Good afternoon, ladies and gentlemen, and welcome to the M.P. Evans Group PLC Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged. They can be submitted at any time via the Q&A tab that's just situated on the right-hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish our responses where it's appropriate to do so on the Investor Meet Company platform. Before we begin, we would just like to submit the following poll, and if you could give that your kind attention, I'm sure the company would be most grateful.
I would now like to hand you over to the team from M.P. Evans Group PLC. Peter, good afternoon, sir.
Thank you very much, Jake. Good afternoon to everybody. Thank you so much for joining us today. Today's presentation relates specifically to the interim results announced yesterday, which have been well received by the market. We will take you through a number of slides. Myself, Peter Hadsley-Chaplin, I'm the Non-Executive Chairman. I'm joined by my colleagues, Matthew Coulson, who's sadly, slightly ailing, but nonetheless, nobly joining us from his home, and our CFO, Luke Shaw. What we would envisage is that the presentation will take, including questions, no longer than one hour maximum. Sure. It's quite enough time for you to hear us talking.
So I will kick off with a little overview of the results and then hand over to my two colleagues. So pleasingly, the group harvest for the group managed areas was up by 9% to just under 620,000 tonnes compared with 566,000 or so last year, with the purchases of independent crop from the outside suppliers reduced quite significantly by 39% to 118,000 tonnes. But nonetheless, resulting in a similar level of total crude palm oil production. And as I'm sure Luke will or Matthew will go on to explain, the harvest of the significantly higher amount of group crop has very favorably impacted on the so-called crop mix.
The crude palm oil mill gate prices, i.e., the price that we get in our pockets, as it were, were up very pleasingly by almost $100 a tonne, up by 13% to $868 per tonne. Staggeringly, palm kernel prices were up by 71%. And again, that will be spoken about a little more later on. This all feeds into the gross profit, up by 50% to $63.4 million, compared with $42.1 million last year, due to the CPO and PK pricing levels. The crop mix I just referred to, cost phasing, which will be described in more detail later, and indeed, a slightly favorable foreign exchange movement. Earnings per share were up by 60% to 71.7 pence.
We have, as last year, in fact, increased the interim dividend by 20% from last year's 15 pence per share to 18 pence per share for the interim period. At this point, I will hand over to Matthew.
That's great. Thank you, Peter, and good afternoon, everybody. Before we get into a little bit more detail on our own operations, it's always very important just to look in a little bit more detail at palm oil market and indeed, the pricing environment we've seen in the first half of this year. And that's what this slide does. So looking at the chart, first of all, on the top right-hand side of this slide, you get a sense of the pricing environment looking back over the last five or so years. And the dark green shaded part represents the first half of this year.
What you can see is that the price increase in CPO and crude palm oil that we saw coming through in the second half of last year has really persisted through the first half of this year, which has been fantastic for the results during that six-month period. So the average price in CIF Rotterdam terms, the average price is up noticeably. And it's on average $1,179 per tonne, up from just under $1,000 per tonne in the first half of last year. And we've seen, if you then project forward, if you look in the months of July and August, we've also seen that strong pricing environment persist as well, which is very encouraging as we look forward into the second half. And we'll talk some more about that later on.
Of course, as I'm sure everybody knows, we don't achieve that full CIF Rotterdam price when we're selling our oil. We achieve a lower mill gate price, and that's really what the second half of the slide is all about. And we're looking at that, not exactly a reconciliation, but in more of an illustration of how the one becomes the other. In the bottom chart there, the dark green element shows us the mill gate price, and then the other colors represent where the rest of it goes, if you like. And effectively, the main things to think about are things like export taxes and levies, which the Indonesian government charges, and then, of course, things like transport costs, insurance costs, and other costs of that nature.
And that's why, as you can see, that 1,179 is an average in the first half of the year. So Rotterdam became $868, as Peter has already mentioned, as a mill gate price to us, which, as we say, is, it's a big increase, almost a $100 increase on the first half of 2024. If we then turn on, and now think a little bit more about our own operations, and think about crop pricing, and indeed, sustainable output during the first half of 2024. If we can move to the next slide. This chart, these two charts, here, illustrate the picture in the first half of 2024 compared to the first half of 2025. Looking at the proportions, both crop and indeed, of production.
So you can see particularly how we've been changing the mix of the crop that's been processed in our mills. Particularly, look at the orange part, the left half of each of those analyses, and you can see in 2024, we had basically a quarter of our input came from buying crop from outside suppliers. What we've been doing is actively changing that mix of inputs to our mills. From what was a quarter, is now only 16% of the input to our mills. And that's very important for us, and it's very deliberate. We've been very keen to make that change for lots of reasons.
