R.E.A. Holdings plc: AGM Statement

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 R.E.A. Holdings plc (RE.) 
R.E.A. Holdings plc: AGM Statement 
 
13-Jun-2017 / 10:15 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" *or the *"company")* 
 
*AGM Statement * 
 
*Agricultural operations* 
 
Crops, production statistics and rainfall for the period from January to the 
end of May 2017 (with comparative figures for 2016) are set out below: 
 
+-----------------------------------+------------+-------------+ 
|                                   | *5 months  |*5 months to*| 
|                                   |    to*     |             | 
+-----------------------------------+------------+-------------+ 
|                                   |  *May-17*  |  *May-16*   | 
+-----------------------------------+------------+-------------+ 
|*Crop (tonnes)*                    |            |             | 
+-----------------------------------+------------+-------------+ 
|Fresh Fruit Bunches (FFB) - Jan /  |     160,000|      160,000| 
|Apr                                |            |             | 
+-----------------------------------+------------+-------------+ 
|FFB - May                          |      43,000|       32,000| 
+-----------------------------------+------------+-------------+ 
|                                   |     203,000|      192,000| 
+-----------------------------------+------------+-------------+ 
|FFB external                       |      44,000|       42,000| 
+-----------------------------------+------------+-------------+ 
|                                   |     247,000|      234,000| 
+-----------------------------------+------------+-------------+ 
|*Production (tonnes)*              |            |             | 
+-----------------------------------+------------+-------------+ 
|Crude palm oil (CPO)               |      53,400|       55,600| 
+-----------------------------------+------------+-------------+ 
|Palm kernels                       |      10,700|       11,000| 
+-----------------------------------+------------+-------------+ 
|Crude palm kernel oil (CPKO)       |       3,400|       4,100*| 
+-----------------------------------+------------+-------------+ 
|                                   |            |             | 
+-----------------------------------+------------+-------------+ 
|*Extraction rates (%)*             |            |             | 
+-----------------------------------+------------+-------------+ 
|CPO - Jan / Apr                    |        21.8|         23.9| 
+-----------------------------------+------------+-------------+ 
|CPO - May                          |        22.9|         23.7| 
+-----------------------------------+------------+-------------+ 
|Palm kernels - Jan / Apr           |         4.4|          4.8| 
+-----------------------------------+------------+-------------+ 
|Palm kernels - May                 |         4.4|          4.6| 
+-----------------------------------+------------+-------------+ 
|CPKO - Jan / Apr                   |        38.2|         30.4| 
+-----------------------------------+------------+-------------+ 
|CPKO - May                         |        38.0|         36.7| 
+-----------------------------------+------------+-------------+ 
|                                   |            |             | 
+-----------------------------------+------------+-------------+ 
|*Rainfall (mm)*                    |            |             | 
+-----------------------------------+------------+-------------+ 
|Jan / Apr                          |       1,412|        1,174| 
+-----------------------------------+------------+-------------+ 
|May                                |         314|          240| 
+-----------------------------------+------------+-------------+ 
|                                   |       1,726|        1,414| 
+-----------------------------------+------------+-------------+ 
 
* 2016 CPKO production includes CPKO from prior year kernel production. 
 
The heavy rains in the final months of 2016 persisted into the initial 
months of 2017 but started to ease off in May. As a result, harvesting and 
transportation difficulties experienced at the end of 2016 continued into 
2017 but the operating situation gradually improved over the period and 
there was a marked upturn in crop in May. 
 
Moving into the traditionally dryer period of the year, the programme to 
strengthen the group's road infrastructure can be accelerated. This will 
facilitate more efficient access to mature areas and evacuation of harvested 
crop to the group's mills, supporting the improving trend in production and 
extraction rates. 
 
Mill extraction rates for 2017 to date reflect the harvesting and 
transportation difficulties but these are now on an improving trend as 
evidenced by the rates for May. To some degree, oil extraction rates in the 
first eight months of 2016 will have been inflated by the drought conditions 
as these result in an abnormally low moisture content in FFB harvested. 
 
