Last checked at 9 Apr 2010 07:00
9 April 2010
Anglo-Eastern Plantations PLC
("AEP", "Group" or "Company")
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2009
Anglo-Eastern Plantations PLC, which owns approximately 123,000 hectares of plantation land, primarily in Indonesia, and operates approximately 45,000 hectares of developed plantations,is pleased to announce its preliminary results for the year ended 31 December 2009.
Financial Highlights
·; Revenue for year was $150.1m, compared to $174.7m in 2008.
·; Operating profit, before Biological Asset ("BA") adjustment, was $59.0m (2008: $74.1m) and pre-tax profit after the Biological Asset adjustment was $62.1m (2008: $77.9m).
·; Basic Earnings per Share, before Biological Asset adjustment, decreased by 8.6% to 94.11cts, and diluted EPS after Biological Asset adjustment decreased by 9.62% to 94.99cts.
·; Year-end cash totalled $63.8m, which compares with $69.4m at the end of 2008. Total Bank Loans and other financial liabilities were reduced from $35.6m at 31 December 2008 to $27.0m at 31 December 2009.
·; Repayment of $8.6m of existing borrowings during the year.
·; The board propose a final dividend for the year of 5 cts per share (2008: 5.0 cts per share). If approved at the Company's annual general meeting, this will be paid on 28 May 2010 to shareholders on the register on 30 April 2010.
Commercial Highlights
·; The market average price for crude palm oil ("CPO") for 2009 was $679/mt, compared to $945/mt in 2008.
·; Estate fresh fruit bunches output for 2009 was 9% above the previous year.
For further enquiry, contact:
| Anglo-Eastern Plantations plc |
|
| Donald H Low | Tel 020 72164600 |
| Charles Stanley Securities |
|
| Russell Cook / Jen Boorer | Tel 020 7149 6000 |
Chairman's statement
Results
For the year ended 31 December 2009, revenue was $150.1m compared to $174.7m in 2008. This generated a Group operating profit for 2009, before biological asset (BA) adjustment, of $59.0 million; 20% less than in 2008. Estates fresh fruit bunch ("FFB") output for 2009 was 9% above the previous year. Profit before tax and after BA adjustment was $62.1 million, compared to $77.9 million in 2008. The BA adjustment was a credit of $0.9 million, compared to $1.3 million in 2008, reflecting our estate valuations.
Earnings per share before BA adjustment decreased by 8.6% to 94.11cts, compared to 103.0cts in 2008.
.
Financing
The group's balance sheet remains strong. The Group continued to experience strong cash flow generation for 2009, enabling it to have strong cash reserves and reduce its borrowings. As at 31 December 2009, the Group had a cash position of $63.8 million and lower borrowings of $27.0 million, giving it a net cash position of $36.8 million, compared to $33.8 million in 2008.
During the year, we have has repaid $8.6 million out of our existing borrowings of $35.6 million.
Corporate Development
In 2009, we succeeded in obtaining the crucial land conversion permit from the Indonesian Forestry Department in Central Kalimantan project.
We hope to plant up to 5,000 hectares in Central Kalimantan 2010. We have set a target to plant up to 10,900 hectares for the group in 2010 and a 10,000 hectares per year for the next five years. This means we shall be able to double the current area of 45,000 hectares to 100,000 hectares by 2014. In 2010 we acquired PT Kahayan with the initial "Izin Lokasi" of 17,500 hectares.
The new Sumindo mill (45 MT/hour) is expected to be commissioned in the second quarter of 2010. In 2010, Blankahan oil mill's milling capacity shall be increased from the current 25 MT/hour to 40 MT/hour.
Directors
I am pleased to welcome the appointment of Dr. Kanaka Puradiredja as Independent Non-Executive Director, with effect from 1 August 2009. He will be submitting himself for re-appointment at the forthcoming annual general meeting.
