M.P. Evans Group (LSE:MPE) — Annual General Meeting

0:00 Good afternoon, and welcome to the MPEvans Group PLC annual general meeting. The meeting will begin shortly. Yeah. Good. Are we ready? Yeah. Great. Ladies and gentlemen, good to see that everybody has a seat. It is now twelve noon, the time appointed for the annual general meeting. I have great pleasure in welcoming you to the meeting. A quorum of two members is required, and I confirm that more than this number is present. I'm also pleased to inform you that the meeting today is being live streamed and recorded so that shareholders and other stakeholders who cannot be present can view it live or watch it on the company's website in due course.

0:58 And I'm pleased to confirm that I'm joined today by my colleagues on the board. Sadly, though, without Tanya, who I think we will let off because she is in Iceland for a family reunion of 150 family members, which had been planned long ago. So, we wish her well for that. And I'm sure she will be back here next year. I would though just like to take the opportunity to say on behalf of myself, on behalf of the Board, and I think on behalf of all shareholders there are seats at the front, by the way a huge thank you to my colleague, Bruce, who has served on the board magnificently for the last nine years and will be retiring in his capacity as a non executive director.

1:57 For the last number of years, he has been our senior independent director as well as chair of both the Audit Committee and the Group Remuneration Committee. Bruce has so many different skill sets and areas of knowledge and expertise, it's hard to enumerate. But amongst them, banking, commodities, agriculture, ESG, many, many others. So,

2:27 yours will clearly be a tough act to follow, but I know that we'll stay in touch with you and you with us, and I'm sure we'll be seeing again at these meetings. But you've been your contribution to the Board has been invaluable in terms of the wise counsel that you've offered us. And you've been a great and loyal support to us. So, you so much.

3:04 And I am at the same time pleased to confirm that Kate, Kate Coppinger, not yet quite a Director, but nonetheless has sneaked onto the top table about an hour ahead of her official appointment to the board following Bruce's retirement, will be joining us as our new independent director. Kate has a lot of experience in commodities, particularly oil and gas, both as an executive, she is Managing Director of Standard Chartered Oil and Gas, before several years ago going to a more sort of plural role as a non executive director of a number of AIM listed and particular companies specializing particularly in oil and gas, but there are many sort of parallels and she has experience as Chair of both Audit Co, Remco and as a Senior Independent Director and will immediately take on the role of our Remuneration Committee Chair. So, Kate very shortly to our Board.

4:09 I'm also pleased to confirm that as was announced recently, Michael, who's been with us now for three years, something like that. Yes, yes. And whose advice we value hugely has made a massive contribution to the Board already. And I have a great, great pleasure in confirming that he will be taking on the role of Senior Independent Director and as Chair of the Audit Committee.

4:44 So, another person I might just mention, although he didn't necessarily want me to, but is Ravi Pakravi Chandran. Do you just want to stand up for a moment, just to embarrass you completely, Ravi. Ravi is President Director of our Indonesian operations based in Jakarta, but travels around all our estates, a very, very important person. And he took over from Chandra a couple of years ago, and we have huge confidence in what Ravi is doing. So please feel free to ask Ravi about any part of our operations, perhaps more informally afterwards. Right. Actually, there's one other person I thought I would mention, and that is a very delightful and colorful shareholder, who's sadly no longer with us, a gentleman named Michael Turner,

5:43 who used to come to our meetings year after year and would grill us. One was always slightly quaking in one's shoes when he used to stand up, but always with a little twinkle in his eye and was actually a huge supporter, fiercely loyal to the company and indeed to, I think, all the other European plantation companies. And I'm delighted that his daughter, Rosemarie, and grandson, Robin are both here as shareholders as well. And we think remember think of and remember your father very fondly. So, as you may be aware, the company released a trading update this morning, a very positive one, covering the first five months of 2025. Copies of this have been distributed in the room, should you wish to review it. Now, my colleague, Matthew, our Chief Executive, will make a short presentation.

6:38 Thank you, Peter. So just to first of all, through a few points about 2024 and then move on and talk a little bit about the content of the trading statement for 2025. And as Peter said, I will certainly keep things brief. First of all, a quick reminder for you of two very important things. First of all, our key strategic pillars, the four key strategic pillars we hold dear to our hearts at MPEvans, are being a responsible producer, striving for excellence in all of our operations, and of course, focusing on growth and ensuring we focus on offering an increasing yield, and we'll come back to those themes as we go through the presentation.

