profit or loss (unlisted)
At 1 January
Exchange differences
At 31 December
17 Current biological assets
Ffb prior to harvest
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS
2021
US$’000
2020
US$’000
67
(2)
65
66
1
67
2021
US$’000
4,520
2020
US$’000
2,749
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. During the year, all of the opening balance of ffb prior to harvest was
harvested whilst all of the closing balance arose in the year due to gains in fair value less costs to sell.
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$4.5 million and US$49.7 million. The Group has never included ffb prior to harvest in its internal reporting
and decision-making.
18 Inventories
Processed produce for sale
Estate stores
Nurseries
2021
US$’000
11,319
9,238
1,197
21,754
2020
US$’000
5,356
4,665
1,596
11,617
77
NOTES TO THE CONSOLIDATED ACCOUNTS continued
19 Trade and other receivables
Current assets
Trade receivables
Receivable from smallholder co-operatives
Due from associate company
Loans to related parties
Other receivables
Prepayments and accrued income
Non-current assets
Due from associate company
Loans to related parties
Trade and other receivables analysed by currency of receivable:
Indonesian Rupiah
US Dollar
Sterling
Malaysian Ringgit
2021
US$’000
6,492
7,734
2,396
697
22,398
2,175
41,892
6,890
9,728
16,618
38,566
10,523
84
9,337
58,510
2020
US$’000
3,283
25,364
—
656
17,284
2,033
48,620
—
10,917
10,917
47,700
11,727
94
16
59,537
The majority of palm-oil sales are made for cash payment in advance of delivery. The Group makes full provision against
invoices outstanding for more than 30 days. At 31 December 2021 there was no provision for impairment of trade receivables
(2020 US$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 of US$60.0
million (2020 US$34.1 million) provided to its associated smallholders. All balances due from smallholders, including those
for immature areas, are repayable on demand. However, the Group may allow a longer period of finance at its discretion. At an
early stage in the development of a new project, costs are incurred but not yet allocated to a specific smallholder, awaiting the
completion of further development.
The Group’s expected credit loss on its trade and other receivables and financial guarantees is not material. The Group applies
the simplified approach in IFRS 9 in determining expected credit losses on trade receivables, taking account of their similar risk
characteristics and the Group’s experience. In assessing expected credit losses on non-trade receivables and financial guarantees
under IFRS 9, the Group considers the long-standing relationship with its stakeholders, the ongoing trading of its associated
smallholders, and its ability to continue to recover balances in a planned and controlled manner.
Given the above, receivables from smallholders have been classified as current assets with the exception of those balances not
yet allocated to a specific smallholder-co-operative which are expected to take greater than 12 months to recover. An analysis of
the balance is as follows:
Immature areas - allocated
Mature areas
Current asset
Non-current asset – immature areas – not allocated
2021
US$’000
4,317
3,417
7,734
—
7,734
2020
US$’000
6,232
19,132
25,364
—
25,364
The Group previously 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$10,425,000 (2020 US$11,573,000).
78
M.P. EVANS GROUP PLCANNUAL REPORT 2021 20 Cash and other liquid resources
Cash and cash equivalents
Current-asset investments
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS
2021
US$’000
65,609
—
65,609
2020
US$’000
27,222
334
27,556
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three
months or less. Current-asset investments are bank deposits with a maturity of twelve months or less, which have been pledged
as security against bank loans. The carrying value of these assets approximates their fair value.
21 Trade and other payables
Current liabilities
Trade payables
Payable to smallholder co-operatives
Lease liabilities
Other payables
Non-current liabilities
Lease liabilities (due in 1-2 years)
2021
US$’000
15,857
5,428
38
9,877
31,200
—
—
2020
US$’000
15,302
—
218
10,519
26,039
38
38
The average credit period taken for trade purchases is 50 days (2020 – 49 days). The Group has processes in place to ensure
payables are settled within the agreed terms. The amounts above also reflect the Group’s anticipated cash outflows for these
financial liabilities.
