R.E.A. Holdings plc: Trading update

R.E.A. Holdings plc (“REA” or the “company”) – Trading update

REA, whose principal business is the cultivation of oil palms in the province of East Kalimantan in Indonesia and the production and sale of CPO and CPKO, is pleased to announce a trading update for the year ended 31 December 2025.  

All terms in this announcement are listed on the group’s website at: www.rea.co.uk/about/glossary.

Agricultural operations

Key agricultural statistics for the year to 31 December 2025 (with comparative figures for 2024) were as follows:

*Based on kernels processed

Group FFB production for 2025 reflected the reduction in mature hectarage by some 4,800 hectares due to the continuing replanting programme as well as the sale in the first half of the year of the outlying subsidiary company, CDM. Additionally, cropping was affected by very high rainfall for the year overall, some 44 per cent higher than in 2024 and some 23 per cent above the 10 year historic average. Climatic factors delayed ripening which meant that the typical weighting of crops to the second half of the year did not occur and the peak crop usually experienced in the final quarter did not materialise.

Despite these challenges, extraction rates remained consistent and oil processing losses remained comfortably below industry standards.

Replanting and extension planting also continued on schedule during 2025 with totals approaching, respectively, 1,500 and 1,000 hectares nearing completion by the end of the year.

Agricultural selling prices

Firmer selling prices were sustained throughout 2025 and served to offset the impact of lower production.

CPO, CIF Rotterdam, remained consistently above $1,000 per tonne, trading between a high of $1,365 and low of $1,060 per tonne. CPKO, CIF Rotterdam, traded between $2,150 and $1,540 per tonne. The CIF Rotterdam prices currently stand at $1,360 per tonne for CPO and $1,990 for CPKO.

As previously explained, the Indonesian government applies duties and tariffs on exports of CPO and CPKO. 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.

The average price realised from sales of CPO in 2025, including premia for oil with certified sustainability credentials but net of export levy and duty, adjusted to FOB Samarinda, was $853 per tonne (2024: $819 per tonne). The average selling price for the group’s CPKO, on the same basis, was $1,629 per tonne (2024: $1,094 per tonne).

Local prices for CPO and CPKO, FOB Belawan/Dumai, currently stand at, respectively, $837 and $1,729 per tonne.

Sustainability and climate

Each year the group participates in the SPOTT assessment by the Zoological Society of London which assesses palm oil producers, processors and traders on their disclosures regarding their organisation, policies and practices with respect to ESG matters to incentivise best practices. In the 2025 assessment, published in November, REA’s score increased to 97.1 per cent (2024: 91.5 per cent), ranking the group second out of the 100 palm oil companies assessed.

Projects to promote sustainable palm oil production, forest protection, climate action and empowering local livelihoods continued throughout the year. Following the sale of CDM, the group achieved 100 per cent RSPO certification of its own plantations in 2025. Additionally, the group has worked closely with its smallholder suppliers to increase the certified component of the group’s supply chain.

Indonesian government compliance review and expenditure on titles

As has been widely reported, during 2025 the Indonesian government initiated a review of regulatory compliance by the Indonesian oil palm industry. Pursuant to this review, large Indonesian oil palm growers have been subject to government inspections and, in cases where infringements of regulations have been identified, fines are being levied and non compliant plantings transferred to a new state owned oil palm company, PT Agrinas Palma Nusantara (Persero).

From inception of its operations in East Kalimantan, REA has been committed to acting responsibly and in compliance with Indonesian regulatory requirements. The Indonesian government inspection of the group’s operations, conducted as part of the above review, did not identify any areas of non compliance within the group’s own oil palm plantings. However, a small area of approximately 200 hectares of plantings owned by a cooperative that is managed by the group was identified as planted within an area zoned for forestry although earmarked for conversion to agriculture. As a result, the group will not in future receive fees (currently some $50,000 per annum) for managing these plantings.

In addition, the inspection raised queries concerning some 3,200 hectares of independent smallholder oil palm plantings in areas within the proximity of the group’s current operations and a further 430 hectares of oil palms developed as a smallholder cooperative (plasma) by a neighbouring company. In both cases, these were areas over which the group originally held provisional land allocations (izin lokasi) but had relinquished such allocations some 30 years ago. Moreover, all the plantings in the areas concerned have occurred subsequent to such relinquishment and without involvement by the group. The group does not therefore believe that it should have any liability in relation to the areas in question.

So far as is known, there will be no further assessments of the group pursuant to the Indonesian government's review of regulatory compliance by oil palm growers.

In view of the obviously heightened focus on regulatory compliance in the oil palm sector, the group concluded that it should proceed earlier than originally planned with renewal of the land titles to some 16,332 hectares of its land holdings which, unless renewed, are due to expire between 2028 and 2029. Concurrently, the group is also renewing or formalising other key titles. The costs of renewal (comprising legal fees and direct renewal charges), coupled with other titling expenditure, is expected to be in the order of $10 million and will increase 2026 capital expenditure above the level previously planned. Such increase will be offset to an extent by postponement of other planned capital expenditure. 

