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

Good afternoon, ladies and gentlemen. Welcome to the M.P. Evans Group PLC 2025 results. [Operator Instructions] Before we begin, we would like to submit the following poll, and I'm sure the company will be most grateful for your participation. I'd now like to hand over to the management team from M.P. Evans Group PLC. Peter, good afternoon.

Thank you very much, Mark, and good afternoon to everyone. Thank you so much for joining us for this presentation of our 2025 annual results. I'm joined, as usual, by my colleagues, Matthew Coulson, our CEO; and Luke Shaw, our CFO. And as usually happens, we'll take you through the presentation, which will last about half an hour, and then we'll allow up to another half an hour for any questions you may have. And please do submit any questions that you're interested to know the answers to, but the full presentation and Q&A won't go on for any longer than 1 hour. So without further ado, let us move to the first slide. This is an overview of us, M.P. Evans. We're a 150-year-old AIM listed plantation group focusing on sustainable Indonesian palm oil. We now, including our small holders who are linked to our projects, have over 70,000 planted hectares. We produce -- 76% of our CPO is certified sustainable. That has gone up, as Matthew will explain, because we are taking out less from independent smallholders. We continued to grow impressively. We've acquired 14,000 hectares since 2023. We have 6 zero-waste palm oil mills. Again, Matthew will talk more about that on the sustainability section. Apart from the 7 of us in the U.K., we have over now 12,500 employees in Indonesia. And on a 5-year total shareholder returns basis, which includes dividends and indeed share price growth, we have achieved 121%. So we can move to the next slide. And this has been another -- a new record year, helped, of course, by the strong pricing of palm oil. Also, as I just touched on, by the beneficial crop mix, which has led to record profits and indeed cash generation. We're continuing to grow the group with more planting, more areas acquired and a continued improvement in the quality of our management, improving yields on both FFB and indeed CPO extraction rate. We are now in an extremely strong financial position, a robust balance sheet, all debt repaid and indeed significant net cash now. We continued to deliver to shareholders increasing dividends and indeed share price growth, which one would look forward to continuing. So if we move to the next slide, these are, if you like, the key -- the highlights from 2025, 5% increase in revenue to over $370 million, a significant increase in earnings per share, up to over 160p. The normal dividend for the year has been increased to 60p per share. So the final dividend proposed is up from last year's 37.5p to 42p per share. As just mentioned, we are debt-free with net cash now of $87.5 million. The total crops harvested between ourselves and our small holders, 1.3 million tonnes. The yield per hectare for our FFB, fresh fruit bunches, is 21.5 tonnes per hectare, a 3% increase on last year. And I think very impressive, so all credit to the team for having significantly increased the extraction rate from last year by 1.3% to 23.5%, which is a very creditable level, but we aim to continue to improve this. And as just mentioned, the proportion of total sustainable production is 76%. These -- just to remind you, our core strategic pillars, responsibility, excellence, growth and yield. And they all link in one with the others. You can run your eye over some of the bullet points there, but I won't run through each of them. But just to say, if it weren't for the responsible approach that we take and the excellence of our team, the excellence of our facilities, we wouldn't be able to encourage the best people to join us or indeed to stay with us. So it all feeds in one into the other and of course, leads to further growth, not just from more acquisitions and new plantings, but also from improving the quality of what we already do. And that in turn leads to the yield -- in terms of yields, return on investment, returns to shareholders by way of dividends, but we also are looking at investing in new areas of land, particularly around the mills, those 6 mills that I referred to. So I'll now, at this point, hand over to Matthew to talk about the market initially.