79
NOTES TO THE CONSOLIDATED ACCOUNTS continued
22 Borrowings
Secured borrowing at amortised cost
Bank loans
Total borrowings
Amount due for settlement within one year
Due for settlement in one to two years
Due for settlement in two to five years
Amount due for settlement after one year
Analysis of borrowings by currency:
US Dollar
Indonesian Rupiah
Analysis of anticipated cash outflows:
Within one year
Due within one to two years
Due within two to five years
2021
US$’000
2020
US$’000
71,048
105,684
20,531
17,998
32,519
50,517
71,048
68,936
2,112
71,048
22,384
19,290
33,236
74,910
39,605
15,541
50,538
66,079
105,684
102,809
2,875
105,684
42,000
17,372
52,538
111,910
Bank loans from lenders in Malaysia are secured on the investment in Bertam Properties. 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$121.3 million (2020 US$137.5 million). At the year end, the
Group had undrawn available credit facilities of US$20 million (2020 US$10 million).
The weighted-average interest rate paid on bank loans in the year was 3.3% (2020 – 3.0%).
The analysis of anticipated cash outflows above is based on interest and exchange rates in force at the balance-sheet date.
23 Deferred tax
The following are the major deferred-tax liabilities and assets recognised by the Group and movements thereon:
At 1 January 2021
Charge to income statement
Credit to other comprehensive income
At 31 December 2021
At 1 January 2020
(Charge)/credit to income statement
Credit to other comprehensive income
At 31 December 2020
ACCELERATED
TAX
DEPRECIATION
US$’000
RETIREMENT-
BENEFIT
OBLIGATIONS
US$’000
OTHER TIMING
DIFFERENCES
US$’000
(8,093)
(686)
—
(8,779)
(6,804)
(1,289)
—
(8,093)
3,090
(27)
(228)
2,835
2,102
284
704
3,090
(480)
(1,391)
—
(1,871)
(2,326)
1,846
—
(480)
TOTAL
US$’000
(5,483)
(2,104)
(228)
(7,815)
(7,028)
841
704
(5,483)
80
M.P. EVANS GROUP PLCANNUAL REPORT 2021
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 (2020 US$8.5 million)
that arose in 2017 on the acquisition of PT Bumi Mas Agro. Certain deferred-tax assets and liabilities have been offset. The
following is the analysis of deferred-tax balances (after offset) for financial reporting purposes:
Deferred-tax assets
Deferred-tax liabilities
2021
US$’000
3,602
(11,417)
(7,815)
2020
US$’000
5,046
(10,529)
(5,483)
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$426,090,000 (2020 US$359,651,000).
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$24,777,000 (2020 US$25,511,000).
No liability has been recognised in respect of these differences because the reversal would not give rise to an additional
tax liability.
Key estimate
At the balance-sheet date, the Group had unused tax losses of US$62,089,000 (2020 US$49,160,000) 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$30,070,000 (2020 US$36,395,000) of such losses. No deferred-tax asset has been recognised
in respect of the remaining US$32,018,000 (2020 US12,764,000) due to the unpredictability of future profit streams. 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, there would be no impact on the deferred-tax asset.
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$1,675,000 (2020 US$1,818,000). No asset has been
recognised in respect of these differences due to the unpredictability of parent-Company future profit streams.
81
NOTES TO THE CONSOLIDATED ACCOUNTS continued
24 Retirement-benefit obligations
The Group’s only obligation relates to an unfunded, non-contributory, post-employment statutory benefit scheme in Indonesia. A
lump sum is paid to employees on retirement or on leaving the Group’s employment. This terminal benefit is accrued by the Group
based on an annual actuarial review and charged in the income statement on the basis of individuals’ service at the balance-
sheet date. Retirement is assumed at the earlier of age 55 years or 30 years’ service. Standard Indonesian mortality assumptions
are used, and no allowance is made for internal promotion. A range of different discount rates are used for each of the Indonesian
subsidiary companies, based on actuarial advice.
The main assumptions used to assess the Group’s liabilities are:
Discount rate
Salary increase per annum
Reconciliation of scheme liabilities:
Current-service cost
Past service cost
Interest cost
Actuarial (gain)/loss
Less: Benefits paid out
Movement in the year
At 1 January
Exchange differences
At 31 December
2021
%
2020
%
5.25-7.50
6.00-8.00
7.00
7.00
2021
US$’000
2020
US$’000
2,347
(2,117)
902
(1,043)
89
(1,055)
(966)
14,051
(199)
12,886
1,392
—
661
3,247
5,300
(594)
4,706
9,401
(56)
14,051
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$1.3 million and
US$1.5 million.