7:26 And then you can see on the map, a reminder of where we operate. We operate across a very wide part of Indonesia from the Northern End of North Sumatra all the way through to the very Eastern tip of East Kalimantan. So a very wide geographical spread. We may be focused on a single country, but across a very wide part of that single country. Those red dots indicate where we have, by the end of twenty twenty four, around 66,000 hectares of planted oil palm that we manage. And as I say, focusing for a moment on the results for 2024, we're not ashamed to say that we think they were outstanding results, record results for the group for 2024, and you can see some of those key metrics illustrated there on the slide. So gross profit up by almost a half on the previous year, up by 49% and earnings per share up by even more earnings per share up by two thirds on the previous year earnings per share of almost 130p.

8:40 So we're very pleased to be able to share those results with you today And I'm sure you may have some questions about them when we get to that part of our meeting today.

8:52 Obviously, as I say, one of the key strategic pillars is all about progressive returns. And you get a sense of what that's looked like over the last decade on this slide. So going back to 2014 and 2015, the total dividends per share were less than 10p. Roll forward to the dividends in respect of 2024, the interim dividend that was paid last November and the final dividend that is being proposed today. And you add those together, we're at more than 50 p per share. So a huge change as you can see illustrated on that chart. And I'm sure it will come as no surprise to those of you who've listened to me before that I can't help but talk a little bit more about the first plank of our strategic pillars, the r for responsibility.

9:54 We're very proud of what we do at MPEvans, and it's always important to illustrate what that looks like in practice. So two pictures on this slide to illustrate what that looks like in practice. On the left hand side, you can see some mangrove forest. And it is an illustration of an area that we took on in 2024, an area going back to the map that's that's adjacent to our very eastern tip of East Kalimantan project, the area we call

10:23 Boomi Mas, where we've been able to secure an area next to our planted area of over a thousand hectares, actually 1,400 hectares of mangrove forest, which we will actively conserve. So it's nothing to do with planting, it's nothing to do with fresh fruit bunches and crude palm oil, it's purely for conservation. And as I'm sure many of you know, mangrove forests are hugely important from a sustainability and a conservation perspective. We estimate that sequestered within that mangrove forest is over half a million tons of CO2 equivalent. So we're very proud of what we've been able to achieve there. On the right hand side is another example of what our teams are doing actively within our estates.

11:12 We've set up a biodiversity team within our Banker estate on Banker Island, off South Sumatra, and there they're taking active steps to think about how we can increase biodiversity across our estates. And it's a really good example to talk about with everybody here because it's something we all intuitively understand, is planting hedgerows. Sounds very simple, but actually it makes a huge difference to biodiversity. As I look around the room, I recognize some faces who came with us to Banco earlier this year and saw this happening in action, saw already the difference that this is making. So it's another example of a project we're very proud of.

11:56 And then I move on to thinking about what we're doing this year in 2025. And this is just to illustrate some of the things that are in the trading statement that was released today. We've seen an increase in the crop that we are harvesting in the areas we manage, an increase of over 10% in the first five months of this year, which is fantastic to be able to report. And we have deliberately restricted the amount of crop that we're buying in from outside suppliers. The crop we harvest is much, much better quality

12:29 than the crop that we buy in from those outside suppliers. So we're changing we're actively changing our product mix that we put through our mills, and that's going to make a big difference for us as we continue to do that. Obviously, you've seen the story of price in the first half sorry, the first five months of this year. And the price we sold our output for is significantly higher than the first five months of last year, up by over a $100 per ton. So you take those two parts of the equation together, and we're very excited about what the first half is going to bring for us. Oh, and I shouldn't forget as well as the CPO, our secondary product, palm kernels, and the price that we're selling our palm kernels for is over 80% higher than for than the first five months of last year.

13:27 Whilst kernels are a smaller part of our output, that kind of price difference is going to make a difference to our overall results as well.

13:38 And then thinking about growth. So thinking about as we go through our strategic pillars, responsibility, excellence, growth and yield, we're continuing to grow as well. We're continuing to plant new areas in our existing estates. We're continuing to plant in South Sumatra at a project called Mussi Ralles, and we're continuing to plant in some of our more recently acquired areas. You remember, we acquired an area called ABK in 2023, where we're planting more hectares there as well. And excitingly, as we announced in April, we're just in the process of buying an additional area close to our Boomi mass project on the Eastern tip of East Kanamantan as well. Take all of this together, and we fully expect to hit another milestone before we get to the end of 2025.

