published on 04/17/2025 at 08:00 from R.E.A. Holdings Plc (isin : GB0002349065)

R.E.A. Holdings plc: Annual report in respect of 2024

R.E.A. Holdings plc (RE.)
R.E.A. Holdings plc: Annual report in respect of 2024

17-Apr-2025 / 07:00 GMT/BST

R.E.A. HOLDINGS PLC (the company)

ANNUAL FINANCIAL REPORT 2024

The company's annual report for the year ended 31 December 2024 (including notice of the AGM to be held on 19 June 2025) (the annual report) will shortly be available for downloading from www.rea.co.uk/investors/financial-reports.

A copy of the notice of AGM will also be available to download from www.rea.co.uk/investors/calendar.

Upon completion of bulk printing, copies of the annual report will be despatched to persons entitled thereto and will be submitted to the National Storage Mechanism to be made available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

The sections below entitled Chairman's statement, Dividends, Principal risks and uncertainties, Longer term viability statement, Going concern and Directors' responsibilities have been extracted without material adjustment from the annual report. The basis of presentation of the financial information set out below is detailed in note 1 to the financial statements below.

HIGHLIGHTS

Overview

• Marked increase in profitability with EBITDA up 41.3 per cent to $61.6 million

• Debt profile and liquidity significantly improved

• Good progress in bringing stone and sand to commercial production

Financial

• Revenue increased by 6.3 per cent to $187.9 million (2023: $176.7 million) primarily reflecting higher average selling prices (net of export duty and levy) at $819 per tonne (2023: $718 per tonne) and CPKO at $1,094 per tonne (2023: $749 per tonne)

• Profit before tax of $38.9 million (2023: loss before tax of $29.2 million) principally due to higher revenues and positive non-routine items

• DSN group’s subscription of further shares in REA Kaltim completed in March 2024 with final subscription proceeds of $53.6 million, increasing DSN’s investment in the operating sub-group from 15 per cent to 35 per cent

• Successful discussions with Bank Mandiri to refinance maturing debt, with two new bank loans and one repackaged bank loan agreed and drawn during 2024

• Purchase and cancellation of £9.2 million nominal of sterling notes due for redemption in August 2025, leaving £21.7 million outstanding at 31 December 2024

• Group net indebtedness reduced to $159.3 million from $188.4 million (including CDM) at 31 December 2024; pre-sale advances reduced by $9.1 million

• Full discharge of outstanding arrears of preference dividend of $10.4 million (equivalent to 11.5p per preference share) in April 2024

Agricultural operations

• FFB harvested down 10.5 per cent to 682,522 tonnes (2023: 762,260) reflecting the widespread impact of drier weather conditions and reduced group hectarage due to the replanting programme

• Improved mill throughput with fewer breakdowns contributing to reduced labour costs

• Replanting and extension planting proceeding as planned (respectively, 1,531 and 1,037 hectares)

Stone and sand operations

• ATP now managed by the group and accounted for as a 95 per cent group subsidiary

• Stone production and sales started

• Sand operation close to commercial production

Sustainability and climate

• One of the first palm oil companies to be EUDR ready

• ZSL SPOTT score increased to 91.5 per cent (2023: 88.7 per cent)

• RSPO certified plantations increased to 84.4 per cent (2023: 79.7 per cent)

• Projects with smallholders to improve the sustainable component of the group’s supply chain and promote sustainable palm oil production

Outlook

• Operational performance projected to benefit from continuing improvements to productivity and progressively increasing crops from currently immature areas reaching maturity

• Stone production to provide a significant addition to results with sand production following

• Debt profile and liquidity further improved by recent Bank Mandiri agreements for further loans and rephased repayment terms providing additional cash resources equivalent to $52.6 million

• Discussions at an advanced stage with holders of $17.5 million nominal of dollar notes, out of a total outstanding of $27.0 million and currently due for redemption in June 2026, to roll over their notes to December 2028

• Cash flow expected to be at good level in 2025 due to current firm CPO and CPKO prices

CHAIRMAN'S STATEMENT

2024 saw a marked improvement in profitability of the group’s operations. Higher selling prices more than offset the lower than expected production volumes that were reportedly widespread across the palm oil industry in Indonesia. Estate operating costs were also well controlled.

