sarawak plantation berhadspb.listedcompany.com/misc/ar2007.pdfto be a leading player in the oil palm...

SARAWAK PLANTATION BERHADCOMPANY NO. 451377-P | INCORPORATED IN MALAYSIA

COMPANY NO. 451377-P INCORPORATED IN MALAYSIA

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www.spbgroup.com.my

SARAWAK PLANTATIONBERHAD

BUSINESS OFFICELot 1173 & 1174, Block 9, MCLD,

Miri Waterfront, Jalan Permaisuri, P. O. Box 661, 98007 Miri, Sarawak.

Tel: 085-413814Email: [email protected]

REGISTERED OFFICE8th Floor, Wisma Naim, 2½ Mile,

Rock Road, 93200 Kuching, Sarawak. Tel: 082-233550,

Email: [email protected]

C o v e r R a t i o n a l eThe main motif for the cover of our 2007 Annual

Report is the Oil Palm Frond. It is the leaves of

the frond that transform the sun’s energy into oil

palm fruits, and thus the frond is an excellent

metaphor for what we do – using our business,

technical and financial resources to transform

our land bank into valuable crude palm oil

(CPO) and related products. The photos at the

bottom of the cover describe the essence of our

business, from growing to harvesting to milling

of harvested fruit bunches to produce CPO.

C o n t e n t s

2 Cautionary Statement Regarding Forward-Looking Statements

3 Vision and Mission Statement

4 5-year Financial Highlights

6 Corporate Information

7 Corporate Structure

8 Organisational Structure

10 Corporate Profile

13 Message to Our Shareholders

21 Review of Operations

34 Board of Directors

41 Conflict of Interest

42 Key Management Personnel

43 Audit Committee Report

45 Statement on Corporate Governance

53 Statement of Internal Control

55 Corporate Social Responsibility

58 Investor Relations Activities

60 SPB in the News

62 Diary of Corporate Events

66 Outlook for the Palm Oil Sector

68 Statement on Directors’ Responsibility

69 Financial Statements

117 Analysis of Shareholdings

120 Top 10 Properties

122 Notice of Annual General Meeting

127 Form of Proxy

Cautionary Statement Regarding Forward-Looking Statements

This Annual Report contains some forward-looking statements in respect of the Company’s

financial condition, results of operations and business. These forward-looking statements

represent the Company’s expectations or beliefs concerning future events and involve known

and unknown risks and uncertainties that could cause actual results, performance or events to

differ materially from those expressed or implied in such statements. Readers are hereby

cautioned that a number of factors could cause actual results to differ, in some instances

materially, from those anticipated or implied in any forward-looking statements. In this

respect readers must therefore not rely solely on these statements in making investment

decisions regarding Sarawak Plantation Berhad. The Board and the Company shall not be

responsible for any investment decisions made by the readers in reliance on those

forward-looking statements. Forward looking statements speak only as of the date they are

made, and it should not be assumed that they have been reviewed or updated in the light of new

information or future events that would arise in the interim of the publication of this Annual

Report and the time of reading this Annual Report. The Board has however established a Risk

Management Committee to mitigate as much as practicably possible the consequences of any

uncertainties and contingencies. Further details can be found in the Statement on Corporate

Governance on pages 45 to 52 of this Annual Report.

2

To be a leading player in the oil palm business and be the most efficient and profitable plantation company in Sarawak.

We are committed to

promote continuous growth and value creation via expansion and diversification.

maximize shareholders’ returns and increase shareholders’ value.

enhance operational efficiency and effectiveness through technology and modernisation.

strive for sustainable, responsible and caring practices through good corporate governance practices and contribute to corporate social well being.

Code of EthicsBe quality conscious

Be effective and efficient Be proactive and positive

Be professional Be productive

Be trustworthy Be caring

People DevelopmentTo strengthen staff core capabilities

Enhance management capabilities of managers Develop managers for business growth/expansion

Promote self-development and learning culture

Management Order To strengthen teambuilding To maintain high safety standards To enhance customer satisfaction To create a learning organisation To be loyal to organisation To be health conscious To inculcate creativity through lateral thinking

Quality Programme & Continuous Improvement Staff wellness Environmental friendly Safety

Our VisionOur Mission

Corporate Culture

3

SARAWAK PLANTATION BERHAD | ANNUAL REPORT 2007

5 - y e a r F i n a n c i a l H i g h l i g h t s

4

# On 135,000,000 ordinary share of RM1.00 each ( dividends declared prior to listing of SPB)

* Computed as if the bonus issue of 115,000,000 ordinary share of RM1.00 each was effected throughout the financial years.

** Less than 0.1

Year 2003 2004 2005 2006 2007

Revenue (RM’000) 129,822 162,231 149,686 142,372 244,009

Profit before tax (RM’000) 43,298 61,006 17,826 67,268 82,768

Net Profit after tax and Minority Interest (RM’000) 31,683 46,824 10,658 63,758 68,235

Total assets (RM’000) 459,768 485,331 484,651 510,975 614,280

Net Tangible assets (RM ‘000) 345,097 391,670 402,077 340,835 480,532

Shareholders’ equity (RM’000) 345,097 391,670 402,077 340,835 480,532

Total number of shares (’000) 135,000 135,000 135,000 135,000 280,000

Basic earnings per share (sen) 13* 19* 4* 26* 26

Gross dividend per share (RM) 0 0 0 1.19# 0.15#

Net tangible assets per share (RM) 2.56 2.90 2.98 2.52 1.72

Gearing ratio (times) 0.1 0.1 0** 0.2 0.1

25,0000 50,000 75,000 100,000 125,000 150,000 175,000 200,000 225,000 250,000

Revenue (RM ’000)

2003

2004

2005

2006

2007

129,822

162,231

149,686

142,372

244,009

90,00080,00070,00060,00050,00040,00030,00020,00010,0000

Profit Before Tax (RM ’000)

2003

2004

2005

2006

2007

61,006

17,826

67,268

82,768

10,0000 20,000 30,000 40,000 50,000 60,000 70,000

Net Profit After Tax & Minority Interest (RM ’000)

2003

2004

2005

2006

2007

31,683

46,824

10,658

63,758

68,235

50,0000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000

Net Tangible Assets (RM ’000)

2003

2004

2005

2006

2007

345,097

391,670

402,077

340,835

480,532

50,0000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000

Shareholders’ Equity (RM ’000)

2003

2004

2005

2006

2007

345,097

391,670

402,077

340,835

480,532

50 10 15 20 25 30

Earnings Per Share (sen)

2003

2004

2005

2006

2007

13*

19*

4*

26*

26

43,298

5


* Computed as if the bonus issue of 115,000,000 ordinary share of RM1.00 each was effected throughout the financial years.

Business OfficeLot 1173 and 1174, Block 9, MCLD Miri Waterfront, Jalan Permaisuri, P O Box 661, 98007 Miri, Sarawak, Malaysia.Tel: 6 085-413814 (12 lines)Fax: 6 085-416192E-mail: [email protected]

SolicitorsALVIN CHONG & PARTNERS ADVOCATESLot 176 and 177, 2nd Floor, Jalan Song Thian Cheok, 93100 Kuching, Sarawak, Malaysia.Tel: 6 082-410111

Share RegistrarTENAGA KOPERAT SDN BHD20th Floor, Plaza Permata, Jalan Kampar, Off Jalan Tun Razak, 50400 Kuala LumpurTel No.: 6 03 40416522

AuditorPRICE WATERHOUSE COOPERS (AF-1146)CHARTERED ACCOUNTANTS9th Floor, Bangunan BINAMAS, Jalan Padungan, P.O. Box 2864, 93756 Kuching, Sarawak, Malaysia.Tel: 6 082-413957/4133958

Principal BankerCIMB BANK BERHAD 1st Floor, Lot 2690, Block 10 KLCD, 3rd Mile, Rock Road, 93250 Kuching, Sarawak, Malaysia.Tel: 6 082 238507/238075

Stock Exchange ListingMAIN BOARD on 28 August 2007Sector: PlantationStock Code: 5135Stock Name: SWKPLNT

ChairmanDatuk Hasmi Bin Hasnan

Deputy ChairmanDato Sri Ahmad Tarmizi Bin Haji Sulaiman

Group Managing DirectorHaji Mohamad Bolhair Bin Reduan

Executive DirectorsHaji Bolhan Bin Berawi (Finance)Haji Abdul Hamid Bin Ibrahim (Plantation)Haji Yahya Bin Haji Daud (Technical Services)

Non-IndependentNon-Executive DirectorsDatuk Abdul Hamed Bin SepawiHaji Chaiti Bin Haji Bolhassan

IndependentNon-Executive DirectorsYB Haji Hamden Bin AhmadDatu Haji Mohammed Sepuan Bin AnuAzizi Bin MorniPolit Bin HamzahUmang Nangku Jabu

Company SecretariesTrina Tan Yang Li (0666-KT032)

Bong Siu Lian (MAICSA 7002221)

Registered Office8th Floor, Wisma Naim, 2½ Mile, Rock Road, 93200 Kuching, Sarawak, Malaysia.Tel: 6 082-233550/233560/233570Fax: 6 082-256560Email: [email protected]


C o r p o r a t e I n f o r m a t i o n

SARAWAK PLANTATION BERHAD(Company No. 451377-P) (Incorporated in Malaysia)

100%

SARAWAKPLANTATION AGRICULTURE

DEVELOPMENT SDN BHDCultivation of oil palm and processing of CPO and PK

100%

SARAWAK PLANTATIONPROPERTY HOLDING SDN BHD

Property investment

60%

100%

100%

75%

SPB PELITA SUAI SDN BHD(Formerly known as Titian Tepat Sdn Bhd)

Cultivation of oil palm

95%

SARAWAK PLANTATION SERVICES SDN BHDProvision of management, agronomic, consultancy and marketing services

100%

SPS TRADING SDN BHDMarketing agent and dealer in water tank and farm machinery

35%

WONDERLAND TRANSPORTSERVICES SDN BHDProvision of transportation services

C o r p o r a t e S t r u c t u r e


7

LIONSUN TIMBER SDN BHDDormant

AZARIA SDN BHDDormant

CAYAMAS SDN BHDDormant

O r g a n i s a t i o n a l S t r u c t u r e

8


INTERNAL AUDIT

BOARD OF DIRECTORS

GROUP MANAGING DIRECTOR

BOARD EXECUTIVE COMMITTEE

REMUNERATION AND NOMINATION COMMITTEE

RISK MANAGEMENT COMMITTEE

BOARD AUDIT COMMITTEE

9

PROCESSING & ENGINEERING

CORPORATE AFFAIRS

PLANTATION OPERATION

CORPORATE LEGAL & SECRETARIAL

INFORMATION TECHNOLOGY

BIO-ENGINEERING & LABORATORY

MARKETING SERVICES

CORPORATE FINANCE & PLANNING

BUSINESS DEVELOPMENT & PROJECT MANAGEMENT

HUMAN RESOURCE & ADMINISTRATION


C o r p o r a t e P r o f i l e

10

Sarawak Plantation Berhad (SPB) is one of the pioneer

players in the oil palm industry in Sarawak. SPB currently has a total

landbank of 51,161 Ha. SPB through its wholly owned subsidiary,

Sarawak Plantation Agriculture Development Sdn Bhd (SPAD) owns

thirteen (13) oil palm estates with a total planted area of 25,449 Ha as at

31 December 2007. Further, in response to the State Government’s

policy on Native Customary Rights (NCR) land development, SPB

through its subsidiary, SPB Pelita Suai Sdn Bhd (SP Suai), formerly

known as Titian Tepat Sdn Bhd, has developed and fully planted 1,855

Ha of NCR land in Sarawak into oil palm plantation.

SPB’s core business activities are as follows:

(1) develop, cultivate and manage oil palm plantations on a large scale

(2) milling of fresh fruit bunches (FFB) into crude palm oil (CPO) and

palm kernel (PK)

(3) plantation management services

(4) act as an investor to cultivate NCR land into oil palm plantations

(5) seed garden supplying high yield seeds and seedlings

(6) laboratory services for oil palm

11

We were incorporated in Malaysia on 28 October 1997 as a

private limited company under the name of Sarawak Plantation

Sdn Bhd and commenced business the same year. We were

converted into a public company on 1 February 2000 and

assumed our present name. Sarawak Plantation Berhad (SPB)

was specially incorporated as the vehicle company for the

privatisation of Sarawak Land Development Board’s (SLDB)

assets.

SLDB is a body corporate established by the Sarawak Land

Development Order, 1972, under the Land Development

Ordinance 1956. The primary functions of SLDB are the

development of large-scale agriculture in the form of oil palm

plantations in Sarawak with the objective of creating

employment opportunities, increasing income and improving the

standard of living of the rural communities.

The privatisation of SLDB’s assets, comprising oil palm

plantations, milling facilities and related assets, was effected

through the transfer of SLDB’s assets to SPB Group of

Companies. With this privatisation, all principal assets of SLDB

are now owned and managed by Sarawak Plantation Berhad

(SPB), Sarawak Plantation Agriculture Development Sdn Bhd

(SPAD) and Sarawak Plantation Property Holdings Sdn Bhd

(SPPH).


Collectively, the Sarawak Government through the

State Financial Secretary (SFS) and other State

Institutions hold substantial shares in SPB. In addition,

some of our substantial shareholders and several of our

Directors have credible standing in the business

community in Sarawak, which will be valuable factors

to enhance the competitiveness of SPB and its

expansion and development in Sarawak.

12

BUSINESS OFFICELot 1173 and 1174, Block 9, MCLD Miri WaterfrontJalan Permaisuri P.O. Box 661, 98007 Miri, SarawaK

REGISTERED OFFICE8th Floor, Wisma Naim, 2 ½ Mile, Rock Road, 93200 Kuching, SarawakTel No.: 082-233550

LIMBANG

MIRI

BINTULU

KAPIT

MUKAH

SIBU

SARIKEI

BETONG

SRI AMANSAMARAHAN

KUCHING

Lundu

Lubuk Antu

Kanowit

Bintangor

LAOS

VIETNAM

PHILIPPINES

SABAHBRUNEI

SINGAPORE

INDONESIA

PENINSULAMALAYSIA

THAILAND

Oil Palm Estate

Teak Plantation

Palm Oil Mill

Laboratory

LEGEND

SUNGEI TANGIT (1,726 ha)3 KM off KM 71 Miri/Bintulu Road

LADANG 3 (2,287 ha)KM 77 Miri/Bintulu Road

OPERATION CONTROLLER OFFICELadang 3

NIAH PALM OIL MILL (NPOM)2 KM off KM 75 Miri/Bintulu Road

LADANG KOSA (2,863 ha)KM 78 Miri/Bintulu Road

SEED GARDEN LABORATORY4KM off KM 55 Miri/Bintulu Road

BUKIT PENINJAU (2,203 ha)8KM off KM 55 Miri/Bintulu Road

LADANG SUREA (1,838 ha)4KM off KM 55 Miri/Bintulu Road

SUBIS 2 (2,763 ha)1KM off KM 87 Miri/Bintulu Road

SUBIS 3 (2,580 ha)6KM off KM 87 Miri/Bintulu Road

SAWAI TEAK PLANTATION (2,726 ha)14 KM off KM 106 Miri/Bintulu Road

SPB PELITA SUAI ESTATE (2,128 ha)(formerly known as Penan Jambatan Suai)13 KM off KM 108 Miri/Bintulu Road

MELUGU (1,335 ha)KM 16, Sri Aman/Serian Road

KUCHING LABORATORY (1.12 ha)Lot 2497, Blk 14, Salak LD, Jalan

Sultan Tengah, Petra Jaya, Kuching

MUKAH 1 (3,947 ha)11KM off KM 85 Sibu/Bintulu Road

SRI DUAN (3,038 ha)27KM off KM 85 Sibu/Bintulu Road

Land aquired from LAKMNS (7,620 ha)Mukah and Bawan LD

SPB PELITA MUKAH 5 & 6 (5,446 ha)Mukah

MUKAH 3 (2,726 ha)20KM off KM 85 Sibu/Bintulu Road

MUKAH PALM OIL MILL (MPOM)13KM off KM 85 Sibu/Bintulu Road

SPB PELITA WAK PAKAN (5,340 ha)Sarikei

TULAI (595 ha)3 KM off KM 20 Sibu/Sarikei Road

L o c a l i t y M a po f O u r O p e r a t i o n s , B u s i n e s s a n d R e g i s t e r e d O f f i c e

M e s s a g e t o O u r S h a r e h o l d e r s

On behalf of the Board of Directors it gives us great pleasure to present your

Company’s Annual Report for the year ended 31 December 2007, the first

since our listing on the Main Board of Bursa Malaysia Securities Berhad.

FINANCIAL PERFORMANCE

The Company recorded an increase in revenue to RM244.0 million in the

period under review, compared to RM142.4 million for 2006. Profit before tax

was RM82.8 million, compared to RM67.3 million for 2006, profit attributable

to shareholders was RM68.2 million compared to RM63.8 million in 2006, and

basic earnings per ordinary share was 26.22 sen compared to 25.50 sen in 2006.

These excellent financial results for 2007 are almost exactly in line with our

profit forecast as noted in our listing prospectus.

REVENUE(Million)

PROFIT BEFORE TAX(Million)

PROFIT ATTRIBUTABLE TO SHAREHOLDERS

(Million)

EARNINGS PERORDINARY SHARE

(Sen)

RM142.4 m2006 RM244.0 m2007

RM67.3 m2006 RM82.8 m2007

RM63.8 m2006 RM68.2 m2007

25.50 sen2006 26.22 sen2007

13


Dividends

The Board is recommending a Final Gross Dividend of 7.20 sen for the financial year ended 31

December 2007, which is subject to shareholders’ approval. Together with the Interim Gross

Dividend of 6.75 sen already declared and paid, this represents a distribution to Shareholders

of RM28.9 million after tax, or 40% of the Group’s profits for the financial year ended 31

December 2007. The dividend yield is 4.41% (Gross) or 3.27% (Net) based on the year-end

share price of RM3.16 and in the Board’s opinion offers adequate short term financial returns

for our investors whilst maintaining reasonable cash reserves for future growth, including

expansion of the land bank, expansion and upgrading of plant and equipment, and other

investments outlined in Prospects on page 17 of the Annual Report.

Our low financial gearing gives us considerable ease of access to external financing to fund

expansion programmes. Therefore we are able to distribute a greater proportion of our

operating profits and other sources of cash as dividends to shareholders. We foresee this trend

continuing in the medium term.

Creation of Shareholders’ Value

The primary objective of all of SPB’s activities is the creation of added value for our

shareholders. Investors buying the Company’s Stock at its initial offer price on 28th August

2007 have seen their investment grow from RM3.00 per share to RM3.72 per share (May 09

2008).

Taking into account this substantial increase in share price, as well as total gross dividends of

13.95 sen, shareholders have enjoyed a financial gain of RM0.8595 per share, a 28% return on

their initial investment, in just over 8 months.

14


CORPORATE HIGHLIGHTS

Listing on Main Board of Bursa Malaysia Securities Berhad

Our highly successful listing was the major highlight of the year for everybody involved with

SPB. The IPO was heavily oversubscribed and achieved a first day premium of RM0.20, with

shares closing at RM3.20 at the end of the first day’s trading. Our sincere thanks are due to all

concerned.

15


16

Signing of Joint Venture Agreements with Pelita Holdings

On 28th November 2007 we signed two Joint Venture agreements with Pelita Holdings Sdn Bhd (Pelita) to develop

lands of Sarawak natives held under Native Customary Rights into oil palm plantations. One Joint Venture involves a

gross area of approximately 5,340 hectares with a plantable area of 3,204 hectares at Wak Pakan, Sarikei, Sarawak. The

other involves two parcels of land known as Mukah 5 & 6, Mukah Division Sarawak with a gross area of

approximately 5,446 hectares and a plantable area of 3,268 hectares. These Joint Ventures not only serve to expand our

land bank, they also benefit the native landowners, who are 30% shareholders in the Joint Venture through Pelita.

Signing of Sales and Purchase

Agreement with LAKMNS

On the same day, our wholly owned subsidiary

Sarawak Plantation Agriculture Development

Sdn Bhd (SPAD) signed three conditional Sale

and Purchase Agreements (SPA) with

Lembaga Amanah Kebajikan Masjid Negeri

Sarawak (LAKMNS) for four parcels of

plantation land covering 7,620 hectares for a

total consideration of RM19.05 million. These

SPA became unconditional on 22 April 2008.


17

Risk Factors

Economic and Political Background

The Malaysian economy is expected to enjoy stable

market conditions throughout the coming financial year.

Malaysian authorities such as Bank Negara Malaysia and

Malaysian Institute Economic Research (MIER), as well

as reputable international observers such as The

Economist, have discounted the likelihood of a potential

US recession having a major impact. The recent General

Election results have had a less destabilizing effect than

many commentators predicted. Increased opposition calls

for transparency in both government and private sectors

should benefit ethical and accountable companies such as

SPB.

Crude Palm Oil (CPO) Prices

As a pure plantation concern, our earnings are highly

sensitive to fluctuations in CPO prices. However the

market for edible oils and feedstock is currently buoyant,

and is expected to remain so for the foreseeable future.

OPERATIONAL HIGHLIGHTS

Key operational highlights were the expansion of our land bank, as outlined above, increase of

mature hectarage under cultivation by over 1,000 hectares, and further implementation of our Good

Agronomic Practices (GAP) programme. See the Review of Operations in the next chapter for

further details.

PROSPECTS FOR 2008 AND BEYOND


18

Exchange Rate

Appreciation of the Malaysian Ringgit will increase the price competitiveness of soyabean oil

and negatively impact CPO prices, but $US denominated raw materials such as fuel and

fertiliser will become cheaper, thus reducing production costs. The converse occurs should the

RM depreciate. Given the mitigating factor of fuel and fertiliser costs, modest currency

fluctuations are likely to have only moderate impact on the Company’s profitability.

Crude Oil Prices

Crude oil prices are expected to appreciate during the year, and have already risen to a record

high of $US125 per barrel (9th May 2008), with some analysts (notably Goldman Sachs)

predicting an eventual rise to $US200 per barrel. This will almost certainly translate into

higher costs for fertiliser and other agro-chemicals which are derived from crude oil, thus

increasing production costs. However, higher crude oil prices tend to drive up CPO prices as

CPO competes with crude oil as a feedstock for many industries, and palm oil based bio-diesel

is an increasingly popular alternative energy source.

Outlook

Given the benign profile of the risk factors outlined

above, the outlook for the short and medium term is

very positive, for a variety of reasons. See also the

chapter on Outlook for The Oil Palm Industry.

Young Oil Palm Age Profile

Over 30% of our oil palms are either immature or young

mature (less than 7 years). As these palms attain

maturity, our CPO yields are poised to improve

compared to those of 2007, whose 3.2MT/ha

represented a 4-year low in the yield cycle.


19

Higher CPO Prices

As outlined in the Risk Factors above, CPO prices are set

to rise steadily over the foreseeable future, with

concomitant growth in profit margins

New Areas Coming Into Maturity

We intend to plant 7,000 ha with oil palms in 2008 and

10,000 ha in 2009, which will partially mature and begin

to yield FFB by 2011 and 2012 respectively.

Increased Milling Capacity

The opening of our upgraded RM61 million Niah Palm Oil

Mill now gives us the capacity to process the entire yield

of fresh fruit bunches (FFB) from our own plantations. It

will also be able to process FFBs from local smallholders,

providing both additional revenue and a valuable

community service.

Independent Opinions

Kenanga Research, the highly respected analysis arm of

Kenanga Investment Bank Berhad, has forecast a 3-year

cumulative annual growth rate (CAGR) in net profit of

21% for SPB, using conservative assumptions.

Anticipated Results

Based on the activities, initiatives and market conditions

outlined above, and barring any unforeseen

circumstances, the Board of Directors is confident of

achieving favourable results for 2008 and beyond.


20

ACKNOWLEDGEMENTS

We would like to convey our sincerest thanks to our fellow directors and all the employees of Sarawak

Plantation Berhad and its subsidiary companies for their hard work and professionalism, We would

also like to thank all the State and Federal Government Ministries, Departments, Statutory Bodies and

Regulatory Agencies who have offered us such close cooperation and support during 2007. Heartfelt

thanks are also due to our customers, joint venture partners, sub-contractors, consultants,

professional advisors and service providers, whose unstinting efforts and support have helped our

Company to perform so well.

We would like to reserve the warmest thanks of all for our fellow shareholders. We are a newly listed

company that is only just beginning to realize its potential in the international plantation sector, and

we are delighted that you have such strong faith in our abilities to achieve that potential.

Thank you

Datuk Hasmi Bin Hasnan

Chairman

Haji Mohamad Bolhair Bin Reduan

Group Managing Director


21


R e v i e w o f O p e r a t i o n s

OIL PALM PLANTATION

We are one of the main players in oil palm plantation in Sarawak.

Land acquisition and joint ventures entered into on 28 November

2007 have increased our landbank of 32,755 Ha to 51,161 Ha.

Logistic costs are kept low as our plantations are close to major

roads within easy reach of Miri, Mukah and Bintulu, key urban

locations with good transhipment facilities for fertilizers and

fresh fruit bunches (FFB).

For the year 2007, we produced a total volume of 338,090 mt. of

FFB. These FFB were milled by our own palm oil mills at Niah

and Mukah, which are located close to our plantations.

10.6%OTHERS5,451 Ha

36.0%NEW LAND

ACQUISITION18,406 Ha

53.4%OIL PALM27,304 Ha

Area Statement

As at 2007, our Group has a total planted area of 27,238

Ha (weighted average) comprising 17% immature and

83% mature palms which was an increase of 348 Ha.

compared to 2006.

