21st Sep 2006 17:17
R.E.A.Hldgs PLC21 September 2006 R.E.A. HOLDINGS PLC - 2006 INTERIM RESULTS SUMMARY======= 6 months to 6 months to 30 June 30 June 2006 2005 Change £'000 £'000 % Revenue 9,064 8,209 + 10 Earnings before interest, tax, depreciation, amortisation and biological gain 3,967 3,716 + 7 Profit before tax 5,505 5,425 + 1 Profit for the period 3,763 3,844 - 2 Profit attributable to ordinary shareholders 3,143 2,902 + 8 Earnings per ordinary share (diluted) 10.7p 10.6p + 1 Dividend per ordinary share nil nil nil CHAIRMAN'S STATEMENT====================Results The profit before tax for the six months to 30 June 2006 amounted to £5,505,000,representing a slight increase on the profit before tax for the correspondingperiod of 2005 of £5,425,000. The results principally reflected the combinationof a higher gross profit for the period (£4,803,000 against £4,141,000) and alower biological gain (£1,926,000 against £2,410,000). At the gross profit level, the benefit of increasing crops more than offsetsignificant increases in operating costs. These increases resulted from thedirect impact of a tripling of diesel oil prices following the 2005 removal ofstate subsidies, wage inflation in Indonesia, itself partly induced by thehigher fuel prices, and a strengthening of the Indonesian rupiah against the USdollar with a consequent increase in operating costs in US dollar terms. Thelower biological gain was derived from a revaluation of the group's biologicalassets at 30 June 2006 on bases that incorporated a number of adjustments to thevariables underlying the 31 December 2005 valuation of those assets. Suchadjustments assumed, in particular, a slightly reduced contribution margin fromfuture biological production and a higher overall cost per hectare to carry tomaturity the significant areas of oil palm that the group is developing. Although a marginally increased rate of tax as compared with the preceding yearmeant that the profit for the period fell short of that of the first six monthsof 2005, profit attributable to ordinary shareholders was in fact higher at£3,143,000 against £2,902,000. This was the consequence of a reduction in profitattributable to minority interests following the company's acquisition, inJanuary 2006, of the former 12.3 per cent minority shareholding in the company'ssubsidiary, Makassar Investments Limited ("Makassar"). Ordinary dividend The group continues to face continuing demands for cash to finance itssubstantial extension development programme and to meet debt repayments. Againstthis, the directors recognise that it is important to many shareholders thatthey receive a sustainable dividend income from their shareholdings. Moreover,the directors consider that the progress of recent months in the consolidationof the group's finances, as detailed under "Group development" below, hasimproved the group's stability and that the group's current results andimmediate prospects are encouraging. Accordingly, they propose that the paymentof ordinary dividends should be resumed and intend to declare an interimdividend in lieu of final in respect of 2006 of 1p per ordinary share, suchdividend to be paid in early 2007. Operations Fresh fruit bunches ("FFB") harvested during the six months to 30 June 2006totalled 191,000 tonnes. This was well ahead of the FFB crop of 148,000 tonnesachieved in the corresponding period of 2005 and some 27,000 tonnes ahead ofbudget. Whilst it is satisfactory to be able to report a surplus against budget,year to year variations in the monthly phasing of crops are normal and it shouldnot be assumed that the budgeted crop for 2006 of 353,000 tonnes will beexceeded, particularly given that, although crops have remained comfortablyahead of budget up to end August 2006, recent bunch censuses for the last fourmonths of the year suggest that a cyclic depression in cropping in some of themature areas may result in a crop outturn for the year much in line with budget.Cyclic depressions or rest periods are a normal aspect of the oil palm'scropping cycle. Crude palm oil ("CPO") and palm kernel production amounted to, respectively,43,900 tonnes (36,500 tonnes) and 7,400 tonnes (6,600 tonnes) reflectingextraction rates of 23.0 per cent for CPO (24.7 per cent) and 3.9 per cent for kernels(4.7 per cent). The lower than normal extraction rates are attributed to sub-optimalcross-pollination in the last quarter of 2005 following the very high levels ofrainfall received in that period. Rainfall in the six months to 30 June 2006averaged 2,070 millimetres. This rainfall was lower than the 2,500 millimetresreceived in the first half of 2005 and much better distributed. Improvedextraction rates can therefore be expected in the second half of 2006. The CPO price in the first half of 2006 averaged US$432 per tonne, CIFRotterdam, as compared with an average of US$418 per tonne for the first half of2005. The group