Fantastic. Thank you very much, Peter. So as you said, we'll just start by taking a very quick look at the palm oil market, but even before that, the wider vegetable oil market. Many of you will have seen this slide before. We've simply added another year to it to show what's happened in 2025. And as you can see, the vegetable oil market does indeed continue to grow as we've added the 2025 bar to this chart. Demand continues to increase around the world for vegetable oil. We now have a 35-year series here on this chart and demand continues to tick up over the last 35 years on average. We've seen about a 4% increase year-to-year-to-year in demand and indeed in consumption of vegetable oil around the world. The largest individual vegetable oil within that complex is palm. You can see the bottom part of each of those bars, in dark green is the contribution made by palm. And if indeed, we do look at palm in a little bit more detail, as I'm sure many of you are aware, the largest producer of palm globally is Indonesia itself. And you can see that Indonesia as a producer accounts for almost 60% of the world's production of palm. In terms of consumers, again, Indonesia is the largest individual consumer of palm around the world. Generally speaking, a large proportion of palm is consumed in Asia. It is the most traded and it is the most exported of the world's vegetable oils, but a large proportion of consumption does happen in that part of the world. One of the reasons why Indonesia is the largest individual country in terms of consumption is to do with their program of supporting biodiesel, biofuel consumption within the country. Indonesia has a very large biofuel program. It has something that is currently described as a B40 program, which means that all of the biofuel that's consumed within the country is expected to have a 40% palm blend within it. Indonesia is currently exploring the potential to move from B40 to B50, which would obviously mean a further increase in demand and consumption of palm within Indonesia. The other important thing to say about palm is just how efficient it is. And that's really what's illustrated on the right-hand side of this chart. The blue bars give you an indication of the ability of other main vegetable oils to produce oil per hectare of land cultivated. And you can see those other major vegetable oils typically doing less than 1 tonne for every hectare cultivated. Palm does a lot better. Palm on average will do more than 3 tonnes per hectare per annum. Palm done well, will do a lot more. And you can see the dark green bar there representing what we achieved in 2025, which was actually just over 5 tonnes on average for every mature hectare that we cultivated. And of course, that's an expression, I should say, of the crude palm oil that's produced. Of course, there are 2 products. So on top of that, there's even more that comes out from every hectare because, of course, there's crude palm oil, but also the palm kernels and hence, the palm kernel oil that comes through as well. In terms of market dynamics, the market has been strong again throughout 2025. And you can see from the chart on the top left-hand side of this slide, an illustration of that. We saw a small dip in Q2. But otherwise, pricing was very strong throughout 2025. You may remember from this time last year, we were very pleased to be able to report to you that we had an average price of over $800 per tonne, leading to the great results for that year, and we had an average price in 2024 of $823. Now we're telling you we have an average price of $866 in terms of our average for 2025, which was a fantastic result for the year. We also saw a step-up in terms of the average price we were able to achieve for the palm kernels that we sold, and Luke will cover that in a bit more detail shortly. This slide simply illustrates the mix change in terms of our inputs and our outputs. Very importantly, as Peter was mentioning earlier, we continue to take in a smaller proportion of crop from outside suppliers to process in our mills. Proportionately, we continue to process more and more of the high-quality crop that comes from the areas that we manage. So as you can see, in 2024, almost 1/4 of what we processed came from outside. Now that's down to 15%, and that makes a real difference to us in terms of not only our cost base and our margins, and Luke will cover that in a bit more detail, but also the quality of our output. And so you can see we're continuing to push up the sustainable proportion of our output, now up to over 3 quarters, and we want to see that continuing to go up as a proportion as we move forward. So I think at that point, we should move on and talk a bit more about the financial performance in detail, and I'll hand over to Luke for that.

