Eng - IOI Group

Chairman’s Statement cont’dUPDATES ON GROWTH STRATEGIES & RECENT CORPORATE DEVELOPMENTS cont’dOn the property front, the Group has also made significant acquisitions during the year. Apart from the objective of taking onadditional land bank for development, the following acquisitions also reflect a fine tuning in our business strategy, that is, tocompliment our core business model of developing townships by also taking on niche, luxury-range projects. This is in response tothe global trend of liquidity driven demand for prime properties as mentioned earlier in my report.• A 50:50 joint venture with a Singapore developer, Ho Bee Investment Limited to develop about 160 units of luxury rangecondominiums in Sentosa Cove, Singapore. The land for the development was acquired through a tender bid from the SentosaDevelopment Corporation for a sum of SGD 460 million. The project is expected to have a gross development value of morethan SGD 800 million and is to be launched in 2008.• A 163,786 sq ft parcel of land in Jalan Ampang, Kuala Lumpur for construction of about 150 units of condominiums with grossdevelopment value expected to be in excess of RM300 million.In addition, the following land acquisitions by the Group were completed during the year:• 925 hectares of freehold land adjacent to Ayer Keroh toll plaza in the state of Melaka, for RM91.3 million.• 102 hectares of freehold land in Tebrau, in the state of Johor for RM87 million.PROSPECTSAs highlighted, the push for bio fuel as alternate energy source by governments in various parts of the world is resulting in astructural change in demand-supply equilibrium for the entire vegetable oil complex. We have seen vegetable oil prices shootingup in the second half of FY2007, with prices of rapeseed oil, soy oil, and CPO reaching highs of USD904, USD870 and USD868per MT respectively, basis Europe, in April/May 2007. CPO price, FOB Malaysia reached an all time high of RM2,764 per MT inJune 2007 before settling between a range of RM2,400 to RM2,500. Because of the typical timing of CPO sales commitment in theindustry, average annual prices tend to lag spot and forward prices in an up-cycle. Current fundamentals suggest a likely averageprice of about RM2,400 for FY2008, which will be 36% higher than the average price achieved for FY2007. Thus, our plantationsegment should enjoy a hefty price driven booster to earnings for FY2008.The downstream manufacturing segment of our palm oil business is also expected to perform well, with volume growth and the benefitof having a full year’s contribution from newly acquired Pan-Century.IOI Corporation BerhadANNUAL REPORT 2007