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 those responses where it's appropriate to do so.
Before we begin, as usual, we would just like to submit the following poll, and if you would give that your kind attention, I'm sure the company would be most grateful. I would now like to hand you over to the board of M.P. Evans Group PLC. Peter, Good afternoon, sir.
Thank you very much, Jake. Hello, everyone. Thank you very much for joining us today. I'm Peter Hadsley-Chaplin, Chairman. As some of you may know, I recently transitioned, as they say, from an executive chair role to that of non-executive. But nonetheless, I find forums like this a good opportunity to stay in touch with investors and indeed would-be investors. And I'm joined, as usual, by my colleague, Matthew Coulson, who's the Chief Executive, and Luke Shaw, who's our CFO. This is primarily a presentation on the 2024 interim results, but we will certainly touch on the group's strategy and operational developments as well.
We'll speak for approximately half an hour, and then we're allowing again about half an hour to answer your questions, but we don't want it to run on any longer than an hour in total. I'm going to kick off with the first overview slide, and then I will pass over to my two colleagues to take us through the rest of the slides. So, I would just for those who are new to M.P. Evans, I would perhaps just give you a tiny bit of overview of us as a company. We're a 150-year-old plantation company listed on the AIM market.
Our origins go back to tea and rubber, but in the last 25 years, we've focused on the development of and the production of sustainable Indonesian palm oil. So with regard to the first half, this was a good set of results, as I'm sure you'll agree. In terms of the actual crop produced and processed, it was up by 5% to 759,700 tonnes, compared with 721,700 tonnes last year. And our own crops, like, crops from the areas owned specifically by the group, rather than from the smallholder areas, was up by 7%.
The total crude palm oil production was up by 6% to 177,000 tonnes, compared with 166,200 last year. And pleasingly, the actual rate of extraction, the oil extraction rate, was up by 23.4%. CPO mill gate prices were up by slightly, by 2%, but nonetheless, good to see them marginally higher at $771, compared with $755 last year. And incidentally, this is not the Rotterdam price, which was trading around $1,000 or so. This is after taking account of transport and other insurance, freight costs, et cetera. So this is the ex-mill gate price, the price we get in our pockets for the oil that we sell.
Very pleasingly, the gross profit was up by 82% to IDR 42.1 billion, due primarily to both lower costs and higher production, which Luke, I think, will talk to a little bit further later. Indeed, earnings per share up by a similar percentage to 44.9p, compared with 24.8p. The board has agreed to increase the dividend by 20% from 12.5p to 15p. So at this point, I'll hand over to Matthew.
Brilliant. Thank you, Peter. So if we then think a little bit more about our operations in the first half of the year, as Peter said, we processed just over 750,000 tonnes of fresh fruit bunches in the first half of the year. You get a sense on this slide of where that fruit came from. Fundamentally, it came from two different sources. It came from the areas that we manage for ourselves, so the areas that we either own or manage on behalf of associated scheme smallholders, or it came from independent suppliers of crop to our mills. You can see that just over 560,000 tonnes came from the areas that we manage, and then just over 190,000 tonnes came from those independent suppliers.
Very nearly all of that crop was processed in our own group mills. We've been working very hard over recent years to increase our own milling capacity. In the first half of this year, we had six group mills running through the entire period, so that meant there was only a very small 5% of the group managed FFB, fresh fruit bunches, that were processed in external mills, and you can see that on the slide there. But very importantly, the vast majority is now processed in group-owned mills, and you can see the consequence there on that slide. In terms of group production of crude palm oil, and importantly, group production also of palm kernels, a very important secondary product that we process through our mills.
The 0.7%, you can see mentioned on the mill itself, is an indication of the increase in productivity in our mills in the first half of the year. Peter mentioned our oil extraction rate, and the fact that that went up to 23.4% in the first half of the year. That went up by 0.3%, but our palm kernel extraction rate went up as well. So that went up from 4.8% to 5.2% in the first half of this year. That may, may not sound like a very big increase, but it's a very important part of our overall group output, and a very pleasing increase, when we've also seen an increase in palm kernel pricing in the first half of this year.