Thanks, Matthew. So I think if we start by just looking at revenue, we touched on up 5% in the year. And you can see the growth there from $352.8 million to $371 million. And a large proportion of that was really the pricing environment that we saw in '25, not just on the CPO side, but also on palm kernel pricing. That was up 42%. And you can see that the PK revenue was a greater proportion of total revenue in the year. On top of that, also, we saw our sustainability income flat really for the year. Despite that increased output that Matthew was just talking about on the previous slide, the units or the amount, I should say, that we are able to receive for a unit of certified output, particularly on the PK side, went down in the year about 20%. So unfortunately, that pricing impact was more than that volume upside that Matthew was just talking about in the previous slide, but still in and around that $5.5 million mark. On the right-hand side of the chart here, we have our 2 cost metrics, and we focus predominantly on the first cost metric, which is the cost to produce a tonne of our own palm product. And you can see that, that was relatively flat in 2025, $414 versus $410 in 2024. If you then look at the breakdown of those costs, that was quite static as well. In the past few years, we've had some ups and downs with fertilizer pricing. But across '24 and '25, that was relatively static. You'll also see that we benefited from about $10 per tonne by a weakening Indonesian rupiah. So we've seen that now for a couple of years where the Indonesian rupiah has weakened against the dollar, and that makes particularly our labor cost in Indonesia cheaper in dollar terms. So we definitely benefited from that over the last 2 years. I sort of estimate that around $10 per tonne in 2025. Always worth pointing out when we reference this number that it's a fully loaded number, includes all of our overheads across the group in Indonesia, including the head office, but also it includes circa 20% of noncash, i.e., depreciation. So when looking at breakeven levels, when looking at our cash cost per tonne, you can kind of take 20% off of that $414, and it's obviously a much lower number. The second cost metric that we look at is the total cost per tonne, which then incorporates the cost of supply from both our scheme smallholders and also the independent suppliers as well, and that went up to $528 compared to $519 the year before. That went up a little bit less than our revenue. And for those that are aware or those that are not, I should say, when we see an increase in the commodity price, that flows down to the cost of supply from scheme smallholders and independent suppliers. And I'll demonstrate that a little bit more on the next slide. So we saw an increase there of 2% in terms of total cost per tonne. If we just jump to the next slide. So focusing on profitability. So this is a gross profit bridge, which takes you from gross profit in 2024 of $116 million through to where we ended up in 2025. So the first 2 bars on the left-hand side, you can see the green and the red, they net out to a net price benefit of just over $20.5 million in '25. And again, that's coming from the pricing benefit for CPO, but also PK too. And I just touched on the fact that as the commodity price goes up, so too does the cost of supply. And that's why we'll always have a net price benefit in there, providing we are buying in from independent suppliers, and we will, of course, continue to buy in from our scheme smallholders. So that takes you to the first blue bar. If we then look at the next few items, so we did process slightly less total crop in 2025 compared to 2024. And that resulted in a small decrease in the volumes that we dispatched throughout '25. But we were able to offset that by the mix change. And that's where we've been processing, as Matthew touched on, more of our own crop as a proportion of the total. And that's a much higher margin than what we achieve on independent crop and scheme smallholder. So that mix benefit, which also includes an improvement in extraction rate that we quantified there, and that absolutely outstrips that volume reduction as well. The next bar, $3.3 million, that is the additional gross profit we received in the year from the new acquisition that we made in July 2025. So we added 2 new subsidiaries, SBS and SKMA, in 2025, and they have formed part of our Bumi Mas estate in East Kalimantan. And at the time, we announced that we paid approximately $12,500 per hectare for that land. And that's slightly more than we have paid previously for land. But one of the reasons for that is the fact the land that we were acquiring and in particular, the plantings were much higher quality than we had purchased