Final Results

Anglo-Eastern Plantations PLC 30 April 2008 29 April 2008 ANGLO-EASTERN PLANTATIONS - PRELIMINARY ANNOUNCEMENT Profit by far a record, Board confident Anglo-Eastern Plantations Plc (AEP.L), which operates and is developing some 83,000 hectares (ha) of plantations, primarily palm oil in Indonesia, announces a record profit for 2007, by far, which was attributable to much improved prices for palm oil. Of equal significance, the group is now strongly positioned for further development through three substantial land acquisitions in 2007 and one in 2008. Financial Highlights •Revenue increased by 62% to $127.9m. •Operating profit increased by 100% to $52.5m, before biological asset (BA) adjustment, and by 87% to $53.5m, after BA adjustment. •Pre-tax profit increased by 97% to $52.6m, before BA adjustment, and by 85% to $53.6m, after BA adjustment. •Diluted EPS increased by 102% to 77.2cts, before BA adjustment, and by 88% to 78.4cts, after BA adjustment. •Year-end net cash totalled $23.3m, which compares with $9.6m at the end of 2006, despite expenditure of $14.5m on three acquisitions and capital expenditure of $12.2m. •In view of the positive outlook for palm oil and the recent satisfactory crops, the board is proposing to increase the 2007 annual dividend by 30% to 14.0cts per share. Commercial Highlights •The market average price for crude palm oil (CPO) for 2007 was $790/mt, compared to $479/mt in 2006, an increase of 65%. •Estate fresh fruit bunches (FFB) output for 2007 was 2% above the previous year, the small increase reflecting the severe drought in the second half of 2006 in Bengkulu and Malaysia. •During 2007 and early 2008, AEP made four acquisitions amounting to 58,000ha. This will enable the group to more than double its planted area from the present 38,660ha to about 83,000ha. •FFB crops so far in 2008 have been satisfactory on all estates - production is about 20% ahead of the same period in 2007 - and the CPO price has risen from $960/mt at the start of 2008 to around $1,160/mt at present. Mr Chan Teik Huat, Chairman and Chief Executive, stated 'As long as any price reaction from current levels is only modest, in the absence of any further increase in Indonesian export levies and providing FFB crops maintain their improved levels, we can expect a satisfactory increase in profits and cash flow for 2008.' Enquiries: Anglo-Eastern Plantations Plc Rollo Barnes (Financial Director) 020-7236 2838 Bankside Consultants Limited Charles Ponsonby 020-7367 8851 Chairman's statement Results I am pleased to report a record profit for 2007 which was attributable to much improved prices for palm oil. Of equal significance, the group is now strongly positioned for further development through four substantial land acquisitions, three in 200 7 and one early in 2008. This will enable the planted area to double in the next six years. To support this, we have arranged appropriate borrowing facilities. Group operating profit for 2007, before biological asset (BA) adjustment, was $52.5 million, precisely double that for 2006. Estate fresh fruit bunch (FFB) output for 2007 was 2% above the previous year. The small increase reflected the effect of the severe drought in the second half of 2006 in Bengkulu and Malaysia. The good performance was mainly the result of the favourable crude palm oil (CPO) price, which rose throughout the year to average 65% higher than that in 2006. The results were adversely affected by increases in Indonesian export taxes on CPO. Profit before tax and after BA adjustment was $53.6 million, compared to $29.0 million in 2006. The BA adjustment was a credit of $1.0 million, compared to $2.3 million in 2006, reflecting our estate valuations referred to below. However, as I now repeat with every results statement, the BA adjustment has no bearing on the operating performance or cash generation of the group. Earnings per share before BA adjustment increased by 102% in US dollars to 77.2 cts, compared to 38.3 cts in 2006. This reflected a lower average tax rate arising from past losses carried forward in our Malaysian subsidiary. In sterling terms, EPS before BA adjustment increased by 86% to 38.4p from 20.6p. Financing Our policy is to fund the group's development from self-generated funds supplemented by term bank loans. The three acquisitions in 2007, referred to under 'Recent acquisitions' below, cost $14.5 million. In addition, capital expenditure on field development and completion of the new mill at Bina Pitri amounted to $12.2 million. During the year, we repaid $1.7 million of our existing borrowings, including all the remaining $0.9 million of bank loans to our Malaysian operation. In anticipation of major