Whilst it is still too early to assess the impact of the increased 
fertiliser programmes introduced into the mature areas in 2016, the benefit 
of these programmes and other measures to optimise field disciplines with 
advice and support from the recently engaged agronomy adviser, should start 
to become progressively more evident in the second half of 2017 and 2018. 
 
Works to expand the capacity of the group's newest mill at Satria and to 
refurbish the last of four boilers in the older mills are on target for 
completion in 2017. When the programme of major works is finished, the group 
will have adequate capacity for its own processing requirements and to 
process expected crops from smallholders at least until 2019. 
 
The CPO price, CIF Rotterdam, started the year in strong fashion rising from 
$790 per tonne at the beginning of January to $857 per tonne by the middle 
of the month on the back of generally lower production. Thereafter, the 
price drifted gently downward reaching a low point of $662.50 in late April 
as stock levels started to increase. Since then, the price has seen some 
recovery, now standing at $712.5 per tonne and is expected to remain 
relatively stable around the $700 level for the remainder of the year, 
supported to a degree by keen demand in the major growth economies. CPKO 
prices in January maintained the exceptionally high premia over CPO 
experienced in the last quarter of 2016 but then declined sharply in 
February to reflect premia in line with historic norms. 
 
The average selling price for the group's CPO for the five months to the end 
of May 2017, on an FOB basis at the port of Samarinda, net of export levy 
and duty, was $623 per tonne (2016: $518 per tonne). The average selling 
price for the group's CPKO, on the same basis, was $1,356 per tonne (2016: 
$941 per tonne). The group continued to sell all of its ISCC certified CPO 
at a premium throughout the period. 
 
Development work in PBJ and CDM has progressed in the first months of 2017, 
but planting at both estates has been delayed until the weather becomes 
dryer and bunding to control flooding has been completed. Thereafter, 
planting out the 4,000 hectares planned for 2017 across both estates should 
be completed rapidly. The bunding now under construction at PBJ is on the 
northern section and is using the same techniques as the existing bunding 
that has proved effective throughout the recent months of heavy rains. 
 
Sales of renewable energy to PLN, the Indonesian national electricity 
company, for distribution to local villages amounted to over $250,000 in the 
five month period to the end of May 2017 (2016: $228,000) with household 
take-up continuing to grow each month. 
 
*Stone and coal operations* 
 
The limestone quarry adjacent to the group's PBJ property remains on track 
to start production during this month. The group is also working actively on 
the reopening of its Kota Bangun coal concession following the recent 
agreement with a new third party to resume mining of this concession. The 
group is in discussions to obtain access to an existing loading point on the 
Mahakam River to be used to evacuate production. 
 
*Finance* 
 
As previously reported, the group's financial position has been much 
improved over the last two years by the subscription of some $28 million for 
additional ordinary and preference capital, the issue of replacement 
sterling and dollar notes, maturing in, respectively, 2020 and 2022, 
totalling $65 million, the loan and equity investment by the group's new 
Indonesian partners, DSN, of $43 million, a new Indonesian term bank loan of 
$18 million and extensions to the maturity of other Indonesian bank 
borrowings. Discussions are continuing on limited further measures to 
improve the maturity profile of the group's indebtedness and the group's 
liquidity. 
 
*Outlook* 
 
Crop levels are now starting to improve. Bunch censuses are encouraging and, 
with improved disciplines in the field, yields gradually benefitting from a 
more intensive fertiliser regime and improved transport conditions, the 
directors are optimistic of increasing crops and, in due course, a full 
recovery in financial performance. 
 
Company enquiries: 
R.E.A. Holdings plc 
Tel: [phone] 
 
Media enquiries: 
Jennifer Renwick 
[e-mail] 
Tel: [phone] 
 
Language:      English 
ISIN:          GB0002349065 
Category Code: AGM 
TIDM:          RE. 
LEI Code:      213800YXL94R94RYG150 
Sequence No.:  4291 
 
End of Announcement EQS News Service 
 
582519 13-Jun-2017 
 
 

(END) Dow Jones Newswires

June 13, 2017 05:16 ET (09:16 GMT)