M.P. Evans Group (LSE:MPE) — Interim results for the six month period ended 30 June 2021

0:00 Good afternoon, ladies and gentlemen, and welcome to the MPEvans Group PLC Interim Results Investor Presentation. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. These will be available via your investment company dashboard and we'll notify you by email when these are ready for your review. I would like to also remind you that this presentation is being recorded. Before we begin, I'd like to submit the following poll. And I'd like to now hand you over to Executive Chairman, Peter Hasley Chaplin Finance Director, Matthew Colson and Executive Director, Chandra progress

0:58 And we're the pleased made. And I've had a a little, sneak, look at, the ad attendees, and it's good to see quite a few, familiar faces. So, thank you to all of you, and we look forward to being in touch with you all soon. And thank you for to any people who are new to MPEvans who want to learn more about us. This is essentially focused on our results, but we'll give you a little bit of a broader introduction to the company and to what what we do as well. And you've been introduced to to us, the executive team.

1:46 I I would just like to a number of you know Tristan, who was with us for Tristan Price, who was with us for fifteen years, who decided around the middle of this year to move on to new career opportunities, but who was CEO for the last five years of his time with us and played a very important and central and key role. And amongst his many, many attributes, he was always very passionate about sustainability, and it's something that we too feel passionate about. But we all wish Tristan very well in in his future career path.

2:37 For the moment, I am managing as executive chairman those responsibilities previously managed by Kristen, and any announcement on a replacement CEO will be made in due course. But I'm very ably supported by my colleagues, Matthew, finance director, and indeed, Chandra. And I'm delighted, that he's been appointed to the board, and he's already proved extraordinary valuable in terms of the contributions that he's been made direct to the board in two of the board meetings we've held recently. So welcome to Chandran. Hope you'll have the opportunity to ask Chandran perhaps some specific sort of more on the ground operational type type questions.

3:29 So let's make a start with our with our presentation just to give you a broad view of of who we are. We're we've been around for almost a hundred and fifty years. We're a UK AIM listed company. But in recent years, the focus has been increasingly and now more or less exclusively on sustainable Indonesian palm oil. We have almost 52,000 hectares of either our own, group owned, areas or areas which are managed by us on behalf of the so called scheme smallholders, the cooperative farmer units, which are attached to our new projects where we develop their plantations to the same exactly the same high standards as our own, but we take in their fruit and process their fruit through our mills, and there's a mutual benefit there.

4:35 We're growing and growing, and we're now proud to say we have more than 10,000 employees in the group. Seven of us in Tunbridge Wells, and the rest are the rest are in Indonesia. And then, of course, they're not only employees, but their families as well. So we have, you know, many people, if you like, dependent on us, and we take that responsibility very seriously. We've invested over $500,000,000 into the Indonesian palm oil, sustainable palm oil plantation sector in the last fifteen years or so since we decided to sell our small Malaysian plantations and go for it in terms of significant expansion into sustainable Indonesian palm oil.

5:21 Just looking at the map, you'll see the various red dots. This is good in that our plantations are generally of a a good sized or economic unit, but and and one of the a mill to serve those economic units. There's just one plantation up in the Northern part of Sumatra, which is too small to have its own mill, but, ideally, that's up at St. Panciria state, which is only about two and a half thousand hectares. But we would like to add more land. If we can secure more land around it, we would then be able to build what will be our seventh mill. We've built we've got five mills up and running already.

6:10 We have a six mill due to go up by the end of next year, 2022, down in Musirawas, which is the Southwesterly part of Sumatra Island. And then we'll talk about further expansion that we're planning in due course. We also have the remnants of our M.P. Burtham sorry, our Malaysian estate ventures, which has now become all about property development. And we're in the course of selling the small piece of land into called Bertam Estate into Bertam Properties, which is a joint venture company, which we've owned for twenty five years, which has developed a new town. So we, by default, in a sense, in Malaysia, become property developers, and that sale of the last piece of land into Bertrand properties is likely to go through in in later in this year.

7:08 And then ultimately, we will sell out of Malaysia altogether. That sale value has a total value of about USD 24,000,000. Moving to the next slide. This is just to give you a broad overview of what I have to say were rather good results. We I mean, in a sense, it was no surprise that we were able to achieve the crops that we achieved and indeed the CPO production because the the the crop growth is on an upward trajectory that we fully expect, and it's in line with expectation. What's it was a nice very nice bonus was the strong palm oil market. So the the results, the earnings that you see below, the very substantial increase in earnings are essentially a function of the the higher crops and the the higher price, which we'll talk more about that.