82
M.P. EVANS GROUP PLCANNUAL REPORT 2021
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS
AUTHORISED
NUMBER
ALLOTTED,
FULLY PAID
AND VOTING
NUMBER
87,000,000
54,490,253
—
206,000
87,000,000
54,696,253
AUTHORISED
£’000
8,700
—
8,700
87,000,000
54,461,220
8,700
—
—
182,320
(153,287)
—
—
87,000,000
54,490,253
8,700
ALLOTTED,
FULLY PAID
AND VOTING
US$’000
9,204
28
9,232
9,200
23
(19)
9,204
25 Share capital
At 1 January 2021
Issued
At 31 December 2021
At 1 January 2020
Issued
Redeemed
At 31 December 2020
During the year, in anticipation of the exercise of share options, the Company issued 206,000 10p shares for US$28,000 cash
consideration. Furthermore, certain share options were exercised in the year giving rise to the share premium shown in note 27.
There were no share buy-backs in the year.
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
2021
NUMBER
OF SHARE
OPTIONS
326,402
46,248
(196,570)
176,080
50,750
2021
WEIGHTED-
AVERAGE
EXERCISE PRICE
(PENCE)
253.5
0.0
305.1
129.2
448.2
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
0.0
253.5
472.7
The weighted-average share price at the date of exercise for share options exercised during the year was 769p. The options
outstanding at 31 December 2021 had a weighted-average remaining contractual life of 6.6 years and exercise prices in the
range of 0 to 483p. The Group recognised total expenses of US$433,000 related to equity-settled share-based payments (2020
US$609,000), with options granted in the year valued using a Black-Scholes pricing model based on exercise after three years,
share volatility over the last year of 24%, assumed dividends of 3-4%, and a risk-free rate of approximately 1%. The fair value
of options granted in the year was between 509p and 664p. Details of the directors’ share options are set out in the directors’
remuneration report on pages 50 to 52.
83
NOTES TO THE CONSOLIDATED ACCOUNTS continued
27 Reserves
SHARE-
PREMIUM
ACCOUNT
US$’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$’000
31,582
553
4,301
766
(5)
1,072
16,856
(35)
55,090
300,117
—
—
—
810
—
—
—
—
(5)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(11)
—
—
—
—
—
—
—
—
2,508
(489)
—
—
—
(2,424)
10
(112)
—
—
90
—
—
—
—
—
2,508
83,898
(404)
(376)
—
754
799
—
—
(20,527)
(2,424)
2,424
(102)
535
32,392
548
4,301
766
(6)
960
16,451
55
55,467
366,825
1,780
16,414
11
55,385
294,139
1,421
—
1,421
18,950
211
(46)
168
145
31,582
550
4,282
766
—
—
—
—
—
—
—
—
—
3
—
—
—
—
—
—
—
—
—
—
19
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(23)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(1,190)
—
—
—
—
—
—
—
(2,346)
(23)
—
19
(1,155)
—
(12,105)
(1,190)
1,190
(690)
1,299
31,582
553
4,301
766
(5)
1,072
16,856
(35)
55,090
300,117
18
(708)
—
At 1 January
2021
Profit for the
financial year
Exchange
differences
Retirement-
benefit
obligations
Issue of
shares
Dividends
paid
Dividends from
associates
Share-based
payments
At 31 December
2021
At 1 January
2020
Profit for the
financial year
Exchange
differences
Retirement-
benefit
obligations
Issue of
shares
Share
buy-back
Dividends
paid
Dividends from
associates
Share-based
payments
At 31 December
2020
The nature and purposes of each reserve is described by its title shown in the table above.
