M P Evans Regulatory News (MPE)

M.P.EVANS GROUP PLC

M.P.Evans Group PLC ("MP Evans", "the Group" or "the Company"), a producer of Indonesian palm oil, announces its unaudited preliminary results for the year ended 31 December 2016.

Highlights

Financials

· Profit for the year including discontinued operations US$35.3 million (2015 US$25.4 million)

· Profit for the year on continuing operations more than doubled to US$16.4 million (2015 US$7.8 million)

· Total dividends for the year, including special dividend of 5.00 pence per share, of 20.00 pence per share (2015 - 8.75 pence per share)

· Dividends for 2017, including special dividend of 10.00 pence per share, to be minimum of 25.00 pence per share

· Earnings per share 56.1 US cents (2015 - 43.4 US cents)

· Net funds at 31 December 2016 of US$75.3 million (2015 US$11.5 million)

Indonesian palm oil

· Plantation gross profit US$24.4 million (2015 US$15.1 million)

· Palm-oil prices c.i.f. Rotterdam higher at average of US$700 per tonne (2015 US$622)

· F.f.b. crops fell 6% due to dry weather of an exceptional 'El Niño', in line with global palm-oil production

· Strong average extraction rates of 24.1%

· New 60-tonne mill commissioned in Bangka; fourth Group mill to be completed in 2018

· Total new planting of 3,600 ha in the year (Group and smallholders)

· Active negotiation for substantial new hectarage following sale of minority share in Agro Muko

· Young planted areas, average age of 7½ years, mean Group crops projected to rise strongly in future years

Malaysian property

· 36% increase in Group share of Bertam Properties' profit as more sales completed in year

· Less development begun in 2016 than in previous years

Group valuation

· Directors' estimate of Group equity value at period end, based on independent valuation, of £11.00 per share

Commenting on the results, Peter Hadsley-Chaplin, executive chairman of MP Evans, said: "2016 proved an excellent year and the Group remains on track in its strategy of continued expansion in the Indonesian palm-oil sector, thereby providing the opportunity for enhanced earnings and further growth in the value of its assets. This is underpinned by the age profile of our current plantings, many of which are set to enter a phase of significant yield growth over the coming years. The board is excited at the prospect of increasing the Group's hectarage by adding significant new areas to our existing plantations."

Enquires:

An analysts' meeting will be held today at 9.30 a.m. at the offices of Hudson Sandler, 29 Cloth Fair, London EC1A 7NN.

OVERVIEW OF RESULTS

The Group is able to report an excellent result for the year with profit rising by US$9.9 million to US$35.3 million, including discontinued operations.

The year saw a steady recovery in the price of crude palm oil ("CPO"), the Group's principal commodity, which finished the year at US$795 per tonne c.i.f. Rotterdam, some 37% higher than the US$580 per tonne where it started the year. With global consumption of CPO rising, partly due to new regulations on the admixture for biodiesel in Indonesia, a sharp fall in global production led to a dramatic drawdown of stocks that eventually stimulated a rally in the price. Additionally, high prices for palm kernel oil, which translate directly into the price for the palm kernels sold by the Group, rose even higher than the strong levels experienced in 2015.

Crops from the Group's own areas fell by an average of 6% during 2016 as a result of the widely reported El Niño weather pattern, the most severe for nearly 20 years. The effects were most keenly felt on the Group's estates in Kalimantan and Bangka; less so in North Sumatra. The dry weather occasioned by the El Niño had abated by the middle of the year and the return to more normal rainfall resulted in crops increasing during the last quarter. Total crop for the year, including that from smallholder co-operatives attached to the Group's estates and outside crop purchased from third parties, reached 543,700 tonnes for the year (2015 - 562,300 tonnes).