8:14 We'll also talk about the sustainability pre premier. Perhaps, Matthew, you might talk a little bit about that and what exactly is a sustainability premium, which somebody has already asked us. We'll talk more about the results in due course. So we'll move on to the next the next slide. We thought we'd just reaffirm what our sort of core values are, what our core strategic objectives are. These aren't just

8:50 sort of buzzwords. They are each one has a specific meaning for us. I mean, in terms of responsibility, this comes in many forms. That's the first of our sort of core pillars. We are extremely responsible in our approach to the environment. We've been active members of the RSPO almost since its inception in the early two thousands. We absolutely do not deforest. We have a policy of zero waste. We produce organic compost from the empty fruit bunches, which reduces the amount of inorganic fertilizer that we need to to buy.

9:36 We produce green energy. We we we take the we capture the methane, and we scrub it to turn this into electricity, which serves all our needs on the various estates where we have the biogas plants, and there will be more to come. So it serves our needs in terms of our electricity requirements on the estates and more. We're able to sell surplus electricity into the into the grid. And that accounted, in addition to our other sustainability premium of just under 2,000,000, a further 500,000 or so by way of electricity sales. And then there's also the, if you like, saving of what we would have had to spend on electricity had we not been able to produce our own green energy.

10:25 Our theme of responsibility ties in very closely with that of excellence. We're we're delighted to have Chandra on board with us since he joined in 2008, and Chandra's approach to agronomic man management is absolutely one of one of excellence, and that culture is instilled from the top right down to the, you know, to the harvesters and to the the weeders on the ground. So this is something which very much ties in with our with our strategic values. We are investing not only in the assets themselves, in the plantations, in the mills, but but also in the people in the that work for us in a in a responsible way.

11:19 We provide them with not only with with good housing, but also leisure facilities and also

11:28 schooling, particularly on the the new newer, more remote plantations, which don't have good schools. And that's an added incentive, a magnet to attract good quality managers who might be a little bit wary or leery of actually going to a more remote project. But if they know there's good education there on their doorstep, that's that serves as a magnet to induce them to go and work for us there. The the excellence the excellent quality of our agronomic practices links in with the theme of growth, and the growth comes from essentially three three sources, our our crop volumes and our c p o CPO production will grow by virtue of the fact that our palms are young, and they will be growing, and they will produce more fruit, there will be more CPO.

12:19 If we don't plant a single further palm, our production will grow significantly over the next number of years to come. It it will also grow because of the continuing good, better, excellent practices that we instill in getting the maximum for every single palm that is in the ground. And finally, it's something we perhaps slightly underplayed in the past, is our ambition, and we believe a realistic ambition, to acquire, to secure new areas in the first instance around our existing projects where we have mills to make better use of our existing and excess mill capacity rather than buying in a significant amount of independent smallholder for fruit.

13:10 We'd like to exchange that, if you like, for although that is profitable for a significantly more profitable activity of growing more of our own crops from newly purchased areas, and Chandra will talk more about this and the opportunities for growth. First, around our existing projects, But ultimately, as we look further ahead, perhaps the next three to five years, more of the sorts of 10,000 hectare projects that we've acquired back in the more recent past in the 2017, the Boomi Mass purchase or before that, the Musi Rauas purchase. One was an old well, actually, a relatively newly planted palm oil estate. That's Bumi Mas. The the other, Mussi Rawas, is a very old small holder sort of rubber project. In each case, we've helped to rehabilitate or improve those projects to to bring them up to a sort of excellent excellent standard.

14:10 And finally, the fourth pillar, as it were, is that of yield. And in this instance, I mean dividend yield, giving an increasingly better yield, better return to to our shareholders on the back of our increasingly higher growth and better and better results. This is just really a little bit more on that subject, an example of one of our schools in the top left, top right, an example of on Bumi Mass, the quality of our new housing, the quality of our new planting, the quality of the roads we put in, it all serves to make better and better yields, better and better results from what we have, making the making the most and the best of what we actually own.

15:08 The example of the growth, historic growth is shown on the bottom left box. This is where we have come from in the last ten years. It shows a combination of growth from our own production, from that of our own scheme smallholders, that processed in our mills from our so called the independent smallholders whose fruit we buy in from outside. And then historically, this shows the the yield, the dividends that we've paid. It's unusual for, particularly, an AIM company to have been able to maintain only to maintain or increase dividends over a ten year span. In fact, we've achieved this over more than twenty five years and even more so for commodities based company whose income relies, well, really exclusively now, on the the revenue from the palm oil. But yet because of our substantially increasing crops, that helps to mitigate against the effects of any decreases in the price.

16:19 And we feel confident about being able to continue to deliver higher and higher dividends as we grow more and more.

