Interim Results

Rowe Evans Investments PLC 28 September 2001 ROWE EVANS INVESTMENTS PLC OIL PALM AND RUBBER PLANTATIONS IN INDONESIA Associated companies with plantation and property-development interests in Malaysia and cotton farming in Australia Preliminary announcement of unaudited results for the six months ended 30 June 2001 Highlights from the chairman's statement and unaudited interim results for the six months ended 30 June 2001 * profit before tax £774,000 (2000 £2,587,000) * lower profit primarily due to exceptionally poor palm oil prices, partly offset by weakness of the Indonesian Rupiah * share of profits of associates lower at £410,000 (2000 £1,528,000) - Indonesian plantation companies suffered from poor palm oil prices and sharp reduction in crop by PT Agro Muko - a reaction to last year's high yields - higher crops from Malaysian plantation companies but adversely affected by the palm oil price - lower cotton crop due to dry weather in Australia and lower profits reported by Lendu Holdings PLC * palm oil prices have picked up in the second half * merger of Bertam Holdings PLC with Beradin Holdings PLC, Padang Senang Holdings PLC and The Singapore Para Rubber Estates, PLC successfully completed. Share of Bertam Holdings PLC's merger costs, £313,000, treated as exceptional item Chairman's statement Palm oil prices languished during the first half of 2001 at exceptionally low levels. As a result of this, profits from the plantation operations of both the Group's estates and those of the associated companies were markedly lower than for the same period last year. The Group's profit before taxation of £774,000 compared with £2,587,000 last year. I am pleased to report, however, that the palm oil price has improved to some extent in the second half. INDONESIA Many difficulties, political, social and economic, continue in Indonesia but it is pleasing to note that calm has so far reigned following the momentous events leading up to the appointment of the new president, Mrs Megawati Sukarnoputri. Much needs to be done to put business in general, and the banking sector in particular, back on to a sound basis for sustainable future growth. This has not been helped by the general downturn in world trade but it is hoped that the new government will start to tackle the problems with a view to laying a secure foundation for a soundly-based economy. PALM OIL MARKET As I mentioned in my statement accompanying the 2000 annual report, world production of palm oil continued at a higher level, and for longer, than had been expected in the latter half of 2000. As a consequence, stocks increased and the price fell. This situation continued into 2001 with the price plummeting to the extraordinarily low level of US$215 per tonne. However, as often happens, negative sentiment went too far and as production fell and stocks with it, there was a sharp correction around the middle of the year but this came too late to affect the first half's results. INDONESIAN PLANTATION OPERATIONS Crops and sales details were as follows:- 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2001 2000 2000 CROPS Tonnes Tonnes Tonnes Oil palm fresh fruit bunches 61,400 59,200 138,400 Rubber 486 517 1,176 ------------- ----------------- ----------------- AVERAGE SELLING PRICES Rp'000/tonne Rp'000/tonne Rp'000/tonne Oil palm fresh fruit bunches 351 409 371 Rubber 5,825 4,862 5,224 ------------- ----------------- ----------------- EXCHANGE RATES Rp Rp Rp £1 = Indonesian Rupiah - average 14,953 12,217 12,666 - period-end 15,988 13,227 14,215 ------------- ----------------- ----------------- As can be seen from the table, the crop of oil palm fresh fruit bunches ('f.f.b.') was in line with last year. This was also in line with expectations. The palm oil price, as referred to above under 'Palm oil market', was weak but this was mitigated to some extent by the further weakening of the Rupiah against Sterling. The palm oil price is determined in US Dollars whilst a significant proportion of costs are Rupiah based. The rubber crop, whilst behind last year's high levels, was ahead of expectations. The rubber price remained weak in US Dollar terms but, like palm oil, was assisted by the weakness of the Rupiah. As a result of the above, the Group's estate profit amounted to £627,000 compared with last year's £1,064,000. ASSOCIATED COMPANIES Crops were as follows:- 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2001 2000 2000 Oil palm fresh fruit bunches Tonnes Tonnes Tonnes - Indonesia 104,000 132,000 255,000 - Malaysia 41,000 31,000 75,000 ---------- -------------- ------------------ Rubber - Indonesia 863 951 1,851 - Malaysia 40 44 107 ---------- -------------- ------------------ Cotton Bales Bales Bales - Australia 8,012 16,521 16,521 ---------- -------------- ------------------ Indonesia The Indonesian associated companies reported lower profits. After achieving exceptionally good f.f.b. yields during 2000, PT Agro Muko (30.43% owned) suffered a reaction in the first