DJ 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
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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 USD61.6 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 USD187.9 million (2023: USD176.7 million) primarily reflecting higher average
selling prices (net of export duty and levy) at USD819 per tonne (2023: USD718 per tonne) and CPKO at USD1,094 per tonne
(2023: USD749 per tonne)
. Profit before tax of USD38.9 million (2023: loss before tax of USD29.2 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
USD53.6 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 GBP9.2 million nominal of sterling notes due for redemption in August 2025, leaving GBP21.7
million outstanding at 31 December 2024
. Group net indebtedness reduced to USD159.3 million from USD188.4 million (including CDM) at 31 December 2024; pre-sale
advances reduced by USD9.1 million
. Full discharge of outstanding arrears of preference dividend of USD10.4 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 USD52.6 million
. Discussions at an advanced stage with holders of USD17.5 million nominal of dollar notes, out of a total outstanding
of USD27.0 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 USD187.9 million, USD10.2 million (6.3 per cent) higher than that achieved in 2023,
resulting in EBITDA of USD61.6 million, up by 41.3 per cent from 2023. Operating profits amounted to USD35.0 million, 135.6
per cent higher than in the previous year (2023: USD14.8 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 USD940 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 USD1,265 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 USD819 per tonne (2023: USD718 per tonne) and the average selling price for CPKO, on
the same basis, was 46.1 per cent higher at USD1,094 per tonne (2023: USD749 per tonne).
By contrast, average premia realised for sales of certified oil increased to just USD14 per tonne (2023: USD13 per tonne)
for CPO sold with ISCC certification, and fell to USD12 per tonne (2023: USD15 per tonne) and USD77 per tonne (2023: USD213 per
tonne) for, respectively, CPO and CPKO sold with RSPO certification.
Profit before tax for 2024 was USD38.9 million (after an impairment write back of USD3.1 million) compared with a loss of
USD29.2 million in 2023 (after impairment and similar charges of USD26.1 million). Administrative costs, before deduction
of amounts capitalised were broadly in line with those of 2023. Interest income amounted to USD3.4 million (2023: USD4.1
million). During the year there was a USD6.6 million release of a provision for interest payable by the stone company.
Other gains and losses included gains of USD6.6 million from exchange movements, principally in relation to rupiah
borrowings (2023: loss of USD4.2 million). Finance costs in 2024 were slightly lower at USD16.4 million (2023: USD17.5
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 USD224.5 million (2023: USD219.8 million) and non-controlling interests to USD70.5
million (2023: USD14.3 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 USD159.3 million (2023: USD178.2 million, excluding CDM net indebtedness of USD10.2 million) and prepaid
sales advances from customers to USD8.0 million (2023: USD17.1 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 USD37.6 million.
Additionally, Bank Mandiri has provided a new term loan to PU, equivalent to USD15.0 million (of which USD5.1 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 USD27.0 million nominal
of dollar notes to roll over their notes until 31 December 2028. Discussions are at an advanced stage with holders of
USD17.5 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.
Identi?cation, 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 ?nances on a basis that leaves the group with some capacity to withstand adverse
impacts from both identi?ed 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 signi?cance 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, re?ects 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 A reduction in harvested crop resulting The group has adopted standard operating
upkeep standards in loss of potential revenue practices designed to achieve required upkeep
standards
Pest and disease damage to oil A loss of crop or reduction in the The group adopts best agricultural practice
palms and growing crops quality of harvest resulting in loss of to limit pests and diseases
potential revenue
Other operational factors
The group maintains stocks of necessary
inputs to provide resilience and has
Shortages of necessary inputs to Disruption of operations or increased established biogas plants to improve its
the operations, such as fuel and input costs leading to reduced profit self-reliance in relation to fuel.
fertiliser margins Construction of a further biogas plant in due
course would increase self-reliance and
reduce costs as well as GHG emissions
The group endeavours to employ a sufficient
FFB crops becoming rotten or over ripe complement of harvesters within its workforce
High levels of rainfall or other leading either to a loss of CPO to harvest expected crops, to provide its
factors restricting or production (and hence revenue) or to the transport fleet with sufficient capacity to
preventing harvesting, production of CPO that has an above collect expected crops under likely weather
collection or processing of FFB average free fatty acid content and is conditions and to maintain resilience in its
crops saleable only at a discount to normal palm oil mills with each of the mills
market prices operating separately and some ability within
each mill to switch from steam based to
biogas or diesel based electricity generation
Disruptions to river transport The requirement for CPO and CPKO storage The group's bulk storage facilities have
between the main area of exceeding available capacity and forcing sufficient capacity for expected production
operations and the Port of a temporary cessation in FFB harvesting volumes and, together with the further
Samarinda or delays in or processing with a resultant loss of storage facilities afforded by the group's
collection of CPO and CPKO from crop and consequential loss of potential fleet of barges, have hitherto always proved
the transhipment terminal revenue adequate to meet the group's requirements for
CPO and CPKO storage.
Occurrence of an uninsured or
inadequately insured adverse The group maintains insurance at levels that
event; certain risks (such as it considers reasonable against those risks
crop loss through fire or other Material loss of potential revenues or that can be economically insured and
perils), for which insurance claims against the group mitigates uninsured risks to the extent
cover is either not available or reasonably feasible by management practices
is considered disproportionately
expensive, are not insured
Produce prices
Volatility of CPO and CPKO Swings in CPO and CPKO prices should be
prices which as primary moderated by the fact that the annual oilseed
commodities may be affected by Reduced revenue from the sale of CPO and crops account for the major proportion of
levels of world economic CPKO and a consequent reduction in cash world vegetable oil production and producers
activity and factors affecting flow of such crops can reduce or increase their
the world economy, including production within a relatively short time
levels of inflation and interest frame
rates
The Indonesian government applies sliding
scales of charges on exports of CPO and CPKO,
which are varied from time to time in
Restriction on sale of the response to prevailing prices, and has, on
group's CPO and CPKO at world occasions, placed temporary restrictions on
market prices including Reduced revenue from the sale of CPO and the export of CPO and CPKO; several such
restrictions on Indonesian CPKO and a consequent reduction in cash measures were introduced in 2022 in response
exports of palm products and flow to generally rising prices precipitated by
imposition of high export the war in the Ukraine but, whilst impacting
charges 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
Depression of selling prices for CPO and The imposition of controls or taxes on CPO or
Disruption of world markets for CPKO if arbitrage between markets for CPKO in one area can be expected to result in
CPO and CPKO by the imposition competing vegetable oils proves greater consumption of alternative vegetable
