We were able to take advantage of the favourable business conditions to grow both our palm oil and property businesses and to register an outstanding set of results overall. Group operating profit (“EBIT”) grew by 69% to RM2.06 billion, with all core segments achieving record results.

Plantation earnings increased by 46% from RM636 million to RM927 million due largely to higher CPO prices which averaged RM1,759 per MT versus RM1,386 per MT the previous financial year. Crop production for FY2007 was 3.69 million MT which was only marginally up compared to the 3.67 million MT for the previous year. This was somewhat disappointing but nonetheless in line with the national industry trend because of the lingering effect of El Nino and biological tree-stressed experienced last year.

The downstream resource base manufacturing, comprising refining, oleochemicals and specialty fats, had an outstanding year, with a multifold increase in operating profit from RM128 million to RM405 million in FY2007. Good demand in target market segments, improvements in operating efficiencies, good price risk management and supply chain management all contributed to the sterling performance.

Segmental Contribution To Operating Profit

2007 2006

Our property segment had another good year, achieving an operating profit of RM598 million, compared to the previous year’s level of RM368 million, a 62% improvement. The results for FY2007 includes a revaluation or “fair value adjustment” gain of RM160 million on its investment properties on adoption of a new accounting standard, FRS 140. Excluding the aforesaid revaluation gain, the operating profit would be RM438 million, which would still be an increase over FY2006, by 19%. Although the broader base housing market remains somewhat sluggish, we have been able to sustain growth by focusing on the upper segment of the market and, as in FY2006, sales of “shop-offices“ in our twin townships in Puchong have been very well received. The good demand for such products is clearly due to the transformation of that locality into a vibrant commercial and retail hub for the rapidly growing community in Puchong and its surrounding districts. I note with pride and satisfaction that apart from the local banks, virtually all foreign commercial banks operating in the country have also chosen to utilise their limited quota of branch licences to open branches in Puchong; a clear endorsement of the current and growing potential of the area.

Overall, Group Pre-tax Earnings rose by 73% to RM1.99 billion whilst Net Earnings rose by 79% to RM1.48 billion in FY2007, the higher increase at net level is due to proportionately lower share of minority interests. The better operating performances all round have also resulted in an improvement to our Return On average Equity ( ROE ) from 15.2% in FY2006 to 21.5% in FY2007, a level that is in line with our objective of sustaining an average ROE target of 20%.

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

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