R.E.A. Holdings plc (RE.) R.E.A. Holdings plc: Half yearly
results 08-Sep-2021 / 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.
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R.E.A. HOLDINGS PLC (the "company")
HALF YEARLY REPORT 2021
HIGHLIGHTS
Overview
-- Performance turned around and group returned to profit
-- Stronger CPO and CPKO prices holding firm
-- Direct impacts of Covid remain limited
Financial
-- Revenue up 41 per cent to USD87.7 million (2020: USD62.4
million), benefitting from higher average sellingprices, including
premia for certified oil, for CPO and CPKO of, respectively, USD696
(2020: USD551) and USD1,029 (2020:USD625)
-- Cost of sales, excluding FFB purchases, increased 7 per cent
to USD46.5 million (2020: USD43.5 million); costof FFB purchases
increased in line with higher CPO prices and volume
-- EBITDA increased 147 per cent to USD27.7 million (2020:
USD11.2 million)
-- New Indonesian banking arrangements for the group's principal
operating subsidiary successfullyconcluded, with extended repayment
period and reduced interest rate significantly improving group cash
flow
-- Net indebtedness decreased by USD14.0 million to USD175.4
million (31 December 2020: USD189.4 million)
-- Further initiatives to improve financial resilience
progressing
-- Payment of preference dividends resumed
Agricultural operations
-- FFB production increased to 361,167 tonnes (2020: 342,653
tonnes)
-- Third party FFB purchases increased to 114,924 tonnes (2020:
98,297 tonnes)
-- CPO extraction rates averaged 22.3 per cent (2020: 22.9 per
cent)
Stone and coal interests
-- MoU signed by stone concession holding company ATP to supply
andesite to a neighbouring coal company andnegotiations with
quarrying contractor progressing
-- Coal contractor preparing to resume mining at IPA's
concession and deliveries from neighbouring coalcompany to IPA's
port facilities recently commenced
-- Group intends to recover coal loans and to withdraw from coal
interests as soon as practicable
Sustainability
-- Recertification audits successfully completed and licences
renewed pending conclusion of outstandingonsite audit work when
travel restrictions permit
-- Pilot project underway with an international body to
establish financing mechanism in support of localsmallholders with
objective of improved traceability of the FFB supply chain
-- Gold certificate awarded by the Ministry of Manpower for the
group's Covid prevention and controlprogramme
Outlook
-- More favourable trading environment and new banking
arrangements in place afford opportunity tostrengthen the group's
finances
-- With CPO and CPKO prices expected to remain at remunerative
levels, the group looks forward to a periodof prosperity
SUMMARY OF RESULTS
For the six months ended 30 June 2021
6 months to 6 months to
30 June 30 June
2021 2020
Results USD'000 USD'000
Revenue 87,667 62,356
Earnings before interest, tax, depreciation and amortisation* 27,670 11,242
Profit / (loss) before tax 7,648 (7,231)
Loss attributable to ordinary shareholders (2,366) (7,881)
Cash generated by operations** 29,187 29,809
Return per ordinary share
Loss (US cents) (5.4) (17.9)
* See note 5
** See note 17
INTERIM MANAGEMENT REPORT
Results
The result for the first half of 2021 was a profit before tax of
USD7.6 million. This compared with the loss of USD7.2 million
reported for the first half of 2020 and confirmed a turnaround in
the performance of the group.
The results benefitted from higher average selling prices as
shown by the following table:
6 months 6 months Year to
to 30 June to 30 June 31 December
2021 2020 2020
Average selling prices per tonne*: USD USD USD
CPO 696 551 579
CPKO 1,029 625 615
* Including premia for certified oil
With sales volumes also above 2020 levels, revenue of USD87.7
million showed a 41 per cent increase compared with the same period
in 2020.
Earnings before interest, depreciation, amortisation and tax
amounted to USD27.7 million (2020: USD11.2 million).
Specific components of the results
Cost of sales for the six months to 30 June 2021, with
comparative figures for 2020, was made up as follows:
6 months 6 months Year to
to 30 June to 30 June 31 December
2021 2020 2020
USD'm USD'm USD'm
Purchase of external FFB* 15.7 10.4 23.1
Estate operating costs 31.2 28.4 59.4
Depreciation and amortisation 14.1 14.1 28.0
Stock movement at historic cost 1.2 1.0 (0.3)
62.2 53.9 110.2
* Purchase of external FFB in 2021 includes purchases of FFB
from plantings that are being reallocated from group to plasma
The overall increase of USD8.3 million in cost of sales against
the corresponding period in 2020 was principally the result of the
higher volumes of FFB harvested and processed during the period and
an increase in the cost of external FFB purchases. The latter arose
from the adjustment of buying prices in line with the increased
selling prices of CPO and CPKO and, to a limited extent, the
reclassification as external FFB of the FFB harvested from areas
that were previously treated as group areas and that have been
reclassified as plasma from the start of 2021.
Administrative expenses amounted to USD8.4 million against
USD6.2 million in 2020, the increase reflecting the timing of
certain employee expenses which in 2020 were accrued in the second
half of the year rather than being accrued evenly over the course
of the year as in 2021. For the full year 2021, administrative
expenses are expected to be in line with 2020.
Finance costs for the half year amounted, before capitalisation,
to USD6.2 million against USD4.6 million in 2020. The increase was
wholly attributable to the reduced contribution from foreign
exchange profits which amounted to USD3.2 million against USD5.7
million.
The tax charge for the period was USD4.6 million against USD0.8
million in 2020. USD1.0 million of the 2021 charge relates to tax
paid by one of the Indonesian subsidiaries in respect of a prior
year and USD2.5 million represents a release of a deferred tax
asset as losses of previous years are utilised to offset current
year profits.
Dividends
As anticipated in the company's 2020 annual report, the fixed
semi-annual dividend on the company's preference shares that fell
due on 30 June 2021 was duly paid.
The cumulative arrears of preference dividend currently amount
to 18p per share and the directors intend that 1p per share of this
should be paid on 31 December 2021 together with the semi-annual
preference dividend arising on that date. The directors recognise
the importance of eliminating the arrears of the preference
dividend and will aim progressively to reduce such arrears as
rapidly as the performance of the group permits.
While the dividends on the preference shares are more than six
months in arrears, the company is not permitted to pay dividends on
its ordinary shares.
Agricultural operations
Key agricultural statistics were as follows:
6 months to 6 months to
30 June 30 June
2021 2020
FFB?harvested (tonnes)*
Group 361,167 342,653
Third party 114,924 98,297
Total 476,091 440,950
Production (tonnes)
Total FFB processed 464,045 430,293
FFB sold 8,121 11,773
CPO 103,299 98,651
Palm kernels 21,905 21,443
CPKO 8,310 6,912
Extraction rates (percentage)
CPO 22.3 22.9
Palm kernel 4.7 5.0
CPKO 38.6 39.8
Rainfall (mm)
Average across the estates 1,785 1,543
* Group harvested FFB for both periods excludes crops from
plantings that are being reallocated from group to plasma
Despite high average rainfall and the Ramadan holiday period
falling in the first half of 2021, production in the first half was
at good levels, with the typical year end peak crop period of 2020
extending into the early months of the year. Group FFB increased by
5 per cent compared with the previously reported crop for 2020,
notwithstanding the exclusion of crops from former group areas that
are being reallocated to plasma and which, accordingly, are now
treated as third party FFB.
