Anglo-Eastern Plantations
Annual Report 2002

Plain-text annual report

N N U A L R E P O RT 20 0 2 A C O N T E N T S Financial Summary 1 Chairman’s Statement 2 Location of Estates 6 Estate Areas 7 Financial Record 8 Additional Information 9 Directors’ Report 11 Directors’ Responsibilities Directors 14 Statement on Corporate Governance 15 Directors’ Remuneration Report 16 Auditors’ Report 18 Consolidated Profit and Loss Account ($) 19 Consolidated and Company Balance Sheet ($) 20 Recognised Gains and Losses ($) Movement in Shareholders’ Funds ($) Historical Cost Profits and Losses ($) 21 Consolidated Cash Flow Statement ($) 22 Notes to the Financial Statements ($) 23 Consolidated Profit and Loss Account (£) 35 Consolidated and Company Balance Sheet (£) 36 Consolidated Cash Flow Statement (£) 37 Notice of Meeting 38 Company Addresses Company Advisers 40 Photographs New oil mill - Puding Mas (pages 2-3) Cocoa under coconuts - Rambung (page 4) Family day - North Sumatra estates (page 5) Rubber - Rambung (page 9) Anglo-Eastern Plantations Plc, quoted on the London Stock Exchange, operates and is developing plantations in Indonesia and Malaysia, amounting to some 40,000 hectares producing palm oil, rubber and cocoa. FINANCIAL SUMMARY 2002 2001 US$000 US$000 2002 £000 2001 £000 31,139 12,092 81,133 16.5cts 4.0cts 16,992 20,622 11,800 3,359 8,008 2,333 80,629 50,393 55,225 5.2cts 2.0cts 10.9p 2.58p 3.6p 1.40p Turnover Profit before tax Shareholders’ funds (year end) Earnings per share Dividends per share PROFIT BEFORE TAX: NET INTEREST PAID EARNINGS: DIVIDENDS PER SHARE 16,000 14,000 12,000 10,000 0 0 0 $ ' 8,000 6,000 4,000 2,000 0 Pre-tax profit Interest Paid EPS Dividend 18 16 14 12 10 8 6 4 2 0 e r a h s r e p s t n e c S U 1997 1998 1999 2000 2001 2002 1997 1998 1999 2000 2001 2002 A N G L O - E A S T E R N P L A N TAT I O N S P L C 1 C H A I R M A N ’ S S TAT E M E N T Iam pleased to report that in 2002 the group achieved a turnover of $31.1 million and profit before tax of $12.1 million. The previous year’s turnover and profit were $17.0 million and $3.4 million respectively. The increase reflects mainly a strong palm oil price after three years of falling or weak prices, but is also supported by increasing production from our Bengkulu project which is now coming to maturity and was the principal contributor to a 16% increase in group FFB production. There was also an exchange gain of $0.8 million arising on our long term borrowings compared to a loss of $0.2 million in the previous year. Against these positives there were significant increases in operating costs following an industry wide 36% increase in wages and a reduction in fuel subsidies in Indonesia from January 2002. The results for 2001 included an exceptional provision of $1.5 million against the value of our Malaysian estates. Earnings per share were 16.5 cts (10.9p) compared to 5.2 cts (3.6p) in 2001. Group net assets per share at the year end amounted to 207 cts, largely unchanged from the previous year because of exchange effects. In line with its major capital expenditure programme, the group completed draw down of its long term development loan facilities during 2002 bringing the total borrowings outstanding to $10.1 million. Against this, the group’s cash balances stood at $8.4 million at the year end. Commodity prices The CPO price began to improve from March 2002 after reaching a low of $215/mt (cif Rotterdam) in May 2001, the lowest level for 15 years. The average price for 2002 was $400/mt, compared to $281/mt in 2001. At A N G L O - E A S T E R N P L A N TAT I O N S P L C 2 C H A I R M A N ’ S S TAT E M E N T the end of 2002 the price was $465/mt. Prices for the other two crops produced by the group also recorded strong increases in 2002. Average prices for rubber were around 27% higher and for cocoa, which reached a 15 year peak, 56% higher. These two crops contributed about 6% of group profits in 2002. Indonesia FFB production from our main estate, Tasik, and from Anak Tasik in North Sumatra, was 149,000 mt, down 3,000 mt from the previous year. Although this was the second consecutive year of decline in output, the cause was probably due more to weather factors rather than reflecting the age of the plantings. By contrast, FFB crops from our three smaller estates around Medan registered an increase of 22% to an all time record of 51,000 mt. Cocoa and rubber crops at these estates also improved. New planting in Bengkulu was scaled down to 350 ha in 2002 while we concentrated on improving infrastructure and consolidating the areas already planted. Total area planted there now is 9,600 ha, of which 2,100 ha are still immature. FFB production at Bengkulu was 62,000 mt compared to 30,000 mt in 2001. The 40mt/hr mill in Bengkulu, pictured below, was commissioned on schedule in April 2002. In the eight months of its operation, the mill was able to run at a satisfactory throughput as a result of processing bought-in crop of 28,000 mt as well as 52,000 mt of our own. However, this high proportion of bought-in crop affected the extraction rate. It is planned that the mill will be expanded to a capacity of 60mt/hr in A N G L O - E A S T E R N P L A N TAT I O N S P L C 3 C H A I R M A N ’ S S TAT E M E N T 2004/5 which will allow us to handle all the crops from Bengkulu for the next five years. Definitive land titles were finally obtained over all the Bengkulu areas which we have planted, or will plant, in the next three or four years. The terms are described in note 10 to the accounts. We have rights over another 5,000 ha of vacant land and will apply for the relevant papers in the light of prevalent conditions at the appropriate time. I am pleased to report that the Indonesian operations continue to operate with no unusual interruption. Our local management and staff continue to pay particular attention to good relations with local authorities and local residents. Malaysia Our Malaysian estates experienced an exceptionally dry spell in early 2002 which affected production. Although the FFB crop of 32,000 mt was an improvement of 11% over the previous year, it was below our expectations. At present prices, the estates are just self- funding, including loan repayments. The operation made a loss, at the pre-tax level, of $190,000 in 2002 compared to a loss of $490,000 in the previous year. However, low yields remain a concern. We have recently strengthened local management and hope that new approaches to field husbandry, in what is hilly terrain, will accelerate the move to profitability. Directors Mr Wee Sin Tho, who was instrumental in the acquisition by my family of its holding in Anglo-Eastern in 1993, has decided not to seek re-election at the forthcoming annual A N G L O - E A S T E R N P L A N TAT I O N S P L C 4 C H A I R M A N ’ S S TAT E M E N T general meeting. We are grateful to him for his help and advice over the time he has been with us. Outlook and dividend Group crops for the first three months of 2003 have been above expectations and are 35% ahead of same period in 2002. However, it is difficult to predict whether this improvement will continue for the rest of the year. The CPO price settled at $450/mt in January and February but has since fallen to $405/mt. Rubber and cocoa prices are around 15% better than last year’s averages and our production is at a similar level to that of the same period in 2002. Competition for bought-in crop at Bengkulu and Tasik is expected to increase with new mill capacities coming on stream near both locations, so contribution from this source is expected to be lower in the current year. The group’s cash position has continued to improve but significant capital expenditure in Bengkulu remains and repayment of our long term loans commenced this year. In addition, we are considering building a small oil mill for our Medan estates which is expected to cost nearly $3 million. If CPO prices average about $400/mt, the group can expect an improved profit for 2003. Having regard to the satisfactory results and to the increasing production from the Bengkulu estates, the board is proposing to double the dividend in respect of 2002 to 4.0 cts per share. CHAN TEIK HUAT Chairman 9 April 2003 A N G L O - E A S T E R N P L A N TAT I O N S P L C 5 E S TAT E A R E A S - - - 9 5 2 9 5 2 - - - - - - - 1 7 1 - 9 0 6 - 0 8 7 - - - - - - - 9 5 2 0 8 7 7 5 9 , 4 3 3 6 , 3 9 0 8 , 1 4 1 7 , 2 1 4 9 , 2 5 6 3 8 1 - 6 5 3 , 3 6 5 3 , 3 3 5 1 3 4 7 1 9 , 3 7 9 3 , 5 4 1 3 , 9 0 1 5 1 3 3 1 2 2 4 6 3 1 1 2 5 1 1 - - 9 1 0 , 6 3 2 3 , 4 9 1 0 , 6 3 2 3 , 4 - - - 5 1 1 4 2 9 , 1 4 2 9 , 1 - - - - - - - - - - - - - - - 3 0 3 3 0 3 - - - - - 0 4 5 0 4 5 7 9 1 1 6 8 5 2 - 8 2 8 - 7 2 2 2 - 7 7 8 7 7 8 - - - - - - - - - - - - - - - - - - - - - - 3 4 8 3 4 8 7 9 1 1 6 8 5 2 - 6 2 9 6 6 7 0 2 0 , 6 8 7 9 , 9 1 - 1 9 2 6 5 9 - 6 5 9 - - 1 3 7 9 7 - 7 9 7 - 1 1 6 6 - 7 9 0 , 6 7 9 0 , 6 9 2 5 , 6 9 9 0 , 1 0 6 6 6 6 2 , 8 2 7 9 3 , 5 3 6 6 , 3 3 - - - - - - 8 4 5 9 8 , 3 6 6 7 , 1 0 4 7 7 1 - 8 1 4 , 6 8 1 4 , 6 R A I N A K I s e r a t c e h s e r a t c e h O D N M U S I O N L A s e r a t c e h U L U K G N E B S A M s e r a t c e h I G N D U P I E G N U S M A S U M s e r a t c e h s e r a t c e h s e r a t c e h G N U B M A R N A H A K N A L B K A N A K I S A T s e r a t c e h K I S A T s e r a t c e h L A T O T s e r a t c e h s e r a t c e h G N U R E D N E C L A T O T s e r a t c e h 2 0 0 2 r e b m e c e D 1 3 t A A R T A M U S H T R O N A I S E N O D N I A I S Y A L A M P U O R G 8 6 2 8 0 8 - - - 0 7 1 - - 1 8 3 - - - - - - - - - - - - - 8 6 2 7 2 2 , 2 8 7 4 6 1 4 - 7 5 9 , 4 3 3 6 , 3 6 0 5 , 1 0 3 6 2 9 6 6 7 0 2 0 , 6 7 7 8 , 8 1 7 4 8 , 3 1 8 8 , 3 3 6 4 , 3 5 2 1 , 1 0 3 6 2 9 6 6 7 0 2 0 , 6 2 8 3 , 6 1 3 5 9 , 2 5 3 3 , 9 1 - 6 4 7 3 4 6 , 2 4 2 7 , 2 2 - 3 4 8 3 4 8 7 9 1 1 6 8 5 2 8 4 3 0 0 2 e r u t a m o t e u d n o i t a r a p e r p r e d n u r e h t o e r u t a m m I e r u t a M m l a P l i O e r u t a m m I e r u t a M l a t o T l a t o T r e b b u R e r u t a m m I e r u t a M l a t o T a o c o C r e b m T i 3 7 8 , 3 2 a e r a d e t n a l p l a t o T 5 9 2 , 8 9 3 8 , 1 e l b a t n a l p n U e l b a t n a l P s e v r e s e R 7 7 6 c t e , s d a o r , g n i s u o h - r e h t O 7 9 3 , 5 d e u s s i e b o t e l t i t r e h t r u F 4 8 6 , 4 3 s e l t i t d n a l l a t o T 1 8 0 , 0 4 l a t o T A N G L O - E A S T E R N P L A N TAT I O N S P L C 7 . d e t e l p m o c n e e b e v a h s e r u d e c o r p n o i t a c i l p p a n i a m e h t e r e h w o d n m u S i n o a h 7 9 3 , 5 r e h t r u f a r e v o s t h g i r s a h p u o r g e h T : e t o N F I N A N C I A L R E C O R D Profit and Loss Account Turnover Operating profit Net interest - (paid)/received - capitalised Profit before tax Taxation Minority interests Profit attributable to shareholders Dividends 2002 $000 31,139 12,767 (895) 220 12,092 (4,367) (1,250) 6,475 (1,571) 2001 $000 16,992 3,369 (320) 310 3,359 (1,638) 320 2,041 (785) 2000 $000 17,562 6,560 27 56 6,643 (3,147) (522) 2,974 (588) 1999 $000 19,636 8,954 277 - 9,231 (3,399) (984) 4,848 (1,569) 1998 $000 14,944 9,421 245 - 9,666 (3,170) (1,042) 5,454 (2,746) Retained profit 4,904 1,256 2,386 3,279 2,708 Balance Sheet Fixed assets Cash net of short term borrowings Long term loans Other working capital and deferred tax $000 103,558 6,376 (8,085) (3,339) $000 104,333 2,149 (6,460) (1,594) $000 97,556 1,660 (1,412) (2,910) $000 95,284 2,709 - (4,344) $000 87,587 6,943 - (5,614) 98,510 98,428 94,894 93,649 88,916 Minority interests (17,377) (17,799) (17,993) (19,073) (17,896) Net worth 81,133 80,629 76,901 74,576 71,020 Share capital Share premium and capital redemption account Revaluation and exchange reserve Profit and loss account 15,171 24,657 6,586 34,719 15,171 24,657 10,986 29,815 15,171 24,657 8,514 28,559 15,171 24,657 8,575 26,173 15,480 24,348 6,290 24,902 Shareholders’ funds 81,133 80,629 76,901 74,576 71,020 Ordinary shares in issue (‘000s) Earnings per share (US cents) Dividends per share (US cents) Asset value per share (US cents) Earnings per share (pence equivalent) Dividends per share (pence equivalent) Asset value per share (pence equivalent) Borrowings net of cash: shareholders’ funds (%) 39,227 16.5cts 4.0cts 207cts 10.9p 2.58p 128p 2% 39,227 5.2cts 2.0cts 206cts 3.6p 1.40p 141p 5% 39,227 7.6cts 1.50cts 196cts 5.0p 1.04p 132p - 39,227 12.3cts 4.00cts 190cts 7.6p 2.56p 118p - 40,027 13.3cts 7.00cts 177cts 8.0p 4.34p 106p - Relevant exchange rates shown on page 9. A N G L O - E A S T E R N P L A N TAT I O N S P L C 8 A D D I T I O N A L I N F O R M AT I O N Crops FFB - all estates - bought in or processed for third parties Saleable Crude Palm Oil (CPO) Rubber Cocoa Sales CPO - Tasik FFB - other estates Rubber Cocoa Average Sales Prices - Indonesia CPO (after export tax) Rubber Cocoa FFB Average Sales Prices - Malaysia FFB Exchange Rates - Year End Rp : $ $ : £ RM: $ Exchange Rates - Average Rp : $ $ : £ RM: $ 2002 Tonnes 294,062 99,029 63,240 1,491 193 63,042 93,929 1,508 170 Rp/kg 3,113 6,698 15,214 617 2001 Tonnes 252,632 74,789 52,073 1,376 120 52,072 61,458 1,351 127 Rp/kg 2,271 5,254 9,712 380 2000 Tonnes 253,094 38,730 52,297 1,253 131 53,169 54,114 1,251 134 Rp/kg 2,026 5,206 6,029 358 1999 Tonnes 206,725 36,730 42,941 1,595 182 44,619 31,887 1,595 175 Rp/kg 2,295 5,037 7,791 491 1998 Tonnes 176,546 42,750 31,224 1,621 206 29,012 26,486 1,621 162 Rp/kg 3,166 6,941 15,787 668 RM/mt 242 RM/mt 152 RM/mt 158 RM/mt 243 RM/mt 424 8,940 1.61 3.80 9,253 1.51 3.80 10,400 1.46 3.80 10,270 1.44 3.80 9,595 1.49 3.80 8,510 1.51 3.80 7,100 1.61 3.80 7,795 1.61 3.80 8,025 1.67 3.80 9,935 1.66 3.89 A N G L O - E A S T E R N P L A N TAT I O N S P L C 9 A D D I T I O N A L I N F O R M AT I O N FFB PRODUCTION RUBBER AND COCOA PRODUCTION Estate Outside 1997 1998 1999 2000 2001 2002 PALM OIL - PRICE * (Rotterdam) 350000 300000 250000 s e n n o T 200000 150000 100000 50000 0 800 700 600 500 400 300 200 100 0 e n n o t / $ 1800 1600 1400 1200 1000 800 600 400 200 0 3000 2500 2000 1500 1000 500 0 s e n n o T e n n o t / $ Rubber Cocoa 1997 1998 1999 2000 2001 2002 RUBBER AND COCOA PRICES * Cocoa Rubber 1997 1998 1999 2000 2001 2002 1997 1998 1999 2000 2001 2002 PLANTED AREAS - HECTARES Rubber (843 ha - 3.5%) Cocoa (258 ha - 1.1%) Oil palm - Immature (3,389 ha - 14.2%) Oil palm - mature (19,335 ha - 81.2%) * = Source: Thomson Financial Datastream 140 120 100 80 60 40 20 0 e r a h s r e p e c n e P ANGLO-EASTERN SHARE PRICE (Month opening) 1997 1998 1999 2000 2001 2002 A N G L O - E A S T E R N P L A N TAT I O N S P L C 10 D I R E C TO R S ’ R E P O RT The directors present their annual report on the therefore resign on that date. In accordance with affairs of the group, together with the financial the Articles of Association, Mr P E O'Connor statements and auditors' report, for the year ended and Datuk H Chin Poy-Wu will retire by 31 December 2002. rotation and offer themselves for re-election at the forthcoming annual general meeting. Principal Activity The company acts as a holding company and co- Directors' interests ordinates the businesses of its subsidiaries. At 31 The beneficial interests of the directors together December 2002 these comprised principally the with those of their immediate families in the cultivation of oil palm, rubber and cocoa in securities of the company were as shown below: Indonesia and Malaysia. The subsidiary undertakings principally affecting the profits or net assets of the group in the year are listed in note 26 to the financial statements. Results and Dividends The audited financial statements for the year Directors’ beneficial interests at 31 December R O B Barnes T H Chan Datuk Chin Dato Haron S C Ho S K Lim P E O’Connor S T Wee 2002 Ordinary shares 3,602 345,500 - - 340,000 20,917,914 300,000 - 2001 Ordinary shares 3,602 345,500 - 249,000 400,000 20,917,914 300,000 - ended 31 December 2002 are set out on pages 19 Until November 2002 Mr S T Wee was general to 37. The group profit for the year on ordinary manager of SouthQuay Global Markets Ltd, activities before taxation was $12,092,000 (2001 - which owned 244,117 shares at 31 December $3,359,000) and the profit attributable to ordinary 2001 and 2002 but sold its entire interest in shareholders was $6,475,000 (2001 - $2,041,000). February 2003. Mr Wee has no beneficial interests. No interim dividend was paid.The directors The interests disclosed for Madam S K Lim recommend a final dividend of 4.00 cts (2001 – are held by Genton International Ltd and certain 2.00cts) to be paid on 18 June 2003 to other companies of which Madam Lim is the shareholders on the register on 23 May 2003. controlling shareholder. Shareholders who elect to receive their dividend Between 31 December 2002 and the date of in sterling as described on page 12 will receive a this report, Mr T H Chan disposed of 245,500 dividend of 2.58p (2001 – 1.40p). shares. Fixed Assets financial statements no director had a material Information relating to changes in tangible fixed interest in any contract of the company subsisting assets is given in note 10 to the financial during, or at the end of, the financial year. Other than as set out in note 18 to the statements. Substantial Share Interests Directors As at 9 April 2003 the following were the interests A full list of directors appears on page 14. in excess of 3% of the issued ordinary share capital: All the directors served throughout the year. Mr S T Wee will not seek re-election at the forthcoming annual general meeting and will Name of holder Genton International Limited Alcatel Bell Pension Fund S N Roditi Number 20,176,414 5,000,000 2,116,900 Percentage held 51.4% 12.7% 5.4% A N G L O - E A S T E R N P L A N TAT I O N S P L C 11 D I R E C TO R S ’ R E P O RT Power to Issue Share Capital The board will only make purchases if they At the annual general meeting held on 13 June believe the earnings or net assets per share of the 2002 shareholders authorised the board under the company would be improved by such purchases. provisions of section 80 of the Companies Act All such purchases will be market purchases made 1985 to allot relevant securities within specified through the London Stock Exchange and will be limits for a period of five years. Renewal of this subject to the Financial Services Authority model authority on similar terms is being sought under code of dealings. Any shares purchased by the Resolution 6 at the forthcoming annual general company will be cancelled and the number of meeting. Such authority will be limited to the shares in issue will accordingly be reduced. unissued authorised share capital. Resolution 8 to be proposed at the A fresh authority is also being sought under forthcoming annual general meeting seeks the provisions of section 95 of the Companies Act renewed authority to purchase up to a maximum 1985 to enable the board to make an issue to of 3,927,492 ordinary shares of 25p each on the existing shareholders without being obliged to London Stock Exchange, representing 10% of the comply with certain technical requirements of the company's issued ordinary share capital. The Companies Act, which create problems with maximum price which may be paid for ordinary regard to fraction entitlements and to overseas shares on any exercise of the authority will be shareholders. In addition the authority will give restricted to 5% above the average middle market the board power to make issues of shares for cash quotations for such shares as derived from the to other than existing shareholders up to a London Stock Exchange Daily Official List for maximum nominal amount of £490,936 the 5 business days before the purchase is made. representing 5% of the current issued share capital. The section 95 authority will last for up to 15 Payment of Dividends months from the date of the annual general The group reporting currency is US dollars. meeting. However at the time of acquiring their interest shareholders can choose to receive dividends in Scrip Dividends US dollars or in sterling. In the absence of any Resolution 7 to be proposed at the annual general specific instruction up to the date of closing the meeting seeks renewal for a further five years of register, shareholders with addresses in the UK are the authority under which the directors are able deemed to have elected to receive their dividends to offer shareholders a scrip dividend alternative. in sterling and those with addresses outside the No scrip alternative is being offered in respect of UK in US dollars. the 2002 final dividend. The sterling equivalent dividend will be paid at the exchange rate ruling at the date of the Acquisition of the Company's Own Shares preliminary announcement of the company’s and Authority to Purchase Own Shares results and in the case of the current year is At 9 April 2003, the directors had remaining recorded within the section "Results and authority, under the shareholders' resolution of 13 Dividends" on page 11. June 2002, to make purchases of 3,922,692 of the company's ordinary shares. This authority expires Supplier Payment Policy on 10 June 2003. It is the group’s policy to pay suppliers promptly A N G L O - E A S T E R N P L A N TAT I O N S P L C 12 D I R E C TO R S ’ R E P O RT in accordance with agreed terms of payment. Year end trade creditor days were about 30 (2001 – 30). Liability Insurance for Company Officers As permitted by the Companies Act 1985 the company has maintained insurance cover for the directors against liabilities in relation to the company. Political and Charitable Donations None (2001: none). Income and Corporation Taxes Act 1988 In the opinion of the directors, the company is not a close company within the meaning of the above Act. By order of the board R O B Barnes Secretary 9 April 2003 A N G L O - E A