previously. And that meant that they were able to effectively supply the mill at a good rate and a good yield immediately. And that ultimately generated that earnings enhancing amount of $3 million in the second half. So it's a fantastic return on our initial outlay of just over $30 million, which I'll come on to in a minute. And then, of course, we do have some cost pressure. In particular, in Indonesia, we have our labor inflation, which we have to try and manage as best we can. We try and do that by offsetting that labor increase by increasing the amount of output to really drive that cost per tonne down as we touched on the previous slide, that $414 number. That $6 million though is still sort of less than 3% of the total cost base for the group. So we try our best to manage that. And then if you add in the final light green bar of $2.9 million, that effectively is the FX benefit, which also helps us on that cost base. So that's the weakening IDR coming through in absolute terms. And if you then take that across the page, you get to the $142 million of gross profit, up 22% compared to 2024. That drops through further down the P&L to our operating profit. That's gone up by 20%. And then our profit for the year is up 25% and Peter has already touched on the fact that we repaid all of our debt in the year, reducing as a result, the finance cost for the group. So we've now moved in 2025 to a net finance income position, and that gives us a little bit extra when we kind of move down from operating profit down to profit for the year. So that's up 25%. If we move on from profit and then take a look at cash. So hopefully, most people are familiar with this chart now. But if not, the top bar reflects the amount of cash that we came into the year with. So that first blue bar, the $79 million, that takes account for the cash that we came into 2025 with. That was a gross cash number. We had net cash at that point close to around $46 million. And then the bigger light green bar at the top of the page, that shows exactly how cash generative the business is, of course, supported by some of that price environment, but still generating over $160 million from cash from operations in 2025 is fantastic, and that's 116% cash conversion. The bar below ultimately shows how we used that cash throughout 2025. So we've continued to pay our taxes. Then I touched on the fact we repaid all of our debt. So we were due to repay all of our U.S. dollar debt that we had for a number of years. That was repaid by the first half. But then in the second half of the year, we accelerated our repayment on the Indonesian debt that we had acquired as part of an acquisition in 2023. So we are now debt-free on the balance sheet. The 3 dark green bars in the middle, that is a continuation of our balanced approach to capital allocation. So with the first number being CapEx, just under $25 million, we're continuing to invest in the group, continuing in particular to plant new areas at our Musi Rawas estate and also at Kota Bangun, our large Kota Bangun estate, where some of the areas we acquired in 2023 had planting opportunities. We then made that acquisition in the year that I touched on for around $33 million, adding in that additional hectares just around 3,000 hectares, and then also continued to give money back to shareholders through dividends. And that number there reflects the final dividend from last year and the interim dividend for 2025. So despite doing a reasonable job of spending the cash that we came into the year with, we actually exit '25 with more cash than we came in at just over $87 million. And I think we've said in the past that having cash on the balance sheet is beneficial for a couple of reasons. One, obviously, we are in a commodity business, and we need to manage any of those cycles that come through. But also what we do find is having cash readily available when it comes to M&A opportunities does put us at a little bit of advantage if it comes to a competitive process. So having that available absolutely helps us when it comes to our growth ambitions moving forward. And then this slide here just shows our dividend progression. So we now have a record of 35 years of either maintaining or increasing our dividend. And that's something that we're very proud of at M.P. Evans and something that the Board takes really seriously. And because we take it so seriously, when we do think about dividend increases, we absolutely take an approach to a sustainable dividend growth model. So we had a very good year in 2025 from an earnings perspective, over 160p per share, and we distributed 60p, as Peter already touched on for 2025, up by 14% compared to the prior year. And with that, I'll pass back to Matthew for some sustainability.

