Final Results

RNS Number : 9253J

Anglo-Eastern Plantations PLC

09 April 2010

 



9 April 2010

Anglo-Eastern Plantations PLC

("AEP", "Group" or "Company")

FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2009

Anglo-Eastern Plantations PLC, which owns approximately 123,000 hectares of plantation land, primarily in Indonesia, and operates approximately 45,000 hectares of developed plantations,is pleased to announce its preliminary results for the year ended 31 December 2009.

Financial Highlights

·     Revenue for year was $150.1m, compared to $174.7m in 2008.

·     Operating profit, before Biological Asset ("BA") adjustment, was $59.0m (2008: $74.1m) and pre-tax profit after the Biological Asset adjustment was $62.1m (2008: $77.9m).

·     Basic Earnings per Share, before Biological Asset adjustment, decreased by 8.6% to 94.11cts, and diluted EPS after Biological Asset adjustment decreased by 9.62% to 94.99cts.

·     Year-end cash totalled $63.8m, which compares with $69.4m at the end of 2008.  Total Bank Loans and other financial liabilities were reduced from $35.6m at 31 December 2008 to $27.0m at 31 December 2009.

·     Repayment of $8.6m of existing borrowings during the year.

·     The board propose a final dividend for the year of 5 cts per share (2008: 5.0 cts per share).  If approved at the Company's annual general meeting, this will be paid on 28 May 2010 to shareholders on the register on 30 April 2010.

Commercial Highlights

·     The market average price for crude palm oil ("CPO") for 2009 was $679/mt, compared to $945/mt in 2008.

·     Estate fresh fruit bunches output for 2009 was 9% above the previous year.

For further enquiry, contact:

Anglo-Eastern Plantations plc
Donald H Low	Tel [phone]
Charles Stanley Securities
Russell Cook / Jen Boorer	Tel [phone]

Chairman's statement

Results

For the year ended 31 December 2009, revenue was $150.1m compared to $174.7m in 2008. This generated a Group operating profit for 2009, before biological asset (BA) adjustment, of $59.0 million; 20% less than in 2008. Estates fresh fruit bunch ("FFB") output for 2009 was 9% above the previous year.    Profit before tax and after BA adjustment was $62.1 million, compared to $77.9 million in 2008. The BA adjustment was a credit of $0.9 million, compared to $1.3 million in 2008, reflecting our estate valuations.

Earnings per share before BA adjustment decreased by 8.6% to 94.11cts, compared to 103.0cts in 2008.

.

Financing

The group's balance sheet remains strong. The Group continued to experience strong cash flow generation for 2009, enabling it to have strong cash reserves and reduce its borrowings. As at 31 December 2009, the Group had a cash position of $63.8 million and lower borrowings of $27.0 million, giving it a net cash position of $36.8 million, compared to $33.8 million in 2008.

During the year, we have has repaid $8.6 million out of our existing borrowings of $35.6 million.

Corporate Development

In 2009, we succeeded in obtaining the crucial land conversion permit from the Indonesian Forestry Department in Central Kalimantan project.

We hope to plant up to 5,000 hectares in Central Kalimantan 2010. We have set a target to plant up to 10,900 hectares for the group in 2010 and a 10,000 hectares per year for the next five years. This means we shall be able to double the current area of 45,000 hectares to 100,000 hectares by 2014. In 2010 we acquired PT Kahayan with the initial "Izin Lokasi" of 17,500 hectares.

The new Sumindo mill (45 MT/hour) is expected to be commissioned in the second quarter of 2010. In 2010, Blankahan oil mill's milling capacity shall be increased from the current 25 MT/hour to 40 MT/hour.

Directors

I am pleased to welcome the appointment of Dr. Kanaka Puradiredja as Independent Non-Executive Director, with effect from 1 August 2009. He will be submitting himself for re-appointment at the forthcoming annual general meeting.

Madam Lim Siew Kim, our non-executive director, will be submitting herself for re-election at the forthcoming annual general meeting.

I will be submitting myself for re-appointment at the same annual general meeting.

Outlook

FFB production as of February 2010 was lower by 8% against the same period in 2009. The abnormal low cropping trend appears to be nationwide and mainly caused by adverse weather conditions compared to the same period in 2009. It is too early to forecast whether the performance will be better for the rest of the year.

The CIF Rotterdam Crude Palm Oil ("CPO") price opened the year 2009 at $495/mt and ended the year at $780/mt, averaging $679/mt for the year. Low interest rates, non-traditional monetary easing, extremely accommodative fiscal policy coupled with a weak US dollar  have generated considerable liquidity into theglobal economy and together with the increased demand from China and India have helped underpin the commodity prices.

