REG-R.E.A. Holdings plc R.E.A. Holdings plc: Half yearly results <Origin Href="QuoteRef">REAH.L</Origin> - Part 2
22/09/2017 07:06
- Part 2: For the preceding part double click ID:nEQ42D27na
_______ _______ _______
Net cash used in investing activities (13,333) (8,138) (31,561)
_______ _______ _______
Financing activities
Preference dividends paid (3,720) (3,901) (7,402)
Repayment of bank borrowings (1,544) (7,552) (11,004)
Proceeds of issue of ordinary shares,
less costs of issue
- - 13,040
Proceeds of issue of US dollar notes,
less costs of issue
- - (44)
Redemption of US dollar notes (20,048) - (45)
Proceeds of issue/sale of sterling
notes, less costs of issue
- - 1,922
Proceeds of sale of investments 4,925 - -
Proceeds of sale of shareholding in - - 13,985
subsidiary
New borrowings from non-controlling
shareholder and related party
22,000 10,000 12,446
New bank borrowings drawn 3,222 4,614 14,939
_______ _______ _______
Net cash from financing activities 4,835 3,161 37,837
_______ _______ _______
Cash and cash equivalents
Net (decrease)/increase in cash and
cash equivalents
13 (21,751) (11,635) 8,874
Cash and cash equivalents at
beginning of period
24,593 15,758 15,758
Effect of exchange rate changes 132 340 (39)
_______ _______ _______
Cash and cash equivalents at end of 2,974 4,463 24,593
period
_______ _______ _______
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of accounting
The condensed consolidated financial statements for the six months ended 30
June 2017 comprise the unaudited financial statements for the six months ended
30 June 2017 and 30 June 2016, neither of which has been reviewed by the
company's auditor, together with audited financial statements for the year
ended 31 December 2016.
The information shown for the year ended 31 December 2016 does not constitute
statutory accounts within the meaning of section 435 of the Companies Act
2006, and is an abridged version of the group's published financial statements
for that year which have been filed with the Registrar of Companies. The
auditor's report on those statements was unqualified and did not contain any
statements under section 498(2) or (3) of the Companies Act 2006.
The condensed consolidated financial statements for the six months ended 30
June 2017 have been prepared in accordance with IAS 34, "Interim Financial
Reporting" as adopted by the European Union, and should be read in conjunction
with the annual financial statements for the year ended 31 December 2016 which
were prepared in accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union.
The accounting policies and methods of computation adopted in the preparation
of the condensed consolidated financial statements for the six months ended 30
June 2017 are the same as those set out in the group's annual report for 2016.
For the reasons given under "Going concern" above, the financial statements
have been prepared on the going concern basis.
The condensed consolidated financial statements for the six months ended 30
June 2017 were approved by the Board of Directors on 21 September 2017.
2. Revenue
6 months to 6 months to Year to
30 June 30 June 31 December
2017 2016 2016
$'000 $'000 $'000
Sales of goods 45,708 38,100 77,642
Revenue from services 567 1,237 1,623
_______ _______ _______
46,275 39,337 79,265
Other operating income - - 1
Investment revenue 263 1,238 1,742
_______ _______ _______
Total revenue 46,538 40,575 81,008
_______ _______ _______
3. Segment information
The group continues to operate in two segments, being the cultivation of oil
palms and the stone and coal operations, together with head office made up of
the activities of the UK, European and Singaporean subsidiaries. In the period
ended 30 June 2017, the relevant measures for the stone and coal operations
continued to fall below the quantitative thresholds set out in IFRS 8.
Accordingly, no segment information is included in these financial statements.
4. Agricultural produce inventory movement
The net (loss)/gain arising from changes in fair value of agricultural produce
inventory represents the movement in the fair value of that inventory less the
amount of the movement in such inventory at historic cost (which is included
in cost of sales).
