As highlighted, the push for bio fuel as alternate energy source by governments in various parts of the world is resulting in a structural change in demand-supply equilibrium for the entire vegetable oil complex. We have seen vegetable oil prices shooting up in the second half of FY2007, with prices of rapeseed oil, soy oil, and CPO reaching highs of USD904, USD870 and USD868 per MT respectively, basis Europe, in April/May 2007. CPO price, FOB Malaysia reached an all time high of RM2,764 per MT in June 2007 before settling between a range of RM2,400 to RM2,500. Because of the typical timing of CPO sales commitment in the industry, average annual prices tend to lag spot and forward prices in an up-cycle. Current fundamentals suggest a likely average price of about RM2,400 for FY2008, which will be 36% higher than the average price achieved for FY2007. Thus, our plantation segment should enjoy a hefty price driven booster to earnings for FY2008.

The downstream manufacturing segment of our palm oil business is also expected to perform well, with volume growth and the benefit of having a full year’s contribution from newly acquired Pan-Century.

As for the property segment, our products in the upper tier continue to be well received. Meantime, the broader base medium cost housing market is also expected to reflate, benefiting from new government incentives, pay increase for civil servants and positive sentiments.

Barring unforeseen circumstances, all segments are therefore expected to enjoy another good year and hence overall, the Group should achieve another year of record earnings in FY2008.

As we look beyond the current financial year, we must also be prepared to face the rapidly changing landscape in the palm oil industry, where both new opportunities as well as new challenges abound. On our part, we have continued to invest significantly for future growth. More importantly, we have been able to do this in a focused and disciplined manner that allows us to ride along with positive trends shaping the industry without taking on excessive risks. We have also been fortunate to have the opportunity to add on pieces that will create greater value to the whole. We have businesses that are in leading positions in their respective segments and these businesses put together, give us an integrated business model that provides us a unique dimension, added competitive edge and strategic capabilities. On a daily basis, we continue to ensure excellence in execution, focusing relentlessly on efficiency, productivity, and improving customer service and quality. Last but certainly not the least, we have a team of experienced and committed people who still very much aspire to reach greater heights. All of these give me the confidence that we are well positioned for the future.

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