Extracted from Annual Report 2008

Against this backdrop, I amglad to note that the Boustead Group has achieved top-line and bottom-line growth. I must admit, it has not been easy to do so given the context of the year.

Financial Performance

As you will note from our results, profit attributable to shareholders increased to RM579 million compared with RM478 million a year ago. A large portion of this increase was from two major contributors, Boustead Plantations Berhad and Boustead Properties Berhad. As these companies are now wholly owned, there are no profits accuring to minority shareholders.

These results were achieved on the back of a significant 22% jump in turnover amounting to RM7.03 billion. Testament to our sustainable organic growth, it provides validation of our desire to manage our six divisions under one consolidated conglomerate.

We are heartened that in spite of the trying conditions we have exceeded on all our key performance indicators (KPI) for GLC's, except one.

In keeping with our plans, we have reduced our gearing from 1.4 to 1.2 times despite the increase in borrowings to RM3.5 billion. The single primary factor for this reduction was the increase in shareholder funds to RM2.9 billion. The Board is aware of our responsibility to further reduce gearing and is reviewing various means to do so in the foreseeable future.

Although crude palm oil (CPO) saw highly volatile price movements, the Plantation Division achieved commendable results delivering very strong profits for the Group. Our focus on improving yield and strengthening oil extraction rates was on going as we pursued various measures for our plantations.

The Property Division set a significant benchmark, registering a large jump in profit. This was primarily attributable to the sale of corporate lots at our highly successful Mutiara Damansara development in Selangor.

Our Heavy Industries Division registered a lower profit due to lower progress billings. The Finance and Investment Division recorded a modest loss reflective of adverse market conditions accompanied by higher interest costs and impairment of investments.

The Manufacturing & Services Division performed well despite very tough operating conditions, particularly on the domestic front. Unfortunately, our Trading Divisionwas not spared due to the sharp volatility of crude oil prices globally. This single factor caused the Division to register a loss which demonstrates the impact external factors can have, no matter how resilient the Group is.

Corporate Initiatives

Continuing on our course to improve our investments and extract greater value from our businesses, we undertook a major exercise which saw the privatisation of our listed property arm.We viewthe property sector as a cornerstone of the Malaysian economy and with the market maturing, particularly in the areas of business we are involved in, it was imperative that we remain focused on anticipating market trends and keeping the competition at bay. Its impact has been immediate, given the reduction in minority interests.

Given our intention to build the hospitality business further, we are in the final stages of completing our acquisition of Royale Bintang Serembanwhichwas formerly known as the Hilton Seremban. Our confidence in Mutiara Damansara is unwavering, as such we are in the midst of finalising the acquisition of the remaining 50%of Cineleisure Damansara not held by the Group. This will give us the opportunity to own and manage two premium shopping centres within this vibrant commercial enclave.

As I have noted on numerous occasions, the Boustead Group is serious about unlocking value and disposing of non-core assets or businesses that do not have a role in enhancing the Group's potential. In our efforts tomaintain only strong yielding plantation assets, we disposed of lossmaking PT Anam Koto estate in Indonesia for a total cash consideration of RM34 million.

Under the Asset Backed Securitisation structure undertaken in 2005, we exercised our first call option during the year whereby we bought back 3,700 hectares of plantation assets.We subsequently injected these assets via a sale and leaseback arrangement into the Al-Hadharah Boustead REIT. This exercise netted the Group a gain of RM75million while maintaining the productive use of the assets and increased our stake inMalaysia's only Islamic plantation real estate investment trust.

Outlook

The Boustead Group has an interest in multiple sectors of the Malaysian economy. As such, I am confident we will weather this economic storm,more so aswe enter the new year with our solid track record in place.

The Plantation Division will face volatility as a result of the trend impacting CPO prices which will then have an effect on its profit contribution to our bottom-line. Nevertheless, as the Malaysian Government implements the usage of biofuel for government vehicles, this should drive demand for palm oil further. We are also heartened by the Government's replanting incentive which should have a positive impact on CPO prices in the foreseeable future.

I expect the Property Division to feel the heat of the economic weather in the coming financial year. Nonetheless, I am optimistic that our very viable developments in Selangor and Johor along with our investment properties will perform well.

The hospitality business has established itself and its recent achievementwill be themanagement of the Royale Chulan Kuala Lumpur, a 5-star 400-room masterpiece in the heart of the capital.We will also be completing the construction of Royale Bintang Penang inWeld Quay, George Town and commencing work on Royale Bintang Surian which will complement the existing Royale Bintang Damansara.With the completion of these initiatives, we will have six hotels managed by us.

Our Heavy Industries Division is expected to deliver strong recurring profits thanks to the patrol vessel project, a positive orderbook for commercialmarine projects and our foray into the oil and gas segment.

The Finance and Investment Divisionwill be burdened by a downtrend in investment banking and stock broking businesses given depressed market conditions. However, I am optimistic that the consumer banking segment of this Division will perform well in the coming financial year.

The Manufacturing and Services accompanied with the Trading Divisions will need to review cost structures, increase productivity and find all means possible to generate earnings in challenging market conditions. On this score, BH Petrol is already exploring prospects tomake further inroads into the liquefied petroleum gas segment.

Our goal during these trying times will be in the form of unlocking value, organic growth, reducing gearing and generating earnings.We are fully aware of our responsibility to our stakeholders, along this premise we will plough through this year, certain that hard work coupled with innovative ideas is the only way forward.

The following pages will provide you with an indepth perspective of the developments that have taken place at divisional level. I trust you will find it insightful and informative. This year we have included a new section in our annual report highlighting our social responsibility intiatives which reflects our role as a responsible corporate citizen. We remain committed and we look forward to a collective positive effort to pull through the coming year.

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