5. Administrative expenses
6 months to 6 months to Year to
30 June 30 June 31 December
2017 2016 2016
$'000 $'000 $'000
Net foreign exchange (gains)/losses - (33) 1,290
Loss on disposal of property, plant and - - 12
equipment
Indonesian operations 6,184 5,309 9,621
Head office 3,520 3,530 5,377
_______ _______ _______
9,704 8,806 16,300
Amounts included as additions to fixed (2,450) (1,645) (4,313)
assets
_______ _______ _______
7,254 7,161 11,987
_______ _______ _______
6. Finance costs
6 months to 6 months to Year to
30 June 30 June 31 December
2017 2016 2016
$'000 $'000 $'000
Interest on bank loans and overdrafts 7,505 5,123 12,617
Interest on US dollar notes 1,639 1,362 2,899
Interest on sterling notes 2,324 2,776 5,184
Interest on other loans 760 - 273
Change in value of sterling notes arising
from exchange fluctuations
3,069 (5,641) (10,470)
Change in value of loans arising from
exchange fluctuations
1,110 3,573 1,378
Other finance charges 468 570 251
_______ _______ _______
16,875 7,763 12,132
Amount included as additions to property,
plant and equipment
(3,393) (2,865) (6,127)
_______ _______ _______
13,482 4,898 6,005
_______ _______ _______
7. Tax
6 months to 6 months to Year to
30 June 30 June 31 December
2017 2016 2016
$'000 $'000 $'000
Current tax:
UK corporation tax 136 106 1
Overseas withholding tax 494 586 1,604
Foreign tax 16 20 38
Foreign tax - prior year - - 3
_______ _______ _______
Total current tax 646 712 1,646
_______ _______ _______
Deferred tax:
Current year (2,830) (1,465) 373
Prior year 925 - -
_______ _______ _______
Total deferred tax (1,905) (1,465) 373
_______ _______ _______
Total tax (1,259) (753) 2,019
_______ _______ _______
The tax credit for the period of $1.3 million (2016: $0.8 million) is based on
the reported results of the operations in each jurisdiction, using relevant
rates of tax, adjusted for items which include non-taxable income/expense,
prior year reduction in the carrying value of Indonesian tax losses and
Indonesian withholding taxes not utilisable in the UK. If the income mix in
the second half of 2017 differs materially from that of the first half, it may
result in a disproportionate movement in the effective rate of taxation for
the full year.
8. Loss per share
6 months to 6 months to Year to
30 June 30 June 31 December
2017 2016 2016
$'000 $'000 $'000
Loss for the purpose of calculating loss (14,144) (7,911) (17,800)
per share*
_______ _______ _______
* being net loss attributable to ordinary
shareholders
'000 '000 '000
Weighted average number of ordinary shares
for the purpose of loss per share
40,510 36,840 36,950
_______ _______ _______
9. Dividends
6 months to 6 months to Year to
30 June 30 June 31 December
2017 2016 2016
$'000 $'000 $'000
Amounts recognised as distributions to
equity holders:
Preference dividends of 9p per share per
annum (2016: 9p per share)
3,720 3,901 7,402
_______ _______ _______
3,720 3,901 7,402
_______ _______ _______
10. Capital expenditure on property, plant and equipment and capital
commitments
In the period, there were additions to property, plant and equipment of $11.9
million (31 December 2016: $31.1 million, 30 June 2016: $8.5 million).
Capital commitments contracted, but not provided for by the group as at 30
June 2017, amounted to $2.4 million (31 December 2016: $1.4 million, 30 June
2016: $0.4 million).
11. Fair values of financial instruments
The table below provides an analysis of the book values and fair values of
financial instruments, excluding receivables and trade payables and Indonesian
coal interests, as at the balance sheet date. Cash and deposits, US dollar
notes and sterling notes are classified as level 1 in the fair value hierarchy
prescribed by IFRS 7 "Financial instruments: disclosures". (Level 1 includes
instruments where inputs to the fair value measurements are quoted prices in
active markets). All other financial instruments are classified as level 3 in
the fair value hierarchy. (Level 3 includes instruments which have no
observable market data to provide inputs to the fair value measurements). No
reclassifications between levels in the fair value hierarchy were made during
2017 (2016: none).
30 June 2017 30 June 2016 31 December 2016
Book Fair Book Fair Book Fair
value value value value value value
$'000 $'000 $'000 $'000 $'000 $'000
Cash and deposits* 2,974 2,974 4,463 4,463 24,593 24,593
Debt-within one (29,398) (29,398) (64,992) (64,992) (28,628) (28,628)
year*
Debt-after more
than one year* (99,844) (99,844) (67,274) (67,274) (97,771) (97,771)
Loan from related
party-within one (5,400) (5,400) - - - -
year*
Loans from
non-controlling
shareholder-after
more than one (29,516) (29,516) - - (12,469) (12,469)
year*
US dollar
notes-repayable - - (33,725) (29,930) (20,048) (20,206)
2017**
US dollar
notes-repayable (23,614) (23,915) - - (23,646) (24,035)
2022**
Sterling
notes-repayable (10,803) (10,651) (9,496) (10,842) (10,103) (10,143)
2017**
Sterling
notes-repayable (39,877) (41,479) (41,026) (41,060) (37,037) (38,553)
2020**
______ ______ ______ ______ ______ ______
Net debt and
related (235,478) (237,229) (212,050) (209,635) (205,109) (207,212)
engagements
______ ______ ______ ______ ______ ______
* bearing interest at floating rates
** bearing interest at fixed rates
The fair values of cash and deposits and bank debt approximate their carrying
values since these carry interest at current market rates. The fair value of
investments approximates their carrying value. The fair values of the US
dollar notes and sterling notes are based on the latest prices at which those
notes were traded prior to the balance sheet dates.
A one per cent increase in interest applied to those financial instruments
shown in the table above which carry interest at floating rates would have
resulted over a period of one year in a pre-tax profit (and equity) decrease
of approximately $1.6 million (2016: pre-tax profit (and equity) decrease of
$1.2 million).
