Final Results

M.P.EVANS GROUP PLC ("MPEvans" or the "Group") Preliminary unaudited results for the year ended 31 December 2005 "New strategy of divesting Malaysian plantations and investing in Indonesian oil palm and Australian beef cattle progressing well" Highlights * three of the six Malaysian estates have been sold to date * new 12,000-hectare oil-palm project on Bangka Island, Indonesia progressing * Australian beef-cattle operations expanded by recent acquisition of a contiguous property of 7,586 hectares * profit before tax in 2005 of £7,576,000 (2004 £10,862,000) primarily due to a fall in palm-oil prices from the high levels experienced in 2004 * dividend for the year increased to 6.25p (2004 - 6.00p) per share - 2.00p already paid as an interim * share of The North Australian Pastoral Company (27.92% owned) brought in for the first time Commenting on the results, R M Robinow, chairman of M.P. Evans Group PLC, said: "Our stated new strategy of selling our Malaysian plantations and investing in substantial oil-palm developments in Indonesia and expanding our Australian beef-cattle interests has made a very positive start. In Malaysia three of the six estates have been sold. In Indonesia progress has been made on the 12,000-hectare oil-palm project on Bangka Island. In Australia we have recently expanded our Queensland cattle venture with the purchase of a property adjacent to the existing area, Woodlands. It remains the Group's policy to acquire further land in Indonesia for oil-palm development. Similar crops of oil palm fresh fruit bunches(`f.f.b.') on both the majority- owned estates (222,700 tonnes (2004 - 228,300 tonnes)) and those held by the associates (334,800 tonnes (2004 - 336,000 tonnes)) were achieved.Lower palm- oil prices in 2005 than the high levels experienced in 2004 resulted in lower profits. Despite this, and in view of the Malaysian property disposals, the dividend for the year has been increased to 6.25p (2004 - 6.00p), of which 2.00p has already been paid as an interim dividend. Palm-oil prices have remained in the US$400-450 range so far in 2006 buoyed by continuing strong demand for and increasing interest in bio fuels. The US Dollar has weakened sharply against many currencies including the Indonesian Rupiah which has a negative impact on earnings. Beef-cattle prices remain firm in Australia The board remains positive about the long-term strategic prospects for the Group and specifically for both the palm-oil and beef markets." Enquiries M. P. Evans Group PLC Telephone 020 7796 4133 on Wednesday, 10 May. Thereafter telephone 01892 516333 Peter Hadsley-Chaplin Joint managing director Philip Fletcher Joint managing director Hudson Sandler Telephone 020 7796 4133 Andrew Hayes James White An analysts' meeting will be held today at 9:30 a.m. at the offices of Hudson Sandler, 29 Cloth Fair, London EC1A 7NN Extract from the review of operations:- REVIEW OF RESULTS This is the first full set of annual accounts reflecting the merger that was completed in February 2005. The 2004 Group results, balance sheet and cash- flow statement have all been restated as if the merger with Bertam Holdings PLC had been in place throughout that year. Lendu Holdings PLC has been treated on an acquisition-accounting basis and its results, net assets and cash flows have been brought into account as from the date of the merger. Gross profit 2005 was characterised by crops of f.f.b. similar to the previous year, weaker palm-oil prices, a volatile Sterling/US Dollar exchange rate and a generally weakening Indonesian Rupiah against the US Dollar. The first profits from the upgraded Australian cattle-fattening property, Woodlands, were recorded. As a result, gross profit for the year amounted to £5,082,000 compared with £6,374,000 for 2004, as restated. The palm-oil market Palm oil traded within a relatively narrow band in 2005 between US$390 and US$450 per tonne (an average of US$420 (2004 US$475)). World production of the two biggest vegetable oils, palm and soybean, increased markedly during 2005 and stocks rose despite continued strong demand. As a result, prices eased. Exchange rates The Group's earnings, cash flows and net assets (reported in Sterling) continue to be susceptible to the movements of the currencies in the various areas of operation. The Indonesian Rupiah was generally weak throughout 