84
M.P. EVANS GROUP PLCANNUAL REPORT 2021 FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS
28 Non-controlling interests
At 1 January
Share of profit in the year
Dividends paid
Share of retirement benefit credited/(debited) to other comprehensive income
At 31 December
2021
US$’000
9,729
5,376
(1,641)
60
13,524
2020
US$’000
8,962
1,798
(875)
(156)
9,729
The Group has a minority partner in each of its plantation operations. The minority share of profit for the year and Group equity,
allocated by operation, is shown in the following table:
PROFIT
US$’000
1,121
2,292
975
663
132
193
2021
EQUITY
US$’000
2,598
5,825
3,244
2,337
(285)
(195)
5,376
13,524
Kota Bangun
Bangka
Pangkatan group
Bumi Mas
Musi Rawas
Simpang Kiri
29 Note to the consolidated cash-flow statement
Operating profit
Biological gain
Disposal of property, plant and equipment
Release of deferred profit
Depreciation of property, plant and equipment
Amortisation of intangible assets
Retirement-benefit obligations
Share-based payments
Dividends from associated companies
Operating cash flows before movements in working capital
Increase in inventories
Increase in receivables
Increase in payables
Cash generated by operating activities
Income tax paid
Interest paid
Net cash generated by operating activities
PROFIT
US$’000
259
1,085
514
8
(130)
62
1,798
2021
US$’000
114,556
(1,771)
(13,538)
(64)
20,641
167
(351)
433
2,424
122,497
(10,137)
(8,461)
5,341
109,240
(14,269)
(2,699)
92,272
2020
EQUITY
US$’000
1,784
3,488
2,918
1,853
(247)
(67)
9,729
2020
US$’000
31,321
(682)
1,008
(58)
17,776
165
2,148
609
1,646
53,933
(545)
(7,574)
3,806
49,620
(6,614)
(3,408)
39,598
85
NOTES TO THE CONSOLIDATED ACCOUNTS continued
30 Analysis of movements in net debt
CASH AND
CASH
EQUIVALENTS
US$’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 2021
27,222
334
(39,605)
(66,079)
(78,128)
Net increase in cash and cash
equivalents
Repayment of borrowings
Change in deposits
Reclassification
Foreign-exchange movements
At 31 December 2021
38,441
—
—
—
(54)
65,609
—
—
(334)
—
—
—
—
34,636
—
(15,562)
—
—
—
—
15,562
—
38,441
34,636
(334)
—
(54)
(20,531)
(50,517)
(5,439)
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
31 Financial instruments
1,344
—
—
—
—
(69)
27,222
—
—
—
(826)
—
—
334
—
(10,000)
13,307
—
(14,639)
64
(39,605)
—
(14,581)
—
—
14,639
—
(66,079)
1,344
(24,581)
13,307
(826)
—
(5)
(78,128)
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$5,439,000 (2020 US$78,128,000) and equity attributable to the owners of the parent
Company of US$431,524,000 (2020 US$364,111,000). 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 2021.
86
M.P. EVANS GROUP PLCANNUAL REPORT 2021 FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED ACCOUNTS
NOTES TO THE CONSOLIDATED ACCOUNTS continued
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
2021
US$’00
18,439
39,349
7,562
259
65,609
2020
US$’000
14,575
12,086
178
717
27,556
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$7.6 million (2020 US$5.7 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$0.6 million (2020 US$0.9 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 51. The directors’ participation in the executive share-option schemes and long-term incentive scheme is
disclosed on page 52.
On 15 October 2021, the Group completed 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. Further details are
in note 12.
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.
87
PARENT-COMPANY BALANCE SHEET
As at 31 December 2021
COMPANY NUMBER: 1555042
Non-current assets
Property, plant and equipment
Investments in subsidiaries
Trade and other receivables
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
iv
v
vi
vi
vii
viii
ix
ix
2021
US$’000
846
15,799
115,588
132,233
746
8,926
9,672
141,905
5,808
3,864
—
5,808
2020
US$’000
857
15,799
—
16,656
147,684
389
148,073
164,729
5,873
142,200
—
5,873
136,097
158,856
9,232
38,890
87,975
136,097
9,204
38,193
111,459
158,856
The Company recorded a loss for the year of US$3,492,000 (2020 loss US$4,518,000).
The financial statements on pages 88 to 93 were approved by the board of directors on 22 March 2022 and signed
on its behalf by
Peter Hadsley-Chaplin
Executive chairman
Matthew Coulson
Chief executive
88
M.P. EVANS GROUP PLCANNUAL REPORT 2021
PARENT-COMPANY
FINANCIAL STATEMENTS
PARENT-COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
Loss for the year
Total comprehensive expense for the year
Issue of share capital
Dividends
Credit to equity for equity-settled
share-based payments
Transactions with owners
At 1 January 2021
At 31 December 2021
Loss for the year
Total comprehensive expense for the year
Issue of share capital
Dividends
Share buy-back
Credit to equity for equity-settled
share-based payments
Transactions with owners
At 1 January 2020
At 31 December 2020
SHARE
CAPITAL
US$’000
—
—
28
—
—
28
9,204
9,232
—
—
23
—
(19)
—
4
9,200
9,204
OTHER
RESERVES
US$’000
—
—
799
—
(102)
697
38,193
38,890
—
—
(23)
—
19
(690)
(694)
38,887
38,193
RETAINED
EARNINGS
US$’000
(3,492)
(3,492)
—
(20,527)
535
(19,992)
111,459
87,975
(4,518)
(4,518)
—
(12,105)
(1,155)
1,299
(11,961)
127,938
111,459
TOTAL
US$’000
(3,492)
(3,492)
827
(20,527)
433
(19,267)
158,856
136,097
(4,518)
(4,518)
—
(12,105)
(1,155)
609
(12,651)
176,025
158,856
89
NOTES TO THE PARENT-COMPANY ACCOUNTS
For the year ended 31 December 2021
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 100. 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 42.
