Final Results

Anglo-Eastern Plantations PLC 01 April 2005 Friday 1 April 2005 ANGLO-EASTERN PLANTATIONS PLC - PRELIMINARY ANNOUNCEMENT Anglo-Eastern Plantations, which operates approximately 31,000 hectares (ha) of developed plantations, primarily oil palm in Indonesia, announces a pre-tax profit of $24.8m on turnover of $65.6m, and a 33% increase in dividend per share to 8.0cts - all three figures a record. 2004 2003 Increase Turnover ($000) 65,618 48,519 35.2% Operating profit ($000) 25,095 19,994 25.5% Pre-tax profit ($000) 24,808 19,587 26.7% Basic earnings per share (cts) 34.5 28.6 20.6% Dividend per share (cts) 8.0 6.0 33.3% • The record result was due to a 15% increase in production of fresh fruit bunches (FFB), to a record 429,000mt, a 41% increase in FFB bought in for processing to 241,000mt, and favourable crude palm oil (CPO) prices which averaged $460/mt compared to $440/mt in 2003. • In the past 12 months, the group has acquired approximately 10,000ha of land and rights over land in Bina Pitri and Labuhan Bilik, which will bring total plantable area to 42,000 ha, closer to 50,000ha, an objective set by the board some 10 years ago. • The new mill in Blankahan, commissioned in December 2004, and the mill extensions completed at Puding Mas in October 2004 and underway at Tasik will provide 65% more processing capacity at 140mt/hr by the end of 2005. • Year end net cash totalled $3.8m (2003: $7.0m) despite the outflow in 2004 of $10.0m on Bina Pitri consideration, $11.0m on capital expenditure and $1.4m on a share buy back. Mr Chan Teik Huat, Chairman, stated: 'In the absence of unfavourable weather conditions, the group is expected to increase its crop production on the back of increasing contribution from the Bengkulu and Bina Pitri estates as well as CPO output from the expanded mill processing capacity. However, the group's operating results depend heavily on the movement in CPO prices and I do not think the high prices in 2004 will be repeated this year. Nonetheless, if the CPO price stays at the present level, I am hopeful the group will be able to maintain the same level of profit for the current year.' 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 glad to report record turnover and profit for 2004. The satisfactory results and our strong financial position allowed the group to make two acquisitions in the past 12 months of approximately 10,000 ha of land and rights over land. These new acquisitions will bring our total plantable area to 42,000 ha, closer to 50,000 ha, an objective set by the board when my family assumed control of the company in late 1993. Financial Review The group profit before tax was $ 24.8 million, an increase of 27% over the previous record profit of $19.6 million achieved in 2003. Turnover at $65.6 million was 35% higher than the $48.5 million recorded in the previous year. This record result was due to our highest ever production of fresh fruit bunches (FFB) at 429,000 mt, a successful policy of buying in crop for processing, and favourable crude palm oil (CPO) prices. Our production of CPO passed the 100,000 mt mark for the first time, reaching 118,000 mt. Earnings per share (EPS) was 34.5 cts, up 21% on 2003, a smaller increase relative to pre-tax profit because of higher corporation tax and withholding tax charges. The increase in EPS in sterling terms to 18.8p from 17.4p was only 8% because of the strength of sterling against the US dollar during the year. The appreciation of sterling also affected the increase in the group's net asset value in sterling terms, up 9p or 7% to 135p at the end of 2004. In dollar terms, net asset value was 260 cts, an increase of 16%. Group operating cash flow continued to be strong. Bina Pitri estate was acquired in March 2004 for $10.0 million and capital expenditure during the year on oil mills and field development was $11.0 million. In late December we were able to buy in 468,000 of the company's shares (1.1% of the issued capital) for a cost of $1.4 million or 153p per share. These shares have not been cancelled and are being held as treasury shares. Despite this heavy expenditure, group cash, net of all borrowings, ended the year at $3.8 million compared to $7.0 million at the end of 