Madam Lim Siew Kim, our non-executive director, will be submitting herself for re-election at the forthcoming annual general meeting.
I will be submitting myself for re-appointment at the same annual general meeting.
Outlook
FFB production as of February 2010 was lower by 8% against the same period in 2009. The abnormal low cropping trend appears to be nationwide and mainly caused by adverse weather conditions compared to the same period in 2009. It is too early to forecast whether the performance will be better for the rest of the year.
The CIF Rotterdam Crude Palm Oil ("CPO") price opened the year 2009 at $495/mt and ended the year at $780/mt, averaging $679/mt for the year. Low interest rates, non-traditional monetary easing, extremely accommodative fiscal policy coupled with a weak US dollar have generated considerable liquidity into theglobal economy and together with the increased demand from China and India have helped underpin the commodity prices.
Oil World has revised its 2010 CPO production forecasts upward for Indonesia to 22.4m tonnes and exports at 17m tonnes, while for Malaysia CPO production forecasts were revised downward to 18m tonnes, while exports were revised down to 16m tonnes. With the latest revisions, Oil World expects 2010 global CPO production growth of 5.6% (from 4.4% growth in 2009) and demand growth of 5.8% (from 5.1% demand growth for 2009), which results in a lower global stock/usage ratio for CPO of 12% (from 15.2% in 2009 and 15.9% from 2008). This is positive for the CPO price.
The US dollar depreciated by approximately 15% against Indonesian Rupiah during 2009. Indonesian Rupiah has not experienced adverse fluctuations against the US dollar during early 2010. We expect a stable exchange level to be attainable for the rest of the year. To mitigate the exposure to currency exchange volatility, the group is managing its cash in dollars and local currencies prudently, taking into consideration its dollars-denominated borrowings and operational cost currencies requirements.
Prospects for 2010 will be cautiously optimistic in view of the higher CPO price during the first quarter of 2010 due to a global economy recovery. Indonesia's economy has been resilient through the downturn while current political developments now pave the way for economic policies to underpin long term sustainable growth, with strong support from the government in palm oil industries. The group is confident that CPO demand will be sustainable in view of a global economy recovery and we can expect a satisfactory profit level and cash flow for 2010.
Dividends
The board is mindful that the group's development programme will require a considerable capital commitment. In this respect, the dividend level needs to be balanced against the planned capital expenditure. The board is proposing to declare a final dividend of 5 cts in respect of 2009 (5.0 cts in 2008). Shareholders choosing to receive their dividend in Sterling will do so at the rate ruling on 30 April 2010, when the register closes. Based on the exchange rate at 15 March 2010 of $1.5052/£, the proposed dividend would be equivalent to 3.3p, compared to 3.0p declared in respect of 2008.
CHAN TEIK HUAT
Chairman 8 April 2010
Business review
Commodity Prices
2009 had been a volatile year for vegetable oil prices, including CPO. The global economic crisis resulted in weak business sentiment across the globe with credit markets seizing up and unprecedented amounts of liquidity having to be injected into the global financial system to recapitalise major financial institutions and prevent systemic defaults. This has led to a sharp deterioration in economic growth with the turmoil in financial markets impacting on business and consumer confidence in both developed and developing markets. Given these adverse developments, world output has shown a decline in 2009 with a gradual recovery not expected until 2010.
The CPO price opened year 2009 at $495/mt and ended the year at $780/mt, averaging $679/mt for the year (down 28% from 2008 average price of $945/mt). Low interest rates, non-traditional monetary easing, extremely accommodative fiscalpolicy coupled with a weak USD have generated considerable liquidity into the global economy. This, together with the increased demand from China and India has helped underpin the commodity prices. Pricing in CPO is the result of a complex relationship between competing oils and meals, oil seed production in both hemispheres, and as can be seen correlates to a certain extent with crude oil due to its biodiesel potential.