of import controls or taxes in insufficient to compensate for the oils within that area and the substitution
consuming countries market disruption created outside that area of CPO and CPKO for other
vegetable oils
Expansion
The group holds sufficient fully titled or
allocated land areas suitable for planting to
Failure to secure in full, or Inability to complete, or delays in enable it to complete its immediately planned
delays in securing, the land or completing, the planned extension extension planting. It works continuously to
funding required for the group's planting programme with a consequential maintain permits for the planting of these
planned extension planting reduction in the group's prospective areas and aims to manage its finances to
programme growth 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 A possible adverse effect on market The group maintains flexibility in its
planting programme negatively perceptions as to the value of the planting programme to be able to respond to
impacting the continued growth group's securities changes in circumstances
of the group
Sustainable practices
Failure by the agricultural The group has established standard practices
operations to meet the standards designed to ensure that it meets its
expected of them as a large Reputational and financial damage obligations, monitors performance against
employer of significant economic those practices and investigates thoroughly
importance to local communities and takes action to prevent recurrence in
respect of any failures identified
The group is committed to sustainable
Criticism of the group's development of oil palm and has obtained RSPO
environmental practices by certification for most of its current
conservation organisations operations. All group oil palm plantings are
scrutinising land areas that on land areas from which trees have
fall within a region that in Reputational and financial damage previously been extracted by logging
places includes substantial companies and which have subsequently been
areas of unspoilt primary zoned by the Indonesian authorities as
rainforest inhabited by diverse appropriate for agricultural development. The
flora and fauna group maintains substantial conservation
reserves that safeguard landscape level
biodiversity
Community relations
The group seeks to foster mutually beneficial
economic and social interaction between the
Disruption of operations, including local villages and the agricultural
A material breakdown in blockages restricting access to oil palm operations. In particular, the group gives
relations between the group and plantings and mills, resulting in priority to applications for employment from
the host population in the area reduced and poorer quality CPO and CPKO members of the local population, encourages
of the agricultural operations production 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 The group has established standard procedures
payable for land areas allocated to ensure fair and transparent compensation
to the group that were Disruption of operations, including negotiations and encourages the local
previously used by local blockages restricting access to the area authorities, with whom the group has
communities for the cultivation the subject of the disputed compensation developed good relations and who are
of crops or as respects which therefore generally supportive of the group,
local communities otherwise have to assist in mediating settlements
rights
Where claims from individuals in relation to
Individuals party to a Disruption of operations, including compensation agreements are found to have a
compensation agreement blockages restricting access to the valid basis, the group seeks to agree a new
subsequently denying or areas the subject of the compensation compensation arrangement; where such claims
disputing aspects of the disputed by the affected individuals are found to be falsely based the group
agreement encourages appropriate action by the local
authorities
Stone and sand operations
Production
The stone and sand concession holding
Failure by external contractors companies endeavour to use experienced
to achieve agreed production Reduction in revenue contractors, to supervise them closely and to
volumes with optimal extraction take care to ensure that they have equipment
rates of capacity appropriate for the planned
production volumes
External factors, in particular Adverse external factors would not normally
weather, delaying or preventing Reduced production and consequent loss have a continuing impact for more than a
delivery of extracted stone and of revenue limited period
sand
Geological assessments, which Unforeseen extraction complications The stone and sand concession holding
are extrapolations based on causing cost overruns and production companies seek to ensure the accuracy of
statistical sampling, proving delays or failure to achieve projected geological assessments of any extraction
inaccurate production resulting in loss of revenue programme
and reduced operating margins
Sales
The group aims to secure forward sales
Inadequate demand reducing sales Reduced revenue and profits offtake agreements for stone and sand and to
volumes set its production targets to align with the
expected offtake
For the stone operations, the group has
established transport corridors to east and
Transport constraints delaying Failure to meet contractual sale west of the main stone deposit and intends
deliveries or reducing delivered obligations with loss of revenue and that regular maintenance will ensure that
volumes possible consequential costs these corridors remain fit for purpose; the
sand concession is adjacent to the Mahakam
River and barges are readily available to
effect sand deliveries
There are currently no other stone quarries
Local competition reducing stone of similar quality or volume in the vicinity
and sand prices Reduced revenue and operating margins of the stone concessions and the cost of
transporting stone should restrict
competition
Imposition of additional The Indonesian government has not to date
royalties or duties on the imposed measures that would seriously affect
extraction of stone or sand or Reduced revenue the viability of Indonesian stone and sand
imposition of export quarrying operations
restrictions
Sustainable practices
The areas of the stone and sand concessions
are relatively small and should not be
difficult to supervise. The concession
Failure by the stone and sand holding companies are committed to
operations to meet the standards Reputational and financial damage international standards of best environmental
expected of them and social practice and, in particular, to
proper management of waste water and
reinstatement of quarried and mined areas on
completion of extraction operations
General
IT security
The group's IT controls and financial
reporting systems and procedures are
independently audited and tested annually and
IT related fraud including cyber recommendations for corrective actions to
attacks that are becoming Losses as a result of disruption of enhance controls are implemented accordingly.
increasingly prevalent and control systems and theft Several upgrades to firewalls and other
sophisticated anti-malware protections were installed
during 2024 and a disaster recovery plan has
been fully tested and implemented. Cyber
security reviews are conducted periodically
Currency
As respects costs and sterling denominated
shareholder capital, the group considers that
the risk of adverse exchange movements is
inherent in the group's business and
Strengthening of sterling or the Adverse exchange movements on those structure and must simply be accepted. As
rupiah against the dollar components of group costs and funding respects borrowings, where practicable the
that arise in rupiah or sterling group seeks to borrow in dollars but, when
borrowing in sterling or rupiah, considers it
better to accept the resultant currency risk
than to hedge that risk with hedging
instruments
Cost inflation
Increased costs as result of For each of the group's products, cost
worldwide economic factors or inflation is likely to have a broadly equal
shortages of required inputs impact on all producers of that product and
(such as shortages of fuel or Reduction in operating margins may be expected to restrict supply if
fertiliser arising from the production of the product becomes uneconomic.
