Unaudited Interim Results

Rowe Evans Investments PLC 28 September 2000 ROWE EVANS INVESTMENTS PLC OIL PALM AND RUBBER PLANTATIONS IN INDONESIA ASSOCIATED COMPANIES WITH PLANTATIONS AND PROPERTY-DEVELOPMENT INTERESTS IN MALAYSIA AND COTTON FARMING IN AUSTRALIA ANNOUNCEMENT OF UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2000 Highlights from the chairman's statement and unaudited interim results as follows:- * profit before tax £2,587,000 (1999 £2,779,000) * slightly improved crop of oil palm fresh fruit bunches ('f.f.b.') but lower palm oil prices * similar results, in total, from associates:- - Indonesian plantation companies achieved markedly increased ffb crops and higher profits despite lower palm oil prices - Malaysian plantation companies suffered lower ffb crops and lower profits - improved performance in by Lendu Holdings PLC after record Australian cotton crop * palm oil market weak during first half due to high stock levels and lower demand from India and China * Indonesian economy has returned to growth but still many problems particularly in the banking sector * original f.f.b. crop estimate of around 133,000 for whole of 2000 expected to be largely achieved. * palm oil prices have remained at lacklustre levels so far since 30 June 2000 but possible upturn towards the end of the year CHAIRMAN'S STATEMENT The profit before taxation of £2,587,000 for the first six months of 2000 was slightly lower than the £2,779,000 recorded for the same period last year. This was largely attributable to weak palm oil prices, partly offset by higher crops. INDONESIA The Indonesian economy has returned to growth, with exports - particularly non-oil exports - the balance of payments and foreign exchange reserves all strengthening. However, many problems remain. The banking sector, although improving, remains weak with inadequate equity to support business growth. Further rationalisation in the sector seems essential. Overall corporate recovery, including the recovery of the banking sector, is also hampered by difficulties in enforcing liquidation laws. This prevents the redistribution of assets and businesses held by companies that are not commercially viable. Corporate restructuring, so necessary for sustainable recovery, is thus proceeding very slowly, adding to the negative sentiment of potential foreign investors. Although economic growth has been recorded, it is at a lower level than has been achieved by other countries in South East Asia. As can be seen from the accompanying graph, the Rupiah steadily weakened during the first six months of the year and, having strengthened somewhat in the last two months or so, seems again to be on a downward trend. PALM OIL MARKET The accompanying graph shows palm oil prices at weak levels throughout most of 2000 apart from a short-lived peak reached in April. World stocks of vegetable oils have been high and two of the big markets for palm oil, China and India, have not been in the market to the extent seen in earlier years. China has been importing more oil seeds for processing within the country and India has increased the tariffs imposed on palm oil. Commodity prices are notoriously difficult to predict but there is evidence that, with the erosion of stock levels, weather problems possibly affecting the soya bean crop in the southern states of the USA, lower rape seed crops and increasing levels of disposable wealth associated with world economic growth, palm oil prices may be bottoming out and upward pressure may be seen towards the end of the year. INDONESIAN PLANTATION OPERATIONS Crops and sales details for the six months ended 30 June 2000 with comparatives for the same period in 1999, and for the whole of 1999, were as follows:- 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2000 1999 1999 SUBSIDIARY COMPANIES' CROPS OIL PALM - fresh fruit bunches ('f.f.b.') Crop for the period - tonnes 59,200 56,000 123,870 Average sales price per tonne - Rp'000 409 500 453 RUBBER Crop for the period - tonnes 517 405 863 Average sales price per tonne - Rp'000 4,862 5,339 4,887 ASSOCIATED COMPANIES' CROPS OIL PALM f.f.b. - tonnes Indonesia 132,000 106,000 209,000 Malaysia 31,400 38,600 78,300 (including the crop of Bertam Holdings PLC's 40% associate, Bertam Properties Sdn. Bhd.) RUBBER - tonnes Indonesia 952 776 1,666 EXCHANGE RATES £1 = Indonesian Rupiah - average 12,217 13,519 12,672 - period-end 13,227 10,859 11,390 Oil palm f.f.b. The Group's Indonesian oil palm f.f.b. crop was much in line with expectations overall. Bilah Estate achieved a very