M.p. Evans Group Plc · LSE:MPE
M.p. Evans — H1 2015 Earnings Presentation
36 slides from M.p. Evans's earnings presentation, Sep 16, 2015
Slide 1: Interim report 2015
2015 Interim report Wednesday, 16 September 2015
Slide 2: Agenda
Agenda 1. Overview 2. Corporate overview 3. Operational highlights Indonesian palm oil Australian beef cattle Malaysian property 4. Interim results 5. Outlook and investment case 6. Appendices Interim results September 2015 1
Slide 3: Corporate overview & financial highlights
Corporate overview & financial highlights Interim results September 2015 2
Slide 4: Corporate overview
Corporate overview A UK, AIM-listed agri-business group producing palm oil in Indonesia and beef cattle in Australia, with residual Malaysian property assets in the course of disposal. Geographical spread of Group assets Malaysia 10% Australia 15% Indonesia 75% Interim results September 2015 3
Slide 5: Financial highlights
Financial highlights Results reported without adjustment for ‘biological assets’ Profit for the period US$15.3 million (first half 2014 US$15.4 million) Interim dividend maintained at 2.25p per share Indonesian palm-oil profits, both majority-owned and associates, significantly lower due to weaker C
Slide 6: Strategy
Strategy Interim results September 2015 5
Slide 7: Strategy - Indonesian palm oil
Strategy - Indonesian palm oil To invest further in a fast-growing, low-cost World vegetable-oil consumption food commodity 2014: 166 million tonnes To expand the Group’s oil-palm areas in 2004: 101 million tonnes Indonesia in an environmentally-sustainable 2% 2% manner 4% 3% 2014 Continually to mai
Slide 8: Strategy – Australian beef cattle
Strategy – Australian beef cattle To dispose of Woodlands – contract for sale recently signed To maximise productivity in NAPCo To capitalise on any future strategic opportunities re NAPCo Interim results September 2015 7
Slide 9: Strategy - Malaysian property
Strategy - Malaysian property To continue to benefit from property- development and raw-land-sale profits at Bertam Properties To dispose of the small Bertam Estate and the 40% interest in Bertam Properties at appropriate time to reinvest in Indonesian palm oil Interim Results September 2015 8
Slide 10: Operational overview – Indonesian palm oil
Operational overview – Indonesian palm oil Interim results September 2015 9
Slide 11: Operational overview - palm oil
Operational overview - palm oil Overall Group f.f.b. crop 187,100 tonnes, 2% higher than first half 2014 – new projects 9% higher As expected, associates’ f.f.b. crops 12% lower at 172,400 tonnes Average palm-oil prices 25% lower than first half 2014 due to general weakness of commodity markets foll
Slide 12: Operational overview - palm oil (continued)
Operational overview - palm oil (continued) Planting programme on new projects started in 2005 – Group f.f.b. crops now increasing significantly but dry period in Kalimantan at end of 2014 has impacted crops so far in 2015. El Niňo event may affect crops in 2016 and 2017 Actual and projected f.f.b.
Slide 13: Increasing oil-palm plantings - planted areas
Increasing oil-palm plantings - planted areas Planting programme on new projects started in 2005 – f.f.b. crops now increasing significantly 30 June 2015 New projects: Kalimantan 9,800 Bangka 5,000 Musi Rawas 400 15,200 Established North Sumatran estates 9,500 Total majority owned areas 24,700 Effec
Slide 14: Palm-oil – opportunity for growth
Palm-oil – opportunity for growth Remaining estimated plantable areas on new projects Group Smallholders Estimated Total when Estimated Total when still to plant fully planted still to plant fully planted Ha Ha Ha Ha Kalimantan 800 10,600 200 4,400 Bangka 1,000 6,000 1,600 4,000 Musi Rawas 6,600 7,0
Slide 15: Operational overview – Australian beef cattle
Operational overview – Australian beef cattle Interim results September 2015 14
Slide 16: Operational overview - Australian beef cattle: Woodlands
Operational overview - Australian beef cattle Woodlands Conditional contract recently signed for sale of Woodlands for approximately US$20 million; likely to complete before year end Positive start to 2015 season with rainfall resulting in good pastures and forage crops Herd numbers at good levels,
Slide 17: Operational overview - Australian beef cattle (continued): NAPCo
Operational overview - Australian beef cattle (continued) NAPCo Significant first-half profit in 2015 compared with losses in the previous two years’ first halves Prices for grain-finished cattle (as produced by NAPCo) have improved dramatically, increasing the value of the herd Better season has le
Slide 18: Operational overview – Malaysian property
Operational overview – Malaysian property Interim results September 2015 17
Slide 19: Operational highlights - Malaysian property