Great. Thank you, Luke. As Luke says, no presentation from us is complete without a few words on our sustainability strategy and how we continue to deploy that. First of all, a quick update for you on where we are with our carbon balance sheet as it's called. We've been measuring this now for the last 5 years. We first recorded our carbon balance sheet in accordance with the guidelines back in 2021. It's very pleasing to be able to report to you that, that balance sheet, unlike our financial one, has shrunk significantly since we first captured it, now down by 45%. We've been working very hard in this area. And particularly if you measure it in a sense of carbon intensity, which is one of our KPIs and actually, it's gone down even more because obviously, it is reduced as production has increased. So when measured and looked at per tonne of CPO produced palm product, actually, it's down by more than half. So we're pleased with progress in this area, and we're carrying on thinking about what more we can do to work towards the targets that have been set. Giving a live example of operationalizing, I use such a terrible word, sustainability. Again, we've spoken about this before, but really to give you a sense of scale, we're very pleased with the progress that's been made with our biogas, our bioelectricity facilities across our mills. Last year, we generated not far shy of 40 million kilowatt hours of renewable electricity at these facilities, which is superb. The vast majority of that we then use in our own operations to replace what would otherwise be effectively powered by diesel gen sets, putting it bluntly. So it's a fantastic sustainability win. It's also a fantastic win for us in terms of cost savings because even after netting off the cost of running these facilities, we estimate that by doing this, we're saving more than $4 million each year. So fantastic for us in terms of reducing our exposure to the cost of alternative fuel sources, but clearly also a fantastic win from a sustainability perspective, and we're excited about doing more. This is not the end of the story when it comes to these facilities. At the moment, we can only use the renewable electricity as far as we can put out our electricity grids around our estates. So there are some remote locations that we can't get to. And we're thinking about what we can do there, and we're excited about a new program we're developing now to actually compress the biomethane and then send it around to our more remote locations so we can use renewable energy to replace other sources of energy in our more remote locations around some of our estates, which is fantastic. And we hope to have that operational next year. Thinking more broadly about future plans for the group. I hope you get the sense that this is a journey, not a destination, and there's lots more that we're still focused on in accordance with our strategic priorities. We continue to push up the amount of certified sustainable output that we deliver, both in terms of absolute volumes and in terms of the proportion of our output as we become less and less reliant on buying in from outside suppliers. So expect to see that continue to change as you've seen it change in 2025. We're building a number of new facilities, a very good example being that biomethane plant that we're building to make sure we're getting the very, very best out of our ability to generate renewable energy across all of our facilities. We're continuing to grow. We're still planting. We're still planting new hectares at several of our locations, but we're continuing to look for new suitable lands to bring into the group, very similar to what we've just done in 2025, where we bought the hectorage close to Bumi Mas. We want to be doing more and more of that. If we're successful in buying more land around our Simpang Kiri project in Aceh in Northern Sumatra, then that would give us the opportunity to build our seventh mill. And that's something we're excited about looking at if we can find that suitable land. And of course, all of this is within the commitment to make sure we're applying sound financial management and capital allocation, a core part of which, of course, is deploying funds towards continuing to enhance shareholder returns. We're absolutely committed to our progressive approach to dividends. You'll remember the slide that Luke just showed you in terms of what we've been doing with dividends over recent years, and we absolutely want that to continue. This slide really just further illustrates, if you like, I guess, the sort of size of the prize in terms of what's possible as we go forward. If you look at the chart on the right-hand side of this slide, you can see where we've come from and how we -- the dark and light green part of this bar representing the crop that we harvest have grown and we expect will continue to grow as areas continue to mature as we continue to push up our 21.5 tonnes per mature hectare in the coming years. And then the blue represents us continuing to buy some crop from outside suppliers. The gap that in future years, we've colored in orange, that goes to show where we've got that real opportunity to buy in further hectorage to continue the growth story for the group. And of course, it's not just the orange, of course, we would be delighted to buy more than the orange and continue to squeeze out the blue, if you like. If we're successful in buying enough hectorage to do so, that would be superb. And of course, here we are today reporting to you on 2025, and we're almost 1/4 of the way through 2026 already. So we should give you an update on that as well. And we're pleased to do so and pleased to share with you that 2026 has got off to a great start, too. You get a sense of that in terms of this table showing you the first 2 months of crop. You can see that our own crop continues to increase compared to the first 2 months of last year. We continue to hold back and hold the line in terms of what we're buying in from outside suppliers. So that mix change is carrying on, and we're pleased that, that is the case. And pricing remains very strong. So in the first 2 months of the year, we see average pricing of around $860 per tonne in terms of what we've been tendering, but we do see signs of increases in March for very obvious reasons, given what's going on in the wider world. I clearly can't say how long that will last, but we do see signs of higher pricing at the current time, and that will benefit our results in the latter part of this first quarter. So that's where we are. This slide simply summarizes what you've heard, a fantastic 2025, whilst at the same time, we feel we've got off to a great start in 2026 with lots more exciting things to come. So hopefully, that gives a clear picture. We can see there have been lots of questions coming in along the way. But just at this point, I'll pass back over to Mark for a moment. Thank you very much.

