DJ REA Finance B.V.: Half year report
REA Finance B.V. (RE20)
REA Finance B.V.: Half year report
27-Sep-2019 / 11:07 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.
REA Finance B.V., Amsterdam
HALF YEARLY REPORT 2019
Management herewith presents to the shareholder the half yearly report and
condensed annual accounts of REA Finance B.V. (hereinafter the "Company")
for the six-month period ended 30 June 2019.
General
The Company is a private company with limited liability incorporated under
the laws of the Netherlands and acts as a finance company. The ultimate
holding company is R.E.A. Holdings plc (hereinafter "REAH"), London, United
Kingdom. The REAH Group is principally engaged in the cultivation of oil
palms in the province of East Kalimantan in Indonesia and in the production
of crude palm oil and by-products from fruit harvesting from its oil palms.
Overview of activities
At 1 January 2019 and 30 June 2019 the Company had outstanding GBP30,852,000
8.75 per cent guaranteed sterling notes 2020 (the "2020 sterling notes") and
a loan of GBP31,327,000 to REAH bearing interest at 8.9283 per cent. The 2020
sterling notes and the loan are repayable on 20 August 2020.
During the period under review the Company received interest on the loan
from the Company to REAH and paid interest to the holders of the 2020
sterling notes and to REAH.
Results
The net asset value of the Company as at 30 June 2019 amounts to GBP981,941
(30 June 2018: GBP934,012). The net result for the period of six months ended
30 June 2019 is a profit of GBP17,836 (30 June 2018: GBP13,862).
Risks and uncertainties
The principal risks and uncertainties facing the Company relate to the due
performance by REAH of its obligations under the loan agreement with the
Company. Any shortfall in performance would impact negatively on the
Company's ability to perform its obligations to the holders of the 2020
sterling notes. Further details of these risks and uncertainties were set
out on page 5 of the Company's annual report and accounts for the year ended
31 December 2018 (the "2018 Annual report"), a copy of which is available on
REAH's website at www.rea.co.uk [1].
To date there has been no subsequent change in the principal risks and
uncertainties facing the business, or in the arrangements designed to limit
the extent of the principal risks.
Risk management objectives
The Company's risk management objectives were set out on page 5 of the 2018
Annual Report, and there has been no subsequent change.
Related party transactions
There has been no change to related party transactions since 30 June 2019.
Future outlook
In the Financing and Outlook sections of the Interim management report
included in the REAH Half yearly report 2019, the directors of REAH included
the following:
The group's annual strategic report noted that the group was in discussions
with its Indonesian bankers regarding the provision of an additional loan of
$11.0 million to fund 2019 capital expenditure on the group's mills and, in
effect, re?nance bank loan repayments falling due in 2019. Unfortunately,
these discussions had to be temporarily suspended pending receipt by the
bank of the 2018 audited accounts of REAK and its subsidiaries, which REAK
has only very recently been able to submit to the bank. This is because the
unexpected dissolution of the group's former Indonesian audit ?rm and
transfer of the REAK audit to a successor ?rm signi?cantly delayed
completion of the audit of the accounts in question. Discussions with the
bank regarding the group's future funding are now being resumed.
In the meanwhile, the group has been engaged in discussions with its
customers regarding the provision of funding in exchange for forward
commitments of CPO and CPKO (but on a basis that pricing will be fixed at
time of delivery on an agreed basis by reference to then prevailing prices).
Supply arrangements recently agreed with one customer will result in that
customer subscribing to $3 million of new 2022 dollar notes for a total
consideration of $3 million in cash reflecting the value of the notes, the
value of the CPO supply arrangements agreed by the group and an agreement by
the company to repurchase the notes should the supply arrangements
terminate. It is expected that formal agreements in relation to these
arrangements will be executed, and that the new dollar notes will be issued,
before 31 October 2019. Discussions regarding arrangements for other
customer funding are continuing.
Once the customer funding arrangements referred to above have been
concluded, the group intends to formulate proposals for the re?nancing of
the GBP31.9 million nominal of sterling notes 2020 which fall due for
repayment in August 2020. Provided that CPO prices continue to recover, the
group also plans, as noted under "Dividends" above, to be able to submit
proposals to preference shareholders to deal with the arrears of preference
dividend and to resume payment of cash dividends.
The group recognises that implementation of the above proposed transactions
will require additional equity.