But if you think about the nature of the crop that we process, the crop that comes from the green elements, the dark and light green elements, so that's crop that we harvest in areas that we manage. And there are two key characteristics of that crop, that it is important to highlight to you. One is, it's cheaper for us, and we can actually deliver that crop to our mill for a lower cost. And secondly, because we are controlling the area, because we are harvesting the crop, we know that it is of a much higher quality. So it makes a huge difference to us when it comes to our ability to turn crop into production, into margin. So we're very excited about making that change, and we want to do more of it.
The other thing that it does, which is really represented by the proportions shown in the production elements of the bars, is the ability to produce more certified, sustainable output. Because as we are harvesting from areas that we know and love, so we are able to increase the proportion of our certified sustainable output. And you can see the difference that we've made just from one year to the next. What was 68% certified sustainable output in 2024, in the first half, has now become over three-quarters, and so we've made a big change there as well. And we want ... again, we want to do more of the same. And as you know, we achieve an additional piece of income for every extra tonne that we produce as certified sustainable output.
But fundamentally, we acknowledge that it's something that we're extraordinarily keen to do, because it signifies very clearly in a quantifiable way, our commitment to being a responsible producer of certified sustainable palm oil. At this stage, I think we should get into the numbers in a bit more detail, and at this point, I'll pass over to Luke.
Thanks, Matthew. We'll just skip to the next slide. Thank you. And so looking at the first half results, and starting with the left-hand side of the screen here, and looking at revenue, you can see the revenue increased by 10%, and primarily that was due to the higher price environment from both a CPO and PK perspective. And you'll see the little table there underneath the pie charts, which is showing the split of our revenues by CPO and PK. And you can see a significant step up in that PK revenue, over $10+ million, really driven by that much higher price environment of 71%. Our CPO number is up, we did have a working capital benefit in the first half of last year, which is making that increase look a little bit lower.
But that working capital benefit didn't reoccur in 2025, but nonetheless, that pricing environment for CPO also did increase our CPO revenues as well. Matthew's just touched on sustainability premium, and we saw the overall amount we received of sustainability premium fall ever so slightly from $3 million to $2.8 million in the first half. That was despite an increase in the amount of output, certifiable production. What we saw was a reduction in the amount of premium that we received for, in particular, PK. So there was a step down in the PK premiums, which offset, more than offset that increased volume, as a result of that higher production that Matthew already touched on.
If I move over to the right-hand side of the slide, and we look at costs, you can see this cost metric that we highlight here, is the cost to produce our own palm product. So that's the cost to produce CPO and PK, and that fell to $446 per tonne, in the first half. We always have a slightly higher cost per tonne on in the first half, due to some of our cost phasings. And you'll see that, in particular this year, and one of the reasons for that reduction, was the fertilizer application, that we would normally put down in the first half, has been slightly delayed. We had a number of days of wet weather in the first half, which stopped our operations teams from putting that fertilizer on the ground.
Clearly, we don't want to do that, it's so let it wash away, so we effectively deferred some of the fertilizer application from H1 into H2. We also benefited from a weaker Indonesian rupiah. So our biggest element of cost is the labor, we pay our labor in rupiah, and as the dollar strengthened, as the rupiah weakened against the dollar, that means that we see a benefit when it comes to that labor cost. The second cost metric we focus on is the total cost per tonne, by how much it costs to produce our own fruit, but also then adding in the amount it costs to buy the fruit from our scheme smallholders, and the independent crop. You see that that was a total of $553 per tonne, up 5% compared to 2024.
I'll touch on that again in my next slide, but part of the reason for that, and the main reason for that going up, was because the commodity price environment had gone up as well. And the amount of the, that we have to pay for the supply, moves in line with that commodity price. If it was going up, so too does that cost of supply, but also, if the commodity price is going down, that cost of supply, so too, would fall. But when you factor in on average, that our, our costs were $446 per tonne, the cost of buying fruit, across the other two sources, was north of $700 per tonne.
So that gives you a little bit of an insight, in terms of the margin benefit that we can achieve, if we are processing more of our own crop, rather than that, that we buy in. So a little bit more on that now. Just go to the next slide. So if we look at the gross margin, we can see that that's gone up 50% over the last, over the period. So from 2024, we had a gross margin of $42.1 million, and in 2025, we had a gross margin of, or gross profit of $63.4 million.
