DJ R.E.A. Holdings plc: Annual reports and accounts 2018
Dow Jones received a payment from EQS/DGAP to publish this press release.
R.E.A. Holdings plc (RE.)
R.E.A. Holdings plc: Annual reports and accounts 2018
29-Apr-2019 / 07:00 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.
R.E.A. HOLDINGS PLC (the "company")
ANNUAL FINANCIAL REPORT
The company's annual report for the year ended 31 December 2018 (including
notice of the annual general meeting to be held on 20 June 2019) (the
"annual report") will shortly be available for downloading from the
company's web site at www.rea.co.uk [1].
Upon completion of bulk printing, copies of the annual report will be
despatched to persons entitled thereto and will be submitted to the National
Storage Mechanism to be made available for inspection at
www.hemscott.com/nsm.do [2]
The sections below entitled "Chairman's statement", "Dividends", "Risks and
uncertainties", "Viability statement", "Going concern" and "Directors'
confirmation of responsibility" have been extracted without material
adjustment from the annual report. The basis of presentation of the
financial information set out below is detailed in note 1 of the notes to
the financial statements below.
HIGHLIGHTS
Overview
· Second year of operational recovery, with record crop production in 2018
and further increase expected in 2019
· Improved operational performance not reflected in financial results due
to material decline in the CPO price during 2018
· Sale of 95 per cent interest in PBJ to KLK group completed
Financial
· Revenue up 5.3 per cent to $105.5 million (2017: $100.2 million), as
reduced CPO and CPKO prices largely offset the production gains
· Cost of sales increased to $99.6 million (2017: $86.3 million)
reflecting greater purchases of external FFB and increased estate
operating costs due to higher volumes, costs of remedial upkeep and an
unusually high requirement for downstream loading; nevertheless, estate
operating costs increased at a lower rate than FFB volumes
· Pre-tax loss of $5.5 million (2017: loss $21.9 million) after reflecting
a gain on the disposal of PBJ of $10.4 million
· Net indebtedness at $189.5 million (2017: $211.7 million), with existing
bank facilities repaid and replaced in 2018 with new longer dated
facilities to align better with projected future cash flows
· Further discussions with Indonesian bankers to refinance bank loan
repayments falling due in 2019 and reduce interest costs through partial
conversion of rupiah loans to dollars
· Provision for deferred tax increased by $9.5 million resulting in tax
charge of $12.7 million (2017: $3.0 million)
Agricultural operations
· 51 per cent increase in FFB production to 800,050 tonnes (2017: 530,565
tonnes), reflecting the benefit of close focus on field disciplines and
supervision
· Increase in third party FFB purchased to 191,228 tonnes (2017: 114,005
tonnes)
· Extraction rates generally stable despite some logistical challenges
associated with sudden crop increase, CPO averaging 22.5 per cent (2017:
22.8 per cent)
· Yields grew by 48 per cent to 23.1 tonnes per mature hectare (2017: 15.6
tonnes per mature hectare)
· 2018 extension planting largely concentrated on PBJ to maximise proceeds
from PBJ disposal
Coal operations
· Access to and licensing of the loading point on the Mahakam River
secured in preparation for mining at the Kota Bangun concession
· Existing coal stockpile of 16,000 tonnes from previous mining operations
sold
· Dewatering recently completed giving access to the Kota Bangun northern
pit
Outlook
· Record production in 2018 expected to be followed by a further increase
in 2019 to some 900,000 tonnes of FFB, with 166,000 tonnes in first
quarter (2017: 135,000)
· Indications that the CPO price recovery will continue through 2019 and
beyond as global consumption of palm oil increases, production reduces and
restocking continues
· Undeveloped land bank of 6,000 hectares immediately available for
extension planting but programme on hold pending further recovery in CPO
price
· Capacity of the third oil mill to be increased to 80 tonnes per hour to
meet rising crop levels, with work expected to be completed in second half
of 2019 in time for peak cropping period
· Discussions advanced with potential partners and third party contractors
for the resumption of coal mining at Kota Bangun
CHAIRMAN'S STATEMENT
?While 2018 saw continued improvement in crop production and yields, the
financial results were dominated by the marked fall in crude palm oil
("CPO") prices, particularly during the second half of the year, and the
consequent impact on profitability. Foreign exchange gains which positively
impacted results in the first half of the year, principally as a result of
the decline in the value of the Indonesian rupiah against the US dollar,
were partly reversed during the second half of the year. As a consequence,
the group's overall financial performance for the year was less than might
have been expected.
Total revenue for 2018 amounted to $105.5 million, compared with $100.2
million in 2017, reflecting the impact of weak CPO prices on production that
increased by more than 50 per cent on the previous year. While CPO prices
have recovered significantly since the year end, they have not yet rallied
to the levels seen at the beginning of 2018.
The loss before tax for 2018 was $5.5 million. This included a profit on
disposal of PT Putra Bongan Jaya ("PBJ") of $10.4 million. The latter figure
differs from the loss of $8.0 million estimated by the group in its
announcement of 11 February 2019 because of two technical adjustments
involving the release of deferred tax liabilities and prior year translation
gains relating to PBJ.
Fresh fruit bunches ("FFB") harvested amounted to some 800,000 tonnes,
compared with 530,000 tonnes in 2017, surpassing the group's previous
highest production and producing a yield per mature hectare of 23 tonnes
compared with 16 tonnes in 2017. These yields take account of the PBJ sale
which led to slight decrease in mature hectarage from 34,076 hectares to
33,292 hectares in 2018. FFB purchases from smallholders and other third
parties also increased significantly to some 191,000 tonnes compared with
114,000 tonnes in 2017.
CPO production totalled 218,000 tonnes in 2018, compared with the 144,000
tonnes in 2017. Notwithstanding a more rigorous maintenance programme, the
rapid escalation of throughput in the second half of the year with
consequent pressure on evacuation and increased equipment wear and tear
restricted overall CPO extraction rates which decreased to 22.5 per cent
compared with 22.8 per cent in 2017. Crude palm kernel oil ("CPKO")
extraction rates however, improved to 40.2 per cent compared with 38.0 per
cent in 2017. Overall yields for CPO and CPKO were, respectively 5.4 and 0.4
tonnes per mature hectare compared with, respectively 3.6 and 0.3 tonnes per
hectare in 2017.
Changes to work programmes and new incentive targets for harvesters
contributed to steady improvements in efficiencies in the field through the
year and contributed to effective management of the sudden upsurge in crop.