Operational highlights - Malaysian property Bertam Properties Few completed sales of developed properties in first half 2015 Number of sales in process and likely to be recognised in second half 2015 Group share of loss for period US$0.10 million compared with profit of US$2.10 million in 2014 Inter
Slide 20: Interim results
Interim results Interim results September 2015 19
Slide 21: Interim results - overall results and financial position
Interim results - overall results and financial position All results published without recording plantings as ‘biological assets’ Much reduced operating profit as CPO prices lower, despite increased volumes Revenue 17% lower than 2014; mill gate price down US$159 to US$582 Profit for the period simi
Slide 22: Interim results - profit growth
Interim results - profit growth Gross profit of US$10.5 million 35.0% fall in total gross profit Profit of US$1.6 million in cattle ‘farm’ result compared with US$0.3 million loss in 2013 Plantation gross profit margin reduced to 23.4% though costs similar to 2014 at US$425 per tonne of palm product
Slide 23: Interim results - other operating flows
Interim results - other operating flows Significant effect of foreign exchange as Indonesian Rupiah weakened 6.7% against the US Dollar during the period Unrealised reduction in value of: Loans made to smallholder co-operative schemes Recoverable tax Cash balances Other administrative expenses 1% hi
Slide 24: Interim results - funding
Interim results - funding Ambitious capital programme continues on new projects Bangka mill expected to be commissioned in mid-2016 Housing and amenities being built up in Kalimantan Federal tax associated with final land licenses US$10 million revolving credit facility converted into a into a 49-mo
Slide 25: Outlook and investment case
Outlook and investment case Interim results September 2015 24
Slide 26: Outlook for palm oil
Outlook for palm oil Standard oil-palm yield curve Prices weakened sharply since the half (Tonnes per hectare by age) year – currently around US$550 per 35 tonne F.f.b. tonnes per hectare per annum 30 25 Planting and crop growth expected to 20 continue 15 10 5 Young age profile of plantings - 0 appr
Slide 27: Outlook for beef
Outlook for beef Beef-cattle prices continue at record-high levels Strength of US Dollar adds to Australia’s competitive pricing advantage in S.E. Asian markets Demand for exports to Asia showing signs of improvement Interim results September 2015 26
Slide 28: Investment case
Investment case M. P. Evans well positioned to benefit from increasing f.f.b. crops Young age profile of plantations will generate increasing crop for years to come Good cash flow provides a strong platform for continued expansion Good long-term price prospects for Indonesian palm oil despite retrea
Slide 29: Appendices
Appendices Interim results September 2015 28
Slide 30: Appendix: Area of operations
Appendix: Area of operations Interim Results September 2015 29
Slide 31: Appendix: Strategic disposal of Malaysian assets
Appendix: Strategic disposal of Malaysian assets 2005 strategy envisaged disposing of more than half of the Group’s assets for re-investment in new projects 140.0 120.0 100.0 US$ million 80.0 60.0 40.0 20.0 0.0 Sold to date To be sold Malaysian Estates Thai and other Bertam Properties Bertam Propert
Slide 32: Appendix: Consolidated income statement
Appendix: Consolidated income statement 6 months 6 months Year ended 31 ended 30 June ended 30 June December 2015 2014 2014 US$’000 US$’000 US$’000 Revenue 39,241 47,514 90,922 Gross profit 10,463 16,106 31,935 Exchange differences (3,997) 662 (2,379) Administrative expenses, etc. (548) (3,812) (5,4
Slide 33: Appendix: Consolidated balance sheet
Appendix: Consolidated balance sheet At 31 At 30 June At 30 June December 2015 2014 2014 US$’000 US$’000 US$’000 Non-current assets Goodwill 1,157 1,157 1,157 Property, plant and equipment 197,014 190,519 191,584 Investments 96,508 102,458 94,429 Deferred-tax asset 15,924 13,707 14,137 310,603 307,8
Slide 34: Appendix: Consolidated cash flow
Appendix: Consolidated cash flow 6 months 6 months Year ended 31 ended 30 June ended 30 June December 2015 2014 2014 US$’000 US$’000 US$’000 Net cash generated by operating activities 7,876 14,939 29,106 Investing activities Interest received 505 848 1,650 Sale of shares to non-controlling interest
Slide 35: Appendix: CPO price
Appendix: CPO price Crude palm-oil price, c.i.f. Rotterdam (US$/tonne) 1,400 1,300 1,200 1,100 1,000 900 800 700 600 500 400 Jul 10 Jul 11 Jul 12 Jul 13 Jul 14 Jul 15 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Interim results September 2015 34
Slide 36: Appendix: Cattle prices
Appendix: Cattle prices Eastern Young Cattle Indicator and 100-day short fed cattle prices (A$ / Kg) 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 EYCI (Woodlands) 100-day short fed (NAPCo) 2.00 Jul 10 Jul 11 Jul 12 Jul 13 Jul 14 Jul 15 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Interim results September 2