In 2007, there was an increase of 1,069 Ha. for mature

area. The increase were due to palms coming to

maturity during the review period, increasing the total

matured oil palm area to 22,551 Ha. compared to

21,482 Ha. in 2006. 0

5,000

10,000

15,000

20,000

25,000

30,000

(WHa)

OM - Old MaturePM - Prime MatureYM - Young MatureIMM - Immature

2003 2004 2005 2006 2007

4,148 3,9335,148 5,408 4,687

6,0755,908 5,439

3,443

11,39512,031

13,482 16,7074,713 2,999

2,561 2,401

6,690

9,550

5,895

22


0

100,000

200,000

300,000

400,000

(MT)

2003 2004 2005 2006 2007

24,207

58,416 61,79365,807

29,501

49,730

176,678

247,190262,049 284,382

278,960

Unit 2003 2004 2005 2006 2007

PLANTED HECTARAGEOil Palm - Mature Wha 22,135 22,183 20,938 21,482 22,551 - Immature Wha 4,148 3,933 5,148 5,408 4,687 Total planted hectarage Wha 26,283 26,116 26,086 26,890 27,238

MATURE HECTARAGEOld Mature Wha 5,895 4,713 2,999 2,561 2,401Prime Mature Wha 9,550 11,395 12,031 13,482 16,707Young Mature Wha 6,690 6,075 5,908 5,439 3,443Mature Hectarage (Gross) Wha 22,135 22,183 20,938 21,482 22,551Less: Estates Roads Wha 1,390 1,391 1,312 1,347 1,413Mature Hectarage (Net) Wha 20,745 20,792 19,626 20,135 21,138

FFB PRODUCTION VOLUMEOld Mature MT 88,238 76,485 46,458 22,992 29,501Prime Mature MT 176,678 237,042 228,659 249,405 276,151Young Mature MT 58,416 61,793 65,807 49,730 24,207Underplanting MT 0 10,148 33,390 29,555 8,231Total MT 323,332 385,468 374,314 351,682 338,090 YIELDOld Mature MT/Wha 15.97 17.32 16.53 9.58 13.11Prime Mature MT/Wha 19.74 22.20 23.25 19.74 18.16Young Mature MT/Wha 9.31 10.85 11.87 9.75 7.49Average MT/Wha 15.59 18.54 19.07 17.47 15.99

5 years FFB record by age profile

88,238

76,485 46,45822,992

OM - Old Mature

PM - Prime Mature

YM - Young Mature

23


0

100,000

200,000

300,000

15

20

25400,000

(MT) (MT/Ha)

MT MT/Ha

2003 2004 2005 2006 2007

323,332

15.59

18.54

17.4719

.07

15.99

385,468374,314

351,682 338,090

Compared to 2006, FFB Production decreased by

4% to 338,090 mt. in 2007. The decrease was mainly

brought about by :-

1. Effect of unfavourable weather conditions in

2005 and spill over of cyclical production stress

to the palms experienced in 1st half of 2007.

2. Lower old mature hectarage for 2007 because of

replanting programme.

FFB Production And Yield Pattern 2003 To 2007

24


Estate MechanizationLabour shortage continues to haunt the industry as a whole and Sarawak

Plantation Berhad is no exception. Job vacancies for oil palm harvesters

and general workers remain to be filled. The response by locals to these job

opportunities is not encouraging.

Major estate activities were carried out manually and the operations are

laborious. In order to overcome the labour shortage, SPB estates have over

the years done major improvements and upgrading of its infrastructure in

the estates to cater for mechanization.

Todate, 75% of our plantation area has been fully mechanised and our

main focus is on the following activities :-

Infield FFB Collection. Mainline Transport.

Fertilizer Application Spraying Operations.

Through mechanisation productivity of harvesters or workers increased

ranging from 50% - 100%.

Expansion/Future Plans

SPB will continue to expand its

mechanisation program to all

existing and future developed

estates. This is to reduce labour

dependence, especially on foreign

workers, and reduce estate direct

cost of production.

Mechanization under SPB Estates

Cost Saving

0

10

20

30

2007

12

30

18

5

MainlineManuring

Infield Collection

Spraying

Productivity

0

5,000

10,000

15,000

20,000

2003 2004 2005 2006 2007

00 1,200

10,2

50

0008,

650

0005,

500

04,

675

3,20

013

,649

6,10

08,54

09,

550

17,3

07

Mainline ManuringInfield Coll Spraying

0

10

20

30

40

Conventional Mechanisation

Manuring

Harvesting

Spraying

35

5

15

29

3

7

(MT & Ha)

(Ha)

(RM/MT)

25


Good Agronomic Practices (GAP) are in place. The principle focus of GAP is on manuring, weeding, water management, disease control and Integrated Pest Management (IPM), with the aim of enhancing FFB production.

IPM as practiced in our estates includes planting of beneficial plants such as Cassia cobanensis, Turnera subulata and Ipomea sp. In 2008, Antigonan leptopus will be introduced in our estates.

Canopy management was introduced in November 2006, which focuses more on leaf area index (LAI) and maintaining optimum number of fronds for satisfactory palm growth and yield.

In line with our Group’s continuous effort on yield improvement, the site specific application of various fertilizers was introduced to minimise surface run-off losses on hilly areas and slow release fertilizer in peat soil areas. Proper nutrient management and effective techniques of fertilizer application are practised. Global Information System (GIS) applications are being introduced as a precision agriculture practices, providing accurate palm counts and up-to-date information on palm health and vitality.

For 2007, improved frond placement has been practiced to retain water and improve soil fertility. In addition, Empty Fruit Branch (EFB) is applied on the hilly terrain areas to conserve moisture in order to improve nutrient uptake. Legume Cover Crops (LCC) such as Mucuna bracteata have also been planted in our estates and have proven to be effective in reducing soil erosion and nutrient losses and in suppressing weed growth.

Good Agronomic Practices

26


During the year under review, remote sensing was implemented as a pilot project at our Ladang Surea Estate which covers individual tree counting, road and track network mapping, database establishment, disease mapping, drainage and flood-proned area mapping and fertilizer management.

The implementation of this remote sensing will enhance our operational efficiency and effectiveness, ultimately reduce our cost and increase our productivity.

In 2001, we received 215 heads of cattle under the “Pawah” scheme from the Department of

Agriculture (DOA) Sarawak. As at December 2007, the number of cattle has increased to 1,515

heads through normal calving process and expansion of project sites to six oil palm estates

within the Group. In 2007, a total of 104 heads were returned to DOA as payback and another

83 heads were sold.

Cattle integration has to some extent assisted the estates in its integrated weed management

programme and will eventually contribute to weeding cost reduction once unwanted noxious

weed not consumed by the cattle have been eradicated. Decreased use of herbicides will also

enhance our efforts towards achieving good agriculture and farm (GAF) practices and

standards.

Through systematic grazing, good animal husbandry and good estate management practices,

the calving rate achieved for the year was 46%, with a low mortality rate of 2.28%. Therefore

this is an economically viable project in the long term and also provides a safe and

environmentaly friendly weeding practice which is in line with the principle of GAF practice

and is aimed at reducing Malaysia’s food import bill as spelt out under the third National

Agriculture Policy (NAP3).

Cattle Integration

27


Seed Garden

Our Seed Garden started to produce D x P oil palm seeds in 2007 with the production of 1.2

million seeds and having the capacity to increase to 4 million by 2011. The elite mother palms

were supplied in collaboration with Malaysian Palm Oil Board (MPOB) to produce high FFB

yield, high oil to bunch ratio and low height increment.

We also participated in the International Oil Palm Comparative Trial organised by MPOB from

2007 to determine our seed performance as compared to other seed producers in the industry.

Another 30 hectares extension of the seed garden is in progress to further increase the

production to meet the seed requirement both internally and from third parties. A progeny trial

of DxP planting materials is being planted on 74 hectares in various locations to study the G x E

interaction.

The application for SIRIM certificate is in progress and is expected to be approved in the third

quarter of 2008. The characteristic of our selected mother palms is above SIRIM standard at

>180kg/palm for dura parent palms.

28


MILLING OPERATION

Overview

Currently we have two (2) mills, namely Mukah Mill located in the Mukah Division and Niah Mill, located

in the Miri Division.

Mukah Mill was commissioned in 1981 with a capacity of 25 MT/hour. This mill was upgraded to 60

MT/hour in 2004, which represents its current capacity.

Niah Mill was commissioned in 1976 with a capacity of 30 MT/hour. Through the years, it was upgraded

to 60MT/hour. In 2007, this mill was upgraded to 120 MT/hour. The upgraded Niah Mill was

commissioned in December 2007, and officially launched by the Chief Minister of Sarawak on 27 February

2008.

With the upgrading of Niah Mill to 120 MT/hour capacity, the combined capacity of both mills is currently

180 MT/hour.

Logistic costs are kept low as our mills are close to major roads within easy reach of Miri, Mukah and

Bintulu, key urban locations with strong customer bases, good transhipment facilities and most

important, major buyers in Bintulu.

Special emphasis has been placed on converting empty fruit bunches to produce compost in order to

reduce fertilizer costs and improve soil condition in estates neighbouring our palm oil mills.

Milling efficiency is maintained at both mills and production losses are controlled within the industry

acceptable level.

Both mills process both our own crops and third party crops. For year 2007 the FFB throughput for the

Niah Mill and Mukah Mill were 313,787 MT and 89,943 MT respectively. The third party crops represent

about 22% of total crops processed at Niah Mill and 31.5% of total crops processed at Mukah Mill.

29


Quality ControlWe place great emphasis on the quality of the oil palm products that we produce. The milling quality control begins with the grading of FFB to ensure that the FFB quality is in line with MPOB’s recommended guidelines and practices. Our graders are trained to identify the various categories of FFB classifications. The results will provide feedback to the estates for them to control FFB quality in the field. Co-ordination and co-operation between our estates and our mills is vital for achieving good Oil Extraction Rate (OER).

The mills adopted the following measures to ensure quality products:

(i) Minimum FFB handling at loading ramp to avoid damage to the fruits.

(ii) Adequate sterilisation of FFB by cycle selection based on crop. A shorter sterilisation time is selected for overripe and small bunches;

(iii) Close monitoring of the processing lines to ensure minimal losses.

(vii) All machineries are under stringent maintenance programmes to ensure operational efficiency.

Samples of CPO and PK produced are taken from the mills regularly and are analysed by our laboratories in accordance with guidelines published by MPOB. This is to ensure that the CPO and PK produced comply with relevant standards and technical specifications, especially the levels of acidity, moisture and impurities in the CPO and PK.

Year ended 31 December 2003 2004 2005 2006 2007

Intake of FFB (MT)

Niah Mill 252,618 317,314 329,238 314,743 313,787

Mukah Mill 102,007 97,748 99,813 91,161 89,943

Total 354,625 415,062 429,051 405,904 403,730

Output of CPO (MT)

Niah Mill 53,094 67,311 69,722 65,581 63,577

Mukah Mill 19,090 18,779 19,422 18,497 17,450

Total 72,184 86,090 89,144 84,078 81,027

Output of PK (MT)

Niah Mill 13,463 15,941 17,623 15,939 15,440

Mukah Mill 5,308 5,119 5,649 4,885 3,998

Total 18,771 21,060 23,272 20,824 19,438

Oil average extraction rate (“OER”) (%)

Niah Mill 21.02 21.21 21.18 20.84 20.26

Mukah Mill 18.71 19.21 19.46 20.29 19.40

Weighted average 20.36 20.74 20.78 20.71 20.07

Kernel average extraction rate (“KER”) (%)

Niah Mill 5.33 5.02 5.35 5.06 4.92

Mukah Mill 5.20 5.24 5.66 5.36 4.44

Weighted average 5.29 5.07 5.42 5.13 4.81

Production records 2003 to 2007

The production records of our two (2) mills for the past five (5) financial years are as follows :

30


PRINCIPAL MARKETS

Our Group’s revenue is principally derived from the sale of CPO, PK and FFB. Our CPO and PK are sold to

refiners, feedmillers and poultry farms in Sarawak. The main buyer of our CPO and PK is Bintulu Edible

Oils Sdn Bhd (BEO), which is currently one of the largest oil refiners and PK crushers in Sarawak.

Our CPO and PK sales volume for the past five (5) years are set out below:

Others including feedmiller and Total BEO poultry farms Volume

Year CPO PK CPO PK CPO PK MT MT MT MT MT MT

2003 72,805 19,451 961 - 73,766 19,451

2004 84,462 20,529 627 - 85,089 20,529

2005 89,261 23,836 1,236 - 90,497 23,836

2006 78,261 19,077 3,259 - 81,520 19,077

2007 79,852 19,420 1,146 250 80,998 19,670

HEALTH, SAFETY AND THE ENVIRONMENT (HSE)

The Board and Management of SPB place health, safety and environmental responsibility at the head of our

operational agenda. During the year in review we achieved a number of important milestones and also

strengthened ongoing HSE systems and practices.

• A Chemical Hazard Risk Assessment (CHRA) was successfully carried out in full compliance with

Occupational Safety and Health Act 1994 (OSHA) requirements under the “Use and Standards of

Exposure of Chemical Hazardous to Health Regulations 2000.”

• Our “Zero Open Burning” practice was rigorously and 100% successfully enforced in all areas of

operation.

• A Noise Mapping exercise was carried out in our palm oil mills operations and a Hearing Preservation

Programme implemented.

• We continued our ongoing efforts to coordinate and promote safe, healthy and environment friendly

work practices, and also coordinated and promoted a hazard awareness programme, including hazard

identification, risk assessments and control measures.

31


HUMAN RESOURCE

Human capital investment will remain one of our key priorities as we strive towards a contented, effective

and productive workforce which is constantly expanding to meet the demands of our rapid growth and

development.

Our Group Managing Director, Executive Directors for Finance, Plantation and Technical Services and

senior management have vast experience and are professionally qualified with many years of service in the

industry.

Our management and staff are centralised and are allocated to various subsidiaries and operating units

based on their respective requirements. Such centralisation of human resources enables us to share

resources and achieving a synergistic team management approach. This in turn enables us to utilise our

management expertise with greater effectiveness and maintain human resources costs to the minimum.

One of our key success factors is our ability to retain a highly skilled and knowledgeable workforce. It is

with this objective in mind that continuous employee training and development is conducted to improve

productivity, quality and knowledge, as well as to provide a platform for personal career advancement

within our Group.

In line with our policy of developing a well-trained, highly skilled and technically empowered workforce,

a significant effort was devoted to manpower training and development. As a result, during the year in

review we achieved 1,400 training man days for our staff and 1,700 training man days for industrial training

(student attachment).

Year CPO PK RM/MT RM/MT

2003 1,509 678

2004 1,608 974

2005 1,365 924

2006 1,485 811

2007 2,455 1,327

Revenue from sale of oil palm products is sensitive to the selling price and sale volume. The performance

of the palm oil industry is closely related to the movement in prices of edible oils and fats. Also, the

movement in prices of edible oils and fats corresponds with the movement in demand and supply factors.

The decrease in palm oil stock level and the increase in demand would raise the price of commodity and

vice-versa. The cyclical trend has a direct correlation with the changes in the prices of palm oil.

PRINCIPAL MARKETS (continued)

Average selling price realised for the past five (5) years are:

32


We recognize the need to ensure continuity in our management in order to maintain our competitive edge.

We believe that the continuity of our success depends, among other things, on the support and dedication

of our key personnel. Therefore during the year, we engaged a reputable consultant to review and develop

a new salary structure which is better aligned to our long-term business requirements, taking into account

the following:

• Attraction and motivation of talent to support the vision of the Group.

• Retention of critical talents to sustain and support future growth

• A structure that will support and encourage a performance-based system.

• Competitive level of remuneration within the industry and the marketplace.

We have also endeavoured to assist employees in achieving an ideal work-leisure balance. Fully furnished

new quarters have been provided to replace the old quarters in line with our aim to provide a conducive

working and living environment to all of our employees. In addition, sports facilities and other amenities

are being upgraded progressively, as we believe that valuing and caring for our employees will enhance job

satisfaction and thus have a positive effect on our business operations.

INFORMATION TECHNOLOGY

We completed the installation and commissioning of Wide Area Network (WAN) Satellite Networking

at three locations, namely our Business Office, the Operation Controller’s Office in Miri, and our

Registered Office in Kuching. This will enhance communication, realise cost savings and increase

operational efficiency. In addition, Firewall routers were installed throughout the organisation to enhance

information transfer and data security.

In the field, we implemented a Remote Sensing Project for better plantation management, fertilizer

management and infrastructure management, and also enhanced our Executive Information System to

improve macro- and micro-management of plantation operations, in turn improving overall operational

efficiency.

CORPORATE FINANCE AND PLANNING

The Board ensures that our financial reporting is carried out in compliance with the Financial Reporting

Standards (FRS) and other statutory requirements. We achieved full conversion to FRS for the financial

year ended 31 December 2006, and we continued to implement the newly applicable FRS for the financial

year ended 31 December 2007.

In addition, we recognize the fundamental importance of public trust in financial reporting and we

encourage transparency. We ensure that timely, accurate and reliable financial information are provided

to our shareholders and investment community all the time.

In line with our mission to enhance operational efficiency and effectiveness, maximise shareholders’

returns and increase shareholders’ value, our corporate finance and planning department focuses on

creating value by providing proactive and valuable support to our other operating units. Budgetary control

is one of the key tools for effective cost rationalization and controls. Monitoring and sourcing of funds to

finance our operations and new development are crucial in the light of our expansion programme. We

continue to ensure that the selected funding strategy is in the best interest of the Company and the

shareholders.

33


34

B o a r d o f D i r e c t o r s

Datuk Hasmi Bin HasnanChairman

Datuk Hasmi, aged 55, a Malaysian, was appointed as our Director on

30 August 2005. He is currently our Chairman, a member of our Board

Executive Committee and our Nomination and Remuneration

Committee. He graduated with a BSc in Estate Management from

London South Bank University, United Kingdom in 1978. He is a Senior

Certified Valuer with International Real Estate Institute, USA and a

member of The International Real Estate Federation (FIABCI). He

began his career in 1979 as a valuer in the Land and Survey Department

of Sarawak. Since 1982, he has been involved in a wide range of

businesses, including valuation, project management, property

development and management, timber, construction and publishing.

He has been the Managing Director of Naim Cendera Holdings Berhad

since 25 July 2003 and was appointed the Chairman of Dayang

Enterprise Holdings Berhad on 29 February 2008. He also holds

various directorships in other companies.

35

Dato Sri Ahmad Tarmizi, aged 46, a Malaysian, was appointed as our Director on 30 August 2005. He is the Chairman of our Board Executive Committee. He holds a Bachelor of Science (Business Administration) and a Masters of Business Administration. His current and previous employments include as the State Financial Secretary of Sarawak from 2004, Chief Executive Officer with Amanah Saham Sarawak Berhad between 1993 and 2002 and as an Investment Manager with both American International Assurance Co. Limited and Arab-Malaysian Merchant Bank Berhad. Dato Sri Ahmad Tarmizi is the Chairman of Kuching Water Board, a Board Member of several Sarawak Government Agencies and Government Linked Companies such as SLDB, Sarawak Economic Development Corporation, Bintulu Development Authority, Sarawak Tourism Board, Sarawak Land Consolidation and Rehabilitation Authority (SALCRA), Sarawak Foundation and Land Custody and Development Authority (LCDA). In the corporate sector, amongst others, he is the Chairman of Sacofa Sdn Bhd and a Director of Amanah Saham Sarawak Berhad, Syarikat SESCO Berhad and Borneo Housing Mortgage Finance Berhad.

Datuk Abdul Hamed, aged 59, a Malaysian, was appointed as our Director on 30 August 2005. He is the Chairman of our Nomination and Remuneration Committee and a member of our Board Audit Committee. He holds a Bachelor of Science degree from University of Malaya and a Bachelor of Forestry from Australia National University. He also holds a Masters degree in Forest Products Utilisation from the Oregon State University. He has been a substantial investor in a number of oil palm companies for about 10 years including such names as Ladang Selezu Sdn Bhd, Sebubu Sdn Bhd, Medan Sepadu Sdn Bhd and Butrasemari Sdn Bhd. He is very active in timber, property/ construction, as well as the oil palm business. He has been the Executive Chairman of Ta Ann Holdings Berhad, a resource-based group since 1999, the Chairman and a substantial shareholder of Naim Cendera Holdings Berhad and the Chairman of Sarawak Energy Berhad (SEB), a company that owns 100% of a power-generating company in Sarawak, namely Syarikat SESCO Berhad. Ta Ann Holdings Berhad, Naim Cendera Holdings Berhad and SEB are listed on the Main Board of Bursa Malaysia Securities Berhad.

Datuk Abdul Hamed Bin SepawiNon-Independent Non-Executive Director

Dato Sri Ahmad Tarmizi Bin Haji SulaimanDeputy Chairman


Haji Mohamad Bolhair, aged 51, a Malaysian, has been our Group Managing Director since October 1997. He is a member of our Board Executive Committee and our Risk Management Committee. His professional qualifications include being a Member of the Chartered Institute of Cost and Management Accountants, United Kingdom and a member of the Malaysian Institute of Management and he holds a Certificate in the KLCE Commodity Futures Trading since 1991. He started his career as an Accountant with Malaysia LNG Sdn Bhd in 1982. In 1987, he joined ASEAN Bintulu Fertiliser Sdn Bhd as a Financial Accountant and in 1988, he was promoted to Management Accountant with the same organisation. He left ASEAN Bintulu Fertiliser Sdn Bhd in 1990 to become the Deputy General Manager of SLDB. He was the General Manager of SLDB from 1992 until his appointment as Managing Director of SPS in October 1993. He was a Director of Suai Plantation Sdn Bhd from 1992 to 2004, Board Member of BEO from 1991 to 2004, Board Member of Palm Oil Research Institute of Malaysia from 1991 to 1992, Council Member of Malaysian Palm Oil Growers Council and Committee Member of United Planting Association of Malaysia. He is currently in the Board of MPOB, Advisor for Universiti Teknologi MARA and Deputy Chairman of East Malaysia Planters Association.

Haji Chaiti, aged 54, a Malaysian, was appointed as our

Director on 30 August 2005. He is member of our

Nomination and Remuneration Committee. He is

currently the Permanent Secretary, Ministry of Land

Development and Ministry of Rural Development

Sarawak. He graduated from University Sains Malaysia

in the field of Social Science and obtained Master’s

Degree in Public Administration from the University of

Southern California, Los Angeles, USA in 1988. He had

also attended Senior Executive Fellow Program (SEF)

at Harvard University, USA in 2002.

Haji Chaiti Bin Haji BolhassanNon-Independent Non-Executive Director

Haji Mohamad Bolhair Bin ReduanGroup Managing Director

36


37

Haji Bolhan bin Berawi, aged 55, a Malaysian, was

appointed as our Director on 1 May 2007. He is a member of

our Risk Management Committee and is currently the

Chief Financial Officer of the Group. He has been a

Director of SPAD and SPPH since March 1999. He holds a

Masters of Business Administration from the University of

the Sunshine Coast, Australia and a Bachelor of Arts

(Accounting) from Newport University, California. His

previous employments include being the Accounts and

Administration Manager for TAB Timbers (S) Sdn Bhd,

Manager Financial Accounting for Malaysia LNG Sdn Bhd

(Petronas), Manager Finance and Services for Malaysia

LNG Dua Sdn Bhd (Petronas) and Financial Controller for

SALCRA. He has considerable experience in areas of

accounting and finance in timber logging operation, oil and

gas industry and in plantation development and operation.

Haji Yahya Haji Daud, aged 56, a Malaysian, was appointed

as our Director on 1 May 2007. He is a member of our Risk

Management Committee. He graduated from Institut

Teknologi Kebangsaan Malaysia with a First Class

Diploma in Mechanical Engineering in 1973 and has a First

Grade Steam Engineer Certificate from Jabatan Kilang dan

Jentera in 1978. He joined SLDB as a Technical Assistant in

1973 and served as Engineer/Manager and Senior Engineer

before being promoted to the position of Visiting Engineer

in 1992. He is responsible for the operations of all our

Group’s palm oil mills, building and road constructions. He

managed the implementation of infrastructure works for

rural growth centres for the State Government of Sarawak

as part of the function of SLDB when SPS was managing

SLDB. He is a Fellow of the Institution of Certified

Engineers Malaysia and also a Director of Azaria.

Haji Yahya Bin Haji DaudExecutive Director

Haji Bolhan Bin BerawiExecutive Director


Haji Abdul Hamid Ibrahim, aged 55, a Malaysian, was


our Risk Management Committee. He obtained his

Diploma in Agriculture from Universiti Putra Malaysia in

1975 and is a Member of Incorporated Society of Planters.

He started his career in SLDB as a Scheme Supervisor (Oil

Palm) in 1975, Assistant Manager in 1978, Estate Manager

in 1987, Group Manager in 1992 and Operation Controller

Surveillance 1 in 1994. In 1996 he was seconded to SALCRA

as Field Operation Controller and as one of the

management team managing the organisation. Currently,

he is the Operation Controller of our Group and a Director

of SPB Pelita Suai Sdn Bhd.

YB Haji Hamden, aged 60, a Malaysian, was appointed as

our Director on 1 May 2007. He is the Chairman of our

Board Audit Committee. He is a Chartered Accountant of

the Malaysian Institute of Accountants and a Fellow of the

Association of Chartered Certified Accountants (FCCA).

He began his career as a Chief Accountant with Sarawak

Land Development Board from 1978 to 1982. He set up his

own accounting firm in 1983. He is currently an elected

member of Dewan Undangan Negeri Sarawak and a Senior

Independent Non-Executive Director of Naim Cendera

Holdings Berhad. He holds directorship in several private

limited companies.

