R.E.A. HOLDINGS PLC
Annual Report and Accounts
2024
R.E.A. Holdings plc (REA or the company) is a UK public listed company of
which the shares are admitted to the Official List and to trading on the main
market of the London Stock Exchange.
The REA group (the company and its subsidiaries) is principally engaged in the
cultivation of oil palms in the province of East Kalimantan in Indonesia and in the
production and sale of crude palm oil and crude palm kernel oil.
1
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
Contents
Overview
Key statistics
2
Highlights
3
Officers and advisers
4
Map
5
Strategic report
Chairman’s statement
6
Strategic environment
8
Agricultural operations
12
Stone and sand operations
17
Finance
19
Sustainability and climate report
25
Principal risks and uncertainties
30
Regulatory information
37
Governance
Board of directors
43
Directors’ report
44
Corporate governance report
52
Audit committee report
58
Directors’ remuneration report
61
Directors’ responsibilities
70
Independent auditor’s report
71
Group financial statements
Consolidated income statement
81
Consolidated statement of comprehensive income
82
Consolidated balance sheet
83
Consolidated statement of changes in equity
84
Consolidated cash flow statement
85
Notes to the consolidated financial statements
86
Company financial statements
Company balance sheet
127
Company statement of changes in equity
128
Notes to the company financial statements
129
Notice of annual general meeting
137
Glossary
142
All terms in this report are listed in the Glossary.
References in this report to group operating companies in Indonesia are as listed under the map on page 5.
2
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Key statistics
2024
2023
2022
2021
2020
Results ($’000)
Revenue
187,943
176,722
208,783
191,913
139,088
Earnings before interest, tax,
depreciation and amortisation (see note 7)
61,580
43,594
69,055
75,807
36,775
Profit / (loss) before tax
38,897
(29,245)
42,046
29,198
(23,250)
Profit / (loss) attributable to ordinary shareholders
18,275
(14,370)
18,951
(1,500)
(13,604)
Cash generated by operations (see note 38)
49,086
47,174
48,282
64,035
53,579
Returns per ordinary share
Profit / (loss) (US cents)
41.6
(32.7)
43.1
(3.4)
(31.0)
Dividend (pence)
–
–
–
–
–
Plantation land areas (hectares)*
Mature oil palm
31,605
34,043
35,461
35,665
34,745
Immature oil palm
4,267
1,699
507
351
1,219
Planted areas
35,872
35,742
35,968
36,016
35,964
Infrastructure and undeveloped
27,745
27,875
28,554
28,506
28,558
Fully titled***
63,617
63,617
64,522
64,522
64,522
Subject to completion of title
5,454
5,454
10,723
10,723
10,723
Total
69,071
69,071
75,245
75,245
75,245
FFB harvested (tonnes)*
Group
682,522
762,260
765,681
738,024
765,821
Third party
210,594
231,823
248,971
210,978
205,544
Total
893,116
994,083 1,014,652
949,002
971,365
Production (tonnes)*
Total FFB processed
857,575
949,701
981,011
933,120
948,260
FFB sold
34,192
45,032
33,168
18,369
20,058
CPO
190,235
209,994
218,275
209,006
213,536
Palm kernels
44,286
47,324
46,799
44,735
47,186
CPKO
18,086
19,393
18,206
17,361
16,164
CPO extraction rate**
22.2%
22.1%
22.3%
22.4%
22.5%
Yields (tonnes per mature hectare)*
FFB
21.6
22.4
21.6
20.7
22.0
CPO
4.8
5.0
4.8
4.6
5.1
CPKO
0.4
0.4
0.4
0.4
0.4
Average exchange rates
Indonesian rupiah to US dollar
15,906
15,219
14,917
14,345
14,570
US dollar to pounds sterling
1.28
1.25
1.23
1.38
1.29
*
2020 hectarage and FFB reflect certain adjustments for the redesignation of areas to infrastructure, conservation or plasma, and reallocations
between planting years; 2023 and 2024 hectarage and FFB reflect changes arising from the replanting and extension planting programmes
** The group cannot separately determine extraction rates for its own FFB and for third party FFB; CPO extraction rate and CPO and CPKO yields
are therefore calculated applying uniform extraction rates across all FFB processed
*** Of the group’s total plantable land areas in 2024, 62,843 hectares are able to be certified in accordance with the RSPO’s principles and criteria
3
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
Overview
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
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R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Officers and advisers
Directors
D J Blackett
M Djalil
C E Gysin
J C Oakley
R M Robinow
M A St. Clair-George
R Satar
Secretary and registered office
R.E.A. Services Limited
5th Floor North
Tennyson House
159-165 Great Portland Street
London W1W 5PA
Stockbrokers
Panmure Liberum
Level 12 Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
Solicitors
Ashurst LLP
London Fruit & Wool Exchange
1 Duval Square
London E1 6PW
Independent auditor
MHA
6th Floor
2 London Wall Place
London EC2Y 5AU
Registrars and transfer office
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
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R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
Overview
Map
Tabang
The map provides a plan of the operational areas and of the river and road system by which access is
obtained to the main areas.
Key
Companies
Methane capture plant
Agricultural operations
New capital city (IKN) under construction
CDM
PT Cipta Davia Mandiri
Oil mill
KMS
PT Kutai Mitra Sejahtera
Road
PU
PT Prasetia Utama
Tank storage
REA Kaltim PT REA Kaltim Plantations
SYB
PT Sasana Yudha Bhakti
Stone operations
ATP
PT Aragon Tambang Pratama
Sand operations
MCU
PT Millenia Coalindo Utama
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R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
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).
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R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
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, but with
appropriate arrangements for those noteholders who do not
wish to roll over their notes. 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 roll over 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
8
R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
Strategic environment
Business model and resources
The group is principally engaged in the cultivation of oil
palms in the province of East Kalimantan in Indonesia and
in the production and sale of CPO and CPKO. Ancillary to
these activities, the group generates renewable energy from
its methane capture plants to provide power for its own
operations and, at times, for sale to local villages via the
Indonesian state electricity company, PLN. The group is also
developing stone quarrying and sand mining operations with
concessions located in East Kalimantan.
Detailed descriptions of the group’s oil palm and related
activities and information regarding the stone and sand
activities are provided under, respectively, Agricultural
operations and Stone and sand operations below.
The group and predecessor businesses have been involved
for over one hundred years in the operation of agricultural
estates growing a variety of crops in developing countries in
South East Asia and elsewhere. Today, the group sees itself as
marrying developed world capital and Indonesian opportunity
by offering investors in, and lenders to, the company the
transparency of a company listed on the LSE while using
capital raised by the company (or with the company’s support)
to develop natural resource based operations in Indonesia
from which the group believes that good returns can be
achieved.
The knowledge and expertise gained from the group’s long
involvement in the plantation industry and experience in
Indonesia represent significant intangible resources that
underpin the group’s credibility. This is important when
sourcing capital, working with the Indonesian authorities in
relation to project development and recruiting a high calibre
experienced management team familiar with Indonesian
regulatory processes and social customs and with a firm
commitment to sustainable practices and respect for the
environment. Other resources important to the group are its
established base of operations, large and near contiguous
land concessions, and a trained workforce with strong links to
the local community.
Objectives and general strategy
The group’s objectives are to provide attractive overall returns
to investors in the shares and other securities of the company
from the operation and expansion of the group’s existing
businesses and to foster social and economic progress in
the localities of the group’s activities, while maintaining high
standards of sustainability, respect for the environment and
addressing the impacts of climate change.
CPO and CPKO are primary commodities that are sold
at prices determined by world supply and demand and
the local regulatory environment. Such prices fluctuate in
ways that are difficult to predict and that the group cannot
control. The group’s strategy for its agricultural operations
is therefore to concentrate on minimising unit production
costs, without compromising on quality or its objectives as
respects sustainable practices, with the expectation that, by
optimising efficiencies, the group will have greater resilience
to downturns in prices than competitor producers.
The group adopts a two-pronged approach in seeking
production cost efficiencies in the agricultural operations. First,
the group strives continually to improve the productivity and
efficiency of its established agricultural operations. Secondly,
the group aims to capitalise on its available resources by
developing its land bank as rapidly as logistical, financial and
regulatory constraints permit while utilising the group’s existing
agricultural management capacity to manage the resultant
larger business.
The stone and sand operations derive from original plans for
the group to diversify in a limited way into mining activities.
This diversification was initially by way of loans to a group
of connected holding companies owning stone and coal
concessions with the intention of ultimately acquiring majority
equity interests in those companies. Changes in Indonesian
mining regulations for a long time precluded implementation
of such original planned equity ownership, but further changes
to those regulations have altered the position and the group
is now rationalising the structure of its mining interests as
detailed in Stone and sand operations below.
Access to stone deposits offers a valuable resource for
improving the durability of infrastructure in the group’s
agricultural operations and for sale to neighbouring companies
for road building. With the stone operations located in close
proximity to the agricultural operations, both operations can
efficiently share management. Stone has the capacity to
make a material contribution to group profits, and sand can
provide a useful add-on to stone without significant additional
overheads. The group’s strategy for stone and sand is
therefore to maximise production and sales while seeking to
optimise productivity.
The group’s financial strategy is discussed under Financing
policies in Finance below.
The group recognises that its agricultural operations, of
which the total assets at 31 December 2024 represented
approximately 81 per cent of the group’s total assets and
which, in 2024, contributed substantially all of the group’s
revenue, lie within a single locality and rely on a single crop.
This permits significant economies of scale but brings with
it some risks. Whilst further diversification would afford the
group some offset against these risks, the directors believe
that the interests of the group and its shareholders will be
best served by focusing on the growth and development of the
existing operations. They therefore have no plans for further
diversification, save as respects the mining of stone and sand
as detailed in Stone and sand operations below.
Initiatives
During 2024 DSN, the Indonesian minority shareholder in
REA Kaltim, increased its equity interest in REA Kaltim from
15 per cent to 35 per cent by way of a subscription of further
shares in REA Kaltim. Concurrently, the group completed
an intra-group sale and purchase of the group’s new
9
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
development estate, PU, such that the DSN group ceased to
hold an indirect interest, through REA Kaltim, in PU and PU
became a wholly owned subsidiary of the company. While the
further DSN subscription diluted the company's interest in
REA Kaltim from 85 per cent to 65 per cent, it provided an
immediate and substantial cash injection to the group and
permitted the group to retain control of its core operations.
The cash inflow resulting from such further subscription of
shares in REA Kaltim, coupled with improved trading by the
group, has been successful in eliminating in full all remaining
arrears of dividend on the company's preference shares and
in reducing the group’s net indebtedness, which stood at
$188.4 million at 31 December 2023, to the level of $159.3
million at 31 December 2024 (in both cases including the net
indebtedness of CDM).
To the extent that circumstances permit, the directors aim to
continue reducing the group’s net indebtedness, whilst also
taking steps to improve the maturity profile of the group's
borrowings. As detailed in Finance below, in 2024 and 2025
to date, the group has been successful in agreeing several
new bank loans which will replace indebtedness maturing in
the short term with new indebtedness of significantly longer
tenor. In addition, the group is well advanced in proposals to
extend the maturity date of at least a proportion of the dollar
notes and has recently secured the agreement of the two
largest holders of dollar notes to support the proposals.
The group has recently concluded an agreement with
a neighbouring company, Enggang, to take over the
management of some 2,300 hectares of oil palms planted
in areas adjacent to the group’s estates. The group will be
remunerated for its management services by a fixed fee of,
initially, some $500,000 per annum and an incentive fee equal
to 30 per cent of the component of Enggang’s profit before
tax attributable to the areas to be managed. The agreement
is for a term of ten years. All FFB from the areas in question
will be processed in the group’s mills. The group already mills
most of the FFB harvested from these areas, however FFB
production should increase substantially with the planned
rehabilitation and replanting programme for these areas,
providing remunerative utilisation of the group’s surplus milling
capacity.
Succession planning
Carol Gysin, the company’s managing director, has advised
the company that she wishes to step down from her current
position at the end of 2025. Carol has been managing director
since the beginning of 2017 and has overseen a substantial
recovery in the group’s affairs during her tenure. The directors
have agreed that Luke Robinow should be appointed as
managing director in her place.
Luke, who is now aged 40, moved to Indonesia in 2008 to
join REA Kaltim, the company’s principal operating subsidiary.
Initially employed on the REA Kaltim estates, he has over
the 17 years since 2008 had experience of all aspects
of the group’s Indonesian operations and has had overall
responsibility for those operations since 2018 when he was
appointed President Director of REA Kaltim. The directors are
confident that Luke has the skills and understanding of the
group’s business needed to drive the business forward.
With Luke continuing to reside in Indonesia, the directors
recognise that there will be a requirement for a senior director
based in London to oversee the group’s London office and all
administrative activities handled by that office. The directors
are therefore grateful that Carol has agreed to assume that
role and to continue as an executive director on a part time
basis.
As the management of the group transfers to a younger
generation, it is expected that the more longstanding non-
executive members of the board will progressively retire. The
directors intend that they should be replaced to the extent
necessary to assure continuance of the board’s ethnic and
gender diversity aims and maintenance of the board’s mix of
skill sets.
The vegetable oil market
According to Oil World, in the year to 30 September 2024
worldwide production of the 17 major vegetable and animal
oils and fats increased by 2.2 per cent to 259.8 million tonnes
and consumption increased by 3.6 per cent to 261.2 million
tonnes. For the same period, production and consumption of
CPO represented, respectively, 80.1 million tonnes and 81.9
million tonnes. Production of the 17 vegetable and animal oils
and fats is currently forecast by Oil World to increase by 1.2
per cent in 2025 to 262.9 million tonnes and consumption
by 0.8 per cent to 263.3 million tonnes, of which CPO
production is projected to account for 81.0 million tonnes and
consumption 80.3 million tonnes, representing some 31 per
cent of the total.
Vegetable and animal oils and fats have conventionally been
used principally for the production of cooking oil, margarine
and soap. Consumption of these basic commodities correlates
with population growth and, in less developed areas, with
per capita incomes and thus economic growth. Demand for
vegetable and animal oils and fats for these uses is therefore
driven by the increasing world population and economic
growth in the key markets of Indonesia, China and India.
The principal competitors of CPO are the oils from the annual
oilseed crops, the most significant of which are soybean,
oilseed rape and sunflower. Since the oil yield per hectare
from oil palms (at up to seven tonnes) is much greater
than that of the principal annual oilseeds (less than one
tonne), CPO can be produced more economically than the
principal competitor oils and this provides CPO with a natural
competitive advantage within the vegetable oil and animal
fat complex. Within vegetable oil markets, CPO should also
continue to benefit from health concerns in relation to trans-
fatty acids. Such acids are formed when vegetable oils are
artificially hardened by partial hydrogenation. Polyunsaturated
oils, such as soybean oil, rape oil and sunflower oil, require
partial hydrogenation before they can be used for shortening
and other solid fat applications, but CPO does not.
10
R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
Strategic environment
continued
Vegetable and animal oils and fats can also be used to make
biofuels and, in particular, biodiesel. In recent years, biofuel
has become an increasingly important factor in the vegetable
oil markets. According to Oil World, biofuel production in the
year to 30 September 2024 accounted for some 21 per cent
of global consumption of the 17 major vegetable and animal
oils and fats. An increasing element of biofuel use reflects
government mandates. In Indonesia, for example, fuel for use
in transport and in power stations is, in each case, required
to contain a stipulated minimum percentage of biodiesel. As
a result, an increasing amount of Indonesian CPO is being
converted to biodiesel for internal consumption.
The Indonesian government applies duties and tariffs on
exports of CPO and CPKO. These tariffs are calculated on
a sliding scale by reference to a CPO reference price that is
set periodically by the Indonesian government on the basis of
recognised benchmark CPO prices. Export levy is payable to a
dedicated fund that utilises levy income to support measures
designed to benefit the growing of oil palms in Indonesia.
Export duty is a tax payable to the Indonesian government.
The applicable tariffs, which are adjusted from time to time, are
published on the group’s website at www.rea.co.uk/investors/
cpo-export-tariffs.
The group sells CPO into the local Indonesian market which
is not subject to export levy or export duty. However, arbitrage
between the Indonesian and international CPO markets
normally results in a local price that is broadly in line with
prevailing international prices after adjustment of the latter for
delivery costs and export tariffs and restrictions. Changes to
export tariffs and restrictions therefore have an indirect effect
on the prices that the group achieves on sales of its CPO.
A graph of CPO monthly average prices, CIF Rotterdam, for
the ten years to 31 December 2024, as derived from prices
published by Oil World, is shown above. The monthly average
price over the ten years has moved between a high of $1,990
per tonne and a low of $439 per tonne. The monthly average
price over the ten years as a whole has been $851 per tonne.
Opening 2024 at $940 per tonne, CIF Rotterdam, prices
steadily increased to peak at $1,390 per tonne in mid
December and ended the year at $1,265 per tonne. Despite
some increased volatility since the start of 2025, CPO prices
have remained comfortably above the $1,000 per tonne mark
and currently stand at $1,140 per tonne.
These historically high CPO prices reflect the lower levels
of CPO production seen during 2024. Whilst there may be
some recovery in production going forward, supplies remain
tight and are expected to remain thus as Indonesia continues
to push increased use of biodiesel in transport fuel. This
encourages the hope that, notwithstanding the uncertainties
regarding international tariffs and the US commitment to
biofuels, prices will be sustained at levels above the average
for 2024.
The Indonesian context
In February 2024 Indonesia held its sixth fully democratic
elections since former President Soeharto stood down in
May 1998. The pairing of Prabowo Subianto (Presidential
candidate), the former Minister of Defence running for
the presidency for the third time, and Gibran Rakabuming
Raka, son of the former President Jokowi (Vice Presidential
candidate) resulted in an electoral success. Despite court
challenges by the two losing candidates, in April 2024,
Prabowo and Gibran were declared winners with over 58.5 per
cent of the vote and were inaugurated in October 2024.
Notwithstanding continuing global economic challenges and
increasing geopolitical tensions, the Indonesian economy grew
by 5.03 per cent in 2024 (2023: 5.05 per cent). The new
government has committed to increasing economic growth
to 8.0 per cent per annum by the end of their four year term,
focusing on expanding downstream processing capacity
for Indonesian commodities, services and tourism, housing
and construction, the digital economy, technology and green
energy.
2015
2016
2017
2018
2019
2020
2021
2022
2024
2023
400
800
1200
1600
2000
CPO monthly average price (USD)
11
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
On 1 January 2025, President Prabowo, delivering on one of
his key campaign commitments, announced a new regulation
to implement a biofuel blend based on 40 per cent CPO
(B40) and 60 per cent diesel by the end of March 2025.
Once fully implemented, this new regulation will lead to
significantly higher domestic consumption of CPO than under
the previous B35 blend. With Indonesian CPO production
now relatively static at around 47 million tonnes per annum
and increasing domestic demand for food and soap products
containing CPO, the volume of palm oil available for export will
inevitably decline. This is likely to support both domestic and
international CPO prices.
The reported Indonesian annual inflation rate in 2024 of
1.57 per cent is the lowest achieved in the last two decades,
2023 being the previous low at 2.61 per cent. The 2024
fiscal deficit was contained at 2.29 per cent (2023: 1.7 per
cent), well within the 3.0 per cent limit permitted by current
Indonesian law.
The US dollar to Indonesia rupiah exchange rates fluctuated
considerably during 2024. Starting the year at Rp 15,416 =
$1, the currency then weakened to Rp 16,450 = $1 in mid
June, strengthened again to Rp 15,100 in September, but
then again weakened to Rp 16,162 = $1 at the end of 2024.
The rupiah has weakened further since the start of 2025 and
is currently trading in a range +/- Rp 16,773 = $1. Despite
this weakness, the Bank of Indonesia has maintained its base
rate at 6.0 per cent since September 2024.
Evaluation of performance
In seeking to meet its expansion, efficiency and sustainability
objectives, the group sets operating standards and targets
for most aspects of its activities and regularly monitors
performance against those standards and targets. For many
aspects of the group’s activities, there is no single standard
or target that, in isolation from other standards and targets,
can be taken as providing an accurate continuing indicator of
progress. In these cases, a collection of measures has to be
evaluated and a qualitative conclusion reached.
The directors do, however, rely on regular reporting of certain
KPIs that are comparable from one year to the next, in
addition to monitoring the key components of the group’s
profit and loss account and balance sheet. These performance
indicators are summarised in the Glossary below.
Quantifications of the indicators for 2024 with, where
available, comparative figures for 2023 are provided in the
succeeding sections of this report, with each category of
indicators being covered in the corresponding section of the
report.
12
R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
Agricultural operations
Structure
All of the group’s agricultural operations are located in
East Kalimantan and have been established pursuant to an
understanding dating from 1991 whereby the East Kalimantan
authorities undertook to support the group in acquiring,
for its own account and in cooperation with local interests,
substantial areas of land in East Kalimantan for planting with
oil palms.
The group’s core agricultural land areas, the first of which was
acquired in 1991 and planted in 1994, are owned by REA
Kaltim, together with REA Kaltim's wholly owned subsidiaries.
REA Kaltim is owned as to 65 per cent by a group company
and as to 35 per cent by DSN. A separate agricultural land
area, into which the group is currently expanding its oil palm
plantings, is held by PU, a wholly owned subsidiary of the
company.
DSN is an Indonesian natural resources company listed on the
Indonesia Stock Exchange in Jakarta and is engaged in the
cultivation of oil palm plantations, the processing of oil palm
fruit and the manufacture of wood products, with plantation
estates based in East, Central and West Kalimantan.
Land areas
The group’s operations are located some 140 kilometres
north-west of Samarinda, the capital of East Kalimantan, and
lie either side of the Belayan River, a tributary of the Mahakam,
one of the major river systems of South East Asia. The SYB
areas are contiguous with the REA Kaltim areas and together
these form a single site falling within the Kutai Kartanegara
regency of East Kalimantan. The CDM and KMS areas are
located in close proximity of each other in the East Kutai
regency of East Kalimantan. KMS lies less than 30 kilometres
to the east of the REA Kaltim areas whereas CDM lies some
70 kilometres north-west of the REA Kaltim administrative
centre. Land held by PU is adjacent to the land areas held by
REA Kaltim and SYB.
Historically, the REA Kaltim estates and adjacent areas could
only be accessed by river but, in 2015, a government road was
constructed between Tabang (a town to the north of the REA
Kaltim estates) and Kota Bangun connecting via a bridge over
the Mahakam River with an existing road from Kota Bangun to
Samarinda. This road passes through the REA Kaltim estates
and provides the group with alternative transport options
which are of particular value when excessively dry periods limit
river access to the estates. A bridge across the Senyiur River
links REA Kaltim with the KMS and CDM areas.
In 2023, a local coal company, which mines areas adjacent
to SYB’s northern estate, constructed a haul road starting
to the north of the PU estate, crossing the Belayan River by
way of a newly constructed bridge and then, by agreement,
passing through the group’s estates and on to the Mahakam
River. The new bridge over the Belayan is already helpful to
the group in transporting produce and other items between
the group estates that lie to each side of the river. Additionally,
the haul road potentially provides the group with a valuable
alternative land route for evacuating its produce at times when
river access to the estates is limited. Moreover, the access
afforded to the Mahakam River would, if a loading point was
established on the Mahakam, permit evacuation of CPO in
larger barges than can then be accommodated at the group's
existing estate loading points.
Although the 1991 understanding established a basis for
the provision of land for development by, or in cooperation
with, the group, all applications to develop previously
undeveloped land areas must be agreed by the Indonesian
Ministry of Forestry and have to go through a titling and permit
process. This process begins with the grant of an allocation
of Indonesian state land by the Indonesian local authority
responsible for administering the land area to which the
allocation relates (an Izin Lokasi). Allocations are normally
valid for periods of between one and three years but may be
extended if steps have been taken to obtain full titles.
After a land allocation has been obtained (either by direct
grant from the applicable local authority or by acquisition from
the original recipient of the allocation or a previous assignee),
the progression to full title involves environmental and other
assessments to delineate those areas within the allocation
that are suitable for development, settlement of compensation
claims from local communities and other necessary legal
procedures that vary from case to case. The titling process is
then completed by a cadastral survey (during which boundary
markers are inserted) and the issue of a formal registered
land title certificate (a Hak Guna Usaha or HGU). Separately,
central government and local authority permits are required
for the development of land. Renewal of the group’s earliest
HGUs that were approaching the end of their initial validity
period in the next few years was successfully concluded in
2023.
The group’s fully titled agricultural land, at 31 December
2024, totalled 63,617 hectares. In addition to that land, at 31
December 2024, the group held land allocations in CDM of
5,454 hectares representing land that was originally zoned for
use under the Indonesian transmigration scheme and held by
CDM pursuant to a former licence (which is currently under
renewal) issued by the Indonesian Ministry of Transmigration.
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
R.E.A. Holdings plc Annual Report and Accounts 2024
13
Details of the land areas held by the group as at 31 December
2024 are set out below:
Plantation land areas
Hectares
Fully titled land
CDM
9,784
KMS
7,321
PU
9,097
REA Kaltim
29,442
SYB
7,973
Fully titled*
63,617
Land subject to completion of titling
CDM
5,454
* Of the group’s total plantable land areas in 2024, 62,843 hectares are
able to be certified in accordance with the RSPO’s principles and criteria
Areas the subject of land allocations may be reduced on
renewal of allocations and further reduced on full titling, or
renewal of full titles, when land the subject of conflicting
claims or reallocated for smallholder cooperatives may be
excluded.
Not all areas in respect of which full HGU titles are issued can
be planted with oil palms. Some land may be unsuitable for
planting, HCV areas must not be developed, and some land
will be required for roads, buildings and other infrastructural
facilities. The directors believe that currently unplanted fully
titled land and existing land allocations, augmented by some
potentially available adjacent plots, should permit extension of
the group’s existing oil palm plantings by between 5,000 and
10,000 hectares.
With land prices rising, increasing interest in plantation
development and sustainability obligations severely restricting
land development, plantable land is much less available than
was the case in 1991 when the group was first established
in East Kalimantan. Moreover, the Indonesian government
now applies a "use it or lose it" policy to land. Pursuant to
this policy, land allocations and titles may be rescinded if
the land concerned is not utilised within a reasonable period
for the purposes for which it was allocated. The group must
therefore manage its land bank carefully to ensure that it can
demonstrate clear plans for the utilisation of its undeveloped
land holdings, subject to the group’s environmental policies
and sustainability obligations. The group does not believe that
any land now intended for further expansion is likely to be lost
as a consequence of this government policy.
Land development
Areas planted as at 31 December 2024 amounted in total
to 35,872 hectares, having a weighted average age of 16.8
years. Mature plantings comprised 31,605 hectares.
The breakdown by planting year of the total of 35,872
hectares planted is shown below:
Planted areas*
Hectares
Mature areas
1995
611
1996
1,896
1997
2,269
1998
4,333
1999
351
2000
874
2004
3,190
2005
2,280
2006
3,361
2007
3,446
2008
936
2009
124
2010
666
2011
578
2012
1,926
2013
1,814
2014
79
2015
1
2016
1,858
2017
801
2018
211
31,605
Immature areas
2021
140
2022
327
2023
1,232
2024
2,568
4,267
35,872
* Planted areas that complete a planned planting programme for a
particular year but are planted in the early months of the succeeding
year are normally allocated to the planting year for which they were
planned
Replanting and extension planting continued on schedule
during 2024. A total of 1,531 hectares were replanted,
principally representing mature oil palms dating from 1994
to 1997. A further 1,037 hectares of new plantings were
established in PU. Other changes to planted areas are
accounted for as follows: 940 hectares of 2010 to 2017
plantings being re-allocated to plasma in CDM; and 249
hectares of 2010 to 2017 plantings being transferred from
the group’s Satria estate to the neighbouring coal company
that has constructed the road through that estate and down to
the Mahakam River as described under Land areas above.
14
R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
Agricultural operations
continued
Extension planting in areas adjacent to the existing developed
areas offers the prospect of good returns. It remains the policy
of the directors to continue the group’s extension planting
programme within the framework of the group’s sustainability
criteria, and when funding so permits, so that, over time, all
suitable undeveloped land available to the group (other than
areas set aside by the group for conservation) will be planted
with oil palms. As previously acknowledged, such expansion
involves a series of discrete annual decisions as to the area to
be planted in each forthcoming year and the rate of planting
may be accelerated or scaled back in the light of prevailing
circumstances. Subject to availability of funding, the group
aims, during 2025, to continue replanting of older areas and
extending its planted areas at the PU estate at a similar rate to
that achieved in 2024.
The group sizes its nurseries to ensure availability of seedlings
to meet the group’s planned replanting and extension planting
programmes.
Processing and transport facilities
The group operates three oil mills, POM, COM and SOM, in
which the FFB crops harvested from group and smallholder
areas are processed into CPO and palm kernels. POM and
COM date from 1998 and 2006 respectively and each is
designed to have an effective processing capacity of 80
tonnes per hour. SOM, operating since 2012, initially had a
capacity of 45 tonnes per hour but an extension completed in
2023 has doubled its capacity.
Following the substantial investment over the past few years
in the expansion of SOM and in the renovation of POM and
COM, all three mills are operating with good reliability and
maximising throughput. Processing capacity should remain
ample for some time for the group's own FFB crops and
for the volume of FFB expected to be purchased from third
parties. The mills will continue to require regular replacement
and upgrading of mill machinery, but with two boilers in each
mill providing resilience and facilitating downtime for this
ongoing programme, the annual investment entailed should be
less prone to fluctuation than in recent years.
The sufficiency of processing capacity allowed the group,
during 2024, to install verifiable processes and control
systems for producing segregated oil at one of its three mills
(COM). Segregated certified CPO normally commands a price
premium.
COM and SOM incorporate, within their overall facilities,
palm kernel crushing plants in which palm kernels are further
processed to extract the CPKO that the kernels contain. Each
kernel crushing plant has a nominal design capacity of 150
tonnes of kernels per day. The installed capacity is sufficient to
process current kernel output from the group’s three oil mills.
A fleet of river barges for transporting CPO and CPKO is
used in conjunction with tank storage adjacent to the oil mills
and a transhipment terminal owned by the group downstream
of the port of Samarinda. The core river barge fleet, which
is operated under time charter arrangements to ensure
compliance with current Indonesian cabotage regulations,
comprises a number of small vessels, ranging between 750
and 2,000 tonnes. These barges are used for transporting
CPO and CPKO from the estates to the transhipment terminal
for bulking and then either loading to buyers’ own vessels
on an FOB basis or for loading to a 4,000 tonne seagoing
barge. The seagoing barge, also operated under a time charter
arrangement, makes deliveries on a CIF basis to customers
operating refineries along the coast of East Kalimantan. On
occasion, the group also spot charters additional barges for
shipments and to provide temporary storage if required.
The current river route downstream from the mature estates
follows the Belayan River to Kota Bangun (where the Belayan
joins the Mahakam River), and then the Mahakam through
Tenggarong, the capital of the Kutai Kartanegara regency,
to Samarinda, the East Kalimantan provincial capital, and
ultimately through the Mahakam delta into the Makassar
Straits.
During periods of lower rainfall (which normally occur for short
periods during the drier months of May to August of each
year), river levels on the upper part of the Belayan become
more volatile. CPO and CPKO must then be transferred by
road from the mills to a point some 70 kilometres downstream
at Pendamaran where the group has established a permanent
loading facility and where the year round loading of barges of
up to 2,500 tonnes is possible. The group uses a combination
of its own fleet of trucks and contractors’ trucks to transport
CPO and CPKO from the oil mills either to the usual loading
points on the upper reaches of the Belayan or to the
downstream loading point at Pendamaran.
The new road through the group’s Satria estate and on to the
Mahakam River would, as discussed under Land areas above,
provide an alternative option for evacuation of CPO and CPKO
if the group established a loading point on the Mahakam at
the end of the road.
Flexibility of delivery options is helpful to the group in its
efforts to minimise CPO and CPKO stocks and optimise the
net prices, FOB port of Samarinda, that it is able to realise for
its produce. Moreover, the group’s ability to deliver CPO on a
CIF basis, buyer’s port, allows the group to make sales without
exposure to the collection delays sometimes experienced with
FOB buyers. The majority of CPO sales are currently made
CIF to an Indonesian refinery in East Kalimantan, which can
be easily accessed from the group’s bulking terminal on the
Mahakam River.
In conjunction with the new installations for producing
segregated CPO at COM, during 2024 the group’s bulking
terminal also completed the installation of an additional
unloading and loading pipeline to allow for the segregation of
fully certified CPO into separate storage tanks. The group’s
bulking terminal now houses three sets of unloading pipelines
for CPO which facilitate short unloading times for the fleet of
river barges, as well as two loading pipelines for loading CPO
to the 4,000 tonne seagoing barge.
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
15
Crops and extraction rates
Key agricultural statistics for the year were as follows:
2024
2023
FFB harvested (tonnes)
Group
682,522
762,260
Third party
210,594
231,823
Total
893,116
994,083
Production (tonnes)
Total FFB processed
857,575
949,701
FFB sold
34,192
45,032
CPO
190,235
209,994
Palm kernels
44,286
47,324
CPKO
18,086
19,393
Extraction rates (per cent)
CPO
22.2
22.1
Palm kernels
5.2
5.0
CPKO*
40.6
40.2
Rainfall (mm)
Average across the estates
2,707
3,225
* Based on kernels processed
Group FFB production for 2024 fell some 10 per cent below
production in 2023. Albeit that crop levels were weighted
to the second half of the year, this weighting was less
pronounced than usual with no discernible peak period as
typically occurs in the latter months of the year. The lower
overall level of production and absence of a peak period is
attributed to drier weather having inhibited female flowering
in an earlier period and is reported to have been widespread
across Indonesia. Additionally, the group’s lower crop volumes
reflected the reductions in hectarage following clearing of
mature areas for replanting.
Third party FFB was similarly impacted by the climatic factors
that reduced production generally and, in turn, CPO production
mirrored the drop in total FFB processed.
The CPO extraction rate for the year averaged 22.2 per cent,
consistently in the upper quartile when compared against local
benchmarks. Oil losses in the mills remain comfortably below
the minimum standards for the industry. Under experienced
engineering management and with the benefit of recent
substantial investments, improvements in operating efficiency
and capacity utilisation in the group’s three mills were reflected
in increased average throughput per hour, fewer breakdowns,
and a consequent reduction in labour costs.
The group's own FFB crop for the first quarter of 2025 was
160,103 tonnes compared with 166,456 tonnes harvested
during the same period in 2024, but with the current year
crop coming from a mature area that has been reduced by the
continuing replanting programme. Third party FFB amounted
to 50,049 tonnes against 50,237 tonnes for 2024. The CPO
extraction rate for the quarter averaged 22.0 per cent against
the 22.3 per cent rate for the same period in 2024. The
2023 comparatives have been adjusted to reflect settlement
agreements reached in 2024 in respect of plasma allocations
at CDM.
The rolling out of various initiatives, including improvements
to infrastructure and reorganisation and upskilling of field
management, should support improvements to production and
extraction rates in 2025.
Revenues
During 2024, all of the group’s CPO and CPKO was sold
in the local Indonesian market, reflecting continuing good
demand from easily accessible local refiners. The group has
established relationships with each of the four main refineries
now operating locally. Competition between these refineries
ensures that prices achieved are competitive.
CPO and CPKO sales are made on contract terms that are
comprehensive and standard for each of the markets into
which the group sells. The group therefore has no current
need to develop its own terms of dealing with customers. CPO
and CPKO are widely traded and the group does not see the
concentration of its sales on a small number of customers
as a significant risk. Were there to be problems with any one
customer, the group could readily arrange for sales to be made
further afield and, whilst this could result in additional delivery
costs, the overall impact would not be material.
Whilst the group has never ruled out making forward sales at
fixed prices, the fact that export levy and export duty are levied
on prices prevailing at date of delivery, not on prices realised,
acts as a disincentive to making forward fixed price sales. This
is because a rise in CPO prices prior to delivery of fixed price
forward sales will mean that the group will not only forego
the benefit of a higher price but may also pay export levy and
duty on, and at rates calculated by reference to, a higher price
than it has obtained. No deliveries were made against forward
fixed price sales of CPO or CPKO during 2024 and the group
currently has no sales outstanding on this basis. The group’s
sales are for the most part priced approximately four weeks
ahead of delivery. This means that there is a lag of four weeks
in the impact on the group of price movements in the CPO
and CPKO markets.
Arrangements with the group’s customers for the provision
of funding in exchange for forward commitments of CPO
and CPKO, on the basis that pricing is fixed at the time of
shipment by reference to prevailing prices, are continuing into
2025, with buyers continuing to seek secure oil supplies. The
average selling price for the group's CPO for 2024, including
premia for oil with certified sustainability credentials, net of
export duty and levy, adjusted to FOB Samarinda, was $819
per tonne (2023: $718 per tonne). The average selling price
for the group's CPKO, on the same basis, was $1,094 per
tonne (2023: $749 per tonne).
16
R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
Agricultural operations
continued
Sales of CPO and CPKO are shown below:
2024
CPO
CPKO
tonnes
%
tonnes
%
RSPO sales
99,052
51.5
10,661
56.1
ISCC sales
16,012
8.3
–
–
RSPO sold as
non-certified
31,051
16.3
4,945
26.0
ISCC sold as
non-certified
87
0.0
–
–
Non-certified
45,710
23.8
3,400
17.9
Total
192,912
100.0
19,006
100.0
Average premium for
RSPO certified sales
$12
$77
Average premium for
ISCC certified sales
$14
n/a
2023
CPO
CPKO
tonnes
%
tonnes
%
RSPO sales
45,830
21.7
2,392
12.0
ISCC sales
42,321
20.0
–
–
RSPO sold as
non-certified
22,153
10.5
10,680
53.7
ISCC sold as
non-certified
16,219
7.7
–
–
Non-certified
84,624
40.1
6,826
34.3
Total
211,147
100.0
19,898
100.0
Average premium for
RSPO certified sales
$15
$213
Average premium for
ISCC certified sales
$13
n/a
Operating efficiency
The costs specifically attributable to the group’s agricultural
operations principally comprise: direct costs of harvesting,
processing and despatch; direct costs of upkeep of mature
areas; estate and central overheads in Indonesia; and
financing costs. The group’s strategy, in seeking to minimise
unit costs of production, includes maximising yields per
hectare and seeking efficiencies in overall costs.
The group’s operations lie in an area where average rainfall
levels are high. The group endeavours to capitalise on this
advantage by striving to achieve economic efficiencies and
best agricultural practice. In particular, careful attention is
given to ensuring that new oil palm areas are planted with high
quality seed from proven seed gardens and that all oil palm
areas receive appropriate husbandry.
Methane from the group’s two methane capture plants using
bio waste, which were commissioned in 2012, drives seven
generators each of one megawatt capacity. This provides four
to six megawatts of power for the group’s own use and has
largely eliminated the use of diesel gensets on the REA Kaltim
and SYB estates with consequential material savings in energy
costs. For some years, the group’s additional generating
capacity was used to supply power to villages and sub-villages
surrounding the group’s estates by way of the local grid owned
by the Indonesian state electricity company, PLN. Recently,
however, the local grid has been connected to the national grid
which has gradually reduced PLN’s reliance on power supplied
by the group. The group now supplies power to the grid as and
when required. By contrast, the group’s own requirement for
electricity has steadily increased with electrification of newly
installed dewatering pumps and other formerly diesel powered
equipment, for which surplus generating capacity is critical
to avoid power interruptions. Revenue from sales of green
electricity to PLN amounted to some $210,000 in 2024,
compared with $594,000 in 2023.
In addition to reducing energy costs, the two methane
capture facilities have substantially reduced the group’s
GHG emissions. The mooted construction of a third methane
capture plant at SOM, with a view to producing biogas
for power generation at SOM and potentially for sale to
neighbouring companies or for upgrading to compressed
biomethane gas to replace diesel used by the group’s vehicle
fleet, remains under consideration but, for the moment, is
regarded as a lower priority than more immediately pressing
capital expenditure projects.
The group continues to implement other cost saving initiatives
as opportunities arise and technologies develop. Such
initiatives have included measures to reduce the use of
pesticides, manufacture of batako bricks for housing using a
mixture of cement and boiler ash from the mills, and switching
to using compound fertiliser, in place of separate applications
of the various component fertiliser inputs, to reduce the labour
requirement for fertiliser application. Additionally, the group
has significantly enhanced its in house fabrication capacity on
the estates in order to reduce reliance on contractors, which
has improved the quality of parts and reduced response times
for replacements and repairs.
The opening of the andesite quarry (discussed under Stone
and sand operations below) is allowing the group to press
ahead with progressively building a stone base to all the
group's roads so as to convert these into all-weather roads.
Better quality roads are improving logistical efficiency and
reducing operating and maintenance costs, particularly during
periods of heavy rainfall.
17
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
Strategic report
Stone and sand operations
Structure
The stone and sand operations derive from original plans for
the group to diversify in a limited way into mining activities.
This diversification was initially by way of loans to a group
of connected holding companies owning stone (ATP) and
coal (IPA and PSS) concessions, located in East Kalimantan.
The loans were made by the group in conjunction with
arrangements which were intended to permit the group to
acquire majority equity interests in the concession holding
companies.
Changes in Indonesian mining regulations for a long time
precluded implementation of such originally planned equity
ownership, but further changes to those regulations have
altered the position. Accordingly, as previously reported, the
group has implemented the original agreement under which
it had the right to acquire majority ownership of ATP, albeit
that formal registration of its ownership remains subject to
completion of Indonesian regulatory requirements.
The coal mining concessions originally comprised a high
calorific value coal deposit near Kota Bangun (held by IPA)
and the lower grade Liburdinding concession (held by PSS)
in the southern part of East Kalimantan. Mining of the IPA
concession between 2021 and 2023 permitted recovery
of substantially all group loans to IPA but, at current coal
prices, mining of the remaining coal at IPA and of the PSS
concession is considered to be uneconomic. Accordingly, the
group has withdrawn from providing further funding to IPA
and PSS (except, as respects IPA, to the extent required for
closure of the former coal mining activities), has relinquished
its rights to acquire a majority equity interest in PSS and will
rely on a guarantee given by ATP of loans made to PSS for
recovery of those loans.
The group is, however, continuing its involvement with IPA
because, in 2022, substantial silica (quartz) sand deposits
were identified in the coal concession area held by IPA. Under
Indonesian law, sand mining and coal mining are subject
to separate licensing arrangements which must be held by
separate legal entities. The rights to mine the sand deposits
have been obtained by MCU.
Under a joint venture agreement with the shareholders
of MCU in 2022, the group agreed that, once all licences
necessary for mining had been secured by MCU, it would
subscribe shares in MCU representing a 49 per cent interest
in MCU and would, in the meanwhile, provide loans to MCU
to finance pre-production expenditure. This agreement
remains in place but, following recent discussions with the
shareholders of MCU, the group now expects to increase the
number of shares in MCU that it will subscribe so as to hold a
95 per cent controlling interest once MCU has been brought
into commercial operation. Shares subscribed in MCU by the
group will be paid up by conversion of existing group loans to
MCU.
Given that IPA and MCU have concessions involving
overlapping deposits within the same physical area, the
group believes that splitting ultimate ownership of the two
companies would be likely to create conflicting interests and
operational challenges. Accordingly, it has been agreed that
MCU should assume ownership of IPA (which has hitherto
been substantially owned by ATP). The retention of IPA by
MCU may provide the opportunity for the group to recover
some further value from IPA should coal prices return to
higher levels or the mining of sand in the overburden above
the limited remaining coal seams reduce the applicable
stripping ratio and improve the economic potential of the
residual coal.
In mid 2024, the group took over full responsibility for the
management of ATP. Accordingly, ATP is being treated as a
95 per cent subsidiary of the company with effect from then.
ATP and MCU have appointed the company’s 95 per
cent subsidiary, KCCRI, to act as their marketing agent in
connection with the sale of their stone and sand production
and have agreed to pay KCCRI appropriate sales related
commissions for this service.