capital expenditure, we secured and drew down in the middle of 2007 a new five year loan of $34.5 million. Together with the group's self-generated funds, this positioned us to act quickly if and when acquisition opportunities arose. In addition, the group also arranged a revolving short-term facility of $3.0 million, which was fully drawn down for the year end and was repaid early in 2008. At the end of 2007, the group's bank borrowings totalled $43.0 million against cash of $66.3 million, giving net cash of $23.3 million, which compares with $9.6 million at the end of 2006. The effect of these substantial increases in both borrowings and cash balances has been to increase interest costs and income, with a resulting small increase of $0.2 million in net finance costs. Recent acquisitions In my statements for the last two years, I said that, in anticipation of completion of planting of Bengkulu and Labuhan Bilik by 2009, our management in Indonesia were actively searching for both vacant land and planted estates for further expansion. It was pleasing to announce during 2007 and early 2008 four acquisitions amounting to 58,000 ha. This will enable the group to more than double its planted area from the present 38,660 ha to about 83,000 ha. While these new properties are all evidenced by official 'rights to occupy' (a temporary title which precedes application for and grant of a full land title or Hak Guna Usaha (HGU)), they require detailed survey. In addition to identifying plantable areas, this survey involves an assessment of the areas that ought to be set aside for local community use. With land available for commercial and private agriculture becoming increasingly scarce in Indonesia, this is an important and sensitive issue. At present, we do not know for certain how large these set aside areas will be. For the purposes of providing some indication, we have estimated that we will be able to plant about 70% of the vacant land we have acquired. Therefore, of the 58,000 ha acquired in 2007/8 to date about 2,000 ha is already planted and approximately 40,000 ha is estimated to be plantable. The peak net development cost of the total plantable area of about 40,000ha of the above acquisitions is likely to be about $100 million over the period to 2013. We plan to build four oil mills which will together cost about a further $35 million. Directors Mr Peter O'Connor and Mr Ho Soo Ching, two of our independent non-executive directors have decided not to seek re-election at the forthcoming annual general meeting. We thank them for their contribution and service rendered in past years. I am pleased to welcome Dato' John Lim as a non-executive director of Anglo-Eastern with effect from 26 April 2008. Dato' Lim, aged 58, is a Fellow of the Association of Chartered Certified Accountants and has been partner for 10 years with UHY Hacker Young LLP, Chartered Accountants, in London. He has extensive audit and business consultancy experience, particularly with Far Eastern clients with operations in the UK. The Combined Code on Corporate Governance requires non-executive directors who have served for more than nine years to submit themselves for re-election every year. Our two remaining long serving non-executives are affected by this provision. In addition, the Code assumes that, after nine years, previously independent non-executives cease to be independent. This applies to Datuk Henry Chin, whom I specifically commend to you as continuing to be thoroughly independent. I recommend that shareholders vote in favour of re-appointment of both long serving non-executive directors. Our finance director, Mr Barnes is retiring on 30 April 2008. I am pleased to welcome Mr David Smith who was appointed a director of Anglo-Eastern with effect from 26 April 2008 and will take over from Mr Barnes as Finance Director and Company Secretary on 1 May 2008. Mr Smith, aged 59, is a Chartered Accountant. He was previously with the Commonwealth Development Corporation and has extensive international experience, particularly in agriculture. He has been involved in investment in the oil palm sector and has worked in Indonesia in plantations. Outlook FFB crops so far in 2008 have been satisfactory on all estates - production is about 20% ahead of the same period in 2007. However, it is too early to forecast whether this improvement can be sustained for the rest of the year. Bought-in crops in the first two months have been 25% higher than in the same period of 2007. The CPO price has risen from $960/mt (CIF Rotterdam) at the start of 2008 to around $1,160/mt at present. In early March 2008, it reached a brief all time high of $1,390/mt. Much of this increase probably reflected