Now, a big proportion of that increase has come from sales, the selling price, and again, here we show a net benefit of $18.8 million, and again, that's because we have to give some of that commodity price increase back to those suppliers, because those two are effectively formulated to be linked. So the big proportion of the increase on price takes us up to $60.9 million. We then saw a reduction in volume, and again, most of that is a result of that working capital benefit last year that didn't repeat. Approximately $3 million of that $4 million is that working capital benefit. But of course, we did process slightly less crop than we did in the prior period, and that had little impact on the volume and, you know, of dispatches.
But then we offset the mix benefit, which I just touched on, that margin differential, we did over $3.5 million of mix benefit in the first half, and that really is that mix of crop coming through into the profitability. The next slide, after we worked across, is $1.7 million. That predominantly is the fertilizer application that was delayed in H1, and really that's gonna come and hit the PNL in H2 instead. That gets you to $62 million in gross profit, and then finally, we've had some FX benefit, as I touched on earlier, of $1.4 million, taking us all the way to that $63.4 million, and the 50% increase.
We do a pretty good job of keeping costs below the line as tight as we can, but we also offset those costs with some other income, through electricity sales or shell sales, as sort of waste products that we're able to sell onwards. And then as a result, that 50% drops down to the operating profit as well. So that's also up 50%. And then our profit for the period is up a little bit more than that 50%, and that's really due to the fact that we've seen a shift from a sort of net finance cost to a net finance income. And that's because we've been able to clear the US dollar debt that was on our balance sheet.
That was fully repaid during the first half, and, and with the cash position, which I'll come on to, that's now generating some returns. So we've flipped from a sort of net finance cost to a net finance income, and that's one of the reasons why the profit for the period is up more in percentage terms than the gross profit and, and the OP. So if we look next at cash, the group continues to be a significantly cash generative operation. So we came into the year, if we just look at that top bar, we came into the year with just under $80 million of gross cash, and then in the first half, we generated just under $73 million from operations.
One of the reasons why we can generate that much cash is, it actually on our cost base, always worth calling out, that about 20%-25% of that is non-cash. So that's really where we get that cash conversion percentage north of 100%, and in this period, it was at 117. So if you take the 79, plus the $72 million or $73 million that we generated, and then you look on the next bar, what did we do with that cash? So we paid our taxes, and we continue to do that. We also repaid that debt that I was talking about.
Then, in the two red parts of that second bar, you'll see that we spent just over $10 million on capital expenditure, and then also $26 million on dividends, and that's the final dividend for 2024, being paid in June 2025. We continue to balance that capital allocation between a number of different areas, and in this period, the real focus was on that dividend payment and the CapEx. That CapEx number is coming down from some of the historical levels, particularly now that we're not in a mill building phase. But what we are still seeing, and, and I think it's always worth calling out, is we see opportunities at some of our estates to continue planting, and that is a CapEx requirement.
So we're continuing to put new palms in the ground at our existing estates, and that absolutely represents a fantastic return for us, if we can do that. So if you take those cash outflows, we're still left with just over $91 million of gross cash at the end of June 2025, and that is a net fund position of just over $70 million. But in July, we did a job of spending some of that. We bought an additional 3,000 hectares, which Matthew will touch on in a little bit more detail shortly. That took $35 million of that $91 million away in July. But nonetheless, even after that acquisition, we still have a fantastic balance sheet, with real firepower to look at the pipeline for further acquisitions and other areas of capital allocation.
With that, I'll just move on to dividends. I talked on the cash outflow about the 2024 dividend that was paid, and Peter's already touched on. We're delighted to announce, for the interim dividend this year, that we've increased it by 20% again, up to 18p from 15p. And again, one of the reasons why we can do that is, I've touched on the EPS enhancement as a result of those finance costs now switching to more finance income. But also last half year, we were able to acquire some of the hectares from one of our minority partners, and that absolutely has helped improve our EPS position too. And we're very proud at M.P. Evans of our dividend track record.
We now have a 35-year history of either maintaining or increasing our dividend, and that's something that the board take very seriously, and we're very proud of. I think it's an incredible achievement for any business, but certainly when you consider a commodity business as well, that goes through the cycles, it's even more impressive. Can I just go to the next slide? I'll hand back to Matthew, to talk to you through a little bit about our strategy.