Rubber prices averaged $1,800/mt for 2009 (2008-$2,500/mt). Our small area of 406 ha of mature rubber contributed a pre-tax profit of $1.8 million in 2009. The newly planted 270 ha of rubber is expected to start production in 2011.
Valuation
Since 2007 the main valuation assumptions have been changed to reflect the improving outlook for palm oil and also Indonesia to reflect increasing operating costs. In 2009 the valuation model has remained consistent with the main assumptions changing to $550/mt for the CPO price and the discount rate to 16.25%.
Indonesia
FFB production in North Sumatra, which aggregates the estates of Tasik, Anak Tasik, Labuhan Bilik, Blankahan, Rambung, Sungai Musam and CPA, produced 266,000mt in 2009 (2008-261,000mt), 2% higher than 2008. The small increase is encouraging, considering the mature age of the trees in Tasik, which ordinarily would become less yielding as the trees mature. As a counter measure to maintain core critical mass, the group has begun a replanting program. Tasik contributed 60% of the total production in the North Sumatra estates.
FFB production in Bengkulu (South Sumatra), which aggregates the estates of Puding Mas and Alno as well as three newly acquired land of KKST, ELAP and RAA, produced 233,000mt (2008-186,000mt), 25% higher than 2008. The absence of a more pronounced drought effect compared to last year, coupled with the improved road infrastructure, contributed to this improved performance. The new Sumindo mill (45 MT/hour) is expected to be commissioned in the second quarter of 2010. It is expected to result in saving in transport costs as well as procuring more bought-in crop from smallholders once it is in fully commissioned.
FFB production in the Riau region, comprising Bina Pitri estates, produced 87,000mt in 2009 (2008-79,000mt), 10% higher than 2008. The improved performance was a result of higher productivity arising from a fertilisation and rehabilitation programme started in 2005/6, immediately after Bina Pitri was acquired.
Overall bought-in crops for Indonesia operations were at 435,000mt for the year 2009 (2008-443,000mt). The average oil extraction rate from our mills was 20.9% in 2009 (2008-21%).
Malaysia
FFB production in 2009, at 32,000mt, was 20% below 2008 due to shortage of labour available for harvesting and disruption in harvesting due to adverse weather condition towards the end of the year. Malaysian estates contribute pre-tax profit of $0.7 million, 61% lower than 2008.
Development
The Group's total area planted on recently acquired land is on schedule, with 4,479 ha already planted in 2009 compared to 2,242 ha in 2008. This significant increase shows that we are giving more attention to the replanting and planting of our newly acquired land. Field planting had commenced in PT ELAP in South Sumatra region, with PT SGM in Central Kalimantan starting in November 2009.
In 2009, we have succeeded in getting the crucial land conversion permit from the Indonesian Forestry Department in Central Kalimantan project. As mentioned in the Chairman's Statement, we hope to plant up to 5,000 hectares in Central Kalimantan in 2010. We have set a target to plant up to 10,900 hectares in 2010 and 10,000 hectares per year for the next five years. This means we shall be able to double the current area of 45,000 hectares to 100,000 hectares by 2014.