continues to explore options for minimising shipping costs so asto reduce the differential between the CIF Rotterdam price for CPO and the priceachievable FOB Samarinda (the group's closest port). To this end, the group hasrecently expanded its barge fleet by time chartering a 3,000 tonne barge, doublethe tonnage of the largest barge previously operated by the group. Initialresults suggest that this latest addition to the barge fleet will enable thegroup to improve returns from local CPO sales by delivering to local buyers' nominated destinations rather than, as has hitherto been the case, requiring that the CPO be collected from Samarinda. The group's extension development programme continues to be a major area ofoperational focus. The group has previously suffered delays to the developmentprogramme as a result of difficulties in agreeing compensation claims from, orotherwise satisfying the concerns of, villagers from villages adjacent to thegroup's operational areas. The first six months of 2006 saw a recurrence ofthese difficulties with the villagers on this occasion expressing concern aboutthe grant to the group by the Indonesian government of titles to land claimedhistorically to have been used by the villages for various purposes. Thesedifficulties have, for the moment at least, been overcome as the group'sexpanding community development and smallholder programmes begin to bear fruitand development is now proceeding apace. Provided that weather and other normalconstraints permit the current rate of progress to be maintained, the groupshould be able to achieve its targeted extension development of 6,000 hectaresduring 2006 and may even, prior to year end, make a start on the targeted 2007development of 7,000 hectares. Construction of the group's second oil mill and palm kernel processing plantremains on schedule and the mill and processing plant are currently beingcommissioned. The existing oil mill continues to operate satisfactorily. Group development The first half of 2006 saw substantial progress in the consolidation of thegroup's financial position. The longstanding dispute between the group and Mr M E Zukerman and hisassociated interests (the "MEZ group") was finally resolved with the payment bythe group to the MEZ group of $6 million in cash, in settlement of variousclaims by the MEZ group, and the acquisition by the company, for a considerationof $19 million, of the minority interest in Makassar formerly owned by the MEZgroup. This consideration was satisfied by the issue by the company to the MEZgroup of $19 million nominal of 7.5 per cent dollar notes 2012/14 of the company("dollar notes"). During the period, the company also issued a total of 4,200,000 new ordinaryshares and 3,000,000 new preference shares for cash to raise some £13.4 million,net of estimated expenses. Of these monies, $6 million was applied inrefinancing the $6 million payment to the MEZ group and $5.7 million in fundingliquidation distributions to third party shareholders in the company'ssubsidiary, Makassar Participation plc, which is being wound up. Proposals agreed in April 2006 with the holders of the company's outstandingwarrants resulted in amendment of the terms of the warrants so as to requirethat all warrants be exercised or allowed to lapse during 2006. Following thisamendment, 910,858 warrants were exercised during July and August 2006 and it isto be expected that the balance of 637,949 warrants will be exercised by or onbehalf of the remaining holders by the end of October 2006. The consequent cashinflow during the second half of the 2006 should be some £900,000. The thirdquarter of 2006 has also seen a net cash inflow to the company of $5.4 millionfrom the completion of the dollar note offering programme with the issue of afurther $6 million nominal of dollar notes increasing the nominal amount ofdollar notes in issue to the full $30 million originally proposed. The combined effect of the foregoing transactions has been to eliminate allgroup minority interests, other than interests representing local investorparticipations in Indonesia, and to provide the group with cash resourcesappropriate to the immediate needs of the group's extension developmentprogramme. Group indebtedness now comprises the $30 million nominal of dollarnotes referred to above, a term bank loan of $41 million and modest drawingsunder working capital and leasing facilities. The directors are satisfied thatthis level of indebtedness can be supported by the group but retain theirpreviously expressed concern that the term bank loan is repayable by instalmentsover a five year period when the new oil palm plantings that the loan is, insubstance, financing will take nearly four years from nursery planting tomaturity and then a further period of three to four years to full yield. Thegroup continues to explore alternative debt financing strategies to address