Final Results

R.E.A.Hldgs PLC
26 April 2002

R.E.A. Holdings plc

26 April 2002

Preliminary Results For The Year Ending 31 December 2001



Commentary on preliminary results - 2001

Results

The profit before taxation for 2001, as shown in the accompanying consolidated
profit and loss account, and the comparative figure for 2000, may be analysed as
follows


                                                                          2001                                   2000
                                                                         £'000                                  £'000
Normal Profits
Continuing operations                                                     (34)                                    233
Discontinued operations                                                     13                                  (133)
Sale of assets and investments                                             448                                    524
                                                                         _____                                  _____
                                                                           427                                    624
                                                                         _____                                  _____



As the table shows, the group results were again dominated by profits from the
divestment of assets. There was a small negative contribution from the
continuing operations. That this should have been the case was only to be
expected. Substantially the whole of the continuing operations now comprises the
group's interest in the East Kalimantan project and, whilst that project is now
moving rapidly into production, the major part of the project was still immature
or newly mature during 2001. Moreover, the average crude palm oil price for 2001
at $286 per tonne was a low of the annual averages of the past ten years (and
compares with a high of $671 per tonne in 1998).



Group development

The year saw the substantial completion of the divestment programme started in
1998. This was initially designed to focus the group's operations and to raise
money for the East Kalimantan project. As the programme progressed, the ultimate
objective was extended to one of basing the future of the group entirely on the
East Kalimantan project. This has now been achieved.

Businesses and assets divested during the year consisted of the activities in
East Africa (mainly comprising the sisal growing operations conducted through
REA Vipingo Plantations Limited but also including the East African residue of
the group's merchanting operations), the North American agricultural interests
(derived through a minority shareholding in Anglo American Agriculture PLC), the
long leasehold interest in the group's former head office at 7 Bedford Square
and the remaining participation in the group's tea gardens in Bangladesh
(although, in this last case, the divestment in part remains subject to
shareholders' approval which is to be sought shortly).



The entire net proceeds of the above divestments have been utilised in, or
earmarked for, the provision of further financing to the East Kalimantan
project.



Net assets

The 2001 balance sheet includes a revaluation of the group's Indonesian fixed
assets. As in the past, the net overall revaluation has been combined with
various exchange translation adjustments. These arise mainly from the impact of
currency fluctuations on the translation into sterling of the local currency
values of overseas estates.



Dividends

The semi-annual dividend on the 9 per cent cumulative preference shares due on
30 June 2001 was duly paid but payment of the subsequent dividend due on 31
December 2001 has been deferred. The directors intend to recommence payment of
preference dividends as soon as the cash resources of the company permit and the
directors are confident that payment of such dividends will not prejudice the
group's ability to take the East Kalimantan project as it now stands to full
maturity without further recourse to ordinary shareholders for additional
capital. In the meanwhile, all arrears of preference dividend will accumulate.
The directors recognise that many preference shares are acquired for income and
that such income should be postponed for as short a period as possible. No
ordinary dividends have been paid or are proposed in respect of 2001.



Consolidated balance sheet 31 December 2001
                                                                                2001              2000
                                                                                £000              £000
Fixed asset investments
Tangible fixed assets                                                         50,304             1,625
Investments                                                                      507             7,394
                                                                               _____             _____
                                                                              50,811             9,019
                                                                               _____             _____
Current assets
Stocks                                                                         1,143                35
Debtors                                                                        2,892             8,677
Cash                                                                           5,398             4,109
                                                                               _____             _____
                                                                               9,433            12,821
Creditors up to one year                                                    (39,373)           (5,201)
                                                                               _____             _____
Net current (liabilities) / assets                                          (29,940)             7,620
                                                                               _____             _____
Total assets less current liabilities                                         20,871            16,639
Creditors over one year                                                      (1,871)           (1,100)
                                                                               _____             _____
Net assets                                                                    19,000            15,539
                                                                               _____             _____
Capital and reserves
Called up share capital                                                        8,812            14,890
Share premium account                                                          1,178               720
Capital redemption reserve                                                     3,240             3,240
Warrants                                                                       1,218             1,219
Revaluation reserve                                                          (2,316)             (772)
Profit and loss account                                                        2,465           (3,778)
                                                                               _____             _____
Shareholders' funds*                                                          14,597            15,519
Minority interests                                                             4,403                20
                                                                               _____             _____
Total capital employed                                                        19,000            15,539
                                                                               _____             _____

* Shareholders' funds comprise equity interest of £8,892,000 (2000 £9,814,000)
and non-equity interest of £5,705,000 (2000 £5,705,000).



