Final Results

R.E.A.Hldgs PLC
27 April 2005

R.E.A. Holdings plc

Commentary on preliminary results - 2004

Results

Group profit on ordinary activities before taxation for 2004, as shown in the
accompanying consolidated profit and loss account, amounted to £4,685,000. This
represents an increase of 126 per cent over the profit before tax of the
preceding year of £2,070,000.

A higher percentage tax charge than in 2003 (when the tax charge was reduced by
a number of non-recurring adjustments) nevertheless resulted in a profit after
tax and minority interests of £2,641,000, some 96 per cent higher than the
£1,342,000 achieved in the preceding year.

The increase in 2004 profits over those of 2003 would have been even greater
were it not for the strength of sterling against the US dollar (the average
exchange rate was £1 = US$ 1.84 in 2004 against £1 = US$ 1.64 in 2003). Such
strength negatively impacts the group because the group's produce is sold on the
basis of US dollar prices and the value realised in sterling terms is reduced
when sterling strengthens against the US dollar.

Operations

The fresh fruit bunch ('FFB') crop for 2004 was 293,883 tonnes, representing
98.4 per cent of budget and some 32 per cent ahead of the 222,713 tonnes
harvested in 2003. Unusually, the crop of the first six months was almost
identical with that of the second six months. This reflected an extended drier
spell in the second half although rainfall for the year as a whole at an average
of 3,877 mm across the estates compared well with 3,550 mm in 2003, a level that
was already more than satisfactory for oil palm cultivation.

The crude palm oil ('CPO') extraction rate for the year was 24.3 per cent
against the 24.9 per cent achieved in 2003. This lower rate reflected crop
collection difficulties during the heavy rains of the first half of the year and
minor teething troubles in running in the second production line that was added
to the mill during 2003. Against industry norms, an extraction rate of in excess
of 24 per cent is regarded as very satisfactory but, in the context of the
group's operations, the directors believe that a rate of 25 per cent or better
ought to be achievable. With less heavy rainfall in the second half of the year
and minor modifications to production flows, the extraction rate for the second
half of the year was markedly better than that of the first half.

Work has started on site clearing in preparation for the construction of a
second oil mill which it is planned should be brought into operation in the
latter part of 2006. The new mill will eventually have a similar capacity to the
existing mill but will incorporate high efficiency boilers and turbines able to
power a kernel crushing plant in which it is intended that all palm kernel
output from both the existing and the new mill will be crushed to produce palm
kernel oil and expeller. Tenders for the construction of both the new mill and
the kernel crushing plant have recently been awarded.

Planting out of the first 3,000 hectares of the extension planting programme
instituted in 2003 was completed in February 2005, having been slightly delayed
by the drier weather of July to October 2004. A second 3,000 hectares is
scheduled to be planted out during 2005 in conjunction with preparation of a
further 3,000 hectares for 2006 planting. In addition, it is hoped to plant an
initial 1,500 hectares of the group's new joint venture development adjacent to
the south eastern boundary of the group's existing operational area on the
southern side of the Belayan river. Overall, this represents a major expansion
programme but in 2005, to-date at least, the expansion works have been moving
forward smoothly and as planned.

Finance

The year finally saw the completion of the debt restructuring of PT REA Kaltim
Plantations ('REA Kaltim'), the direct owner of the established East Kalimantan
operations. The key step towards achieving such completion was taken in April
2004 when REA Kaltim drew down a new loan of US$ 11 million from PT Bank Niaga
Tbk and applied that loan in repaying its outstanding indebtedness to
Commerzbank (South East Asia) Limited. At the same time, the group refinanced
indebtedness of US$ 8.175 million owed to interests associated with Mr M E
Zukerman (the 'MEZ group'). The restructuring was then completed when those
remaining lenders to REA Kaltim who had not previously acceded to the debt
restructuring agreed to do so.