YB Haji Hamden Bin AhmadIndependent Non-Executive Director

Haji Abdul Hamid Bin IbrahimExecutive Director

38


39

Datu Haji Mohammed Sepuan, aged 62, a Malaysian, was


our Board Audit Committee and our Risk Management

Committee. He graduated with a BSc (Hons) in

Agricultural Engineering from the University of Cranfield,

United Kingdom in 1977. He started work as an Assistant

Agricultural Officer in Simunjan in 1968. He has wide

experiences in agriculture developments especially in the

establishment of crops like oil palm, rubber, fruit crops and

rice in the smallholders sector. He was appointed as a

Director of the Integrated Agriculture Development

Project Samarahan in 1994 and then served as Director of

Agriculture in 2001 until the end of his tenure in March

2006. His last assignment was as an Agriculture Advisor in

the Ministry of Modernisation of Agriculture. His term

expired on 30 April 2007.

Azizi Morni, aged 35, a Malaysian, was appointed as our

Director on 1 May 2007. He is a member of our Board Audit

Committee and our Nomination and Remuneration

Committee. He graduated from the University of Malaya

with Bachelor of Laws Degree with Honours in 1999 and

was admitted to the High Court of Sabah and Sarawak in

October 2000. He began his legal career with Messrs. Sim

& Yee Advocates and later joined Messrs. Khaider Zaidell

& Company Advocates as a partner in 2001 before setting

up his sole proprietor practice under the name of Azizi

Ariffin Advocates & Solicitors in 2003. In January 2006, his

sole proprietor practice Messrs. Azizi Ariffin Advocates &

Solicitors merged with Messrs. Chen Chieng Ning &

Company to form Messrs Chen Ching Ning & Azizi

Advocates. Azizi Morni’s work over the years has covered

civil litigation and conveyancing, servicing private and

corporate clients such as Malayan Banking Bhd, CIMB

Bank, RHB Bank Bhd, Bank Islam Malaysia Bhd, Syarikat

SESCO Berhad, Sarawak Economic Development

Corporation, Dewan Bandaraya Kuching Utara, Pusat

Pembangunan Kemahiran Sarawak and Housing

Development Corporation.

Azizi Bin MorniIndependent Non-Executive Director

Datu Haji Mohammed Sepuan Bin AnuIndependent Non-Executive Director


Polit Hamzah, aged 58, a Malaysian, was appointed as our Director on 1 May 2007. He is the Chairman of our Risk Management Committee and a member of our Board Audit Committee. He graduated with BSc (Hons) in Geology from University of Malaya in 1975. He worked for twenty years (1975-1996) in the oil and gas exploration and production company (Petronas Carigali Sdn Bhd) in various technical and management positions with the last position being the General Manager in-charge of the Sabah Operations. From 1997-2001, he headed the LCDA, a body responsible for planning and development of lands for large scale commercial agriculture (oil palm, sago) plantations and property development throughout the State of Sarawak through partnerships with listed and private companies. In 2002-2003 he was the General Manager of the Sarawak Economic Development Corporation. From 2003 till to date, he continues to get involved in the Boards of various government and private owned companies in Sarawak and at the federal level, he was a member of the Board of Lembaga Pergalakan Pelancongan Malaysia (Tourism Malaysia), a body corporate under the Ministry of Tourism, Malaysia. On 29 February 2008, he was appointed a director of Dayang Enterprise Holdings Berhad.

Umang Nangku Jabu, age 31, a Malaysian, was appointed as

our Director on 1 May 2007. She graduated from RMIT

University in Melbourne, Australia in 2003 with a degree

of Masters of Finance. Prior to that, she completed her

studies at Monash University in Melbourne, Australia

with a Graduate Diploma in Industrial and Employee

Relations in 1999 and subsequently with a Master of

Management in Human Resource Management in 2000.

Her undergraduate was in Bachelor of Business (Business

Information System) from RMIT University Melbourne,

Australia in 1999 where she graduated with a distinction.

She commenced her working career in Australia as a

Human Resources Officer for a company in Melbourne in

March 2000. She returned to her home town, Kuching,

Sarawak, Malaysia in 2003 to explore business

opportunities. Since then, she has been involved in private

business sector as directors of a number of companies. The

companies she is involved are predominantly in the sector

of construction and health services. She is also currently

involved with the Dewan Usahawan Bumiputera Sarawak

as the Penolong Bendahari Agung.

Umang Nangku JabuIndependent Non-Executive Director

Polit Bin HamzahIndependent Non-Executive Director

40


41


Save as disclosed below, none of our Directors or substantial shareholders of our Company has any

interest, direct or indirect, in any business carrying on a similar trade as our Group.

Company Principal activities Major products

Datuk Abdul Hamed bin Sepawi

Butrasemari Sdn Bhd Oil palm plantation Palm oil products

Ladang Selezu Sdn Bhd Oil palm plantation Palm oil products

Manis Oil Sdn Bhd Milling of palm oil Palm oil products

Medan Sepadu Sdn Bhd Investment holding. Palm oil products

The company holds 30% equity

interest in KUB Sepadu Sdn Bhd

whereby its principal activity is

in cultivation of oil palm

Mega Bumimas Sdn Bhd Oil palm plantation Palm oil products

Multi Maximum Sdn Bhd Cultivation of oil palm Palm oil products

Sebubu Sdn Bhd Oil palm plantation Palm oil products

Ta Ann Holdings Berhad Investment holding Palm oil products

(cultivation of oil palm and

milling of palm oil via its

subsidiaries)

Ta Ann Pelita Igan Plantation Sdn Bhd Cultivation of oil palm Palm oil products

Ta Ann Pelita Silas Plantation Sdn Bhd Cultivation of oil palm Palm oil products

Ta Ann Plantation Sdn Bhd Investment holding Palm oil products

(cultivation of oil palm and

milling of palm oil via its

subsidiaries)

Datuk Hasmi bin Hasnan

Medan Sepadu Sdn Bhd Investment holding. Palm oil products

The company holds 30% equity

interest in KUB Sepadu Sdn Bhd

whereby its principal activity is

in cultivation of oil palm

Haji Chaiti bin Haji Bolhassan

Bau Palm Oil Mill Sdn Bhd Processing of oil palm products Palm oil products

Boustead Pelita Kanowit Sdn Bhd Oil palm plantation Palm oil products

Saratok Palm Oil Mill Sdn Bhd Processing of oil palm products Palm oil products

C o n f l i c t o f I n t e r e s t

Additional Information

None of our Directors have been convicted of any offences.

For our Directors’ attendance at Board Meetings held during the year in review, please refer to pages 45

to 46 of this Annual Report.

For our Directors’ securities holdings in SPB, please refer to page 119 of this Annual report.

42

K e y M a n a g e m e n t P e r s o n n e l

HAJI BOLHAN BIN BERAWIChief Financial Officer.

Joined SPB in 1997.

Over 30 years experience in finance and accounting.

HAJI YAHYA BIN HAJI DAUDVisiting Engineer.

Joined SLDB (before privatisation) in 1973.

Over 30 years experience in processing and engineering.

TRINA TAN YANG LICorporate Legal & Secretarial Manager

Joined SPB in 2000

15 years legal and 7 years company secretarial experience.

HAJI ABDUL HAMID BIN IBRAHIMOperation Controller


Over 30 years experience in plantation operation.

LIEW MEN KHIANMarketing Manager


Over 15 years experience in marketing of oil palm products.

HAJI MOHAMAD BOLHAIR BIN REDUANGroup Managing Director

General Manager of SLDB (before privatisation) since 1992.

15 years management experience in plantation industry.

43

A u d i t C o m m i t t e e R e p o r t

The Board of Sarawak Plantation Berhad is pleased to present the Report on the Audit Committee (the "Committee") for the financial year ended 31 December 2007.

1. Members and meetings The members of the Committee during the financial year are as per listed below:-

No. Audit Committee Members Status of Directorship Independent Appointment / Resignation

1 YB Hj. Hamden Bin Ahmad Non-Executive Director Yes Appointed on 1 May 2007

2 Datuk Abdul Hamed Bin Sepawi Non-Executive Director No Appointed on 1 May 2007

3 Datu Hj. Mohammed Sepuan Bin Anu Non-Executive Director Yes Appointed on 1 May 2007

4 Encik Azizi Bin Morni Non-Executive Director Yes Appointed on 1 May 2007

5 Encik Polit Bin Hamzah Non-Executive Director Yes Appointed on 1 May 2007

6 Haji Soedirman Bin Hj. Aini Not applicable (N/A) N/A Resigned on 1 May 2007

7 Encik Sebastian Chen Fu Kiong Not applicable (N/A) N/A Resigned on 1 May 2007

8 Haji Bolhan Bin Berawi Executive Director No Resigned on 1 May 2007

During the financial year, the Committee conducted five (5) meetings and the members’ attendance are as follows:-

* Absent with apology

Following the listing of Sarawak Plantation Berhad on the Main Board of Bursa Malaysia Securities Berhad, YB Hj. Hamden B. Ahmad, Datuk Abdul Hamed B. Sepawi, Datu Hj. Mohammed Sepuan B. Anu, Encik Azizi B. Morni and Encik Polit B. Hamzah were appointed as new members of the Audit Committee on 1 May 2007 whilst Hj. Soedirman B. Hj. Aini, Encik Sebastian Chen Fu Kiong and Hj. Bolhan Berawi resigned on the same date.

The Group's internal and external auditors and certain members of senior management attended the meetings by invitation during the financial year.

Details of the Committee members' profiles are contained in the "Board of Directors" as set out on pages 34 to 40 of this Annual Report.

2. Summary of activitiesThe Committee has carried out its activities pertaining to the scope and responsibilities which includes: Reviewing reports from internal and external auditors and report to the Board; Evaluating existing policies, establishing audit quality and ensuring compliance with the Group’s policies; Providing assurance that the Group’s goal and objectives are achieved and assets are safeguarded; Ensuring that proper processes and procedures are in place to comply with all laws, regulations and rules established by

all relevant regulatory bodies; Reviewing all related party transactions and conflict of interest situations that may arise; Reviewing and approving the annual audit plan proposed by internal and external auditors; Reviewing the quarterly results and year end financial statements of the Group prior to the approval by the Board;

No. Audit Committee Members No. of Meetings Attended Attendance (%)

1 YB Hj. Hamden Bin Ahmad 3/3 100

2 Datuk Abdul Hamed Bin Sepawi *1/3 33

3 Datu Hj. Mohammed Sepuan Bin Anu 3/3 100

4 Encik Azizi Bin Morni 3/3 100

5 Encik Polit Bin Hamzah 3/3 100

6 Haji Soedirman Bin Hj. Aini 2/2 N/A

7 Encik Sebastian Chen Fu Kiong *1/2 N/A

8 Haji Bolhan Bin Berawi 2/2 N/A


44

2. Summary of activities (Cont’d)

Reviewing the findings of the external auditors in relation to audit and accounting issues arising from the audit, and updates of new developments on accounting standards issued by Malaysia Accounting Standard Board (MASB);

Reviewing all audit reports presented by internal auditors on their findings and recommendations with respect to system and control weaknesses; and

Ensuring the adequacy of the scope, functions and resources of the internal audit functions and that it has necessary authority to carry out its work.

3. Internal audit function The Group has an internal audit function whose primary responsibility is to undertake regular and systematic reviews of the system of internal control so as to provide reasonable assurance that such system continues to operate satisfactorily and effectively within the Group. The internal audit function adopts a risk-based audit methodology, which is aligned with the risks of the Group to ensure that relevant controls addressing those risks are reviewed on a rotational basis.

The activities carried out by internal audit include amongst others, the review of the adequacy of risk management, system of internal control for effectiveness and efficiency, compliance with established rules, guidelines, laws and regulations, reliability and integrity of information and means of safeguarding assets.

The Internal Audit Manager is responsible for enhancing the quality assurance and improvement programme of the internal audit function. In order to achieve this, the monitoring of its effectiveness is done through internal self-assessment tools and independent external assessment. The results will then be communicated to the Committee. The Internal Audit Manager reports directly to the Chairman of the Committee.

4. Terms of reference The terms of reference of the Committee are as per follows:

To provide assistance to the Board in fulfilling its fiduciary responsibilities relating to corporate accounting and reporting practices for the Group;

To maintain through regularly scheduled meetings a direct line of communication between the Board and the external and internal auditors;

To avail to auditors a private and confidential audience at any time they desire and to request such audience through the Chairman of the Committee with or without the prior knowledge and concern of the management;

To act upon the Board of Directors’ request to investigate and report on any issues or concern with regard to the management of the Group.

In addition, the Committee shall be authorised to carry out duties as mentioned below and has unrestricted access to all of Group’s records, properties and personnel to enable it to discharge its duties.

To keep under review the quality and effectiveness of the accounting and internal control systems as well as the efficiency of the Group’s operation.

To recommend the nomination of a person or persons as external auditors

To approve the appointment of the Internal Audit Manager and ensure that the Group Internal Audit Department is adequately resourced and has an independent status within the Group.

To review the audit plan, scope of examination and audit observations of the external and internal auditors and to ensure that appropriate action is taken by Management in respect of the audit observations and the Audit Committee recommendations.

To review the annual financial statements before submission to the Board and to focus primarily on compliance with accounting standards as well as other regulatory requirements and the adequacy of information disclosure for a fair and full presentation of the financial affairs of the Group.

To assess the effects of any change in accounting principles or of any development arising from the accounting profession or any statutory authority.

To direct any special investigations on the Group’s operations to be carried out by the Internal Audit Department or any other appropriate agencies.

To discuss problems and reservations arising out of external or internal audits, and any matters which the auditors wish to bring up in the absence of Management or Executive Director where necessary.

To perform any other related duties as directed by the Board.

A u d i t C o m m i t t e e R e p o r t

45

S t a t e m e n t o n C o r p o r a t e G o v e r n a n c e

The Board of Directors is committed to maintaining good corporate governance in the running of the affairs of the Company. The standards are aligned to the principles and best practices of the Malaysian Code of Corporate Governance.

In compliance with Paragraph 15.26 of the Bursa Malaysia Listing Requirements, the Board of Directors is pleased to provide the following statement on how the principles and best practices of the Malaysian Code of Corporate Governance are practiced in the Company:

I. BOARD OF DIRECTORS

Duties and Responsibilities

The Board sets the vision and the strategies of the Company, placing great emphasis on enhancing shareholders’ value, investors’ confidence whilst maintaining a high standard of integrity. The Board also sets the framework within which the Company shall operate, in particular the areas of corporate governance, internal controls, risk management, succession planning and investment strategies.

To assist the Board to discharge its responsibility, the Board Audit Committee, the Board Executive Committee, the Risk Management Committee and the Nomination and Remuneration Committee have been set up. The Board Audit Committee has been set up since 11 November 2000, the Board Executive Committee was set up on 26 September 2005 whilst the Risk Management Committee and the Nomination and Remuneration Committee were both set up on 1 May 2007.

Board Meetings

During the year, the Board of Directors met six times. The existing Directors, save for Datuk Hasmi bin Hasnan, Dato Sri Ahmad Tarmizi Hj. Sulaiman, Haji Mohamad Bolhair Reduan, Datuk Abdul Hamed bin Sepawi and Haji Chaiti Haji Bolhassan, were all appointed on 1 May 2007.

For the period between 1 January 2007 till 30 April 2007, two meetings were held. Datuk Hasmi bin Hasnan, Haji Mohamad Bolhair Reduan and Datuk Abdul Hamed bin Sepawi attended both these meetings. For the period 1 May 2007 till 31 December 2007, four meetings were held wherein the existing directors attended all the meetings save for Datuk Hasmi bin Hasnan, Dato Sri Ahmad Tarmizi Hj. Sulaiman, Datuk Abdul Hamed bin Sepawi and Cik Umang Nangku Jabu.

The details of the individual director’s attendance are as follows:

Name of Director Date of Appointment / No. of Meetings Percentage Resignation and Designation Attended (%)

Haji Soedirman Bin Haji Aini Resigned on 1 May 2007 1/2 N/A

Encik Sebastian Chen Fu Kiong Retired on 27 April 2007 2/2 N/A

Datuk Hasmi Bin Hasnan Appointed on 30 August 2005 Non Independent Non Executive Chairman 5/6 83

Dato Sri Ahmad Tarmizi Bin Appointed on 30 August 2005Hj Sulaiman* Non Independent Non Executive Deputy Chairman 1/6 17

Haji Mohamad Bolhair Bin Reduan Appointed on 28 October 1997 Executive Director / Group Managing Director 6/6 100

Datuk Abdul Hamed Bin Sepawi Appointed on 30 August 2005 Non Independent Non Executive Director 5/6 83

Haji Chaiti Bin Haji Bolhassan Appointed on 30 August 2005 Non Independent Non Executive Director 6/6 100


46

Name of Director Date of Appointment / No. of Meetings Percentage Resignation and Designation Attended (%)

Haji Bolhan Bin Berawi Appointed on 1 May 2007 Executive Director 4/4 100

Haji Abdul Hamid Bin Ibrahim Appointed on 1 May 2007 Executive Director 4/4 100

Haji Yahya Bin Haji Daud Appointed on 1 May 2007 Executive Director 4/4 100

YB Haji Hamden Bin Ahmad Appointed on 1 May 2007 Independent Director 4/4 100

Datu Haji Mohammed Appointed on 1 May 2007Sepuan Bin Anu Independent Director 4/4 100

Encik Polit Bin Hamzah Appointed on 1 May 2007 Independent Director 4/4 100

Encik Azizi Bin Morni Appointed on 1 May 2007 Independent Director 4/4 100

Cik Umang Nangku Jabu Appointed on 1 May 2007 Independent Director 3/4 75

* For the better part of the year in review, Dato Sri Ahmad Tarmizi Hj Sulaiman was on medical leave.

Board Balance

The Board of Directors of the Company comprises thirteen directors of whom five are independent. Of the remainder, four are Executive Directors and the rest are non Independent Non Executive Directors. The Chairman of the Company is one of the Non Independent Non Executive Director.

A brief profile of each director is provided on pages 34 to 40 of this Annual Report.

The Board of Directors constitutes a merger of diverse professional backgrounds with wide ranging experience and expertise to support the operations of the Company and to take it to greater heights of achievement.

Supply of Information

All Directors are supplied with ample information through Board Papers and have free access to the Management at all times to inquire or request further information.

At Board Meetings, the Directors are provided with financial and operational information and progress reports relating to the crucial aspects of the operation of the Company. These papers are circulated to the Directors at least one week before the date of the Board Meeting. The Board of Directors is also specifically tasked to approve annual budgets, acquisition and disposal of properties or materials of substantial value, appointment of consultants for specific assignments and changes to the management and control structure within the Company.

Further, the Board of Directors is also updated at Board Meetings on the latest amendments to legislature and how they impact the Company. They are also notified of any corporate announcement released by Bursa Malaysia Securities Berhad (Bursa Securities) and any impending restriction in dealing with the securities of the Company at least one month prior to the announcement of the quarterly results.

Appointments to the Board

Since the listing of the Company on 28 August 2007, no new directors were appointed to the Board. For future appointments, the Company has put in place an evaluation process which will be carried out by the Nomination and Remuneration Committee.


47

I. BOARD OF DIRECTORS (continued)

Re-election of Directors

In accordance with the Company’s Articles of Association, one third or the number closest to one third of the Directors for the time being shall retire from their office and be eligible for re-election annually provided always that all the Directors shall retire from their office at least once in every three years. Any person elected by the Board either to fill a casual vacancy or as an addition to the existing Directors shall hold office only until the next annual general meeting and shall then be eligible for re-election.

II. BOARD COMMITTEES The following Board Committees have been established to assist the Board to discharge its duties and responsibilities.

None of the Committees listed below have executive powers but report to the Board of Directors on all matters considered and submit their recommendations to the Board for its approval.

Board Audit Committee

The Board Audit Committee established on 11 November 2000 provides assistance to the Board of Directors in fulfilling its statutory and fiduciary responsibilities for examination of the Company and in the monitoring of its accounting and financial reporting practices. It also serves as an independent and objective party in the review of financial information presented by management for distribution to shareholders and the general public.

The Board Audit Committee comprises the following members:

Name of Committee Member Designation

YB Haji Hamden Bin Ahmad Chairman - Independent Director

Datuk Abdul Hamed Bin Sepawi Non Independent Non Executive Director

Datu Haji Mohammed Sepuan Bin Anu Independent Director

Encik Polit Bin Hamzah Independent Director

Encik Azizi Bin Morni Independent Director


Dato Sri Ahmad Tarmizi Bin Hj Sulaiman Chairman - Non Independent Non Executive Director

Datuk Hasmi Bin Hasnan Non Independent Non Executive Director

Haji Mohamad Bolhair Bin Reduan Executive Director

The terms of reference of the Board Audit Committee together with the Audit Committee’s Report are set out on pages 43 to 44 of this Annual Report. The activities of the Board Audit Committee for the year ended 31 December 2007 are also set out in the Audit Committee’s Report.

Board Executive Committee

The Board Executive Committee established on 26 September 2005 comprises the following members:

The terms of reference of Board Executive Committee includes the following:

(a) to deliberate and make appropriate recommendations to the Board of Directors on policy matters, major activities and urgent material transactions;

(b) to approve matters which requires immediate or urgent decision and where these matters are beyond the financial limit of authority of the Management;

(c) to act upon the Board of Directors’ request to investigate and assist Management to resolve critical issues and areas of concern.


48


Encik Polit Bin Hamzah Chairman - Independent Director

Datu Haji Mohammed Sepuan Bin Anu Independent Director

Haji Mohamad Bolhair Bin Reduan Executive Director

Haji Bolhan Bin Berawi Executive Director

Haji Abdul Hamid Bin Ibrahim Executive Director

Haji Yahya Bin Haji Daud Executive Director

Encik Liew Men Khian Marketing Manager


Datuk Abdul Hamed Bin Sepawi Chairman - Non Independent Non Executive Director

Datuk Hasmi Bin Hasnan Non Independent Non Executive Director

Haji Chaiti Bin Haji Bolhassan Non Independent Non Executive Director

Encik Azizi Bin Morni Independent Director

Nomination and Remuneration Committee

The Nomination and Remuneration Committee established on 1 May 2007 comprises the following members:

The Nomination and Remuneration Committee seeks to establish a remuneration policy which attracts, maintains and retains a set of Executive Directors and senior executives of requisite caliber to propel the Company towards greater prospects and growth. The remuneration packages are also linked to seniority, position, experience and the Company’s overall performance. The Nomination and Remuneration Committee also seeks to establish a formal and transparent procedure for the appointment of new directors to the Board and top management executives.

The terms of reference of the Nomination and Remuneration Committee includes the following:

(a) establish and review terms and conditions of employment and remuneration of the Executive Directors and top Management Executives of the Company;

(b) to approve annual salary increments and bonuses of the Executive Directors and top Management Executives of the Company based on their individual assessment made by the relevant Appraiser;

(c) to identify and nominate for approval of the Board candidates to fill board vacancies as and when they arise;

(d) to review the required mix of skills, experience and other qualities, including core competencies, which Non Executive Directors should bring to the Board;

(e) establish the minimum requirements for the Board and the Chief Executive Officer to perform their responsibilities effectively;

(f) establish a mechanism for the formal assessment of the Board’s effectiveness as a whole, the contribution of each director to the effectiveness of the Board and the contribution of the Board’s various committees;

(g) oversee the appointment, management, succession planning and performance evaluation of top Management Executives and recommend to the Board of Directors their removal if they are ineffective, errant and/or negligent in discharging their responsibilities;

(h) ensure that all Directors undergo compulsory and other appropriate induction programmes and receive continuous training.

The Nomination and Remuneration Committee met twice during the year.

Risk Management Committee

The Risk Management Committee established on 1 May 2007 met once during the year. The Risk Management Committee comprises the following members:



II BOARD COMMITTEES (continued)

Risk Management Committee

The Risk Management Committee forms an integral part of the effective management of the Company and it seeks to identify and address principal risk areas which include business, environment, human capital, safety and security and operation of the Company with the aim of preventing and mitigating these risks.

The terms of reference of the Risk Management Committee includes the following:

(a) establish the risk management policy of the Company and review such policy regularly in view of the changing business environment;

(b) identify principal risks underlying the business and operation of the Company and to set up the risk profile of the Company;

(c) evaluate, monitor and develop strategies and actions to address these principal risks with a view to maintain a balance between the risks and the returns to the shareholders;

(d) review the reports on risks, major findings and management actions in addressing these risks;

(e) perform review of the application of risk management policy and practices of the Company on at least a half yearly basis;

(f) report to the Board of Directors on the status of the evaluation, monitoring of the risk profile on a half yearly basis;

(g) advise the Management on the resources required in reviewing, evaluating and monitoring of the risk profile of the Company;

(h) direct the Internal Auditor to pursue further in areas identified as high risks and report its findings and recommendations for submission to the Audit Committee.

III. DIRECTORS’ TRAINING All Directors have attended the Directors’ Mandatory Accreditation Programme organised by Bursa Securities.

IV. DIRECTORS’ REMUNERATION The fees of the non executive directors are determined by the Board of Directors with the approval of the shareholders

at the Annual General Meeting. All directors are paid meeting allowance for each Board Meeting that they attend and are also eligible for other benefits in kind, including medical expenses, up to the limit as approved by the Company. The Executive Directors are also rewarded with bonus which is dependent on the performance of the Company and the individual director. The bonus of the Executive Directors is approved by the Nomination and Remuneration Committee and endorsed by the Board of Directors.

