R.E.A. HOLDINGS PLC
regulations that affect the group Restriction on the group's ability to planned changes that would adversely affect
(including, in particular, laws retain its current structure or to the group to a material extent; current
and regulations relating to land continue operating as currently regulations restricting the size of oil palm
tenure, work permits for growers in Indonesia will not impact the
expatriate staff and taxation) group for the foreseeable future
Breach of the various continuing The group endeavours to ensure compliance
conditions attaching to the with the continuing conditions attaching to
group's land rights and the stone its land rights and concessions and that its
and coal concessions (including Civil sanctions and, in an extreme activities and the activities of the stone
conditions requiring utilisation case, loss of the affected rights or and coal concession companies are conducted
of the rights and concessions) or concessions within the terms of the licences and permits
failure to maintain all permits that are held and that licences and permits
and licences required for the are obtained and renewed as necessary
group's operations
The group has traditionally had, and
Failure by the group to meet the continues to maintain, strong controls in
standards expected in relation to Reputational damage and criminal this area because Indonesia, where all of the
human rights, slavery, sanctions group's operations are located, has been
anti-bribery and corruption classified as relatively high risk by the
International Transparency Corruption
Perceptions Index
Restrictions on foreign The group endeavours to maintain good
investment in Indonesian mining Constraints on the group's ability to relations with local partners to ensure that
concessions, limiting the recover its investment returns appropriately reflect agreed
effectiveness of co-investment arrangements
arrangements with local partners
Country exposure
In the recent past, Indonesia has been stable
and the Indonesian economy has continued to
grow but, in the late 1990s, Indonesia
Difficulties in maintaining operational experienced severe economic turbulence and
Deterioration in the political or standards particularly if there was a there have been subsequent occasional
economic situation in Indonesia consequential deterioration in the instances of civil unrest, often attributed
security situation 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
Restriction on the transfer of fees, The directors are not aware of any
interest and dividends from Indonesia circumstances that would lead them to believe
Introduction of exchange controls to the UK with potential consequential that, under current political conditions, any
or other restrictions on foreign negative implications for the servicing Indonesian government authority would impose
owned operations in Indonesia of UK obligations and payment of exchange controls or otherwise seek to
dividends; loss of effective management restrict the group's freedom to manage its
control operations
The group accepts there is a significant
possibility that foreign owners may be
required over time to divest partially
Mandatory reduction of foreign Forced divestment of interests in ownership of Indonesian oil palm operations
ownership of Indonesian Indonesia at below market values with but has no reason to believe that such
plantation operations consequential loss of value divestment would be at anything other than
market value. Moreover, the group has local
participation in all its Indonesian
subsidiaries
Miscellaneous relationships
The group appreciates its material dependence
upon its staff and employees and endeavours
Disputes with staff and employees Disruption of operations and consequent to manage this dependence in accordance with
loss of revenues international employment standards as
detailed under "Employees" in
"Sustainability" of the annual report
Reliance on the Indonesian courts for
enforcement of the agreements governing
its arrangements with local partners The group endeavours to maintain cordial
Breakdown in relationships with with the uncertainties that any relations with its local investors by seeking
the local shareholders in the juridical process involves and with any their support for decisions affecting their
company's Indonesian subsidiaries failure of enforcement likely to have a interests and responding constructively to
material negative impact on the value any concerns that they may have
of the stone and coal interests because
the concessions are legally owned by
the group's local partners
VIABILITY STATEMENT
The group's business activities, together with the factors likely to affect its future development, performance and position are described in the "Strategic report" of the annual report which also provides (under the heading "Finance") a description of the group's cash ?ow, liquidity and ?nancing adequacy and treasury policies. In addition, note 23 to the consolidated ?nancial statements in the annual report includes information as to the group's policy, objectives, and processes for managing capital, its ?nancial risk management objectives, details of ?nancial instruments and hedging policies and exposures to credit and liquidity risks.
The "Principal risks and uncertainties" section of the "Strategic report" in the annual 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. Possible risks associated with the Covid-19 pandemic and emerging risks are also addressed in this section of the report.
The group has material indebtedness, in the form of bank loans and listed notes. At 31 December 2020 (after reflecting the waiver of covenant breaches referred to in "Capital structure" under the heading "Finance" in the "Strategic report" of the annual report), the equivalent of USD54.1 million rupiah denominated term bank loans were due for repayment over the period 2021 to 2023 and, in addition, a rupiah working capital loan, equivalent to USD5.0 million, was subject to annual renewal in November of each year. Of the listed notes, USD27.0 million of 7.5 per cent dollar notes 2022 (the "dollar notes") are due for repayment on 30 June 2022. In view of the material component of the group's indebtedness falling due in the period to 31 December 2023, the directors have chosen this period for their assessment of the long term viability of the group.
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