Chairman's Statement

Extracted from Annual Report 2015

Dear Shareholder,

While we were faced with an undoubtedly challenging year, Boustead Plantations Berhad continued to build on our solid foundation within the plantations sector. The lower global commodity prices and volatile economic environment impacted us; nonetheless, we achieved a satisfactory profit for the financial year under review.

Economic Landscape

Throughout the year, 2015 presented multiple challenges that affected the global economy. The interest rate hike by the US Federal Reserve and the dramatic slowdown of the Chinese economy, not to mention the rapid slump in Brent crude oil prices, negatively impacted crude palm oil (CPO) prices.

Despite the mild El Nino weather phenomenon, CPO prices remained sluggish as production continued to outperform demand. Decreasing exports as well as a narrow price differential against competing vegetable oils caused CPO prices to drop significantly reaching a low of RM1,834 per metric tonne during the financial year.

The economic ecosystem that influences the palm oil sector is indeed a dynamic one. During the year, Malaysia and Indonesia jointly agreed to the set-up of the Council of Palm Oil Producing Countries to implement steps that will benefit two of the world's largest producers of palm oil.

These efforts include coordination of palm oil production and stock management with a view towards stabilising CPO prices. Both nations have also agreed to harmonise the standards of the Malaysian and Indonesian Sustainable Palm Oil.

Financial Performance

We completed our first full year of operations since our listing with a profit of RM95 million, compared with RM90 million in 2014. While the Group's earnings were indeed impacted by lower CPO prices, this was offset by gains from disposal of non-core land. Revenue for the year was RM615 million, a 14% reduction from the year before.

For the year under review, earnings per share was 4.9 sen, while net assets closed at RM1.36 per share.

Dividend

The Group is strongly committed to consistently delivering value to our shareholders via positive dividend yields.

Dividend was 13 sen per share, which represented a 8.7% yield based on the closing stock price for the financial year ended 31 December 2015. To date, the Group has paid out dividends totalling 10 sen to shareholders. The remaining 3 sen will be paid on 25 March 2016 to shareholders on the register as at 9 March 2016.

Human Capital

A strong, skilled and driven talent pool is integral in realising our plans for further growth and to drive the Group forward.

While we implemented various initiatives focused on talent development over the course of the year, we also placed importance in maintaining a close employer-employee relationship.

Outlook

Global forecasts predict a year of dampened growth in 2016, while on the domestic front, overall sentiment remains cautious. However, analysts and industry experts have taken a bullish view of palm oil prices in the upcoming months.

Analysts are expecting a recovery in global demand particularly in the food sector paired with lower CPO production as a result of vagaries in weather conditions such as the haze and drought arising from the El Nino phenomenon.

More pressure on stocks is projected should the effects of the drought brought about by El Nino become severe. Palm oil prices are expected to be further strengthened with the successful implementation of increased biofuel mandates in Malaysia and Indonesia.

Undoubtedly, there will be challenges to be faced. Regardless, we remain focused in our plans, confident in our growth strategies, and more determined than ever to concentrate our efforts on driving the Group to greater heights.

AcknowledgEment

My sincere appreciation to our dedicated Board members, for their guidance and invaluable expertise in guiding the Group through the year's challenges.

As always, the stalwart leadership of our Management team, not to mention the unwavering loyalty and support of our employees, have been fundamental to delivering a solid performance. I would like to express my deep gratitude for their contributions and continuous efforts in ensuring the Group's success.

Last but not least, to our shareholders, financiers, business associates, consultants and regulatory bodies, thank you for your support and confidence in Boustead Plantations Berhad.

Gen. Tan Sri Dato' Mohd Ghazali Hj. Che Mat (R)
Chairman

25 February 2016

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