The details of the remuneration of the Directors of SPB during the year are as follows:

Executive Directors Non Executive Directors Total (RM) (RM) (RM)

Fees 240,000 270,000 510,000

Salary 902,040 - 902,040

Benefits-in-kind (Other Emoluments) 198,847 5,472 204,319

Bonus 149,613 - 149,613

Meeting Allowance 15,500 24,000 39,500

Total 1,506,000 299,472 1,805,472

49


V. SHAREHOLDERS’ COMMUNICATION AND INVESTORS’ RELATIONS

Shareholders and Investors’ Communication

The Company recognizes the importance of effective communication with its shareholders and investors. The Board is committed to ensure that information with regards to major corporate developments and events are disseminated through the following channels:

- Annual Reports

- Various disclosures and announcements made to Bursa Securities

- Press release and press statements

- Circular to shareholders

- Company’s website at www.spbgroup.com.my

In addition, the investment community comprising individuals, analysts, fund managers and other stakeholders, have dialogues with the Company’s representatives on a regular basis. This enables the investors to get a balanced understanding of the main issues and concerns affecting the Company. Discussions at such meetings and dialogues are restricted to matters that are in the public domain.

Whilst the Company endeavours to provide as much information as possible to its shareholders and investors, it must also be wary of the legal and regulatory framework governing the release of material and price-sensitive information.

Annual General Meeting (AGM)

AGMs act as another source of communication with the shareholders of the Company. This is the platform at which shareholders are encouraged to participate actively through question and answer sessions with the Directors to better inform themselves of the financial and operational performance of the Company. Shareholders who are unable to attend are allowed to appoint proxies to attend and vote on their behalf.

The aggregate remuneration of the Directors of SPB for the year in the respective bands are as stated below:

Executive Directors Non Executive Directors Total

Below RM50,000 - 11 11

RM50,001 - RM100,000 - - -

RM100,001 - RM150,000 - - -

RM150,001 – RM200,000 1 - 1

RM200,001 – RM250,000 - - -

RM250,001 – RM300,000 1 - 1

RM300,001 – RM350,000 - - -

RM350,001 – RM400,000 1 - 1

RM400,001 – RM450,000 - - -

RM450,001 – RM500,000 - - -

RM500,001 – RM550,000 - - -

RM550,001 – RM600,000 - - -

RM600,001 – RM650,000 - - -

RM650,001 – RM700,000 - - -

RM700,001 – RM750,000 1 - 1

50


VI. ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board of Directors is responsible to present a balanced, clear and comprehensive assessment of the Company’s financial performance through the interim and annual financial statements to shareholders. The Board of Directors and the Audit Committee have to ensure that the financial statements are drawn up in accordance with the provisions of the Companies Act 1965 and the Malaysian Accounting Standard Board (MASB) approved accounting standards for entities other than private entities. In presenting the financial statements, the Board of Directors has reviewed and ensured that appropriate accounting policies have been used, consistently applied and supported by reasonable and prudent judgments and estimates.

Internal Controls

The Board of Directors assumes the responsibility for the Company to maintain a sound system of internal controls to safeguard shareholders’ investment and the Company’s assets as well as reviewing the adequacy and effectiveness of the system of internal controls.

The Board of Directors also recognizes that due to the limitations inherent by any internal controls, such systems of internal controls are designed to manage and mitigate risks that may impede the Company’s achievements on its objectives rather than eliminate these risks. Accordingly, the systems of internal control can only provide reasonable but not absolute assurance against any material misstatements, loss or fraud.

The Directors’ Statement on Internal Control as set out on page 53 to 54 page of this Annual Report provides an overview of the Company’s approach in maintaining a sound system of internal control to safeguard shareholders’ interests and the Company’s assets.

Statement of Compliance with the best practices of the Code

The Board of Directors is committed to uphold high standards of professionalism and excellent corporate governance practices in the running of the affairs of the Company. The Board of Directors is pleased to confirm that it has complied with the best practices of the Malaysian Code of Corporate Governance during the year in review.

Relationship with the Auditors

The Board of Directors, via its Board Audit Committee, maintains a formal and transparent relationship with its external auditors in seeking their professional advice and to ensure compliance with approved accounting standards and statutory requirements.

VII. OTHER INFORMATION

Utilisation of proceeds from Corporate Proposals

During the financial year, a total gross proceeds of RM90 million was raised from the public issue consisting of the issuance of 30 million new ordinary shares of RM1.00 each in the Company at an issue price of RM3.00 per ordinary share in conjunction with the listing of the Company on the Main Board of Bursa Securities on 28 August 2007.

The status of the utilization of proceeds as at 30 April 2008 is as below:

The intended time frame for full utilization of the proceeds is 24 months from date of Prospectus dated 7 August 2007.

(RM’000)

Gross proceeds received on 28 August 2007 90,000

Less utilization for :

Working capital purposes for the Group’s core business 43,989

Share issue expenses 4,031

Unutilised balance as at 30 April 2008 41,980

51


Share Buy Back

During the financial year ended 31 December 2007, the Company did not enter into any share buy back transactions.

Options Warrants or Convertible Securities

There were no options, warrants or convertible securities issued by the Company during the year.

American Depository Receipt (“ADR) or Global Depository Receipt (“GDR”) Programme

The Company did not sponsor any ADR or GDR programmes during the year.

Imposition of Sanctions and / or Penalties

The were no sanctions and / or penalties imposed on the Company or its subsidiaries, directors or management arising from any significant breach of rules guidelines legislation by any relevant authority for the financial year ended 31 December 2007.

Non Audit Fee

The amount of non audit fees paid to the external auditors, PricewaterhouseCoopers by the Company and its subsidiaries during the financial year ended 31 December 2007 amounted to RM261,000.

Variation in profit estimate, forecast or projection

The variance between the actual audited and forecast consolidated profit after tax and minority interest for the financial year ended 31 December 2007 was below 10%.

Variation in Results

The was no deviation of 10% or more between the profit after taxation and minority interest stated in the Quarter IV Announcement of unaudited results for the financial year ended 31 December 2007 and the audited financial statements of the Company for the financial year ended 31 December 2007.

Profit Guarantee

The Company did not give any profit guarantee during the year.

Material Contracts

There were no material contracts of the Company and its subsidiaries involving the Directors and major shareholders either subsisting at the end of the financial year or entered into since the end of the previous financial year.

Recurrent Related Party Transactions of a revenue or trading nature

For further details on the recurrent related transactions of a revenue or trading nature of the Company conducted in the financial year ended 31 December 2007, please refer to note 32 of the Financial Statements as set in pages 109 to 110 of this Annual Report.

Revaluation Policy on Landed Properties

There was no revaluation policy on landed properties adopted by the Company during the financial year ended 31 December 2007.

This statement is made in accordance with the resolution of the Board of Directors dated 24 April 2008.

52


Board responsibilities

The Board of Directors (the “Board”) of Sarawak Plantation

Berhad acknowledges its responsibility for the Group to

maintain a sound system of internal control to safeguard

shareholders’ investment and the Group’s assets as well as

reviewing the adequacy and effectiveness of the system of

internal control. A sound system of internal control includes

the establishment of an appropriate control environment and

framework, encompassing financial, operational and

compliance controls, and management of risks throughout its

operations.

Due to the limitations inherent by any internal control, such

systems are designed to manage and mitigate risks that may

impede the Group’s achievements on its objectives rather than

eliminate these risks. Accordingly, the system of internal

control can only provide reasonable but not absolute assurance

against any material misstatement or loss arising from the

possibility of poor judgement in decision making, management

overriding controls, loss and the occurrence of unforeseeable

circumstances. The concept of reasonable assurance also

recognises that the cost of control procedures should not

exceed the expected benefits.

Internal control and risk management

The Board regards risk management as an integral part of

effective management of the business and operation of the

Group which can directly affect its ability to implement its

strategy and achieve its mission. Risk management practices

and internal controls are embedded in the day to day

operations of the Group. An on going process to identify the

risks, evaluation of those identified significant risks and

actions to be taken in managing those significant risks faced by

the Group is in place. This includes examining the business

operational risks in critical areas, potential impacts and

identifying measures and time frame to mitigate those risks.

The management consistently reviews the measures taken to

manage those identified risks with the assistance of Internal

Audit. The Risk Management Committee, comprising

representatives from the Board and the management, was

established on 1 May 2007, to assist the Board in reviewing and

monitoring the risk management process.

53

S t a t e m e n t o f I n t e r n a l C o n t r o l

This Statement of Internal

Control by the Board of

Directors is made pursuant to

the Listing Requirements of

Bursa Malaysia on the Group’s

compliance with the Principle

and Best Practices for the state

of internal control as provided

in the Malaysian Code on

Corporate Governance.


Other key elements of internal control

Other key elements of the Group’s system of

internal control are as follows:-

Defined management structure of the Group

and established responsibilities of the

committees of the Board and management

clearly define lines of responsibilities and

delegation of authority.

Standard Operating policies and procedures

setting out the operating control procedures

pertaining to plantation, mill operation,

process and engineering, health and safety,

finance, human resource, marketing,

information technology and corporate legal and

secretarial are in place and are continuously

being reviewed and updated to reflect the

changes in business environment and legal

requirements;

A detailed annual budgeting process is

established whereby operating units prepare

its budget and business plan for consolidation

and review by the management. The

consolidated budgets are thereafter aligned to

the corporate objectives and strategies of the

Group and are presented to the Board for

deliberation and approval;.

Comprehensive financial and operational

reports are reviewed by the Board on a

quarterly basis. Any significant deviation from

the budget and parameters set by the Board

would be investigated, explained and

presented to the Board;

Regular meetings are held between Executive

Directors and the management to deliberate

the Group’s strategies, policies, financial and

operational performance and other key issues;

Management meetings are held by the key

management team to review the Group’s

operations which include analyzing the results

and addressing key operational issues faced by

the Group.

Internal audit

The Group has its own internal audit department which

reports directly to the Audit Committee on quarterly basis

on results of works which are carried out in accordance

with the Internal Audit Plan approved by the Audit

Committee. Based on the risk-based audit plan, the

internal audit function performs periodic reviews on

critical business processes to identify any significant risks,

assessing the effectiveness and adequacy of the system of

internal control and where necessary, recommends areas of

improvements.

The Audit Committee, on behalf of the Board, receives

reports from both internal and external auditors. The

Audit Committee regularly reviews the reports and holds

discussions with the management on the actions taken on

identified internal control issues.

Weaknesses in internal control

There were no major internal control weaknesses

identified during the year, nor have any of the reported

weaknesses resulted in material losses or contingencies

requiring disclosure in the Group’s Annual Report. Those

areas which require improvements as highlighted by the

internal and external auditors have been, or are being

addressed.

The Board confirms that its system of internal control were

operational throughout the year and up to the date of

approval of the Annual Report. In addition, the Board

remains committed towards operating a sound system of

internal control and therefore recognises that the system

must continuously evolve to support the type of business

and size of operations of the Group. As such, the Board, in

striving for continuous improvement will put in place

proper action plans, when necessary, to further enhance

the Group’s system of internal control.

The Group’s system of internal control applies to the

Company and its subsidiaries only and does not cover its

associated company.

This statement is made in accordance with the resolution

of the Board of Directors dated 24 April 2008.

54

S t a t e m e n t o f I n t e r n a l C o n t r o l

C o r p o r a t e S o c i a l R e s p o n s i b i l i t y

Overview

SPB believes that good Corporate Social Responsibility (CSR) policies are integral to its

operations. We are committed to CSR as a sustainable approach to business that benefits all

stakeholders: customers, employees, shareholders, as well as communities in general.

SPB aims to uphold the highest standards of environmental and social responsibility. CSR

forms part of our Corporate Culture. The Company will strive to be a socially responsible

corporate citizen, meeting globally recognised corporate responsibility standards.

55


Contribution To The Community

As a continuing contribution to the community in

which our Group operates, SPB will continue to

provide facilities such as schools and other educational

requirement, clinics, playgrounds, community halls,

transport facilities, as well as improvement to

infrastructure and other communication facilities.

Currently our staff are enjoying modern living quarters

with the completion of semi-detached quarters,

managers’ bungalows and workers’ barracks in our

estates and mills. Upgrading works are always

continuous and on going. We have also constructed a

new management office located along the Miri-Bintulu

road to serve our northern region estates.

In addition, a fund raising dinner was organised by a

committee comprising SPB’s staff with the target to

raise RM150,000 for the purpose of constructing a new

mosque located at our Ladang Tiga Estate to meet the

needs in light of the increasing muslim population in

the Subis area and also for muslims traveling the Pan

Borneo highway.

The estimated cost of the mosque is RM2 million. Once

completed, the new mosque could accommodate 1,000

muslim congregations at any one time.

56



The CSR related activities consistently

undertaken are:

1. Donations to local primary and secondary

schools e.g. Yayasan Sehati Education Fund,

SJK Chung Hua Sungai Jernang, SK St.

Augustine Betong.

2. Yearly donations to charitable organizations

such as PERYATIM, SABATI and Sarawak

Heart Foundation

3. Donations to LAKMNS, Masjids and Suraus.

4. Community activities such as blood donations

and gotong-royong.

57


58

I n v e s t o r R e l a t i o n s A c t i v i t i e s

SPB always believes in having a mutually beneficial

long term relationship with its shareholders. With this

in mind, Investor Relations (IR) activities are a key

priority. These are conducted to consistently update

and provide shareholders, institutional investors and

research analysts with relevant comprehensive,

transparent and prompt information. This is SPB’s way

of allowing its existing and potential shareholders to

have an informed and realistic opinion of the

Company’s profitability, strategic positioning and the

associated opportunities as well as risks. Other ways of

achieving this objective include timely announcement

of SPB’s quarterly financial reports and conducting

regular activities to inform shareholders and analysts

of business development as well as important events

within SPB.

To develop a long-term relationship of trust among

existing and future shareholders, SPB has participated

in and organized visits, roadshows, briefings, meetings

and presentations locally and abroad for fund

managers as well as investment analysts. It is through

such IR activities that SPB’s corporate management

strategies and current developments are discussed

with interested parties who will gain balanced and

necessary information. Such IR activities are regularly

led and conducted personally by the Chairman, Datuk

Hasmi Bin Hasnan, and Group Managing Director,

Haji Mohamad Bolhair Bin Reduan, who communicate

directly with interested parties on pertinent matters.

59

I n v e s t o r R e l a t i o n s A c t i v i t i e s

As one of the leading players in the plantation industry

in Sarawak, SPB has been regularly invited to

participate in international road shows in Singapore

and Hong Kong and todate it has good and consistent

coverage by ABN AMRO, CIMB Research, Dow Jones

Newswires, HWANGDBS Vickers Research, HLG

Securities, Kenanga Research, RHB Research, TA

Securities and OSK Research. SPB has also been invited

to meet local and international investors and fund

managers in Kuala Lumpur which were well received.

On the international front, SPB had participated in

roadshows held in Hong Kong and Singapore.

For the year in review, AmResearch, CIMB Investment

Bank, HSBC, Kuwait Finance House, RHB Research

and TA Securities visited SPB’s business operations in

Kuching and Miri in order to have a better

understanding of the strengths as well as future

prospects of the Company.

The communications and discussions at meetings and

roadshows and any other IR activities were restricted

to matters that are in the public domain.


S P B i n t h e N e w s

60

61


D i a r y o f C o r p o r a t e E v e n t s

62

January 19, 2007

Keredas get together telematch

Procession in conjunction with Maulidur Rasul 1428H

Briefing to SPB’s staff on SPB’s Listing

Securities Commission’s visit in conjunction with SPB’s Listing Application

March 17, 2007

March 31, 2007

May 25, 2007

May 29, 2007

Underwriting Signing Ceremony in conjunction with SPB’s listing

Closing Ceremony of Program Ihtifal Kesenian Islam Kemas

MPOB’s Minggu Sawit Sarawak

Briefing to SPB’s staff on SPB’s Listing

June 29, 2007

July 21, 2007

August 6-10, 2007

63


D i a r y o f C o r p o r a t e E v e n t s

64

50th Merdeka Day Parade

Listing of SPB on Main Board of Bursa Malaysia

Bintulu Job Fair

Keredas Sport Carnival

August 25, 2007

August 31, 2007

August 28, 2007

September 8-9, 2007

September 20, 2007

Majlis Berbuka Puasa with the anak-anak yatim from Miri

SPB’s Hari Raya Open House

Netball Friendly Match - SPB vs Miri Maybank

Majlis Berbuka Puasa with the anak-anak yatim from Mukah

September 27, 2007

October 27, 2007

November 20, 2007

65


66

O u t l o o k f o r t h e P a l m O i l S e c t o r

The following are independent opinions from authoritative sources on the outlook for the oil palm

plantation and palm oil milling sectors for 2008 and beyond. Unless otherwise stated these organizations

have no connection with SPB or its subsidiaries. All statements are copyright of their respective

originators and are reproduced here under the rule of fair comment.

Malaysian Palm Oil Board

Overview of the Malaysian Palm Oil Industry 2007,

Crude palm oil production is forecast to rise to 16.2 million tonnes in 2008 because of a recovery in yields

and an expansion in matured area. However, the outlook for palm oil prices continues to remain positive

in view of the global oils and fats tightness and the volatility of crude oil prices.

Oxford Business Group

Malaysia Economic Report 2008

For many years Malaysia has been the world's largest producer and exporter of palm oil. The oil palm is

Malaysia's leading plantation product, occupying 67% of the country's agricultural land area. Although the

production has been down since 2005, it still looks set to dominate the future, both as a provider of edible

fats and as an energy source. The environmental question in the palm oil sector remains, and producers

have responded by introducing more environmentally friendly standards, while the government has

brought in strict criteria for sustainability certification.

The Economist Intelligence Unit

Indonesia Country Briefing, Jan 2008

Export earnings will continue to grow strongly in 2007-08, supported by persistently strong prices for

some of Indonesia's commodity exports, such as rubber and palm oil, and by steady growth in the country's

major export markets. Although import growth will be faster in percentage terms, owing to a recovery in

domestic demand, the trade surplus will nevertheless expand.

Agriculture & Agri-Food Canada

China: Oilseeds Situation and Outlook

Over the medium-term, China's demand for oilseeds is expected to continue to grow. In its Agricultural

Outlook to 2012-2013, the Food and Agricultural Policy Research Institute (FAPRI) at the University of

Missouri foresees stable production and increased demand for China. Per capita vegetable oil consumption

is expected to increase by more than 25% over this ten year period.

67


Asia Times (Hong Kong)

SE Asia offers haven from US turmoil (22 Dec 2007)

High global commodity prices and seemingly insatiable Chinese demand for raw materials have buoyed

several Southeast Asian economies, including Thailand, Malaysia and Indonesia. In particular, natural

resource-rich Indonesia has piggybacked on China's economic boom, offsetting the negative economic

impacts of a decade-long de-industrialization process through ramping up energy and commodity exports.

Malaysia has profited from spiking global palm oil exports, Thailand from value-added foods, and Vietnam

from food commodities. HSBC regional economist Fredric Neumann ventures that even if the US goes into

recession, global commodity prices would not collapse due mainly to Chinese demand. "It represents the

first time that the commodity price cycle is not directly linked to US demand," Neumann says. "That's

where you've really seen a Southeast Asian decoupling [from the US]."

Commodity Online

Malaysia, Indonesia to gain from palm oil boom (15 May 2008)

With oil experts predicting a palm oil boom for the next five to ten years, the major beneficiaries are going

to be Malaysia with a record output predicted for 2009 and Indonesia set to attract more investment into

palm oil plantations.

The other day, Dorab Mistry, Director of London-based Godrej International, whose vegetable oil forecasts

are closely followed world wide said that vegetable oil demand is going to remain buoyant in the medium

to long term. Malaysia’s palm oil output is expected to reach a record high of around 18 million metric tons

in 2009, according to senior analysts. In 2008, the production is expected to be 17.3 million to 17.4 million

metric tonnes., they said.

Mistry said the annual worldwide growth in demand for vegetable oils is between 5.0 million tons and 6.0

million tons. “Over the next five years, we require additional 25 million to 30 million tons of vegetable oils

supply,” noted Mistry. He said there aren’t much prospects for growth in production of high oil-bearing

oilseeds and the best hope for expansion in acreage is in palm oil.

Even if palm oil production is increased by 2.0 million to 3.0 million tons each year, it may not be sufficient

to meet the global demand. Therefore, Mistry is upbeat and bullish on palm oil prices for the medium to

long term.

68

Statement On Directors’ Responsibility For Preparing The Annual Financial Statements

The Board of Directors is required by the Companies Act 1965 (“the Act”) to prepare financial

statements which give a true and fair view of the state of affairs of the Company and the Group at the

end of every financial year and of the results and cash flows of the Company and the Group for every

financial year.

As required by the Act, the financial statements have been prepared in accordance with MASB

Approved Accounting Standards in Malaysia for Entities other than Private Entities and the provisions

of the Act. The Directors have considered that in preparing the financial statements for the financial

year ended 31 December 2007 as set out in pages 76 to 116 of this Annual Report. Appropriate accounting

policies have been adopted and are consistently applied and supported by reasonable and prudent

judgements and estimates. These estimates and judgements in applying the accounting policies of the

Company and the Group are based on the Directors’ best knowledge of current events and actions.

The Directors have the responsibility to ensure that the Company and the Group maintain proper

accounting records which disclose with reasonable accuracy the financial position and performance of

the Company and the Group and also to ensure that the financial statements comply with the Act. The

Directors have overall responsibility for taking such steps as are reasonably open to them to safeguard

the assets of the Company and the Group and to prevent and detect fraud and other irregularities.

The statement is made in accordance with a resolution of the Board of Directors dated 24 April 2008.

70 Directors’ Report

74 Statement by Directors

Statutory Declaration

75 Report of the Auditors

76 Income Statements

77 Balance Sheets

79 Consolidated Statement of Changes in Equity

80 Company Statement of Changes in Equity

81 Cash Flow Statements

83 Notes to the Financial Statements

SARAWAK PLANTATION BERHAD(Company No. 451377-P)

F i n a n c i a l S t a t e m e n t s 3 1 D e c e m b e r 2 0 0 7

69

The Directors are pleased to submit their report to the members together with the audited financial statements of the Group andCompany for the financial year ended 31 December 2007.

Principal activities

The Company is principally an investment holding company. The principal activities of the Group consist of cultivation of oil palmand processing of fresh fruit bunches as well as provision of management, agronomic and consultancy services. There was nosignificant change in the nature of these activities of the Group and Company during the financial year.

Financial results

D i r e c t o r ’ s R e p o r t

70

Group Company

Profit for the financial year 71,443,601 38,447,228

Dividends

The dividends on ordinary shares paid or declared by the Company since 31 December 2006 were as follows:

RM

In respect of the financial year ended 31 December 2005, as reported in theDirectors’ report of that financial year:

Balance of the final gross dividend of approximately 94 sen per share on 135,000,000ordinary shares of RM1.00 each, less income tax of 28%, was paid on 21 May 2007 33,012,000

Balance of the final tax exempt dividend of approximately 25 sen per share on 135,000,000ordinary shares of RM1.00 each, was paid on 21 May 2007 11,988,000

45,000,000

In respect of the financial year ended 31 December 2006, as reported in theDirectors’ report of that financial year:

Final gross dividend of approximately 15 sen per share on 135,000,000 ordinary shares ofRM1.00 each, less income tax of 28%, paid on 21 May 2007 15,000,000

The Board of Directors declared an interim dividend of 6.75 sen per share on 280,000,000 ordinary shares of RM1.00 each, less incometax of 26%, amounting to RM13,985,999 for the financial year ended 31 December 2007, which was paid on 18 April 2008 toshareholders registered on the Company’s register of members at the close of business on 24 March 2008.

The Directors now recommend the payment of a final gross dividend of 7.20 sen per share on 280,000,000 ordinary shares of RM1.00each, less income tax of 26%, amounting to RM14,918,400 which, is subject to the approval of members at the forthcoming AnnualGeneral Meeting of the Company.

Reserves and provisionsAll material transfers to or from reserves and provisions during the financial year are shown in the financial statements.

Issue of shares

During the financial year, the issued and paid-up share capital of the Company was increased from RM135,000,000 comprising135,000,000 ordinary shares of RM1.00 each to RM280,000,000 comprising 280,000,000 ordinary shares of RM1.00 each by way ofthe issuance of:

(i) 115,000,000 new ordinary shares of RM1.00 each by virtue of a Bonus Issue exercise undertaken by the Company on 5 July 2007;and


71

(ii) 30,000,000 new ordinary shares of RM1.00 each at an issue price of RM3.00 per ordinary share for cash pursuant to a PublicIssue which was carried out in conjunction with its listing exercise on the Main Board of Bursa Securities Malaysia Berhad on 28August 2007.

The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of theCompany.

Directors

The Directors who have held office during the period since the date of the last report are as follows: Datuk Hasmi Bin Hasnan Dato Sri Ahmad Tarmizi Bin Haji Sulaiman Datuk Abdul Hamed Bin Sepawi Haji Mohamad Bolhair Bin Reduan Haji Chiti @ Chaiti Bin Haji Bolhassan Haji Bolhan Bin Berawi (appointed on 1 May 2007) Haji Abdul Hamid Bin Ibrahim (appointed on 1 May 2007) Haji Yahya Bin Haji Daud (appointed on 1 May 2007) Azizi Bin Morni (appointed on 1 May 2007) Polit Bin Hamzah (appointed on 1 May 2007) YB Hamden Bin Ahmad (appointed on 1 May 2007) Datu Haji Mohammed Sepuan Bin Anu (appointed on 1 May 2007) Umang Nangku Jabu (appointed on 1 May 2007) Haji Soedirman Bin Haji Aini (resigned on 1 May 2007) Sebastian Chen Fu Kiong (resigned on 27 April 2007)

Directors’ benefits

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements withthe object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debenturesof, the Company or any other body corporate.