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.
Balances are classified as non-current if they are not expected to be recovered in less than one year.
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 69. The directors have concluded that there are no critical judgements and accounting
estimates in the preparation of the parent-Company accounts.
90
M.P. EVANS GROUP PLCANNUAL REPORT 2021 PARENT-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 2021 of US$3,492,000 (2020 loss
US$4,518,000). The Company’s main source of income is dividends from subsidiary companies.
The auditors’ remuneration for audit services was US$27,000 (2020 US$25,000).
iii Employees
Employee costs during the year
Wages and salaries
Social security costs
Pension costs
Share-based payments
2021
US$’000
2020
US$’000
2,349
502
52
195
3,098
1,868
229
48
245
2,390
As recorded in the directors’ remuneration report on page 50, wages and salary costs include bonuses paid to the directors in
respect of 2021 and 2020.
Average monthly number of people employed
Staff
Directors
iv Property, plant and equipment
Cost
At 1 January 2021 and 31 December 2021
Accumulated depreciation
At 1 January 2021
Charge for the year
At 31 December 2021
Net book value at 31 December 2021
Net book value at 31 December 2020
2021
NUMBER
2020
NUMBER
5
3
8
4
3
7
LAND AND
BUILDINGS
US$’000
PLANT,
EQUIPMENT
& VEHICLES
US$’000
834
—
—
—
834
834
TOTAL
US$’000
958
101
11
112
846
124
101
11
112
12
23
857
91
NOTES TO THE PARENT-COMPANY ACCOUNTS continued
v
Investments in subsidiaries
Subsidiary undertakings
At 1 January and 31 December 2021
The following companies are the principal direct subsidiary companies of M.P. Evans Group PLC:
M.P. Evans & Co. Limited
Sungkai Holdings Limited
US$’000
15,799
HOLDING
%
100
100
COUNTRY OF
OPERATION
UK
UK
Holdings are all of ordinary shares. The directors believe the carrying value of investments is supported by their underlying net
assets. Details of all subsidiary companies are shown on page 94.
2021
US$’000
2020
US$’000
—
691
55
746
115,588
115,588
2021
US$’000
5,000
808
5,808
147,598
40
46
147,684
—
—
2020
US$’000
5,000
873
5,873
vi Trade and other receivables
Current assets
Amounts owed by subsidiary undertakings
Other debtors
Prepayments and accrued income
Non-current assets
Amounts owed by subsidiary undertakings
vii Trade and other payables
Borrowings
Other creditors
viii Called-up share capital
See note 25 to the consolidated financial statements.
92
M.P. EVANS GROUP PLCANNUAL REPORT 2021 NOTES TO THE PARENT-COMPANY ACCOUNTS continued
PARENT-COMPANY
NOTES TO THE PARENT-COMPANY ACCOUNTS
CAPITAL-
REDEMPTION
RESERVE
US$’000
MERGER
RESERVE
US$’000
TREASURY
SHARES
US$’000
OTHER
RESERVES
US$’000
TOTAL
US$’000
RETAINED
EARNINGS
US$’000
ix Reserves
At 1 January 2021
Issue of shares
Share-based payments
Loss for the year
Dividends*
SHARE-
PREMIUM
ACCOUNT
US$’000
31,582
810
—
—
—
4,110
1,434
—
—
—
—
—
—
—
—
At 31 December 2021
32,392
4,110
1,434
At 1 January 2020
31,582
4,091
1,434
Issue of shares
Share buy-back
Share-based payments
Loss for the year
Dividends*
—
—
—
—
—
—
19
—
—
—
—
—
—
—
—
At 31 December 2020
31,582
4,110
1,434
* See note 10 to the consolidated financial statements.
