M.P. Evans Group PLC (MPE.L) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to the M.P. Evans Group full year results investor presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted today. It will publish responses where it's appropriate to do so. These will be available via your Investor Meet Company dashboard and you'll be notified once these are ready for your review. I'd also like to remind you this presentation is being recorded. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Peter Hadsley-Chaplin, Chairman; Tristan Price CEO; and Matthew Coulson, CFO of M.P. Evans Group plc. Good afternoon.

Hello. Thank you, [ Paul ], and good afternoon to you all, and thank you so much for tuning in this afternoon and hearing our presentation. This is essentially our post results presentation following the results for 2020, which were recently released. But it's also perhaps an opportunity for any new prospective investors, anybody interested in our company, in what we do, to become acquainted with us. So it won't be just about the results, although it will be largely focused on the 2020 results. So let me start by moving to the first slide. Who are we? We are -- well, we've been around a long time. We've been a plantation company for nigh on 150 years. We've been involved in various crops in various countries. But in recent years, our focus has been very much on sustainable Indonesian palm all. And this is where we have been concentrating our expansionary efforts. We've established over many years a track record of both growth and financial returns. And we believe that there is significant growth opportunities and financial returns still to come, as you'll hear about. You'll see from the map, I don't know how clearly you can see it, but we are essentially focused on Indonesia. Just touching briefly on the remnants of what we used to have in Malaysia. We have 1 single plantation area, which is more of a property development venture these days. It's #8 that you may see in Malaysia, right at the top left-hand part of the map. And that's where we own a small estate, Bertam, which is in the course of being sold to the joint venture property development project called Bertam Properties, in which we've been shareholders for about 30 years now. And that company, Bertam Properties, has been developing a new town. And we are now in the course of selling the remaining part of Bertam Estate into that property development company for a price of about $25 million. And we expect that to be settled in about the next 3 or 4 months, which will be used for cash, but we will maintain our investment in Bertam Properties, which will continue to develop out the remaining part of that land, to complete the development of that township at Bertam. The rest of what we own is all in Indonesia. It's about sustainable palm oil. And we have a diverse portfolio of high-quality, sustainably managed plantations there. And I think it's important to emphasize the word diverse, because they're well distributed mainly across Sumatra Island and across Kalimantan, that Indonesian part of Borneo. And each of those plantations, bar one, is large enough to warrant having its own separate mill. And in 1 case, in East Kalimantan, the project is big enough to warrant 2 mills. We currently have 4 mills. And by next year, as you'll hear more from Tristan, we will have a total of 6 mills. But in a way, it's good to have that distribution because there are sometimes changes in weather and sometimes there are dryer spells in some regions. And so by and large, by having our estates well distributed across different parts of Indonesia, we don't suffer the effects of any particularly prolonged dry spell, for instance, throughout the entire estate as it were. One of the benefits of M.P.Evans is that our -- the average age of our estates compared to many, if not most, plantation companies is young. It's about 8 years. An oil palm generally has a lifespan of about 25 years before it's felled and replanted. And because we have been expanding rapidly in the last 15 years or so, it means we have an unusually high proportion of younger palms. So the average age of our palms is 8 years compared to the perhaps industry normal of about 13 or 14 years. Now an oil palm is planted after being for about a year in the nursery. And then following planting out in the field, it's able to produce its first fruit after about 30 months, 2.5 years. And then it progresses quickly up to a point of reaching, if you like, maturity, producing its peak yield by about year 8 and 9, which is why we're just as an average hitting peak yield shortly. And then it remains at those high yields for about another 10 years until about year 19 when it gradually starts to taper off before we then replant it about year 25. So as you can tell by young average palm age, we have a very attractive earnings profile ahead of us, which will lead, as we talk more about, to sharply increasing profits and indeed dividends. If we move to the next slide. We aim for operational excellence, and this is being borne out in our results. In 2020, our crop was up -- the crop that we processed in our mills was up by 21% to 1.2 million tonnes. Our average palm oil extraction rate in our mills was 23%, which is high by industry standards. It would be even higher if it weren't for the fact that we take in quite a large amounts of outside crop, pending the production increases from crops from our own young areas. We're buying in fruit from outside and the quality of that crop tends to be of a lower level with lower extraction rates able to be achieved, but it's still profitable, as, again, you'll hear more about later. But our average oil extraction rate is still at a good industry stand -- level of 23%. We are increasingly being regarded as a reference point. We're not a huge company by any means, but we're being regarded as a reference point in the industry for our high agriculture standards, for our oil extraction rates and for our approach to sustainability and traceability about, which you'll hear more shortly, too, for our general professionalism. And partly, this is because we have a policy of having even those senior managers, bar just a few, actually resident on the ground on the estates. So it's only those who really need to be in head office who are based there. But anyone who we can have on the estates where the action is, as it were, is there. And again, that's not always the case with other plantation companies who sometimes have their more senior managers based in their head offices. So if we move to the next slide. I mean about 15 years ago, in 2005, we undertook quite a radical new policy. We decided to sell our small Malaysian estates, which had some of them a certain amount of underlying real estate property development value. We did keep one of those, as I referred to earlier, Bertam Estate, but we sold the rest. But with the proceeds, having sold what amounted to 5,000 hectares, we've been able to develop 5x that area, 25,000 hectares, on top of what we already owned. So that brings us to something like 37,000 hectares plus the areas of smallholders attached to our projects, which have been developed to the same high standards as our own, which just brings us to well over 50,000 hectares. And that has all been achieved in the last 15 years. And as a result of that, an incident that we spent over $0.5 billion in investing in these new development projects in Indonesia. It's been another record year, as I alluded to earlier, for both crops and for CPO production, and our operating profit is up 94% compared with last year. Following the payment of the interim dividend of 5p per share last November, we have proposed a final dividend of 17p per share. This is up from 12.75p in the previous year and, indeed, in the preceding 3 years or so before that. So for the first time in 3 or 4 years, we are increasing the total dividend from 17.75p to 22p per share, a 24% increase. And, furthermore, we are very, very confident both of our production prospects and the price prospects for palm oil. And we do not believe it is, in any way, reckless or irresponsible based on what we can see coming through to stint our intention to pay a 30p per share dividend for the year in which we are, in 2021. So that effectively, within a couple of years, the dividend, which is where the norm had been 17p or so, the new norm will become 30%. So getting on for double what we've been paying for the last number of years, reflecting the significantly better results, which will be coming through and rewarding shareholders for their patience to supporting us and I hope encouraging new shareholders to come aboard as well. So perhaps I can now pass across to Tristan to talk about -- initially about the market.