Whilst the group has been fortunate in having suffered only
limited disruption as a result of Covid, Covid related travel
restrictions within Indonesia have made the recruitment of new
harvesters more difficult. As a result, the group's harvesters have
been under pressure to complete all necessary harvesting and there
has been some slippage in the collection of loose fruit, as a
consequence of which extraction rates have been lower than the
group would like. Close attention to harvesting standards, backed
by a range of measures including realignment of incentives to
encourage loose fruit recovery, has produced some improvement but
extraction rates remain a key area of focus.
The continuing repair and modification works in the mills
generally proceeded satisfactorily during the period under review.
Perdana oil mill ("POM") suffered a setback at the end of June when
a fire occurred in one of its two boilers. Fortunately, the
imminent completion of the Satria oil mill ("SOM") expansion
project should mean that the group retains sufficient capacity to
process all expected crops while the damaged Perdana boiler remains
out of commission. It is expected that the costs of reinstating the
damaged boiler will be largely covered by insurance.
In line with its previously stated intentions, the group has
recently commenced work on replanting one of the oldest mature
areas of some 80 hectares dating from 1994. Bunding and resupplying
certain areas prone to flooding is continuing.
Agricultural selling prices
CPO prices remained firm throughout the six months to 30 June
2021, supported by the favourable demand-supply balance for
vegetable oils generally and, in particular, for CPO where stocks
have been depleted by lower production in Malaysia. Opening the
year at USD1,050 per tonne, CIF Rotterdam, prices traded in the
range USD950 to USD1,295 per tonne in the six months to 30 June
2021 and currently stand at USD1,200 per tonne. The Indonesian
government has maintained export duty and levy at relatively high
levels, albeit that a recent revision of the scale of export levy
has resulted in some reduction in the overall level of export
charges.
The average selling price for the group's CPO for the six months
to the end of June 2021, including premia for certified oil, net of
export duty and levy, was USD696 per tonne (2020: USD551 per
tonne). The average selling price for the group's CPKO, on the same
basis, was USD1,029 per tonne (2020: USD625 per tonne).
If Covid issues abate, prices could start to ease towards the
end of the year and into 2022, although reduced fertiliser
applications by smaller producers in response to previously weak
CPO prices, labour shortages in Malaysia, as well as limited new
plantings are likely to support solid price levels.
Stone and coal interests
As previously reported, the stone concession holding company, PT
Aragon Tambang Pratama ("ATP"), has signed a memorandum of
understanding with a neighbouring coal company for the supply of
andesite for a new road planned to be built by that company running
in part through the group's estates. Following on from that, ATP
has recently agreed an easement to permit evacuation of stone from
the concession. With this easement in place, negotiations are being
progressed with a potential contractor for quarrying the stone on a
basis whereby the contractor would conduct the quarrying operations
and fund capital expenditure required to commence operations in
exchange for a participation in profits from the concession.
Good progress has been made by PT Indo Pancadasa Agrotama
("IPA") in preparing for resumed mining of its coal concession.
Land compensation with affected local individuals has been settled
and IPA has concluded an agreement with a coal company that holds a
concession adjacent to IPA to evacuate IPA coal utilising a road
running through the adjacent concession. This will avoid the costs
and delays that would be entailed were IPA to build its own
evacuation road. A work plan has been agreed with IPA's appointed
contractor (with whom a funding and profit sharing agreement is
already in place) and overburden removal is expected to start
shortly with coal recovery beginning in the final quarter of
2021.
IPA is also seeking to generate revenue from its port on the
Mahakam river by encouraging neighbouring coal companies to utilise
the port facilities in exchange for a fee per tonne of coal
shipped. One such arrangement has already been agreed and
deliveries have now commenced. Two other such arrangements are
under discussion.
Sustainability
Certification and recertification audits for the ISCC, RSPO, and
ISPO schemes in 2021 have been affected to some degree by ongoing
travel restrictions due to the Covid pandemic. Completed audits
were conducted remotely while some onsite field audits are still to
be carried out later in 2021 (such as for the RSPO Principles and
Criteria ("P&C") certification). All licences have been renewed
or extended, pending onsite audits where applicable.
Certificates for each of the group's three mills and the bulking
station were renewed and remain valid until March 2022.
The RSPO recertification audit for POM and its supply base as
well as the annual surveillance audit for Cakra oil mill ("COM")
and its supply base (in accordance with P&C certification) were
conducted partly remotely, resulting in the PalmTrace licences for
POM and COM being temporarily extended until later in 2021 pending
completion of the onsite audit work. The recertification audit (in
accordance with SCCS certification) for the kernel crushing plant
("KCP") at COM was completed remotely and the certificate has been
renewed until July 2026 subject to annual surveillance audits
commencing in May 2022. The PalmTrace licence for the Cakra KCP has
been renewed until July 2022.
The group is continuing to work with RSPO to resolve
compensation liabilities and remedial action in relation to minor
historic errors in the application of RSPO criteria affecting two
small areas of SYB, 959 hectares at CDM, land clearing at two
plasma cooperatives and the establishment of riparian reserves
along rivers in Berkat and Damai. Once the SYB position is
resolved, SOM can be audited to secure recertification and Tepian
Estate will be able to be reinstated within the POM certificated
supply base. Compensation liabilities agreed will be payable over
several years and should not exceed USD50,000 per annum.
The annual renewal under ISO 14001, the international standard
for effective environmental systems, for the REA Kaltim and SYB
estates and mills and the bulking station was successfully
completed in the first quarter of 2021.
The group is in discussion with an international funding body to
establish a financing mechanism that would enable smallholder
farmers to access funds for intensifying their oil palm yields and
developing alternative revenue streams. The objective is to reduce
pressure on the remaining forest areas outside the group's
concession areas as well as to improve the traceability of the FFB
supply chain. A pilot project is being set up to demonstrate the
effectiveness of this approach and 150 local smallholders in two
local villages have currently received training in best management
practices for oil palm to help improve yields and FFB quality. It
is intended that this training will be rolled out to other local
villages.
Plans to develop a network of trained community groups to
promote fire prevention and upgrade firefighting capabilities in
eight local villages have been hindered by the ongoing Covid
restrictions, but it remains the intention to expand this project
to include additional villages in 2022.