16:31 Just on the palm oil market itself, I mean, the this was extremely strong by historic standards. We saw the Sif Rotterdam price increase by 72%, at times, well over $1,200 a ton. I think the historic high is around $1,400, which obviously was was very good news. Not such good news was the fact that in December 2020, the in Indonesian government introduced an additional export tax over that already imposed. It was quite a swinging additional tax, which was done in order to help to subsidize the producers in Indonesia of biofuel, biodiesel, because the Indonesian government have the ambition to have more and more biofuel as part of the mix in in in in their diesel production.

17:30 Nonetheless, we were still able to achieve an increase of 34% in the actual price, the bottom line price that we received averaging $724 per ton for the first first half of the year. The reasons for the strong market were partly because vegetable stocks generally were low and because production was down. In terms of the the vegetable market as a whole, The Americas, both North And South America, experienced, sadly for them, weather issues affecting the soybean crops there, which has affected production. And soybean, soy oil is the second biggest vegetable after palm oil.

18:21 But also specific to palm oil, Malaysia, which is the second biggest producer of palm oil after Indonesia, and the two countries between them account for almost 85% of the world's palm oil production. So Malaysia experienced very serious difficulties and problems related to labor. They are almost wholly dependent on immigrant labor. And due to the pandemic, sadly, they were much of this labor was no longer available, and therefore, they couldn't get in and harvest. They couldn't get in and spread fertilizer. And even if they get up and running again, the fact that they haven't distributed fertilizer will mean that they're likely not to be able to return to former levels for some time to come. Indonesia did not experience the same difficulties because they have a population 10 times the size and are not reliant on immigrant labor.

19:25 Following the end of the period, palm oil prices have remained strong. The forward market shows prices remain strong through to the end of this year and indeed beyond. So there's some sign of a bit of softening as we go into next year, but by historical standards, still a lot of strength evident. Now at this point, I'd like to hand over to Chandi to talk about the operations and initially about the impact or otherwise of COVID on our operations. K. Thank you, Peter. COVID, as you know, has there was a pan there is an existing pandemic, as you all know. And Indonesia was considered as the epicenter of the Delta variant after India three months ago.

20:17 Today, numbers have decreased drastically as I speak. Yesterday, there there was 3,786 cases, the whole of Indonesia that was reported, and two hundred and seventy six cases of death. Speaking about MPE events or PT events in Indonesia, for the last twenty four months, we had three hundred and eighty seven cases. Three hundred and eighty seven cases and no deaths. As I speak today, we have thirty eight case infected cases, all in isolation. The group remains very vigilant in monitoring the situation very carefully.

21:03 We are very sensitive about this. All the states and mills over the last two years, twenty four months during the pandemic have continued to operate without any inter interruption at all.

21:18 When necessary, especially in the Jakarta main office, head office, remote working is in place for mainly administrative functions. Especially senior staff continue to travel within Indonesia, as part of the normal operational management and support. Vaccination rates have been are increasing over forty percent of the group's workforce, having received at least one vaccination. As you know, we are very dependent on the Indonesian government on on availability of vaccines, but I'm very confident in the last quarter, we can achieve at least sixty to seventy percent double dose vaccination.

22:06 Next, please.

22:11 Okay. This is on crop growth. The bar charts that you see reflects on crop as as at June 2021 and 2020. The green bar the the last green bar, the very, right shows total crop processed. What is total crop process made out made out of? It's own crops, schemes called smallholder crops. These are schemes, plasma schemes or cacapia schemes as they are called, that we develop for the villages who who gave up their land to let us develop the land into plantation.

23:03 These are schemes for this. We develop it, and we manage it for them. And then we have independent smallholder crops. These these are crops that that these are crop that is basically sourced from outside farmers. We purchased this to improve the mill utilization. So as of June this year, we we processed a total of 702,300 tons compared to 549,600 tons.

23:39 Why is this so? This is mainly because our average age of palms has increased, and we are going into the prime stage of our our growth of our palm growth. And

23:59 yeah. So if we break breakdown in our own crops, we also produce 413,000 as at June 2021 compared to 334,100 as of June 2020. You will see that there is a surge, own crop mainly because of age of palm. Schemes called smallholders also showed a bigger increase of 43%. Independent smallholders, we we started buying aggressively

24:38 smallholder crops because in 2020 and 2021, we increased our milling capacity. We had two mills operation. One in in the Kota Pangon project and one in the new Bumimas project. So we had two new 60 ton mills in operations, and this made us concentrate also on independent sporeholder crop. Next slide, please. Next. K. This is a very important graph,

25:20 which shows our increased milling capacity. The linear graph, the linear line shows our milling capacity increase over the years. Yeah. You will notice that from 02/20 to 02/21, there there is an upward trend. This is when two more mills came into operation. The bar charts show our growth in our own crop, smallholders smallholder crop, and also the purchase of outside crop. That that is reflected by the orange bar. C CPO production in the first half was 161,400 tons in comparison to, the first half two twenty, which, where we processed only 124,800.