wars) Cost inflation can only be mitigated by
improved operating efficiency
Funding
The group maintains good relations with its
Bank debt repayment instalments bankers and other holders of debt who have
and other debt maturities generally been receptive to reasonable
coincide with periods of adverse requests to moderate debt profiles or waive
trading and negotiations with covenants when circumstances require. Such
bankers and investors are not Inability to meet liabilities as they was the case, for example, when certain
successful in rescheduling fall due breaches of bank loan covenants by group
instalments, extending companies at 31 December 2020 and 2023 were
maturities or otherwise waived. Moreover, the directors believe that
concluding satisfactory the fundamentals of the group's business will
refinancing arrangements normally facilitate procurement of additional
equity capital should this prove necessary
Counterparty risk
The group maintains strict controls over its
financial exposures which include regular
Default by a supplier, customer Loss of any prepayment, unpaid sales reviews of the creditworthiness of
or financial institution proceeds or deposit counterparties and limits on exposures to
counterparties. In addition, 90 per cent of
sales revenue is receivable in advance of
product delivery
Regulatory exposure
New, and changes to, laws and
regulations that affect the Restriction on the group's ability to The directors are not aware of any specific
group (including, in particular, retain its current structure or to planned changes that would adversely affect
laws and regulations relating to continue operating as currently the group to a material extent
land tenure, work permits for
expatriate staff and taxation)
Breach of the various continuing The group endeavours to ensure compliance
conditions attaching to the with the continuing conditions attaching to
group's land rights and the its land rights and concessions, that its
stone and sand concessions Civil sanctions and, in an extreme case, activities, and the activities of the stone
(including conditions requiring loss of the affected rights or and sand concession holding companies, are
utilisation of the rights and concessions conducted within the terms of the licences
concessions) or failure to and permits that are held and that licences
maintain or renew all permits and permits are obtained and renewed as
and licences required for the necessary
group's operations
The group has traditionally had, and
Failure by the group to meet the continues to maintain, strong controls in
standards expected in relation Reputational damage and criminal this area because Indonesia, where all of the
to human rights, slavery, sanctions group's operations are located, has been
anti-bribery and corruption classified as relatively high risk by the
International Transparency Corruption
Perceptions Index
Restrictions on foreign The group endeavours to maintain good
investment in Indonesian mining Constraints on the group's ability to relations with the local partners in the
concessions, limiting the recover its investment group's mining interests so as to ensure that
effectiveness of co-investment returns appropriately reflect agreed
arrangements with local partners arrangements
Country exposure
Indonesia currently appears stable and the
Indonesian economy has continued to grow but,
in the late 1990s, Indonesia experienced
Deterioration in the political Difficulties in maintaining operational severe economic turbulence and there have
or economic situation in standards particularly if there was a been subsequent occasional instances of civil
Indonesia consequential deterioration in the unrest, often attributed to ethnic tensions,
security situation in certain parts of Indonesia. The group has
never, since the inception of its East
Kalimantan operations in 1989, been adversely
affected by regional security problems
Restriction on the transfer of fees, The directors are not aware of any
Introduction of exchange interest and dividends from Indonesia to circumstances that would lead them to believe
controls or other restrictions the UK with potential consequential that, under current political conditions, any
on foreign owned operations in negative implications for the servicing Indonesian government authority would impose
Indonesia of UK obligations and payment of restrictions on legitimate exchange transfers
dividends; loss of effective management or otherwise seek to restrict the group's
control freedom to manage its operations
The group accepts there is a possibility that
foreign owners may be required over time to
divest partially ownership of Indonesian oil
palm operations and there are existing
Mandatory reduction of foreign Forced divestment of interests in regulations that may result in a requirement
ownership of Indonesian Indonesia at below market values with to divest over an extended period part of the
plantation or mining operations consequential loss of value substantial equity participation in the stone
concession holding company that the group has
agreed to acquire but the group has no reason
to believe that any divestment would be at
anything other than market value
Miscellaneous relationships
The group appreciates its material dependence
upon its staff and employees and endeavours
Disputes with staff and Disruption of operations and consequent to manage this dependence in accordance with
employees loss of revenues international employment standards as
detailed under Employees in the
Sustainability and climate report in the
annual report
Reliance on the Indonesian courts for
enforcement of the agreements governing The group endeavours to maintain cordial
its arrangements with local partners relations with its local investors by seeking
with the uncertainties that any their support for decisions affecting their
Breakdown in relationships with juridical process involves and with any interests and responding constructively to
local investors in the group's failure of enforcement likely to have, any concerns that they may have. Further, the
Indonesian subsidiaries in particular, a material negative group is currently applying to register its
impact on the value of the stone and ownership of 95 per cent of the stone
sand interests because ownership of concession holding company and 49 per cent of
those concessions currently remains the sand concession holding company
registered in the name of by the group's
local partners
Climate-related risks and opportunities
S Short term (1-3 years)
M Medium term (3-5 years)
L Long term (5-15 years)
Risk Impact Mitigation Opportunity
Transition
risks
- EUDR affords a competitive
advantage, maintaining future
access for the group's CPO and
CPKO to EU markets
- Prepared for EUDR compliance by
engaging Control Union Malaysia for an - Allows for increased premia
independent readiness assessment for EUDR compliance from
(covering the three mills and seven December 2025, in addition to
- Increased investment and costs of estates), developing a due diligence premia for RSPO certified
compliance, including mapping land system to mitigate deforestation products
use, enhancing traceability risks, and establishing a robust
Regulatory systems, and verifying supply traceability system, - Encourages local FFB
compliance chains suppliers to become eligible
(EUDR, RSPO, - Invested in a traceability system to to attract increased premia
ISCC) (S) - Impact on sourcing external FFB track FFB to its origin and under EUDR
as stricter regulations may infrastructure to enable physical
disproportionately affect segregation of (external) FFB supplies - Allows the group to increase
independent smallholders and tank storage the volume of sustainably
sourced FFB by including
- Increased RSPO certification of its independent smallholders for
plantations to 84.4 per cent and is EUDR through the launch of
working towards achieving 100 per cent SHINES
- Recent RSPO certification of
COM will permit sales of RSPO
identity preserved CPO as
market demand increases
- Opportunities for
partnerships with relevant
- Adheres to an NDPE policy and stakeholders
strictly applies this policy to all
suppliers through due diligence - Stronger stakeholder
onboarding relationships through a
proactive engagement strategy
- Impact on revenue, market access, - Established grievance action
Reputational and long term sustainability processes (GREAT) in support of - Improving brand reputation
risk from strategy due to increased transparency and accountability, and a through communication and
deforestation regulatory compliance costs and structured approach to addressing sharing of success stories in
concerns negative perception of palm oil stakeholder concerns social media
(S-M) products
- Redefined community and stakeholder - Enhancing media relations
engagement strategy to improve for current and future
long-term community relationships communications
- Implemented internal communication - Partnering with RSPO on
and social media strategy communication initiatives
- Adopting the international GHG
- Potential costs associated with Protocol Corporate Standard for carbon
Carbon carbon taxation and emission caps footprint assessment - The group can develop
pricing and verified baseline, short,
emissions - Impact of EU Omnibus Directive to - Improving carbon footprint medium and long-term targets
regulation simplify and streamline EU monitoring for emission reduction
(M) regulations on carbon
- Monitoring industry and market
trends on carbon related requirements
- Established SHINES to
improve livelihoods and
- Smallholder livelihoods are - Expanding smallholder programmes, include smallholders in the
increasingly at risk due to climate including providing support, capacity supply chain
Community and variability and evolving regulatory for, and promoting, RSPO certification
smallholder requirements, which may create for smallholders, including polygon - Increased sustainably
resilience financial and operational mapping and acquiring legitimacy sourced FFB from independent
(M-L) challenges in meeting compliance through the eSTDB platforms managed by smallholders through SHINES
standards, potentially leading to the Indonesian government and other smallholder
exclusion partnership programmes
(including Reforma Agraria
Land Object (TORA))
- Achieving 100 per cent RSPO
certification - Brand differentiation with
- Shifting demand towards increased market share in
sustainable palm oil - Continuous compliance with various responsible supply chains
Market and national and international
consumer - Shifting market demand away from sustainability standards embodied in - Market demand for EUDR oil
preferences RSPO mass balanced (MB) oil towards certification schemes (RSPO, ISPO, starting in December 2025 is
(S-M) RSPO segregated (SG) oil, with ISCC) expected to increase sourcing
physical segregation increasingly from eligible farmers with an
viewed as a way to ensure - Maintaining a robust traceability expected premium for EUDR
deforestation-free supply chains system compliant produce in addition
to RSPO premia
- Being EUDR-ready
Physical
risks
- Conducting hydrology assessment of
- Intense rainfall leading to assets - More resilient operations
Extreme seasonal flooding of low lying
weather estate areas, thereby damaging Improving drainage systems - Adapting to climate
events palms, conservation areas, variability by innovation and
(flooding, infrastructure, and disrupting Road stoning for all-weather access adoption of
droughts) (S) supply chains technology-assisted tools
- Training smallholders on sustainable
best agricultural practices
- Water scarcity and inconsistent - Exploring the use of mill
Changing weather affecting FFB yields - Rainwater capture organic by-products to enhance
rainfall soil moisture and nutrient
patterns - Reduced production impacting - Improved irrigation techniques retention
(S-M) revenue
- Extending rainfall capture
- Ensuring strict NDPE policy
enforcement
- Forest protection and
Biodiversity - REA Kon biodiversity monitoring and conservation leading to
loss and - Ecosystem imbalances preventative actions biodiversity protection
habitat
degradation - Effect on ecosystem services - Partnering with various stakeholders - Stronger collaborations with
(M-L) such as NGOs, educational institutions conservation bodies for mutual
and local governments on research and benefits
actions
- Adherence to TNFD
LONGER TERM VIABILITY STATEMENT
The group's business activities, together with the factors likely to affect its future development, performance and financial position are described in the Strategic report of the annual report which also provides (under the heading Finance) a description of the group's cash ?ow, liquidity and financing development and treasury policies. In addition, note 26 to the group ?nancial statements in the annual report includes information as to the group's policy, objectives, and processes for managing capital, its ?nancial risk management objectives, details of ?nancial instruments and hedging policies and exposures to credit and liquidity risks.
