DJ R.E.A. Holdings plc: Update re certain matters
R.E.A. Holdings plc (RE.)
R.E.A. Holdings plc: Update re certain matters
07-Dec-2020 / 12:08 GMT/BST
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
R.E.A. Holdings plc ("REA")
Update re certain matters
Selling prices
Since May 2020, the price of crude palm oil ("CPO"), CIF Rotterdam, has
risen from a low of $510 per tonne to a current price of $920 per tonne.
Whilst the higher prices now prevailing are materially beneficial to REA,
the extent of the benefit is reduced by two imposts chargeable on exports of
Indonesian CPO: export duty and export levy.
Export duty is a tax payable to the Indonesian government. Export levy is
payable to a dedicated fund which utilises levy income to subsidise the
manufacture of biodiesel from CPO and to support other measures designed to
benefit the growing of oil palms in Indonesia. According to Oil World,
Indonesian biodiesel will consume approaching 8 million tonnes of CPO in
2020 and the Indonesian government has stated that it is committed to
increasing the mandatory usage of biodiesel in transport fuel.
Because biodiesel is a substitute for petroleum based diesel oil, it has to
be priced on a basis that reflects prevailing levels of petroleum oil
prices. As a result, at current CPO prices, the manufacture of biodiesel
would be uneconomic without the subsidy funded by the export levy.
Both export duty and export levy are calculated on sliding scales by
reference to a CPO reference price that is set periodically by the
Indonesian government on the basis of CIF Rotterdam and other recognised
benchmark CPO prices. Following the rise in the CPO price referred to above,
the Indonesian government has recently announced changes to the export levy
scale. As a result, the combined incidence of export duty and export levy at
different CPO reference prices is as shown by the table annexed to this
announcement. The current CPO reference price is $870.77.
CPO produced by REA is generally sold in the Indonesian local market. As
such, group sales are not subject to export duty or export levy. However,
arbitrage between the Indonesian local and international CPO markets
normally results in a local price that is broadly in line with prevailing
international prices after adjustment of the latter for delivery costs and
export duty and levy.
Bank financing
Agreement has recently been reached with the group's Indonesian bankers on
extension for a further year of the group's working capital facility,
equivalent to some $5 million, which fell due for renewal in November 2020.
Discussions are continuing as to possible additions to the group's term loan
facilities to fund, in part, nearer term repayments due in respect of those
facilities.
Claims against coal interest
As previously reported, PT Indo Pancadasa Agrotama ("IPA"), an Indonesian
company owning a coal concession near Kota Bangun in East Kalimantan, to
which REA has extended funding, has been the object of certain arbitration
claims by two claimants (connected with each other) with whom IPA previously
had conditional agreements relating to the development and operation of
IPA's coal concession. REA was joined as a party to the arbitration on a
prima facie basis and without prejudice to any final determination of
jurisdiction. Further separate, but related, potential claims threatened by
the two claimants in respect of, inter alia, alleged tortious conduct by
REA's subsidiary, R.E.A. Services Limited, and its managing director were
stayed pending a conclusion of the arbitration hearing.
Following a virtual merits hearing of the arbitration claims at the end of
June 2020, the arbitral tribunal has dismissed all claims in the arbitration
against IPA and REA and has awarded costs on an indemnity basis to IPA. The
tribunal's decision removes the grounds for the separate stayed claims in
respect of tortious conduct.
Trading update
REA plans to issue an update on 2020 trading early in 2021.
Enquiries:
R.E.A. Holdings plc
Tel: 020 7436 7877
ANNEXURE
COMBINED EXPORT LEVY AND EXPORT DUTY
From To Levy Duty Total Net price*
$ $ $ $ $ $
0 670 55 - 55 615
670 695 60 - 60 635
695 720 75 - 75 645
720 745 90 - 90 655
745 750 105 - 105 645
751 770 105 3 108 662
770 795 120 3 123 672
795 800 135 3 138 662
801 820 135 18 153 667
820 845 150 18 168 677
845 850 165 18 183 667
851 870 165 33 198 672
870 895 180 33 213 682
895 900 195 33 228 672
901 920 195 52 247 673
920 945 210 52 262 683
945 950 225 52 277 673
951 970 225 74 299 671
970 995 240 74 314 681
995 1000 255 74 329 671
1001 1050 255 93 348 702
1051 1100 255 116 371 729
1101 1150 255 144 399 751
1151 1200 255 166 421 779
1201 1250 255 183 438 812
1251 1300 255 200 455 845
*At top of band
ISIN: GB0002349065
Category Code: MSCM
TIDM: RE.
LEI Code: 213800YXL94R94RYG150
Sequence No.: 89166
EQS News ID: 1153247
End of Announcement EQS News Service
(END) Dow Jones Newswires
December 07, 2020 07:08 ET (12:08 GMT)