With crop levels continuing to increase, the group is pushing ahead with the
expansion of the group's newest mill to almost double its capacity to 80
tonnes per hour to ensure adequate processing capacity going forward. These
works are expected to be completed in time for the peak cropping period in
the second half of the year.
The CPO price, CIF Rotterdam, fell sharply over 2018 from $677 per tonne to
a low in mid November of $439 per tonne on the back of considerably higher
levels of CPO production in Indonesia and Malaysia and increasing stocks of
CPO and other vegetable oils worldwide. Prices started to recover towards
the end of the year, closing the year at $506 per tonne, and this trend has
continued, albeit with some intermittent volatility, into 2019 as the supply
surplus has started to reduce. The CPO price currently stands at $536 per
tonne. Indications are that prices will recover further during 2019 and
beyond as consumption increases, fuelled by restocking and the expansion of
biodiesel usage, and stock levels at origin gradually reduce with the
seasonal slowdown in production in the first half of the year.
CPKO prices were similarly affected by a supply surplus, opening at $1260
per tonne, CIF Rotterdam, in 2018, declining to $651 per tonne in November
and closing the year at $783 per tonne. The CPKO price, CIF Rotterdam is
currently at $594 per tonne.
The group has an undeveloped land bank with some 6,000 hectares immediately
available for extension planting. While nursery areas have been established
to ensure availability of seedlings for later development, the directors
have decided to wait for further recovery in the CPO price before
recommencing any expansion.
Preparations to reopen the mine at the group's principal coal concession
interest at Kota Bangun are progressing with dewatering of the site recently
completed. Having secured access to a loading point on the Mahakam River and
a licence to export coal, the group disposed of the existing stockpile of
some 16,000 tonnes during 2018. Refurbishment of the port, loading point and
conveyor acquired during 2018 should be completed in the next few months.
Discussions with potential third party contractors are reaching an advanced
stage.
The group continues to be financed by a combination of debt and equity.
Total equity (including preference share capital) amounted to $261.3 million
(MORE TO FOLLOW) Dow Jones Newswires
April 29, 2019 02:02 ET (06:02 GMT)
DJ R.E.A. Holdings plc: Annual reports and accounts -2-
as at 31 December 2018 compared to $276.7 million as at 31 December 2017.
Net indebtedness at 31 December 2018 amounted to $189.5 million compared
with $211.7 million as at 31 December 2017. In August 2018, two new rupiah
bank facilities, equivalent in total to some $32.2 million, were arranged
and drawn and certain existing facilities, amounting to $10.3 million, were
repaid. Subsequently, to align better the repayment profile of the group's
bank loans with projected future cash flows, two further new rupiah loans,
equivalent to some $82.2 million, were arranged and drawn and existing,
shorter dated facilities of some $59.4 million, were repaid.
In view of the financial performance of the group in 2018, the directors
have not declared or recommended the payment of any ordinary dividend in
respect of the year.
Production in the first months of 2019 was well ahead of the levels achieved
in the same period in 2018, with group FFB to the end of March of 166,000
tonnes (2018: 135,000 tonnes). Some slowdown in production can be expected
through to the middle of the year in line with the normal monthly phasing of
crops but indications are that production for the year overall will be
comfortably ahead of 2018 with a budgeted FFB crop of some 900,000 tonnes.
While the directors remain optimistic about the operations and the prospects
for the group, there remains much to be done this year to ensure that the
group realises its full potential. It will be particularly important to
maximise FFB collection and optimise evacuation and processing. To this end,
capital expenditure will be focused on works that will ensure resilience and
availability of sufficient capacity in the group's mills. With current CPO
prices still at depressed levels (albeit that prices are significantly ahead
of those of the last quarter of 2018), measures are also in hand to reduce
costs particularly in administrative and support departments. It should also
be possible to reduce the employment of temporary workers for remedial
upkeep as the work being undertaken is progressively completed.
To ensure the availability of sufficient funding to meet the costs of the
third mill extension and planned enhancements to the group's other mills,
the group is in discussion with its Indonesian bankers regarding a further
facility of some $11 million. There are also continuing discussions aimed at
reducing interest costs by conversion of a proportion of the group's rupiah
loans to dollar loans.
Looking ahead, CPO prices are expected to increase further with continued
growth in consumption and a general slowdown in CPO production with fewer
new plantings in both Indonesia and Malaysia. Subject to this proving the
case, further improvements in operating performance are expected to
translate into an improvement in underlying profitability and cash flows
through 2019 and thereafter.
Finally, I would like to welcome Rizal Satar who joined the board in
December 2018 as an independent non-executive director. Rizal was educated
in the United States and Belgium, where he majored in computer science,
accounting and finance, and worked for 20 years for PricewaterhouseCoopers,
Indonesia, as a senior partner in their advisory services business.
DAVID J BLACKETT
Chairman
DIVIDENDS
The ?xed semi-annual dividends on the 9 per cent cumulative preference
shares that fell due on 30 June and 31 December were duly paid. In view of
the results reported for 2018, the directors have concluded that they should
not declare or recommend the payment of any dividend on the ordinary shares
in respect of 2018.
ANNUAL GENERAL MEETING
The fifty-ninth annual general meeting of R.E.A. Holdings plc will be held
at the London office of Ashurst LLP at 1 Duval Square, London Fruit and Wool
Exchange, London E1 6PW on 20 June 2019 at 10.00 am.
RISKS AND UNCERTAINTIES
The group's business involves risks and uncertainties. Identification,
assessment, management and mitigation of the risks associated with
environmental, social and governance matters forms part of the group's
system of internal control for which the board of the company has ultimate
responsibility. The board discharges that responsibility as described in
"Corporate governance" in the annual report.
Those risks and uncertainties that the directors currently consider to be
material are described below. There are or may be other risks and
uncertainties faced by the group that the directors currently deem
immaterial, or of which they are unaware, that may have a material adverse
impact on the group.
?The risks detailed below as relating to "Agricultural operations -
Expansion" and "Coal and stone operations" are prospective rather than
immediate material risks because the group is currently not expanding its
agricultural operations and not mining its coal and stone concessions.
However, such risks will apply when, as is contemplated, expansion and
mining are resumed. The effect of an adverse incident relating to the coal
and stone operations, as referred to below, could impact the ability of the
coal and stone companies to repay their loans.
Material risks, related policies and the group's successes and failures with
respect to environmental, social and governance matters and the measures
taken in response to any failures are described in more detail under
"Sustainability" in the annual report. Where risks are reasonably capable of
mitigation, the group seeks to mitigate them. Beyond that, the directors
endeavour to manage the group's finances on a basis that leaves the group
with some capacity to withstand adverse impacts from identified areas of
risk but such management cannot provide insurance against every possible
eventuality.