The Principal risks and uncertainties section above describes the material risks faced by the group and actions taken to mitigate those risks. In particular, there are risks associated with the group's local operating environment and the group is materially dependent upon selling prices for CPO and CPKO over which it has no control.
The group has material indebtedness in the form of bank loans and listed notes. At 31 December 2024, over half of this indebtedness was due for repayment in the three year period to 31 December 2027. For this reason, the directors have chosen that period for their assessment of the longer term viability of the group.
Total group indebtedness at 31 December 2024, as detailed in Capital structure in the Strategic report of the annual report, amounted to USD198.1 million, comprising Indonesian rupiah denominated term bank loans equivalent in total to USD131.6 million, drawings under Indonesian rupiah denominated working capital facilities equivalent to USD2.8 million, USD27.0 million nominal of 7.5 per cent dollar notes 2026, GBP21.7 million nominal (equivalent, with accrued redemption premium, to USD28.2 million) of 8.75 per cent sterling notes 2025 and loans from the non-controlling shareholder in REA Kaltim of USD8.8 million. The total borrowings repayable in the period to 31 December 2027 (based on exchange rates ruling at 31 December 2024) amounted to the equivalent of USD118.8 million of which USD49.0 million falls due in 2025, USD46.6 million in 2026 and USD23.2 million in 2027.
In addition to the cash required for debt repayments, the group also faces substantial demands on cash to fund capital expenditure, dividends on the company's preference shares and the repayment of contract and similar liabilities, the outstanding amount of which at 31 December 2024 was USD8.0 million.
Whilst the group has some flexibility in determining its annual levels of capital expenditure, maintenance in 2025 and the immediately succeeding years of capital expenditure on the plantation operations at the level incurred in 2024 would be desirable to permit continuance of current programmes for the replanting of older palm areas in REA Kaltim, extension planting in PU and the progressive stoning of the group's extensive road network to improve the durability of roads in periods of heavy rain. After the very substantial investments already made in the stone and sand operations, capital expenditure within those operations should now reduce but some further expenditure will be needed as the operations are brought into full production.
In March 2025 Bank Mandiri agreed to repackage, with immediate drawdowns and repayments, existing loans to REA Kaltim and SYB equivalent in total to USD66.2 million repayable over the period to 2029, as new loans equivalent to USD103.8 million and repayable over the period to 2033. Additionally, Bank Mandiri has provided a new term loan to PU equivalent to USD15.0 million of which USD5.1 million has been drawn down and the balance of USD9.9 million is expected to be drawn down during the remaining months of 2025.
As already noted, a total of USD27.0 million falls due for payment during 2026 on maturity of the group's dollar notes. To alleviate the possible pressure that this could place on the group's cash resources, the group intends over the coming months to seek an extension to the maturity date of the dollar notes to 31 December 2028. This will be on terms that those noteholders who do not wish to retain their notes for the extended period will have the right to elect to have their dollar notes purchased by the company at par plus accrued interest on the existing maturity date of 30 June 2026. Discussions are at an advanced stage with holders of USD17.5 million nominal of dollar notes, who have confirmed their willingness, subject to agreement of detailed terms, to support the proposals and not to exercise their right to sell their notes on 30 June 2026.
Whilst commodity prices can be volatile, CPO and CPKO prices are expected to remain at remunerative levels for the immediate future. Some cost inflation may be unavoidable, but the group believes that improved operating efficiencies, facilitated by the substantial investments of recent years in roads, factories and equipment, will limit cost increases. With financing costs continuing to reduce as net debt falls, the group's plantation operations should generate cash flows at good levels. Stone production is still at an early stage but indications are that it will provide a significant addition to group cash flows in 2025. Positive cash flows from sand are also likely to make a useful additional contribution before long.
Taking account of the cash already held by the group at 31 December 2024 of USD38.8 million, the cash inflow from the new Bank Mandiri loans (USD52.6 million), the forthcoming extension of the maturity date of a substantial proportion of the dollar notes and the projected cash flow from the group's operations, the group should be well placed to meet its obligations from 2025 to 2027.
Based on the foregoing, the directors have a reasonable expectation that the company and the group have adequate resources to continue in operational existence for the period to 31 December 2027 and to remain viable during that period.
GOING CONCERN
Factors likely to affect the group's future development, performance and financial position are described in the Strategic report of the annual report. The directors have carefully considered those factors, together with the principal risks and uncertainties faced by the group which are set out in the Principal risks and uncertainties section above and have reviewed key sensitivities which could impact on the liquidity of the group.
As at 31 December 2024, the group had cash and cash equivalents of USD38.8 million, and borrowings of USD198.1 million (in both cases as set out in note 26 of the annual report). The total borrowings repayable by the group in the period to 30 April 2026 (based on exchange rates ruling at 31 December 2024) amounted to the equivalent of USD54.1 million.
In addition to the cash required for debt repayments, the group also requires cash in the period to 30 April 2026 to fund capital expenditure, preference dividends and repayment of contract and similar liabilities as referred to in more detail in the Longer term viability statement above. That statement also notes the cash inflows from new bank loans and the group's expectations regarding positive cash flows from its various operations.
Having regard to the foregoing, based on the group's forecasts and projections (taking into account reasonable possible changes in trading performance and other uncertainties) and having regard to the group's cash position and available borrowings, the directors expect that the group should be able to operate within its available borrowings for at least 12 months from the date of approval of the ?nancial statements.
On that basis, the directors have concluded that it is appropriate to prepare the ?nancial statements on a going concern basis.
DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the annual report and the ?nancial statements in accordance with applicable law and regulations.
To the best of the knowledge of each of the directors, they con?rm that:
. the group financial statements, prepared in accordance with UK adopted IFRS, give a true and fair view of the assets, liabilities, financial position, and profit or loss of the company and the subsidiary undertakings included in the consolidation taken as a whole;
. the company financial statements, prepared in accordance with UK Accounting Standards, comprising FRS 101 Reduced Disclosure Framework, give a true and fair view of the company's assets, liabilities, and financial position of the company;
. the Strategic report and Directors' report of the annual report include a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and
. the annual report and ?nancial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the group's and the company's position, performance, business model and strategy.
The current directors of the company and their respective functions are set out in the Board of directors section of the annual report.
