REG-R.E.A. Holdings plc R.E.A. Holdings plc: publication of circular and updated on current trading

R E A HoldingsAnnouncement

12/06/2018 14:20

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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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