Audited consolidated income statement
for the year ended 31 December 2009
|
|
| 2009 | 2008 | ||||
|
Continuing operations |
| Result before BA adjustment |
BA adjustment |
Total | Result before BA adjustment |
BA adjustment |
Total |
|
|
| $000 | $000 | $000 | $000 | $000 | $000 |
| Revenue |
| 150,080 | - | 150,080 | 174,684 | - | 174,684 |
| Cost of sales |
| (88,202) | - | (88,202) | (96,812) | - | (96,812) |
| Gross profit |
| 61,878 | - | 61,878 | 77,872 | - | 77,872 |
| Biological asset revaluation |
|
|
|
|
|
|
|
| movement (BA adjustment) |
| - | 888 | 888 | - | 1,347 | 1,347 |
| Administration expenses |
| (2,923) | - | (2,923) | (3,808) | - | (3,808) |
| Operating profit |
| 58,955 | 888 | 59,843 | 74,064 | 1,347 | 75,411 |
| Exchange profits |
| 1,259 | - | 1,259 | 1,503 | - | 1,503 |
| Finance income |
| 3,202 | - | 3,202 | 3,645 | - | 3,645 |
| Finance costs |
| (2,219) | - | (2,219) | (2,686) | - | (2,686) |
| Profit before tax |
| 61,197 | 888 | 62,085 | 76,526 | 1,347 | 77,873 |
| Tax |
| (16,667) | (267) | (16,934) | (25,487) | (404) | (25,891) |
| Profit for the year |
| 44,530 | 621 | 45,151 | 51,039 | 943 | 51,982 |
| Attributable to: |
|
|
|
|
|
|
|
| - Equity holders of the parent |
| 37,146 | 348 | 37,494 | 41,182 | 819 | 42,001 |
| - Minority interests |
| 7,384 | 273 | 7,657 | 9,857 | 124 | 9,981 |
|
|
| 44,530 | 621 | 45,151 | 51,039 | 943 | 51,982 |
| Earnings per share |
|
|
|
|
|
|
|
| - basic |
|
|
| 94.99cts |
|
| 105.1 cts |
| - diluted |
|
|
| 94.99cts |
|
| 104.8cts |
Audited consolidated statement of Comprehensive income
for the year ended 31 December 2009
|
|
|
|
| ||||
|
|
|
|
|
| 2009 $000 |
| 2008 $000 |
| Profit for the year |
|
|
|
| 45,151 |
| 51,982 |
| Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unrealised (loss)/ surplus on revaluation of the estates |
|
|
|
| (12,320) |
| 5,302 |
| Profit/(loss) on exchange translation of foreign operations |
|
|
|
| 41,058 |
| (29,944) |
| Deferred tax on revaluation |
|
|
|
| (6,286) |
| (1,128) |
|
|
| 22,452 |
| (25,770) | |||
| Total comprehensive income for the year |
|
|
| 67,603 |
| 26,212 | |
|
|
|
|
|
|
|
|
|
| Attributable to: |
|
|
|
|
|
|
|
| - Equity holders of the parent |
|
|
|
| 52,172 |
| 19,872 |
| - Minority interest |
|
|
|
| 15,431 |
| 6,340 |
|
|
|
|
|
| 67,603 |
| 26,212 |
Audited consolidated balance sheet
as at 31 December 2009
|
|
|
|
|
| 2009 $000 |
| 2008 $000 |
| Non-current assets |
|
|
|
|
|
|
|
| Biological assets |
|
|
|
| 47,608 |
| 38,843 |
| Property, plant and equipment |
|
|
|
| 200,414 |
| 160,012 |
| Receivables |
|
|
|
| 1,677 |
| 1,677 |
|
|
|
|
|
| 249,699 |
| 200,532 |
| Current assets |
|
|
|
|
|
|
|
| Inventories |
|
|
|
| 3,720 |
| 4,196 |
| Tax receivables |
|
|
|
| 5,181 |
| 761 |
| Trade and other receivables |
|
|
|
| 2,582 |
| 4,143 |
| Cash and cash equivalents |
|
|
|
| 63,761 |
| 69,442 |
|
|
|
|
|
| 75,244 |
| 78,542 |
| Current liabilities |
|
|
|
|
|
|
|
| Bank loans and other financial liabilities |
|
|
| (9,424) |
| (8,639) | |
| Trade and other payables |
|
|
|
| (5,077) |
| (10,749) |
| Tax liabilities |
|
|
|
| (4,291) |
| (10,428) |
|
|
|
|
|
| (18,792) |
| (29,816) |
| Net current assets |
|
|
|
| 56,452 |
| 48,726 |
| Non- current liabilities |
|
|
|
|
|
|
|
| Bank loans and other financial liabilities |
|
|
| (17,589) |
| (27,025) | |
| Deferred tax liabilities |
|
|
|
| (28,772) |
| (28,450) |
| Retirement benefits - net liabilities |
|
|
|
| (1,830) |
| (1,494) |
| Net assets |
|
|
|
| 257,960 |
| 192,289 |