14:29 We fully expect to be over 70,000 planted hectares managed as well. So I hope you get the sense from that, that not only are we very pleased to be able to share with you and talk about the 2024 results today, but we think there's lots of good stuff coming in 'twenty five as well. With that, I'll hand back to Peter. Thank you, Matthew. My colleagues and I will now be pleased to deal with any general questions or particular points on the report and financial statements, which shareholders present at the meeting would like to raise. So please raise your hand and wait until the microphone reaches you before speaking, if there are any questions. Could I ask that you would that you would smaller produce that can be harvested by machines rather than sorry, rather than by hand?

15:29 That's a shall we pass that to one of them? Chandra, should I ask would you like to answer that one, Chandra, as our agricultural one of our two agricultural experts Can on the the trees be bred to a lower level? Oil palm breeding has has concentrated on shortening the height of palms, but not to the extent yet to be very easily mechanized. Because you see, for machine to get into a piece of land planted with oil pump, you need to basically get the infrastructure right.

16:21 Right now, companies in their second cycle and their third cycle are already preparing fields for mechanization. I must also highlight that there has yet been found a machine that's suitable to harvest, but there are many trials going on in Indonesia and Malaysia working towards mechanical harvesting. Thank you. Yes. When it's interesting that both in the rubber and the oil palm sector, the majority of the whether it's rubber trees or old palms are still most of the work is done by hand, although there are there is increasing work going on to help to mechanize. And there is some experimentation with the smaller palms, but so as not to have such long poles necessary, but there's still work going on, think, so they're common.

17:25 Any other questions?

17:35 Mark Atkinson, Private Investor. Two questions, please, Mr. Chairman. Firstly, on the acquisitions, the area is described as relatively young with nothing being planted before 2016. Could you give some kind of guidance as to when you expect this will reach its full potential? And secondly, on the EUDR, which comes into effect in January 2026, this will require supply chains of products sold in the European Union to be free of deforestation. Now neither do we participate in deforestation or import into Europe, but the EU will have the power to find a company up to 4% of their European turnover It's for noncompliance.

18:23 So this is a lucrative incentive for the EU to fight against businesses, and I would expect them to be zealous in their execution. Is there any risk to us of fine contagion simply through administrative oversights? Do you want to answer both of those methods? You the potential for on your acquisition? Yes. So why don't I address both of those questions, Mark? Thank you. So for the acquisition that we're contemplating and working through completing at the moment, as you say, it's all relatively young planting. We expect it will take some years for it to come to its full potential for two reasons. One, because we think there's an opportunity for us to add value through improving the agronomy and improving the management in that area, which is something that we identify in a number of the acquisitions that we do. But to more simply because it is still quite young.

19:23 And so the average age, think, is what was it the oldest plantings of 2016, making them less than 10 years old. The average age, of course, is much younger. So there are many years over which the yield will increase naturally as it comes to its full potential as the palms mature. So there is some time, I don't have an exact number of years, but it's going to take between five and ten years before it will reach its full potential just through its natural maturing. So there is some time for us to enjoy an increase in benefit from the yield coming through at the state that we are acquiring. On the EUDR point, we see it far more as an opportunity than as a risk.

20:12 We don't see there being a significant concern because of the way we've approached everything we've done responsibly for a very long time that we see that sort of contagion risk that you described. We see far more an opportunity for us to explore ways in which we can engage with customers and form part of the supply chain of EUDR oil, which potentially then is all somewhat to be determined because it's still being worked out by our customers who will then form a supply into Europe, but we see far more of an opportunity to form part of that supply chain and access higher premiums than the kind of risks that you described.

21:00 Any more questions? Yes? Good afternoon. My name is Phil Clark. Very happy long term shareholder. It's good to be here. First of all, many congratulations on the fabulous results. It's completely glorious to be a shareholder. Thank you very much But for I know you're not complacent. So the extraction rates from our mills is about 23% or so. How do you benchmark that? How do you know that's a good rate? And can we learn from others in terms of how we improve our yields and similarly for of the crop?