speculation by financial institutions seeking to diversify from traditional markets or hedge against the dollar and we have now seen some correction. Nevertheless, most analysts see underlying demand for traditional food uses, particularly in China and India, remaining strong throughout 2008. In March 2008, Indonesian export taxes on CPO were reformulated to an escalating scale ranging from 5% on effective Rotterdam CIF prices between $650/mt and $750 /mt up to 20% on prices between $1,200/mt and $1,300/mt and 25% over $1,300/mt. This scale effectively caps CIF prices at between $1,000/mt and $1,050/mt. As long as any price reaction from current levels is only modest, in the absence of any further increase in Indonesian export levies and providing FFB crops maintain their improved levels, we can expect a satisfactory increase in profits and cash flow for 2008. Dividend The board is mindful that the group's development programme represents a considerable capital commitment. However, in view of the positive outlook for palm oil and the recent satisfactory crops, the board is proposing to increase the annual dividend in respect of 2007 by 30% to 14.0 cts per share from 10.8 cts in respect of 2006. Shareholders choosing to receive their dividend in sterling will do so at the rate ruling on 8 August, when the register closes. At today's exchange rate, the proposed dividend would be equivalent to 7.1p, an increase of 30% over the 5.46p paid in respect of 2006. CHAN TEIK HUAT Chairman 29 April 2008 Business Review Commodity prices During 2007 and so far in 2008, there were exceptional increases in vegetable oil prices, including CPO. In 2007, the CPO price opened the year at $570/mt, already a satisfactory level by historic standards, and ended at $960/mt. The average price was $790/mt, compared to $479/mt in 2006. Pricing in vegetable oil markets is a complex relationship between competing oils and meals, oil seed production in both hemispheres, and now bio-fuels. At its simplest, the increase in the CPO price has been driven by strong demand from traditional food uses, particularly in India and China, expanding acceptance of oleo-chemicals derived from palm oil, and increasing interest in bio-fuels. The effect on domestic cooking oil prices of the sharp increases in CPO prices has been of concern to the government of Indonesia, where cooking oil is one of the basic foodstuffs. In an attempt to limit the effect on local prices, the export tax on CPO was increased in June 2007 from 1.5% to 6.5% and again in September 2007 to 10%. This rate of tax was adjusted in March 2008 (please refer to the Chairman's Statement). While we do not export CPO, this tax is passed back to producers and reduces ex-factory prices directly. Rubber prices averaged $2,100/mt for 2007 (2006 - $1,590/mt); in February 2008, they set a record at $2,860/mt, the previous being $2,750/mt in June 2006. Our small area of 409 ha of mature rubber contributed a pre-tax profit of $1.8 million in 2007. The newly planted 270 ha of rubber will not be brought into production until 2012. Valuations In 2006, our main valuation assumptions were changed to reflect the improving outlook for palm oil and for Indonesia, and also to reflect increasing operating costs. These trends continued in 2007 and therefore we have increased the CPO price assumption from $440/mt to $500/mt; the discount rate is unchanged at 12%. This has had the effect of compensating for expected operating cost increases. As a result, we are valuing our planted Indonesian estates at about $4,630/ha, compared to $4,450/ha at the end of 2006. It should be noted that this is only a 'value in use' of the estates to the group on the above assumptions and we feel it is a prudent figure in relation to market values of planted oil palm land in Indonesia. The relatively small BA adjustment in 2007 reflects this small increase in estate valuations. Indonesia FFB production from Tasik and Anak Tasik was 178,896mt, 7% higher than 2006. Tasik again surprised with its good performance from ageing palms. The group has begun a small amount of under-planting with young palms. However, in view of the current high produce prices, it is the plan to defer the start of full replanting until 2010, then to be spread over eight years to 2017. Bought-in crop of 107,000mt at the Tasik mill was 17% below 2006, reflecting very strong competition in the vicinity. The oil extraction rate fell to 20.7% from 21.4% in 2006. FFB production from the three small estates around Medan was a record at 76,000mt, 15% higher than 2006. Bought-in crop at the mill on Blankahan was 52,700mt, an increase of 17% on 2006; the oil extraction rate fell to 21.9% compared