thismismatch of maturity profiles. Good progress continues to be made in completing the formalities relating to theestablishment of PT Sasana Yudha Bakti and PT Kutai Kartanegara Sakti as 95 percent subsidiaries of the company, with 5 per cent local Indonesian investorparticipations, and in finalising titles to all of the land areas, totallingsome 36,000 hectares, that have been allocated to these subsidiaries. Thecompany has also initiated discussions regarding the possible formation of afurther 95 per cent subsidiary, again with local Indonesian investorparticipation of 5 per cent, to secure an additional land area of around 8,000hectares adjacent to the existing allocated areas. Were full titles to beobtained to both the 36,000 hectares and the 8,000 hectares, the fully titledareas held by the group would, in total, increase to 74,000 hectares. Board of the company The directors are pleased to announce the appointment of David Killick as anindependent non-executive director of the company. After qualifying as a barrister, Mr Killick, who is aged 68, worked for over 28 years for the Commonwealth Development Corporation serving as a member of its management boardfrom 1980 to 1994. He therefore brings to the company many years' experience ofagricultural and other projects in developing countries generally and Indonesiain particular. Since retiring from Commonwealth Development Corporation, Mr Killick has held a number of directorships. These include a non-executivedirectorship of Makassar of which he has been a board member since 1995. Mr Killick is currently also a director of Siberia Investment Management CompanyLimited and Reallyenglish.com Limited and a member of the council of management of Slough Council for Voluntary Service. Prospects Recent months have seen the CIF Rotterdam price of CPO at over $500 per tonne and it is currently standing at slightly below that level. If such higher prices for CPO are maintained throughout the remainder of 2006, the group can expect a slight increase in US dollar revenues in the second half of the year notwithstanding that a crop outturn for the year at the budgeted level would imply FFB production in the second half of 162,000 tonnes against the 191,000 tonnes harvested in the first half. Looking further forward, consumption of vegetable oils continues to growstrongly with traditional food offtake augmented by increased use of vegetableoil in bio-diesel and other bio-fuels. Whilst the viability of bio-fuels dependsmaterially on the price of petroleum oil and the levels of government subsidiesdesigned to encourage the use of sustainable resources, the reported expansionof bio-diesel manufacturing capacity in Malaysia and Indonesia seems likely atleast to maintain CPO prices at good levels well into 2007 and thereafter tounderpin vegetable oil markets in a way that may moderate the extent of anyfuture downturn in those markets. Whilst the ability to sell its produce at favourable prices is obviously apositive development for the group, CPO prices are set by international marketsand the group cannot influence them. The group therefore continues toconcentrate its energies on maximising production efficiency with a view toachieving a unit cost of production that is as low as, and ideally lower than,that of other producers of CPO and competitor vegetable oils. The directorsbelieve that realisation of this objective will be facilitated by capitalisingon the economies of scale that a single site plantation permits and building thegroup's East Kalimantan operations, which already represent a substantial unit,into one of the largest single site plantation units in South East Asia. The prospective achievement of the current year extension development targetprovides encouragement that the group has the logistical capacity to manage alarge expansion programme. Cost inflation in Indonesia is impacting developmentcosts, but extension planting in areas adjacent to the existing developed areasstill offers the prospect of attractive returns. Accordingly, the directorsintend to continue extending the existing operations as rapidly as the dictatesof prudence and the group's land bank and finances permit. Assuming that the 2006 extension development target is achieved, developedhectarage at the end of the year would amount to some 25,000 hectares. That isnearly double the existing mature area of 13,000 hectares. The enlarged hectarage, when fully mature, can therefore be expected to result in a near doubling of crops with the expectation of still further material increases in crops from the extension developments of 2007 and later years. The resultant impact on revenues, with a central overhead that should not increase proportionately as the group expands, offers exciting prospects for the future value of the group. RICHARD M ROBINOWChairman21 September 2006 CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2006=================================================================== 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 Note £'000 £'000 £'000Revenue 2 9,064 8,209 14,944Cost of sales (4,261) (4,068) (6,641) -------------------------------Gross profit 4,803 4,141 8,303Net gain arising from changes in fair value of biological assets 7 1,926 2,410 4,133Other operating income 5 479 6Distribution costs (93) (67) (190)Administrative expenses (1,188) (1,177) (1,572)Other operating expenses - (51) - ------------------------------- Operating profit 5,453 5,735 10,680Investment revenues 2 751 60 98Finance costs 4 (699) (370) (1,156) ------------------------------- Profit before tax 5,505 5,425 9,622Tax 5 (1,742) (1,581) (3,323) ------------------------------- Profit for the period 3,763 3,844 6,299 =============================== Attributable to:Ordinary shareholders 3,143 2,902 4,520Preference shareholders 450 383 765Minority interest 170 559 1,014 ------------------------------- 3,763 3,844 6,299 =============================== Earnings per 25p ordinary share 6Basic 11.5p 14.4p 20.0pDiluted 10.7p 10.6p 16.7p All operations in all periods are continuing. CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2006============================================= 30 June 30 June 31 December 2006 2005 2005 Note £'000 £'000 £'000Non-current assetsGoodwill 10 6,798 - -Biological assets 7 69,173 59,709 68,192Property, plant and equipment 12,743 8,172 10,565Prepaid operating lease rentals 1,017 447 661Deferred tax assets 5,357 6,675 5,619Non-current receivables 1,662 941 1,193 --------------------------------- Total non-current assets 96,750 75,944 86,230 Current assetsInventories 2,608 1,700 2,017Trade and other receivables 1,680 2,655 2,854Assets held for resale - 1,067 -Cash and cash equivalents 9,014 1,093 5,007 ---------------------------------Total current assets 13,302 6,515 9,878 ---------------------------------Total assets 110,052 82,459 96,108 ---------------------------------Current liabilitiesTrade and other payables (3,266) (4,887) (7,122)Current tax liabilities (136) (132) (141)Obligations under finance leases (161) (227) (354)Bank loans (4,730) (3,019) (2,180)Other loans and payables (152) - (149) ---------------------------------Total current liabilities (8,445) (8,265) (9,946) ---------------------------------Non-current liabilitiesBank loans (18,378) (12,218) (19,913)US dollar notes (12,889) - (2,852)Convertible loan stock - (2,367) -Deferred tax liabilities (17,049) (16,300) (17,372)Obligations under finance leases (172) (421) (190)Other loans and payables (1,796) (1,688) (1,702) ---------------------------------Total non-current liabilities (50,284) (32,994) (42,029) ---------------------------------Total liabilities (58,729) (41,259) (51,975) ---------------------------------Net assets 51,323 41,200 44,133 =================================EquityIssued share capital 18,884 13,536 14,788Share premium account 9,172 3,888 2,627Capital redemption reserve - 3,240 3,240Warrants 1,162 1,164 1,162Translation reserve (8,802) (7,004) (5,858)Equity reserve - 369 -Special reserve (non-distributable) 2,768 - -Retained earnings 28,043 20,050 21,668 --------------------------------- 51,227 35,243 37,627Minority Interests 96 5,957 6,506 ---------------------------------Total equity 51,323 41,200 44,133 ================================= CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE FOR THE SIX MONTHS TO 30 JUNE 2006======================================================= 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000Exchange translation differences (3,357) 2,398 3,522Tax on items taken directly to equity 148 110 352 -------------------------------Net income recognised directly in equity (3,209) 2,508 3,874Profit for the period 3,763 3,844 6,299 ------------------------------- Total recognised income and expense for the period 554 6,352 10,173 ===============================Attributable to:Ordinary shareholders 199 5,010 7,791Preference shareholders 450 383 765Minority interests (95) 959 1,617 ------------------------------- 554 6,352 10,173 =============================== RECONCILIATION OF MOVEMENTS IN EQUITY FOR THE SIX MONTHS TO 30 JUNE 2006======================================================================== 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000Total recognised income and expense for the period 554 6,352 10,173Issue of new ordinary shares less expenses 10,334 - -Issue of preference shares less expenses 3,067 - -Issue of new ordinary shares arising on conversion of convertible loan stock - 5 7Issue of new ordinary shares arising on restructuring of the balance of the convertible loan stock and write off of debt and equity issuance costs - - (384)Issue of ordinary shares on exercise of warrants - - 2Dividends to minority shareholders of a subsidiary (60) (110) (236)Dividends to preference