Consolidated profit and loss account for the year ended 31 December 2001
                                                                      2001         2001         2000         2000
                                                                      £000         £000         £000         £000
Turnover
Continuing                                                                        1,326                       894
Discontinued                                                                        105                    13,054
                                                                                  _____                     _____
                                                                                  1,431                    13,948
Cost of sales                                                                     (403)                  (11,485)
                                                                                  _____                     _____
Gross profit                                                                      1,028                     2,463
Other income and expenses                                                       (1,223)                   (2,819)
                                                                                  _____                     _____
Continuing                                                           (241)                     (505)
Discontinued                                                            46                       149
                                                                     _____                     _____
Group operating loss                                                              (195)                     (356)
Share of operating (loss) / profit of associates
-     continuing                                                                   (29)                       124
-     discontinued                                                                  151                      (22)
Disposal of assets and investments                                                  448                       524
Interest receivable and similar income                                            1,131                     1,541
Interest payable - associates                                                     (807)                     (547)
Interest payable - group                                                          (272)                     (640)
                                                                                  _____                     _____
Profit on ordinary activities before taxation                                       427                       624
Tax on profit on ordinary activities                                              (147)                        15
                                                                                  _____                     _____
Profit on ordinary activities after taxation                                        280                       639
Minority interests (including non-equity                                           (59)                      (21)
interests)
                                                                                  _____                     _____
Profit for the financial year                                                       221                       618
Non-equity dividends                                                              (512)                     (513)
                                                                                  _____                     _____
Retained (loss) / profit for the year                                             (291)                       105
                                                                                  _____                     _____
Earnings per ordinary share
- basic                                                                          (2.6)p                      1.1p
- fully diluted                                                                  (2.6)p                      1.1p





Total consolidated recognised gains and losses for the year ended 31 December 2001
                                                                                   2001                      2000
                                                                                   £000                      £000
Profit for the financial year                                                       221                       618
Currency translation and revaluation adjustments                                (2,254)                   (3,231)
                                                                                  _____                     _____
                                                                                (2,033)                   (2,613)
                                                                                  _____                     _____



Consolidated cash flows for the year ended 31 December 2001
                                                                                   2001                      2000
                                                                                   £000                      £000
Net cash (outflow) / inflow from operating activities                           (2,522)                     5,007
                                                                                  _____                     _____
Returns on investments and servicing of finance
Interest received                                                                 1,131                     1,541
Interest paid                                                                     (272)                     (640)
Investment income                                                                     -                        14
Dividends paid to minority shareholders                                               -                      (40)
Dividends paid to preference shareholders                                         (256)                     (513)
                                                                                  _____                     _____
                                                                                    603                       362
                                                                                  _____                     _____
Taxation                                                                           (59)                         2
                                                                                  _____                     _____
Capital expenditure and financial investment
Purchase of tangible fixed assets                                                 (664)                      (29)
Sale of tangible fixed assets                                                     2,146                         -
Sale of investments                                                                 406                     1,008
                                                                                  _____                     _____
                                                                                  1,888                       979
                                                                                  _____                     _____
Acquisitions and disposals
Purchase of shares in associated companies                                            -                     (313)
Sale of subsidiaries                                                              3,145                       500
Adjustment of selling price of interests in subsidiaries                            100                      (53)
                                                                                  _____                     _____
                                                                                  3,245                       134
                                                                                  _____                     _____
Equity dividends paid                                                                 -                     (368)
                                                                                  _____                     _____
Cash inflow before management of liquid resources and financing                   3,155                     6,116
                                                                                  _____                     _____
Management of liquid resources                                                      108                   (1,641)
                                                                                  _____                     _____
Financing
Net (repayment) of debt up to one year                                          (2,699)                   (4,972)
Net (repayment)/issue of debt over one year                                     (1,064)                       575
Finance lease repayments                                                            (7)                     (129)
Share issue and expenses                                                          1,268                         -
                                                                                  _____                     _____
                                                                                (2,502)                   (4,526)
                                                                                  _____                     _____
                                                                                  _____                     _____
Increase/(decrease) in cash                                                         761                      (51)
                                                                                  _____                     _____



Notes to the preliminary accounts

(a) Segment information

In the tables below the group's net assets, turnover and profit before taxation
(excluding result of sales of assets) are analysed by geographical area and by
business class. The element of continuing turnover and profit before taxation
(excluding result of sales of assets) included in total, is separately
identified.

Net assets, in the case of the geographical analysis, are allocated to the area
where the main operation of a particular activity is carried out and where the
majority of that activity's assets are situated. Unallocated items include
general group financing and head office costs; financing which is directly
attributable to a particular activity has been allocated to that activity.

