REG-R.E.A. Holdings plc R.E.A. Holdings plc: Update re certain matters

R E A HoldingsAnnouncement

07/12/2020 12:10

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   R.E.A. Holdings plc (RE.)
   R.E.A. Holdings plc: Update re certain matters

   07-Dec-2020 / 12:08 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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   R.E.A. Holdings plc ("REA")

   Update re certain matters

   Selling prices

   Since May 2020, the price of crude palm oil ("CPO"), CIF Rotterdam, has
   risen from a low of $510 per tonne to a current price of $920 per tonne. 
   Whilst the higher prices now prevailing are materially beneficial to REA,
   the extent of the benefit is reduced by two imposts chargeable on exports
   of Indonesian CPO: export duty and export levy.

   Export duty is a tax payable to the Indonesian government.  Export levy is
   payable to a dedicated fund which utilises levy income to subsidise the
   manufacture of biodiesel from CPO and to support other measures designed
   to benefit the growing of oil palms in Indonesia.  According to Oil World,
   Indonesian biodiesel will consume approaching 8 million tonnes of CPO in
   2020 and the Indonesian government has stated that it is committed to
   increasing the mandatory usage of biodiesel in transport fuel. 

   Because biodiesel is a substitute for petroleum based diesel oil, it has
   to be priced on a basis that reflects prevailing levels of petroleum oil
   prices.   As a result, at current CPO prices, the manufacture of biodiesel
   would be uneconomic without the subsidy funded by the export levy.

   Both export duty and export levy are calculated on sliding scales by
   reference to a CPO reference price that is set periodically by the
   Indonesian government on the basis of CIF Rotterdam and other recognised
   benchmark CPO prices.  Following the rise in the CPO price referred to
   above, the Indonesian government has recently announced changes to the
   export levy scale.  As a result, the combined incidence of export duty and
   export levy at different CPO reference prices is as shown by the table
   annexed to this announcement.  The current CPO reference price is $870.77.

   CPO produced by REA is generally sold in the Indonesian local market.  As
   such, group sales are not subject to export duty or export levy.  However,
   arbitrage between the Indonesian local and international CPO markets
   normally results in a local price that is broadly in line with prevailing
   international prices after adjustment of the latter for delivery costs and
   export duty and levy.

   Bank financing

   Agreement has recently been reached with the group's Indonesian bankers on
   extension for a further year of the group's working capital facility,
   equivalent to some $5 million, which fell due for renewal in November
   2020.  Discussions are continuing as to possible additions to the group's
   term loan facilities to fund, in part, nearer term repayments due in
   respect of those facilities.

   Claims against coal interest

   As previously reported, PT Indo Pancadasa Agrotama ("IPA"), an Indonesian
   company owning a coal concession near Kota Bangun in East Kalimantan, to
   which REA has extended funding, has been the object of certain arbitration
   claims by two claimants (connected with each other) with whom IPA
   previously had conditional agreements relating to the development and
   operation of IPA's coal concession.  REA was joined as a party to the
   arbitration on a prima facie basis and without prejudice to any final
   determination of jurisdiction.  Further separate, but related, potential
   claims threatened by the two claimants in respect of, inter alia, alleged
   tortious conduct by REA's subsidiary, R.E.A. Services Limited, and its
   managing director were stayed pending a conclusion of the arbitration
   hearing. 

   Following a virtual merits hearing of the arbitration claims at the end of
   June 2020, the arbitral tribunal has dismissed all claims in the
   arbitration against IPA and REA and has awarded costs on an indemnity
   basis to IPA.  The tribunal's decision removes the grounds for the
   separate stayed claims in respect of tortious conduct.

   Trading update

   REA plans to issue an update on 2020 trading early in 2021.

    

   Enquiries:

   R.E.A. Holdings plc

   Tel: 020 7436 7877

    

     

   ANNEXURE

    

   COMBINED EXPORT LEVY AND EXPORT DUTY    
   From   To        Levy   Duty   Total   Net price*
   $      $            $      $       $            $
   0      670         55      -      55          615
   670    695         60      -      60          635
   695    720         75      -      75          645
   720    745         90      -      90          655
   745    750        105      -     105          645
   751    770        105      3     108          662
   770    795        120      3     123          672
   795    800        135      3     138          662
   801    820        135     18     153          667
   820    845        150     18     168          677
   845    850        165     18     183          667
   851    870        165     33     198          672
   870    895        180     33     213          682
   895    900        195     33     228          672
   901    920        195     52     247          673
   920    945        210     52     262          683
   945    950        225     52     277          673
   951    970        225     74     299          671
   970    995        240     74     314          681
   995    1000       255     74     329          671
   1001   1050       255     93     348          702
   1051   1100       255    116     371          729
   1101   1150       255    144     399          751
   1151   1200       255    166     421          779
   1201   1250       255    183     438          812
   1251   1300       255    200     455          845
   *At top of band                         

    

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   ISIN:          GB0002349065
   Category Code: MSCM
   TIDM:          RE.
   LEI Code:      213800YXL94R94RYG150
   Sequence No.:  89166
   EQS News ID:   1153247


    
   End of Announcement EQS News Service

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