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(extracted from Annual Report 2017)

On behalf of the Board of Directors, it gives me great pleasure to present the Company's Annual Report for the financial year ended 31 December 2017, our tenth full year of operation since our listing on the Main Market of Bursa Malaysia on 28 August 2007.

2017 Performance

For the financial year 2017, the Group achieved a revenue of RM399.2 million, compared to RM384.0 million in 2016, an increase of 4%, with higher profits from operating activities.

However, the Group recognised impairment losses of RM43.0 million, most of which are related to encumbered estates in Mukah Region. These impairment losses were recognised due to continuing inability to harvest fresh fruit bunches ("FFB") from these areas.

As a result, the Group recorded a net loss of RM10.3 million in 2017 compared against a net profit of RM22.2 million in 2016.

Acquisition of Stake in the Company by Ta Ann Holdings Berhad

Cermat Ceria Sdn Bhd, being the single largest shareholder of SPB, had on 11 January 2018, entered into a conditional share sale agreement with Ta Ann Holdings Berhad ("Ta Ann"), to dispose its entire shareholdings held in SPB, which is equivalent to 30.39% stake in the Company, to Ta Ann. On 23 March 2018, Ta Ann obtained its shareholders' approval for the said acquisition, thus fulfilling the conditions precedent in the conditional share sale agreement.

With the completion of the said share sale agreement on 28 March 2018, we welcome Dato Wong Kuo Hea on board as the Executive Director. Dato Wong has vast experience in the plantation business and operation. He is currently the Group Managing Director / Chief Executive Officer of Ta Ann.

This corporate restructuring enables the Company to leverage on Ta Ann's experience and expertise in plantation management. With the appointment of Dato Wong as the Executive Director of the Company, the focus will be placed on the transformation and reform of the Group's management and to strengthen and improve the standard operating procedures for the plantations to push for a better yield in the coming year.

Way Forward and Sustainability

In facing the continuous and anticipated challenging business environment, the Board recognises the importance of increasing productivity and improving fresh fruit bunches ("FFB") production as of utmost priority.

Great emphasis is placed on organisational and operational enhancement with the aim to increase productivity and production. Resources are allocated for areas that will immediately impact production and productivity as the Board recognises the need for immediate improvements in operation to bring the level of production to that of the industry standards.

The Board is confident that with these improvements in place, the Group will achieve better results in the near future.

We stress the importance of adopting sustainable agriculture practices to ensure sustainability. Our aim is to always ensure that profitability is balanced with the protection of environment and the stakeholders. In this regard, the Group focuses on Malaysian Sustainable Palm Oil (MSPO) certification. Kosa and Ladang 3 Estates as well as Niah Palm Oil Mill were selected as pilot sites for the implementation of MSPO. External audits have been completed for these three sites and certification is expected to be obtained within the first half of 2018.

On the other hand, gap analysis for other estates and mill of the Group is in progress. Improvements are carried out gearing towards MSPO compliance.

Prospect and Outlook

The outlook for palm oil industry in 2018 is challenging. Nevertheless, we believe that the Malaysian palm oil industry outlook remains positive both in a mid-term and long-term perspective.

We are commited to grow our business and strengthen our position for the benefit of our esteemed stakeholders and continue to pursue value creation potentials for our shareholders.

Appreciation

We would like to convey our sincerest thanks to our shareholders for their continued support and belief in Sarawak Plantation Berhad. We would also like to thank all the State and Federal Government Ministries, Departments, Statutory Bodies and Regulatory Agencies who have offered us such close cooperation and support throughout 2017, along with other relevant authorities.

Heartfelt thanks are also due to our joint venture partners, vendors, consultants, professional advisors, service providers and community neighbours for their goodwill and unstinting efforts. Last but not least, we would like to reserve the warmest thanks to our directors and all the employees of SPB for their hard work and professionalism.

Thank you,

Datuk Amar Abdul Hamed Bin Sepawi
Executive Chairman