21:47 How do we benchmark that? And how do we know we're doing well? You want to take that again, Maki? Yes. Absolutely. It's question. It can be difficult to benchmark, but we do have access to some information from other mills and other companies to give us a good guide to where we sit within the pack. And there is some public data available that we can look at to get a sense of benchmarking. We believe that twenty three percent twenty three plus actually that we achieve is a very good extraction rate and we're very pleased to be able to achieve it. As you say, we are absolutely not complacent, and our mill and estate teams work in close harmony to look at ways in which we can continue to improve our extraction rate.

22:36 One of the ways in which we want to focus on improving our extraction rate is to think about the product mix that we put through or the fruit mix that we put through our mills. And this comes back to the point that was being made earlier about the way in which we're harvesting more and more of our own crop from our own estates, which we believe we don't just believe we know, is of a much better quality and restricting and reducing the amount of crop we buy in from outside suppliers, which we know is of a lower quality and leads to a lower extraction rate. So if you change that product mix and do more of your own crops for your own mills and less of bought in crop through your own mills, that has the effect of improving your extraction rate.

23:27 We're doing that, we want to do more of it. Matthew, any more questions? Yes, Martin. I'm very impressed by the facility you've aligned with the new staff, the houses and what have you. To what extent are the tenants or the occupants of these houses sort of responsible for their upkeep and the general upkeep of the facilities in the villages that you set up? Ravi, are you happy to answer that question since you're really closest to us and you've been involved so much? Do do you need a mic? That's it. It's Yeah.

24:22 Yeah. Give me the mic. I I think you need a mic. It might be better with a mic, actually. I think it's better with a mic. Yeah. Yeah. We have lot of houses in the plantation, which we provide for the stops. We have maintenance program every year. Civil engineering team on the ground, and they will carry out the maintenance program every year, take care of the quality. K? Apart from that, we also give housemates for every staff to you know, some of the subs will be like singles. They don't really care for the cleanliness of the house. Okay?

25:10 So we give housemates so they to take care of the cleanliness of the house. So So that's how we take care of the quality. Thank you. Yes. I mean, I would add that it's I think one of the features of MPE is that we do provide the highest quality of housing, school facilities, particularly on the remote areas, clubhouse facilities. And this all feeds into the theme of sort of Reg G responsibility, excellence, growth and yield because by being responsible and providing excellent facilities, it helps to retain people. So senior managers and staff who wouldn't otherwise perhaps be willing to go and live in such remote locations because of the high quality of the facilities, not least the excellent schooling for their children are happy to go. So it all ties in together. Sorry, next question.

26:17 No. No. It is it is it is maintained to a high standard. Yeah. Yeah. Any other questions? Yes. I'm Richard Snelling. A very happy and fairly long term shareholder. What I wanted to ask the board is, do you have any serious competitors on who there might be in the palm oil business? Well, funny enough, in a sense, we're not really competing with other palm oil companies. I mean, are a tiny part, a tiny cog in the palm oil wheel and that we account for less than 05% of all palm oil that is produced. And in a sense, it's actually good to compare notes with our peers, such as with our friends at KLK, who are shareholders in us, and they're much bigger operators than us. They have many more hectares, but it's really good to compare notes with each other.

27:22 In a sense, the competitors are more the other vegetable oils that are produced, the biggest being soy oil. But we tend to be more competitive in terms of palm oil versus soy oil because our costs tend to be lower. And we also, as an Indonesian, an efficient Indonesian palm oil producer, have a comparative advantage over Malaysia where costs are generally higher. So we do have a natural, if you like, edge over producers there. But we don't think of ourselves as competitors with other palm oil companies. Any other questions?

28:09 Yes. Is there any problem in obtaining labor on Alpine estates? Any issues with the labor, did you say, in obtaining labor? Question, quantity of labor. Do you want to answer Matthew? In essence, no, we haven't found there to be an issue with obtaining labor. I mean, it varies a little bit location by location as saw in the presentation, we're very geographically diverse across Indonesia. In the Northern part of Sumatra, the industry is a little bit more mature, shall we say, whereas in South Sumatra and in East Kalimantan, oil palm is that little bit newer. So obtaining skilled workers can be a little bit more challenging and will require a need for a little bit more training to ensure that we have the people capable and able to do all the necessary skilled tasks within our operations.