to 22.6% in 2006. FFB production at Bengkulu, at 170,600mt, was 10% below the previous year. This disappointing output was probably due to the rather hilly terrain of this property where the drought in 2006 might have had a more pronounced adverse effect. Although crops in the first two months of 2008 have been significantly higher than the level in the corresponding period in 2007, it is difficult to predict the output for the rest of the year. Nevertheless, improvements to roads are being carried out against the normal heavy year end monsoon. Bought-in crop fell only slightly to 117,330mt from 119,690mt, but extraction rates fell back to 20.9% from 21.9% in 2006. The group plans to commence construction in 2008 of a second 40/60mt/hr oil mill, to be located on one of the outlying estates where there will be a saving in transport costs and where there is prospect for bought-in crop from smallholders. Cost is likely to be about $8.5 million. Bina Pitri, a run down estate acquired in 2004, was also affected by the drought, with crop 7% below expectations at 60,280mt but 29% up on 2006. The benefits of the resumption of fertilising and of rehabilitation in 2005/6 are now beginning to show. The new mill was commissioned in April 2007, achieving extraction rates of 23% before the introduction of bought-in crop, when rates fell to 21.2%. However, bought-in crop reached 55,390mt, which was almost 50% of throughput, a very pleasing result for a new operation. The acquisition cost of this estate was $10 million and investment in the mill and rehabilitation has been a further $8 million; the contribution to pre-tax profit in 2007 was $7 million. Malaysia Malaysian production, at 39,210mt, was 11% below 2006, due largely to the unusual weather of 2006. This was disappointing after the improvement of 14% achieved in 2006. However, with the favourable CPO prices, the Malaysian properties recorded a contribution to pre-tax profit of $2.3 million. By the end of 2007, the Malaysian subsidiary had cash of $2.4 million with no external debt. This will enable repayment during 2008 of some of the group's investment. Existing development Labuhan Bilik is the most important development. The original area, which was acquired in December 2004, is now set at 3,700 ha. Negotiation has been ongoing since 2004 to acquire contiguous areas amounting to 2,280 ha. This proved successful when the group received a formal 'right to occupy' in January 2008, making this potentially a 6,000 ha estate. At December 2006, 2,440 ha had been planted. It is expected that planting of the entire estate would complete in 2009. This is a flat, fertile property which will begin yielding as soon as 2009 and is expected to be a very valuable profit earner. The land title over the original 3,700 ha is expected to be issued shortly. Issue of the full title over the extension of 2,280 ha is likely to take another two years. The other current development is the completion of planting of 1,020 ha at Bengkulu, where 360 ha were planted during 2007, leaving 660 ha to complete. The slow progress has been caused by protracted compensation negotiations with neighbouring villages. It is important these are handled carefully and fairly. When fully planted, these 'old' Bengkulu properties will total 15,880 ha. Acquisitions The four acquisitions during 2007 and early 2008 were: 1. Sibolga As explained in the interim statement, in June 2007 the group acquired a 90% interest in PT Cahaya Pelita Andhika (CPA), an Indonesian company operating an estate of 4,470 ha, of which 2,007 ha are planted and mature. In March 2008, CPA was successful in obtaining re-instatement of rights over 1,300 ha of plantable land, bringing the estate to 5,770 ha. The remaining 10% interest in CPA will be held by a member of the family of one of our local partners. There is a valid HGU land title over the 4,470 ha which expires in 2029 and is renewable for about another 60 years. The estate is located on the west coast of North Sumatra near the town of Sibolga and about 180km from our nearest existing estate, Tasik. The property was very overgrown but is now being rehabilitated. A nursery has been established, from which existing planted areas with low stands will be supplied, as well as providing material for planting up the balance area of 3,760 ha. There is no mill but the group plans to commission one of 40/60mt/hr in 2010 at a cost of about $8.6 million. In the meantime, it will be necessary to transport the crop to Tasik. CPA is not expected to make a material contribution to group results until 2010. 