Group revenue for 2024 amounted to $187.9 million, $10.2 million (6.3 per cent) higher than that achieved in 2023, resulting in EBITDA of $61.6 million, up by 41.3 per cent from 2023. Operating profits amounted to $35.0 million, 135.6 per cent higher than in the previous year (2023: $14.8 million).

FFB harvested fell back by 10.5 per cent in 2024 to 682,522 tonnes (2023: 762,260 tonnes). The fall can be attributed to generally widespread lower crop yields resulting from past drier weather conditions that inhibited female flowering as well as to the reduction in mature hectarage due to the group’s replanting programme. Third party FFB purchases were similarly lower than in 2023.

CPO, CPKO and palm kernel production for 2024 amounted to, respectively, 190,235 tonnes (2023: 209,994 tonnes), 18,086 tonnes (2023: 19,393 tonnes) and 44,286 tonnes (2023: 47,324 tonnes) with the group’s three mills continuing to operate efficiently, with oil losses consistently minimised and below the standards for the industry. Mill capacity utilisation, as measured by average throughput per hour, saw further improvement during the year with fewer breakdowns contributing to reduced mill labour costs.

Replanting and extension planting continued on schedule with a total of 1,531 hectares of mature palms being replanted and a further 1,037 hectares of new plantings being established in the group’s PU estate. Subject to availability of funding, these programmes are expected to continue during 2025 at a similar rate to that achieved in 2024.

Throughout 2024, the group continued to develop its leadership as a sustainable palm oil producer, cementing sustainability and climate action as core elements in all aspects of the group’s business and long term strategy. In addition to maintaining 100 per cent RSPO certification for its three mills, the proportion of its RSPO certified plantations increased to 84.4 per cent from 79.7 per cent in 2023. The group also became one of the first palm oil companies to be independently verified as EUDR-ready, ensuring that the operations align with evolving regulatory requirements. To support smallholder inclusion, the group launched a programme designed to assist smallholders achieve RSPO certification and EU compliance. In 2024, the group’s SPOTT score, in the assessment conducted by ZSL, increased to 91.5 per cent from 88.7 per cent in 2023, reinforcing the group’s status as a leading sustainable palm oil producer.

Good progress was made throughout 2024 in bringing both the stone and sand operations to commercial production, although some permitting delays meant that their contribution to the group’s financial results for the year was immaterial. Both operations, however, should start to make meaningful contributions in 2025. Following the change in its ownership structure, the stone company is now being managed and accounted for as a 95 per cent subsidiary of the company.

The CPO price, CIF Rotterdam, opened the year at $940 per tonne and remained firm during the first half of the year. The second half of the year saw prices strengthen considerably, largely as a consequence of generally lower CPO production and increased demand, closing at $1,265 per tonne at the end of 2024. The average selling price for the group’s CPO during the year, including premia for certified oil but net of export duty and levy, adjusted to FOB Samarinda, was 14.1 per cent higher at $819 per tonne (2023: $718 per tonne) and the average selling price for CPKO, on the same basis, was 46.1 per cent higher at $1,094 per tonne (2023: $749 per tonne).

By contrast, average premia realised for sales of certified oil increased to just $14 per tonne (2023: $13 per tonne) for CPO sold with ISCC certification, and fell to $12 per tonne (2023: $15 per tonne) and $77 per tonne (2023: $213 per tonne) for, respectively, CPO and CPKO sold with RSPO certification.