Stone operations
ATP is located some 15 kilometres to the north-west of
SYB’s northern-most plantation. The concession comprises
substantial deposits of high grade andesite stone. Access to
this stone offers a valuable resource, both for improving the
durability of infrastructure in the group’s operations and for
sale to neighbouring companies for road building. Moreover,
the profits from quarrying such deposits has the potential to
make a significant contribution to group results.
Development of the stone concession progressed towards
commercial production throughout 2024 with permits
obtained to extend the area in which the concession can be
mined and extensive work to improve the roads to the east
and west of the concession completed to permit more efficient
access. With the access roads to the ATP quarry open and
two contractors working on site, some 75,000 tonnes of stone
were produced, and the first volumes of some 40,000 tonnes
had been sold and delivered by the end of the year.
An unexpected delay in renewing one permit has meant that
production and sales did not accelerate as rapidly as had been
hoped during the first quarter of 2025. The required permit
has now been renewed and ATP still expects to scale up
production steadily throughout 2025, with a target of 100,000
tonnes per month. Production may be increased further in
accordance with demand. Local demand for crushed stone for
infrastructure projects is strong and the majority of sales will
be to neighbouring coal companies for road building. ATP has
now concluded offtake agreements for delivery of 290,000
tonnes of stone during 2025 and 2026 with a sales value ex
quarry of some $6.5 million. ATP expects to conclude further
offtake agreements with other interested purchasers.
18
R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
Stone and sand operations
continued
To date, production has been from large boulders found
across the ATP concession area as a result of past rock falls,
but good progress is being made in establishing access to
the west face of the andesite deposit which will permit ATP to
start bench quarrying on that face and step up production in
the coming months. In the interim, clearance of access to the
west face is providing increasing volumes of loose rock for
crushing and sale.
Sand operations
As noted under Structure above, MCU’s sand concession
is near Kota Bangun and comprises silica (quartz) sand
deposits within the IPA coal concession area, in part within
the overburden overlaying the remaining coal deposits. The
sand is suitable for premium uses such as glass making, solar
panels and technological components.
Arrangements for sand production progressed well in 2024,
MCU having agreed production arrangements with IPA’s
coal mining contractor (who already has equipment on site)
on terms similar to those that previously applied to mining
coal at IPA. Pursuant to such terms, the contractor funds all
necessary expenditure on infrastructure, land compensation
and mobilisation (such expenditure to be reimbursed on an
agreed basis from the proceeds of future sand sales) and
the profit contribution from MCU sand sales (representing
the excess of the net proceeds of such sales over the direct
costs) will be shared between MCU and the contractor in the
approximate proportion 70:30. By the end of 2024, some
16,000 tonnes of sand had been stockpiled.
The contractor is now commissioning a sand washing plant
and thereafter expects to be in a position to produce some
50,000 tonnes of sand per month, in due course scaling up
to some 100,000 tonnes per month. The market for sand
appears to be large, but under greater price pressure than the
market for stone. Nonetheless, offtake agreements should
be at prices and for volumes that will support commercial
production so that sand mining can be expected to start
providing a useful contribution to group profits.
Port operations
Although mining of coal at IPA has now ceased, other
companies in the vicinity are continuing to mine and sell coal.
These third parties are utilising IPA’s loading point on the
Mahakam River to evacuate their coal production for which
IPA receives modest fee revenue.
19
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
Strategic report
Finance
Accounting policies
The group continues to report in accordance with UK adopted
IFRS and the company continues to report under FRS 101.
Both the group and the company present their financial
statements in dollars.
There have been no changes to the group’s accounting
policies as a consequence of new standards and amendments
that are mandatorily effective for accounting periods
beginning on or after 1 January 2024 as such new standards
and amendments do not impact the disclosures or amounts
reported by the group.
Consolidated group
Due to ongoing discussions with DSN, which at the time had
a priority right to acquire CDM, at 31 December 2023 the
assets of CDM were reported in the consolidated balance
sheet as Assets classified as held for sale and the liabilities
of CDM as Liabilities directly associated with assets held for
sale. As previously reported, DSN confirmed at the end of
June 2024 that they would not exercise their right to purchase
CDM and CDM was reconsolidated at its recoverable amount
at 30 June 2024, assumed to be equivalent to the DSN
valuation. The impairment of $23.6 million in respect of
CDM that had been recognised in the 2023 consolidated
financial statements was allocated against non-current asset
categories and deferred tax.
As noted under Stone and sand operations above, the
stone company has been consolidated from 1 July 2024
on the basis on 95 per cent ownership. This has resulted in
the derecognition of the group loans to that company, the
consolidation of its assets and liabilities in the consolidated
balance sheet as at 31 December 2024, a fair value
adjustment to its mining asset of $58.9 million, and the
inclusion of its results from 1 July 2024 in the consolidated
income statement for the year ended 31 December 2024.
Group results
Group revenue, operating profit and profit before tax for 2024
(with comparative figures for 2023), were as follows:
2024
2023
$’m
$’m
Revenue
187.9
176.7
Operating profit
35.0
14.8
Profit / (loss) before tax
38.9
(29.2)
In comparing profit before tax for 2024 with the loss before
tax of 2023, account needs to be taken of gains / (losses)
on disposals of subsidiaries and similar charges, foreign
exchange movements and other non-routine items. The
following table shows the effect of excluding these items:
2024
2023
$’m
$’m
Profit / (loss) before tax
38.9
(29.2)
Exclude:
Gains / (losses) on disposal of
subsidiaries and similar charges
(3.1)
26.1
Foreign exchange movements
(6.6)
4.2
Gain on sterling notes
(0.7)
–
Prior year provision released
(6.6)
–
21.9
1.1
Revenues increased by 6.3 per cent in 2024 compared with
2023 due to higher average selling prices which offset the
lower CPO sales volumes (see above under Revenues in
Agricultural operations). Average prices realised were:
2024
2023
$
$
Average price per tonne*:
CPO
819
718
CPKO
1,094
749
* Including premia for certified oil but net of export levy and duty, adjusted
to FOB Samarinda
Cost of sales reported for 2024 was made up as follows (with
comparative figures for 2023):
2024
2023
$’m
$’m
Estate operating costs
72.7
78.0
Purchase of external FFB
36.9
33.6
Depreciation and amortisation
26.6
28.8
Stock movements
0.3
2.0
136.5
142.4
Estate operating costs were 6.8 per cent lower in 2024 than
in 2023. Upkeep costs reduced significantly principally as
a result of lower fertiliser prices and the change to using
compound fertiliser in place of separate applications of the
various component fertiliser inputs. This change meant that
there were fewer rounds of application with a consequent
saving in the associated labour cost.
The increased purchase cost of external FFB reflected higher
CPO prices, the impact of which more than outweighed the
reduced volume which was 9.2 per cent lower than in 2023
(2024: 210,594 tonnes; 2023: 231,823 tonnes).
The $11.2 million increase in revenue and $8.3 million
reduction in operating costs meant that operating profit for
2024 at $35.0 million was $20.2 million higher than the
corresponding figure for 2023.
20
R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
Finance
continued
Administrative costs reported for 2024 were made up as
follows (with comparative figures for 2023):
2024
2023
$’m
$’m
Loss on disposal of PPE
0.3
1.1
Indonesian operations
16.0
14.9
Head office
3.2
3.4
19.5
19.4
Amount capitalised
(4.3)
(2.0)
15.2
17.4
Total administrative costs of $19.5 million, before deduction
of amounts capitalised, were broadly in line with 2023. 2024
reflected a $0.5 million increase in Indonesian salary costs
and a $0.3 million additional cost in respect of IT security
which was offset by an $0.8 million reduction in losses on
disposals of PPE. Costs capitalised were $2.3 million higher
than in 2023 due to the increased proportion of total plantings
represented by immature areas.
EBITDA increased by $18.0 million to $61.6 million (2023:
$43.6 million). As in previous years, EBITDA in the second
half at $40.0 million showed a significant improvement on
the first half of $21.6 million. Although the usual weighting of
crops to the second half of the year was less pronounced than
usual, the group benefited from higher average selling prices
of $877 per tonne in the second half, compared with $755
per tonne in the first half.
Interest income decreased by $0.7 million to $3.4 million in
2024 (2023: $4.1 million), the reduction being principally
attributable to only six months of interest payable by the stone
company to the company before 1 July 2024 compared to
12 months of interest in 2023. In 2024 there was also the
release of a provision of $6.6 million in respect of past interest
due from the stone company which commenced generating
revenue during 2024 and is now consolidated.
Gains / (losses) on disposal of subsidiaries and similar
charges comprised a gain of $3.1 million in 2024 representing
the release of an impairment provision in respect of planted
hectarage transferred to plasma schemes by CDM during
the year, the carrying value of such planted hectarage
having previously been fully impaired (2023: $23.6 million
impairment of CDM and a $2.4 million loss on reorganisation
of subsidiaries).
Other gains and losses comprised a gain of $7.3 million in
2024 (2023: $4.7 million loss). $6.6 million of this gain arose
on exchange movements, principally in relation to rupiah
borrowings (2023: $4.2 million loss in relation to sterling and
rupiah borrowings). There was also a $0.7 million gain on the
purchase of sterling notes for cancellation (2023: $0.4 million
loss on the sale of dollar notes held in treasury).
Finance costs for 2024 were $16.4 million (2023: $17.5
million). Bank interest was $0.4 million lower than in 2023
as a result of slightly lower average bank borrowings during
2024, despite a general increase in rupiah interest rates
resulting in the rate payable on the Bank Mandiri loans being
raised from 8.0 per cent to 8.25 per cent from 1 October
2024. Interest on the dollar notes was $0.3 million higher
than in 2023 because 2023 dollar note interest was reported
net of six months’ interest on $8.6 million nominal of notes
that were held in treasury for part of 2023. Other finance
charges were $1.2 million higher than in 2023 due to higher
amortisation of bank loan issuance costs on the repackaging
of KMS’s loan facility. Interest capitalised was $1.6 million
higher in 2024 than in 2023 reflecting, as with administrative
costs, the increased proportion of total plantings represented
by immature areas.
Profit before taxation for 2024 was $38.9 million, compared
to a loss of $29.2 million in 2023.
The tax charge for 2024 was $8.4 million (2023: credit of
$11.6 million). This comprised a current tax charge of $7.0
million (2023: $5.7 million) and a deferred tax charge of $1.4
million (2023: $17.2 million deferred tax credit). The $1.3
million increase in the current tax charge reflects the higher
profits from the plantation operations. The deferred tax current
year charge of $3.1 million mainly comprises the following: a
$2.4 million charge being exchange differences on deferred
tax in the year (2023: credit of $4.6 million), a $1.8 million
charge on the release of impairment provision as a result of
the sale of non-current assets by CDM (2023: $10.6 million
credit arising on the impairment of CDM in the local accounts
of REA Kaltim) and a $1.3 million credit in respect of tax
losses created in the year (2023: $1.6 million). The prior year
credit of $1.7 million (2023: charge of $1.4 million) was the
effect of the change in the rupiah exchange rate on opening
balances.
Dividends
The outstanding preference dividend arrears (amounting in
aggregate to 11.5p per preference share) were paid on 15
April 2024 and the semi-annual dividends on the preference
shares arising in June and December 2024 were paid on the
due dates.
The directors expect that the semi-annual dividends arising
on the preference shares in June and December 2025 will be
paid in full on the 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 continuing high
level of group net debt, no dividend in respect of the ordinary
shares has been paid in respect of 2024 or is proposed.
Capital structure
The group is financed by a combination of debt and equity
(comprising ordinary and preference share capital). Total
equity less non-controlling interests at 31 December 2024
amounted to $224.5 million as compared with $219.8 million
at 31 December 2023. Non-controlling interests at
21
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
31 December 2024 amounted to $70.5 million (2023: $14.3
million).
The agreed issue of further shares in REA Kaltim to the
DSN group, on the terms previously advised to and approved
by shareholders, was completed in March 2024 with the
final subscription price subsequently determined at $53.6
million. As a result of the issue, the DSN group’s ownership of
REA Kaltim increased from 15 per cent to 35 per cent, this
being the principal reason for the increase in non-controlling
interests detailed above.
During 2024, Bank Mandiri provided additional rupiah
denominated facilities to the group. These comprised a
replanting loan to REA Kaltim (equivalent to $21.7 million),
agreed in March 2024 and subsequently drawn down in full,
a loan to CDM (equivalent to $15.5 million), agreed in August
2024 and immediately drawn down in full and a repackaging
of an existing loan to KMS, (equivalent to $13.9 million), as a
new loan (equivalent to $25.5 million), agreed in December
2024 and immediately drawn down in full. During 2024,
group repayments of Bank Mandiri loans (excluding the KMS
repackaged loan) amounted in total to the equivalent of $14.2
million.
Group borrowings from the DSN group were reduced during
the year. The DSN group loan to CDM of $10.6 million
outstanding at 31 December 2023 and classified as a
liability relating to assets held for sale in the consolidated
group balance sheet as at that date was repaid in full and the
amount owed by REA Kaltim to the DSN group was reduced
from $13.5 million at 31 December 2023 to $8.8 million at 31
December 2024.
During October and November 2024 the group purchased
and cancelled £9.2 million nominal of sterling notes, leaving
outstanding £21.7 million nominal of the sterling notes.
Following the above, group indebtedness at 31 December
2024 amounted to $198.1 million against which the group
held cash and cash equivalents of $38.8 million. The
composition of the resultant net indebtedness of $159.3
million was as follows:
$’m
Dollar notes ($27.0 million nominal)*
26.7
Sterling notes (£21.7 million nominal)**
28.2
Loans from non-controlling shareholder
8.8
Indonesian term bank loans*
131.6
Drawings under working capital facilities
2.8
198.1
Cash and cash equivalents
(38.8)
Net indebtedness
159.3
*
Net of issue costs
** Plus $1.0 million present value of premium on redemption
The group has no material contingent indebtedness save
that, in connection with the development of oil palm plantings
owned by village cooperatives and managed by the group, the
group has guaranteed the Indonesian rupiah bank borrowings
of the cooperatives concerned. The outstanding balance of
these borrowings at 31 December 2024 was equivalent to
$3.2 million (2023: $4.6 million).
The dollar notes are unsecured obligations of the company
and are repayable in a single instalment on 30 June 2026.
The sterling notes are issued by REAF, a wholly owned
subsidiary of the company, are guaranteed by the company
and REAS, and are secured almost wholly on an unsecured
loan made by REAS to PU. The sterling notes are repayable
in a single instalment on 31 August 2025 at a premium of £4
per £100 of notes.
Indonesian bank borrowings provided by Bank Mandiri at 31
December 2024 comprised rupiah denominated loans to REA
Kaltim, SYB, KMS and CDM and rupiah denominated working
capital facilities provided to REA Kaltim and SYB with the
working capital facilities subject to annual renewal.
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 to the consolidated closing financial position
as at the year end, of REA Kaltim and its subsidiaries. The
covenants have been complied with for 2024.
The REA Kaltim loan and working capital facility were
secured on certain assets of REA Kaltim and guaranteed
by the company. The outstanding balance of the loan at 31
December 2024 was the equivalent of $67.1 million. The
balance was repayable as follows: 2025: $10.6 million, 2026:
$11.2 million, 2027 to 2029: $26.2 million and thereafter
$19.1 million. The working capital facility amounted to $1.9
million.
The SYB loans and working capital facility were secured on
certain assets of SYB and guaranteed by the company and
REA Kaltim. The outstanding balance of the loans at 31
December 2024 was the equivalent of $26.2 million. That
balance was repayable as follows: 2025: $3.7 million, 2026:
$4.4 million, 2027 to 2029: $17.8 million and thereafter $0.3
million. The working capital facility amounted to $0.9 million.
The KMS loan was secured on certain assets of KMS and
guaranteed by the company and REA Kaltim. The outstanding
balance of the loan at 31 December 2024 was the equivalent
of $25.2 million. The loan was repayable as follows: 2025:
$3.3 million, 2026: $3.3 million, 2027 to 2029: $10.3 million
and thereafter $8.2 million.
22
R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
Finance
continued
The CDM loan was secured on certain assets of CDM and
guaranteed by the company and REA Kaltim. The outstanding
balance of the loan at 31 December 2024 was the equivalent
of $15.5 million. The loan was repayable as follows: 2025:
$0.3 million, 2026: $0.6 million, 2027 to 2029: $3.1 million
and thereafter $11.5 million.
Each of the term loans provided by Bank Mandiri, as detailed
above, requires the applicable group company to maintain a
certain level of cash deposits with the bank but Bank Mandiri
has agreed that the applicable company can draw short-term
revolving borrowings against the relative cash deposits. There
were no such drawings as at 31 December 2024 (2023: $6.1
million).
The company has shareholder authority to buy back
limited numbers of ordinary shares into treasury with the
intention that, once a holding of a reasonable size has
been accumulated, the holding be placed with one or more
investors. No acquisitions pursuant to this authority were
made in 2024, but 132,500 ordinary shares were acquired
previously and remain held in treasury.
Group cash flow
Group cash inflows and outflows are analysed in the
consolidated cash flow statement. Cash and cash equivalents
increased during 2024 from $14.2 million to $38.8 million.
As noted under Group results above, the operating profit for
2024 amounted to $35.0 million compared to $14.8 million
in the prior year. After adjusting for depreciation, amortisation
and other non-cash items ($23.6 million), operating cash
flows before movements in working capital were $58.6 million.
There was a $9.6 million increase in working capital in 2024
(2023: $1.5 million decrease) mainly due to the repayment
of $9.0 million pre-sale advances provided by the group’s
customers in exchange for forward commitments of CPO and
CPKO. Cash generated by operations in 2024 was $49.1
million (2023: $47.2 million).
There were $3.6 million of net taxes paid during the year
(2023: $2.2 million). Interest paid amounted to $13.7 million
(2023: $15.4 million).
Investing activities for 2024 involved a net outflow of $40.4
million (2023: outflow of $35.4 million). This was principally
accounted for by capital expenditure on plantation assets
which, net of proceeds from disposals, amounted to $32.6
million (2023: $23.8 million), made up as follows:
2024
$’m
Replanting*
13.2
Extension planting*
6.6
Road stoning (mature areas)
3.8
Buildings
1.8
Oil mills and biogas
3.6
Plant, equipment and similar
1.8
Land rights and titling
4.5
Intangibles
1.5
36.8
Proceeds from disposals
(4.2)
32.6
* Including upkeep of immature areas from prior years
In 2024 there was $2.4 million expenditure on the mining
assets (2023: not applicable).
The $5.4 million outflow of investing activities not related to
capital expenditure comprised $8.0 million loans to stone,
sand and coal interests, $1.1 million interest received and
other cash receipts of $1.5 million.
The net cash inflow from financing activities amounted to
$32.1 million (2023: $1.3 million outflow) made up as follows:
2024
2023
$’m
$’m
Preference dividends paid
(18.6)
(4.1)
Repayments to non-controlling shareholder
(12.2)
(1.4)
Borrowings from non-controlling shareholder
10.0
New equity from non-controlling interests
53.6
0.2
Cost of non-controlling interest transaction
(1.1)
–
Sale / (purchase) of dollar notes held in
treasury
–
8.1
Purchase of sterling notes for cancellation
(11.6)
Net movement in bank borrowings
27.5
(9.7)
Net movement in other borrowings
(2.8)
(2.8)
Purchase of non-controlling interest
(2.7)
(1.6)
32.1
(1.3)
Liquidity and financing development
As noted under Cash flow above, the group opened 2025
with cash balances totalling $38.8 million.
In March 2025, Bank Mandiri agreed to repackage, with
immediate drawdowns and repayments, existing loans to
REA Kaltim, equivalent in total to $41.6 million, as new
loans equivalent to $70.4 million, and existing loans to SYB,
equivalent in total to $24.6 million, as new loans equivalent to
$33.4 million. The repackaged loans to REA Kaltim together
with the replanting loan to REA Kaltim agreed in March
2024 (equivalent at 31 December 2024 to $21.1 million) are
repayable as follows: 2025: $8.3 million, 2026: $11.7 million,
2027 to 2029: $31.9 million and thereafter $39.7 million.
23
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
The repackaged loans to SYB are repayable as follows: 2025:
$4.1 million, 2026: $4.8 million, 2027 to 2029: $19.3 million
and thereafter $5.2 million.
Additionally, Bank Mandiri has provided a new term loan to
PU. The loan is equivalent to $15.0 million of which $5.1
million has been drawn down and the balance of $9.9 million
is expected to be drawn down during the remaining months
of 2025. The loan is repayable as follows: 2025: $0.2 million,
2026: $0.3 million, 2027 to 2029: $4.0 million and thereafter
$10.5 million.
The repackaged and new loans carry interest at rates of
between 8.25 and 8.5 per cent per annum. The repackaged
loans to REA Kaltim and SYB are secured similarly to the
loans that they replace (as detailed under Capital structure
above), The loan to PU is secured on assets of PU and is
guaranteed by the company and Luke Robinow personally in
his capacity as President Director of PU. The company has
agreed to provide a limited indemnity to Luke Robinow in
respect of his guarantee to Bank Mandiri.
A total of $27.0 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 $17.5 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 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 around 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.
The group expects that CPO and CPKO prices will 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 is not yet
in full production 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 contribution.
The repackaged Bank Mandiri loans and new loan to PU will
provide the group with cash inflows totalling $52.6 million
which are being applied by the group towards funding the
repayments of bank term loans due in 2025 of $19.6 million,
the repayment of the £21.7 million nominal of sterling notes
(total cash outflow to be $29.8 million including the 4p
premium per £1 nominal of notes) and the repayment of the
$8.0 million of funding provided by the group’s customers
in exchange for forward commitments of CPO and CPKO
that was outstanding at 31 December 2024. The proposed
extension of the maturity date of the dollar notes should
improve liquidity in 2026.
As a result of these developments, the group can look forward
to reporting a strengthened financial position at the end of
2025, with greater cover for debt service from operational
cash flows, reduced net indebtedness and an improved debt
maturity profile. Going forward, the directors' strategy for
the group will be to derive maximum value from the ancillary
operations in stone and sand and to use such extracted
value, supplemented by the cash flow from the core oil palm
business, further to reduce group net indebtedness while
continuing to invest in improvements to and the expansion of
the oil palm operations.
The group’s oil palms fruit continuously throughout the
year, but crops are generally weighted to the second half of
each year. This results in some seasonality in the funding
requirements of the agricultural operations with cash
generation greater in the second half of the year than the first.
Financing policies
The directors believe that, in order to maximise returns to
holders of the company’s ordinary shares, a proportion of
the group’s funding needs should be met with prior ranking
capital, namely borrowings and preference share capital.
The latter has the particular advantage that it represents
relatively low risk permanent capital and, to the extent that
such capital is available, the directors believe that it is to be
preferred to debt. Insofar as the group does have borrowings,
the directors believe that the borrowings should be structured
to fit the characteristics of the assets that they are financing
so that new plantings, which take several years to mature, are
financed with longer term debt while shorter term debt is used
only to finance working capital requirements.
Whilst the directors retain the above stated policy regarding
borrowings, they recognise that further debt reduction will be
needed to bring the group’s capital structure fully into line with
the policy.
24
R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
Finance
continued
Net debt was 54.0 per cent of total shareholder funds at 31
December 2024 (31 December 2023: 76.1 per cent, 80.7 per
cent including CDM). The total net debt at 31 December 2024
amounted to $159.3 million (31 December 2023: $178.2
million, $188.4 million including CDM).
The sterling notes and the dollar notes carry interest at fixed
rates of, respectively, 8.75 and 7.5 per cent per annum (the
sterling notes are also entitled to a 4.0 per cent premium on
final redemption in August 2025). Interest is currently payable
on the rupiah term bank loans and working capital facilities at
rates of between 8.25 and 8.5 per cent per annum. A 1.0 per
cent increase in the floating rates of interest payable on the
group’s floating or variable rate borrowings at 31 December
2024 would have resulted in an additional annual cost to the
group of approximately $1.0 million (2023: $1.0 million).
The group regards the dollar as the functional currency of
most of its operations. The directors believe that the group will
be best served going forward by simply maintaining a balance
between its borrowings in different currencies and avoiding
currency hedging transactions. Accordingly, the group regards
some exposure to currency risk on its non-dollar borrowings
as an inherent and unavoidable risk of its business. The
group has never covered, and does not intend in future to
cover, the currency exposure in respect of the component of
the investment in its operations that is financed with sterling
denominated shareholder capital.
The group’s policy is to maintain a cash balance in sterling
sufficient to meet its projected sterling expenditure for a
period of between six and twelve months and a cash balance
in rupiah sufficient to cover its forthcoming rupiah debt service
obligations and short term rupiah denominated operating
expenditure.
25
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
Strategic report
Sustainability and climate report
Introduction
In 2024, under the direction of the group’s newly appointed
chief sustainability officer, the group continued to develop its
sustainability leadership, cementing sustainability as a core
element in all aspects of the group’s business and long term
strategy. To provide the foundation for, and to add impetus
to, the group’s approach to sustainability, four strategic pillars
(sustainable development, climate action, forest preservation
and empowering livelihoods) were established with a view
to ensuring that the operations contribute positively to
sustainable growth, emission reduction, forest conservation,
biodiversity protection, smallholder inclusion, and creating
values for stakeholders.
Focusing on key areas that support responsible and
sustainable business practices, the group has: expanded
the certification of its operations to ensure compliance
with evolving standards; sought to drive improvements and
empower inclusivity across the supply chain by expanding
strategic partnerships with smallholders and building on
engagement and firm relationships with local communities;
and worked to reduce emissions through circularity and
conservation initiatives.
Several key milestones reflect the group’s progress in 2024.
These are described below under TCFD, Climate-related risks
and opportunities, and other following sections of this report.
In addition to maintaining 100 per cent RSPO certification
for the group’s three mills, the proportion of RSPO certified
plantations increased to 84.4 per cent (2023: 79.7 per cent).
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 SHINES,
a programme designed to help smallholders achieve RSPO
certification and EUDR compliance. A grievance committee
and Grievance Action Team (GREAT) was established in
a drive towards greater transparency and accountability,
enabling a structured approach to addressing stakeholder
concerns. Two RSPO complaint cases were successfully
resolved.
The group achieved a ZSL SPOTT score of 91.5 per cent
(2023: 88.7 per cent), reinforcing the group’s status as
a leading sustainable palm oil producer. Additionally, the
group became a member of the Palm Oil Collaboration
Group (POCG) to further expand the group’s engagement in
sustainability initiatives at industry level.
In addition to the sustainability information published each
year in the annual report, the group publishes on its website
more detailed information regarding the group’s sustainability,
environmental and social performance in accordance with
internationally recognised standards and practices. This allows
the group to take responsibility for its impacts and allows
stakeholders to monitor the group’s progress in meeting its
sustainability commitments. This additional sustainability
information is updated regularly through the year and
is available at www.rea.co.uk/sustainability. The website
information substitutes for standalone hard copy sustainability
reports such as were published by the group in the past, but
does not substitute for the statutory disclosures (as set out in
Regulatory information below) required pursuant to the UK
Listing Rules.
Certification
Certification provides third party verification that a company
is operating in accordance with national and international
standards. Further, it encourages companies to improve
their policies and practices by generating higher premia
for certified products. Standards are embodied in various
certification schemes, specifically the RSPO, ISPO and
ISCC. These schemes focus on minimising deforestation,
transparent feedstock supply chains, human rights and safety,
and measurement of GHG emissions. The group aims to
achieve and maintain certification under these internationally
recognised schemes for all of its plantations and mills.
Certified sales
During 2024, some 86 per cent of the group’s FFB was
sourced from estates managed by the group and some 14
per cent was purchased from third party suppliers. Some
84.4 per cent (2023: 79.7 per cent) of the group’s estates is
now RSPO certified whilst a significantly lower percentage
of external FFB suppliers is RSPO certified. The successful
resolution in 2024 of two RSPO complaint cases means that,
going forward, almost all of the group's own FFB crop will be
classified as RSPO certified.
Where CPO is both RSPO and ISCC certified, such oil can
only be sold with one of the two certifications. Accordingly,
the group decides which certification scheme should apply to
each sale to achieve the highest premium. Although the same
is true of RSPO and ISCC certified CPKO, in practice CPKO
is only sold under the RSPO certification scheme. A schedule
of sales classified by certification category is set out under
Revenues in Agricultural operations above.
There was only limited demand for ISCC certified oil in 2024.
Demand for RSPO certified oil, though higher, was still limited
which meant that significant volumes of RSPO certified oil
were again sold as non-certified and therefore without premia
on such sales.
The group uses the RSPO PalmTrace system for certifying
transfers of oil palm products from mills to buyers' refineries.
Where RSPO certified oil is sold as non-certified, the
group is able to obtain RSPO paper credits and sell those
credits separately from the oil. RSPO PalmTrace provides a
marketplace for such credits which can be carried forward and
sold at a later date at the group’s discretion.
26
R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
Sustainability and climate report
continued
Environment and responsible agricultural practices
The group’s mills are also rated annually under PROPER,
an initiative of the Indonesian government’s Environmental
Impact Agency which seeks to mitigate risks of pollution
and associated consequences. A blue rating denotes that
environmental management standards meet the regulatory
requirements; a green rating denotes that the company’s
standards go beyond the standard regulatory requirements. In
2024, COM became the first palm oil mill in East Kalimantan
to earn the National Green PROPER award.
2024
2023
Provincial
National
Provincial
National
POM
Green
Blue
Green
Blue
COM
Green
Green
Green
Blue
SOM
Green
Blue
Green
Blue
Usage of water and inorganic fertiliser are as shown below:
2024
2023
Water usage (m³ per tonne of FFB)
1.60
1.61
Inorganic fertiliser application (tonnes)
28,757
29,374
Inorganic fertiliser application
(tonnes per hectare)
0.75
0.74*
*Restated
Production of CPO and CPKO uses large quantities of water
which must be carefully managed to minimise waste and to
reduce the risks associated with droughts during the drier
seasons. Water usage inevitably increases as FFB production
increases, so the group has been working to improve the
efficiency of water consumption in its mills and has developed
a time bound plan with the objective of minimising water
usage, which is consistently maintained at below 2.5m³ per
tonne of FFB. The reduction in water usage in 2024 was
due to utilisation of condensate water for processing in mills
and regular preventative maintenance on water management
equipment. The group conducts an annual review and
evaluation of water saving targets to ensure ongoing
reductions in water consumption.
SECR
The group has been monitoring and reporting its carbon
footprint using the PalmGHG tool for over ten years and
currently uses the latest version (version 4) of the PalmGHG
tool which became mandatory for RSPO members on 1
January 2020. The PalmGHG tool was developed by a multi
stakeholder group within RSPO which included leading
scientists in the field of GHG accounting for oil palm
operations. Annual reporting of emissions using the PalmGHG
tool has been mandatory for all RSPO members since 2016,
with submissions independently verified by RSPO accredited
certification bodies. The group also reports emissions for both
ISCC and ISPO using a different calculation methodology.
The PalmGHG tool uses a lifecycle assessment approach,
whereby all the major sources of GHG emissions (carbon
dioxide (CO2), methane (CH4) and nitrous oxide (N2O))
linked to the cultivation, processing and transport of oil
palm products are quantified and balanced against carbon
sequestration and GHG emission avoidance. All direct, and
the majority of indirect, emissions associated with the group’s
oil palm operations in Indonesia are captured within the
PalmGHG tool. Changes in the calculation methodologies of
the various versions of the PalmGHG tool as it has developed
mean that there are variations in the calculation of emissions
from year to year.
Information on the group’s emissions and energy consumption
in accordance with SECR is set out in Regulatory information
below.
Whilst the methodology for calculating emissions under SECR
is identical to that used for RSPO, the scope of activities
covered is different. RSPO requires only the GHG emissions
from the group’s palm oil mills and their supply bases to be
included. Emissions linked to the group’s estates that do not
yet supply FFB to one of the group’s mills are not included.
Instead, emissions associated with the land use change
component of new oil palm developments are amortised over
the 25 year oil palm lifecycle once the development starts
producing crop. The scope of emissions reported under SECR,
however, includes all group activities worldwide and thus
includes emissions from new developments as these arise, but
without applying the concept of emission amortisation. Except
where otherwise stated, the PalmGHG methodology, adjusted
for this different basis, has been used for the calculations.
Going forward, the group will adopt the now widely accepted
international GHG Corporate Standard for calculating and
reporting the group’s GHG emissions although the PalmGHG
tool may continue to be used for the purposes of certification
schemes for palm oil.
Gross GHG emissions associated with the group’s oil palm
operations were overall 3.6 per cent lower in 2024 compared
with 2023 due to a reduction in the FFB received from third
party suppliers, leading to lower emissions from transportation
and processing.
Net GHG emissions are calculated by deducting from the
gross GHG emissions the carbon that is estimated to have
been fixed (sequestered) by the oil palms and conserved
set-aside forest through the process of photosynthesis. A
further deduction is made to account for the GHG emissions
that have been avoided as a result of the use of renewable
electricity from the group’s methane capture facilities in
domestic buildings and by local communities that were
previously supplied with electricity from diesel powered
generators. As a result, net emissions are substantially lower
than gross emissions.
In 2024, net GHG emissions were 25.6 per cent lower than
in 2023 due principally to a significant reduction in fertiliser
use, reflecting the switch from single fertilisers (Urea, MOP,
KCP, RP) to compound fertilisers (NPK), a decrease in
third party FFB, and a reduced loss of stored carbon due to
27
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
biomass and land clearing. However, collection, milling and
distribution emissions increased due to the diversion of FFB
between different mills, principally to allow for segregation in
preparation for EUDR, as well as the activities associated with
the planting and replanting programmes.
The group applies two measures to its evaluation of the
intensity of its GHG emissions: net GHG emissions per
tonne of CPO produced and net GHG emissions per planted
hectare (immature and mature). Both intensity measures
are considered relevant because the maturity of the oil palm
within the supply base does not influence the trend in GHG
emissions per planted hectare, whereas it does impact the
GHG emissions per tonne of CPO. Net GHG emissions in
2024 show a 17.9 per cent decrease to 0.46 tCO2eq (2023:
0.56 tCO2eq) when expressed per tonne of CPO produced
(2024: 193,582 tonnes) and a 27.3 per cent decrease to
2.21 tCO2eq (2023: 3.04 tCO2eq) when expressed per
planted hectare (2024: 40,695 hectares, including both group
and plasma hectarage). The group’s long term strategy is to
reduce emissions by focusing on decarbonisation and carbon
insetting, as explained under TCFD and UK CFD below.
Employees
2024
Male
Female
Total
Directors (including non-
executive directors)
5
2
7
Management
69
22
91
Rest of workforce
6,142
2,468
8,610
Total workforce
6,216
2,492
8,708
Proportion of total workforce
71%
29%
Proportion of management team
76%
24%
2023
Male
Female
Total
Directors (including non-
executive directors)
5
2
7
Management
76
19
95
Rest of workforce
6,936
2,341
9,277
Total workforce
7,017
2,362
9,379
Proportion of total workforce
75%
25%
Proportion of management team
80%
20%
The workforce reduction in 2024 reflected the drive to reduce
headcount whilst improving efficiency and productivity.
The directors encourage and promote the participation of
women in senior leadership roles and seek to increase the
number of female employees at all levels throughout the
group. Substantially all of group’s employees are based in
Indonesia and 8,676 (some 99 per cent) are South East
Asian. Given the nature and location of the group’s operations,
the directors have not set specific targets as respects gender
or ethnic diversity.
Performance of management and employees is evaluated
annually in relation to a pre-agreed set of quantitative and
objective KPIs and in line with best practice in the industry
in which the group operates. Particular attention is paid to
ensuring that compensation and benefits for field workers,
who are a key component of the group’s workforce, are
competitive and effective.
The group runs in-house and external training and coaching
for employees to ensure the alignment of individual and
corporate values, policies, and priorities. The group also
promotes upward mobility of promising employees through
its management training programme and by recruiting new
graduates through collaborations with local polytechnics and
universities. 30 per cent of participants in this programme
since its initiation in 1997 are still employed by the group.
The group partners with a specialist palm oil polytechnic,
CWE (Citra Widya Edukasi), in supporting the development
of future technical specialists by sponsoring scholarships for
CWE’s diploma programme. Nine students, children of group
employees and members of the local community, who have
been awarded scholarships were in their third year of study in
2024 and will be offered employment by the group upon their
graduation.
As well as opportunities for career development, the group
provides competitive remuneration packages and a decent
standard of living on the estates for employees and their
families in order to attract and retain staff at all levels. This
is particularly important given the remote location of the
group’s estates. Good quality housing and community facilities
for employees are a priority. The village emplacements are
provided with medical clinics, crèches, mosques, churches,
sports facilities and markets. Three employee cooperative
shops (REA Mart) serve the group’s estate areas. These
supply everyday groceries and household items for the benefit
of employees living on the estates. The shops are able to bulk
purchase and thereby source products competitively. In 2024,
a new fast food outlet franchise was completed and new
indoor sports facilities and adjacent café were established for
employees.
The group’s educational foundation provides a network of
27 schools across the estates, authorised in accordance
with government regulations, comprising 13 pre-schools,
13 primary schools and one secondary school. At the end
of 2024, there were 2,655 students (536 pre-school, 1,874
primary school and 245 secondary school children) enrolled in
the group’s school system.
An informal team of volunteers who are either employees or
employee family members, works to develop and undertake
activities aimed at improving the quality of the REA Kaltim
community, focusing on educational facilities and general
hygiene.
28
R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
Sustainability and climate report
continued
Social matters
Health and safety
The group maintains health and safety policies and procedures
for employees, contractors and visitors to the group’s sites.
In 2024, the group successfully completed a comprehensive,
independent company-wide safety audit for the SMK3 Gold
certification under the Indonesian Health and Safety Work
Management System (SMK3). Routine training covers safe
working practices throughout the operations, fire risks and
management, and first aid.
2024
2023
Work incident cases
955
1,367
Working days lost
651
1,256
LTIFR
11.8
17.9
The decrease in incidents and working days lost is attributable
to continuous safety training, stricter enforcement of safety
protocols, and increased supervision, particularly in high-risk
areas such as tall palm harvesting, including rigorous safety
audits, inspections, and corrective actions. This has played
a crucial role in identifying and mitigating potential hazards
before incidents occur.
Healthcare provision is usually extremely limited in the remote
rural areas in Indonesia, such as in the locations of the group’s
operations. The group has therefore established a network
of 19 clinics to provide healthcare to employees, their family
members and members of the local communities living in
proximity to the group’s operations. There is a full time team
of three general practitioners, one dentist, 26 nurses, 13
midwives, two pharmacists, a laboratory analyst, a nutritionist,
an environmental health officer and one medical record officer
on site.
All employees receive training in basic life support skills
and, at certain levels, training in first aid. The group performs
regular general and specific work related medical checks,
and promotes monthly immunisation and disease prevention
programmes. The group’s medical facilities were again
recognised with a silver award from the provincial government
for success in the prevention and control of HIV AIDS.
Communities
The group remains committed to fostering strong relationships
with local communities to support their wellbeing and ensure
sustainable operations. An in-house team engages regularly
with community representatives to facilitate dialogue, address
concerns, and enhance collaboration with local communities.
Land claims
Land rights claims against the group due to encroachment
activities have decreased significantly in recent years, from
27 claims in 2017 to a handful of claims in each year since. In
2024, one new land claim was lodged covering an area of 4
hectares in an HCV area.
Community resources
Water treatment facilities installed by the group provide
access to clean drinking water for local villages. Additionally,
the renewable energy generated by the group and distributed
through the infrastructure of the Indonesian state electricity
company, PLN, is available to villages in the vicinity the group's
operations. With the local grid now connected to the national
grid, however, PLN's reliance on power supplied by the group
has reduced to an as-required basis, as explained under
Operating efficiency in Agricultural operations above.
Smallholders
The group supports oil palm smallholders in the surrounding
communities by way of three smallholder schemes: Program
Pemberdayaan Masyarakyat Desa (PPMD), plasma, and
independent cooperatives. These schemes create mutually
beneficial relationships, contribute to local employment and
are supported by the group's provision of training in better,
more sustainable, agricultural practices.
The group currently purchases FFB from 11 PPMD
cooperatives and 22 plasma scheme and independent
cooperatives. Planted areas owned by these cooperatives,
and the FFB purchased from them, is shown below with other
relevant statistics:
2024
2023
Smallholder plantings (hectares)
Plasma
4,266
4,034
Independent cooperatives
7,510
7,917
PPMD
1,479
1,281
Total
13,255
13,232
Group plantings (hectares)
35,873
35,742
Smallholder plantings equivalent to the
planted areas of the group’s own estates
37%
37%
2024
2023
FFB purchased (tonnes)*
Plasma
72,636
74,054
Independent smallholder and PPMD
cooperatives
123,662
152,486
Total
196,298
226,540
Proportion of smallholder FFB processed in
the group's mills
16%
23%
Revenue to cooperatives ($ millions)
35.5
32.8
* Excluding purchases from third party corporates
The group’s SHINES programme, launched in 2024, is
a bespoke initiative designed to support smallholders in
attaining RSPO certification and EUDR compliance whilst
promoting forest conservation of some 10,000 hectares.
Some 600 smallholders are currently enrolled in the
programme.
29
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
Governance
Respect for human rights
The group takes seriously its duty to protect and respect
the human rights of any person affected by its operations
and is committed to adhering to the core conventions of the
International Labour Organisation’s Fundamental Principles
and Rights at Work, as well as Indonesian labour regulations
and the provisions of the Modern Slavery Act 2015. The policy
on human rights is displayed at work sites to communicate
the group’s commitments in this regard to employees at
every level. This policy includes a commitment to promote
diversity and equality in the workplace and states clearly that
discrimination based on age, disability, ethnicity, gender, marital
status, political opinion, race, religion, or sexual orientation
will not be tolerated. As at the end of 2024, 40 ethnicities
and 5 religions were represented in the group’s workforce.
The group’s DEI committee comprises the head of human
resources, senior managers and employees with relevant
knowledge and expertise. The DEI committee advises on and
supports the implementation of group policies, promoting an
inclusive workplace culture.
Anti-corruption and anti-bribery safeguards
A code of conduct established in 2011 embodies the group’s
anti-bribery and corruption policy as well as whistleblowing
procedures. Anti-bribery training for employees in Indonesia
covers both local and international standards of good
governance, laws and regulations, with specific reference
to the Bribery Act 2010. The whistleblowing procedure
implemented for employees in Indonesia, where the majority
of the workforce is based, and for external stakeholders is
managed and facilitated by a professional independent third
party firm. Matters, such as unethical, illegal, or improper
activities that could harm individuals, the group, stakeholder’s
interests or the environment, may be reported via the group’s
website at www.rea.co.uk/sustainability/complaints-and-
grievances. Reported matters that warrant investigation are
brought to the attention of the REA Kaltim audit committee
which has primary responsibility for oversight of issues arising
and any follow up action necessary in respect of the group’s
code of conduct. As required, such matters are referred to the
group audit committee.
Conservation
Plantation development in the tropics has the potential to
alter local biodiversity and natural ecosystem functions. The
group therefore believes that operational requirements for
oil palm cultivation, that include land clearing, maintenance,
harvesting, processing and delivery, should be guided by
conservation principles designed to avoid or mitigate negative
impacts and augment positive steps to restore or enhance
original landscape level biological diversity. Currently a total
of approximately 18,000 hectares have been set aside as
conservation reserves within the group’s titled land bank,
accounting for over 26 per cent of the group's land areas.
The group’s dedicated conservation department (REA Kon) is
responsible for a range of activities, including:
•
monitoring water quality
•
monitoring temperature, rainfall and humidity from
weather stations across the estates
•
species monitoring and data logging to maintain a
database of, in particular, Critically Endangered (CR)
or Endangered (EN) species in accordance with
the International Union for Conservation of Nature’s
(IUCN) species classification system, which is
externally verified for RSPO certification purposes
•
investigating any encroachment and, as necessary,
processing transgressions in conjunction with local
communities and government authorities
•
establishing HCV boundary markers and conservation
signboards
•
distributing seedlings for enrichment programmes
to enhance biodiversity and improve the ecological
function of the conservation areas
•
promoting environmental awareness and collaboration
through outreach programmes for students,
employees, and local communities.