(i)     Net assets                                                2001            2001             2000             2000
                                                            Associates           Total       Associates            Total
Net assets - by geographical area                                   £m              £m               £m               £m
     United Kingdom                                                  -             5.7                -              8.0
     Continental Europe                                              -               -                -              0.3
     Bangladesh                                                      -             0.5              1.1              1.1
     Indonesia                                                       -            12.8              3.7              3.7
     America                                                         -               -              0.3              0.3
     Africa                                                          -               -              2.1              2.1
                                                                   ___             ___              ___              ___
                                                                     -            19.0              7.2             15.5
                                                                   ___             ___              ___              ___
Net assets - by business class
     Merchanting                                                     -               -                -              0.3
     Agriculture                                                     -            13.3              7.2              7.2
     Unallocated                                                     -             5.7                -              8.0
                                                                   ___             ___              ___              ___
                                                                     -            19.0              7.2             15.5
                                                                   ___             ___              ___              ___
(ii)     Turnover


                                                                  2001            2001             2000             2000

                                                                 Total        of which            Total         of which
                                                                            continuing                        continuing
Turnover - by geographical area                                     £m              £m               £m               £m
     United Kingdom                                                0.3             0.3              2.7              0.3
     Continental Europe                                              -               -              5.4                -
     Asia                                                          0.9             0.9              2.5              0.2
     America                                                         -               -              2.0              0.1
     Africa                                                        0.2             0.1              1.2              0.3
     Australasia                                                     -               -              0.1                -
                                                                   ___             ___              ___              ___
                                                                   1.4             1.3             13.9              0.9
                                                                   ___             ___              ___              ___
Turnover - by geographical area, by origin of
transaction
     United Kingdom                                                0.7             0.6             11.1              0.8
     Continental Europe                                              -               -              2.5                -
     Africa                                                          -               -              0.3              0.1
     Indonesia (1 month)                                           0.7             0.7                -                -
                                                                   ___             ___              ___              ___
                                                                   1.4             1.3             13.9              0.9
                                                                   ___             ___              ___              ___
Turnover - by business class
     Merchanting                                                   0.1               -             12.1              0.2
     Agriculture (1 month)                                         0.7             0.7                -                -
     Other activities                                              0.6             0.6              1.8              0.7
                                                                   ___             ___              ___              ___
                                                                   1.4             1.3             13.9              0.9
                                                                   ___             ___              ___              ___
(iii)     Profit before taxation excluding sales
of assets and investments
                                              2001         2001         2001            2000          2000          2000

                                        Associates        Total     of which      Associates         Total      of which

                                              £000         £000   continuing            £000          £000    continuing

                                                                        £000                                        £000
Profit - by geographical
area, by origin of transaction
     United Kingdom                              -          527          489               -           493           654
     Continental Europe                          -            -            -               -           116             -
     Bangladesh                                 35           35            -             (1)           (1)           (1)
     Indonesia                               (660)        (523)        (523)           (129)         (129)         (129)
     America                                  (56)         (56)            -           (122)         (122)          (92)
     Africa                                    (4)          (4)            -           (193)         (257)         (199)
                                               ___          ___          ___             ___           ___           ___
                                             (685)         (21)         (34)           (445)           100           233
                                               ___          ___          ___             ___           ___           ___
Profit - by business class
     Merchanting                                 -           45            -               -            29            65
     Agriculture                             (685)        (548)        (523)           (445)         (445)         (415)
     Other activities                            -          118          125               -          (67)             -
     Unallocated                                 -          364          364               -           583           583
                                               ___          ___          ___             ___           ___           ___
                                             (685)         (21)         (34)           (445)           100           233
                                               ___          ___          ___             ___           ___           ___



(b) Taxation
                                                                      2001             2000
                                                                      £000             £000
UK Corporation tax                                                   (122)             (20)
Foreign taxation                                                      (97)             (51)
Share of taxation of                                                  (13)               23
associated companies
Previous years                                                          85               63
                                                                       ___              ___
                                                                     (147)               15
                                                                       ___              ___



(c) Tangible fixed assets



Consolidated balance sheet



The movement in the year was as follows:
                                             Estates, land and         Leasehold         Plant and            Total
                                                     buildings          property         machinery
                                                                                                              £'000
                                                         £'000             £'000             £'000
Cost or valuation
                                                            
    Beginning of year                                        -             1,500               233            1,733

                                                       
    Revaluation and foreign exchange                   (4,187)                 -                40          (4,147)

                                                           
    Additions                                              580                 -               188              768

                                                        
    New subsidiary                                      50,260                 -             5,645           55,905