S T E R N P L A N TAT I O N S P L C 13 D I R E C TO R S ’ R E S P O N S I B I L I T I E S Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company and group and of the profit or loss of the group for that period. After making enquiries, the directors have a reasonable expectation that the company and the group have adequate resources to continue operations for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements. In preparing those financial statements, the directors are required to: - select suitable accounting policies and then apply them consistently; - make judgements and estimates that are reasonable and prudent; - - state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and group and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. D I R E C TO R S T H Chan (Chairman and CEO, aged 63) Chartered Accountant; managing director of Metroplex Berhad, an investment holding company, listed on the Kuala Lumpur Stock Exchange, primarily engaged in property development, investment property, hotel ownership, building materials, leisure and gaming; founder and managing partner of a leading accounting firm in Malaysia for some 17 years. R O B Barnes (Chief financial officer, aged 58) Chartered Accountant; director of The Chillington Corporation Plc from 1986 to 1989. Dato Haron bin Dato Mohd Salleh (Managing director, Anglo-Eastern Plantations (M) Sdn Bhd, aged 59) Vice Admiral Royal Malaysian Navy, now retired. Chief of Staff Malaysian Armed Forces HQ 1994 - 1996. Madam S K Lim (Non-executive, aged 54) Executive chairman of Metroplex Berhad. S T Wee (Independent non-executive, aged 54) Consultant. P E O'Connor (Senior independent non- executive, aged 62) Chairman of City Merchants High Yield Trust Plc and of Advance Developing Markets Plc; director of AMR Technologies Inc and of IMS Investment Manager Selection Limited; director of GT Management Plc 1975 to 1990 (in London and Hong Kong). S C Ho (Independent non-executive, chairman of audit committee, aged 53) Executive director of Nexgen Financial Solutions (Asia) Ltd, a financial services firm. Datuk H Chin Poy-Wu (Independent non- executive, chairman of remuneration committee, aged 66) Chairman of Hap Sang Consolidated, director of Glenealy Plantations Berhad, Bhd and Sabah Forest Industries Sdn Bhd. Commissioner of Police - Kuala Lumpur, retired 1993. A N G L O - E A S T E R N P L A N TAT I O N S P L C 14 S TAT E M E N T O N C O R P O R AT E G OV E R N A N C E In June 1998 the Stock Exchange published the Principles of Good Governance and Code of Best Practice (the "Combined Code"). During 2002 the company has complied with the majority of the requirements of the Combined Code. Where the requirements were not met during 2002, particular comment is made in the statements below and in the Directors’ Remuneration Report on page 16. The Board Mr T H Chan has been both chairman and chief executive since 1998. Together with his wife, Madam S K Lim, he is a controlling shareholder of the company. In the opinion of the board, given the size of his family's commitment to the company, his common interest as shareholder and manager in the company make it reasonable that the post of chairman and chief executive are combined. The other members of the board are satisfied that through the specific powers reserved for the board, and given the presence of four wholly independent non-executives, there is a reasonable balance of influence. Mr P E O’Connor has been senior non- executive director since January 1999. Non-executives are not appointed for specified terms. There have been changes in non- executive directors at intervals in the past for a variety of reasons. While accepting the need to maintain the vitality of the board the directors do not intend to specify terms of office for non- executives. However, the board will review the position of each director at the time set for his normal two to three yearly reappointment under the Articles. New directors have not received formal training on the occasion of their appointment to the board as all have previous experience of public company directorships. Remuneration The required report is set out at the end of this statement. Relations with Shareholders Company executives attempt to contact principal shareholders at least twice a year and at all times are pleased to speak to and meet any shareholder. A member of the audit and remuneration committees will be available at the 2003 annual general meeting. Accountability and Audit The responsibilities of the directors as regards the financial statements are set out on page 14. A statement of going concern is also on page 14. The audit committee comprises Mr S C Ho, Mr P E O'Connor and Datuk H Chin Poy-Wu. The committee met prior to the completion of the 2002 accounts, and three times during the year. Internal Control The company has followed the Combined Code provisions and Turnbull Committee guidance on internal control since 1999. The board has overall responsibility for the group’s internal control and risk management; the audit committee reviews and monitors specific risks and internal control procedures and reports to the board where appropriate. Executive staff and directors are responsible for implementation of control procedures and for identifying and managing business risks. The audit committee review is a continuous but sequential process and in any one year does not necessarily cover all risks which are significant to the group. The process aims to provide reasonable assurance against material misstatement or loss. The board receives regular reports from executive management in Indonesia and Malaysia and focuses at each meeting on the principal continuing risks to which the group is exposed. These comprise: commodity price movements, exchange rate movements, political and social change and government legislation. A N G L O - E A S T E R N P L A N TAT I O N S P L C 15 D I R E C TO R S ’ R E M U N E R AT I O N R E P O RT This report by the remuneration committee has Share options been approved by the board of directors for Options are granted to senior executives and submission to shareholders for their approval at managers throughout the group. Policy is the forthcoming annual general meeting. generally to phase the grant over three years. Membership seniority and total market value at date of grant is The remuneration committee comprised limited to four times base salary. Exercise of throughout the year Mr S C Ho and Mr P E options is only permitted three years after grant O'Connor and was chaired by Datuk H Chin and there are no performance criteria for exercise. The total grant to each holder is determined by Poy-Wu. Policy Pensions The remuneration committee makes There is no company pension scheme for recommendations on senior management pay and executive directors or senior executives and conditions, after consultation with the chief management. In the case of one executive executive, and recommends to the board the terms director, Mr Barnes, the company makes of executive directors. contributions based on base salary only to a Non-executive directors' remuneration is personal money purchase scheme. Senior considered by the board as a whole. executives who leave voluntarily after more than The committee recommends remuneration five years' service are entitled to a leaving payment terms by reference to individual performance, of one month's base salary for each year of service. market conditions, the company's performance and the need to maintain an economic operation. Service contracts The committee is also charged with overseeing Other than Mr Barnes, as a matter of policy no the company's share option scheme. director has either a service contract or notice Components in May 2004; in the event that this contract is not period. Mr Barnes has a contract which expires Base salary renewed in certain circumstances Mr Barnes Base salaries are reviewed on an annual basis by would be entitled to one year's termination the remuneration committee or when an payment. Notice periods for all other senior individual changes responsibilities. Non-executive management are generally three months. directors receive no benefits other than a fixed fee. Bonus Performance graph The graph at the top of the next page shows the company's performance, measured by capital The group operates a bonus scheme for senior return, compared to the Kuala Lumpur Stock executives and managers which is generally Exchange (KLSE) Plantation Index for the period determined by physical and operating cost 27 February 1998 to 28 February 2003. This is performance criteria. Annual bonuses for senior the only relevant index available in terms of sector executives and managers are capped at 66% of base salary. Executive directors receive a bonus but many Malaysian plantation companies are diversified as well as not holding as great a which has ranged from 25% to zero in past years, proportion of their assets in Indonesia as Anglo- at the discretion of the board. Eastern. A N G L O - E A S T E R N P L A N TAT I O N S P L C 16 D I R E C TO R S ’ R E M U N E R AT I O N R E P O RT Anglo-Eastern Plantations Malaysia KLSE/Plantation Directors' share options Share options granted to the directors of the company under the company's 1994 Executive Share Option Scheme and Overseas Share Option Scheme at 31 December 2002 were: Name of Director R O B Barnes T H Chan No of ordinary shares under option 31,412 14,338 250,000 40,800 30,600 Date of Grant Exercise price Exercise period 5.11.94 24.5.96 25.10.99 25.10.99 16.10.00 93.2p 124p 47p 47p 37p 5.11.97-4.11.04 24.5.99-23.5.06 25.10.02-24.10.09 25.10.02-24.10.09 16.10.03-24.10.10 1998 1999 2000 2001 2002 The market price of shares at 31 December 2002 was 91.5p and the range during 2002 was 36.5p 70 60 50 40 30 20 10 0 -10 -20 -30 -40 -50 -60 h t w o r G e g a t n e c r e P In determining senior management compensation, to 95.5p. the remuneration committee is influenced by the operating performance of the company and not directly by the share price. Directors' remuneration The remuneration of all directors who served during the year was: Name of director Fees $000 Executive salary $000 Bonus (re 2001) $000 Benefits in kind $000 Total 2002 $000 Executive: T H Chan (Chairman and CEO) R O B Barnes Dato Haron Non-executive: S K Lim Datuk H Chin S C Ho P E O’Connor S T Wee 2002 2001 - - 12 12 12 12 12 12 72 72 60 130 33 - - - - - 223 210 - 11 1 - - - - - 12 10 60 149 52 12 12 12 12 12 321 - 8 6 - - - - - 14 10 Total 2001 $000 59 135 48 12 12 12 12 12 302 Pension contribution 2001 $000 2002 $000 - 22 - - - - - - 22 - 23 - - - - - - 23 The executive salary and other benefits of Dato Haron are paid by a third party company with whom he has an employment contract. Since his entire salary is charged to the group it has been decided his remuneration should be included in the table