Business Overview

6. INFORMATION ON OUR GROUP 6. INFORMATION ON OUR GROUP 6.1 OUR COMPANY 6.1.1 Background and history Our Company was incorporated in the Federation of Malaya under the Companies Ordinance 1910 on 4 July 1946 as a pUblic limited company under the name of The Kuala Sidim Rubber Company, Limited. On 15 April 1966, our Company changed our name to The Kuala Sidim Rubber Company Berhad and subsequently on 12 December 1994, changed our name to Kuala Sidim Berhad. On 10 April 2004, we assumed our present name. The principal activity of our Company is to carry on the business of an investment holding company and oil palm plantations. Our subsidiaries are principally involved in the ownership and management of oil palm plantations, cultivation of oil palm and production of oil palm products. Our associates are principally involved in agricultural and agronomic research and commercial production of planting materials. For further details of the principal activities of our subsidiaries and associate, see Section 6.2 of this Prospectus. We were previously listed on Bursa Securities before our delisting in the year 2003, further information on which is set out under Section 7.1.1 of this Prospectus. In conjunction with, and as an integral part of our Listing, we had implemented and completed the following corporate exercises: BREIT Privatisation The BREIT Privatisation comprised the following exercises: (i) Amended Trust Deed BREIT was established as a REIT and was constituted pursuant to the Trust Deed and was regulated by the CMSA and the REIT Guidelines. BREIT was a unit trust scheme that invested primarily in income generating real estate assets with the main objective of providing its investors with stable distribution of income primarily from the leasing of all the plantation estates and palm oil mills heid under BREIT to our Group. The Amended Trust Deed was required to enable the corporate integration of BREIT under our Group by way of the following: (a) the implementation of the SUR Exercise thereby converting BREIT to a private property trust with BPB being its sole beneficiary; and
(b) subsequently, to undertake the de-listing exercise pursuant to Paragraph 16.07(b) of the Bursa Securities LR which involves the withdrawal of BREIT’s listing from the Official List upon 100% of the Units being held by BPB pursuant to the BREIT Privatisation.

(ii) SUR Exercise The SUR Exercise invoived the redemption of all Units held by the Unitholders of BREIT (except BPB) at RM1.94 for each Unit which was paid to all the Unitholders of BREIT (except BPB) whose names appear in the Record Of Depositors of BREIT on the BREIT Entitlement Date.

6. INFORMATION ON OUR GROUP (Cont’d) (iii) Special Dividend The Special Dividend involved the proposal by BREIT to pay the special gross dividend of RMO.16 for each Unit that is held by the Unitholders of BREIT as a condition to the SUR Exercise. As such, the total dividend paid by BREIT was as follows: RM Dividend paid to all Unilholders of BREIT 46,558,400 Divided paid to BPB 53,746,320 Total Special Dividend paid by BREIT 100,304,720 On 5 December 2013, the shareholders of BHB and the Unltholders of BREIT had approved the BREIT Privatisation and SUR Exercise at the extraordinary general meeting of BHB and Unitholders of BREIT’s meeting respectively. In this regard, our Company now holds the entire 335,914,500 Units remaining, representing 100% interest in BREIT. On 28 January 2014 and 29 January 2014, the payment of the Special Dividend and the SUR Offer Price was made respectively. On 30 January 2014, BREIT was converted to a private property trust with our Company being its sole beneficiary and on 19 February 2014, the Units were removed from the Official List of Bursa Securities. As a private property trust, BREIT is no longer a collective investment scheme for the purpose of the REIT Guidelines and hence is not regulated under the CMSA and the REIT Guidelines. 6.1.2 Listing Scheme 6.1.2.1 Share Split On 7 April 2014, our Company had undertaken the Share Split, involving the subdivision of every existing one ordinary share of RM1.00 each held in our Company into two ordinary shares of RMO.50 each in our Company, which were accrued as fUlly paid-up. The BPB Shares resulting from the Share Split ranks pari passu In all respect with the existing shares of BPB prior to the Share Split including voting rights and rights to all dividends and other distributions that may be declared, subsequent to the date of allotment thereof. Upon completion of the Share Split, the authorised share capital of our Company is RM2,000,000,000 comprising 4,000,000,000 BPB Shares whilst the resultant issued and paid up share capital of our Company is RM124,521 ,383 comprising 249,042,766 BPB Shares.