2003. The total cost of Bina Pitri was refinanced in the second half of the year by a long term loan of $5.0 million. Against that, repayments of existing long term loans elsewhere in the group amounted to $2.0 million, leaving at the end of 2004 group total borrowings of $11.1 million and cash of $14.9 million. Commodity prices CPO prices for much of 2004 were even more favourable than 2003, averaging $460/ mt compared to $440/mt in 2003. However, having started the year at $450/mt and peaked at $550/mt in April, they fell to $418/mt by the close of 2004. Rubber prices were also very strong throughout the year, reaching the highest average level of $1.28/kg for ten years compared to an average of $1.09/kg in 2003. Our small but high yielding area of rubber made another contribution of about $1.1 million. Cocoa prices fell during the year from the peaks of 2003. We have not been successful in obtaining satisfactory yields from this problematic crop and are likely to replant our remaining small areas over the next few years with another crop. Indonesia FFB production from Tasik and Anak Tasik in North Sumatra, at 174,000 mt, was 3,000 mt higher than in 2003 and close to the record of 176,000 mt in 2000. Tasik continues to surprise us with its performance from what, in theory, should be areas past their prime. The first plantings are now 22 years old, but the returns from these continue to be so satisfactory that we have decided to defer replanting for as long as the palms are harvestable. Our present estimate is that we may not have to commence replanting there until 2008/09. Production from the three smaller estates around Medan in North Sumatra was 58,000 mt, a new record and 3,000 mt more than the previous record in 2003. These properties are now in their prime. We cannot expect any dramatic increases in yield but they should continue to perform satisfactorily for quite a few years. In December 2004, we commissioned the new 20 mt/hr mill at Blankahan at a cost of $ 2.3 million. This mill is processing FFB from Blankahan, Sungei Musam and Rambung at an oil extraction rate of 25%, well in excess of the 21-22% we achieve at our other mills, where rates are reduced by the crop bought in from outside, as well as from our own older planting material at Tasik. The Blankahan mill will improve significantly the profitability of our smaller North Sumatra estates. Production from the Bengkulu estates in southern Sumatra was on target at 145,000 mt, 35% up on the previous year. Started in 1996, this project is at last beginning to look an established operation. The estates are becoming significant earners of profit and cash . At the end of 2004, there was still an immature area of 3,378 ha out of the total planted area of 12,627 ha. New planting in 2004 amounted to 1,365 ha, which was below our budget at 1,600 ha. The delay was caused by extended negotiations with squatters on our land title areas. We expect to complete the 2004 programme by May 2005. There remain another 2,900 ha of reserves which we plan to plant over the next two years. The Bengkulu project will then be fully planted. Continuing what is now established policy, we purchased record quantities of crop from outside in 2004, totalling 241,000 mt of FFB, up 41% over 2003. The production from bought in crop has become a useful profit contributor. Bought in crop amounted to about 42% of total mill throughput of 560,000 mt in 2004. To meet the increasing throughput from our own and from outside crop, extension of the Puding Mas mill from 40 mt/hr to 60 mt/hr was completed in October 2004 at a cost of $1.8 million. We are now extending the Tasik mill from 45mt/hr to 60mt/hr, also at a cost of about $1.8 million. Bina Pitri, in the province of Riau, produced 15,000 mt of FFB in its first nine months under our ownership. Shareholders will recall that this 4,300 ha estate was in a very derelict condition. It has required an enormous effort to clear out the undergrowth and begin to establish a proper infrastructure of roads, housing and transport. We are very pleased with the result and our local management are to be praised for all they have achieved. It will be another 18 months before we begin to see the delayed effects of a proper