shareholders (450) (383) (765)Acquisition of minority interest in a subsidiary (4,011) - -Redemption of shares in a subsidiary held by minorities (2,244) - - -------------------------------- 7,190 5,864 8,797Equity at beginning of period 44,133 35,336 35,336 --------------------------------Equity at end of period 51,323 41,200 44,133 ================================ CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS TO 30 JUNE 2006=================================================================== 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 Note £'000 £'000 £'000Operating activitiesOperating profit 5,453 5,735 10,680Depreciation of property, plant and equipment 428 384 806Amortisation of prepaid operating lease rentals 12 7 19Biological gain (1,926) (2,410) (4,133)Gain on disposal of property, plant and equipment - - (5)Loss on disposal of investment - - 9 --------------------------------Operating cash flows before movements in working capital 3,967 3,716 7,376(Increase)/decrease in inventories (691) 122 (116)Decrease/(increase) in receivables 459 (202) (647)(Decrease)/increase in payables (2,766) 814 2,933Exchange differences (336) (231) (505) --------------------------------Cash generated by operations 8 633 4,219 9,041Taxes paid (45) (31) (59)Interest paid (699) (335) (1,008) --------------------------------Net cash from operating activities (111) 3,853 7,974 --------------------------------Investing activitiesInterest received 156 60 98Proceeds on disposal of property, plant and equipment - - 15Purchases of property, plant and equipment (3,488) (435) (2,931)Expenditure on biological assets (4,006) (1,596) (5,660)Expenditure on operating leases (426) (132) (332)Costs incurred in acquisition of minority interest in a subsidiary (198) - -Disposal of investments - - 1,058 -------------------------------- Net cash from investing activities (7,962) (2,103) (7,752) --------------------------------Financing activitiesPreference dividends paid (450) (383) (765)Dividends paid to minority shareholders in a subsidiary (850) - -Repayment of borrowings - (1,264) (17,463)Repayment of obligations under finance leases (200) (114) (158)Proceeds of issue of ordinary share capital less expenses 10,334 - (138)Proceeds of issue of preference share capital less expenses 3,067 - -Redemption of preference shares by a subsidiary undertaking (2,244) - -New borrowings raised 2,639 - 22,093Issue costs of US dollar notes (30) - (49) --------------------------------Net cash from financing activities 12,266 (1,761) 3,520 --------------------------------Cash and cash equivalentsNet increase/(decrease) in cash and cash equivalents 4,193 (11) 3,742Cash and cash equivalents at beginning of period 5,007 1,061 1,061Effect of exchange rate changes (186) 43 204 --------------------------------Cash and cash equivalents at end of period 9,014 1,093 5,007 ================================ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS==============================================1. Basis of accounting The consolidated financial statements for the six months ended 30 June 2006 havebeen prepared in accordance with International Financial Reporting Standards(IFRS) endorsed for use by the EU at that date and in accordance with theprovisions of the Companies Act 1985. The group accounting policies are set outin the annual report and financial statements for 2005. The consolidated interimfinancial information has been prepared in accordance with those accounting policies and with IAS 34 "Interim Financial Reporting". 2. Revenue 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000Sales of goods 9,010 8,084 14,770Revenue from services 54 125 174 ------------------------------- 9,064 8,209 14,944Other operating income 5 479 6Investment revenues 751 60 98 -------------------------------Total revenue 9,820 8,748 15,048 -------------------------------Investment revenues comprises:Interest receivable 157 60 98Exchange profit on redemption of preference shares held by minority shareholders in a subsidiary undertaking 594 - - ------------------------------- 751 60 98 ------------------------------- 3. Segment information The group operates in only one business segment and hence no analysis of resultsby segment is required. 