29:16 But other than that, at this stage, no. I mean, Indonesia is a huge country with a very large population, so access to a workforce has not really been a big issue for us. Thanks, Matthew. Any more questions? Right. Well, thank you so much. And of course, you have every opportunity to continue to ask us questions after the formalities of this finished, which shouldn't be too long and we can get outside again. So I shall now proceed with the formal part of the meeting. The notice of meeting has been in the hands of members for the statutory period, may I please take it as read?

30:12 Thank you. The independent orders report to the members of MPEmmons Group PLC is set out on pages 58 to 63 in the annual reports and accounts. The report is on the group financial statements, including the parent company financial statements. May I take it as read? Thank you. Voting today will be conducted on a show of hands. May I remind you that shareholders who are present here in person or by corporate representative are entitled to one vote on a show of hands. A proxy who is present and has been duly appointed by a shareholder entitled to vote also has one vote on a show of hands. Please do not raise your hand if you're not a shareholder or a formally appointed representative or proxy.

31:01 Resolutions one to six are proposed as ordinary resolutions and require a simple majority to be passed. Resolution seven is proposed as a special resolution, which requires a majority of 75% to pass. We received proxies in respect of 23,305,532 shares, copies of a schedule detailing proxy voting instructions for, against or withheld received in relation to each resolution have been distributed in the room. A vote withheld is not a vote in law, is not counted in the calculation of the proportion of the votes for and against. With that in mind, I'm pleased to confirm that of the votes cast, not fewer than 92% are in favor of all resolutions.

31:48 A breakdown of the results of the proxy voting is set out in the printed out schedule. The reports and financial statements have been sent or made available by digital means to all members. And I hope they provide shareholders with a clear explanation of the group's strategy, its activities and its profit and financial position as at the 12/31/2024. I now propose as Resolution one that the report of the directors and the audited financial statements for the year ended 12/31/2024, now laid before the meeting, be received. I put the resolution to the meeting. Those in favor? Those against? I declare the resolution carried.

32:34 I now propose as resolution two, the Director's Remuneration Report as set out in the Annual Report in order to financial statements for the year ended 12/31/2024, now late before the meeting be received. I put the resolution to the meeting. Those in favor? Those against? I declare the resolution carried. I have pleasure in proposing as Resolution three that Mr. K. Chandra Sakharan be reelected a director of the company. I put the resolution to the meeting. Those in favor? Those against? I declare the resolution carried. I I'll nominate Bruce to put resolution four to the vote.

33:22 Thank you, Peter. I have pleasure in proposing as resolution four that mister Peter Haskell Chaplin be reelected director of the company. Put the resolution to the meeting. Those in favor? Those against? I declare the resolution. Okay. Thank you. I now propose as Resolution five that a final dividend of 37.5p per share be declared payable on or after the 06/19/2025 in respect of the year ended on 12/31/2024 to all holders of shares on the register of members of the company at the close of business on the 04/25/2025.

34:11 I put the resolution to the meeting. Those in favor? Those against? I declare the resolution carried. I now propose as Resolution six that BDO, LLP, chartered accountants and registered auditors be appointed auditors of the company to hold office from the conclusion of the meeting until the conclusion of the next meeting at which financial statements are laid before the company in accordance with Section 4,371 Companies Act 2,006 at a fee to be determined by the directors. I put the resolution to the meeting. Those in favor? Those against? I declare the resolution carried. I now move on to the special business of the meeting and propose as a special resolution, the resolution as set out in the notice of meeting number seven.

35:01 The resolution gives authority for the purchase for the company to purchase up to 10% of its own shares during the coming year as and when the directors consider it appropriate. I put the resolution to the meeting. Those in favor? Those against? Notes one or two. I declare the resolution carried. Now, before concluding the business in the meeting, it's always been customary for shareholder kindly to propose a vote of thanks to our staff overseas, who, as you know, perform the most extraordinary job, all 12,000 of them. And if somebody were kind enough to our normal proposal, Christopher Moore, doesn't appear to be with us, I don't think. But is somebody there's somebody else who's yes, thank you very much.

35:58 That's very kind. That will be conveyed. No doubt Ravi can take the message back to Jakarta and convey that to all concerned. So thank you all very much for attending. You're now invited to join us for some light refreshments in the Courtyard. I think the sun is shining and hopefully, we will remain dry, and I think it will for the next hour or two at least. So, please join us there. Thank you again for coming. Well done. Well done. Thank you for attending today's annual general meeting, and good afternoon to you all.