UNAUDITED HALF YEAR FINANCIAL STATEMENT ANNOUNCEMEENT FOR PERIOD ENDED 30 JUNE 2008 1 (a) (i) An income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year. n/m: not meaningful 1 (a) (ii) profit before income tax is arrived at after charging / (crediting) the following significant items: 1
1 (b) (i) Balance sheet (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year. 2
1 (b) (ii) Aggregate amount of the Group s borrowings and debt securities. Some of the borrowings are secured by corporate guarantees and certain assets of the group. 3
1 (c) A cash flow statement (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial period. 4
1 (d) (i) A statement (for the issuer and group) showing either (i) all the changes in equity or (ii) changes in equity other than those arising from capitalization issues and distributions to shareholders together with a comparative statement for the corresponding period of the immediately preceding financial year 5
1 (d) (ii) Details of any changes in the company s share capital arising from rights issue, bonus issue, share buy backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. 1 (d) (iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year. Total number of issued shares (excluding treasury shares): As at 30 June 2008 As at 31 December 2007 798,044,720 1 The company has no treasury shares. 1 (d) (iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on. Not applicable. 2. Whether the figures have been audited or reviewed, and in accordance with which auditing standard or practice. This unaudited consolidated financial information have not been audited or reviewed by the auditor. 6
3. Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of a matter) Not applicable 4. Whether the same accounting policies and methods of computation as in the issuer s most recently audited financial statements have been applied. The same accounting policies and methods of computation have been applied in this unaudited consolidated financial information as the ones applied in the most recently audited consolidated financial information as at 31 December 2007. 5. If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changes as well as the reason for, and the effect of, the change. Not Applicable. 6. Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding year, after deducting any provision for the preference dividends; (a) Based on weighted average number of shares and (b) On a fully diluted basis (detailing any adjustments made to the earnings) Earnings per ordinary share for the period (US Cents) 1 st Half 2007 1 st half 2008 (a) Based on weighted average number of shares 1.25 1.96 (b) Based on a fully diluted basis 1.25 1.96 Note: The earnings per share for the period ended 30 June 2007 and 2008 are calculated by dividing the Group s profit for the year by the number of the pre invitation ordinary shares of 798,044,720 7
7. Net asset value (for the group) per ordinary share based on issued share capital fo the issuer at the end of the (a) current period reported on and (b) immediately preceding financial year. As at 31/12/2007 As at 30/06/2008 Net asset value per ordinary share 9.8 11.5 8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. It must include a discussion of (a) any significant factors that affected the turnover, costs, and earnings, of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors,and (b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on. Review of Group Performance The revenue for our Group has increased by 146.8% from US$ 21.7m in the first half of 2007 to US$ 53.5m in the first half of 2008, which is due to increase in sales volume and the increase in commodity prices. Our Group s cost of sales increased from US$14.1m to US$39.1m. The increase in cost of sales is mainly due to higher costs of raw materials, fertiliser, and fuel in the first half of 2008 as compared to those of the same period in the previous year. Overall gross profit has increased from US$ 7.6 m in the first half of 2007 to US$14.4m in the first half of 2008. Gains arising from changes in fair value of biological assets for the first half of 2008 was approximately US$14.1m (first half 2007: US$8.8m). This is mainly due to higher average CPO price used, maturity profile and increased planted area used in the fair valuation as at the end of the period under review, as compared to those as at 31 December 2007. Our Group has incurred higher administrative and distribution expenses in the first half of 2008 as compared to those of the same period in the previous year. This is mainly due to increase in headcount, salary increment, fuel costs, depreciation charges and professional fees. Other credits have increased mainly due to realised gain from forward exchange hedging transactions. Our operating profit has increased by 73.7% from US$14.3m to US$24.8m. Our Group s interest income has increased to US$0.1m in the first half of 2008. The gain on foreign exchange transactions for the period was US$0.6m and our Group has incurred financial expense of US$3.8m. As a result, our profit before tax for the first half of 2008 increased by 62.5% from US$13.4m to US$21.8m. Our income tax expense for the first half of 2008 increased as a result of higher operating profit. Our deferred tax provision was higher as a result of the increase in the net gain on fair valuation of 8
biological assets. Net profit after tax for our group has increased by 56.7% to US$15.6 m (first half 2007: US$9.9m). Review of Financial Position Total assets of the group have increased by US$41.9m since 31 December 2007. This is mainly due to increase in trade and other receivables of US$ 16.6m, increase in inventory of US$4.7m, the purchase of property, plant and equipment of US$3.0m as well as increase in the fair valuation of our Group s biological assets of US$21.1m, which is partially offset by reduction in cash of US$3.9m. The increase in trade and other receivables were mainly due to temporary timing differences on payment by our major customers, deferred listing expenses and increase on prepayment of raw materials in our group due to increase in raw material prices. Total liabilities and equity of the group have increased by US$41.9m since 31 December 2007. This is mainly due to increase in bank borrowings of the group by US$11.7m to a total of US$46.0m (As at 31 December 2007: US$33.9m), which was necessary to fund the group s planting and expansion programme in the first half of 2008. Trade and other payables of the group have increased US$ 11.2m due to payment timing differences. Deferred tax liabilities have increased by US$ 6.7m in line with the gain of fair valuation of biological assets recognised in our income statement. Our group s shareholders equity has increased by US$12.8m and the group total net assets have increased by US$13.5m. 9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. Not applicable. 9
10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. The outlook of palm oil industry remains positive, supported by the global demand growth for palm oil products. Our Group s performance will be influenced by several external factors such as volatility of CPO prices, climatic conditions, foreign exchange movements and changes in the regulatory environment in Indonesia. The group will concentrate mainly on actively seeking opportunities to acquire additional land bank, planting in our existing land bank and improving overall productivity in the next 12 months. 11. If a decision regarding dividend has been made. (a) Current Financial Period Reported On Nil. (c) Corresponding Period of the Immediately Preceding Financial Year Nil. 12. If no dividend has been declared (recommended), a statement to that effect. No dividend has been declared or recommended for the financial period ended 30 June 2008 13. Segmented revenue and results for business or geographical segments (of the group) in the form presented in the issuer most recently audited annual financial statements, with comparative information for the immediately preceding year. Not applicable as our plantation segment accounts more than 99% of the group s revenue and profit. 14. Disclosure of the aggregate value of the transactions conducted under the shareholders mandate for interested person transaction Rule 920 (1)(a)(ii) of the Listing Manual Not applicable as there was no material interested party transactions carried out during the first half of 2008. 10
15. CONFIRMATION PURSUANT TO THE RULE 705(4) OF THE LISTING MANUAL Kencana Agri Limited The Directors do hereby confirm that to the best of their knowledge, nothing has come to their attention which would render the unaudited financial results for the six month period ended 30 June 2008 to be false or misleading. On behalf of the Board of Directors Kent Surya 14 August 2008 Ratna Maknawi BY ORDER OF THE BOARD Catherine Lim Siok Ching Company Secretary 14 August 2008 THE INITIAL PUBLIC OFFERING OF THE COMPANY WAS SPONSORED BY DBS BANK LTD (THE "ISSUE MANAGER"). THE ISSUE MANAGER ASSUMES NO RESPONSIBILITY FOR THE CONTENTS OF THIS ANNOUNCEMENT. 11