Despite a small reduction in crop, a recovery in prices combined with good control of costs led to a sharp rise in gross profit on continuing operations to US$24.4 million (2015 US$15.1 million). The Group's other administrative expenses increased to US$4.9 million in the year (2015 US$2.8 million). During the year, the Group incurred professional fees of US$2 million in responding to the unsuccessful unsolicited bid by Kuala Lumpur Kepong Berhad ("KLK") to purchase the Group. Regarding taxation, the Group's tax charge amounted to US$7.5 million (2015 US$2.4 million). The Group's effective rate in 2016 exceeded the standard rate largely due to the higher rate of taxation borne by the Group's subsidiary companies in Indonesia and exchange differences not allowable for tax.

Profit for the year on continuing operations more than doubled to US$16.4 million from US$7.8 million. The Group's share of the results in both PT Agro Muko ("Agro Muko") and The North Australian Pastoral Company Pty Limited ("NAPCo") up to the point of disposal, as well as the profit made on selling NAPCo, comprised US$18.8 million of profit on discontinued operations in 2016. This compares with US$17.6 million in 2015, chiefly reflecting NAPCo's and Agro Muko's trading results and the sale of Woodlands. Overall, earnings per share on continuing operations increased to 22.3 US cents per share (2015 - 11.7 US cents per share); earnings per share on continuing and discontinued operations rose by 29% to 56.1 US cents per share (2015 - 43.4 US cents per share).

Dividend

An interim dividend of 2.25p per share in respect of 2016 was paid on 4 November. Separately, shareholders received a special dividend of 5.00p per share on 17 August following the disposal of the Group's significant investment in NAPCo. In line with its previously announced intention, the board is recommending a final dividend for the year of 12.75p per share. Overall, therefore, shareholders will have received total dividends in respect of 2016 of 20.00p per share (2015 - 8.75 pence per share).

In respect of 2017, the board will, on 12 April, pay a special dividend of 10.00p per share following completion of the sale of its interest in Agro Muko. The board has also announced its intention to maintain or increase its dividend in future years, starting with a dividend of at least 15.00p per share in respect of both 2016 and 2017, excluding any special dividends. Shareholders can therefore expect total dividends of at least 25.00p per share in respect of 2017.

STRATEGY

The Group finished the year as a one-commodity company, principally located in one country, well on the way to controlling all of its operations. To focus on oil palm in Indonesia, and to be in control of all the Group's assets, have both been long-standing strategic objectives of the board.

The successful disposal of the Group's investment in NAPCo marked its exit from the Australian cattle sector. The Group sold its shares in NAPCo for A$18.50 per share that it had bought for an average of A$8.44 per share. Total proceeds from the disposal were US$79.7 million. Combining the Group's share of profit prior to disposal and the profit on disposal after costs and associated taxation, the total profit to the Group in the year from NAPCo was US$11.7 million.

The Group also reached an agreement in late 2016 to sell its investment in Agro Muko, a joint venture in which it had a 37% share. This sale was made at a level supported by an independent valuation and was significantly higher than that implied by the unsuccessful unsolicited offer made in October for the Group's shares by KLK.

The sale of NAPCo and Agro Muko, in line with the Group's strategy, puts it in a strong position to expand its plantation hectarage, and so strengthen the growth in crop which it already expects from the projects developed over the last ten years. The proceeds from these disposals are expected to allow the Group to increase returns to shareholders through enhanced dividends, without compromising its ongoing programme of expansion and hence growth in value.

As in the case of NAPCo and Agro Muko, the board will give consideration to the payment of special dividends as and when further non-core asset disposals are achieved.

The board is actively reviewing a prospective investment in a new, developed oil-palm project to replace at least the equivalent hectarage of its share in Agro Muko. In addition, the Group is at an advanced stage in negotiations for further smaller areas in the immediate vicinity of the Group's existing East Kalimantan project, which will bring the size of that project from some 15,000 hectares (including smallholder co-operatives) towards the desired target of 20,000 hectares. These are exciting prospects and, in view of the Group's excellent operational management team and proven track record of developing new plantation projects in Indonesia, give grounds for confidence that the Group will be able to expand its plantation hectarage, delivering strong crop growth and hence improving results for shareholders.