Profit before tax for 2024 was $38.9 million (after an impairment write back of $3.1 million) compared with a loss of $29.2 million in 2023 (after impairment and similar charges of $26.1 million). Administrative costs, before deduction of amounts capitalised were broadly in line with those of 2023. Interest income amounted to $3.4 million (2023: $4.1 million). During the year there was a $6.6 million release of a provision for interest payable by the stone company. Other gains and losses included gains of $6.6 million from exchange movements, principally in relation to rupiah borrowings (2023: loss of $4.2 million). Finance costs in 2024 were slightly lower at $16.4 million (2023: $17.5 million).

Following completion in March 2024 of the issue of further shares in REA Kaltim to the DSN group, the group’s ownership of REA Kaltim was diluted from 85 per cent to 65 per cent. At 31 December 2024, shareholders’ funds less non-controlling interests amounted to $224.5 million (2023: $219.8 million) and non-controlling interests to $70.5 million (2023: $14.3 million).

The subscription monies received from the DSN group enabled the group to materially reduce group net debt, presale advances from customers, and to eliminate all arrears of dividend on the preference shares. Net debt at 31 December 2024 amounted to $159.3 million (2023: $178.2 million, excluding CDM net indebtedness of $10.2 million) and prepaid sales advances from customers to $8.0 million (2023: $17.1 million).

Dividends arising on the preference shares in June and December 2024 were paid on the due dates. As a priority, the group intends to continue to reduce its debt and accordingly does not intend at this time to declare any dividends on the group’s ordinary shares.

Since the year end, further steps have been taken to improve the group’s liquidity. In March 2025, agreements were concluded with Bank Mandiri to provide further term loans and to amend the repayment terms of certain existing loans to REA Kaltim and SYB, thereby providing the group with additional cash resources equivalent to $37.6 million. Additionally, Bank Mandiri has provided a new term loan to PU, equivalent to $15.0 million (of which $5.1 million has been drawn down) to assist in financing PU’s continuing development programme.

The additional cash resources at the end of 2024, together with the further liquidity resulting from the enhanced bank facilities in Indonesia, will support the repayment in August 2025 of the sterling notes due, repayments falling due in the short term on existing borrowings, as well as the elimination of the remaining prepaid sales advances from customers.

The group intends further to improve the maturity profile of its debt by inviting holders of its $27.0 million nominal of dollar notes to roll over their notes until 31 December 2028. Discussions are at an advanced stage with holders of $17.5 million nominal of dollar notes, who have confirmed their willingness, subject to agreement of detailed terms, to rollover their notes.

Building on the strategic initiatives of 2023, good progress was made in 2024 in addressing the legacy of excessive net indebtedness and simplifying the group structure. Net debt has reduced as detailed above and the group has assumed substantially full ownership and control of the stone operations. Discussions are in hand which are expected to lead to the sand operations becoming similarly owned and controlled by the group, facilitating savings in sand and stone overheads.

With liquidity improved, certainty as to the group’s ability to retire the sterling notes, a stable outlook for CPO and CPKO prices, and operational performance benefitting from the substantial investments in infrastructure and factories in recent years allowing levels of capital expenditure to normalise, the group expects that its financial position will continue to strengthen. With financing costs continuing to reduce as net debt falls, the plantation operations should generate cash flows at good levels. With stone production expected to provide a valuable addition to 2025 results and a positive contribution from the sand mining operations also likely to follow, the prospects for the group are encouraging.

The group’s much improved financial position and prospects contrast favourably with the group’s situation in 2017 when Carol Gysin assumed the role of group managing director. Carol has decided to step down from that position at the end of 2025. I would like to express the board’s appreciation of Carol’s successful stewardship of the group during a difficult period. The board intends to appoint Luke Robinow to succeed Carol, confident that, after 17 years working for the group in Indonesia, latterly as President Director of REA Kaltim, Luke will drive the group’s continued recovery and enable it to fulfil its potential.