The rate of growth in demand for vegetable oils is now exceeding the rate of
growth in supply. This situation is expected to continue with increasing use
of bio-diesel in vegetable oil producing countries, a number of different
factors limiting supplies of the principal vegetable oils and, in
particular, as respects palm oil, increasing constraints on the expansion of
oil palm hectarage as a result of sustainability concerns. CPO stocks are
being absorbed and this is already being re?ected in an improvement in the
CPO price. The group agrees with the view of professional commentators that
CPO prices are likely to go higher.
The cost reduction initiatives referred to under "Agricultural operations"
above are expected to result in some savings in the second half of 2019, but
those savings will be limited as the initiatives are being implemented over
a period of several months and, in some cases, result in immediate one off
costs. Nevertheless, those savings that are achieved, combined with the
normal weighting of annual crops to the second half and the higher CPO
prices currently prevailing, are expected to result in a material
improvement in the results reported by the group for the second half,
subject to CPO prices remaining at current levels for the remainder of 2019.
For 2020 and subsequent years, the group is aiming to achieve savings, when
measured against 2019 budgeted costs, of not less than $10 million per
annum.
With good crop levels and yields being maintained, some potential for
further improvements to extraction rates and the impact of increased prices
on a lower cost base, the directors look forward to the group's return to
pro?tability.
Statement of directors' responsibilities
The sole director of the Company is Corfas B.V. The director confirms that
this condensed set of half-year annual accounts has been prepared in
accordance with Dutch Generally Accepted Accounting Principles as applicable
to interim reports, and that the interim management report herein includes a
fair review of the information required by the Disclosure and Transparency
Rules of the Financial Conduct Authority, paragraph DTR 4.2.7.
Amsterdam, 27 September 2019
Corfas B.V.
Balance Sheet at 30 June 2019
30 June 30 June 31 Dec
2019 2018 2018
Notes GBP'000 GBP'000 GBP'000
Fixed assets
Financial
fixed assets
Loan to parent 1 31,327 32,327 31,327
company
Total fixed 31,327 32,327 31,327
assets
Current assets
Receivable 482 378 418
from parent
company
Prepayments 10 10 -
Taxation 13 26 12
receivable
Cash and cash 17 55 88
equivalents
Total current 522 469 518
assets
Current
liabilities
Taxation - -
payable
Accruals 15 10 29
Total current 15 10 29
liabilities
Current assets 507 459 489
less current
liabilities
Total assets 31,834 32,786 31,816
less current
liabilities
Long term liabilities
2020 sterling 2 30,852 31,852 30,852
notes
Total long 30,852 31,852 30,852
term
liabilities
Shareholder's 3
equity
Paid-up and 16 16 16
called-up
share capital
Share premium 475 475 475
Translation (4) (4) (4)
reserve
Other reserves 477 433 433
Unappropriated 18 14 44
results
Total 982 934 964
shareholder's
equity
Total long term liabilities 31,834 32,786 31,816
and shareholder's equity
Profit and Loss account for the period of six months ended 30 June 2019
30 30 31 December 2018
June June
2019 2018
Notes GBP'000 GBP'000 GBP'000
Operating
expenses
General (28) (29) (68)
and
administr
ative
expenses
Operating (28) (29) (68)
result
Financial
income
and
expenditu
re
Interest 1,399 1,444 2,865
income on
loan to
parent
company
Other income - - 24
(MORE TO FOLLOW) Dow Jones Newswires
September 27, 2019 06:08 ET (10:08 GMT)
Interest (1,35 (1,39 (2,766)
expense 0) 4)
sterling
notes
Currency 1 (4) 16
translati
on
results
Total 50 46 123
financial
income
and other
expenditu
re
Result 22 17 55
before
taxation
Corporate 4 (4) (3) (11)
income
tax
Net 18 14 44
result
Notes to the accounts for the period of six months ended 30 June 2019
General
The Company was incorporated as a private company with limited liability
under the laws of the Netherlands on 7 November 2006 and has its statutory
seat in Amsterdam, the Netherlands. The ultimate holding company is R.E.A.
Holdings plc in London, United Kingdom. The principal activity of the
Company is to act as a finance company, and its place of business is at
Amstelveenseweg 760, 1081 JK Amsterdam, the Netherlands.
The functional currency of the Company is GBP, which is also the
presentation currency of the accounts.
Basis of preparation
The condensed financial information for the period of six months ended 30
June 2019 comprises the unaudited results for the six months ended 30 June
2019 and 30 June 2018 together with the audited annual accounts for the year
ended 31 December 2018 on which the auditors gave an unqualified report and
did not draw attention to any matters by way of emphasis.
