Kencana Agri Limitedkencana.listedcompany.com/newsroom/20090813_064926_F9M...Group’s financial position remained healthy with US$4.5 million in cash and net current assets of US$4.3

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Kencana Agri Limited

Disclaimer

This document has not been independently verified and has been prepared for informational purposesonly. No representation or warranty express or implied is made as to, and no reliance should be placedon, the fairness, accuracy, completeness or correctness of the information or opinions containedherein.

It is not the intention to provide, and you may not rely on this document as providing, a complete orcomprehensive analysis of the company’s financial or trading position or prospects. The informationand opinions contained in these materials are provided as at the date of this presentation and aresubject to change without notice.

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subject to change without notice.

None of Kencana Agri Limited or any of its affiliates, advisers or representatives shall have any liabilitywhatsoever (in negligence or otherwise) for any loss whatsoever arising from any use of this documentor its contents.

Agenda

Company Overview

Operational Highlights

Financial Highlights

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Key Developments 1H2009

Company Overview

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PT. Wira Sawit Mandiri

PT. Indotrust

PT. Agro Sawitmas Lestari

PT. Sawit Kaltim LestariPT. Agri Eastborneo KencanaPT. Agrojaya Tirta Kencana

PT. Wira Mas Permai

Where We Are

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Samarinda

PT. Sawindo KencanaPT. Kencana Agro Jaya

PT. Listrindo Kencana

PT. Sawindo Cemerlang

PT. Belitung Energy

PT. Agro Inti Kencanamas

PT. Alamraya Kencana Mas

PT. Sawindo Cemerlang

1. Company Overview 2. Operational Highlights 3. Financial Highlights 4. Key Developments and Industry Outlook 5. Growth Strategies

Plantation

Total Production Volume: • 64,557 MT (FY07)• 66,017 MT (FY08)• 40,198 MT (1H09)

Palm Oil Mills

No. of Mills: 2

Total Production Capacity: 120 MT/hour

Total Annual Processing Capacity :684,000 MT

Processing Products Supporting Business

Bulking Terminal

Logistics

Renewable Waste(Empty Fruit Bunches,

CPO

Fresh Fruit Bunches (FFB)

Total Land bank 188,784 ha (1)

Overview of Our Group’s Operations

Total capacity: 19,500 MT

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Kernel Crushing Plants

No. of Kernel Crushing Plants : 2

Total Production Capacity: 435 MT/day

Total Annual Processing Capacity :108,315 MT

Total Production Volume:• 28,485 MT (FY07)• 24,323 MT (FY08)• 9,259 MT (1H09)

Biomass Power Plant

1st Plant (2005)Location: BangkaCapacity: 6.0 MW

2nd Plant (2009)Location: BelitungCapacity: 7.5 MW

Note :

1. As at 30 June 2009

Palm Kernel Cake

(Empty Fruit Bunches, Liquid Waste, Kernel

Shells, Fibre)

CPKO

188,784 ha (1)

Nucleus: 176,412 ha, Plasma: 12,372 ha.Total Planted Area 34,308 ha(1)

Nucleus: 25,643 ha, Plasma: 8,665 ha.Mature Area16,790 ha (own)


Total Capacity: 8,000 MT

Operational Highlights

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Significant Land Bank for Future Planting

82%

55%

42%

18%

Total Land Bank 188,784 ha (including Plasma)Total Land Bank 188,784 ha (including Plasma)

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(hectares) Land BankEstimated

Planted Area

Nucleus 176,412 25,643

Plasma 12,372 8,665

Total 188,784 34,308


Available land Planted Mature Immature

Age Profile of Planted Areas

Age Profile (Nucleus) Age Profile (Plasma)

Immature8,853 Ha34%

Young9,378 Ha

37%

Prime7,412 Ha

29%

Immature3,135 Ha

36%

Young3,439 Ha

40%

Prime2,091 Ha

24%

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(hectares)

Immature(1-3 yrs)

Young (4-6 yrs)

Prime(7-18 yrs)

Total

Nucleus 8,853 9,378 7,412 25,643

Plasma 3,135 3,439 2,091 8,665

Total 11,988 12,817 9,503 34,308

% Nucleus 34% 37% 29% 100%

% Plasma 36% 40% 24% 100%


We have planted approximately 1,227 new areas in 1H2009.

Production Volume

1H 2008 1H 2009 % Change 2Q 2008 2Q 2009 % Change

Fresh Fruit Bunch (Ton) 170,870 196,994 +15.3 84,011 116,029 +33.9

- Nucleus 91,435 123,110 +34.6 44,524 74,158 +66.6

- Plasma 18,097 30,921 +70.9 8,898 17,549 +97.2

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- External 61,338 42,963 -30.0 30,589 24,322 -20.5

Crude Palm Oil (MT) 36,858 40,198 +9.1 17,879 23,814 +33.2

Crude Palm Kernel Oil (MT) 13,761 9,259 -32.7 6,505 4,789 -26.4


CPO and CPKO Production:

The increase in CPO production is mainly due to increase in our FFB production from both our nucleus and plasma plantations.

Decrease in CPKO production is due to sharp decrease in palm kernel purchases from third party.

Production Yields


FFB Yield (Ton/ha)

- Nucleus 8.03 8.22 +2.4 3.9 4.9 +25.6

- Plasma 4.29 6.10 +42.2 2.1 3.5 +66.7

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Oil Extraction Rates 21.6 20.4 -5.6 21.8% 20.5% -6.0

Kernel Extraction Rates 5.2 5.2 - 5.0% 5.2% 4.0

Kernel Oil Extraction Rates 40.6 39.9 -1.7 40.3% 40.4% 0.2

Production volume analysis

FFB yield increased due mainly to better production management in our estates and increased maturity profile of our plantation

Oil Extraction Rates (“OER”) have decreased slightly due to FFB produced from the newly matured area which has brought down the average OER for the Group.


