Final Results

Anglo-Eastern Plantations PLC 24 March 2004 ANGLO-EASTERN PLANTATIONS PLC - PRELIMINARY ANNOUNCEMENT Record result, good prospects • Anglo-Eastern Plantations, which owns approximately 30,000 ha of plantations, primarily in Indonesia, announces that group pre-tax profit for 2003 was easily a record at US$ 19.6m on the back of record palm oil output and strong commodity prices during most of the year. 2003 2002 Increase Turnover ($000) 48,519 31,139 55.8% Operating profit ($000) 19,994 12,767 56.7% Pre-tax profit ($000) 19,587 12,092 62.0% Basic earnings per share (cts) 28.6 16.5 73.3% Dividend per share (cts) 6.0 4.0 50.0% • In sterling terms, the pre-tax profit was £11.9m, up 48.7% on 2002's £8.0m, whilst basic EPS was 59.6% higher at 17.4p (2002: 10.9p). • Opening net debt of $1.7m was transformed into net cash of $7.0m. • The average CPO (crude palm oil) price of 2003 was $441/mt compared to $400/mt in 2002. • Output of palm oil FFB (fresh fruit bunches) totalled 372,000mt, 27% up from 2002's 294,000mt. • Bought in FFB, for processing at the group's mills at Puding Mas (Bengkulu) and Tasik, increased by 67% to 171,000mt, making a useful contribution to group profits. • Last week's $10m acquisition of the Bina Pitri estate in central Sumatra takes the group's total planted area to 30,000ha, which compares with an objective of 50,000ha. • Mr T H Chan, Chairman, stated 'The group's FFB crops for the first two months of 2004 were on target and slightly ahead of the same period in 2003. About 980 ha of new plantings in Bengkulu are expected to be brought into production during the year. CPO prices have been favourable and strengthened since the year end to $540/mt. If this price remains for the rest of the year, we can reasonably expect another successful and satisfactory year for 2004.' Enquiries: Anglo-Eastern Plantations Plc 020-7236 2838 Rollo Barnes (Financial Director) Bankside Consultants Limited Charles Ponsonby 020-7444 4166 / 07789-202 312 CHAIRMAN'S STATEMENT I am pleased to announce record results and good prospects. Financial review Group profit before tax for 2003 was a record at US$19.6 million on the back of record palm oil output and strong commodity prices throughout most of the year. The previous record profit was $14.3 million reported for 1995. Profit before tax for 2003 was a 62% increase over that of $12.1 million for 2002. Earnings per share (EPS) increased by 73% from 16.5cts to 28.6cts. The greater improvement in EPS relative to pre-tax profit reflects a slightly lower rate of tax charge. This was caused in the main by improved results from Malaysian operations where previous high local operating losses could not be offset against other taxable profits in the group. The results would have been higher but for the weakness of the dollar in relation to the Indonesian rupiah, in which most of the costs and expenses of the group are incurred. The strength of sterling also resulted in a smaller EPS increase of 60% in sterling terms. The relative weakness of the dollar also had a small impact on the group's net asset value. In dollar terms, net asset value at the year end was 225cts as compared to 207cts at the beginning of the year. In sterling terms, net asset value decreased from 128p to 126p. The strong profit translated into strong cash flow. Group cash balances increased from $8.4 million to $15.1 million, after capital expenditure of $5.7 million and $2.0 million term loan servicing. The group's long term loans reduced from $10.1 million to $8.1 million. Accordingly, net debt of $1.7 million was transformed into net cash of $7.0 million. Commodity prices CPO prices, which were $450/mt (cif Rotterdam) at the beginning of the year, weakened to $415/mt by June. Prices recovered in the second half and ended the year at $450/mt. Reasons for the price movement are complicated but in this case a lower than expected US soya crop in 2004 appeared to be a major factor. The average CPO price for 2003 was $441/mt compared to $400/mt in the previous year. Rubber prices reached a peak in 2003 which was the highest level for seven years. Our rubber production therefore made a small but useful contribution of $1.1 million in 2003. Cocoa prices fell during 2003 from a 15 year high but still remain at historically high levels, enabling a profit contribution of $0.2 million. Contribution from these commodities will lessen relative to oil palm in the future as the group increases