6.1.2.2 Bonus Issue On 7 April 2014, our Company had undertaken the Bonus Issue involving the issuance of 770,957,234 Bonus Shares which were credited as fully paid-up, on the basis of apprOXimately 3.1 Bonus Shares for everyone BPB Share held after the Share Split. The Bonus Issue was effected by way of capitalisation of approximately RM208,038,992 out of our Company’s retained earnings account and RM177,439,625 out of our Company’s share premium account. 6. INFORMATION ON OUR GROUP (Cont’d) The Bonus Shares rank pari passu in all respect with the existing BPB Shares, including voting rights and rights to all dividends and other distributions that may be declared, subsequent to the date of allotment thereof. Upon completion of the Bonus Issue, our issued and paid up share capital increased to RM510,000,000 comprising 1,020,000,000 BPB Shares.
6.1.2.3 IPO and listing The final step in our Listing Scheme involves the IPO, details of which are set out in Section 4.3 of this Prospectus, and the Listing.

6.1.3 Share capital As at the date of this Prospectus, our authorised share capital is RM2,000,000,000 comprising 4,000,000,000 Shares whilst our issued and paid-up share capital is RM510,000,000 comprising 1,020,000,000 Shares. The changes in our issued and paid-up share capital for the past three years preceding the date of this Prospectus are as set out below: Dale of Cumulative issued allotmentl No. of Par and paid-up share subdivision Shares value Consideration capital RM RM 7 April 2014 249,042,766 0.50 Share split 124,521,383 7 April 2014 770,957,234 0.50 Issued pursuant to 510,000,000 the Bonus Issue Our issued and paid-up share capital will increase to RMBOO,OOO,OOO comprising 1,600,000,000 Shares following the completion of the Public Issue. [The rest of this page has been intentionally left blank]
6. INFORMATION ON OUR GROUP (Conl’d) 6.2 SUBSIDIARIES AND ASSOCIATES As at the LPD, our group structure is set out below: BPB
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p.:•.• ·.H~ll’ ••••••.••• 100% Note: Private property trust with CIMB Trustee as its trustee that holds certain plantation assets on behalf Df BPB, who has sole beneficial interest in the private property trust as its sole beneficiary. 59 Subsidiary Associate …….
.. . ….. … . .. . .. C=:JPrivate Property Trust
6. INFORMATION ON OUR GROUP (Cont’d) Our subsidiaries and associates as at the the date of this Prospectus are as set out below: Our  Date and  effective  country of  Issued and paid- equity  Name  incorporation  up share capital  interest  Principal activities  RM (unless  %  otherwise stated)  Our subsidiaries  Bounty Crop  27 February 1995  70,200,000  100  Investment holdings  Malaysia  B Gradient  18 July 1980  3,000,000  100  Cultivation and processing  Malaysia  of oil palm  B Rimba Nilai  13 June 1995  100,000,000  100  Cultivation and processing  Malaysia  of oil palm  B Solandra  8 June 1981  200,000  100  Cultivation of oil palm  Malaysia  B Kanowit Oil  1 April 1996  30,000,000  60  Operation of oil palm mill  Mill  Malaysia  B Silasuka  15 January 1980  10,000,000  100  Ceased operations  (B Silasuka has  Malaysia  commenced  liquidation)  B Sungai Manar  25 March 1991  4,500,000  100  Investment property holding  Malaysia  B Telok Sengat  19 January 1954  9,184,000  100  Cultivation and processing  Maiaysia  of oil palm and investment  holding  BEA  23 February 1966  1,050,000  100  Providing management  Malaysia  services to the estate and  mill  B Tinjar  19 March 1988  49,180,000′  60  Cultivation and processing  Malaysia  of oil palm  B Kanowit  25 October 1995  36,560,0002  60  Cultivation of oil palm  Malaysia  B Eldred  30 January 1948  15,000,000  100  Operation of oil palm  Malaysia  plantation  B Emastulin  8 August 1975  17,000,000  100  Cultivation and processing  Maiaysia  01 oil palm  B Sedili  16 July 1997  6,150,000  70  Cultivation of oil palm  Malaysia  B Trunkline  28 March 1990  7,000,000  100  Operation of oil palm  Malaysia  plantation  BACS  24 March 1984  500,002  100  Provision of management  Malaysia  services to estates  BASEA  9 July 1992  500,000  100  Investment holding  Malaysia
1 Comprising 48,000,000 ordinary shares of RM1.00 each and 118,000,000 RPS of RMO.01 each. 2 Comprising 34,560,000 ordinary shares of RM1. 00 each and 200,000,000 eulmilafive RPS ofRMO.01 each.