During 2021 further links have been established with waste and
recycling schemes in local communities to improve the efficiency
and increase the capacity of recycling centres. Under a programme
sponsored by the regional Environment and Forestry Service, waste
and recycling centres have already been established in the housing
areas for each of the group's estates and mills whereby households
receive financial compensation based on the volume of waste
deposited and the group benefits from the reduction in waste
collected for landfill.
The conservation department has continued to supply seedlings of
endemic forest fruit and timber tree species to local communities
and for restoration projects with 462 seedlings having been
supplied since January 2021. The conservation department maintains
a nursery with over 4,000 seedlings of local forest fruit and
timber trees for restoration at various sites, including the
regeneration of conservation reserves, and for the benefit of local
communities and the group's employees.
The biodiversity team's programme of mapping the locations of
all species within the group's conservation reserves has identified
192 species (mostly birds) so far in 2021 including 43 species of
Critically Endangered, Endangered and Vulnerable species in a
variety of habitats across the group's concession areas. Although
workshops and programmes have been disrupted by the Covid pandemic,
the conservation department has continued to promote conservation
and environmental awareness amongst local communities as well as
working with estate employees throughout the period. The
conservation department has also regularly participated in joint
patrols with government forestry department enforcement officers to
monitor and record instances of illegal forest clearing and logging
activities in areas surrounding the group's concession areas.
Financing
At 30 June 2021, the group continued to be financed by a
combination of debt and equity (comprising ordinary and preference
share capital). Total equity including non-controlling interests
amounted to USD244.9 million (31 December 2020: USD245.8
million).
Group indebtedness at 30 June 2021 totalled USD204.2 million
against USD201.2 million at 31 December 2020. Against this
indebtedness, the group held cash and cash equivalents of USD28.8
million (31 December 2020: USD11.8 million). As a result, the group
net indebtedness at 30 June 2021 of USD175.4 million showed a
decrease of some USD14.0 million from the group net indebtedness at
31 December 2020 of USD189.4 million.
The composition of the net indebtedness at 30 June 2021 was as
follows:
USD'm
7.5 per cent dollar notes 2022 ("dollar notes") (USD27.0 million nominal) 26.9
8.75 per cent guaranteed sterling notes 2025 ("sterling notes") (GBP30.9 million nominal) 43.4
Loan from related party 4.1
Loans from non-controlling shareholder 17.1
Indonesian term bank loans 110.6
Drawings under working capital lines 2.1
204.2
Cash and cash equivalents (28.8)
Net indebtedness 175.4
On 30 June 2021, REA Kaltim repaid its outstanding bank loan and
working capital facility totalling USD64.7 million and drew down
two new loans and a new working capital facility totalling USD82.8
million (all denominated in Indonesian rupiah). The original loan
had been repayable over the next 5 years with an interest rate of
10.5 per cent; the new loan is repayable over 8 years and has an
interest rate of 9.5 per cent. The same reduction in interest rates
applies to the working capital facility though this has been
reduced from USD4.9 million to USD2.1 million. It is now expected
that one outstanding technical requirement relating to the new REA
Kaltim loans, namely the registration of a charge over one title
deed (which was delayed by queries from the relevant local land
office), will be completed shortly.
Earnings before interest, tax, depreciation and amortisation for
the six months to 30 June 2021 amounted to USD27.7 million which
covered interest payments of USD9.3 million, the preference
dividend of USD4.5 million, capital expenditure of USD3.7 million
and taxes of USD4.0 million. Other material items affecting cash
flow were movements in bank indebtedness reflecting routine
periodic repayments and the changes to REA Kaltim's bank borrowings
described above, the recovery of USD5.8 million costs in respect of
the coal arbitration and the rolling forward of pre-sale advances
from customers keen to secure future supplies of CPO and CPKO. With
the improvement in the group's finances, credit from suppliers has
been reduced to normal levels.
The group is continuing to work towards improving the resilience
of the group's finances. Completion of the reorganisation of REA
Kaltim's bank borrowings represented a significant step forward and
the group is optimistic that over the coming months it will
complete a similar reorganisation of SYB's bank borrowings in which
the existing SYB bank loan is replaced with new bank loans of
longer tenor and providing additional overall funding. The group is
also close to completing agreements with its key customers on the
continuance of pre-sale advances from the customers concerned in
exchange for extended forward commitments of agreed volumes of CPO
and CPKO but on the basis that pricing is fixed at the time of
delivery by reference to prices then prevailing.
Concurrently with discussions with Mandiri, the group continues
to explore alternative financing options to ensure its ability to
redeem the USD27.0 million nominal of dollar notes falling due for
repayment in 2022 and to enable it progressively to reduce the
arrears of preference dividend.
Outlook
The group's return to profit in the first six months of 2021 is
encouraging and if, as is normal, crops are weighted to the second
half of the year and current CPO and CPKO prices are maintained for
the rest of the year, the group can expect that revenues for the
second half of 2021 will exceed those of the first half.
Current coal prices offer the prospect of a significant near
term recovery of the group's coal related loans to IPA and, if
quarrying of the stone concession owned by ATP can be successfully
initiated, this will further augment the group's cash flow.
The above favourable combination of circumstances provides an
opportunity to place the group's finances on a firmer footing and,
if, as the group expects, CPO and CPKO prices remain at
remunerative levels, the group can look forward to a period of
prosperity.
Approved by the board on 7 September 2021 and signed on its
behalf by
DAVID J BLACKETT
Chairman
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties, as well as mitigating and
other relevant considerations, affecting the business activities of
the group as at the date of publication of the 2020 annual report
(the "annual report") were set out on pages 37 to 43 of that
report, under the heading "Principal risks and uncertainties". A
copy of the report may be downloaded from the company's website at
www.rea.co.uk. Such principal risks and uncertainties in summary
comprise:
Agricultural operations
Climatic factors Material variations from the norm
Cultivation Impact of pests and diseases
Other operational factors Logistical disruptions to the production cycle, including transportation and input
shortages or cost increases
Produce prices Consequences of lower realisations from sales of CPO and CPKO
Expansion Delays in securing land or funding for extension planting
Climate change Reduced production due to change in levels and regularity of rainfall and sunlight hours
Environmental, social and Failure to meet expected standards
governance practices
Community relations Disruptions arising from issues with local stakeholders
Stone and coal interests
Operational factors Failure by external contractors to achieve agreed targets
Prices Consequences of lower prices and variations in quality of deposits
Environmental, social and Failure to meet expected standards
governance practices
General
Currency Adverse exchange movements between sterling or rupiah against the dollar
Funding Meeting liabilities as they fall due in periods of weaker produce prices
Counterparty Default by suppliers, customers or financial institutions
Regulatory and country Failure to meet or comply with expected standards or applicable regulations; adverse
exposure political, economic, or legislative changes in Indonesia
Miscellaneous relationships Disruption of operations and consequent loss of revenues as a result of disputes with
local stakeholders
The risks relating to "Agricultural operations - Expansion" and
"Stone and coal interests" are prospective rather than immediate
material risks because the group is currently not expanding its
agricultural operations and the stone and coal concessions in which
the group holds interests are not currently being mined. However,
such risks will apply when, as is contemplated, expansion and
mining are resumed or commenced. The effect of an adverse incident
relating to the stone and coal interests could impact the ability
of the stone and coal companies to repay their loans. As noted in
the group's 2020 annual report, it is ultimately the group's
intention to withdraw from its coal interests.