Thank you, Peter. I think if I could just give you an overview of what happened in the palm oil market in 2020. It was a very unusual year, not only because of COVID, but because palm oil production fell during 2020. That's not something that's happened since the late 1990s. So that's a very unusual period in the palm oil market. And palm oil, rather like the rest of the world, suffered in a broad shock in February of 2020. And as you can see from the chart on the right of this slide, the palm oil price fell quite quickly and quite broadly. I think what's really noticeable though is how fast price of palm oil reached the bottom of the trough that you see there, and how emphatically then rebounded all through the remainder of 2020 and indeed then that momentum carrying through into 2021. I think we have to acknowledge that we haven't had the full benefit of that price rise because the Indonesian government introduced a new export levy at the end of 2020. Officially, it took hold in December, but in fact, it would be widely anticipated. And in fact, the effect of that was that, from about October, we felt the effect of that new levy. And it means that the Indonesian government takes much of the benefit of the price above $700 per tonne cif Rotterdam, and takes that for itself. There is still some slight improvement for the group. But the coronary of that is that as the price starts to fall, that doesn't affect the price that the group receives at its mill gate. So the palm oil is at very high levels at the moment, but falls in that price do not feed through to the price that the group receives at the mill gate. And the current mill gate price is one that leaves a very acceptable margin for us, and it's an attractive price. So the story of 2020 in terms of the price was a COVID fall followed by an emphatic rebound. And looking at the reasons for that, I think, firstly, it was a very unusual year, and the COVID affected consumption has affected people's behavior. People didn't go out to restaurants and hotels in the way that they had before. So there was a fall in consumption. But there was an even faster fall in production of palm oil. And you can see that very clearly in the chart in that first quarter. There was a significantly greater fall in production than in consumption. As we move through the year and the production builds back a bit faster than consumption does, but that big fall in production certainly is one reason why the price reached its trough so quickly after COVID had taken hold. I think the other feature of the palm oil market during 2020 is to look at what happened to stocks of palm oil and to look at trade in palm oil. You can see from the orange bars on the chart here as you move through the quarters of 2020, that trade fell along with everything else quite strongly in the first quarter. Now it didn't recover that much during the second quarter. But as you move through the third and the fourth quarters, trade really recovered quite strongly. I think the other thing that you really see in this chart is that stock fell also in the first quarter. I think what we saw happen was that production fell very strongly in the first quarter as we've just seen, and consumption didn't fall so quickly. And the gap was made up by people drawing down on their stocks. As production resumed, to some extent in the second quarter that stocks built back, but through the rest of the year, the stock position actually diminished again. So worldwide, by the end of 2020, stocks were at quite low levels again. And indeed, the ratio of palm oil stocks to the core consumption were at the lowest level for more than 5 years. And that situation was mirrored too in other vegetable oils. So we enter 2021 with relatively low levels of stock and a situation where competing vegetable oils find themselves in a similar position. So the market for 2020 was a complicated one in some ways. But the key point for us and our results was how strongly the price recovers and how that momentum is carried through into the current year and how the environment in the market suggests that, that strength is going to continue, at least for the medium term. Having mentioned our results, could I, perhaps, at this point, ask Matthew to take you through the results for 2020.