4. Finance costs 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000Interest on bank loans 1,098 539 1,302Interest on US dollar notes 482 - 94Interest on convertible loan stock - 91 95Interest on other loans - - 168Interest on obligations under finance leases 22 35 64 ------------------------------- 1,602 665 1,723Amount included as additions to biological assets (849) (360) (967)Amount capitalised on acquisition (54) - - ------------------------------- 699 305 756Other finance charges - 11 277Exchange loss on repayment of long term intra-group foreign currency loans - 54 123 ------------------------------- 699 370 1,156 ------------------------------- 5. Tax 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000Current tax:UK corporation tax - - -Foreign tax 40 31 79 -------------------------------Total current tax 40 31 79 Deferred tax:Current year 1,702 1,550 3,244Attributable to an increase in the rate of tax - - - -------------------------------Total deferred tax 1,702 1,550 3,244 ------------------------------- Total tax 1,742 1,581 3,323 ------------------------------- 6. Earnings per share 6 months to 6 months to Year to 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000Earnings for the purpose of basic earnings per share* 3,143 2,902 4,520Interest on convertible loan stock (net of tax) - 43 66 -------------------------------Earnings for the purpose of diluted earnings per share 3,143 2,945 4,586 -------------------------------* being profit attributable to ordinary shareholders '000 '000 '000Weighted average number of ordinary shares for the purpose of basic earnings per share 27,210 20,122 22,631Effect of dilutive potential ordinary shares 2,105 7,626 4,784 --------------------------------Weighted average number of ordinary shares for the purpose of diluted earnings per share 29,315 27,748 27,415 -------------------------------- 7. Biological assets 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000Beginning of period 68,192 51,765 51,765Additions to planted area and costs to maturity 4,006 1,596 5,660Net biological gain 1,926 2,410 4,133Exchange differences (4,951) 3,938 6,592Transfers - - 42 --------------------------------End of period 69,173 59,709 68,192 --------------------------------Net biological gain comprises:Gain arising from changes in fair value attributable to physical changes 2,336 3,220 4,309Loss arising from changes in fair value attributable to price changes (410) (810) (176) ------------------------------- 1,926 2,410 4,133 ------------------------------- 8. Consolidated cash flow statement Cash generated by operations of £633,000 has been reduced by the payment of $6,000,000 (£3,417,000) made in February 2006 as part of a settlement with Mr M E Zukerman and his associated interests of claims for additional interest on former loans to, and fees for past services and financial support, to PT REA Kaltim Plantations ("REA Kaltim", a member of the group). This payment is reflected in the decrease in payables in the period to 30 June 2006, the settlement liability having been accrued at 31 December 2005. 9. Movement in net borrowings 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000Change in net borrowings resulting from cash flows:Increase/(decrease) in cash and cash equivalents 4,193 (11) 3,742(Increase)/decrease in borrowings (2,409) 1,378 (4,423) -------------------------------- 1,784 1,367 (681)Issue of US dollar notes for the acquisition of minority interest in a subsidiary (10,728) - -Issue of US dollar notes - - (2,745)Interest charged less paid on US dollar notes and convertible loan stock - (30) (35)Conversion of convertible loan stock - - 2,367New leases (20) (81) (10) -------------------------------- (8,964) 1,256 (1,104)Currency translation differences 2,130 (1,004) (1,967)Net borrowings at beginning of period (20,482) (17,411) (17,411) --------------------------------Net borrowings at end of period (27,316) (17,159) (20,482) -------------------------------- 10. Goodwill on acquisition of minority interest in a subsidiary £'000Consideration:US dollar notes issued 10,728 Costs of acquisition 198 ------Total costs of acquisition 10,926Net book value of shares formerly held by minorities (4,011) ------Goodwill recognised on acquisition 6,915Goodwill on previous acquisitions not separately identified 192Exchange differences (309) ------Goodwill at end of period 6,798 ------ On 23 January 2006, R.E.A. Holdings plc acquired the 12.3 per cent minority interest in the issued ordinary share capital of Makassar Investments Limited, the parent company of REA Kaltim, for a consideration comprising the issueof $19 million nominal (£10.7 million) of 7.5 per cent dollar notes 2012/14. The goodwill of £6.8 million at the end of the period is considered by the directors to be fully supported by their view of the long-term prospects for REA Kaltim. 11. Basis of preparation The interim financial information contained in this report has not been auditedand does not constitute statutory accounts for the purpose of Section 240 ofthe Companies Act 1985. It complies with applicable International FinancialReporting Standards and has been prepared on the basis of the stated accountingpolicies which are the policies set out in the 2005 annual report. The figuresfor the year ended 31 December 2005 are abridged and have been based on figuresextracted from the statutory accounts filed with the Registrar of Companies onwhich the auditors gave an unqualified report. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
R.e.a.hldgs.