To facilitate the REA Kaltim debt restructuring, the group purchased at a
discount certain loan balances owed by REA Kaltim thereby reducing the group's
overall indebtedness. The group's financial position has been further
strengthened both by reinvestment of retained profits and by the issue by the
company during 2004 of some 2.8 million new 9 per cent cumulative preference
shares. Of these, approximately one million shares were issued pursuant to a
scheme to eliminate arrears of dividend on the then outstanding issued
preference shares and the balance were issued for cash. A proportion of the
resultant cash proceeds was applied in the repurchase of £250,000 nominal of the
company's outstanding 4 per cent convertible loan stock 2012. The outstanding
stock was further reduced by the conversion during the year into ordinary shares
of some £700,000 of the stock.

With the completion of the REA Kaltim debt rescheduling and the elimination of
dividend arrears on the preference shares, the group is now current on all
obligations. However, implementation of the group's planned planting programme
(as referred to above) will require substantial investment. This could place a
strain on the group's cash resources if, as could happen, CPO prices fall and
the group remains obliged to make substantial further reductions in its existing
indebtedness before the cash flow from the extension planting programme
materialises. Accordingly, the group is currently seeking to negotiate new debt
financing which would replace a substantial proportion of its existing
indebtedness, provide additional liquidity and establish greater contingency
margins in projected future cash flows.

Litigation

2004 saw some escalation in the dispute between the group and the MEZ group with
the receipt of a letter threatening to add new proceedings in Jersey to the
legal proceedings in New York that were instituted by the MEZ group in 2001.
Notwithstanding recent repetition of this threat, it is now expected that there
will be a mediated discussion of the disputed issues in the second half of 2005.

The directors retain their previously expressed view that the actual and
threatened legal proceedings against the group by the MEZ group have no genuine
merit but the directors accept that it would be in the best interests of the
company if the position of the MEZ group in relation to its contingent
entitlement to further interest from REA Kaltim (amounting to some US$ 3 million
at 31 December 2004) and its 12 per cent minority shareholding in Makassar
Investments Limited was resolved. The directors are unable to judge whether,
absent judicial determination of the MEZ group's claims against the group and
the group's potential counterclaims, a resolution is possible but a mediated
discussion of the disputed issues may at least offer a forum for exploring
resolution.

Dividends

The fixed semi-annual dividends on the 9 per cent cumulative preference shares
that fell due on 30 June and 31 December 2004 were duly paid and, as already
noted, all arrears of dividend on the preference shares were eliminated during
2004 by a scheme involving the issue of further preference shares. Absent an
unforeseen material adverse change in the group's circumstances, the directors
intend that all future semi-annual dividends on the preference shares should be
paid as these arise.

The arrears of preference dividends having been eliminated, there is now no
legal impediment to the payment of ordinary dividends. However, the group
continues to face significant potential demands on cash both for its planned
planting programme and for scheduled debt repayments (although a successful
conclusion to the current negotiations for new debt financing would spread the
cash requirements for the latter). In addition, with the present possibility
that there may be mediated discussions with the MEZ group and that those
discussions could result in a settlement of the disputes with the MEZ group, the
directors must have regard to the funding obligations to which any such
settlement would give rise. Against this background, the directors have
concluded that they cannot recommend payment of an ordinary dividend in respect
of 2004 and that, until such time as there is greater certainty as to the
group's future cash flows, it would be imprudent to give any indication as to
when the payment of ordinary dividends might be resumed. The directors remain
committed to the restoration of ordinary dividends as soon as the directors
become confident that the group's cash flow can support such dividends.

Prospects

Although the drier period experienced during the second half of 2004 could have
caused some moisture stress, the directors are hopeful that the good rainfall
received over 2004 as a whole will mean that the East Kalimantan operations will
yield normally during 2005. On that basis, the FFB crop for 2005 has been
budgeted at 331,000 tonnes although disruption to operations caused by severe
flooding from the Belayan and Mahakam rivers following exceptionally heavy
rainfall during April 2005 could mean that this target may prove a little
ambitious.

The CPO market presents a slightly uncertain picture with good current offtake
being tempered by the uncertainties of a significant overhang of uncrushed
soybean resulting from the record soybean crops harvested in the United States
and Brazil in the past year. Against this, increasing production of biodiesel is
resulting in significantly greater industrial usage of vegetable oils.

