M.P. Evans Group (LSE:MPE) — Full year results investor presentation

0:00 Good morning and welcome to the MPEvans Group PLC Full Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it received during the meeting itself. However, the company will review all questions for today and publish responses where it is appropriate to do so. Before we begin, I'd like to select the following poll. I'd now like to hand over to Chandra Secarin, Executive Director Matthew Coulson, Chief Executive and

0:32 Peter Hasley, Chaplin, Chairman. Good morning to you all. Thank you very much, Alessandro. Good morning to you all. Thank you very much for taking time out on this beautifully sunny morning to hear our presentation following our results, which we announced yesterday, a record trading profit as a number of you will have no doubt, noted. We do want to restrict the total time to one hour, not least as you may be aware, there's a a minute silence at twelve noon. So we're trying that in in memory of victims of COVID in The UK. So we'll we'll wrap up by then. We'll try and speak for not not much more than half an hour on presentation and then invite questions after that. Incidentally, you you see the first slide, that is a drone drone picture. It's not just a design photo. It's a a real photo on top of one of our plantations.

1:38 If we can move to the next the next slide, that is also one of our plantations at, one of the newer housing areas that have been developed.

1:54 So can we make that any bigger? Otherwise, I'll I'll resort to my that's fine. As long as everybody can see it okay. When who we are, for those of you who are not so familiar with us, because I know there are people who are attending who are not so familiar with our story, equally, there are shareholders. So we'll focus largely on the results, but also expand a little bit about who we are and, most importantly, what we're doing now and and where we're going. We we've been around a long time. We're a 150 year old plantation company, UK listed, focusing in the last number of years on sustainable Indonesian palm oil.

2:42 And and importantly, we still have an ambitious vision for the future. So we're still growing, and we still plan to grow further over the coming years. We've grown significantly whereby we have now over 10,000 employees. And, of course, they live from the plantations, many of them with their families. So we're effectively responsible for looking after large numbers of of people. We've grown now to just under 53,000 hectares, some 40,000 of which are our own, and the balance of those, which we've developed on behalf of the scheme smallholders, those smallholder cooptured farmers who were attached to some of our newer projects. We've invested over $500,000,000 into Indonesian sustainable palm oil in the last fifteen or sixteen years or so, and we will continue to invest more in the future.

3:40 We've been members of the RSPO, the Roundtable on Sustainable Palm Oil, which is the independent body who who audit and certify our production. There are several thousand members comprising different stakeholders in the in the palm oil industry, whether producers, consumers, retailers, banks, NGOs. And it it's it's increasingly recognized as the body that the independent body that certifies the production of the mill. Matthew will talk a little bit about this. And for those those companies who are certified whose is certified with the r s p o RSPO, premier are able to able to be obtained.

4:29 And our premier that we secured last year was higher than any previous year, which is which is which is good news. We are committed to operational excellence, and this ties in, if we go to the next slide, with our four core pillars, responsibility, which, of course, comprises sustainability, environmental responsibilities. Clearly, there's a strict policy of no deforestation, zero burning, zero waste, which Chandra might talk a little bit about when we come to the picture of the mill, just how efficiently we manage the mill operations. Is is wasted.

5:15 But in addition, in terms of our responsibilities, we mustn't forget our social responsibilities, particularly towards our our staff and the local communities and the fact that we are able to provide good quality housing and, indeed, schooling where appropriate on some of the more remote plantations where there isn't good quality schooling, encourages staff and managers to remain with us. And that, in turn, feeds into the the next, if you like, pillar, that's of excellence. It encourages good people to stay and to ensure an excellent quality of of our operations. And by having excellent staff that feeds into the next pillar, that of that of helping to grow by improved agronomic practices with the excellent management that we have.

6:08 But apart from improving yields through better agronomic practices, production is increasing because crops are growing because our palms are still quite young. So as as the palms grow older, the the the trees become more productive and the crops grow, and so the amount of oil also grows. So that that is still coming through through the pipeline. But in addition to that, there's a third source of growth, which is from the potential acquisition of new areas with the first target being areas immediately around our existing plantations where we have spare bidding capacity. And and second, perhaps a little further down the line, we would look at bigger new acquisitions of sort of size or size, 10,000 hectare acquisitions.