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than Directors’remuneration as disclosed in Note 9 to the financial statements) by reason of a contract made by the Company or a related corporationwith the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest exceptas disclosed in Note 32 to the financial statements.

Directors’ interests in shares

According to the register of Directors’ shareholdings, particulars of interests of Directors who held office at the end of the financialyear in shares in the Company and its related corporations are as follows:

Number of ordinary shares of RM1.00 each in the Company

At Bonus At 1.1.2007 Issue Bought Sold 31.12.2007

Indirect interest

Datuk Hasmi Bin Hasnan 68,850,000 58,591,350 1,508,000 ( 45,844,326) 83,105,024*

Datuk Abdul Hamed Bin Sepawi 68,850,000 58,591,350 26,400 ( 45,844,326) 81,623,424*

Haji Mohamad Bolhair Bin Reduan 0 0 20,000 0 20,000#

* Deemed interest via companies in which the Directors have substantial financial interest.# Deemed interest via spouses’ shareholding.

D i r e c t o r ’ s R e p o r t

Number of ordinary shares of RM1.00 each in the Company

At 1.1.2007/date Atof appointment Bought Sold 31.12.2007

Direct interest

Datuk Hasmi Bin Hasnan 0 3,250,000 0 3,250,000

Datuk Abdul Hamed Bin Sepawi 0 200,000 0 200,000

Dato Sri Ahmad Tarmizi Bin Haji Sulaiman 0 200,000 0 200,000

Haji Mohamad Bolhair Bin Reduan 0 18,773,985 0 18,773,985

Haji Chiti @ Chaiti Bin Haji Bolhassan 0 100,000 0 100,000

Haji Bolhan Bin Berawi 0 600,000 0 600,000

Haji Abdul Hamid Bin Ibrahim 0 625,487 0 625,487

Haji Yahya Bin Haji Daud 0 725,733 0 725,733

Azizi Bin Morni 0 50,000 ( 39,000) 11,000

Polit Bin Hamzah 0 50,000 0 50,000

YB Hamden Bin Ahmad 0 100,000 0 100,000

Datu Haji Mohammed Sepuan Bin Anu 0 50,000 0 50,000

Umang Nangku Jabu 0 50,000 0 50,000

None of the other Directors in office at the end of the financial year held any interest in shares in the Company or its relatedcorporations during the financial year.

72

Statutory information on the financial statements

Before the income statements and balance sheets were made out, the Directors took reasonable steps:

(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtfuldebts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made fordoubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their valuesas shown in the accounting records of the Group and Company had been written down to an amount which they might beexpected so to realise.

At the date of this report, the Directors are not aware of any circumstances:

(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financialstatements of the Group and Company inadequate to any substantial extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and Company misleading; or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and Companymisleading or inappropriate.

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after theend of the financial year which, in the opinion of the Directors, will or may affect the ability of the Group or Company to meet theirobligations when they fall due.


At the date of this report, there does not exist:

(a) any charge on the assets of the Group or Company which has arisen since the end of the financial year which secures the liabilityof any other person; or

(b) any contingent liability of the Group or Company which has arisen since the end of the financial year.

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financialstatements which would render any amount stated in the financial statements misleading.

In the opinion of the Directors:

(a) the results of the Group’s and Company’s operations during the financial year were not substantially affected by any item,transaction or event of a material and unusual nature; and

(b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or eventof a material and unusual nature likely to affect substantially the results of the operations of the Group or Company for thefinancial year in which this report is made.

Auditors

The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors in accordance with their resolution dated 24 April 2008.

DATUK HASMI B. HASNAN HAJI MOHAMAD BOLHAIR B. REDUANCHAIRMAN DIRECTOR

Kuching

73

We, Datuk Hasmi B. Hasnan and Haji Mohamad Bolhair B. Reduan, two of the Directors of Sarawak Plantation Berhad, state that, inthe opinion of the Directors, the financial statements set out on pages 76 to 116 are drawn up so as to give a true and fair view of thestate of affairs of the Group and Company as at 31 December 2007 and of the results and cash flows of the Group and Company forthe financial year ended on that date in accordance with the provisions of the Companies Act 1965 and MASB Approved AccountingStandards in Malaysia for Entities Other than Private Entities.

Signed on behalf of the Board of Directors in accordance with their resolution dated 24 April 2008.

DATUK HASMI B. HASNAN HAJI MOHAMAD BOLHAIR B. REDUANCHAIRMAN DIRECTOR

74

S t a t e m e n t b y D i r e c t o r sp u r s u a n t t o S e c t i o n 1 6 9 ( 1 5 ) o f T h e C o m p a n i e s A c t 1 9 6 5

S t a t u t o r y D e c l a r a t i o np u r s u a n t t o S e c t i o n 1 6 9 ( 1 6 ) o f T h e C o m p a n i e s A c t 1 9 6 5

I, Haji Bolhan B. Berawi, the Director primarily responsible for the financial management of Sarawak Plantation Berhad, do solemnlyand sincerely declare that the financial statements set out on pages 76 to 116 are, in my opinion, correct and I make this solemndeclaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act 1960.

HAJI BOLHAN B. BERAWI

Subscribed and solemnly declared by the abovenamed Haji Bolhan B. Berawi at

Kuala Lumpur on 24 April 2008, before me.

COMMISSIONER FOR OATHS


We have audited the financial statements set out on pages 76 to 116. These financial statements are the responsibility of theCompany’s Directors. It is our responsibility to form an independent opinion, based on our audit, on these financial statements andto report our opinion to you, as a body, in accordance with Section 174 of the Companies Act 1965 and for no other purpose. We donot assume responsibility to any other person for the content of this report.

We conducted our audit in accordance with approved auditing standards in Malaysia. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by the Directors, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion:

(a) the financial statements have been prepared in accordance with the provisions of the Companies Act 1965 and MASB ApprovedAccounting Standards in Malaysia for Entities Other than Private Entities so as to give a true and fair view of:

(i) the matters required by Section 169 of the Companies Act 1965 to be dealt with in the financial statements; and

(ii) the state of affairs of the Group and Company as at 31 December 2007 and of the results and cash flows of the Group andCompany for the financial year ended on that date;

and

(b) the accounting and other records and the registers required by the Act to be kept by the Company and by the subsidiaries ofwhich we have acted as auditors have been properly kept in accordance with the provisions of the Act.

The names of the subsidiaries of which we have not acted as auditors are indicated in Note 17 to the financial statements. We haveconsidered the financial statements of these subsidiaries and the auditors’ reports thereon.

We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financialstatements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financialstatements and we have received satisfactory information and explanations required by us for those purposes.

The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include anycomment made under subsection 3 of Section 174 of the Act.

PRICEWATERHOUSECOOPERS JAYARAJAN a/l U. RATHINASAMY(No. AF: 1146) (No. 2059/06/08 (J))Chartered Accountants Partner of the firm

Kuching

25 April 2008

R e p o r t of th e A u d i t o r sto th e me m b e r s of S a r a w a k P l a n t a t i o n B e r h a d

75

76

I n c o m e S t a t e m e n t sfo r th e fi n a n c i a l ye a r en d e d 3 1 D e c e m b e r 2 0 0 7

Group Company

Note 2007 2006 2007 2006RM RM RM RM

Revenue 6 244,009,293 142,372,230 51,893,027 91,173,715

Cost of sales ( 123,359,411 ) ( 89,244,055 ) 0 0

Gross profit 120,649,882 53,128,175 51,893,027 91,173,715

Other operating income:

- Gain on disposal of:

- quoted investments 64,900 62,153,494 0 62,167,494

- non-current asset held for sale 475,025 0 0 0

- Write-back of allowance for impairment in quoted investments 463,070 376,818 0 0

- Interest income 3,059,759 2,664,891 1,498,427 1,612,249

- Others 1,183,541 1,107,705 2,500 0

Distribution costs ( 11,999,930 ) ( 6,458,381 ) 0 0

Administrative expenses

- Impairment loss on:

- property, plant and equipment 0 ( 3,633,198 ) 0 0

- prepaid lease rental 0 ( 36,104 ) 0 0

- plantation development expenditure 0 ( 4,615,874 ) 0 0

- Allowance for deposits 0 ( 16,673,567 ) 0 0

- Others ( 23,969,422 ) ( 13,087,859 ) ( 1,241,587 ) ( 1,283,578 )

Replanting expenditure ( 5,261,610 ) ( 6,587,516 ) 0 0

Finance cost 10 ( 1,872,203 ) ( 787,978 ) 0 0

Share of results of associates ( 25,088 ) ( 283,273 ) 0 0

Profit before tax 7 82,767,924 67,267,333 52,152,367 153,669,880

Tax expense 1 1 ( 11,324,323 ) ( 3,841,719 ) ( 13,705,139 ) ( 22,215,010 )

Profit for the financial year 71,443,601 63,425,614 38,447,228 131,454,870

Attributable to:

Equity holders of the Company 68,234,448 63,757,531 38,447,228 131,454,870

Minority interest 3,209,153 ( 331,917 ) 0 0


Earnings per share attributed toequity holders of the Company

- Basic (sen) 12(a) 26.22 25.50


77

B a l a n c e S h e e t sa s a t 3 1 D e c e m b e r 2 0 0 7

Group Company

Note 2007 2006 2007 2006RM RM RM RM

Non-current assets

Property, plant and equipment 1 3 205,569,652 142,867,166 1,804 25,786

Prepaid lease rental 1 4 7,706,688 8,448,762 0 0

Investment properties 15 6,323,725 6,485,871 0 0

Plantation development expenditure 16 213,215,412 208,894,692 0 0

Investment in subsidiaries 17 0 0 198,685,575 198,685,575

Investment in associates 18 0 25,088 0 0

Other investments 19 1,740,048 1,289,187 128,930 129,940

Deferred tax assets 30 3,015,017 0 0 0

437,570,542 368,010,766 198,816,309 198,841,301

Current assets

Inventories 21 14,656,739 11,035,247 0 0

Trade and other receivables 22 26,523,360 14,626,644 246,683 1,248,460

Amount due from a corporate shareholder 20 0 11,166,361 0 182,892

Amounts due from subsidiaries 23 0 0 85,726,708 96,348,653

Non-current assets held for sale 24 533,044 39,975 0 0

Tax recoverable 1,043,435 453,862 553,500 0

Deposits 25 130,626,445 103,566,510 98,518,013 23,043,453

Cash and bank balances 3 1 3,326,644 2,075,251 41,672 61,214

176,709,667 142,963,850 185,086,576 120,884,672

Current liabilities

Trade and other payables 26 50,004,834 29,533,683 671,986 799,296

Amount due to a corporate shareholder 20 1,875,891 25,238,095 0 0

Borrowings 27 50,000,000 53,564,000 0 0

Current tax liabilities 5,343,041 840,136 0 111,957

Dividend payable 0 45,000,000 0 45,000,000

107,223,766 154,175,914 671,986 45,911,253

Group Company

Note 2007 2006 2007 2006RM RM RM RM

Net current assets/(liabilities) 69,485,901 ( 11,212,064) 184,414,590 74,973,419

507,056,443 356,798,702 383,230,899 273,814,720

Capital and reserves attributable toequity holders of the Company

Share capital 28 280,000,000 135,000,000 280,000,000 135,000,000

Share premium 60,968,951 73,404,716 60,968,951 73,404,716

Retained earnings 29 139,069,639 132,430,475 42,261,948 65,410,004

Other reserve 35 493,560 0 0 0

480,532,150 340,835,191 383,230,899 273,814,720

Minority interest 2,836,178 537,025 0 0

Total equity 483,368,328 341,372,216 383,230,899 273,814,720

Non-current liabilities

Deferred tax liabilities 30 23,688,115 15,426,486 0 0

507,056,443 356,798,702 383,230,899 273,814,720

B a l a n c e S h e e t sa s a t 3 1 D e c e m b e r 2 0 0 7

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Group Company

2007 2006 2007 2006RM RM RM RM

Operating activities


Adjustments for:

Property, plant and equipment

- depreciation 11,214,411 10,489,740 23,982 39,102

- write-offs 0 36,664 0 0

- gain on disposal (net) ( 46,940) ( 34,542) 0 0

- impairment losses 0 3,633,198 0 0

Depreciation of investment properties 162,146 162,146 0 0

Plantation development expenditure


Allowance for:

- deposits 0 16,673,567 0 0

- other receivables 140,971 126,971 3,083 0

Prepaid lease rental

- gain on disposal ( 475,025) 0 0 0

- amortisation of prepaid lease rental 209,030 185,845 0 0

- impairment losses 0 36,104 0 0

Inventories write-down 184,967 80,483 0 0

Amortisation of club membership 1,010 1,010 1,010 1,010

Net gain on disposal of quoted investments ( 64,900) ( 62,153,494) 0 ( 62,167,494)

Interest income ( 3,059,759) ( 2,664,891) ( 1,498,427) ( 1,612,249)

Gross dividend income ( 42,866) ( 43,481) ( 51,893,027) ( 91,173,715)

Interest expense 1,872,203 787,978 0 0

Write-back of allowance for impairment in quoted investments ( 463,070) ( 376,818) 0 0

Employee Share Scheme charge 493,560 0 0 0

Share of results of associates 25,088 283,273 0 0

Tax expense 11,324,323 3,841,719 13,705,139 22,215,010

92,918,750 39,106,960 ( 1,211,012) ( 1,243,466)

Changes in working capital:

Inventories ( 3,806,459) ( 616,958) 0 0

Receivables 1,051,778 ( 4,187,034) 11,886,874 ( 17,803,537)

Payables ( 10,577,815) ( 7,092,854) ( 128,320) 616,113

Restricted bank balance and deposits 0 67,550 0 0

79,586,254 27,277,664 10,547,542 ( 18,430,890)

Dividends received from quoted investments 42,866 43,481 37,780,000 29,130,000

Tax refund 213,849 9,077,426 0 0

Tax paid ( 2,419,011) ( 3,655,999) ( 257,570) ( 375,212)

Interest received 2,964,900 2,673,079 1,416,095 1,612,249

Interest paid ( 2,187,134) ( 787,978) 0 0

Net cash flow from operating activities 78,201,724 34,627,673 49,486,067 11,936,147

C a s h F l o w S t a t e m e n t sf o r t h e f i n a n c i a l y e a r e n d e d 3 1 D e c e m b e r 2 0 0 7

81

C a s h F l o w S t a t e m e n t sf o r t h e f i n a n c i a l y e a r e n d e d 3 1 D e c e m b e r 2 0 0 7

82

Group Company

2007 2006 2007 2006Note RM RM RM RM

Investing activities

Proceeds from disposal ofquoted investments 76,099 71,444,454 0 71,317,494

Purchase of property, plantand equipment 1 3 ( 56,344,068) ( 24,611,368) 0 0

Plantation development expenditure(net of depreciation and interest capitalised) ( 3,881,035) ( 5,263,036) 0 0

Proceeds from disposal of property,plant and equipment 170,697 34,592 0 0

Proceeds from disposal of a non-currentasset held for sale 515,000 0 0 0

Net cash flow (used in)/frominvesting activities ( 59,463,307) 41,604,642 0 71,317,494

Financing activities

Drawdown of revolving credit 0 50,000,000 0 0

Repayment of term loan ( 3,564,000) ( 14,288,000) 0 0

Proceeds from issuance of new sharespursuant to Public Issue 90,000,000 0 90,000,000 0

Payment to a corporate shareholder (net) 20 ( 11,922,040) 0 0 0

Share issue expenses paid ( 4,031,049) 0 ( 4,031,049) 0

Dividends paid to equity holdersof the Company 34 ( 60,000,000) ( 80,000,000) ( 60,000,000) ( 80,000,000)

Dividend paid to minority interestof a subsidiary ( 910,000) 0 0 0

Net cash flow from/(used in)financing activities 9,572,911 ( 44,288,000) 25,968,951 ( 80,000,000)

Net change in cash and cashequivalents 28,311,328 31,944,315 75,455,018 3,253,641

Cash and cash equivalents atbeginning of the financial year 104,357,011 72,412,696 23,104,667 19,851,026

Cash and cash equivalents atend of the financial year 3 1 132,668,339 104,357,011 98,559,685 23,104,667


1 General information

The Company is principally an investment holding company. The principal activities of the Group consist of cultivation of oilpalm and processing of fresh fruit bunches as well as provision of management, agronomic and consultancy services.

The number of employees in the Group at the end of the financial year was 3,518 (2006: 3,877). There are no employees in theCompany as the operations of the Company are managed by a subsidiary, Sarawak Plantation Services Sdn. Bhd..

The Company is a public limited liability company, incorporated and domiciled in Malaysia. It was listed on the Main Board ofBursa Securities Malaysia Berhad on 28 August 2007.

The addresses of the Group’s and Company’s registered office and business office are as follows respectively:

Registered office8th Floor, Wisma Naim, 2½ Mile Rock Road, 93200 Kuching, Sarawak

Business office and principal place of businessLot 1174, Block 9, MCLD, Miri Waterfront, Jalan Permaisuri, P.O.Box 661, 98007 Miri, Sarawak

2 Basis of preparation

The financial statements of the Group and Company have been prepared under the historical cost convention except as disclosedin the summary of significant accounting policies as set out in Note 4 to the financial statements.

The financial statements of the Group and Company have been prepared in accordance with the provisions of the Companies Act1965 and Financial Reporting Standards (“FRS”), the MASB Approved Accounting Standards in Malaysia for Entities Otherthan Private Entities

The preparation of financial statements in conformity with FRS requires the use of certain critical accounting estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at thedate of the financial statements, and the reported amounts of revenues and expenses during the reported financial year. It alsorequires Directors to exercise their judgment in the process of applying the Group’s and Company’s accounting policies.Although these estimates and judgment are based on the Directors’ best knowledge of current events and actions, actual resultsmay differ.

The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to thefinancial statements, are disclosed in Note 5 to the financial statements.

(a) Standards that are applicable to the Group and that are effective

The new accounting standards that are effective for the Company’s financial year ended 31 December 2007 and applicableto the Group are as follows:

FRS 117 : Leases FRS 124 : Related Party Disclosures

The Group has applied all the standards that have been adopted by the Group on a retrospective basis. All changes inaccounting policies have been made in accordance with the transitional provisions in the respective standards and interpretations.

The adoption of the above accounting standards did not result in substantial changes to the Group’s accounting policies otherthan the effects which have been disclosed in Note 40 to the financial statements. The adoption of FRS 124 has largelyaffected the presentation and disclosures in the financial statements.

(b) Standard that is yet to be effective but has been early adopted by the Group

The revised accounting standard that is only applicable for financial periods beginning on or after 1 July 2007 but has beenearly adopted by the Group is FRS: 112 Income Taxes. The impact of the adoption of this standard is set out in Note 40 tothe financial statements.

83

N o t e s t o t h e F i n a n c i a l S t a t e m e n t sf o r t h e f i n a n c i a l y e a r e n d e d 3 1 D e c e m b e r 2 0 0 7

(c) Standards and amendments to published standards that are applicable to the Group but not yet effective

The new and revised accounting standards that are applicable to the Group for financial periods beginning on or after 1 July2007 or later periods, but which the Group has not early adopted, are as follows:

FRS 139 Financial Instruments: Recognition and Measurement (effective date yet to be determined by the MalaysianAccounting Standards Board).

This new standard establishes principles for recognising and measuring financial assets, financial liabilities and somecontracts to buy and sell non-financial items. Hedge accounting is permitted only under strict circumstances. The Groupwill apply this standard when effective.

The Group has applied the transitional provision in FRS 139 which exempts entities from disclosing the possible impactarising from the initial application of this standard on the financial statements of the Group and Company.

Other revised standards that have no significant changes compared to the original standards:

- FRS 107 : Cash Flow Statements- FRS 118 : Revenue- FRS 134: Interim Financial Reporting

FRS 137 : Provisions, Contingent Liabilities and Contingent Assets

The amendments to this standard removed editorial differences with IAS 37 and will not have an impact on the Group’sor Company’s financial statements.

IC Interpretation 8 Scope of FRS 2

This interpretation clarifies that FRS 2 Share-based Payment applies even in the absence of specifically identifiablegoods and services.

The Group will apply these standards from financial periods beginning on 1 January 2008.

(d) Standards, amendments to published standards and interpretations to existing standards that are not yet effective and arenot relevant to the Group

The new and revised standards, amendments to published standards and interpretations to existing standards that are notyet effective and are not relevant to the Group are as follows:

FRS 120: Accounting for Government Grants and Disclosure of Government Assistance (effective for accounting periodsbeginning on or after 1 July 2007). This revised standard allows the alternative treatment of recording non-monetarygovernment grants at nominal amount on initial recognition.

FRS 111: Construction contracts. This standard has no significant change as compared to the original standard.

IC Interpretation 1: Changes in Existing Decommissioning, Restoration and Similar Liabilities (effective for accountingperiods beginning on or after 1 July 2007). This interpretation deals with changes in the estimated timing or amount ofthe outflow of resources required to settle the obligation, or a change in the discount rate.

IC Interpretation 2: Members’ Shares in Co-operative Entities and Similar Instruments (effective for accountingperiods beginning on or after 1 July 2007). This interpretation deals with liability or equity classification of financialinstruments which gives the holder the right to request redemption, but subject to limits on whether it will be redeemed.

IC Interpretation 5: Rights to Interests arising from Decommission, Restoration and Environmental RehabilitationFunds (effective for accounting periods beginning on or after 1 July 2007). This interpretation deals with accounting bya contributor for its interests arising from decommissioning funds.

3 Financial risk management objectives and policies

The Group seeks to ensure that adequate financial resources are available for the operation of the Group’s business whilstmanaging its risks.

84



(a) Interest rate risk

Interest rate exposure arises from the Group’s borrowings and deposits, and is managed through periodic reviews. TheGroup has no substantial long-term interest bearing assets or liabilities as at 31 December 2007. The investments infinancial assets are short-term in nature and are not held for speculative purposes but are mostly placed in fixed deposits.The Group’s interest rate exposure is managed through a mix of fixed and floating rate borrowings.

(b) Credit risk

Management has a credit policy in place and the Group does not face significant exposure from credit risk. At the balancesheet date, the Group has no significant concentration of credit risk except for:

(i) trade receivables relating to a major customer of a subsidiary of the Company for the Group’s oil palm productsamounting to RM12,665,253 (2006: RM4,785,497). However, the risk is foreseen to be at an acceptable level in viewof prompt settlement made by this customer. Management believes that no additional credit risk beyond the amountsprovided for collection losses is inherent in the Group’s trade receivables; and

(ii) a majority of the Group’s deposits are placed with major financial institutions. The Directors are of the view that thepossibility of non-performance by these financial institutions is remote on the basis of their financial strength.

(c) Liquidity and cash flow risk

The Group monitors and maintains a level of cash and cash equivalents deemed adequate by management to finance theoperations and to mitigate the effects of fluctuation in cash flows.

4 Summary of significant accounting policies

Unless otherwise stated, the following accounting policies have been used consistently in dealing with items which are consideredmaterial in relation to the financial statements.

(a) Basis of consolidation

Subsidiaries are those corporations, partnerships or other entities (including special purposes entities) in which the Grouphas power to exercise control over the financial and operating policies so as to obtain benefits from their activities, generallyaccompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rightsthat are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are consolidated using the purchase method of accounting.

Under the purchase method of accounting, the results of subsidiaries are fully consolidated from the date on which control istransferred to the Group and de-consolidated from the date that control ceases. The cost of an acquisition is measured as thefair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costdirectly attributable to the acquisition.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measuredinitially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the costof acquisition over the fair value of the Group’s share of the subsidiaries’ identifiable net assets acquired at the date ofacquisition is reflected as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary, thedifference is recognised directly in the income statement.

Minority interest represents that portion of the profit or loss and net assets of a subsidiary attributable to equity intereststhat are not owned, directly or indirectly through subsidiaries, by the parent. It is measured at the minorities’ share of thefair value of the subsidiaries’ identifiable assets and liabilities at the acquisition date and the minorities’ share of changesin the subsidiaries’ equity since that date.

Intragroup transactions, balances and unrealised gains on transactions between Group companies are eliminated; unrealisedlosses are also eliminated unless there is an impairment on the asset transferred. Where necessary, adjustments are madeto the financial statements of subsidiaries to ensure consistency of accounting policies with those adopted by the Group.

The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group’s share of its netassets as of the date of disposal, and is recognised in the consolidated income statement.

85

86

4 Summary of significant accounting policies (continued)

(b) Associates

Associates are those corporations, partnerships or other entities in which the Group exercises significant influence, but whichit does not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Significantinfluence is the power to participate in the financial and operating policy decisions of the associates but not the power toexercise control over those policies. Investments in associates are accounted for in the consolidated financial statements byusing the equity method of accounting and are initially recognised at cost.

Equity accounting involves recognising the Group’s share of the post-acquisition results of the associates in the incomestatement, and its share of post-acquisition movements within reserves. The cumulative post-acquisition movements areadjusted against the carrying amount of the investment.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group’s interest isreduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal orconstructive obligations or made payments on behalf of the associates.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interestin the associates, unrealised losses are also eliminated unless the transaction provides evidence on impairment of the assettransferred. Where necessary, in applying the equity method, adjustments are made to the financial statements ofassociates to ensure consistency of accounting policies with those of the Group.

(c) Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinarycourse of the Group’s activities. Revenue is shown net of sales tax and discounts and after eliminating sales within theGroup.

Sale of palm oil is recognised upon delivery of products and acknowledgement of acceptance by customers.

Management and agronomic services income is recognised upon performance of services.

Dividend income is recognised when the shareholders’ right to receive payment is established.

Rental income is recognised on an accrual basis.

Interest income is recognised on a time proportion basis, taking into account the principal outstanding and the effective rateover the period maturity, when it is determined that such income will accrue to the Group.