PALM-OIL MARKET

The palm-oil market in 2016 was dominated by the effects of a severe El Niño resulting in a period of dryness in South East Asia. Palm productivity was adversely affected by this and exacerbated by a period of haze in parts of Indonesia and Malaysia. According to Oil World, these factors resulted in global palm-oil production falling by 6% during 2016 compared to 2015, with average yield per hectare falling to its lowest level for more than 15 years.

Stocks of CPO began 2016 at record-high levels, but were drawn down during the year in response to low production and finished the year at a multi-year low level of less than 10 million tonnes. In spite of lower production, this reduction in stocks allowed consumption of palm oil to increase during 2016, notably as a result of the sharp increase in demand flowing from Indonesia's adoption of a mandatory increase in the proportion of vegetable oil in its biodiesel standard. Shortage in supply affected trade, where exports of CPO fell to a three-year low. Imports by both China and India decreased significantly.

Prices for CPO improved during 2016. After a weak showing in January, prices strengthened during the first quarter before receding gently in the middle part of the year and then rose sharply in August. Following a short setback in October, they finished the year strongly at US$795 per tonne, more than US$200 per tonne higher than they had been on 1 January. The average price for CPO c.i.f. Rotterdam during 2016 was US$700 per tonne, US$78 or 13% higher than in 2015. The increase in the price of CPO was constrained by continuing weakness in the price of mineral oil and that of competing vegetable oils. Unusually, there were points during 2016 when CPO traded at a premium to soybean oil. Production in Indonesia began a recovery during the last quarter of 2016, and a similar turnaround was expected in Malaysia during the first quarter of 2017. This recovery in supply is likely to exert downward pressure on the market for CPO, especially during the second half of 2017.

Palm kernel oil was affected by the same forces that bore down on volumes of CPO, resulting in a 7% fall in production. However, unlike CPO, lower opening stock levels resulted in very tight supply in the latter part of 2016, reinforced by equally reduced supplies of competing coconut oil, with ensuing high prices.

OPERATIONS: INDONESIAN PALM OIL

Majority-owned estates

Crops

Crops in 2016 were adversely affected by the El Niño which, as reported in the 2015 annual report, was gathering strength during the last quarter of 2015. The Group's estates in Kalimantan and Bangka were particularly severely affected. Overall, the Group's own crops fell by 6% to 399,300 tonnes and those of its associated smallholder co-operatives by 8% to 92,400 tonnes. Purchases of third-party f.f.b. were hit by the general reduction in available supply due to the El Niño, falling by 25% year on year. However, total purchases of outside crop in fact increased due to commencing purchases in Bangka during 2016 following the commissioning of the Group's newest mill in May. In total, crops fell by 3% to 543,700 tonnes.

Details of crops for 2016, with comparative figures for 2015, are set out below:-

Crop on the Group's mature operations around Pangkatan was less affected by the adverse weather that impacted the Group's operations in other parts of Indonesia. Although the younger plantings would under other circumstances have been expected to produce an increase in crop, the dry weather led crops in this region to rise marginally above those recorded in 2015. An aggressive replanting programme at Simpang Kiri was the principal cause of the reduction in crop from this estate: mature hectarage was 12% lower during 2016 than in 2015. The accelerated replanting programme in North Sumatra is expected to continue for the next five years. The Group is able to make a good return on purchasing outside crop during the peak cropping months by using spare capacity in its Pangkatan mill. The general reduction in Indonesian crop during 2016 meant that competition from other mills in its vicinity curtailed this opportunity in 2016.

Bangka suffered an extended period of acute dryness that severely affected the crop on this estate, with the Group's crop falling by 8% and those of the associated smallholder co-operatives by 17%. Long-term average rainfall fell for 17 months from June 2014 until November 2015. More normal, higher, patterns of rainfall have since re-established themselves and in consequence Bangka's crop finished the year on an upward trend.