In addition to the foregoing risks, Covid remains a risk to the
group, assessment of which is measured against the impacts
experienced to date and the likelihood of further impacts in the
future. Overall, the Covid pandemic has had limited direct effect
on the group's day to day operations, save for periodic shortfalls
in the availability of harvesters, contractors and spare parts due
to travel restrictions. Adapted working practices and hygiene
measures in accordance with regulations and guidelines remain in
place throughout the group and on-site testing is conducted
regularly. The group has been awarded a gold certificate by the
Ministry of Manpower for its Covid prevention and control
programme.
In the first 8 months of 2021 there were some 500 confirmed
cases of Covid amongst employees and their family members, the vast
majority being asymptomatic or experiencing mild symptoms and
recovered or recovering. Regrettably, one employee has died as a
result of Covid and two employees have been hospitalised. A further
employee is suffering from long Covid.
The group has secured private vaccinations for a proportion of
employees who are not eligible for the government vaccination
programme and has submitted application for further vaccines with a
view to offering vaccinations to all employees who are not
eligible.
CPO prices have recovered strongly from the weak levels seen in
2020 in response to the onset of the Covid pandemic and
consequential disruption to the global economy reflecting the
favourable demand-supply balance for vegetable oils as economies
recover. Nevertheless, operational disruption and global economic
factors associated with Covid will continue to represent a risk
that the directors seek to address and mitigate by, wherever
possible, minimising costs without compromising the operations or
the group's financial position.
Climate change represents an emerging risk both for the
potential impacts of the group's operations on the climate and the
effects of climate change on the group's operations. The group has
been monitoring and working to minimise its greenhouse gas ("GHG")
emissions for over ten years, with levels of GHG emissions an
established key performance indicator for the group and for
accreditation by the independent certification bodies to which the
group subscribes. In addition to reporting on energy consumption
and efficiency in accordance with the UK Government's recently
introduced SECR framework, the group is preparing to incorporate
disclosures in accordance with the TCFD recommendations in its 2021
annual report.
The directors keep under review potential impacts on its
operations from the termination of UK membership of the European
Union ("Brexit"). This could result in a movement in sterling
against the dollar and rupiah with consequential impact on the
group dollar translation of its sterling costs and sterling
liabilities, although the directors do not believe that such impact
(which could be positive or negative) would be material in the
overall context of the group. Beyond this, and considering that the
group's entire operations are in Indonesia, as previously stated
the directors do not see Brexit as posing a signi?cant risk to the
group.
At the date of the annual report, in addition to the Covid
pandemic, risks assessed by the directors as being of particular
signi?cance were those as detailed under Agricultural operations
(Produce prices, Climatic factors and Other operational factors)
and General (Funding).
The directors' assessment, as respects produce prices and
funding, re?ects the key importance of those risks in relation to
the matters considered in the "Viability statement" in the
"Directors' report" on pages 45 to 47 of the annual report and
under "Financing" above and, as respects climatic and other
factors, the extent of the negative impact that could result from
adverse incidence of such risks.
The directors consider that the principal risks and
uncertainties for the second six months of 2021 continue to be
those set out in the annual report and as summarised above.
GOING CONCERN
In the statements regarding viability and going concern on pages
45 to 47 of the 2020 annual report, the directors set out
considerations with respect to the group's capital structure and
their assessment of liquidity and financing adequacy.
Since publication of the 2020 annual report, the group has
continued to benefit from firm CPO prices supported by the
favourable demand-supply balance for vegetable oils. Meanwhile, the
impact of Covid on the operations has been restricted to some
periodic shortages of harvesters and contractors due to travel
hesitancy as well as delays in deliveries of spare parts.
Discussions with the group's Indonesian bankers, PT Bank Mandiri
(Persero) Tbk ("Mandiri"), were successfully concluded in June 2021
with completion of an agreement that the Indonesian rupiah
denominated loan and working capital facility previously provided
by Mandiri to REA Kaltim be replaced with two new loans and a new
working capital facility, denominated in Indonesian rupiah. The new
facilities significantly improve the group's cash flow being
repayable over 8 rather than 5 years at an interest rate of 9.5 per
cent reduced from 10.5 per cent.
The group's net indebtedness reduced by USD14.0 million over the
six months to 30 June 2021. During the same period, the group
reduced to normal levels the extended credit from suppliers that
had built up during 2019 and 2020.
Proposals for the replacement of the existing Mandiri term loan
to SYB continue to advance through the bank's approval process. The
group is also close to completing agreements with its key customers
on the continuance of pre-sale advances from the customers. At the
same time, the group continues to explore alternative financing
options should these be needed.
Provided that CPO prices remain at current firm levels, the
group's operating and financial performance is expected to improve
further. Accordingly, and based on the foregoing, the directors
have a reasonable expectation that the company will be able to
continue its operations and meet its liabilities as they fall due
over the period of twelve months from the date of approval of the
accompanying condensed consolidated financial statements and they
continue to adopt the going concern basis of accounting in
preparing these statements.
DIRECTORS' RESPONSIBILITIES
The directors are responsible for the preparation of this half
yearly report.
The directors confirm that to the best of their knowledge:
-- the accompanying set of condensed consolidated financial
statements has been prepared in accordance withUK adopted IAS 34
"Interim Financial Reporting";
-- the "Interim management report" and "Principal risks and
uncertainties" sections of this half yearlyreport include a fair
review of the information required by rule 4.2.7R of the Disclosure
Guidance and TransparencyRules of the Financial Conduct Authority,
being an indication of important events that have occurred during
thefirst six months of the financial year and their impact on the
set of condensed consolidated financial statements,and a
description of the principal risks and uncertainties for the
remaining six months of the year; and
-- note 19 in the notes to the condensed consolidated financial
statements includes a fair review of theinformation required by
rule 4.2.8R of the Disclosure Guidance and Transparency Rules of
the Financial ConductAuthority, being related party transactions
that have taken place in the first six months of the current
financialyear and that have materially affected the financial
position or performance of the group during that period, andany
changes in the related party transactions described in the 2020
annual report that could do so.
The current directors of the company are as listed on page 44 of
the company's 2020 annual report.
