Our principal activity is the production of crude palm oil through the ownership, management and development of sustainable oil-palm estates in Indonesia, together with the management and development of smallholder areas attached to some of those estates.
The Group’s strategy is to expand its production of crude palm oil and maintain a steady rate of growth in planted hectarage controlled by it. The Group deploys its operational expertise with the aim of generating substantial returns to shareholders through a sustained increase in dividends as a result of anticipated significant crops and production.
The Group has confidence in both the palm-oil sector and Indonesia as an area of operation to provide a basis for successfully delivering its strategy.
During 2016, the Group reached agreement to sell its share of the three-way Agro Muko joint venture, a mature 19,100 hectare Indonesian plantation project.
In accordance with the Group's strategy, the Group completed the purchase of PT Bumi Mas Agro ("BMA") in December 2017. BMA is on the east coast of Kalimantan and comprises almost 9,000 planted hectares, including smallholders. The young age profile of BMA's existing planting underpins the Group's intention to produce increasing volumes of crude palm oil and palm kernels.
Additionally, we are constantly evaluating opportunities to acquire pieces of land suitable for sustainable oil-palm development located near our existing estates. The Group seeks to bring its operating units to what the board considers an optimal size of 10,000 hectares with a palm‐oil mill. The Group seeks continually to maintain and, where possible, improve agronomic standards and productivity on its estates with a view to increasing crops of fresh fruit bunches and production of crude palm oil.
The sale in 2016 of our Australian operations and Agro Muko puts us in a strong position to expand our plantation hectarage, and so strengthen the growth in crop which we already expect from the projects developed over the last ten years. The proceeds from these disposals are expected to allow the Group to increase returns to shareholders through enhanced dividends, without compromising its ongoing programme of expansion and hence growth in value.