R E A : Half yearly report 2021

R.E.A. HOLDINGS PLC

Half yearly report

2021

R.E.A. Holdings plc ("REA") is a UK company of which the shares are admitted to the Official List and to trading on the main market of the London Stock Exchange.

The REA group is principally engaged in the cultivation of oil palms in the province of East Kalimantan in Indonesia and in the production and sale of crude palm oil ("CPO") and crude palm kernel oil ("CPKO").

Key statistics

Contents

	6 months to	6 months to
	30 June	30 June
	2021	2020
Results ($'000)
Revenue	87,667	62,356
Earnings before interest, tax,
depreciation and amortisation*	27,670	11,242
Profit / (loss) before tax	7,648	(7,231)
Loss attributable to
ordinary shareholders	(2,366)	(7,881)
Cash generated by operations**	29,187	29,809
Return per ordinary share
Loss (US cents)	(5.4)	(17.9)
FFB harvested (tonnes)
Group***	361,167	342,653
Third party	114,924	98,297
Total	476,091	440,950
Production (tonnes)
FFB processed	464,045	430,293
FFB sold	8,121	11,773
CPO	103,299	98,651
Palm kernels	21,905	21,443
CPKO	8,310	6,912
Extraction rates (percentage)
CPO	22.3	22.9
Palm kernels	4.7	5.0
CPKO	38.6	39.8
Average exchange rates
Indonesian rupiah to US dollar	14,323	14,622
US dollar to pound sterling	1.39	1.27

• See note 5
• See note 17
• Group harvested FFB for both years excludes crops from plantings that are being reallocated from group to plasma

References in this report to group operating companies in Indonesia are as listed under the map on page 3.

The terms "FFB", "CPO" and "CPKO" mean, respectively, "fresh fruit bunches", "crude palm oil" and "crude palm kernel oil".

References to "dollars" and "$" are to the lawful currency of the United States of America; to "rupiah" are to the lawful currency of Indonesia; and to "sterling" or "pounds sterling" are to the lawful currency of the United Kingdom.

Highlights	2
Map	3
Interim management report	4
Principal risks and uncertainties	8
Going concern	10
Directors' responsibilities	11
Consolidated income statement	12
Consolidated statement of comprehensive income	13
Consolidated balance sheet	14
Consolidated statement of changes in equity	15
Consolidated cash flow statement	16
Notes to the condensed consolidated financial
statements	17

R.E.A. Holdings plc Half yearly report 2021	1

Highlights

Overview

• Performance turned around and group returned to profit
• Stronger CPO and CPKO prices holding firm
• Direct impacts of Covid remain limited

Financial

• Revenue up 41 per cent to $87.7 million (2020: $62.4 million), benefitting from higher average selling prices, including premia for certified oil, for CPO and CPKO of, respectively, $696 (2020: $551) and $1,029 (2020: $625)
• Cost of sales, excluding FFB purchases, increased 7 per cent to $46.5 million (2020: $43.5 million); cost of FFB purchases increased in line with higher CPO prices and volume
• EBITDA increased 147 per cent to $27.7 million (2020: $11.2 million)
• New Indonesian banking arrangements for the group's principal operating subsidiary successfully concluded, with extended repayment period and reduced interest rate significantly improving group cash flow
• Net indebtedness decreased by $14.0 million to $175.4 million (31 December 2020: $189.4 million)
• Further initiatives to improve financial resilience progressing
• Payment of preference dividends resumed

Agricultural operations

• FFB production increased to 361,167 tonnes (2020: 342,653 tonnes)
• Third party FFB purchases increased to 114,924 tonnes (2020: 98,297 tonnes)
• CPO extraction rates averaged 22.3 per cent (2020: 22.9 per cent)

Stone and coal interests

• MoU signed by stone concession holding company ATP to supply andesite to a neighbouring coal company and negotiations with quarrying contractor progressing
• Coal contractor preparing to resume mining at IPA's concession and deliveries from neighbouring coal company to IPA's port facilities recently commenced
• Group intends to recover coal loans and to withdraw from coal interests as soon as practicable

Sustainability

• Recertification audits successfully completed and licences renewed pending conclusion of outstanding onsite audit work when travel restrictions permit
• Pilot project underway with an international body to establish financing mechanism in support of local smallholders with objective of improved traceability of the FFB supply chain
• Gold certificate awarded by the Ministry of Manpower for the group's Covid prevention and control programme

Outlook

• More favourable trading environment and new banking arrangements in place afford opportunity to strengthen the group's finances
• With CPO and CPKO prices expected to remain at remunerative levels, the group looks forward to a period of prosperity

2	R.E.A. Holdings plc Half yearly report 2021

Map

Tabang 

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KALIMANTAN

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Mahakam River

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R i v e r

Kota Bangun 

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
Tenggarong	Samarinda
	▼

EAST

KALIMANTAN

Balikpapan MAKASSAR STRAIT

10 20 3010 4020 5030 km40 50 km

The map provides a plan of the operational areas and of the river and road system by which access is obtained to the main areas.

Key

Coal concession

Methane capture plant

Oil mill

Proposed new Indonesian capital city

Road

Stone source

Tank storage

Companies

				CDM	PT Cipta Davia Mandiri
				KMS	PT Kutai Mitra Sejahtera
				PBJ2	PT Persada Bangun Jaya
				PU	PT Prasetia Utama
				REA Kaltim	PT REA Kaltim Plantations
				SYB	PT Sasana Yudha Bhakti
				SYB	SYB land transfer

R.E.A. Holdings plc Half yearly report 2021	3