7:03 So that that is the sort of more medium term plan, sort of two to three years ahead. And with the with the with the further growth comes growing share shareholder returns, higher dividends, and we very much plan on maintaining our record, which Matthew will demonstrate later, of our our historic achievement in terms of dividend returns and the the pursuit of a a continuing progressive dividend policy. Well, last year, of course, was excellent, and the two fundamental drivers were the increase in crop, which was expected. Therefore, the increase in CPO production, which was expected.

7:53 But, of course, what helped to make the results really, really good was the significant increase in in the palm oil price, and we'll talk a bit more about that in a moment. But I've also alluded to the increase in the sustainability premium that we achieved, which is which is very pleasing as well. And the final point of note on this slide, I think, is the is the increase in the dividend, which I've touched on. The the only box which is not there, which, if you like, has gone down, but, again, which is good news, is the the gearing, the debt level, which has come down very substantially. And, again, Matthew will talk about that, shortly. Moving on to the power market itself.

8:40 Even before these dreadful, awful events in Ukraine unfolded, the palm oil market was was very strong following partly as a result of the the effects of the the pandemic, which, for instance, impact impacted quite severely on Malaysian production. Malaysia has one tenth of the population of Indonesia, but it produces a little more than half of Indonesia's palm oil production. So it's it's a huge industry still in Malaysia, but more or less entirely manned by immigrant foreign labor. So, with with restrictions,

9:25 lockdown restrictions, quarantine measures, it made it very difficult for the Malaysian palm oil industry, which was already struggling with its labor to operate efficiently and effectively. And as a result, there was a a lot of labor which which which could not be deployed. So harvesting rounds got missed. Fertilizer applications applications didn't didn't get put down, and that in turn impacted on on on supply, on the amount produced. And that will continue. That that's an ongoing issue even with the lifting of some of the restrictions in Malaysia. Labor, I'm sure could talk more about that if if there's time. Labor remains a serious issue. So that was one of the factors also.

10:17 The poor soybean crops in both North And South America impacted on total vegetable oil production. And, of course, the the all the vegetable oils are interlinked in terms of supply, demand, and price. So that kept upward pressure on on the price. And then, of course, since the end of the year, the impact of COVID continued to to be, to be applicable. But then, of course, we we had the events in in Ukraine, and that's just put further pressure on on supply. Maybe we don't know that the Ukraine is is a huge producer of sunflower seeds and sunflower therefore, sunflower seed oil supply is likely to be restricted. Sunflower is one of the biggest of the vegetable oils along with with with palm, soya, rape.

11:11 Those those are three other big ones. So that's only likely to impact further on supply and, in turn, on on price. And so we've seen prices go even higher, touching $2,000 a ton at one point. But this this had a real impact on domestic, consumption in Indonesia. I mean, palm oil is a staple part of the average Indonesian person's diet, And therefore, the Indonesian govern government sought to take measures to mitigate against this. They they had first introduced a so called domestic market obligation, but then that really was was was badly understood and not properly implemented, and they scrapped that after three or four weeks. And in its place, they simply increased the levy, which was already in place, but they've added an additional levy, at the top band.

12:14 And there's a there's we we we actually put out an announcement, last Friday following the Indonesian government's announcement of the change in the levy structure. But because the market had already taken account of the likely restriction in exports and the likely impact on domestic prices brought about by the domestic market obligations, the differential between the SIF Rotterdam price and the estate price, which is the price we get in our pockets for the oil we sell, had already widened out by an additional $200. So the the the the additional levy was $200. So when this additional levy was announced on Friday, there was actually no impact whatsoever on the Millgate price prices that we've received. And indeed, as announced the other day, on Friday, we got the same price on that day, a thousand and $80 net.

13:19 And we've actually since received today $1,100 net for another another consignment. So these prices compare with the average net price of $800 per ton that we received for the whole of last year. So we're still well ahead in terms of the average prices that are being traded now compared with the whole of last year. Just now a note on the sustainable palm oil market. Clearly, the demand for vegetables generally and palm oil specifically is going to continue to grow. Sustainable palm oil, we think, is a very good way of supplying that that need. Sadly, only 20% of palm oil is currently certified sustainable. We would love to see that a percentage increase that would only encourage our peers to become RSPO certified, and, of course, to encourage buyers to be willing to pay a premium to to to buy sustainable palm oil. One point which sometimes not entirely understood is it's the mill itself which is certified sustainable.