above for the year ended 31 December 2002. The comparative for the year ended 31 December 2001 has been amended accordingly. The disclosures on this page on share options and directors’ remuneration have been audited, as required by Part 3 of Schedule 7A of the Companies Act 1985. Graph source : Lipper Hindsight A N G L O - E A S T E R N P L A N TAT I O N S P L C 17 AU D I TO R S ’ R E P O RT Independent auditors' report to the shareholders of Anglo-Eastern Plantations Plc We have audited the financial statements of Anglo-Eastern Plantations Plc for the year ended 31 December 2002 on pages 19 to 37 which have been prepared under the accounting policies set out on pages 23 and 24. We have also audited the information in the Directors' Remuneration Report that is described as having been audited. Respective responsibilities of directors and auditors The directors' responsibilities for preparing the Annual Report, the Directors' Remuneration Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards are set out in the Statement of Directors' Responsibilities. Our responsibility is to audit the financial statements and the parts of the Directors' Remuneration Report to be audited in accordance with relevant legal and regulatory requirements, United Kingdom Auditing Standards and the Listing Rules of the Financial Services Authority. We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements and the part of the Directors' Remuneration Report to be audited have been properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors' Report is not consistent with the financial statements, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law or the Listing Rules regarding directors' remuneration and transactions with the group is not disclosed. We review whether the Corporate Governance Statement reflects the group's compliance with the seven provisions of the Combined Code specified for our review by the Listing Rules, and we report if it does not. We are not required to consider whether the board's statement on internal control covers all risks and controls, or form an opinion on the effectiveness of the group's corporate governance procedures or its risk and control procedures. We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. This other information comprises only the Financial Summary, Chairman's Statement, Location of Estates, Estate Areas, Financial Record,Additional Information, Directors' Report, the unaudited parts of the Directors' Remuneration Report and the Statement on Corporate Governance. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. Our report has been prepared pursuant to the requirements of the Companies Act 1985 and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of the Companies Act 1985 or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability. Basis of audit opinion We conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the part of the Directors' Remuneration Report to be audited. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements and the part of the Directors' Remuneration Report to be audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Fundamental uncertainty In forming our opinion we have considered the adequacy of the disclosures made in note 25 to the financial statements concerning political change in Indonesia where most of the group’s activities are based. In view of the significance of this uncertainty we consider that it should be drawn to your attention but our opinion is not qualified in this respect. Opinion In our opinion: • the financial statements give a true and fair view of the state of the group's and the company's affairs as at 31 December 2002 and of the group's profit for the year then ended; and • the financial statements and the part of the Directors' Remuneration Report to be audited have been properly prepared in accordance with the Companies Act 1985. 10 April 2003 BDO Stoy Hayward Chartered Accountants and Registered Auditors 8 Baker Street London W1U 3LL A N G L O - E A S T E R N P L A N TAT I O N S P L C 18 C O N S O L I DAT E D P RO F I T A N D L O S S AC C O U N T FOR THE YEAR ENDED 31 DECEMBER 2002 Turnover - continuing operations Cost of sales Gross profit - continuing operations Administration and other expenses Operating profit - continuing operations Interest - receivable - payable Profit on ordinary activities before taxation Tax on profit on ordinary activities Profit on ordinary activities after taxation Minority interests (all equity interests) Profit for the financial year Dividends proposed Retained profit for the year Earnings per ordinary share (basic and diluted) - basic - diluted Notes 2 3 4 5 2 7 19 8 19 9 9 2002 US$000 31,139 2001 US$000 16,992 (17,475) (10,334) 13,664 (897) 6,658 (3,289) 12,767 3,369 50 (725) 12,092 (4,367) 7,725 (1,250) 6,475 (1,571) 4,904 16.5cts 16.4cts 48 (58) 3,359 (1,638) 1,721 320 2,041 (785) 1,256 5.2cts 5.2cts The accompanying notes are an integral part of this consolidated profit and loss account. A N G L O - E A S T E R N P L A N TAT I O N S P L C 19 C O N S O L I DAT E D A N D C O M PA N Y B A L A N C E S H E E T S 31 DECEMBER 2002 Fixed Assets Tangible assets Investments in subsidiary undertakings Current Assets Stocks Debtors Investments Cash at bank and in hand Current Liabilities Creditors: falling due within one year Borrowings Other creditors Net current assets/(liabilities) Total assets less current liabilities Non-current Assets/Liabilities (Creditors)/assets: due after more than one year Borrowings Deferred taxation Net assets Capital and Reserves Called-up share capital Share premium account Share capital redemption reserve Revaluation and exchange reserve Profit and loss account Consolidated Company Notes 2002 US$000 2001 US$000 2002 US$000 10 26 11 12 13,24 24 15,24 14 103,558 104,333 - - 103,558 104,333 928 2,001 234 8,416 11,579 (2,040) (7,717) (9,757) 1,822 600 1,916 266 2,248 5,030 (99) (5,266) (5,365) (335) - 45,425 45,425 - 31 234 1,335 1,600 - (1,702) (1,702) (102) 2001 US$000 (restated) - 43,115 43,115 - 26 266 1,202 1,494 - (862) (862) 632 105,380 103,998 45,323 43,747 15,24 16 (8,085) 1,215 98,510 (6,460) 890 - - - - 98,428 45,323 43,747 17 19 19 19 19 15,171 23,570 1,087 6,586 34,719 81,133 17,377 15,171 23,570 1,087 10,986 29,815 80,629 17,799 15,171 23,570 1,087 3,872 1,623 15,171 23,570 1,087 3,872 47 45,323 43,747 - - Shareholders’ funds - all equity interests Minority interests - all equity interests 19,27 Total capital employed 98,510 98,428 45,323 43,747 The financial statements were approved by the board of directors on 9 April 2003 and were signed on its behalf by R O B Barnes. The accompanying notes are an integral part of these balance sheets. A N G L O - E A S T E R N P L A N TAT I O N S P L C 20 R E C O G N I S E D G A I N S A N D L O S S E S R E C O N C I L I AT I O N O F M OV E M E N T S I N S H A R E H O L D E R S ’ F U N D S H I S TO R I C A L C O S T P RO F I T S A N D L O S S E S FOR THE YEAR ENDED 31 DECEMBER 2002 Statement of Total Recognised Gains and Losses Profit for the financial year Unrealised (deficit)/surplus on revaluation of the estates Profit/(loss) on exchange translation Consolidated Company 2002 US$000 6,475 (15,375) 10,975 2001 US$000 2,041 7,292 (4,820) 2002 US$000 3,147 - - 2001 US$000 740 - - Total recognised gains relating to the year 2,075 4,513 3,147 740 Reconciliation of Movements in Shareholders’ Funds Total recognised gains Dividends Net increase/(decrease) in shareholders’ funds Beginning of year End of year 2,075 (1,571) 504 80,629 4,513 3,147 (785) (1,571) 3,728 76,901 1,576 43,747 740 (785) (45) 43,792 81,133 80,629 45,323 43,747 Historical Cost Profits and Losses Reported profit on ordinary activities before taxation 12,092 3,359 3,172 818 Difference between historical cost depreciation charge and the actual depreciation charge for the year (692) (800) - Historical cost profit on ordinary activities before taxation 11,400 2,559 Historical cost retained profit/(loss) for the year 4,212 456 3,172 1,576 - 818 (45) The accompanying notes are an integral part of this statement of total recognised gains and losses, and this note of historical cost profits and losses. A N G L O - E A S T E R N P L A N TAT I O N S P L C 21 C O N S O L I DAT E D C A S H F L OW S TAT E M E N T FOR THE YEAR ENDED 31 DECEMBER 2002 Notes 22 2002 US$000 US$000 13,691 2001 US$000 US$000 6,666 Net cash inflow from operating activities Returns on Investments and Servicing of Finance Interest received Interest paid Interest element of finance lease payment Dividends paid to minority shareholders Taxation Foreign tax paid UK tax paid Capital Expenditure Payments to acquire tangible fixed assets Payments to acquire land Proceeds from sale of tangible fixed assets Equity Dividends Paid Parent company Cash inflow/(outflow) before financing Financing Drawdown of long term loan Finance lease repayments Increase in cash in year 23 50 (942) (3) (263) (2,424) - (6,136) (620) 34 3,663 (29) 48 (362) (6) - (1,158) (320) (2,511) (2) (2,424) (2,513) (7,605) (270) 71 5,080 (29) (7,804) (588) (4,559) 5,051 492 (6,722) (785) 2,602 3,634 6,236 The accompanying notes are an integral part of this consolidated cash flow statement. A N G L O - E A S T E R N P L A N TAT I O N S P L C 22 N OT E S TO T H E F I N A N C I A L S TAT E M E N T S 1 Accounting Policies The principal accounting policies are summarised below. Except as noted below they have all been applied consistently throughout the year and the preceding year. Basis of accounting The financial statements have been prepared under the historical cost convention, modified to include the revaluation of certain tangible fixed assets, and in accordance with applicable United Kingdom law and accounting standards. Basis of consolidation The group financial statements consolidate those of Anglo-Eastern Plantations Plc and its subsidiary undertakings, drawn up to 31 December each year under the acquisition method of accounting. Tangible fixed assets Tangible fixed assets are stated at cost or valuation, net of depreciation and any provision for impairment. Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost or valuation, less estimated residual value, of each asset as described below. Estates are shown at valuation, which are calculated internally every year and reviewed by an external valuer every five years. Estates are valued at the lower of replacement cost and recoverable amount, which is the higher of value in use and net realisable value. Value in use is calculated as the present value of the local currency cash flows of each estate over the next twenty years, including replanting where required. Any surplus or deficit on revaluation is transferred to the revaluation and exchange reserve, except that a deficit which is in excess of any previously recognised surplus relating to the same property is charged to the profit and loss account. On the disposal or recognition of a provision for impairment of a revalued fixed asset, any related balance remaining in the revaluation and exchange reserve is transferred to the profit and loss account as a movement on reserves. The Tasik oil mill is included at cost less depreciation. The depreciation charge on Indonesian estates is based on mature values at the beginning of the year and is provided at a rate of 2% per annum. The Tasik oil mill is depreciated at a rate of 5% per annum. The Malaysian leasehold land is depreciated over the remaining term of the lease. Mature plantations in Malaysia are depreciated at a rate of 5% per annum. Fixed asset investments The company's fixed asset investments in subsidiary undertakings are stated at cost less provisions for impairment. Only dividends received or receivable are credited to the company’s profit and loss account. Leasing Assets financed by leasing agreements which give rights approximating to ownership (finance leases) are capitalised at amounts equal to the original cost of the asset to the lessors and depreciation is provided on the asset over the shorter of the lease term or its useful economic life on the basis of group depreciation policy. The capital elements of future obligations under finance leases are included as liabilities in the balance sheet and the current year’s interest element is charged to the profit and loss account to produce a constant rate of charge on the balance of capital repayments outstanding. There are no operating leases. Stocks Stocks are stated at the lower of cost and net realisable value. Current asset investments The company's current asset investments are stated at the lower of cost or market value. Foreign currency Normal trading transactions in foreign currencies are recorded at the rates of exchange at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the profit and loss account. In the group financial statements the results and year end balances of foreign group companies are translated using the average and closing rates respectively which are shown on page 9. Exchange rate adjustments arising from translation are transferred direct to the revaluation and exchange reserves. Exchange differences on foreign currency intercompany loans, to the extent that they relate to investments in overseas operations, are also taken to the revaluation and exchange reserve. Turnover Turnover represents amounts receivable for goods and services provided by the group in the normal course of business, net of trade discounts,VAT and export taxes. A N G L O - E A S T E R N P L A N TAT I O N S P L C 23 N OT E S TO T H E F I N A N C I A L S TAT E M E N T S 1 Accounting Policies - continued Overhead capitalisation Directly attributable overheads are capitalised in respect of immature areas. Interest capitalisation Interest on loans directly related to field development is capitalised in the proportion that the opening immature area bears to the total planted area of the relevant estate. Interest on loans related to construction in progress (such as an oil mill) is capitalised up to the commissioning of that asset. Pensions The group operates a number of defined pension schemes in respect of its Indonesian operations. The pension costs of these schemes charged to the profit and loss accounts comprise the annual payments to the schemes as advised by the schemes’ actuaries together with any provision required for any shortfall in funding as disclosed by annual valuations of the schemes. This policy is not in accordance with SSAP24 ‘Accounting for Pension Costs’, but any differences are not material. Taxation UK and foreign corporation tax is provided at amounts expected to be paid or recovered using the tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax Following the adoption of FRS19, Deferred Tax, is recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that: • deferred tax is not recognised on timing differences arising on revalued properties unless the company has entered into a sale agreement and is not proposing to take advantage of rollover relief; and • the recognition of deferred tax assets is limited to the extent that the company anticipates making sufficient taxable profits in the future to absorb the reversal of the underlying timing differences. Deferred tax balances are not discounted. The adoption of the accounting standard has not had a material impact on current or prior year. Liquid resources For the purposes of the cash flow statement liquid resources are defined as current asset investments and short term deposits. 2 Segment Information Net assets Turnover 2002 $000 91,271 1,632 700 - - 4,907 98,510 2002 $000 80,555 17,498 457 98,510 2001 $000 94,893 1,884 435 - - 1,216 98,428 Net assets 2001 $000 79,531 17,710 1,187 98,428 By activity: Oil palm Rubber Cocoa Administration and other expenses Interest Unallocated assets By geographic origin: Indonesia Malaysia UK By location of customer: Indonesia Malaysia 2002 $000 29,768 1,092 279 - - - 31,139 2002 $000 29,132 2,007 - 31,139 29,132 2,007 31,139 2001 $000 16,180 692 120 - - - 16,992 Turnover 2001 $000 15,864 1,128 - 16,992 15,864 1,128 16,992 Profit/(loss) before taxation 2001 $000 2002 $000 12,852 629 183 (897) (675) - 12,092 6,275 338 45 (3,289) (10) - 3,359 Profit/(loss) before taxation 2001 $000 2002 $000 12,970 (269) (609) 12,092 6,174 (2,143) (672) 3,359 A N G L O - E A S T E R N P L A N TAT I O N S P L C 24 N OT E S TO T H E F I N A N C I A L S TAT E M E N T S 3 Administration and Other Expenses Administrative expenses Other operating income Income from current asset investments (Loss)/profit on disposal of fixed assets Movement in market value of current asset investments Exchange profit/(losses) Provision for reduction in value of Malaysian estates 4 Operating Profit Operating profit is stated after charging Depreciation (including $16,000 (2001 – $19,000) in respect of leased assets) Auditors’ remuneration - audit - other advisory services – company only 5 Interest Payable Payable on loans repayable within five years: Development loans Overdraft - (note 15) - (note 15) Other (including $3,000 (2001 –$6,000) in respect of finance leases) Interest capitalised on loans related to field development and construction in progress 6 Employees' and Directors' Remuneration Average numbers employed (primarily overseas) during the year - full time - casual Staff costs (primarily overseas): Wages and salaries Social security costs Retirement benefit costs 2002 $000 (1,751) 63 - (5) (32) 828 - (897) 2002 $000 2,411 67 11 2002 $000 667 17 261 (220) 725 2002 number 2,927 2,974 2002 $000 4,495 136 195 4,826 2001 $000 (1,646) 43 4 4 47 (188) (1,553) (3,289) 2001 $000 2,115 65 7 2001 $000 332 30 6 (310) 58 2001 number 2,645 2,812 2001 $000 3,102 100 152 3,354 The company has contributed $31,000 (2001 - $29,000) to directors’ and employees’ money purchase pension plans administered by UK insurance companies. Only one director is a member of such plans and no other director has a pension entitlement. The remaining amount of $164,000 (2001 - $119,000) for retirement benefit costs charged to profit and loss account relates to schemes described in note 21. The information required by the Company Act and the listing rules of the Financial Services Authority is contained in the directors' report on remuneration on pages 16 to 17 of which the information on page 17 has been audited. Directors’ emoluments Pension contributions 2002 $000 321 22 343 2001 $000 302 23 325 A N G L O - E A S T E R N P L A N TAT I O N S P L C 25 N OT E S TO T H E F I N A N C I A L S TAT E M E N T S 7 Taxation The tax charge comprises: Foreign corporation tax - current year Foreign withholding tax on remittances Deferred tax adjustment - current year - prior years 2002 $000 4,170 372 (175) - 4,367 2001 $000 2,443 97 (472) (430) 1,638 The corporation tax rates in Indonesia and Malaysia, the group's countries of operation, are close to the 30% standard rate of corporation tax in the UK but the charge for the year differs from the standard UK rate of corporation tax for the reasons below. Profit on ordinary activities before tax Profit on ordinary activities multiplied by standard rate of UK corporation tax of 30% (2001 – 30%) Effects of: Rate adjustment relating to overseas profits Group accounting adjustments not subject to tax Provision for reduction in value of Malaysian estates Expenses not allowable for tax Timing differences Losses not offsetable against fellow subsidiary profits Utilisation of tax losses brought forward Current tax charge for period 8 Dividends Final proposed – 4.00 cts per ordinary share (2001 – 2.00cts) 9 Earnings per Ordinary Share 2002 $000 12,092 2001 $000 3,359 3,628 1,008 (13) 73 - 63 64 402 (47) 4,170 2002 $000 1,571 (18) (210) 466 47 9 1,335 (194) 2,443 2001 $000 785 Basic net earnings per ordinary share have been calculated on the profit attributable to ordinary shareholders being $6,475,000 (2001: - $2,041,000) divided by 39,226,922 (2001 – 39,226,922) ordinary shares, being the weighted average number of ordinary shares in issue during the year. The equivalent figure for diluted net earnings per share is 39,440,025 (2001 – 39,226,922) which includes the effect of share options granted to directors and employees. 