Stone and sand operations

Stone and sand operations continued to progress during 2025.

In the first half of the year scaling up of stone production at ATP was hampered by the very high levels of rainfall which slowed development of the necessary haul roads. With blasting having commenced in September, the production potential steadily increased. Crushed stone production for the year totalled some 187,000 tonnes of which some 104,000 tonnes were sold and delivered to third parties, and the balance of 83,000 tonnes was partially utilised in hardening ATP roads and partially sold to REA Kaltim for road hardening.

As previously reported, the group has confirmed contracts for delivery of in excess of 1 million tonnes of stone during 2026 and 2027 to neighbouring coal mining companies. The Indonesian government has recently indicated that it will significantly reduce 2026 coal production quotas below the levels granted in 2025. The group does not expect that annual quotas will be permanently reduced but, if the indicated reductions in 2026 quotas are confirmed, this may impact 2026 stone sales should the group's stone customers elect to postpone part of their agreed 2026 offtake to 2027.

Following sample testing of the sand deposits at MCU, it was decided to enhance the capabilities of the washing plant. The enhancements, which include the addition of a magnetic separator to extract ferrite materials, will improve the purity of the silica sand produced and thus optimise its sales potential. The enhancement works are now expected to be completed ahead of schedule before the end of the first quarter of 2026. 

A number of parties have expressed interest in purchasing sand from MCU, but such interest remains subject to provision of samples which can only be provided once the enhanced washing plant is in operation. If the expressed interest is confirmed as expected, MCU will be well placed to move rapidly to full scale production.

The group now has direct management control of both ATP and MCU and, upon finalisation of the requisite regulatory approvals, will hold 95 per cent economic ownership of each company.

Finance

The semi-annual dividends arising on the preference shares in June and December 2025 were paid on their respective due dates.

During 2025, the group successfully implemented a number of initiatives, all of which have been previously reported, to improve its financial position and extend the average maturity of its indebtedness. In Indonesia, REA Kaltim's subsidiary, CDM, was sold while existing loans from Bank Mandiri were repackaged to provided additional funding and an extended maturity profile. In addition, the group secured a new term loan from Bank Mandiri to fund a proportion of the costs of the extension planting at PU.

In Europe, the outstanding £21.4 million nominal of sterling loan notes issued by REAF were redeemed while the redemption date of the $27.0 million nominal of Dollar notes was extended from June 2026 to December 2028. As respects the dollar note date extension, holders still have the right to require the company to purchase or procure purchasers of their notes at par on the original redemption date but noteholders holding $17.6 million nominal have agreed not to exercise that right.

These initiatives have been followed in the current year by an agreement that Bank Mandiri will extend a further loan equivalent to some $20.5 million to assist funding of the continuing REA Kaltim replanting programme. Subject to REA Kaltim's continued compliance with Bank Mandiri covenants, this loan will be drawn over a three year period and repayable by increasing instalments ending in 2040. Drawings in 2026 are projected to amount to the equivalent of $7.0 million and will partially refund repayments of group debt to Bank Mandiri, equivalent to $20.0 million, falling due in 2026 as well as the possible repurchases of up to $9.4 million of dollar notes.

Outlook

The outlook for production and sales of both CPO and CPKO is positive. Crops should steadily increase as FFB harvested from currently immature areas begin to more than substitute for FFB lost in older areas taken out of production for replanting. Extraction rates can be expected to improve as an increasing proportion of the group’s crop is harvested from younger areas where the oil content of the FFB should be higher than that of FFB harvested from the group’s older areas. In the immediate term, prices are expected to remain firm due to the continuing tight balance between supply and demand witnessed in recent months.

In 2026, the group aims to continue its extension and replanting programmes but with a slightly reduced extension planting programme of 700 hectares (scaled back from the 1,000 hectares originally planned) and a maintained replanting programme of some 1,400 hectares. Other reductions to previously planned 2026 capital expenditure to accommodate the additional titling expenditure referred to earlier will be achieved by deferring for one year purchases of capital equipment that are not time critical and where deferral is unlikely to have any material effect on the group's performance.

Whilst the group must continue to balance the need for significant reductions in the group’s net debt against rewarding capital expenditure on maintaining and enhancing the value of the group's assets, the directors are confident that the continuing rejuvenation of the agricultural operations, coupled with the benefits of scaling up the stone and sand operations in 2026, will further strengthen the group's financial position and improve shareholder value.

Publication of results

In line with the timetable adopted in previous years, the final results for 2025 are due to be announced, and the annual report in respect of 2025 published, in the second half of April 2026.

Enquiries:

R.E.A. Holdings plc

Tel: 020 7436 7877