Great start. Thank you very much, Luke. So this slide, as Luke says, covers some thoughts on our strategy. And I'm sure many of the people on the call today will already be friends with REGI, and will be familiar with the strategy as, as sort of, articulated in this way. We are a responsible producer of sustainable Indonesian palm oil, striving for excellence in all of our operations, with a focus on continuing growth and offering an increasing yield. And that is REGI in a nutshell. We've indicated on this slide here some examples how under each of these strategic pillars we've been pushing forward over the course of this interim period. And you've heard about some of them already as we've been discussing what's been going on with you.
So I won't, if you like, labor the point in sort of item by item across this slide, but I hope it's extremely clear to you how this really does govern everything that we think about, and we make sure that all that we're doing is really with at least one, if not several, of these strategic pillars in mind. And perhaps what's best to do is then provide some further illustration of exactly what REGI means to us in practice, by looking at the next couple of slides, where we talk about a couple of them in a bit more detail.
Firstly, starting actually with growth, and going back to exactly what Luke was just describing, which is that, whilst you may say we're slightly cheating, because it's not exactly within the period in question, but nonetheless, very important to us and covered within the reporting that we are disclosing with you, and talking to you about just now. The fact that we have just completed the acquisition of some further planted hectares, which is fantastic. So perhaps if we do just turn to the next slide, we can look in a bit more detail at the acquisition we've just completed. Which is a further 3,000 planted hectares close to our Bumi Mas estate in East Kalimantan, which is something we're very pleased to confirm to you.
As I say, it doesn't make a difference to the six-month period we are reporting just now, but will make a difference to the second six months. We will look forward to reporting to you in due course. We acquired essentially two blocks of 1,500 hectares, which comprise the 3,000 hectares that we acquired. One on either side of our Bumi Mas project in East Kalimantan, effectively turning what is a 9,000-hectare estate into a 12,000-hectare estate, which is superb when it comes to our ability to then provide crop to the 60-tonne-per-hour mill that we have in Bumi Mas, in East Kalimantan.
What we're doing is then once again thinking about how we're changing that mix of crop supply to our mills that we've already invested in. And so we will, over time there, continue to increase the proportion of our own crop that we mill in East Kalimantan at Bumi Mas, and become less and less reliant on third party crops to fill up the milling capacity there in East Kalimantan. It's relatively young hectarage we've acquired, which again is absolutely in line with our strategic objectives to make sure we continue to renew our portfolio and maintain overall a relatively young average age. And we expect our acquisition to be immediately earnings enhancing. It's entirely funded out of our internal resources.
You've just seen from Luke, the fact that we are in a very healthy and very strong financial position, so we're able to fund it entirely out of existing resources. It gets us to an exciting new milestone. We're able now to talk about the fact that we are a 70,000-hectare company. When we look across all of our projects now, we've achieved that new milestone. When you think about the amount of growth that we've been able to deliver over the course of recent years, in terms of planted hectarage, we're up by the thick end of 13% in terms of planted hectarage, over the last three years, very much delivering on the G of REGI, over recent years.
So that's one example, which we're very pleased to be able to share. But then coming back to the beginning of REGI, coming back to the R of REGI, thinking about our commitment to being a responsible operator, and we continue to focus on our estate communities, and making sure that our estates are very, very well maintained and supported in terms of community life on our estates. And we just give you an example here of what that means for us in practice. When we think about all of the facilities that are provided across all of our estates, whether it's high quality housing, whether it's medical facilities, whether it's recreational facilities, estate shops, you know, et cetera, et cetera.
I could go on and on providing you a whole range of further examples, just to demonstrate what it looks and feels like for the many thousands of people who make their homes on our oil palm estates. So moving on now, and actually thinking a little bit about the second half of this year and beyond, and thinking about outlook. We've published alongside our first half results, an indication of what the next couple of months look like. And the answer to what the next couple of months look like is more of the same, basically. So we're very pleased to be able to share that crops continue to do well.
You get a sense there, the crops are still very much around 10-ish% up, or 8% up on our own crop, 11% up on the crop harvested from the scheme smallholder areas. We continue with our strategy of restricting the crop being bought in from outside suppliers. We think absolutely that's the right thing to continue doing. And then from a price perspective, as you already saw from the chart I was showing you earlier on, our pricing remains extremely robust. So the averages, the year-to-date averages for the 8-month period there, look very, very similar to the 6-month averages that we've disclosed for our interim results. So the 8-month averages are now $865 and $737. Very, very similar to the 6-month averages.
So we think with those two-thirds of the year analysis, that puts us in a very strong position to see robust averages for the year as a whole. So that just knocks us on a couple of more months and looks very encouraging. And that really leaves us on, we're at the time. In fact, it's half past. We're just going to take some time for questions. So just very quickly summarizing what you've heard, which is that it's been a fantastic first half. We're very pleased to be able to share that with you today.
