For FY2012, the Group’s operating profit of RM2.4 billion was 16% lower than the previous year with reductions reported in all main business segments with the exception of our plantation division.

The plantation segment reported a 4% increase in operating profit to RM1,638.5 million for FY2012. The higher profit reported was due mainly to higher average CPO price realised of RM3,135/MT as compared to FY2011 average CPO price realised of RM2,945/MT. In addition, the better operating performance from our associate, Bumitama Agri Ltd (“BAL”), had also contributed to the plantation segment’s operating results.

Overall, the property division registered a decline in operating profit for FY2012 at RM704.0 million against RM770.1 million for the year. After excluding non-operating gains and losses such as investment properties revaluation gain of RM165.0 million for FY2012 and RM93.1 million for FY2011 respectively and gain on disposal from disposal of investment properties for FY2011 amounting to RM62.7 million, the underlying operating profit eased by about 12% to RM538.3 million due to lower contributions from our Malaysia and Singapore property development. However, the property division achieved higher average sales value per unit as progress was made on marketing higher value properties although there was a decline in the total number of units sold during the year. On the whole, our performance is still considered satisfactory compared to the industry.

Segmental Contribution To Operating Profit

2012 2011

The resource-based manufacturing division reported a profit of RM287.1 million for FY2012, 36% lower than the profit of RM446.0 million reported for FY2011. The division has reported a RM88.2 million loss on changes in fair value of derivative contracts for FY2012 whilst there was a fair value gain of RM6.4 million for FY2011. After excluding these fair value differences, the resourcebased manufacturing division’s profit reported a decline of RM64.3 million or 15% to RM375.3 million which is due to weaker performance from the refinery and specialty fats sub-segments, but partially offset by better performance from the oleochemical sub-segment. The weaker results were mainly attributed to stiff competition posed by the Indonesian resource-based manufacturers which have a cost advantage due to Indonesia’s preferential export duty tariff structure. Despite the shortcoming on the results, it is still considered satisfactory given the challenging environment the Group has to operate in.

The Group’s pre-tax profit of RM2,379.0 million was 17% lower than the results achieved in the previous year whilst net earnings declined by 20% to RM1,789.4 million. Apart from the effects from the aforementioned, the decline was also caused by translation loss on its foreign-currency denominated borrowings amounting to RM327.1 million as opposed to a translation gain of RM215.4 million from the previous year. The translation loss is however partially mitigated by a gain of RM124.5 million due to dilution of interest in our associate company, BAL, as a result of BAL’s listing exercise on the Singapore Stock Exchange (“SGX”). After excluding the translation gain and loss on foreign-currency denominated borrowings, gain from changes in interest in BAL, and other one-off items from both financial years, the normalised pre-tax profit for the Group would be 2% lower and the net profit would be similar to the previous year.

A more detailed review of the Group’s performance is covered under the section on “Management’s Discussion and Analysis” in the Annual Report.