R E A : Annual report in respect of 2021

R.E.A. HOLDINGS PLC

Annual Report and Accounts

2021

R.E.A. Holdings plc ("REA") 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 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.

Bay owl (Phodilus badius)

Harlequin tree frog (Rhacophorus pardalis)

Bornean Orangutan (Pongo pygmaeus morio) , mother & baby

Bornean Orangutan (Pongo pygmaeus morio)

Blue-eared Kingfisher (Alcedo meninting)

Leopard cat (Prionailurus bengalensis)

Contents

Overview 2

Key statistics 2

Highlights 3

Overview

Officers and advisers 4

Map 5

Strategic report 6

Chairman's statement 6 Introduction and strategic environment (including Non-financial information and

Section 172(1) statements and Taskforce on Climate-related Financial Disclosures) 8

Agricultural operations 15

Stone and coal interests 21

Sustainability (including streamlined energy and carbon reporting) 23

Strategic report

Finance 33

Principal risks and uncertainties 38

Governance 45

Board of directors 45

Directors' report 46

Corporate governance report 55

Audit committee report 61

Governance

Directors' remuneration report 66

Directors' responsibilities 75

Independent auditor's report 76

Group financial statements 86

Income statement 86

Statement of comprehensive income 87

Balance sheet 88

Statement of changes in equity 89

Cash flow statement 90

Accounting policies 91

Notes 97

Group financial statements

Company financial statements 128

Balance sheet 128

Statement of changes in equity 129

Accounting policies 130

Notes 131

Notice of annual general meeting 138

Company financial statements

References in this report to group operating companies in Indonesia are as listed under the map on page 5.

The terms "FFB", "CPO" and "CPKO" mean, respectively, "fresh fruit bunches", "crude palm oil" and "crude palm kernel oil".

References to "dollars" and "$" are to the lawful currency of the United States of America.

References to "rupiah" and "Rp" are to the lawful currency of Indonesia.

Notice of AGM

References to "sterling", "pounds sterling" and "£" are to the lawful currency of the United Kingdom.

R.E.A. Holdings plc Annual Report and Accounts 2021

01

Key statistics

2021	2020	2019	2018	2017
Results ($'000)
Revenue	191,913	139,088	124,986	105,479	100,241
Earnings before interest, tax,
depreciation and amortisation*	75,807	36,775	18,173	12,287	20,051
Profit / (loss) before tax	29,198	(23,250)	(43,676)	(5,474)	(21,862)
Loss attributable to ordinary shareholders	(1,500)	(13,604)	(17,814)	(22,021)	(27,408)
Cash generated by / (contributed to) operations**	64,035	53,579	26,505	(8,826)	45,816
Returns per ordinary share
Loss (US cents)	(3.4)	(31.0)	(43.1)	(54.4)	(67.0)
Dividend (pence)	-	-	-	-	-
Land areas (hectares)***
Mature oil palm	35,665	34,745	33,055	33,292	34,076
Immature oil palm	351	1,219	3,099	3,208	10,018
Planted areas	36,016	35,964	36,154	36,500	44,094
Infrastructure and undeveloped	28,506	28,558	28,371	28,025	32,033
Fully titled	64,522	64,522	64,525	64,525	76,127
Subject to completion of title	10,723	10,723	15,873	17,837	34,347
Total	75,245	75,245	80,398	82,362	110,474
FFB Harvested (tonnes)***
Group	738,024	765,821	800,666	800,050	530,565
Third party	210,978	205,544	198,737	191,228	114,005
Total	949,002	971,365	999,403	991,278	644,570
Production (tonnes)***
Total FFB processed	933,120	948,260	979,411	969,356	630,600
CPO	209,006	213,536	224,856	217,721	143,916
Palm kernels	44,735	47,186	46,326	45,425	29,122
CPKO	17,361	16,164	15,305	16,095	11,052
CPO extraction rate ****	22.4%	22.5%	23.0%	22.5%	22.8%
Yields (tonnes per mature hectare)***
FFB	20.7	22.0	24.2	23.1	15.6
CPO	4.6	5.1	5.6	5.4	3.6
CPKO	0.4	0.4	0.4	0.4	0.3
Average exchange rates
Indonesian rupiah to US dollar	14,345	14,570	14,158	14,215	13,400
US dollar to pounds sterling	1.38	1.29	1.28	1.33	1.29

* **see note 5 see note 33

*** 2019 and 2020 hectarage and FFB harvested reflect certain adjustments as described in "Agricultural operations" in the Strategic report; 2018 hectarage excludes PT Putra Bongan Jaya ("PBJ"), but FFB harvested and production include PBJ to August 2018 **** 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

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R.E.A. Holdings plc Annual Report and Accounts 2021

Highlights

Overview

• • Return to profitability in 2021 and payment of preference dividends resumed

• • Higher average selling prices for CPO and CPKO: increased by, respectively, 37 per cent and 88 per cent to $777 per tonne (2020: $566) and $1,157 per tonne (2020: $615)

Financial

• • Revenue increased by 38 per cent in 2021 to $191.9 million (2020: $139.1 million)

• • EBITDA more than doubled to $75.8 million (2020: $36.8 million)

• • Group net indebtedness reduced from $189.4 million in 2020 to $175.7 million in 2021

• • Dollar note maturity extended by four years to 30 June 2026

• • New Indonesian bank facilities secured with longer maturities and lower interest rates

Agricultural operations

• • FFB production of 738,024 (2020: 765,821)

• • CPO extraction rate averaging 22.4 per cent (2020: 22.5 per cent)

• • Expansion of SOM complete, ensuring sufficient processing capacity for foreseeable future

Stone and coal

• • In principle agreement for sale by ATP of 1 million cubic metres of andesite stone to neighbouring coal company over 24 months with quarrying expected to commence in 2022

• • Coal mining operations recommenced at IPA's Kota Bangun concession and first 3 coal shipments totalling 94,500 tonnes completed to date in 2022

• • Group expecting early recovery of coal loans and to withdraw from coal interests as soon as practicable

Sustainability

• • Increased score in the SPOTT assessment by the Zoological Society of London of 84.4 per cent, up from 79.8 per cent (ranked 8th out of 100 companies assessed)

• • Independent review of strategy and practices commissioned to evaluate and address climate related risks and opportunities and develop roadmap for further reducing GHG emissions

• • Pilot projects established to provide financing and training for smallholders to improve productivity, traceability of FFB supply chain, encourage diversification, and reduce pressure on forests outside the group's concessions

• • Platinum certificate awarded by Ministry of Manpower for the group's Covid prevention and control programme

Outlook

• • CPO prices firm in the first quarter of 2022 and projected to remain at remunerative levels

• • Resumption of extension planting and further replanting of older areas in 2022 to enhance agricultural operations

• • Programme to increase durability of roads based on stone to be provided by the ATP quarry

• • Third methane capture plant to be constructed at SOM to improve carbon footprint and further reduce dependence on diesel for transport and electricity generation

• • Healthy margins again improving the financial position in 2022, despite significant potential inflationary costs, particularly for fertiliser

• • Longer term, expansion of planted hectarage and progressive reduction in net indebtedness placing the group on a solid footing for the future

R.E.A. Holdings plc Annual Report and Accounts 2021

Overview

Strategic reportGovernanceGroup financial statementsCompany financial statementsNotice of AGM

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