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2024
2024 2023
USD'000 USD'000
Revenue 187,943 176,722
Net gain / (loss) arising from changes in fair value of biological assets 9 (580)
Cost of sales (136,495) (142,415)
Gross profit 51,457 33,727
Distribution costs (1,281) (1,511)
Administrative expenses (15,208) (17,372)
Operating profit 34,968 14,844
Interest income 3,369 4,091
Reversal of provision 6,622 -
Gains / (losses) on disposals of subsidiaries and similar charges 3,051 (26,051)
Other gains / (losses) 7,317 (4,669)
Finance costs (16,430) (17,460)
Profit / (loss) before tax 38,897 (29,245)
Tax (8,434) 11,552
Profit / (loss) after tax 30,463 (17,693)
Attributable to:
Equity shareholders 26,447 (10,241)
Non-controlling interests 4,016 (7,452)
30,463 (17,693)
Profit / (loss) per 25p ordinary share (US cents)
Basic 41.6 (32.7)
Diluted 41.6 (32.7)
All operations for both years are continuing.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2024
2024 2023
USD'000 USD'000
Profit / (loss) for the year 30,463 (17,693)
Other comprehensive (losses) / income
Items that may be reclassified to profit or loss:
Foreign exchange on new subsidiary (712) -
Reclassification of foreign exchange differences on disposal of group company (1,204) 685
Loss arising on sale of non-controlling interests taken to equity (580) -
Loss arising on purchase of non-controlling interests taken to equity (668) (96)
(3,164) 589
Items that will not be reclassified to profit or loss:
Actuarial loss (113) (449)
Deferred tax on actuarial loss 22 99
(91) (350)
Total other comprehensive (losses) / income (3,255) 239
Total comprehensive income / (loss) for the year 27,208 (17,454)
Attributable to:
Equity shareholders 23,219 (9,961)
Non-controlling interests 3,989 (7,493)
27,208 (17,454)
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2024
2024 2023
USD'000 USD'000
Non-current assets
Goodwill 11,144 11,144
Intangible assets 2,684 1,593
Property, plant and equipment 386,997 297,255
Land 58,098 46,015
Financial assets 26,735 73,640
Deferred tax assets 21,278 15,012
Total non-current assets 506,936 444,659
Current assets
Inventories 18,393 16,709
Biological assets 3,338 3,087
Trade and other receivables 31,312 28,254
Current tax asset 228 975
Cash and cash equivalents 38,837 14,195
Total current assets 92,108 63,220
Assets classified as held for sale - 32,516
Total assets 599,044 540,395
Current liabilities
Trade and other payables (44,715) (27,834)
Current tax liabilities - (1,462)
Bank loans (20,012) (17,413)
Sterling notes (28,167) -
Other loans and payables (2,707) (14,891)
Total current liabilities (95,601) (61,600)
Non-current liabilities
Trade and other payables - (16,841)
Bank loans (114,417) (94,361)
Sterling notes - (40,549)
Dollar notes (26,746) (26,572)
Deferred tax liabilities (47,404) (34,888)
Other loans and payables (19,897) (15,356)
Total non-current liabilities (208,464) (228,567)
Liabilities directly associated with assets held for sale - (16,109)
Total liabilities (304,065) (306,276)
Net assets 294,979 234,119
Equity
Share capital 133,590 133,590
Share premium account 47,374 47,374
Translation reserve (26,332) (24,416)
Retained earnings 69,826 63,267
224,458 219,815
Non-controlling interests 70,521 14,304
Total equity 294,979 234,119
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
Share Share Translation Retained Subtotal Non- Total
capital premium reserve earnings controlling equity
interests
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
At 1 January 2023 133,590 47,374 (25,101) 78,042 233,905 23,625 257,530
Loss for the year - - - (10,241) (10,241) (7,452) (17,693)
Other comprehensive income / (loss) for the year - - 685 (405) 280 (41) 239
Total comprehensive income / (loss) for the year - - 685 (10,646) (9,961) (7,493) (17,454)
Reorganisation of subsidiaries - - - - - (1,978) (1,978)
Capital from non-controlling interest - - - - - 150 150
Dividends to preference shareholders - - - (4,129) (4,129) - (4,129)
At 31 December 2023 133,590 47,374 (24,416) 63,267 219,815 14,304 234,119
Profit for the year - - - 26,447 26,447 4,016 30,463
Other comprehensive loss for the year - - (1,916) (1,312) (3,228) (27) (3,255)
Total comprehensive (loss) / income for the year - - (1,916) 25,135 23,219 3,989 27,208
Reorganisation of subsidiaries - - - - - (854) (854)
Capital from non-controlling interest - - - - - 53,082 53,082
Dividends to preference shareholders - - - (18,576) (18,576) - (18,576)
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2024
2024 2023
USD'000 USD'000
Net cash from operating activities 31,751 29,625
Investing activities
Interest received 1,069 4,019
Proceeds on disposal of PPE 4,179 3,054
Purchases of intangible assets and PPE (34,621) (21,756)
Expenditure on land (4,530) (5,093)
Net investment stone and coal interests (3,610) (13,314)
Net investment sand interest (4,413) (3,633)
Cash received from non-current receivables 1,258 1,574
Cash acquired with new subsidiary 259 -
Cash divested on disposal of group company - (1,340)
Cash reclassified from / (to) asset held for sale 9 (674)
Proceeds on disposal of group company - 1,810
Net cash used in investing activities (40,400) (35,353)
Financing activities
Preference dividends paid (18,576) (4,129)
Repayment of bank borrowings (36,862) (15,773)
New bank borrowings drawn 64,342 6,098
Sale of dollar notes held in treasury - 8,142
Purchase of sterling notes for cancellation (11,606) -
Repayment of borrowings from non-controlling shareholder (12,234) (1,394)
New borrowings from non-controlling shareholder - 10,000
New equity from non-controlling interests 53,580 150
Cost of non-controlling interest transaction (1,078) -
Purchase of non-controlling interest (2,726) (1,575)
Repayment of lease liabilities (2,724) (2,846)
Net cash from / (used in) financing activities 32,116 (1,327)
Cash and cash equivalents
Net increase / (decrease) in cash and cash equivalents 23,467 (7,055)
Cash and cash equivalents at beginning of year 14,195 21,914
Effect of exchange rate changes 1,175 (664)
Cash and cash equivalents at end of year 38,837 14,195
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of preparation
The consolidated financial statements and notes 1 to 22 below (together the financial information) have been extracted without material adjustment from the consolidated financial statements of the group for the year ended 31 December 2024 (the 2024 financial statements). The auditor has reported on those accounts; the reports were unqualified and did not contain statements under sections 498(2) or (3) of the Companies Act 2006 (CA 2006). Copies of the 2024 financial statements will be filed in the near future with the Registrar of Companies. The accompanying financial information does not constitute statutory accounts of the company within the meaning of section 434 of the CA 2006.
Whilst the 2024 financial statements have been prepared in accordance with UK adopted IFRS and with the requirements of the CA 2006, as applicable to companies reporting under IFRS. As at the date of authorisation of those accounts the accompanying financial information does not itself contain sufficient information to comply with IFRS.
The 2024 financial statements and the accompanying financial information were approved by the board of directors on 16 April 2024.