The El Niño also affected crops in Kalimantan, although the dry period there was shorter than that experienced in Bangka with good rainfall occurring from the middle of the year. This led to crop increasing during the last quarter of 2016, leaving the combined crop for the year from the Group's own areas as well as associated smallholder co-operatives 7% below that in 2015. By the end of the year, heavy rain meant that the new system of bunds and water pumps in the northern part of the estate was proving its worth. The dry weather that adversely affected crops enabled work on the bunds to progress faster than expected, with the first two phases of this project being completed in October. Pumping stations evacuate water collecting inside the project to the Mahakam River. In the southern part of the estate, however, flooding led to some crop losses.

Production

The Group was able to maintain excellent rates of extraction during 2016. Whilst absolute production in the Kalimantan and Pangkatan mills reduced in line with crop, the Group's total production increased as a result of its new mill in Bangka being commissioned in May 2016, reaching 117,300 tonnes of CPO and 24,400 tonnes of palm kernel during the year. The details of production and extraction rates for 2016, with comparative figures for 2015, are set out below:-

The new mill in Bangka has performed to a good standard. Its extraction rate of 23.3% is below the 25.0% recorded in Kalimantan due to the decision taken by the Group to maximise the purchase of outside fruit in Bangka in order to utilise, as much as possible, spare capacity at the mill. There is a good supply of outside fruit available for purchase. This fruit yields significantly lower rates of extraction than fruit from the Group's own areas or that of its associated smallholder co-operatives, although this is reflected in the price the Group pays for it. Hence, purchases of outside fruit make an acceptable profit margin notwithstanding the consequential reduction in the mill's average rate of extraction.

All of the mill effluent from the Bangka mill is collected and held in a pond to allow collection of methane which is then burned in a gas engine to produce electricity. The Group has signed a contract with the local state-owned power utility to sell it any excess power over and above the Group's requirements for its own use. The facility was being commissioned at the end of 2016 and began transmission in early January 2017. Production of power will increase as the volume of crop processed in the mill increases. Separately, all of the empty fruit bunches are conveyed to a composting facility where, over 50 days, the Group creates a compost rich in potassium and nitrogen which it returns to the field reducing the need for inorganic fertilizers. This is in line with the Group's facilities in Pangkatan and Kalimantan.

The extraction rate in Pangkatan, as reported in previous annual reports, lags behind that in Kalimantan due to the greater average age of its plantings, as well as the improved planting material available to the Group when it developed its estates in Kalimantan and Bangka. Furthermore, f.f.b. from Sennah estate, which supplies the Pangkatan mill, contains fruit from some low-yielding Dura palms. These are gradually being replanted, which will in due course lead to an increased extraction rate in the Pangkatan mill.

Work has begun on designing a fourth mill, the second in Kalimantan, necessitated by the sharp projected increase in crop over the coming years. This fourth mill is expected to be operational in 2018.

Costs

The combined operating cost of the Group's three mills was US$370 per tonne of palm product during 2016, US$20 higher than in 2015. This rise partly reflects depreciation on increased plantings as the Group brings more hectarage into maturity: at the end of 2016 the Group had 21,000 mature hectares compared with 20,500 at the end of 2015. The 2016 cost also incorporates depreciation on the new Bangka mill. The underlying cash operating costs increased modestly, mainly due to unit labour costs in the field which have risen as a result of the crop falling. Whilst the cost of harvesting broadly rises and falls in line with crop, the cost of field maintenance and that of fertilizing and manuring do not vary with crop. Lower crop would therefore be expected to push up the cost per tonne of palm product. Overall, despite the pressures of lower crop and increased depreciation, the Group was able to limit the increase in its unit cost, underlining its ability to control costs through its operational expertise. For example, extensive use of river transport to bring supplies into the Kalimantan project has allowed the Group to make and maintain significant procurement savings.

Mill-gate price

The average mill-gate price for the CPO sold by the Group during 2016 was US$595, a marked increase on the US$500 per tonne in 2015. This price takes account of the US$50 per tonne export levy due on CPO which is in practice borne largely by CPO producers irrespective of whether they make sales into the domestic or export markets. The average mill-gate price rose steadily through the year, reaching US$621 per tonne CPO for the last quarter.