Sales Volume

Significant increase in overall sales volume attributed mainly to higher FFB production from our own and plasma plantations

40,000

60,000

80,000

100,000

120,000

140,000

92,149

69,093

27,120

29,318

14,618

12,978

(MT)

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Sales Volume (MT)

- CPO 39,440 69,093 +75.2 29,441 46,594 +58.3

- CPKO 14,612 12,978 -11.2 10,120 5,728 -43.4


1H2008-

20,000

40,000

FY2007 FY2008 1H2008 1H2009

66,874

39,440

69,093

Revenue

Improved 1H2009 CPO revenue despite significant fall in CPO prices

1H2009 sales revenue from CPKO has decreased mainly due to reduction in third party kernel purchases.

1H2008 1H2009

CPO SalesUSD 38.3 m

83%

CPKO Sales USD 8.0 m

17%

CPO SalesUSD 34.1 m

67%

CPKO SalesUSD 16.8 m

33%

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1H 2008 1H 2009 % Change 2Q2008 2Q2009 % Change

Sales Revenue (USD’000)

- CPO 34,091 38,292 +12.3 26,052 27,055 +3.8

- CPKO 16,797 7,966 -52.6 11,806 3,564 -69.8

Sales Price (USD / MT)

- CPO 860 550 -37.4 890 580 -34.4

- CPKO 1,150 610 -47.4 1,170 620 -46.6

third party kernel purchases.



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USD’000 1H 2008 1H 2009 % Change 2Q2008 2Q2009 % Change

Revenue 53,510 47,542 -11.2 39,523 31,450 -20.4

Gross profit 13,030 9,505 -27.1 9,178 5,877 -36.0

Operating profit 9,618 5,569 -42.1 6,906 4,214 -39.8

Profit before tax 7,714 4,175 -45.9 5,806 3,528 -39.2

Net profit 5,776 3,020 -47.7 4,473 2,516 -43.8

EBITDA

Operational Performance (excl FV Gain of BA)

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EBITDA 10,660 6,767 -36.5 7,429 4,829 -35.0

Gross margin (%) 24.4 20.0 -18.0 23.2 18.7 -19.5

Profit margin (%) 10.8 6.4 -40.7 11.3 8.0 -29.2

EBITDA margin (%) 19.9 14.2 -28.6 18.8 15.4 -18.1


Balance Sheet

USD’000 1H 2008 1H 2009 % Change

Current Assets 36,723 35,770 -2.6

Non-current Assets 159,404 164,671 +3.3

Total Assets 196,127 200,441 +2.2

Current Liabilities 45,523 31,511 -30.8

Non-current Liabilities 59,179 49,758 -15.9

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Total Liabilities 104,702 81,269 -22.4

Shareholders’ Equity 91,413 119,172 +30.4

Net Debt/Equity Ratio (%) 48.5 30.5 -37.1

Net Debt/Total Assets (%) 22.6 18.1 -19.8

Debt/EBITDA (x) 1.9 6.0 +215.79

EBITDA/Interest Expense (x) 12.3 4.8 -61.0


Cash Flow

USD’000 1H 2008 1H 2009 % Change 2Q2008 2Q2009 % Change

Net cash from/(used in) operating activities

(3,264) 5,858 n/m 1,821 2,674 +46.8

Net cash used in investing activities

(8,219) (18,009) +119.1 (5,141) (12,732) +147.7

Net cash from financing activities

11,098 1,955 -82.4 4,353 3,114 -28.5

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Net effect of exchange rate changes in consolidating entities

(1,617) 1,967 n/m (30) 2,870 n/m

Net (decrease)/increase in cash and cash equivalents

(2,002) (8,229) +311.1 1,003 (4,074) n/m

Cash and cash equivalents at beginning of period

3,999 10,909 +172.8 994 6,754 +579.5

Cash at end of period 1,997 2,680 +34.2 1,997 2,680 +34.2



Decrease in revenue, profit and margins in 1H2009 as compared to those of 1H2008 was mainly due to the sharp drop in CPO and CPKO prices.

Lower cost of production was achieved due to higher FFB harvested and lower proportionate purchase of third party FFB.

Group’s financial position remained healthy with US$4.5 million in cash and net current assets of US$4.3 million.

Group net asset value increased to US$119million.

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Group net asset value increased to US$119million.

The group generated net operating cash flow of US$5.9million in 1H2009.

Decrease in cash and cash equivalents of approximately US$8.2million was mainly due capital expenditure incurred on property, plant and equipments, biological assets and land rights


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Expansion of Land Bank

Increase nucleus land bank by 82% since 2008

Attaining 79,569 hectares of land bank in Sulawesi, Indonesia

Joint Venture with Louis Dreyfus Commodities Asia

Joint venture expected to propel Kencana’s expansion in East Kalimantan and Sulawesi and bring greater operational efficiencies

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Kalimantan and Sulawesi and bring greater operational efficiencies and potentially better margins

Construct and operate a palm oil trading port in Indonesia

Source and trade CPO and other palm products

New Debt Facilities

Secured additional Rp400 billion (approximately US$40 million) 13 years term-loan for new planting.


Thank You

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Documents

Kencana Agri Limitedkencana.listedcompany.com/newsroom/20090813_064926_F9M...Group’s financial position remained healthy with US$4.5 million in cash and net current assets of US$4.3