fertiliser regime after years of neglect. We plan to begin construction of a 30 mt/hr mill, expandable to 60 mt/hr, towards the end of 2005. During the year, we applied for rights over a further 2,000 ha of vacant land contiguous to Bina Pitri. Before issue of any final land title, it is normal in Indonesia to be required to demonstrate commitment by beginning to plant some of this area. We shall plant 900 ha during 2005, as well as continuing to replant and rehabilitate 400 ha in our existing land title area. While it is unlikely we shall be able to acquire the whole extra area for which we have applied, we are optimistic of making this at least a 5,000 ha estate. Malaysia 2004 was a disappointing year on our Cenderung estates with FFB production of 36,000 mt, down 4% on the previous year. Some of this decline was weather, and some management, related; we continue to work to improve the latter. The Malaysian operation made a small profit of $131,000 in group terms in 2004. It has been able to meet all its outside loan interest and repayment commitments, but it is not well placed to meet any significant fall in the CPO price. Group development Our objective is to reach a planted area of 50,000 ha. Ten years ago, planted area was 10,000 ha. Now, it is over 30,000 ha. With the Bengkulu estates earmarked to be fully planted by the end of 2006, the group will have a total planted area of some 35,000 ha. Given the difficulty in acquiring developed estates at attractive prices, it is likely that future growth will come from acquisition of lands suitable for development. In December 2004, we completed negotiations for the acquisition of land rights over 4,800 ha of vacant land, called Labuhan Bilik, about 130 km north of Tasik. We have just completed the survey to confirm that area, the consideration for which is $388,000. Development of this area will commence in 2006 and, assuming the land title is issued without complications, then the group's total land title area will be about 45,000 ha. Upon full development of this property, the group will have a planted area of some 40,000 ha. Our long established local partner in Tasik has joined us in investing in 20% of Bina Pitri and Labuhan Bilik. We are looking for further land in the Labuhan Bilik area with the intention of building a larger land bank for the group's future development. Vacant land in North Sumatra is now scarce and we may well have to pay more than for Labuhan Bilik. However, we believe it is a great advantage to the group to remain operating only in Sumatra, if possible within reach of the group's existing estates and mills, rather than to look further afield to less developed parts of Indonesia. With the expected replanting of our Tasik estates beginning in 2008/09, the temporary fall in production there will be offset partly by increasing output of the Bengkulu estates and the new Bina Pitri estate. The new mill in Blankahan and the two mill extensions described earlier will provide processing capacity of 140 mt/hr by the end of this year. I expect these developments, together with the future development of Bina Pitri and Labuhan Bilik, to enable the group to achieve continued long term growth in production. International Accounting Standards As mentioned in my last half year statement, all listed companies are required, under EU regulations, to apply International Accounting Standards (IAS) to their consolidated financial statements for accounting periods commencing on or after 1 January 2005. Comparative figures for 2004 will have to be amended accordingly. Therefore, the results included in the financial statements which follow will change when shown as comparatives in the 2005 interim report and final report. A review of the main effects of applying IAS to the group has been undertaken. The principal impact relates to the requirement to: 1) value our biological assets at market value and charge or credit the changes in an accounting period to profit and loss (IAS 41); and 2) provide deferred taxation on all property valuation surpluses even if there is no intention to dispose of those properties. This will reduce the reported net assets by approximately $17.9 million or about 24p/share. Outlook The CPO price