As a result of the lack of supply of coconut oil and the market conditions affecting palm kernel oil, the average mill-gate price for palm kernels substantially exceeded even the levels experienced in 2015 to reach US$514 per tonne in 2016, an increase of US$195 per tonne.

Planting

New planting proceeded strongly during 2016, totalling 3,600 hectares by the year end, of which 2,100 related to the Group and 1,500 to associated smallholder co-operatives. Approaching half of this took place on the Group's Musi Rawas project in South Sumatra, where 1,100 hectares were planted for the Group and 600 for smallholder co-operatives. At the year end, a further 800 hectares had been cleared ready for planting, which did not take place owing to a planting pause initiated by the Group in order to control pig damage to new plantings . The Group moved quickly to address this issue as soon as it became apparent, individually protecting palms that had been planted with bamboo fencing. Planting resumed in January 2017.

Development of the Group's projects in Bangka and Kalimantan is nearing completion. A total of 900 hectares was planted during 2016 in Kalimantan, mainly behind the new flood-protection bund, of which 700 was for the Group and 200 for smallholder co-operatives. Some 1,000 hectares were planted in Bangka, 300 for the Group and 700 for smallholder co-operatives.

By the end of 2017, the Group expects to have substantively concluded planting in Kalimantan and Bangka with, respectively, 10,600 and 6,000 hectares for itself and 4,500 and 4,000 hectares in respect of the smallholder co-operatives. In Kalimantan, in early 2017 the government issued the Group and the associated smallholder co-operatives with the final land lease, the HGU, in respect of 8,680 and 1,920 hectares respectively. A full title for the balance of the land will follow in due course. It is too early yet to predict with confidence how many hectares the Group will eventually be able to plant in Musi Rawas, but the board's current estimate is 7,000 hectares for itself and 3,000 hectares for the smallholder co-operatives.

New land

The Group's strategy is to replace its share in the hectarage of the disposed Agro Muko joint venture, 7,000 hectares, with new estates under its control. To this end, it is actively reviewing suitable newly planted projects. In addition, it has ambitions to add to its portfolio of estates to maintain its ability to increase crop and future profits.

As well as acquiring suitably sized discrete new projects, the Group is exploring the acquisition of incremental hectarage close to its new projects to bring them to an optimal size. The Group's experience is that 10,000 hectares of oil palm with a 60-tonne mill provides a unit which is both big enough to provide economies 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 and Musi Rawas, including smallholder areas, are of this size. In Kalimantan, the board is actively engaged in extending the Group's areas from the currently projected 15,100 hectares to bring the project to the equivalent of two 10,000 hectare units. The design for a second mill has already begun and construction is expected to begin before the end of the 2017.

Minority-owned estates

Crops and production

Details of crops, production and extraction rates for 2016, with comparative figures for 2015, are set out below:-

Agro Muko

Whilst an agreement was reached in December 2016 to sell the Group's share in the Agro Muko joint venture, the operation remained part of the Group for the entire year under review and has been reported under discontinued operations. Agro Muko's own f.f.b. crop of 341,900 tonnes in 2016 was very similar to the crop achieved in 2015. In line with the Group's own operations in North Sumatra, Agro Muko suffered relatively little from the El Niño that affected the more easterly parts of Indonesia. As noted in previous annual and interim reports, Agro Muko is undergoing an extensive programme of replanting that is expected to hold back crop growth until the middle of the next decade. There was a significant increase in the quantity of outside crop bought for processing in Agro Muko's mills, including from a 2,000 hectare project partly owned and managed by the SIPEF group, one of the Agro Muko joint-venture partners. However, outside crop remains relatively small in absolute terms, representing a little less than 6% of total crop processed by Agro Muko.

Production in Agro Muko's two oil-palm mills amounted to 80,700 tonnes, a small increase on the 80,300 tonnes recorded in 2015. This was less than expected given the growth in crop processed because the oil-extraction rate fell to 22.2%. As noted in previous reports, local management is engaged in a set of initiatives to improve extraction, initially by driving up field standards.