6. INFORMATION ON OUR GROUP (Cont’d) Our Date and effective country of Issued and paid-equity Name incorporation up share capital interest Principal activities RM (unless % otherwise stated) B Sutera 12 June 1959 4,250,000 100 Ceased operations (B Sutera has Malaysia commenced liquidation) BREIT 11 December 335,914,500 Units’ 100 Property Investment 2006 Malaysia Our associates AA Resources 23 September 750,000′ 50 Provision of agronomic 1982 advisory services, the Malaysia commercial production of oil palm planting materials and investment holding AA Research 9 December 2003 500,000 50 Providing agronomy Malaysia research services PT AARI 10 September IDR12,775,000,000 50 Provide agronomic and 2007 advisory services Indonesia PTAAR 14 May 2012 IDR10,000,000,000 25 Production of oil palm seeds Nusantara Indonesia [The rest of this page has been intentionally left blank] 3 Pnvate property trust with CIMB Trustee as its trustee that holds certain plantation assets on behalfofour Company as its sale beneficiary. 4 Compnsing compnsing 500,000 ordinary shares ofRMI.00 each and 2,500,000 RPS of RMO.10 each.

 

6. INFORMATION ON OUR GROUP (Cont’d) The details of our subsidiaries and associates as at the LPD are as set out below: 6.2.1 Our subsidiaries (i) Bounty Crop (Company No. 334935-H) Bounty Crop was incorporated in Malaysia under the Act on 27 February 1995 as a private limited company under its present name. Bounty Crop is principally involved in investment holdings and commenced its business on 27 February 1995. The authorised share capital of Bounty Crop is RM100.000.000 comprising 100.000.000 ordinary shares of RM1.00 each and its issued and paid-up share capital is RM70.200.000 comprising 70.200.000 ordinary shares of RM1.00 each. There has been no change in the issued and paid-up share capital of Bounty Crop for the past three years preceding the LPD. Bounty Crop is our wholly-owned subsidiary. As at the LPD. Bounty Crop does not have any subsdiary or associate. (ii) B Gradient (Company No. 60431-X) B Gradient was incorporated in Malaysia under the Act on 18 July 1980 as a private limited company under the name of Nasiry Plantations Sdn Bhd. On 16 December 2003. the company assumed its present name. B Gradient is principally involved in cultivation and processing of oil palm and commenced its business on 18 July 1980. The authorised share capital of B Gradient is RM3.000.000 comprising 3.000.000 ordinary shares of RM1.00 each and its issued and paid-Up share capital is RM3.000.000 comprising 3.000.000 ordinary shares of RM1.00 each. There has been no change in the issued and paid-up share capital of B Gradient for the past three years preceding the LPD. B Gradient is our wholly-owned sUbsidiary. As at the LPD. B Gradient does not have any sUbsdiary or associate. (iii) B Rimba Nilai (Company No. 346457-W) B Rimba Nilai was incorporated in Malaysia under the Act on 13 June 1995 as a private limited company under the name of Rimba Nilai Sdn Bhd. On 4 March 2004. the company assumed its present name. B Rimba Nilai is principally involved in cultivation and processing of oil palm and commenced its business since 2003. The authorised share capital of B Rimba Nilai is RM100.000.000 comprising 100.000.000 ordinary shares of RM1.00 each and its issued and paid-up share capital is RM100.000.000 comprising 100.000.000 ordinary shares of RM1.00 each. There has been no change in the issued and paid-up share capital of B Rimba Nilai for the past three years preceding the LPD. B Rimba Nilai is our wholly-owned subsidiary. As at the LPD. B Rimba Nilai does not have any subsdiary or associate. 62