So we take all of those operations together, and then we start to think about what does that mean for us in financial terms? And at that point, I'll pass over to Luke, to discuss our results in a little bit more detail.
Thanks, Matthew. So on this slide, let's start on the left-hand side and just sort of touch on the pricing that Peter's already alluded to. So we saw a slightly higher first half average CPO price per tonne at $771. That compares to the $755 that we saw in the first half in 2023, so a 2% increase. I think also we should probably call out that we saw an increase in palm kernel pricing as well, up from $410- $437 per tonne in the first half.
So, both of those elements flow into our increased revenue of 22%, and so an element of that is, as I said, relating to the price, but also the increased production, and also some additional dispatches from inventory, and we had a working capital benefit in the first half, helped drive that revenue up GBP 30 million to GBP 164 million for the first half. And then pleasingly, as well as that increase in revenue, we were able to reduce our cost per tonne, and this figure here that we're quoting is the group cost per tonne of palm product. So that's the cost for the group to produce its palm kernel and its CPO.
And really pleasingly, that fell from $535 per tonne to $458 per tonne in the first half. And I will go into a bit more detail on that on the next slide, but predominantly, that was driven by a decrease in fertilizer pricing. So if we look at the impact of that higher revenue and the lower cost, and that drops through to the gross profit, and here we're just gonna try and walk through some of those key variables that led to a substantial increase in gross profit in the first half. So if I start on the left-hand side of this slide, you can see the small green bar of $23.1. That was the gross profit in the first half in 2023.
You then take the next two bars, the 5.3 and the 2.5, and that gives us a net price benefit in the first half of $2.8 million. Now, we always have a net price benefit on price movements, because when we sell our CPO for a higher price, not only do we get the benefit of that, but we have to also pay our suppliers of fresh fruit bunches a higher price as well, because the two are linked through a formula. So there'll always be a net price benefit to us, and that would work the same way if the price went down. So if you take that $2.8 million of price benefit, you get to the next gray bar, which is $25.9 million.
And then, if you add the 5.9, that's relating to our additional volume that was dispatched in the first half. So that's a combination of higher production, and also some of the inventory that was on the balance sheet at the end of 2023, flowing out to customers. The next green bar is 4 million, and that reflects the benefit in dollar terms, on gross profit from a lower fertilizer price. So it's probably worth just pausing here to reflect, that fertilizer prices really peaked after the Russia and Ukraine incident in 2022.
Now, fertilizer pricing has been coming down since the early part of 2023, but in the first half of 2023, we were severely impacted by that higher fertilizer pricing, as we were applying pretty much the most expensive fertilizer that we had purchased at that point. So really, as the price has come down, we've now seen a benefit to the tune of $4 million in the first half. The next bar is 2.5 million green bar, so that is the benefit of the extraction rate improvements. So Matthew just touched on that 0.7 that was in the middle of the mill.
It may not sound a lot, but that gives you an indication of just that small improvement to 0.7, really does drop through to profitability, and also importantly, cash as well. Then the next green bar, also $2.5 million, lower operating costs. This is a little bit of phasing between H1 and H2, but predominantly, this was due to the fact that we actually applied a little less fertilizer in the first half in 2024, than we did in the first half in 2023. And that can vary.
Our fertilizer application is reviewed annually, and there are some years where the palms, and it's addressed on an estate by estate, almost block by block basis, there are some occasions where fertilizer needs to go up and some occasions where fertilizer needs to go down. So that was the main factor in that $2.5 million. We then had some other additional costs of $0.7 million, which then takes us up to a gross profit of $40.1 million. And then the final light green bar of $2 million is to do with the foreign exchange movement. So a large proportion of our cost base is in rupiah, predominantly our labor. And the rupiah weakened considerably through the first half of 2024 against the dollar.