That's great. Peter, Matthew, Luke, thank you very much indeed for updating investors. [Operator Instructions] I'd like to remind you a recording of this presentation will be available post today's session. Peter, if I may be a good time to hand back to you, if I could ask you, please, to moderate us through the questions. There's a number of questions. Thank you to everybody for engagement. And Peter, over to you, sir.

Yes, indeed, I echo that, Mark. Thank you so much for a very good and interesting range of questions submitted. We'll try and get through them as best we can in the remaining 25 or so minutes. So broadly, I think I can sort of take them through from top to bottom. There are some which are a little bit overlap, but we'll get through as best we can. So since the war began in the Middle East, the Rotterdam palm oil price has moved up. Has the mill gate price in Indonesia tracked to this, and is there likely to be an export tax or presumably an increased export tax? Luke, do you want to take it?

I think you're right. The Cif Rotterdam price has gone up in particular over the last couple of weeks. We haven't seen the movement in that Cif Rotterdam price. We haven't seen that drop through to the EMD pricing at this stage. We have seen, as Matthew touched on, I think, just a little while ago, we have seen an increase in the EMD price above the sort of reported level of $860 for the first few months of the year. We have seen that, but we haven't seen, if you like, a proportionate increase in Cif Rotterdam drop down to EMD. Now sometimes that can take some time to do so, considering where we are in the chain, but we haven't seen that. But what I will say is that we haven't seen and we're not expecting any changes in the tax environment as a result of that. The tax scale is a graduated scale. So the proportion that the government take on the export tax and levies is effectively the same as the price goes up and as it comes down. So we're not expecting an additional tax ground, if you like, based on where the pricing is at the moment. But we'll obviously keep an eye on that as we move forward in [indiscernible].

Thank you, Luke. Next one, Matthew. What proportion of cost of production is fertilizer cost? Do you have alternative sources of fertilizer than typical ammonium nitrate-based products, e.g., non-chemically produced alternatives?

Yes. So to answer the first part of the question, you may have noticed in the earlier part of the presentation reviewing the cost the cost per tonne analysis, fertilizer cost accounts for a little bit more than 10%, about 11% of the total cost of production. In terms of alternative sources of fertilizer, we do produce quite a substantial amount of organic fertilizer as part of the milling process. So when we think about our integrated milling facilities and the fact we're entirely committed to this concept of zero waste, the empty fruit bunches that come out of the milling process are actually put through a composting facility to generate organic compost that goes back into the field. That's very much complementary to the use of inorganic fertilizers. So we do still use inorganic fertilizers alongside that compost. I presume that partly the question is motivated by some reporting about the fact that, again, broader global factors are leading to some increases in input costs and fertilizer has been referred to specifically recently. That may have an effect on us as we move forward. And one thing I would say, though, is that we had, prior to what's been happening in the Middle East, already secured our fertilizer tenders all the way through to the end of 2026, which gives us a degree of security in terms of price certainty for all of this year.

Thank you, Matthew. The next question is, as a company listed on AIM, are you eligible for the AIM tax benefits? I'll attempt a brief answer on that, correct me Finance Director if you have anything to add. But I think in short, we would say that we don't provide advice on this. However, we -- certainly, I have not known of any cases where an estate where there are [indiscernible] shares have not been eligible for the full AIM tax benefits. Of course, those benefits have changed since the chancellor's budget of whenever it was, which I'm sure most people will be familiar with. But as far as we are aware, we continue to be eligible, but you must seek your own separate advice on this. Now there are 2 or 3 questions on this particular topic. The first one is, would you please expand on your statement regarding the Indonesian task force known as Satgas and their purpose in Indonesia. The next one, I really want to make your note, Matthew, because [indiscernible] these all in together. The next one is related, it is with regard to potential challenges to legal titles, which have been referred to in the press. The question says, especially with local groups, small holders, is the land title issue a possible concern for M.P. Evans? And then we also had a question regarding whether there have been any challenge by Satgas to foreign companies like ourselves owning land in Indonesia? And I believe there was another question along those lines. But I think that's the -- that pretty much summarizes the extent of questions or gives a broad claim for the questions about this particular issue. So do you want to attempt to answer that?