half of 2001 and the crop fell sharply. This, combined with the low palm oil price and exchange losses arising from the weakness of the Rupiah, resulted in a substantial reduction in profits compared with last year. Malaysia F.f.b. crops on the Malaysian estates were substantially higher in the first half of the current year following last year's particularly acute fall off in yields. This improvement was offset by the weakness of the palm oil price and, unlike Indonesia, was not helped by any currency weakness as the Ringgit is at a fixed rate against the US Dollar. The operations of Bertam Holdings PLC's 40% associate, Bertam Properties Sdn. Bhd., continued to suffer from a lacklustre Malaysian property market but a small profit was recorded for the first half compared with last year's loss. Australia Lendu Holdings PLC (35.11% owned) recorded a less successful cotton crop for the 2000/2001 season with just over 8,000 bales produced, which compares with over 16,000 bales achieved in 1999/2000. The lower cotton crop arose from adverse weather conditions at the time of planting, which prevented a larger area being planted. Cotton prices were firmer and improved profits were achieved by the expanded cattle operations but overall profits were substantially lower compared with the first half of 2000. As a result of all of the above, the Group's share of the profits before taxation of the associated companies was £410,000 for the period compared with last year's £1,528,000. The Group's share of the exceptional costs of the associated companies is referred to in the next paragraph. AMALGAMATION OF ASSOCIATED COMPANIES WITH MALAYSIAN OPERATIONS The merger of Bertam Holdings PLC with Beradin Holdings PLC, Padang Senang Holdings PLC and The Singapore Para Rubber Estates, PLC was completed on 10 July 2001. The Group now owns 43.30% of the enlarged Bertam Holdings PLC group. The costs associated with this merger have been treated by Bertam Holdings PLC as an exceptional item and, as set out in note 3, the Group's share amounts to £313,000 which has also been treated as an exceptional item. CURRENT TRADING As referred to above, the palm oil price staged a sharp rally in early July reaching around US$385 per tonne before easing to the current level of around US$300. This not an exciting price but is obviously a great deal healthier than the low point seen earlier in the year. World stocks have fallen sharply and indications are that demand will be reasonably strong but it remains to be seen how and when the price is affected. At this stage, it looks as if the original estimate for the year of 136,000 tonnes of f.f.b. may not quite be achieved. PT Agro Muko's f.f.b. crop is improving but will not match 2000 whilst the Malaysian crops have peaked but are expected to exceed last year's. 28 September 2001 PHILIP FLETCHER Chairman Consolidated profit and loss account FOR THE SIX MONTHS ENDED 30 JUNE 2001 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2001 2000 2000 £'000 £'000 £'000 Turnover 1,636 2,191 4,534 Cost of sales (1,009) (1,127) (2,282) --------- --------- ----------- Estate profit 627 1,064 2,252 Administrative expenses (209) (204) (382) Exchange differences 99 77 104 --------- --------- ----------- Group operating profit 517 937 1,974 Share of operating profit in associates 410 1,528 2,402 --------- --------- ----------- Total operating profit 927 2,465 4,376 Exceptional items (note 3) (246) - 311 --------- --------- ----------- Profit on ordinary activities before interest 681 2,465 4,687 Interest receivable and similar income 93 122 217 --------- --------- ----------- Profit on ordinary activities before taxation 774 2,587 4,904 Tax on profit on ordinary activities (286) (682) (1,223) --------- --------- ----------- Profit on ordinary activities after taxation 488 1,905 3,681 Equity minority interests (108) (164) (343) --------- --------- ----------- Profit on ordinary activities attributable to the members of Rowe Evans Investments PLC 380 1,741 3,338 Equity dividend proposed - - (2,057) --------- --------- ----------- Profit retained for the financial period 380 1,741 1,281 --------- --------- ----------- Basic and diluted earnings per 10p share 0.79p 3.60p 6.90p --------- --------- ----------- All operations are classed as continuing. Consolidated balance sheet AT 30 JUNE 2001 30 June 30 June 31 December 2001 2000 2000 £'000 £'000 £'000 Fixed assets Tangible assets 8,731 8,996 9,064 Investments 37,785 38,998 38,029 ------- ------- ---------- 46,516 47,994 47,093 ------- ------- ---------- Current assets Stocks 117 121 126 Debtors 862 910 773 Cash at bank and in hand 1,750 3,924 3,053 ------- ------- ---------- 2,729 4,955 3,952 ------- ------- ---------- Creditors: Amounts falling due within one year Trade creditors 113 154 98 Other creditors including taxation and social 68 38 50 security Equity dividend proposed - 2,057 2,057 ------- ------- ---------- 181 2,249 2,205 ------- ------- ---------- Net current assets 2,548 2,706 1,747 ------- ------- ---------- Total assets less current liabilities 49,064 50,700 48,840 Equity minority interests (1,098) (1,167) (1,133) ------- ------- ---------- 47,966 49,533 47,707 ------- ------- ---------- Capital and reserves Called-up share capital 4,840 4,840 4,840 Share premium account 5,977 6,940 5,977 Capital redemption reserve 27 27 27 Revaluation reserve 10,521 10,193 10,306 Profit and loss account 26,601 27,533 26,557 ------- ------- ---------- Total equity shareholders' funds 47,966 49,533 47,707 ------- ------- ---------- Reconciliation of movements in shareholders' funds Profit attributable to members of the Company 380 1,741 3,338 Equity dividend - - (2,057) ------- ------- ---------- 380 1,741 1,281 Issue of shares - - 140 Other recognised gains and losses relating to the (121) 2,000 494 period ------- ------- ---------- Net addition to shareholders' funds 259 3,741 1,915 Opening equity shareholders' funds 47,707 45,792 45,792 ------- ------- ---------- Closing equity shareholders' funds 47,966 49,533 47,707 ------- ------- ---------- Consolidated cash-flow statement FOR THE SIX MONTHS ENDED 30 JUNE 2001 6 6 Year months months ended ended ended 31 30 June 30 June December 2001 2000 2000 £'000 £'000 £'000 Reconciliation of total operating profit to net cash inflow from operating activities Total operating profit 927 2,465 4,376 Exchange differences (74) (99) (235) Gain on sale of tangible fixed assets - (19) - Depreciation 114 130 250 Share of associated undertakings' profits (410) (1,528) (2,402) Decrease/(increase) in stocks 9 - (5) (Increase)/decrease in debtors (145) (13) 167 Increase/(decrease) in creditors 57 (113) (180) ------- ------- ---------- Net cash inflow from operating activities 478 823 1,971 Returns on investments and servicing of finance 651 307 1,174 Taxation (240) (277) (682) Capital expenditure and financial investment (83) (1,894) (2,267) Equity dividend paid (2,057) - (2,057) Management of liquid resources Decrease in short-term deposits 1,196 951 1,935 Financing Issue of shares - 140 140 ------- ------- ---------- (Decrease)/increase in cash (55) 50 214 ------- ------- ---------- Returns on investments and servicing of finance Dividends received from associated undertakings 601 257 1,160 Dividends paid to minorities (43) (78) (211) Interest and similar income received 93 128 225 ------- ------- ---------- Net cash inflow on returns on investments and servicing of finance 651 307 1,174 ------- ------- ---------- Taxation UK corporation tax recovered including ACT - 319 320 Overseas tax paid (240) (596) (1,002) ------- ------- ---------- Tax paid (240) (277) (682) ------- ------- ---------- Capital expenditure and financial investment Purchase of tangible fixed assets (95) (242) (604) Sale of tangible fixed assets 12 19 23 Purchase of fixed-asset investments - (1,671) (1,686) ------- ------- ---------- Net cash outflow from capital expenditure and financial Investment (83) (1,894) (2,267) ------- ------- ---------- Reconciliation of net cash flow and movement in net funds (Decrease)/increase in cash in the period (55) 50 214 Decrease in liquid resources (1,196) (951) (1,935) Exchange differences (52) (118) (169) ------- ------- ---------- Movement in net funds (1,303) (1,019) (1,890) Net funds at 1 January 3,053 4,943 4,943 ------- ------- ---------- Net funds at 30 June/31 December 1,750 3,924 3,053 ------- ------- ---------- NOTES 1. Statutory information The financial information for the six-month periods ended 30 June 2001 and 2000 has been neither audited nor reviewed by the Group's auditors and does not constitute accounts within the meaning of section 240 of the Companies Act 1985. The financial information for the year ended 31 December 2000 is abridged from the statutory accounts which have been reported on by the Group's auditors, Deloitte & Touche, and which have been filed with the Registrar of Companies. The report of the auditors thereon was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. 2. Accounting policies These interim accounts have been prepared on the basis of accounting policies as set out in the annual financial statements at 31 December 2000. 3. Exceptional items 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2001 2000 2000 £'000 £'000 £'000 Gain on sale of tangible fixed assets 11 - 19 Share of associated undertakings' exceptional items Gain on sale of tangible fixed assets 50 - 272 Gain on sale of fixed-asset investments 6 - 20 Merger costs (313) - - -------- -------- ----------- (246) - 311 -------- -------- ----------- 4. Distribution The Company will be circulating its interim report to members on 5 October 2001 and copies may be obtained thereafter from M.P.Evans (UK) Limited, 3 Clanricarde Gardens, Tunbridge Wells, Kent TN1 1HQ. By order of the board M. P. Evans (UK) Limited Secretaries 28 September 2001 Enquiries: Philip Fletcher Telephone 01892 516333 Fax: 01892 518639 E-mail: philipf@mpevans.co.uk

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