Great. Thank you, Tristan, and a very good afternoon to everybody. So let's just turn to some highlights of the 2020 results themselves. And you can see on the slide here, some of those highlights. Let's start with revenue. And you can see revenue was up by almost half compared to the previous year. So up by 46% to $174.5 million. As always, and as I'm sure I've said previously in these presentations, the determination of our revenue is a relatively straightforward exercise. It's all about production, and it's all about price. And you've heard something about both of those things already. So a strong increase in production. So the amount of crop processed was at a record level this year at 1.2 million tonnes. And then you also heard about the story of price during 2020 as well and the significant recovery in price that took place after the dip at the start of the year. Overall, that meant that the average price for CPO, looking at the cif Rotterdam measure, was at $716 per tonne in the year, and that's over a quarter. That's 26% up on the price in the previous year. And if we translate that into what we receive as our mill gate price, our mill gate price was up by a similar amount, and we received just under $600 a tonne. I think it was $590 per tonne mill gate. So we take those 2 together, the increase in production, the increase in average price, and that contributes to our 46% increase in revenue. And as Peter has already mentioned, we almost doubled our operating profit, 94% up on operating profit from $16 million to just over $31 million in the year. And the reason we saw such a big increase in operating profit compared to the increase in revenue really was because we were able to keep very tight control over our costs. Again, it's something we've talked about a lot before. But we pride ourselves on being what we consider to be a very low-cost producer of CPO, and that continued into 2020. You can see there that production costs actually fell slightly during the course of 2020. In 2019, our production cost was $345 per tonne, and we were able to push that down slightly during the course of 2020 to $340 per tonne. We think that as production continues to increase, we recognize we're approaching the bottom of that cost curve. But with production costs at that level, we believe we'll be able to continue to achieve very healthy margins. And as we work our way down to the bottom of the income statement, so a doubling at -- almost doubling at operating profit level becomes an almost tripling of retained profit for the year. And you can see the increase there to just over $22 million, which translates to an earnings per share figure of just over $0.37 per share or just under -- if we translate it, so just under 30p, I think it's 29.2p per share in terms of earnings. Moving on and looking at some of the other key highlights. Always very important to focus on cash generation, and you can see an increase there as well. So almost 20% up in terms of cash generation. As before, we report operating cash before tax and interest payments, so what we would consider to be a fairly pure or a fairly true operating cash measure and you can see where it was just over $40 million in 2019. So it's just a shade under $50 million, $49.6 million, in terms of operating cash in 2020. And perhaps whilst we're on cash a word, more about '21 perhaps than 2020. We signed an agreement during the course of 2020 as we reported in July to sell our remaining wholly-owned Malaysian land asset -- development land at Bertam Estate to our joint venture partner, Bertam Properties. And that will contribute significant cash once that contract completes, which we expect to be during the course of 2021. So just a significant note for looking forward into 2021 from a cash perspective. In terms of uses of cash, our capital investment program marched forward during the course of 2020. And you can see, again, we deployed over $40 million towards that capital investment program. Another year of over $40 million of capital investment. We were at $46 million in 2019, $41 million in 2020. Again, a significant part of that is on our mill building program. So our second mill at Kota Bangun, the Rahayu mill, opened during the course of 2020. We continue to invest in our project at Bumi Mas. So significant investment during the year in infrastructure there. So road building and housing development at Bumi Mas, but also making the start on mill #5. So mill #5 is well underway at Bumi Mas, and we look forward to opening mill #5 during the course of 2021. And a final word, just on the balance sheet. You can see the continuing strength in the balance sheet with net assets of over $370 million. And what we consider to be perfectly reasonable and modest levels of net debt at $78 million, which is very competitively priced, leaving us with net gearing under 20% -- net gearing at 17% at the end of the year. So that's all I wanted just to highlight from 2020 results. And at that point, I will pass you back to Tristan.