12. Reconciliation of operating profit to operating cash flows
6 months to 6 months to Year to
30 June 30 June 31 December
2017 2016 2016
$'000 $'000 $'000
Operating loss (2,489) (1,530) (5,026)
Amortisation of intangible assets 201 - 74
Depreciation of property, plant and 10,467 9,181 20,766
equipment
Decrease/(increase) in fair value of
agricultural produce inventory
1,830 660 (632)
Amortisation of prepaid operating lease 169 - 432
rentals
Amortisation of sterling and US dollar
note issue expenses
547 306 584
Loss on disposal of property, plant and - - 12
equipment
_______ _______ _______
Operating cash flows before movements in
working capital
10,725 8,617 16,210
Decrease/(increase) in inventories
(excluding fair value movements)
3,558 1,770 (3,944)
(Increase)/decrease in receivables (10,461) (4,110) 760
(Decrease)/increase in payables (6,227) (2,982) 13,136
Exchange translation differences 1,606 (2,130) (791)
_______ _______ _______
Cash (utilised)/generated by operations (799) 1,165 25,371
Taxes paid (34) (52) (2,313)
Tax refunds received - - 241
Interest paid (12,420) (7,771) (20,701)
_______ _______ _______
Net cash (to)/from operating activities (13,253) (6,658) 2,598
_______
_______ _______
13. Movements in net borrowings
6 months to 6 months to Year to
30 June 30 June 31 December
2017 2016 2016
$'000 $'000 $'000
Change in net borrowings resulting from
cash flows:
(Decrease)/increase in cash and cash (21,619) (11,635) 8,874
equivalents
Net increase in borrowings (1,678) (7,062) (3,935)
Interest in non-controlling shareholder
and related party borrowings
(22,966) - (12,469)
_______ _______ _______
(46,263) (18,697) (7,530)
Issue of US dollar notes - - (345)
Amortisation of sterling notes expenses (471) (218) (318)
Amortisation of US dollar notes expenses (76) (88) (266)
Redemption of US dollar notes 20,048 - -
_______ _______ _______
(26,762) (19,003) (8,459)
Currency translation differences (3,607) 5,639 2,036
Net borrowings at beginning of period (205,109) (198,686) (198,686)
_______ _______ _______
Net borrowings at end of period (235,478) (212,050) (205,109)
_______ _______ _______
14. Related parties
Transactions between the company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note.
During the period the company has drawn a short term unsecured dollar loan
from R.E.A. Trading Limited, a company controlled by Mr R M Robinow and his
family, on normal commercial terms as to interest. At 30 June 2017, the loan
amounted to $5.4 million. Other than this loan during the first six months of
2017 there have been no other new material related party transactions and only
those related transactions which were disclosed in the company's 2016 annual
report have continued.
15. Events after the reporting period
Resolution of competing rights over certain plantation areas
Implementing agreements were executed in July 2017 in respect of the
arrangements that were finalised in late 2015 to sell land held by the group's
subsidiary company, SYB and acquire land held by PT Prasetia Utama ("PU").
Under the agreements, SYB is to sell 3,554 hectares of its land areas that
overlap with mineral rights held by an Indonesian third party company, PT Ade
Putra Tanrajeng ("APT"), and SYB and its local partner is to purchase shares
in PU, an associate of APT, that holds 9,097 hectares of fully titled land
areas. The acquisition of the PU shares by SYB and its local partner has now
been completed (with SYB taking 95 per cent of the PU shares). Meanwhile APT
and its associates have been granted access to the SYB mining overlap areas
pending completion of the legal formalities relating to the land titles for
such areas, which will take place in due course.
16. Rates of exchange
30 June 2017 30 June 2016 31 December 2016
Closing Average Closing Average Closing Average
Indonesian rupiah to US 13,319 13,344 13,180 13,479 13,436 13,369
dollar
US dollar to pound sterling 1.2990 1.27 1.3428 1.43 1.2226 1.36
Reference to "dollars" and "$" are to the lawful currency of the United States
of America.
17. Cautionary statement
This document contains certain forward-looking statements relating to R.E.A.
Holdings plc ("the group"). The group considers any statements that are not
historical facts as "forward-looking statements". They relate to events and
trends that are subject to risk and uncertainty that may cause actual results
and the financial performance of the group to differ materially from those
contained in any forward-looking statement. These statements are made by the
directors in good faith based on information available to them and such
statements should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any such
forward-looking information.
18. Shareholder information
The company's half yearly report for the six months ended 30 June 2017 will
shortly be available for downloading from the company's web site at
1 www.rea.co.uk
Press enquiries to:
R.E.A. Holdings plc
Tel: 020 7436 7877
══════════════════════════════════════════════════════════════════════════════
ISIN: GB0002349065
Category Code: IR
TIDM: RE.
LEI Code: 213800YXL94R94RYG150
Sequence No.: 4649
End of Announcement EQS News Service
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611981 22-Sep-2017
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