So we've got a $2 million benefit in the first half from a weaker rupiah. So if you add all of those green bars together, you get to the end on the right-hand side, the dark green bar, and that gets us to the $42.1 million of gross profit that we achieved for the first half in 2024. So that drops through to an increased earnings per share of 44.9p, up 81%, and as Peter's already touched on, we're delighted to increase the interim dividend by 20%, up to 15p, from 12.5p. If we then move from profit to cash, the group continues to be significantly cash generative.
Just walk through this slide, so at the top bar, you'll see there's the blue section and the green section. So the blue section reflects the opening gross cash position that we entered 2024 with, which was just under $40 million. And again, a reasonable amount of cash on the balance sheet, despite a substantial outlay in 2023, predominantly through or due to acquisitions. You then have the green bar, which reflects the $60 million of cash, $60 million dollars that was generated from operations in the first half. Now, that does include that working capital benefit, but nonetheless, that's a cash conversion of 144%, which is a fantastic result in the first half for the group.
We then move to the bar below, in terms of how we used that cash through H1, and we paid our taxes, we have to do that. Then we also continued to pay down some of our debt, and service that debt with interest as well. You then get to the red section in the middle, and this is really where we are balancing our capital allocation. So we are continuing to invest in the group through our CapEx, so just under $10 million. Predominantly, that was a investment in further planting. That's new planting at our estate in Musi Rawas. And then also some replanting in relation to the acquisitions that we made, at the start of 2023. That was known on the way in, and that's how we gone about executing in the first half.
We then have the next smaller red bar of $6 million that is relating to the purchase of one of our minority interests during the first half, and we'll touch on that in a little bit more detail later. But we paid a gross consideration of $14 million for the minority interest. However, that partner owed us $8 million, which results in that $6 million net outflow to the group as a result of that transaction. The next red bar is the dividend, so that is the final dividend from 2023 being paid in June 2024. And then the final red bar is the $3.5 million relating to our continuing share buyback program.
We announced yesterday that we, on Monday, that we are continuing with that share buyback program for the remainder of 2024. So by the time we get to the end of 2024, we anticipate around about $8 million will be allocated to the share buyback program. That's slightly lower than the run rate we achieved last year, and that was partially due to the fact that in Q1 this year, we were a little bit restricted in terms of the volume of shares we could buy back due to safe harbor rules. So all of that considered, we kind of leave H1 as we came in with a gross cash position of $35 million.
With a debt position of circa $43 million, we are around a net debt position of $7.3 million at the end of the first half, and a very low net gearing level of 1%. Finally, I think it's always worth calling out that we tend to be more cash generative in the second half of the year, so this is a fantastic foundation for the rest of 2024. With that in mind, I'll actually pass back to Matthew to talk a little bit about how we've been executing on our strategy through the first half.
Great. Thank you, Luke. So if we turn to the group's strategy, and we focus first of all, on the group's strategic pillars, many of you will be familiar with these. We've spoken about them many times. This has been a strategic priority for a number of years now. They're focused around four areas, and those four areas being a responsible operator, being focused on excellence, continuing to deliver growth, and extremely importantly, being focused on increasing the yield that we deliver as well. So nothing new, if you like, in this slide, but important to remind everybody of those strategic pillars.
Then really what we're seeking to do today is to provide an illustration of how we've continued to deliver on, and how we've continued to live that strategy over the first half of 2024. And perhaps if we turn to the first of those, and we look at what we've been doing under the banner of being a responsible operator, and focusing on responsibility in the first half of the year, a few points to share with you. So we've talked about the fact that we now have six palm oil mills in full operation, and it's very pleasing that all six of those mills are producing certified sustainable output.