So, you know, crop and our production doing very well, pricing terrific, we've come out of the first half with a, with a very, very strong balance sheet, which enables us to do the kinds of investment you've just seen me talking about. And we look forward into the second half with... and beyond, indeed, with much positivity. We continue to look at the opportunity to add more hectarage into the group, and we continue to be highly cash generative, enabling us to deliver more and more in terms of returns to shareholders, and more and more in terms of ongoing growth. So that's our story.
I'm sure there are. I can see there are some questions coming in, but I will just for a moment hand back to Jake from IMC before we move on to questions. But thank you, everybody.
Perfect, guys, that's great, and thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that's situated on the right-hand corner of your screen. But just while the team take a few moments to review those questions that have been submitted already, just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can all be accessed via your investor dashboards. Guys, you can see there, we have received a number of questions throughout your presentation this afternoon, and thank you to all of those on the call for taking the time to submit their questions.
But, Peter, at this point, sir, if I may hand over to you to share the Q&A with the team, and if I pick up from you at the end, that'd be great. Thank you.
Thank you very much, Jake. Well, thank you for the questions that a number of you have submitted. And I will try to take these relatively in chronological order, which will make it simpler for me, but there are one or two which are similar, which I'll try to group together. The first question perhaps I might put to Matthew, it is a subject particularly close to Matthew's heart, but to all our hearts, is regarding sustainability, and how will you be improving, I'd say, improve even further, the sustainability of your operations. Matthew, would you like to comment on that?
Yes, absolutely. I think you get a sense from everything we're saying so far, that we're working very hard on that. One of the things that we're very keen on is continuing to improve the certified sustainability, the proportion of the certified sustainability of our output. And that's why being able to deliver more and more of our own high quality and certified sustainable input to our mills, and we've made a step change on that already this year. So we're very pleased with what we've done on that. And we think absolutely there's the opportunity to continue to deliver more.
I haven't touched on, I'm sure in some senses, from a keeping to time perspective, people will be glad that I haven't touched on some of the other things that are included in our separate standalone sustainability publications, like our recently published TCFD report. Although, as always, I commend it to everybody here, please do take the opportunity to review that, and you'll see a lot more about our journey there, what we're doing to continue to work on reducing our carbon balance sheet, and some of the targets we're setting ourselves to continue to work very, very hard on that.
Thanks, Matthew. Thank you for the congratulations on our results. What has caused a substantial increase in the kernel price? This was touched on in the presentation, but, essentially, kernel competes directly with the coconut oil, for which there's been heightened demand, as a result of a shortage, in the Philippines. If there's anything else you want to add to that, Matthew, or sir?
I know you're exactly right. I mean, there was a shortage in the early part of the year in coconut supply, and that really drove the price increase, and it's been sustained for some time, which is superb. And, and, you know, selfishly, from an M.P. Evans perspective, long may that continue.
Yeah. Well, yes. There were a couple of questions about share buybacks. On the eighteenth of June, we announced a share buyback program with up to GBP 2 million to be used by seventeenth of September. Could you please advise why this has not yet been initiated? And naturally, we're not quite to the seventeenth, so if not utilized, will it be carried forward? Unfortunately, there are quite a lot of questions for Matthew. I might just make a couple of broad questions or comments on this, and maybe let Luke comment further. But, it's really a question of capital allocation. And I would also say that, certainly, in going back over many years in terms of share buybacks, there have been times when we paused, when we kept the price at a certain level.
We believe strongly that we still represent good value, but it's a question of priority over capital allocation. You've heard that we've recently invested in a further 3,000 hectares at a cost of some $35 million. Given that we still have significant surplus capacity from our existing mills, there could be the potential, without building a single further mill, to add some 10, 12, possibly 15,000 hectares, on top of what we've got, where one could be talking, you know, $80 million-$120 million.
It's unlikely that will happen at once, but we look at various possibilities, projects which are put to us, so a little bit keeping our powder dry, but share buybacks in the longer term will continue to be a priority, along with the priority of dividends and indeed continuing to invest in new land. So it's a matter of juggling those three. Do you have anything further to add?
No, I think you're right, Peter. I think we've always taken a balanced approach to capital allocation, and I think Peter's just sort of explained that, so spot on with that.
There's some questions on sort of customers. In terms of how much production is used locally in Indonesia and how much is exported, and where exported, who the customer is, who's buying the CPO. Do you want to take that, Matthew, and then a couple of follow-up questions?