As expected, following the planting of new rubber concentrated around its crumb-rubber factory, Agro Muko's rubber crop grew by 12% in 2016. Rubber prices increased gradually during the year, notably in the last quarter.

The Group's share of Agro Muko's profit increased to US$7.1 million (2015 US$5.1 million). The Group received gross dividends of US$3.7 million (2015 US$5.5 million) from Agro Muko during the year.

Kerasaan

Crops at Kerasaan Estate were, as expected, similar to 2015. This estate has good soils and benign terrain. The estate has a relatively old average age of planting, so a programme of replanting will have to begin in the next few years. In the meantime, the main challenge in maintaining production is to identify palms affected by the fungal disease ganoderma and prevent its spread. Local management is continuing to address this.

Improving prices during the year resulted in an increase in the Group's share of Kerasaan's profit to US$1.0 million (2015 US$0.7 million). The Group received gross dividends of US$0.8 million (2015 US$0.6 million) from Kerasaan during the year.

OPERATIONS: MALAYSIAN PROPERTY

Majority owned: Bertam Estate

The value of this land, sited in a prime position not far from the slip road onto the highway heading to Penang Island, rises as development progresses on the neighbouring Bertam Properties land. It remains the board's intention to sell Bertam Estate at a suitable time taking into account market conditions and the Group's need for investment capital.

In the meantime, the minor residual oil-palm operation on 65 hectares of cultivated land yielded a crop of 1,700 tonnes (2015 - 1,800 tonnes). No replanting has been done since 1997 and the Group's objective in managing this land is to maximise the crop from its ageing palms whilst minimising costs. The Group has only two junior employees on Bertam Estate and no other employees or office space in Malaysia. Administrative and agricultural advice and work is carried out by Straits Estates Sdn Berhad and other external service providers.

Associated company: Bertam Properties

Mixed development of residential housing and commercial properties continues to progress on Bertam Properties' land. At the end of 2016, Bertam Properties owned 314 hectares of land, including 29 hectares under development and 143 hectares of golf course. This left a balance of 142 hectares for development or sale. Given the small membership of the 36-hole golf course, a discussion was under way at the end of 2016 as to whether the golf course could be reduced to an 18-hole course releasing some 40 hectares for development. Outline planning permission was successfully sought and, on 18 February 2017, the golf club membership voted at an extraordinary general meeting to accept a scheme along these lines, which compensated individual golf club members 12,000 Malaysian Ringgit each (some US$2,700) for their loss of amenity; a total cost to Bertam Properties of some US$2.4 million.

During 2016, Bertam Properties completed the sale of 479 developed properties, a significant increase over the 370 units on which sales were completed in 2015. Sales recorded in 2016 were mainly of single-storey residential terraces, and sales during the year yielded a very similar margin to those in the previous year. Two pieces of land were sold for development, including one for a Tesco supermarket, generating a profit of US$1.4 million (2015 US$1.0 million). Overall, less development was begun in 2016 than in previous years, reflecting a slowdown in the Penang property market. The volume of property transactions in the Penang region, and their total value, decreased during 2016 in part reflecting tighter lending conditions by banks. Revenue from property development increased by 41% in the year. The profit arising on these activities was US$8.4 million (2015 US$6.2 million).

The Group's share of Bertam Properties' profit in the year was US$3.8 million (2015 US$2.8 million) and its share of Bertam Properties' gross dividends was US$1.9 million (2015 US$1.0 million).

The remaining development land at Bertam Properties remains a valuable asset whose value has appreciated as development in the project is completed and the new town attracts residents and businesses to an area that is designated by the Malaysian government as a 'hub' for education. The board expects the value of this land to continue to appreciate in future.