As a result of that, we've seen a significant increase in the amount of CPO, group palm oil, that qualifies as certified sustainable output. Up by almost a quarter compared to the first half of last year, almost 120,000 tonnes of sustainable output from our six mills. When it comes to then thinking about those mills, we're also extremely focused on ensuring they're all accredited with the RSPO. That's the Roundtable on Sustainable Palm Oil, the main well-recognized industry body that certifies and accredits you for delivering sustainable output. We received our fifth accreditation during the first half of 2024, which was very important to us, and then we're already a long way towards receiving our final accreditation at our sixth mill.
We had the audit visit from the RSPO last month, and based on the output of that visit, we very much expect to receive our final sign-off and our accreditation before the end of this year. That will be an absolute milestone moment for the group, to be able to say that we have all six mills accredited by the RSPO. We continue to provide more reporting and documentation, and disclosure around what we're doing in the whole sustainability arena. Two new reports were published in the first half of this year. One focusing on carbon and our carbon balance sheet, and our carbon reporting, and our carbon reduction journey, s o that was published early in 2024.
And then a broader report, an ESG report, focusing on everything in environmental, social, and governance, and both of those reports are available via the group's website. Of course, this is a continually evolving and changing and developing area, whether it's in relation to reporting obligations or regulatory requirements, and this is an area we continue to monitor, we continue to do more on, and absolutely expect to hear more of, m ore on this area from us over the course of the remainder of 2024. On perhaps a more sort of operational level, very important to note that we were very pleased to open the third of our community clubhouses for use by our staff in Indonesia.
That, that was a community clubhouse at our Bumi Mas estate in, in East Kalimantan, and you can see a picture of that community clubhouse on, on the slide there. So turning from the responsibility pillar to, to the second one, focusing on excellence, of course, we're not able to deliver the results that we're sharing with you today, were it not for the, the extraordinarily hard work of the 12,000-13,000 people we have working across Indonesia. So it's absolutely right that we continue to focus on the training, the development, the wellbeing of, of all of our staff across Indonesia. And it's only because we have very experienced, expert, highly motivated teams across all of our estates, that we continue to deliver the yields that you're seeing from our estate areas.
Those teams continue to respond to ongoing challenges, whether it's environmental, whether it's agronomic, whether it's weather-related, you know, whatever it is, in terms of, you know, dealing with the agricultural environment they find themselves in. And then secondly, that we continue to work extremely hard with the mills that we now have within our portfolio, to work on delivering the very highest extraction rates across all of those locations. And you've seen the impact of that in what Luke's been talking to you about in terms of the consequences for our results.
On the next strategic pillar, on growth, in terms of activity in the first half of this year, we were very pleased to be able to make the acquisition we made in the first half, to acquiring the 5% minority interest in the vast majority of our operating locations. So by acquiring from our minority partner, his 5% interest in almost all of our operating locations, we effectively, from a shareholder's perspective, we effectively acquired a further 1,700 hectares from that minority partner during the first half of this year. And one way of thinking about it is to say, we increased our majority ownership in all of those plantations for a minority price. So we achieved that transaction at a price of around $9,000 per hectare.
An immediately value-adding transaction and immediately earnings enhancing. Of course, we've been working very hard during the first half of this year on integrating and assimilating the 10,000 hectares we bought during the course of last year. That's an ongoing project for the long-term benefit of the group. We're doing some replanting in the area we acquired close to Simpang Kiri, and we're working very hard on improving the yields in East Kalimantan, at the 8,000 hectares we acquired close to Kota Bangun. But very importantly, we're already taking the crop from those areas into one of our Kota Bangun mills, which is fantastic in terms of being able to improve the input to, to those mills in Kota Bangun.
We're continuing to plant at Musi Rawas, in South Sumatra, which bodes well for the future growth of that estate, and we continue to look at new opportunities for further acquisitions. We hope to have more to talk to you about on that in the future. On our last strategic pillar, not to diminish its importance, it's last but not least, we focus absolutely on yield, and perhaps, Luke, you may wish to comment further on yield.