Yes, absolutely. So when it comes to CPO production and usage, Indonesia itself is the largest consumer of palm. It is the largest producer and consumer of palm globally. So from a consumption perspective, it uses around a quarter of the world's palm. And then, obviously the remainder is then sent for export. In terms of our own production, you know, we can't say for certain how much of our own is consumed locally, and how much is exported. And the reason for that is slightly connected to the next question about our customers.
Because our customers are all Indonesian, because obviously being at the very beginning of the supply chain, all of our customers are local refiners in Indonesia, who will take our crude palm oil on, and then take it to the next stage of refining. But that all happens within Indonesia. As I say, we then lose sight. It's likely that, you know, a significant part of that is then retained for the local market, but also a significant part will be exported.
Fine. Thank you, Matthew. Do you want to comment on the kernels versus the CPO? So sorry, are there different customers for the kernels versus the CPO?
Not particularly, no.
Yeah. Okay. What is your target percentage for certified CPO in future years? Do you see this continuing to climb? I mean, you have already touched on this, but might want to elaborate again, actually.
No, of course. And so, and hopefully it's clear with everything we've been discussing, that our ambition is absolutely that we expect this to continue to climb. We haven't set a specific target. To some degree this is somewhat of a, of a location by location question, and it goes back to what Peter was just saying about our opportunity to acquire further hectares. And as we go through that process, and subject to our ability to acquire those additional hectares, so we will be able to continue specifically, I mean, as I was just saying, Bumi Mas, that was a very good example, where we just bought 3,000 hectares. That enables us, and accelerates our ability to cut back on independent crop, and yet maintain a level of capacity utilization within our mills.
And enables us to continue making the step changes to our crop mix, and increase our sustainable output.
Thank you. Now, could you please give some color on long-term industry supply and demand outlook? Perhaps, just to complicate things, of course, in terms of the industry, palm oil competes with other vegetable oils. So there is a wider industry of vegetable oils, and then there is the industry specifically of palm oil. But again, Matthew, do you want to comment on that?
You're right. It's always very hard to talk about palm in isolation, without getting interested in lots of other vegetable oils. But without taking too long over it, just looking at palm for a moment. Well, I suppose on the demand side, there is no question that there is, there has been for a very long time, a steady tick up in demand for vegetable oil, inclusive of palm around the world, and there's no reason to think that's stopping anytime soon. On the supply side for palm, there is a lot of evidence that points to the fact that there is some restriction in the level of supply coming through, because of a lack of long-term investment in the key producing countries, both in Malaysia and to a degree in Indonesia, in terms of an investment in replanting.
A lot of areas have an aging stock of palms, which is something which, you know, we obviously are very keen to work on, to maintain a very healthy and, you know, good age, and invest in replanting stock across our portfolio. So we fight very hard against that, despite the fact that the industry isn't doing quite so much.
Thank you. And the other one, so the minority stake in PT Kerasaan Indonesia, the questioner asks, he thinks that we have the intention to hold on to majority stakes. Are the negotiations with SIPEF to sell our 38% stake? And just to give a little bit of background, we still have two minority shareholdings. One is our share of Bertam Properties, which is the remnants of what we used to own in Malaysia, which is now a very long-term town development project on what used to be a rubber oil palm estate. And the other is our 38% share in a relatively small estate in Indonesia. And yes, you're right, that we would like, in the longer term, to have only majority stakes.
I'm sure that will eventually be the conclusion, but these things have to be agreed, negotiated. There have been discussions with SIPEF, and no doubt there'll be further discussions, but as yet, it is well managed by SIPEF and a profitable investment. So no doubt it will be revisited in the future. Another question is, any thoughts on the AIM status of the company going forward? I don't know, do you, Matthew, do you want to comment on that, versus main board, I suppose, is that on... I guess that's the-
I presume that's behind the question, yes. We are, and have been, an AIM company for a very long time, and I think, you know, we've enjoyed and benefited greatly from being a member of that index. Of course, we keep that under review, and it's something that we discuss as a board. And, you know, we recognize the fact that we are now, you know, within our chosen index, one of the very largest companies. You know, I think we're one of the... By market cap, I think we're one of the 10 largest companies on AIM, as we sit here today. So it would be wrong of us not to at least think about that and keep it under review.
But right now, this minute, we have no immediate plans to dash off anywhere else.