NET ASSETS AND BORROWING

At the end of 2016, the Group's net assets were US$344.2 million (2015 US$321.6 million). Current assets exceeded current liabilities by US$131.6 million (2015 US$43.7 million), the increase being due to both a significant increase in the Group's cash balances following the disposal of the Group's interest in NAPCo, and to a change in the treatment for 2016 of the investment in Agro Muko to be an 'asset held for sale', a current asset in the year-end balance sheet.

The Group had cash and liquid resources of US$105.7 million (of which US$14.3 million has been pledged as security) at the end of 2016. At this date, the Group's gearing ratio was 8% and it held a net funds balance of US$75.3 million (2015 US$11.5 million).

ANALYSIS OF GROUP EQUITY VALUE

The information in the following table provides a directors' estimate of the Group equity value at 31 December 2016, and is based on an independent valuation of the Group's properties performed at the end of 2016.

CURRENT TRADING AND PROSPECTS

F.f.b. crops during the first quarter of 2017 have been in line with expectation. At the end of March they stood at 99,900 tonnes, 15% ahead of the same period in 2015. Crops have benefited from the increase in rainfall that accompanied the end of the dry weather occasioned by the El Niño weather pattern. The increase in crop was held back in Kalimantan by the flooding described above, which interfered with harvesting and collection of f.f.b.. The flooding has now receded and crops are on a strongly upward trend. The details are set out in the following table:-

The end of the El Niño in 2016 is likely to herald an increasing crop in 2017, which will add further momentum to the Group's f.f.b. crop. This is already rising, owing to the young average age of its palms, only 7½ years, as a consequence of the development of its projects in Bangka and Kalimantan over the last ten years. The upward trend in crop is expected to last well into the next decade. This would be augmented by the acquisition or development of new project areas.

The expected increase in global CPO production in 2017 is likely to put some pressure on prices, particularly in the second half of the year, notwithstanding very low levels of CPO stocks. The average CPO price c.i.f. Rotterdam for the first quarter of the year has been US$772 per tonne, but weakened noticeably in the last week of March to finish the quarter at US$700 per tonne, compared with US$795 per tonne at the end of 2016. Low levels of physical supply in the first part of the year could lead to some price volatility. However, the board is of the view that palm oil, because of its high yield and low cost of production, is well placed to continue to benefit from increasing demand for vegetable oil and the outlook, therefore, remains encouraging.

Peter Hadsley-Chaplin

Chairman

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2016

* Restated for discontinued operations.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2016

CONSOLIDATED BALANCE SHEET

At 31 December 2016

* Restated for current-asset investments.

CONSOLIDATED CASH-FLOW STATEMENT

For the year ended 31 December 2016

* Restated for current-asset investments.

NOTES

1. Dividends paid and proposed

2. Tax on profit on ordinary activities

3. Basic and diluted earnings per share

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

* 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.

4. Financial information

The financial information contained in this announcement has been derived from the statutory consolidated accounts for the year ended 31 December 2016. The information in this preliminary results announcement has been prepared on the basis of the accounting policies which will be used in the Group accounts for the year ended 31 December 2016 and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. No standards or amendments to existing standards adopted with effect from 1 January 2016 have had a material impact on the Group. The auditors anticipate issuing an unqualified opinion.Full accounts of M.P.Evans Group PLC for the year ended 31 December 2015, which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

5. International Financial Reporting Standards

This announcement is based on the Group's financial statements which are being prepared in accordance with International Financial Reporting Standards ("IFRS"), as adopted for use in the EU.

Whilst the financial information included in this announcement has been prepared in accordance with the recognition and measurement criteria of IFRS, this announcement does not itself contain sufficient information to comply with IFRS. The Group expects to publish full financial statements that comply with IFRS on or after 13 April 2017.

6. Distribution timetable

The Group's 2016 annual report will be available on the Group's website on or after 13 April 2017 and despatched to shareholders shortly thereafter. Printed copies of the Group's 2016 annual report will be available from the Company, 3 Clanricarde Gardens, Tunbridge Wells, Kent TN1 1HQ. The annual general meeting will be held on Friday 9 June 2017.

By order of the board

Katya Merrick

Company Secretary