Approved by the board on 7 September 2021
DAVID J BLACKETT Chairman
CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2021
6 months to 6 months to Year to
30 June 30 June 31 December
2021 2020 2020
Note USD'000 USD'000 USD'000
Revenue 2 87,667 62,356 139,088
Net loss arising from changes in fair value of agricultural produce 4 (3,279) (4,701) (777)
inventory
Cost of sales:
Depreciation and amortisation (14,092) (14,097) (27,969)
Other costs (48,092) (39,825) (82,215)
Gross profit 22,204 3,733 28,127
Distribution costs (249) (421) (2,835)
Administrative expenses 5 (8,377) (6,167) (16,486)
Operating profit / (loss) 13,578 (2,855) 8,806
Investment revenues 2 270 143 525
Impairments and similar charges - - (9,483)
Finance costs 6 (6,200) (4,519) (23,098)
Profit / (loss) before tax 7,648 (7,231) (23,250)
Tax 7 (4,585) (808) 7,336
Profit / (loss) for the period 3,063 (8,039) (15,914)
Attributable to:
Equity shareholders (2,366) (7,881) (13,183)
Preference shareholders 8 4,502 - -
Non-controlling interests 927 (158) (2,731)
3,063 (8,039) (15,914)
Loss per 25p ordinary share (US cents) 9 (5.4) (17.9) (30.0)
All operations in all periods are continuing.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2021
6 months to 6 months to Year to
30 June 30 June 31 December
2021 2020 2020
Note USD'000 USD'000 USD'000
Profit / (loss) for the period 3,063 (8,039) (15,914)
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations 1,673 - (3,504)
Deferred tax on exchange differences (630) 1,148 1,769
1,043 1,148 (1,735)
Items that will not be reclassified to profit or loss:
Actuarial gains / (losses) 5 268 1,835
Deferred tax on actuarial gains / (losses) (1) (67) (367)
4 201 1,468
Total comprehensive income for the period 4,110 (6,690) (16,181)
Attributable to:
Equity shareholders (1,319) (6,532) (13,450)
Preference shareholders 8 4,502 - -
Non-controlling interests 927 (158) (2,731)
4,110 (6,690) (16,181)
CONSOLIDATED BALANCE SHEET
As at 30 June 2021
30 June 30 June 31 December
2021 2020 2020
Note USD'000 USD'000 USD'000
Non-current assets
Goodwill 12,578 12,578 12,578
Intangible assets 10 575 1,613 1,098
Property, plant and equipment 11 366,545 384,922 376,551
Land 12 39,942 40,348 39,879
Financial assets: stone and coal interests 14 53,109 53,930 57,548
Deferred tax assets 6,762 13,001 8,931
Non-current receivables 5,302 3,889 5,302
Total non-current assets 484,813 510,281 501,887
Current assets
Inventories 15,085 12,947 16,069
Biological assets 2,373 1,514 2,953
Trade and other receivables 35,232 50,242 41,059
Cash and cash equivalents 28,795 6,337 11,805
Total current assets 81,485 71,040 71,886
Total assets 566,298 581,321 573,773
Current liabilities
Trade and other payables (45,930) (46,510) (51,644)
Current tax liabilities (1,564) (960) -
Bank loans 16 (16,214) (21,007) (54,148)
Dollar notes (26,937) - -
Other loans and payables (7,293) (7,541) (7,321)
Total current liabilities (97,938) (76,018) (113,113)
Non-current liabilities
Trade and other payables (14,436) - (20,712)
Bank loans 16 (96,463) (94,530) (56,062)
Sterling notes (43,444) (37,130) (42,908)
Dollar notes - (26,851) (26,891)
Deferred tax liabilities (39,774) (51,580) (39,581)
Other loans and payables (29,358) (49,480) (28,690)
Total non-current liabilities (223,475) (259,571) (214,844)
Total liabilities (321,413) (335,589) (327,957)
Net assets 244,885 245,732 245,816
Equity
Share capital 133,586 133,586 133,586
Share premium account 47,358 47,358 47,358
Translation reserve (24,790) (24,519) (25,833)
Retained earnings 68,331 76,831 70,693
224,485 233,256 225,804
Non-controlling interests 20,400 12,476 20,012
Total equity 244,885 245,732 245,816
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2021
Non-
Share Share Translation Retained controlling Total
capital premium reserve earnings Subtotal interests equity
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
At 1 January 2020 133,586 47,358 (26,032) 84,779 239,691 12,999 252,690
Loss for the period - - - (7,881) (7,881) (158) (8,039)
Other comprehensive income for the period - - 1,513 (67) 1,446 (365) 1,081
At 30 June 2020 133,586 47,358 (24,519) 76,831 233,256 12,476 245,732
Loss for the period - - - (5,302) (5,302) (2,573) (7,875)
Other comprehensive income for the period - - (1,314) (1,969) (3,283) 165 (3,118)
Reserve adjustment relating to warrant issue - - - 1,133 1,133 - 1,133
New equity from non-controlling shareholder - - - - - 9,944 9,944
At 31 December 2020 133,586 47,358 (25,833) 70,693 225,804 20,012 245,816
Profit for the period - - - 2,136 2,136 927 3,063
Dividends to preference shareholders - - - (4,502) (4,502) - (4,502)
Other comprehensive income for the period - - 1,043 4 1,047 (539) 508
At 30 June 2021 133,586 47,358 (24,790) 68,331 224,485 20,400 244,885
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2021
6 months to 6 months to Year to
30 June 30 June 31 December
2021 2020 2020
Note USD'000 USD'000 USD'000
Net cash from operating activities 17 15,889 14,433 33,479
Investing activities
Interest received 270 143 525
Proceeds on disposal of property, plant and equipment - 3 1,066
Purchases of property, plant and equipment (3,618) (4,179) (10,768)
Expenditure on land (63) (1,750) (3,897)
Repayment from / (investment in) stone and coal interests 4,439 (3,600) (7,218)
Net cash generated by / (used in) investing activities 1,028 (9,383) (20,292)
Financing activities
Preference dividends paid (4,502) - -
Repayment of bank borrowings (76,828) (6,867) (18,734)
New bank borrowings drawn 82,781 - 5,250
New borrowings from related party - 1,816 4,031
Repayment of borrowings from non-controlling shareholder - - (7,514)
New equity from non-controlling interests - - 9,944
Costs of extending repayment date of sterling notes - (425) (459)
Payment of warranty obligations relating to divested subsidiary - - (663)
Repayment of lease liabilities (1,100) (1,147) (2,434)
Net cash from / (used in) financing activities 351 (6,623) (10,579)
Cash and cash equivalents
Net increase / (decrease) in cash and cash equivalents 17,268 (1,573) 2,608
Cash and cash equivalents at beginning of period 11,805 9,528 9,528
Effect of exchange rate changes (278) (1,618) (331)
Cash and cash equivalents at end of period 28,795 6,337 11,805
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of accounting The condensed consolidated financial
statements for the six months ended 30 June 2021 comprise the
unaudited financial statements for the six months ended 30 June
2021 and 30 June 2020, neither of which has been reviewed by the
company's auditor, together with audited financial information for
the year ended 31 December 2020.