good performance which offset a disappointing reappearance of another acute and abrupt down phase at Simpang Kiri Estate, although a marked improvement is being experienced in the second half. Rubber The rubber crop on Pangkatan Estate was pleasingly ahead of expectations and well ahead of the same period last year as the young areas increase their yields. Unfortunately, rubber prices have continued at poor levels, not helped by the buffer stock overhanging the market after the disbanding of the International Natural Rubber Organization (INRO). ASSOCIATED COMPANIES Indonesia The Indonesian associated companies, particularly PT Agro Muko (30.43% owned), reported strongly increased crops and profits despite the weakness of palm oil prices. The new, second, palm oil mill in Bengkulu is under construction and is expected to be completed on schedule around the end of the year. I am glad to report that the earthquake near the town of Bengkulu, which resulted in tragic loss of life and substantial damage to property, caused no significant problems on the estate. Malaysia Plantations Unlike in Indonesia, most of the Malaysian plantations owned by the associated companies experienced a sharp drop in f.f.b. crops and this, together with the weak palm oil prices, resulted in substantially reduced profits and, in some cases, losses. Property The property market in Malaysia has continued to show signs of increased activity. Bertam Holdings PLC's 40% associate, Bertam Properties Sdn. Bhd., has a number of developments under way and has entered into a conditional sale of some 127 hectares of its land for a total price of RM61.2 million, or some RM482,000 per hectare. It is hoped to finalise the sale before the end of the year. Australia Lendu Holdings PLC (35.11% owned) has just completed a successful 1999/2000 cotton season, achieving over 16,000 bales although the selling price was lower than the previous season. Profits increased, assisted by the upgraded cattle operations on the new land, and development on that new land continues with pasture improvement and clearing for cereals well under way. CURRENT TRADING Palm oil prices have continued at lacklustre levels into the second half although, as referred to above, there is some expectation of improvement towards the end of 2000. Indonesian crops are continuing reasonably healthily and, as mentioned above, Simpang Kiri Estate should pick up in the second half. It is expected that the original f.f.b. estimate for the year of 133,000 tonnes will largely be achieved. Malaysian crops are expected to recover to some extent in the second half from the very acute downturn experienced in the first half. I mentioned in my statement in the 1999 annual report that discussions were under way between the associated companies with Malaysian interests, namely Bertam Holdings PLC, Beradin Holdings PLC, Padang Senang Holdings PLC and The Singapore Para Rubber Estates, PLC. These discussions may result in an amalgamation of these companies. Whilst this is likely to take a little time to complete, your board continues to believe in the merits of the transactions, providing appropriate terms can be agreed. UNAUDITED INTERIM RESULTS The board announces the following unaudited results CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTH ENDED 30 JUNE 2000 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2000 1999 1999 £'000 £'000 £'000 Turnover 2,191 2,215 4,756 Cost of sales (1,127) (936) (2,145) ------ ------ ------ Estate profit 1,064 1,279 2,611 Administrative expenses (204) (184) (362) Exchange differences 77 8 39 ------ ------ ------ Group operating profit 937 1,103 2,288 Share of operating profit in associates 1,528 1,527 2,644 ------ ------ ------ Total operating profit 2,465 2,630 4,932 Gain on sale of fixed assets - - 167 ------ ------ ------ Profit on ordinary activities before interest 2,465 2,630 5,099 Interest receivable and similar income 122 149 276 ------ ------ ------ Profit on ordinary activities before taxation 2,587 2,779 5,375 Tax on profit on ordinary activities (682) (692) (1,364) ------ ------ ------ Profit on ordinary activities after taxation 1,905 2,087 4,011 Equity minority interests (164) (236) (379) ------ ------ ------ Profit on ordinary activities attributable to the members of Rowe Evans Investments PLC 1,741 1,851 3,632 Equity dividend proposed - - (2,057) ------ ------ ------ Profit retained for the financial period 1,741 1,851 1,575 ====== ====== ====== Earnings and diluted earnings per 10p share - pence 3.60 3.83 7.53 ====== ====== ====== All operations are classed as continuing. CONSOLIDATED BALANCE SHEET AT 30 JUNE 2000 30 June 30 June 31 December 2000 1999 1999 £'000 £'000 £'000 Fixed assets Tangible assets 8,996 9,302 9,309 Investments 38,998 33,926 33,995 ------ ------ ------ 47,994 43,228 43,304 ------ ------ ------ Current assets Stocks 121 163 121 Debtors 910 938 1,076 Cash at bank and in hand 3,924 5,961 4,943 ------ ------ ------ 4,955 7,062 6,140 ------ ------ ------ Creditors: Amounts falling due within one year Trade creditors 154 184 207 Amounts owed to associated undertakings 13 - - Other creditors including taxation and social security 25 73 163 Equity dividend proposed 2,057 2,048 2,057 ------ ------ ------ 2,249 2,305 2,427 ------ ------ ------ Net current assets 2,706 4,757 3,713 ------ ------ ------ Total assets less current liabilities 50,700 47,985 47,017 Equity minority interests (1,167) (1,175) (1,225) ------ ------ ------ 49,533 46,810 45,792 ====== ====== ====== Capital and reserves Called-up share capital 4,840 4,819 4,815 Share premium account 6,940 5,855 5,849 Capital redemption reserve 27 23 27 Revaluation reserve 10,193 9,007 8,826 Profit and loss account 27,533 27,106 26,275 ------ ------ ------ Total equity shareholders' funds 49,533 46,810 45,792 ====== ====== ====== Reconciliation of movements in shareholders' funds Profit attributable to members of the Company 1,741 1,851 3,632 Equity dividend - - (2,057) ------ ------ ------ 1,741 1,851 1,575 Purchase of own shares - (67) (93) Other recognized gains and losses relating to the period 2,000 1,382 666 ------ ------ ------ Net addition to shareholders' funds 3,741 3,166 2,148 Opening equity shareholders' funds 45,792 43,644 43,644 ------ ------ ------ Closing equity shareholders' funds 49,533 46,810 45,792 ====== ====== ====== CONSOLIDATED CASH-FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2000 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2000 1999 1999 £'000 £'000 £'000 Reconciliation of total operating profit to net cash inflow from operating activities Total operating profit 2,465 2,630 4,932 Exchange differences (99) 352 302 Gain on sale of tangible fixed assets (19) (8) - Depreciation 130 99 213 Share of associated undertakings' profits (1,528) (1,527) (2,644) Increase in stocks - (66) (24) Increase in debtors (13) (178) (80) (Decrease)/increase in creditors (113) 12 100 ------ ------ ------ Net cash inflow from operating activities 823 1,314 2,799 Returns on investments and servicing of finance 307 425 1,020 Taxation (277) (1,287) (1,877) Capital expenditure and financial investment (1,894) (146) (565) Equity dividend paid - - (2,048) Management of liquid resources Decrease/(increase) in short-term deposits 951 (399) (83) Financing Issue of shares 140 - - ------ ------ ------ Increase/(decrease) in cash 50 (93) (754) ====== ====== ====== Return on investments and servicing of finance Dividends received from associated undertakings 257 341 927 Dividends paid to minorities (78) (65) (174) Interest and similar income received 128 149 267 ------ ------ ------ Net cash inflow on returns on investments and servicing of finance 307 425 1,020 ====== ====== ====== Taxation UK corporation tax recovered including ACT 319 148 149 Overseas tax paid (596) (1,435) (2,026) ------ ------ ------ Tax paid (277) (1,287) (1,877) ====== ====== ====== Capital expenditure and financial investment Purchase of tangible fixed assets (242) (91) (362) Sale of tangible fixed assets 19 12 26 Purchase of fixed-asset investments (1,671) - (136) Purchase of own shares - (67) (93) ------ ------ ------ Net cash outflow from capital expenditure and financial investment (1,894) (146) (565) ====== ====== ====== Reconciliation of net cash flow and movements in net funds Increase/(decrease) in cash in the period 50 (93) (754) (Decrease)/increase in liquid resources (951) 399 83 Exchange differences (118) 154 113 ------ ------ ------ Change in net funds (1,019) 460 (558) Net funds at 1 January 4,943 5,501 5,501 ------ ------ ------ Net funds at 30 June/31 December 3,924 5,961 4,943 ====== ====== ====== NOTES 1. Statutory information The financial information for the six-month periods ended 30 June 2000 and 1999 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 1999 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 1999. By order of the board M.P.Evans (UK) Limited Secretaries 28 September 2000 Enquiries: Mr P A Fletcher Telephone: 01892 516333 Fax: 01892 518639 E-mail: Philipf@mpevans.co.uk

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