David J BLACKETT

Chairman

DIVIDENDS

All arrears of dividend outstanding on the company's preference shares (amounting in aggregate to 11.5p per preference share as at 31 December 2023) were discharged in April 2024 and the fixed semi-annual dividends that fell due on the preference shares in June 2024 and December 2024 were paid on their due dates.

While the dividends on the preference shares were more than six months in arrear, the company was not permitted to pay dividends on its ordinary shares but with the payment in full of the outstanding arrears of preference dividend that is no longer the case. Nevertheless, in view of the group's current level of net debt, no dividend in respect of the ordinary shares has been paid or is proposed in respect of 2024.

ANNUAL GENERAL MEETING

The sixty fifth annual general meeting (AGM) of R.E.A. Holdings plc to be held at the London office of Ashurst LLP at London Fruit & Wool Exchange, 1 Duval Square, London E1 6PW on 19 June 2025 at 10.00 am.

Attendance

To help manage the number of people in attendance, we are asking that only shareholders or their duly nominated proxies or corporate representatives attend the AGM in person. Anyone who is not a shareholder or their duly nominated proxies or corporate representatives should not attend the AGM unless arrangements have been made in advance with the company secretary by emailing company.secretary@rea.co.uk.

Shareholders are strongly encouraged to submit a proxy vote on each of the resolutions in the notice in advance of the meeting:

(i) by visiting Computershare’s electronic proxy service www.investorcentre.co.uk/eproxy (and so that the appointment is received by the service by no later than 10.00 am on 17 June 2025); or

(ii) via the CREST electronic proxy appointment service; or

(iii) by completing, signing and returning a form of proxy to the Company’s registrar, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY as soon as possible and, in any event, so as to arrive by no later than 10.00 am on 17 June 2025; or

(iv) by using the Proxymity platform if you are an institutional investor (for more information see Notice).

The company will make further updates, if any, about the meeting at www.rea.co.uk/investors/regulatory-news and on the website's home page. Shareholders are accordingly requested to visit the group’s website for any such further updates.

PRINCIPAL RISKS AND UNCERTAINTIES

The group’s business involves risks and uncertainties. Risks and uncertainties that the directors currently consider to be material or prospectively material are described below, together with climate-related risks and the opportunities that these may provide. There are or may be further risks and uncertainties faced by the group (such as future natural disasters or acts of God) that the directors currently deem immaterial, or of which they are unaware, that may have a material adverse impact on the group.

Identiﬁcation, assessment, management and mitigation of the risks associated with sustainability matters forms part of the group’s system of internal control for which the board has ultimate responsibility. The board discharges that responsibility as described in Corporate governance in the annual report. Material risks, related policies and the group’s successes and failures with respect to sustainability matters and the measures taken in response to any failures are described in more detail in Climate-related risks and opportunities below.

Geo-political uncertainty, such as may be caused by wars, can lead to pricing volatility and shortages of the necessary inputs to the group’s operations, such as fuel and fertiliser, inflating group costs and negatively impacting the group’s production volumes. The impact of input shortages, however, may be offset by a consequential benefit to prices of the group’s outputs.

Where risks are reasonably capable of mitigation, the group seeks to mitigate them. Beyond that, the directors endeavour to manage the group’s ﬁnances on a basis that leaves the group with some capacity to withstand adverse impacts from both identiﬁed and unidentified areas of risk, but such management cannot provide insurance against every possible eventuality.

Risks assessed by the directors as currently being of particular signiﬁcance are those detailed below under:

• Agricultural operations – Produce prices

• Agricultural operations – Other operational factors

• Stone and sand operations – Sales

• General – Funding

The directors’ assessment, as respects the above risks, reﬂects both the key importance of those risks in relation to the matters considered in the Longer term viability statement below and more generally the extent of the negative impact that could result from adverse incidence of such risks.