?The directors have carefully reviewed the potential impact on its
operations of the various possible outcomes to the current discussions on
the termination of UK membership of the European Union ("Brexit"). The
directors expect that certain outcomes may result in a movement in sterling
against the US dollar and Indonesian rupiah with consequential impact on the
group dollar translation of its sterling costs and sterling liabilities. The
directors do not believe that such impact (which could be positive or
negative) would be material in the overall context of the group. Were there
to be an outcome that resulted in a reduction in UK interest rates, this may
negatively impact the level of the technical provisions of the REA Pension
Scheme but given the Scheme's estimated funding position, the directors do
not expect that this impact would be material in the overall context of the
group. Beyond this, and considering that the group's entire operations are
in Indonesia, the directors do not see Brexit as posing a significant risk
to the group.
The directors have considered the potential impact on the group of global
climate change. Between 5 and 10 per cent of the group's existing plantings
are in areas that are low lying and prone to flooding if not protected by
bunding. Were climate change to cause an increase in water levels in the
rivers running though the estates, this could be expected to increase the
requirement for bunding or, if the increase was so extreme that bunding
became impossible, could lead to the loss of low lying plantings, the
percentage of which could be expected to increase. Changes to levels and
regularity of rainfall and sunlight hours could also adversely affect
production. However, it seems likely that any climate change impact
negatively affecting group production would similarly affect many other oil
palm growers in South East Asia leading to a reduction in CPO and CPKO
supply. This would be likely to result in higher prices for CPO and CPKO
which should provide at least some offset against reduced production.
?Risks assessed by the directors as being of particular significance are
those detailed below under:
* "Agricultural operations - Produce prices"
* "General - Funding"
* "Agricultural operations - Climatic factors"
* "Agricultural operations - Other operational factors".
The directors' assessment, as respects produce prices and funding, reflects
the key importance of those risks in relation to the matters considered in
the "Viability statement" in the "Directors' report" below and, as respects
climatic and other factors, the negative impact that could result from
adverse incidence of such risks.
Risk Potential impact Mitigating or other
relevant
considerations
Agricultural
operations
Climatic factors
Material variations A loss of crop or Over a long period,
from the norm in reduction in the crop levels should
climatic conditions quality of harvest be reasonably
resulting in loss of predictable
potential revenue
Unusually low levels A reduction in Operations are
of rainfall that lead subsequent crop located in an area
to a water levels resulting in of high rainfall.
availability below the loss of potential Notwithstanding
minimum required for revenue; some seasonal
the normal development variations, annual
of the oil palm rainfall is usually
adequate for normal
the reduction is development
likely to be broadly
proportional to the
cumulative size of
the water deficit
Overcast conditions Delayed crop Normal sunshine
formation resulting hours in the
in loss of potential location of the
revenue operations are well
suited to the
cultivation of oil
(MORE TO FOLLOW) Dow Jones Newswires
April 29, 2019 02:02 ET (06:02 GMT)
DJ R.E.A. Holdings plc: Annual reports and accounts -3-
palm
Low levels of rainfall Inability to obtain The group has
disrupting river delivery of estate established a
transport or, in an supplies or to permanent
extreme situation, evacuate CPO and downstream loading
bringing it to a CPKO (possibly facility, where the
standstill leading to river is tidal. In
suspension of addition, road
harvesting) access between the
ports of Samarinda
and Balikpapan and
the estates offers
a viable
alternative route
for transport with
any associated
additional cost
more than
outweighed by the
potential negative
impact of
disruption to the
business cycle by
any delay in
evacuating CPO
Cultivation risks
Failure to achieve A reduction in The group has
optimal upkeep harvested crop adopted standard
standards resulting in loss of operating practices
potential revenue designed to achieve
required upkeep
standards
Pest and disease A loss of crop or The group adopts
damage to oil palms reduction in the best agricultural
and growing crops quality of harvest practice to limit
resulting in loss of pests and diseases
potential revenue
Other operational
factors
Shortages of necessary Disruption of The group maintains
inputs to the operations or stocks of necessary
operations, such as increased input inputs to provide
fuel and fertiliser costs leading to resilience and has
reduced profit established biogas
margins plants to improve
its self-reliance
in relation to fuel
A hiatus in FFB crops becoming The group
harvesting, collection rotten or over-ripe endeavours to
or processing of FFB leading either to a maintain a
crops loss of CPO sufficient
production (and complement of
hence revenue) or to harvesters within
the production of its workforce to
CPO that has an harvest expected
above average free crops and to
fatty acid content maintain resilience
and is saleable only in its palm oil
at a discount to mills with each of
normal market prices the mills operating
separately and some
ability within each
mill to switch from
steam based to
biogas or diesel
based electricity
generation
Disruptions to river The requirement for The group's bulk
transport between the CPO and CPKO storage storage facilities
main area of exceeding available have substantial
operations and the capacity and forcing capacity and
Port of Samarinda or a temporary further storage
delays in collection cessation in FFB facilities are
of CPO and CPKO from harvesting or afforded by the
the transhipment processing with a fleet of barges.
terminal resultant loss of Together, these
crop resulting in a have hitherto
loss of potential always proved
revenue adequate to meet
the group's
requirements for
CPO and CPKO
storage and may be
expanded to
accommodate
anticipated
increases in
production
Occurrence of an Material loss of The group maintains
uninsured or potential revenues insurance at levels
inadequately insured or claims against that it considers
adverse event; certain the group reasonable against
risks (such as crop those risks that
loss through fire or can be economically
other perils), for insured and
which insurance cover mitigates uninsured
is either not risks to the extent
available or is reasonably feasible
considered by management
disproportionately practices
expensive, are not
insured
Produce prices
Volatility of CPO and Reduced revenue from Price swings should
CPKO prices which as the sale of CPO and be moderated by the
primary commodities CPKO production and fact that the
may be affected by a consequent annual oilseed
levels of world reduction in cash crops account for
economic activity and flow the major
factors affecting the proportion of world
world economy, vegetable oil
including levels of production and
inflation and interest producers of such
rates crops can reduce or
increase their
production within a
relatively short
time frame
Restriction on sale of Reduced revenue from The Indonesian
the group's CPO and the sale of CPO and government allows
CPKO at world market CPKO production and the free export of
prices including a consequent CPO and CPKO but
restrictions on reduction in cash applies a sliding
Indonesian exports of flow scale of duties on
palm products and exports, which is
imposition of high varied from time to
export duties (as has time in response to
occurred in the past prevailing prices,
for short periods) to allow producers
economic margins.