2. Bangka In December 2007, the group acquired a 95% interest in PT Bangka Malindo Lestari (BML), an Indonesian company owning the rights to 7,000 ha of vacant land on the island of Bangka off the south eastern coast of Sumatra. Consideration was $1.5 million in cash. In March 2008, the area was re-designated and increased by the local authorities to 9,000 ha at a small cost to BML. The balancing 5% interest in BML will be held by the vendor, an Indonesian national whom we have known for many years. Terrain and rainfall are suitable for both oil palm and rubber. Bangka is becoming an important plantation development area. The estate is well located on the sheltered coast facing the Sumatran mainland and therefore well placed to ship oil direct to mainland refineries. Vegetation is scrub and previously logged secondary forest. The area is zoned for agricultural development but contains small villages to which some land will be allocated for community development, as described in the Chairman's Statement. Planting will commence in 2009 and should be complete by 2012. Production should commence in 2013. 3. Kalimantan Also in December 2007, the group acquired for a cash consideration of $6.8 million a 95% interest in PT Sawit Graha Manunggal (SGM), an Indonesian company owning the rights to 26,000ha of vacant land in Central Kalimantan, about six hours' drive north of the south eastern port city of Banjarmasin, just outside the district capital of Tamiang Lagang. Access by both road and river is good. The balancing 5% interest in SGM is held by the vendor, an Indonesian national whom we met only through the negotiations. Terrain and rainfall are suitable for both oil palm and rubber. Again, the area is mainly scrub, the original forest having been removed some years ago. The area is zoned for commercial agricultural development, but contains isolated villages for which a portion of land will be reserved for community projects. Development will commence in 2008. FFB production is likely to commence in 2013 and the area should be fully planted by 2013. Kalimantan is already an important plantation region but, as there are no mills in the vicinity of SGM, it will be necessary to build one by 2013/14. It is planned to establish a sizeable rubber estate in either Kalimantan or Bangka. 4. Bengkulu II In January 2008, the group acquired for a cash consideration of $3.8 million a 95% interest in PT Riau Agrindo Agung (RAA), an Indonesian company owning the rights to 15,000ha of vacant land in Bengkulu. The balancing 5% interest in RAA is held by the vendor, who is also the vendor of SGM. The location is about 120 kilometres south of the group's existing properties in Bengkulu (the 'old' Bengkulu) and 60 kilometres north of the provincial capital, Bengkulu town. It will therefore make a natural addition to the group's 15,000 planted hectares and, in its early years, will have the support of existing nurseries and access to the group's existing mills. Terrain of this property is hilly, but better than that of the 'old' Bengkulu properties. Soils are good and rainfall is suitable for oil palm. Vegetation is scrub and light secondary forest, the original forest having been removed some years ago. As for the other properties, the area is zoned for development but contains villages whose own development needs must be met. Limited planting can begin in 2008, with significant planting commencing in 2009 for completion by 2013 and production commencing in 2013. Conversion of the land rights in Bangka, Kalimantan and Bengkulu to full HGU titles is likely to take two to three years. Unaudited Consolidated income statement 2007 2006 Result Result before before BA BA BA BA adjust- adjust- adjust- adjust- ment ment Total ment ment Total $000 $000 $000 $000 $000 $000 ----------------- -------- ------- ------- -------- ------- -------- Revenue 127,898 - 127,898 79,094 - 79,094 Cost of sales (72,297) - (72,297) (50,089) - (50,089) ----------------- -------- ------- ------- -------- ------- -------- Gross profit 55,601 - 55,601 29,005 - 29,005 Biological asset revaluation movement (BA adjustment) - 1,001 1,001 - 2,312 2,312 Other income 566 - 566 13 - 13 Administration expenses (3,646) - (3,646) (2,748) - (2,748) -------- ------- ------- -------- ------- -------- Operating profit 52,521 1,001 53,522 26,270 2,312 28,582 Exchange profits 215 - 215 368 - 368 Finance income 1,800 - 1,800 538 - 538 Finance costs (1,945) - (1,945) (448) - (448) ----------------- -------- ------- ------- -------- ------- -------- Profit before tax 52,591 1,001 53,592 26,728 2,312 29,040 Tax (15,328) (300) (15,628) (8,595) (694) (9,289) ----------------- -------- ------- ------- -------- ------- -------- Profit for year 37,263 701 37,964 18,133 1,618 19,751 ----------------- -------- ------- ------- -------- ------- -------- Attributable