14:33 So we develop and operate our plantations absolutely fully a 100 to RSPO sustainable standards. But at at this point, 55% of our production, which is what is certified by the RSPO, is is RSPO certified. So we get the premium for that element of our production. And that's only because two of our mills are still pending certification. It's quite a lengthy rigorous process to become certified, quite likely,

15:06 but that is that will soon come through. And then, of course, we have a further mill being built, and our production from that will in turn become certified. But until that becomes the case, we we sell our FFB, our fresh food punctures outside to external mills. And similarly, impacting on this percentage is the fact that we buy in fruit from independent smallholders who are not themselves certified, but we are actually helping independent small host to become certified under a new scheme initiated by the RSP, but one in which we we are intimately involved. So there is a chance that in due course, independent production will be certified, which will increase our percentage of certified production as well.

16:02 I think we'll we'll move on to the next slide now, and I'll ask Matthew to take over talking no. Sorry. To take over, sorry, about our operations and and specifically our our our crops to start with. Thank you, Peter. Good morning to everybody. I'll be taking over the next three slides, which basically touches on operation. I'm based in Jakarta right now. I'm speaking from Jakarta. First of all, we'll talk about crop crop growth, the comparison between 02/21 and 02/20. The total crop processed by our four five mills was 1,366,200 tons in 02/21, A thirteen percent increase when compared to 02/20.

16:55 We processed 1,207,000 tons in 02/20. This is because of more fields coming to harvesting,

17:08 palms from young young from the young stage getting into the prime stage, a more aggressive approach on purchase of outside crop. So what is total crop process? What what is it made out of? Number one, it's our own crops. That's crop crop from MPE. Two is smallholder crop that is the cooperative crops that we manage and which we manage totally. So there is traceability total traceability here. And independent crops purchase. This is where our marketing team aggressively try to purchase crop from farmers, small holdings in the vicinity, give them an opportunity to sell sell their crop to us.

17:58 So for own crops, we also had a 12% increase. We had 809,700 tons in 02/21 versus 724,300 tons. Cooperative crops, we had 229,300 tons processed versus 193,000 tons processed in 2020, a 19% increase. This is clearly because of more fields more fields from immature coming to maturity and also more from the young young category moving to the prime category. And then we have the inter independent crops purchase. Our marketing team this year or last year rather in 02/21 was more aggressive to basically increase our mill utilization.

18:51 We managed to purchase 327,200 tons all over our five mills in all the provinces compared to only 289,700 tons in 2020. So this is, this slide clearly shows our growth, from 02/2020 to 2021 in terms of, crop processing our five mills. Next slide, please.

19:27 This slide is about our increasing milling capacity. If you look at the at the graph, the linear graph shows our milling capacity over the years. In 02/10 in 02/10, we had only one forty ton mill in Pangkatan Sumatra.

19:47 And over the years, we have built five mills as at 02/21. We have one forty ton mill in Pangkatan, one forty five ton mill in b in Kalimantan, three sixty ton mills spread out between Bangka and Kalimantan. So we have a total of five mills right now. And in 02/22, as you can see in my next slide, we intend or we we are targeting to complete our sixth mill in Mussi Rawas. The dark green charts clearly show crop from MPE. Are this is actual crop crop. The lighter green shows crop from the cooperative.

20:32 The orange bars show crop that has been purchased from outside vendors.

20:40 So if you look at the graph very clearly, this is the progress of MPE Evans. It tells us the whole MPE Evans story over the last fifteen years in Indonesia.

20:55 CPO production in 02/21, we produced 312,900 tons versus 271,700 tons. Mill output was totally unaffected by COVID COVID nineteen in the pandemic year. Production cost is slowest, especially when milling own crop in group mills. To to basically show you this production cost for own crop is only $350 per ton. Whereas total production cost in our group mills is $46.05 per ton. Why? Why the difference is because we purchase the cooperative crop and the outside crop at at a at a price which is very much related to the CPO market.