26:14 Production cost is lowest when milling our own crop in group mills. Production cost from our own crop was US $335 per ton. That is that is the cost of producing one ton of oil, one ton of CPO, and this is basically from our own crop. But total production cost

26:38 in group mills was US $437 per ton. This is because this is the the crop that we buy from our smallholders as well as from the farmers. We we pay an extra amount, which is related to the CPO price of the market. Nevertheless, the the margins are still very, very attractive. As I said earlier, there were two mills that were commissioned in 02/2020 and 2021 in Kalimantan. And the group's sixth mill will be underway in Mussirawas. Work has started on landfilling, and the tender process is is ongoing.

27:30 We hope to complete this mill in 02/22 end.

27:37 The margin the margin increases as more of our own crop is mainly in our own mills. We hope in the end of two twenty two, 96% of our own crop will be processed by when our sixth mill opens in Mussirawas.

28:02 We continue to invest in planting. Planting has restarted in Mussirawas. Why I say restarted? Because the Roundtable Sustainability Oil Palm Organization had put in more stringent laws towards deforestation, carbon stock, etcetera. So we had we had already planted 8,000 hectares in Moose Rawas prior to this. And when the rules were implemented, we had to submit all our documents all our documents, and it has it had to be verified by RSPO.

28:42 So we just received the green light in July to carry on, and we expect to plant at least 10,000 hectares in Mussirawas.

28:54 And as I I said many times before, the sixth mill in Mussirawas will be prioritized in 02/22. The group continues to invest in biogas plants, bulking facilities, infrastructure, and regional offices offices to support the growth. The group is also looking at upper acquisition opportunities for sustainable new land around our existing estates. Basically, we are concentrating our growth around our existing estates for the time being, for the short term for the short term. Number one, this is to maximize our milling capacity.

29:42 We also like a very measured growth as we got to have a very good management team to lead the next large project. So this has to be done very carefully and very thoughtfully.

30:02 Pup Matthew, you can carry on. That's great. Thank you very much, Chandra. If we turn now and just spend a little bit of time talking about the results themselves for the for the first half of of twenty twenty one. And it's great to be able to share them with you, and I think you'll see very clearly from the slide there that the theme the theme is increase and dramatic increase of that.

30:33 And if we start with revenue for the first half of this year, that was up by 69%, so up to a 128,000,000 for the first half of for the first half of this year. And as I'm sure some of you will have heard me refer to before, determining determining our revenue is really a very straightforward exercise. It's a case of looking at our CPO production and our Millgate price and multiplying the two together. It's it's no more complicated than that. You you've heard you've heard about both of those two factors already

31:09 as part of our our discussion today. So Chandra was telling you about CPO production, how that's up to 161,000 tonnes in the first half of this year, up by 29%.

31:22 Peter was talking about prices, how the headline price of CPO has jumped up by 72% in the first half of this year, but how we've still seen a very big increase, a 34% increase in our Millgate pricing for the oil that we sell to $724 per tonne on average. And it's simply taking those two together, we get a big increase to $128,000,000 of revenue in the first half.

31:55 Peter referenced sustainability premia as well. And because of the accreditation and the certification that we have at a number of our mills, we're able to sell a significant part of our output, the certified sustainable oil. At the moment, it's just over half of our oil that we're able to sell, 54% of our oil that we're able to sell as a certified sustainable oil. And because we're able to sell it with that certification attached, we're able to obtain an extra premium for the oil that we sell and a small extra on top of the headline price for the oil that we sell. It's not a huge amount, but it makes a difference. And importantly, it's increasing as well.

32:44 So you can see that the sustainability premium income more than doubled in the first half of this year, which we're very pleased to report to you. So just under $2,000,000 of income from sustainability premiums that we were able to secure in the first half of this year.

33:05 Then looking at profitability, so you can see a big increase in gross margin in the first half of this year, up from 12% in the first half of twenty twenty to 33% in the first half of twenty twenty one. Now, of course, a big part of that is because of the increase we saw in pricing, but that's not the whole story. We continue to be very focused on controlling our costs.