CPO prices at the start of 2005 fell below US$ 400 per tonne CIF Rotterdam but
have since recovered back to the US$ 420 to US$ 440 range. Higher world freight
rates have in the past twelve months increased the differential between CIF and
FOB values but CPO prices of over US$ 400 per tonne CIF still provide the group
with more than acceptable margins. Accordingly, the directors expect that 2005
will prove another good year.

Looking beyond 2005, it must be recognised that the group is dependent upon a
single commodity and that commodity markets are inherently cyclical.
Accordingly, fluctuations must be expected in the group's results and there is
little that the group can do to mitigate such fluctuations. What the group can
do, and is doing, is expand its planted hectarage and, through that expansion,
progressively increase its productive capacity. Whilst such progressive increase
cannot be guaranteed to offset the negative effects of price reductions during a
cyclical downturn, the directors believe that, viewing the returns of the group
over each commodity cycle as a whole, the present development programme offers
the prospect of increasing returns for many years to come.


CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2004
                                                       Unaudited
                                                            2004          2003
                                                            £000          £000
Turnover                                                  16,052        13,781
Cost of sales                                             (7,530)       (7,469)
                                                          ------        ------
Gross profit                                               8,522         6,312
Administrative expenses                                   (2,359)       (2,236)
                                                          ------        ------
Group operating profit                                     6,163         4,076
Disposal of fixed assets and investments - continuing          7            24
Disposal of fixed assets and investments - discontinued        -          (281)
Interest receivable and similar income                       157           165
Interest payable and similar charges                      (1,642)       (1,914)
                                                          ------        ------
Profit on ordinary activities before taxation              4,685         2,070
Tax on ordinary activities                                (1,320)         (345)
                                                          ------        ------
Profit on ordinary activities after taxation               3,365         1,725
Minority interests - equity                                 (528)         (203)
Minority interests - non-equity                             (196)         (180)
                                                          ------        ------
Profit for the financial year                              2,641         1,342
Non-equity dividends                                        (639)         (513)
                                                          ------        ------
Retained profit for the year                               2,002           829
                                                          ------        ------

Earnings per share - basic                                 10.1p          5.1p
Earnings per share - fully diluted                          7.6p          3.7p

All operations in both years are continuing except where stated.

CONSOLIDATED BALANCE SHEET
31 DECEMBER 2004
                                                       Unaudited
                                                            2004          2003
                                                            £000          £000
Fixed assets
Tangible fixed assets                                     52,174        50,238
                                                          ------        ------
Current assets
Stocks                                                     1,248         1,346
Debtors                                                    3,307         3,710
Investments                                                1,067             -
Cash                                                       1,061         6,790
                                                          ------        ------
                                                           6,683        11,846
Creditors falling due within one year                     (6,631)      (15,244)
                                                          ------        ------
Net current assets/(liabilities)                              52        (3,398)
                                                          ------        ------
Total assets less current liabilities                     52,226        46,840
                                                          ------        ------
Creditors: falling due after more than one year
Convertible debt                                          (2,837)       (3,463)
Other creditors                                          (13,402)      (15,312)
Provision for liabilities and charges (deferred tax)      (2,107)         (288)
                                                          ------        ------
Net assets                                                33,880        27,777
                                                          ------        ------
Capital and reserves
Called up share capital                                   13,533        10,376
Share premium account                                      3,858         4,665
Capital redemption reserve                                 3,240         3,240
Warrants                                                   1,164         1,212
Revaluation reserve                                          852          (384)
Other reserve                                                  -         1,027
Profit and loss account                                    6,362         3,333
                                                          ------        ------
Shareholders' funds                                       29,009        23,469
Equity minority interests                                  2,721         2,002
Non-equity minority interests                              2,150         2,306
                                                          ------        ------
Total capital employed                                    33,880        27,777
                                                          ------        ------
Shareholders' funds may be analysed as follows:
Equity interests                                          20,506        16,737
Non-equity interests                                       8,503         6,732
                                                          ------        ------
                                                          29,009        23,469
                                                          ------        ------

