Anglo-Eastern Plantations Regulatory News (AEP)

24 Jun 2008 07:00



Tuesday 24 June 2008

ANGLO-EASTERN ACQUIRES A FURTHER 30,000 HECTARES OF LAND FOR $7.7 MILLION

Anglo-Eastern Plantations Plc (AEP.L), which owns approximately 102,000 hectares (ha) of plantation land, of which some 83,000 ha are developable and 39,000ha are currently planted, principally with oil palm in Indonesia, has acquired the rights over 30,000 ha of land in the province of South Sumatra in Indonesia. The total consideration is $7.7 million in cash, from the group's existing facilities. 

This acquisition follows acquisitions of 33,000ha in Kalimantan and Bangka island in December 2007 and of 15,000ha in Bengkulu province in January 2008. The group now has a substantial land bank, enabling significant expansion over the next five to eight years.

The South Sumatra land rights are owned by two local companies. The first is  P.T. Empat Lawang Agro Perkasa,  95% of which is to be acquired for a consideration of $3.6 million, and the second is PT Karya Kencana Sentosa Tiga, where 95% is to be acquired for a consideration of $4.1 million The balance of 5% in each company will be retained by the vendor, who will fund his share of the development alongside Anglo-Eastern.

The land is conveniently placed to form a natural management unit with the existing operations in the neighbouring province of Bengkulu. The location is 125 kms east of Bengkulu town. 

Terrain is undulating while soils and rainfall are both suitable for both oil palm and rubber. Vegetation is predominately scrub and light secondary forest. The area is vacant, except for some villages, and is zoned for commercial agricultural development. At present, it is not possible to estimate accurately the proportion of the area which will be allocated to local community projects, but a substantial portion of the area will be available for planting by the group.

Limited planting will begin in 2009, using material from the group's existing nurseries in the region, and significant planting will commence in 2010.Production is likely to commence in 2013 and the area should be fully planted by 2017.

Application has been made for conversion of the local companies into accredited 'foreign investment' companies.

Conversion of the land rights into confirmed land titles will take between one and two years and requires development to commence in the interim.

Assuming that 22,000ha can be developed, field development costs over the next five years are estimated at $70 million.  Long term borrowings, as well as self-generated funds, will be used to develop this and other current projects. Net cash currently exceeds $30 million, up from $23.3 million at 31 December 2007.

This acquisition will not affect group profits in 2008, other than in respect of its financing cost. Earnings should begin to be significant in 2014. 

Mr T H Chan, Chairman and Chief Executive, commented: 'This further acquisition- the group's fourth since December 2007- is a valuable addition to the group's existing operations in the region and adds to the group's already substantial land bank, enabling its significant expansion in the next five years and beyond. The acquisition increases the group's total land holding to 132,000ha.'

Notes for editors: 

In 2007, Anglo-Eastern reported a pre-tax profit of $52.6 million, up 97%, on revenues of $127.9 million, up 62%. In its Interim Manangement Statement of 15 May 2008, Anglo- Eastern stated that profit before tax for the first quarter was well ahead of that for the first quarter of 2007 and that its prospects for 2008 remain very positive. At last night's closing mid-market share price of 586p, Anglo-Eastern had a market capitalisation of £234 million.