33:35 And the output of that focus is that production cost fell in the first half of this year, and that's that's measuring production cost for our our own fruit going through our own mills. That's at the core of our business, our own fruit being processed in our own milling facilities. And you can see that was down significantly to $335 per tonne in the first half of this year. Chandra also referenced the $437 per ton, which is our total cost of production in our in our own mills. When you blend everything together, so our own fruit and the purchased fruit going through our mills, that comes out to that $43.07 figure, and that is a little bit up on the previous period. But as Chandra also mentioned, that's a reflection of the fact that the price we pay for buying in fruit is indeed pegged to the CPO price itself. So you would expect to see that increase a little bit as CPO prices are higher. So

34:42 we understand why that's gone up a little bit, but overall, of course, we're making a larger profit. So, you know, we're we're we're okay with that. Moving then, you know, we see how all of this feeds its way through the income statement to the bottom line and how we have that big jump this year compared to last year in earnings per share. So we're in the first half of twenty twenty, earnings per share were just under 6p, 5.7. So earnings per share in the first half of this year were 38.3p, a significant change. And of course, that very much supports the plan we have to be focused on increasing returns to our shareholders. Moving on then and looking at cash and balance sheet measures, very important to note that we continue to be very cash generative, and our cash generation is increasing substantially.

35:44 So where in the first half of last year, our operating cash generation was just over $11,000,000 that's almost tripled in the first half of this year to $33,000,000, and that's measuring operating cash before interest and tax payments, which is a consistent measure. That's the measure we always report in these presentations. And what have we been using our cash for? Well, of course, we've been using it to continue our capital investment program, dollars 15,100,000 deployed towards capital investment in the first half of this year. A big part of that towards completing Mill Number 5, which was opened just after the end of the first half of this year. Mill Number 5 opened at our Bumimas estate commissioned in August of this year.

36:39 And then important to note that a significant amount of cash was used in returning dividends to shareholders, so $13,100,000 was used for paying dividends to shareholders in the first half of twenty twenty one. And despite those uses of cash, we continue to reduce net debt. So net debt was down to $67,000,000 at the end of the first half. One big factor in helping with that was repayment of funding that we've given to scheme smallholders during the first half of this year. So we provide initial funding to scheme smallholders when they when they plant and develop their areas attached to our own estates.

37:25 But as those areas become mature, as the yields from those areas increase and the operating cash flows increase, so repayments come back to the group from those scheme smallholders, and $13,000,000 was repaid to the group in the first half of this year. And overall, if we measure against the first half of last year compared to the end of the first half this year, there's been over a 20% reduction in the group's net debt. And you can see where we stand in terms of balance sheet overall, over $390,000,000 of net assets, a very strong position, net gearing at 15%. And we believe that very much supports the group's plans for continuing investment and continuing growth.

38:16 Just a brief comment on where where we are after the end of the first half of twenty twenty one. Included in the interim report was some information about crop up to the end of August, so all the way through to the end of last month. At that point, we were up to 928,000 tons of crop processed overall. Chandra was sharing with you where we were at the end of June with just over 700,000 tons, so you can see how we've progressed in the last two months. At the end of at the end of June comparing to last year, we were 28% up year on year. And so we continue to be 28% up when we move forward to the end of August with nine hundred nine hundred and twenty eight compared to 725,000 tonnes. So you can see that crop growth is continuing as we move through into the second half of the year.

39:19 Then when it comes to pricing, we were $724 per ton as an average for the first six months of the year. That's moved on even further as we as we move through to the end of August, and our average pricing all the way through to the end of August has stepped up to $73.08. So you get a sense of just how strong CPO pricing has been in July and August. And, of course, that both of these factors absolutely continues to underpin our plans when it comes to returns to shareholders for 2021. I don't think I need to say too much more about these strategic and operational priorities. You've heard about them already.

40:06 Construction of Mill 6, focusing on planting at Musi Raras as well as building that mill, making sure we get to our minimum planted area of 10,000 hectares, and we've already spoken to you about that priority to identify acquisitions of additional land around our existing projects. So that just leaves one final thing for me to to share with you, which is really just an an an illustration, but hopefully a a useful valuable illustration to share with you, which is really looking at where where returns may be based on crop process between one point four and one point eight million tonnes, taking a few, what we believe to be perfectly sensible and reasonable assumptions.

41:05 The key assumption that I draw your attention to is the gross profit per tonne of palm product, where we have assumed for the purposes of this illustration, this piece of modeling, $200 of profit, of gross profit per ton of palm product. And if you if you make that assumption, and I should point out that if you go back and look at where we are in the first half of of twenty twenty one, we're actually achieving more than $200 per ton of gross profit. But if you make that $200 per ton assumption along with the the other assumptions you can see on the slide, 1,400,000 tons of crop processed would lead you through to 70p of earnings per share.

41:55 And then as you go across the slide, you can see 1,800,000 tonnes of crop processed would lead you to 90p of earnings per share. I think the other two points at the bottom of the slide are, I would hope, relatively self evident from from the slide and from what from what you've seen. An increase in crop would obviously form the basis for those higher earnings and therefore an opportunity to accelerate shareholder returns. And then whilst whilst the illustration itself doesn't deal with cash, one might expect cash flows and free cash flows to increase even more sharply once you get to a point where depreciation steps up and steps in front of capital expenditure.