2. Revenue and cost of sales
2024 2023
USD'000 USD'000
Revenue:
Sales of palm product 185,919 175,313
Revenue from management services 941 1,138
Sales of stone 1,083 -
Marketing commission on sales of coal - 271
187,943 176,722
Cost of sales:
Depreciation and amortisation (26,612) (28,750)
Other costs (109,883) (113,665)
(136,495) (142,415)
3. Segment information
The group operates in two segments: the cultivation of oil palms and stone operation and sand interest (2023: oil palms and stone, sand and coal interests). In 2024 the latter met the quantitative thresholds set out in IFRS 8: Operating segments and, accordingly, analyses are provided by business segment. (In 2023 the quantitative thresholds were not met but segmental analyses are provided as comparatives.)
Segment revenue Segment profit
2024 2023 2024 2023
USD'm USD'm USD'm USD'm
Plantations 186.8 176.4 31.9 12.4
Stone operation and sand interest (2023: stone, sand and coal interests) 1.1 0.3 0.4 0.3
Other - - 2.7 2.1
187.9 176.7 35.0 14.8
Interest income 3.4 4.1
Reversal of provision 6.6 -
Gains / (losses) on disposals of subsidiaries and similar charges 3.0 (26.0)
Other gains / (losses) 7.3 (4.7)
Finance costs (16.4) (17.4)
Profit / (loss) before tax 38.9 (29.2) 4. Administrative expenses
2024 2023
USD'000 USD'000
Loss on disposal of PPE 310 1,055
Indonesian operations 16,030 14,895
Head office 3,204 3,436
19,544 19,386
Amount included as additions to PPE (4,336) (2,014)
15,208 17,372 5. Interest income and reversal of provision
2024 2023
USD'000 USD'000
Interest on bank deposits 281 851
Other interest income 3,088 3,240
Interest income 3,369 4,091
Reversal of provision in respect of interest on stone loan 6,622 -
Other interest income includes USD2.3 million interest receivable in respect of stone, sand and coal loans (2023: interest receivable of USD3.9 million net of a provision of USD0.7 million). In 2024, interest from stone represents interest receivable in the period prior to the borrowing company becoming a subsidiary (see note 18).
The provision of USD6.6 million reversed in 2024 was in respect of past interest due from the stone concession holding company which has commenced commercial production and sales.
6. Gains / (losses) on disposals of subsidiaries and similar charges
2024 2023
USD'000 USD'000
Impairment of asset held for sale - (23,616)
Release of impairment provision on sale of non-current assets 3,051 -
Reorganisation of subsidiaries - (2,435)
3,051 (26,051)
The impairment of asset held for sale was the effect of adjusting CDM's assets and liabilities to their fair value less cost to sell in line with the terms of the potential sale of CDM to DSN.
The USD3.1 million release of impairment provision on the sale of non-current assets is the amount receivable for the transfer of hectarage to plasma schemes by CDM, the carrying value of which had been fully impaired.
In 2023 the reorganisation of subsidiaries is in respect of the steps taken during 2023 to simplify the structure of the group and thereby reduce administrative costs. The REA Kaltim sub-group acquired the 5 per cent third party interests in its previously 95 per cent held subsidiaries such that these are all now wholly owned by REA Kaltim. Concurrently, two subsidiaries, KKP and KKS, in the latter case with its subsidiary, PBA, were divested. The acquisition of the former 5 per cent third party interests in subsidiaries of REA Kaltim was made possible by a 2021 change in the Indonesian regulations which abolished a previous requirement for 5 per cent local ownership of all Indonesian companies engaged in oil palm cultivation. The USD2.4 million cost in 2023 comprises the USD0.6 million write down of a loan to a third party interest, a USD0.7 million reclassification of foreign exchange differences on the divestment of KKP, a loss on the sale of KKS and PBJ2 of USD0.1 million and USD1.0 million provision in respect of indemnities given in connection with that sale.
7. Other gains / (losses)
2024 2023
USD'000 USD'000
Change in value of sterling notes arising from exchange fluctuations 265 (2,199)
Change in value of other monetary assets and liabilities arising from exchange fluctuations 6,350 (2,042)
Gain on acquisition of sterling notes for cancellation 702 -
Loss on sale of dollar notes held in treasury - (428)
7,317 (4,669)
8. Finance costs
2024 2023
USD'000 USD'000
Interest on bank loans and overdrafts 9,240 9,623
Interest on dollar notes 2,028 1,708
Interest on sterling notes 3,231 3,412
Interest on other loans 1,086 1,319
Interest on lease liabilities 374 529
Other finance charges 3,136 1,961
19,095 18,552
Amount included as additions to PPE (2,665) (1,092)
16,430 17,460
Other finance charges comprise bank charges and fees and amortised bank loan and loan note issue expenses.
Amounts included as additions to PPE arose on borrowings applicable to the Indonesian operations and reflected a capitalisation rate of 17.1 per cent (2023: 7.0 per cent). There is no directly related tax relief.
9. Tax
2024 2023
USD'000 USD'000
Current tax:
UK corporation tax - -
Overseas withholding tax 696 1,097
Foreign tax 6,883 4,271
Foreign tax - prior year (536) 317
Total current tax charge 7,043 5,685
Deferred tax:
Current year 3,079 (18,593)
Prior year (1,688) 1,356
Total deferred tax charge / (credit) 1,391 (17,237)
Total tax charge / (credit) 8,434 (11,552)
Taxation is provided at the rates prevailing for the relevant jurisdiction. For Indonesia, the current and deferred taxation provision is based on a tax rate of 22 per cent (2023: 22 per cent) and for the UK, the taxation provision reflects a corporation tax rate of 25 per cent (2023: 23.5 per cent) and a deferred tax rate of 25 per cent (2023: 25 per cent).
10. Dividends
2024 2023
USD'000 USD'000
Amounts recognised as distributions to preference shareholders:
Dividends on 9 per cent cumulative preference shares 18,576 4,129
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.
11. Profit / (loss) per ordinary share
2024 2023
USD'000 USD'000
Profit / (loss) attributable to equity shareholders 26,447 (10,241)
Preference dividends paid relating to current year (8,172) (4,129)
Profit / (loss) for the purpose of calculating profit / (loss) per share 18,275 (14,370)
'000 '000
Weighted average number of ordinary shares for the purpose of:
Basic profit / (loss) per share 43,964 43,964
Diluted profit / (loss) per share 43,964 43,964
The warrants (see note 35 of the annual report) are non-dilutive in 2024 as the average share price was below the exercise price.