CONSOLIDATED STATEMENT OF RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 31 DECEMBER 2004
                                                       Unaudited
                                                            2004          2003
                                                            £000          £000
Profit for the financial year                              2,641         1,342
Currency translation adjustments                          (1,688)       (2,175)
Revaluation adjustments                                    2,924         2,325
                                                           -----         -----
                                                           3,877         1,492
                                                           -----         -----

CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2004
                                                       Unaudited
                                                            2004          2003
                                                            £000          £000
Net cash flow from operating activities                    5,694         7,259
                                                           -----         -----
Returns on investments and servicing of finance
Interest received                                             54           165
Interest paid                                               (800)       (1,914)
Preference dividends paid                                   (639)         (257)
                                                           -----         -----
                                                          (1,385)       (2,006)

Taxation                                                    (118)          (11)

Capital expenditure and financial investment
Purchase of tangible fixed assets                         (3,420)       (4,675)
Purchase on investments                                   (1,067)            -
Sale of tangible fixed assets                                 15            40
Sale of investments                                            -           597
                                                           -----         -----
                                                          (4,472)       (4,038)
Equity dividends paid                                          -             -
Cash (outflow)/inflow before management of liquid
resources and financing                                     (281)        1,204

Management of liquid resources                             5,908        (4,226)

Financing
Issue of ordinary share capital and expenses                  47         4,901
Issue of preference share capital and expenses             1,600             -
Net increase/(repayment) of debt over one year               520        (2,619)
Net (repayment) of debt up to one year                    (6,974)            -
Finance lease repayments                                    (411)         (244)
                                                           -----         -----
                                                          (5,218)        2,038

Increase/(decrease) in cash in the year                      409          (984)


NOTES TO PRELIMINARY RESULTS

Basis of preparation

The financial statements have been prepared in accordance with accounting
standards applicable in the United Kingdom. The principal accounting policies
have been applied consistently.

Segment information

In the tables below, the group's turnover, net assets and profit before taxation
are analysed by geographical area. No analysis of these items is provided by
business class as the group only operates within the agricultural sector with
any other income being incidental to that activity. Net assets are allocated to
the area in which the activity related to the assets is located.

                                                       Unaudited
                                                            2004          2003
                                                             £'m           £'m
Turnover by geographical origin:
United Kingdom                                               0.1           0.2
Indonesia                                                   16.0          13.6
                                                            ----          ----
                                                            16.1          13.8
                                                            ----          ----
Turnover by geographical destination:
United Kingdom                                               0.1           0.2
Indonesia                                                   11.4          10.4
Other Asia                                                   4.6           3.2
                                                            ----          ----
                                                            16.1          13.8
                                                            ----          ----
Net assets by geographical origin:
United Kingdom                                              (2.3)         (2.5)
Indonesia                                                   36.2          30.3
                                                            ----          ----
                                                            33.9          27.8
                                                            ----          ----

                                                       Unaudited
                                                            2004          2003
                                                            £000          £000
Profit by geographical origin:
United Kingdom                                            (1,423)          956
Indonesia                                                  6,101         1,371
                                                           -----         -----
                                                           4,678         2,327
Disposal of assets and investments                             7          (257)
                                                           -----         -----
                                                           4,685         2,070
                                                           -----         -----
Interest payable and similar charges:
Interest payable on bank loans and overdrafts              1,134         1,833
Interest payable on other loans                              375         1,209
                                                           -----         -----
                                                           1,509         3,042
Interest capitalised                                        (606)       (1,128)
                                                           -----         -----
                                                             903         1,914
Realised loss on repayment of long term intra-group
foreign currency loans                                       739             -
                                                           -----         -----
                                                           1,642         1,914
                                                           -----         -----