42:55 And just to go back to where we are, of course, we've just completed mill number five in our in our program of increasing our milling capacity, and we aim to complete mill number six by the end of next year or around the end of next year. And we would expect that really to be a point at which we might expect depreciation to start running ahead of capital expenditure as we've completed that that mill expansion program across our existing portfolio of properties. So, hopefully, a useful illustration to reflect on in terms of what crop process can lead to is some sensible, possibly even conservative assumptions in terms of earnings per share.

43:45 So at that point, I will pass back to Peter just for some concluding remarks. Thank you very much, Matthew. Well, just to conclude indeed, regarding our strategy and our values, we aim very much to grow in a responsible and in an excellent way and in order to help to deliver greater returns to our shareholders. We are looking forward to growing crops, to increasing milling capacity and to our continuing investment initially over the next two to three years around our existing projects, there could be significant scope for growth, the acquisition of land around our existing projects to make best use of our milling capacity.

44:46 But as we go a bit further forward at bigger acquisitions, perhaps perhaps more like the sort of 10,000 hectare type project that we've seen in the likes of Gumli Mas or Musirawas. We've produced, I hope you agree, an outstanding set of results for the first half with revenue up 69%, gross margin up from 12% to 33%, Earnings per share, up from 5.7 p to 38.3 p. And we have a very exciting future ahead, we believe, with increases in crop yield and and milling, which will support higher production and cash flows, and certainly the opportunity for further increases in shareholder returns.

45:44 So that that concludes the formal part of our presentation. We seem to have a number of questions, which we'd be delighted to to to answer. So perhaps we'll just have a moment to consider those. Peter, thank you very much for your presentation there. Ladies and gentlemen, please continue to submit your questions using the Q and A tab situated on the top right hand corner of the screen. But just while the company take a few moments to review those investor questions submitted already, I'd like to remind you that the recording of this presentation, along with a copy of the slides and the published Q and A, can be accessed via your investor dashboard on the investor meet company platform. Investors have submitted a number of questions during the presentation today. And I just want to turn back so that you can respond to those registered appropriate for you guys to do so. So could I please ask you to read out the question and then who it is from yes thank you very much Ali just I think actually there's a good range of questions and we can probably take them from the top as it were.

46:55 The first is, can you add any detail on how easy or difficult it is to get permission to do extension planting? Have you anything to add about the land titles you were waiting for as mentioned in the annual report? I mean, in terms of extension planting, I mean, there's the the Mussi Rauas extension, the the continuing planting of the land we already own for which we have now been given permission. So that that has already got underway, and we expect, as Chandra said, to reach at least 10,000 hectares, hopefully closer to 11 or 12,000 hectares.

47:48 In terms of planting that we might achieve in areas that we might acquire, and maybe that links in with the question about land titles, if we were to acquire new land titles. I mean, we're unlikely to be acquire anything which is more of a greenfields type site. We'll tend to even if it's not environmentally sensitive, generally, we'll go for brown brownfields and the land titles will come with the acquisition of the projects that we acquire. Unless I'm missing something regarding land titles, is there something that you would add on that? The only thing I would add on land titles is obviously we report in each year's annual report the status of final receipt of the last stage which which is some of our some some of the people on our call today may be familiar with, which is called the HGU.

48:52 And in some instances, we were in the process of obtaining the final land titles in our existing portfolio of early states. We're very close to receiving those final land titles. That process goes on exactly as you would expect and exactly as part of the retooling process. We will you know, we we don't give a a full analysis of that as part of the interim report. We will give a further update on that as part of the annual report. But, you know, there there is there is nothing of concern to report that process just, you know, continues as you would expect. Fine. Shall we continue to scroll down? Yes. There's there's a question on on the change of CEO.

49:43 I don't think there's really anything that I can add to what has already been said in public and what I just said, but I would just add that the business continues to be managed very effectively, we believe, both from Tunbridge Wells and indeed from Jakarta. So moving on to the next question. Would you ever consider a dual listing on an exchange more local to the operations? We have considered this. And, to be honest, I think, generally speaking, I mean, being listed on one exchange comes with a lot of, you know, bureaucracy, and it would just be double the amount of bureaucracy, and I think without the sort of returns that one might wish for.

50:39 So I I don't think we've been convinced on that. I think also it might affect for those private investors. If I'm not mistaken, a dual listing might affect the IHT status for those shareholders who are private investors on AIM, where one of the reasons besides many other reasons for investing is for the IHT status. But we we certainly haven't been convinced that it would improve our rating by having a dual listing, but it's something we will continue to keep an open mind on, but certainly not been persuaded on that so far. Perhaps, Matthew, you might take the next question.