12. Property, plant and equipment
Plantings Mining Buildings Plant, Construction Total
assets and equipment in progress
structures and vehicles
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Cost:
At 1 January 2023 176,547 - 255,293 130,177 13,168 575,185
Additions 4,141 - 6,731 4,578 6,826 22,276
Reclassifications and adjustments - - 7,844 9,187 (17,031) -
Disposals (4,511) - (3,102) (1,322) - (8,935)
Divested on sale of subsidiary (176) - (330) (31) - (537)
Transferred to assets held for sale (18,090) - (37,154) (1,055) (76) (56,375)
At 31 December 2023 157,911 - 229,282 141,534 2,887 531,614
Additions 7,315 1,059 15,090 2,066 7,801 33,331
Reclassifications and adjustments - 1,330 2,220 124 (3,674) -
Disposals (6,906) - (7,740) (3,545) - (18,191)
Acquired with new subsidiary - 66,841 - 1,602 153 68,596
Transferred from assets held for sale 18,092 - 35,435 1,099 88 54,714
At 31 December 2024 176,412 69,230 274,287 142,880 7,255 670,064
Accumulated depreciation:
At 1 January 2023 76,011 - 66,601 78,545 - 221,157
Charge for year 9,586 - 8,111 10,679 - 28,376
Disposals (2,705) - (872) (1,249) - (4,826)
Divested on sale of subsidiary (7) - (10) (31) - (48)
Transferred to assets held for sale (3,705) - (5,858) (737) - (10,300)
At 31 December 2023 79,180 - 67,972 87,207 - 234,359
Charge for year 8,510 - 7,303 10,413 - 26,226
Disposals (5,248) - (5,012) (1,850) - (12,110)
Release of impairment (1,007) - (2,044) - - (3,051)
Acquired with new subsidiary - - - 164 - 164
Transferred from assets held for sale 13,946 - 22,728 805 - 37,479
At 31 December 2024 95,381 - 90,947 96,739 - 283,067
Carrying amount:
At 31 December 2024 81,031 69,230 183,340 46,141 7,255 386,997
At 31 December 2023 78,731 - 161,310 54,327 2,887 297,255
The depreciation charge for the year includes USD376,000 (2023: USD144,000) which has been capitalised as part of additions to plantings and buildings and structures.
At the balance sheet date, the group had entered into USD3.7 million contractual commitments for the acquisition of PPE (2023: nil).
At the balance sheet date, PPE of USD131.8 million (2023: USD118.1 million) had been charged as security for bank loans (see note 15).
Additions to PPE include USD187,000 of ROU assets which are not included in purchases of PPE within the consolidated cash flow statement.
13. Land
2024 2023
USD'000 USD'000
Cost:
Beginning of year 48,832 48,648
Additions 4,530 5,093
Acquired with new subsidiary 3,086 -
Transferred from assets held for sale 4,467 -
Transferred to assets held for sale - (4,909)
End of year 60,915 48,832
Accumulated amortisation:
Beginning of year 2,817 3,681
Transferred to assets held for sale - (864)
End of year 2,817 2,817
Carrying amount:
End of year 58,098 46,015
Beginning of year 46,015 44,967
Balances classi?ed as land represent amounts invested in land utilised for the purpose of the plantation and stone operations in Indonesia.
There are two types of plantations cost, one relating to the acquisition of HGUs and the other relating to the acquisition of Izin Lokasi.
At 31 December 2024, certi?cates of HGU had been obtained in respect of areas covering 63,617 hectares (2023: 63,617 hectares). An HGU is effectively a government certi?cation entitling the holder to utilise the land for agricultural and related purposes. Retention of an HGU is subject to payment of annual land taxes in accordance with prevailing tax regulations. HGUs are normally granted for periods of up to 35 years and are renewable on expiry of such term.
The other cost relates to the acquisition of Izin Lokasi, each of which is an allocation of Indonesian state land granted by the Indonesian local authority responsible for administering the land area to which the allocation relates. Such allocations are preliminary to the process of fully titling an area of land and obtaining an HGU in respect of it. Izin Lokasi are normally valid for periods of between one and three years but may be extended if steps have been taken towards obtaining full titles.
Stone operation land includes the costs of acquiring licences and permits together with making compensation payments to traditional users of such land. The principal licences are IUPs (mining licences) and IPPKH (additional permits granted to IUP holders operating in a forest area). These licences are granted for periods of 5 years, renewable subject to the fulfilment of certain conditions.
At the balance sheet date, land titles of USD36.9 million (2023: USD30.9 million) had been charged as security for bank loans (see note 15).
14. Financial assets
2024 2023
USD'000 USD'000
Stone interest - 44,681
Sand interest 8,405 3,633
Coal interests 3,478 11,835
Provision against loan to coal interests (2,550) (2,550)
9,333 57,599
Plasma advances 15,406 12,788
Other non-current receivables 1,996 3,253
17,402 16,041
Total financial assets 26,735 73,640
Pursuant to the arrangements concluded some years ago between the group and its local partners, the company's subsidiary, KCC, had the right, subject to satisfaction of local regulatory requirements, to acquire, at original cost, 95 per cent ownership of two Indonesian companies that directly, and through an Indonesian subsidiary of one of those companies, own rights in respect of certain stone and coal concessions in East Kalimantan Indonesia. Until recently local regulatory requirements precluded the exercise of such rights but following new legislation that position has changed.
Accordingly in 2024 the group implemented the original agreement under which it had the right to acquire majority ownership of the stone concession holding company, albeit that formal registration of its ownership remains subject to final completion of Indonesian regulatory requirements. Pending completion of the formalities of the ownership structure, the stone concession holding company is being managed and controlled by the group. At 1 July 2024 USD65.3 million loans owed by and guaranteed by the stone concession holding company to the group have been treated as intercompany and are eliminated on consolidation (see note 37 of the annual report).
Following the identification of quartz sand deposits lying in the overburden within the concession area held by one coal concession holding company the group, in 2022, concluded agreements with the company holding the rights to mine such sand deposits. The latter company is a separate legal entity from the coal concession holding company in question because sand mining and coal mining in Indonesia are subject to separate licencing arrangements and a coal mining licence does not entitle the holder of such licence to mine sand. Pursuant to its agreements with the sand concession holding company, the group has made loans to finance the pre-production costs of that company. The agreements provided that, once all licences necessary for mining had been secured, the group would subscribe new shares in the sand concession holding company so as to provide it with a 49 per cent participation in the company. This agreement remains in place but the group now expects to increase the number of shares that it will subscribe, so as to hold a 95 per cent controlling interest once the sand concession holding company has been brought into commercial operation.
Concurrently with the agreement to acquire the stone concession holding company, the group relinquished its rights to acquire interests in the coal concession holding companies on terms that the ownership of the company with mining rights overlapping those of the sand concession holding company would be transferred to that company. The stone concession holding company had previously guaranteed the loans to the second coal concession holding company and the group will now rely on that guarantee for recovery of the loans going forward.
Included within the stone and coal interest balances in 2023 is past interest due of USD11.8 million net of a provision of USD9.7 million. This interest, due from the stone concession holding company and the second coal concession holding company was provided against due to the creditworthiness of the applicable concession holding companies. The USD6.6 million provision relating to the stone concession holding company has now been reversed as that company has commenced commercial production and sales (see note 5).
Plasma advances are discussed under Credit risk in note 26 of the annual report.
Other non-current receivables is a participation advance to a third party formerly holding a 5 per cent non-controlling interests in a group subsidiary. USD1.2 million was repaid during the year on the purchase of the non-controlling interest in the applicable subsidiary.
15. Bank loans
2024 2023
USD'000 USD'000
Bank loans 134,429 111,774
The bank loans are repayable as follows:
On demand or within one year 20,012 17,413
Between one and two years 19,348 16,662
Between two and five years 56,489 58,684
After five years 38,580 19,015
134,429 111,774
Amount due for settlement within 12 months 20,012 17,413
Amount due for settlement after 12 months 114,417 94,361
134,429 111,774
All bank loans are denominated in rupiah and are stated above net of unamortised issuance costs of USD2.3 million (2023: USD3.8 million). The bank loans repayable within one year include USD2.8 million drawings under working capital facilities (2023: USD2.9 million and USD6.1 million short term revolving borrowings secured against blocked cash (see note 25 of the annual report).
