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R.E.A. Holdings plc (RE.)
R.E.A. Holdings plc: publication of circular and updated on current
trading
12-Jun-2018 / 14:20 GMT/BST
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR), transmitted by
EQS Group.
The issuer is solely responsible for the content of this announcement.
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NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART,
DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO
WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH
JURISDICTION
FOR IMMEDIATE RELEASE
12 June 2018
R.E.A. Holdings plc ("REA" or the "company")
Publication of circular and update on current trading
Further to the announcement by the company on 25 April 2018 regarding the
proposed sale by its subsidiary, PT REA Kaltim Plantations ("REA Kaltim")
of REA Kaltim's 95 per cent interest in PT Putra Bongan Jaya ("PBJ") to
Kuala Lumpur Kepong Berhad (the "proposed sale"), REA announces that a
circular regarding the sale (the "circular") dated 12 June 2018 is being
posted to shareholders today1 . The circular also contains an update on
current trading, trends and prospects, which is reproduced in full below.
As set out in the circular, the proposed sale constitutes a class 1
transaction for REA under the Financial Conduct Authority's Listing Rules
and therefore requires, and is conditional upon, approval by REA
shareholders. Accordingly, the circular contains a notice convening a
general meeting of the company to be held at Ashurst LLP at Broadwalk
House, 5 Appold Street, London EC2A 2HA on 10 July 2018 at 11.00 a.m., for
the purpose of considering and, if thought fit, approving the proposed
sale.
In addition to approval by REA shareholders, the proposed sale is
conditional upon, amongst other things, the receipt of all necessary
regulatory approvals and consents required under Indonesian law (including
in particular the approval of the Indonesia Investment Coordinating Board
(Badan Koordinasi Penanaman Modal)) and the formal approval of REA
Kaltim's lending bank.
A copy of the circular and notice of general meeting will be available for
inspection at the company's registered office and on the company's website
at 1 www.rea.co.uk and will also be submitted to the National Storage
Mechanism, where it will be available for inspection at
2 www.morningstar.co.uk/uk/NSM.
Words and phrases used, but not defined, in this announcement shall have
the same meaning as in the circular.
Current trading, trends and prospects
Crops, production statistics and rainfall for the period from 1 January
2018 to 31 May 2018 (with comparative figures for 2017) are set out below:
Five months to 31 May Five months to 31 May
2018 2017
FFB crops (tonnes)
Group harvested 263,000 203,000
Third party harvested 64,000 44,000
327,000 247,000
Production (tonnes)
CPO 72,700 53,400
Palm kernels 15,200 10,700
CPKO 5,900 3,400
Extraction rates (%)
CPO 22.9 22.0
Palm kernels 4.8 4.4
CPKO 40.3 38.2
Rainfall (mm)
Average across the estates 1,542 1,726
As noted in the annual report of the group for the year ended 31 December
2017, which was published on 27 April 2018, the recovery in group
operations that began in 2017 has continued into 2018, with production in
March demonstrating a noticeable upturn, against a background of generally
poorer cropping in East Kalimantan. The positive trend has continued into
April (FFB crop of 59,000 tonnes against 32,000 tonnes in 2017) and May
(FFB crop of 67,000 tonnes against 43,000 tonnes in 2017).
The average selling price for the group's CPO for the five months to the
end of May 2018, on an FOB basis at the port of Samarinda, net of export
levy and duty, was $554 per tonne (2017: $623 per tonne). The average
selling price for the group's CPKO, on the same basis, was $979 per tonne
(2017: $1,356 per tonne).
Bunch counts indicate that crop availability over the three months to 31
August 2018 should be at least at the level seen in May (although crop
harvested in June may be adversely affected by the Idul Fitri ten day
holiday period). If the normal annual cropping cycle applies in 2018, the
group could expect higher average monthly crops over the final four months
of the year, being the normal peak cropping period.
The significant progress in cropping is being accompanied by improvements
to palm appearance. Fronds are growing more vigorously and canopies are
enlarging. This must be attributed, at least in part, to the enhanced
fertiliser programmes introduced into the mature areas in 2016 and
continuing. It augurs well for crops going forward beyond 2018.
Evacuating the rapidly increasing daily crops being harvested has proved
challenging. Fortunately, the road improvement programme instituted in
2017, although still ongoing, has progressed sufficiently that poor road
conditions have not seriously inhibited collection. In addition, the
group has been able to source additional FFB collection trucks in volumes
so as to manage the logistics associated with the increase in production.
Nevertheless there have at times been delays in crop collection and,
whilst this has not affected CPO quality significantly, it has made it
more difficult to achieve the extraction rates for which the group is
aiming. With an enlarged transport fleet now in place, it is hoped to see
further improvements in crop collection and a consequential increase in
extraction rates.
Three of the four boilers in the group's two older oil mills having been
previously refurbished, work on refurbishing the fourth of these boilers
is well in hand. Work also continues on maintaining and improving the
efficiency of the group's oil mills. In particular, the group is now
installing bunch presses in each of the mills to reduce oil losses in
empty fruit bunches. With crops moving to higher levels, expansion of
capacity of the group's newest mill to 80 tonnes per hour is now planned
for 2019.
Following the agreement to sell PBJ, the first priority of the group's
planting programme has been to complete the 520 hectares of 2018 planting
that are required at PBJ if the proceeds of the sale of PBJ are to be
maximised. To date 202 hectares have been planted, bunding is nearing
completion to allow the planting of a further 160 hectares and land
compensation discussions are at an advanced stage to release land
sufficient to complete the planting of the balance of 158 hectares.
Elsewhere, over 200 hectares have been planted at CDM. For the balance of
2018, the group hopes at least to plant 600 hectares in PBJ2 (adjacent to
REA Kaltim) and to replant 600 hectares in the SYB southern areas. Much
larger extension planting is then planned for PU and the KKS area to the
north of CDM, but plantings in these areas can only start once the
necessary environmental compliance procedures have been completed. These
are in progress but may not be finished in time for planting to commence
in 2018. The group should, however, be well placed to plant a large area
in 2019.
Following the previously reported purchase of coal loading facilities on
an adjacent property, the group is pushing ahead with plans to resume
mining at its Kota Bangun coal concession. The licence required for the
export of coal from this concession has now been obtained and work is in
hand to refurbish the acquired loading facilities.
The improvements to the continuing group's balance sheet that will follow
from the proposed sale and a resumption of coal revenues should help the
group accelerate development of its land bank. With CPO prices expected
to remain around current levels, the prospects for the continuing group
are more encouraging than they have been for some years.
Enquiries
David Blackett
Chairman
R.E.A. Holdings plc
Tel: 020 7436 7877
1. Shareholders who have requested to receive all communications by email
will also receive an email including a website link to the circular
and details regarding voting. The full circular will be available on
REA's website at 3 www.rea.co.uk.
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ISIN: GB0002349065
Category Code: CIR
TIDM: RE.
LEI Code: 213800YXL94R94RYG150
Sequence No.: 5639
EQS News ID: 694707
End of Announcement EQS News Service
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