2005 against the US Dollar but the US Dollar, having remained weak against Sterling in the first half, strengthened in the second so that the average for the whole year was similar to 2004. The average rate for the Malaysian Ringgit against Sterling was similar to 2004. During 2005, the Australian Dollar strengthened a little against Sterling. Other administrative expenses Other administrative expenses, at £2,075,000 (prior to the credit for goodwill amortisation of £942,000), were some 42% higher than 2004's restated £1,464,000. This was due primarily to legal costs incurred in defending against the continuing lawsuit in connection with Sennah Estate in Indonesia and the increased provision for potential national insurance on unexercised share options. Administrative expenses for the Australian activities and the new Bangka project were brought in for the first time in 2005. The higher cost for administrative expenses was, however, more than offset by the credit arising from the amortisation of negative goodwill. This negative goodwill arose both from the inclusion of Lendu Holdings PLC further to the merger in the early part of the year and from the acquisition of shares in The North Australian Pastoral Company Pty. Limited ("NAPCo"). Associated companies The share of operating profits/(losses) in associates was as follows:- 2005 2004 % held £'000 £'000 PT Agro Muko 31.53 1,759 2,622 PT Kerasaan Indonesia 36.00 605 714 Bertam Properties Sdn. Bhd. 40.00 395 1,211 Kennedy, Burkill & Co. Berhad 20.00 134 212 Asia Green Environmental Sdn. Bhd. 30.00 16 25 NAPCo 27.92 885 - Lendu Holdings PLC 35.11 - (182) ------ ------ 3,794 4,602 ------ ------ Weaker commodity prices and similar f.f.b. crops to the previous year in the associated plantation companies resulted in lower profits. A continuing lacklustre housing market in Malaysia and fewer land disposals resulted in lower profits in Bertam Properties Sdn. Bhd. but these lower results were offset by the inclusion for the first time of the Group's share of NAPCo. Exceptional items Professional costs in connection with the merger in February 2005 amounted to £590,000. As a result of all of the above, the profit on ordinary activities before taxation for the year amounted to £7,576,000 compared with £10,862,000 for 2004 (as restated). INDONESIA - oil-palm and rubber plantations Majority-owned estates F.f.b. crops were in line with budget but slightly lower than 2004. The small remaining areas of rubber on Pangkatan and Sennah Estates produced markedly lower crops than last year, albeit at very high prices, as the programme of replanting into oil palm continues. Pangkatan palm-oil mill The new palm-oil mill on Pangkatan Estate was commissioned in January 2005 and is now processing f.f.b. from its own estate as well as from Bilah and Sennah Estates. This is the first year in which palm oil and kernels, rather than f.f.b., have been produced and is therefore not comparable with 2004 in that respect. 21,500 tonnes of crude palm oil and 5,000 tonnes of kernels were produced during 2005 and sales by regular tender in the local market were undertaken. As expected, the extraction rate from the mill has been on the low side, at around 21%, largely due to the poor-quality planting material which was inherited on Sennah Estate. A replanting programme to counter this problem is currently under detailed consideration. Associated-company estates Both PT Agro Muko (31.53% owned) and PT Kerasaan Indonesia (36% owned) reported f.f.b. crops similar to last year. The expected upturn in the second half of the year in the crops of the PT Agro Muko estates disappointingly failed to materialise as the palms took longer than expected to emerge from their down cycle and, in addition, very wet weather was experienced. Similar rubber crops to 2004, but at very strong prices, partially offset the downturn in palm-oil operations. The planting of the PT Agro Muko estates is expected to be completed by the end of 2006 with some 830 hectares of oil palm and 100 of rubber scheduled for the year. At this point some 19,500 hectares will have been planted; 17,500 with oil palm and 2,000 with rubber. Kerasaan Estate continues to be a well-run mature estate. Bangka project Both infrastructural and planting work on the new 12,000-hectare project has been carried out to a high-quality level. A number