I think that takes us, I think, from the results themselves. We'd like to emphasize at this point that what we're producing is certified, sustainable Indonesian palm oil. So the results need to be seen in that context is that we are approaching this in a way that takes account of the environment, that takes account of how we produce sustainably and takes account of the impact that we have on our community. So indeed, we have a structure, a framework that we apply to our operations that very specifically takes those things into account. So in terms of our protection of the environment, we think about the greenhouse gases that we admit. We've captured methane from 3 of our mills, and we use that to generate electricity and to participate in producing compost as well. I hope it goes without saying that we do not deforest. We're extremely careful about not encroaching into forest areas and maintaining constellation areas in all of our projects. In terms of sustainable production, where we're very careful about managing water, that includes, for example, in those feat areas, which we're responsible, making sure that they remain wet. And in terms of traceability, there's something particularly, I think, I'd like to highlight. In that, the Roundtable for (sic) [ on ] Sustainable Palm Oil, the RSPO, which sets the principal sustainable standard for us, has introduced a way in which independent smallholders, so really small independent producers in Indonesia -- it provides a way that they can become sustainable producers. And we are running a project at our Bangka plantation to try and draw independents smallholders into this traceability network, so that they can become part of a sustainable production chain. In terms of our communities, I think we run extremely good smallholder schemes for all those attached to our projects. And we're very careful about the way we treat our workforce. We should emphasize again that all of the palm oil that's produced by us in terms of the land that we operate on behalf of the group and behalf of the scheme smallholders is operated to RSPO standards. However, the RSPO itself doesn't certify plantation land. It certifies mills. And I think you've already heard from Matthew that we're not yet quite at the end of our mill building program. So at the moment, the RSPO certifies 53% of our production as being sustainable. As we complete our mills, that will rise towards 100%. And we do have a target to certify all of our palm oil as being sustainably produced. In the meantime, we have a zero waste philosophy. We turn empty bunches into compost. I've mentioned the methane capture that we do to generate electricity, both for ourselves and for supply to our own housing and workers' housing and to the local electricity grid. We invested a lot of effort and time in building the relationship with the communities where we are. And I think it is important to mention that 2020 was the year in which -- the first year in which we produced a self standing sustainability report. Over the years, we have given a lot of information about what we do in this area. But we felt it was right to bring it all together and present it in one place. So there is a self standing sustainability report, and, indeed, a lot of additional disclosure that you can find on our website. Moving specifically to the operations in 2020 and what happened there. We can say that our operations were really not affected by COVID-19. Harvesting carried on. Our mills continued working and extraction at the good levels that Peter mentioned in his introduction. If we're looking for reasons for that, I think we could point the way our operations are very dispersed. They're quite remote. They're typically not very close to city centers. And the workforce is quite young and so has proved quite resilient, I think, to COVID-19. So our staffing there would remain at full strength. And we've also introduced in our Jakarta office much of what has become very recognizable in the U.K. So there are lots of people working from home. They use their laptops. They use video conferencing. But also true to say that Indonesia was much faster to introduce ways in which people could still travel by air. So they have protocols for testing in advance of flying, of socially distance transport that enabled our most senior managers to continue visits to supervise our operations. And the main point to come out really from 2020 was that it was another year where our crop grew. So our fresh fruit bunches grew 9% from 2019. The scheme smallholders a little bit more than that at 12%. And we were very successful in buying bunches from independent smallholders. Meaning that altogether, we processed 21% more crop, 1.2 million tonnes than the previous year. And for us, that growth was particularly pronounced at the younger plantations, which are on that very steep upward part of the yield curve as their palms endure and those are at Bumi Mas and Musi Rawas. At Musi Rawas, we had paused planting, whilst we have assessed new rules introduced by the RSPO that they clarify should be applied retrospectively. And we've filed all of those reports and that assessment with the RSPO and will continue planting once we get the green light from them. And we hope that, that will take place in the middle of this year. And indeed, we expect to be able to plant in this location everything that was planned. And the growth that we saw in 2020 isn't very much is the end of the story. I think we have a very upward trend in crop that will continue through to 2027 or more. We have a very young average palm age that Peter explained about the yield profile in his instruction. And so not only do we have additional mature hectares being added to the group's productive capacity, but we have that natural maturing of the palms, that is producing this growth in the group's crop. Overall, we expect planting from the existing land to reach 53,600 hectares. So we only have a small area left to plant. And it's important to emphasize this crop growth is essentially from plants that are already planted. This is not about planting that we plan to do in future. It's from palms that are already in the ground. And when we get to 2027, the crop doesn't start going down the hill. It reaches that peak and then it's essentially is on a plateau for a number of years before there's any expectation of that diminution. And naturally, if we do manage to acquire additional hectarage, then that would both make the peak higher and would push into the future the point at which that peak happen. But for the time being, we've been focusing very much on developing our mills and our milling capacity. And the reason for that is that our mills extract a really good margin, much better than the margin that you get from selling your fruits to other millers -- outsiders. We commissioned a new mill in Kota Bangun in September of 2020. And Matthew's already led you a little bit through the construction that's already underway. So we have another 1 that is coming on stream in a few months' time in the middle of this year. Another 1 at the end of next year. So that by the end of 2022, the group plans to have 6 mills in operation. And there just might be a seventh. We're looking at our land in Aceh, where we have a very good plantation that's just not quite big enough to justify its own mill. And we're looking to see whether we can acquire additional hectarage in that region that would justify the building of a seventh mill. And when we build our mills, we build them to be able to process our own crop, which, of course, we expect to rise over time through that natural maturity and the increasing yield of the palms. And we aim to put the capacity in place to match that growth in crop. So by the end of 2022, when we complete that sixth mill, we expect to be billing some 96% of the group's crop. If we are successful in acquiring land at Simpang Kiri, then that will move towards 100%. It is right that the independent fruit that we buy in to fill up that capacity is extremely profitable. But it does bring down the average oil extraction rates that we can report because the fruit is just not as good a quality as that, that we produce ourselves. But of course, that is reflected in the price that we pay for that crop. And the picture on the right there shows the combination of the group's own crop, scheme smallholders' crop attached to the group, as well as the independent fruit that we look to buy in and how that matches against our milling capacity and the very sharp increase in mill capacity that we've managed to put in place. And as you've heard, this capital program is coming to an end, very little planting left at Musi Rawas, maybe 2,000 hectares. In the meantime, we've made excellent progress on the civil engineering that all plantations require, so the roads, the housing, the water management. We build bulking science, and we've got 2 small regional offices. Those will all be finished by the end of this year, 2021. And then by the time we get through the completion of the mills, we should bring capital expenditures to that maintenance level by about 2024. So where does that leave us? Well, we wanted to suggest to you that we're at an inflection point. It brings the business to a really important and rather exciting point in its development. You see here in earnings per share, what we produced in 2019 and 2020 on the basis of milling 1 million tonnes of fruit and 1.2 million tonnes of fruit. And we wanted to present to you an illustration based on some assumptions, with an illustration of where we might be if we get to processing 1.6 million tonnes, which we think is something that is achievable in the really, really quite near future. If you make some assumptions about the price on the left-hand side here, a $600 a tonne mill gate is significantly less than we are at the moment and we feel is entirely reasonable assumption to make, along with costs of $400 per tonne to generate a margin of $200 per tonne. And you combine that with some assumptions about central costs and about the exchange rate. Then milling 1.6 million tonnes brings you to an earnings per share figure of more than 80p per share. And I think it's that perspective that is quite important to bear in mind when you think about the points that Peter was making about the dividend and about its increasing, about where it might yet go. The reason for this is -- the underlying reason is the higher crop, the crop that is still growing, the deepening margin that we're getting from having our own mills and milling our own fruit, combined with the cash generation that Matthew covered, leading to a falling debt and then falling capital expenditures we reached the end of that program. That gives the accelerating cash flow, that gives scope, not only for higher dividends, but gives scope for us to continue investing in the business and being in a position to invest in the future. So at that point, if I could hand back to Peter perhaps to say a few words in conclusion, to bring the formal part, at least of the presentation, to an end.