The information shown for the year ended 31 December 2020 does
not constitute statutory accounts within the meaning of section 435
of the Companies Act 2006, and is an abridged version of the
group's published financial statements for that year which have
been filed with the Registrar of Companies. The auditor's report on
those statements was unqualified and did not contain any statements
under section 498(2) or (3) of the Companies Act 2006.
The annual financial statements of the group will be prepared in
accordance with the United Kingdom adopted International Financial
Reporting Standards ("IFRS"). The condensed consolidated financial
statements included in this half yearly report have been prepared
in accordance with United Kingdom adopted International Accounting
Standard 34 "Interim Financial Reporting".
Going concern
The directors are satisfied that the group has sufficient
resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the condensed consolidated financial statements.
Adoption of new and revised standards
New standards and amendments to IFRSs issued by the
International Accounting Standards Board ("IASB") that are
mandatorily effective for an accounting period beginning on 1
January 2021 have no impact on the disclosures or on the amounts
reported in these condensed consolidated financial statements.
Accounting policies
The accounting policies and methods of computation adopted in
the preparation of the condensed consolidated financial statements
for the six months ended 30 June 2021 are the same as those set out
in the group's annual report for 2020.
The condensed consolidated financial statements for the six
months ended 30 June 2021 were approved by the board of directors
on 7 September 2021.
2. Revenue
6 months to 6 months to Year to
30 June 30 June 31 December
2021 2020 2020
USD'000 USD'000 USD'000
Sales of goods 87,021 61,795 137,993
Revenue from services 646 561 1,095
87,667 62,356 139,088
Investment revenue 270 143 525
Investment revenue includes USD1.3 million interest receivable
from the group's stone and coal interests (see note 14) net of a
provision of USD1.2 million (31 December 2020: interest receivable
of USD2.7 million, provision USD2.5 million, 30 June 2020: interest
receivable of USD1.3 million, provision USD1.2 million).
3. Segment information
The group continues to operate in two segments: the cultivation
of oil palms and stone and coal interests. In the period ended 30
June 2021 the latter did not meet the quantitative thresholds set
out in IFRS 8 "Operating segments" and, accordingly, no analyses
are provided by business segment.
4. Agricultural produce movement
The net loss arising from changes in fair value of agricultural
produce inventory represents the movement in the carrying value of
such inventory after reflecting the movement in the fair value of
the fresh fruit bunch input into that inventory (measured at fair
value at point of harvest) less the amount of the movement in such
inventory at historic cost (which is included in cost of
sales).
5. Administrative expenses
6 months to 6 months to Year to
30 June 30 June 31 December
2021 2020 2020
USD'000 USD'000 USD'000
(Profit) / loss on disposal of property, plant and equipment - (3) 537
Indonesian operations 7,232 5,203 13,865
Head office 1,826 1,957 3,701
9,058 7,157 18,103
Amount included as additions to property, plant and equipment (681) (990) (1,617)
8,377 6,167 16,486
6 months to 6 months to Year to
30 June 30 June 31 December
2021 2020 2020
USD'000 USD'000 USD'000
Earnings before interest, tax, depreciation and amortisation:
Operating profit / (loss) 13,578 (2,855) 8,806
Depreciation and amortisation 14,092 14,097 27,969
27,670 11,242 36,775
6. Finance costs
6 months to 6 months to Year to
30 June 30 June 31 December
2021 2020 2020
USD'000 USD'000 USD'000
Interest on bank loans and overdrafts 5,563 6,488 12,591
Interest on dollar notes 1,014 1,014 2,028
Interest on sterling notes 1,865 1,656 3,498
Interest on other loans 563 644 1,095
Interest on lease liabilities 134 171 301
Change in value of sterling notes arising from exchange fluctuations 544 (2,696) 1,869
Change in value of loans arising from exchange fluctuations (3,752) (2,967) (1,538)
Finance charge related to warrant issue - - 1,133
Other finance charges 288 310 2,380
6,219 4,620 23,357
Amount included as additions to property, plant and equipment (19) (101) (259)
6,200 4,519 23,098
Other finance charges include USD50,000 (31 December 2020:
USD1.1 million, 30 June 2020: USDnil) being the amount for the
period of the present value of the premium payable on redemption of
the sterling notes discounted at the coupon rate.
7. Tax
6 months to 6 months to Year to
30 June 30 June 31 December
2021 2020 2020
USD'000 USD'000 USD'000
Current tax:
UK corporation tax - - -
Overseas withholding tax 341 370 968
Foreign tax 1,146 75 343
Total current tax 1,487 445 1,311
Deferred tax:
Current year 3,098 363 (9,830)
Prior year - - 1,183
Total deferred tax 3,098 363 (8,647)
Total tax 4,585 808 (7,336)
Taxation is provided at the rates prevailing for the relevant
jurisdiction. For Indonesia, current and deferred taxation
provisions are based on a tax rate of 20 per cent (31 December
2020: 20 per cent, 30 June 2020: 25 per cent) and for the UK, the
taxation provisions reflect a corporation tax rate of 19 per cent
(2020: 19 per cent) and a deferred tax rate of 19 per cent (2020:
19 per cent). The corporation tax rate in the UK will increase from
19 per cent to 25 per cent from 1 April 2023. A deferred tax asset
relating to UK tax losses is carried at the rate in force during
the period in which the tax losses are expected to be utilised.
8. Dividends
6 months to 6 months to Year to
30 June 30 June 31 December
2021 2020 2020
USD'000 USD'000 USD'000
Amounts recognised as distributions to equity holders:
Preference dividends of 9p per share per annum 4,502 - -
As anticipated in the company's 2020 annual report, the fixed
semi-annual dividend on the company's preference shares that fell
due on 30 June 2021 was duly paid.
The cumulative arrears of preference dividend currently amount
to 18p per share and the directors intend that 1p per share of this
should be paid on 31 December 2021 together with the semi-annual
preference dividend arising on that date. The directors recognise
the importance of eliminating the arrears of the preference
dividend and will aim progressively to reduce such arrears as
rapidly as the performance of the group permits.
While the dividends on the preference shares are more than six
months in arrears, the company is not permitted to pay dividends on
its ordinary shares.
9. Loss per share
6 months to 6 months to Year to
30 June 30 June 31 December
2021 2020 2020
USD'000 USD'000 USD'000
Loss for the purpose of calculating loss per share* (2,366) (7,881) (13,183)
'000 '000 '000
Weighted average number of ordinary shares for the purpose of loss per share 43,951 43,951 43,951
* Being net loss attributable to ordinary shareholders
10. Intangible assets
30 June 30 June 31 December
2021 2020 2020
USD'000 USD'000 USD'000
Beginning of period 5,438 5,430 5,430
Additions - - 8
End of period 5,438 5,430 5,438
Amortisation:
Beginning of period 4,340 3,295 3,295
Additions 523 522 1,045
End of period 4,863 3,817 4,340
Carrying amount:
End of period 575 1,613 1,098
Beginning of period 1,098 2,135 2,135
Development expenditure on computer software that is not
integral to an item of property, plant and equipment is recognised
separately as an intangible asset.