of roads have been constructed in addition to several buildings, including an office and staff quarters. So far, 700 hectares have been cleared and some 390 hectares of young oil palms planted. These have responded well, with little or no evidence of any transplanting shock. The million or so seedlings of young oil palms currently in the nursery are also in healthy condition. The rate of planting to date has been slower than originally planned as there have been some delays resulting from differences over compensation claims. Although it is expected that the rate of both clearing and planting will accelerate considerably as the year progresses, it is possible that a proportion of the 4,000-hectare programme may be carried forward for completion in 2007. New land It remains the Group's policy to secure another 30,000 to 40,000 hectares of land in Indonesia, probably in Kalimantan, for development into oil-palm plantations. Any such land will be subject to rigorous financial, social and environmental assessment. New Jakarta office In view of the board's commitment to expand substantially into the Indonesian palm-oil domain, it has been decided to open an office in Jakarta. MALAYSIA - oil-palm plantations and property development Operations Oil palm f.f.b. F.f.b. crops were similar to last year but below original expectations as yields generally fell back in Malaysia in reaction to the high yields of the previous year. Associated companies Bertam Properties Sdn. Bhd. ("Bertam Properties") (40% owned) The housing market in Malaysia remained lacklustre during 2005. The value of raw land, however, as referred to in more detail below under "Land disposals", continued at robust levels. Bertam Properties' housing- development activities remained profitable but the company made fewer land disposals during 2005 than the previous year and overall profits fell accordingly. Kennedy, Burkill & Co. Berhad ("KB") (20% owned) KB reported lower profits in 2005 mainly because of property-development activities at a reduced level compared with 2004. As with the Group's plantation operations, profits were lower because of the weaker palm-oil price. Asia Green Environmental Sdn. Bhd. ("AG") (30% owned) AG made a small profit in 2005, as it did in 2004. Although the board remains confident that the concept of palm-oil waste-composting systems is a sound one with exciting prospects, it remains the intention to dispose of this investment at the appropriate time as it is not regarded as a core part of the Group's future activities. Land disposals Significant progress has been made in respect of the sale of the Malaysian estates since last year's merger. A summary of the status of the various sales is as follows:- Sungei Reyla As announced to the Stock Exchange on 4 May 2006, the sale of the 660-hectare estate, for a total of RM31.4 million (£4.7 million), has recently been completed. Lendu The sale and purchase agreement in respect of this 195-hectare estate was signed in June 2005 for a total of RM26.0 million (£3.9 million). One condition remains outstanding, namely that of the approval of the Estate Land Board ("ELB"). It is not uncommon for the ELB approval system to take up to a year or so. It is understood that the approval relating to Lendu is likely to be satisfied very shortly. Settlement is scheduled to occur within two months thereafter. Beradin The sale and purchase agreement in respect of this 1,085-hectare estate was signed in January 2006 for a total of RM53.2 million (£7.9 million). As with Lendu Estate, the only condition which remains to be satisfied is the ELB approval. This is hoped to be achieved within the next three months. Settlement is expected to follow within a further two months. Sungei Kruit This 828-hectare estate is being actively marketed for sale. It was valued at RM61.5 (£9.2 million) for the purposes of the February 2005 merger. Perhentian Tinggi Negotiations are at an advanced stage with regard to the sale of a 200- hectare portion of this 926-hectare estate. The balance of the estate is being actively marketed. The whole estate was valued at RM91.0 (£13.6 million) for the purposes of the 2005 merger. Bertam This 74-hectare piece of land which was not sold to Bertam Properties in the 1990's has appreciated substantially since then, chiefly as a result of the Bertam Properties development itself. The