(5)
(11)
10
—
—
(6)
—
(23)
—
18
—
—
(5)
1,072
—
(112)
—
—
38,193
111,459
799
(102)
—
—
—
535
(3,492)
(20,527)
87,975
960
38,890
1,780
38,887
127,938
—
—
(708)
—
—
(23)
19
(690)
—
—
—
(1,155)
1,299
(4,518)
(12,105)
1,072
38,193
111,459
93
SUBSIDIARY AND ASSOCIATED UNDERTAKINGS
As at 31 December 2021
SUBSIDIARY UNDERTAKINGS
Details of the Group’s subsidiary undertakings as at 31 December 2021 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
95
95
51
95
90
95
95
95
95
95
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
PT Evans Indonesia
100
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Production at Kota Bangun
Production at Kota Bangun
Production at Kota Bangun
Production at Bumi Mas
Production at Bangka
Production at Musi Rawas
Production at Pangkatan group
Production at Pangkatan group
Production at Pangkatan group
Production at Simpang Kiri
Provision of agronomic and
management-consultancy services
Bertam Consolidated Rubber
Company Limited
M.P. Evans & Co. Limited*
Sungkai Holdings Limited*
Sunrich Plantations Pte Ltd
PT Perusahaan Pertanian Perkebunan
Perindustrian dan Perdagangan Surya
Makmur
100
England and Wales
Malaysia
Holding company
100
100
100
95
England and Wales
United Kingdom
Holding company
England and Wales
United Kingdom
Holding company
Singapore
Indonesia
Singapore
Indonesia
Holding company
Holding company
PT Aceh Timur Indonesia
95
Indonesia
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 25 North Bridge Road, Level 7 Singapore 179104, and for all UK companies is the Group’s
registered office as shown on page 100.
ASSOCIATED UNDERTAKINGS
Details of the associated undertakings as at 31 December 2021 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
38
40
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.
94
M.P. EVANS GROUP PLCANNUAL REPORT 2021 OTHER INFORMATION
ANALYSIS OF INDONESIAN PLANTATION LAND AREAS
As at 31 December 2021
The information on pages 95 to 100 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
4,490
1,351
3,881
2,292
158
87
-
512
4,648
1,438
3,881
2,804
12,014
757
12,771
95
95
90
95
95
95
38
10,362
7,278
6,135
5,013
6,435
1,996
37,219
35,052
2,073
788
140
215
16
1,238
531
429
2,569
2,439
102
39
10,502
7,493
6,151
6,251
6,966
2,425
39,788
37,491
2,175
827
35,840
2,478
38,318
38,007
2,608
40,615
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 all HGUs except for approximately 900 hectares for which the HGU is currently being obtained.
2. All the scheme-smallholder areas at Bangka and Musi Rawas have an HGU. At Kota Bangun, HGUs have been granted over 3,300 of
the planted hectares. The Group is assisting the smallholders in obtaining the HGUs for the remaining areas at Kota Bangun and at
Bumi Mas.
3. The board’s current estimate is that, between Group and scheme-smallholder areas it will be possible to plant a minimum of 10,000
hectares at Musi Rawas, and that this may be extendable to between 11,000 – 12,000 hectares as a final total.
95
ANALYSIS OF GROUP EQUITY VALUE
As at 31 December 2021
The information in the following table provides a directors’ estimate of the Group equity value at 31 December 2021
utilising, except where indicated, an independent valuation of the Group’s properties performed at the end of 2021.
OWNERSHIP
%
PLANTED
AREA
HA
TOTAL MARKET
VALUE
US$’000
MARKET VALUE
PER PLANTED
HECTARE
US$
MARKET VALUE
ATTRIBUTABLE
TO GROUP
US$’000
INDONESIAN OIL PALM
PLANTATIONS
Group
Kota Bangun1
Bumi Mas1
Bangka1
Musi Rawas
Pangkatan group1
Simpang Kiri
Smallholders
Kota Bangun
Bumi Mas
Bangka
Musi Rawas
Associates
Kerasaan2
Total Indonesia
MALAYSIAN PROPERTY
Bertam Properties3
Total Malaysia
Net debt4
Other assets and liabilities5
Total equity value
Equity value (£ per share6)
Notes
95
95
90
95
95
95
95
95
90
95
38
40
10,502
7,493
6,151
6,251
6,966
2,425
39,788
4,648
1,438
3,881
2,804
12,771
244,800
177,000
134,900
115,300
129,400
33,500
834,900
29,600
7,100
17,400
18,900
73,000
23,300
23,600
21,900
18,400
18,600
13,800
21,000
6,400
4,900
4,500
6,700
5,700
2,175
33,100
15,200
n/a
232,560
168,150
121,410
109,535
122,930
31,825
786,410
28,120
6,745
15,660
17,955
68,480
12,578
867,468
47,637
47,637
(7,363)