The condensed half-year annual accounts for the period of six months ended
30 June 2019 have been prepared in accordance with accounting principles
generally accepted in the Netherlands and in conformity with provisions
governing annual accounts as contained in Part 9 of Book 2 of the Dutch
Civil Code, and should be read in conjunction with the audited annual
accounts for the year ended 31 December 2018.
The same accounting policies, presentation and methods of computation are
followed in this condensed set of half-year annual accounts as applied in
the Company's latest audited annual accounts.
Exchange rates
The exchange rates used are:
30 June 2019 30 June 2018 31 December 2018
1 GBP (pound 1.12 1.13 1.11
sterling) = EUR
(euro)
1. Fixed assets - loan to parent company
30 June 2019 30 June 2018 31 December
2018
GBP'000 GBP'000 GBP'000
R.E.A. Holdings 31,327 32,327 31,327
plc (due after
one year)
Total loan to 31,327 32,327 31,327
parent company
R.E.A. Holdings plc ("REAH"), the Company's parent company, is a company
incorporated in the United Kingdom whose share capital is listed on the
London Stock Exchange.
The loan to REAH bears interest at 8.9283 per cent and is repayable on 31
August 2020. The loan represents the on-lending of proceeds from the issue
of the 8.75 per cent guaranteed sterling notes 2020 (the "2020 sterling
notes").
2. 2020 sterling notes
30 June 2019 30 June 2018 31 December 2018
GBP'000 GBP'000 GBP'000
2020 8.75 per 30,852 31,852 30,852
cent guaranteed
sterling notes
(due after one
year)
30,852 31,852 30,852
The sterling notes are listed on the London Stock Exchange and are
irrevocably and unconditionally guaranteed by REAH and R.E.A. Services
Limited ("REAS"), a subsidiary of REAH incorporated in the United Kingdom.
The 2020 sterling notes are repayable on 20 August 2020.
3. Shareholder's equity
The authorised share capital of the Company amounts to EUR 90,000 divided
into 90,000 shares of EUR 1 each, of which 18,000 shares have been issued
and fully paid-up. The share capital is recorded at the rate of exchange at
the balance sheet date. At 30 June 2019 the rate was 1 GBP = 1.12 EUR (30
June 2018: 1 GBP = 1.13 EUR).
Share Share Translation Other Unappropriated
capit premi reserve reser results
al um ves
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Unaudited 16 475 (4) 433 14
balance as at
30 June 2018
Revaluation - - - - -
Result for - - - 30
the period
Appropriation - - - - -
of result
Audited 16 475 (4) 433 44
balance as at
Dec 31, 2018
Revaluation - - - - -
Result for - - - - 18
the period
Appropriation - - - 44 (44)
of result
Unaudited 16 475 (4) 477 18
balance as at
30 June 2019
4. Corporate income tax
30 June 2019 30 June 2018 31 December
2018
GBP'000 GBP'000 GBP'000
Corporate income (4) (3) (11)
tax - current
period
OTHER INFORMATION
Shareholder information
The Company's report and condensed half-year annual accounts for the six
months ended 30 June 2019 (the "half yearly report") is available for
downloading from REAH's website at www.rea.co.uk [1].
Statutory rules relating to the appropriation of results
In accordance with article 18 of the Company's articles of association, and
Book 2 of the Dutch Civil Code, the allocation of profits accrued in a
financial year shall be determined by the general meeting. If the general
meeting does not adopt a resolution regarding the allocation of the profits
prior to or at latest immediately after the adoption of the annual accounts,
the profits will be reserved.
The general meeting has the authority to make distributions. If the Company
is required by law to maintain reserves, this authority only applies to the
extent that the equity exceeds these reserves. No resolution of the general
meeting to distribute shall have effect without the consent of the
management board. The management board may withhold such consent only if it
knows or reasonably should expect that after the distribution, the Company
will be unable to continue the payment of its debts as they fall due.
Subsequent events
No events have occurred since the balance sheet date which would change the
financial position of the Company and which would require adjustment of or
disclosure in, the half yearly report and condensed half-year annual
accounts now presented.
ISIN: GB00BYY8MM32, GB00B1FWDD12
Category Code: IR
TIDM: RE20
LEI Code: 2138008NELEFK21TEZ94
Sequence No.: 21638
EQS News ID: 881631
End of Announcement EQS News Service
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