6. INFORMATION ON OUR GROUP (Cont’d) (iv) B Solandra (Company No. 71453-0) B Solandra was incorporated in Malaysia under the Act on 8 June 1981 as a private limited company under the name of Solandra Sdn Bhd. On 27 March 2004, the company assumed its present name. B Solandra is principally involved in cultivation of oil palm and commenced its business on 8 June 1981. The authorised share capital of B Solandra is RM500,000 comprising 500,000 ordinary shares of RM1.00 each and its issued and paid-up share capital is RM200,000 comprising 200,000 ordinary shares of RM1.00 each. There has been no change in the issued and paid-up share capital of B Solandra for the past three years preceding the LPD. B Solandra is our wholly-owned subsidiary. As at the LPD, B Solandra does not have any subsdiary or associate. (v) B Kanowil Oil Mill (Company No. 382041-V) B Kanowit Oil Mill was incorporated in Malaysia under the Act on 1 April 1996 as a private limited company under the name of Hexagon Hectares Sdn Bhd. On 02 March 1999, the company changed its name to Kanowit Oil Palm Mill Sdn Bhd. On 16 December 2003, the company changed its name to Boustead Kanowit Oil Mill Sdn Bhd. On 29 December 2004, the company assumed its present name. B Kanowit Oil Mill is principally involved in operation of oil palm mill and commenced its business on 1 June 2003. The authorised share capital of B Kanowit Oil Mill is RM30,000,000 comprising 30,000,000 ordinary shares of RM1.00 each and its issued and paid-up share capital is RM30,000,000 comprising 30,000,000 ordinary shares of RM1.00 each. There has been no change in the issued and paid-up share capital of B Kanowit Oil Mill for the past three years preceding the LPD. B Kanowit Oil Mill is our 60%-owned subsidiary. As at the LPD, B Kanowit Oil Mill does not have any subsdiary or associate. The shareholders of B Kanowit Oil Mill and their respective shareholdings in B Kanowit Oil Mill as at the LPD are set out below: Shareholder No. of ordinary shares % BPB 18,000,000 60 PelIta Holdln9s Sdn Bhd 12,000,000 40 (vi) B Silasuka (Company No. 54163-K) B Silasuka was incorporated in Malaysia under the Act on 15 January 1980 as a private limited company under the name of Ladang Yeoh Kim Tian Sdn Bhd. On 1 April 1989, the company changed its name to Ladang Silasuka Sdn Bhd. On 16 December 2003, the company assumed its present name. B Silasuka commenced its business on 15 January 1980. The company was principally involved in the cultivation of oil palm and owned the Ong Estate comprising Ladang Silasuka and Ladang Sungai Manar measuring approximately 1,501 Ha in Lahad Datu, Sabah. B Silasuka ceased operations after its disposal of the Ong Estate to Ikhtisas Sempurna Sdn Bhd in 2005. 6. INFORMATION ON OUR GROUP (Cont’d) (vii) (viii) The authorised share capital of B Silasuka is RM10,000,000 comprising 10,000,000 ordinary shares of RM1.00 each and its issued and paid-up share capital is RM10,000,000 comprising 10,000,000 ordinary shares of RM1.00 each. There has been no change in the issued and paid-up share capital of B Silasuka for the past three years preceding the LPD. B Silasuka is our wholly-owned subsidiary. As at the LPD, B Silasuka does not have any subsdiary or associate. B Silasuka had commenced liquidation on 22 February 2013. The liquidation of B Silasuka was part of BPB Group’s plan to minimise administration costs as well as to streamline BPB Group’s structure. B Sungai Manar (Company No.214463-U) B Sungai Manar was incorporated in Malaysia under the Act on 25 March 1991 as a private limited company under the name of Right Perspective Sdn Bhd. On 12 March 1992, the company changed its name to Ladang Sungai Manar Sdn Bhd. On 9 February 2004, the company assumed its present name. B Sungai Manar is principally involved in investment property holding and commenced its business on 25 March 1991. The authorised share capital of B Sungai Manar is RM7,500,000 comprising 7,500,000 ordinary shares of RM1.00 each and its issued and paid-up share capital is RM4,500,OOO comprising 4,500,000 ordinary shares of RM1.00 each. There has been no change in the issued and paid-up share capital of B Sungai Manar for the past three years preceding the LPD. B