The extension of
this sliding scale
to incorporate an
export levy to fund
biodiesel subsidies
is designed to
support the local
price of CPO and
CPKO
Distortion of world Depression of The imposition of
markets for CPO and selling prices for controls or taxes
CPKO by the imposition CPO and CPKO if on CPO or CPKO in
of import controls or arbitrage between one area can be
taxes in consuming markets for expected to result
countries, for competing vegetable in greater
example, by imposition oils proves consumption of
of reciprocal trade insufficient to alternative
barriers or tariffs compensate for the vegetable oils
between major market distortion within that area
economies created and the
substitution
outside that area
of CPO and CPKO for
other vegetable
oils
Expansion
Failure to secure in Inability to The group holds
full, or delays in complete, or delays significant fully
securing, the land or in completing, the titled or allocated
funding required for planned extension land areas suitable
the group's planned planting programme for planting. It
extension planting with a consequential works continuously
programme reduction in the to maintain up to
group's prospective date permits for
growth the planting of
these areas and
aims to manage its
finances to ensure,
in so far as
practicable, that
it will be able to
(MORE TO FOLLOW) Dow Jones Newswires
April 29, 2019 02:02 ET (06:02 GMT)
DJ R.E.A. Holdings plc: Annual reports and accounts -4-
fund any planned
extension planting
programme
A shortfall in A possible adverse The group maintains
achieving the group's effect on market flexibility in its
planned extension perceptions as to planting programme
planting programme the value of the to be able to
impacting negatively company's securities respond to changes
the continued growth in circumstances
of the group
Environmental, social
and governance
practices
Failure by the Reputational and The group has
agricultural financial damage established
operations to meet the standard practices
standards expected of designed to ensure
them as a large that it meets its
employer of obligations,
significant economic monitors
importance to local performance against
communities those practices and
investigates
thoroughly and
takes action to
prevent recurrence
in respect of any
failures identified
Criticism of the Reputational and The group is
group's environmental financial damage committed to
practices by sustainable
conservation development of oil
organisations palm and has
scrutinising land obtained RSPO
areas that fall within certification for
a region that in most of its current
places includes operations. All
substantial areas of group oil palm
unspoilt primary rain plantings are on
forest inhabited by land areas that
diverse flora and have been
fauna previously logged
and zoned by the
Indonesian
authorities as
appropriate for
agricultural
development. The
group maintains
substantial
conservation
reserves that
safeguard landscape
level biodiversity
Community relations
A material breakdown Disruption of The group seeks to
in relations between operations, foster mutually
the group and the host including blockages beneficial economic
population in the area restricting access and social
of the agricultural to oil palm interaction between
operations plantings and mills, the local villages
resulting in reduced and the
and poorer quality agricultural
CPO and CPKO operations. In
production particular, the
group gives
priority to
applications for
employment from
members of the
local population,
encourages local
farmers and
tradesmen to act as
suppliers to the
group, its
employees and their
dependents and
promotes
smallholder
development of oil
palm plantings
Disputes over Disruption of The group has
compensation payable operations, established
for land areas including blockages standard procedures
allocated to the group restricting access to ensure fair and
that were previously to the area the transparent
used by local subject of the compensation
communities for the disputed negotiations and
cultivation of crops compensation encourages the
or as respects which local authorities,
local communities with whom the group
otherwise have rights has developed good
relations and who
are therefore
generally
supportive of the
group, to assist in
mediating
settlements
Individuals party to a Disruption of Where claims from
compensation agreement operations, individuals in
subsequently denying including blockages relation to
or disputing aspects restricting access compensation
of the agreement to the areas the agreements are
subject of the found to have a
compensation valid basis the
disputed by the group seeks to
affected individuals agree a new
compensation
arrangement; where
such claims are
found to be falsely
based the group
encourages
appropriate action
by the local
authorities
Coal and stone
operations
Operational factors
Failure by external Loss of prospective The group
contractors to achieve revenue endeavours to use
agreed production experienced
volumes with optimal contractors, to
stripping values or supervise them
extraction rates closely and to take
care to ensure that
they have equipment
of capacity
appropriate for the
planned production
volumes
External factors, in Delays to receipt or Deliveries are not
particular weather, loss of revenue normally time
delaying or preventing critical and
delivery of extracted adverse external
coal and stone factors would not
normally have a
continuing impact
for more than a
limited period
Geological Unforeseen The group seeks to
assessments, which are extraction ensure the accuracy
extrapolations based complications of geological
on statistical causing cost assessments of any
sampling, proving overruns and extraction
inaccurate production delays or programme
failure to achieve
projected production
Prices
Volatility of Reduced revenue and The high quality of
international coal a consequent the coal in the
prices and local reduction in cash group's main coal
competition reducing flow and profit concession may
stone prices limit volatility.
There are currently
no other stone
quarries in the
vicinity of the
group's deposits
and the cost of
transporting stone
should restrict
competition
Imposition of Reduced revenue and The Indonesian
additional royalties a consequent government has not
or duties on the reduction in cash to date imposed
extraction of stone or flow and profit measures that would
coal seriously affect
the viability of
Indonesian stone
quarrying or coal
mining operations
(MORE TO FOLLOW) Dow Jones Newswires
April 29, 2019 02:02 ET (06:02 GMT)
DJ R.E.A. Holdings plc: Annual reports and accounts -5-
Unforeseen variations Inability to supply Geological
in quality of deposits product within the assessments ahead
specifications that of commencement of
are, at any extraction
particular time, in operations should
demand with have identified any
consequent loss of material variations
revenue in quality
Environmental, social
and governance
practices
Failure by the coal Reputational and The areas of the
and stone operations financial damage coal and stone
to meet the expected concessions are
standards relatively small
and should not be
difficult to
supervise. The
group is committed
to international
standards of best
environmental and
social practice
and, in particular,
to proper
management of waste
water and
reinstatement of
quarried and mined
areas on completion
of extraction
operations
General
Currency
Strengthening of Adverse exchange As respects costs
sterling or the movements on those and sterling
Indonesian rupiah components of group denominated
against the dollar costs and funding shareholder
that arise in capital, the group
Indonesian rupiah or considers that this
sterling risk is inherent in
the group's
business and
structure and must
simply be accepted.