11. Property, plant and equipment
Buildings Plant,
and equipment Construction
Plantings structures and vehicles in progress Total
USD'000 USD'000 USD'000 USD'000 USD'000
Cost:
At 1 January 2020 175,329 245,789 122,207 7,659 550,984
Additions 505 1,349 371 1,954 4,179
Reclassifications and adjustments (1) 240 374 (906) (293)
Disposals - property, plant and equipment - - (506) - (506)
At 30 June 2020 175,833 247,378 122,446 8,707 554,364
Additions 745 702 2,386 2,748 6,581
Reclassifications and adjustments 1 1,210 1,407 (2,342) 276
Disposals - property, plant and equipment (1,164) (696) (2,091) - (3,951)
At 31 December 2020 175,415 248,594 124,148 9,113 557,270
Additions 427 718 151 2,322 3,618
Reclassifications and adjustments (19) 1,585 414 (1,941) 39
Disposals - property, plant and equipment (55) - (311) - (366)
At 30 June 2021 175,768 250,897 124,402 9,494 560,561
Accumulated depreciation:
At 1 January 2020 46,208 45,015 65,405 - 156,628
Charge for period 5,083 3,636 4,856 - 13,575
Reclassifications and adjustments (1) (216) (38) - (255)
Disposals - property, plant and equipment - - (506) - (506)
At 30 June 2020 51,290 48,435 69,717 - 169,442
Charge for period 4,929 3,661 4,759 - 13,349
Reclassifications and adjustments 1 275 - - 276
Disposals - property, plant and equipment (206) (51) (2,091) - (2,348)
At 31 December 2020 56,014 52,320 72,385 - 180,719
Charge for period 5,085 3,817 4,667 - 13,569
Reclassifications and adjustments - 39 - - 39
Disposals - property, plant and equipment - - (311) - (311)
At 30 June 2021 61,099 56,176 76,741 - 194,016
Carrying amount:
At 30 June 2021 114,669 194,721 47,661 9,494 366,545
At 31 December 2020 119,401 196,274 51,763 9,113 376,551
At 30 June 2020 124,543 198,943 52,729 8,707 384,922
12. Land
30 June 30 June 31 December
2021 2020 2020
USD'000 USD'000 USD'000
Cost:
Beginning of period 44,201 42,920 42,920
Additions 63 1,750 3,897
Reclassifications and adjustments - - 1
Impairment - - (2,617)
End of period 44,264 44,670 44,201
Accumulated amortisation:
Beginning and end of period 4,322 4,322 4,322
Carrying amount:
End of period 39,942 40,348 39,879
Beginning of period 39,879 38,598 38,598
13. Contractual commitments
At the balance sheet date the group had entered into contractual
commitments for the acquisition of property, plant and equipment
amounting to USD4.0 million (31 December 2020: USD2.6 million, 30
June 2020: USD1.7 million).
14. Financial assets: stone and coal interests
30 June 30 June 31 December
2021 2020 2020
USD'000 USD'000 USD'000
Stone interest 24,266 23,444 24,266
Coal interests 31,843 33,486 36,282
Provision against loan to coal interests (3,000) (3,000) (3,000)
53,109 53,930 57,548
Interest bearing loans have been made to three Indonesian
companies that own rights in respect of certain stone and coal
concessions in East Kalimantan Indonesia. Pursuant to the
arrangements between the group and its local partners, the
company's subsidiary, KCC Resources Limited ("KCC"), has the right,
subject to satisfaction of local regulatory requirements, to
acquire 95 per cent of the concession holding group of companies at
original cost with the balance of 5 per cent remaining owned by the
local partners. Under current regulations such rights cannot be
exercised. In the meantime, the concession holding companies are
being financed by loan funding from the group and no dividends or
other distributions or payments may be paid or made by the
concession holding companies to the local partners without the
prior agreement of KCC. A guarantee has been executed by the stone
concession company in respect of the amounts owed to the group by
the two coal concession companies.
As previously reported, a merits hearing in the arbitration in
respect of certain claims made against PT Indo Pancadasa Agrotama
("IPA") by two claimants (connected with each other), with whom IPA
previously had conditional agreements relating to the development
and operations of the IPA coal concession, took place by way of a
virtual hearing at the end of June 2020. The company 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
the group's subsidiary, R.E.A. Services Limited ("REAS"), and its
managing director were stayed pending a conclusion of the
arbitration hearing. None of the claims was considered to have any
merit and this was confirmed in December 2020, when the arbitral
tribunal dismissed all claims in the arbitration against IPA and
the group and awarded costs on an indemnity basis to IPA. Such
costs totalling USD5.8 million were fully recovered in January
2021. The tribunal's decision also removed the grounds for the
separate stayed claims in respect of tortious conduct.
Included within the stone and coal interest balances at 30 June
2021 is cumulative interest receivable of USD10.1 million net of a
provision of USD10.1 million (31 December 2020: USD9.0 million
cumulative interest receivable and provision, 30 June 2020: USD6.5
million cumulative interest and provision). This interest has been
provided against due to the creditworthiness of the stone and coal
interests, which are not yet in production, and as such have no
operational cashflows from which to settle interest. The directors
will reassess these balances once production has begun and the
liquidity of the stone and coal interests has improved.
15. Fair values of financial instruments
The table below provides an analysis of the book values and fair
values of financial instruments, excluding receivables and trade
payables and Indonesian stone and coal interests, as at the balance
sheet dates. Cash and deposits, dollar notes and sterling notes are
classified as level 1 in the fair value hierarchy prescribed by
IFRS 13 "Fair value measurement" (level 1 includes instruments
where inputs to the fair value measurements are quoted prices in
active markets). All other financial instruments are classified as
level 3 in the fair value hierarchy (level 3 includes instruments
which have no observable market data to provide inputs to the fair
value measurements). No reclassifications between levels in the
fair value hierarchy were made during 2021 (2020: none).
30 June 2021 30 June 2020 31 December 2020
Book Fair Book Fair Book Fair
value value value value value value
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Cash and deposits* 28,795 28,795 6,337 6,337 11,805 11,805
Bank debt within one year** (16,214) (16,214) (21,007) (21,007) (54,148) (54,148)
Bank debt after more than one year** (96,463) (96,463) (94,530) (94,530) (56,062) (56,062)
Loan from non-controlling shareholder after more than one (6,025) (6,025) (13,539) (13,539) (6,025) (6,025)
year**
Loan from non-controlling shareholder after more than one (11,091) (11,091) (11,091) (11,091) (11,091) (11,091)
year*
Loan from related party within one year - sterling** (2,694) (2,694) - - (2,661) (2,661)
Loan from related party within one year - dollar* (1,370) (1,370) (1,847) (1,847) (1,370) (1,370)
Dollar notes - repayable 2022** (26,937) (26,224) (26,851) (25,143) (26,891) (25,683)
Sterling notes after one year - repayable 2025** (43,444) (42,637) (37,130) (34,064) (42,908) (37,896)
Net debt (175,443) (173,923) (199,658) (194,884) (189,351) (183,131)
* Bearing interest at floating rates
** Bearing interest at fixed rates
The fair values of cash and deposits, loans from non-controlling
shareholder, loans from related party and bank debt approximate
their carrying values since these carry interest at current market
rates. The fair values of the dollar notes and sterling notes are
based on the latest prices at which those notes were traded prior
to the balance sheet dates.