51:27 Yeah. Happy to do so. We have a question about the information we provide in relation to our our associate companies. Question being, is there any reason that we don't publish the pretax figure for the share of our associated company profits? The simple answer is is no. We're obliged under the rules to bring into our income statement our share of those companies' post tax profits, and that's what we do. In our in our annual I had to remind myself, and I just just had a look in our in our annual report report, we provide quite a large amount of information about the both the income statement and the balance sheet of our associated companies.

52:16 We provide information about their revenue, about a summary of their balance sheets, quite a large amount of information. As it happens, we don't we don't share what their pretax profits are, just their post tax profits, but it's not because we're seeking to hide anything. It's just because that's what we're, yeah, we we're obliged to disclose under the under the accounting rules. Fine. The next question is, do you see corporate acquisitions as being part of your future development? It's a good a good question. We've referred to our aspirations in terms of acquiring initially parcels of perhaps two to 3,000 hectares, further down the line, more like 10,000 hectares.

53:02 Some of the the owners, even of the smaller parcels, are sort of corporate entities in Indonesia. Some of them are partnerships. It's perhaps not quite what in mind you in the in the question. What I think we will not be likely to be looking at is large scale m and a. We believe that the more organic approach to to expansion is is the better one for us. This ties in with our our ambitions of of excellence, and just spreading our excellence too thinly, if you like, can be dangerous. We think what we do, we do very well, and we can cope with a gradual, growth, program.

53:54 But suddenly, to merge in with another group, whoever that might be, of, say, a similar size or of whatever, I think that would not be without its challenges. And I think one has to look at really what what the best value per share for every shareholder is. So we'd have to look long and hard before we looked at a large scale m and a m and a type proposal, more organic generally than that. We've got a question on dividend cover. Would you like to address that, Matthew? Yes. Happy to do so. So the question that's come in asks, what do we consider to be a reasonable dividend cover in the future?

54:41 And the straightforward answer to that question is that we do not set for ourselves a particular target for achieving a certain level of dividend cover. The reason for that is partly because of the nature of the industry and the business within which we operate, but also a reflection of the fact, hopefully, of the of two strands or two aspects, if I call call them those, of what you would have heard about in our presentation and our our pillars, our strategic pillars. We are focused on continuing growth in the business and ensuring that we have the resources to continue with developing and growing the business for the future, but also on ensuring that we're able to continue delivering increasing returns for our shareholders.

55:34 So it's about managing that balance, and we want to ensure that we have the flexibility to continue to manage that balance. So we're not going to set hard and fast rules about dividend color has to be x or y, but making sure we have the flexibility to enable us to do both of those things. The next question is just briefly, we have talked about expansion. Have you identified any significant larger acquisitions? We have certainly identified a number of projects of the sort of 2,000 to 3,000 hectare size. We've been pursuing one or two of those. There's nothing which we're ready to report on. We haven't been pursuing the bigger 10,000 hectare type projects yet, but we certainly identified a number of projects. And we're hopeful that, you know, by exploring and pursuing a number of them that, you know, one or two of them will be will come through and be successful.

56:38 The the next question is is on selling forward. Given the current strong pricing environment, can you would you sell forward a proportionate state of production to lock in the good pricing at the moment? Now we get this sort of question a lot. I have to say one of the reasons we have performed so well for the first half and indeed in in the recent past is because specifically we don't lock in large volumes in advance. It's always so tempting for companies to see a strong price and what's regarded as strong and to want to lock it in and for the next, you know, three to six months or or or further ahead. And we would always maintain, and we believe we're we're we're we're justified in this and vindicated in it that it's very hard to better the average price over time.

57:33 And I have to say, I think our average price that we've achieved is significantly better than than many others precisely because we don't attempt to outperform, outdo better the the market. So we a little bit take the rough with the smooth. I mean, we give ourselves a little bit of flexibility, but broadly speaking, we spread our sales over a given month or over a period of time. And where we really focus our marketing efforts is on achieving better and better premia for the through a sustainability premia from what we are able to sell. So we we we're not looking to change our approach on that. And now from we have one on earnings per share.

58:23 So have you looked to this would you like to answer it, Matthew? Sorry. I'm not ready yet. No. That's fine. That's no problem. So we have a question around earnings per share. The question says earnings per share for 2021 is likely to exceed 80p. However, you are projecting earnings per share for year three at ATP, so effectively no growth forecast in the next two years. Please comment. Actually, I appreciate you raising this, thank you, because it helps me to clarify any misunderstanding in Firstly, this the opening statement earnings per share for 2021 is likely to exceed ATP. I'm I'm very glad that you think so.