Risk	Potential impact	Mitigating or other relevant considerations
Agricultural operations
Cultivation risks
Failure to achieve optimal upkeep standards	A reduction in harvested crop resulting in loss of potential revenue	The group has adopted standard operating practices designed to achieve required upkeep standards
Pest and disease damage to oil palms and growing crops	A loss of crop or reduction in the quality of harvest resulting in loss of potential revenue	The group adopts best agricultural practice to limit pests and diseases
Other operational factors
Shortages of necessary inputs to the operations, such as fuel and fertiliser	Disruption of operations or increased input costs leading to reduced profit margins	The group maintains stocks of necessary inputs to provide resilience and has established biogas plants to improve its self-reliance in relation to fuel. Construction of a further biogas plant in due course would increase self-reliance and reduce costs as well as GHG emissions
High levels of rainfall or other factors restricting or preventing harvesting, collection or processing of FFB crops	FFB crops becoming rotten or over ripe leading either to a loss of CPO production (and hence revenue) or to the production of CPO that has an above average free fatty acid content and is saleable only at a discount to normal market prices	The group endeavours to employ a sufficient complement of harvesters within its workforce to harvest expected crops, to provide its transport fleet with sufficient capacity to collect expected crops under likely weather conditions and to maintain resilience in its palm oil mills with each of the mills operating separately and some ability within each mill to switch from steam based to biogas or diesel based electricity generation
Disruptions to river transport between the main area of operations and the Port of Samarinda or delays in collection of CPO and CPKO from the transhipment terminal	The requirement for CPO and CPKO storage exceeding available capacity and forcing a temporary cessation in FFB harvesting or processing with a resultant loss of crop and consequential loss of potential revenue	The group’s bulk storage facilities have sufficient capacity for expected production volumes and, together with the further storage facilities afforded by the group’s fleet of barges, have hitherto always proved adequate to meet the group’s requirements for CPO and CPKO storage.
Occurrence of an uninsured or inadequately insured adverse event; certain risks (such as crop loss through fire or other perils), for which insurance cover is either not available or is considered disproportionately expensive, are not insured	Material loss of potential revenues or claims against the group	The group maintains insurance at levels that it considers reasonable against those risks that can be economically insured and mitigates uninsured risks to the extent reasonably feasible by management practices
Produce prices
Volatility of CPO and CPKO prices which as primary commodities may be affected by levels of world economic activity and factors affecting the world economy, including levels of inflation and interest rates	Reduced revenue from the sale of CPO and CPKO and a consequent reduction in cash flow	Swings in CPO and CPKO prices should be moderated by the fact that the annual oilseed crops account for the major proportion of world vegetable oil production and producers of such crops can reduce or increase their production within a relatively short time frame
Restriction on sale of the group’s CPO and CPKO at world market prices including restrictions on Indonesian exports of palm products and imposition of high export charges	Reduced revenue from the sale of CPO and CPKO and a consequent reduction in cash flow	The Indonesian government applies sliding scales of charges on exports of CPO and CPKO, which are varied from time to time in response to prevailing prices, and has, on occasions, placed temporary restrictions on the export of CPO and CPKO; several such measures were introduced in 2022 in response to generally rising prices precipitated by the war in the Ukraine but, whilst impacting prices in the short term, were subsequently modified to afford producers economic margins. The export levy charge funds biodiesel subsidies and thus supports the local price of CPO
Disruption of world markets for CPO and CPKO by the imposition of import controls or taxes in consuming countries	Depression of selling prices for CPO and CPKO if arbitrage between markets for competing vegetable oils proves insufficient to compensate for the market disruption created	The imposition of controls or taxes on CPO or CPKO in one area can be expected to result in greater consumption of alternative vegetable oils within that area and the substitution outside that area of CPO and CPKO for other vegetable oils
Expansion
Failure to secure in full, or delays in securing, the land or funding required for the group’s planned extension planting programme	Inability to complete, or delays in completing, the planned extension planting programme with a consequential reduction in the group’s prospective growth	The group holds sufficient fully titled or allocated land areas suitable for planting to enable it to complete its immediately planned extension planting. It works continuously to maintain permits for the planting of these areas and aims to manage its finances to ensure, in so far as practicable, that it will be able to fund any planned extension planting programme