10 Tangible Fixed Assets Cost or valuation Beginning of year Revaluations and exchange translations Additions Disposals End of year Depreciation Beginning of year Revaluations and exchange translations Charge for the year Disposals End of year Net book value Beginning of year End of year Estates $000 Oil mills $000 Total $000 101,753 (9,637) 5,320 (35) 97,401 (1,553) 3,671 (2,118) - 5,129 830 1,656 (6) 7,609 (996) (165) (293) 2 106,882 (8,807) 6,976 (41) 105,010 (2,549) 3,506 (2,411) 2 - (1,452) (1,452) 100,200 97,401 4,133 6,157 104,333 103,558 A N G L O - E A S T E R N P L A N TAT I O N S P L C 26 N OT E S TO T H E F I N A N C I A L S TAT E M E N T S 10 Tangible Fixed Assets – continued Net book value of estates includes $48,000 (2001 - $55,000) in respect of assets held under finance leases. The directors valued the estates at 31 December 2002 and 2001 at the higher of net realisable value and value in use. In the case of the Indonesian estates the 2001 valuations were independently reviewed in accordance with the requirement of FRS 15, Tangible Fixed Assets, by PT Nagadi Ekasakti, management consultants in Indonesia, who have extensive plantation experience. The Indonesian estates have been included at value in use, which in the opinion of the directors are probably above market values at the date of this report. The impairment loss, if any, has not been accounted for as the directors believe that valuations of the Indonesian estates on the basis of their value to the company as a going concern best reflect their worth as opposed to general market values, which are impacted by current conditions in Indonesia and current palm oil prices and are in any event difficult to determine. The Malaysian estates were professionally valued by Messrs Khong & Jafaar in December 2001 on an open market existing use basis and are included at this valuation plus subsequent additions at cost less depreciation. Tangible fixed assets include $220,000 (2001: $310,000) of interest and $1,589,000 (2001: $1,725,000) of overheads capitalised during the year in respect of expenditure on estates under development during 2002. Original cost and depreciation at historical rates of exchange of tangible fixed assets at 31 December 2002 were: Original cost Cumulative depreciation based on original cost Estates $000 117,895 (20,083) 97,812 Oil mill $000 14,904 (5,468) 9,436 Total $000 132,799 (25,551) 107,248 The Indonesian authorities have granted certain land exploitation rights and operating permits for the estates. In the case of estates in North Sumatra these rights and permits expire between 2023 and 2028 with rights of renewal thereafter for a period of 35 years. In the case of estates in Bengkulu outstanding land titles were issued in 2002 and the titles expire between 2028 and 2032 with rights of renewal thereafter for two consecutive periods of 25 and 35 years respectively. Renewal is subject to compliance with the laws and regulations of Indonesia. As described in note 1 the values in use of the Indonesian estates are depreciated over a period of fifty years since the directors expect the renewals will take place. The land title of the estate in Malaysia is a long lease expiring in 2084. 11 Stocks These are estate and mill stores of $718,000 (2001 - $574,000), and produce stocks of $210,000 (2001 - $26,000), stated at the lower of cost and net realisable value. Replacement value is not materially different. 12 Debtors Consolidated balance sheet Due within one year Trade debtors Other debtors Taxation Prepayments and accrued income Due after more than one year Minority shareholders (note 27) Company balance sheet Due within one year Other debtors Prepayments and accrued income 2002 $000 657 344 250 193 557 2001 $000 493 238 428 200 557 2,001 1,916 2002 $000 4 27 31 2001 $000 4 22 26 A N G L O - E A S T E R N P L A N TAT I O N S P L C 27 N OT E S TO T H E F I N A N C I A L S TAT E M E N T S 13 Investments These represent short term investments listed on the Kuala Lumpur Stock Exchange and are shown at market value, being lower than cost of $591,000 (2001 - $591,000). 14 Creditors: Amounts Falling Due Within One Year Consolidated balance sheet Trade creditors Overseas taxation Other creditors Accruals Proposed dividend Company balance sheet Other creditors Proposed dividend Accruals 15 Borrowings Consolidated balance sheet Bank overdraft (a) Finance lease obligations (b) Long term development loan (c) Long term development loan (d) Amounts repayable after more than one year, as follows: in more than one year but not more than two years in more than two years but not more than five years more than five years 2002 $000 666 3,051 1,401 1,028 1,571 7,717 2002 $000 11 1,571 120 1,702 2001 under one year 68 31 - - 99 2001 $000 520 1,111 1,813 1,037 785 5,266 2001 $000 4 785 74 863 more than one year - 18 4,734 1,708 6,460 2,360 3,760 340 6,460 under one year - 20 1,600 420 2,040 2002 more than one year - - 6,400 1,685 8,085 2,021 6,064 - 8,085 (a) The bank overdraft is secured by a fixed and floating charge over the land titles and assets of the company’s Malaysian operating subsidiary, Anglo-Eastern Plantations (M) Sdn Bhd (“AEP Malaysia”) as well as over the company’s shareholding in AEP Malaysia. The company has guaranteed the overdraft. Interest is at 2% above Malaysian Bank Lending Rate or about 8.4%. (b) Finance lease obligations relate to vehicles and machinery, on which the obligations are secured, in the Indonesian subsidiaries. Interest is effectively at 8%. Payments complete by the end of 2003. (c) The long term development loan, which is part of a facility of $8,000,000, is made to and secured by a fixed and floating charge on the land titles and other assets of PT Mitra Puding Mas and PT Alno Agro Utama. The company has guaranteed the loan. Interest is at 1% under the US dollar Indonesian prime rate or about 8.3% through 2002. The loan is repayable in eight quarterly instalments of $400,000 from January 2003 to September 2004, and four quarterly instalments of $1,200,000 from January 2004 to September 2005. (d) The long term development loan is made to AEP Malaysia on the same security and interest terms described for the overdraft in note 15(a) above. The loan is repayable in equal monthly instalments over five years commencing January 2003. A N G L O - E A S T E R N P L A N TAT I O N S P L C 28 N OT E S TO T H E F I N A N C I A L S TAT E M E N T S 16 Deferred Taxation Consolidated balance sheet Beginning of year asset Transfer to revaluation reserve Credit to profit and loss account during year Exchange adjustment End of year asset Deferred tax asset at end of year comprises: Unutilised tax losses Other timing differences 2002 $000 890 - 175 150 1,215 2002 $000 1,069 146 1,215 2001 $000 816 74 890 Potential tax payable if revalued assets realised for their carrying value 2002 $000 14,835 2001 $000 17,762 Unutilised tax losses for which no deferred tax asset created 17 Share Capital Company Consolidated 2002 $000 369 2001 $000 565 2002 $000 12,554 2001 $000 11,884 Authorised Number Issued and fully paid Number Ordinary shares of 25p each Beginning of year End of year 60,000,000 39,226,922 60,000,000 39,226,922 Authorised $000 23,865 23,865 Issued and fully paid $000 15,171 15,171 Authorised £000 15,000 15,000 Issued and fully paid £000 9,808 9,808 Options have been granted under the company's 1994 Executive Share Option Scheme and Overseas Share Option Scheme to subscribe for ordinary shares of 25p each of the company as follows: Date of grant 5.11.94 3.11.95 24.5.96 25.10.99 16.10.00 16.04.02 Price per share 93.2p 115.8p 124.0p 47.0p 37.0p 44.7p Period of option 1 Jan 01 5.11.97 - 4.11.04 3.11.98 - 2.11.05 24.5.99 - 23.5.06 25.10.02 – 24.10.09 16.10.03 – 15.10.10 30.04.05 – 29.04.12 1 1 1 28 32 0 63 31 Dec 01 Number of options Granted/ (Lapsed) 0 0 0 (6) (7) 28 15 1 1 1 22 25 28 78 1 Jan 01 31 Dec 01 Number of shares subject to option Granted/ (Lapsed) 0 0 0 (31,200) (27,200) 196,500 31,412 8,000 14,338 409,600 164,900 196,500 31,412 8,000 14,338 440,800 192,100 0 686,650 138,100 824,750 Options granted to directors, included above, are shown on page 17. In January 2003 options over 48,000 shares were exercised at 47p increasing the number of shares in issue to 39,274,922. 18 Ultimate Controlling Shareholder At 31 December 2002 Genton International Limited, a company registered in Hong Kong, held 20,176,414 (2001 – 20,176,414) shares of the company representing 51.4% (2000 – 51.4%) of the issued share capital of the company. Madam S K Lim, a director of the company has advised the company that she is the controlling shareholder of Genton International Limited. A subsidary of the company rents office space at $20,000 p.a. from, and for a fee of $6,000 p.a. manages a small plantation owned by, companies controlled by Madam S K Lim.These contracts are on an arm’s length basis. A N G L O - E A S T E R N P L A N TAT I O N S P L C 29 N OT E S TO T H E F I N A N C I A L S TAT E M E N T S 19 Reserves and Minority Interests (a) Consolidated balance sheet Beginning of year Revaluation Exchange translation Retained profit for year Minority dividends End of year Share premium account $000 23,570 - - - - 23,570 Share capital redemption $000 1,087 - - - - 1,087 Revaluation and exchange reserve $000 10,986 (15,375) 10,975 - - Profit and loss account $000 29,815 - - 4,904 - 6,586 34,719 Minority interests $000 17,799 (3,044) 2,299 1,250 (927) 17,377 As significantly all foreign exchange translation is attributable to fixed assets, foreign exchange translation effects have been included in the revaluation and exchange reserve. This reserve includes cumulative revaluation reserve of $76,258,000 (credit), the reserve of $3,449,000 (credit) referred to in note 19(b) below and exchange translation loss of $73,121,000 (debit). No deferred tax has been provided by the group in respect of the revaluation and exchange reserve. (b) Company balance sheet Beginning of year Profit for the financial year Proposed dividend Retained profit for year End of year Share premium account $000 23,570 - - - 23,570 Share capital redemption $000 1,087 - - - Revaluation and exchange reserve $000 3,872 - - - Profit and loss account (distributable) $000 47 3,147 (1,571) 1,576 1,087 3,872 1,623 As permitted by section 230 of the Companies Act 1985, a separate profit and loss account dealing with the results of the company has not been presented. The profit before tax of the company for the year was $3,252,000 (2001 - $818,000). Of the revaluation and exchange reserve, $3,449,000 is available to meet any reduction in dollar terms of investments in and loans to subsidiaries caused by adverse exchange rate movements on the underlying assets. 20 Guarantees and Other Financial Commitments Consolidated Capital commitments at 31 December Contracted for but not provided for - normal operations Authorised but not contracted for - oil mill - normal operations - acquisition of new land 2002 $000 2001 $000 477 - 1,350 - 231 1,239 1,190 100 Contingent liabilities A subsidiary is facing a claim over 236ha of unplanted land in Indonesia. The subsidiary in question has a valid HGU land title covering the relevant area and has won its case in the local and Appeal courts but the plaintiff has appealed to the Supreme Court. The company is reasonably confident of winning this case. The relevant piece of land is valued in the consolidated financial statements at approximately $45,000. Company The company has provided a guarantee for loans and overdrafts to subsidiaries totalling $10,105,000 (2001 - $6,442,000), as set out in note 15. The company had no capital commitments at 31 December 2002 (2001 - nil). A N G L O - E A S T E R N P L A N TAT I O N S P L C 30 N OT E S TO T H E F I N A N C I A L S TAT E M E N T S 21 Retirement Benefits The group maintains a defined benefit funded pension scheme for labour in Indonesia. The scheme is valued by an actuary at the end of each financial year. The major assumptions used by the actuary were: Inflation Rate of increase in wages Discount rate The fair values of assets in the scheme were: Cash (expected long term rate of return: 12%) The following amounts were measured in accordance with the requirements of FRS 17. Fair value of scheme assets Actuarial value of scheme liabilities Deficit in scheme provided within accruals (note 14) 2002 $000 10% 10% 12% 2002 $000 397 2002 $000 397 (473) (76) 2001 $000 10% 10% 12% 2001 $000 287 2001 $000 287 (363) (76) The group also operates a non-contributory non-funded retirement plan for staff in Indonesia. Retirement benefits are paid to employees in a single lump sum at the time of retirement. Retirement benefit is accrued by the group based on individual employees’ service up to the end of the financial year. Amount included in accruals (note 14) 2002 $000 227 2001 $000 147 Since deficits have been provided in full within the group financial statements the group net assets and results would be unaffected if the schemes were combined within the financial statements in accordance with FRS 17. 