Indeed. Now, the next one, what are the five main reasons why all Indonesia palm oil plantations have an incredible return this year? Well, I can start off with the first reason, which is the very robust palm oil price. I don't know whether either two of you would like to add any further reasons? I mean, those reasons basically we've already given in terms of the better result this year compared to last. Do you want to comment?
Yeah, I mean, I just thinking about it, I mean, I can't really sort of go into the sort of returns for other-
For others, no.
companies at all. But, in terms of our own return, I think it's a combination of the price environment being, you know, robust for a longer period, which is fantastic when it comes to the cash that can be generated. And also, I think it's just, you know, the three of us and others have been trying to, you know, explain the story about M.P. Evans and make sure that people are aware of what the business can do and the future of the investment case. I'd like to think that some of that has played a part in some of that return as well.
Thank you, Luke. I think this has been kind of the fundamentals driving palm oil price, and where do you see it in the coming years? I think that's largely been covered, hasn't it? So, I think we might move on from that. But thank you for that question, nonetheless. There's a reference to the recent social unrest in Indonesia, and whether this poses a financial risk to the company.
All I say, initially from a broader perspective, having been with the company for some 37 years, there have been periods of social unrest in the past, but broadly speaking, Indonesia remains a very friendly and benign environment for the foreign investor, investors such as ourselves, not least because of the significant amount of investment we have made and continue to make into their economy. Do you want either of you, Matthew, Luke, just to make any specific comments about what's been happening in recent week or last week or two?
I think I need to say that it's obviously something that we've been listening to the guidance from our colleagues in Jakarta on very carefully. And based on what they've been sharing with us, firstly, as you say, I mean, there's been no impact whatsoever on our operations. And the guidance we've been receiving is that, whilst you know, as has been reported, there has been some unrest and some demonstrations in Jakarta, things seem to have settled down fairly quickly after that, and things seem to be getting back to normal.
Thank you. As cash is coming in at a very fast pace, are you considering other countries to invest in? Do you want to answer that one, Luke?
Yeah. Not right now. I think we have very much benefited from sort of one country approach with Indonesia. And we, and I think as we've touched on throughout this presentation, that we see lots of opportunity to continue growing within Indonesia and within the regions that we are in, in Indonesia. And I think we're absolutely focused on those opportunities first, before we were to look further afield.
Let's see. A specific question about about palm oil seeds and which ones to use, and what superior yield do you deliver? Maybe without being too specific, do you want to comment about the seeds, what we use, the mix, that sort of thing, Matthew?
Yeah, of course. I mean, as you say, we don't go into detail of seed type and what we use where, and so on and so forth. But fundamentally, what we do is we don't place it over a reliance on a single seed type or a single seed supplier. We listen very carefully to our agronomic team and our economic advisors, who understand this stuff in a huge amount of detail, to ensure that we get the right material in the right places when we're doing either new planting, or indeed replanting, in order to be able to one, maximize yield, and two, minimize any planting risks associated with what we plant and where we plant it.
And so we have some fantastic teams internally, if you look at this stuff, and we also rely on advice as well.
Thank you. I think one to you, Matthew. As the company aims to be nature friendly, i.e., sustainability, can you talk about studies of wildlife, flora, fauna in your non-farmed crops areas?
Yes, I can. We've got some information on this. I think there's a little bit of information on this in our last annual report, but certainly there's information on this in our sustainability reporting. Our sustainability and biodiversity teams are very much on top of exactly this. And we support and encourage increasing biodiversity across our estates, both in planted and non-planted areas, in fact. And it's something that's extremely important for us.
The next question: Does the rise in the commodity price impact on the value of the estate? And if there is an effect, there tends to be a lag effect. And funny enough, the value of plantations doesn't fluctuate to anything like the extent that the commodity price does. It seems to move very slowly. So I don't think there's been a significant change to the underlying value of the plantations or the projects that we've been looking at to invest in. Would you agree with that?
No, I mean, I think certainly, you know, when we're looking at values of estates, we're not sort of reacting to the sort of current levels of the commodity price environment. We very much take a longer term view when it comes to that. I think most valuers would also take a similar approach.
Yeah.
to that, valuation methodology for estates.
Would you ever consider investing in refining your own produce?
I mean, for now, no, because we're simply not big enough. I mean, if we had all our 70,000 hectares in one block, then maybe, yes, but we don't. And actually, as Matthew touched on earlier, it's good to have that geographical diversity we feel, and we do what we feel we do best, which is to grow the crops, to process the crop to our crude palm oil mills, and then sell it on at the best price, the best premium to the refiners. So we wouldn't be looking to do that with our current hectarage.