Yeah. So thanks, Matthew. So as we've said, I make no apologies for saying again, that our interim dividend up 20% compared to 2023, up to 15p. And I think this is a slightly shorter graph than perhaps we've shared in the past, in terms of the number of years on the chart. But nonetheless, I think, you know, you see a significant step up in the dividend in recent years. But also to sort of call out that the group has added effectively still to the 30-year+ track record of maintaining or increasing its dividend. And it's something that the group is very proud of, and the board is very proud of at M.P. Evans. It's something that we absolutely would look to continue as we move forward.
And I think it's important also just to touch on the fact that, you know, we do prioritize a sustainable level of dividend growth, and we do have periods where we have substantial profitability, and we have periods where it's not so profitable. But what we do try and do is even those out, what might seem a little stingy in those better years would tend to be offset with perhaps more generous dividend in those periods where it's not so good. But I think this is track record, as I say, we're very proud of at M.P. Evans, and we'll look to continue as part of our capital allocation policy. So if we can now move to a bit of an outlook for the rest of 2024, again, a great foundation at the start in the first half of 2024.
Total crop, you may have seen our eight-month crop result, that was in our interim report. That was ever so slightly down on 2023, just 1% down at a total crop process level. Predominantly, the reason for that is that we had the peak in crop in 2023, in the months of July and August. We're anticipating slightly later peak this year, but probably more around October, November. That's really as a result of waiting on some rainfall to help ripen the fruit. The good news is, the fruit is on the trees, but we are requiring a little bit of rainfall in the second half to help ripen that fruit, which may result, if that doesn't come in time, in some crops slipping into 2025.
Our anticipation at the moment, and expectation, is that should that rainfall come, crop year-on-year will broadly be where it was at the end of 2023. In terms of price outlook, we reported a price at the end of the first half of $771 per ton, and you can see there that first bullet point says that the price, the average year-to-date price up to the end of August 2024, was $777. So you can see an improvement there on the 771. And we've continued to see a robust and strong price environment into September as well. So there could be a softening in that price environment should the crops pick up.
However, if maybe those crops don't come through, and I think our performance will be reflective of the Indonesian market as a whole, if that crop doesn't pick up, there could be some sustaining of that sort of stronger price environment, perhaps sort of hedging out any volume drop that may go into 2025. In terms of costs, so we've had that substantial $4 million benefit of fertilizer price reduction in the first half. Sadly, that won't be repeated in the second half, that'll be a lot lower, and that's really because by the time we had, or we were applying fertilizer in the second half last year, costs had fallen dramatically, not quite back to the level they were at before. Certainly, had fallen away from the peak.
But we do expect unit costs through the rest of 2024 to fall, and again, that is in line with historical performance, largely related to some of the cost phasing that we have in the group. So we expect unit costs to fall in 2024 for the remainder of 2024, I should say, based on the output levels projected. So I think there's probably two risks to just mention. I've said about the rainfall with some fruit perhaps touching or moving into 2025. And then also, probably just worth calling out that, again, some of the benefit we saw in the first half from that kind of weaker rupiah-
As the dollar has weakened against a number of currencies, in the past couple of months, it's unlikely that that level of benefit will be there in the second half. But I think outside of that sort of more short-term outlook, in the medium and long term, the group remains very confident in the growth, organic growth, as we have our plantations that continue to mature, and also as we look to improvements in the yields for the newly acquired land that was purchased in 2023. So I'll just pass back to Matthew to summarize.
Thank you, Luke. Well, I think just to conclude and to draw together some of the strands of the things we've been discussing so far, we're very pleased with where we've got to at the end of the first half of 2024. We've seen crop production price all up in the first half of this year, and that's enabled us to really deliver a very pleasing result for the first half of the year. So as you can see, earnings per share are up to just under 45p. And again, that's enabled us to push forward with an increase in the dividend to 15 pence per share, another step forward in our progressive dividend policy.