Orangutan and other wildlife population monitoring
is conducted using camera traps. Data is analysed in
collaboration with researchers for spatial distribution and
population estimates. Since 2018, the number of CR and EN
species recorded has remained stable.
30
R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
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 below. 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 in the Directors’ report 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
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
31
R.E.A. Holdings plc Annual Report and Accounts 2024
Risk
Potential impact
Mitigating or other relevant
considerations
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
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R.E.A. Holdings plc Annual Report and Accounts 2024
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Principal risks and uncertainties
continued
Risk
Potential impact
Mitigating or other relevant
considerations
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
33
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
Risk
Potential impact
Mitigating or other relevant
considerations
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
There are currently no other stone quarries of
similar quality or volume in the vicinity of the
stone concessions and the cost of transporting
stone should restrict competition
Imposition of additional royalties or duties on
the extraction of stone or sand or imposition
of export restrictions
Reduced revenue
The Indonesian government has not to date
imposed measures that would seriously affect
the viability of Indonesian stone and sand
quarrying operations
Sustainable practices
Failure by the stone and sand operations to
meet the standards expected of them
Reputational and financial damage
The areas of the stone and sand concessions
are relatively small and should not be
difficult to supervise. The concession
holding companies are committed to
international standards of best environmental
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
IT related fraud including cyber attacks that
are becoming increasingly prevalent and
sophisticated
Losses as a result of disruption of control
systems and theft
The group’s IT controls and financial
reporting systems and procedures are
independently audited and tested annually
and recommendations for corrective actions
to enhance controls are implemented
accordingly. Several upgrades to firewalls and
other 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
Strengthening of sterling or the rupiah
against the dollar
Adverse exchange movements on those
components of group costs and funding that
arise in rupiah or sterling
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
structure and must simply be accepted. As
respects borrowings, where practicable the
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 worldwide
economic factors or shortages of required
inputs (such as shortages of fuel or fertiliser
arising from the wars)
Reduction in operating margins
For each of the group’s products, cost
inflation is likely to have a broadly equal
impact on all producers of that product
and may be expected to restrict supply
if production of the product becomes
uneconomic. Cost inflation can only be
mitigated by improved operating efficiency
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R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
Principal risks and uncertainties
continued
Risk
Potential impact
Mitigating or other relevant
considerations
Funding
Bank debt repayment instalments and
other debt maturities coincide with periods
of adverse trading and negotiations with
bankers and investors are not successful
in rescheduling instalments, extending
maturities or otherwise concluding
satisfactory refinancing arrangements
Inability to meet liabilities as they fall due
The group maintains good relations with
its bankers and other holders of debt who
have generally been receptive to reasonable
requests to moderate debt profiles or waive
covenants when circumstances require. Such
was the case, for example, when certain
breaches of bank loan covenants by group
companies at 31 December 2020 and
2023 were waived. Moreover, the directors
believe that the fundamentals of the group’s
business will normally facilitate procurement
of additional equity capital should this prove
necessary
Counterparty risk
Default by a supplier, customer or financial
institution
Loss of any prepayment, unpaid sales
proceeds or deposit
The group maintains strict controls over
its financial exposures which include
regular reviews of the creditworthiness of
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 group (including, in particular,
laws and regulations relating to land tenure,
work permits for expatriate staff and
taxation)
Restriction on the group’s ability to retain its
current structure or to continue operating as
currently
The directors are not aware of any specific
planned changes that would adversely affect
the group to a material extent
Breach of the various continuing conditions
attaching to the group’s land rights and
the stone and sand concessions (including
conditions requiring utilisation of the rights
and concessions) or failure to maintain or
renew all permits and licences required for
the group’s operations
Civil sanctions and, in an extreme case, loss
of the affected rights or concessions
The group endeavours to ensure compliance
with the continuing conditions attaching
to its land rights and concessions, that its
activities, and the activities of the stone and
sand concession holding companies, are
conducted within the terms of the licences
and permits that are held and that licences
and permits are obtained and renewed as
necessary
Failure by the group to meet the standards
expected in relation to human rights, slavery,
anti-bribery and corruption
Reputational damage and criminal sanctions
The group has traditionally had, and continues
to maintain, strong controls in this area
because Indonesia, where all of the group’s
operations are located, has been classified
as relatively high risk by the International
Transparency Corruption Perceptions Index
Restrictions on foreign investment in
Indonesian mining concessions, limiting the
effectiveness of co-investment arrangements
with local partners
Constraints on the group’s ability to recover
its investment
The group endeavours to maintain good
relations with the local partners in the group’s
mining interests so as to ensure that returns
appropriately reflect agreed arrangements
Country exposure
Deterioration in the political or economic
situation in Indonesia
Difficulties in maintaining operational
standards particularly if there was a
consequential deterioration in the security
situation
Indonesia currently appears stable and
the Indonesian economy has continued
to grow but, in the late 1990s, Indonesia
experienced severe economic turbulence
and there have been subsequent occasional
instances of civil unrest, often attributed to
ethnic tensions, 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
35
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
Risk
Potential impact
Mitigating or other relevant
considerations
Introduction of exchange controls or other
restrictions on foreign owned operations in
Indonesia
Restriction on the transfer of fees, interest
and dividends from Indonesia to the UK with
potential consequential negative implications
for the servicing of UK obligations and
payment of dividends; loss of effective
management control
The directors are not aware of any
circumstances that would lead them to
believe that, under current political conditions,
any Indonesian government authority would
impose restrictions on legitimate exchange
transfers or otherwise seek to restrict the
group’s freedom to manage its operations
Mandatory reduction of foreign ownership of
Indonesian plantation or mining operations
Forced divestment of interests in Indonesia
at below market values with consequential
loss of value
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
regulations that may result in a requirement
to divest over an extended period part of the
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
Disputes with staff and employees
Disruption of operations and consequent loss
of revenues
The group appreciates its material
dependence upon its staff and employees
and endeavours to manage this dependence
in accordance with international employment
standards as detailed under Employees in the
Sustainability and climate report above
Breakdown in relationships with local
investors in the group’s Indonesian
subsidiaries
Reliance on the Indonesian courts for
enforcement of the agreements governing
its arrangements with local partners with
the uncertainties that any juridical process
involves and with any failure of enforcement
likely to have, in particular, a material negative
impact on the value of the stone and sand
interests because ownership of those
concessions currently remains registered in
the name of by the group’s local partners
The group endeavours to maintain cordial
relations with its local investors by seeking
their support for decisions affecting their
interests and responding constructively to
any concerns that they may have. Further,
the group is currently applying to register
its ownership of 95 per cent of the stone
concession holding company and 49 per cent
of the sand concession holding company
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
Regulatory compliance
(EUDR, RSPO, ISCC) S
• Increased investment and costs of
compliance, including mapping land
use, enhancing traceability systems,
and verifying supply chains
• Impact on sourcing external
FFB as stricter regulations
may disproportionately affect
independent smallholders
• Prepared for EUDR compliance by
engaging Control Union Malaysia
for an independent readiness
assessment (covering the three
mills and seven estates), developing
a due diligence system to mitigate
deforestation risks, and establishing
a robust traceability system,
• Invested in a traceability system
to track FFB to its origin and
infrastructure to enable physical
segregation of (external) FFB
supplies and tank storage
• Increased RSPO certification of its
plantations to 84.4 per cent and
is working towards achieving 100
per cent
• EUDR affords a competitive
advantage, maintaining future
access for the group’s CPO and
CPKO to EU markets
• Allows for increased premia for
EUDR compliance from December
2025, in addition to premia for
RSPO certified products
• Encourages local FFB suppliers to
become eligible to attract increased
premia under EUDR
• Allows the group to increase the
volume of sustainably sourced
FFB by including independent
smallholders for EUDR through the
launch of SHINES
• Recent RSPO certification of COM
will permit sales of RSPO identity
preserved CPO as market demand
increases
36
R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
Principal risks and uncertainties
continued
Risk
Impact
Mitigation
Opportunity
Reputational risk from
deforestation concerns S-M
• Impact on revenue, market access,
and long term sustainability strategy
due to increased regulatory
compliance costs and negative
perception of palm oil products
• Adheres to an NDPE policy and
strictly applies this policy to all
suppliers through due diligence
onboarding
• Established grievance action
processes (GREAT) in support of
transparency and accountability,
and a structured approach to
addressing stakeholder concerns
• Redefined community and
stakeholder engagement strategy
to improve long-term community
relationships
• Implemented internal
communication and social media
strategy
• Opportunities for partnerships with
relevant stakeholders
• Stronger stakeholder relationships
through a proactive engagement
strategy
• Improving brand reputation through
communication and sharing of
success stories in social media
• Enhancing media relations for
current and future communications
• Partnering with RSPO on
communication initiatives
Carbon pricing and emissions
regulation M
• Potential costs associated with
carbon taxation and emission caps
• Impact of EU Omnibus Directive
to simplify and streamline EU
regulations on carbon
• Adopting the international GHG
Protocol Corporate Standard for
carbon footprint assessment
• Improving carbon footprint
monitoring
• Monitoring industry and market
trends on carbon related
requirements
• The group can develop verified
baseline, short, medium and long-
term targets for emission reduction
Community and smallholder
resilience M-L
• Smallholder livelihoods are
increasingly at risk due to climate
variability and evolving regulatory
requirements, which may create
financial and operational challenges
in meeting compliance standards,
potentially leading to exclusion
• Expanding smallholder
programmes, including providing
support, capacity for, and promoting,
RSPO certification for smallholders,
including polygon mapping and
acquiring legitimacy through the
eSTDB platforms managed by the
Indonesian government
• Established SHINES to improve
livelihoods and include smallholders
in the supply chain
• Increased sustainably sourced
FFB from independent
smallholders through SHINES
and other smallholder partnership
programmes (including Reforma
Agraria Land Object (TORA))
Market and consumer
preferences S-M
• Shifting demand towards
sustainable palm oil
• Shifting market demand away
from RSPO mass balanced (MB)
oil towards RSPO segregated
(SG) oil, with physical segregation
increasingly viewed as a way to
ensure deforestation-free supply
chains
• Achieving 100 per cent RSPO
certification
• Continuous compliance with
various national and international
sustainability standards embodied
in certification schemes (RSPO,
ISPO, ISCC)
• Maintaining a robust traceability
system
• Being EUDR ready
• Brand differentiation with increased
market share in responsible supply
chains
• Market demand for EUDR oil
starting in December 2025 is
expected to increase sourcing from
eligible farmers with an expected
premium for EUDR compliant
produce in addition to RSPO premia
Physical risks
Extreme weather events
(flooding, droughts) S
• Intense rainfall leading to seasonal
flooding of low lying estate
areas, thereby damaging palms,
conservation areas, infrastructure,
and disrupting supply chains
• Conducting hydrology assessment
of assets
• Improving drainage systems
• Road stoning for all-weather access
• Training smallholders on sustainable
best agricultural practices
• More resilient operations
• Adapting to climate variability
by innovation and adoption of
technology-assisted tools
Changing rainfall
patterns S-M
• Water scarcity and inconsistent
weather affecting FFB yields
• Reduced production impacting
revenue
• Rainwater capture
• Improved irrigation techniques
• Exploring the use of mill organic by-
products to enhance soil moisture
and nutrient retention
• Extending rainfall capture
Biodiversity loss and habitat
degradation M-L
• Ecosystem imbalances
• Effect on ecosystem services
• Ensuring strict NDPE policy
enforcement
• REA Kon biodiversity monitoring
and preventative actions
• Partnering with various
stakeholders such as NGOs,
educational institutions and local
governments on research and
actions
• Adherence to TNFD
• Forest protection and conservation
leading to biodiversity protection
• Stronger collaborations with
conservation bodies for mutual
benefits
37
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
Strategic report
Regulatory information
Nature of information
The company’s Strategic report has been prepared to provide holders of the company’s shares with information that
complements the accompanying financial statements. Such information is intended to help shareholders in understanding the
group’s business and strategic objectives and thereby assist them in assessing how the directors have performed their duty of
promoting the success of the company.
The report contains forward-looking statements. These have been included by the directors in good faith based on the
information available to them up to the time of their approval of this report. Such statements should be treated with caution
given the uncertainties inherent in any prognosis regarding the future and the economic and business risks to which the group’s
operations are exposed.
This section includes details of the group’s compliance with:
•
Non-financial and sustainability information statement – CA 2006 section 414CB
•
Section 172(1) statement – CA 2006.
•
Taskforce on Climate-related Financial Disclosures (TCFD) – UKLR 6.6.6(8)R
•
Climate-related Financial Disclosures (UK CFD) – CA 2006 sections 414 CA and CB
•
Streamlined Energy and Carbon Reporting (SECR).
Non-financial and sustainability information statement
In addition to complying with the requirements of section 414CB of the CA 2006, the group has included certain non-financial
information within this report as detailed below:
(a)
The group’s business model and resources, its objectives and strategy for achieving
these and the market context in which the group operates
See above in Strategic environment
(b)
Information on the following matters, including the relevant policies, the due
diligence processes implemented in pursuance of those policies and the resultant
outcomes of such policies:
• Environmental matters (see TCFD, Climate-related risks and opportunities,
UK CFD, SECR, Environment and responsible agricultural practices, and
Conservation)
• Employees
• Social matters (see Health and safety, Communities, and Smallholders)
• Respect for human rights
• Anti-corruption and anti-bribery safeguards
See above in the Sustainability and climate
report
(c)
The principal risks identified in relation to the matters listed above and considered
by the directors to be material or prospectively material, including, where relevant,
a description of the business relationships, products and services that are likely to
cause adverse impacts in those areas of risk, and a description of how such risks
are managed
See above in Principal risks and
uncertainties
(d)
Non-financial KPIs that the directors consider relevant to assessment of the
group’s performance
See above in the Sustainability and climate
report, and below under Glossary
(e)
Operational review, including, where appropriate, references to, and additional
explanations of, amounts included in the group’s accompanying financial
statements
See above in Agricultural operations,
Stone and sand operations, Finance, and
the Sustainability and climate report
(f)
UK CFD
See table below
38
R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
Regulatory information
continued
Section 172(1) statement
All directors recognise their responsibilities to promote the success of the company for its shareholders, other investors, its
employees, customers, suppliers and the wider community. Due consideration is given to stakeholders’ interests as well as the
other matters referred to below when strategic decisions are taken. Further information regarding the chairman and individual
directors and their approach as regards leadership, responsibilities and strategy are set out in the Directors’ and Corporate
governance reports in the Governance section of this annual report.
The directors are conscious that the group is in essence a guest in Indonesia and that an understanding of local customs and
sensitivities is important. To enhance their understanding and better inform their decisions, directors make periodic visits to
the group’s operations to ensure that they each have a proper understanding of, and learn at first hand about, the day to day
issues and challenges for the group. The managing director, who resides in the UK, and the president director of the group’s
principal operating subsidiary, who resides permanently in Indonesia, hold weekly meetings by conference call on each aspect
of the business. The president director submits a monthly report covering key aspects of the group’s operations, finance, and
sustainability matters. The president director presents in person (or by conference call) a detailed report on the operations and
proposed projects for discussion and, as required, approval at each regular meeting of the board.
Long term consequences of decisions
Strategic and operational decisions must be
and are based on long term considerations as
agricultural activities require continuity and time,
and impact the local community and physical
environment, on both of which the group is
dependent
See Agricultural operations below
Employees’ interests
Employee welfare is central to decision making,
particularly given the remote rural location of
the group’s operations and the fact that most
employees live with their families on the group’s
plantations
See Employees and Health and safety in the
Sustainability and climate report below
Business relationships with suppliers,
customers and others
Mutually beneficial long term relationships are
developed with the group’s suppliers, customers
and other counterparties based on the policies
and internationally recognised certification
criteria against which the group is continuously
audited and which drive the group’s sustainability
standards and its reputation as a trusted producer
of certified CPO and CPKO
See the Sustainability and climate report and the
Directors’ report below
Impact of the operations on the community
and the environment
Good relations and mutual respect between
the group and the communities impacted by its
operations are of fundamental importance to
the living standards and conditions of the local
communities and to the group’s ability to operate
sustainably and efficiently
The board acknowledges the importance of
climate change and seeks to mitigate the negative
impacts of the business on the environment
through its sustainable practices
See TCFD, Climate-related risks and
opportunities, UK CFD, SECR, Environment and
responsible agricultural practices, Communities,
Smallholders, and Conservation in the
Sustainability and climate report below; see also
the KPIs described in the Glossary
Reputation for high standards of business
conduct
The group’s long established framework of
policies embodies the standards, values and
culture to which it has committed and govern the
conduct of its operations
See the Sustainability and climate report below
and policies available for download at
www.rea.co.uk/sustainability/policies
Acting fairly between members of the
company
The directors seek to ensure that there
is a regular dialogue with the group’s key
stakeholders, particularly shareholders and debt
investors, based on a mutual understanding of
respective interests
The directors recognise that holders of the
company’s preference shares and holders of its
ordinary shares have separate interests and take
care to ensure that these separate interests are
appropriately balanced and that, within each class
of capital, holders are treated equally according to
their holdings
See Corporate governance below
39
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
TCFD
In compliance with UK Listing Rule 6.6.6(8)R, the group has included in this annual report climate-related financial disclosures,
as respects the group, consistent with the TCFD recommendations and recommended disclosures. The table below provides
a summary of the group’s climate-related financial disclosures, noting which of these disclosures are aligned with the TCFD
recommendations. The disclosures required pursuant to UK CFD are set out separately below.
* Aligned with TCFD recommended disclosures
** Not yet fully aligned with TCFD recommended disclosures
Governance
Board oversight of climate-related
risks and opportunities*
The managing director, the board of the company and the president director of REA Kaltim together have
oversight of the group’s approach and strategies to address sustainability matters. Climate-related matters are
presented in the monthly operational management reports from the chief sustainability officer and in the quarterly
president director’s reports to directors. These are then considered at, respectively, all regular quarterly meetings
of the REA Kaltim and at the regular meetings of the board of the company.
Role of management in assessing
and managing climate-related
risks and opportunities*
The group’s chief sustainability officer, who is based in South East Asia and reports directly to both the president
director of REA Kaltim and the managing director, is responsible for oversight and implementation of the
group’s strategy for identifying and managing climate-related risks and opportunities. Climate-related matters
are discussed monthly at operational management meetings of all business units in Indonesia to foster an
accountable and collaborative approach, moving beyond the work of the former Climate Change Working Group.
Focusing on the group’s four strategic pillars (sustainable development, climate action, forest preservation, and
empowering livelihoods), all business unit leaders are responsible for identifying, assessing and highlighting
environmental and climate-related risks and opportunities and work together with the chief sustainability officer
to analyse threats and opportunities, implement strategies and develop commitments and targeted actions to
address these matters as they affect their respective departments. Strategies and actions are then agreed with
and approved by the president director and the managing director.
The Grievance Committee, headed by the president director and chief sustainability officer, and the cross
functional Grievance Action Team (GREAT), manage environmental and climate-related risk from unsustainable
practices, NDPE violations, and community activities within the group’s operations or supply bases. GREAT
identifies and addresses risks (including illegal logging, encroachment into conserved forests, and threats to
key biodiversity areas) and works closely with relevant stakeholders to coordinate necessary actions and ensure
effective mitigating measures are taken.
Strategy
Climate-related risks and
opportunities identified over the
short, medium and long term*
Climate and climate change present specific risks and opportunities for an agricultural group to adapt in its
drive to achieve a lower carbon economy. Climate change is forecast to introduce increasing variability in rainfall
patterns in the humid tropics where the group’s operations are based.
A detailed assessment of climate-related risks and opportunities is set out in the following section, together with
the time horizons (short, medium and long term) for each.
Impact of climate-related risks and
opportunities on business, strategy
and financial planning*
The group has always and continues to implement programmes to address climate-related risks and
opportunities, and specifically to improve resilience to volatile weather patterns. These programmes are explained
under Climate-related risks and opportunities below.
The group’s annual budget incorporates the costs of all such climate-related programmes. In assessing the
group’s viability, the group also considers climate-related risks and opportunities, together with their impact on the
group’s projections over a two to five year time horizon. Optimising sustainable production can, in turn, maximise
sales premia.
Resilience of strategy taking
account of climate-related
scenarios**
The current strategy and practices being developed are intended to build operational resilience in response to
existing climate conditions and also to address anticipated climate scenarios as global temperatures increase and
weather patterns become more variable. Intense rainfall brings the threat of seasonal flooding of the group’s low-
lying estate areas thereby damaging the palms, conservation areas and infrastructure and restricting access.
Directors consider the potential impacts of climate change when considering the group’s projections and
statements as regards viability and going concern. The directors consider that the group’s sustainable policies
and practices mean that climate change is not considered to be a principal risk. Risks presented by climate
change are being addressed and the group has committed to working towards net-zero GHG emissions by 2050.
Accordingly, pursuant to UKLR 6.6.10 G, the directors do not, at present, intend to perform scenario analyses to
take account of the impacts of changing weather patterns on the group’s financial performance.
40
R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
Regulatory information
continued
Risk management
Process for identifying and
assessing climate-related risks*
Identification of climate change impacts is the responsibility of the group’s operational team lead by the president
director in Indonesia. The head of compliance and certification, together with the conservation department (REA
Kon), document findings from department heads and, through the chief sustainability officer, submit their findings
to the president director. Findings are assessed and considered by management and the managing director and,
ultimately, the board of the company, after which action is agreed as required.
Process for managing climate-
related risks*
Climate-related matters are considered and addressed in the monthly meetings between operational senior
management, which includes conservation and sustainability managers in Indonesia, and in the operational
management reports and quarterly president director’s reports considered by the board, as described under
Corporate governance below. The chief sustainability officer provides targeted and in-depth management
oversight aimed at ensuring that agreed actions are implemented and coordinated through all business units.
Integration of climate-related risks
into overall risk management*
The sustainability department (under the direction of the group’s chief sustainability officer) has established
four strategic pillars aimed at ensuring that identification and evaluation of climate-related risks are a priority in,
and integral to, management of the group’s operations. Targets for water consumption and fertiliser usage, as
well as progress in reducing GHG emissions and developing practices to address climate-related matters, are
components of individual managers’ and corporate KPIs. At each board meeting, directors consider the likelihood
and impact of climate-related risks and actions, if any, that may be required to address such risks.
Metrics and targets
Internal metrics to assess climate-
related risks and opportunities in
line with group strategy*
The group records climate-related data daily, as well as biodiversity indicators across the operational landscape.
Climate-related risks and opportunities are assessed and managed using climate indicator tools recording data on
temperature, rainfall and humidity at the group’s weather stations. The group seeks to minimise water waste and
the use of inorganic fertiliser. Usage of both is reviewed annually to target reductions. REA Kon monitors water
quality to ensure that resources remain free of contamination and encroachment through regular patrols on the
ground supported by satellite imagery. REA Kon maintains a permanent database of species richness, distribution,
and abundance emphasising the status of flora and fauna listed as Critically Endangered of Endangered by the
IUCN. REA Kon runs programmes for rewilding and enrichment, as well as education for local communities.
The group has signed collaboration agreements with relevant organisations to develop expertise and capacity to
record and evaluate performance on a timely basis. These organisations include Rainforest Research Sdn Bhd on
behalf of SEARRP, a Malaysian based research organisation engaged in programmes to address environmental
issues in the tropics and, specifically, in fragmented oil palm landscapes across South East Asia.
In 2023, the group signed up to the SBTi net-zero standard. However, after reassessing the group’s climate
strategy in 2024, the group is no longer pursuing formal verification under SBTi, but instead is adopting what the
group considers to be a more balanced and pragmatic sustainability approach by focusing on the four strategic
pillars to guide the group’s efforts beyond simply carbon reduction. The pillars offer a holistic framework that
balances environmental, social, and economic priorities, ensuring long-term resilience and meaningful impact.
The group remains committed to achieving net zero by 2050 and a 50 per cent reduction in net GHG emissions
by 2030, but also recognises the importance of a broader, integrated approach to sustainability.
GHG emissions (scope1, scope 2,
(and scope 3 if appropriate))*
As explained under SECR below, for over ten years the group has been monitoring and reporting its carbon
footprint using the PalmGHG tool that is mandatory for RSPO members. Going forward, the group intends to
adopt the now widely accepted international GHG Corporate Standard for calculating and reporting the group’s
GHG emissions although the PalmGHG tool may continue to be used for the purposes of certification schemes
for palm oil. Details of global gross and net emissions (Scope 1, 2 and partial Scope 3) are set out in the SECR
table.
Targets for managing climate-
related risks and opportunities**
The group’s performance (described further in the Sustainability and climate report) is measured in terms of
several key environmental indicators including GHG emissions, water usage, and inorganic fertiliser application.
While long-term climate targets are already in place, the group is currently refining interim targets and KPIs based
on short, medium and long-term goals, to better demonstrate progress and communicate the group’s commitment
to its 2030 and 2050 climate goals.
The group's current KPIs are based on intensity metrics:
•
GHG: the group uses an intensity-based approach, measuring emissions per tonne of CPO produced. The
methodology follows the RSPO PalmGHG calculator to ensure consistency and transparency.
•
Water use: the group tracks consumption intensity by measuring water used per tonne of FFB processed.
This approach reflects the group’s focus on improving operational efficiency and responsible water usage.
•
Inorganic Fertiliser: the group monitors the intensity of chemical fertiliser usage per hectare, with the goal
of gradually reducing dependence on inorganic inputs. This includes a transition to organic fertilisers while
maintaining productivity through improved sustainable good agricultural practices.
The group has adopted 2023 as the baseline year for clear year-on-year comparison and progress tracking.
In 2025, the group will define interim targets aligned with the opportunities described above. These targets will
reflect the group’s ongoing efforts to build a low-emission, resource-efficient operation, supporting the group’s
broader ambition of achieving net-zero emissions by 2050.
41
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
UK CFD
The group’s UK CFDs comply with the requirements of the CA 2006 sections 414 CA and CB, as amended by the Companies
(Strategic Report) (Climate-related Financial Disclosure) Regulations 2022, as follows:
Pillar
Disclosure
(a)
Governance arrangement for assessing and managing climate-
related risks and opportunities:
Persons or committees responsible for identifying and considering, and
frequency of considering, such matters: see TCFD – Governance above
regarding regular company board meetings, and REA Kaltim quarterly
board and monthly operational meetings.
(b)
How the business identifies, assesses and manages climate-related
risks and opportunities
The extent to which climate-related risks and opportunities are considered
at group and subsidiary level and how frequently these processes are
refreshed: see TCFD – Governance and Risk management above
regarding consideration at regular company board meetings, and REA
Kaltim quarterly board and monthly operational meetings. Processes are
continuously reviewed and refreshed.
(c)
How processes for identifying, assessing and managing climate-
related risks are integrated into the overall risk management
process
How climate-related risks contribute to decision making and risk
management: see TCFD – Risk management above.
(d)
The climate-related risks and opportunities arising in connection
with the business operations and the time periods for assessing
such risks and opportunities
Programmes to address climate-related risks and opportunities are set out
in the table above, and include:
•
generating renewable energy from the group’s two methane capture
facilities to replace diesel consumption
•
investments in: independent verification to secure certification
(RSPO, ISPO and ISCC) for the group’s operations; infrastructure
to permit supply chain segregation; traceability and verification
solutions (such as polygon mapping and the e-STDB regulatory
process) to optimise sustainable production
•
preparing for compliance with the EUDR and the increasing market
demands for sustainable CPO in export destinations
•
taking advantage of the opportunity provided by the current
replanting programme to improve drainage and the permeability and
water retention capacity of the soils
•
stoning roads to provide all-weather access across the group’s
estates
•
concluding agreements to use a neighbouring coal company’s new
haul road as an alternative land route for evacuating produce when
river levels restrict barge access to the Belayan River.
•
exploring additional uses for mill organic by-products, such as
fertiliser to improve soil health, water retention capacity and reduce
carbon emissions
•
extending rainfall capture for both domestic and operational use
to reduce extraction of river water and chemical usage for water
treatment.
(e)
Actual and potential impacts of principal climate-related risks and
opportunities on the business model and strategy
Principal risks with potential to have a material impact on the business
strategy: see TCFD – Strategy and Climate-related risks and
opportunities above.
(f)
Analysis of the resilience of the business model and strategy taking
into consideration different climate-related scenarios
Scenario analysis: see TCFD – Strategy above. The group has decided to
omit this requirement on the basis that such disclosure is not considered
necessary for an understanding of the business and is part of the group's
developing sustainability plan.
(g)
Targets for managing climate-related risks and for realising climate-
related opportunities and performance against those targets
Transition plan for identified risks and opportunities, with time frame for
monitoring and achieving targets: see TCFD – Metrics and targets and
Climate-related risks and opportunities above.
(h)
KPIs used to assess progress against targets to manage climate-
related risks and release climate-related opportunities and
description of the calculations on which the KPIs are based
Annual progress in meeting KPIs: see TCFD – Risk management and
Metrics and targets, and Climate-related risks and opportunities above.
The group has decided to omit this requirement on the basis that such
disclosure is not considered necessary for an understanding of the
business and is part of the group's developing sustainability plan.
42
R.E.A. Holdings plc Annual Report and Accounts 2024
Strategic report
Regulatory information
continued
SECR
2024
2023
2022
Gross emissions (tCO2eq)
Oil palm cultivation in Indonesia1, 2
417,105
452,809
480,912
Manufacture, transport and use of fertilisers3
43,118
69,387
49,872
Subtotal
460,222
522,196
530,784
Collection, milling and distribution operations in Indonesia4
145,756
106,573
100,578
Electricity purchased for own use5
90
79
79
Global emissions
606,069
628,848
631,442
UK emissions included within global emissions
17
17
17
Net emissions (tCO2eq)
Oil palm cultivation in Indonesia1 (including manufacture, transport and use of fertilisers3)
(11,122)
67,100
39,997
Collection, milling and distribution operations in Indonesia4
100,908
53,556
35,773
Electricity purchased for own use5
90
79
79
Global emissions
89,876
120,735
75,848
UK emissions included within global emissions
17
17
17
Energy usage (kWh '000)
Combustion of fuel
179,454
96,968
85,416
Methane capture generated electricity
17,614
17,933
17,520
Purchased electricity
86
75
75
Global energy use
197,154
114,976
103,011
UK energy use included within global energy use
16
10
16
Intensity measures (tCO2eq)6
Gross emissions / planted hectare7
14.89
15.81*
17.76
Gross emissions / tonne of CPO produced8
3.13
2.94*
2.80
Net emissions / planted hectare7
2.21
3.04*
2.13
Net emissions / tonne of CPO produced8
0.46
0.56*
0.34
* Restated
1
Covers Scope 1 direct GHG emissions from historic land conservation, agricultural practices and peat soil
2
Includes land use change (LUC) emissions, which decreased by 8.0 per cent to 410,324.49 in 2024 (2023: 446,028.85 tCO2eq) due to the
exclusion of LUC emissions from oil palm areas older than 25 years
3
Covers Scope 3 indirect GHG emissions including those associated with the extraction, production, LUC and transport of purchased materials such
as fertilisers and pesticides, as well as fuel usage by third party contractors involved in operations
4
Covers Scope 1 and 3 emissions from the transport and processing of crop and waste products. Conversion factor used to calculate energy use
from combustion of fuel is 10.58kWh/litre diesel (Source: UK government GHG Conversion Factors for company reporting 2020)
5
Covers Scope 2 emissions associated with electricity usage in group offices in both Indonesia and the UK, representing indirect GHG emissions
from the consumption of purchased electricity as defined by the GHG protocol
6
Calculated using the group’s palm oil emissions data
7
Based on 40,695 planted hectares in 2024, of which group plantings comprised 35,872 hectares and smallholder plantings comprised 4,823
hectares
8
Based on total CPO produced from the group’s operations of 193,582 tonnes in 2024, of which 190,235 tonnes were produced in the group’s
mills and 3,347 tonnes from FFB sold to and processed by third parties
Approved by the board on 16 April 2025 and signed on behalf of the board by
DAVID J BLACKETT
Chairman
43
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
Governance
Board of directors
David Blackett | Chairman (independent)
Committees: nomination (chairman) and remuneration
David Blackett was appointed a non-executive director in July
2008. After qualifying as a chartered accountant in Scotland,
he worked for over 25 years in South East Asia, where he
concluded his career as chairman of AT&T Capital Inc’s Asia
Pacific operations. Previously, he was a director of an international
investment bank with responsibility for the bank’s South
East Asian operations and until October 2014 served as an
independent non-executive director of South China Holdings
Limited (now Orient Victory China Holdings Limited), a company
listed on the Hong Kong Stock Exchange. He was appointed
chairman in January 2016 following the retirement of Richard
Robinow from that position.
Mieke Djalil | Non-executive director
Mieke Djalil was appointed as a non-executive director in July
2022. Mieke is an Indonesian national residing in Indonesia, with
over 36 years of experience in business process improvement
and project management. She was educated in the USA,
graduating with a Bachelor of Business Administration and
started her career as an auditor with Ernst & Young. She then
moved to PwC Consulting which subsequently became part
of IBM. Since leaving IBM as a Partner and Country General
Manager of the Business Consulting Services, Mieke has worked
as an advisor for, and director of, various Indonesian companies,
specialising in IT, systems, and business transformation. Mieke
is currently an independent commissioner of PT Chubb General
Insurance Indonesia and Pure DC in Jakarta, and a member of the
audit committees of PT Bank Permata Tbk and the University of
Indonesia.
Carol Gysin | Executive director
Carol Gysin was appointed to the board as managing director
in February 2017. Based in London, she had previously worked
for the group for over eight years as group company secretary,
with increasing involvement in the operational areas of the
business, including making regular visits to the group’s offices and
plantation estates in Indonesia. Prior to joining the group, Carol
worked as company secretary to a telecommunications company,
Micadant plc (formerly, Ionica Group plc, listed in London and on
NASDAQ), to a medical devices company, Weston Medical plc,
as well as to a number of early-stage technology companies,
following an initial career in investment banking in London and
Geneva.
John Oakley | Non-executive director
After early experience in investment banking and general
management, John Oakley joined the group in 1983 as divisional
managing director of the group’s then horticultural operations.
He was appointed to the main board in 1985 and in the early
1990s took charge of the day to day management of the group’s
then embryonic East Kalimantan agricultural operations. He was
appointed managing director in 2002 and, until the appointment
of a regional executive director in 2013, was the sole executive
director of the group. He retired as managing director in January
2016 but remains on the board as a non-executive director.
Richard Robinow | Non-executive director
Richard Robinow was appointed a director in 1978 and became
chairman in 1984. Following his seventieth birthday, he retired
from the chairmanship in January 2016. He remains on the board
as a non-executive director and undertakes some additional
responsibilities particularly as respects the financing of the group.
After early investment banking experience, he has been involved
for some 50 years in the plantation industry. He is a non-executive
director of a Kenyan plantation company, REA Vipingo Plantations
Limited, substantially all of the shares in which are indirectly
owned by his family and which is principally engaged in growing
sisal in Kenya and Tanzania.
Rizal Satar | Independent non-executive director
Committees: audit and remuneration
Rizal Satar was appointed to the board in December 2018. He
lives in Indonesia and is an Indonesian national, educated in
the United States and Belgium where he majored in computer
science, accounting and finance. Rizal previously worked for 20
years for PwC, as a director/senior partner in Advisory Services.
Prior to joining PwC, he worked for various companies in
Indonesia specialising in finance, leasing and computer systems.
Rizal is also an independent commissioner (the Indonesian
equivalent of a non-executive director) of two Indonesian-based
companies: PT Centratama Telekomunikasi Indonesia Tbk, a
company listed on the Indonesia Stock Exchange and engaged
in the provision of infrastructure for cellular networks and
broadband internet services, where he is also head of the audit
committee; and PT FWD Asset Management, a fund management
company owned by FWD Insurance, part of the Asian-based
private investment Pacific Century Group, which has interests in
technology, media and telecommunications, financial services and
property.
Michael St. Clair-George | Senior independent non-executive
director
Committees: audit (chairman), nomination,
remuneration (chairman)
Michael St. Clair-George was appointed to the board in October
2016. He is a fellow of the Institute of Chartered Accountants
in England & Wales. He has over 40 years’ experience in the
plantation and agribusiness industries in Malaysia and Indonesia,
having worked for some 25 years in the Far East, initially as
financial controller of the Harrison’s & Crosfield group Malaysian
plantations (becoming finance director of Harrisons Malaysian
Plantations Berhad on that company taking over ownership of
such plantations) and, after that, as president director of Sipef
NV’s Indonesian operations. He then spent 10 years as managing
director of Sipef NV, based in Belgium. Retiring from this position
in 2007 and returning to London, he served until 2013 as senior
non-executive director and chairman of the audit committee of
New Britain Palm Oil Limited, a company then listed in London.
44
R.E.A. Holdings plc Annual Report and Accounts 2024
Governance
Directors’ report
The directors present their annual report on the affairs of the
group, together with the financial statements and independent
auditor’s report, for the year ended 31 December 2024. The
Corporate governance report below forms part of this report.
There are no significant events since 31 December 2024 to
be disclosed.
Financial instruments
Information about the use of financial instruments by the
company and its subsidiaries is given in note 26 to the
consolidated financial statements.
Results and dividends
The results are presented in the consolidated income
statement and notes thereto.
All arrears of dividend outstanding on the company’s
preference shares 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.
The directors expect that the semi-annual dividends arising
on the preference shares in June and December 2025 will be
paid in full on the 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.
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 above which
also provides (under the heading Finance) a description of
the group’s cash flow, liquidity and financing development and
treasury policies. In addition, note 26 to the group financial
statements includes information as to the group’s policy,
objectives, and processes for managing capital, its financial
risk management objectives, details of financial instruments
and hedging policies and exposures to credit and liquidity
risks.
The Principal risks and uncertainties section of the Strategic
report 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, amounted to
$198.1 million, comprising Indonesian rupiah denominated
term bank loans equivalent in total to $131.6 million, drawings
under Indonesian rupiah denominated working capital facilities
equivalent to $2.8 million, $27.0 million nominal of 7.5 per
cent dollar notes 2026, £21.7 million nominal (equivalent,
with accrued redemption premium, to $28.2 million) of
8.75 per cent sterling notes 2025 and loans from the non-
controlling shareholder in REA Kaltim of $8.8 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 $118.8 million of which $49.0
million falls due in 2025, $46.6 million in 2026 and $23.2
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 $8.0
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 $66.2 million repayable
over the period to 2029, as new loans equivalent to $103.8
million and repayable over the period to 2033. 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
and the balance of $9.9 million is expected to be drawn down
during the remaining months of 2025.
As already noted, a total of $27.0 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.
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
45
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 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 $38.8 million, the cash inflow from the
new Bank Mandiri loans ($52.6 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. 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 of the Strategic report 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 $38.8 million, and borrowings of $198.1 million
(in both cases as set out in note 26 to the group financial
statements). 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 $54.1
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 financial statements.
On that basis, the directors have concluded that it is
appropriate to prepare the financial statements on a going
concern basis.
Sustainability and climate change
Detailed information regarding sustainability, the environment,
and energy and carbon disclosures (SECR), including TCFD,
is provided in the Sustainability and climate report and
Regulatory information sections of the Strategic report and at
www.rea.co.uk/sustainability.
Control and structure of capital
Details of the company’s share capital are set out in note 35 to
the consolidated financial statements. At 31 December 2024,
the issued preference share capital and the issued ordinary
share capital represented, respectively, 86.8 and 13.2 per cent
of the nominal value of the total issued share capital.
In addition, at 31 December 2024, the company had in issue
3,997,760 warrants with each such warrant entitling the
holder to subscribe, until 15 July 2025, one new ordinary
share in the capital of the company at a subscription price of
£1.26 per share.
The rights and obligations attaching to the ordinary shares,
preference shares and warrants are governed by the
company’s articles of association, the warrant instrument and
prevailing legislation. A copy of the articles of association
and the warrant instrument are available at www.rea.co.uk/
investors/capital-and-constitution. Rights of ordinary and
preference shares to income and capital are summarised in
note (xiii) to the company’s financial statements.
On a show of hands at a general meeting of the company,
every holder of ordinary shares and every duly appointed proxy
of a holder of ordinary shares, in each case being entitled
to vote on the resolution before the meeting, shall have one
vote. On a poll, every holder of ordinary shares present in
person or by proxy and entitled to vote on the resolution the
subject of the poll shall have one vote for each ordinary share
held. Holders of preference shares are not entitled to vote
on a resolution proposed at a general meeting unless, at the
date of notice of the meeting, the dividend on the preference
shares is more than six months in arrear or the resolution is for
the winding up of the company or is a resolution directly and
adversely affecting any of the rights and privileges attaching
to the preference shares. Deadlines for the exercise of voting
rights and for the appointment of a proxy or proxies to vote in
relation to any resolution to be proposed at a general meeting
are governed by the company’s articles of association and
prevailing legislation and will normally be as detailed in the
R.E.A. Holdings plc Annual Report and Accounts 2024
Governance
Directors' report
continued
46
notes accompanying the notice of the meeting at which the
resolution is to be proposed.
There are no restrictions on the size of any holding of shares
in the company. Shares may be transferred either through
the CREST system (being the relevant system as defined
in the Uncertificated Securities Regulations 2001 of which
Euroclear UK & Ireland Limited is the operator) where
held in uncertificated form or by instrument of transfer in
any usual or common form duly executed and stamped,
subject to provisions of the company’s articles of association
empowering the directors to refuse to register any transfer of
shares where the shares are not fully paid, the shares are to
be transferred into a joint holding of more than four persons,
the transfer is not appropriately supported by evidence of the
right of the transferor to make the transfer or the transferor
is in default in compliance with a notice served pursuant to
section 793 of the CA 2006. The directors are not aware
of any agreements between shareholders that may result in
restrictions on the transfer of securities or on voting rights.
No person holds securities carrying special rights with regard
to control of the company and there are no arrangements
in which the company co-operates by which financial rights
carried by shares are held by a person other than the holder of
the shares.
The articles of association provide that the business of the
company is to be managed by the directors and empower
the directors to exercise all powers of the company, subject
to the provisions of such articles (which include a provision
specifically limiting the borrowing powers of the group) and
prevailing legislation and subject to such directions as may be
given by the company in general meeting by special resolution.
The articles of association may be amended only by a special
resolution of the company in general meeting and, where such
amendment would modify, abrogate or vary the class rights
of any class of shares, with the consent of that class given
in accordance with the company’s articles of association and
prevailing legislation.
The company's dollar notes, and the sterling notes issued by
the company’s wholly owned subsidiary, REAF, and guaranteed
by the company, are transferable either through the CREST
system, where held in uncertificated form, or by instrument
of transfer. Transfers may be in any usual or common form
duly executed in amounts, in the case of the dollar notes, of
$120,000 and integral multiples of $1 in excess thereof; and,
in the case of the sterling notes, of £100,000 and integral
multiples of £1,000 in excess thereof. There is no maximum
limit on the size of any holding in each case.
Substantial holders
On 31 December 2024, based on notifications received by
the company in accordance with the DGTRs of the FCA, the
following were substantial holders of voting rights attaching to
ordinary shares of the company.
Substantial holders of shares
Number
of voting
shares
Percentage
of voting
rights
Emba Holdings Limited*
13,022,420
29.71
M&G Investment Management Limited
6,022,546
13.74
Arbuthnot Latham (Nominees) Limited
3,258,643
7.43
James Bartholomew
2,585,314
5.90
*
The issued ordinary share capital of Emba Holdings Limited (Emba) is
owned by certain members of the Robinow family. The ordinary shares
of the company held by Emba are included in the interest of Richard
Robinow, shown under Statement of directors’ shareholdings in the
Directors’ remuneration report
As explained under Dividends in the Finance section of the
Strategic report above, all outstanding arrears of dividend
on the company’s preference shares were paid on 15 April
2024. Accordingly, holders of preference shares are no longer
entitled to voting rights on the same basis as holders of
ordinary shares.
During the period from 31 December 2024 to the date of
this report, the company did not receive any notifications in
accordance with the DGTRs save as stated above.