Yes. Thank you, Tristan. Well, to conclude, and as I hope has been illustrated from a number of the points made through the presentation, we believe we have a very bright future ahead, not least that we have a past of 150 years, but we have a very promising future. And we have achieved an extraordinary amount in the last 20 years or so to enable us to increase very substantially our production of sustainable Indonesian palm oil, in which we have a huge confidence. Our focus will continue to be on majority-owned plantations. So we're in charge of running them. We own them. We manage them and on behalf of our scheme smallholders producing sustainable palm oil. And we've touched a couple of times on the value that we are still extracting from our remaining Malaysian assets in the sale of Bertam Estate to Bertam Properties and then, again, the continuing value to be derived from the development out of the remainder of the Bertam Properties township. The crops and revenues from the existing plantations are on the rise and will continue to rise as you've seen until at least 2027. Of course, as Tristan said, if we are to buy more land, then we have the possibility to increase that peak and to push back the time when -- the peak level to beyond 2027, and at what point it doesn't just slip away, it then plateaus out. So we'll see crops and production levels then continue on at significantly higher levels than where we are now for many years to come. And as a result of this, we are able with confidence to say that we're looking at the prospect of sharply increasing dividends, which provides both yield, but it's not just about yield increases, also about continuing capital growth. So the 2 side-by-side, yield and capital growth. So that concludes our presentation. Thank you for listening to that. We'd now be delighted to receive questions. We've seen there a number have come through. And I think Tristan is going to be in charge of fielding them. I don't know whether, Paul, you wanted to say anything.

