Business

The business of the group principally comprises oil palm operations in East Kalimantan, Indonesia. Land allocations held by the group will, upon renewal of one allocation as respects which the original letter of allocation has expired, total some 124,000 hectares of which 46,841 hectares are fully titled. The land allocations comprise a core area lying either side of the Belayan river (a tributary of the Mahakam river, one of the major river systems of South East Asia) together with satellite areas located within reasonable proximity of the core area.

Areas planted and in course of development as at 31 December 2008 amounted in total to 28,300 hectares of which 16,487 hectares was mature. A further 2,257 hectares planted in 2005 was classified as mature at the start of 2009. Development of the areas planted has been accompanied by the construction of all necessary infrastructure, including villages and amenities for the almost entirely residential workforce. With the onset of the international financial crisis, extension planting was suspended but it has since been resumed with an initial concentration on planting a further 2,000 hectares of oil palms. Beyond that, it is intended that the REA group should continue its expansion and aim over time to plant with oil palms all suitable undeveloped land available to the group (other than areas set aside by the group for conservation).

All oil palm fresh fruit bunches harvested from the present mature areas are processed in the group's two oil mills which have an existing capacity of 140 tonnes per hour (to be expanded to 160 tonnes per hour in 2010). One of the mills incorporates a palm kernel crushing facility in which all palm kernel output from the two mills is processed into crude palm kernel oil.

The REA group operates its own fleet of river barges which are used to transfer crude palm oil and crude palm kernel oil from storage tanks adjacent to the oil mills either to the transhipment terminal owned by the group downstream of the port of Samarinda or directly to buyers' vessels. In addition, the group time charters one larger barge which can be used for sea voyages to Malaysia and within Indonesia. This permits deliveries direct to customers' nominated destinations in Malaysia and Indonesia.

During 2008, the REA group decided to augment the traditional plantation operations of the group and acquired rights in respect of two small coal concessions in East Kalimantan. It is intended that these concessions be brought into production during 2009.

Further information regarding the REA group's business is provided in the 'Review of the group' section of the REA 2008 annual report which may be downloaded from the corporate documents page within the 'Investors' section of this website.