Significant holdings (being 10 per cent or more) of ordinary
shares, preference shares, dollar notes and sterling
notes shown by the respective registers of members and
noteholders as at 31 December 2024 are set out below:
Substantial holders of
Ordinary
Preference
Dollar
Sterling
securities
shares
shares
notes
notes
'000
'000
$’000
£’000
Luna Nominees Limited
10,096
–
–
–
State Street Nominees
Limited OM04
5,923
–
–
–
KLK Overseas Investments
Limited
–
–
9,000
–
KL-Kepong International
Limited
–
–
8,570
–
Securities Services Nominees
Limited 1702334 acct
–
–
–
8,767
State Street Nominees
Limited OU61 acct
–
7,202
5,100
7,526
Euroclear Nominees Limited
EOC01 acct
–
–
–
6,565
A change of control of the company would entitle holders of
the sterling notes to require repayment of the notes held by
them at 104 per cent of par.
The directors are not aware of any agreements between the
company and its directors or between any member of the
group and a group employee that provides for compensation
for loss of office or employment that occurs because of a
takeover bid.
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
R.E.A. Holdings plc Annual Report and Accounts 2024
47
Directors
The directors who served during 2024 and up to and including
the date of this report are listed under Board of directors
above, which is incorporated by reference in this Directors’
report.
In accordance with the provisions of the Code issued by the
FRC, all continuing directors are subject to annual re-election.
Resolutions 4 to 10, which are set out in the accompanying
notice (the Notice) of the forthcoming AGM and will be
proposed as ordinary resolutions, deal with the re-election of
the directors.
The board considers that the contribution of each current
director is, and continues to be, important and of value to the
long term success of the company and the group.
David Blackett, who was first appointed to the board in 2008
and was appointed chairman in 2016, has served on the board
for more than nine years. The board considers that David
Blackett’s term as chairman should again be extended beyond
that recommended under the Code, as he provides valuable
continuity and support to the company and management
during a period of operational and financial recovery, and in
particular with regard to the group's relationship with DSN.
David makes yearly visits to the operations in Indonesia and
has considerable knowledge of the business of the company,
offering insights based on his previous experience in the
region. In fulfilling his role as chairman, David promotes
healthy debate amongst directors and the board considers
that his objectivity and judgement are not compromised by his
length of service.
Carol Gysin is the sole executive director of the company.
Based in England, Carol has worked for the group for over 16
years. She joined the group as group company secretary but,
after increasing involvement in the group’s operations, she was
appointed managing director in 2017. Carol makes regular
visits to the group’s offices and plantation estates in Indonesia.
John Oakley was managing director of the company from
2002 until the end of 2015. John has remained on the board
as a non-executive director and provides valuable support
to the current management, given his detailed knowledge of
agronomic practices and oil mill engineering.
Richard Robinow relinquished his position as chairman of
the company in January 2016. Richard has remained on the
board as a non-executive director and, with his significant
family shareholding in the company, continues to support the
development of the group, particularly with regard to financing
and strategic initiatives.
Rizal Satar, an Indonesian national based in Indonesia, has
extensive experience in accounting and finance having
previously worked for PwC, Indonesia, for 20 years until
2017, latterly as a director/senior partner in Advisory
Services. Rizal is a valuable member of the board in terms of
his relevant commercial and financial experience and local
knowledge. Rizal is also an independent commissioner (the
Indonesian equivalent of a non-executive director) of REA
Kaltim and chairman of the REA Kaltim sub-group’s audit
committee which oversees on behalf of the group matters that
include internal audit, anti-bribery and corruption measures,
whistleblowing policies and procedures, and employee
engagement. As detailed under Diversity and human rights
below, substantially all of the group's employees are based in
Indonesia.
Michael St. Clair-George is the senior independent non-
executive director of the company and chairman of the
audit and remuneration committees. Now based in England,
Michael has over 40 years’ experience in the plantation and
agribusiness industries in Malaysia and Indonesia first in the
Harrison's & Crosfield group and then in the Sipef group.
Mieke Djalil is an Indonesian national, based in Indonesia
and has over 35 years of experience in business process
improvement and project management. Mieke’s broad
commercial and technical knowledge and her local and
international experience are valuable resources for the board.
The senior independent non-executive director confirms that,
following the annual performance review and evaluation of the
chairman, the latter's performance continues to be effective
and to demonstrate his commitment to the role. Accordingly,
the senior non-executive director, together with fellow
non-executive directors recommend the re-election of the
chairman as a non-executive director.
The chairman confirms that, following the annual performance
review and evaluation, the performance of each of the current
non-executive directors and the managing director continues
to be effective and recommends their re-election to the board.
The chairman particularly welcomes the valuable commitment
and extensive experience of all of the directors.
Engagement with suppliers, customers and other
stakeholders
As noted in the section 172(1) statement in the Regulatory
information section of the Strategic report, each director is
conscious of their and the group’s responsibility to customers,
suppliers, the wider community and other stakeholders.
There is a regular dialogue between managers in the sales
and marketing and Sustainability department and the group’s
customers, with whom the group has developed long term
supply arrangements and who take a keen interest in the
group’s sustainability credentials. An important area of
focus is the scheduling of deliveries with timely fulfilment of
importance to customers and critical to the smooth running
of the group’s operations. Managers in the procurement
department have an open dialogue with the group’s limited
number of suppliers and contractors to ensure that contracts
are performed efficiently and satisfactory relationships are
maintained. The company seeks to procure that suppliers,
contractors and customers conform to the group's
sustainability principles and practices.
R.E.A. Holdings plc Annual Report and Accounts 2024
Governance
Directors' report
continued
48
In support of the established relationships, from time to time
the group’s president director in Indonesia has meetings
with the group’s key suppliers and customers at which any
concerns can be aired. Occasionally, the managing director will
also participate in such meetings.
Managers are in regular communication with local government
bodies in Indonesia and with the certification and other
bodies that promote sustainability matters. Issues, if any,
are discussed at the regular meetings between senior
management and the president director and escalated, as
required, to the managing director. The company's non-
executive Indonesia resident directors provide a conduit to the
group board for matters arising with stakeholders in Indonesia.
Directors’ indemnities
Qualifying third party indemnity provisions (as defined in
section 234 of the CA 2006) were in place for the benefit of
directors of the company and of other members of the group
for 2024 and remain in place at the date of this report.
The group carries appropriate insurance cover in respect of
legal actions against the directors, commissioners and senior
managers of the group in the UK and Indonesia.
Political donations
No political donations were made during the year.
Acquisition of the company’s own shares
The company’s articles of association permit the purchase by
the company of its own shares subject to prevailing legislation
which requires that any such purchase (commonly known
as a "buy-back"), if a market purchase, has been previously
authorised by the company in general meeting and, if not, is
made pursuant to a contract of which the terms have been
authorised by a special resolution of the company in general
meeting.
The company currently holds 132,500 of its ordinary shares of
25p each, representing 0.3 per cent of the called up ordinary
share capital, as treasury shares which were acquired with
the intention that, once a holding of reasonable size has
been accumulated, such holding be placed with one or more
substantial investors on a basis that, to the extent reasonably
possible, broadens the spread of substantial shareholders
in the company. Save to the extent of this intention, no
agreement, arrangement or understanding exists whereby
any ordinary shares acquired pursuant to the share buy-back
authority referred to below will be transferred to any person.
There were no acquisitions or disposals of treasury shares
during 2024.
The directors are seeking renewal at the forthcoming AGM
(resolution 15 set out in the Notice) of the buy-back authority
granted in 2024 to purchase up to 5,000,000 ordinary
shares, on terms that the maximum number of ordinary
shares that may be bought back and held in treasury at any
one time is limited to 400,000 ordinary shares. The directors
may, if it remains appropriate, seek further annual renewals
of this authority at subsequent AGMs. The authorisation
being sought will continue to be utilised only for the limited
purpose of buying back ordinary shares into treasury with the
expectation that the shares bought back will be re-sold when
circumstances permit. The new authority, if provided, will expire
on the date of the AGM to be held in 2026 or on 30 June
2026 (whichever is the earlier).
Although the directors are seeking renewal of the buy-back
authority to maintain flexibility for the future, they do not
currently intend to exercise such authority.
The renewed buy-back authority is sought on the basis that
the price (exclusive of expenses, if any) that may be paid by
the company for each ordinary share purchased by it will be
not less than 25p and not greater than an amount equal to
the higher of: (i) 105 per cent of the average of the middle
market quotations for the ordinary shares in the capital of the
company as derived from the Daily Official List of the LSE
for the five business days immediately preceding the day on
which such share is contracted to be purchased; and (ii) the
higher of the last independent trade and the current highest
independent bid on the LSE.
Any ordinary shares held in treasury by the company will
remain listed and form part of the company’s issued ordinary
share capital. However, the company will not be entitled to
attend meetings of the members of the company, exercise
any voting rights attached to such ordinary shares or receive
any dividend or other distribution (save for any issue of bonus
shares). Sales of shares held in treasury will be made from
time to time as investors are found, following which the new
legal owners of the ordinary shares will be entitled to exercise
the usual rights from time to time attaching to such shares and
to receive dividends and other distributions in respect of the
ordinary shares.
The consideration payable by the company for any ordinary
shares purchased by it will come from the distributable
reserves of the company. The proceeds of sale of any ordinary
shares purchased by the company would be credited to
distributable reserves up to the amount of the purchase price
paid by the company for the shares, with any excess over such
price being credited to the share premium account of the
company.
The company will continue to comply with its obligations under
the Listing Rules of the FCA in relation to the timing of any
share buy-backs and re-sales of ordinary shares from treasury.
Authorities to allot share capital
At the AGM held on 6 June 2024, shareholders authorised
the directors under the provisions of section 551 of the
CA 2006 to allot ordinary shares or 9 per cent cumulative
preference shares within specified limits. Replacement
authorities are being sought at the 2025 AGM (resolutions
13 and 14 set out in the Notice) to authorise the directors (a)
to allot and to grant rights to subscribe for, or to convert any
security into, shares in the capital of the company (other than
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
R.E.A. Holdings plc Annual Report and Accounts 2024
49
9 per cent cumulative preference shares) up to an aggregate
nominal amount of £3,652,585 representing 33.3 per cent of
the issued ordinary share capital (excluding treasury shares)
at the date of this report, and (b) to allot and to grant rights
to subscribe for, or to convert any security into, 9 per cent
cumulative preference shares in the capital of the company up
to an aggregate nominal amount of £24,000,000 representing
33.3 per cent of the issued preference share capital of the
company at the date of this report. The new authorities, if
provided, will expire on the date of the AGM to be held in
2026 or on 30 June 2026 (whichever is the earlier). The
directors have no current intention of exercising the allotment
authorities.
Authority to disapply pre-emption rights
Fresh powers are also being sought at the forthcoming AGM
under the provisions of sections 570 and 573 of the CA 2006
to enable the board to make a rights issue or open offer of
ordinary shares to existing ordinary shareholders without being
obliged to comply with certain technical requirements of the
CA 2006 which can create problems with regard to fractions
and overseas shareholders.
In addition, the resolution to provide these powers (resolution
16 set out in the Notice) will, if passed, empower the directors
to allot equity securities or sell treasury shares for cash and
otherwise than to existing shareholders pro rata to their
holdings up to a maximum aggregate nominal amount of
£1,095,775 (representing 10 per cent of the issued ordinary
share capital of the company (excluding treasury shares) at
the date of this report).
The figure of 10 per cent reflects the Pre-Emption Group
2022 Statement of Principles for the disapplication of pre-
emption rights (the Statement of Principles). The board will
have due regard to the Statement of Principles in relation to
any exercise of this power.
Reflecting the Statement of Principles, a further power is
being sought at the forthcoming AGM to enable the board to
allot equity securities or sell treasury shares for cash otherwise
than to existing shareholders pro rata to their holdings in
addition to the 10 per cent referred to above. The resolution to
provide these powers (resolution 17 set out in the Notice) will,
if passed, be limited to the allotment of equity securities and
sales of treasury shares for cash up to a maximum aggregate
nominal amount of £1,095,775 (representing 10 per cent of
the issued ordinary share capital of the company (excluding
treasury shares) at the date of this report). The board will have
due regard to the Statement of Principles in relation to any
exercise of this power and in particular the board may only use
this power in connection with a transaction which they have
determined to be an acquisition or other capital investment
(of a kind contemplated by the Statement of Principles most
recently published prior to the date of this notice) which is
announced contemporaneously with the announcement of the
issue, or which has taken place in the preceding 12 month
period and is disclosed in the announcement of the issue.
The foregoing powers (if granted) will expire on the date of
the AGM to be held in 2026 or on 30 June 2026 (whichever
is the earlier).
General meeting notice period
At the 2025 AGM a resolution (resolution 18 set out in the
Notice) will be proposed to authorise the directors to convene
a general meeting (other than an AGM) on 14 clear days’
notice (subject to due compliance with requirements for
electronic voting). The authority, if granted, will be effective
until the date of the AGM to be held in 2026 or until 30 June
2026 (whichever is the earlier). The applicable resolution is
proposed following legislation which, notwithstanding the
provisions of the company’s articles of association and in the
absence of specific shareholder approval of shorter notice, has
increased the required notice period for general meetings of
the company to 21 clear days. While the directors believe that
it is sensible to have the flexibility that the proposed resolution
will offer to convene general meetings on shorter notice than
21 days, this flexibility will not be used as a matter of routine
for such meetings, but only where use of the flexibility is
merited by the business of the meeting and is thought to be to
the advantage of shareholders as a whole.
Directors’ remuneration report
Resolution 2 as set out in the Notice provides for approval of
the Directors' remuneration report as detailed below.
Directors’ remuneration policy
In December 2024, following the recommendation of the
remuneration committee, the directors determined that
the company’s long term incentive plan (LTIP) should be
terminated on the grounds that it is no longer required. Under
the rules of the scheme, the LTIP was due to terminate in any
event after 10 years i.e. June 2025. However, there are no
longer any participants in the LTIP (the last participant having
left the company in 2017) and there is no intention to grant
any new awards under the scheme. Accordingly, the directors
resolved to terminate the scheme in advance of June 2025 to
reduce unnecessary administration.
Resolution 3 as set out in the Notice provides for approval of
the company’s revised directors’ remuneration policy, which
no longer includes an LTIP, as detailed in the report below.
If approved, the policy will take effect from the date of such
approval. The directors’ remuneration policy was previously
approved at the company’s 2024 AGM.
Recommendation
The board considers that the proposals to grant the directors
the authorities and powers as detailed under Acquisition of
the company’s own shares, Authorities to allot share capital
and Authority to disapply pre-emption rights above and the
proposals to permit general meetings (other than AGMs) to be
held on just 14 clear days’ notice as detailed under General
meeting notice period above are all in the best interests of
the company and shareholders as a whole and accordingly
R.E.A. Holdings plc Annual Report and Accounts 2024
Governance
Directors' report
continued
50
the board recommends that shareholders vote in favour of
resolutions 13 to 18 as set out in the Notice.
Independent auditor
Each director of the company at the date of approval of this
report has confirmed that, so far as such director is aware,
there is no relevant audit information of which the company’s
independent auditor is unaware; and that such director has
taken all the steps that ought to be taken as a director in
order to make himself or herself aware of any relevant audit
information and to establish that the company’s independent
auditor is aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the CA
2006.
A resolution to re-appoint MHA as independent auditor
(resolution 11 set out in the Notice) will be proposed at the
2025 AGM.
Resolution 12 set out in the Notice proposes that the audit
committee, in accordance with its terms of reference and
standard practice, be authorised to determine and approve the
remuneration of the independent auditor.
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
R.E.A. Holdings plc Annual Report and Accounts 2024
51
Disclosure requirements of UKLR 6.6.1R
The following table references the location of information required to be disclosed in accordance with UKLR 6.6.1R of the
Listing Rules published by the FCA.
Following the changes in 2024 to the FCA listing categories which replaced the two tier (premium and standard) listing
segments with new listing categories, the company is now classed as a commercial company with ordinary shares categorised
as equity shares and preference shares categorised as non-voting equity shares.
Disclosure requirement
Disclosure in annual report
The amount of interest capitalised during the year with an indication of the amount and
treatment of any related tax relief
Note 12 to the consolidated
financial statements
Any information required in respect of published unaudited financial information as required
by UKLR 6.2.23R
Not applicable
Details of long-term incentive scheme as required under UKLR 9.3.3R
Not applicable
Any arrangements under which a director has waived or agreed to waive any emoluments
from the company or any subsidiary undertaking
Not applicable
Any arrangement under which a director has agreed to waive future emoluments
Not applicable
Allotments for cash of equity securities made during the period under review otherwise
than to the holders of the company’s equity shares in proportion to their holdings of
such equity shares and which has not been specifically authorised by the company’s
shareholders
Not applicable
Allotments for cash of equity securities by a major unlisted subsidiary of the company
made during the period under review otherwise than to the holders of the company’s
equity shares in proportion to their holdings of such equity shares and which has not been
specifically authorised by the company’s shareholders
Not applicable
Participation by a parent company in any placing made by the company
Not applicable
Any contract of significance:
(i) to which the listed company, or one of its subsidiary undertakings, is a party and in
which a director of the listed company is or was materially interested; and
(ii) between the listed company, or one of its subsidiary undertakings, and a controlling
shareholder
Not applicable
Contracts for the provision of services to the company or any of its subsidiary undertakings
by a controlling shareholder
Not applicable
Arrangements under which a shareholder has waived or agreed to waive any dividends
Not applicable
Arrangements under which a shareholder has agreed to waive future dividends
Not applicable
Board statement in respect of relationship agreement with the controlling shareholder
Not applicable
By order of the board
R.E.A. SERVICES LIMITED
Secretary
16 April 2025
52
R.E.A. Holdings plc Annual Report and Accounts 2024
Governance
Corporate governance report
This directors’ report on corporate governance in respect of
the year ended 31 December 2024 is made pursuant to the
Code, which is available from the FRC’s website at
www.frc.org.uk.
Throughout the year ended 31 December 2024, the company
remained in compliance with the provisions set out in the
Code.
Statement on corporate governance
The directors appreciate the importance of ensuring that the
group’s affairs are managed effectively and with integrity and
acknowledge that the principles laid down in the Code provide
a widely endorsed model for achieving this. The directors seek
to apply the Code principles and the supporting provisions in
a manner proportionate to the group’s size but, as the Code
permits, reserving the right, when and if it is appropriate to the
individual circumstances of the company, not to comply with
certain Code principles and to explain why. The directors are
mindful of the changes to the Code (the 2024 Code) that will
apply to financial years beginning on or after 1 January 2025
and will seek to apply the revised principles and provisions as
applicable to the group.
At the performance review and evaluation conducted in
2024 and following a further formal review and evaluation
conducted in April 2025, directors concluded that the
board performed effectively as constituted during 2024 and
continues to do so during 2025. It was further concluded
that the diversity of gender and ethnic backgrounds and
complementary skills of individual board members are
appropriate for the size and strategic direction of the group
and for the challenges that it faces. It was considered that
each director brings separate valuable insights into, variously,
the plantation industry, business in Indonesia and the group’s
affairs. Taking account of the nature and size of the company
and the limited number of directors on the board, it was
decided that an externally facilitated board evaluation was not
required.
The directors are conscious that the group relies not only on
its shareholders but also on the holders of its debt securities
for the provision of the capital that the group utilises. The
comments below regarding liaison with shareholders apply
equally to liaison with holders of debt securities.
Role and responsibilities of the board
The board is responsible for the proper leadership of
the company in meeting its objectives for the long term
sustainable success of the company, the community in which it
operates and its shareholders.
The board has a schedule of matters reserved for its
decision which is kept under review. Such matters include
strategy, material investments and financing decisions and
the appointment or removal of executive directors and the
company secretary. In addition, the board is responsible for
ensuring that resources are adequate to meet the group’s
objectives and for reviewing performance, financial and
operational controls, risk and compliance with the group’s
policies and procedures with respect to its strategy and
values regarding business ethics, responsible development,
environment and biodiversity conservation, human rights,
diversity, and health and safety. Each of these matters is
considered at the group’s quarterly board meetings with such
discussions informed by exchanges with, and information
provided by, the senior management team. The group’s culture
and long history of operating in South East Asia underpins the
policies, standards and procedures that it employs in seeking
to meet the group’s objectives. The group’s local directors,
commissioners and minority shareholders are a valuable
resource in ensuring that the culture and conduct of the group
are maintained and appropriately aligned with that of the
region in which it operates.
The chairman and managing director (being the chief
executive) have defined separate responsibilities under the
overall direction of the board. The chairman has responsibility
for leadership and effective management of the board
in the discharge of its duties; the managing director has
responsibility for the executive management of the group
overall. Neither has unfettered powers of decision.
Michael St. Clair-George, Rizal Satar and Mieke Djalil are
considered by the board to be independent directors. Further,
the chairman on appointment was considered to meet the
board of directors’ criteria for independence. There is a
regular and frank dialogue, both formal and informal, between
all directors and senior management and communication is
open and constructive and non-executive directors are able
to express their views, challenge one another and senior
management and to raise issues or concerns. Executive
management is responsive to feedback from non-executive
directors and to requests for clarification and amplification.
Composition of the board
The board currently comprises the chairman, one executive
director and five non-executive directors, three of whom the
board considers to be independent. Two (representing 29 per
cent) of the seven members of the board, being the managing
director and one independent non-executive director, are
female.
Biographical information concerning each of the directors of
the company is set out under Board of directors above. The
variety of backgrounds brought to the board by its members
provides perspective and facilitates balanced and effective
strategic planning and decision making for the long-term
success of the company in the context of the company’s
obligations and responsibilities, both as the owner of a
business in Indonesia and as a UK listed entity. In particular,
the board believes that the respective skills and experience of
its members complement each other and that their knowledge
and commitment is of specific relevance to the nature and
geographical location of the group’s operations.
The group’s London office comprises the managing director
and a small number of senior executives, all of whom are
female, managing the company’s London listing and liaising
R.E.A. Holdings plc Annual Report and Accounts 2024
53
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
with its European investors, as well as liaising closely with
the senior management team in Indonesia. The Indonesian
management team has day to day responsibility for the
plantation operations and reports to the local president
director.
Under the company’s articles of association, any director
who has not been appointed or re-appointed at each of the
preceding two AGMs shall retire by rotation and may submit
himself for re-election. This has the effect that each director is
subject to re-election at least once every three years. Further,
any director appointed during the year holds office until the
next AGM and may then submit himself or herself for re-
election. However, in compliance with the Code, all directors
are subject to annual re-election by shareholders.
It is the policy of the company that the board should be
refreshed on the basis that independent non-executive
directors will not normally be proposed for reappointment if,
at the date of reappointment, they have served on the board
for more than nine years. However, David Blackett, who was
first appointed to the board in 2008 and was appointed
chairman in 2016, has served on the board for more than
nine years. The board is mindful of maintaining a suitable
balance between independence and relevant experience and
considers that, as chairman, David's objectivity and judgement
are not compromised by his length of service. The board
considers that the value brought to board proceedings by
David’s commitment and continuity outweighs other factors.
David fosters healthy discussions at board meetings to ensure
that board decision making is effective and conforms with the
group’s strategy and objectives. Accordingly, as explained in
the Directors’ report above, the board has further extended
the chairman’s term beyond that recommended under the
Code, taking account of the views of fellow directors and of
the company’s major shareholders.
Directors’ conflicts of interest
In connection with the statutory provisions regarding the
avoidance by directors of situations which conflict or may
conflict with the interests of the company, the board has
approved the continuance of potential conflicts notified by
Richard Robinow, who absented himself from the discussion
in this respect. Such notifications relate to Richard’s interests
as a shareholder in or as a director of companies the interests
of which might conflict with those of the group but are not at
present considered to do so. No other conflicts or potential
conflicts have been notified by directors.
Professional development and advice
In view of their previous relevant experience and, in some
cases, length of service on the board, all directors are
familiar with the financial and operational characteristics
of the group’s activities. Directors are required to ensure
that they maintain that familiarity and keep themselves
fully cognisant of the affairs of the group and matters
affecting its operations, finances and obligations (including
sustainability responsibilities). Whilst there are no formal
training programmes, the board regularly reviews its own
competences, receives periodic briefings on legal, regulatory,
operational and political developments affecting the group
and may arrange training on specific matters where it is
thought to be required. Directors are able to seek the advice
of the company secretary and, individually or collectively, may
take independent professional advice at the expense of the
company if necessary.
Newly appointed directors receive induction on joining the
board and steps are taken to ensure that they become fully
informed as to the group’s activities.
Information and support
Monthly operational, financial and sustainability reports are
issued to all directors for their review and comment. These
reports are augmented by annual budgets and positional
papers on matters of a non-routine nature and by prompt
provision of such other information as the board periodically
decides that it should have to facilitate the discharge of its
responsibilities.
Board evaluation
A formal rigorous internal evaluation of the performance of the
board, the committees and individual directors is undertaken
annually. Balance of powers, mix of skills, experience and
knowledge, ongoing contribution to objectives, strategy,
efficacy, diversity, climate change and accountability to key
stakeholders are reviewed by the board as a whole. The
performance of the chairman is appraised by the independent
non-executive directors led by the senior independent
director. The appraisal process includes assessments
against a detailed set of criteria covering a variety of matters
including how the board works together as a unit, key
board relationships, effectiveness of individual directors
and committees and the commitment and contribution of all
directors in developing strategy and enforcing disciplined risk
management, pursuing areas of concern, if any, and in addition
setting appropriate commercial, social and environmental
responsibility objectives, the adequacy and timeliness of
information made available to the board and the proportion
of time allotted for considering financial performance versus
strategic matters.
Following the 2025 evaluation, and noting the plans for
succession outlined in the Strategic report above (under
Succession planning in Strategic environment), the chairman
confirmed the directors’ view that the board is effective
as currently constituted and that the performance of each
of the non-executive directors continues to be effective.
The chairman welcomed the valuable commitment and
engagement of all the directors, each of whom has extensive
experience relevant to the group’s business and of broader
issues that are of relevance to the group’s immediate and
longer term goals and was satisfied that the board performed
effectively throughout the period under review and to date.
R.E.A. Holdings plc Annual Report and Accounts 2024
Governance
Corporate governance report
continued
54
Board committees
The board has appointed nomination, audit and remuneration
committees to undertake certain of the board’s functions, with
written terms of reference which are available for inspection
at www.rea.co.uk/investors/corporate-governance and are
updated as necessary.
Overall, the board considers that the board committees are
of a size that is appropriate to the needs and circumstances
of the company and that the structure of the committees
retains a suitable balance between independence and recent
and relevant financial or industry experience and avoids
unnecessary duplication of the oversight exercised by the
commissioners of REA Kaltim (the Indonesian sub-holding
company of all of the group’s plantation interests) of which a
majority are independent.
There is a committee of the board, currently comprising any
two of the managing director, the chairman and Richard
Robinow, to deal with various matters of a routine or executory
nature.
Nomination committee
The members of the nomination committee are David
Blackett (chairman) and Michael St. Clair-George. Although
David has served on the board for more than nine years,
he was independent upon his appointment to the board
and to the nomination committee and, as noted above, the
board considers that his independence is not compromised
by his length of service. Further, given that the board
currently comprises only seven members, it is not considered
appropriate to change membership of the nomination
committee at this time.
The duties of the nomination committee, including as respects
board evaluation and succession planning, are set in its terms
of reference available at www.rea.co.uk/investors/corporate-
governance. The outcome of the annual board evaluation is
summarised above under Board evaluation. The group’s policy
and approach as respects diversity and inclusion are detailed
under Diversity and human rights below.
The nomination committee is responsible for monitoring
the performance of the executive director and senior
management against agreed performance objectives and
submitting recommendations for the appointment and
removal of directors for approval by the full board. In making
such recommendations, the committee pays due regard to
the group’s diversity policy and takes into consideration the
ethos of the company and the specific nature and location of
the group operations. Experience and understanding of the
plantation industry and business in Indonesia, including that
from a South East Asian perspective provided by overseas
directors, is an important factor in considering a potential
appointment, whether from an external applicant or as part
of the succession planning process. The committee may use
external consultants to advertise directly for or carry out a
search exercise for potential applicants when seeking a new
chairman or directors.
A prospective director’s availability to devote the time and
attention necessary to support the company’s long-term
sustainable success is considered vital. It is important that
directors make periodic visits to the group’s operations
which are located in a remote rural location in Indonesia,
entailing lengthy and sometimes complex, strenuous travel.
The nomination committee assesses current demands on a
potential director’s time in addition to the time commitment
and stamina expected of a director, prior to recommending
their appointment to the board. The board considers whether
a proposed director is able to discharge his duties within
the constraints on the proposed director’s availability and
preparedness for such a role.
The managing director does not currently hold any other
significant appointment.
Audit committee
The members of the audit committee are detailed in the Audit
committee report below. The company constitutes a smaller
company for the purpose of the Code and accordingly an
audit committee comprising two members complies with
the requirements of the Code. Both members have relevant
financial expertise and experience. Given the commitment
and specific competencies relevant to the group’s business
that are required of audit committee members, the board is
satisfied that the committee is appropriately constituted.
Rizal Satar, who is one of the two members of the audit
committee, is also chairman of the audit committee of the REA
Kaltim sub group and has primary responsibility for overseeing
audit matters in the region and for reporting back to the audit
committee in London. Membership of the audit committee is
kept under review by the board to ensure that it continues to
remain independent and effective.
As set out in its terms of reference, the audit committee
monitors and reports to the board at each quarterly meeting
on the independence and effectiveness of the internal and
external audit functions, the integrity of financial and narrative
statements and its assessment of risk management and
internal control procedures. The audit committee’s report on
its composition and activities is set out in the Audit committee
report below. This also provides information concerning the
independent external auditor.
Remuneration committee
The members of the remuneration committee are detailed in
the Directors’ remuneration report below. The remuneration
committee meets the criteria of the Code as respects
both independence and the composition of remuneration
committees.
The principles, policies and activities of the remuneration
committee are set out in the Directors’ remuneration
report below. This also provides information concerning the
remuneration of the directors and includes details of the basis
upon which such remuneration is determined.
55
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
R.E.A. Holdings plc Annual Report and Accounts 2024
Board proceedings
Four meetings of the board are scheduled each year. Other
board meetings are held as required to consider corporate
and operational matters with all directors consulted in
advance regarding significant matters for consideration and
provided with relevant supporting information. Minutes of
board meetings are circulated to all directors. The managing
director is present at all board meetings. Where appropriate,
telephone discussions take place between the chairman and
the other non-executive directors outside the formal meetings.
Committee meetings are held as and when required. All
proceedings of committee meetings are reported to the full
board.
The attendance of individual directors, who served during
2024, at the board meetings held in 2024 is set out below:
Regular
meeting
Ad hoc
meeting
David Blackett
4
2
Mieke Djalil
4
2
Carol Gysin
4
2
John Oakley
4
2
Richard Robinow
4
2
Michael St. Clair-George
4
2
Rizal Satar
4
2
In addition, during 2024 there were three meetings of the
audit committee and one meeting of each of the remuneration
committee and nomination committee. All committee meetings
were attended by all of the committee members appointed at
the time of each meeting.
Whilst all formal decisions are taken at board meetings,
the directors have frequent informal discussions among
themselves and with management and most decisions
at board meetings reflect a consensus that has been
reached ahead of the meetings. Two of the directors reside
permanently in the Asia Pacific region and some UK based
directors travel extensively. Since the regular board meetings
are fixed to fit in with the company’s budgeting and reporting
cycle and ad hoc meetings normally have to be held at short
notice to discuss specific matters that do not fall within the
remit of the board committees, it may not always be practical
to fix meeting dates to ensure that all directors are able
to attend each meeting in person but, when possible, the
company organises a conference facility to facilitate remote
attendance. In the event that a director is unable to attend
a meeting in person or by way of a conference facility, the
company ensures that the director concerned is fully briefed
so that the director’s views can be made known to other
directors ahead of time and be reported to, and taken into
account, at the meeting.
The use of conference facilities is not felt by directors to
impact adversely the conduct or administration of meetings or
the quality and depth of board discussions and contributions
by individual directors.
Audit, risk and internal control
The board is responsible for the group’s audit and system
of internal control and for reviewing their effectiveness,
taking account of the views and recommendations of the
audit committee in considering such matters. The system is
designed to manage, rather than eliminate, the risk of failure to
achieve business objectives and can only provide reasonable
and not absolute assurance against material misstatement or
loss.
The board has established a continuous process for
identifying, evaluating and managing the principal risks which
the group faces (including risks arising from sustainability
matters) and considering any such risks in the context of the
group’s overall strategic objectives.
A robust assessment of the principal and emerging risks, as
set out under Principal risks and uncertainties in the Strategic
report above, was conducted by the board on 15 April 2025.
The board also regularly reviews the process and internal
control systems, which were in place throughout 2024 and
up to the date of approval of this report, in accordance with
the FRC Guidance on Risk Management, Internal Control and
Related Financial and Business Reporting.
The board attaches importance not only to the process
established for controlling risks but also to promoting an
internal culture in which all group staff are conscious of the
risks arising in their particular areas of activity, are open with
each other in their disclosure of such risks and combine
together in seeking to mitigate risk. In particular, the board
has always emphasised the importance of integrity and ethical
dealing and continues to do so, in accordance with the group’s
policies on business ethics and human rights.
Policies and procedures in respect of diversity, human rights
and anti-bribery and corruption are in place for all of the
group’s operations in Indonesia as set out in the Strategic
report above (under the Employees in the Sustainability and
climate report) as well as in the UK. These include detailed
guidelines and reporting requirements, a comprehensive,
continuous training programme for all management and
employees and a process for ongoing monitoring and review.
To support the group’s policies and procedures, a local third
party assists with corporate governance matters and regular
anti-bribery training for employees in Indonesia. Such training
covers local and international standards of good governance
and anti-bribery laws and regulations, with specific reference
to the Bribery Act 2010. The group’s whistleblowing
procedure, implemented for employees in Indonesia, where
over 99 per cent of the workforce is based, is managed and
facilitated externally by a professional independent third party
firm.
The group has in place measures to ensure that it is compliant
with UK GDPR.
The board, assisted by the audit committee and the internal
audit process, reviews the effectiveness of the group’s
system of internal control on an ongoing basis. The board’s
R.E.A. Holdings plc Annual Report and Accounts 2024
Governance
Corporate governance report
continued
56
monitoring covers all controls, including financial, operational
and compliance controls and risk management. It is based
principally on reviewing reports from management and the
internal audit department (providing such information as the
board requires) and considering whether significant risks are
identified, evaluated, managed and controlled and whether
any significant weaknesses are promptly remedied or indicate
a need for more extensive monitoring. Details of the internal
audit function and the board’s risk management monitoring
are provided under Internal audit and Risk management and
internal control in the Audit committee report below.
Internal audit and reporting
The group’s internal audit arrangements are described in the
Audit committee report below.
The group has established a management hierarchy which is
designed to delegate the day to day responsibility for specific
departmental functions within each working location, including
financial, operational and compliance controls and risk
management, to a number of senior managers and department
heads who in turn report to the managing director.
Management reports to the board on a regular basis by way
of the circulation of progress reports, management reports,
budgets and management accounts. Management reports, in
particular as regards finance matters, are also considered by
the audit committee as required. Management is required to
seek authority from the board in respect of any transaction
outside the normal course of trading which is above an
approved limit and in respect of any matter that is likely to
have a material impact on the operations that the transaction
concerns. Monthly meetings to consider operational matters
are held in London and Indonesia and regular meetings
are held between the two offices by way of conference
calls. Directors based in London make frequent visits to the
overseas operations each year. The managing director has
a continuous dialogue with the chairman and with other
members of the board.
Diversity and human rights
The group encourages an open approach to recruitment,
promotion and career development irrespective of age,
gender, national origin or background. As noted in the group’s
Non-financial and sustainability information statement in
the Strategic report above under Regulatory information,
applicable policies are designed to recognise and promote
this open approach. Substantial progress has been made
in implementing the diversity policy as evidenced by the
composition of the group board, Indonesian subsidiary
boards and senior management, and the DEI committee, thus
broadening the scope of the previous gender committee, as
set out in the Strategic report above under Employees in the
Sustainability and climate report.
The directors have determined that the main board should
continue to be of a size that is appropriate to the needs and
circumstances of the company with its operations being based
entirely overseas in Indonesia. Given the nature and location
of the group’s operations, the directors have not set specific
targets as respects gender or ethnic diversity.
As at 31 December 2024, the company was in compliance
with the requirements of UKLR 6.6.6R(9) as respects senior
board positions and ethnic diversity, but not as respects the
40 per cent target for women on the board. The managing
director and one independent non-executive director of the
company are women, together representing 29 per cent of
the board of seven directors. 29 per cent of the board are also
from minority ethnic backgrounds as determined by the Office
for National Statistics. As noted in the Strategic report above
(under Succession planning in Strategic environment), the
directors are contemplating new appointments to the board as
existing longstanding directors retire. Those appointments and
any new appointments to board committees will take account
of the group’s diversity policy.
The directors encourage and promote the participation
of women in senior leadership roles and seek to increase
the number of female employees at all levels throughout
the group. The group head office in London comprises six
employees, five of whom are senior executives (including the
managing director), and all of whom are women. Substantially
all of group’s employees are based in Indonesia and 8,676
(some 99 per cent) are South East Asian. As noted in the
Strategic report under Employees in the Sustainability
and climate report, 29 per cent of the group's combined
Indonesian and UK workforce, and 24 per cent of the
management team, are women.
Gender representation
No. of
board
members
% of
board
No. of
senior
positions
on board*
No. in
executive
manage-
ment
% of
executive
manage-
ment
Men
5
71
2
3
38
Women
2
29
1
5
63
Ethnicity representation
No. of
board
members
% of
board
No. of
senior
positions
on board*
No. in
executive
manage-
ment
% of
executive
manage-
ment
White British or
other White**
5
71
3
7
87
Mixed Multiple
ethnic groups
–
–
–
–
–
Asian/Asian
British
2
29
–
1
13
Black/African/
Caribbean/
Black British
–
–
–
–
–
Other ethnic
group including
Arab
–
–
–
–
–
Not specified
–
–
–
–
–
* (CEO, CFO, SID, Chair)
** (Including minority-White groups)
57
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
R.E.A. Holdings plc Annual Report and Accounts 2024
The group collects and stores employee data on a human
resources management information system which complies
with data protection regulations in the applicable locations.
Data as regards gender is mandatory in Indonesia; data as
regards ethnicity is provided voluntarily and may be withheld at
the employee’s discretion.
In accordance with the Modern Slavery Act 2015, the group
seeks to ensure that its partners abide by its ethical principles,
including those with respect to slavery as set out in the
policies on human rights and business ethics. All full time
employees, casual workers and third party contractors are
provided with clear terms of engagement, including a defined
notice period for termination and the group’s policy with
respect to slavery or trafficked labour. The policy statement
on modern slavery is available on the group’s website and is
reviewed annually by the board in light of the group’s policies
and practices. The group is also subject to assessments of
its human rights policies and procedures by major customers
and certification bodies. These audits, which are usually
conducted by independent bodies, cover the management
and governance of human rights, as well as respect for
fundamental rights in the workplace and in the community.
Relations with stakeholders
The Chairman’s statement and Strategic report above,
when read in conjunction with the financial statements, the
Directors’ report above and the Audit committee report and
Directors’ remuneration report below are designed to present
a comprehensive and understandable assessment of the
group’s position and prospects. The respective responsibilities
of the directors and independent auditor in connection
with the financial statements are detailed in Directors’
responsibilities below and in the Independent auditor’s report.
The group maintains its website at www.rea.co.uk. The website
has detailed information on, and photographs illustrating
various aspects of, the group’s activities, including its
commitment to sustainability, conservation work and managing
its carbon footprint. The website is updated regularly and
includes information on the company’s share prices and
the price of CPO. The company’s corporate governance
documentation is published at www.rea.co.uk/investors/
corporate-governance. The company’s results and other news
releases issued via the LSE’s Regulatory News Service are
published at www.rea.co.uk/investors/regulatory-news and,
together with other relevant documentation concerning the
company, are available for downloading.
The directors endeavour to ensure that there is satisfactory
dialogue, based on mutual understanding, between the
company and its shareholder body. The annual report, interim
communications, periodic press releases and such circular
letters to shareholders as circumstances may require are
intended to keep shareholders informed as to progress in
the operational activities and financial affairs of the group.
In addition, within the limits imposed by considerations of
confidentiality, the company engages with institutional and
other major investors through regular meetings and other
contact in order to understand their concerns. The views of
shareholders are communicated to the board as a whole to
ensure that the board and the board committees maintain a
balanced understanding of shareholder opinions and issues
arising.
All ordinary shareholders may attend the company’s annual
and other general meetings and put questions to the board.
Two directors reside permanently in the Asia Pacific region.
Moreover, the nature of the group’s business requires that
directors travel frequently to Indonesia. It is therefore not
always feasible for all directors to attend general meetings,
but, those directors who are present are available to talk on an
informal basis to shareholders after the meeting’s conclusion.
At least 20 working days’ notice is given of the AGM and
related papers are made available to shareholders at least
20 working days ahead of the meeting. For every general
meeting, proxy votes are counted, and details of all proxies
lodged for each resolution are reported to the meeting and
made available on the group’s website as soon as practicable
after the meeting.
Arrangements for the company’s 2025 AGM are set out in the
Notice. Reference should be made to the Notice for further
information regarding attendance at the meeting.
The board is mindful of another of the company’s key
stakeholders, its employees. Rizal Satar, who resides in
Indonesia and is also a commissioner (akin to a non-
executive director) of REA Kaltim and chairman of the local
audit committee, is the designated non-executive director
with responsibility for engagement with employees, as well
as oversight of anti-bribery and whistleblowing procedures
in line with the group’s policies. Rizal works with REA
Kaltim’s president director, head of human resources and
chief sustainability officer to consider employee issues and
periodically attends employee workshops on the group’s
estates. In addition, Rizal provides the conduit between
the independent whistleblowing facilitator and the board.
Outcomes and findings from employee engagement and
whistleblowing procedures are reported to the local boards
of directors and commissioners and ultimately to the
group’s main board via the REA Kaltim audit committee.
This engagement mechanism is to ensure that the board
understands the views of all stakeholders and that employee
interests have been considered in board discussions and
decision making in order to promote the long term success of
the company.
Approved by the board on 16 April 2025 and signed on behalf
of the board by
DAVID J BLACKETT
Chairman
58
R.E.A. Holdings plc Annual Report and Accounts 2024
Governance
Audit committee report
Summary of the role of the audit committee
The terms of reference of the audit committee are available for
download at www.rea.co.uk/investors/corporate-governance.
The audit committee’s remit covers the group as a whole, as
well as the parent company and major subsidiary undertakings,
unless required otherwise by regulations. The audit committee
is responsible for:
•
monitoring the integrity of the financial statements,
reviewing formal announcements of financial performance
and the significant reporting issues and judgements that
such statements and announcements contain
•
reviewing the effectiveness of the internal control
functions (including the internal financial controls and
internal audit function in the context of the group’s overall
risk management system, as well as arrangements
whereby internally raised staff concerns as to financial
reporting and other relevant matters are considered)
•
making recommendations to the board in relation to the
appointment, reappointment, removal, remuneration and
terms of engagement of the independent external auditor,
and overseeing the relationship with and reviewing the
audit findings of the independent external auditor
•
reviewing and monitoring the independence of the
external auditor and the effectiveness of the audit
process.
The audit committee also monitors the engagement of the
independent external auditor to perform non-audit work.
During 2024, non-audit work undertaken by the independent
auditor was principally in relation to the shareholder circular
dated 25 January 2024 in respect of the proposals for the
further investment by DSN in REA Kaltim, the potential sale
of CDM and the intra-group sale and purchase of PU. The
fee for such non-audit work was approved by the board on
25 January 2024. Additional non-audit work undertaken
by the independent auditor was, as in previous years,
routine compliance reporting in connection with covenant
obligations applicable to certain group loans (as respects
which the governing instruments require that such compliance
reporting is carried out by the independent auditor). The audit
committee considered that the nature and scope of, and
remuneration payable in respect of, these engagements were
such that the independence and objectivity of the auditor
was not impaired. Fees payable are detailed in note 7 to
the consolidated financial statements. MHA will undertake
covenant compliance tasks during 2025, subject to their
reappointment at the 2025 AGM.