21:49 There were two new mills commissioned in 02/20 and 02/21, both in Kalimantan. One is the Raiu mill in P M in TGA, and the other one is the Bumimas, Binhwang mill in the Bumimas project. One is a 45 ton mill. The other is a 60 ton mill.

22:09 Development of our group's sixth mill, as I said earlier, at Mussi Ravas is on track and for completion at the end of twenty twenty two. Margin, of course, increases as more of our own crop is milled in our own mills. We expect to process 96% of our own crop once our sixth mill is open. That is expected to be ready December 2022. Next slide, please. Continuing our investment. Planting as we started in Mooshrawas, we expect a total of 10,000 hectares to be planted this year. We had already planted about 9,000 until until last last year, and we are hoping to achieve approximately 12,000 hectares in this Mussi Rawas project.

23:09 As I said earlier, Mill Number 6 at Mussi Rawas Con construction will be completed in 2022. Work is in progress. Yeah. If you look at this beautiful picture of a mill in this is an example of a mill. This is in Bangka. You can see the mill, the ones the the the building with the green roof. The orange the orange,

23:42 structures are the storage tanks for CPU. The balloon like cover is our biogas plant. And if you see carefully, on the left hand side is our compost plant. The water body is our catchment area.

24:02 Basically, all our mills go through this zero waste system where biogas is used for electricity and sold to the grid also. All our villages are wired to the to the grid. We don't use fossil fuels at all for our villages. The compost, the empty fruit bunches are used as a fertilizer resource and put back into the field. We continue to invest in our group estates, biogas plants, bulking facilities, infrastructure, and regional offices.

24:47 To move to give you an example, we just completed our biogas plant for the Binhwang mill in in Bumimas. We completed two bulking facilities last year, one in bulk Bangka in Bangkapinang and the other in Ara, that's a Bumimas project. The bulking facilities is where we store our oil and where our oil is shipped out through a river. We continuously improve our in infrastructure that's roads, housing, grades, culverts, bridges, etcetera.

25:26 I'm very glad to inform you that we just moved into our brand new regional office in San Marinda. Acquisition opportunities for sustainable new land around existing estates has been our priority. We are looking at three parcels, two in Kalimantan and one in Sumatra. This will really help in improving our mill utilization. So that is our number one priority. And at present, negotiations are on the way. Of course, our medium term objective is to acquire or develop a new 10,000 acre property.

26:14 We only look at brownfields that is. And right now, the human resource aspect is being attended to before we move into this seriously. That means, you know, there are lots of lots of

26:35 parcels coming to us. We believe that we have to be very, very equipped with our human capital before we take over a project. Of course, we we have to look at the sustainability aspect and and various other issues before we we purchased we purchased an a new 10,000 hectare project. Matthew, maybe you like to carry on from here. Thank you. Thank you very much, Chandra. I think at this stage, we will move on and just spend a a short amount of time looking at the 2021 results themselves. You've you've already seen the the highlights slide that Peter shared with you, but, hopefully, you've already taken from that that that the main theme for for 2021 results, which is all all about increases

27:28 across the board and and a little bit more on that in terms of this slide. So you can see revenue up substantially, revenue up by more than 50%, and revenue just over $275,000,000 when we look at 2021. Of course, that's that's a factor of of our increased production that you've seen already and then the price environment within which we've operated over the course of 2021. So our mill gate price that we achieve up by 37%, our average mill gate price over the course of the year was up to just over $800 per ton, 810. And similarly, Peter already touched on the increase that we've been able to achieve in our sustainability income during the course of 2021.

28:17 Similarly, a big increase in gross profit. It's great to be able to report to you that for the first time, we have gross profit of over $100,000,000 in 2021 and a big step up in terms of margin, So margin of 37% in the year compared to 20% in in the previous year. We've talked about production costs, how how our production costs are at their lowest when we when we mill our own crop in it in our own milling facilities, but our total production costs in the year of 465 and the the $3.50 being related to that own crop through through our own milling facilities. Yes, we do see some anticipated inflationary pressure coming through in 'twenty two. But of course, we expect that to be more than offset by the high price environment we find ourselves in right now. And then you can see earnings per share, more more than a pound of earnings per share, 115.6p of earnings per share, absolutely supporting step up in terms of of of normal dividends for 2021.