We're pleased to have been able to increase our effective ownership by acquiring that minority stake I was discussing. And as Luke says, as we move into the second half, very encouraging to see the higher pricing environment we've been experiencing, and that very much has offset the slightly lower crop we've seen. We think that puts us in a very strong position for the remainder of the year. We continue to look for opportunities to add further hectarage into the group as we continue to grow.
We're continuing with our share buyback program, and as we look to the longer term, we think that the ongoing crop growth trend will continue, supported by the increasing yields from some of our younger areas, and also the increasing yields we expect to see from some of those areas we've bought over the course of the last 12 months or so. And obviously, we absolutely continue to be very highly cash generative, and that does indeed support some of those strategic priorities and strategic ambitions I was talking about a little bit earlier. So we look forward to the remainder of the year with much enthusiasm, and look forward to sharing that with you in our next presentation.
But I think that concludes the formal part of our presentation for today, and we look forward, at this stage, to responding to some of the questions that you have.
Perfect. That's great. Matthew, Peter, Luke, if I may just jump back in there, 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 company take a few moments to review those questions that were submitted already, I'd 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 dashboard. Guys, as 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, guys, at this point, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so, and if I pick up from you at the end, that would be great.
Thank you very much, Jake, and thank you indeed for your questions, which have been coming in during the course of the of our presentation. And they're reasonably diverse in nature. I don't think there are any overlaps, so I think the simplest thing is to take them from the top, and between us, we will attempt to answer them. So the first one is: Many of your peers appear to be larger companies with higher production, while they seem to have fewer employees. Can you explain this, if I am correct? Do you want to answer that one, Matthew?
I'd be pretty happy to do so, yes. I think it's quite difficult to do some reliable benchmarking in this area. What we tend to do is look at the number of employees we have per hectare that we manage, and then assess that based on industry norms, if I can call it that. And of course, what we also look at is, you know, clearly employee costs is a significant part of our overall cost base, feeding into our overall cost per tonne of palm product. Cost per tonne of palm product is, of course, a fundamental measure for us in ensuring we deliver our output at an overall low cost.
But in terms of employees, you know, we feel satisfied that we're in a good place when it comes to making sure we run an efficient operation, whilst at the same time, ensuring we live up to our own expectations in terms of quality standards.
Fine. The next question is: How far are we from having our growth strategy limited by the rules on the amount of planted land we can own as a foreign investor? I think I can probably answer this, and, Matthew, or Luke, may want to add to it. But as the rules currently stand, a foreign company is not permitted to own more than 100,000 hectares. There are exceptions for foreign companies who've owned much more than that in the past, but as the rules stand in terms of new, any new developments. But whilst we have been significantly increasing our hectarage, this only applies to the land we specifically own ourselves, i.e., it doesn't apply to our smallholder cooperative areas.
So the actual land that we currently own ourselves is a little over 50,000. Just, just over 50,000. So we're actually, you know, a little more than half, halfway towards that 100,000 level, so we have plenty of room yet for further growth. The next question is: with a net gearing of just 1% and an increase in cash flow from operations, what are the group's capital allocation priorities for the next 12-18 months? Will we see further acquisitions or more aggressive share buybacks? I think any of us can answer that one, but we-
Yeah, of course. Yes. I mean, I think you're quite right to highlight the fact that, as Luke had indicated, our gearing is extremely low, and we continue to be very cash generative. That puts us in a very strong position as we look forward and think about our strategic priorities and what we want to be doing with the group over the course of the next 1-2 years, as you highlight.
I think also what was being shown on the usage of cash analysis was something that we've been very clear about for some time as well, which is that we want to take a balanced approach to capital allocation, in terms of investing in what we already have, making sure that we're doing the right things in terms of our existing portfolio of assets, and at the same time, ensuring that we have, if you like, the firepower, if I can call it that, to look at opportunities for further acquisitions, and we absolutely do have that firepower. In terms of the last part of your question, at the current time, we don't have any intention to be, as you call it, more aggressive when it comes to share buybacks.
