M.P. Evans Group PLC, a producer of sustainable Indonesian palm oil, is pleased to announce that its wholly-owned subsidiary, P.T. Evans Indonesia, has signed a conditional agreement to acquire the entire issued share capital of two Indonesian companies, PT Agro Bumi Kaltim (“ABK”) and PT Nusantara Agro Sentosa (“NAS”), for a total consideration of US$60 million, subject to the completion of legal and regulatory formalities in Indonesia, which the Group expects to be finalised before the end of 2023.
The acquisition is in line with the Group’s established strategy of increasing the planted hectarage close to its existing operations. ABK and NAS both own oil-palm plantations in East Kalimantan, and between them manage a total planted area of 8,350 hectares. This is made up of 4,973 hectares at ABK and 3,377 hectares at NAS, comprising a total of 6,664 hectares under direct ownership and 1,686 hectares managed on behalf of associated smallholder co-operatives., and following the completion of this transaction, it is expected that all the crop from ABK will be sent to the Group’s Kota Bangun estate for processing in Group mills. The crop from NAS will be sent to an external mill. The majority of the planted area at ABK and NAS is made up of young palms, with almost 90% planted between 2017-2019, and the Group expects yields from these young areas to increase as the palms continue to mature.
“”The addition of the estates at ABK and NAS to the Group portfolio is a great achievement and will bring our total area under management to over 65,000 hectares. We have been very keen to acquire more hectares close to Kota Bangun for some time, and having the ABK estate supplying its crop to our existing mills will further enhance our operational efficiencies. With more hectares delivering more crop, we will be able to continue to increase our output, supporting the Group’s ambition to deliver progressive returns,” said Group’s chairman, Peter Hadsley-Chaplin.
The acquisition is in line with the Group’s established strategy of increasing the planted hectarage close to its existing operations. ABK and NAS both own oil-palm plantations in East Kalimantan, and between them manage a total planted area of 8,350 hectares. This is made up of 4,973 hectares at ABK and 3,377 hectares at NAS, comprising a total of 6,664 hectares under direct ownership and 1,686 hectares managed on behalf of associated smallholder co-operatives., and following the completion of this transaction, it is expected that all the crop from ABK will be sent to the Group’s Kota Bangun estate for processing in Group mills. The crop from NAS will be sent to an external mill. The majority of the planted area at ABK and NAS is made up of young palms, with almost 90% planted between 2017-2019, and the Group expects yields from these young areas to increase as the palms continue to mature.
The most recent audited accounts for the companies being acquired are for the year ended 31 December 2022. They show that, as estates with relatively young plantings, ABK made a loss after tax in the year of US$3.0 million and NAS a loss of US$2.6 million. The Group expects that results from ABK and NAS will improve as the areas mature, and as management work to improve agronomic standards on both estates. The Group also expects to see benefits for the Kota Bangun milling facilities, as the reliance on outside crop suppliers starts to fall. As a priority after acquisition, the Group will work to include the acquired areas as part of its registration with the Roundtable on Sustainable Palm Oil (the “RSPO”), in accordance with its continuing commitment to increase the proportion of its output that is certifiably sustainable. Anticipated costs associated with this were taken into consideration when determining the purchase price.