59:10 It's obviously not not for me to to comment, so let's just park that thought. But particularly on the question of the project what you're calling the projection and the fact that in year three, that shows 80p. And so you're you're you're sort of linking those two those two those two things. What what we had on the slide there was was very much designed to be hopefully, as I was I was I was trying to emphasize that maybe I didn't make the point clearly enough. It was very much a sort of piece of modeling, an illustration. And as you in in year three of of that model, it yes, it did show 80p, but that was, as I say, based upon that assumption of achieving $200 of gross profit per ton of palm product.

1:00:06 At the moment, as I say, we are running ahead of $200 per ton of palm product. So I think you need to just slightly separate out in your mind the two things and see that what we were showing as a as a piece of illustration and modeling was based upon a set of assumptions, whereas what's going on at the moment in the real world may be some be rather different. Yeah. I mean, what what is clear is if the crops continue to go up, which we know they will significantly, and if the price were to stay the same as it is now, clearly, earnings would increase significantly. And even if the price falls, that will be sort of mitigated against by the significantly rising crops. Exactly.

1:00:56 Exactly. A comment on the I think we have one final question. It seems to be a final question about exchange rates and about the Indonesia dollar, the the rupee dollar exchange rate asking whether perhaps the the rupee has stopped depreciating against the US dollar, and is this a new trend? The honest answer to that question is we don't know. It it it certainly has been more stable over over a period of time and certainly over the majority of this year. But as as to whether that's a new trend, you know, if if if we if we all knew that for certain sure, then I no no no doubt there'd be some way in which we'd be working the currency markets, and we all we'd all be very rich indeed.

1:01:46 But, yeah, it it it it's it's very hard to say. It's it's an impossible question, I'm afraid. Yeah. Matthew, but let let's take that as the last question. I just thought, Chandra, it might be interesting just on the because I we've been very much promoting this notion, this ambition of seeking to acquire more land, and you haven't had a chance to comment on that yourself. I think it might be quite good for people just to see a little bit of sort of local color on that. What what's your take, your perspective on how available land is and what the opportunities are and what what you know, how likely we are to be successful in securing land in the way we would like to? Basically, acquiring land in Indonesia is very complicated.

1:02:36 It has seen the downfall of many many plantation groups. Number one, land is aplenty. Land is a plenty, and the licenses involved are very tricky. You have to be very, very careful. What most plantations why most plantations have failed, they like the word expansion. They like the word growth, but they do not check within whether they have the people to to maintain, the plantation well, to to look after the plantation well. In the end, your more established plantations will lose out on quality.

1:03:23 So here, I I have instilled and I have always advised the board, do not do not, you know, expand crazily and then lose control. Many plantations have done that. I I I come from I used to come from a company that believes on on on on quantity rather than quality. In the end, there's no consolidation. So here in M. P. I. Once we grow in a very structured manner. Number one, we we look at look at the land that we want to acquire, look at the licenses very carefully, look at the people.

1:04:12 You see, Indonesia is so large. You also got to look at the culture of the people, whether they accept us, the, you know, the opposition that we are going to face. And then we also have to look at the sustainability part. Is it logged over? Is it a brownfield? Right now, with all all the implications, we we are not going to touch any any other most of the time, we are not going to touch any other other project than a brownfield, which has been planted with the oil palm, and that is what I would recommend to the board. Yeah. Because because we we we are following the sustain sustainability route by the book.

1:05:05 So, you know, we have got our priorities. We have to be careful. We have to look after our shareholders. I I don't foresee this crazy kind of expansion. We are not not volume players. We we have to have seek the balance between quality and volume. There was this question about extension of of permits and and licenses. If you do the right things, if you have all your documents right, it will take time, but it has it has never been a problem. It has we have got all our, even the Kalimantan.

1:05:54 Even the Mussi Ravas project has been completed, but it took time. And, they would ask for all kinds of documents, all kind of requirements, but it's all stipulated in the law. What they ask is all stipulated in the law. And if we provide them, they they would believe, but we have eventually got nearly every certificate that is required. And I don't foresee extension of these permits as a problem. That that's very good. Thank you, Chandra, for that very much local input of what's what really does happen. And you're right. Things often take time in Indonesia, but we we get there. We And answer And happy operator then be for to open questions.

1:07:06 Sure. Well, just to say once again, thank you so much for joining us, and thank you for your many questions. I hope we've been able to give you a flavor of where we are and and where we're going and what the prospects are, and we very much look forward to seeing you again soon. And please don't hesitate to be in touch if you've got any further specific questions. So thank you so much again for attending. Thanks again for updating investors today. Could I please ask investors not to close the session as you will now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations?

1:07:54 This will only take a few moments to complete and is greatly valued by the company. On behalf of the management team of MPEvans Group PLC, we'd like to thank you for attending today's presentation. That now concludes today's session, and good afternoon to you.