22 Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities 2002 $000 12,767 2,411 - 5 32 (328) (263) (815) (118) Operating profit Depreciation and amortisation Provision for reduction in value of Malaysian estates Loss/(profit) on sale of fixed assets Movement in market value of investments (Increase)/decrease in stocks Increase in debtors (Decrease)/increase in creditors Foreign exchange Net cash inflow from ordinary activities 23 Reconciliation of Net Cash Flows to Movement in Net Debt Increase in cash in year Cash inflow from increase in long term loans Cash outflow from decrease in finance leases Change in net debt resulting from cash flows Change in market value of current asset investments Movement in net debt in year Net (debt)/funds at start of year (note 24) Net debt at end of year (note 24) 13,691 2002 $000 6,236 (3,663) 29 2,602 (32) 2,570 (4,045) (1,475) 2001 $000 3,369 2,115 1,553 (4) (47) 184 (314) 130 (320) 6,666 2001 $000 492 (5,080) 29 (4,559) 47 (4,512) 467 (4,045) A N G L O - E A S T E R N P L A N TAT I O N S P L C 31 N OT E S TO T H E F I N A N C I A L S TAT E M E N T S 24 Analysis of Net Debt Cash at bank and in hand Overdraft Net cash Loans due within 1 year Finance leases due within 1 year Borrowings due in more than 1 year Finance leases due in more than 1 year Current asset investments Net funds/(debt) At 31 Dec 2001 $000 2,248 (68) 2,180 - (31) (6,442) (18) 266 (4,045) Flows $000 6,168 68 6,236 - 29 (3,663) - - 2,602 Reclas- sification $000 - - - (2,020) (18) 2,020 18 - - Change in market value $000 - - - - - - - (32) (32) At 31 Dec 2002 $000 8,416 - 8,416 (2,020) (20) (8,085) - 234 (1,475) 25 Disclosure of Financial Instruments and Other Risks General The group’s financial instruments at present comprise cash and liquid resources, some short term creditors, together with normal trade debtors and creditors, and long term loans in Indonesia and Malaysia. The main risks which arise from these financial instruments relate to liquidity, interest rates and exchange rates. Liquidity risk At 31 December 2002 the group had the following loans and facilities. Malaysia: ringgit denominated - overdraft - long term loan Indonesia: US dollar denominated - long term loan Borrowings $000 - 2,105 8,000 Facilities $000 790 2,105 8,000 Repayable on demand 2003 – 2007 (note 15) 2003 – 2005 (note 15) The total long term loan facilities of $10,105,000 are repayable as follows: 2003 $000 2,021 2004 $000 2,021 2005 $000 5,221 2006 $000 421 2007 $000 421 Interest rate risk The loans listed above are all at variable rates of interest as described in note 15. The group’s financial liabilities comprise long term loans as set out above, as well as short term creditors, and a potential short term overdraft facility. The group’s financial assets comprise short term debtors, short term portfolio investments, cash at bank and long term debtors. All surplus cash is in bank deposits at variable short term rates of interest. Long term debtors comprise dollar denominated amounts due from minority shareholders, as described in note 27, on which amounts interest is due at 6% (fixed) but not accrued in the group accounts; these debtors are expected to be settled in about five years. The interest rate profiles of the group’s financial liabilities at 31 December 2002 and 2001 were: Currency 2002 Sterling US dollar Rupiah Ringgit Total Total Fixed rate financial (liabilities) $000 (131) (10,631) (4,836) (2,244) (17,842) $000 - - - - - Variable rate financial (liabilities) $000 - (8,020) - (2,105) (10,125) Financial (liabilities) on which no interest is paid $000 (131) (2,611) (4,836) (139) (7,717) A N G L O - E A S T E R N P L A N TAT I O N S P L C 32 N OT E S TO T H E F I N A N C I A L S TAT E M E N T S 25 Disclosure of Financial Instruments and Other Risks Interest rate risk – continued 2001 Sterling US dollar Rupiah Ringgit Total All currencies - 2002 Total Fixed rate financial (liabilities) $000 (78) (7,113) (2,277) (2,357) (11,825) $000 - (1,314) - - (1,314) Variable rate financial (liabilities) $000 - (4,734) - (1,776) (6,510) Financial (liabilities) on which no interest is paid $000 (78) (1,065) (2,277) (581) (4,001) Fixed rate financial (liabilities) Weighted average interest rate % - Weighted average period on which rate is fixed Years - Financial (liabilities) on which no interest is paid Weighted average period until maturity Years <1 Foreign currency risk All the group’s operations are overseas. The group is therefore exposed to currency movements on its net investment overseas. The effects of devaluation in local currencies on the group's operations are as follows: Since selling prices of the group's produce are linked directly to the US dollar, a depreciation of local currencies against the US dollar would increase the profit of the Malaysian and Indonesian subsidiaries. However, this benefit is partly offset over time by consequent inflation in local costs. Cost of development in dollar terms also reduces. Value of plantations in Indonesia are included in the group's financial statements based on estimated future cash flows in rupiah. Plantations in Malaysia have been included in the group's financial statements at ringgit market valuation determined by a professional valuer. In both cases, exchange losses on translation of these values into US dollars are offset against revaluation surpluses. The group retains little of its cash balances in local currencies. The exchange profits or losses arising in overseas subsidiaries holding foreign currency balances are also credited or charged in the group profit and loss account. The group’s subsidiaries which are borrowing US dollars, as shown under “Liquidity risk” above, could face significant exchange losses, which would be charged in the group profit and loss account. This risk is mitigated in part by the dollar denomination of the group’s income, and by any dollar liquid assets. Exchange losses on long term dollar intercompany debt are charged against the revaluation surpluses referred to above and do not affect the group’s profit. Gains and losses arising from structural currency exposures are taken to the revaluation and exchange reserve and are therefore recognised in the Statement of Total Recognised Gains and Losses. The table below shows the net monetary assets and liabilities of the group at 31 December 2002 and 2001 that were not denominated in the operating (or “functional”) currency of the operating unit involved. Functional currency of group operation 2002 Indonesian rupiah US dollar Total 2001 Indonesian rupiah US dollar Total Net foreign currency assets/(liabilities) US dollar $000 (2,996) - (2,996) $000 (6,018) - (6,018) Ringgit $000 - 244 244 $000 - 273 273 Sterling $000 - (69) (69) $000 - (20) (20) Total $000 (2,996) 175 (2,821) $000 (6,018) 253 (5,765) A N G L O - E A S T E R N P L A N TAT I O N S P L C 33 N OT E S TO T H E F I N A N C I A L S TAT E M E N T S 25 Disclosure of Financial Instruments and Other Risks Fair values of financial assets and financial liabilities There is no material difference between the book values and fair values of the group’s financial assets and liabilities as at 31 December 2002. Gains and losses on hedges The group enters into no hedging transactions and normally does not contract to sell produce more than one month ahead. Other risks Indonesia has been through a period of major political change. Further changes could affect exchange and interest rates and social stability. Indonesian government policy towards foreign investment and the plantation industry may also change, affecting the group’s future profits and cash flow. The net assets of the group in Indonesia subject to these risks are set out in note 2. 26 Investments in Subsidiary Undertakings - Company At beginning of year Movement in year At end of year Investments in subsidiary undertaking $000 1,599 - 1,599 Loans to subsidiary undertakings $000 41,516 2,310 43,826 Total $000 43,115 2,310 45,425 Loans to and from subsidiary companies do not have fixed repayment dates and on this basis have previously been included under current assets and liabilities. Since these balances are effectively long term in nature it has been decided to reclassify them with the investments in subsidiaries at 31 December 2002. The comparative figures for investments and for amounts due from and to subsidiaries at 31 December 2001 have been re-stated accordingly. Percentage holding of ordinary shares Principal United Kingdom sub-holding company Anglo-Indonesian Oil Palms Limited UK management company Indopalm Services Limited Malaysian operating companies Anglo-Eastern Plantations (M) Sdn Bhd Anglo-Eastern Plantations Management Sdn Bhd Indonesian operating companies PT Alno Agro Utama PT Anak Tasik PT Mitra Puding Mas PT Musam Utjing PT Simpang Ampat PT Tasik Raja PT United Kingdom Indonesia Plantations 100 100 55 100 94 100 90 75 100 80 75 The principal United Kingdom sub-holding company and UK management company are registered in England and Wales and are direct subsidiaries of the company. Details of United Kingdom subsidiaries which are not significant have been omitted. The Malaysian operating companies are incorporated in Malaysia and are direct subsidiaries of the company. The Indonesian operating companies are incorporated in Indonesia and are direct subsidiaries of the principal sub-holding company. The principal activity of the operating companies is plantation agriculture. The company’s entire interest in Anglo-Eastern Plantations (M) Sdn Bhd has been secured against the loans to that subsidiary set out in note 15. 