29:34 And then looking at cash and the balance sheet. So another $100,000,000 milestone here on operating cash. So when we look at operating cash before interest and tax, a $109,000,000 of operating cash generated in the year, supporting the remaining capital investment we're working through. So that supported the operating these were the capital investment in our Bournemouth mill and other things that we were doing in 2021, and we'll continue to support what we're doing into 2022. And a big step up in cash used for shareholder returns in the year there, as you can see. As Peter said, the only thing that's gone down in the year is net debt. Net debt was very nearly eliminated in the year. We started with $78,000,000 of net debt, and we closed the year with 5,000,000 of net debt. So a real change in terms of our balance sheet in the year. When you look at the balance sheet, net assets up to $445,000,000.

30:40 Net gearing, essentially gone, nothing, 1%, and then a very strong balance sheet to put us in a great position to pursue our strategic goals. And when we think about the outlook and we think about, first of all, stepping into 2022, a very strong start to 2022. Just to highlight, we actually, when we look at the very early part of '22, we see a slightly lower crop in the first couple of months of '22 compared to 2021. That's really a seasonal issue just in terms of being in a high cropping period versus a low a low cropping period in the early part of this year. But we absolutely expect the long term trend of crop increases to reassert itself as we move through the year.

31:31 And as I'm sure it's become already clear as as we've been talking to you, the CPO price environment within which we find ourselves means that the average Millgate price for the early part of this year is significantly ahead of the average we saw for 2021. So as I said, just over $800 per ton throughout 2021. First two months of '22, over a thousand dollars. So a thousand and 50 is the average for the first two months of '22. And that means we continue to be very cash generative. So as I said, we opened the year with a small net debt position. We now, by the middle of March, find ourselves in very much a net cash position, 27,000,000 of net cash by the middle of March, a significant further step forward from a balance sheet perspective.

32:29 We continue to work hard on potential sustainable acquisition opportunities. We continue to invest in Mishirawas in terms of ongoing planting. The mill development program remains very much on track, so we expect that to be ready to go around the end of this year. And important to note, group plantings overall remain pretty young by industry standards, so that gives us very much that promising growth profile for several years still to come. We expect the strength in palm oil pricing and in the palm oil market to continue for some time still to come and and and finally, to to observe and to reassure we continue throughout our operations unimpacted by COVID nineteen.

33:31 A final word on returns, on dividends. So you can see in the chart there our long term track record over thirty years, so all the way back to 1992. And you can see that our long term track record of dividends only goes in one direction. It's an ever increasing track record of returns, and you can see the big step up in the last few years. So going back for for three years, we've moved from 17 to 22 and now to 35p in terms of normal dividends for shareholders.

34:16 And, of course, we would be extremely reluctant to to turn back on this long term track record, and that's very much our expectation for the future that we continue to work on progressive returns for shareholders. And so finally, we can perhaps just leave leave the summary there. I don't think we need to Yeah. Go over the points again. Hopefully, the the points we've made have been clear. And perhaps at at this stage, this would be a good point at which to turn to the questions that I know a number of people have been asking whilst we've been talking to you. Peter, Matthew, Chandra, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the top right corner of your screen. But just while the company take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. As you can see and as you just mentioned, we've received a number of questions throughout today's presentation, and thank you to all the investors for submitting those. Could I ask you to read out the questions and give responses where it's appropriate to do so? And then I'll pick up from you at the end.

35:37 Thank you very much, Alessandro. We we thank you so much for all your I mean, there were lots of questions. Thank you so much for taking so much interest. We we may not be able to get through all of them, and I suspect we won't. So I'm we'll try and sort of lump some of them together as it were. We might just kick off with with three of the questions or the themes anyway. The first one, perhaps I'll tackle on on selling forward. There's a question on that as to whether at these high prices, whether we're planning to sell forward. And perhaps Matthew might answer a number of questions about the levy duty, whether this is a kind of one off windfall, whether there are further levies, questions relating to that, if that's okay, Matthew. And, Chandra, there's been a question regarding whether we could improve our yields as good as they are already, whether there is capacity to improve our FFB yields and our oil extraction rate yield. So those two. So we might start with those those three questions as it were. So on the question of selling forward, the way the question is phrased is actually on hedging forward. I mean, I would slightly sort of controversially say, well, do you mean speculating forward? Because in a sense, the natural hedge is by selling as we produce.

