R.E.A. Holdings plc: publication of circular and updated on current trading (694707)

Dow Jones received a payment from EQS/DGAP to publish this press release.

 
 
 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. 
 
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 www.rea.co.uk [1] and will also be submitted to the National Storage 
Mechanism, where it will be available for inspection at 
www.morningstar.co.uk/uk/NSM [2]. 
 
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  Five months to 31 
                                    May 2018           May 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                     1,542              1,726 
estates 
 
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: [phone] 
 
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 www.rea.co.uk [1]. 
 
ISIN:          GB0002349065 
Category Code: CIR 
TIDM:          RE. 
LEI Code:      213800YXL94R94RYG150 
Sequence No.:  5639 
EQS News ID:   694707 
 
End of Announcement EQS News Service 
 
 
1: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=b7175c9bb47e31ea427be0251b246ff2&application_id=694707&site_id=vwd_london&application_name=news 
2: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=d16e1e2c58f305fa956b4e96999f613e&application_id=694707&site_id=vwd_london&application_name=news 
 

(END) Dow Jones Newswires

June 12, 2018 09:21 ET (13:21 GMT)