What percentage of the planted hectares will require replanting during the next five years? Do you want to take that, Luke?
Yeah, sure. Not a significant proportion of our planted hectares within the next five years. We always do a little bit of replanting, and also part of the skill and the strategy is also to manage those replanting phases for the group. But, we're actually quite fortunate in the timeframe specified in the question, that over the next five years, not a lot of replanting necessarily required, and we also hope there'll be lots of opportunity for new planting. As I said earlier, we're continuing through our CapEx expenditure, to put new plants in the ground at our existing estates, and also where there's opportunities to do so on some of the newly acquired estates that we have as well.
Thank you very much. Now this question: What is the current implied enterprise value per planted hectare with M.P. Evans? I mean, first of all, we need to define enterprise value, and there is a certain amount, arguably, of subjectivity about this. I don't know whether you'd like to comment, Matthew, in terms of that question.
Yes, absolutely. It is, I mean, it clearly has been increasing as we've been enjoying an increase in overall market value over the last 12 months. But-
Would you just explain what enterprise value means?
Yes, by all means. So, I mean, as we take it, when we look at the market value, and we adjust for non-planting assets, so re-adjust for the cash and any other assets on the balance sheet, to leave what's left for the planting, and estate assets, and then divide by the hectarage to give an enterprise value per planted hectare. We would say we're still looking at no more than $10,000 per planted hectare, I would say, which given the extremely high quality and productive and cash generative nature of the planting portfolio, we would say is actually a still very low valuation per planted hectare, when you think about the M.P. Evans portfolio.
Thank you. The next question is really about Prabowo. Do the current administration and change of government finance minister worry us? I think Matthew has answered that in terms of the question about the social unrest, so I think we can move on from that. If I haven't had a chance to review this. It's quite a long question, but historically, the palm oil price has been very cyclical, with several episodes of more than 50% drops in price, given that most of the demand is essentially non-cyclical food consumption and plant growth takes years, why would this be the case? And will the cyclicality persist in the future? Look at your crystal ball, Matthew.
Well, yes, indeed. I mean, I think the last time we saw a particularly sharp increase, first of all, followed by something of a reset in the palm oil price, was to do with concerns associated with other oils. And that goes back to 2022, where we saw the outbreak of war between Russia and Ukraine, and that caused something of a spike, followed by a reset in CPO pricing. So that was very much external events causing things to change more sharply. And I think that historic example may give some clues to the future.
But as the questioner rightly says, fundamentally, we're dealing with something which is an essential, and so you wouldn't expect those sorts of sharp changes, but then life sometimes comes along and surprises you, because there are external events that you can't necessarily legislate for. But what we would say is that our experience shows that while you may have those short-term peaks and troughs, we are in a position where we continue to sort of, if you like, you know, sail serenely through them and continue to enjoy the ability to generate returns, generate cash, generate the ability to persist with our progressive dividend policy over the long term for our investors.
And so, yeah, I think it's a point well made by the questioner, but, but nonetheless, you know, we, we make sure that we have a very robust balance sheet behind us, and we think in very much a sort of a long-term view of life, notwithstanding the occasional, peak and trough in, in our commodity price.
Well, thank you, Matthew, and that rather neatly takes us to just 2 minutes before the hour that we spoke about.
Mm-hmm.
So, thank you so much for all your questions, and they're very interesting questions there. I'll just hand back to Jake for a moment, if that's okay?
Absolutely, guys. Thank you very much indeed for being so generous with your time and addressing all of those questions that came in from investors this afternoon. And of course, if there are any further questions that do come through, we'll make these available to you afterwards, just for you to review. But, Peter, perhaps before really now just looking to redirect those on the call to provide you their feedback, which I know is particularly important to yourself, and the company. If I could please just ask you for a few closing comments, just to wrap up with, that'd be great.
Thank you, Jake. Well, I hope that's been helpful, and thank you again for the various questions that were submitted. And thank you to Jake and IMC for hosting this. I think this is an excellent forum, I have to say. And those familiar with us, including shareholders, would-be shareholders, people who follow us, will know we'd be likely to present here again normally in March, following the annual results. So we look forward to seeing many of you then, we hope. But thank you again for your time today.
Perfect, Peter. That's great. Thank you once again for updating investors this afternoon. Could I please ask investors not to close this session, as you'll now be automatically redirected for the opportunity to provide your feedback, in order for the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of M.P. Evans Group PLC, we would like to thank you for attending today's presentation. That now concludes today's session, so good afternoon to you all.