36:58 Palm oil is unlike most other crops whereby we are constantly harvesting, and we're constantly selling every day, week, month of the year, unlike an annual crop. So many crops are just harvested once a year, and there is good reason in those instances, arguably, to hedge forward, to sell forward as you see the prices rise. But, I mean, we were asked when the price was at 800, indeed, then again at 2,200, Rotterdam, whether we should be selling forward. And we feel strongly that we do best by accepting the price on the day by maximizing, a, the productivity, maximizing the price we achieve through the sustainability premiere.

37:45 But there are risks involved in and and practicalities involved in selling forward, not least that refiners often don't actually want to take on both the risk themselves in accepting forward purchases on the physical market. Otherwise, you have to look at alternatives selling forward on the futures markets, which are already trading at a discount. You get brokerage commissions, all the rest of it, and you get the prospect of additional taxes being charged, levied, say the market goes up substantially, you've sold forward at a lower price, you get taxed at the higher rates. It's a sort of double whammy. Why go to all that potential risk when you can just quietly achieve the average day by day, week by week. So we that tends to be our policy. I mean, we do sell have a little bit of an attitude. We might sell forward to the spot could be anything up to the next month or two or even even arguably three, but really not beyond that. And and I think we generally do better by that by that strategy.

38:53 So, Matthew, do you want to talk about levies, etcetera? Indeed. So we've had a number of people who've introduced a question connected to the change in the export levy structure in Indonesia, which is a relatively recent change. And, indeed, we we highlighted it in an announcement that we made last week, reflecting the fact that it was indeed a change that was only formalized in the last week or so. Essentially, what's happened is that up to last week, the the way in which the the export tax and the export levy was charged in Indonesia, there was a for for both the the tax and the levy, there was a graduated scale of charges, but the graduated scale stopped at prices above $1,250 a ton.

39:47 Now with the with the increase in prices that we'd observed in in in recent weeks and recent months, the Indonesian government had sought to introduce a new measure in in order to support the domestic market. And the new measure that introduced was, indeed, called a domestic market obligation, which was designed to make sure that prices for the local market for local consumers remained at at what they considered to be a reasonable level. This new measure that was introduced called the domestic market obligation, I don't think worked entirely as planned, shall we say.

40:33 As a result of which, several weeks of seeking to introduce this new measure, this market obligation, the Indonesian government took the decision within within the last week or so to remove that, to take away the domestic market obligation. And and far more simply, to update the existing export levy structure. And because up up to now, the export levy stopped its graduated scales at $1,250 a ton, to to update that graduated scaling and update it from the the the 1,200 up to $1,500 so that for prices between 1,200 and $1,500, there was there was an extra amount of graduated increase.

41:25 And for prices above $1,500 a ton, essentially, there was an extra $200 of export levy. And that's where that's where we now find ourselves. So, obviously, the price at moment is above $1,500 a ton, and therefore, an extra $200 per ton is charged. Now we don't pay you the export levies because we're not exporters. However, what happens is the amount that we then are offered in tenders for selling our oil where we sell it from our mill gate, the the vast majority of that finds its way back to us. So we end up with a wider gap between what's the quoted price, the most down price that you can see on the screen and what everyone understands and and what we receive mill gate.

42:13 So there's a there's a there's a widening. Now sorry if this is a long explanation. There already had been some widening as people tried to work out what was going on with this domestic market obligation. And, actually, what we found is because there'd already been some of that widening going on with the domestic market obligation, what happened when the export levy was introduced? Firstly, people were pleased because it gave clarity because it was an existing measure that everyone already understood. And secondly, prices just before and just after the introduction of the change to the levy were pretty much the same. And to give you a flavor of that, we tried to make that clear, in our announcement last week to say that our first tender, just after the export levy was updated, was still at, well over a thousand dollars a ton. I think we announced it was a thousand and $80 a ton. And as you can see from the our our what we were just talking about, our average in the first two months of the year was a thousand and 50.