land was valued at a total of RM23.8 million (£3.6 million) for the purposes of the 2005 merger and is believed to have risen further in value since then. The land is not being actively marketed for sale as, in view of the rate at which the other estates are being sold, there is no immediate cash requirement. It is also considered likely that raw-land values in this area will continue to escalate over the next year or so. Bertam Properties As announced to the Stock Exchange on 2 December 2005, agreement was reached to sell 339 hectares of raw land to Naza Motor Sdn. Bhd. for RM376,750 per hectare, equivalent to a total of RM127.50 million (£19.0 million). This is for the purpose of establishing an automotive manufacturing plant on the site. No account will be taken of the profit on any part of the disposal until the final instalment has been paid in two years' time. Other raw land sales on the project area are in the course of negotiation. AUSTRALIA - beef cattle Majority-owned operations During the severe drought conditions in eastern Australia in the first half of 2005, many operators were forced to turn off more cattle than they would have wished and this, in turn, had a negative impact on prices. However, welcome rains were received in the second half and beef prices soon recovered. On the Group's property, Woodlands, the first year of full-scale operations resulted in some 2,100 head being sold at generally good prices and a profit achieved. There were some 2,500 head on the property at the end of the year. Flinton Station ("Flinton") purchase As announced to the Stock Exchange on 31 March 2006, the acquisition of the neighbouring 7,586-hectare property, Flinton, has been completed. The Woodlands/Flinton aggregation, comprising 19,412 hectares, is managed by Mr Michael Wright, who formerly managed Woodlands alone. Work has already commenced in enabling the two properties to be managed more effectively as a single entity. This is through the establishment of, primarily, a more efficient watering system, a new set of cattle yards and a new cattle "laneway" between the two properties. These capital works will cost in the region of A$400,000 (£165,000). It is believed that these improvements will prove beneficial from an operational perspective and also add value to the aggregation. Associated company - NAPCo (27.92% owned) As referred to above in connection with Woodlands, the cattle breeding and fattening activities of NAPCo were also adversely affected by the severe drought conditions in the company's areas of operation. As a result, some 12,000 head had to be sold in the first half of the year at lighter weights and at lower prices than would apply in more normal circumstances. Consequently, most of the profit for the year occurred in the first half. Recently, NAPCo acquired, at a cost of A$35.5 million, a 20,000-hectare, first-class backgrounding property, named Cungelella, located north of Roma in Central Queensland. The company has for some time been short of suitable additional backgrounding country, where young steers and heifers are grass fed before being grain fed at the company's feedlot, Wainui, located near Brisbane. This will now permit the company's strategy to be implemented more effectively. This involves, inter alia, the construction of further bore holes on the company's premier breeding station, Alexandria, which comprises a total of some 1.6 million hectares. This will allow more of the hitherto- unutilised country to be grazed which, in turn, will permit more breeders to be run and therefore more calves to be produced. As more cattle are put through the system, there will be a requirement for the feedlot to be expanded. The relevant approvals for this area are already in the process of being applied for. All of this is only likely both to improve earnings and to add further value to the company. The net asset value per share, as stated in the company's 2005 consolidated balance sheet, stands at A$12.65 per share. This compares favourably with the Group's average purchase cost of its now 29.29% holding of approximately A$7.30 per share. Beef-cattle prices remain firm in Australia, buoyed by the continuing ban on US beef imports into Japan as a result of further incidents of BSE in North America. Prices may be subject to some downward pressure once this ban is lifted but longer-term