its oil palm plantings. Indonesia Fresh fruit bunch (FFB) crop output at the Tasik and Anak Tasik estates in 2003 was the second highest ever at 172,000mt, compared to the peak of 175,000mt recorded in 2000. While we cannot expect these levels to continue in the coming years, this is a most encouraging performance, particularly from Tasik which has a large proportion of plantings which are now 21 years old and theoretically past their prime. FFB production from the smaller estates near Medan, in North Sumatra, amounted to 55,000 mt compared to 52,000 mt in the previous year. These properties, with favourable soils and climate, performed satisfactorily. Production from the Bengkulu estates in southern Sumatra was 108,000mt compared to 61,000mt in 2002, largely on the back of increasing yields from the relatively young palms. During 2003, 270 ha came into production. The rate of new planting in Bengkulu increased to 1,700 ha in 2003 and we expect to maintain this rate in 2004. The remaining balance of 3,000 ha of reserve land is expected to be fully planted by 2007. These properties are expected to increase production in the coming years. The group continues to buy in FFB for processing at its two oil mills. In 2003, the amount of bought in crop increased by 67% to 172,000 mt, making a useful contribution to group profits. The new mill on Puding Mas in Bengkulu contributed most of this increase, operating, like Tasik, close to capacity throughout the year. The expansion of the Puding Mas mill from 40 mt/hr to 60 mt /hr is expected to be completed in the last quarter of this year. Likewise, the new 20 mt/hr mill at Blankahan near Medan in North Sumatra is also expected to be commissioned at the end of this year. I would like take this opportunity to pay tribute to our estate and mill staff whose dedication and hard work have made this a most successful and satisfactory year. This is particularly so for those working on our newer properties in Bengkulu and Malaysia who have had to cope with unusually heavy monsoon rains which, while good for palms, were most trying for the estate infrastructure and crop transport. In 2003, we began to achieve a long held aim to assist villages adjoining our properties in Bengkulu to establish their own 20 ha blocks of oil palm which contribute to village funds. After much negotiation by our management, I am pleased to report that we have now implemented 15 such schemes. I expect this to contribute to social stability in areas surrounding our estates there. Malaysia As reported in our interim results, the Cenderung estates showed some improvement in the middle of the year. For the year, the operation reported a small profit contribution of $173,000, largely as a result of favourable commodity prices. Crops increased 10% to 38,000 mt for the year. Crops up to September continued to be encouraging. However, production in the last quarter was adversely affected by unusually heavy monsoon rain. More effort will be expended to improve this property which has disappointed for some time. Group Development At the year end, we were half way to achieving our aim of enlarging our planted acreage to 50,000 ha. For some time, we have been seeking to take advantage of our stronger balance sheet to increase our planted area by acquisition of a medium sized planted estate. Last week, as announced, we acquired the entire issued share capital of P T Bina Pitri Jaya, an Indonesian company whose principal asset is Bina Pitri estate, a planted oil palm estate of land title area of 4,329 ha. The land title runs to 2033 when, under current legislation, it is renewable for a further 35 years. The planted area is about 4,400 ha of which about 200ha are planted in an extension area of 2,000 ha over which the temporary land rights have expired. Steps will be taken to obtain title over about 500 ha of this area. The transaction requires the approval of the Indonesian Investment Co-ordination Board which has indicated its approval in principle. The total consideration was US$10 million, including US$2.8 million of confirmed third party liabilities which require to be settled by the end of March 2004. Other than the estate, there were no significant assets in the company purchased. Financial data was not comprehensive but sufficient for us to enter a contract; 5% of the consideration has been deferred for three months against undisclosed liabilities. The consideration is payable in cash from the group's