As respects
borrowings, where
practicable the
group seeks to
borrow in dollars
but, when borrowing
in another
currency, considers
it better to accept
the resultant
currency risk than
to hedge that risk
with hedging
instruments
Funding
Bank debt repayment Inability to meet The group maintains
instalments and other liabilities as they good relations with
debt maturities fall due its bankers and
coincide with periods other holders of
of adverse trading and debt who have
negotiations with generally been
bankers and investors receptive to
are not successful in reasonable requests
rescheduling to moderate debt
instalments, extending profiles when
maturities or circumstances
otherwise concluding require; moreover,
satisfactory the directors
refinancing believe that the
arrangements fundamentals of the
group's business
will facilitate
procurement of
additional equity
capital should this
prove necessary
Counterparty risk
Default by a supplier, Loss of any The group maintains
customer or financial prepayment, unpaid strict controls
institution sales proceeds or over its financial
deposit exposures which
include regular
reviews of the
creditworthiness of
counterparties and
limits on exposures
to counterparties.
Sales are generally
made on the basis
of cash against
documents
Regulatory exposure
New, and changes to, Restriction on the The directors are
laws and regulations group's ability to not aware of any
that affect the group retain its current specific planned
(including, in structure or to changes that would
particular, laws and continue operating adversely affect
regulations relating as currently the group to a
to land tenure, work material extent;
permits for expatriate current regulations
staff and taxation) restricting the
size of oil palm
growers in
Indonesia will not
impact the group
for the foreseeable
future
Breach of the various Civil sanctions and, The group
continuing conditions in an extreme case, endeavours to
attaching to the loss of the affected ensure compliance
group's land rights rights or with the continuing
and the coal and stone concessions conditions
quarry concessions attaching to its
(including conditions land rights and
requiring utilisation concessions and
of the rights and that activities are
concessions) or conducted within
failure to maintain the terms of the
all permits and licences and
licences required for permits that are
the group's operations held and that
licences and
permits are
obtained and
renewed as
necessary
Failure by the group Reputational damage The group has
to meet the standards and criminal traditionally had,
expected in relation sanctions and continues to
to bribery, corruption maintain, strong
and slavery controls in this
area because
Indonesia, where
all of the group's
operations are
located, has been
classified as
relatively high
risk by the
International
Transparency
Corruption
Perceptions Index
Restrictions on Constraints on the Maintenance of good
foreign investment in group's ability to relations with
Indonesian mining earn an equity local partners to
concessions, limiting return on its ensure that returns
the effectiveness of investment appropriately
co-investment reflect agreed
arrangements with arrangements
local partners
Country exposure
Deterioration in the Difficulties in In the recent past,
political or economic maintaining Indonesia has been
situation in Indonesia operational stable and the
standards Indonesian economy
particularly if has continued to
there was a grow but, in the
consequential late 1990s,
deterioration in the Indonesia
security situation experienced severe
economic turbulence
and there have been
subsequent
occasional
instances of civil
unrest, often
attributed to
ethnic tensions, in
(MORE TO FOLLOW) Dow Jones Newswires
April 29, 2019 02:02 ET (06:02 GMT)
DJ R.E.A. Holdings plc: Annual reports and accounts -6-
certain parts of
Indonesia. The
group has never,
since the inception
of its East
Kalimantan
operations in 1989,
been adversely
affected by
regional security
problems
Introduction of Restriction on the The directors are
exchange controls or transfer of fees, not aware of any
other restrictions on interest and circumstances that
foreign owned dividends from would lead them to
operations in Indonesia to the UK believe that, under
Indonesia with potential current political
consequential conditions, any
negative Indonesian
implications for the government
servicing of UK authority would
obligations and impose exchange
payment of controls or
dividends; loss of otherwise seek to
effective management restrict the
control group's freedom to
manage its
operations
Mandatory reduction of Forced divestment of The group accepts
foreign ownership of interests in there is a
Indonesian plantation Indonesia at below significant
operations market values with possibility that
consequential loss foreign owners may
of value be required over
time to divest
partially ownership
of Indonesian oil
palm operations but
has no reason to
believe that such
divestment would be
at anything other
than market value.
Moreover, the group
has local
participation in
all its Indonesian
subsidiaries
Miscellaneous
relationships
Disputes with staff Disruption of The group
and employees operations and appreciates its
consequent loss of material dependence
revenues upon its staff and
employees and
endeavours to
manage this
dependence in
accordance with
international
employment
standards as
detailed under
"Employees" in
"Sustainability" of
the annual report
Breakdown in Reliance on the The group
relationships with the Indonesian courts endeavours to
local shareholders in for enforcement of maintain cordial
the company's the agreements relations with its
Indonesian governing its local investors by
subsidiaries arrangements with seeking their
local partners with support for
the uncertainties decisions affecting
that any juridical their interests and
process involves and responding
with any failure of constructively to
enforcement likely any concerns that
to have a material they may have
negative impact on
the value of the
coal and stone
operations because
the concessions are
at the moment
legally owned by the
group's local
partners
Viability statement
The group's business activities, together with the factors likely to affect
its future development, performance and position are described in the
"Strategic report" above which also provides (under the heading "Finance") a
description of the group's cash ?ow, liquidity and ?nancing adequacy and
treasury policies. In addition, note 24 to the consolidated ?nancial
statements includes information as to the group's policy, objectives and
processes for managing capital, its ?nancial risk management objectives,
details of ?nancial instruments and hedging policies and exposures to credit
and liquidity risks.
The "Risks and uncertainties" section of the Strategic report describes the
material risks faced by the group and actions taken to mitigate those risks.
In particular, there are risks associated with the group's local operating
environment and the group is materially dependent upon selling prices for
crude palm oil ("CPO") and crude palm kernel oil ("CPKO") over which it has
no control.
As respects funding risk, the group has material indebtedness, in the form
of bank loans and listed notes. Some $9.1 million of bank indebtedness falls
due for repayment during 2019 and a further $52.3 million over the period
2020 to 2022. In addition, GBP30.9 million ($39.1 million) of 8.75 per cent
guaranteed sterling notes 2020 (the "sterling notes") will become repayable
in August 2020 and $24.0 million of 7.5 per cent dollar notes 2022 (the
"dollar notes") will become repayable in June 2022. In view of the material
component of the group's indebtedness falling due in the period to 31
December 2022, as described above, the directors have chosen this period for
their assessment of the long-term viability of the group.
With the improvement in operating performance and CPO prices ?rming since
2018, the group's plantation operations can be expected to generate
increasing cash ?ows going forward. In addition, the arrangements to
recommence operations at the group's principal coal concession can be
expected to enhance future cash ?ow. Whilst the group hopes to resume its
extension planting programme when funding permits, for the moment this is on
hold. Moreover, the successful completion of the divestment of PT Putra
Bongan Jaya in 2018 and the extension of the group's third mill to almost
double its capacity in 2019 means that the group is unlikely to require an
additional mill for several years, if at all. Accordingly, the group can
reasonably expect that from 2020 onwards a much greater proportion of
operational cash ?ows will be available to reduce debt than has been the
case for many years.