| Equity |
|
|
|
|
|
|
|
| Share capital |
|
|
|
| 15,504 |
| 15,504 |
| Treasury shares |
|
|
|
| (1,744) |
| (1,785) |
| Share premium reserve |
|
|
|
| 23,935 |
| 23,935 |
| Share capital redemption reserve |
|
|
|
| 1,087 |
| 1,087 |
| Revaluation and exchange reserves |
|
|
|
| (7,405) |
| (22,083) |
| Retained earnings |
|
|
|
| 179,594 |
| 144,073 |
| Equity attributable to equity holders of the parent |
|
|
| 210,971 |
| 160,731 | |
| Minority interests |
|
|
|
| 46,989 |
| 31,558 |
| Total equity |
|
|
|
| 257,960 |
| 192,289 |
Audited consolidated cash flow statement
for the year ended 31 December 2009
|
|
|
|
|
|
|
|
|
|
| 2009 $000 |
| 2008 $000 |
| Cash flows from operating activities |
|
|
|
|
|
| Profit before tax |
|
| 62,085 |
| 77,873 |
| Adjustments for: |
|
|
|
|
|
| BA adjustment |
|
| (888) |
| (1,347) |
| Profit on disposal of tangible fixed assets |
|
| 21 |
| (53) |
| Depreciation |
|
| 5,070 11 |
| 4,902 - |
| Share based remuneration expenses Retirement benefit provisions |
|
| 336 |
| 40 |
| Net finance (income)/expense |
|
| (983) |
| (959) |
| Operating cash flow before changes in working capital |
|
| 65,652 |
| 80,456 |
| Decrease/(increase) in inventories |
|
| 476 |
| 712 |
| (Increase)/decrease in trade and other receivables |
|
| 1,561 |
| (2,730) |
| (Decrease)/increase in trade and other payables |
|
| (5,672) |
| (3,935) |
| Cash inflow from operations |
|
| 62,017 |
| 74,503 |
| Interest paid |
|
| (2,219) |
| (2,728) |
| Overseas tax paid |
|
| (27,169) |
| (17,898) |
| Net cash flow from operations |
|
| 32,629 |
| 53,877 |
|
|
|
|
|
|
|
| Investing activities |
|
|
|
|
|
| Acquisition of subsidiaries |
|
| - |
| (11,363) |
| Property, plant and equipment |
|
|
|
|
|
| - purchase |
|
| (39,925) |
| (19,738) |
| - sale |
|
| 108 |
| 489 |
| Interest received |
|
| 3,202 |
| 3,645 |
| Net cash used in investing activities |
|
| (36,615) |
| (26,967) |
| Financing activities |
|
|
|
|
|
| Dividends paid by parent company |
|
| (1,973) |
| (5,112) |
| Share options exercised |
|
| 30 |
| - |
| Repayment of existing long term loans |
|
| (8,638) |
| (4,237) |
| Finance lease (repayment)/drawdown |
|
| (13) |
| (110) |
| Dividends paid to minority shareholders |
|
| - |
| (2,378) |
| Repayment of loan by minority shareholder |
|
| - |
| 48 |
| Net cash (used in)/from financing activities |
|
| (10,594) |
| (11,789) |
| Increase in cash and cash equivalents |
|
| (14,580) |
| 15,121 |
|
|
|
|
|
|
|
| Cash and cash equivalents less overdrafts |
|
|
|
|
|
| At beginning of period |
|
| 69,442 |
| 63,357 |
| Foreign exchange |
|
| 8,899 |
| (9,036) |
| At end of period |
|
| 63,761 |
| 69,442 |
|
Comprising: |
|
|
|
|
|
| Cash at end of year |
|
| 63,761 |
| 69,443 |
| Overdraft at end of year |
|
| - |
| (1) |
| Net cash at end of year |
|
| 63,761 |
| 69,442 |
Notes to the financial statements
1. Basis of preparation
The financial information set out in this announcement does not constitute the company's statutory accounts for the years ended 31 December 2009 or 2008, but is derived from those accounts. Statutory accounts for the period ended 31 December 2008, prepared under IFRS, have been delivered to the Registrar of Companies and those for the year ended 31 December 2009 will be delivered following the company's annual general meeting. The auditors reported on these accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498(2) or (3) of the Companies Act 2006. While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs.