The members of the audit committee discharge their
responsibilities by formal meetings and informal discussions
between themselves, meetings with the independent external
auditor, and with management in Indonesia and London and
by consideration of reports from management, the Indonesian
audit committee and the independent external auditor.
The committee provides advice and recommendations to the
board with respect to the financial statements to ensure that
these offer fair, balanced, understandable and comprehensive
information for the purpose of informing and protecting the
interests of the company’s shareholders.
Composition of the audit committee
The audit committee currently comprises Michael St. Clair-
George (chairman) and Rizal Satar. Both are considered by the
directors to have relevant financial and professional expertise
and experience, as well as experience of the business sector
and region in which the company operates, so as to be able to
fulfil their specific duties effectively with respect to the audit
committee. The experience of each member of the committee
is described under Board of directors above.
Meetings
Three audit committee meetings are scheduled each year to
match the company’s budgeting and reporting cycle. Additional
ad hoc meetings are held to discuss specific matters when
required, including meetings called at the request of the
independent external auditor.
Significant issues relating to the financial statements
The committee reviewed the half year financial statements
to 30 June 2024 (on which the independent auditor did not
report) and the full year financial statements for 2024 (the
2024 financial statements) contained in this annual report.
The external audit report on the latter was considered together
with a paper to the committee by the independent auditor
reporting on the principal audit findings. The audit partner of
MHA responsible for the audit of the group attended the audit
planning meeting prior to the year end as well as the meeting
of the committee at which the full year audited financial
statements were considered and approved. Senior members
of staff of MHA who were involved in the audit also attended
the meetings.
In relation to the group’s audited 2024 financial statements,
the committee considered the significant accounting and
judgement issues set out below.
R.E.A. Holdings plc Annual Report and Accounts 2024
59
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
Significant accounting and judgement issues
Issues
Relevant considerations
Consolidation of ATP
The consolidation of ATP within the group in line with IFRS 3: Business Combinations
requires management to make significant judgements in respect of control and the fair value
of the assets acquired (see note 3). A substantial fair value adjustment has been made in
respect of the mining asset as management considers it to be appropriate in view of future
cash flows and the long term value to the group.
A deferred tax asset of $6.3 million (2023:
nil) is recognised in the consolidated financial
statements as a result of carried forward
income tax losses in Indonesia. The carrying
value assumes that sufficient profits are
generated within the relevant subsidiaries in
the five year statutory expiry limit imposed in
Indonesia to utilise fully the tax losses
The group seeks to limit uncertainty in respect of utilisation of tax losses by preparing
detailed forecasts of future taxable profits by company which are flexed for a range of
outcomes, for example, ten per cent decreases in price and production. Provisions are made
to the extent that losses may not be utilised.
The amount of the deferred tax liability that
is recognised in the consolidated financial
statements as a result of differences between
the carrying amounts of financial assets
and liabilities in those statements and the
corresponding fiscal balances used in reporting
taxable results
The computation of deferred tax liabilities is complicated by Indonesian tax legislation and by
the extent of differences between group and local carrying amounts that have accumulated
over many years, in part due to the past requirements of IAS 41 to restate plantings at fair
value for group reporting purposes. The computation methodology applied is consistent with
that adopted in previous years.
The accounting treatment of land titles and
whether amounts included in respect of land
titles in non-current plantation operating assets
should be amortised or depreciated
The committee has considered and taken independent advice regarding Indonesian land
tenure law and regulations as applied to oil palm plantations.
The Indonesian system of land tenure for agricultural purposes (HGU) gives the licensee
rights to occupy for periods of up to 35 years, followed by an extension and then further
renewals of between 25 and 35 years. The committee has concluded that acquiring an
HGU represents, in substance, purchase of an item of PPE. To reach this conclusion the
committee made the judgement that the initial payment to acquire an HGU is akin to a
payment to purchase land and that valid renewal requests will always be granted by the
Indonesian administration (unless there is a significant change in law or government policy).
The alternative would be to treat an HGU as a lease of land rights and depreciate the cost
over the period of the HGU. Either treatment requires review of whether the underlying
assets are impaired at period ends.
From 1 January 2017, the group moved to a position of considering land titles (previously
known as "pre-paid operating lease rentals") as a class of non-current assets with no
amortisation, bringing the group’s treatment into line with other companies in the oil palm
sector. Previously, the group had amortised the pre-paid operating lease rentals at group
level although Indonesian standards had not required any amortisation in the local accounts.
Land rights in the past have been generally renewed without issue and it is a reasonable
assumption that HGUs will continue to be renewed or extended. Further, land suitable for
oil palm development and subject to HGUs can be readily bought and sold. Accordingly,
and taking account of independent advice, the committee considers that the group should
continue to adopt the policy that land titles are treated as non-current assets with no
amortisation, in line with local treatment and with other oil palm groups.
60
R.E.A. Holdings plc Annual Report and Accounts 2024
Governance
Audit committee report
continued
In its review of the annual report and the financial statements,
the committee considered management’s submissions on
the matters above, together with the conclusions reached by
the independent auditor, to ensure that the annual report and
the consolidated financial statements are fair, balanced and
understandable and provide sufficient information to enable
shareholders to make an assessment of the group’s position,
performance, business model and strategy.
External audit
The independent external auditor, MHA (a member firm
of Baker Tilly International), was appointed as the group’s
external auditor in 2020, following approval of their
appointment by the company’s shareholders at the AGM held
in 2020. Rakesh Shaunak has completed his fifth and final
year as the group’s senior statutory auditor. Simon Knibbs, the
replacement partner, has been engaged. The other key audit
partners are expected to continue their engagement with the
group for a further three years.
The audit committee meets the independent external auditor
each year to consider the annual audit plan, specific auditing
and accounting matters and the independent auditor’s report
to the committee. In its assessment of the independent
external auditor, the audit committee considered the following
criteria and confirmed that it was satisfied that such criteria
had been met:
•
delivery of a thorough and efficient audit of the group in
accordance with agreed plans and timescales
•
provision of accurate, relevant and robust advice on,
and challenge of, key accounting and audit judgements,
technical issues and best practice
•
the degree of professionalism and expertise
demonstrated by the audit staff
•
sufficient continuity planned for within the core audit
team
•
adherence to independence policies and other regulatory
requirements.
Risk management and internal control
The board of the company has primary responsibility for
the group’s risk management and internal control systems.
At each of its meetings, the committee conducts a robust
assessment of principal, prospective and emerging risks
faced by the group and makes recommendations to the board
accordingly. Current risks, and the assessment thereof are set
out under Principal risks and uncertainties in the Strategic
report above and are reflected in the Viability statement and
Going concern in the Directors’ report above.
The audit committee supervises the internal audit function,
which forms a key component of the control systems, and
keeps the systems of financial, operational and compliance
controls generally under review. Any deficiencies identified
are drawn to the attention of the board.
The committee is regularly appraised of matters relating to
potential IT related fraud which requires continued vigilance
and system monitoring and presents a substantial, albeit
remote, risk for all business areas. Several upgrades to
firewalls and other anti malware protection were implemented
during 2024. A disaster recovery plan has been put in place
and tested. Cyber security reviews of information technology
are conducted periodically throughout the year. The
committee is satisfied that the group’s systems are effective
and sufficient for their purpose.
Internal audit
The group’s Indonesian operations have an internal audit
function supplemented where necessary by the use of
external consultants to assist with corporate governance
and anti bribery training for employees. Such training covers
local and international standards of good governance and
anti-bribery laws and regulations, with specific reference
to the Bribery Act 2010. The function issues reports on
each internal audit topic for consideration by the audit
committee in Indonesia. Report summaries and remedial
actions are submitted for consideration to the group audit
committee. An internal audit programme is agreed at the
beginning of each year and supplemented by special audits
through the year as and when directed by management.
In addition, follow-up audits are undertaken to ensure that
necessary remedial action has been taken. Internal audit
work continued throughout 2024, in accordance with the
internal audit programme agreed with the committee. The
group’s whistleblowing procedure, implemented for employees
in Indonesia, where over 99 per cent of the workforce is
based, is managed and facilitated externally by a professional
independent third party firm.
In the opinion of the audit committee and the board, there is
no need for an internal audit function outside Indonesia due
to the limited nature of the non-Indonesian operations.
Approved by the audit committee on 16 April 2025 and
signed on behalf of the committee by:
MICHAEL A ST. CLAIR-GEORGE
Chairman of the audit committee
61
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
R.E.A. Holdings plc Annual Report and Accounts 2024
Governance
Directors’ remuneration report
This report has been prepared in accordance with Schedule 8 of the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 (the Regulations) as amended. The report is split into three main sections: the
statement by the chairman of the remuneration committee, the annual report on remuneration, and the policy report. The annual
report on remuneration provides details of directors’ remuneration during 2024 and certain other information required by the
Regulations. The annual report on remuneration will be put to an advisory shareholder vote at the company’s 2025 AGM. The
remuneration policy detailed in the policy report is separately subject to approval at that AGM. The remuneration policy is
unchanged from the policy that was previously approved at the company’s 2024 AGM, save that the policy no longer includes a
long term incentive component (the LTIP), for the reasons explained in the Directors’ report above and under Scheme interests
below.
The Companies Act 2006 requires the independent auditor to report to shareholders on certain parts of the annual report
on remuneration and to state whether, in their opinion, those parts of the report have been properly prepared in accordance
with the Regulations. The parts of the annual report on remuneration that have been audited are indicated in that report. The
statement by the chairman of the remuneration committee and the policy report are not subject to audit.
Statement by Michael St. Clair-George, chairman of the remuneration committee
The succeeding sections of this Directors’ remuneration report cover the activities of the remuneration committee during
2024 and provide information regarding the remuneration of executive and non-executive directors. In particular, the report is
designed to compare the remuneration of directors with the performance of the company.
The group’s policy on remuneration is designed to be clear, simple and consistent with the group’s values. The committee
believes that remuneration should continue to motivate and reward individual performance in a way that supports the best
long term interests of the company, its shareholders and stakeholders. The committee considers that executive remuneration
is consistent with such policy and that the award of any bonus, which is wholly discretionary and currently the only variable
element of remuneration for the sole executive director, takes account of the group’s targets and objectives.
The policy and principles applied by the remuneration committee in fixing the appropriate remuneration of the sole executive
director take account of the company’s strategy, commercial goals and achievements as well as its sustainability objectives in
furtherance of the long term success of the company. In addition, the committee takes into consideration external guidance and
benchmarks, including annual publications by leading audit firms regarding directors’ remuneration in smaller (FTSE SmallCap)
companies, as well as remuneration awards for senior managers of the company in Indonesia and London.
In considering a bonus for the managing director (being the sole executive director) in respect of 2024, the committee
confirmed the importance of striking an appropriate balance between positive and negative factors, reward and incentive in the
context of the group’s financial and share price performance in 2024. The committee noted continued progress on operational,
financial and administrative fronts: replanting and extension planting; commencement of the stone and sand operations and the
reorganisation of the group’s interests in these companies; finance initiatives, including reorganisation of the group’s debt profile
(bank financing in Indonesia and buying in of sterling notes), and payment of all outstanding arrears of preference dividend
in April 2024; management development, succession planning and organisational changes across the group; sustainability
initiatives, including preparing for EUDR compliance, raising the group’s SPOTT score, measures to address climate change
risks and opportunities and smallholder projects; and completion of strategic initiatives such as the reorganisation of the REA
Kaltim sub-group and the DSN subscription and related arrangements.
The committee reflected these factors in awarding the managing director’s bonus in respect of 2024 and setting the executive
remuneration and specific objectives for 2025. The committee considers that it has struck an appropriate balance between
reward and incentive in approving the remuneration package of the managing director for 2025.
Annual report on remuneration
The information provided below under Single total figure of remuneration for each director, Pension entitlements, Scheme
interests and Directors’ shareholdings has been audited.
Single total figure of remuneration for each director
The remuneration of the executive and non-executive directors for 2023 and 2024 was as follows (stated in sterling as all the
directors are remunerated in sterling). There was no remuneration in respect of any long term incentive plan in 2024 or 2023.
62
R.E.A. Holdings plc Annual Report and Accounts 2024
Governance
Directors' remuneration report
continued
2024
Salary
and fees
(fixed)
£’000
All taxable
benefits
(fixed)
£’000
*
Annual
bonus
(variable)
£’000
**
Pensions
(fixed)
£’000
***
Total
£’000
Managing director
C E Gysin
412.5
12.7
165.0
15.1
605.3
Chairman and non-executive directors
D J Blackett
122.1
–
–
–
122.1
M Djalil
33.6
–
–
–
33.6
J C Oakley
33.6
–
–
–
33.6
R M Robinow
122.1
14.9
–
–
137.0
R Satar
36.1
–
–
–
36.1
M A St. Clair-George
36.1
–
–
–
36.1
Total
796.1
27.6
165.0
15.1
1,003.8
2023
Salary
and fees
(fixed)
£’000
All taxable
benefits
(fixed)
£’000
*
Annual
bonus
(variable)
£’000
**
Pensions
(fixed)
£’000
***
Total
£’000
Managing director
C E Gysin
392.9
35.2
160.0
15.7
603.8
Chairman and non-executive directors
D J Blackett
116.2
–
–
–
116.2
M Djalil
32.0
–
–
–
32.0
J C Oakley
32.0
–
–
–
32.0
R M Robinow
116.2
10.9
–
–
127.1
R Satar
34.5
–
–
–
34.5
M A St. Clair-George
34.5
–
–
–
34.5
Total
758.3
46.1
160.0
15.7
980.1
*
Types of benefit: health insurance, rental accommodation
**
In respect of the applicable year (awarded in the subsequent year)
*** Contributions to auto enrolment workplace pension
Fees paid to Michael St. Clair-George and Rizal Satar in 2023 and 2024 included additional remuneration at the rate of £2,500
per annum in respect of their membership of the audit committee.
Pension entitlements
In the past, executive directors were eligible to join the R.E.A. Pension Scheme, a defined benefit scheme of which details are
given in note 40 to the consolidated financial statements. That scheme is now closed to new members and it is no longer the
policy of the company to offer pensionable remuneration to directors, except to the extent required under local legislation.
Mr Oakley (who was aged 76 at 31 December 2024) is a pensioner member of the scheme. Details of Mr Oakley’s annual
pension entitlement are set out below:
£
In payment at beginning of year
87,538
Increase during the year
3,407
In payment at end of year
90,945
Scheme interests awarded during the financial year
There were no scheme interests awarded during the financial year.
63
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
R.E.A. Holdings plc Annual Report and Accounts 2024
Directors’ shareholdings
There is no requirement for directors to hold shares in the company.
At 31 December 2024, the interests of directors (including interests of persons connected with directors) in the 9 per cent
cumulative preference shares of £1 each, ordinary shares of 25p each of the company and warrants to subscribe ordinary
shares were as set out in the table below:
Directors
Preference
shares
Ordinary
shares
Warrants to
subscribe
ordinary
shares
D J Blackett
250,600
131,144
–
M Djalil
–
–
–
C E Gysin
91,957
2,132
–
J C Oakley
–
442,493
–
R M Robinow
50,000
13,046,587
1,734,330
R Satar
–
–
–
M A St. Clair-George
2,108
129,371
–
There have been no changes in the interests of the directors between 31 December 2024 and the date of this report.
Scheme interests
No director currently holds any scheme interests in shares of the company.
As explained in the Directors’ report above, following the recommendation of the committee, the directors resolved in
December 2024 that the LTIP be terminated forthwith, there being no participants in the scheme and there being no intention
to grant new awards under the scheme. Accordingly, the LTIP approved by shareholders in June 2015 has been terminated and
the policies to be applied to the remuneration of senior management have been revised so as to exclude a long term incentive
component. The revised company policy on remuneration, which is set out below under Future policy tables, is subject to the
approval of shareholders at the 2025 AGM.
Performance graph and managing director remuneration table
The following graph shows the company’s performance, measured by total shareholder return, compared with the performance
of the FTSE All Share Index also measured by total shareholder return. The FTSE All Share index has been selected for this
comparison as there is no index available that is specific to the activities of the company.
2014
2015
2016
2017
2018
2019
2020
2021
2023
2024
2022
REA
FT Index
0
50
100
150
200
64
R.E.A. Holdings plc Annual Report and Accounts 2024
Governance
Directors' remuneration report
continued
The table below provides details of the remuneration of the managing director over the ten years to 31 December 2024.
Managing director’s remuneration
Single figure
of total
remuneration
£’000
Annual bonus
pay-out against
maximum
%
Long term incentive
vesting rates
against maximum
opportunity
%
2024
C E Gysin
605.3
80
N/A
2023
C E Gysin
603.8
81
N/A
2022
C E Gysin
557.9
80
N/A
2021
C E Gysin
538.5
83
N/A
2020
C E Gysin
494.2
57
N/A
2019
C E Gysin
439.8
35
N/A
2018
C E Gysin
473.3
67
N/A
2017
C E Gysin (for the period 21 February to 31 December 2017)
400.3
50
N/A
2017
M A Parry (for the period 1 January to 20 February 2017*)
412.8
N/A
N/A
2016
M A Parry
617.3
92
N/A
2015
M A Parry
541.7
88
N/A
2015
J C Oakley
473.9
60
N/A
* Includes £200,000 ex gratia payment for loss of office pursuant to a resolution of shareholders in 2017
Percentage change in remuneration
The table below shows the percentage changes in the remuneration of each director and in the average remuneration (on a full
time equivalent basis) of employees of the company in the UK and of certain senior managers in Indonesia between 2020 and
2024. The selected comparator employee group is considered to be the most relevant taking into consideration the nature and
location of the group’s operations. Using the entire employee group would involve comparison with a workforce in Indonesia,
whose terms and conditions are substantially different from those pertaining to employment in the UK. The remuneration of the
selected group in prior years has been restated at prevailing average exchange rates for 2024 so as to eliminate distortions
based on exchange rate movements of the rupiah and dollar against sterling.
Percentage change in
remuneration (FTE)
C E Gysin
D J
Blackett
M Djalil/
I Chia*
J C Oakley** R M Robinow
R Satar
M A St. Clair-
George
Employees
2023-2024
Salary and fees
5
5
5
5
4.6
4.6
5
5.0
All taxable benefits
(64.0)
–
–
–
36.8
–
–
0.1
Annual bonuses
3.1
–
–
–
–
–
–
8.1
Total
0.4
5
5
5
7.7
4.6
5
5.3
2022-2023
Salary and fees
8.5
8.5
9.9
9.9
8.5
9.1
9.1
1.2
All taxable benefits
12.5
–
–
–
8.8
–
–
(4.5)
Annual bonuses
6.7
–
–
–
–
–
–
1.4
Total
8.2
8.5
9.9
9.9
8.5
9.1
9.1
1.9
2021-2022
Salary and fees
4.0
4.0
4.0
(70.3)
4.0
3.7
3.7
4.3
All taxable benefits
(0.6)
–
–
–
0.0
–
–
(7.9)
Annual bonuses
3.4
–
–
–
–
–
–
2.3
Total
3.6
4.0
4.0
(70.3)
3.6
3.7
3.7
3.7
2020-2021
Salary and fees
0.0
3.0
3.7
(22.8)
3.0
3.4
3.4
(2.1)
All taxable benefits
(2.1)
–
–
–
18.6
–
–
13.8
Annual bonuses
45.0
–
–
–
–
–
–
(2.7)
Total
9.2
3.0
3.7
(22.8)
4.2
3.4
3.4
(1.9)
* I Chia retired 31 December 2021. M Djalil was appointed 4 July 2022
** Fees paid to J C Oakley in 2020 and 2021 include additional remuneration for his assistance with various operational projects. Such additional
duties ceased at the end of 2021
65
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
R.E.A. Holdings plc Annual Report and Accounts 2024
Relative importance of spend on pay
The graph below shows the movements between 2023 and 2024 in total employee remuneration, cost of goods sold and
ordinary and preference dividends. Cost of goods sold has been selected as an appropriate comparator as it provides a
reasonable measure of the growth in the group’s activities.
Functions of the remuneration committee
The remuneration committee currently comprises independent non-executive directors, Michael St. Clair-George (chairman) and
Rizal Satar. The committee sets the remuneration and benefits of the executive directors. The committee is also responsible for
long term incentive arrangements, if any, for key senior executives in Indonesia.
The committee does not use independent consultants but takes into consideration external guidance, including annual
publications by leading audit firms regarding directors’ remuneration in smaller (FTSE SmallCap) companies.
Service contracts of directors standing for re-election
David Blackett, Mieke Djalil, Carol Gysin, John Oakley, Richard Robinow, Rizal Satar and Michael St. Clair-George are proposed
for re-election at the forthcoming AGM. Carol Gysin, the managing director and sole executive director, has a service contract
of which the unexpired term is nine months. All the non-executive directors have contracts for services to the company which
are terminable at will by either party.
Statement of voting at general meeting
At the annual general meeting held on 6 June 2024, votes lodged by proxy in respect of the resolutions to approve the 2023
directors’ remuneration report and policy were as follows:
Votes
for
Percentage
for
Votes
against
Percentage
against
Total
votes
Votes
withheld
Voting on remuneration report
22,466,317
99.96
9,232
0.0 22,475,549
511
Voting on remuneration policy
22,466,317
99.96
9,232
0.0
22,475,549
511
The company pays due attention to voting outcomes. Where there are substantial votes against resolutions in relation to
directors’ remuneration, relevant information pertaining to such votes will be published on the group’s website, the reasons for
any such vote will be sought, and any actions in response will be detailed in the next directors’ remuneration report.
2024
2023
Total employee remuneration
Cost of goods sold
Ordinary and preference dividends
-3%
-4%
$’m
350%
2024
2023
2024
2023
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
66
R.E.A. Holdings plc Annual Report and Accounts 2024
Governance
Directors' remuneration report
continued
Policy report
The information provided in this part of the Directors’ remuneration report is not subject to audit.
The remuneration policy detailed below is subject to approval at the company’s 2025 AGM on 19 June 2025 in accordance
with the CA 2006 (Strategic report and Directors' report) Regulations 2013 requiring all companies to put their remuneration
policy to shareholders for approval at least every three years or earlier if there is a change to the policy.
The remuneration policy is unchanged from the policy that was previously approved at the company’s 2024 AGM, save that the
policy no longer includes a long term incentive component (LTIP), for the reasons explained in the Directors’ report and under
Scheme interests above.
The remuneration of directors approved in respect of 2025 is consistent with this policy.
Future policy tables
The table below provides a summary of the key components of the company’s policy in respect of the remuneration package
for directors. In determining and implementing such policy, the company seeks to ensure that arrangements are clear and
transparent, straightforward, predictable as regards the range of any discretionary awards, and proportionate in terms of targets
and values in the context of the company’s business and strategy. It is not the policy of the company to provide for possible
recovery after payment of directors’ remuneration.
Purpose
Operation
Opportunity
Applicable performance
measures
Executive directors
Salary and
fees
To provide a competitive
level of fixed remuneration
aligned to market
practice for comparable
organisations, reflecting
the demands, seniority
and location of the
position and the expected
contribution to achievement
of the company’s strategic
objectives
Reviewed annually with
annual increases effective
from 1 January by reference
to: the rate of inflation,
specific responsibilities and
location of the executive,
current market rates for
comparable organisations,
rates for senior employees
and staff across the
operations, and allowing for
differences in remuneration
applicable to different
geographical locations
Within the second or
third quartile for similar
sized companies
None
Taxable
benefits
To attract, motivate, retain
and reward fairly individuals
of suitable calibre
Benefits customarily
provided to equivalent senior
management in their country
of residence
The cost of providing
the appropriate benefits,
subject to regular review
to ensure that such
costs are competitive
None
Annual
bonus
To incentivise performance
over a 12 month period,
based on achievements
linked to the company’s
strategic objectives
Annual review of
performance measured
against prior year progress
in corporate development,
both commercial and
financial, and including
objectives relating
to sustainability and
governance
Up to a maximum of 50
per cent of annual base
salary
A range of objectives for
the respective director,
reflecting specific goals
for the relevant year,
with weighting assessed
annually on a discretionary
basis depending upon the
dominant influences during
the year to which a bonus
relates
Pensions
Compliance with prevailing
legislation
Compliance with prevailing
legislation
Compliance with
prevailing legislation
None
67
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
R.E.A. Holdings plc Annual Report and Accounts 2024
Purpose
Operation
Opportunity
Applicable performance
measures
Non-executive directors
Fees
To attract and retain
individuals with suitable
knowledge and experience
to serve as directors of a
listed UK company engaged
in the plantation business in
Indonesia
Determined by the board
within the limits set by the
articles of association and
by reference to comparable
organisations and to the
time commitment expected;
reviewed annually
Fees for
additional
duties
An additional flat fee in
each year in respect of
membership of certain
committees and additional
fees in respect of particular
services performed
Determined by the board
having regard to the time
commitment expected and
with no director taking part
in the determination of such
additional remuneration in
respect of himself; reviewed
annually
Taxable
benefits
Continuance of previously
agreed arrangements
The provision of private
medical insurance, subject
to regular review to ensure
that the cost is competitive
The policies on remuneration set out above in respect of executive directors are applied generally to the senior management
and executives of the group but adjusted appropriately to reflect the position, role and location of an individual. Remuneration of
other employees, almost all of whom are based in Indonesia, is based on local and industry benchmarks for basic salaries and
benefits, subject as a minimum to an annual inflationary adjustment, and with additional performance incentives as and where
this is appropriate to the nature of the role.
Approach to recruitment remuneration
In setting the remuneration package for a newly appointed executive director, the committee will apply the policy set out above.
Base salary and bonuses, if any, will be set at levels appropriate to the role and the experience of the director being appointed
and, together with any benefits to be included in the remuneration package, will also take account of the geographical location
in which the executive is to be based. The maximum variable incentive which may be awarded by way of annual bonus will be
50 per cent of the annual base salary.
In instances where a new executive is to be domiciled outside the United Kingdom, the company may provide certain relocation
benefits to be determined as appropriate on a case by case basis taking account of the specific circumstances and costs
associated with such relocation.
Directors’ service agreements and letters of appointment
The company’s policy on directors’ service contracts is that contracts should have a notice period of not more than one year and
a maximum termination payment not exceeding one year’s salary. No director has a service contract that is not fully compliant
with this policy.
Contracts for the services of non-executive directors may be terminated at the will of either party, with fees payable only to
the extent accrued to the date of termination. Continuation of the appointment of each non-executive director depends upon
satisfactory performance and re-election at annual general meetings in accordance with the articles of association of the
company and the provisions of the Code.
68
R.E.A. Holdings plc Annual Report and Accounts 2024
Governance
Directors' remuneration report
continued
Carol Gysin has two service agreements whereby her working time and remuneration are shared between two employee
companies to reflect the division of responsibility between different parts of the group. The contracts state that her appointment
shall continue until automatically terminated on 31 January 2026 without the need for notice unless it is previously terminated
by either party giving the other at least 12 months’ prior written notice expiring before 31 January 2026. As at the date of
this report, the unexpired term under Carol Gysin’s contracts was nine months. The nomination committee will consider the
arrangements in respect of Carol Gysin prior to 31 December 2025 having regard to her planned new role after that date as
outlined in the Strategic report above (under Succession planning in Strategic environment).
Illustration of application of remuneration policy
The chart below provides estimates of the potential remuneration receivable pursuant to the remuneration policy by the
managing director (being the only executive director) and the potential split of such remuneration between its different
components (being the fixed component and the annual variable component) under three different performance scenarios:
minimum, in line with expectations and maximum. The managing director’s remuneration has no long-term variable component.
Managing director
Minimum remuneration
receivable
In line with
expectations
Maximum remuneration
receivable
440
100%
81%
19%
68%
32%
543
£’000
647
Fixed pay
Annual bonus
0
100
200
300
400
500
600
700
The figures reflected in the chart above have been calculated against the policies that were applicable throughout 2024 and on
the basis of remuneration payable in respect of 2025.
Payment for loss of office
It is not company policy to include provisions in directors’ service contracts for compensation for early termination beyond
providing for an entitlement to a payment in lieu of notice if due notice is not given.
The company may cover the reasonable cost of repatriation of any expatriate executive director and the director’s spouse in the
event of termination of appointment, other than for reasons of misconduct, and provided that the move back to the director’s
home country takes place within a reasonable period of such termination.
Consideration of employment conditions elsewhere in the company
In setting the remuneration of executive directors, regard will be had to the levels of remuneration of expatriate employees
overseas and to the increments granted to employees operating in the same location as the relevant director. Employee
views are not specifically sought in determining this policy. Employee salaries will normally be subject to the same inflationary
adjustment as the salaries of executive directors in their respective locations.
69
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
R.E.A. Holdings plc Annual Report and Accounts 2024
Shareholder views
Shareholders are not specifically consulted on the remuneration policy of the company. Shareholders who have expressed
views on remuneration have supported the company’s policies and the application of those policies to date. Were a significant
shareholder to express a particular concern regarding any aspect of the policy, the views expressed would be carefully weighed.
Approved by the board on 16 April 2025 and
signed on behalf of the board by
MICHAEL A ST. CLAIR-GEORGE
Chairman of the remuneration committee
70
R.E.A. Holdings plc Annual Report and Accounts 2024
Governance
Directors’ responsibilities
The directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law
and regulations.
UK company law requires the directors to prepare financial
statements for each financial year. Under company law,
the directors are required to prepare the group financial
statements in accordance with UK adopted IFRS and have
also chosen to prepare the company financial statements in
accordance with the United Kingdom Generally Accepted
Accounting Practice (UK Accounting Standards, comprising
FRS 101 Reduced Disclosure Framework, and applicable
law). Under company law the directors must not approve the
financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the group and the
company and of the profit or loss for that period.
In preparing the financial statements, the directors are
required to:
•
select suitable accounting policies and apply them
consistently;
•
make judgements and estimates that are reasonable and
prudent;
•
state whether applicable UK adopted IFRS have been
followed for the group financial statements and UK
Accounting Standards, comprising FRS 101 Reduced
Disclosure Framework, have been followed, subject to
any material departures disclosed and explained in the
financial statements; and
•
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
company will continue in business.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the group's and the company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
group and the company and enable them to ensure that its
financial statements comply with the CA 2006. They are also
responsible for safeguarding the assets of the group and
the company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are also responsible for the maintenance and
integrity of the corporate and financial information included
on the group’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Responsibility statement
To the best of the knowledge of each of the directors, they
confirm 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 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 financial 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.
Approved by the board on 16 April 2025 and signed on behalf
of the board by
DAVID J BLACKETT
Chairman
71
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
Governance
Independent auditor’s report to
the members of R.E.A. Holdings plc
For the purpose of this report, the terms “we” and “our” denote MHA in relation to UK legal, professional and regulatory
responsibilities and reporting obligations to the members of R.E.A. Holdings plc. For the purposes of the table on pages 73
to 75 that sets out the key audit matters and how our audit addressed the key audit matters, the terms “we” and “our” refer to
MHA. The Group financial statements, as defined below, consolidate the accounts of R.E.A. Holdings plc and its subsidiaries
(the “Group”). The “Parent Company” is defined as R.E.A. Holdings plc, as an individual entity. The relevant legislation governing
the Company is the United Kingdom Companies Act 2006 (“Companies Act 2006”).
Opinion
We have audited the financial statements of R.E.A. Holdings plc for the year ended 31 December 2024. The financial
statements that we have audited comprise:
•
the Consolidated Income Statement;
•
the Consolidated Statement of Comprehensive Income;
•
the Consolidated Balance Sheet;
•
the Consolidated Statement of Changes in Equity;
•
the Consolidated Cash Flow Statement;
•
the Notes to the consolidated financial statements, including material accounting policies;
•
the Parent Company Balance Sheet;
•
the Parent Company Statement of Changes in Equity; and
•
the notes to the Parent Company Financial Statements, including material accounting policies.
The financial reporting framework that has been applied in the preparation of the Group’s financial statements is applicable
law and United Kingdom adopted International Financial Reporting Standards (‘UK adopted IFRS’). The financial reporting
framework that has been applied in preparation of the Parent Company financial statements is applicable law and United
Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom
Generally Accepted Accounting Practice).
In our opinion:
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31
December 2024 and of the Group’s profit for the year then ended;
•
the Group’s financial statements have been properly prepared in accordance with UK adopted IFRS;
•
the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public
interest entities, and we have fulfilled our ethical responsibilities in accordance with those requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group and Parent Company’s ability to continue to adopt the going concern
basis of accounting included:
•
the consideration of inherent risks to the Group’s and the Parent Company’s operations and specifically their business
model;
•
confirming our understanding of the directors’ going concern assessment process, including obtaining an understanding of
relevant controls over management’s model;
72
R.E.A. Holdings plc Annual Report and Accounts 2023
Governance
Independent auditor's report to
the members of R.E.A. Holdings plc continued
•
testing the mathematical accuracy and appropriateness of the model used to prepare the forecast and verifying going
concern model inputs against board-approved forecasts;
•
obtaining confirmation for the financing facilities including the nature of facilities, repayment terms and covenant
compliance and liquidity requirements both during the year and during the going concern period;
•
evaluation of the financial forecasts for the Group and the Parent Company, including consideration of management’s
ability to forecast through review of previous models, recent production, trading activity and business plans, in assessing
the reasonableness of the directors’ going concern assumptions;
•
the evaluation of the Group’s base case and stress case scenarios, including the associated sensitivities and consideration
of possible mitigating actions, and the rationale supporting the underlying assumptions; and
•
assessing the Groups going concern related financial statement disclosures.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s and Parent Company ability to continue as a going concern
for a period of at least twelve months from when the financial statements are authorised for issue.
In relation to the Group’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add
or draw attention to in relation to the Directors’ statement in the company’s financial statements about whether the directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
Overview of our audit approach
Scope
Our audit was scoped by obtaining an understanding of the Group, including the Parent
Company, and its environment, including the Group’s system of internal control, and assessing
the risks of material misstatement in the financial statements. We also addressed the risk of
management override of internal controls, including assessing whether there was evidence of
bias by the directors that may have represented a risk of material misstatement.
We, and our component auditors acting on specific group instructions, undertook full scope
audits on the complete financial information of 5 components, specified audit procedures on
particular aspects and balances on another 6 components.
Materiality
2024
2023
Benchmark Used
Group
$2.91m
$3.6m
5% of 3-year average EBITDA (2023: 1.5% of Plantation
assets)
Parent Company
$2.4m
$2.6m
1% (2023: 1%) of gross assets
Key audit matters
Recurring
The key audit matter that we identified in the current year relating to the Group and Parent
Company is:
•
Non-impairment of plantation assets
Our assessment of the Group’s key audit matters remains consistent with 2023, except for the removal of the key audit matter
relating to the recoverability of loans to stone, sand, and coal interests. This was a key audit matter in 2023 but has been
removed following the consolidation of PT Aragon Tambang Pratama (ATP) during the year, which is now considered a key
audit matter in 2024.
73
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
R.E.A. Holdings plc Annual Report and Accounts 2024
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due
to fraud) that we identified. These matters included those matters which had the greatest effect on:
•
the overall audit strategy;
•
the allocation of resources in the audit; and
•
directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Non-impairment of plantation assets
Key audit matter
description
Plantations, as defined by the Group, which includes goodwill, intangible assets, plantings, buildings and
structures and land, had a book value of $404.3m at 31 December 2024 ($355.6m at 31 December
2023). There is a risk of impairment due to the volatility of Crude Palm Oil (CPO) prices.
The valuation of these cash generating units rely on certain assumptions and estimates in relation to the
ability of the underlying plantations to generate suitable future cash flows. A key input to the valuation is
the CPO price which requires the judgement of the directors. The CPO price is known to be volatile, and the
use of an inappropriate CPO price could have a material impact on the valuation of plantation assets.
The discount rate used is also a key input to the valuation and requires the judgement of the directors. The
calculation of the discount rate includes certain inputs that are judgemental. The use of an inappropriate
discount rate could have a material impact on the valuation of plantation assets.
As disclosed in note 3, critical accounting judgements and key sources of estimation uncertainty,
management has performed a sensitivity analysis which involves judgement over the potential impact of a
change in CPO pricing and the discount rate used.
Further details are included within critical accounting estimates and key sources of estimation uncertainty
note in note 3.
How the scope of our
audit responded to the
key audit matter
Our work over the valuation of plantations included:
•
obtaining an understanding of the review controls over the impairment assessment including the CPO
price and discount rate assumptions to ensure there is an appropriate management review control;
•
assessing arithmetic workings of the model and the integrity of the formulae used;
•
assessing the design and implementation of relevant controls;
•
comparing CPO prices used to the Group’s average selling price over the past 10 years to assess
reasonableness;
•
reviewing forecast inflation adjustments included in the CPO price calculation for reasonableness;
•
reviewing publicly available news articles and other publications commenting on the expectations for
the CPO price and global demand and supply;
•
assessing the level of impairment at different CPO prices;
•
assessing the appropriateness of the methodology used in calculating the discount rate, including
input from independent specialists acting as auditor experts;
•
corroborating the inputs to the calculation of the discount rate and assessing the appropriateness of
the inputs used utilising auditors experts;
•
challenging management to understand how they concluded that their price and discount rate
assumptions were appropriate;
•
reviewing the yield assumptions made as part of the impairment assessment comparing to historic and
market data and assessing the reasonableness;
•
reviewing the events after the reporting period for matters which may have a bearing on the valuation
model;
•
reviewing the sensitivity analysis prepared by management on palm oil price and discount rate changes
and stress testing based on those sensitivities; and
•
reviewing the disclosures in the financial statements against the relevant reporting requirements.
74
R.E.A. Holdings plc Annual Report and Accounts 2023
Governance
Independent auditor's report to
the members of R.E.A. Holdings plc continued
Key observations
communicated to
the Group’s Audit
Committee
Nothing has come to our attention that indicates the carrying value of plantations is misstated, or that
management’s assessment that no impairment is required is unreasonable.
Consolidation of PT Aragon Tambang Pratama
Key audit matter
description
The Group held loans made to stone, sand and coal concession holding companies in Indonesia for which
control was outside of the Group as at 31 December 2023.
During the year the Group obtained control of stone concession company; PT Aragon Tambang Pratama
(ATP). In accordance with the terms and conditions of agreements made as part of the loan funding
provided to ATP, the Group has assumed operational control, demonstrated through the appointment of
the director during the year. The Group’s management has made the assessment that these appointments
demonstrate that control was obtained from 1 July 2024.
The acquired assets and liabilities were recognised at fair value upon acquisition, resulting in the
recognition of uplifts to mining assets, net of deferred tax, amounting to $58.9m in the financial statements
as at 31 December 2024, resulting in neither goodwill or a gain on bargain purchase.
How the scope of our
audit responded to the
key audit matter
Our work over the consolidation of ATP included:
•
review of board resolutions confirming the appointment of senior Group board members on 17 July
2024;
•
evaluated operational meeting minutes and governance documents evidencing Group direction of ATP
from 1 July 2024;
•
reviewed shareholder arrangements and obtained representations confirming no protective or veto
rights remain with legacy shareholders;
•
reviewed management’s accounting paper and internal valuation model to assess the fair value
measurement, and reconciled key DCF assumptions (including production volumes, pricing, and costs)
to ATP’s operational plans;
•
assessing the design and implementation of relevant controls around the consolidation of ATP;
•
reviewed ATP’s December 2024 operational report for consistency with valuation assumptions;
•
verified the uplift entry in group journals and confirmed appropriate consolidation elimination of the
intercompany loan;
•
engaged external auditor’s expert to review the reasonableness of the valuation adjustments including
the discount rate applied.
Key observations
communicated to
the Group’s Audit
Committee
Nothing has come to our attention to suggest that the Group’s consolidation of ATP from 1 July 2024 is
misstated, or that management’s assessment of having obtained control in substance under IFRS 10 is
unreasonable, based on board appointments, operational oversight, and the absence of protective rights.
Furthermore, nothing has come to our attention to indicate that the valuation of ATP’s mining assets is
misstated, or that management’s valuation approach and related disclosures in the consolidated financial
statements are unreasonable.
75
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
R.E.A. Holdings plc Annual Report and Accounts 2024
Our application of materiality
Our definition of materiality considers the value of error or omission on the financial statements that, individually or in
aggregate, would change or influence the economic decision of a reasonably knowledgeable user of those financial
statements. Misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the
nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the
financial statements as a whole. Materiality is used in planning the scope of our work, executing that work and evaluating the
results.
Performance materiality is the application of materiality at the individual account or balance level, set at an amount to reduce, to
an appropriately low level, the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality
for the financial statements as a whole.
The determination of performance materiality reflects our assessment of the risk of undetected errors existing, the nature of
the systems and controls and the level of misstatements arising in previous audits.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Parent Company financial statements
Overall materiality
US$ 3.9 million
(2023: US$ 3.6 million)
US$ 2.4 million
(2023: US$ 2.6 million)
How we determined it
5% of three year average EBITDA
(2023: 1.5% of plantation assets)
1.0% of Parent Company’s gross assets
(2023: 1.0% of Parent Company’s gross assets)
Rationale for the
benchmark applied
We consider a 3-year average EBITDA
benchmark to be appropriate.
In 2023, materiality was determined using the
net book value of plantation assets. However,
in light of the Group’s recent operational
diversification following the acquisition of ATP,
stakeholders, including lenders, shareholders,
and investors are placing increased emphasis
on performance metrics such as EBITDA. This
measure is widely recognised as an indicator
of underlying profitability, operational efficiency,
and the Group’s ability to service debt, and has
therefore been selected as the benchmark for
2024.
We set our 2024 performance materiality at
60% of overall materiality, amounting to $1.74m
(2023: 60%) to reduce the probability that,
in aggregate, uncorrected and undetected
misstatements exceed the materiality for
the financial statements as a whole. In
determining performance materiality, we
considered a number of factors – the history
of misstatements, our risk assessment and
the strength and robustness of the control
environment.
The Parent Company is a holding company whose
purpose is to consolidate the active trading
entities and other Group companies. We consider
gross assets to be the most important balance to
the users of the financial statements.
We set our 2024 performance materiality at 60%
of overall materiality, amounting to $1.56m (2023:
60%) to reduce the probability that, in aggregate,
uncorrected and undetected misstatements
exceed the materiality for the financial statements
as a whole. In determining performance
materiality, we considered a number of factors –
the history of misstatements, our risk assessment
and the strength and robustness of the control
environment.
We agreed to report any corrected or uncorrected adjustments exceeding $195,000 (2023: $182,000) and $28,000 (2023:
$130,000) in respect of the Group and Parent Company respectively to the Audit Committee as well as differences below this
threshold that in our view warranted reporting on qualitative grounds.
76
R.E.A. Holdings plc Annual Report and Accounts 2023
Governance
Independent auditor's report to
the members of R.E.A. Holdings plc continued
Overview of the scope of the Group and Parent Company audits
Our assessment of audit risk, evaluation of materiality and our determination of performance materiality sets our audit scope for
each company within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements.
This assessment takes into account the size, risk profile, organisation / distribution and effectiveness of group-wide controls,
changes in the business environment and other factors such as recent internal audit results when assessing the level of work
to be performed at each component.
The Parent Company, head office and services company are UK based whilst the plantations are based in Indonesia and the
financing company is based in the Netherlands.
Considering operational and financial performance and risk factors, we assessed risks of material misstatement at Group
Classes of Transactions, Account Balances, and Disclosures (COTABDs) level and determined how those risks are associated
with the assertions in a component’s financial information. We, along with our component auditors, performed audits of the
entire financial information of the Parent Company and four Indonesian components; PT R.E.A. Kaltim Plantations (RKP),
PT Cipta Davia Mandiri (CDM), PT Sasana Yudha Bhakti (SYB), and PT Kutai Mitra Sejahtera (KMS) along with the audits of
specified COTABD’s over six entities, including two in the UK, one in Netherlands and three in Indonesia.