In 2019, the group will still incur signi?cant capital expenditure on the
third mill extension, necessary enhancements to the other mills and upkeep
of existing immature areas. To ensure the availability of suf?cient funding
for these purposes, the group is at an advanced stage in discussions to
re?nance the bank indebtedness falling due in 2019 with longer term bank
indebtedness. Following completion of this re?nancing, the group will resume
discussions with its Indonesian bankers on reduction of interest costs by
conversion of a proportion of the group's rupiah loans to dollar loans.
The directors expect that the improving outlook for the group's internally
generated cash ?ows will permit the group to repay the group indebtedness
falling due for repayment during the period of assessment other than a
proportion of the sterling notes falling due for repayment in 2020 which the
directors would expect to be able to re?nance with new notes. However,
should this not prove the case, or should additional funding otherwise be
required, the group will seek to raise additional capital by an issue of
shares or of a share linked instrument.
Based on the foregoing and after making enquiries, the directors therefore
have a reasonable expectation that the company and the group have adequate
resources to continue in operational existence for the period to 31 December
2022 and to remain viable during that period.
Going concern
Material risks faced by the group are set out in the "Risks and
uncertainties" section of the "Strategic report" with an indication of those
risks regarded by the directors as potentially signi?cant together with
mitigating and other relevant considerations for the management of risks.
Financing policies are described on pages 33 and 34 of the Strategic report
and 2018 developments relating to capital structure are detailed in the
"Finance" section of the Strategic report under "Capital structure". The
directors have set out their assessment of liquidity and ?nancing adequacy
on pages 32 and 33 of the Strategic report.
Based on the foregoing, having made due enquiries, the directors reasonably
expect that the company and the group have adequate resources to continue in
operational existence for at least twelve months from the date of approval
of the ?nancial statements, and therefore they continue to adopt the going
(MORE TO FOLLOW) Dow Jones Newswires
April 29, 2019 02:02 ET (06:02 GMT)
DJ R.E.A. Holdings plc: Annual reports and accounts -7-
concern basis of accounting in preparing the ?nancial statements.
DIRECTORS' CONFIRMATION OF RESPONSIBILITY
The directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and regulations.
To the best of the knowledge of each of the directors:
· the ?nancial statements, prepared in accordance with International
Financial Reporting Standards, give a true and fair view of the assets,
liabilities, ?nancial position and pro?t or loss of the company and the
undertakings included in the consolidation taken as a whole;
· the "Strategic report" section of this annual report includes a fair
review of the development and performance of the business and the position
of the company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face; and
· the annual report and ?nancial statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the company's performance, business model and
strategy.
The current directors of the company and their respective functions are set
out in the "Board of directors" section of the annual report.
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2018
2018 2017
$'000 $'000
Revenue 105,479 100,241
Net gain / (loss) arising from changes in
fair value of agricultural produce inventory
305 (1,069)
Cost of sales:
Depreciation and amortisation (23,014) (22,215)
Other costs (76,571) (64,062)
_______ _______
Gross profit 6,199 12,895
Distribution costs (1,258) (1,378)
Administrative expenses (15,668) (13,681)
_______ _______
Operating loss (10,727) (2,164)
Investment revenues 292 1,072
Profit on disposal of subsidiary 10,373 -
Finance costs (5,412) (20,770)
_______ _______
Loss before tax (5,474) (21,862)
Tax (12,734) (3,039)
_______ _______
Loss for the year (18,208) (24,901)
_______ _______
Attributable to:
Ordinary shareholders (22,021) (27,408)
Preference shareholders 8,353 7,777
Non-controlling interests (4,540) (5,270)
_______ _______
(18,208) (24,901)
_______ _______
Basic and diluted loss per 25p ordinary
share (US cents)
(54.4) (67.0)
All operations for both years are continuing
CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2018
2018 2017
$'000 $'000
Non-current assets
Goodwill 12,578 12,578
Intangible assets 2,581 3,477
Property, plant and equipment 407,164 482,341
Land titles 35,890 35,178
Coal and stone interests 46,011 37,877
Deferred tax assets 10,088 9,867
Non-current receivables 7,544 4,996
_______ _______
Total non-current assets 521,856 586,314
_______ _______
Current assets
Inventories 22,637 11,497
Biological assets 2,589 1,927
Investments - 2,730
Trade and other receivables 50,714 39,280
Cash and cash equivalents 26,279 5,543
_______ _______
Total current assets 102,219 60,977
_______ _______
Total assets 624,075 647,291
_______ _______
Current liabilities
Trade and other payables (59,779) (62,212)
Current tax liabilities - (11)
Bank loans (13,966) (28,140)
Other loans and payables (718) (10,469)
_______ _______
Total current liabilities (74,463) (100,832)
_______ _______
Non-current liabilities
Bank loans (117,008) (96,991)
Sterling notes (38,213) (41,364)
Dollar notes (23,724) (23,649)
Deferred tax liabilities (79,247) (79,600)
Other loans and payables (30,146) (28,120)
_______ _______
Total non-current liabilities (288,338) (269,724)
_______ _______
Total liabilities (362,801) (370,556)
_______ _______
Net assets 261,274 276,735
_______ _______
Equity
Share capital 132,528 132,528
Share premium account 42,401 42,401
Translation reserve (42,470) (50,897)
Retained earnings 114,360 135,074
_______ _______
246,819 259,106
Non-controlling interests 14,455 17,629
_______ _______
Total equity 261,274 276,735
_______ _______
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018
2018 2017
$'000 $'000
Loss for the year (18,208) (24,901)
_______ _______
Other comprehensive income
Items that may be reclassified to profit
or loss:
Actuarial gains / (losses) 1,732 (205)
Deferred tax on actuarial (gains) / losses (425) 41
_______ _______
1,307 (164)
Items that will not be reclassified to
profit or loss: instrument
Exchange differences on translation of 14,087 (11,419)
foreign operations
Exchange differences on deferred tax 3,110 (279)
_______ _______
18,504 (11,862)
_______ _______
Total comprehensive income for the year 296 (36,763)
_______ _______
Attributable to:
