Chairman's Statement

Extracted from Annual Report 2007

Dear Shareholder,
It has been an eventful year for Boustead Holdings Berhad given that we achieved significant milestones. We remain true to our vision of achieving growth, enhancing shareholder value and striving for excellence.

Evidenced by our focused approach in capitalising on our strengths, seizing opportunities and driving our corporate exercises, I am pleased to present to you our annual report for the year ended 31 December 2007.

A reflection of how we have managed these internal and external developments is reflected by our performance as the Group registered a significant increase in pre-tax profit to RM829 million in comparison with the previous financial year's RM386 million.

Economic Landscape

In today's business environment, there is no question that economic developments that affect a particular nation, especially one like the United States, could leave an impactful mark on the rest of the world.

Nevertheless, despite the softening of the US economy as a direct result of its sub-prime crisis, the global growth outlook was spurred by emerging economies, namely China, India, Brazil and Russia.

On the home front, our nation remains a key participant in the global economy and the Government continues to play its role in developing the economy, particularly with the Ninth Malaysian Plan, prudent Budget measures and strategic sectoral initiatives.

The unveiling of the economic regions, namely the Iskandar Development Region, Northern Corridor Economic Region and the Eastern Corridor Economic Region is a step in the right direction to improve both domestic and foreign direct investments.

With the positive outlook of our national economy, complemented by the Group's clear strategy and solid plans, we are confident of seizing opportunities and pursuing excellence in all segments of our businesses.

Financial Performance

Our Plantation and Heavy Industries Divisions set the pace in terms of delivering profits for the Group. This was complemented with sustained earnings via our Property, Finance & Investment, Manufacturing & Services and Trading Divisions.

We closed the year on a very high note registering a profit after tax of RM655 million signifying a jump of 87% compared with RM351 million recorded in 2006.

Profit attributable to shareholders was RM478 million (2006: RM210 million) while earnings per share ended at 79 sen (2006: 35 sen) and net assets per share was RM3.75 (2006: RM3.22).

Shareholders' funds stood at RM2.4 billion for the year ended 31 December 2007 as compared with RM1.9 billion in the previous year. We have also seen a rise in our market capitalisation and share price on a year-on-year basis.

I am also pleased to note that our ability to further develop our current businesses while identifying and expanding into new sectors have clearly borne results. Our Plantation Division, a traditional business of the Group, and our Heavy Industries Division, our latest addition in terms of business focus, have contributed 70% of our profits this year.

Dividend

Boustead Holdings Berhad has a solid reputation as a good dividend stock over the years. Staying true to our commitment to deliver value to our loyal shareholders, this year will see the highest total dividend payout of 60% or 30 sen per share compared with 37% or 18.5 sen per share last year. This includes a proposed final dividend of 16% and a bonus dividend of 20%.

Corporate Social Responsibility

The Boustead Group does not operate in isolation and is very much aware of its responsibility to both shareholders and the community at large. As we drive earnings up, we are committed to deliver good Corporate Social Responsibility (CSR).

Given the fact that we do not exist on the margins of corporate Malaysia but have a tangible stake in the Malaysian economy, we have taken firm and thorough initiatives to improve our CSR objectives.

In tandem with the Silver Book framework introduced as part of the Government's GLC Transformation Programme, we have developed and introduced the Group's inaugural CSR Policy. Our policy outlines the way forward in our obligation to the Malaysian Armed Forces as well as the communities closely associated with the Group.

During the year, we continue to contribute to various education, social and welfare programmes for members of the Armed Forces and their families. One of these initiatives is our annual contribution to Yayasan Warisan Perajurit, which is a foudation established by members of the Lembaga Tabung Angkatan Tentera Group of Companies to assist in the education of children and disadvantaged members of the Armed Forces. Contributions were also channelled towards improving the quality of life for retired and needy Armed Forces personnel.

We have also extended our reach to East Malaysia, by undertaking a land development project in Sarawak together with relevant state bodies. This Native Customary Rights land development project has shown positive results by improving the economy of participating landowners as well as for the community at large.

The Group continues with its environmental management best practices. To this end we own and operate a unique automated and mechanised composting process designed to use empty FFB to produce organic fertiliser. This 'zero-waste zerodischarge' plant which is under construction, known as the Boustead Biotherm Palmass Process is located at our Teluk Sengat estate in Johor.

We have also committed ourselves to a more progressive stance given that we are a founding member of the Roundtable of Sustainable Palm Oil (RSPO). This environmentally prudent initiative will ensure that we stay steadfast to good agricultural practices which are founded on the tenets of the RSPO. We have already taken steps to initiate self assessment programmes to ensure that we remain an environment conscious oil palm grower as the environment cannot be taken for granted.

Human Capital Development

At Boustead, we truly believe that people are our best asset to help us attain our objectives. Staying true to our philosophy of 'Towards Achieving a Culture of Excellence', we go to great lengths to provide our people with the necessary skills and training to ensure they reach their potential.

The Group conducted numerous training and development programmes in 2007, varying from personal development to those that focused on building competencies. One such example was the 'Blue Ocean Strategy Programme' which was introduced to our management team with the hope of encouraging strategic and creative thinking.

Recruiting the right talent proved to be another key area, as we appointed top graduates to join our Management Trainee Programme. This programme was developed to prepare trainees to embrace the working culture at Boustead and to impart knowledge to them.

We are pleased to announce that in March 2007, Boustead was appointed an authorised training organisation for the Institute of Chartered Accountants in England and Wales to train students to qualify for this prestigious qualification.

Succession planning has become a priority area with regards to human capital development particularly for senior and middle management leadership. We will continue on this course given the fact that the Group is insistent on ensuring future growth.

Outlook

While uncertainty in the global economy will echo throughout the year, the economic indicators in Malaysia have shown that we are poised for further progress. Although there are concerns on the rise in oil prices, it should be noted that this is based on increasing demand which can only translate into stronger growth.

2008 will certainly be a challenging year, amidst the economic crisis faced by the United States that may have spill-over effects on our country. In spite of these concerns, Malaysia will prosper thanks to our strong economic fundamentals, which have the objective of producing another year of growth.

Acknowledgement

The success enjoyed by Boustead Holdings Berhad is certainly attributed to a large pool of dedicated and talented individuals. On this score and on behalf of the Group, I wish to express my deepest gratitude to the management team and our employees for their unwavering support and commitment.

My appreciation to our shareholders, financiers, business partners, consultants and relevant approving authorities who have graciously co-operated with us to achieve our goals.

GEN. (R) TAN SRI DATO' MOHD GHAZALI HJ. CHE MAT
Chairman
29 February 2008