The work over the audits of entire financial information combined with specified COTABDs provided coverage of 100% of
revenue, profit before tax, and net assets.
Our audit of the Group financial statements involved the use of component auditors, particularly in relation to components
based in Indonesia and the Netherlands. The group audit team was actively involved in directing, supervising and reviewing
their work. This included regular correspondence, scheduled video conference calls, and remote file reviews of key working
papers and reporting deliverables. We assessed the risks of material misstatement at the level of classes of transactions,
account balances and disclosures (COTABDs), determined how these risks related to relevant assertions in each component’s
financial information, and coordinated the audit approach accordingly. The proposed responses to these risks were discussed
and agreed with the component auditors, along with the required nature, timing and extent of their procedures and the format
of their reporting. Throughout the audit, the group team maintained close involvement through review of work performed
and participation in discussions at key stages of the engagement, ensuring the appropriateness and consistency of the audit
conclusions drawn.
The specified procedures on COTABDs for the UK entities; R.E.A Services Limited and KCC Resources Limited were carried
out by the Group audit team.
The control environment
We evaluated the design and implementation of those internal controls of the Group, including the Parent Company, which are
relevant to our audit, such as those relating to the financial reporting cycle.
Revenue
81%
69%
31%
19%
1%
Audits of the entire financial information
Analytical procedures
Audits of specified COTABDs
Net assets
Profit before tax
99%
77
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
R.E.A. Holdings plc Annual Report and Accounts 2024
Climate-related risks
In planning our audit and gaining an understanding of the Group and Parent Company we considered the potential impact
of physical and transitional climate-related risks on the business and its financial statements. We obtained management’s
climate-related risk assessment, along with relevant documentation and reports relating to management’s assessment and held
discussions with management to understand their process for identifying and assessing those risks.
We then engaged internal specialists to assess, amongst other factors, the benchmarks used by management, the nature of the
Group’s business activities, its procedures and processes and the geographic distribution of its activities. We critically reviewed
management’s assessment and challenged the assumptions underlying their assessment.
We specifically considered the mitigating actions taken by the Group to reduce its exposure to climate-related risks, and
factored these into our evaluation of management’s assessment. We have agreed with managements’ assessment that climate-
related risks are not material to these financial statements.
We critically reviewed management’s assessment and challenged the assumptions underlying their assessment. We also
designed our audit procedures to specifically consider those assets where we anticipated, based on the work performed, that
the highest impact arising from climate change might fall. We considered the ongoing viability of the business in respect both to
physical climate risks and changes in legislation as nations implement new reporting regulations and associated commitments
to reduce greenhouse gas emissions.
Reporting on other information
The other information comprises the information included in the annual report other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion
on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the
financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Strategic report and directors report
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
•
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and their environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
Directors’ remuneration report
Those aspects of the director’s remuneration report which are required to be audited have been prepared in accordance with
applicable legal requirements.
78
R.E.A. Holdings plc Annual Report and Accounts 2023
Governance
Independent auditor's report to
the members of R.E.A. Holdings plc continued
Corporate governance statement
We have reviewed the Directors’ Statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the entity’s compliance with the provisions of the UK Corporate Governance Code specified
for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
•
Directors’ statement with regard to the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 45;
•
Directors’ explanation as to its assessment of the entity’s prospects, the period this assessment covers and why the period
is appropriate set out on page 44;
•
Directors’ statement on whether it has a reasonable expectation that the Group will be able to continue in operation and
meets its liabilities set out on page 45;
•
Directors’ statement on fair, balanced and understandable set out on page 70;
•
Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 30;
•
Section of the Annual Report and Accounts that describes the review of effectiveness of risk management and internal
control systems set out on page 60; and
•
Section describing the work of the Audit Committee set out on page 58.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
•
adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been
received by branches not visited by us; or
•
the Parent Company financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
•
the part of the directors’ remuneration report to be audited is not in agreement with the accounting records and returns; or
•
we have not received all the information and explanations we require for our audit; or
•
a corporate governance statement has not been prepared by the Parent Company.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and Parent Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
79
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
R.E.A. Holdings plc Annual Report and Accounts 2024
Auditor responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
These audit procedures were designed to provide reasonable assurance that the financial statements were free from fraud or
error. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from
error and detecting irregularities that result from fraud is inherently more difficult than detecting those that result from error, as
fraud may involve collusion, deliberate concealment, forgery or intentional misrepresentations. Also, the further removed non-
compliance with laws and regulations is from events and transactions reflected in the financial statements, the less likely we
would become aware of it.
Identifying and assessing potential risks arising from irregularities, including fraud
The procedures undertaken to identify and assess the risks of material misstatement in respect of irregularities, including fraud,
included the following:
•
we considered the nature of the industry and sector, the control environment, business performance including
remuneration policies and the Company’s own risk assessment that irregularities might occur as a result of fraud or
error. From our sector experience and through discussion with the directors, we obtained an understanding of the legal
and regulatory frameworks applicable to the Group and Parent Company focusing on laws and regulations that could
reasonably be expected to have a direct material effect on the financial statements, such as provisions of the Companies
Act 2006, Indonesian labour laws, UK tax legislation or those that had a fundamental effect on the operations of the
Group.
•
we enquired of the directors and management including the audit committee concerning the Group’s and the Parent
Company’s policies and procedures relating to:
o
identifying, evaluating and complying with the laws and regulations and whether they were aware of any instances of
non-compliance;
o
detecting and responding to the risks of fraud and whether they had any knowledge of actual or suspected fraud; and
o
the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations.
•
we assessed the susceptibility of the financial statements to material misstatement, including how fraud might occur by
evaluating management’s incentives and opportunities for manipulation of the financial statements. This included utilising
the spectrum of inherent risk and an evaluation of the risk of management override of controls. We determined that the
principal risks were related to posting inappropriate journal entries in order to conceal misappropriation of assets or other
manipulation of accounting entries intended to result in the production of financial statements which give a misleading
view of the entity’s financial position or performance. The group engagement team shared this risk assessment with the
component auditors of significant subsidiaries so that they could include appropriate audit procedures in response to such
risks in their work.
80
R.E.A. Holdings plc Annual Report and Accounts 2023
Governance
Independent auditor's report to
the members of R.E.A. Holdings plc continued
Audit response to risks identified
In respect of the above procedures:
•
we corroborated the results of our enquiries through our review of the minutes of the Group’s and the Parent Company’s
board and Audit Committee meetings;
•
audit procedures performed by the engagement team in connection with the risks identified included:
o
assessing the Group’s risk register and its approach to identifying and responding to applicable legal and regulatory
frameworks, including those relevant to UK listed entities and the plantation sector. This included review of
correspondence with the Group’s key legal advisers and a review of minutes from various governance committees;
o
gaining an understanding of the key laws and regulations applicable to the Group, including the UK Companies
Act, Listing Rules, tax legislation, employee legislation, and environmental regulations, which are fundamental to its
operations;
o
evaluation of the design and implementation of management’s controls designed to prevent and detect irregularities;
o
challenging assumptions and judgements made by management in their significant accounting estimates, in particular,
with respect to valuations of plantation assets and the consolidation of ATP;
o
the use of data analytics software to interrogate the journals posted in the year and to review areas where the
incentive to override controls may be greatest. We also used our data analytics tool to identify potential transactions
with related parties; and
o
review of legal expenses incurred for evidence of potential undisclosed contingent liabilities.
•
the Group operates in an agriculture industry. As such, the Senior Statutory Auditor considered the experience and
expertise of the engagement team to ensure that the team had the appropriate competence and capabilities; and
•
we communicated relevant laws and regulations and potential fraud risks to all engagement team members, including
experts and the component auditors, and remained alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit.
Other matters which we are required to address
Following the recommendation of the Audit Committee, we were initially appointed by the members of the company by ordinary
resolution at the Annual General Meeting held on 11 June 2020 and have been reappointed at subsequent Annual General
Meetings. Our total uninterrupted engagement is 5 years.
We did not provide any non-audit services which are prohibited by the FRC’s Ethical Standard to the Group or the Parent
Company, and we remain independent of the Group and the Parent Company in conducting our audit.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these
financial statements form part of the European Single Electronic Format (ESEF) prepared Annual Financial Report filed on the
National Storage Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard ((ESEF RTS). This
auditor’s report provides no assurance over whether the annual financial report has been prepared using the single electronic
format specified in the ESEF RTS.
Simon Knibbs MA FCA
(Senior Statutory Auditor)
for and on behalf of MHA, Statutory Auditor
Milton Keynes, United Kingdom
16 April 2025
MHA is the trading name of MHA Audit Services LLP, a limited liability partnership in England and Wales (registered number OC455542)
81
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
Group financial statements
Consolidated income statement
for the year ended 31 December 2024
Note
2024
$’000
2023
$’000
Revenue
4
187,943
176,722
Net gain / (loss) arising from changes in fair value of biological assets
6
9
(580)
Cost of sales
4 (136,495) (142,415)
Gross profit
51,457
33,727
Distribution costs
(1,281)
(1,511)
Administrative expenses
7
(15,208)
(17,372)
Operating profit
34,968
14,844
Interest income
9
3,369
4,091
Reversal of provision
9
6,622
–
Gains / (losses) on disposals of subsidiaries and similar charges
10
3,051
(26,051)
Other gains / (losses)
11
7,317
(4,669)
Finance costs
12
(16,430)
(17,460)
Profit / (loss) before tax
7
38,897
(29,245)
Tax
13
(8,434)
11,552
Profit / (loss) after tax
30,463
(17,693)
Attributable to:
Equity shareholders
26,447
(10,241)
Non-controlling interests
36
4,016
(7,452)
30,463
(17,693)
Profit / (loss) per 25p ordinary share (US cents)
Basic
15
41.6
(32.7)
Diluted
15
41.6
(32.7)
All operations for both years are continuing.
82
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Consolidated statement of comprehensive income
for the year ended 31 December 2024
Note
2024
$’000
2023
$’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
36
(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
40
(113)
(449)
Deferred tax on actuarial loss
30
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)
83
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
Group financial statements
Consolidated balance sheet
as at 31 December 2024
Note
2024
$’000
2023
$’000
Non-current assets
Goodwill
16
11,144
11,144
Intangible assets
17
2,684
1,593
Property, plant and equipment
18
386,997
297,255
Land
19
58,098
46,015
Financial assets
20
26,735
73,640
Deferred tax assets
30
21,278
15,012
Total non-current assets
506,936
444,659
Current assets
Inventories
22
18,393
16,709
Biological assets
23
3,338
3,087
Trade and other receivables
24
31,312
28,254
Current tax asset
228
975
Cash and cash equivalents
25
38,837
14,195
Total current assets
92,108
63,220
Assets classified as held for sale
34
–
32,516
Total assets
599,044
540,395
Current liabilities
Trade and other payables
33
(44,715)
(27,834)
Current tax liabilities
–
(1,462)
Bank loans
27
(20,012)
(17,413)
Sterling notes
28
(28,167)
–
Other loans and payables
31
(2,707)
(14,891)
Total current liabilities
(95,601)
(61,600)
Non-current liabilities
Trade and other payables
33
–
(16,841)
Bank loans
27 (114,417)
(94,361)
Sterling notes
28
–
(40,549)
Dollar notes
29
(26,746)
(26,572)
Deferred tax liabilities
30
(47,404)
(34,888)
Other loans and payables
31
(19,897)
(15,356)
Total non-current liabilities
(208,464) (228,567)
Liabilities directly associated with assets held for sale
34
–
(16,109)
Total liabilities
(304,065) (306,276)
Net assets
294,979
234,119
Equity
Share capital
35
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
36
70,521
14,304
Total equity
294,979
234,119
Authorised and approved by the board on 16 April 2025 and signed on behalf of the board.
DAVID J BLACKETT
Chairman
84
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Consolidated statement of changes in equity
for the year ended 31 December 2024
Share
capital
(note 35)
$’000
Share
premium
$’000
Translation
reserve
$’000
Retained
earnings
$’000
Subtotal
$’000
Non-
controlling
interests
(note 36)
$’000
Total
equity
$’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)
At 31 December 2024
133,590
47,374
(26,332)
69,826
224,458
70,521
294,979
85
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
Group financial statements
Consolidated cash flow statement
for the year ended 31 December 2024
Note
2024
$’000
2023
$’000
Net cash from operating activities
38
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
17,18
(34,621)
(21,756)
Expenditure on land
19
(4,530)
(5,093)
Net investment stone and coal interests
20
(3,610)
(13,314)
Net investment sand interest
20
(4,413)
(3,633)
Cash received from non-current receivables
1,258
1,574
Cash acquired with new subsidiary
37
259
–
Cash divested on disposal of group company
–
(1,340)
Cash reclassified from / (to) asset held for sale
34
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
14
(18,576)
(4,129)
Repayment of bank borrowings
26
(36,862)
(15,773)
New bank borrowings drawn
26
64,342
6,098
Sale of dollar notes held in treasury
26
–
8,142
Purchase of sterling notes for cancellation
26
(11,606)
–
Repayment of borrowings from non-controlling shareholder
26
(12,234)
(1,394)
New borrowings from non-controlling shareholder
26
–
10,000
New equity from non-controlling interest
36
53,580
150
Cost of non-controlling interest transaction
(1,078)
–
Purchase of non-controlling interest
(2,726)
(1,575)
Repayment of lease liabilities
32
(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
25
38,837
14,195
Group financial statements
Notes to the consolidated financial statements
86
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
1. General information
R.E.A. Holdings plc is a company registered in England and Wales under the CA 2006 with registration number 00671099.
The company’s registered office is at 5th Floor North, Tennyson House, 159-165 Great Portland Street, London W1W 5PA.
Details of the group’s principal activities are provided in the Strategic report.
Basis of accounting
The consolidated financial statements are prepared in accordance with UK adopted IFRS and with the requirements of the
CA 2006, as applicable to companies reporting under IFRS. The statements are prepared under the historical cost convention
except where otherwise stated in the accounting policies.
For the reasons given under Going concern in the Directors’ report, the consolidated financial statements have been prepared
on the going concern basis.
Presentational currency
The consolidated financial statements of the group are presented in dollars, which is considered to be the functional currency
of the company and the currency of the primary economic environment in which the group operates and are rounded to the
nearest thousand. References to $ or dollar in these financial statements are to the lawful currency of the United States of
America.
2. Material accounting policies
Adoption of new and revised standards
New standards and amendments to IFRSs and IASs issued by the IASB that are mandatorily effective for an accounting period
beginning on 1 January 2024 have been reviewed and have had no impact on the disclosures in, or the amounts reported, in
these consolidated financial statements.
In April 2024 the IASB published IFRS 18: Presentation and Disclosure in Financial Statements, which aims to improve how
companies communicate in their financial statements by: (i) Requiring additional defined subtotals in the statement of profit or
loss; (ii) Requiring disclosures about management-defined performance measures; and (iii) Adding new principles for grouping
of information. IFRS 18 is effective for annual reporting beginning on or after 1 January 2027 and has yet to be endorsed by
the UK. The standard is expected to result in presentational changes to the group's consolidated income statement and new
disclosures of management-defined performance measures will be required in the notes to the financial statements.
At the date of approval of these financial statements, there were no other standards and interpretations which were in issue but
not yet effective that have not been applied in these financial statements.
Basis of consolidation
The group consolidated financial statements consolidate the financial statements of the company and entities controlled by
the company (its subsidiary companies as listed in note (v) to the company’s individual financial statements) made up to 31
December of each year.
A parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the subsidiary and
has the ability to affect those returns through its power over that entity.
The acquisition method of accounting is adopted with assets and liabilities valued at fair values at the date of acquisition. The
interest of non-controlling shareholders is stated at the non-controlling shareholders’ proportion of the assets and liabilities
recognised. Appropriate proportions of total comprehensive income are attributed to the owners of the parent and to non-
controlling interests even if this results in the non-controlling interests having a deficit balance. Results of subsidiaries acquired
or disposed of are included in the consolidated income statement from the effective date of acquisition (when control is
obtained) or to the effective date of disposal (when control is lost). On the sale of a subsidiary the difference between the
subsidiary’s carrying value and the sum of the consideration received and receivable is recognised in profit or loss within Gains/
losses on disposals of subsidiaries and similar charges. Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies into line with those used by the group.
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Overview
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Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
2. Material accounting policies – continued
Goodwill
Goodwill is recognised as an asset on the basis described under Basis of consolidation above and once recognised is
not amortised although it is tested for impairment at least annually. Any impairment is debited immediately as a loss in the
consolidated income statement and is not subsequently reversed. On the disposal or reclassification of a subsidiary as an asset
held for sale, the attributable amount of any goodwill is included in the determination of the profit or loss on disposal.
For the purpose of impairment testing, goodwill is allocated to each of the group’s cash generating units expected to benefit
from the synergies of the combination. Cash generating units to which goodwill has been allocated are tested for impairment
annually, or more frequently when there is an indication that the goodwill attributable to a unit may be impaired.
Other intangible assets
Other intangible assets are stated at cost less accumulated amortisation and any recognised impairment losses.
Intangible assets acquired separately are measured at cost on initial recognition. An intangible asset with a finite life is
amortised on a straight-line basis so as to charge its cost to the income statement over its expected useful life.
Computer software that is not integral to an item of property, plant and equipment is recognised separately as an intangible
asset. Amortisation is provided on a straight-line basis so as to charge the cost of the software to the income statement over its
expected useful life, not exceeding eight years.
The expected useful life of development expenditure on computer software is four to eight years.
Assets held for sale
Assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs
to sell.
Assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction
rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or
disposal group) is available for immediate sale in its present condition. The directors must be committed to the sale which
should be expected to qualify for recognition as a completed sale within one year from the date of classification.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash generating unit) is reduced to its recoverable amount. This impairment is recognised in profit or
loss within Gains/losses on disposals of subsidiaries and similar charges.
When the group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that
subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the group will retain
a non-controlling interest in its former subsidiary after the sale.
When an asset (or disposal group) ceases to be classified as held for sale it is reconsolidated at the lower of its carrying
amount before the asset (or disposal group) was classified as held for sale adjusted for any depreciation, amortisation or
revaluations that would have been recognised had the asset (or disposal group) not been classified as held for sale and its
recoverable amount at the date of the subsequent decision not to sell. Any reversal of impairment provision is recognised in
profit or loss within Gains/losses on disposals of subsidiaries and similar charges.
Revenue recognition
Revenue is measured as the fair value of the consideration received or receivable in respect of goods and services provided in
the normal course of business, net of VAT and other sales related taxes.
Most of the group’s sales are in respect of the sale of CPO and CPKO which are made on a mix of CIF (Cost, Insurance and
Freight) and FOB (Free on Board) terms. Revenue is recognised in respect of the shipment of oil at the time of transfer to
the buyer, that is upon the completion of the discharge of the applicable oil into the buyer’s tank or vessel which is evidenced
by a surveyor’s report (CIF sales) or a bill of lading (FOB sales). Contract prices are negotiated based on prevailing market
prices. Adjustments to contract prices may be made at the point of delivery if certain quality standards fall outside contracted
parameters. The group has prepaid sales contracts whereby advance payments are received for future product deliveries.
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R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
2. Material accounting policies – continued
No revenue is recognised until product delivery. The advance payments are recognised as contract liabilities until the revenue is
recognised.
Income from services is accrued on a time basis by reference to the rate of fee agreed for the provision of services.
For sales of stone, revenue is recognised when control of the stone has transferred to the buyer, being either when the stone
has been collected by the buyer from the quarry or when delivered to the customer. A receivable is recognised by the group
when the stone is provided to the customer as this represents the point in time at which the right to consideration becomes
unconditional.
Commission income in respect of stone, sand and coal marketing services is recognised when the relative stone, sand or coal
sales are completed, being in each case the point of delivery to the buyer.
Interest income is accrued on a time basis by reference to principal outstanding and at the effective interest rate applicable
(which is the rate that exactly discounts estimated future cash receipts, through the expected life of the relative financial asset,
to that asset’s net carrying amount). Dividend income is recognised when the right to receive payment has been established.
Leases and ROU assets
The group leases barges for the transportation of CPO and CPKO and also leases office properties. Lease terms are
negotiated on an individual basis and contain a range of different terms and conditions. The lease agreements do not impose
any covenants, but leased assets may not be used as security for borrowing purposes. Land titles are not treated as leases, but
as in-substance fixed assets, with no depreciation.
The lease liability is initially measured at the present value of the lease payment obligations, which include the following:
•
fixed payments (including in-substance fixed payments), less any lease incentives receivable
•
variable lease payments that are based on an index or a rate
•
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The obligations are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the group’s
incremental borrowing rate is used, being the rate that the group would have to pay to borrow the funds necessary to acquire
an asset of a similar value in a similar economic environment, with similar terms and conditions. Generally, the group uses its
incremental borrowing rate as the discount rate.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the
effective interest method as described above) and by reducing the carrying amount to reflect the lease payments made. The
interest is charged to the consolidated income statement.
An ROU asset is measured at cost, which comprises the following:
•
the amount of the initial measurement of lease liability
•
any lease payments made at or before the commencement date less any lease incentives received (e.g. rent free period)
•
any initial direct costs, and
•
restoration costs.
An ROU asset is subsequently depreciated over the shorter of the lease term and the asset’s useful life on a straight-line basis.
Foreign currencies
Transactions in foreign currencies are recorded at the rates of exchange ruling at the dates of the transactions. At each
balance sheet date, monetary assets and liabilities denominated in foreign currencies are retranslated at the rates of exchange
prevailing at that date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Non-monetary
items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the dates that the
fair values were determined.
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Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
2. Material accounting policies – continued
Exchange differences are recognised in the consolidated income statement in the period in which they arise except for
exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither
planned nor likely to occur in the foreseeable future (therefore forming part of the net investment in the foreign operation),
which are recognised initially in other comprehensive income and reclassified from equity to profit or loss in the consolidated
income statement on disposal or partial disposal of the net investment.
For consolidation purposes, the assets and liabilities of any group entity with a functional currency other than the dollar
are translated at the exchange rate at the balance sheet date. Income and expenses are translated at the average rate for
the period unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of
transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in
translation reserve (or attributed to non-controlling interests if appropriate).
On the disposal of a foreign operation, all of the exchange differences accumulated in translation reserve in respect of that
operation and attributable to the owners of the operation are reclassified to profit or loss in the consolidated income statement,
within gain/loss on disposal of subsidiaries and similar charges.
Goodwill and fair value adjustments arising on the acquisition of an entity with a functional currency other than the dollar are
treated as assets and liabilities of that entity and are translated at the closing rate of exchange.
Borrowing costs
Borrowing costs incurred in financing construction or installation of qualifying property, plant or equipment are added to the
cost of the qualifying asset, until such time as the construction or installation is substantially complete and the asset is ready
for its intended use. Borrowing costs incurred in financing the planting of extensions to the developed agricultural area are
treated as expenditure relating to plantings until such extensions reach maturity. All other borrowing costs are recognised in the
consolidated income statement of the period in which they are incurred.
Operating profit
Operating profit is stated after any gain or loss arising from changes in the fair values of growing produce and agricultural
produce inventory but before investment income, finance costs and impairments and similar charges that do not relate to
operating activities.
Pensions and other post-employment benefits
United Kingdom
Certain existing and former UK employees of the group are members of a multi-employer contributory defined benefit scheme.
The estimated regular cost of providing for benefits under this scheme is calculated so that it represents a substantially level
percentage of current and future pensionable payroll and is charged as an expense as it is incurred.
Amounts payable to recover actuarial losses, which are assessed at each actuarial valuation, are payable over a recovery period
agreed with the scheme trustees. Provision is made for the present value of any future amounts payable by the group to cover
its share of such losses. The provision is reassessed at each balance sheet date, with the difference on reassessment being
charged or credited to the consolidated income statement in addition to the adjusted regular cost for the period.
Indonesia
In accordance with local labour law, the group’s employees in Indonesia are entitled to lump sum payments on retirement.
As required by IAS19: Employee benefits, the cost of these unfunded obligations are based on periodic assessments by
independent actuaries as this arrangement is categorised as a defined benefit plan. Actuarial gains and losses are recognised
in the statement of comprehensive income; any other increase or decrease in the provision is recognised in the consolidated
income statement.
Taxation
The tax expense represents the sum of tax currently payable and deferred tax. Tax currently payable represents amounts
expected to be paid (or recovered) based on the taxable profit (or loss) for the period using the tax rates and laws that have
been enacted or substantively enacted at the balance sheet date.
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R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
2. Material accounting policies – continued
A provision is recognised for those matters for which the tax determination is uncertain but as respects which it is considered
probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the
amount expected to become payable. The assessment is based on specialist independent tax advice supported by previous
experience in respect of such matters.
Deferred tax is calculated on the balance sheet liability method on a non-discounted basis on differences between the carrying
amounts of assets and liabilities in the financial statements and the corresponding fiscal balances used in the computation of
taxable profits (temporary differences). Deferred tax liabilities are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible
temporary differences can be utilised. A deferred tax asset or liability is not recognised in respect of a temporary difference that
arises from goodwill or from the initial recognition of other assets or liabilities in a transaction which affects neither the profit for
tax purposes nor the accounting profit.
Deferred tax is calculated using the tax rates and laws that are expected to apply in the periods when deferred tax liabilities are
settled or deferred tax assets are realised. Deferred tax is charged or credited in the consolidated income statement, except
when it relates to items charged or credited to other comprehensive income or equity, in which case the deferred tax is also
dealt with in, respectively, other comprehensive income or equity.
PPE – plantings
On application of the amendments to IAS41: Agriculture and IAS 16: Property, plant and equipment, the directors elected to
state the group’s plantings at deemed cost, being the fair value recognised as at 1 January 2015 less the fair value at that date
of the growing produce which is disclosed in current assets under Biological assets. Additions after that date (which include
interest incurred during the period of immaturity) are recognised at historical cost.
All expenditure on plantings up to maturity, including interest, is treated as addition to plantings. Expenditure to maturity
includes an allocation of overheads to the point that oil palms are brought into productive cropping. Such overheads include
general charges and the costs of the Indonesian head office (including in both cases personnel costs and local fees) together
with costs (including depreciation) arising from the use of agricultural buildings, plantation infrastructure and vehicles.
Depreciation is not provided on immature plantings. Once plantings reach maturity, depreciation is provided on a straight-line
basis at a rate that will write off the costs of the plantings by the date on which they are scheduled to be replanted, with a
maximum of 25 years.
PPE – other
All PPE other than plantings is carried at original cost less any accumulated depreciation and any accumulated impairment
losses. Depreciation is computed using the straight line method so as to write off the cost of assets, other than property and
plant under construction, over the estimated useful lives of the assets as follows:
•
Buildings and structures
20 to 67 years
•
Plant, equipment and vehicles
4 to16 years
•
Construction in progress
not depreciated
The gain or loss on the disposal or retirement of an asset is determined as the difference between the sales proceeds, less
costs of disposal, and the carrying amount of the asset and is recognised in the consolidated income statement.
Mining assets
Development expenditure on mining assets incurred by or on behalf of the group is capitalised. Such expenditure comprises
costs directly attributable to the establishment of the mine and the related infrastructure but excludes separately identifiable
physical assets and land rights which are recorded as fixed assets.
Mining assets are amortised using the units of production method from the date of commencement of commercial operations.
The amortisation is based on estimated reserves. Changes in estimated reserves are accounted for on a prospective basis from
the beginning of the period in which the change occurs.
Mining assets acquired in a business combination are initially recognised as assets at their fair value.
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Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
2. Material accounting policies – continued
Land
Land comprises payments to acquire Indonesian licences over land for plantation purposes, together with related costs
including permits, surveys and villager compensation. In view of the indefinite economic life associated with such licences, land
is not depreciated.
Impairment of PPE and intangible assets excluding goodwill
At each balance sheet date, the group reviews the carrying amounts of its PPE and intangible assets to determine whether
there is any indication that any asset has suffered an impairment loss. If any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash
flows that are independent from other assets, the group estimates the recoverable amount of the cash generating unit to which
the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an
indication that the asset may be impaired.
The recoverable amount of an asset (or cash generating unit) is the higher of fair value less costs to sell and value in use. In
assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and those risks specific to the asset (or cash generating unit)
for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash generating
unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash generating unit) is reduced to
its recoverable amount.
Where, with respect to assets other than goodwill, an impairment loss subsequently reverses, the carrying amount of the asset
(or cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for
the asset (or cash generating unit) in prior years.
Inventories
Inventories of agricultural produce are stated at the lower of cost and net realisable value but the cost of the FFB input into
such inventories is taken, where such FFB is harvested from the group’s estates, to be the fair value of that FFB at point of
harvest. Inventories of engineering and other items are valued at the lower of cost, on the weighted average method, or net
realisable value.
For these purposes, net realisable value represents the estimated selling price (having regard to any outstanding contracts for
forward sales of produce) less all estimated costs of processing and costs incurred in marketing, selling and distribution.
Biological assets
Biological assets comprise the growing produce (FFB) on oil palm trees and are carried at fair value using a formulaic
methodology to determine the value of the oil content of such produce at the balance sheet date.
Periodic movements in the fair value of growing produce are reflected in the consolidated income statement.
Recognition and derecognition of financial instruments
Financial assets and liabilities are recognised in the group’s financial statements when the group becomes a party to the
contractual provisions of the relative constituent instruments. Financial assets are derecognised only when the contractual
rights to the cash flows from the assets expire or if the group transfers substantially all the risks and rewards of ownership to
another party. Financial liabilities are derecognised when the group’s obligations are discharged, cancelled or expire.
Financial assets
The group’s financial assets comprise trade receivables, loans and cash and cash equivalents. The group’s receivables and
loans are initially recognised at fair value plus transaction costs and subsequently at amortised cost under the effective interest
method.
At each reporting date the company reviews the carrying amount of each financial asset initially carried at amortised cost. The
company accounts for expected credit losses and changes in those expected credit losses to reflect changes in credit risk
since initial recognition of the financial asset.
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R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
2. Material accounting policies – continued
The group has applied the simplified approach under IFRS 9: Financial Instruments, and records lifetime expected losses on all
trade receivables.
For loans, the group measures expected credit losses by applying the general expected credit loss model under IFRS 9 (three
stages of expected credit loss assessment).
When interest past due is added to a loan and a provision made against this interest element of the loan, the interest receivable
and provision are recognised within Interest income in profit and loss. When the provision is subsequently reversed the reversal
is through Reversal of provision in profit and loss.
Cash and cash equivalents comprise cash in hand, demand deposits and other short term highly liquid investments that have a
maturity of not more than three months from the date of acquisition and are readily convertible to a known amount of cash and,
being subject to an insignificant risk of changes in value, are stated at their nominal amounts.
Financial liabilities
The group’s financial liabilities comprise redeemable instruments, bank borrowings, loans from non-controlling shareholder,
trade payables and contract liabilities.
Redeemable instruments and bank borrowings
Redeemable instruments, being dollar and sterling note issues, and bank borrowings are classified in accordance with
the substance of the relative contractual arrangements. Finance costs are charged to income on an accruals basis, using
the effective interest method, and comprise, with respect to redeemable instruments, the coupon payable together with
the amortisation of issuance costs (and any premia payable or expected by the directors to be payable on settlement or
redemption) and, with respect to bank borrowings, the contractual rate of interest together with the amortisation of costs
associated with the negotiation of, and compliance with, the contractual terms and conditions. Redeemable instruments are
recorded in the accounts at their expected redemption value net of the relative unamortised balances of issuance costs and
premia. Notes purchased by the group and held for resale are also deducted. Bank borrowings are recorded at the amounts
of the proceeds received less subsequent repayments with the unamortised balance of issuance costs netted off the gross
borrowing.
Derecognition of financial liabilities
The group derecognises financial liabilities when, and only when, the group’s obligations are discharged, cancelled or have
expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and
payable is recognised in profit or loss. When the group exchanges with the existing lender one debt instrument for another
one with the substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability
and the recognition of a new financial liability. Similarly, the group accounts for substantial modification of terms of an existing
liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that
the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees
paid net of any fees received and discounted using the original effective interest rate differs by at least 10 per cent from the
discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial, the
difference between the carrying amount of the liability before the modification and the present value of the cash flows after
modification is recognised in profit or loss as a modification gain or loss within other gains and losses.
Trade payables
All trade payables owed by the group are non-interest bearing and are stated at amortised cost.
Equity instruments
Instruments are classified as equity instruments if the substance of the relative contractual arrangements evidences a residual
interest in the assets of the group after deducting all of its liabilities. Equity instruments issued by the company are recorded at
the proceeds received, net of direct issue costs not charged to income.
The preference shares of the company are regarded as equity instruments because the terms of the preference shares contain
no provisions for their redemption and provide that the semi-annual dividend on the preference shares becomes payable only if
it is resolved to make a distribution in respect of the preference shares.
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R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
3. Critical accounting judgements and key sources of estimation uncertainty
In the application of the group’s accounting policies (see note 2) the directors are required to make judgements, estimates
and assumptions. Such judgements, estimates and assumptions are based upon historical experience and other factors that
are considered to be relevant. Actual values of assets and amounts of liabilities may differ from estimates. The judgements,
estimates and assumptions are reviewed on a regular basis. Revisions to estimates are recognised in the period in which the
estimates are revised.
Critical judgements in applying the group’s accounting policies
The following are critical judgements not being judgements involving estimations (which are dealt with below) that the directors
have made in the process of applying the group’s accounting policies.
Land rights
The Indonesian system of land tenure for agricultural purposes (HGU) gives the licensee rights to cultivate agricultural land
for periods of up to 35 years, followed by an extension and then further renewals of between 25 and 35 years. The directors
have concluded that acquiring an HGU represents the in-substance purchase of an item of PPE. To reach this conclusion the
directors have made the judgements that the initial payment to acquire an HGU is consistent with a payment to purchase the
land and valid renewal requests will always be granted by the Indonesian administration (at least until a significant change in
law or government policy occurs). The alternative would be to treat an HGU as the lease of land rights and so depreciate the
cost over the period of the HGU.
Control of stone operations
Interest bearing loans have been made to Indonesian companies which own the rights to stone and coal concessions in East
Kalimantan, Indonesia. In 2008, the company’s subsidiary, KCC, entered into an option to acquire the shares of the concession
holding companies at original cost but subsequent regulations, which limited foreign ownership of stone and coal concessions,
meant that the option could not be exercised. Following further changes in the applicable regulations, which have to an extent
relaxed the previous restrictions on foreign ownership of the concession holding companies, the group has implemented
the original agreement under which it has the right to acquire majority ownership of the stone concession holding company.
Although the formal registration of ownership is still pending due to Indonesian regulatory requirements, this does not prevent
the Group from exercising its power over the investee. The stone concession holding company has therefore been consolidated
from 1 July 2024. This has resulted in the elimination of the group loans to the stone concession holding company, which were
$65.3 million as at 30 June 2024, and the consolidation of the assets and liabilities of that company in the group balance
sheet as at 31 December 2024 and the inclusion of its results in the consolidated income statement for the year ended 31
December 2024.
Key sources of estimation uncertainty
The key sources of estimation uncertainty at the balance sheet date, which have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.
Mining assets
The stone concession holding company has been consolidated from 1 July 2024, and in line with the requirements of IFRS 3
the directors have performed a fair value analysis of the assets and liabilities acquired. The aggregate fair value of the assets
was derived by applying a project-specific pre-tax discount rate of 19.5 per cent to the projected future cash flows of the
company over the lifetime of the mining asset, which is essentially indefinite as the proven stone deposits would take at least
90 years to quarry. The discount rate was calculated by taking the group’s pre-tax discount rate of 11.6 per cent and applying a
premium to reflect additional risks associated with the stone operation including the size of the current operation, the possibility
of delays in production and other operational risks associated with running a mining operation. The fair value of liabilities was
assessed to be the face value of the liabilities.
The calculation of the fair value of the assets acquired is sensitive to the price at which the stone will be sold and the discount
rate. The valuation model applied uses an average stone price of $18.4 per tonne and monthly production of 94,000 tonnes.
The stone price would have to fall to $17.9 per tonne or the monthly production fall to 89,500 tonnes before there would be
any material reduction to the valuation. As discussed above, a discount rate of 19.5 per cent has been used, and an increase in
rate of 1 per cent would result in a $2.6 million change in the valuation of the assets being valued.
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R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
3. Critical accounting judgements and key sources of estimation uncertainty – continued
Plantation assets
Plantation assets (including PPE, land, intangible assets and goodwill) are carried at $404.3 million (2023: $355.6 million) in
the consolidated balance sheet. At 31 December 2024, each group plantation company has been identified as a CGU and
tested for impairment by calculating the value in use over 25 years. The 25 year forecast period reflects the nature and growth
profile of the assets and their long term resilience to variations in climate and weather patterns and this is used to derive a net
present value. The key assumptions in the model used are the CPO selling prices assumed and the discount rate applied. The
CPO prices base case has been derived by calculating a ten year average of inflation adjusted CPO prices FOB Samarinda and
then assuming that this price ($733) is maintained throughout the 25 year period of the projections (2023: $719). Viewing
the group’s plantation assets as a whole if there was an expectation that the price would be at $684 per tonne (2023: $600
per tonne) over the next 25 years (a possibility that is considered remote) then an impairment of $14.1 million (2023: $10.0
million) would be required being the difference between the carrying value of the assets and their value in use. The average
price in 2024 was $814 per tonne (2023: $718 per tonne). The average price from 1 January 2025 to 31 March 2025 was
$877 per tonne (2024: $744 per tonne). The discount rate applied was 11.6 per cent (2023: 8.3 per cent) on a pre-tax basis.
If the discount rate was increased by 2.0 per cent to 13.6 per cent then no impairment would be required.
Deferred tax assets
A deferred tax asset of $6.3 million (2023: nil) is recognised in the consolidated financial statements as a result of carried
forward income tax losses in Indonesia. The carrying value assumes that sufficient profits are generated within the relevant
subsidiaries in the five year statutory expiry limit imposed in Indonesia to utilise fully the tax losses. The group seeks to limit
uncertainty in respect of utilisation of tax losses by preparing detailed forecasts of future taxable profits by company which are
flexed for a range of outcomes, for example, ten per cent decreases in price and production. Provisions are made to the extent
that losses may not be utilised.
Retirement benefit obligations
The costs recorded in the financial statements are assessed in accordance with the advice of independent qualified actuaries
but require the exercise of significant judgement in relation to assumptions for long-term inflation, mortality and future
salary and pension increases, and in the selection of appropriate rates at which to discount future liabilities (see note 40 for
sensitivities to variations in the underlying assumptions).
4. Revenue and cost of sales
2024
$’000
2023
$’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)
In 2024, three customers accounted for respectively 49 per cent, 20 per cent and 16 per cent of the group’s sales of
agricultural goods (2023: three customers, 47 per cent, 19 per cent and 18 per cent). As stated under Credit risk in note 26,
substantially all sales revenue is receivable in advance of product delivery and accordingly the directors do not consider that
these sales result in a concentration of credit risk to the group.
The crop of oil palm FFB for 2024 amounted to 682,522 tonnes (2023: 762,260 tonnes). The fair value of the crop of
FFB was $117.4 million (2023: $113.2 million), based on the price formulae determined by the Indonesian government for
purchases of FFB from smallholders.
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R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
5. 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
$’m
2023
$’m
2024
$’m
2023
$’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)
Segment assets
Segment liabilities
2024
$’m
2023
$’m
2024
$’m
2023
$’m
Plantations
484.5
479.3
(242.4)
(270.3)
Stone operation and sand interest (2023: stone, sand and coal interests)
92.7
58.6
(14.3)
–
Total segment
577.2
537.9
(256.7)
(270.3)
Unallocated
21.8
2.5
(47.4)
(36.0)
Total group
599.0
540.4
(304.1)
(306.3)
The group’s sales of goods and carrying amount of net assets analysed by geographical area of asset location are as follows:
2024
$’m
2023
$’m
Sales by geographical destination:
Indonesia
187.9
176.7
187.9
176.7
2024
Europe
$’m
2024
Indonesia
$’m
2024
Total
$’m
2023
Europe
$’m
2023
Indonesia
$’m
2023
Total
$’m
Consolidated non-current assets
68.8
438.1
506.9
57.3
415.3
472.6
Consolidated current assets
9.3
82.8
92.1
4.3
63.5
67.8
Consolidated liabilities
(56.4)
(247.6)
(304.0)
(68.5)
(237.8)
(306.3)
Net assets / (liabilities)
21.7
273.3
295.0
(6.9)
241.0
234.1
Note: 2023 figures have been updated to include assets held for sale which were all in Indonesia.
96
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
6. Net gain / (loss) arising from changes in fair value of biological assets
Net gain / (loss) arising from changes in fair value of biological assets represents the movement in the fair value of growing
produce (FFB) on oil palms arising on the revaluation of the estimated oil content of such produce at the balance sheet date and
determined using a formulaic methodology (see note 23).
7. Profit / (loss) before tax
2024
$’000
2023
$’000
Salient items charged in arriving at profit / (loss) before tax
Administrative expenses (see below)
15,208
17,372
Movement in agricultural produce inventory
310
1,973
Movement in fair value of biological assets (see note 23)
(9)
580
Amortisation of intangible assets
386
374
Depreciation of PPE*
26,226
28,376
* Of which $2.0 million (2023: $2.1 million) is depreciation of ROU assets (see note 32)
Administrative expenses
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
Amounts payable to the company’s auditor and its affiliates
The amount payable to MHA for the audit of the financial statements of the company and its subsidiaries was $264,250
(2023: $235,000).
The amount payable to MHA for other services in 2024 was $6,000 in respect of the report to the trustee regarding group
compliance with covenants pursuant to the terms of the trust deed in respect of the dollar notes (2023: $6,000 regarding
covenant compliance and $115,000 in relation to the shareholder circular dated 25 January 2024 in respect of the proposals
for the further investment by DSN in REA Kaltim, the potential sale of CDM and the intra-group sale and purchase of PU).
Amounts payable to affiliates of MHA for the audit of subsidiaries’ financial statements was $136,000 (2023: $126,000) and
for agreed upon procedures in respect of financial statements prepared in local currency was $59,000 (2023: $65,000).
2024
$’000
2023
$’000
Earnings before interest, tax, depreciation and amortisation
Operating profit
34,968
14,844
Depreciation and amortisation
26,612
28,750
61,580
43,594
97
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
8. Staff costs, including directors
2024
Number
2023
Number
Average number of employees (including executive directors):
Agricultural – permanent
8,794
9,085
Stone – permanent
18
–
Head office
6
6
8,818
9,091
$’000
$’000
The aggregate payroll costs comprised:
Wages and salaries
44,187
45,406
Social security costs
2,385
2,514
Pension costs
1,245
1,618
47,817
49,538
2024 pension costs included a $0.5 million provision release arising on an actuarial revaluation.
Details of the remuneration of directors are shown in the Directors’ remuneration report.
9. Interest income and reversal of provision
2024
$’000
2023
$’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 $2.3 million interest receivable in respect of stone, sand and coal loans (2023: interest
receivable of $3.9 million net of a provision of $0.7 million). In 2024, interest from stone represents interest receivable in the
period prior to the borrowing company becoming a subsidiary (see note 37).
The provision of $6.6 million reversed in 2024 was in respect of past interest due from the stone concession holding company
which has commenced commercial production and sales.
98
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
10. Gains / (losses) on disposals of subsidiaries and similar charges
2024
$’000
2023
$’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)
In 2023 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 (see note 34).
The $3.1 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 $2.4 million cost in 2023 comprises the $0.6 million write down of a loan to a third party interest, a $0.7 million
reclassification of foreign exchange differences on the divestment of KKP, a loss on the sale of KKS and PBJ2 of $0.1 million
and $1.0 million provision in respect of indemnities given in connection with that sale.
11. Other gains / (losses)
2024
$’000
2023
$’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)
12. Finance costs
2024
$’000
2023
$’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.
99
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
13. Tax
2024
$’000
2023
$’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).