Ordinary shareholders (3,517) (39,270)
Preference shareholders 8,353 7,777
Non-controlling interests (4,540) (5,270)
_______ _______
296 (36,763)
_______ _______
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
Share Share Translation Retained Sub Non- Total
capital premium reserve earnings total controlling Equity
interests
$'000 $'000 $'000 $'000 $'000 $'000 $'000
At 1 121,426 42,585 (39,127) 161,839 286,7 22,827 309,55
January 23 0
2017
Total - - (11,770) (19,795) (31,5 (5,198) (36,76
comprehen 65) 3)
sive
income
Sale of
sharehold
ing in
sub-group
- - - 807 807 - 807
Issue of
new
preferenc
e shares
(cash) 11,102 (184) - - 10,91 - 10,918
8
Dividends
to
preferenc
e
sharehold - - - (7,777) (7,77 - (7,777
ers 7) )
_____ _____ _____ _____ _____ _____ _____
At 31 132,528 42,401 (50,897) 135,074 259,1 17,629 276,73
December 06 5
2017
Total - - 15,831 (12,361) 3,470 (3,174) 296
comprehen
sive
income
Disposal - - (7,404) - (7,40 - (7,404
of 4) )
subsidiar
y
Dividends
to
preferenc
e
sharehold - - - (8,353) (8,35 - (8,353
ers 3) )
_____ _____ _____ _____ _____ _____ _____
At 31 132,528 42,401 (42,470) 114,360 246,8 14,455 261,27
December 19 4
2018
_____ _____ _____ _____ _____ _____ _____
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2018
(MORE TO FOLLOW) Dow Jones Newswires
April 29, 2019 02:02 ET (06:02 GMT)
DJ R.E.A. Holdings plc: Annual reports and accounts -8-
2018 2017
$'000 $'000
Net cash (used in) / from operating (26,861) 19,670
activities
_______ _______
Investing activities
Interest received 94 29
Purchases of property, plant and (23,793) (31,960)
equipment
Purchases of intangible assets (33) (112)
Expenditure on land titles (1,005) (949)
Investment in coal and stone interests (5,593) (669)
Proceeds of disposal of subsidiary 2,793 -
_______ _______
Net cash used in investing activities (27,537) (33,661)
_______ _______
Financing activities
Preference dividends paid (8,353) (7,777)
Repayment of bank borrowings (105,768) (6,754)
New bank borrowings drawn 119,847 6,356
New borrowings from related party 13,440 7,400
Repayment of borrowings from related (13,440) (7,400)
party
Repayment of borrowings from (6,469) -
non-controlling shareholder
23,986
New borrowings from non-controlling - 16,586
shareholder
Proceeds of issue of preference shares, - 10,918
less costs of issue
Redemption of 2017 dollar notes - (20,156)
Redemption of 2017 sterling notes - (11,154)
Redemption of 2020 sterling notes (1,307) -
Proceeds of sale of investments 2,730 7,078
Repayment of balances from divested 50,027 -
subsidiary
Settlement of bank loan by purchaser of 24,748 -
subsidiary
_______ _______
Net cash from / (used in) financing 75,455 (4,903)
activities
_______ _______
Cash and cash equivalents
Net increase / (decrease) in cash and 21,057 (18,894)
cash equivalents
Cash and cash equivalents at beginning of 5,543 24,593
year
Effect of exchange rate changes (321) (156)
_______ _______
Cash and cash equivalents at end of year 26,279 5,543
_______ _______
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
The accompanying financial statements and notes 1 to 14 below (together the
"accompanying financial information") have been extracted without material
adjustment from the financial statements of the group for the year ended 31
December 2018 (the "2018 financial statements"). The auditor has reported on
those accounts; the reports were unqualified and did not contain statements
under sections 498(2) or (3) of the Companies Act 2006. Copies of the 2018
financial statements will be filed in the near future with the Registrar of
Companies. The accompanying financial information does not constitute
statutory accounts within the meaning of section 434 of the Companies Act
2006 of the company.
Whilst the 2018 financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by the
European Union as at the date of authorisation of those accounts, the
accompanying financial information does not itself contain sufficient
information to comply with IFRS.
The 2018 financial statements and the accompanying financial information
were approved by the board of directors on 26 April 2019.
2. Revenue
2018 2017
$'000 $'000
Sales of goods 105,297 99,956
Revenue from services 182 285
_______ _______
105,479 100,241
Investment revenue 292 1,072
_______ _______
Total revenue 105,771 101,313
_______ _______
3. Segment information
In the table below, the group's sales of goods are analysed by geographical
destination and the carrying amount of net assets is analysed by
geographical area of asset location. The group operates in two segments: the
cultivation of oil palms and coal and stone operations. In 2018 and 2017,
the latter did not meet the quantitative thresholds set out in IFRS 8
"Operating segments" and, accordingly, no analyses are provided by business
segment.
2018 2017
$'m $'m
Sales by geographical location:
Indonesia 105.5 100.2
Rest of World - -
_______ _______
105.5 100.2
_______ _______
Carrying amount of net assets by
geographical area of asset location:
UK, Continental Europe and Singapore 26.4 58.0
Indonesia 234.9 218.7
_______ _______
261.3 276.7
_______ _______
4. Agricultural produce inventory movement
The net gain / (loss) 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
2018 2017
$'000 $'000
Loss on disposal of property, plant and 10 -
equipment
Indonesian operations 14,728 14,685
Head office 5,696 5,665
_______ _______
20,434 20,350
Amount included as additions to property,
plant and equipment
(4,766) (6,669)
_______ _______
15,668 13,681
_______ _______
6. Finance costs
2018 2017
$'000 $'000
Interest on bank loans and overdrafts 15,485 15,665
Interest on dollar notes 1,877 2,669
Interest on sterling notes 4,085 5,184
Interest on other loans 2,549 1,896
Change in value of sterling notes arising
from exchange fluctuations
(2,297) 4,800
Change in value of loans arising from (12,547) (1,190)
exchange fluctuations
Other finance charges 1,022 817
_______ _______
10,174 29,841
Amount included as additions to property,
plant and equipment
(4,762) (9,071)
_______ _______
5,412 20,770
_______ _______
Amounts included as additions to property, plant and equipment arose on
borrowings applicable to the Indonesian operations and re?ected a
capitalisation rate of 15.9 per cent (2017: 23.5 per cent); there is no
directly related tax relief.
7. Tax
2018 2017
$'000 $'000
Current tax:
UK corporation tax - 28
Overseas withholding tax 1,552 1,538
Foreign tax 9 27
_______ _______
Total current tax 1,561 1,593
_______ _______
Deferred tax:
Current year 10,628 (794)
Prior year 545 2,240
_______ _______
Total deferred tax 11,173 1,446
_______ _______
Total tax 12,734 3,039
_______ _______
Taxation is provided at the rates prevailing for the relevant jurisdiction.