Oil World has revised its 2010 CPO production forecasts upward for Indonesia to 22.4m tonnes and exports at 17m tonnes, while for Malaysia CPO production forecasts were revised downward to 18m tonnes, while exports were revised down to 16m tonnes. With the latest revisions, Oil World expects 2010 global CPO production growth of 5.6% (from 4.4% growth in 2009) and demand growth of 5.8% (from 5.1% demand growth for 2009), which results in a lower global stock/usage ratio for CPO of 12% (from 15.2% in 2009 and 15.9% from 2008). This is positive for the CPO price.

The US dollar depreciated by approximately 15% against Indonesian Rupiah during 2009. Indonesian Rupiah has not experienced adverse fluctuations against the US dollar during early 2010.  We expect a stable exchange level to be attainable for the rest of the year. To mitigate the exposure to currency exchange volatility, the group is managing its cash in dollars and local currencies prudently, taking into consideration its dollars-denominated borrowings and operational cost currencies requirements.

Prospects for 2010 will be cautiously optimistic in view of the higher CPO price during the first quarter of 2010 due to a global economy recovery. Indonesia's economy has been resilient through the downturn while current political developments now pave the way for economic policies to underpin long term sustainable growth, with strong support from the government in palm oil industries. The group is confident that CPO demand will be sustainable in view of a global economy recovery and we can expect a satisfactory profit level and cash flow for 2010.

Dividends

The board is mindful that the group's development programme will require a considerable capital commitment. In this respect, the dividend level needs to be balanced against the planned capital expenditure. The board is proposing to declare a final dividend of 5 cts in respect of 2009 (5.0 cts in 2008). Shareholders choosing to receive their dividend in Sterling will do so at the rate ruling on 30 April 2010, when the register closes. Based on the exchange rate at 15 March 2010 of $1.5052/£, the proposed dividend would be equivalent to 3.3p, compared to 3.0p declared in respect of 2008.

CHAN TEIK HUAT

Chairman                                                                                                       8 April 2010

Business review

Commodity Prices

2009 had been a volatile year for vegetable oil prices, including CPO. The global economic crisis resulted in weak business sentiment across the globe with credit markets seizing up and unprecedented amounts of liquidity having to be injected into the global financial system to recapitalise major financial institutions and prevent systemic defaults. This has led to a sharp deterioration in economic growth with the turmoil in financial markets impacting on business and consumer confidence in both developed and developing markets. Given these adverse developments, world output has shown a decline in 2009 with a gradual recovery not expected until 2010.

The CPO price opened year 2009 at $495/mt and ended the year at $780/mt, averaging $679/mt for the year (down 28% from 2008 average price of $945/mt). Low interest rates, non-traditional monetary easing, extremely accommodative fiscalpolicy coupled with a weak USD have generated considerable liquidity into the global economy. This, together with the increased demand from China and India has helped underpin the commodity prices. Pricing in CPO is the result of a complex relationship between competing oils and meals, oil seed production in both hemispheres, and as can be seen correlates to a certain extent with crude oil due to its biodiesel potential.

Rubber prices averaged $1,800/mt for 2009 (2008-$2,500/mt). Our small area of 406 ha of mature rubber contributed a pre-tax profit of $1.8 million in 2009. The newly planted 270 ha of rubber is expected to start production in 2011.

Valuation

Since 2007 the main valuation assumptions have been changed to reflect the improving outlook for palm oil and also Indonesia to reflect increasing operating costs. In 2009 the valuation model has remained consistent with the main assumptions changing to $550/mt for the CPO price and the discount rate to 16.25%.

Indonesia

FFB production in North Sumatra, which aggregates the estates of Tasik, Anak Tasik, Labuhan Bilik, Blankahan, Rambung, Sungai Musam and CPA, produced 266,000mt in 2009 (2008-261,000mt), 2% higher than 2008. The small increase is encouraging, considering the mature age of the trees in Tasik, which ordinarily would become less yielding as the trees mature. As a counter measure to maintain core critical mass, the group has begun a replanting program. Tasik contributed 60% of the total production in the North Sumatra estates.

FFB production in Bengkulu (South Sumatra), which aggregates the estates of Puding Mas and Alno as well as three newly acquired land of KKST, ELAP and RAA, produced 233,000mt (2008-186,000mt), 25% higher than 2008. The absence of a more pronounced drought effect compared to last year, coupled with the improved road infrastructure, contributed to this improved performance. The new Sumindo mill (45 MT/hour) is expected to be commissioned in the second quarter of 2010. It is expected to result in saving in transport costs as well as procuring more bought-in crop from smallholders once it is in fully commissioned.

FFB production in the Riau region, comprising Bina Pitri estates, produced 87,000mt in 2009 (2008-79,000mt), 10% higher than 2008. The improved performance was a result of higher productivity arising from a fertilisation and rehabilitation programme started in 2005/6, immediately after Bina Pitri was acquired.