The tax charge for the year can be reconciled to the profit per the consolidated income statement as follows:
2024
$’000
2023
$’000
Profit / (loss) before tax
38,897
(29,245)
Notional tax at the Indonesian standard rate of 22 per cent (2023: 22 per cent)
8,557
(6,434)
Tax effect of the following items:
Interest expense not deductible
911
1,387
Other expenses not deductible
384
595
Exchange difference on deferred tax
2,369
(4,571)
Prior year adjustments
(2,224)
1,673
Non-taxable income
(1,694)
(71)
UK tax rates above Indonesian standard rate
228
24
Overseas withholding taxes, net of relief
–
418
Impairment
18
(5,034)
Tax losses not recognised for deferred tax purposes
–
303
Other movements
(115)
158
Tax charge / (credit) at effective tax rate for the year
8,434
(11,552)
The deferred tax current year charge of $3.1 million mainly comprises the following: a $2.4 million charge being exchange
differences on deferred tax in the year (2023: credit of $4.6 million), a $1.8 million charge on the release of impairment
provision as a result of the sale of non-current assets by CDM (2023: $10.6 million credit arising on the impairment of CDM
in the local accounts of REA Kaltim) and a $1.3 million credit in respect of tax losses created in the year (2023: $1.6 million).
The prior year credit of $1.7 million (2023: charge of $1.4 million) was the effect of the change in the rupiah exchange rate on
opening balances.
100
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
14. Dividends
2024
$’000
2023
$’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.
15. Profit / (loss) per ordinary share
2024
$’000
2023
$’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 ordinary share
43,964
43,964
Diluted profit / (loss) per ordinary share
43,964
43,964
The warrants (see note 35) are non-dilutive in 2024 as the average share price was below the exercise price.
16. Goodwill
2024
$’000
2023
$’000
Beginning of year
11,144
12,578
Transferred to assets held for sale
–
(1,434)
End of year
11,144
11,144
Goodwill of $12.6 million arose from the acquisition by the company in 2006 of a non-controlling interest in the issued ordinary
share capital of Makassar Investments Limited, the parent company of REA Kaltim, for a consideration of $19.0 million and
has an indefinite life. Due to the potential sale of CDM in 2023 a portion of the goodwill was deemed attributable to CDM and
reclassified as part of the asset held for sale and was subsequently impaired to a nil value. The amount of goodwill transferred
was based on the proportion of net assets of CDM compared to total plantation assets.
The goodwill is reviewed annually for impairment. The group’s testing for impairment of goodwill includes the comparison of the
recoverable amount of each CGU to which goodwill has been allocated (the remaining plantation companies, excluding PU,
which are treated for this purpose as a single CGU) with their carrying value and this is updated at each reporting date and
whenever there are indications of impairment. The recoverable amounts of all plantations are based on their value in use. Value
in use is the present value of expected future cash flows from the plantations over a 25 year plantation cycle (25 years being
the normal cycle of an oil palm planting). The key assumptions and sensitivities are set out in note 3.
Based upon their review, the directors have concluded that no impairment of goodwill is required as at 31 December 2024 (31
December 2023: nil).
101
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
17. Intangible assets
2024
$’000
2023
$’000
Beginning of year
7,124
6,993
Additions
1,477
131
End of year
8,601
7,124
Amortisation:
Beginning of year
5,531
5,157
Charge for year
386
374
End of year
5,917
5,531
Carrying amount:
End of year
2,684
1,593
Beginning of year
1,593
1,836
Included within Intangible assets is development expenditure on computer software that is not integral to an item of PPE and is
therefore recognised separately as an intangible asset and costs of easements.
102
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
18. Property, plant and equipment
Plantings
$’000
Mining
assets
$’000
Buildings
and
structures
$’000
Plant,
equipment
and vehicles
$’000
Construction
in progress
$’000
Total
$’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 (see note 38)
–
66,841
–
1,602
153
68,596
Transferred from assets held for sale (see note 34)
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 (see note 38)
–
–
–
164
–
164
Transferred from assets held for sale (see note 34)
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 $376,000 (2023: $144,000) which has been capitalised as part of additions to
plantings and buildings and structures.
At the balance sheet date, the group had entered into $3.7 million contractual commitments for the acquisition of PPE (2023:
nil).
At the balance sheet date, PPE of $131.8 million (2023: $118.1 million) had been charged as security for bank loans (see
note 27).
Additions to PPE include $187,000 of ROU assets which are not included in purchases of PPE within the consolidated cash
flow statement.
103
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
19. Land
2024
$’000
2023
$’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 (see note 34)
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 classified 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, certificates of HGU had been obtained in respect of areas covering 63,617 hectares (2023: 63,617
hectares). An HGU is effectively a government certification 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 $36.9 million (2023: $30.9 million) had been charged as security for bank loans (see
note 27).
104
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
20. Financial assets
2024
$’000
2023
$’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 (see note 24)
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 $65.3 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).
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 $11.8 million net of a provision of $9.7
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 $6.6 million provision
relating to the stone concession holding company has now been reversed as that company has commenced commercial
production and sales (see note 9).
Plasma advances are discussed under Credit risk in note 26.
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. $1.2 million was repaid during the year on the purchase of the non-controlling interest in the applicable
subsidiary.
105
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
21. Subsidiaries
A list of the subsidiaries, including the name, country of incorporation, activity, registered office address and proportion of
ownership is given in note (v) to the company’s individual financial statements.
22. Inventories
2024
$’000
2023
$’000
Agricultural produce
6,273
6,092
Engineering and other operating inventory
12,120
10,617
18,393
16,709
Agricultural produce is carried at the lower of cost and net realisable value but for this purpose the cost of FFB (which forms
part of the input to the cost of agricultural produce) has been measured at fair value at point of harvest.
The cost of agricultural produce inventory recognised as an expense in the year is disclosed in note 7.
23. Biological assets
Biological assets comprise the growing produce (FFB) on oil palm trees and are carried at fair value using a formulaic
methodology to determine the value of the oil content of such produce at the balance sheet date. This determination is made
by attributing oil content as of the balance sheet date to the FFB harvested in the weeks immediately following the balance
sheet date and valuing that oil content by reference to the value of oil at the point of harvest on the balance sheet date. All the
relevant inputs to this valuation methodology are observable:
•
the quantity of oil attributed (the rate of oil formation is drawn from academic studies)
•
the amount of FFB harvested during the applicable period
•
the sales price of CPO and CPKO at the balance sheet date (from published market prices)
•
the costs to harvest and process FFB
•
the sales charges (transport, export tax, etc.).
Biological assets are classified as level 2 in the fair value hierarchy prescribed by IFRS 13: Fair value measurement as there
are observable data inputs to enable the valuation of growing produce prior to harvest.
The reconciliation below does not show decreases due to harvest as required by IAS 41 as all growing produce having a value
at the end of each accounting period will have been harvested by the end of the immediately succeeding accounting period.
2024
$’000
2023
$’000
Beginning of year
3,087
3,909
Fair value gain / (loss) taken to income (see note 7)
9
(580)
Movement in CDM whilst held for sale
150
–
Transferred from assets held for sale (see note 34)
92
–
Transferred to assets held for sale
–
(242)
End of year
3,338
3,087
At the balance sheet date, biological assets of $3.3 million (2023: $3.1 million) had been charged as security for bank loans
(see note 27).
106
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
24. Trade and other receivables
2024
$’000
2023
$’000
Financial assets
Due from sale of goods
1,742
3,731
Plasma advances
18,003
15,824
Advances to third parties
10,326
9,171
Other receivables
5,000
4,302
35,071
33,028
Non-financial assets
Prepayments
4,211
2,562
Other tax and social security
7,436
5,452
11,647
8,014
Total trade and other receivables
46,718
41,042
Receivable as follows:
Within one year (shown under current assets)
31,312
28,254
After one year (see note 20)
15,406
12,788
46,718
41,042
In respect of CPO and CPKO which represent 95 per cent of the group's revenue from sales of goods, payment of 90 per
cent of the cargo is received in advance of loading to the buyers vessel (FOB) or discharge to the buyer (CIF). Due from sale
of goods represents amounts in respect of the balance due on sales of CPO and CPKO plus receivables in respect of other
products.
Amounts due from sale of goods had an average credit period of 7 days (2023: 6 days). The directors consider that the
carrying amount of trade and other receivables approximates their fair value.
Plasma advances are discussed under Credit risk in note 26. Receivables after one year represent the portion of plasma
advances that are due after one year in Financial assets in non-current assets (see note 20).
25. Cash and cash equivalents
Cash and cash equivalents comprise cash held by the group and short-term bank deposits. The Moody’s prime rating of short
term bank deposits amounting to $38.8 million (2023: $14.1 million) is set out in note 26 under the heading Credit risk.
At 31 December 2024 $13.5 million (2023: $6.1 million) of total bank deposits were subject to charges. $8.0 million of this
total (2023: nil) represents security in respect of the sterling notes. The remaining $5.5 million (2023: $6.1 million) are Mandiri
deposits. Under the Mandiri facilities, the group is required to leave agreed amounts of cash on deposit but is allowed additional
borrowings equal to the amount of the blocked cash (see note 27).
107
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
26. Financial instruments
Capital risk management
The group manages as capital its debt, which includes the borrowings disclosed in notes 27 to 29 and note 31, cash and cash
equivalents and equity attributable to shareholders of the company, comprising issued ordinary and preference share capital,
reserves and retained earnings as disclosed in note 35 and the consolidated statement of changes in equity. The group is not
subject to externally imposed capital requirements.
The directors’ policy in regard to the capital structure of the group is to seek to enhance returns to holders of the company's
ordinary shares by meeting a proportion of the group's funding needs with prior ranking capital and to constitute that capital
as a mix of preference share capital and borrowings from financial institutions and the public debt market, in proportions which
suit, and as respects borrowings that have a maturity profile which suits, the assets that such capital is financing. In so doing,
the directors regard the company’s preference share capital as permanent capital and then seek to structure the group's
borrowings so that shorter term bank debt is used only to finance working capital requirements while debt funding for the
group's development programme is sourced from issues of listed debt securities and medium term borrowings from financial
institutions.
Whilst the group retains this policy, the directors recognise that the group’s borrowings were not compliant with the policy at 31
December 2024.
Net debt to equity ratio
Net debt, equity and the net debt to equity ratio at the balance sheet date were as follows:
2024
$’000
2023
$’000
Debt*
198,092
192,379
Cash and cash equivalents
(38,837)
(14,195)
Net debt
159,255
178,184
* Being the book value of long and short term borrowings as detailed in the table below under Fair value of financial instruments
Equity (including non-controlling interests)
294,979
234,119
Net debt to equity ratio
54.0%
76.1%
Material accounting policies
Details of the material accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial instrument are
disclosed in note 2 of this annual report.
108
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
26. Financial instruments – continued
Categories of financial instruments
Financial assets as at 31 December 2024 comprised trade receivables and loans held at amortised cost and cash and cash
equivalents.
2024
$’000
2023
$’000
Non-current (see note 20)
Sand and coal interests (2023: stone, sand and coal interests)
9,333
57,599
Plasma advances
15,406
12,788
Other non-current receivables
1,996
3,253
26,735
73,640
Current (see note 24)
Due from sale of goods
1,742
3,731
Advances to third parties
10,326
9,171
Plasma advances
2,597
3,036
Other receivables
5,000
4,302
19,665
20,240
Cash and cash equivalents
38,837
14,195
85,237
108,075
Financial liabilities as at 31 December 2024 comprised liabilities at amortised cost amounting to $215.4 million (2023: $222.9
million).
As explained in note 20, conditional arrangements exist for the group to acquire at historic cost the shares in the Indonesian
companies owning rights over certain stone and coal concessions. The directors have attributed a fair value of nil to these
interests in view of the prior claims of loans to the concession holding companies and the fact that until recently local regulatory
requirements precluded the exercise of such rights.
Financial risk management objectives
The group manages the financial risks relating to its operations through internal reports which permit the degree and
magnitude of such risks to be assessed. These risks include market risk, credit risk and liquidity risk.
The board sets policies on foreign exchange risk, interest rate risk, credit risk, the use of financial instruments and the
investment of excess liquidity. Compliance with policies and exposure limits is reviewed on a continuous basis. The group does
not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
Market risk
The financial market risks to which the group is primarily exposed are those arising from changes in interest rates and foreign
currency exchange rates.
The group’s policy as regards interest rates is to borrow whenever economically practicable at fixed interest rates, but where
borrowings are raised at floating or variable rates the directors would not normally seek to hedge such exposure. The sterling
notes and the dollar notes carry interest at fixed rates of, respectively, 8.75 and 7.5 per cent per annum. In addition, the
company’s preference shares carry a cumulative entitlement to an annual dividend of 9 pence per share subject to the same
being declared by the directors.
At 31 December 2024 interest was payable on drawings under Indonesian rupiah term loan facilities at 8.25 per cent or 8.5
per cent (2023: 8.00 per cent) and under short term working capital facilities at 8.25 per cent (2023: 8.0 per cent).
109
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
26. Financial instruments – continued
A 1 per cent increase in interest applied to those financial instruments shown in the table below entitled Fair value of financial
instruments as held at 31 December 2024 which carry interest at floating or variable rates would have resulted over a period of
one year in a loss in the consolidated income statement and other equity of $1.0 million (2023: loss of $1.1 million).
The group regards the dollar as the functional currency of most of its operations. The directors believe that the group will be
best served going forward by simply maintaining a balance between its borrowings in different currencies and avoiding currency
hedging transactions. Accordingly, the group regards some exposure to currency risk on its non-dollar borrowing as an inherent
and unavoidable risk of its business. The group has never covered, and does not intend in future to cover, the currency exposure
in respect of the component of the investment in its operations that is financed with sterling denominated shareholder capital.
The group’s policy is to maintain a cash balance in sterling sufficient to meet its projected sterling expenditure for a period of
between six and twelve months and a limited cash balance in Indonesian rupiah.
At the balance sheet date, the group had non-dollar monetary items denominated in sterling and rupiah. A 5 per cent
strengthening of sterling against the dollar would have resulted in a loss in the consolidated income statement and other equity
of $1.4 million on the net sterling denominated monetary items (2023: loss $2.0 million). A 5 per cent strengthening of the
rupiah against the dollar would have resulted in a loss in the consolidated income statement and other equity of $3.9 million on
the net Indonesian rupiah denominated monetary items (2023: loss of $4.0 million).
Credit risk
Credit risk is the risk that one party will fail to discharge an obligation and cause the other party to incur a loss. Management
has established a credit policy and the exposure to credit risk is monitored on a continuous basis.
The group has credit risk in respect of the loans to sand and coal interests, advances to plasma cooperatives (Plasma
advances), other non-current receivables and other advances to third parties.
The group's maximum exposure to credit risk is $39.7 million (2023: $85.8 million)
The credit risk in relation to the sand and coal interests, other non-current receivables and other advances to third parties is
addressed by applying the lifetime expected credit loss model as set out in note 2.
The credit risk in relation to customers is limited as sales are either prepaid, paid against presentation of documents or paid by
letters of credit. There are three types of sales of CPO and CPKO: Indonesian FOB sales (prepaid in advance of loading to the
buyer's vessel) representing 35 percent of sales in 2024 (2023: 31 per cent); Indonesian CIF sales (paid against presentation
of documents demonstrating discharge to the buyer) representing 65 per cent of sales in 2024 (2023: 69 per cent); and
export CIF sales (paid by letters of credit) of which there were none in 2024 (2023: none).
Plasma advances comprise the cost of developing plasma plantations less recoveries (loan repayments) arising from surplus
cashflows generated by the plasma plantations. These plasma plantations are managed by the company thereby ensuring that
high agronomy standards are maintained and yields and profitability maximised. With CPO and CPKO prices now forecast to
remain at remunerative levels for the foreseeable future, all plasma plantations are expected to be profitable and generate
sufficient cashflows to repay fully the advances made.
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international
credit agencies. At 31 December 2024, 23 per cent of bank deposits were held with banks with a Moody’s prime rating of P1
(2023: 29 per cent) and 77 per cent with a bank with a Moody’s prime rating of P2 (2023: 71 per cent).
The group reviews the recoverable amount of each debt on an individual basis at the end of the reporting period to ensure that
adequate loss allowance is made for irrecoverable amounts. During 2024 a loss allowance of $0.5 million was made in respect
of non-current receivables (2023: nil).
110
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
26. Financial instruments – continued
Liquidity risk
Ultimate responsibility for liquidity risk management rests with the board of directors of the company, which has established an
appropriate framework for the management of the group’s short, medium and long term funding and liquidity requirements.
Within this framework, the board continuously monitors forecast and actual cash flows and endeavours to maintain adequate
liquidity in the form of cash reserves and borrowing facilities to meet the projected obligations of the group. As disclosed in
note 27 there were undrawn facilities of $5.8 million (2023: nil) available to the group at the balance sheet date.
The board maintains and regularly reviews cash forecasting models for the group's operations and compares projected cash
inflows with the forecast outflows for debt obligations and projected capital expenditure programmes, applying sensitivities to
take into account perceived major uncertainties. In their review, the directors place the greatest emphasis on the cash flow of
the first two years.
Financial instruments
The following tables detail the contractual maturity of the group’s financial liabilities at 31 December 2024. The tables have
been drawn up based on the undiscounted amounts of the group’s financial liabilities based on the earliest dates on which the
group can be required to discharge those liabilities. The table includes liabilities for both principal and interest.
2024
Weighted
average
interest rate
%
Under
1 year
$’000
Between
1 and 2
years
$’000
Between
2 and 5
years
$’000
Over
5 years
$’000
Total
$’000
Bank loans
8.3
30,076
28,298
70,646
46,795
175,815
Dollar notes – repayable 2026
7.5
2,028
28,049
–
–
30,077
Sterling notes – repayable 2025
8.8
29,617
–
–
–
29,617
Non-controlling shareholder loan
5.8
503
503
8,219
1,286
10,511
Trade and other payables, and contract liabilities
–
24,666
–
–
–
24,666
86,890
56,850
78,865
48,081
270,686
2023
Weighted
average
interest rate
%
Under
1 year
$’000
Between
1 and 2
years
$’000
Between
2 and 5
years
$’000
Over
5 years
$’000
Total
$’000
Bank loans
7.7
30,718
23,054
67,389
12,829
133,990
Dollar notes – repayable 2026
7.5
2,028
2,028
28,049
–
32,105
Sterling notes – repayable 2025
8.8
3,337
41,978
–
–
45,315
Non-controlling shareholder loan
6.2
11,715
1,481
714
–
13,910
Trade and other payables, and contract liabilities
–
29,764
–
–
–
29,764
77,562
68,541
96,152
12,829
255,084
At 31 December 2024, the group’s financial assets (other than receivables) comprised cash and deposits of $38.8 million
(2023: $14.2 million) carrying a weighted average interest rate of 1.2 per cent (2023: 2.2 per cent) and loans to sand and coal
interests of $9.3 million (2023: $57.6 million loans to stone, sand and coal interests) details of which are given in note 20.
111
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
26. Financial instruments – continued
Fair value of financial instruments
The table below provides an analysis of the book values and fair values of financial instruments, excluding receivables and trade
payables and Indonesian sand and coal interests, as at the balance sheet date. Cash and deposits, dollar notes and sterling notes
are classified as level 1 in the fair value hierarchy prescribed by IFRS 13: Fair value measurement (level 1 includes instruments
where inputs to the fair value measurements are quoted prices in active markets). No reclassifications between levels in the fair
value hierarchy were made during 2024 (2023: none).
2024
Book value
$’000
2024
Fair value
$’000
2023
Book value
$’000
2023
Fair value
$’000
Cash and deposits*
38,837
38,837
14,195
14,195
Bank debt within one year*
(20,012)
(20,012)
(17,413)
(17,413)
Bank debt after more than one year*
(114,417) (114,417)
(94,361)
(94,361)
Loans from non-controlling shareholder within one year**
–
–
(11,394)
(11,394)
Loans from non-controlling shareholder after more than one year**
(8,750)
(8,750)
(2,090)
(2,090)
Dollar notes after one year – repayable 2026**
(26,746)
(25,683)
(26,572)
(25,683)
Sterling notes within one year – repayable 2025**
(28,167)
(26,237)
–
–
Sterling notes after one year – repayable 2025**
–
–
(40,549)
(34,706)
Net debt
(159,255) (156,262) (178,184) (171,452)
*
Bearing interest at floating/variable rates
** Bearing interest at fixed rates
The fair values of cash and deposits, loan from non-controlling shareholder and bank debt approximate their carrying values
since these carry interest at current market rates. The fair values of the dollar notes and sterling notes are based on the latest
prices at which those notes were traded prior to the balance sheet dates.
Changes in liabilities arising from financing activities and analysis of movement in borrowings
The table below details changes in the group's liabilities arising from financing activities, including both cash and non-cash
changes. Liabilities from financing activities are those for which cash flows were, or future cash flows will be, classified in the
group's consolidated cash flow statement as cash flows from financing activities.
At
1 January
2024
$’000
Financing
cash flows
$’000
Non-cash
and other
changes
$’000
At 31
December
2024
$’000
Bank debt
(111,774)
(27,480)
4,825
(134,429)
Loans from non-controlling shareholder
(13,484)
12,234
(7,500)
(8,750)
Dollar notes – repayable 2026
(26,572)
–
(174)
(26,746)
Sterling notes – repayable 2025
(40,549)
11,606
776
(28,167)
Lease liabilities
(5,929)
2,724
(341)
(3,546)
Total liabilities from financing activities
(198,308)
(916)
(2,414)
(201,638)
There were no loans from related parties during the year.
At
1 January
2023
$’000
Financing
cash flows
$’000
Non-cash
and other
changes
$’000
At 31
December
2023
$’000
Bank debt
(117,120)
9,675
(4,329)
(111,774)
Loans from non-controlling shareholder
(15,519)
(8,606)
10,641
(13,484)
Dollar notes – repayable 2026
(17,842)
(8,142)
(588)
(26,572)
Sterling notes – repayable 2025
(38,162)
–
(2,387)
(40,549)
Lease liabilities
(7,438)
2,846
(1,337)
(5,929)
Total liabilities from financing activities
(196,081)
(4,227)
2,000
(198,308)
There were no loans from related parties during the year.
112
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
27. Bank loans
2024
$’000
2023
$’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 $2.3 million (2023: $3.8
million). The bank loans repayable within one year include $2.8 million drawings under working capital facilities (2023: $2.9
million and $6.1 million short term revolving borrowings secured against blocked cash (see note 25).
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 $136.8 million (2023: $115.6 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 $177.5 million (2023: $158.1
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 $5.5 million (2023: nil).
113
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
28. Sterling notes
The sterling notes at 31 December 2024 comprised £21.7 million nominal of 8.75 per cent guaranteed 2025 sterling notes
(2023: £30.9 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 £9.2 million nominal of notes for cancellation.
The outstanding sterling notes are due for repayment on 31 August 2025. A premium of 4p per £1 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) on or before the final 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 £21.7 million ($27.1 million) is carried on the balance sheet at
$28.2 million (2023: $40.5 million) which includes the amortised premium to date.
29. Dollar notes
The dollar notes as at 31 December 2023 and 2024 comprised $27.0 million nominal of 7.5 per cent dollar notes 2026 and
are stated net of the unamortised balance of the note issuance costs.
The dollar notes are due for repayment on 30 June 2026.
114
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
30. Deferred tax
The following are the major deferred tax assets and liabilities recognised by the group and the movements thereon during the
year and preceding year:
Deferred tax assets / (liabilities)
Plantings
and
related
structures
$’000
Other
property,
plant and
equipment
$’000
Income/
(expenses)*
$’000
Agricultural
produce
and other
inventory
$’000
Tax
losses
$’000
Total
$’000
At 1 January 2023
(37,321)
(6,676)
1,741
(457)
1,259
(41,454)
Prior year adjustment
–
(1,356)
–
–
–
(1,356)
Credit / (charge) to income for the year
427
76
11,962
(73)
1,630
14,022
Credit to comprehensive income for the year**
–
–
99
–
–
99
Exchange differences***
1,917
2,653
36
(35)
–
4,571
Transferred to liabilities related to assets held for sale
5,764
142
(79)
51
(1,636)
4,242
At 31 December 2023
(29,213)
(5,161)
13,759
(514)
1,253
(19,876)
Prior year adjustment
3,968
(2,282)
–
2
–
1,688
(Charge) / credit to income for the year
(1,624)
(39)
(80)
(314)
1,347
(710)
Credit to comprehensive income for the year**
–
–
22
–
–
22
Exchange differences***
(2,243)
470
(639)
43
–
(2,369)
Acquired with new subsidiary (see note 37)
–
(10,797)
–
–
3,901
(6,896)
Transferred from assets held for sale (see note 34)
562
(212)
80
(50)
1,635
2,015
At 31 December 2024
(28,550)
(18,021)
13,142
(833)
8,136
(26,126)
Deferred tax assets
–
–
13,142
–
8,136
21,278
Deferred tax liabilities
(28,550)
(18,021)
–
(833)
–
(47,404)
At 31 December 2024
(28,550)
(18,021)
13,142
(833)
8,136
(26,126)
Deferred tax assets
–
–
13,759
–
1,253
15,012
Deferred tax liabilities
(29,213)
(5,161)
–
(514)
–
(34,888)
At 31 December 2023
(29,213)
(5,161)
13,759
(514)
1,253
(19,876)
* Includes income, gains or expenses recognised for reporting purposes, but not yet charged to or allowed for tax
** Relating to actuarial losses / gains
*** Included in the consolidated income statement
At the balance sheet date, the group had unused tax losses of $35.8 million (2023: $4.7 million) available to be applied
against future profits. A deferred tax asset of $8.1 million (2023: $1.3 million) has been recognised in respect of these losses,
which are expected to be used in the future based on the group’s detailed cashflow and profitability projections. Tax losses
aggregating $1.5 million (2023: $2.5 million) incurred by KCCRI have not been recognised; these tax losses expire after five
years. Capital tax losses totalling $4.4 million in the company and REAS are not recognised in deferred tax as they are not
expected to be used.
At the balance sheet date, the aggregate amount of net temporary differences (gross differences after 10 per cent withholding
tax) associated with undistributed earnings of subsidiaries for which deferred tax liabilities have not been recognised was $3.5
million (2023: $2.6 million). No liability has been recognised in respect of these differences because the group is in a position
to control the reversal of the temporary differences and it is probable that such differences will not reverse significantly in the
foreseeable future.
The temporary difference of $28.6 million (2023: $29.2 million) in respect of plantings and related structures arises from
their recognition prior to 2015 at fair value in the group accounts, compared with their historic base cost in the local accounts
of overseas subsidiaries. From 2015 onwards this temporary difference reverses as the plantings and related structures are
depreciated over their remaining useful life.
115
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
31. Other loans and payables
2024
$’000
2023
$’000
Indonesian retirement benefit obligations (see note 40)
9,572
9,098
Lease liabilities (see note 32)
3,546
5,929
Loan 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
Liabilities by currency:
Sterling
261
369
Dollar
9,486
15,220
Rupiah
12,857
14,658
22,604
30,247
Loan from non-controlling shareholder comprises an $8.7 million interest bearing loan repayable in equal instalments over the
period from January 2027 to January 2030 (2023: a $3.5 million interest bearing loan repayable in equal instalments up to
June 2026, plus a $10.0 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.
116
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
32. Leases
The group leases barges for the transportation of CPO and CPKO and also leases office properties in London and Balikpapan.
The office leases have been capitalised as assets in buildings and structures and the boats in plant, equipment and vehicles
within PPE in non-current assets (see note 18).
ROU assets in PPE
Buildings
and
structures
$’000
Plant,
equipment
and vehicles
$’000
Total
$’000
Cost:
At 1 January 2023
1,347
7,212
8,559
Additions
–
645
645
Disposals
–
(632)
(632)
At 31 December 2023
1,347
7,225
8,572
Additions
219
–
219
Disposals
(88)
(98)
(186)
At 31 December 2024
1,478
7,127
8,605
Accumulated depreciation:
At 1 January 2023
287
595
882
Charge for year
281
1,814
2,095
Disposals
–
(625)
(625)
At 31 December 2023
568
1,784
2,352
Charge for year
301
1,737
2,038
Adjustment
–
820
820
Disposals
(88)
–
(88)
At 31 December 2024
781
4,341
5,122
Carrying amount:
At 31 December 2024
697
2,786
3,483
At 31 December 2023
779
5,441
6,220
Lease liabilities (see note 31)
2024
$’000
2023
$’000
Within one year
1,876
2,428
Between one and two years
1,577
1,912
Between two and five years
93
1,589
3,546
5,929
Other information relating to leases
Interest on lease liabilities (see note 12)
374
529
Principal payments on lease liabilities disclosed in the cash flow statement
2,724
2,846
Short term leases
A number of the barge leases qualify for the short term lease exemption but for consistency all barge leases are treated in the
same way.
117
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
33. Trade and other payables
2024
$’000
2023
$’000
Trade payables
7,351
11,630
Contract liabilities
8,032
17,134
Other tax and social security
7,903
100
Accruals
12,146
14,811
Other payables
9,283
1,000
44,715
44,675
Repayable as follows:
On demand or within one year (shown under current liabilities)
44,715
27,834
In the second year
–
16,841
In the third to fifth years inclusive
–
–
Amount due for settlement after 12 months
–
16,841
44,715
44,675
The average credit period taken on trade payables is 23 days (2023: 30 days).
The contract liabilities relate to prepaid sales contacts whereby advance payments are received for future product deliveries.
$9.1 million of the 2023 contract liabilities were recognised in revenue in 2024. $8.0 million of the contract liabilities will be
recognised in 2025.
The directors estimate that the fair value of trade and other payables approximates their carrying value.
118
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
34. Assets held for sale
In 2023 the group entered into a share subscription agreement with DSN. Included in this agreement was a priority right,
exercisable by notice in writing to the company given at any time prior to 30 June 2024, for DSN to acquire CDM at a price
calculated by reference to a valuation of the asset and liabilities of CDM on the basis stipulated in the agreement. Accordingly,
at 31 December 2023, the assets of CDM with previous carrying value of $40.0 million were treated as assets held for sale
and were impaired by $23.6 million to equal the estimated fair value less costs to sell of $16.4 million.
DSN confirmed at the end of June 2024 that they would not exercise their right to purchase CDM. CDM was therefore
reconsolidated at its recoverable amount at 30 June, assumed to be equivalent to the DSN valuation. After the impairment of
$23.6 million has been allocated against non-current asset categories and deferred tax the following assets and liabilities were
reclassified from held for sale.
June
2024
$’000
PPE
17,235
Land
4,467
Deferred tax
2,015
Inventories
1,286
Biological assets
92
Plasma advances
1,504
Trade and other receivables
1,295
Cash and bank balances
9
Total assets reclassified from held for sale
27,903
Trade payables
(452)
Other loans and payables
(7,401)
Retirement benefits
(367)
Total liabilities related to assets classified from held for sale
(8,220)
Net assets reclassified from held for sale
19,683
In both 2024 and 2023 the results of CDM were fully consolidated in the group with the exception of depreciation. If CDM
had not been held for sale in either year then an additional charge of $787,000 in the six months to 30 June 2024 (2023:
additional charge of $261,000 for two months to 31 December 2024) would have been recognised.
119
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
35. Share capital
2024
$’000
2023
$’000
Issued and fully paid:
72,000,000 – 9 per cent cumulative preference shares of £1 each (2023: 72,000,000)
116,516
116,516
43,963,529 – ordinary shares of 25p each (2023: 43,963,529)
18,075
18,075
132,500 – ordinary shares of 25p each held in treasury (2023: 132,500)
(1,001)
(1,001)
133,590
133,590
The preference shares entitle the holders thereof to payment, out of the profits of the company available for distribution, but
subject to the approval of a board resolution to make a distribution out of available profits, of a cumulative preferential dividend
of 9 per cent per annum on the nominal amount paid up on such preference shares. The preference shares shall rank for
dividend in priority to the payment of any dividend to the holders of any other class of shares. In the event of the company
being wound up, holders of the preference shares shall be entitled to the amount paid up on the nominal value of such shares
together with any arrears and accruals of the dividend thereon. On a winding up or other return of capital, the preference shares
shall rank in priority to any other shares of the company for the time being in issue.
Subject to the rights of the holders of preference shares, holders of ordinary shares are entitled to share equally with each
other in any dividend paid on the ordinary share capital and, on a winding up of the company, in any surplus assets available for
distribution among the members. Shares held by the company in treasury do not carry voting rights.
The company has outstanding 3,997,760 warrants to subscribe for ordinary shares (2023: 3,997,760 warrants). Each warrant
entitles the holder to subscribe for one ordinary share at a subscription price of 126p per share on or before 15 July 2025.
Holders of sterling notes exercising warrants may satisfy the subscription obligations by surrendering sterling notes (see note
28).
There were no changes in preference share capital, ordinary share capital or ordinary shares held in treasury during the current
year.
120
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
36. Non-controlling interests
2024
$’000
2023
$’000
Beginning of year
14,304
23,625
Capital injection
53,082
150
Share of result for the year
4,016
(7,452)
Share of other comprehensive loss for the year
(27)
(41)
Reorganisation of subsidiaries
(854)
(1,978)
End of year
70,521
14,304
The non-controlling interests comprise a 35 per cent equity interest held by two subsidiary companies of DSN in REA Kaltim
(see note (v) to the company accounts); a 5 per cent equity interest held by a local partner in ATP; and a 5 per cent equity
interest held by a local partner in KCCRI (2023: 15 per cent equity interest held by two subsidiary companies of DSN in
REA Kaltim, a 5 per cent equity interest held by a local partner in SYB; and a 5 per cent equity interest held by a local partner
in KCCRI). During 2024 the 5 per cent equity interest held by the local partner in SYB was purchased, completing the
reorganisation of subsidiaries that started in 2023 (see note 10).
The capital injection of $53.1 million represents DSN's increase of equity interest in REA Kaltim from 15 per cent to 35 per
cent by way of a subscription of further shares. Subscription proceeds were $53.6 million and transaction expenses $1.1
million. A loss of $0.6 million was recognised in the statement of comprehensive income.
Key financial information (including intra-group balances but excluding group adjustments) in respect of REA Kaltim and its
subsidiaries as extracted from the consolidated financial statements is as follows:
2024
$’000
2023
$’000
Revenue
186,869
175,871
Profit after tax
16,161
5,501
Non-current assets
387,999
364,055
Current assets
54,993
70,799
Non-current liabilities
(119,381)
(91,050)
Current liabilities
(79,338)
(118,757)
Net cash inflow / (outflow) from operating activities
3,812
(9,668)
Net cash outflow from investing activities
(12,377)
(22,713)
Net cash inflow from financing activities
20,470
21,491
Net cash increase / (decrease) in cash and cash equivalents
11,905
(10,890)
121
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
37. Acquisition of subsidiary (ATP)
As previously discussed (see note 20), 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
$’000
PPE (see note 18)
68,432
Land (see note 19)
3,086
Deferred tax asset (see note 30)
3,901
Current assets
7,679
Cash
259
83,357
Current liabilities
(7,290)
Deferred tax liability (see note 30)
(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). This resulted in a fair value
adjustment of $58.9 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
$nil.
In the six months to 31 December 2024 the results of ATP included within the group results were as follows:
2024
$’000
Revenue
1,083
Cost of Sales
(648)
Gross Profit
435
Administrative expenses
(65)
Operating Profit
370
Other gains / (losses)
449
Finance costs
(684)
Profit before tax
135
If ATP had been consolidated from 1 January 2024 then the results for the group would have been as follows:
2024
$’000
Revenue
187,943
Net gain / (loss) arising from changes in fair value of biological assets
9
Cost of sales
(136,567)
Gross profit
51,385
Distribution costs
(1,281)
Administrative expenses
(15,387)
Operating profit
34,717
Interest income
3,369
Reversal of provision
6,622
Gains / (losses) on disposals of subsidiaries and similar charges
3,051
Other gains / (losses)
4,332
Finance costs
(17,431)
Profit before tax
34,660
122
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
38. Reconciliation of operating profit to operating cash flows
2024
$’000
2023
$’000
Operating profit
34,968
14,844
Amortisation of intangible assets
386
374
Depreciation of PPE
26,226
28,376
Decrease in fair value of growing produce
(9)
580
Loss on disposal of PPE
310
1,055
Movement in assets held for sale
(1,559)
(784)
Exchange translation differences
(1,686)
1,188
Operating cash flows before movements in working capital
58,636
45,633
(Increase) / decrease in inventories (excluding movements in fair value growing produce)
(887)
9,482
Decrease / (increase) in receivables
4,675
(3,123)
Decrease in payables
(13,338)
(4,818)
Cash generated by operations
49,086
47,174
Taxes paid
(3,621)
(2,177)
Interest paid
(13,714)
(15,372)
Net cash from operating activities
31,751
29,625
39. Movement in net borrowings
2024
$’000
2023
$’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)
123
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
40. Retirement benefit obligations
United Kingdom
The company is the principal employer of the Pension Scheme and a subsidiary company is a participating employer. The
Pension Scheme is a multi-employer contributory defined benefit scheme with assets held in a trustee-administered fund,
which has participating employers outside the group. The Pension Scheme is closed to new members.
As the Pension Scheme is a multi-employer scheme, in which the employers are unable to identify their respective shares of the
underlying assets and liabilities (because there is no segregation of the assets), and does not prepare valuations on an IAS 19
basis, the group accounts for the Pension Scheme as if it were a defined contribution scheme. The company’s share of the total
employer contribution is 6.9 per cent.
A non-IAS 19 valuation of the Pension Scheme was last prepared, using the attained age method, as at 31 December
2023. This method had been adopted in the previous valuation as at 31 December 2020 and in earlier valuations, as it was
considered the appropriate method of calculating future service benefits as the Pension Scheme is closed to new members.
At 31 December 2023 the Pension Scheme had an overall surplus of assets, when measured against the Scheme’s technical
provisions, of £12.5 million. The technical provisions were calculated using assumptions of an investment return equal to the
Bank of England gilt curve plus 0.25 per cent per annum and annual increases in pensionable salaries in line with RPI. It was
further assumed that the retired members’ mortality would reflect S3PXA tables (light version) at 100 per cent and that non-
retired members would take on retirement the maximum cash sums permitted from 1 January 2024. Had the Pension Scheme
been valued at 31 December 2023 using the projected unit method and the same assumptions, the overall deficit would have
been similar.
The Pension Scheme has agreed a statement of funding principles with the principal employer and has also agreed a schedule
of contributions with participating employers covering normal contributions which are payable at a rate calculated to cover
future service benefits under the Pension Scheme.
Total employer contributions for 2025 are estimated to be nil (2024: $21,000).
There are no agreed allocations of any surplus on either the wind-up of the Pension Scheme or on any participant’s withdrawal
from the Pension Scheme.
An actuarial review as at 31 December 2024 has been completed and the next actuarial valuation will be made as at 31
December 2026.
The company is responsible for contributions payable by other (non-group) employers in the Pension Scheme; however,
such liability will only arise if other (non-group) employers do not pay their contributions. There is no expectation of this and,
therefore, no provision has been made.
The sensitivity of the surplus as at 31 December 2023 to variations in certain of the principal assumptions underlying the
actuarial valuation as at that date is summarised below:
Reduction
in surplus
$’000
Decrease in discount rate by 0.1% p.a.
271
Increase inflation by 0.1% p.a.
103
Increase in long term rate of mortality improvement by 0.25% p.a.
129
124
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
40. Retirement benefit obligations – continued
Indonesia
In accordance with Indonesian labour laws, group employees in Indonesia are entitled to lump sum payments on retirement
at the age of 55 years. The group records a provision in the financial statements for such payments which are not separately
funded: accordingly there are no separate assets set aside to meet these entitlements. The provision is assessed at each
balance sheet date by an independent actuary using the projected unit credit method. The principal assumptions used were as
follows:
2024
2023
Discount rate (per cent)
7.12
6.81
Salary increases per annum (per cent)
6
6
Mortality table (Indonesia) (TM1)
IV/2019
IV/2019
Retirement age (years)
55
55
Disability rate (per cent of the mortality table)
10
10
The movement in the provision for employee service entitlements was as follows:
2024
$’000
2023
$’000
Balance at 1 January
9,098
7,824
Current service cost
1,140
1,259
Interest expense
627
598
Past service cost
–
209
Actuarial loss recognised in statement of comprehensive income
113
449
Exchange
(459)
156
Paid during the year
(1,314)
(1,040)
Transferred from assets held for sale (see note 34)
367
–
Transferred to assets held for sale
–
(357)
Balance at 31 December (see note 31)
9,572
9,098
The amounts recognised in the consolidated income statement were as follows:
2024
$’000
2023
$’000
Current service cost
1,140
1,259
Past service cost
–
209
Interest expense
627
598
Exchange
(459)
156
1,308
2,222
Estimated lump sum payments to Indonesian employees on retirement in 2025 are $991,000 (2024: $715,000).
The number of employees eligible for benefits in Indonesia is 6,046 (2023: 6,555). The average age of employees is 38.6
years with 8.8 years past service and 16.3 years estimated future service. The maturity profile of the retirement benefits is as
follows:
2024
$’000
2023
$’000
Within one year
95
69
Between two and five years
321
284
Between six and ten years
885
694
After ten years
8,271
8,051
9,572
9,098
125
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
40. Retirement benefit obligations – continued
The sensitivity of the deficit as at 31 December 2024 to variations in certain of the principal assumptions underlying
(increase) / decrease in the actuarial deficit as at that date is summarised below:
Change
in deficit
$’000
Decrease in discount rate by 0.1% p.a.
(663)
Increase in discount rate by 0.1% p.a.
590
Decrease salary increase by 0.1% p.a.
651
Increase salary increase by 0.1% p.a.
(718)
41. 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.
2024
$’000
2023
$’000
Short term benefits
1,283
1,222
42. Rates of exchange
2024
Closing
2024
Average
2023
Closing
2023
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
43. 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.
126
R.E.A. Holdings plc Annual Report and Accounts 2024
Group financial statements
Notes to the consolidated financial statements
continued
44. Financial guarantees
In furtherance of Indonesian government policy which requires the owners of oil palm plantations to develop smallholder
plantations (plasma plantations), the REA Kaltim plantations group has established 11 separate plasma plantations owned by
local cooperatives but under the management of the group. These plasma plantations have, in the first instance, been funded by
the group but, where possible, have subsequently been refinanced by local banks.
The first three plasma plantations, established in 2009 and 2010 on land owned by smallholders, were refinanced by Bank
BPD, a regional development bank, under which the cooperatives borrowed in aggregate rupiah 157 billion ($9.7 million) with
the amounts borrowed repayable over 14 years and secured on the lands under development. REA Kaltim has guaranteed the
obligations of two of the cooperatives as to payments of principal and interest under the respective bank facilities. SYB has
guaranteed the obligations of the third cooperative on a similar basis.
During 2022 SYB was able to secure refinancing from Bank Mandiri for two further co-operatives owning plasma plantations
that have been established on land within the SYB’s titled plantation areas (the SYB HGU area). Under the refinancing
arrangements Bank Mandiri provided one loan of rupiah 25 billion ($1.5 million) repayable over 10 years and a second loan
of rupiah 10.8 billion ($0.7 million) repayable over 5 years. These loans are secured on the respective plasma plantations
together with certain land titles within the SYB HGU area. SYB has guaranteed the obligations of these two cooperatives as to
payments of principal and interest under the respective bank facilities.
As at 31 December 2024 the aggregate outstanding balances owing by the five cooperatives to Bank BPD and Bank Mandiri
amounted to rupiah 52 billion ($3.2 million) (2023: rupiah 71.1 billion – $4.6 million).