demand prospects for Australian beef, particularly from Asia, continue to appear favourable. Richard Robinow Chairman CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2005 2005 2004 as restated (see note 5) £'000 £'000 Turnover* 12,182 12,911 Cost of sales (7,100) (6,537) ------ ------ Gross profit 5,082 6,374 ------ ------ Foreign-exchange gains 234 177 Other administrative expenses (1,133) (1,464) ------ ------ Total administrative expenses (899) (1,287) ------ ------ Group operating profit* 4,183 5,087 Share of operating profit in associates 3,794 4,602 ------ ------ Total operating profit 7,977 9,689 Exceptional (charge)/credit (note 3) (525) 715 ------ ------ Profit on ordinary activities before interest 7,452 10,404 Interest receivable 318 393 Income from fixed-asset investments 89 72 Interest payable (283) (7) ------ ------ Profit on ordinary activities before taxation 7,576 10,862 Tax charge on profit on ordinary activities (note 2) (2,617) (3,538) ------ ------ Profit on ordinary activities after taxation 4,959 7,324 Equity minority interests (499) (725) ------ ------ Profit on ordinary activities attributable to the members of M.P. Evans Group PLC 4,460 6,599 ------ ------ Basic earnings per 10p share - pence (note 4) 8.86 13.86 ------ ------ Diluted earnings per 10p share - pence (note 4) 8.56 13.37 ------ ------ * All operations are classed as continuing and included in the above is turnover of £840,000 and Group operating profit of £130,000 relating to acquired operations. CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2005 2005 2004 as restated (see note 5) £'000 £'000 £'000 £'000 Fixed assets Goodwill 292 - Negative goodwill (889) - ------ ------ Intangible assets (597) - Tangible assets 40,500 31,565 Investments 31,789 19,646 ------ ------ 71,692 51,211 ------ ------ Current assets Stocks 1,622 666 Debtors 3,516 3,866 Investments 2,790 4,633 Cash at bank and in hand 3,006 6,752 ------ ------ 10,934 15,917 Creditors - amounts falling due within one year (7,022) (2,539) ------ ------ Net current assets 3,912 13,378 ------ ------ Total assets less current liabilities 75,604 64,589 Creditors - amounts falling due after more than one year (536) (1,183) Provisions for liabilities and charges (779) (729) Equity minority interests (3,319) (2,843) ------ ------ Net assets 70,970 59,834 ------ ------ Capital and reserves Called-up share capital 5,078 4,762 Share premium account 10,317 5,108 Revaluation reserve 20,372 17,646 Capital redemption reserve 2,139 2,139 Merger reserve (4,099) (4,522) Share of associated companies' reserves 5,093 5,823 Profit and loss account 32,070 28,878 ------ ------ Total equity shareholders' funds 70,970 59,834 ------ ------ CONSOLIDATED CASH-FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2005 2005 2004 as restated (see note 5) £'000 £'000 Net cash inflow from operating activities 5,499 9,160 Dividends from associated undertakings 1,180 2,268 Returns on investments and servicing of finance (327) 59 Taxation (1,838) (2,226) Capital expenditure and financial investment (4,199) (4,593) Acquisitions (4,276) - Equity dividend paid (4,049) (2,644) ------ ------ Net cash (outflow)/inflow before management of liquid resources and financing (8,010) 2,024 Management of liquid resources 2,151 1,019 Financing (214) 1,555 ------ ------ (Decrease)/increase in cash (6,073) 4,598 ------ ------ STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31 DECEMBER 2005 2005 2004 as restated (see note 5) £'000 £'000 Profit attributable to the members of the Company 4,460 6,599 Unrealised share of movements in associated undertakings' reserves (1,020) 1,469 Previously unrealised profit on sale of land to associated undertaking released to profit and loss account on sale of land by associate (33) (202) Tax credited straight to reserves - 27 Exchange differences on foreign-currency net investments 6,253 (4,006) ------ ------ Total recognised gains and losses for the year 9,660 3,887 ------ ------ RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS FOR THE YEAR ENDED 31 DECEMBER 2005 2005 2004 as restated (see note 5) £'000 £'000 Profit attributable to members of the Company 4,460 6,599 Equity dividend paid (note 1) (4,049) (2,644) ------ ------ 411 3,955 Issue of shares 5,525 - Other recognised gains and losses relating to the year 5,200 (2,712) ------ ------ Net