to: - Equity holders of the parent 30,485 515 31,000 15,153 1,321 16,474 - Minority interest 6,778 186 6,964 2,980 297 3,277 ----------------- -------- ------- ------- -------- ------- -------- 37,283 701 37,964 18,133 1,618 19,751 ----------------- -------- ------- ------- -------- ------- -------- Earnings per share - basic 78.5 cts 41.7 cts - diluted 78.4 cts 41.7 cts Earnings per share before BA adjustment are shown in note 6 Unaudited Consolidated statement of recognised income and expenses 2007 2006 $000 $000 Unrealised surplus on revaluation of the estates 4,823 6,016 (Loss)/profit on exchange translation (5,932) 11,718 Deferred tax on revaluation (1,186) (3,327) -------- -------- Net income recognised directly in equity (2,295) 14,407 Profit for the year 37,964 19,751 ------------------------------------ -------- -------- Total recognised income and expense for the year 35,669 34,158 ------------------------------------ -------- -------- Attributable to: - Equity holders of the parent 28,639 28,002 - Minority interests 7,030 6,156 ------------------------------------ -------- -------- 35,669 34,158 ------------------------------------ -------- -------- Unaudited Consolidated balance sheet 2007 2006 $000 $000 Non-current assets Biological assets 38,580 33,255 Property, plant and equipment 148,443 127,568 Receivables 1,677 1,337 ------------------------------------ -------- -------- 188,700 162,160 ------------------------------------ -------- -------- Current assets Inventories 4,910 1,785 Tax receivables 1,875 2,684 Trade and other receivables 1,462 1,652 Cash and cash equivalents 66,358 17,246 ------------------------------------ -------- -------- 74,605 23,367 ------------------------------------ -------- -------- Current liabilities Bank loans and other financial liabilities (7,293) (2,167) Trade and other payables (9,311) (5,308) Tax liabilities (8,085) (3,235) ------------------------------------ -------- -------- (24,689) (10,710) ------------------------------------ -------- -------- Net current assets 49,916 12,923 ------------------------------------ -------- -------- Non-current liabilities Bank loans and other financial liabilities (35,719) (5,454) Deferred tax liabilities (23,025) (21,152) Retirement benefits - net liabilities (1,534) (834) ------------------------------------ -------- -------- Net assets 178,338 147,377 ------------------------------------ -------- -------- Equity Share capital 15,504 15,495 Treasury shares (1,785) (1,387) Share premium reserve 23,935 23,904 Share capital redemption reserve 1,087 1,087 Revaluation and exchange reserve 46 2,407 Retained earnings 107,184 80,450 ------------------------------------ -------- -------- Equity attributable to equity holders of the parent 145,971 121,956 Minority interests 32,367 25,421 ------------------------------------ -------- -------- Total equity 178,338 147,377 ------------------------------------ -------- -------- Unaudited Consolidated cash flow statement 2007 2006 $000 $000 Profit before tax 53,592 29,040 Adjustments for: BA adjustment (1,001) (2,312) Net (profit)/loss on disposal of current and fixed asset investments (518) 158 Depreciation 4,264 3,551 Share-based remuneration expense 87 20 Retirement benefit provisions 700 232 Net finance expense/(income) 145 (90) ------------------------------------ -------- ------- Operating cash flow before changes in working capital 57,269 30,689 (Increase)/decrease in inventories (3,125) 714 Decrease in trade and other receivables 142 85 Increase in trade and other payables 3,600 1,007 ------------------------------------ -------- ------- Cash inflow from operations 57,886 32,405 Interest paid (2,051) (541) Overseas tax paid (9,196) (9,321) ------------------------------------ -------- ------- Net cash flow from operations 46,639 22,543 ------------------------------------ -------- ------- Investing activities Acquisition of subsidiaries (14,480) - Property, plant and equipment - purchase (12,244) (15,370) - sale 94 119 Interest received 1,800 538 ------------------------------------ -------- ------- Net cash used in investing activities (24,830) (14,713) ------------------------------------ -------- ------- Financing activities Dividends paid by parent company (4,266) (3,560) Share options exercised 40 50 Purchase of own shares for treasury (398) - Repayment of existing long term loans (1,694) (1,645) Drawdown of new long term loan 34,500 3,200 Finance lease drawdown/(repayment) 7 (11) Dividends paid to minority shareholders (735) (460) Loan to minority shareholder (578) - Repayment by minority shareholders 286 - Subscriptions to subsidiary share capital by minority shareholders (1,668) - Receipt from sale of portfolio investment 2,234 267 ------------------------------------ -------- ------- Net cash used in financing activities 27,728 (2,159) ------------------------------------ -------- ------- Increase in cash and cash equivalents 49,537 5,671 Cash and cash equivalents less overdrafts At beginning of year 16,823 10,805 Foreign exchange (3,003) 347 ------------------------------------ -------- ------- At end of year 63,357 16,823 ------------------------------------ -------- ------- Comprising: Cash at end of year 66,358 17,246 Overdraft at end of year (3,001) (423) ------------------------------------ -------- ------- 63,357 16,823 ------------------------------------ -------- ------- Notes to the financial statements 1 Basis of preparation The unaudited financial information included in this announcement has been extracted from the Consolidated Financial Statements of Anglo-Eastern Plantations Plc and its subsidiaries (the group) which have been prepared in accordance with International Financial Reporting Standards, as adopted by the European Union ('adopted IFRS'), and those parts of the Companies Act 1985 applicable to companies reporting under adopted IFRS. 2 Accounting Policies The accounting policies adopted in the preparation of the Consolidated Financial Statements for the year to 31 December 2007 are consistent with those followed in the preparation of the Annual Report and Financial Statements for the year ended 31 December 2006 and have been applied consistently throughout the group for the purposes of the Consolidated Financial Statements for the years ended 31 December 2007 and 31 December 2006. 3 Nature of financial information The financial information contained in this preliminary announcement does not constitute the company's consolidated statutory financial statements for the years ended 31 December 2007 or 2006, but is derived from those financial statements. The financial statements for the year ended 31 December 2007 are unaudited. The financial statements for the year ended 31 December 2006 have been delivered to the Registrar of Companies. The auditors report on the financial statements for the year ended 31 December 2006 was unqualified, did not contain any emphasis of matter paragraphs, and did not contain statements under section 237 (2) or (3) of the Companies Act 1985. 4 Exchange rates 2007 2006 Year end Rp : $ 9,419 9,020 $ : £ 1.99 1.96 RM : $ 3.31 3.53 Average Rp : $ 9,170 9,141 $ : £ 2.01 1.86 RM : $ 3.43 3.66 5 Tax 2007 2006 $000 $000 Foreign corporation tax - current year 14,356 7,794 Foreign withholding tax on remittances 499 590 Deferred tax adjustment - current year 773 905 -------- -------- Total tax charge for year 15,628 9,289 -------- -------- 6 Earnings per ordinary share (EPS) 2007 2006 Number of Number of shares shares '000 '000 Weighted average number of shares in issue in year - used in basic EPS 39,480 39,478 - dilutive effect of outstanding employee share options 65 55 -------- -------- - used in diluted EPS 39,545 39,533 -------- -------- 2007 2006 US$ US$ Basic earnings per share before BA adjustment: 77.2 cts 38.3 cts Basic earnings per share 78.5 cts 41.7 cts There is no significant difference between basic and diluted EPS. 7 Dividend 2007 2006 2007 2006 $000 $000 Paid during the year 10.8 cts 8.8 cts 4,266 3,560 Proposed final dividend in respect of the year ended 31 December 14.0 cts 10.8 cts 5,524 4,265 The proposed dividend for 2007 is subject to shareholder approval at the forthcoming annual general meeting and has not been included as a liability. Assuming shareholder approval, the proposed dividend will be paid on 9 September 2008 to shareholders on the register on 8 August 2008. 8 Crops 2006 2006 Tonnes Tonnes Oil palm fresh fruit bunches - all estates 528,862 513,902 - bought-in or processed for third parties 332,887 294,647 - mill throughput 813,063 717,888 Saleable CPO 170,936 156,285 Saleable palm kernels 40,734 36,596 Rubber 1,060 1,088 Cocoa - 46 9 Areas Planted Reserves Total Mature Immature Plantable Unplantable ha ha ha ha ha Planted oil palm 37,979 30,912 7,067 Planted rubber 679 409 270 -------- -------- --------- 38,658 31,321 7,337 Reserves 44,264 29,997 14,267 -------- -------- --------- --------- --------- Total 31 Dec 2007 82,922 31,321 7,337 29,997 14,267 Acquired 2008 18,679 - - 14,179 4,500 -------- -------- --------- --------- --------- Total April 2008 101,601 31,321 7,337 44,176 18,767 -------- -------- --------- --------- --------- Potential plantable 82,834 --------------------- This information is provided by RNS The company news service from the London Stock Exchange

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