                                                            
    Subsidiaries sold                                        -                 -              (23)             (23)

                                                            
    Disposals                                                -           (1,500)             (116)          (1,616)

                                                        ______            ______            ______           ______
                                                        46,653                 -             5,967           52,620
                                                        ______            ______            ______           ______
Depreciation
                                                           
    Beginning of year                                        -                 -               108              108

                                                             
    Revaluation and foreign exchange                         6                 -                 8               14

                                                            
    Charge                                                  70                 -                67              137

                                                         
    New subsidiary                                       1,000                 -             1,115            2,115

                                                             
    Subsidiaries sold                                        -                 -              (17)             (17)

                                                            
    Disposals                                                -                 -              (41)             (41)

                                                        ______            ______            ______           ______
                                                         
    End of year                                          1,076                 -             1,240            2,316

                                                        ______            ______            ______           ______
Net book value
                                                        
    End of year                                         45,577                 -             4,727           50,304

                                                        ______            ______            ______           ______
                                                            
    Beginning of year                                        -             1,500               125            1,625

                                                        ______            ______            ______           ______



At the year end the net book value of finance leases in plant and machinery
included above was £150,000 (2000 £44,000).



The estates were revalued at the year end by PT Cakra Hasta Konsultan, an
independent external valuer in Indonesia, at 31 December 2001. The valuation is
based on a seven year crop method.



(d) Creditors: falling due within one year
Consolidated balance sheet                                                          2001            2000
                                                                                    £000            £000
Bank loans and overdrafts - agriculture                                         (27,931)               -
Bank loans and overdrafts - merchanting                                                -            (19)
Current portion of debenture loans                                                     -            (75)
Loan from related party                                                                -         (2,630)
Loan from a shareholder in a subsidiary                                          (5,638)               -
Lease obligations                                                                   (83)            (38)
Trade creditors                                                                  (1,284)            (43)
Associates                                                                             -            (10)
Taxation and social security                                                       (142)            (43)
Other creditors                                                                  (1,493)         (2,219)
Accruals                                                                         (2,802)           (124)
                                                                                     ___             ___
                                                                                (39,373)         (5,201)
                                                                                     ___             ___

During the year, a subsidiary defaulted on payment of interest due on bank loans
and overdrafts - agriculture and of principal due on certain of those loans. The
subsidiary has entered into negotiations with its bankers to reschedule these
loans and has agreed a memorandum of understanding setting out proposed terms
for this rescheduling. The first date on which a repayment will be made is to be
postponed. Since under FRS 4 Capital Instruments the maturity of debt is
determined by reference to the earliest date on which the lender can require
repayment, all bank loans are shown as fully due within one year.

A subsidiary has granted a floating charge over its fixed assets, stocks and all
other tangible properties to secure bank borrowings of £17,931,000 and has
granted a mortgage over the phase II development of the estate to secure bank
borrowings of £7,586,000.



(e) Audit opinion and fundamental uncertainty

This statement was approved by the board on 26 April 2002. It does not
constitute the Company's statutory accounts for the year ended 31 December 2001
but is derived from those accounts. The Auditors have reported on those accounts
and their report is unqualified and did not contain statements under s237(2) or
(3) of the Companies Act 1985. However, in the audit report in respect of the
year ended 31 December 2001, the auditors have referred to fundamental
uncertainty affecting the group in the following terms:


    'Fundamental uncertainty and going concern

    The group's operations in Indonesia continue to be exposed to adverse
    economic, political and social conditions. In forming our opinion we have
    considered the adequacy of disclosures, made in the financial statements
    concerning the economic, political and social situation in Indonesia and its
    effect on the group.

    Although exchange rates and other economic indicators were less than
    volatile during the year, it is not possible to determine the effect that
    social unrest, political change or further deterioration in economic
    conditions may have on future values of assets, earnings, profitability or
    cash flows of the group. The financial statements include the effects of
    these factors so far as can be currently determined and estimated.

    The financial statements have been prepared on a going concern basis. There
    remains a fundamental uncertainty as to the effect on the group's operations
    of the economic, political and social conditions in Indonesia.

    Our opinion is not qualified in this respect.

    In forming our opinion, we have considered the adequacy of disclosures made
    in the financial statements in Notes 7 and 23 concerning the default of
    payment of interest by PT REA Kaltim Plantations on its loans, and the
    uncertainty over the rescheduling or replacement of these loans. In view of
    the significance of this uncertainty we consider that it should be brought
    to your attention but our opinion is not qualified in this respect.'



It is expected that full accounts for 2001 will be despatched to shareholders
today.



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