I think it served us and served our shareholders quite well to continue with our, if I call it, steady approach to continual buybacks that continue reliably and on an ongoing basis at the pace that we're currently doing it.
Thank you. Fertilizer is a major cost, that is true. As the group continues to build mass, at any point, would there be any merit in bringing fertilizer production in-house? We do, of course, produce our own organic compost, which is more of a supplement than a replacement of inorganic compost. Would either of you like to comment further on that? I think it would be inappropriate for us to be able to produce the likes of potassium and phosphate and some of the inorganic fertilizers. It's very specialist, and we need those inorganic fertilizers.
Exactly right. And I think, you know, it's very important to highlight the point that you're making, that we already do produce a form of fertilizer for ourselves, and that is quite a significant step that we can take by delivering that compost back to the field. I think because of the complexities and the specialisms of the inorganic fertilizer business, and because we also, as I think Luke mentioned, rely on quite a significant array of different fertilizer inputs, it's probably not practical to contemplate doing that for ourselves.
Thank you. One for Luke, I think. Alluded to working capital benefit, how much was this, and will it unwind in the second half? Do you hedge out the weak dollar to the pound, so the, the dollar to the pound, rather?
Yeah. Yeah, thanks. Yeah, so I think on the working capital benefit, I mean, from a cash flow perspective, it was sort of in the region of approximately just under $10 million benefit in terms of that inventory movement in the first half. And in terms of unwinding, no, I don't expect it to unwind in H2. I think we can sometimes have a little bit of a lumpy working capital movement, and really, that just depends on some of the timing of dispatches. Some of the amounts that we do ship out can be quite large shipments, and if they slip between one reporting period to another, then that can sometimes move that working capital number up or down. So not expecting a huge amount of unwinding in H2.
And then on the pound, I mean, we actively seek to manage the FX exposure between dollar and pound. Obviously, we earn in dollars, and we pay a dividend in pounds, so we try to make sure that we're doing what we can to manage that FX exposure.
Thank you. There is a speculation that in the forthcoming UK budget, the IHT relief on AIM-listed business could be withdrawn. If this was to materialize, would you give consideration to listing on another index or possibly delisting?
Yeah, that, you're right. There has indeed been speculation, but obviously all will be revealed when as Ms. Reeves presents her budget on the 30th of October. Sorry, can you just go back to make sure I've got the full question again? So we clearly don't know what will happen there, but I would make a couple of comments. I mean, we're not tax advisors, but in my experience, the full benefit of BPR relief, business property relief on our shares has always been available and that has continued to be the case. This may change from the 30th of October, we simply don't know. We're not listed on AIM, primarily because of IHT benefits.
It seems to be a suitable arena for us as a company, but we do keep track of what the benefits of, for instance, a full listing might be. And no doubt we will continue to review those options from time to time, but we obviously have to wait to see what happens on the 30th of October.
The next one, I understand that the EU has issued a directive on deforestation. To what extent do you believe this will impact the company, Matthew?
So the question is absolutely correct. EU has issued a new regulation, a new law around deforestation. Insofar as it relates to products being imported to the EU, it comes into effect from the start of next year. We, as a company, don't export from Indonesia. We only sell domestically within Indonesia, so it doesn't have any direct impact on us in that sense. However, we are working with our customers to support them, to make sure that they will have everything they need from us to support their own requirements, to ensure they comply with the new obligations from next year.
The Bank of Indonesia has started cutting interest rates. To what extent does this impact your business?
Yeah, I mean, I'll tell—I mean, directly and primarily, the impact there is we do have a little bit of rupiah debt that we acquired at the end of 2023, which is on a variable rate. So if they're starting to cut those rates, which I'm aware they have, that obviously would be a benefit to us as the cost of servicing that debt would fall. So that would be the main impact of that interest rate cut on M.P. Evans.