A shortfall in achieving the group’s planned extension planting programme negatively impacting the continued growth of the group	A possible adverse effect on market perceptions as to the value of the group’s securities	The group maintains flexibility in its planting programme to be able to respond to changes in circumstances
Sustainable practices
Failure by the agricultural operations to meet the standards expected of them as a large employer of significant economic importance to local communities	Reputational and financial damage	The group has established standard practices designed to ensure that it meets its obligations, monitors performance against those practices and investigates thoroughly and takes action to prevent recurrence in respect of any failures identified
Criticism of the group’s environmental practices by conservation organisations scrutinising land areas that fall within a region that in places includes substantial areas of unspoilt primary rainforest inhabited by diverse flora and fauna	Reputational and financial damage	The group is committed to sustainable development of oil palm and has obtained RSPO certification for most of its current operations. All group oil palm plantings are on land areas from which trees have previously been extracted by logging companies and which have subsequently been zoned by the Indonesian authorities as appropriate for agricultural development. The group maintains substantial conservation reserves that safeguard landscape level biodiversity
Community relations
A material breakdown in relations between the group and the host population in the area of the agricultural operations	Disruption of operations, including blockages restricting access to oil palm plantings and mills, resulting in reduced and poorer quality CPO and CPKO production	The group seeks to foster mutually beneficial economic and social interaction between the local villages and the agricultural operations. In particular, the group gives priority to applications for employment from members of the local population, encourages local farmers and tradesmen to act as suppliers to the group, its employees and their dependents and promotes smallholder development of oil palm plantings
Disputes over compensation payable for land areas allocated to the group that were previously used by local communities for the cultivation of crops or as respects which local communities otherwise have rights	Disruption of operations, including blockages restricting access to the area the subject of the disputed compensation	The group has established standard procedures to ensure fair and transparent compensation negotiations and encourages the local authorities, with whom the group has developed good relations and who are therefore generally supportive of the group, to assist in mediating settlements
Individuals party to a compensation agreement subsequently denying or disputing aspects of the agreement	Disruption of operations, including blockages restricting access to the areas the subject of the compensation disputed by the affected individuals	Where claims from individuals in relation to compensation agreements are found to have a valid basis, the group seeks to agree a new compensation arrangement; where such claims are found to be falsely based the group encourages appropriate action by the local authorities
Stone and sand operations
Production
Failure by external contractors to achieve agreed production volumes with optimal extraction rates	Reduction in revenue	The stone and sand concession holding companies endeavour to use experienced contractors, to supervise them closely and to take care to ensure that they have equipment of capacity appropriate for the planned production volumes
External factors, in particular weather, delaying or preventing delivery of extracted stone and sand	Reduced production and consequent loss of revenue	Adverse external factors would not normally have a continuing impact for more than a limited period
Geological assessments, which are extrapolations based on statistical sampling, proving inaccurate	Unforeseen extraction complications causing cost overruns and production delays or failure to achieve projected production resulting in loss of revenue and reduced operating margins	The stone and sand concession holding companies seek to ensure the accuracy of geological assessments of any extraction programme
Sales
Inadequate demand reducing sales volumes	Reduced revenue and profits	The group aims to secure forward sales offtake agreements for stone and sand and to set its production targets to align with the expected offtake
Transport constraints delaying deliveries or reducing delivered volumes	Failure to meet contractual sale obligations with loss of revenue and possible consequential costs	For the stone operations, the group has established transport corridors to east and west of the main stone deposit and intends that regular maintenance will ensure that these corridors remain fit for purpose; the sand concession is adjacent to the Mahakam River and barges are readily available to effect sand deliveries
Local competition reducing stone and sand prices	Reduced revenue and operating margins

Profitability Annual Financial Report R.E.A. Holdings Plc Debt Profile Stone And Sand Operations

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