(d) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Costincludes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’scarrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefitsassociated with the item will flow to the Group and the cost of the item can be measured reliably. All other repair andmaintenance costs are charged to the income statement during the financial year in which they are incurred.

Capital work-in-progress is not depreciated. Depreciation of capital work-in-progress commences when the assets are readyfor their intended use.

All other property, plant and equipment are depreciated on the straight-line basis to write off the cost of the assets to theirresidual values over their estimated useful lives at the following annual rates:

Commercial buildings 2%

Other buildings 5%

Office equipment, furniture and fittings 10% - 20%

Infrastructure works 5% - 12.5%

Plant and equipment 5% - 20%

Motor vehicles 16% - 20%



87

Commercial buildings comprise office buildings and shop lots.

Included in other buildings are estate buildings, staff quarters and laboratories.

The residual values, useful lives of assets and depreciation method are reviewed at each balance sheet date to ensure that theamount, depreciation method and period of depreciation are consistent with previous estimates and the expected pattern ofconsumption of the future economic benefits embodied in the items of property, plant and equipment.

The policy for the recognition and measurement of impairment losses is set out in Note 4(g) to the financial statements.

All items of property, plant and equipment are derecognised upon disposal or when no future economic benefits are expectedto be derived from its use or disposal. The difference between the net disposal proceeds, if any, and the net carrying amountis recognised in profit or loss before tax.

(e) Investment properties

Investment properties, comprising office buildings sited on leasehold land, are held for long term rental yields or for capitalappreciation or both, and are not occupied by the Group. Leasehold land are included in prepaid rentals (see accountingpolicy, 4(f)).

Investment properties are stated at cost less accumulated depreciation and accumulated impairment losses.

On disposal of an investment property, or when it is permanently withdrawn from use and no future economic benefits areexpected from its disposal, it shall be derecognised. The difference between the net disposal proceeds and the carryingamount is recognised in profit or loss in the period of the retirement or disposal.

(f) Leases

Operating leases

Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified asoperating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to theincome statement on the straight-line basis over the lease period.

Prepaid lease rental represents long-term leasehold land and is amortised in equal instalments over the period of therespective leases that range from 57 to 99 years.

(g) Impairment of non-financial assets

Property, plant and equipment and other non-current assets that are subject to amortisation are reviewed for impairmentlosses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairmentloss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. Recoverableamount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment,assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

An impairment loss is charged to the income statement immediately. Reversal of impairment losses recognised in prior yearsis recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased.The reversal is recognised to the extent of the carrying amount of the asset that would have been determined (net ofamortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the income statementimmediately.

(h) Non-current assets classified as non-current asset held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a saletransaction rather than through continuing use. The condition is regarded as met only when the sale is highly probable andthe asset is available for immediate sale in its present condition subject only to terms that are usual and customary.

Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.

88


(i) Plantation development expenditure

(i) Oil palm and rubber plantation

Plantation development expenditure comprises new planting expenditure incurred from land clearing and upkeep oftrees to the point of maturity. This expenditure is capitalised until such time when the plants attain maturity after a pre-determined period from the year of planting. No amortisation is considered necessary on plantation developmentexpenditure, which represents cost incurred in replanting old planted areas, as their value is maintained throughreplanting programmes. Replanting expenditure is charged to the income statement in the financial year in which theexpenditure is incurred.

Interest costs on borrowings to finance the new planting expenditure are capitalised as part of plantation developmentexpenditure during the period of time before the plants attain maturity. Interest income on the temporary investmentof unutilised borrowings is deducted from the interest cost capitalised.

(ii) Teak tree plantation

Expenditure incurred on land clearing and upkeeping of trees is capitalised under plantation development expenditure.The accumulated cost of planting will be amortised to the income statement in proportion to the teak extracted.

(j) Investments

Investments in subsidiaries and associates are shown at cost less accumulated impairment losses. The policy for therecognition and measurement of impairment losses is set out in Note 4(g) to the financial statements.

Marketable securities are carried at the lower of cost and market value, determined on an aggregate portfolio basis bycategory of investment.

Cost is derived at on the weighted average basis. Market value is calculated by reference to stock exchange quoted sellingprices at the close of business on the balance sheet date. Increases/decreases in the carrying amount of marketable securitiesare credited/charged to the income statement.

Investment in club membership is stated at cost and is amortised on the straight-line basis over the tenure of the membershipperiod of 99 years. Investment in club membership with no expiry period specified is not amortised.

On disposal of an investment, the difference between net disposal proceeds and its carrying amount is charged/credited tothe income statement.

(k) Borrowing cost

(a) Classification

Borrowings are initially recognised based on the proceeds received, net of transaction costs incurred.

Interest, dividends, losses and gains relating to a financial instrument classified as a liability is reported within financecost in the income statement.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of theliability for at least 12 months after the balance sheet date.

(b) Capitalisation of borrowing cost

Borrowing costs incurred to finance the construction of property, plant and equipment and development of new plantingdevelopment expenditure are capitalised as part of the cost of the asset during the period of time that is required tocomplete and prepare the asset for its intended use. All other borrowing costs are expensed.



89

(l) Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost of produce inventories includes, where relevant, an appropriate proportion of overheads and is determined on a weightedaverage basis.

Nursery seedlings comprise the cost of seedlings remaining in the nursery for eventual field planting.

Cost of consumables is determined on a weighted average basis.

Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion andapplicable selling expenses.

(m)Receivables

Receivables are carried at anticipated realisable value. Bad debts are written off in the financial year in which they areidentified. An estimate is made for doubtful debts based on a review of all outstanding amounts at the balance sheet datewhen there is objective evidence that the Group will not be able to collect all amount due according to the original terms ofreceivables.

(n) Cash and cash equivalents

For the purpose of the cash flow statement, cash and cash equivalents comprise cash and bank balances, short-term depositsexcluding deposits pledged for banking facilities, and short-term, highly liquid investments that are readily convertible toknown amounts of cash and which are subject to an insignificant risk of changes in value.

(o) Income taxes

Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and includes alltaxes based upon the taxable profits and real property gains taxes payable on disposal of properties.

Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amountsattributed to assets and liabilities for tax purposes and their carrying amounts in financial statements.

Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which thedeductible temporary differences or unused tax losses can be utilised.

Deferred tax is recognised on temporary differences arising on investments in subsidiaries and associates except where thetiming of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will notreverse in the foreseeable future.

Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantially enacted by the balancesheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

(p) Employee benefits

(i) Short-term employee benefits

Wages, salaries, paid annual leave, bonuses, and non-monetary benefits are accrued in the period in which the associatedservices are rendered by employees of the Group.

(ii) Post-employment benefits

Defined contribution plans

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity (afund) and will have no legal or constructive obligations to pay further contributions if the fund does not hold sufficientassets to pay all employee benefits relating to employee service in the current and prior periods.

The Group’s contributions to defined contribution plans are charged to the income statement in the period to which theyrelate. Once the contributions have been paid, the Group has no further payment obligations.


(p) Employee benefits (continued)

(iii)Termination benefits

Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement dateor whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises terminationbenefits when it is demonstrably committed to either terminate the employment of current employees according to adetailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made toencourage voluntary redundancy. Benefits falling due more than 12 months after balance sheet date are discounted topresent value.

(iv)Share-based payments

The equity-settled, share-based compensation plan for eligible employees of the Group is in respect of the EmployeeShare Scheme which involved the sale of shares by certain shareholders of the Company to these employees (refer Note39(a) to the financial statements). The fair value of the employee services received in exchange for the grant of theshares is recognised as an expense in the income statement. The total amount to be expensed is determined by referenceto the fair value of the shares granted.

(q) Contingent liabilities and contingent assets

The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingentliability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognisedbecause it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability alsoarises in the extremely rare case where there is a liability that cannot be recognised because it cannot be measured reliably.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one of more uncertain future events beyond the control of the Group. The Group does not recognise contingentassets but discloses its existence where inflows of economic benefits are probable, but not virtually certain.

(r) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primaryeconomic environment in which the entity operates (the “functional currency”). The financial statements are presented inRinggit Malaysia, which is the functional and presentation currency of the Group and Company.

(s) Financial instruments

A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability orequity instrument of another enterprise.

A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another enterprise,a contractual right to exchange financial instruments with another enterprise under conditions that are potentially favourable,or an equity instrument of another enterprise.

A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to anotherenterprise, or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable.

(i) Financial instruments recognised on the balance sheet

The particular recognition method adopted for financial instruments recognised on the balance sheet is disclosed in theindividual policy statement associated with each item.

(ii) Fair value estimation for disclosure purposes

The fair value of financial assets and liabilities is estimated by discounting the future contractual cash flows at thecurrent market interest rate available to the Group for similar financial instruments.

90



6 Revenue

Group Company

2007 2006 2007 2006RM RM RM RM

Sale of palm oil products 243,927,422 142,288,832 0 0

Agronomic services 81,871 83,398 0 0

Dividends from subsidiaries 0 0 51,893,027 91,173,715

244,009,293 142,372,230 51,893,027 91,173,715

91

The face values, less any estimated credit adjustments, for financial assets and liabilities with a maturity of less than oneyear are assumed to approximate their fair values.

All financial instruments are denominated in Ringgit Malaysia unless otherwise stated.

(t) Share capital

Ordinary shares with discretionary dividends are classified as equity. Dividends on ordinary shares are recognised as aliability in the period in which they are declared.

5 Critical accounting estimates and judgments

Estimates and judgements are continually evaluated by the Directors and are based on historical experience and other factors,including expectations of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,rarely equal the related actual results. Set out below are the critical accounting estimates and assumptions made by managementin the process of applying the Group’s historical experience and expectations of future events that are believed to be reasonableunder the circumstances which have the most significant effect on the amounts recognised in the financial statements.

Deferred tax assets

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which thetemporary differences can be utilised. This involves judgement regarding the future financial performance of the companieswithin the Group in which the deferred tax asset has been recognised.

Critical judgment in applying accounting policies

In determining and applying accounting policies, judgment is often required in respect of items where the choice of specific policycould materially affect the reported results and financial position of the Group. However, the Directors are of the opinion thatthere are no accounting policies that require subjective judgment in the current financial year.

7 Profit before tax

The following items have been charged/(credited) in arriving at profit before tax:

Group Company

2007 2006 2007 2006RM RM RM RM

Auditors’ remuneration

- current year 115,300 129,059 20,000 35,000

- (over)/under accrual in prior financial years ( 18,750) 3,000 ( 15,000) 0

Property, plant and equipment:

- depreciation (Note 13) 11,214,411 10,489,740 23,982 39,102

- write-offs 0 36,664 0 0

- gain on disposal ( 46,940) ( 34,542) 0 0


Prepaid lease rental

- gain on disposal ( 475,025) 0 0 0

- amortisation of prepaid lease rental (Note 14) 209,030 185,845 0 0

- impairment losses of leasehold land included in prepaid lease rental 0 36,104 0 0

Depreciation of investment properties (Note 15) 162,146 162,146 0 0

Plantation development expenditure


Write-back of allowance for impairment in quoted investments ( 463,070) ( 376,818) 0 0

Allowance for doubtful debts

- other receivables 140,971 126,971 3,083 0

- deposits 0 16,673,567 0 0

Inventories write-down 184,967 80,483 0 0

FFB consumed and change in inventories 51,068,149 17,725,437 0 0

Mill maintenance and consumables 5,517,149 5,736,250 0 0

Cooking oil stabilisation cess 5,599,019 0 0 0

Amortisation of club membership 1,010 1,010 1,010 1,010

Staff cost (including Executive Directors’ remuneration) (Note 8) 38,634,527 33,810,917 10,500 1,500

Rental income ( 825,810) ( 847,773) 0 0

92



8 Staff cost (including Executive Directors’ remuneration)

9 Directors’ remuneration

The aggregate amount of emoluments received and receivable by Directors of the Group and Company during the financial yearwas as follows:

Group Company

2007 2006 2007 2006RM RM RM RM

Executive Directors

- salaries, bonuses, allowances and other emoluments 1,154,796 563,859 10,500 1,500

- defined contribution plans 111,204 58,248 0 0

- fees 240,000 126,719 72,000 24,000

1,506,000 748,826 82,500 25,500

Non-executive Directors

- fees 368,500 216,000 198,000 150,000

- other allowances 27,500 7,500 22,000 7,000

- estimated monetary value of benefits-in-kind 8,147 5,688 5,472 5,367

404,147 229,188 225,472 162,367

Total 1,910,147 978,014 307,972 187,867

Group Company

2007 2006 2007 2006RM RM RM RM

Wages, salaries, allowances and bonuses 34,405,088 30,686,670 10,500 1,500

Employee Share Scheme charge 493,560 0 0 0

Defined contribution plans 2,357,902 2,243,714 0 0

Other employee benefits 1,377,977 880,533 0 0

38,634,527 33,810,917 10,500 1,500

10 Finance cost

Group Company

2007 2006 2007 2006RM RM RM RM

Term loan interest 7,962 787,978 0 0

Revolving credit interest 1,864,241 0 0 0

1,872,203 787,978 0 0

93

11 Tax expense

The tax charge for the financial year comprises:

94

The explanation of the relationship between tax expense and profit before tax is as follow:

Group Company

2007 2006 2007 2006RM RM RM RM

Malaysian tax

Current tax 6,077,711 4,101,568 13,705,139 22,215,010

Deferred tax (Note 30) 5,246,612 ( 259,849) 0 0

11,324,323 3,841,719 13,705,139 22,215,010

Current tax

Current financial year 5,999,587 4,346,170 13,703,447 22,216,353

Under/(over) accrual in prior financial years 78,124 ( 244,602) 1,692 ( 1,343)

6,077,711 4,101,568 13,705,139 22,215,010

Deferred tax

Origination and reversal oftemporary differences (net) 5,246,612 928,952 0 0

Change in tax rate 0 ( 1,188,801) 0 0

5,246,612 ( 259,849) 0 0

11,324,323 3,841,719 13,705,139 22,215,010

Group Company

2007 2006 2007 2006RM RM RM RM

Profit before tax 82,767,924 67,267,333 52,152,367 153,669,880

Tax calculated at a tax rate of 27% (2006: 28%) 22,347,339 18,834,852 14,081,139 43,027,566

Tax effects of:

- difference in tax rate for the first RM500,000(2006: RM500,000) of chargeable incometaxed at 20% (2006: 20%) ( 39,285) ( 46,422) 0 0

- over recognition of temporary differencesarising from change in tax rate 0 ( 1,188,801) 0 0

- expenses not deductible for tax purposes 879,751 5,364,132 256,405 350,610

- income not subject to tax ( 24,994) ( 17,476,845) ( 634,097) ( 21,161,823)

- current year’s tax losses not recognised 0 530,600 0 0

- utilisation of tax incentives ( 9,295,803) ( 1,836,564) 0 0

- current year temporary differencesnot recognised 50,543 0 0 0

- recognition of previously unrecogniseddeductible temporary differences ( 2,671,352) ( 94,631) 0 0

Under/(over) accrual in prior financial years 78,124 ( 244,602) 1,692 ( 1,343)

Tax expense 11,324,323 3,841,719 13,705,139 22,215,010



The amounts of unutilised tax losses and deductible temporary differences, which have no expiry date, for which no deferred taxassets are recognised in the balance sheet of the Group are approximately:

Group

2007 2006RM RM

Unutilised tax losses 427,000 205,000

Deductible temporary differences 1,445,000 1,338,000

Group

2007 2006

Net profit attributable to equity holders of the Company (RM) 68,234,448 63,757,531

Weighted average number of ordinary shares in issue (unit)* 260,273,973 250,000,000

Earnings per share attributed to equity holders of the Company (sen)- Basic 26.22 25.50

* Computed as if the bonus issue of 115,000,000 ordinary shares of RM1.00 each was effected throughout the financialyears.

12 Earnings per share

(a) Basic earnings per share

Basic earnings per share of the Group is calculated by dividing the profit attributable to ordinary equity holders of theCompany for the financial year by the weighted average number of ordinary shares in issue during the financial year.

(b) Diluted earnings per share

Computation of diluted earnings per share is not applicable as the Company does not have any dilutive potential ordinaryshares.

95

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13 Property, plant and equipment (continued)

In the prior financial year, the Group recognised an impairment of RM3,633,198 for staff quarters and other structures constructedon the alienated resident lands in Lambir and Melugu. Presently, the Group is still in the process of procuring the alienation of theselands from the relevant authorities.

Office equipment,furniture and fitting Motor vehicles Total

Company RM RM RM

2007 Net book value

At 1 January 2007 10,445 15,341 25,786

Depreciation (Note 7) ( 8,641) ( 15,341) ( 23,982)

At 31 December 2007 1,804 0 1,804

At 31 December 2007

Cost 18,012 184,117 202,129

Accumulated depreciation ( 16,208) ( 184,117) ( 200,325)

Net book value 1,804 0 1,804

2006 Net book value

At 1 January 2006 12,722 52,166 64,888

Depreciation (Note 7) ( 2,277) ( 36,825) ( 39,102)

At 31 December 2006 10,445 15,341 25,786

At 31 December 2006

Cost 18,012 184,117 202,129

Accumulated depreciation ( 7,567) ( 168,776) ( 176,343)

Net book value 10,445 15,341 25,786

GroupNote 2007 2006

RM RM

Depreciation charged for the financial year is analysed as follows:

- plantation development expenditure 16 439,685 378,078

- charged to income statement 7 11,214,411 10,489,740

11,654,096 10,867,818

Property, plant and equipment acquired by means of:

- cash 56,344,068 24,611,368

- payables 18,075,522 13,786,462

74,419,590 38,397,830

98



14 Prepaid lease rental

Prepaid lease rental represents long-term leasehold land which is amortised in equal instalments over the period of the respectiveleases that range from 57 to 99 years.

Long-term leasehold land with net book values of RM48,050 (2006: RM49,358) are pledged as securities for a term loan facilitygranted to a subsidiary as disclosed in Note 27 to the financial statements.

Impairment loss of RM36,104 recognised in the prior financial year was related to the unalienated land cost of Melugu as disclosedin Note 13 to the financial statements.

Group

2007 2006RM RM

At 1 January- as restated (Note 40(f)) 8,448,762 8,710,686

Amortisation charged to income statement (Note 7) ( 209,030) ( 185,845)

Impairment loss 0 ( 36,104)

Transferred to non-current assets held for sale (Note 24) ( 533,044) ( 39,975)

At 31 December 7,706,688 8,448,762

Represented by:

Cost 9,236,063 9,769,107

Accumulated amortisation and impairment ( 1,529,375) ( 1,320,345)

At 31 December 7,706,688 8,448,762

15 Investment properties

The fair value of the properties was estimated at RM10,500,000 (2006: RM10,500,000) based on Directors’ valuation and alsovaluation by an independent professionally qualified valuers, CH William Talhar Wong & Yeo for certain properies. Valuations werebased on current prices in an active market.

99

Group

2007 2006RM RM

Net book value

At 1 January- as restated (Note 40(f)) 6,485,871 6,648,017

Depreciation (Note 7) ( 162,146) ( 162,146)

At 31 December 6,323,725 6,485,871

At 31 December

Cost 8,623,575 8,623,575

Accumulated depreciation ( 2,299,850) ( 2,137,704)

Net book value 6,323,725 6,485,871

Included in plantation development expenditure is a parcel of land with net book value of RM23,353,331 (2006: RM23,353,331)which has been pledged as security for a term loan facility granted to a subsidiary as disclosed in Note 27 to the financial statements.

Included in plantation development expenditure incurred during the financial year are depreciation charge of RM439,685 (2006:RM378,078) and interest expense of nil (2006: RM7,746).

In the prior financial year, the Group recognised an impairment loss of RM4,615,874 on the oil palm trees located at Melugu as theland has yet to be alienated to the Group. Presently, the Group is still in the process of procuring the alienation of land from therelevant authorities.

16 Plantation development expenditure

Oil palm Teak treeGroup plantation plantation Total

RM RM RM

2007

At 1 January 2007 192,991,155 15,903,537 208,894,692

Additions 3,403,816 916,904 4,320,720

At 31 December 2007 196,394,971 16,820,441 213,215,412

At 31 December 2007

Cost 201,010,845 16,820,441 217,831,286

Accumulated impairment losses ( 4,615,874) 0 ( 4,615,874)

Net book value 196,394,971 16,820,441 213,215,412

2006

At 1 January 2006 192,606,010 15,263,443 207,869,453

Additions 5,001,019 640,094 5,641,113

Impairment loss ( 4,615,874) 0 ( 4,615,874)

At 31 December 2006 192,991,155 15,903,537 208,894,692

At 31 December 2006

Cost 197,607,029 15,903,537 213,510,566

Accumulated impairment losses ( 4,615,874) 0 ( 4,615,874)

Net book value 192,991,155 15,903,537 208,894,692

100



17 Investment in subsidiaries

Company2007 2006

RM RM

Unquoted shares, at cost 198,685,575 198,685,575

Effective equity interestName Principal activities 2007 2006

% %

Sarawak Plantation Agriculture Cultivation of oil palm and processing 100 100 Development Sdn. Bhd. of fresh fruit bunches

Sarawak Plantation Property Property investment 100 100 Holding Sdn. Bhd.

Sarawak Plantation Services Provision of management, agronomic 95 95 Sdn. Bhd. and consultancy services

SPB Pelita Suai Sdn Bhd + Cultivation of oil palm 60 60 (formerly known as Titian Tepat Sdn. Bhd.)

Lionsun Timber Sdn. Bhd.+ Dormant 100 100

Azaria Sdn. Bhd.+ Dormant 75 75

Cayamas Sdn. Bhd.+ Dormant 100 100

Subsidiary of Sarawak Plantation Services Sdn. Bhd.

SPS Trading Sdn. Bhd.+ Marketing agent and dealer for water tanks and farm machineries 95 95

The details of the subsidiaries, all of which are incorporated in Malaysia, are as follows:

+ Audited by a firm other than PricewaterhouseCoopers, Malaysia

101

18 Investment in associates

Group2007 2006

RM RM

Unquoted shares, at cost 205,000 205,000

Share of post acquisition losses ( 205,000) ( 179,912)

0 25,088

Share of net assets of associates 0 25,088

Group2007 2006

RM RM

Revenue 565,509 2,391,332

Loss after tax ( 25,088) ( 283,273)

Non-current assets 689,638 1,172,443

Current assets 470,868 694,487

Current liabilities ( 1,160,506) ( 1,554,258)

Non-current liabilities 0 ( 287,584)

Net assets 0 25,088

Effective equity interestName Principal activities 2007 2006

% %

Associates of Sarawak Plantation Services Sdn. Bhd.

Wonderland Transport Services Sdn. Bhd.+ Provision of transportation services 33 33

Sarateak Nurseries and General Trading Sdn. Bhd.+ Business of teak nurseries - 29

The Group’s share of losses of associates that have not been recognised amounted to RM360,211 (2006: Nil) for the financial yearand RM378,586 (2006: Nil) cumulatively as at 31 December 2007.

The details of the associates, all of which are incorporated in Malaysia, are as follows:

+ Audited by a firm other than PricewaterhouseCoopers, Malaysia.

Sarateak Nurseries and General Trading Sdn. Bhd. was liquidated on 20 August 2007.

The Group’s share of revenue, profit, assets and liabilities of associates are as follows:

102



19 Other investments

20 Amounts due from/(to) a corporate shareholder

The amounts due to a corporate shareholder as at 31 December 2007 is unsecured and interest free with no fixed terms ofrepayment.

The amount due from/(to) a corporate shareholder, Sarawak Land Development Board (“SLDB”) as at 31 December 2006 wasmainly for the purchase of assets pursuant to the privatisation of SLDB’s assets to the Group in 1999. During the financial year,the Group has, with the consent of SLDB repaid the amounts arising from this transaction on a net basis amounting toRM11,922,040.

21 Inventories

Group2007 2006

RM RM

Produce inventories 6,754,762 4,793,217

Consumables 4,909,090 4,460,724

Nursery seedlings 2,568,275 1,781,306

Oil palm seeds 424,612 0

14,656,739 11,035,247

103

Group Company2007 2006 2007 2006

RM RM RM RM

In Malaysia, at cost

- shares in quoted corporations 1,471,631 1,482,830 0 0

Accumulated impairment losses ( 307,529) ( 630,758) 0 0

1,164,102 852,072 0 0

In Malaysia, at cost

- quoted unit trust 647,259 647,259 0 0

Accumulated impairment losses ( 200,243) ( 340,084) 0 0

447,016 307,175 0 0

Total quoted investments 1,611,118 1,159,247 0 0

Club membership, at cost 136,000 136,000 136,000 136,000

Accumulated amortisation ( 7,070) ( 6,060) ( 7,070) ( 6,060)

128,930 129,940 128,930 129,940

Total 1,740,048 1,289,187 128,930 129,940

Market value of quoted investments

- shares in quoted corporations 1,164,102 852,072

- quoted unit trust 447,016 307,175

1,611,118 1,159,247

22 Trade and other receivables

Group Company2007 2006 2007 2006

RM RM RM RM

Trade receivables 14,761,279 6,168,808 0 0

Allowance for doubtful debts ( 18,147) ( 13,900) 0 0

14,743,132 6,154,908 0 0

Other receivables 5,536,126 5,332,760 255,907 145,976

Allowance for doubtful debts ( 1,161,130) ( 1,024,406) ( 11,382) ( 8,299)

4,374,996 4,308,354 244,525 137,677

Deposits 38,932,011 34,746,708 500 0

Allowance for doubtful debts ( 32,200,000) ( 32,200,000) 0 0

6,732,011 2,546,708 500 0

Prepayments 673,221 1,616,674 1,658 1,110,783

26,523,360 14,626,644 246,683 1,248,460

Included in deposits of the Group are:

(a) an amount of RM32,200,000 (2006: RM32,200,000) paid by a subsidiary of the Company to the vendors for the acquisitionof a 30% equity interest in four plantation companies in prior financial years. These deposits have been provided for in fullin the prior financial year;

(b) an amount of RM1,862,000 (2006: RM1,862,000) paid by a subsidiary of the Company as deposits for the purchase of aparcel of Native Customary Rights (“NCR”) land. The transfer of the land title is still pending as the trustee of the NCRland is still in the process of procuring the alienation of the land;

(b) an amount of RM2,144,019 (2006: Nil) paid by a subsidiary of the Company as deposits for land survey work; and

(d) an amount of RM1,900,000 (2006: Nil) paid by a subsidiary of the Company as deposits for the acquisition of four parcelsof plantation land (refer to Note 39(c)).