2. Exchange rates
| Exchange rates - year end | 2009 |
| 2008 |
| Rp : $ | 9,400 |
| 10,950 |
| $ : £ | 1.61 |
| 1.41 |
| RM: $ | 3.42 |
| 3.48 |
| Exchange rates - average |
|
|
|
| Rp : $ | 10,158 |
| 9,735 |
| $ : £ | 1.57 |
| 1.84 |
| RM: $ | 3.52 |
| 3.34 |
3. Tax
|
| 2009 $000 | 2008 $000 |
| Foreign corporation tax - current year | 16,034 | 20,552 |
| Foreign withholding tax on remittances | - | 4,550 |
| Deferred tax adjustment - current year | 900 | 789 |
| Total tax charge for year | 16,934 | 25,891 |
The corporation tax rates in Indonesia and Malaysia are 28% and 26% respectively. The standard rate of corporation tax in the UK for the current year is 28%.
4. Earnings per ordinary share
|
| 2009 $000 | 2008 $000 |
| Profit for the year attributable to equity holders of the parent company before BA adjustment |
37,146 |
41,182 |
| Net BA adjustment | 348 | 819 |
| Earnings used in basic and diluted EPS | 37,494 | 42,001 |
|
|
|
|
|
| Number | Number |
|
| '000 | '000 |
| Weighted average number of shares in issue in year |
|
|
| - used in basic EPS | 39,470 | 39,976 |
| - dilutive effect of outstanding share options | - | 101 |
| - used in diluted EPS | 39,470 | 40,077 |
|
|
|
|
| Basic EPS before BA adjustment | 94.11cts | 103.0 cts |
| Basic EPS after BA adjustment | 94.99cts | 105.1 cts |
5. Dividends
|
|
| 2009 $000 |
| 2008 $000 |
| Paid during the year |
|
|
|
|
| Final dividend of 5.0 cts per ordinary share for the year ended 31 December 2008 (2007 - 14.0 cts) |
|
1,973 |
|
5,112 |
|
|
|
|
|
|
| Proposed final dividend of 5 cts per ordinary share for the year ended 31 December 2009 (2008 - 5.0 cts) |
|
1,973 |
|
1,973 |
The proposed dividend for 2009 is subject to shareholder approval at the forthcoming annual general meeting.
6. Plantation Summary
|
| Total |
| Group interest in total areas below |
|
| Planted at 31 December 2009 | Ha |
| Oil Palm |
|
| Mature | 34,187 |
| Immature | 9,880 |
| Total | 44,067 |
| Rubber |
|
| Mature | 406 |
| Immature | 270 |
| Total | 676 |
|
|
|
| Total planted area | 44,743 |
|
|
|
| Reserves Plantable |
73,813 |
| Unplantable | 2,043 |
| Other | 2,784 |
|
|
|
| Total area at 31 December 2009 | 123,383 |
7. Posting of Annual Financial Report
The Annual Financial Report will be posted to shareholders in due course. Copies of this announcement are available from the offices of the Company Secretary, CETC (Nominees) Limited, Quadrant House, Floor 6, 4 Thomas More Street, Thomas More Square, London E1W 1YW and on the Company's website at www.angloeastern.co.uk.