Overall bought-in crops for Indonesia operations were at 435,000mt for the year 2009 (2008-443,000mt). The average oil extraction rate from our mills was 20.9% in 2009 (2008-21%).

Malaysia

FFB production in 2009, at 32,000mt, was 20% below 2008 due to shortage of labour available for harvesting and disruption in harvesting due to adverse weather condition towards the end of the year. Malaysian estates contribute pre-tax profit of $0.7 million, 61% lower than 2008.

Development

The Group's total area planted on recently acquired land is on schedule, with 4,479 ha already planted in 2009 compared to 2,242 ha in 2008. This significant increase shows that we are giving more attention to the replanting and planting of our newly acquired land. Field planting had commenced in PT ELAP in South Sumatra region, with PT SGM in Central Kalimantan starting in November 2009.

In 2009, we have succeeded in getting the crucial land conversion permit from the Indonesian Forestry Department in Central Kalimantan project. As mentioned in the Chairman's Statement, we hope to plant up to 5,000 hectares in Central Kalimantan in 2010. We have set a target to plant up to 10,900 hectares in 2010 and 10,000 hectares per year for the next five years. This means we shall be able to double the current area of 45,000 hectares to 100,000 hectares by 2014.

Audited consolidated income statement

for the year ended 31 December 2009

		2009			2008
Continuing operations		Result before BA adjustment	BA adjustment	Total	Result before BA adjustment	BA adjustment	Total
		$000	$000	$000	$000	$000	$000
Revenue		150,080	-	150,080	174,684	-	174,684
Cost of sales		(88,202)	-	(88,202)	(96,812)	-	(96,812)
Gross profit		61,878	-	61,878	77,872	-	77,872
Biological asset revaluation
movement (BA adjustment)		-	888	888	-	1,347	1,347
Administration expenses		(2,923)	-	(2,923)	(3,808)	-	(3,808)
Operating profit		58,955	888	59,843	74,064	1,347	75,411
Exchange profits		1,259	-	1,259	1,503	-	1,503
Finance income		3,202	-	3,202	3,645	-	3,645
Finance costs		(2,219)	-	(2,219)	(2,686)	-	(2,686)
Profit before tax		61,197	888	62,085	76,526	1,347	77,873
Tax		(16,667)	(267)	(16,934)	(25,487)	(404)	(25,891)
Profit for the year		44,530	621	45,151	51,039	943	51,982
Attributable to:
-  Equity holders of the parent		37,146	348	37,494	41,182	819	42,001
-  Minority interests		7,384	273	7,657	9,857	124	9,981
		44,530	621	45,151	51,039	943	51,982
Earnings per share
-  basic				94.99cts			105.1 cts
- diluted				94.99cts			104.8cts

Audited consolidated statement of Comprehensive income

for the year ended 31 December 2009

					2009 $000		2008 $000
Profit for the year					45,151		51,982
Other comprehensive income:
Unrealised (loss)/ surplus on revaluation of the estates					(12,320)		5,302
Profit/(loss) on exchange translation of foreign operations					41,058		(29,944)
Deferred tax on revaluation					(6,286)		(1,128)
					22,452		(25,770)
Total comprehensive income for the year					67,603		26,212
Attributable to:
-  Equity holders of the parent					52,172		19,872
-  Minority interest					15,431		6,340
					67,603		26,212

Audited consolidated balance sheet

as at 31 December 2009

					2009 $000		2008 $000
Non-current assets
Biological assets					47,608		38,843
Property, plant and equipment					200,414		160,012
Receivables					1,677		1,677
					249,699		200,532
Current assets
Inventories					3,720		4,196
Tax receivables					5,181		761
Trade and other receivables					2,582		4,143
Cash and cash equivalents					63,761		69,442
					75,244		78,542
Current liabilities
Bank loans and other financial liabilities					(9,424)		(8,639)
Trade and other payables					(5,077)		(10,749)
Tax liabilities					(4,291)		(10,428)
					(18,792)		(29,816)
Net current assets					56,452		48,726
Non- current liabilities
Bank loans and other financial liabilities					(17,589)		(27,025)
Deferred tax liabilities					(28,772)		(28,450)
Retirement benefits - net liabilities					(1,830)		(1,494)
Net assets					257,960		192,289
Equity
Share capital					15,504		15,504
Treasury shares					(1,744)		(1,785)
Share premium reserve					23,935		23,935
Share capital redemption reserve					1,087		1,087
Revaluation and exchange reserves					(7,405)		(22,083)
Retained earnings					179,594		144,073
Equity attributable to equity holders of the parent					210,971		160,731
Minority interests					46,989		31,558
Total equity					257,960		192,289