27 Minority Interests The minority shareholders in PT Mitra Puding Mas and PT Alno Agro Utama have acquired their interests on deferred terms. The resulting debts together with accrued interest will be settled from dividends arising from these projects. A N G L O - E A S T E R N P L A N TAT I O N S P L C 34 C O N S O L I DAT E D P RO F I T A N D L O S S AC C O U N T ( £ S T E R L I N G ) FOR THE YEAR ENDED 31 DECEMBER 2002 Turnover - continuing operations Cost of sales Gross profit - continuing operations Administration and other expenses Operating profit - continuing operations Interest - receivable - payable Profit on ordinary activities before taxation Tax on profit on ordinary activities Profit on ordinary activities after taxation Minority interests (all equity interests) Profit for the financial year Dividends proposed Retained profit for the year Earnings per ordinary share (basic and diluted) - basic - diluted Notes (References in US Dollars) 2002 £000 2001 £000 2 3 4 5 7 19 8 19 9 9 20,622 (11,573) 9,049 (594) 8,455 33 (480) 8,008 (2,892) 5,116 (828) 4,288 (1,040) 3,248 10.9p 10.9p 11,800 (7,176) 4,624 (2,284) 2,340 33 (40) 2,333 (1,138) 1,195 222 1,417 (545) 872 3.6p 3.6p The accompanying notes are an integral part of this consolidated profit and loss account. A N G L O - E A S T E R N P L A N TAT I O N S P L C 35 C O N S O L I DAT E D A N D C O M PA N Y B A L A N C E S H E E T S ( £ S T E R L I N G ) 31 DECEMBER 2002 Consolidated Company Notes (References in US dollars) 2002 £000 2001 £000 2002 £000 64,322 71,461 - - 64,322 71,461 - 28,214 28,214 Fixed Assets Tangible assets Investments Current Assets Stocks Debtors Investments Cash at bank and in hand Current Liabilities Creditors: falling due within one year Borrowings Other creditors Net current (liabilities)/assets Total assets less current liabilities Non-current Assets/Liabilities Creditors: falling due after more than one year Borrowings Deferred taxation Net assets Capital and Reserves Called-up share capital Share premium account Share capital redemption reserve Revaluation and exchange reserve Profit and loss account 10 26 11 12 13,24 24 15,24 14 15,24 16 17 19 19 19 19 Shareholders’ funds - all equity interests Minority interests - all equity interests 19,27 576 1,243 145 5,227 7,191 (1,267) (4,793) (6,060) 1,131 65,453 (5,022) 755 61,186 9,808 15,329 663 3,028 21,565 50,393 10,793 2001 £000 (restated) - 29,531 29,531 - 18 182 823 1,023 - (591) (591) 432 411 1,312 182 1,540 3,445 - 20 145 829 994 (68) (3,607) (3,675) (230) - (1,057) (1,057) (63) 71,231 28,151 29,963 (4,425) 610 - - - - 67,416 28,151 29,963 9,808 15,329 663 9,004 20,421 55,225 12,191 9,808 15,329 663 1,342 1,009 9,808 15,329 663 4,131 32 28,151 29,963 - - Total capital employed 61,186 67,416 28,151 29,963 The accompanying notes are an integral part of these balance sheets. A N G L O - E A S T E R N P L A N TAT I O N S P L C 36 C O N S O L I DAT E D C A S H F L OW S TAT E M E N T ( £ S T E R L I N G ) FOR THE YEAR ENDED 31 DECEMBER 2002 Net cash inflow from operating activities 22 8,670 4,647 Notes (References in US dollars) 2002 2001 £000 £000 £000 £000 Returns on Investments and Servicing of Finance Interest received Interest paid Interest element of finance lease payment Dividends paid to minority shareholders Taxation Foreign tax paid UK tax paid/repaid Capital Expenditure Payments to acquire tangible fixed assets Payments to acquire land Proceeds from sale of tangible fixed assets Equity Dividends Paid Parent company Cash inflow/(outflow) before financing Financing Drawdown of long term loan Finance lease repayments Increase in cash in year 23 33 (624) (2) (174) (1,605) - (4,064) (411) 23 2,427 (19) 33 (251) (4) - (767) (222) (1,744) (1) (1,605) (1,745) (5,281) (188) 49 3,508 - (5,420) (408) (3,148) 3,508 360 (4,452) (520) 1,326 2,408 3,734 The accompanying notes are an integral part of this consolidated cash flow statement. A N G L O - E A S T E R N P L A N TAT I O N S P L C 37 N OT I C E O F M E E T I N G Notice is hereby given that the eighteenth Annual General Meeting of Anglo-Eastern Plantations Plc will be held at the offices of Lovells,Atlantic House, 50 Holborn Viaduct, London EC1A 2FG on 11 June 2003 at 11.30 am for the following purposes: As Ordinary Business 1 2 3 4 To receive and consider the company’s annual report for the year ended 31 December 2002. To declare a dividend. To approve the remuneration report for the year ended 31 December 2002. To re-elect the following directors. a) Mr P E O'Connor b) Datuk H Chin Poy-Wu To re-appoint BDO Stoy Hayward as auditors and to authorise the directors to fix their remuneration. 5 As Special Business 6 To consider and, if thought fit, to pass the following resolution as a special resolution: That (a) the directors be generally and unconditionally authorised pursuant to and in accordance with section 80 of the Companies Act 1985 (“the Act”) to exercise for the period ending on 10 June 2008 all the powers of the company to allot relevant securities up to an aggregate nominal amount equal to the company's authorised but unissued share capital at the date of this resolution; (b) pursuant to the said authority and during the period expiring on the date of the next Annual General Meeting or on 10 September 2004 (whichever shall be earlier) the directors be empowered to allot equity securities wholly for cash: in connection with a rights issue; and (i) (ii) up to an aggregate nominal amount of £490,936 otherwise than in connection with a rights issue; as if section 89 (1) of the Act did not apply to any such allotment; (c) by such authority and power the directors may during such periods make offers or agreements which would or might require the making of allotments after the expiry of such period; and (d) for the purposes of this resolution: (i) "rights issue" means an offer of equity securities open for acceptance for a period fixed by the directors to holders of equity securities on the register on a fixed record date in proportion to their respective holdings of such securities or in accordance with the rights attached thereto (but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory); (ii) the nominal amount of any securities shall be taken to be, in the case of rights to subscribe for or convert any securities into shares of the company, the nominal amount of such shares which may be allotted pursuant to such rights; and (iii) words and expressions defined in or for the purposes of part IV of the Act shall bear the same meanings herein. 7 To consider and if thought fit to pass the following resolution as a special resolution: That the directors be and they are hereby authorised (i) to exercise the powers contained in Articles 137 and 138 of the Articles of Association of the company so that, to the extent determined by the directors, the holders of ordinary shares be permitted to elect to receive new ordinary shares of 25p each in the capital of the company, credited as fully paid, instead of all or part of any interim or final dividend or dividends which may be declared or paid at any time or times prior to 10 June 2008; and A N G L O - E A S T E R N P L A N TAT I O N S P L C 38 N OT I C E O F M E E T I N G (ii) to capitalise the appropriate nominal amount of additional ordinary shares, falling to be allotted pursuant to elections made as aforesaid, out of the amount standing to the credit of any reserves of the company, to apply such sum in paying up such ordinary shares and pursuant to section 80 of the Act to allot such ordinary shares up to a maximum nominal value of an aggregate nominal amount equal to the company's authorised but unissued share capital at the date of this resolution to members of the company validly making such elections at any time or times prior to 10 June 2008 as if sub-section (1) of section 89 of the said Act did not apply thereto and so that this authority shall be without prejudice and additional to the authority conferred by resolution no 6. 8 To consider and if thought fit to pass the following as a special resolution: That the company is hereby generally and unconditionally authorised to make market purchases (within the meaning of section 163 of the Act) of ordinary shares of 25p each in the capital of the company provided that: (a) the maximum number of ordinary shares hereby authorised to be purchased is 3,927,492 (representing 10% of the issued ordinary share capital); (b) the minimum price which may be paid for each ordinary share is 25p; (c) the maximum price which may be paid for each ordinary share is an amount equal to 105% of the average of the middle market quotations for such share as derived from the Daily Official List of the London Stock Exchange Limited for the five business days immediately preceding the date of purchase; and (d) the authority hereby conferred shall expire at the conclusion of the next Annual General Meeting of the company save that the company may before the expiry of this authority make a contract of purchase which will or may be executed wholly or partly after such expiry and may make a purchase of shares pursuant to any such contract. 9 April 2003 By order of the board R O B BARNES Secretary A member of the company entitled to attend and vote at the meeting may appoint one or more proxies to attend and on a poll vote instead of him. A proxy need not be a member. The instrument appointing a proxy must be deposited at the office of the registrars not less than forty-eight hours before the time appointed for holding the meeting. Pursuant to regulation 34 of the Uncertified Securities Regulations 1995, the company has specified that only those shareholders on the register of members of the company at 11.30 am on 9 June 2003 shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name at that time. Changes to the register of members after 11.30 am on 9 June 2003 shall be disregarded in determining the rights of any person to attend and vote at the meeting. The register of directors' interests, showing any transactions of directors and of their families in the securities of the company, will be available for inspection at the registered office of the company during usual business hours from the date of this notice until the date of the Annual General Meeting and on that day until the conclusion of the meeting. No directors have service agreements exceeding one year's duration. A N G L O - E A S T E R N P L A N TAT I O N S P L C 39 C O M PA N Y A D D R E S S E S C O M PA N Y A DV I S E R S Malaysian Office Level 9 Grand Seasons Avenue 72 Jalan Pahang 53000 Kuala Lumpur Tel : 60 (3) 2693 1828 Fax : 60 (3) 2691 1028 Indonesian Office P T United Kingdom Indonesia Plantations Wisma HSBC Jalan Diponegoro, Kav 11 Medan 20152 North Sumatra Tel : 62 (0)61 4528683 Fax : 62 (0)61 4520029 Auditors BDO Stoy Hayward 8 Baker Street London W1U 3LL Principal Bankers National Westminster Bank Plc 15 Bishopsgate London EC2P 2AP The Hong Kong and Shanghai Banking Corporation Limited Wisma HSBC Jalan Diponegoro, Kav 11 Medan 20152 North Sumatra Secretary and Registered Office (Number Malayan Banking Corporation Bhd 1884630) R O B Barnes 6/7 Queen Street London EC4N 1SP Tel : 44 (0)20 7236 2838 Fax : 44 (0)20 7236 8283 Menara Promenade 100 Jalan Tun Razak 50050 Kuala Lumpur Registrars Capita Registrars The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Solicitors Lovells Atlantic House Holborn Viaduct London EC1A 2FG A N G L O - E A S T E R N P L A N TAT I O N S P L C 40 

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