Interim Results

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 Announcement of unaudited interim results for the six months ended 30 June 2003 Highlights from the chairman's statement and unaudited interim results for the six months ended 30 June 2003 * profit before taxation 56% higher at £4,139,000 (2002 £2,658,000) * operating cash flows £1,576,000 (2002 £646,000) * crops of oil palm fresh fruit bunches ("f.f.b.") and rubber markedly higher than for the same period last year * palm oil prices continued at healthy levels into 2003 - average (cif Rotterdam) US$436 per tonne (2002 US$360) * share of associated companies' profits £2,410,000 (2002 £1,580,000) - Indonesia - higher crops and continued firm palm oil prices resulted in strong profit improvement - Malaysia - higher f.f.b. crops, healthy palm oil prices and improved house sales by 40% associate, Bertam Properties Sdn. Berhad, resulted in higher profit - Australia - unprecedented drought resulted in lower cotton crop, offset by profit on sale of investments * construction of Pangkatan palm oil mill under way * firm palm oil prices have continued so far in second half and, barring unforeseen circumstances, 2003 expected to be another successful year Chairman's statement I am delighted to report a profit before taxation of £4,139,000 for the first half of 2003, a 56% increase over the £2,658,000 relating to the same period in 2002. The Group generated operating cash flows of £1,576,000 (2002 £646,000). The period was marked by improved crops and a continuation of firm palm oil prices. REVIEW OF THE PERIOD The palm oil market Palm oil prices, having weakened a little during the period, nevertheless remained above US$400 per tonne (cif Rotterdam). The usual complexities of the vegetable oil market were at play but uncertainties over the soya bean crop in the USA and generally low stock/usage levels for most oils have supported prices. Exchange rates During the first half of the year, the US Dollar, the currency in which palm oil is traded, weakened against most currencies. Sterling was no exception but the Indonesian Rupiah was particularly robust and strengthened against both the US Dollar and Sterling. This had a marginally negative effect on costs and profit margins. Results for the period Estate profit Crop and sales details were as follows:- 6 months 6 months Year ended ended ended 30 30 31 June June December 2003 2002 2002 CROPS Tonnes Tonnes Tonnes Oil palm fresh fruit bunches 65,900 55,600 133,200 Rubber 810 623 1,550 ====== ====== ======= AVERAGE SELLING PRICES PER TONNE Oil palm fresh fruit bunches - Rp'000 652 567 599 Crude palm oil - Rotterdam cif - US Dollars 436 360 390 Rubber - Rp'000 7,388 5,052 7,083 ====== ====== ======= EXCHANGE RATES Rp Rp Rp £1 = Indonesian Rupiah - average 13,997 13,917 13,976 - period-end 13,665 13,348 14,388 ====== ====== ======= Higher crops of oil palm fresh fruit bunches ("f.f.b.") and the continued strength of the palm oil price resulted in an estate profit of £1,768,000, compared with £1,163,000 for the same period last year. The estates have been performing well with Sennah, which was acquired in March 2002, contributing for the whole period, compared with only part of the period last year. Security problems continue in the province of Aceh where Simpang Kiri Estate is located. Access to the estate by senior head office staff has been limited but, notwithstanding these difficulties, operations have continued largely unhindered and the f.f.b. crop for the first half of the year has been in line with expectations and has exceeded that for the same period last year. The rubber crop on Pangkatan and Sennah Estates was above expectations and rubber prices have been at robust levels. The increased crop has partly been due to intensive tapping prior to the programme of replanting with oil palms in readiness for the new palm oil mill on Pangkatan Estate to which I refer below. Associated companies The Group's share of the profits before taxation of the associated companies was £2,410,000 compared with last year's £1,580,000. Crops were as follows:- 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2003 2002 2002 Oil palm Tonnes Tonnes Tonnes f.f.b. - Indonesia 149,000 119,000 251,000 - Malaysia 44,000 35,000 70,000 ====== ====== ======= Rubber - Indonesia 941 924 1,547 - Malaysia 38 27 77 ====== ====== ======= Cotton Bales Bales Bales - Australia 9,700 18,350 18,350 ====== ====== ======= Indonesia PT Agro Muko (now 31.53% owned) has benefited from increasing crops as the young areas mature and from the continued strength of the palm oil price. Now that the company has cleared its borrowings, operational cash flows permit a programme of regular dividends and, in the first half of the year, £387,000 (gross of Indonesian withholding tax) was received. PT Kerasaan Indonesia (36% owned) benefited similarly and £266,000 (gross) was received by way of dividends in the first half. Malaysia The Bertam Holdings PLC Group (47.42% owned) reported significantly improved profits for the first half of the year arising primarily from higher f.f.b. crops on its Malaysian estates and the continuing strength of the palm oil price. Its 40% associate, Bertam Properties Sdn. Berhad, also reported higher profits from house sales and its own agricultural (oil palm) activities. Australia Lendu Holdings PLC (35.11% owned) reported that it has suffered from the unprecedented drought conditions in Australia. Only some 9,700 bales of cotton were able to be picked, compared with over 18,000 the previous year. Profits were recorded from the disposal of investments resulting in an overall profit for the group for the period. PANGKATAN PALM OIL MILL The tender process for the construction of the mill has been completed and contracts have been awarded. As expected, work started on the ground in July 2003. Commissioning of the mill is expected at the end of 2004. CURRENT TRADING Palm oil prices, having fallen a little below the US$400 per tonne level after the half year, have subsequently recovered and are currently around US$450. F.f.b. crops are a little behind expectations and the original estimate for the year of 154,000 tonnes may not quite be achieved. The original estimate for rubber, however, at 1,175 tonnes, is expected to be comfortably achieved and prices have improved markedly since the already improved levels enjoyed in the first half. Sterling has strengthened a little against the Rupiah since the half year. The US Dollar, having recovered some ground against Sterling, has returned to around the 30 June 2003 level but has strengthened slightly against the Rupiah . The Bertam Holdings PLC Group continues to benefit from the healthy palm oil price as does its associate, Bertam Properties Sdn. Berhad, whose other property activities are also progressing in what is a generally lacklustre market. The prospects for next year's cotton crop for Lendu Holdings PLC depend, to a considerable extent, on the amount of rainfall over the next few weeks as the drought is not yet over. The area allocated for irrigated cotton may have to be curtailed if this rainfall does not arrive, although other crops may be able to be substituted. PROSPECTS Barring unforeseen circumstances your board anticipates that 2003 will be another successful year. PHILIP FLETCHER Chairman CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six months ended 30 June 2003 6 months 6 months Year ended ended ended 30 June 2003 30 June 2002 31 December 2002 £'000 £'000 £'000 Turnover 3,500 2,501 6,399 Cost of sales (1,732) (1,338) (3,060) ------- ------- ------- Estate profit 1,768 1,163 3,339 ------- ------- ------- Administrative expenses (233) (240) (557) Exchange differences (134) (67) (60) ------- ------- ------- Total administrative expenses (367) (307) (617) ------- ------- ------- Group operating profit 1,401 856 2,722 Share of operating profit in associates 2,410 1,580 3,540 ------- ------- ------- Total operating profit 3,811 2,436 6,262 Exceptional items (note 3) 285 167 350 ------- ------- ------- Profit on ordinary activities before interest 4,096 2,603 6,612 Interest receivable and similar income 43 75 86 Interest payable - (20) - ------- ------- ------- Profit on ordinary activities before taxation 4,139 2,658 6,698 Tax on profit on ordinary activities (1,236) (660) (1,887) ------- ------- ------- Profit on ordinary activities after taxation 2,903 1,998 4,811 Equity minority interests (240) (210) (535) ------- ------- ------- Profit on ordinary activities attributable to the members of Rowe Evans Investments PLC 2,663 1,788 4,276 Equity dividend proposed - - (2,284) ------- ------- ------- Profit retained for the financial period 2,663 1,788 1,992 ======= ======= ======= Basic earnings per 10p share 5.53p 3.69p 8.84p ======= ======= ======= Diluted earnings per 10p share 5.48p 3.69p 8.80p ======= ======= ======= All operations are classed as continuing. CONSOLIDATED BALANCE SHEET At 30 June 2003 30 June 2003 30 June 2002 31 December 2002 £'000 £'000 £'000 Fixed assets Tangible assets 12,916 12,715 12,717 Investments 36,154 41,616 35,262 ------- ------- ------- 49,070 54,331 47,979 ------- ------- ------- Current assets Stocks 200 236 175 Debtors 768 740 647 Investments 2,038 729 2,494 Cash at bank and in hand 107 60 153 ------- ------- ------- 3,113 1,765 3,469 ------- ------- ------- Creditors: Amounts falling due within one year Bank overdraft - 174 - Trade creditors 285 714 203 Other creditors including taxation and social security 302 101 480 Equity dividend proposed - - 2,284 ------- ------- ------- 587 989 2,967 ------- ------- ------- Net current assets 2,526 776 502 ------ ------- ------- Total assets less current liabilities 51,596 55,107 48,481 Provisions for liabilities and charges (900) (146) (790) Equity minority interests (2,815) (2,649) (2,795) ------- ------- ------- 47,881 52,312 44,896 ======= ======= ======= Capital and reserves Called-up share capital 4,807 4,840 4,822 Share premium account 5,108 5,108 5,108 Capital redemption reserve 59 27 45 Revaluation reserve - 685 - Share of associated companies' reserves 21,046 25,729 20,153 Profit and loss account 16,861 15,923 14,768 ------- ------- ------- Total equity shareholders' funds 47,881 52,312 44,896 ======= ======= ======= Reconciliation of movements in equity shareholders' funds Profit attributable to members of the Company 2,663 1,788 4,276 Equity dividend - - (2,284) ------- ------- ------- 2,663 1,788 1,992 Buy back of shares (181) - (173) Other recognised gains and losses relating to the period 503 1,147 (6,300) ------- ------- ------- Net addition to/(reduction in) equity shareholders' funds 2,985 2,935 (4,481) Opening equity shareholders' funds 44,896 49,377 49,377 ------- ------- ------- Closing equity shareholders' funds 47,881 52,312 44,896 ======= ======= ======= CONSOLIDATED CASH-FLOW STATEMENT For the six months ended 30 June 2003 6 months ended 6 months ended Year ended 30 June 2003 30 June 2002 31 December 2002 £'000 £'000 £'000 Net cash inflow from operating activities 1,576 646 2,751 Returns on investments and servicing of finance 1,267 909 1,630 Taxation (833) 33 (276) Capital expenditure and financial investment (181) (87) (458) Acquisitions and disposals - (2,555) (2,397) Equity dividend paid (2,284) (2,057) (2,057) ------- ------- ------- Net cash outflow before management of liquid resources and financing (455) (3,111) (807) Management of liquid resources Decrease in short-term deposits 376 2,604 931 Financing Issue of shares - 113 118 Buy back of own shares (181) - (173) ------- ------- ------- (Decrease)/increase in cash (260) (394) 69 ======= ======= ======= Reconciliation of total operating profit to net cash inflow from operating activities Total operating profit 3,811 2,436 6,262 Exchange differences 24 38 (157) Depreciation 155 129 276 Share of associated undertakings' profits (2,410) (1,580) (3,540) Increase in stocks (25) (96) (37) Increase in debtors (127) (366) (380) Increase in creditors 148 85 327 ------- ------- ------- Net cash inflow from operating activities 1,576 646 2,751 ------- ------- ------- Returns on investments and servicing of finance Dividends received from associated undertakings 1,582 853 1,544 Dividends paid to minorities (358) - - Interest and similar income received 43 56 86 ------- ------- ------- Net cash inflow on returns on investments and servicing of finance 1,267 909 1,630 ------- ------- ------- Taxation Overseas tax (paid)/received (833) 33 (276) ------- ------- ------- Capital expenditure and financial investment Purchase of tangible fixed assets (194) (97) (485) Sale of tangible fixed assets 13 10 27 ------- ------- ------- Net cash outflow from capital expenditure and financial Investment (181) (87) (458) ------- ------- ------- Acquisitions and disposals Net overdraft acquired with subsidiary - (803) (753) Purchase of subsidiary undertaking - (1,752) (1,644) ------- ------- ------- Net cash outflow from acquisitions and disposals - (2,555) (2,397) ======= ======= ======= Reconciliation of net cash flow and movement in net funds (Decrease)/increase in cash in the period (260) (394) 69 Decrease in liquid resources (376) (2,604) (931) Exchange differences 134 224 120 ------- ------- ------- Movements in net funds (502) (2,774) (742) Net funds at 1 January 2,647 3,389 3,389 ------- ------- ------- Net funds at 30 June/31 December 2,145 615 2,647 ======= ======= ======= NOTES 1. Statutory information The financial information for the six-month periods ended 30 June 2003 and 2002 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 2002 is abridged from the statutory accounts which have been reported on by the Group's auditors, Deloitte & Touche LLP, 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 2002. 3. Exceptional items 6 months ended 6 months ended Year ended 30 June 2003 30 June 2002 31 December 2002 £'000 £'000 £'000 (Loss)/gain on sale of tangible fixed assets (14) 4 6 Share of associated undertakings' exceptional items Gain on sale of tangible fixed assets 4 163 3 Gain on sale of fixed-asset investments 295 - 307 Merger credit - - 34 ------- ------- ------- 285 167 350 ======= ======= ======= 4. Distribution The Company will be circulating its interim report to members on 30 September 2003 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 26 September 2003 Enquiries: Philip Fletcher Telephone 01892 516333 Fax: 01892 518639 E-mail: philipf@mpevans.co.uk

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