For Indonesia, the current and deferred taxation provision is based on a tax
rate of 25 per cent (2017: 25 per cent) and for the United Kingdom, the
taxation provision re?ects a corporation tax rate of 19 per cent (2017:
19.25 per cent) and a deferred tax rate of 19 per cent (2017: 19 per cent).
The rate of corporation tax will reduce from 19 per cent to 17 per cent from
1 April 2020.
8. Dividends
2018 2017
$'000 $'000
Amounts recognised as distributions to equity
holders:
Preference dividends of 9p per 8,353 7,777
share (2016: 9p per share)
_______ _______
8,353 7,777
_______ _______
9. Loss per share
2018 2017
$'000 $'000
(MORE TO FOLLOW) Dow Jones Newswires
April 29, 2019 02:02 ET (06:02 GMT)
Basic and diluted loss for the purpose of
calculating loss per share*
(22,021) (27,408)
_______ _______
'000 '000
Weighted average number of ordinary shares
for the purpose of basic and diluted loss
per share
40,510 40,510
_______ _______
* Being net loss attributable to ordinary shareholders
10. Property, plant and equipment
Plantings Buildings Plant, Construction Total
and equipment in progress
structures and vehicles
vehicles
$'000 $'000 $'000 $'000 $'000
Cost:
At 1 185,856 258,873 111,672 5,595 561,9
January 96
2017
Opening 3,966 (3,966) - - -
balance
reclassific
ation
Additions 11,547 17,605 1,008 1,678 31,83
8
Transfers - 2,128 69 (2,197) -
to/(from)
constructio
n in
progress
__ ___ __ ___ __ ___ ___ __ __
___
At 31 201,369 274,640 112,749 5,076 593,8
December 34
2017
Additions 7,617 12,228 2,545 6,165 28,55
5
Disposals - - (6,000) (258) - (6,25
property, 8)
plant and
equipment
Disposal of (26,437) (47,075) (1,730) (1,487) (76,7
subsidiary 29)
Transfers - 2,494 18 (2,512) -
to/(from)
constructio
n in
progress
__ ___ __ ___ __ ___ ___ __ __
___
At 31 182,549 236,287 113,324 7,242 539,4
December 02
2018
__ ___ __ ___ __ ___ ___ __ __
___
Accumulated
depreciatio
n:
At 1 17,771 27,098 45,205 - 90,07
January 4
2017
Charge for 9,190 5,281 6,948 - 21,41
year 9
__ ___ __ ___ __ ___ ___ __ __
___
At 31 26,961 32,379 52,153 - 111,4
December 93
2017
Charge for 9,861 5,651 6,499 - 22,01
year 1
Disposals - - - (249) - (249)
property,
plant and
equipment
Disposal of (257) (209) (551) - (1,01
subsidiary 7)
_____ ____ _ _____ _____ _____
At 31 36,565 37,821 57,852 - 132,2
December 38
2018
_____ _____ _____ _____ _____
Carrying
amount:
At 31 145,984 198,466 55,472 7,242 407,1
December 64
2018
__ ___ __ ___ __ ___ ___ __ __
___
At 31 174,408 242,261 60,596 5,076 482,3
December 41
2017
__ ___ __ ___ __ ___ ___ __ __
___
The depreciation charge for the year includes $103,000 (2017: $15,000) which
has been capitalised as part of additions to plantings and buildings and
structures.
At the balance sheet date, the book value of ?nance leases included in
property, plant and equipment was $nil (2017: $nil).
At the balance sheet date, the group had entered into contractual
commitments for the acquisition of property, plant and equipment amounting
to $1.1 million (2017: $8.2 million).
At the balance sheet date, property, plant and equipment of $153.0 million
(2017: $328.5 million) had been charged as security for bank loans.
11. Share capital
There have been no changes in share capital or ordinary shares held in
treasury during the year.
12. Movement in net borrowings
2018 2017
$'000 $'000
Change in net borrowings resulting from
cash flows:
Increase / (decrease) in cash and cash
equivalents, after exchange rate effects
20,736 (19,050)
Net (increase) / decrease in bank (14,079) 398
borrowings
Net decrease / (increase) in related 6,469 (16,586)
party borrowings
_______ _______
13,126 (35,238)
Redemption of 2017 sterling notes - 11,154
Redemption of 2017 dollar notes - 20,156
Redemption of 2020 sterling notes 1,307 -
Amortisation of sterling note issue (497) (537)
expenses
Amortisation of dollar notes issue (75) (111)
expenses
_______ _______
13,861 (4,576)
Currency translation differences 11,053 (4,780)
Net borrowings at beginning of year (214,465) (205,109)
_______ _______
Net borrowings at end of year (189,551) (214,465)
_______ _______
13. Related party transactions
Transactions between the company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note. Transactions between the company and its subsidiaries are dealt with
in the company's individual financial statements.
The remuneration of the directors, who are the key management personnel of
the group, is set out below in aggregate for each of the categories
specified in IAS 24 "Related party disclosures".
2018 2017
$'000 $'000
Short term benefits 1,564 1,364
Termination benefits - 258
_______ _______
1,564 1,622
_______ _______
During the year, R.E.A. Trading Limited ("REAT"), a related party, made
unsecured loans to the company on commercial terms. REAT is owned by Richard
Robinow (a director of the company) and his brother who, with members of
their family, also own Emba Holdings Limited, a substantial shareholder in
the company. The maximum amount loaned was $13.4 million, all of which had
been repaid by 31 December (2017: $7.4 million). Total interest paid during
the year was $243,000 (2017: $97,000). This disclosure is also made in
compliance with the requirements of Listing Rule 9.8.4.
14. Events after the reporting period
There have been no material post balance sheet events that would require
disclosure in, or adjustment to, these financial statements.
Press enquiries to:
R.E.A. Holdings plc
Tel: 020 7436 7877
ISIN: GB0002349065
Category Code: ACS
TIDM: RE.
LEI Code: 213800YXL94R94RYG150
Sequence No.: 8406
EQS News ID: 804213
End of Announcement EQS News Service
1: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=b7175c9bb47e31ea427be0251b246ff2&application_id=804213&site_id=vwd_london&application_name=news
2: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=b78e8a7665ae1d41c84fd9819f4e2030&application_id=804213&site_id=vwd_london&application_name=news
(END) Dow Jones Newswires
April 29, 2019 02:02 ET (06:02 GMT)
© 2019 Dow Jones News
