Eng - IOI Group

Management’s Discussion and Analysis cont’dGROUP FINANCIAL REVIEWFINANCIAL HIGHLIGHTS & INSIGHTS• At Group level, the results for FY2007 versus FY2006 is best compared and explained at three levels, mainly, EBIT, Pre-tax and NetEarnings, as different factors affected the changes between the two fiscal years at the respective levels.• Looking at EBIT, contributions from the segments are as follows:EBITFY2007 FY2006 ChangeRM million % RM million % %Plantation 926.9 45 636.3 52 46Downstream Manufacturing 405.4 20 128.3 11 216Palm Oil – Total 1,332.3 65 764.6 63 74Property 598.3 29 368.3 30 62Others (unallocated) 127.6 6 87.4 7 462,058.2 100 1,220.3 100 69• The palm oil business stream contributed 65% towards Group EBIT for FY2007, about the same level as previous year contributionat 63%. In absolute terms, EBIT for the palm oil business increased by 74% to RM1,332.3 million, with both the plantations and thedown-stream segments increasing by 46% and 216% respectively.• Plantation segment’s EBIT has increase by 46% to RM926.9 million, on the back of 27% increase in average CPO price.• The downstream manufacturing registered multifold increase over last financial year is due mainly to higher sales volume andfavourable margins registered by all three manufacturing sub-segment i.e. refinery, oleochemicals and specialty fats segments.• The property segment’s 62% against market trend growth to a EBIT of RM598.3 million for FY2007 includes RM160.7 million offair valuation gain on investment properties on adopting of Financial Reporting Standards, FRS 140. Even by excluding this gainon fair valuation, overall property segment registered a robust increase in EBIT by 19%. This was mainly because of our ability tocapitalise on better demand in the commercial sub-sector, both in respect of sales and rental revenue, whilst the broad base mediumcost housing market segment remained subdued.19ANNUAL REPORT 2007IOI Corporation Berhad