43:11 So we're still getting very, very strong prices in terms of mill gate pricing even after the introduction of the updated levy. Sorry if that was a long explanation. Inevitably, these things tend to be a number of different moving parts. But the key takeaway is that the export levy has been updated, but we continue to receive very strong ex mill gate prices for our oil. And just briefly, sort of ancillary questions to that regarding whether you know, this is this is just a windfall tax or whether it really will go towards subsidizing, you know, consumers. I I think it is felt that, yes, it it will subsidize because, I mean, it is a real burden on on domestic bias of of palm oil.

43:58 And I I think it's unlikely to be stepped up further because we're a very efficient producer. Other companies, not least some of the Indonesian government doing plantations are not so efficient, so they would really start to hurt if the taxes were even higher than what had been imposed. So I I would doubt that they will go higher, but, I mean, you know, I can't say anything for sure where taxes are involved. Chandra, on on the point about the capacity to improve yields of our on in the field and in the mill, what would you say about that? Yeah. Thank you, Peter. We are doing our best to to touch industry standard, and most of the time we do.

44:47 Usually, when seeds are being sold by the seeds, meaning that planting material is being sold by by vendors, they give us a standard standard yield curve. There are certain times when we have surpassed those yields. Certain times, we we could not because, you see, a piece of land is very varied. It has got physical features. Moisture is a very, very important factor in oil palm yields. But I will assure you that we are achieving very good yields when compared to our competitors or our colleagues both in Indonesia and Malaysia. Even in the mill, all of our mills are above 23% oil extraction rates.

45:38 I think only one operator in Malaysia achieves that that also, not not in every mill. Whereas in Indonesia, because of the labor ample labor supplies, there are number of plantations that achieve above 23%. So we are there on the top. We are there amongst the top. We also employ one of the best agricultural agronomists to give us fertilizer recommendations. We are also fully going into our compost applications to improve the the soil fertility in all our plantation areas. Thank you. Thanks, Chandra. There was a question regarding what is the motivation of people selling land, and also, is it easier to negotiate in the time of downturn in in in prices for new parcels of land? And this is quite a valid point. As Chandra mentioned earlier, we're negotiating to acquire one or two parcels of land around our existing projects at Kotabangal, indeed at St. Bankiri.

46:44 And it is true that some of the sellers might now sort of think twice about, well, perhaps they should be upping their price. But the the thing we should also bear in mind is that we are, in all these instances, the clear and obvious buyer because, generally, these smaller parcels of land of two or 3,000 hectares are not of much interest to the bigger commercial players. They're looking at bigger pieces. You know, if anything, there'd be more competition for the 10,000 hectare blocks that we're seeking a bit further down the track. I mean, the reason very often people are seeking to sell land is because notwithstanding the high prices, their plantations are just in a complete mess because they don't understand the plantation business that that it's become unstuck, and they just need to sell out because they you really do need to know what you're doing, as I'm sure will attest to in terms of managing plantations effectively in in Indonesia.

47:44 So I I hope that answers that one. There was one here that was says presubmitted. Matthew, why do you think the company shares trade below fair value as calculated by common Jaffa, that's the valuers, when the long term palm oil price they use is far below the current ex Millgate price. So that's an Caja valued our plantations, our interest whereby that resulted in in a a a value for the group of £12.65 as as shown in our recent accounts. So, again, we're trying to keep answers reasonably reasonably short. We got quite a lot still quite I mean, that thank you for the question. It's it's a good point you raised. I guess two two things very quickly to say. One one is for everybody's information, the independent valuers, you know, they take a view they take an independent view about long term price assumptions in order to form that valuation. They took a long term price assumption of the mid 6 hundreds Millgate price in order to to derive their their valuations, which ultimately leads to that £12.65.