127
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements Notice of AGM
Glossary
Company financial statements
Company balance sheet
as at 31 December 2024
Note
2024
$’000
2023
$’000
Non-current assets
Investments
Shares in subsidiaries
91,775
91,775
Loans
136,774
148,830
(v) 228,549
240,605
Financial assets
(vi)
14,014
21,031
Deferred tax assets
(vii)
1,803
1,178
Total non-current assets
244,366
262,814
Current assets
Trade and other receivables
(viii)
33
415
Cash and cash equivalents
(ix)
1,418
3,810
Total current assets
1,451
4,225
Total assets
245,817
267,039
Current liabilities
Trade and other payables
(x)
(300)
(1,391)
Amount owed to group undertakings
(xii)
(34,073)
–
Total current liabilities
(34,373)
(1,391)
Non-current liabilities
Dollar notes
(xi)
(26,746)
(26,572)
Amount owed to group undertaking
(xii)
–
(41,290)
Total non-current liabilities
(26,746)
(67,862)
Total liabilities
(61,119)
(69,253)
Net assets
184,698
197,786
Equity
Share capital
(xiii) 133,590
133,590
Share premium account
47,374
47,374
Exchange reserve
(4,300)
(4,300)
Retained earnings
8,034
21,122
Total equity
184,698
197,786
The company reported a profit for the financial year ended 31 December 2024 of $5,488,000 (2023: loss of $2,572,000).
The company is exempt from disclosing its profit and loss account.
Authorised and approved by the board on 16 April 2025 and signed on behalf of the board.
DAVID J BLACKETT
Chairman
128
R.E.A. Holdings plc Annual Report and Accounts 2024
Company financial statements
Company statement of changes in equity
for the year ended 31 December 2024
Note
Share
capital
$’000
Share
premium
$’000
Exchange
reserve
$’000
Retained
earnings
$’000
Total
$’000
At 1 January 2023
133,590
47,374
(4,300)
27,823
204,487
Total comprehensive loss
–
–
–
(2,572)
(2,572)
Exercise of warrants
(xiii)
–
–
–
(4,129)
(4,129)
At 31 December 2023
133,590
47,374
(4,300)
21,122
197,786
Total comprehensive income
–
–
–
5,488
5,488
Dividends to preference shareholders
(iv)
–
–
–
(18,576)
(18,576)
At 31 December 2024
133,590
47,374
(4,300)
8,034
184,698
129
R.E.A. Holdings plc Annual Report and Accounts 2024
Company financial statements
Notes to the company financial statements
Overview
Strategic report
Governance
Group financial statements
Company financial statements Notice of AGM
Glossary
Company financial statements
Notes to the company financial statements
(i)
Accounting policies
The accounting policies of R.E.A. Holdings plc (the company) are the same as those of the group, save as modified below.
Basis of accounting
Separate financial statements of the company are required by the CA 2006. These financial statements are prepared under the
historical cost convention, except as described in the accounting policy on financial instruments, and in accordance with
FRS 101 and applicable UK laws.
The company financial statements present information about the company as an individual undertaking not as a group
undertaking.
The company has applied the exemptions under FRS 101 in respect of the following disclosures:
•
a cash flow statement and related notes
•
transactions with wholly owned subsidiaries
•
capital management
•
as required by IFRS 13: Fair Value Measurement and IFRS 7: Financial Instrument Disclosures
•
the effect of new but not yet effective IFRSs
•
disclosures in respect of compensation of key management personnel
For the reasons given under Going concern in the Directors’ report, the company financial statements have been prepared on
the going concern basis.
By virtue of section 408 of the CA 2006, the company is exempted from presenting an income statement or statement of
comprehensive income. The profit / (loss) attributable to the company is disclosed in the footnote to the company's balance
sheet.
Presentational currency
The financial statements of the company are presented in dollars which is considered to be the functional currency of the
company and the currency of the primary economic environment in which the company operates. References to $ or dollar in
the financial statements are to the lawful currency of the United States of America.
Adoption of new and revised standards
New standards and amendments to IFRSs and IASs issued by the IASB that are mandatorily effective for an accounting period
beginning on 1 January 2024 have no impact on the disclosures or on the amounts reported in these financial statements.
130
R.E.A. Holdings plc Annual Report and Accounts 2024
Company financial statements
Notes to the company financial statements
continued
(ii)
Critical accounting judgements and key sources of estimation uncertainty
In the application of the group’s accounting policies, which are set out in note (i) above, the directors are required to make
judgements, estimates and assumptions. Such judgements, estimates and assumptions are based upon historical experience
and other factors that are considered to be relevant. Actual values of assets and amounts of liabilities may differ from
estimates. The judgements, estimates and assumptions are reviewed on a regular basis. Revisions to estimates are recognised
in the period in which the estimates are revised.
In the opinion of the directors, all critical accounting judgements and key sources of estimation uncertainty relate to the group’s
operations as disclosed in note 3 to the consolidated financial statements with the exception of the investments in, and loans to
group companies which are a source of estimation uncertainty to the company only as these are eliminated in the consolidated
financial statements.
As at 31 December 2024 the shares in subsidiaries are carried at cost of $91.8 million (2023: $91.8 million) and the loans to
group companies at $124.9 million (2023: $101.4 million).
The carrying value of the investment in subsidiary undertakings is reviewed for impairment on an annual basis by reference to
the underlying value of the undertakings utilising plantation and mining assets impairment testing methodology as described in
note 3 to the consolidated financial statements for valuing the plantation and mining assets.
(iii)
Auditor’s remuneration
The remuneration of the company’s auditor is disclosed in note 7 to the consolidated financial statements as required by
section 494(4)(a) of the CA 2006.
(iv)
Dividends
2024
$’000
2023
$’000
Amounts recognised as distributions to preference shareholders:
Dividends on 9 per cent cumulative preference shares
18,576
4,129
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.
131
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements Notice of AGM
Glossary
(v)
Investments
2024
$’000
2023
$’000
Shares in subsidiaries
91,775
91,775
Loans to group companies and third parties
136,774
148,830
228,549
240,605
The movements were as follows:
Shares
$’000
Loans
$’000
At 1 January 2023
91,775
148,007
Repayment of loans
–
(10,673)
Additions to loans
–
12,772
Increase in provision
–
(675)
Write off loans
–
(601)
At 31 December 2023
91,775
148,830
Repayment of loans
–
(26,246)
Additions to loans
–
6,735
Decrease in provision
–
7,455
At 31 December 2024
91,775
136,774
The subsidiaries at the year end, together with their countries of incorporation, activity, registered office address and proportion
of ownership, are listed below. Details of UK dormant subsidiaries are not shown.
Subsidiary
Activity
Registered Office
Class of
shares
Percentage
owned
PT REA Kaltim Plantations (Indonesia)
Plantation agriculture
Gedung Grha Bintang 1st Floor B-C-D, Jl. Jend. Sudirman No.
423, Damai Bahagia, Balikpapan Selatan, Balikpapan 76114,
Kalimantan Timur
Ordinary
65.0
PT Cipta Davia Mandiri (Indonesia)
Plantation agriculture
As for PT REA Kaltim Plantations
Ordinary
65.0
PT Kutai Mitra Sejahtera (Indonesia)
Plantation agriculture
As for PT REA Kaltim Plantations
Ordinary
65.0
PT Sasana Yudha Bhakti (Indonesia)
Plantation agriculture
As for PT REA Kaltim Plantations
Ordinary
65.0
PT Prasetia Utama (Indonesia)
Plantation agriculture
As for PT REA Kaltim Plantations
Ordinary
100.0
PT KCC Resources Indonesia (Indonesia)
Stone and coal marketing
Plaza 5 Pondok Indah Blok B.06, JL Margaguna Raya, Gandaria
Utara, Kebayoran Baru, Jakarta Selatan 12140
Ordinary
95.0
PT Aragon Tambang Pratama (Indonesia)
Stone concession
As for PT KCC Resources Indonesia
Ordinary
95.0
R.E.A. Services Limited (England and Wales)
Group finance and services
5th Floor North, Tennyson House, 159-165 Great Portland Street,
London W1W 5PA
Ordinary
100.0
KCC Resources Limited (England and Wales) Sub holding company
As for R.E.A. Services Limited
Ordinary
100.0
PU Holdings Limited (England and Wales)
Sub holding company
As for R.E.A. Services Limited
Ordinary
100.0
Makassar Investments Limited (Jersey)
Sub holding company
13 Castle Street, St Helier, Jersey JE1 1ES
Ordinary
100.0
REA Finance B.V. (Netherlands)
Group finance
Van Heuven Goedhartlaan 935A, 1181 LD Amstelveen,
Amsterdam, Netherlands
Ordinary
100.0
The entire shareholdings in Makassar Investments Limited, PU Holdings Limited, KCC Resources Limited, R.E.A. Services
Limited and REA Finance B.V. are held directly by the company. All other shareholdings are held by subsidiaries.
Covenants contained in credit agreements between certain of the company’s plantation subsidiaries and banks restrict
the amount of dividend that may be paid to the UK without the consent of the banks to certain proportions of the relevant
subsidiaries’ pre-tax profits. The directors do not consider that such restrictions will have any significant impact on the liquidity
risk of the company.
The company evaluates its investments in subsidiary undertakings annually for any indicators of impairment. The company
considers the relationship between its market capitalisation and the carrying value of its investments, among other factors,
when reviewing for indicators of impairment. However, utilising the plantation and mining asset impairment testing methodology
described in note 3 to the consolidated financial statements the directors have determined that no impairment is required.
132
R.E.A. Holdings plc Annual Report and Accounts 2024
Company financial statements
Notes to the company financial statements
continued
(vi)
Financial assets
2024
$’000
2023
$’000
Amounts owing by group undertakings
14,014
21,031
14,014
21,031
The amounts owing by group undertakings are non-interest bearing.
(vii) Deferred tax asset
$’000
At 1 January 2023
884
Credit to income for the year
294
At 31 December 2023
1,178
Credit to income for the year
625
At 31 December 2024
1,803
There were no deferred tax liabilities at 31 December 2024 or 31 December 2023.
At the balance sheet date, the company had unused tax losses of $7.2 million (2023: $4.7 million) available to be applied
against future profits. A deferred tax asset of $1.8 million (2023: $1.2 million) has been recognised in respect of these losses
as the company considers, based on financial projections, that these losses will be utilised.
The deferred tax asset reflects a tax rate of 25 per cent (2023: 25 per cent).
The aggregate amount of temporary differences associated with undistributed earnings of subsidiaries for which tax liabilities
have not been recognised are disclosed in note 30 to the consolidated financial statements.
(viii) Trade and other receivables
2024
$’000
2023
$’000
Other debtors
13
114
Prepayments and accrued income
20
301
33
415
The directors consider that the carrying amount of trade and other receivables approximates their fair value.
(ix)
Cash and cash equivalents
Cash and cash equivalents comprise short-term bank deposits. These deposits amounting to $1.4 million (2023: $3.8 million)
are held with banks with a Moody's rating of P1.
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R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements Notice of AGM
Glossary
(x)
Trade and other payables
2024
$’000
2023
$’000
Amount owing to group undertakings
–
1,128
Other creditors
44
29
Accruals
256
234
300
1,391
The directors consider that the carrying amount of trade and other payables approximates their fair value. The amounts owing
to group undertakings are non-interest bearing and repayable on demand.
(xi)
Dollar notes
The dollar notes as at 31 December 2023 and 2024 comprise $27.0 million nominal of 7.5 per cent dollar notes 2026 and are
stated net of the unamortised balance of the note issuance costs.
The dollar notes are due for repayment on 30 June 2026.
(xii) Amount owed to group undertakings
Amount owed to group undertakings includes an unsecured interest-bearing loan of £22.1m – $27.7 million (2023: £31.3m
– $39.9 million) from REAF held at amortised cost. Repayments totalling $11.9 million were made during 2024 to finance the
purchase for cancellation by REAF of £9.2 million of the sterling notes in issue. The balance owed by the company to REAF is
repayable on 20 August 2025 and will finance the repayment of the sterling notes issued by REAF on 31 August 2025 (see
note 28 to the consolidated financial statements). A premium of 4p per sterling note will be paid on redemption of the sterling
notes, and an equivalent premium will be payable on the loan. The cost of this is being added to the loan over the period to 20
August 2025. The amount added as at 31 December 2024 is £0.8 million – $1.0 million (2023: £1.1 million – $1.4 million).
134
R.E.A. Holdings plc Annual Report and Accounts 2024
Company financial statements
Notes to the company financial statements
continued
(xiii) Share capital
2024
$’000
2023
$’000
Issued and fully paid:
72,000,000 – 9 per cent cumulative preference shares of £1 each (2023: 72,000,000)
116,516
116,516
43,963,529 – ordinary shares of 25p each (2023: 43,963,529)
18,075
18,075
132,500 – ordinary shares of 25p each held in treasury (2023: 132,500)
(1,001)
(1,001)
133,590
133,590
The preference shares entitle the holders thereof to payment, out of the profits of the company available for distribution, but
subject to the approval of a board resolution to make a distribution out of available profits, of a cumulative preferential dividend
of 9 per cent per annum on the nominal amount paid up on such preference shares. The preference shares shall rank for
dividend in priority to the payment of any dividend to the holders of any other class of shares. In the event of the company
being wound up, holders of the preference shares shall be entitled to the amount paid up on the nominal value of such shares
together with any arrears and accruals of the dividend thereon. On a winding up or other return of capital, the preference shares
shall rank in priority to any other shares of the company for the time being in issue.
Subject to the rights of the holders of preference shares, holders of ordinary shares are entitled to share equally with each
other in any dividend paid on the ordinary share capital and, on a winding up of the company, in any surplus assets available for
distribution among the members. Shares held by the company in treasury do not carry voting rights.
The company has outstanding 3,997,760 warrants to subscribe for ordinary shares (2023: 3,997,760 warrants). Each warrant
entitles the holder to subscribe for one ordinary share at a subscription price of 126p per share on or before 15 July 2025.
Holders of sterling notes exercising warrants may satisfy the subscription obligations by surrendering sterling notes (see note
28).
There have been no changes in share capital or ordinary shares held in treasury during the current year.
135
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements Notice of AGM
Glossary
(xiv) Pensions
The company is the principal employer of the Pension Scheme and a subsidiary company is a participating employer. The
Pension Scheme is a multi-employer contributory defined benefit scheme with assets held in a trustee-administered fund,
which has participating employers outside the group. The Pension Scheme is closed to new members.
As the Pension Scheme is a multi-employer scheme, in which the employers are unable to identify their respective shares of the
underlying assets and liabilities (because there is no segregation of the assets), and does not prepare valuations on an IAS 19
basis, the group accounts for the Pension Scheme as if it were a defined contribution scheme. The company’s share of the total
employer contribution is 6.9 per cent.
A non-IAS 19 valuation of the Pension Scheme was last prepared, using the attained age method, as at 31 December
2023. This method had been adopted in the previous valuation as at 31 December 2020 and in earlier valuations, as it was
considered the appropriate method of calculating future service benefits as the Pension Scheme is closed to new members.
At 31 December 2023 the Pension Scheme had an overall surplus of assets, when measured against the Scheme’s technical
provisions, of £12.5 million. The technical provisions were calculated using assumptions of an investment return equal to the
Bank of England gilt curve plus 0.25 per cent per annum and annual increases in pensionable salaries in line with RPI. It was
further assumed that the retired members’ mortality would reflect S3PXA tables (light version) at 100 per cent and that non-
retired members would take on retirement the maximum cash sums permitted from 1 January 2024. Had the Pension Scheme
been valued at 31 December 2023 using the projected unit method and the same assumptions, the overall deficit would have
been similar.
The Pension Scheme has agreed a statement of funding principles with the company and has also agreed a schedule of
contributions with participating employers covering normal contributions which are payable at a rate calculated to cover future
service benefits under the Pension Scheme.
Total employer contributions for 2025 are estimated to be nil (2024: $17,000).
There are no agreed allocations of any surplus on either the wind-up of the Pension Scheme or on any participant’s withdrawal
from the Pension Scheme.
An actuarial review as at 31 December 2024 has been completed and the next actuarial valuation will be made as at 31
December 2026.
The company is responsible for contributions payable by other (non-group) employers in the Pension Scheme; however,
such liability will only arise if other (non-group) employers do not pay their contributions. There is no expectation of this and,
therefore, no provision has been made.
136
R.E.A. Holdings plc Annual Report and Accounts 2024
Company financial statements
Notes to the company financial statements
continued
(xv) Related party transactions
2024
$’000
2023
$’000
Loans to subsidiaries
PT KCC Resources Indonesia
15,511
16,400
PT REA Kaltim Plantations
–
19,745
Makassar Investments Limited
65,297
65,297
PT Aragon Tambang Pratama
54,481
–
135,289
101,442
ATP became a subsidiary on 1 July 2024 when management and control was assumed by the group. The balance owed by
ATP includes $9.7 million which is owed by a coal concession holding company to REA but is guaranteed by ATP and therefore
treated as a receivable from ATP.
Interest receivable from subsidiary*
PT REA Kaltim Plantations
442
1,345
PT KCC Resources Indonesia
–
1,019
442
2,364
* $1,525,000 interest was also received from ATP in respect of the period 1 January 2024 to 30 June 2024 prior to being a subsidiary. From 1 July
2024 the interest from ATP was waived.
(xvi) Rates of exchange
See note 42 to the consolidated financial statements.
(xvii) 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.
(xviii) Contingent liabilities and commitments
Sterling notes
The company has guaranteed the obligations for both principal and interest relating to the outstanding £21.7 million nominal
8.75 per cent sterling notes 2025 issued by REAF. The directors consider the risk of loss to the company from these
guarantees to be remote.
Bank borrowings
The company has given, in the ordinary course of business, guarantees in support of subsidiary company borrowings from, and
other contracts with, banks amounting in aggregate to $136.8 million (2023: $109.5 million). The directors consider the risk of
loss to the company from these guarantees to be remote.
Pension liability
The company’s contingent liability for pension contributions is disclosed in note (xiv) above.
Notice of annual general meeting
137
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
Notice of annual general meeting
This notice is important and requires your immediate attention. If you are in
any doubt as to what action to take, you should consult your stockbroker,
solicitor, accountant or other appropriate independent professional adviser
authorised under the Financial Services and Markets Act 2000 if you are
resident in the UK or, if you are not so resident, another appropriately
authorised independent adviser. If you have sold or otherwise transferred
all your shares in R.E.A. Holdings plc, please forward this document to the
person through whom the sale or transfer was effected, for transmission
to the purchaser or transferee.
Notice of 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 is set out below.
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);
(ii) via the CREST electronic proxy appointment service;
(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 below).
The company will publish 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 updates.
The directors and the chairman of the meeting, and any person so
authorised by the directors, reserve the right, as set out in article 67 in the
company’s articles of association, to take such action as they think fit for
securing the safety of people at the meeting and promoting the orderly
conduct of business at the meeting.
Notice
Notice is hereby given that the sixty fifth AGM of R.E.A. Holdings plc
will be held at London Fruit & Wool Exchange, 1 Duval Square, London
E1 6PW on 19 June 2025 at 10.00 am for the following purposes and
to consider and, if thought fit, to pass the following 18 resolutions set
out below. Resolutions 1 to 14 (inclusive) will be proposed as ordinary
resolutions and will be passed if more than 50% of the total votes cast are
in favour of each such resolution. Resolutions 15 to 18 (inclusive) will be
proposed as special resolutions and will be passed if not less than 75% of
the total votes cast are in favour of each such resolution.
Ordinary resolutions
1.
To receive the company’s annual accounts for the financial year
ended 31 December 2024, together with the accompanying
statements and reports including the independent auditor’s report.
2.
To approve the directors’ remuneration report (other than the part
containing the directors' remuneration policy) for the financial year
ended 31 December 2024.
3.
To approve the directors’ remuneration policy to take effect
immediately following the AGM.
4.
To re-elect as a director David Blackett.
5.
To re-elect as a director Mieke Djalil.
6.
To re-elect as a director Carol Gysin.
7.
To re-elect as a director John Oakley.
8.
To re-elect as a director Richard Robinow.
9.
To re-elect as a director Rizal Satar.
10. To re-elect as a director Michael St. Clair-George.
11. To re-appoint MHA as independent auditor of the company to
hold office until the conclusion of the next general meeting of the
company to be held in 2026 at which accounts are laid before the
meeting.
12. To authorise the audit committee to determine and approve the
remuneration of the independent auditor.
13. That the directors be and are hereby generally and unconditionally
authorised for the purposes of section 551 of the CA 2006 to
exercise all the powers of the company to allot, and to grant rights
to subscribe for or to convert securities into, shares in the capital
of the company (other than 9 per cent cumulative preference
shares) up to an aggregate nominal amount (within the meaning
of sub-sections (3) and (6) of section 551 of the CA 2006) of
£3,652,585; such authorisation to expire at the conclusion of the
AGM of the company to be held in 2026 (or, if earlier, on 30 June
2026), save that the company may before such expiry make any
offer or agreement which would or might require shares to be
Notice of annual general meeting
138
R.E.A. Holdings plc Annual Report and Accounts 2024
Notice of annual general meeting
continued
allotted, or rights to be granted, after such expiry and the directors
may allot shares, or grant rights to subscribe for or to convert
securities into shares, in pursuance of any such offer or agreement
as if the authorisations conferred hereby had not expired.
14. That the directors be and are hereby generally and unconditionally
authorised for the purposes of section 551 of the CA 2006 to
exercise all the powers of the company to allot, and to grant rights
to subscribe for or to convert securities into, 9 per cent cumulative
preference shares in the capital of the company (the preference
shares) up to an aggregate nominal amount (within the meaning
of sub-sections (3) and (6) of section 551 of the CA 2006) of
£24,000,000, such authorisation to expire at the conclusion of the
AGM of the company to be held in 2026 (or, if earlier, on 30 June
2026), save that the company may before such expiry make any
offer or agreement which would or might require preference shares
to be allotted or rights to be granted, after such expiry and the
directors may allot preference shares, or grant rights to subscribe for
or to convert securities into preference shares, in pursuance of any
such offer or agreement as if the authorisations conferred hereby
had not expired.
Special resolutions
15. That the company be and is hereby generally and unconditionally
authorised for the purposes of section 701 of the CA 2006 to
make market purchases (within the meaning of section 693(4)
of the CA 2006) of its ordinary shares on such terms and in such
manner as the directors may from time to time determine provided
that:
(a)
the maximum number of ordinary shares which may be
purchased is 5,000,000 ordinary shares;
(b)
the minimum price (exclusive of expenses, if any) that may
be paid for each ordinary share is 25p (which amount shall
be exclusive of any expenses, if any);
(c)
the maximum price (exclusive of expenses, if any) that may
be paid for each ordinary share is an amount equal to the
higher of: (i) 105 per cent of the average of the middle
market quotations for the ordinary shares in the capital of
the company as derived from the Daily Official List of the
LSE for the five business days immediately preceding the
day on which such share is contracted to be purchased and
(ii) the higher of the last independent trade of an ordinary
share and the current highest independent bid for an
ordinary share on the LSE; and
(d)
unless previously renewed, revoked or varied, this authority
shall expire at the conclusion of the AGM of the company to
be held in 2026 (or, if earlier, on 30 June 2026)
provided further that:
(i)
notwithstanding the provisions of paragraph (a) above, the
maximum number of ordinary shares that may be bought
back and held in treasury at any one time is 400,000 ordinary
shares; and
(ii) notwithstanding the provisions of paragraph (d) above, the
company may, before this authority expires, make a contract
to purchase ordinary shares that would or might be executed
wholly or partly after the expiry of this authority, and may make
purchases of ordinary shares pursuant to it as if this authority
had not expired.
16. That the directors be and are hereby given power:
(a) for the purposes of section 570 of the CA 2006 and subject
to the passing of resolution 13 set out in the notice of AGM of
the company dated 16 April 2025, to allot equity securities (as
defined in sub-section (1) of section 560 of the CA 2006) of
the company for cash pursuant to the authorisation conferred
by the said resolution 13; and
(b) for the purposes of section 573 of the CA 2006, to sell
ordinary shares (as defined in sub-section (1) of section 560
of the CA 2006) in the capital of the company held by the
company as treasury shares for cash,
as if section 561 of the CA 2006 did not apply to any such
allotment or sale, provided that such powers shall be limited:
(i) to the allotment of equity securities for cash or the sale of
treasury shares for cash in either case in connection with or
pursuant to an offer of, or invitation to apply for, such equity
securities or treasury shares where the offer is made or the
invitation is issued to the holders of relevant securities (and
for this purpose "relevant securities" means ordinary shares
in the capital of the company and, if relevant, any other class
of equity securities of the company where the rights attaching
to such other class of equity securities either (A) entitle the
holders thereof to participate in the offer or invitation; or (B)
include provisions such that the directors consider it necessary
or appropriate to extend the offer or invitation to the holders
of those securities, as permitted by the rights thereof) in
proportion (as nearly as practicable) to the respective numbers
of ordinary shares (or other class of equity securities) held
by them on the record date for participation in the offer or
invitation but subject to such exclusions or other arrangements
as the directors consider necessary or appropriate to deal with
fractional entitlements, treasury shares (other than treasury
shares being sold), record dates or legal, regulatory or practical
difficulties which may arise under the laws of any territory or
the requirements of any regulatory body or stock exchange in
any territory or any other matter whatsoever; and
139
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
R.E.A. Holdings plc Annual Report and Accounts 2024
(ii) otherwise than as specified at paragraph (i) of this resolution,
to the allotment of equity securities and the sale of treasury
shares up to an aggregate nominal amount (calculated, in
the case of the grant of rights to subscribe for, or convert
securities into, shares in the capital of the company, in
accordance with sub-section (6) of section 551 of the CA
2006) of £1,095,775;
and shall expire at the conclusion of the AGM of the company to
be held in 2026 (or, if earlier, on 30 June 2026), save that the
company may before such expiry make any offer or agreement
that would or might require equity securities to be allotted, or
treasury shares to be sold, after such expiry and the directors may
allot equity securities or sell treasury shares, in pursuance of any
such offer or agreement as if the power conferred hereby had not
expired.
17. That the directors be and are hereby given power, subject to
the passing of resolution 13 set out in the notice of AGM of the
company dated 16 April 2025 and in addition to the power given
by resolution 16 set out in the notice of AGM of the company
dated 16 April 2025:
(a) for the purposes of section 570 of the CA 2006 and subject
to the passing of resolutions 13 and 14 set out in the notice
of AGM of the company dated 16 April 2025, to allot equity
securities (as defined in sub-section (1) of section 560
of the CA 2006) of the company for cash pursuant to the
authorisation conferred by the said resolution 13; and
(b) for the purposes of section 573 of the CA 2006, to sell
ordinary shares (as defined in sub-section (1) of section 560
of the CA 2006) in the capital of the company held by the
company as treasury shares for cash.
as if section 561 of the CA 2006 did not apply to any such
allotment or sale, provided that such powers shall be:
(i) used only for the purposes of financing (or refinancing, if the
authority is to be used within 12 months after the original
transaction) a transaction which the directors have determined
to be an acquisition or other capital investment of a kind
contemplated by the Statement of Principles on Disapplying
Pre-Emption Rights most recently published by the Pre-
Emption Group prior to the date of the notice of AGM of the
company dated 16 April 2025; and
(ii) limited to the allotment of equity securities for cash and the
sale of treasury shares up to an aggregate nominal amount
(calculated, in the case of the grant of rights to subscribe for,
or convert securities into, shares in the capital of the company,
in accordance with sub-section (6) of section 551 of the CA
2006) of £1,095,775.
and shall expire at the conclusion of the AGM of the company to
be held in 2026 (or, if earlier, on 30 June 2026), save that the
company may before such expiry make an offer or agreement
that would or might require equity securities to be allotted, or
treasury shares to be sold, after such expiry and the directors may
allot equity securities or sell treasury shares, in pursuance of any
such offer or agreement as if the power conferred hereby had not
expired.
18. That a general meeting of the company other than an AGM may be
called on not less than 14 clear days’ notice.
By order of the board
R.E.A. SERVICES LIMITED
Secretary
16 April 2025
Registered office:
5th Floor North, Tennyson House
159-165 Great Portland Street
London W1W 5PA
Registered in England and Wales no: 00671099
Notice of annual general meeting
140
R.E.A. Holdings plc Annual Report and Accounts 2024
Notice of annual general meeting
continued
Notes
The sections of the accompanying Directors’ report entitled Directors,
Acquisition of the company’s own shares, Authorities to allot share
capital, Authority to disapply pre-emption rights, General meeting
notice period and Recommendation contain information regarding,
and recommendations by the board of the company as to voting on, the
resolutions to be proposed pursuant to 4 to 10 above, and set out at 13 to
18 above, in this notice of the company.
The company specifies that in order to have the right to attend and vote
at the AGM (and also for the purpose of determining how many votes a
person entitled to attend and vote may cast), a person must be entered on
the register of members of the company at 6.00 p.m. on 17 June 2025
or, in the event of any adjournment, at 6.00 p.m. on the date which is two
days before the day of the adjourned meeting. Changes to entries on the
register of members after this time shall be disregarded in determining
the rights of any person to attend or vote at the meeting. Please refer to
the introduction to this notice for information on attendance at the 2025
AGM.
A holder of shares may appoint another person as that holder’s proxy to
exercise all or any of the holder’s rights at the AGM. A holder of shares
may appoint more than one proxy in relation to the meeting provided
that each proxy is appointed to exercise the rights attached to (a)
different share(s) held by the holder. A proxy need not be a member of
the company. A form of proxy for the meeting can be requested from
the company’s registrars, Computershare Investor Services PLC, The
Pavilions, Bridgwater Road, Bristol BS99 6ZY, by calling +44 (0) 370
707 1031 (lines are open from 8.30 am to 5.30 pm (UK time), Monday
to Friday) or by email to webcorres@computershare.co.uk. To be valid,
forms of proxy and other written instruments appointing a proxy must be
received by post or by hand (during normal business hours only) by the
company’s registrars, Computershare Investor Services PLC, The Pavilions,
Bridgwater Road, Bristol BS99 6ZY by no later than 10.00 am on 17
June 2025.
Alternatively, appointment of a proxy may be submitted electronically by
visiting www.investorcentre.co.uk/eproxy. You will be asked to enter the
Control Number, Shareholder Reference Number (SRN) and PIN shown
on the Form of Proxy, so that the appointment is received by the service by
no later than 10.00 am on 17 June 2025 or the CREST electronic proxy
appointment service as described below.
CREST members may register the appointment of a proxy or proxies for
the AGM and any adjournment(s) thereof through the CREST electronic
proxy appointment service by using the procedures described in the
CREST Manual (available via www.euroclear.com/CREST) subject to the
company’s articles of association. CREST personal members or other
CREST sponsored members, and those CREST members who have
appointed (a) voting service provider(s), should refer to their CREST
sponsor or voting service provider(s), who will be able to take the
appropriate action on their behalf.
In order for a proxy appointment, or instruction regarding a proxy
appointment, made or given using the CREST service to be valid, the
appropriate CREST message (a CREST proxy instruction) must be
properly authenticated in accordance with the specifications of Euroclear
UK and Ireland Limited (Euroclear) and must contain the required
information as described in the CREST Manual (available via
www.euroclear.com/CREST). The CREST proxy instruction, regardless of
whether it constitutes a proxy appointment or an instruction to amend a
previous proxy appointment, must, in order to be valid, be transmitted so
as to be received by the company’s registrars (ID: 3RA50) by 10.00 am
on 17 June 2025. For this purpose, the time of receipt will be taken to be
the time (as determined by the time stamp applied to the message by the
CREST applications host) from which the company’s registrars are able
to retrieve the message by enquiry to CREST in the manner prescribed
by CREST. The company may treat as invalid a CREST proxy instruction
in the circumstances set out in Regulation 35(5) (a) of the Uncertificated
Securities Regulations 2001. After this time any change of instructions
to proxies appointed through CREST should be communicated to the
appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting
service provider(s) should note that Euroclear does not make available
special procedures in CREST for particular messages. Normal system
timings and limitations will therefore apply in relation to the input of
CREST proxy instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal
member or sponsored member or has appointed (a) voting service
provider(s), to procure that such member’s CREST sponsor or voting
service provider(s) take(s)) such action as shall be necessary to ensure
that a message is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and, where applicable,
their CREST sponsors or voting service provider(s) are referred, in
particular, to those sections of the CREST Manual concerning practical
limitations of the CREST system and timings.
If you are an institutional investor, you may be able to appoint a proxy
electronically via the Proxymity platform, a process which has been agreed
by the company and approved by the company’s registrar, Computershare
Investor Services PLC. For further information regarding Proxymity, please
go to www.proxymity.io. Your proxy must be lodged by 10.00 am on 17
June 2025 in order to be considered valid. Before you can appoint a proxy
via this process you will need to have agreed to Proxymity’s associated
terms and conditions. It is important that you read these carefully as you
will be bound by them and they will govern the electronic appointment of
your proxy.
Any person to whom this notice is sent who is a person nominated under
section 146 of the CA 2006 to enjoy information rights (nominated
persons) but a nominated person may have a right, under an agreement
with the member by whom such person was nominated, to be appointed
(or to have someone else appointed) as a proxy for the AGM. If a
nominated person has no such right or does not wish to exercise it, such
person may have a right, under such an agreement, to give instructions to
the member as to the exercise of voting rights.
The statement of the above rights of the members in relation to the
appointment of proxies does not apply to Nominated Persons. Those
rights can only be exercised by members of the Company.
Any corporation which is a member can appoint one or more corporate
representatives who may exercise on its behalf all of its powers as a
member provided that, where more than one representative is appointed,
each such representative is appointed to exercise the rights attached to
(a) different share(s) held by the corporation.
Any member attending the AGM has the right to ask questions. The
company must cause to be answered any such question relating to the
business being dealt with at the meeting but no such answer need be
given if (a) to do so would interfere unduly with the preparation for the
meeting or involve the disclosure of confidential information, (b) the
answer has already been given on a website in the form of an answer to
a question, or (c) it is undesirable in the interests of the company or the
good order of the meeting that the question be answered.
A copy of this Notice, and other information required by section 311A of
the CA 2006, may be found on the group's website at www.rea.co.uk.
Under section 527 of the CA 2006, members meeting the threshold
requirements set out in that section have the right to require the company
to publish on a website (in accordance with section 528 of the CA 2006)
a statement setting out any matter that the members propose to raise
at the relevant AGM relating to (i) the audit of the company's annual
accounts that are to be laid before the AGM (including the independent
auditor’s report and the conduct of the audit); or (ii) any circumstance
connected with an auditor of the company having ceased to hold office
since the last AGM of the company. The company may not require the
members requesting any such website publication to pay its expenses in
complying with section 527 or section 528 of the CA 2006. Where the
company is required to place a statement on a website under section 527
of the CA 2006, it must forward the statement to the company's auditor
by not later than the time when it makes the statement available on the
website. The business which may be dealt with at the AGM includes any
141
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
R.E.A. Holdings plc Annual Report and Accounts 2024
statement that the company has been required under section 527 of the
CA 2006 to publish on a website.
Under section 338 and section 338A of the CA 2006, members meeting
the threshold requirements in those sections have the right to require the
company (i) to give, to members of the company entitled to receive notice
of the AGM, notice of a resolution which may properly be moved and is
intended to be moved at the meeting and/or (ii) to include in the business
to be dealt with at the meeting any matter (other than a proposed
resolution) which may be properly included in the business. A resolution
may properly be moved or a matter may properly be included in the
business unless (a) (in the case of a resolution only) it would, if passed, be
ineffective (whether by reason of inconsistency with any enactment or the
company’s constitution or otherwise), (b) it is defamatory of any person,
or (c) it is frivolous or vexatious. Such a request may be in hard copy form
or electronic form, must identify the resolution of which notice is to be
given or the matter to be included in the business, must be authorised by
the person or persons making it, must be received by the company not
later than the date 6 clear weeks before the meeting, and (in the case of
a matter to be included in the business only) must be accompanied by a
statement setting out the grounds for the request.
As at the date of this Notice, the issued share capital of the company
comprises 43,963,529 ordinary shares, of which 132,500 are held as
treasury shares, and 72,000,000 9 per cent cumulative preference
shares. Accordingly, the voting rights attaching to shares of the company
exercisable in respect of each of the resolutions to be proposed at the
AGM total 43,831,029 as at the date of this Notice.
Shareholders may not use any electronic address (within the meaning of
sub-section 4 of section 333 of the CA 2006) provided in this Notice (or
any other related document) to communicate with the company for any
purposes other than those expressly stated.
Glossary
142
R.E.A. Holdings plc Annual Report and Accounts 2024
Glossary
Key Performance Indicators
KPI
Measurement
Purpose
Agricultural operations
FFB crop harvested
The weight in tonnes of FFB delivered to
oil mills from the group’s estates during
the applicable period
To measure field efficiency and assess
the extent to which the group is achieving
its objective of maximising output from its
operations
FFB yield per mature hectare
The FFB crop harvested (as defined
above) divided by the hectarage of the
mature area
To measure field productivity and harvesting
efficiency and assess the extent to which the
group is achieving its objective of maximising
output from its existing plantings
CPO extraction rate achieved
The percentage by weight of CPO
extracted from FFB processed
To measure harvesting and mill efficiency
and assess the extent to which the group is
achieving its objective of maximising output
from its operations
Palm kernel extraction rate achieved
The percentage by weight of palm kernels
extracted from FFB processed
To measure harvesting and mill efficiency
and assess the extent to which the group is
achieving its objective of maximising output
from its operations
CPKO extraction rate achieved
The percentage by weight of CPKO
extracted from palm kernels crushed
To measure mill efficiency and assess the
extent to which the group is achieving its
objective of maximising output from its
operations
New extension area planted
The area in hectares of new land planted
out during the applicable period
To measure performance against the group’s
expansion objective
Stone and sand operations
Stone or sand produced
The weight in tonnes of stone or sand
extracted from each applicable concession
during the applicable period
To measure production efficiency and assess
the extent to which the applicable operations
are achieving the objective of maximising output
Sustainability and climate
Work related fatalities
Number of work related fatalities during
the applicable period
To measure the efficacy of the group’s health
and safety policies
Smallholder percentage
The area of associated smallholder
plantings expressed as a percentage of
the planted area of the group’s estates
To measure performance against the group’s
smallholder expansion objective
GHG emissions per tonne of CPO and
per planted hectare
Emissions measured in tonnes of
CO2 equivalent divided, respectively,
by the weight of CPO extracted from
FFB processed by the group and by
the number of group planted hectares
supplying the group’s mills
To measure the group’s GHG emission
efficiency
Finance
Net debt to total equity
Borrowings and other indebtedness (other
than intra group indebtedness) less cash
and cash equivalents expressed as a
percentage of total equity
To assess the risks of the group’s capital
structure
143
R.E.A. Holdings plc Annual Report and Accounts 2024
Overview
Strategic report
Governance
Group financial statements
Company financial statements
Notice of AGM
Glossary
General
AGM
Annual General Meeting
APT
PT Ade Putra Tanrajeng
ATP
PT Aragon Tambang Pratama
Bank BPD
Bank Pembangunan Daerah Kalimantan
Timur
Bank Mandiri
PT Bank Mandiri Tbk
BOD
Biological Oxygen Demand
BPJS
Indonesian national insurance scheme
CA 2006
The Companies Act 2006
CCWG
Climate Change Working Group
CDM
PT Cipta Davia Mandiri
CGU
Cash Generating Unit
CIF
Cost, Insurance and Freight
COD
Chemical Oxygen Demand
Code
UK Corporate Governance Code 2018
COM
Cakra Oil Mill
CPKO
Crude Palm Kernel Oil
CPO
Crude Palm Oil
CR
Critically endangered
CSR
Corporate and Social Responsibility
CWE
Chandra Widya Edukasi, a specialist palm
oil polytechnic
DEI
Diversity, Equality and Inclusion
DGTR
Disclosure Guidance and Transparency
Rules
Dollar notes
7.5 per cent dollar notes 2026
Dollars, $
The lawful currency of the United States of
America
DSN
PT Dharma Satya Nusantara Tbk
EBITDA
Earnings Before Interest, Tax, Depreciation
and Amortisation
EFB
Empty Fruit Bunches
Emba
Emba Holdings Limited
EN
Endangered
Enggang
PT Enggang Alam Sawita
EUDR
EU Deforestation Regulation
EU RED
European Union Renewable Energy
Directive
FCA
Financial Conduct Authority
FFB
Fresh Fruit Bunches
FOB
Free On Board
FPIC
Free Prior and Informed Consent
FRC
Financial Reporting Council
FRS 101
Financial Reporting Standard 101
Reduced Disclosure Framework
FTE
Full Time Equivalent
GHG
Greenhouse Gas
GHG Corporate
Standard
GHG Protocol Corporate Accounting and
Reporting Standard
GREAT
Grievance Action Team
HCS
High Carbon Stocks
HCV
High Conservation Values
HGU
Hak Guna Usaha; Indonesian land title for
agricultural purposes
IAS
International Accounting Standard
IASB
International Accounting Standards Board
IFRS(s)
International Financial Reporting
Standard(s)
IKN
Ibu Kota Nusantara, new Indonesian capital
city under construction
IPA
PT Indo Pancadasa Agrotama
IPPKH
Izin Pinjam Pakai Kawasan Hutan; permits
granted to mining IUP holders operating in
forest areas
ISCC
International Sustainability and Carbon
Certification
ISPO
Indonesian Sustainable Palm Oil
IUCN
International Union for Conservation of
Nature
IUP
Izin Usaha Pertambangan; mining licence
Izin Lokasi
Indonesian land allocation, subject to
completion of titling
144
R.E.A. Holdings plc Annual Report and Accounts 2024
Glossary
continued
KCC
KCC Resources Limited
KCCRI
PT KCC Resources Indonesia
KCP
Kernel Crushing Plant
KMS
PT Kutai Mitra Sejahtera
KPI
Key Performance Indicator
LSE
London Stock Exchange
LTIP
Long Term Incentive Plan
MIL
Makassar Investments Limited
MCU
PT Millenia Coalindo Utama
MHA
MHA Audit Services LLP; the company's
independent auditor
NDPE
No Deforestation, No Peat, No Exploitation
Notice
Notice of AGM
OHS
Occupational Health and Safety
PalmGHG
RSPO calculator for estimating and
monitoring GHG emissions
PBJ
PT Putra Bongan Jaya
PBJ2
PT Persada Bangun Jaya
Pension
Scheme
REA Pension Scheme
Plasma
Smallholder plantation scheme
PLN
Perusahaan Listrik Negara
POM
Perdana Oil Mill
POME
Palm Oil Mill Effluent
PPE
Property, Plant and Equipment
PPMD
Program Pemberdayaan Masyarakyat Desa
(smallholder scheme)
PROPER
Pollution Control, Evaluation and Rating
PSS
PT Selatan Selabara
PU
PT Prasetia Utama
PUH
PU Holdings Limited
REAF
REA Finance B.V.
REA Kaltim
PT REA Kaltim Plantations
REA Kon
The group's conservation department
REA Mart
Employee cooperative shops
REAS
R.E.A. Services Limited
ROU
Right-of-use
RPI
Retail Prices Index
RSPO
Roundtable on Sustainable Palm Oil
RTE
Rare, Threatened and Endangered
Rupiah, Rp
The lawful currency of Indonesia
SBTi
Science Based Targets initiative
SEARRP
South East Asian Rainforest Research
Partnership
SECR
Streamlined Energy and Carbon Reporting
SEnSOR
Socially and Environmentally Sustainable
Oil palm Research
SHINES
SmallHolder INclusion for Ethical Sourcing
SIA
Social Impact Assessment
SOFRA
Secured Overnight Financing Rate
SOM
Satria Oil Mill
SPA
Share Purchase Agreement
SPOTT
Sustainable Palm Oil Transparency Toolkit
Sterling, pounds
sterling, £
The lawful currency of the United Kingdom
Sterling notes
8.75 per cent sterling notes 2025
SYB
PT Sasana Yudha Bhakti
Taiko
Taiko Plantations Pte. Ltd.
TCFD
Taskforce on Climate-related Financial
Disclosures
TNFD
Taskforce on Nature-related Financial
Disclosures
UK GDPR
UK General Data Protection Regulation
UKLR
UK Listing Rules
Website
www.rea.co.uk
WHO
World Health Organisation
ZSL
Zoological Society of London
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R.E.A. HOLDINGS PLC
R.E.A. Holdings plc
5th Floor North
Tennyson House
159-165 Great Portland Street
London
W1W 5PA
www.rea.co.uk
Registered number
00671099 (England and Wales)