By all means, yes. And I think this is an important issue. And understandably, there are bound to be questions about it given what's been happening. In terms of purpose, first of all, our understanding is that this task force, Satgas task force, are seeking out areas where development has not happened properly. Properly typically would mean where areas have been developed that should not have been developed because they are in areas that are more properly designated as forest areas and/or where there isn't proper title to the land, bringing in the sort of second question that's coming up about concerns with legal title to the land. Now in terms of then those second part to the questions that are being asked about to what extent do we see this as a concern for M.P. Evans, it's very important then to reflect back on what has been, for the very long term, our approach to responsible development. And we've always been extremely clear, and I'm sure you've heard this from us, those of you who participated before, our approach to ensure that the areas that we cultivate are indeed suitable for cultivation, and that's been a very, very long-standing approach that we've taken. We've also been extremely clear about ensuring that we have a fantastic legal team who work very, very hard to ensure that all the necessary titling process is done extremely diligently. Because of these 2 fundamental factors, whilst it would be foolish of me to sit here and tell you that we are sort of exempt from any review by an Indonesian task force, of course, we're not. We are, like everybody else, under their purview, of course, we are. But I think because of these fundamental factors, we feel that puts us in a robust position.

Yes, absolutely. Next question, can you give some color on the operational resilience of your mills if the current oil prices do not recede quickly, presumably, meaning if there were shortage and the extent to which we rely on oil, would you like to do that?

Yes. I mean in terms of the mills themselves, the answer to that is extremely resilient because slightly going back to this point about the zero waste nature of the mills, the mills themselves use a negligible amount of external power in order to run, genuinely a negligible amount of external power to run. The areas where we need to focus is, as I think Luke already mentioned, around transport. So actually transporting the crop to the mill and transporting the output from the mill. But the underlying mill operation itself uses a remarkably small amount of external power.

And sort of slightly linked of potential outcome from the recent crisis situation in the Middle East. There's a Bloomberg report that the biodiesel 40% blend could be disrupted by a shortage of methanol, a crucial element for the production of biodiesel due to the war in Iran as Indonesia has to import around 50% of its needs. Any views on this?

Being perfectly candid, this is not something that we've been made aware of. As far as we are aware, there is a continuing strong demand for palm as a feedstock into biofuel. And if anything, as we were saying, there is a continuing review of the potential to increase the mandate from the current B40.

Luke, you might take this one. I would have presumed that demand for certified product would be increasing. So why did the premium reduce?

Yes. I mean we would absolutely love the demand for sustainable product to increase. I think we have to reflect that there are only certain parts of the world that have been and continue to demand certified sustainable output. And as a result, because that has been falling a little bit, so too has a premium. If some markets, end markets where CPO and PK end up, particularly in Asia, were to start demanding sustainable output, then we are in a fantastic position to take advantage of that. And that is when you will see those premiums start to go up. So it really is a demand-driven element in terms of why those unit prices have fallen slightly.

Another one for you, Luke. What is the capital outlay for an additional seventh mill?

Well, notwithstanding all of the moving parts that are going on in the world right now, that would have any impact. But typically, it does depend on the size of the mill that you build. We have a range of mills. But if you were to build a sort of 60 tonne per hour mill, which is typically what our mills are, that said, I should say particularly on the seventh mill that would be at our Simpang Kiri estate, we may build a slightly smaller one there. So for a 30 tonne per hour mill, probably looking at somewhere in the region of $15 million to $20 million outlay for that.

And talking of costs, that's -- Matthew, do you want to take this one? How easy is it to buy land? Do you prefer crop you can improve planting yield or good quality land with no potential to improve? What price do you consider fair?