26,079
933,821
12.65
1. Market value per planted hectare includes value of mills on the related estates.
2. The Group’s only oil-palm associate, Kerasaan, was not included in the independent valuation at 31 December 2021. The value in the
table above has been carried forward from the independent valuation performed at 31 December 2019.
3. The valuation of Bertam Properties includes Bertam Estate valued at the amount paid to purchase the land from the Group
during 2021.
4. Net debt is taken as cash and other liquid resources less borrowings from the 31 December 2021 balance sheet, attributable to the
owners of M.P. Evans Group PLC.
5. Other assets and liabilities are taken as net assets minus plantation and property-related assets, minus net cash from the
31 December 2021 balance sheet, attributable to the owners of M.P. Evans Group PLC.
6. Amount per share is calculated using the year-end exchange rate and year-end shares in issue (see note 25).
96
M.P. EVANS GROUP PLCANNUAL REPORT 2021 Indonesian associated-company estates
55,200
54,800
54,200
Average sale prices
Crude palm oil – cif Rotterdam per tonne
1,195
US$
FIVE-YEAR SUMMARY
Production
Crude palm oil
Palm kernels
Crops
Oil-palm fresh fruit bunches
Own crops
Scheme-smallholder crops
Independent-smallholder crop purchased
Exchange rates
US$1 = Indonesian Rupiah
– average
– year end
US$1 = Malaysian Ringgit
– average
– year end
£1 = US Dollar
– average
– year end
Revenue
Gross profit
Profit before tax
Basic continuing earnings per share
Basic continuing earnings per share
Dividends per share:
Normal
Special
Total
OTHER INFORMATION
2021
Tonnes
2020
Tonnes
2019
Tonnes
2018
Tonnes
2017
Tonnes
312,900
67,100
271,700
60,400
231,900
53,000
192,500
43,500
154,000
33,500
809,700
229,300
327,200
724,300
193,000
289,700
663,300
172,100
166,100
1,366,200
1,207,000
1,001,500
US$
716
14,541
14,050
4.20
4.02
1.28
1.37
US$’000
174,510
34,755
28,440
US$
566
14,142
13,883
4.14
4.09
1.28
1.32
US$’000
119,341
17,044
12,780
14,295
14,253
4.14
4.17
1.37
1.35
US$’000
276,592
103,613
112,502
573,000
149,600
106,500
829,100
51,700
US$
598
14,234
14,380
4.04
4.13
1.34
1.27
US$’000
108,553
26,525
18,348
434,500
101,300
118,300
654,100
50,000
US$
714
13,382
13,568
4.30
4.05
1.29
1.35
US$’000
116,536
36,246
35,070
US cents
US cents
US cents
US cents
US cents
158.4
Pence
115.6
35.00
5.00
40.00
37.4
11.6
9.9
41.8
Pence
29.2
22.00
—
22.00
Pence
9.0
17.75
—
17.75
Pence
7.4
17.75
—
17.75
Pence
32.4
17.75
10.00
27.75
US$’000
US$’000
US$’000
US$’000
US$’000
Equity attributable to the owners of
M.P. Evans Group PLC
Net cash generated by operating activities
431,524
92,272
364,111
39,598
358,724
32,002
377,033
21,297
387,034
20,723
97
NOTICE OF MEETING
NOTICE IS HEREBY GIVEN that the annual general meeting of M.P. Evans Group PLC will be held at Tallow Chandlers’ Hall,
4 Dowgate Hill, London EC4R 2SH on 10 June 2022 at 12:00 noon. The Company is pleased to be holding an ‘in person’ 2022
AGM, but also aims to make viewing on-line available. Further details will be provided in advance of the meeting on the
Company’s AGM website page. The meeting will be for the following purposes:
AS ORDINARY BUSINESS
RESOLUTION ON
FORM OF PROXY
1
2
3
4
5
6
7
To receive and consider the report of the directors and the audited consolidated financial statements
for the year ended 31 December 2021.