No, just quickly say, Peter, thank you very much. Thank you to yourself, Tristan and Matthew, for the presentation. [Operator Instructions] I'd like to just remind you that a copy of the presentation, along with the recording and availability of the slides will be available on the Investor Meet Company platform on your dashboard. I'd also like to remind that your feedback is important to the company. Immediately after the presentation has ended, you will be redirected for your opportunity to provide feedback in order that the company can better understand your views and expectations. Tristan, may I please just hand back to you to address the Q&A from investors. If I may ask you just to read out the question, give your response, where appropriate, that would be fantastic.

Thank you for the questions that you've already pushed out. Indeed, we received 1 or 2 in advance as well. Could I begin, 1 for Matthew, I think. We've got a question about costs. And the question says that the business looks in very good shape going forward and that we managed costs very well. But the question is then, do you see any room to reduce costs further and are you seeing inflationary pressures?

Okay. Fine. Well, I mean, I think the questioner is right to highlight those points. Yes, of course, like any business, we do see inflationary pressures. However, as you would have seen through the slides that we shared with you, we also see over the coming years significant increases in production and in yields. And our objective in the coming years is through the increasing yields and, therefore, the opportunity to spread those fixed elements within our cost base over that larger production is to have the 1 at least offset the other. So we have the benefit of the increasing production spreading those costs over that larger yield, allowing us to offset any increase caused by inflation to manage our costs per tonne and keep those as low as we can. As I say, whilst we may be coming towards the bottom of the cost curve, we don't expect there to be substantial steps downwards. Our objective is to keep them at the current level.