addition to equity shareholders' funds 11,136 1,243 ------ ------ Opening equity shareholders' funds before prior-year adjustment 56,804 55,947 Prior-year adjustment 3,030 2,644 ------ ------ Opening equity shareholders' funds after prior year adjustment 59,834 58,591 ------ ------ Closing equity shareholders' funds 70,970 59,834 ------ ------ NOTES 1 Equity dividends paid and proposed Following the year end, the board has proposed a final dividend for 2005 of 4.25p per 10p share. If confirmed at the annual general meeting, it will be paid as follows: 2005 2004 Payable on or after 20-06-2006 21-06-2005 Record date 19-05-2006 20-05-2005 Ex-dividend date 17-05-2006 18-05-2005 An interim dividend of 2.00p per share was paid on 4 November 2005 in respect of 2005 (2004 nil). 2005 2004 as restated (see note 5) £'000 £'000 2005 interim dividend - 2.00p per 10p share (2004 interim dividend - nil) 1,014 - 2004 final dividend - 6.00p per 10p share (2003 final dividend - 5.50p) 3,035 2,644 ------ ------ 4,049 2,644 ------ ------ 2 Taxation 2005 2004 as restated (see note 5) £'000 £'000 United Kingdom corporation tax charge for the year 1,335 2,152 Relief for overseas taxation (1,382) (2,032) ------ ------ (47) 120 Overseas taxation 1,734 2,330 Adjustments in respect of prior periods 15 (4) ------ ------ 1,702 2,446 Share of associated undertakings' taxation 1,039 1,075 ------ ------ Total current tax 2,741 3,521 Deferred taxation - origination and reversal of timing differences (124) 17 ------ ------ 2,617 3,538 ------ ------ Unrelieved losses of £5,407,000 (2004 £4,151,000) remain available to offset future taxable profits of Group companies. 3 Exceptional items 2005 2004 as restated (see note 5) £'000 £'000 Group (loss)/profit on sale of tangible fixed assets (72) 197 Group profit on sale of fixed-asset investments 95 197 Fundamental reorganisation expenses (590) - Previously unrealised profit on sale of land to associated undertaking released to the profit and loss account on sale of land by associated undertaking to third party 33 202 Share of associated undertakings' net gains on sale of tangible fixed assets 9 119 ------ ------ Total net exceptional (charge)/credit (525) 715 ------ ------ 4 Basic and diluted earnings per share The calculation of basic earnings per 10p share in 2005 is based on profits of £4,460,000 and on 50,361,470 shares, which was the average number of shares in issue during the year. The calculation of basic earnings per share in 2004 was based on restated profits of £6,599,000 and on 47,619,601 shares (see note 5) which was the average number of shares deemed in issue during that year. The calculation of diluted earnings per 10p share in 2005 is based on profits of £4,460,000 and on 52,101,315 shares, which was the diluted average number of shares in issue during the year. The calculation of diluted earnings per share in 2004 is based on restated profits of £6,599,000 and on 49,359,446 shares (see note 5), which was the diluted average number of shares deemed in issue during that year. The additional shares used in the calculations of the 2005 and 2004 diluted earnings per share represent adjustments made for shares under option. 5 Financial information The financial information set out in this announcement does not constitute the Company's statutory accounts for the years ended 31 December 2005 or 2004. The financial information for the year ended 31 December 2004, which has been delivered to the Registrar of Companies, is derived from the statutory accounts for that year, but has been restated in accordance the requirements of merger accounting and FRS21 (Events After the Balance Sheet Date). The auditors reported on those accounts; their report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The statutory accounts for the year ended 31 December 2005 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies. 6 Timetable The report and financial statements will be despatched to shareholders on 15 May 2006 and the annual general meeting will be held on 13 June 2006. 7 Distribution Copies of the full report and financial statements for the year ended 31 December 2005 will be available from the Company, 3 Clanricarde Gardens, Tunbridge Wells, Kent TN1 1HQ on and after 15 May 2006. By order of the board J F Elliott Secretary 10 May 2006

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