                                                       Unaudited
                                                            2004          2003
                                                            £000          £000
Taxation:
UK corporation tax charge                                      -             -
Relief for overseas tax                                        -             -
                                                           -----         -----
                                                               -             -
Overseas tax                                                 118            57
Adjustments in respect of prior periods                        -             -
                                                           -----         -----
Total current tax                                            118            57
Deferred tax                                               1,202           288
                                                           -----         -----
Tax charge on profit on ordinary activities                1,320           345
                                                           -----         -----

Contingent liability

In November 2001, Bodley Investment Company, M.E. Zukerman & Co. Incorporated
and M.E. Zukerman Investment Limited ('the plaintiffs'), being entities
associated with Mr M. E. Zukerman, commenced an action in New York against the
company and two of its directors personally ('the defendants') asserting claims
for fraud, fraudulent inducement, breach of contract, promissory estoppel and
tortious interference in relation to a purported oral agreement between the
company and the plaintiffs to cause Makassar Investments Limited ('Makassar')
and / or PT REA Kaltim Plantations ('REA Kaltim') to pay a return of 30 per cent
per annum on monies totalling US$ 13.65 million originally lent to REA Kaltim
by, or with the support of, the plaintiffs (which monies, plus current interest,
were repaid in 2004).

The company entered into no such agreement as is alleged by the plaintiffs.
Accordingly, the directors consider that the claims are without merit. On the
basis of legal advice received, the defendants filed a motion to have the claims
dismissed in their entirety. A New York magistrate judge (to whom the motion for
dismissal was referred) recommended, in September 2002, that, save for one minor
component of one claim for fraud, all claims for fraud, fraudulent inducement
and tortious interference should be dismissed but that the remaining claims,
which are all contract related, should proceed against the company (on the
grounds that such claims could not be dismissed without investigation of the
factual background which is not possible on a motion for dismissal). The
plaintiffs have objected to the magistrate's recommendations as respects most of
the claims recommended for dismissal and the defendants have objected as
respects the magistrate's recommendation to retain the minor component of one
claim for fraud. A final ruling on these matters is still awaited.

In addition, in June 2004, solicitors acting for Bodley Investment Company and
The Zukerman Family Trust (another entity associated with Mr M.E. Zukerman) in
their capacity as shareholders in Makassar ('the dissident shareholders') wrote
to the company and Makassar Participation plc ('MP'), claiming that the affairs
of Makassar had been conducted in a manner which was unfairly prejudicial to the
dissident shareholders' interests and threatening that, absent satisfactory
proposals to resolve the matter, the dissident shareholders would commence
proceedings in Jersey for, amongst other things, orders that the boards of
Makassar and REA Kaltim be reconstituted to include equal representation of the
dissident shareholders, that substantially all of the Makassar shares acquired
by MP in 2002 be redeemed or disenfranchised, that the 2002 and 2003 Makassar
rights issues be set aside and that the dissident shareholders be entitled to
bring civil proceedings on behalf of Makassar against certain directors of
Makassar and the company in respect of alleged breaches of duty and abuses of
majority control.

Having reviewed this latest claim against the history of Makassar and REA
Kaltim, the funding thereof and the company's dealings with Mr M. E. Zukerman
and entities associated with him, the directors believe, based on legal advice
received, that this latest claim is also without merit. Nevertheless, and
notwithstanding a recent repetition of the threat that the dissident
shareholders will commence proceedings in Jersey, it has been agreed in
principle that an attempt should be made to resolve the disputes the subject of
the actual New York proceedings and the threatened Jersey proceedings by way of
mediation. It is expected that mediated discussions to this end will take place
in the second half of 2005.

Announcement based on draft financial statements

The financial information set out in the announcement does not constitute the
company's statutory financial statements for the year ended 31 December 2004 or
2003. The financial information for the year ended 31 December 2003 is derived
from the statutory financial statements for that year which have been delivered
to the Registrar of Companies. The auditors reported on those accounts; their
report was unqualified and did not contain a statement under s237 (2) or (3) of
the Companies Act 1985. The statutory financial statements for the year ended 31
December 2004 will be finalised on the basis of the financial information
presented by the directors in this preliminary announcement and will be
delivered to the Registrar of Companies following the company's annual general
meeting.



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