own resources. A local minority shareholder, of up to 20%, may be introduced later. Bina Pitri is located in the province of Riau in central Sumatra, about 50km from the provincial capital, Pekanbaru, and about 180 km to the south east of Anglo-Eastern's Tasik plantation. Riau has a large and well-developed plantation industry. The estate has no oil mill, but FFB will be sold to mills nearby. Terrain and rainfall are very suitable for oil palms. Planted on average about eight years ago, the estate is in need of rehabilitation, the cost of which is expected to require a further US$1 million. The initial annual crop of FFB is expected to be about 30,000mt (less than 10% of the existing group's), but this should build up strongly over the next few years. Profit contribution in the first year is unlikely to be material. The total planted area of the group following this acquisition is 30,000 ha. Directors and Management Dato Haron, who continues to manage our Malaysian operations, stepped down as a director in October 2003. I wish to record our appreciation for his contribution to us. I also welcome Mr. Foo San Kan who joined as an independent non-executive director in October. Mr. Foo, who was the senior partner of Ernst & Young in Malaysia until 2002, brings wide experience of business in the region. Outlook The group's FFB crops for the first two months of 2004 were on target and slightly ahead of the same period in 2003. About 940ha of new plantings in Bengkulu are expected to be brought into production during the year. CPO prices have been favourable and strengthened since the year end to $540/mt. If this price level remains for the rest of the year, we can reasonably expect another successful and satisfactory year for 2004. The rubber crop also started the year well and the price, while below the peak recorded in 2003, has been satisfactory. This crop can be expected again to make a useful contribution in the current year. The less important cocoa crop in the first two months has been rather disappointing. Dividend On the strength of the results for 2003 and the prospects for 2004, the directors are proposing a 50% increase in dividend from 4.0cts to 6.0cts per share. CHAN TIEK HUAT 24 March 2004 Chairman CONSOLIDATED PROFIT AND LOSS ACCOUNT 2003 2002 2003 2002 US$'000 US$'000 £'000 £'000 Unaudited Audited Unaudited Audited Turnover - continuing operations 48,519 31,139 29,495 20,622 ======== ======== ======== ======== Operating profit - continuing operations 19,994 12,767 12,154 8,455 Net interest (payable) (407) (675) (247) (447) -------- -------- -------- -------- Profit on ordinary activities before tax 19,587 12,092 11,907 8,008 Taxation (6,141) (4,367) (3,733) (2,892) -------- -------- -------- -------- Profit on ordinary activities after tax 13,446 7,725 8,174 5,116 Minority interests (all equity interests) (2,201) (1,250) (1,338) (828) -------- -------- -------- -------- Profit attributable to shareholders 11,245 6,475 6,836 4,288 Dividends (2,375) (1,571) (1,444) (1,040) -------- -------- -------- -------- Retained profit for the year 8,870 4,904 5,392 3,248 Earnings per ordinary share 28.6cts 16.5cts 17.4p 10.9p - basic 28.4cts 16.4cts 17.3p 10.9p - diluted 2003 2002 2003 2002 Operating profit is stated US$'000 US$'000 £'000 £'000 after charging: Exchange profits 262 828 159 548 -------- -------- -------- -------- TAXATION: 2003 2002 2003 2002 US$'000 US$'000 £'000 £'000 Foreign corporation tax 5,552 4,170 3,375 2,762 Foreign withholding tax on remittances 321 372 195 246 Deferred tax adjustment - current year 268 (175) 163 (116) -------- -------- -------- -------- 6,141 4,367 3,733 2,892 ======== ======== ======== ======== DIVIDEND: The board has proposed a final and only dividend for 2003 of 6.00cts (2002 - 4.00cts) to be paid on 8 June 2004 to shareholders on the register on 7 May 2004. Shareholders electing to receive their dividend in sterling will receive 3.27p (2002 - 2.58p). ACCOUNTS: The financial information contained in this announcement does not constitute statutory financial statements within the meaning of section 240 of the Companies Act 1985. Statutory accounts for the previous financial year ended 31 December 2002 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under section 237(2) or (3) of the Companies Act 1985. The auditors have not yet reported on the accounts for the year ended 31 December 2003, nor have any such accounts been delivered to the Registrar of