Audited consolidated cash flow statement

for the year ended 31 December 2009

			2009 $000		2008 $000
Cash flows from operating activities
Profit before tax			62,085		77,873
Adjustments for:
BA adjustment			(888)		(1,347)
Profit on disposal of tangible fixed assets			21		(53)
Depreciation			5,070 11		4,902 -
Share based remuneration expenses Retirement benefit provisions			336		40
Net finance (income)/expense			(983)		(959)
Operating cash flow before changes in working capital			65,652		80,456
Decrease/(increase) in inventories			476		712
(Increase)/decrease in trade and other receivables			1,561		(2,730)
(Decrease)/increase in trade and other payables			(5,672)		(3,935)
Cash inflow from operations			62,017		74,503
Interest paid			(2,219)		(2,728)
Overseas tax paid			(27,169)		(17,898)
Net cash flow from operations			32,629		53,877
Investing activities
Acquisition of subsidiaries			-		(11,363)
Property, plant and equipment
-  purchase			(39,925)		(19,738)
-  sale			108		489
Interest received			3,202		3,645
Net cash used in investing activities			(36,615)		(26,967)
Financing activities
Dividends paid by parent company			(1,973)		(5,112)
Share options exercised			30		-
Repayment of existing long term loans			(8,638)		(4,237)
Finance lease (repayment)/drawdown			(13)		(110)
Dividends paid to minority shareholders			-		(2,378)
Repayment of loan by minority shareholder			-		48
Net cash (used in)/from financing activities			(10,594)		(11,789)
Increase in cash and cash equivalents			(14,580)		15,121
Cash and cash equivalents less overdrafts
At beginning of period			69,442		63,357
Foreign exchange			8,899		(9,036)
At end of period			63,761		69,442
Comprising:
Cash at end of year			63,761		69,443
Overdraft at end of year			-		(1)
Net cash at end of year			63,761		69,442

Notes to the financial statements

1.   Basis of preparation

The financial information set out in this announcement does not constitute the company's statutory accounts for the years ended 31 December 2009 or 2008, but is derived from those accounts. Statutory accounts for the period ended 31 December 2008, prepared under IFRS, have been delivered to the Registrar of Companies and those for the year ended 31 December 2009 will be delivered following the company's annual general meeting. The auditors reported on these accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498(2) or (3) of the Companies Act 2006. While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs.

2.   Exchange rates

Exchange rates - year end	2009		2008
Rp : $	9,400		10,950
$  :  £	1.61		1.41
RM: $	3.42		3.48
Exchange rates - average
Rp : $	10,158		9,735
$  :  £	1.57		1.84
RM: $	3.52		3.34

3.   Tax

	2009 $000	2008 $000
Foreign corporation tax     - current year	16,034	20,552
Foreign withholding tax on remittances	-	4,550
Deferred tax adjustment   - current year	900	789
Total tax charge for year	16,934	25,891

The corporation tax rates in Indonesia and Malaysia are 28% and 26% respectively. The standard rate of corporation tax in the UK for the current year is 28%.

4.   Earnings per ordinary share

	2009 $000	2008 $000
Profit for the year attributable to equity holders of the parent company before BA adjustment	37,146	41,182
Net BA adjustment	348	819
Earnings used in basic and diluted EPS	37,494	42,001
	Number	Number
	'000	'000
Weighted average number of shares in issue in year
- used in basic EPS	39,470	39,976
- dilutive effect of outstanding share options	-	101
- used in diluted EPS	39,470	40,077
Basic EPS before BA adjustment	94.11cts	103.0 cts
Basic EPS after BA adjustment	94.99cts	105.1 cts

5.   Dividends

		2009 $000		2008 $000
Paid during the year
Final dividend of 5.0 cts per ordinary share for the year ended 31 December 2008 (2007 - 14.0 cts)		1,973		5,112
Proposed final dividend of 5 cts per ordinary share for the year ended 31 December 2009 (2008 - 5.0 cts)		1,973		1,973

      The proposed dividend for 2009 is subject to shareholder approval at the forthcoming annual general meeting.

6.   Plantation Summary

	Total
Group interest in total areas below
Planted at 31 December 2009	Ha
Oil Palm
Mature	34,187
Immature	9,880
Total	44,067
Rubber
Mature	406
Immature	270
Total	676
Total planted area	44,743
Reserves Plantable	73,813
Unplantable	2,043
Other	2,784
Total area at 31 December 2009	123,383

7.   Posting of Annual Financial Report

       The Annual Financial Report will be posted to shareholders in due course.  Copies of this announcement are available from the offices of the Company Secretary, CETC (Nominees) Limited, Quadrant House, Floor 6, 4 Thomas More Street, Thomas More Square, London E1W 1YW  and on the Company's website at www.angloeastern.co.uk.

 

END

 

 

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