48:57 Now people are entitled to to their own opinions as as to whether that's a a reasonable long term assumption. I think probably people would agree that it's not an unduly aggressive assumption, given where we've been recently, where we are now and what the prospects are. So with that in mind and given where the current share price is, you know, we we think there's there's a lot still to go. But, also, with that in mind, it's probably also just worth highlighting. One thing we are doing is seeking a a new authority at the upcoming annual general meeting to to to reintroduce something we had been doing before. We we stopped temporarily, but we think it's the right thing to reintroduce a new authority for a share buyback program because we think, you know, as as as yes, as things currently stand out, we have a a very insensible thing to do in terms of utilization of of of the funds that the group has to effectively buy, if like, very good quality planted hectare at very good value.

50:05 There's a question which is kind of very, very appropriate, but you may have touched on it when you were speaking earlier, but on on cost because, obviously, we're we're securing substantially higher prices now. But one of one of the things that is affected is, well, some aspects of cost, not least fertilizers. Is there any problem securing fertilizer for the remaining year? How does the fertilizer cost impact the group? Chandra, do you want to talk about I think Okay. Looking at Sure. Availability and cost, again, fairly briefly. Sure. We have secured the first semester fertilizer. It's all in the store. We are presently presently opening our tender for for the second semester that is to be applied between June and June you know, August.

50:53 Of course, potash has gone up 200%. The impact the impact most recent pricing when we checked last week is an extra 6% on the overall production cost because formally, fertilizer used to contribute 14% of of the production cost. Now it may go between 18 to 20. I hope that answers the Yep. But fertilizer is available. Fertilizer is available. Yep. Right now, it's available, and we are trying to beat the mark before others also get it. There've been one or two questions on well, there there were one question on what what might keep us awake at night.

51:45 I mean, you know, obviously, things are, you know, going so well. Of course, there are there are always potential risks. We try to manage our risks as best we can, and the the way we manage them is set out in the annual report. But, I mean, one one of the things that is a risk to many plantation companies is just a potential deterioration in relations with the local communities, less so at the wider, broader government level, but it's more relationships with the local communities. But we have really excellent relations with our local communities, so long may that continue, and and Chandra and his team are absolute expert experts at managing those relations well. I mean, one of the issues, I mean, I I should say that we that the growth will continue regardless of whether we secure new land or not based on the fact that, you know, what's in the ground will be more productive because it's it's getting older and will be will produce more.

52:51 So I suppose, you know, the the challenges are with with the cash flows coming in. It's a nice problem to have, but to allocate that that cash to suitable new acquisitions. So actually being able to, like, identify we have some identified as a matter of actually securing, clinching the deals first for the smaller parcels and then for the bigger parcels. And it is true that where there were there to be a downturn in prices that's one's more likely to be successful in negotiating for for acquisitions. But, nonetheless, we have increasing firepower. We have a sort of war chest, but the additional cash will go towards acquisitions and also towards shareholder returns. So we want to see a suitable combination. Somebody also asked about M and A type acquisitions. We we do want to continue up on a sort of organic growth path. We're not looking at big m and As.

53:49 It's all about doing what we do well to an excellent standards that we referred to earlier. So not large m and As, but the sort of acquisitions that we're talking about, two to 3,000 hectares followed by 10,000 hectares from our resources. We can borrow if need be. We have a very strong balance sheet, and we will do if we if we if the right opportunities come along. Now we discussed any other comment which I Peter, I I think I think you've addressed those questions you can. As for every question you answer, another one comes in. But, of course, the company will review all questions submitted today, we'll publish those responses on the investment company platform. Just before redirecting investors to provide you with their feedback, could I ask Peter, could I ask you for a few closing comments?

54:36 Well, no. I think I can just say thank you so much for attending, and I'm sorry we didn't get to all the all the questions. That's a really, really good and interesting one, but we will endeavor to get get back to you with our answers. For those shareholders amongst you and and would be shareholders, we are having a a physical, a real AGM at the the usual venue of Hall. So we very much hope to to see you there on the, on the June 10. But thank you very much for attending, to to today. Peter, Matthew, Chandra, thank you very much for updating investors today. Could I please ask investors not to close this session as you'll now now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations.

55:23 This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of MPE Evans Group PLC, we'd like to thank you for attending to today's presentation, and good morning to you all.