16. Bank loans
30 June 30 June 31 December
2021 2020 2020
USD'000 USD'000 USD'000
Bank loans 112,677 115,537 110,210
The bank loans are repayable as follows:
On demand or within one year 16,214 21,007 54,148
Between one and two years 17,100 19,240 9,823
After two years 79,363 75,290 46,239
112,677 115,537 110,210
Amount due for settlement within 12 months 16,214 21,007 54,148
Amount due for settlement after 12 months 96,463 94,530 56,062
112,677 115,537 110,210
Within "Amount due for settlement within 12 months" as at 31
December 2020 are bank loans totalling USD30.5 million from the
group's Indonesian bankers Mandiri to SYB and KMS that would have
been classified as non-current liabilities were it not for certain
breaches by those companies of loan covenants applicable at the
balance sheet date. Mandiri subsequently waived the breaches in
question. Such loans would have been classified as non-current
liabilities had the waivers been received before the balance sheet
date.
All bank loans are denominated in Indonesian rupiah and are net
of unamortised expenses. The weighted average interest rate in 2021
was 10.0 per cent (2020: 10.8 per cent).
Under the terms of its bank facilities, certain plantation
subsidiaries are restricted to an extent in the payment of interest
on borrowings from, and on the payment of dividends to, other group
companies. The directors do not believe that the applicable
covenants will affect the ability of the company to meet its cash
obligations.
At the balance sheet date, the group had undrawn Indonesian
rupiah denominated facilities of USDnil (2020: USDnil).
17. Reconciliation of operating profit to operating cash
flows
6 months to 6 months to Year to
30 June 30 June 31 December
2021 2020 2020
USD'000 USD'000 USD'000
Operating profit / (loss) 13,578 (2,855) 8,806
Amortisation of intangible assets 523 522 1,045
Depreciation of property, plant and equipment 13,569 13,575 26,924
Decrease in fair value of agricultural produce inventory 3,279 4,701 588
Decrease / (increase) in value of growing produce 580 1,250 (229)
(Profit) / loss on disposal of property, plant and equipment - (3) 537
Operating cash flows before movements in working capital 31,529 17,190 37,671
(Increase) / decrease in inventories (excluding fair value movements) (2,475) 687 1,789
Decrease / (increase) in receivables 5,626 53 (3,438)
(Decrease) / increase in payables (6,016) 9,962 18,285
Exchange translation differences 523 1,917 (728)
Cash generated by operations 29,187 29,809 53,579
Taxes paid (4,026) (5,534) (882)
Interest paid* (9,272) (9,842) (19,218)
Net cash from operating activities 15,889 14,433 33,479
* Of which USD134,000 is in respect of lease liabilities (31
December 2020: USD301,000, 30 June 2020: USD171,000)
18. Movements in net borrowings
6 months to 6 months to Year to
30 June 30 June 31 December
2021 2020 2020
USD'000 USD'000 USD'000
Change in net borrowings resulting from cash flows:
Increase / (decrease) in cash and cash equivalents, after exchange rate effects 16,990 (3,191) 2,277
Net (increase) / decrease in bank borrowings (5,953) 11,388 13,484
Decrease in borrowings from non-controlling shareholder - - 7,514
Net increase in related party borrowings - (1,816) (4,031)
11,037 6,381 19,244
Amortisation of sterling note issue expenses and premium (91) (159) (1,545)
Amortisation of dollar note issue expenses (46) (47) (87)
Amortisation of bank loan expenses (98) - (175)
Transfer from current assets - unamortised bank loan expenses 953 - 1,126
11,755 6,175 18,563
Currency translation differences 2,153 1,994 (87)
Net borrowings at beginning of period (189,351) (207,827) (207,827)
Net borrowings at end of period (175,443) (199,658) (189,351)
19. Related parties
Transactions between the company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
Loan from related party
R.E.A. Trading plc ("REAT"), a related party, has 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. Total loans outstanding at
30 June 2021 were USD4.1 million (31 December 2020: USD4.0 million,
30 June 2020 USD1.8 million). Interest paid during the period was
USD193,000 (31 December 2020: USD165,000, 30 June 2020 nil). This
disclosure is also made in compliance with the requirements of
Listing Rule 9.8.4(10).
20. Rates of exchange
30 June 2021 30 June 2020 31 December 2020
Closing Average Closing Average Closing Average
Indonesian rupiah to US dollar 14,496 14,323 14,302 14,622 14,105 14,570
US dollar to pounds sterling 1.3820 1.39 1.2268 1.27 1.3648 1.29
21. Events after the reporting period
There have been no material post balance sheet events that would
require disclosure in, or adjustment to, these condensed
consolidated financial statements.
22. Cautionary statement
This document contains certain forward-looking statements
relating to R.E.A. Holdings plc (the "group"). The group considers
any statements that are not historical facts as "forward-looking
statements". They relate to events and trends that are subject to
risk and uncertainty that may cause actual results and the
financial performance of the group to differ materially from those
contained in any forward-looking statement. These statements are
made by the directors in good faith based on information available
to them and such statements should be treated with caution due to
the inherent uncertainties, including both economic and business
risk factors, underlying any such forward-looking information.
References to group companies in this report are defined
below:
CDM PT Cipta Davia Mandiri
KMS PT Kutai Mitra Sejahtera
PBJ2 PT Persada Bangun Jaya
PU PT Prasetia Utama
REA Kaltim PT REA Kaltim Plantations
SYB PT Sasana Yudha Bhakti
The terms "FFB", "CPO" and "CPKO" mean, respectively, "fresh
fruit bunches", "crude palm oil" and "crude palm kernel oil".
References to "dollars" and "USD" are to the lawful currency of
the United States of America; to "rupiah" are to the lawful
currency of Indonesia; and to "sterling" or "pounds sterling" are
to the lawful currency of the United Kingdom.
Press enquiries to:
R.E.A. Holdings plc
Tel: 020 7436 7877
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ISIN: GB0002349065
Category Code: IR
TIDM: RE.
LEI Code: 213800YXL94R94RYG150
Sequence No.: 121677
EQS News ID: 1231866
End of Announcement EQS News Service
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September 08, 2021 02:00 ET (06:00 GMT)
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