To receive and consider the directors’ remuneration report as set out in the annual report and accounts
for the financial year ended 31 December 2021.
To elect K Chandra Sekaran as a director.
To re-elect Jock Green-Armytage as a director.
To re-elect Philip Fletcher as a director.
To declare a final dividend.
To increase the total amount of fees payable to all of the non-executive directors (excluding any
remuneration for special or additional services paid pursuant to article 102) to £250,000.
8
To appoint BDO LLP as auditors and to authorise the directors to determine their remuneration.
No 1
No 2
No 3
No 4
No 5
No 6
No 7
No 8
AS SPECIAL BUSINESS
To consider and, if thought fit, pass the following resolution, as a special resolution:
RESOLUTION ON
FORM OF PROXY
9
That the Company is hereby generally and unconditionally authorised to make market purchases (within
the meaning of section 693 of the Companies Act 2006) of shares of 10p each in the capital of the
Company provided that:
No 9
a) the maximum number of shares hereby authorised to be purchased is 5,469,625;
b) the minimum price which may be paid for each share is 10p (exclusive of expenses);
c) the maximum price (exclusive of expenses) which may be paid for each share is an amount equal
to 105% of the average of the middle-market quotations for such shares as derived from the Daily
Official List of the London Stock Exchange for the five business days immediately preceding the day
of purchase; and
d) the authority hereby conferred shall expire at the conclusion of the next annual general meeting of
the Company or on 30 June 2023 whichever shall be the earlier save that the Company may, before
the expiry of this authority, make a contract of purchase which will or may be executed wholly or
partly after such expiry and may make a purchase of shares pursuant to any such contract.
By order of the board
Katya Merrick
Company secretary
22 March 2022
NOTES
1) A member of the Company entitled to attend, speak and vote at the meeting convened by this notice may appoint a proxy to
exercise all or any of his or her rights to attend, speak and vote at the meeting on his or her behalf. A proxy need not be a member
of the Company. Appointment of a proxy will not subsequently preclude a member from attending and voting at the meeting in
person if he or she so wishes. A member may appoint more than one proxy provided that each proxy is appointed to exercise the
rights attached to different shares held by the member. The form of proxy contains instructions on how to appoint more than
one proxy.
98
M.P. EVANS GROUP PLCANNUAL REPORT 2021 OTHER INFORMATION
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 2022 (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.
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 pm on 8 June 2022 (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 22 March 2022, the Company’s issued share capital consisted of 54,696,253 shares carrying one vote each. Therefore the
total number of voting rights in the Company as at that date was 54,696,253.
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.
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.
THE ANNUAL GENERAL MEETING WILL BE
HELD ON FRIDAY 10 JUNE 2022 AT NOON
VENUE
Tallow Chandlers’ Hall
4 Dowgate Hill
London EC4R 2SH
TALLOW
CHANDLERS’
HALL
CLOSEST TRANSPORT LINKS
Mansion House (District and Circle Lines)
Cannon Street (District and Circle Lines, National Rail Services)
Bank (Central, Northern and Waterloo & City Lines)
99
M.P. EVANS GROUP PLC
ANNUAL REPORT 2022
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
e katya.merrick@mpevans.co.uk
w www.mpevans.co.uk
INDONESIAN REGIONAL OFFICE
PT Evans Indonesia
Gedung Graha Aktiva, Suite 1001,
Jl HR Rasuna Said Blok X-1 Kav 03, Jakarta 12950
PRINCIPAL BANKERS
OCBC Bank
18 Jalan Tun Perak, 50050 Kuala Lumpur, Malaysia
AmBank Group
55 Jalan Raja Chulan, 50200 Kuala Lumpur, Malaysia
NatWest
89 Mount Pleasant Road, Tunbridge Wells, Kent TN1 1QJ
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 on 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
PK
RISS
ISCC
HGU
100
The Bangka mill and biogas plant
CBP011526
This report is printed on paper certified in accordance
with the FSC® (Forest Stewardship Council®).
Woodrow Press Ltd aims to reduce at source the effect
its operations have on the environment and is committed
to continual improvement, prevention of pollution and
compliance with any legislation or industry standards.
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