weakened to $395/mt in the first two months of 2005 largely on expectation of record soya oil production from South America in the first half of 2005. This expectation has been lowered in the past few weeks and the CPO price is now about $430/mt. Weather in Indonesia and Malaysia has been unusually dry and, while group crops in the first three months of 2005 have been 15% ahead of last year, they are 3% below expectations. The rubber price has remained fairly stable and our rubber production is on target. In the absence of unfavourable weather conditions, the group is expected to increase its crop production on the back of increasing contribution from the Bengkulu and Bina Pitri estates as well as CPO output from the expanded mill processing capacity. However, the group's operating results depend heavily on the movement in CPO prices and I do not think the high prices in 2004 will be repeated this year. Nonetheless, if the CPO price stays at the present level, I am hopeful the group will be able to maintain the same level of profit for the current year. Dividend In spite of the less optimistic price outlook for 2005 and the continuing heavy development expenditure, the board feels shareholders should be rewarded on the back of a satisfactory performance and proposes a dividend of 8.0 cts per share, an increase of 33% over 2003. CHAN TEIK HUAT 1 April 2005 Chairman CONSOLIDATED PROFIT AND LOSS ACCOUNT 2004 2003 2004 2003 US$'000 US$'000 £'000 £'000 Unaudited Audited Unaudited Audited =========== =========== =========== =========== Turnover - continuing operations 65,618 48,519 35,662 29,495 Operating profit - continuing operations 25,095 19,994 13,639 12,154 Net interest (payable) (287) (407) (156) (247) ----------- ----------- ----------- ----------- Profit on ordinary activities before tax 24,808 19,587 13,483 11,907 Taxation (8,450) (6,141) (4,592) (3,733) ----------- ----------- ----------- ----------- Profit on ordinary activities after tax 16,358 13,446 8,891 8,174 Minority interests (all equity interests) (2,694) (2,201) (1,464) (1,338) ----------- ----------- ----------- ----------- Profit attributable to shareholders 13,664 11,245 7,427 6,836 Dividends (3,147) (2,375) (1,710) (1,444) ----------- ----------- ----------- ----------- Retained profit for the year 10,517 8,870 5,717 5,392 =========== =========== =========== =========== Earnings per ordinary share - basic 34.5cts 28.6cts 18.8p 17.4p - diluted 34.4cts 28.4cts 18.7p 17.3p 2004 2003 2004 2003 Operating profit is stated after charging: US$'000 US$'000 £'000 £'000 Exchange profits 147 262 80 159 ----------- ----------- ----------- ----------- TAXATION: 2004 2003 2004 2003 US$'000 US$'000 £'000 £'000 Foreign corporation tax 7,003 5,552 3,806 3,375 Foreign withholding tax on remittances 866 321 471 195 Deferred tax adjustment - current year 581 268 315 163 ----------- ----------- ----------- ----------- 8,450 6,141 4,592 3,733 =========== =========== =========== =========== DIVIDEND: The board has proposed a final and only dividend for 2004 of 8.00cts (2003 - 6.00cts) to be paid on 6 July 2005 to shareholders on the register on 10 June 2005. Shareholders electing to receive their dividend in sterling will receive 4.26p (2003 - 3.27p). ACCOUNTS: The financial information contained in this announcement does not constitute statutory financial statements within the meaning of section 240 of the Companies Act 1985. Statutory accounts for the previous financial year ended 31 December 2003 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under section 237(2) or (3) of the Companies Act 1985. The auditors have not yet reported on the accounts for the year ended 31 December 2004, nor have any such accounts been delivered to the Registrar of Companies. Accounting policies remain unchanged from the previous year. This preliminary announcement was approved by the board on 1 April 2005. CONSOLIDATED BALANCE SHEET 2004 2003 2004 2003 US$'000 US$'000 £'000 £'000 Unaudited Audited Unaudited Audited Fixed assets Tangible assets 127,302 105,096 66,303 58,712 ----------- ----------- ----------- ----------- Current assets Stocks 1,535 1,713 800 958 Debtors 3,778 2,736 1,968 1,528 Investments 405 313 211 175 Cash 14,933 15,127 7,778 8,450 ----------- ----------- ----------- ----------- 20,651 19,889 10,757 11,111 =========== =========== =========== =========== Current liabilities Creditors: falling due within one year Borrowings (5,576) (2,060) (2,904) (1,150) Other creditors (13,192) (9,439) (6,871) (5,273) ----------- ----------- ----------- ----------- (18,768) (11,499) (9,775) (6,423) =========== =========== =========== =========== Net current assets 1,883 8,390 982 4,688 ----------- ----------- ----------- ----------- Total assets less current liabilities 129,185 113,486 67,285 63,400 Non-current liabilities Creditors: falling due after more than one year Borrowings (5,558) (6,108) (2,895) (3,412) Deferred taxation 359 1,013 187 566 ----------- ----------- ----------- ----------- Net assets 123,986 108,391 64,577 60,554 =========== =========== =========== =========== Share capital 15,424 15,319 9,952 9,895 Treasury shares (1,387) - (722) Share premium 23,825 23,679 15,474 15,395 Share capital redemption reserve 1,087 1,087 663 663 Revaluation and exchange reserve 8,998 5,375 (394) (556) Profit and loss account 54,219 43,702 28,239 24,415 Shareholders' funds - all equity interests 102,166 89,162 53,212 49,812 Minority interests - all equity interest 21,820 19,229 11,365 10,742 ----------- ----------- ----------- ----------- 123,986 108,391 64,577 60,554 =========== =========== =========== =========== STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 2004 2003 US$000 US$000 Unaudited Audited Profit for the financial year 13,664 11,245 Surplus on deemed disposal of investment in subsidiary - 113 Unrealised surplus/(deficit) on revaluation of the estates 10,505 (5,126) (Loss)/profit on exchange translation (6,882) 3,915 ----------- ----------- Total recognised gains relating to the year 17,287 10,147 =========== =========== RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS 2004 2003 US$000 US$000 Unaudited Audited Total recognised gains 17,287 10,147 Share capital subscription 251 257 Dividends (3,147) (2,375) Purchase of treasury shares (1,387) - Net increase in shareholders' funds 13,004 8,029 Beginning of year 89,162 81,133 ----------- ----------- End of year 102,166 89,162 =========== =========== CONSOLIDATED CASH FLOW STATEMENT 2004 2003 2004 2003 US$'000 US$'000 £'000 £'000 Unaudited Audited Unaudited Audited Net cash inflow from operating activities 29,098 22,142 15,082 12,604 Returns on investment and servicing of finance (1,060) (1,157) (577) (703) Tax paid (6,928) (5,364) (3,766) (3,261) Capital expenditure (11,135) (5,639) (6,050) (3,428) Acquisition of subsidiary (4,777) - (2,428) - Equity dividends paid - parent company (2,375) (1,571) (1,291) (955) ----------- ----------- ----------- ----------- Cash inflow before financing 2,823 8,411 970 4,257 Financing ----------- ----------- ----------- ----------- Share options exercised 251 257 136 156 Purchase of own shares (1,387) - (754) - Repayment of existing long term loans (2,023) (2,023) (1,100) (1,230) Repayment of loans in newly acquired subsidiary (4,154) - (2,258) - Drawdown of new long term loan 5,000 - 2,717 - Finance lease (repayments)/drawdown (15) 47 (8) 29 Advance to minority shareholders (693) - (377) - ----------- ----------- ----------- ----------- (3,021) (1,719) (1,644) (1,045) ----------- ----------- ----------- ----------- (Decrease)/increase in cash in the year (198) 6,692 (674) 3,212 =========== =========== =========== =========== EXCHANGE RATES ($ : £) 2004 2003 Year end 1.92 1.79 Average 1.84 1.65 WEIGHTED AVERAGE NUMBER OF SHARES IN ISSUE Basic 39,609,447 39,378,899 Diluted 39,746,175 39,581,527 CROPS 2004 2003 Tonnes Tonnes Oil palm fresh fruit bunches -ex estates 428,657 372,290 -bought in 241,359 170,948 Saleable crude palm oil (CPO) 118,197 94,523 Saleable palm kernels 28,526 22,325 Rubber 1,370 1,800 Cocoa 208 154 AREAS Total Mature Immature Planted Ha Ha Ha Oil palm 30,033 25,533 4,500 Rubber 434 434 - Cocoa 258 248 10 ----------- ----------- ----------- 30,725 26,215 4,510 Reserves 8,287 ----------- ----------- Land rights 5,900 ----------- Total 44,912 =========== This information is provided by RNS The company news service from the London Stock Exchange

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