23 Amounts due from subsidiaries

Amounts due from subsidiaries are unsecured, interest free and have no fixed terms of repayment.

24 Non-current assets held for sale

On 22 June 2006, a subsidiary of the Company entered into a Sale and Purchase Agreement (“SPA”) for the sale of a parcel ofland for a consideration of RM515,000. The sale was completed during the financial year ended 31 December 2007 with a gainof RM475,025 arising from the disposal.

During the financial year, a subsidiary of the Company is in the process of finalising the disposal of three parcels of land withnet book values of RM533,044 as at 31 December 2007 to third parties. The disposal is expected to complete within the nexttwelve months.

104



25 Deposits

Group Company2007 2006 2007 2006

RM RM RM RM

Deposits with (Note 31):

- licensed banks 130,252,758 103,284,064 98,518,013 23,043,453

- licensed finance companies 373,687 282,446 0 0

130,626,445 103,566,510 98,518,013 23,043,453

Deposits with a licensed bank of the Group amounting to RM795,236 (2006: RM795,236) are pledged for bank guarantees.

The weighted average interest rates per annum of deposits of the Group and Company that are effective at the balance sheet date areas follows:

The weighted average maturity period for deposits of the Group and Company is as follows:

Group Company2007 2006 2007 2006

% % % %

Deposits with:

- licensed banks 3.27 3.19 3.35 3.45

- licensed finance companies 3.20 3.05 - -

Group Company2007 2006 2007 2006

Days Days Days Days

Deposits with:

- licensed banks 63 50 60 90

- licensed finance companies 6 6 - -

105

27 Borrowings

Group2007 2006

RM RM

Secured term loan 0 3,564,000

Secured revolving credit 50,000,000 50,000,000

50,000,000 53,564,000

Borrowings of the Group comprise:

(a) Revolving credit (secured and interest bearing)

The Group has a banking facility which comprises a revolving credit of RM50 million and a term loan of RM75 millionrespectively. As at 31 December 2007, the Group has fully drawndown the RM50 million revolving credit facility but has yetto utilise the RM75 million term loan facility which is available for use by the Group for a period of 24 months from theagreement date.

The banking facility is secured by way of a first legal charge over certain land and buildings of the Group and is guaranteedby the Company.

The effective interest rate of the revolving credit facility at balance sheet date is 5.25% (2006: 5.25%) per annum.

(b) Term loan (secured and interest bearing)

The term loan was secured by way of a first legal charge over certain plantation land of the Group. The loan tenure was fora period of five years from the date of full drawdown and is to be repaid by fourteen quarterly instalments commencingOctober 2003. In the prior financial year, the effective interest rate of the term loan at balance sheet date was 7.45% perannum.

The term loan has been fully repaid during the financial year.

26 Trade and other payables

Group Company2007 2006 2007 2006

RM RM RM RM

Trade payables 18,429,859 11,009,182 0 0

Other payables 2,438,125 1,481,390 65,386 89,959

Accruals 29,136,850 17,043,111 606,600 709,337

50,004,834 29,533,683 671,986 799,296

106



28 Share capital

Group and Company2007 2006

RM RM

Authorised:

Ordinary shares of RM1.00 each 500,000,000 500,000,000

Issued and fully paid:

Ordinary shares of RM1.00 each

At 1 January 2007 135,000,000 135,000,000

Issued during the financial year

- Bonus Issue 115,000,000 0

- Public Issue 30,000,000 0

145,000,000 0

At 31 December 2007 280,000,000 135,000,000

(a) Bonus Issue

On 5 July 2007, the Company has completed a bonus issue of 115,000,000 new ordinary shares of RM1.00 each on the basisof approximately 0.85 bonus share for every one (1) ordinary share held (“Bonus Issue”). The bonus shares were issued toall shareholders of the Company prior to the Public Issue. The Bonus Issue was capitalised partly from the share premiumand retained earnings of the Company.

(b) Public Issue

During the financial year, the Company has undertaken a public issue of 30,000,000 new ordinary shares of RM1.00 each inthe Company at an issue price of RM3.00 per ordinary share (“Public Issue”) via a listing exercise on the Main Board of BursaSecurities Malaysia Berhad.

The Public Issue was completed on 28 August 2007.

29 Retained earnings

Under the single-tier tax system which came into effect from the year of assessment 2008, companies are not required to havetax credits under Section 108 of the Income Tax Act 1967 for dividend payment purposes. Dividends paid under this system aretax exempt in the hands of shareholders. Companies with Section 108 credit as at 31 December 2007 may continue to pay frankeddividends until the Section 108 credits are exhausted or 31 December 2013 whichever is earlier unless they opt to disregard theSection 108 credits to pay single-tier dividend under the special transitional provision of the Finance Act 2007. However, theCompany has not opted for the single-tier tax system.

As at 31 December 2007, pursuant to Section 8 of the Income Tax (Amendment) Act 1999, the Company has sufficient taxexempt account to frank up to approximately RM51,000 (2006: RM51,000) of its retained earnings, if paid out as tax exemptdividends.

The Company has sufficient Section 108 tax credits of the Income Tax Act 1967 available to frank up to approximatelyRM30,268,800 (2006: RM5,315,000) of its retained earnings, if paid out as dividends. The extent of its retained earnings notcovered at that date amounted to RM11,993,148 (2006: RM60,095,004).

107

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against currenttax liabilities and when the deferred taxes relate to the same tax authority.

The following amounts, determined after appropriate offsetting, are shown in the balance sheet:

30 Deferred tax

Group2007 2006

RM RM

Malaysian income tax

Deferred tax assets ( 3,015,017) 0

Deferred tax liabilities 23,688,115 15,426,486

20,673,098 15,426,486

At start of financial year 15,426,486 15,686,335

Charged/(credited) to income statement (Note 11):

- property, plant and equipment 8,241,528 1,390,187

- receivables ( 27,989) ( 15,507)

- provisions 0 ( 1,650,884)

- plantation development expenditure ( 3,015,017) 0

- others 48,090 16,355

5,246,612 ( 259,849)

At end of financial year 20,673,098 15,426,486

Subject to income tax

Deferred tax assets (before offsetting)

- receivables ( 288,571) ( 260,582)

- others ( 41,595) ( 89,685)

- provisions ( 1,665,517) ( 1,665,517)

- plantation development expenditure ( 3,015,017) 0

( 5,010,700) ( 2,015,784)

Offsetting 1,995,683 2,015,784

Deferred tax assets (after offsetting) ( 3,015,017) 0

Deferred tax liabilities (before offsetting)

- property, plant and equipment 25,683,798 17,442,270

- offsetting ( 1,995,683) ( 2,015,784)

Deferred tax liabilities (after offsetting) 23,688,115 15,426,486

108



31 Cash and cash equivalents

Group Company2007 2006 2007 2006

RM RM RM RM

Deposits (Note 25) 130,626,445 103,566,510 98,518,013 23,043,453

Cash and bank balances 3,326,644 2,075,251 41,672 61,214

133,953,089 105,641,761 98,559,685 23,104,667

Bank balance restricted* ( 489,514) ( 489,514) 0 0

Deposits pledged (Note 25) ( 795,236) ( 795,236) 0 0

Cash and cash equivalents 132,668,339 104,357,011 98,559,685 23,104,667

* The bank balance is restricted as security pledged for bank guarantees.

Bank balances are deposits held at call with banks.

32 Significant related party disclosures

In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are the other significantrelated party disclosures. The related party transactions described below were carried out on agreed terms and conditionsbetween the parties.

(a) Related parties and relationship

The related parties and their relationship with the Group and the Directors of the Company are as follows:

Related parties Relationship

SGOS Assets Holdings Sdn Bhd (“SGOS”) State Financial Secretary, Incorporated is a corporate shareholder of theCompany and SGOS. Dato’ Sri Ahmad Tarmizi B. Haji Sulaiman , a Directorof the Company is also a director of SGOS

Wonderland Transport Services Sdn Bhd Associated company of the Group and Haji Mohamad Bolhair B. Reduan,aDirector of the Company is also a director of Wonderland Transport ServicesSdn Bhd

ASSAR Assets Management Sdn Bhd Haji Soedirman B. Haji Aini, a Director of the Company (until 1 May 2007)is also a director of ASSAR Assets Management Sdn Bhd

Sarawak Land Development Board (“SLDB”) Corporate shareholder of the Company and Haji Chiti @ Chaiti B. HajiBolhassan and Dato’ Sri Ahmad Tarmizi B. Haji Sulaiman, Directors of theCompany, are members of SLDB

(b) Related party balances

The significant related party balances are as follows:

Group2007 2006

RM RM

SGOS Assets Holdings Sdn Bhd 1,847,971 1,941,865

109

32 Significant related party disclosures (continued)

(c) Related party transactions

The significant related party transactions arising from the normal course of business during the financial year are as follows:

Group2007 2006

RM RM

Salaries, bonuses and other emoluments 1,767,091 1,395,224

Defined contribution plans 232,833 161,364

1,999,924 1,556,588

33 Key management personnel and compensation

The compensation for key management personnel (including Directors’ remuneration) of the Group during the financial year isas follows:

110

Group2007 2006

RM RM

(i) SGOS Assets Holdings Sdn Bhd

- proceeds from the sale of fresh fruit bunches (“FFB”) in relation to the management of the plantation estate of SGOS 1,754,651 1,039,406

- payment of expenses on behalf of SGOS ( 1,660,757) ( 2,698,252)

(ii) ASSAR Assets Management Sdn Bhd

- fund management services income 80,880 1,180

(iii) Sarawak Land Development Board

- proceeds from the sale of FFB in relation to the management of the plantation estate of SLDB 865,570 791,814

- payment of expenses on behalf of SLDB ( 489,373) ( 763,379)



Company2007 2006

RM RM

In respect of financial year ended 31 December 2005:

Final gross dividend of approximately 94 sen per share on 135,000,000ordinary shares of RM1.00 each, less income tax of 28%

- paid on 8 August 2006 0 58,688,000

- paid on 21 May 2007 0 33,012,000

0 91,700,000

Final tax exempt dividend of approximately 25 sen per share on135,000,000 ordinary shares o RM1.00 each

- paid on 8 August 2006 0 21,312,000

- paid on 21 May 2007 0 11,988,000

0 33,300,000

In respect of financial year ended 31 December 2006:

Final gross dividend of approximately 15 sen per share on 135,000,000ordinary shares of RM1.00 each,

less income tax of 28%, paid on 21 May 2007 15,000,000 0

15,000,000 125,000,000

34 Dividends

Dividends proposed are as follows:

On 28 February 2008, the Directors declared an interim dividend of 6.75 sen per share on 280,000,000 ordinary shares of RM1.00each, less income tax of 26%, amounting to RM13,985,999 for the financial year ended 31 December 2007, which was paid on 18April 2008 to shareholders registered on the Company’s Register of Members at the close of business on 24 March 2008.

The Directors now recommend the payment of a final gross dividend of 7.20 sen per share on 280,000,000 ordinary shares ofRM1.00 each, less income tax of 26%, amounting to RM14,918,400 which is, subject to the approval of members at theforthcoming Annual General Meeting of the Company.

However, these financial statements do not reflect the dividends in respect of the financial year ended 31 December 2007, whichwill accrue as liabilities in the financial year ending 31 December 2008 as the dividends were declared after the balance sheet date.

35 Other reserve

Other reserve represents the capital contribution by shareholders in respect of the shares granted to employees of the Grouppursuant to the Employee Share Scheme as set out in Note 39(a) to the financial statements.

111

36 Future capital expenditure

Capital expenditure not provided for in the financial statements is as follows:

Group2007 2006

RM RM

Authorised by the Directors and contracted for 41,388,076 22,419,801

Authorised by the Directors but not contracted for 35,734,065 118,430,078

77,122,141 140,849,879

Analysed as follows:

Investments (Note 39(d)) 11,305,920 0

Property, plant and equipment 24,010,603 96,451,894

Prepaid lease rental 31,370,441 0

Plantation development expenditure 10,435,177 44,397,985

77,122,141 140,849,879

Company2007 2006

RM RM

Corporate guarantees to a bank for revolving credit granted to a subsidiary 50,000,000 50,000,000

37 Contingent liabilities

38 Segment reporting

Segmental reporting is not applicable as the Group’s activities are pre-dominately engaged in the operation of oil palmplantations and milling, and all of its operations are carried out in Malaysia.

39 Significant events during the financial year

(a) Employee Share Scheme

The Employee Share Scheme (“ESS”) involved the sale of 135,000 ordinary shares of RM1.00 each in the Company bycertain shareholders of the Company, i.e. Cermat Ceria Sdn Bhd, State Financial Secretary, Incorporated and Sarawak LandDevelopment Board (collectively known as “the Offerors”), on a proportionate basis to their then existing shareholdings inthe Company to eligible employees of the Group.

The ESS was offered at an offer price of RM1.90 per ordinary share to certain employees as part of a reward and incentivescheme for the eligible employees.

The ESS was completed on 18 June 2007. The ordinary shares under the ESS were not entitled to any dividends declaredprior to this date but were entitled to the Bonus Issue as set out in Note 28 to the financial statements. These employees werealso not eligible to participate in the Offer for Sale as set out in Note 39(b) to the financial statements on those sharesallocated for employees of the Company and its subsidiaries.

112



(b) Initial Public Offering (“IPO”)

During the financial year, the Company undertook an Initial Public Offering exercise which comprise a combined Offer forSale of 39,750,000 ordinary shares of RM1.00 each and a Public Issue of 30,000,000 new ordinary shares of RM1.00 each.

The IPO was completed on 28 August 2007 and consequently, the Company was listed on the Main Board of Bursa Securitieson that date.

(c) On 28 November 2007, Sarawak Plantation Agriculture Development Sdn Bhd, a subsidiary of the Company, entered intothree conditional Sale and Purchase Agreements (“SPA”) with Lembaga Amanah Kebajikan Masjid Negeri Sarawak(“LAKMNS”) to purchase four parcels of plantation land of approximately 7,620 hectares for a total purchase price ofRM19,050,000. On 22 April 2008, these SPAs became unconditional as LAKMNS has obtained the consent of the Directorof Land and Survey in Sarawak for the transfer of the four parcels of plantation land.

As at 31 December 2007, RM1,900,000 has been paid as deposits for this land acquisition and the balance of RM17,145,000has been included as future capital expenditure as disclosed in Note 36 to the financial statements.

(d) On 28 November 2007, the Company entered into two joint venture agreements with Pelita Holdings Sdn. Bhd. to incorporatetwo joint venture companies, namely SPB Pelita Wak Pakan Plantation Sdn. Bhd. and SPB Pelita Mukah 5 & 6 Plantation Sdn.Bhd. to develop lands held under Native Customary Rights (“NCR”) into oil palm plantations. These parcels of landcontained estimated plantable areas of 6,474 hectares located in Wak Pakan Sarikei and Mukah, Sarawak. The Company willsubscribe for 60% equity interest each in these two companies at cash considerations of RM9,319,680.

40 Changes in accounting policies

(a) FRS 112: Income taxes

This revised standard removes the requirements that prohibit recognition of deferred tax on unutilised reinvestmentallowances or other allowances in excess of capital allowances. The Group has early adopted this standard for the financialyear ended 31 December 2007.

The adoption of this standard to recognise deferred tax on unutilised reinvestment allowances has the effect of decreasing taxexpense by RM2,764,135 and a corresponding increase in the profit for the financial year ended 31 December 2007 as set outin Note 40(e) to the financial statements. There is no impact on prior year’s financial statements.

(b) FRS 117: Leases

This standard requires the classification of leasehold land as prepaid lease rental. Upon the adoption of FRS 117: Leases, theGroup changed its accounting policy to classify leasehold land as prepaid lease rental.

The change in accounting policy was accounted for retrospectively and the effect on the Group’s financial statements for thecurrent and prior financial years are set out in Note 40(e) and Note 40(f) respectively. There is no impact on the Company’sfinancial statements. Consequently, the Group’s amortisation of prepaid lease rental of RM209,030 (2006: RM185,845) isrecognised in the income statement and disclosed separately from depreciation of property, plant and equipment.

(c) FRS 124: Related Party Disclosures

This standard affects the identification of related parties and some other related disclosures resulting in additional disclosuresin the Group’s and Company’s financial statement for the current and prior financial year respectively.

(d) FRS 140: Investment properties

In accordance with FRS 140, investment properties can be valued either using cost or fair value method. The Group hasrecognised investment properties using the cost method. In the prior financial year, investment properties were included inproperty, plant and equipment.

Following the adoption of FRS 140, investment properties are now classified separately. The impact on the Group’s financialstatement for the current and prior financial years are set out in Note 40(e) and Note 40(f) to the financial statementsrespectively.

113

40 Changes in accounting policies (continued)

(e) Effects of the changes in accounting policies on financial statements for the financial year ended 31 December 2007

The following table discloses the impact of the adjustments that have been made in accordance with the changes in accountingpolicies on the Group’s financial statements for the financial year ended 31 December 2007.

(i) Effects on the Group’s balance sheet as at 31 December 2007

FRS 112 FRS 117 FRS 140 (Note 30) (Note 14) (Note 15) Net effects

RM RM RM RM

Property, plant and equipment 0 ( 7,706,688) ( 6,323,725) ( 14,030,413)

Prepaid lease rental 0 7,706,688 0 7,706,688

Investment properties 0 0 6,323,725 6,323,725

Deferred tax assets 2,764,135 0 0 2,764,135

Minority interest 1,105,654 0 0 1,105,654

Retained earnings 1,658,481 0 0 1,658,481

Increase/(decrease)FRS 112

RM

Tax (2,764,135)

Profit for the financial year 2,764,135

Profit attributable to:

Equity holders of the Company 1,658,481

Minority interest 1,105,654

Profit for the financial year 2,764,135

Earnings per share attributed to equity holders of the Company (sen)

- Basic 1 .06

(ii) Effects on the Group’s income statement as at 31 December 2007

IncreaseFRS 112 Net effects

RM RM

Retained earnings 2,764,135 2,764,135

(iii)Effects on the Group’s statement of changes in equity as at 31 December 2007

(iv)Effects on the Group’s cash flow statement as at 31 December 2007

There were no material effects on the Group’s cash flow statement for the financial year ended 31 December 2007.

114



(f) Restatement of balance sheets as at 31 December 2006 and 1 January 2006

The following table discloses the impact of the adjustments that has been made in accordance with the change in accountingpolicies on the Group’ s balance sheets as at 31 December 2006 and 1 January 2006 respectively.

(i) Restatement of balance sheet as at 31 December 2006

As previously AsNote reported FRS 117 FRS 140 restated

RM RM RM RM

Property, plant and equipment 1 3 157,801,799 ( 8,448,762) ( 6,485,871) 142,867,166

Prepaid lease rental 1 4 0 8,448,762 0 8,448,762

Investment properties 15 0 0 6,485,871 6,485,871

As previously AsNote reported FRS 117 FRS 140 restated

RM RM RM RM

Property, plant and equipment 1 3 134,426,580 ( 8,710,686) ( 6,648,017) 119,067,877

Prepaid lease rental 1 4 0 8,710,686 0 8,710,686

Investment properties 15 0 0 6,648,017 6,648,017

(ii) Restatement of balance sheet as at 1 January 2006

41 Material litigation

(a) A subsidiary of the Company, Sarawak Plantation Agriculture Development Sdn. Bhd. (“SPAD”) (“Plaintiff” or “Purchaser”)has instituted legal action against Datuk Haji Zainal Abidin bin Ahmad (“Defendant” or “Vendor”). The claim is for therefund of the sum of RM7,200,000 paid under a Sale and Purchase Agreement (“SPA”) dated 27 November 1999 for thepurchase of 4,148,000 ordinary shares of RM1.00 each in Bahtera Bahagia Sdn Bhd (“Bahtera”). Based on the opinion ofSPAD’s advocates, the Defendant/Vendor failed to obtain a Waiver of Pre-emption Rights by 31 December 2000 and therebybreached one of the conditions precedent of the SPA. Accordingly, SPAD as the Plaintiff/Purchaser became entitled to therefund of the deposit and part payment made under the SPA.

A writ and statement of claim was filed by SPAD on 27 December 2006 and a Defence and Counterclaim was filed by theDefendant and served on SPAD on 26 May 2007.

The Pre-trial Case Management date of this suit is now fixed on 3 July 2008.

The Directors in consultation with the Company’s advocates are of the opinion that SPAD is likely to recover the deposit andpart-payment of RM7.2 million and that SPAD has a good defence against the Defendant’s counterclaim. Notwithstandingthis, the Directors have provided in full the above deposit paid which forms part of the amount of RM32,200,000 set out inNote 22(a) to the financial statements.

(b) Mali bin Seman and 60 others (“Plaintiffs”) are claiming against Sarawak Land Deveopment Board (“SLDB”) and SPAD foran area of 20 acres each to be allocated out of Ladang Dua and Ladang Tiga Oil Palm Plantations, in Miri, and also for damagesfor breach of contract, mesne profits, interest and costs, and such further and or other relief as the court may think fit. ThePlaintiffs have filed in a Statement of Claim alleging that they were employed by SLDB in the 1970s and that they werepromised land as part of their employment contract. SPAD is sued as the successor-in-title of SLDB.

A statement of Defence has been filed by SLDB and SPAD. SLDB has also applied to strike out the claim against it. As atbalance sheet date, the court has not heard SLDB’s application.

The Directors, in consultation with the Solicitors, are of the opinion that SPAD has strong merits in the case.

115

41 Material litigation (continued)

(c) Sarawak Plantation Agriculture Development Sdn. Bhd. (“SPAD”), a subsidiary of the Company, faced a charge underSection 29A of the Environmental Quality Act, 1974, for allowing open burning on Lot 2, Block 11 Kluah Land District (wheretheir Melugu Oil Palm Plantation is situated). The Court acquitted SPAD of the charge on 25 April 2007 but the Prosecutionhas filed a Notice of Appeal to the High Court, appealing against the acquittal. The appeal scheduled to be heard on 12 March2008, was adjourned and the Court directed that parties submit their written submission within certain time frame and theCourt will deliver its ruling on 8 September 2008.

The Directors, in consultation with the Company’s advocates are of the opinion that SPAD has strong merits in the case.

(d) Sarawak Plantation Agriculture Development Sdn. Bhd. (“SPAD”), a subsidiary of the Company, sued TR Ladon anak Ediehand 14 other, and seeked injunctive and declaratory relief against the Defendants for various acts of trespass over its landdescribed as Lot 7 Block 12 Bawan Land District. The financial relief claimed by SPAD are special damages of RM2,836,000,general unspecified damages and interest thereon at the rate of 8% per annum. SPAD has obtained an injunction restrainingthe Defendants from entering or trespassing on its land, threatening or harassing its employees, or disrupting, obstructingor hindering its work. No defence or counterclaim against SPAD has been filed.

The suit has been consolidated with another suit. Kuching High Court Suit No. 22-23-2006II (TR Ladon anak Edieh and10 others vs.SLDB and 2 others). At the mention on 27 March 2008, the Honourable Judge directed the Plaintiffs in Suit No.22-23-2006-II to extract the Order for Consolidation within fourteen (14) days from 27 March 2008 and thereafter to fileForm 63 for Pre-Trial Case Management.

The Directors in consultation with the Company’s advocates are of the opinion that, based on the current pleadings andsituation of the matter, SPAD’s chances for success in the action are good.

42 Fair values

The carrying amounts of financial assets and liabilities at the balance sheet date of the Group and the Company approximatedtheir fair values except for certain prepaid lease rental and investment properties as set out in Note 14 and Note 15 to the financialstatements.

43 Approval of financial statements

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on24 April 2008.


116


A n a l y s i s o f S h a r e h o l d i n g sa s a t 3 0 A p r i l 2 0 0 8

117

According to the Number of Securities Held in Respect of Ordinary Shares.