The interest rate on the bank loans and working capital facilities at 31 December 2024 is 8.25 per cent (2023: 8.0 per cent) except for the loan to CDM on which the rate is 8.5 per cent (2023: not applicable). The short term revolving borrowings have an interest rate of 0.5 per cent above the deposit interest rate applicable to the blocked cash deposits. The weighted average interest rate on all bank borrowings for 2024 was 8.3 per cent (2023: 7.7 per cent).
The gross bank loans of USD136.8 million (2023: USD115.6 million) are secured on certain land titles, PPE, biological assets and cash assets held by REA Kaltim, SYB, KMS and CDM having an aggregate book value of USD177.5 million (2023: USD158.1 million), and are the subject of an unsecured guarantee by the company. The banks are entitled to have recourse to their security on usual banking terms.
REA Kaltim, SYB, KMS and CDM have agreed certain financial covenants under the terms of the bank facilities relating to debt service coverage, debt equity ratio, EBITDA margin and the maintenance of positive net income and positive equity; such covenants are tested annually upon delivery to Bank Mandiri of the audited financial statements in respect of each year by reference to the consolidated results for that year, and consolidated closing financial position as at the year end, of REA Kaltim and its subsidiaries. The covenants have been complied with for 2024. Prior to 2024 each company was tested on a stand alone basis. In 2023 Bank Mandiri waived the testing requirement as regards REA Kaltim's maintenance of positive net income and the testing requirements as regards SYB's debt service coverage, gross margin and the maintenance of positive net income.
Under the terms of their 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 rupiah denominated facilities of USD5.5 million (2023: nil).
16. Sterling notes
The sterling notes at 31 December 2024 comprised GBP21.7 million nominal of 8.75 per cent guaranteed 2025 sterling notes (2023: GBP30.9 million nominal) issued by the company's subsidiary, REA Finance B.V.. The movement during the year resulted from the purchase in October and December 2024 of GBP9.2 million nominal of notes for cancellation.
The outstanding sterling notes are due for repayment on 31 August 2025. A premium of 4p per GBP1 nominal of sterling notes will be paid on redemption of the sterling notes on 31 August 2025 (or earlier in the event of default) or on surrender of the sterling notes in satisfaction, in whole or in part, of the subscription price payable on exercise of the warrants held by sterling note holders (see note 35 of the annual report) on or before the ?nal subscription date (namely 15 July 2025).
The sterling notes are guaranteed by the company and another wholly owned subsidiary of the company, REAS, and are secured principally on unsecured loans made by REAS to an Indonesian plantation operating subsidiary of the company.
The repayment obligation in respect of the sterling notes of GBP21.7 million (USD27.1 million) is carried on the balance sheet at USD28.2 million (2023: USD40.5 million) which includes the amortised premium to date.
17. Other loans and payables
2024 2023
USD'000 USD'000
Indonesian retirement benefit obligations 9,572 9,098
Lease liabilities 3,546 5,929
Loans from non-controlling shareholder 8,750 13,484
Payable under settlement agreement 736 1,736
22,604 30,247
Repayable as follows:
On demand or within one year (shown under current liabilities) 2,707 14,891
Between one and two years 1,898 4,326
Between two and five years 9,728 2,979
After five years 8,271 8,051
Amount due for settlement after 12 months 19,897 15,356
22,604 30,247
Loan from non-controlling shareholder comprises an USD8.7 million interest bearing loan repayable in equal instalments over the period from January 2027 to January 2030 (2023: a USD3.5 million interest bearing loan repayable in equal instalments up to June 2026, plus a USD10.0 million pre-closing loan in connection with the DSN share subscription agreement which was repaid on completion of the share subscription transaction).
The directors estimate that the fair value of other loans and payables approximates their carrying value.
18. Acquisition of subsidiary (ATP)
As previously discussed (see note 14), pending completion of the formalities of the ownership structure, the stone concession holding company (ATP) is being managed and controlled by the group and has therefore been consolidated from 1 July 2024. No consideration was paid in 2024, and it is expected to be minimal with no transaction costs. In line with the provisions of IFRS 3, management have 12 months to finalise the acquisition accounts for ATP and accordingly, the amounts included in these financial statements are provisional.
The net assets of this subsidiary at the date of acquisition were as follows:
2024
USD'000
PPE 68,432
Land 3,086
Deferred tax asset 3,901
Current assets 7,679
Cash 259
83,357
Current liabilities (7,290)
Deferred tax liability (10,797)
Loans from group (65,270)
Total net assets -
The assets and liabilities were valued at fair value at the date of acquisition of control (see note 3 of the annual report). This resulted in a fair value adjustment of USD58.9 million which was applied to the mining assets acquired (included within PPE), the book value of the other assets and liabilities being considered to be their fair values. At acquisition the non-controlling interest of 5 per cent amounts to USDnil.
19. Movement in net borrowings
2024 2023
USD'000 USD'000
Change in net borrowings resulting from cash flows:
Increase / (decrease) in cash and cash equivalents, after exchange rate effects 24,642 (7,719)
Net (increase) / decrease in bank borrowings (27,480) 9,675
Purchase of sterling notes for cancellation 11,606 -
Dollar notes held in treasury - (8,142)
Decrease / (increase) in borrowings from non-controlling shareholder 12,234 (8,606)
Transfer of borrowings to assets held for sale - 10,641
Transfer of borrowings from assets held for sale (7,401) -
13,601 (4,151)
Amortisation of sterling note issue expenses and premium 566 (188)
Loss on disposal of dollar notes held in treasury - (428)
Amortisation of dollar note issue expenses (174) (160)
Amortisation of bank loan expenses (1,884) (1,266)
12,109 (6,193)
Currency translation differences 6,821 (5,262)
Net borrowings at beginning of year (178,184) (166,729)
Net borrowings at end of year (159,254) (178,184) 20. Related party transactions
Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the company and its subsidiaries are dealt with in the company's individual financial statements.
Remuneration of key management personnel
The remuneration of the directors, who are the key management personnel of the group, is set out below in aggregate for each of the categories specified in IAS 24: Related party disclosures. Further information about the remuneration of, and fees paid in respect of services provided by, individual directors is provided in the audited part of the Directors' remuneration report in the annual report.
2024 2023
USD'000 USD'000
Short term benefits 1,283 1,222 21. Rates of exchange
2024 2024 2023 2023
Closing Average Closing Average
Indonesian rupiah to US dollar 16,162 15,906 15,416 15,219
US dollar to pounds sterling 1.2529 1.2783 1.2747 1.2471
22. Events after the reporting period
There have been no material post balance sheet events that would require disclosure in, or adjustment to, these financial statements.
References to group operating companies in Indonesia are as listed under the map on page 5 of the annual report.
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.
References to rupiah and Rp are to the lawful currency of Indonesia.
References to sterling, pounds sterling and GBP are to the lawful currency of the United Kingdom.
Other terms are listed in the glossary of the annual report.
Press enquiries to:
R.E.A. Holdings plc
Tel: 020 7436 7877
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April 17, 2025 02:01 ET (06:01 GMT)