Companies. The accounts for the year ended 31 December 2003 will note that Indonesia has been through a period of major political change. Further changes could affect exchange and interest rates and social stability. Indonesian government policy towards foreign investment and the plantation industry may change, affecting the group's future profits and cash flow. Accounting policies remain unchanged from the previous year. This preliminary announcement was approved by the board on 24 March 2004. CONSOLIDATED BALANCE SHEET 2003 2002 2003 2002 US$'000 US$'000 £'000 £'000 Unaudited Audited Unaudited Audited Fixed assets Tangible assets 105,096 103,558 58,712 64,322 -------- -------- -------- -------- Current assets Stocks 1,713 928 958 576 Debtors 2,736 2,001 1,528 1,243 Investments 313 234 175 145 Cash 15,127 8,416 8,450 5,227 -------- -------- -------- -------- 19,889 11,579 11,111 7,191 ======== ======== ======== ======== Current liabilities Creditors: falling due within one year Borrowings (2,060) (2,040) (1,150) (1,267) Other creditors (9,439) (7,717) (5,273) (4,793) -------- -------- -------- -------- (11,499) (9,757) (6,423) (6,060) ======== ======== ======== ======== Net current assets 8,390 1,822 4,688 1,131 -------- -------- -------- -------- Total assets less current liabilities 113,486 105,380 63,400 65,453 Non-current liabilities Creditors: falling due after more than one year Borrowings (6,108) (8,085) (3,412) (5,022) Deferred taxation 1,013 1,215 566 755 -------- -------- -------- -------- Net assets 108,391 98,510 60,554 61,186 ======== ======== ======== ======== Share capital 15,319 15,171 9,895 9,808 Share premium 23,679 23,570 15,395 15,329 Share capital redemption reserve 1,087 1,087 663 663 Revaluation and exchange reserve 5,375 6,586 (556) 3,028 Profit and loss account 43,702 34,719 24,415 21,565 -------- -------- -------- -------- Shareholders' funds 89,162 81,133 49,812 50,393 Minority interests 19,229 17,377 10,742 10,793 -------- -------- -------- -------- 108,391 98,510 60,554 61,186 ======== ======== ======== ======== CONSOLIDATED STATEMENT OF RECOGNISED GAINS AND LOSSES 2003 2002 US$000 US$000 Unaudited Audited Profit for the financial year 11,245 6,475 Surplus on deemed disposal of investment in subsidiary 113 - Unrealised deficit on revaluation of the estates (5,126) (15,375) Profit on exchange translation 3,915 10,975 -------- -------- Total recognised gains relating to the year 10,147 2,075 -------- -------- RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS 2003 2002 US$000 US$000 Unaudited Audited Total recognised gains 10,147 2,075 Share capital subscription 257 - Dividends (2,375) (1,571) -------- -------- Net increase in shareholders' funds 8,029 504 Beginning of year 81,133 80,629 -------- -------- End of year 89,162 81,133 -------- -------- CONSOLIDATED CASH FLOW statement 2003 2002 2003 2002 US$000 US$000 £000 £000 Unaudited Audited Unaudited Audited Net cash inflow from operating activities 22,142 13,691 12,604 8,670 Returns on investment and servicing of finance (1,157) (1,158) (703) (767) Tax paid (5,364) (2,424) (3,261) (1,605) Capital expenditure (5,639) (6,722) (3,428) (4,452) -------- -------- -------- -------- Equity dividends paid (1,571) (785) (955) (520) - parent company -------- -------- -------- -------- Cash inflow before financing 8,411 2,602 4,257 1,326 Financing -------- -------- -------- -------- Share options exercised 257 - 156 - (Repayment)/drawdown of long term (2,023) 3,663 (1,230) 2,427 loans Finance lease repayments 47 (29) 29 (19) -------- -------- -------- -------- (1,719) 3,634 (1,045) 2,408 -------- -------- -------- -------- Increase in cash in the year 6,692 6,236 3,212 3,734 ======== ======== ======== ======== EXCHANGE RATES ($ : £) 2003 2002 Year end 1.79 1.61 Average 1.65 1.51 WEIGHTED AVERAGE NUMBER OF SHARES IN ISSUE Basic 39,378,899 39,226,922 Diluted 39,581,527 39,440,025 CROPS 2003 2002 Tonnes Tonnes Oil palm fresh fruit bunches 372,290 294,062 -ex estates -bought in 170,948 101,906 Crude palm oil 94,523 63,240 Rubber 1,800 1,491 Cocoa 154 178 AREAS Total Mature Immature Ha Ha Ha Oil palm 24,417 19,910 4,507 Rubber 757 757 - Cocoa 257 240 17 -------- -------- -------- 25,431 20,907 4,524 -------- -------- Reserves 9,251 Further title to be issued 5,397 -------- Total 40,079 ======== This information is provided by RNS The company news service from the London Stock Exchange

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