Top Thirty Shareholders

Names HoldingsNo. %

1 Cermat Ceria Sdn Bhd 81,597,024 29.1418

2 State Financial Secretary Sarawak 71,218,101 25.4350

3 OSK Nominees (Tempatan) Sdn Bhd.Pledged securities account for Mohamad Bolhair bin Reduan 18,473,985 6.5979

4 Lembaga Tabung Haji 14,286,800 5.1024

5 CIMB Group Nominees (Tempatan) Sdn Bhd.CIMB Trustee Berhad for the Yayasan Budaya Melayu SarawakCharitable Trust (49991 TR01) 11,640,939 4.1446

6 Dayak Cultural Foundation 9,854,939 3.5196

7 Yayasan Sarawak 6,802,470 2.4295

8 Lembaga Amanah Kebajikan Masjid Negeri Sarawak 5,000,000 1.7857

9 CIMB Group Nominees (Tempatan) Sdn BhdCIMB Trustee Berhad for the Yayasan Sarawak (49992 TR01) 4,800,469 1.7152

10 CitiGroup Nominees (Asing) Sdn BhdUBS AG Singapore for Ecocube Investments Ltd 4,700,100 1.6786

1 1 CitiGroup Nominees (Asing) Sdn BhdUBS AG Singapore for Walbrook Trustees (Guernsey) Limited(Lambard Int LLC) 3,682,500 1.3152

12 CIMSEC Nominees (Tempatan) Sdn BhdEminent Platform Sdn Bhd 2,540,600 0.9074

1 3 OSK Nominees (Tempatan) Sdn Bhd.Pledged Securities account for Hasmi bin Hasnan 2,400,010 0.8571

No. of % ofShareHolders/ ShareHolders/ No. of % of

Size of Holdings Depositors Depositors Shares Held Issued Capital

1 - 99 10 0.4755 378 0.0001

100 - 1,000 685 32.5725 642,114 0.2293

1,001 - 10,000 1,091 51.8783 4,970,723 1.7753

10,001 - 100,000 235 11.1745 8,430,844 3.0110

100,001 - 13,999,999 78 3.7090 80,380,031 28.7072

14,000,000 and above 4 0.1902 185,575,910 66.2771

Total 2,103 100.0000 280,000,000 100.0000

Top Thirty Shareholders (continued)

118

A n a l y s i s o f S h a r e h o l d i n g sa s a t 3 0 A p r i l 2 0 0 8

Names HoldingsNo. %

1 4 Amanah Raya Nominees (Tempatan) Sdn Bhd.Public Islamic Opportunities Fund 2,117,400 0.7562

15 AllianceGroup Nominees (Tempatan) Sdn. Bhd.Pheim Asset Management Sdn. Bhd. For Employees Provident Fund 1,860,200 0.6644

16 CIMSEC Nominees (Tempatan) Sdn. Bhd.CIMB Bank for Yap Yen Chin (MY0370) 1,830,000 0.6536

17 Cheng Ah Teck @ Cheng Yik Lai 1,750,000 0.6250

18 Lambaian Kukuh Sdn. Bhd. 1,481,600 0.5291

19 OSK Nominees (Tempatan)Sdn. Bhd.Pledged securities account For Ng Ghim Ann 1,469,000 0.5246

20 OSK Nominees (Tempatan) Sdn. Bhd.Pledged Securities account for Chua Eng Lim 1,211,000 0.4325

21 Vision Classic Holdings Limited 931,900 0.3328

22 Amanah Raya Berhad Amittikal 776,400 0.2773

23 HSBC Nominees (Tempatan) Sdn. Bhd.HSBC (M) Trustee Berhad for Maakl Al-Faid ‘(4389) 750,000 0.2679

24 Chew Chiaw Ann 750,000 0.2679

25 AMSEC Nominees (Tempatan) Sdn BhdASSAR Asset Management Sdn Bhd for Tabung Baitulmal Sarawak(Majlis Islam Sarawak) ( FM-ASSAR-TBS) 750,000 0.2679

26 OSK Nominees (Tempatan) Sdn. Bhd.Pledged Securities account for Bolhan Bin Berawi 661,600 0.2363

27 Yahya bin Daud 475,733 0.1699

28 Abdul Hamid Bin Ibrahim 475,487 0.1698

29 HSBC Nominees (Tempatan) Sdn. Bhd.HSBC (Malaysia) Trustee Berhad for Amanah Saham Sarawak 450,000 0.1607

30 Liew Men Khian 425,733 0.1520


Substantial Shareholders

119

Directors’ Direct and Indirect in the Company

Names of Directors Designation Nationality Direct Holdings Indirect Holdings

No. % No. %

01 Datuk Hasmi bin Hasnan Chairman Malaysian 2,400,000 0.86 83,105,024 29.68

02 Dato Sri Ahmad TarmiziBin Sulaiman Deputy Chairman Malaysian 200,000 0.07 71,218,101 25.44

03 Haji Mohamad Bolhair Reduan Managing Director Malaysian 18,773,985 6.70 235,000 0.08

04 Datuk Abdul Hamed bin Sepawi Non Executive Director Malaysian 200,000 0.07 81,623,424 29.15

05 Haji Chaiti bin Bolhassan Non Executive Director Malaysian 100,000 0.04 0 0.00

06 Haji Bolhan bin Berawi Executive Director Malaysian 661,600 0.24 0 0.00

07 Haji Abdul Hamid bin Ibrahim Executive Director Malaysian 625,487 0.22 0 0.00

08 Haji Yahya bin Daud Executive Director Malaysian 625,733 0.22 0 0.00

09 Datu Haji Mohamad Sepuan bin Anu Independent Director Malaysian 50,000 0.02 0 0.00

10 YB Haji Hamden bin Ahmad Independent Director Malaysian 100,000 0.04 0 0.00

1 1 Polit bin Hamzah Independent Director Malaysian 50,000 0.02 0 0.00

12 Azizi bin Morni Independent Director Malaysian 11,000 0.00 0 0.00

1 3 Umang Nangku Jabu Independent Director Malaysian 50,000 0.02 0 0.00

Names of Substantial NRIC/ Nationality/ Indirect HoldingsShareholders Registration Malaysia/ Country of Direct (excluding bare

No. Foreign incorporation Holdings trustees)

No. % No. %

01 Cermat Ceria Sdn Bhd 449914K Malaysian Malaysia 81,597,024 27.14 0 0.00

02 State Financial ORD211948 Malaysian Malaysia 71,218,101 25.44 0 0.00Secretary Sarawak

03 OSK Nominees (Tempatan) 6023A Malaysian Malaysia 18,473,985 6.59 0 0.00Sdn. Bhd.Pledged securities account forMohamad Bolhair bin Reduan

04 Lembaga Tabung Haji ACT5351995 Malaysian Malaysia 14,286,800 5.10 0 0.00

05 Datuk Hasmi bin Hasnan 530411-13-5603 Malaysian Malaysia 2,400,000 0.86 83,105,024 29.68

06 Datuk Abdul Hamed 490531-13-5129 Malaysian Malaysia 200,000 0.07 81,623,424 29.15bin Sepawi

120

T o p 1 0 P r o p e r t i e s

SPAD Bukit Peninjau Lot 12 & 89 Blk 2 Land & Building 3-34 8 KM off KM 55, Miri-Bintulu Road Bukit Kisi LD

Ladang Surea Part of Lot 11 Land & Building 5-27 4 KM off KM 55, Miri-Bintulu Road Blk 2 Bukit Kisi LD

Ladang Tiga Part of Lot 2, Lot 14, Land & Building 3-31 KM 77, Miri-Bintulu Road Blk 11, Niah LD, Lot 3 Blk 8 Bukit Kisi LD

Part of Lot 2 Land & Building 3-31 Blk 11 Niah LD

Subis 2 Lot 2 Blk 17, Part of Land & Building 4-28 1 KM off KM 87, Miri-Bintulu Road Lot 1 Blk 18, Niah LD, Part of Lot 4 Blk 8 Bukit Kisi LD

Subis 3 Part of Lot 1 Blk 18 Land & Building 5-25 6 KM off KM 87, Miri-Bintulu Road Niah LD, Part of Lot4 Blk 8, Bukit Kisi LD

Sawai, Niah Lot 68 Sawai LD Land & Building 3-10 14 KM off KM 106, Miri-Bintulu Road

Mukah 1 Part of Lot 3 Blk 8 Land & Building 3-25 11 KM off KM 85, Sibu-Bintulu Road Sikat LD

Part of Lot 3 Blk 8 Land & Building 3-27 Sikat LD

Mukah 3 Lot 10, Part of Lot 7 Land & Building 5-19 20 KM off KM 85, Sibu-Bintulu Road Blk 12 Bawan LD

Sri Duan Part of Lot 7 Blk 12 Land & Building 5-13 27 KM off KM 85, Sibu-Bintulu Road Bawan LD

SPPH SPB Business Office, Lot 1171-1174 & Land & Building 9 Miri Waterfront, Jalan Permaisuri, Miri Lot 1177 to 1180 Blk 9 Miri Concession LD

Registered Approx. Age of Owner/Lessee Estate/Address Title/Location Description Buildings (years)

* Plantation Development Expenditure

Note: All the above properties were acquired in 1997.

121

60 years/ Oil palm activities/ 2,202.87 3,996,146 15,431,849 19,427,99506.05.2043/ residential/office/store29.11.2057

60 years/ Oil palm activities/ 1,838.00 1,094,843 13,819,531 14,914,37406.05.2043 residential/office/store/ seed garden


60 years/ Mill/residential/ 19.10 15,425,255 0 15,425,25506.05.2043 office/store

60 years/ Oil palm & nursery 06.05.2043/ activities/residential/ 2,763.50 2,026,843 16,467,275 18,494,11829.11.2057 office/store


60 years/ Teak/oil palm activities/ 2,726.00 4,733,775 17,109,186 21,842,96117.01.2056 residential/office/store

60 years/ Nursery/oil palm 11.06.2049 activities/residential/ 3,924.50 2,377,833 27,141,034 29,518,867 office/store

60 years/ Mill/residential/ 22.50 8,471,867 0 8,471,86711.06.2049 office/store

60 years/ Oil palm & nursery 2,726.00 2,129,917 23,600,753 25,730,67011.06.2049 activities/residential/ office/store

60 years/ Oil palm activities/ 3,038.00 3,544,416 17,766,353 21,310,76911.06.2049 residential/office/store

57 years/ Office space & shoplot 0.18 16,822,505 0 16,822,50530.09.2052


Tenure/Expiry Existing use Land Area Net Book Value as at 31/12/2007of Lease (Ha) Land & Building (RM) PDE*(RM) Total (RM)

NOTICE is hereby given that the 11th Annual General Meeting of Sarawak Plantation Berhad will be held at Damai Puri Resort andSPA Teluk Penyuk Santubong Kuching Sarawak on Wednesday, 18 June 2008 at 2 pm to transact the following business:

N o t i c e o f A n n u a l G e n e r a l M e e t i n g

122

Agenda

1 . Adoption of Audited Financial Statements

To receive the Audited Financial Statements for the year ended 31 December 2007 togetherwith the Directors’ and Auditors’ Reports thereon

2. Approval of Final Dividend

To approve the payment of final dividend of 7.20 sen per share less 26% income tax for the yearended 31 December 2007

3 . Approval of Directors’ Fees

To approve Directors’ fees in respect of the financial year ended 31 December 2007

4 . Re-election of Directors

In accordance with Article 86 of the Company’s Articles of Association, the following Directorretires by rotation from the Board and being eligible, offers himself for re-election:Haji Mohamad Bolhair bin Reduan

In accordance with Article 93 of the Company’s Articles of Association, the following Directorsretire from the Board and being eligible, offer themselves for re-election:

Haji Bolhan bin Berawi

Haji Abdul Hamid bin Ibrahim

Haji Yahya bin Daud

YB Haji Hamden Bin Ahmad

Datu Haji Mohammed Sepuan bin Anu

Polit bin Hamzah

Azizi bin Morni

Umang Nangku Jabu

5. Appointment of Auditors

To appoint Auditors and to authorise the Directors to fix their remuneration.

Notice of Nomination pursuant to Section 172 (11) of the Companies Act 1965, a copy of whichis attached hereto marked as Appendix 1, has been received by the Company for the nominationof Messrs. KPMG, who has given their consent to act, for appointment as Auditors of theCompany and to propose the following Ordinary Resolution:

“THAT Messrs. KPMG be and is hereby appointed as Auditors of the Company in place ofretiring Auditors, Messrs. PricewaterhouseCoopers and to hold office until the conclusion ofthe next Annual General Meeting at a remuneration to be determined by the Directors”

Special Businesses

To consider and if thought fit to pass the following as Ordinary Resolutions:

6 . Proposed Shareholders Mandate for Recurrent Related Party Transactions(RRPT) of a Revenue or Trading Nature

“THAT approval be and is hereby given to the Company and its subsidiaries to enter intoRRPT of a Revenue or Trading Nature as set out in Section 2.3 of the Circular to Shareholdersdated 27 May 2008 (“Circular”) with the specific related parties mentioned therein which arenecessary for the Group’s day to day operations, subject to the following:

(a) That the RRPT are entered into on generally acceptable commercial terms not more favourableto the mandated related parties, they are arms’ length and are not prejudicial to theinterests of the minority shareholders; and

Ordinary Resolution 1














123

(b) A disclosure of the aggregate amount of RRPT conducted pursuant to the ProposedShareholders’ Mandate shall be made in the Annual Report, including a breakdown of theaggregate value of the RRPT made during the financial year, amongst others, based on thefollowing information:

(i) The type of recurrent transactions made; and

(ii) The names of the related parties involved in each type of recurrent transactions madeand their relationship with the Company

AND THAT such approval shall continue to be in force until:

(a) The conclusion of the next Annual General Meeting of the Company

(b) The expiration of the period within which the next AGM of the Company subsequentto the date it is required to be held pursuant to Section 143(1) of the Companies Act1965 (“the Act”) (but shall not extend to such extension as may be allowed pursuantto Section 143(2) of the Act; or

(c) Revoked or varied by resolution passed by the shareholders in general meeting;

Whichever is the earlier;

AND THAT the Directors of the Company be authorised to complete and do all such actsand things as they may consider expedient or necessary to give effect to the ProposedShareholders’ Mandate for the period from this Annual General Meeting to the nextAnnual General Meeting”

7 . Proposed Purchase of Own Shares of up to Ten percent (10%) of the Issuedand Paid–Up Share Capital of Sarawak Plantation Berhad

“THAT subject always to the Companies Act 1965 (“the Act”), rules, regulations andorders made pursuant to the Act, provisions of the Company’s Memorandum and Articles ofAssociation and the Bursa Malaysia Securities Berhad (“Bursa Malaysia”) ListingRequirements and any other relevant authority, the Directors of the Company be and arehereby unconditionally and generally authorised to allocate an amount not exceeding thetotal of the audited share premium reserve and retained profit of the Company for thepurpose of and to purchase such amount of ordinary shares of RM1.00 each (“Shares”) in theCompany (“Proposed Share Buy Back”) as may be determined by the Directors of theCompany (“Directors”) provided that the aggregate number of Shares purchased and/orheld as treasury shares pursuant to this resolution does not exceed 28,000,000 Sharesrepresenting approximately ten percent (10%) of the total issued and paid up share capitalof 280,000,000 ordinary shares of RM1.00 each of the Company as at 30 April 2008 ANDTHAT such Shares purchased are to be retained as treasury shares and distributed asdividends and/or resold on the market of the Bursa Malaysia or subsequently may becancelled AND THAT authority be and is hereby given to the Directors of the Company toact and do all things as are necessary or expedient to implement and finalise and give fulleffect to the Proposed Share Buy Back AND FURTHER THAT the authority hereby givenshall commence immediately upon passing of this ordinary resolution and shall remain inforce until:

(a) The conclusion of the first annual general meeting at which time it shall lapse unless byordinary resolution passed at that meeting, the authority is renewed, either unconditionallyor subject to conditions;

(b) The expiration of the period within which the next annual general meeting after that dateis required by law to be held;

(c) Revoked or varied by ordinary resolution passed by the shareholders in general meeting;

Whichever occurs first, in accordance with the provisions of the guidelines issued by BursaMalaysia or any other relevant authorities.”




124

NOTICE OF DIVIDEND PAYMENT AND ENTITLEMENT DATE

NOTICE IS HEREBY GIVEN THAT subject to the approval of the shareholders at the 11th Annual General Meeting, a finaldividend of 7.20 sen per share less 26% income tax in respect of the financial year ended 31 December 2007 will be paid on 28 July2008 to depositors whose names appear in the Record of Depositors on 2 July 2008.

A depositor shall qualify for entitlement only in respect of:

(a) Securities transferred into the Depositors’ Securities Account before 4pm on 2 July 2008;

(b) Shares bought on the Bursa Malaysia on a cum entitlement basis according to the Rules of Bursa Malaysia.

BY ORDER OF THE BOARD

BONG SIU LIAN (MAICSA 7002221)TRINA TAN YANG LI (0666-KT032)

Company Secretaries

Kuching Sarawak

Dated this 27th day of May 2008

NOTES:

1 . A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Act shall not apply to theCompany.

2. To be valid, this form duly completed must be deposited at the registered office of the Company at 8th Floor Wisma Naim 2 ½Mile Rock Road 93200 Kuching Sarawak not less than forty eight (48) hours before the time set for holding the meeting or anyadjournment thereof.

3. A member shall be entitled to appoint more than one (1) proxy to attend at the same meeting provided that the provisions ofSection 149(1)(b) of the Act are complied with.

4. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of hisholdings to be represented by each proxy.

5. If the appointer is a corporation, this form must be executed under its common seal or under the hand of an officer or attorneyduly authorised.

6. Please take note that interested directors, interested major shareholders or interested persons connected with a director or majorshareholder, and where it involves the interest of an interested person connected with a director or major shareholder, suchdirector or major shareholder, must not vote in respect of their direct and/or indirect shareholdings on the resolution approvingthe Proposed Shareholders Mandate.

EXPLANATORY NOTES ON SPECIAL BUSINESS:

(a) Ordinary Resolution on Proposed Shareholders Mandate for Recurrent Related Party Transactions (RRPT) of a Revenue orTrading Nature

This ordinary resolution, if passed, will authorise the Company and its subsidiaries to transact with mandated related partiesfor the period from this Annual General Meeting till the next Annual General Meeting. Please refer to Part I of the Circular toShareholders dated 27 May 2008 for further details.


8 . Authority to Issue Shares pursuant to Section 132D of the Companies Act 1965

“THAT pursuant to Section 132D of the Companies Act 1965 (“the Act”) and subject alwaysto the approval of the relevant authorities, the Directors be and are hereby empowered to issueshares in the Company from time to time and upon such terms and conditions and for suchpurposes as the Directors may in their absolute discretion deem fit, provided that the aggregatenumber of shares issued pursuant to this resolution does not exceed ten percent (10%) of theissued share capital of the Company for the time being AND THAT the Directors be and arehereby empowered to obtain the approval for the listing of and quotation for the additionalshares so issued on Bursa Malaysia AND THAT such authority shall continue to be in forceuntil the conclusion of the next Annual General Meeting of the Company.”


125

b) Ordinary Resolution on Proposed Purchase of Own Shares of up to Ten percent (10%) of the Issued and Paid–Up Share Capitalof Sarawak Plantation Berhad

This ordinary resolution, if passed, will empower the Directors of the Company from the date of this Annual General Meeting,authority to purchase up to ten percent (10%) of the total issued and paid-up share capital of the Company. This authority will,unless revoked or varied by the Company in a General Meeting, expire at the next Annual General Meeting of the Company.Please refer to Part II of the Circular to Shareholders dated 27 May 2008 for further details.

c) Ordinary Resolution on Authority to Issue Shares pursuant to Section 132D of the Companies Act 1965

This ordinary resolution, if passed, will empower the Directors of the Company from the date of this Annual General Meeting,authority to issue and allot Ordinary Shares from the unissued capital of the Company up to an aggregate of ten percent (10%)of the issued and paid-up share capital of the Company for the time being, for such purposes as the Directors consider in theirabsolute discretion to be in the interest of the Company. This authority will, unless revoked or varied by the Company in aGeneral Meeting, expire at the next Annual General Meeting of the Company.

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

1 . THE DIRECTORS WHO ARE STANDING FOR RE-ELECTION

(a) The Directors who are standing for re-election at the 11th Annual General Meeting are as follows:

Haji Mohamad Bolhair Reduan

Haji Bolhan bin Berawi

Haji Abdul Hamid bin Ibrahim

Haji Yahya bin Daud

YB Haji Hamden bin Ahmad

Datu Haji Mohammed Sepuan bn Anu

Polit bin Hamzah

Azizi bin Morni

Umang Nangku Jabu

(b) Further details of the abovenamed Directors are set out in pages 36 to 40 of this Annual Report, and their securities holdings onpages 119 of this Annual Report.

Appendix 1

HAJI MOHAMAD BOLHAIR BIN REDUAN

Lot 269 (3-9-A) Block 15 SLD

901 Camelia Kasuma Resort,

Jalan Stadium Petra Jaya,

93050 Kuching, Sarawak.

The Board of Directors

Sarawak Plantation Berhad

8th Floor Wisma Naim,

2 ½ Mile Rock Road,

93200 Kuching Sarawak

25th April 2008

Dear Sir,

Re: CHANGE OF AUDITORS

Pursuant to Section 172 (11) of the Companies Act 1965, I, Haji Mohamad Bolhair Bin Reduan (NRIC No: 571209-13-5728) being

the registered shareholder of the Company, hereby give notice of my intention to nominate Messrs. KPMG (A.F.0758) for the

appointment of auditors of the Company and to propose the following as an ordinary resolution to be tabled at the forthcoming

Annual General Meeting of the Company to replace the retiring auditors, Messrs. PricewaterhouseCoopers (A.F. 1146):

“That Messrs KPMG (A.F. 0758) be and is hereby appointed auditors of the Company in place of the retiring auditors, Messrs.

PricewaterhouseCoopers (A.F. 1146), and to hold office until the conclusion of the next Annual General Meeting at a remuneration

to be determined by the Directors.”

Yours faithfully,

Haji Mohamad Bolhair B Reduan


126

F o r m o f P r o x y

I/We . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

IC No./ID No./Company No. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (new) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (old)

of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

being a member of SARAWAK PLANTATION BERHAD, hereby appoint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

NRIC NO./Passport No. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (new) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (old)

of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

or failing him/her the Chairman of the meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the 11th Annual General Meeting of the Company to be held at Damai Puri Resort & Spa, Damai Beach, Teluk Penyuk, Santubong, Kuching, Sarawak, Malaysia on Wednesday, 18th June 2008 at 2.00 p.m. or any adjournment thereof, in the manner indicated below:-


RESOLUTIONS FOR AGAINSTOrdinary Resolution 1 Adoption of Audited Financial Statements and Reports thereto Ordinary Resolution 2 Approval of Final Dividend Ordinary Resolution 3 Approval of Directors’ Fees Ordinary Resolution 4 Re-election of Director: Haji Mohamad Bolhair bin Reduan Ordinary Resolution 5 Re-election of Director: Haji Bolhan bin Berawi Ordinary Resolution 6 Re-election of Director: Haji Abdul Hamid bin Ibrahim Ordinary Resolution 7 Re-election of Director: Haji Yahya bin DaudOrdinary Resolution 8 Re-election of Director: YB Haji Hamden Bin AhmadOrdinary Resolution 9 Re-election of Director: Datu Haji Mohammed Sepuan bin AnuOrdinary Resolution 10 Re-election of Director: Polit bin HamzahOrdinary Resolution 11 Re-election of Director: Azizi bin MorniOrdinary Resolution 12 Re-election of Director: Umang Nangku Jabu Ordinary Resolution 13 Appointment of Auditors: Messrs KPMGSpecial Businesses Ordinary Resolution 14 Proposed Shareholders Mandate for Recurrent Related Party Transactions (RRPT) of a Revenue or Trading Nature Ordinary Resolution 15 Proposed Purchase of Own Shares of up to Ten percent (10%) of the Issued and Paid–Up Share Capital of Sarawak Plantation BerhadOrdinary Resolution 16 Authority to Issue Shares pursuant to Section 132D of the Companies Act 1965

(Please indicate with an “X” in the spaces above how you wish your votes to be casted on the resolution specified in the Notice of Meeting. If no specific direction as to the voting is indicated, the proxy/proxies will vote or abstain from voting as he/she/they think(s) fit.)

Date this . . . . . . . . . day of . . . . . . . . . . . . . . . . . . . . . . 2008

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Signature of Shareholder(s)/Common Seal

Notes:1. A proxy may but need not be a member of the Company and the

provisions of Section 149(1)(b) of the Act shall not apply to the Company.

2. To be valid, this form duly completed must be deposited at the registered office of the Company at 8th Floor Wisma Naim, 2½ Mile Rock Road 93200 Kuching Sarawak not less than forth eight (48) hours before the time set for holding the meeting or any adjournment thereof.

3. A member shall be entitled to appoint more than one (1) proxy to attend at the same meeting provided that the provisions of Section 149(1)(b) of the Act are complied with.

4. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

5. If the appointer is a corporation, this form must be executed under its common seal or under the hand of an officer or attorney duly authorised..

CDS account no. of authorized nominee

Number of shares held:

Tea

r li

ne

Tea

r l

ine

F o l d h e r e / L i p a t s i n i

F o l d h e r e / L i p a t s i n i

The Company SecretarySARAWAK PLANTATION BERHAD8th Floor, Wisma Naim, 2½ Mile, Rock Road, 93200 Kuching, Sarawak.

STAMP

C o v e r R a t i o n a l eThe main motif for the cover of our 2007 Annual

Report is the Oil Palm Frond. It is the leaves of

the frond that transform the sun’s energy into oil

palm fruits, and thus the frond is an excellent

metaphor for what we do – using our business,

technical and financial resources to transform

our land bank into valuable crude palm oil

(CPO) and related products. The photos at the

bottom of the cover describe the essence of our

business, from growing to harvesting to milling

of harvested fruit bunches to produce CPO.


COMPANY NO. 451377-P INCORPORATED IN MALAYSIA

| A N N U A L R E P O R T 2 0 0 7 |

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www.spbgroup.com.my

SARAWAK PLANTATIONBERHAD

BUSINESS OFFICELot 1173 & 1174, Block 9, MCLD,

Miri Waterfront, Jalan Permaisuri, P. O. Box 661, 98007 Miri, Sarawak.

Tel: 085-413814Email: [email protected]

REGISTERED OFFICE8th Floor, Wisma Naim, 2½ Mile,

Rock Road, 93200 Kuching, Sarawak. Tel: 082-233550,

Email: [email protected]

sarawak plantation berhadspb.listedcompany.com/misc/ar2007.pdfto be a leading player in the oil palm...

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