Very good. Thank you. I think there's a pair of questions, I think, that are related now. One of them following on from your point on cost, to say what is the political backdrop about potentially increasing tax, yet further given the attractive economics of the business? And another 1 about whether there is a domestic market that avoids the tax? So I think if I could answer that perhaps on the -- looking first the question of the political backdrop and the attractive economics. And I think the attractive economics are particularly relevant to us because of the cost control that Matthew has just been talking about. I mean I don't think we're a typical producer. I think we're a low-cost producer. And I think that's what makes the economics for us particularly attractive. And I think the government is very conscious that a number of the voters might not be so cost efficient. And I think that would be a significant disincentive to increasing the tax in its current form. And the related question is, is there a domestic market that would avoid the tax? And I'm very pleased that was asked because I think it is absolutely the case that there is a premium in the local market to what you might expect if you start with the cif Rotterdam price and just deduct the levies and the taxes. And there is absolutely a premium in the local market, partly we feel as a result of the Indonesian government having offered incentives for people to build refineries over the last decade. And that's been quite successful with the result that there are a lot of refineries in Indonesia looking for crude palm oil feedstock. And that means that there is quite a premium in the local market for palm oil.

If I could just add more generally on tax -- and this is not a comment related specifically to our industry. But I think it's probably an important point for people to be aware of the Indonesian government last year announced a reduction in the headline rate of corporate tax in Indonesia, which benefits us, along with everybody in Indonesia. And so previously, for a long time, the headline rate of corporation tax in Indonesia had been 25%. And that's reduced, and we see the impact of that. And our 2020 results in the corporation tax in Indonesia reduced 22%. And then next year, so not the year we're in now, but next year, in 2022, the headline rate in Indonesia will reduce again to 20%. So clearly, that has a significant bearing on us in terms of retained profits.

Thanks, Matthew. Can I actually ask you to answer the next question as well, which is the question says, what value is the group equity value that we publish in the annual report, given that our share price trades consistently below it?

Yes, of course. So as we have for a number of years now, so, again, in 2020, we've provided full detail of the group equity value in the annual report, and people will find that on Page 94 of the annual report that's available via our website as of yesterday. And what that shows us is that the total equity value has increased in U.S. dollar terms compared to last year, because of the way the exchange rate has changed in the year. It actually then comes back to a figure in pence per share that's almost exactly the same as it was at the end of 2019. So it's within $0.01. It's GBP 11 per share. In terms of how that's determined, it's important to note that that's based upon a valuation of all of the group's property assets, which is performed by an independent valuer. And in terms of how that's done, clearly, our understanding is, clearly, the valuer thinks about values of properties based upon transactions in the marketplace. But primarily the valuer is thinking about, well, to what extent are those properties able to generate cash and be able to generate cash returns for investors in those properties and the owners of those properties. And that is the fundamental basis upon which those valuations have been performed.

Thank you, Matthew. Peter, could I ask you? There's a questioner saying, will there be a special dividend after the sale of the Bertam Property? And perhaps connected to that, another question saying, could you detail the cash proceeds from the Bertam sale?

Yes. Well, thank you for those respective questions. We, the Board, has not formally made any decision, but it would not be anticipated that there would be a special additional dividend paid following the sale of Bertam Estates. I mean, as we've said earlier, we have announced our intention to pay a very significantly higher dividend in respect of 2021, which does take a number of things into account, including the likely sale of Bertam Estates. And we believe it's highly likely that it would be sold. I mean it's -- again, rephrases our intention. It's highly likely that intention will be followed up. I think it's so likely that we will sell Bertam Properties, but there's no -- Bertam Estate, the said point is speculating about whether it or will it be sold until next year. But -- so essentially, the answer is that that's not likely, no, that there'll be a separate special dividend in relation to that sale. In terms of the sale proceeds, settlement is expected to take place in -- around the middle of this year. And the actual payment installments are coming in stages over a 10% deposit paid at the outset. When settlement takes place, a further 50% will be paid. So that would bring us up to a total of 60% of the $24 million or so, which was the sale amount agreed, and then the balance will be paid around 18 months later.