The next question is about values, about plantation areas. What major factors account for the gap between the prices paid for properties acquired in 2023 and 2024, and the appraised value of the pre-existing properties? Do you expect the appraisal value of those newly acquired properties to rise to the group average level in the coming years? Which factors, specifically, plantation, age, better operating practices, mill construction, would be most responsible for any increase in value there? Can we perhaps leave to that point or-
Fine, yes.
If you want to-
I'm very, very happy to respond to the question.
Yeah.
And I think that the factors that have been indicated are a very good starting point in terms of the differences. So I think the questionnaire is absolutely along the right lines. And perhaps to answer the question directly, do we expect the value to increase under our ownership? Yes, absolutely. We do. And we acquired the properties that we acquired last year at the values we acquired them, in the full expectation that we, as the new owners, would be able to add value to them. And that's one of the exciting things for us as a group about bringing our own expert managers into those properties.
And when you look at the properties that we acquired, it's extraordinarily important for us that we understand what we're into, but that we understand that we are comfortable that the fundamentals are secure, if you like. So we're very comfortable that the soil type is good, that the planting material that has been used is good, that the terrain is okay, that obviously it makes sense for us in terms of where it is from a strategic fit for the group. All of those fundamentals, because you can't change any of those things. They are what they are. So we're very happy with all of those things. And then there are some things that you can change, because you can bring our fantastic teams on board and improve the quality of the estate.
That's what we're doing at the moment. We can't do it overnight. I wish we could, but we can't. It takes time. But yeah, as I'm sure we've said to the people on the line who've heard us before, this is a long-term business. We build value over time.
And that's absolutely what our teams are doing with the assets that we acquired over the course of 2023. So absolutely, those values will start to look more like the values of the rest of our portfolio over time. It just will give us a little bit of time, and absolutely that will happen.
Thank you. If the mills are working flat out, will there be a lot of maintenance expenditure in due course? Well, actually, we'd like our mills to be working a bit harder generally, because I mean, they are excellent quality mills, each one of them, many of them relatively new ones.
But as this ties in with our strategy and our target of acquiring more hectare, specifically around our mills, so that the amount of throughput from our own areas through our mills can increase. I think the current amount of usage ranges from the lowest usage of around 62%, up to towards 90%, the high 80s. And really, we'd like to get the mills up to closer to 90-95%. And that still gives the opportunity for the usual routine maintenance to take place and routine maintenance expenditure to take place in the usual way. So, there's nothing untoward at the moment of anything we could do with increased mill usage, and that is specifically our plan, to acquire more areas.
And this will be the highest margins for us to have our own fruit from our own land, increased areas of land, going through our own mills. Does that conclude the questions? Thank you very much for all your questions. And I would also like to take the opportunity to pay tribute to all our Indonesian colleagues. We are but seven of us in the UK, and some getting on to 13,000, I think, without going back to the first question. And, you know, were it not for them, we would not be producing the excellent results that have been produced for the first half.
So many, many thanks from all of the UK, I think from all the shareholders to our fabulous team, headed up by Ravi, who runs our Indonesian operations. But thank you for your questions, and I'll hand back to Jake.
Perfect. Peter, Matthew, Luke, thank you very much indeed for being so generous with your time then, addressing all of those questions that came in from investors this afternoon. Of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended, just for you to review, to then add any additional responses, of course, where it's appropriate to do so. We'll publish all those responses out on the platform. But Peter, perhaps before really just looking to redirect those on the call to provide you with 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 to wrap up with, and then, as I say, I'll redirect those on the call for their feedback.
Lovely. Thank you, Jake, and indeed, thank you to you and the IMC team. We find these forums really helpful, actually, for being able to speak to our shareholders and would-be shareholders, perhaps, and we look forward to seeing you in person, many of you, at next year's AGM. But we very much appreciate your attendance and indeed the interesting questions that you posed. I hope we've gone some way towards answering. So, many thanks again, and until the next time.
Perfect, Peter. That's great, and 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 that the management team can really better understand your views and expectations? This will only take a few moments to complete, but I'm sure be greatly valued by the company. On behalf of the management team with 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.