Sungai Manar is our wholly-owned subsidiary. As at the LPD, B Sungai Manar does not have any subsdiary or associate. B Telok Sengat (Company No. 2469-D) B Telok Sengat was incorporated in Malaysia under the Companies Ordinances 1940 -1946 on 19 January 1954 as a private limited company under the name of Heah Joo Seang Rubber Estates Limited. On 15 April 1966, the company changed its name to Heah Joo Seang Rubber Estates Sdn Berhad. On 11 February 2004, the company changed its name to Boustead Heah Joo Seang Sdn Bhd. On 4 January 2010, the company assumed its present name. B Telok Sengat is principally involved in cultivation and processing of oil palm and investment holding and commenced its business on 19 January 1954. The authorised share capital of B Telok Sengat is RM15,OOO,OOO comprising 15,000,000 ordinary shares of RM1.00 each and its issued and paid-up share capital is RM9,184,OOO comprising 9,184,000 ordinary shares of RM1.00 each. There has been no change in the issued and paid-up share capital of B Telok Sengat for the past three years preceding the LPD. B Telok Sengat is our wholly-owned subsidiary. The subsidiaries of B Telok Sengat as at the LPD are B Tinjar, B Kanowit, B Eldred and B Emastulin, details of which are set out in Sections 6.2.1 (x), (xi), (xii) and (xiii) of this Prospectus, respectively. 6. INFORMATION ON OUR GROUP (Cont’d) The associate of B Telok Sengat as at the LPD is AA Resources, details of which are set out in Sections 6.2.2(i) of this Prospectus. (ix) BEA (Company No. 6537-0) BEA was incorporated in Malaysia under the Act on 23 February 1966 as a private limited company under the name of Boustead Estates Agency Limited. On 1 October 1966, the company changed its name to Barlow Boustead Estates Agency Sendirian Berhad. On 6 July 1983, the company assumed its present name. BEA is principally involved in providing management services to the estates and mill and commenced its business on 23 February 1966. The authorised share capital of BEA is RM14,000,000 comprising 14,000,000 ordinary shares of RM1.00 each and its issued and paid-up share capital is RM1,050,000 comprising 1,050,000 ordinary shares of RM1.00 each. There has been no change in the issued and paid-up share capital of BEA for the past three years preceding the LPD. BEA is our wholly-owned sUbsidiary. The subsidiaries of BEA as at the LPD are BACS and BASEA, details of which are set out in Sections 6.2.1(xvi) and (xvii) of this Prospectus, respectively. As at the LPD, BEA does not have any associate. (x) B Tinjar (Company No. 169338-H) B Tinjar was incorporated in Malaysia under the Act on 19 March 1988 as a private limited company under the name of West One Corporation Sdn Bhd. On 10 September 1988, the company changed its name to Ladang Segamaha Sdn Bhd. On 21 October 1994, the company changed its name to Loagan Bunut Plantations Sdn Bhd. On 14 May 2004, the company changed its name to Boustead Pelita Plantation Sdn Bhd. On 10 June 2004, the company assumed its present name. B Tinjar is principally involved in cultivation and processing of oil palm and commenced its business on 19 March 1988. The authorised share capital of B Tinjar is RM105,000,000 comprising 100,000,000 ordinary shares of RM1.00 each and 500,000,000 RPS of RMO.01 each and its issued and paid-up share capital is RM49,180,OOO comprising 48,000,000 ordinary shares of RM1.00 each and 118,000,000 RPS of RMO.01 each. Details of the changes to the issued and paid-up share capital of B Tinjar for the past three years preceding the LPD are as follows: Cumulative issued and Date of No. of RPS Par paid-up share redemption redeemed value Consideration capital RM RM 30 June 2011 8,000,000 0.01 Cash 49,420,000 1 September 2011 10.000,000 0.01 Cash 49,320,000 1 March 2012 5,000,000 0.01 Cash 49,270,000 2 April 2012 3,000,000 0.01 Cash 49,240,000 6. INFORMATION ON OUR GROUP (Gonl’d) (xi) Cumulative  issued and  Date of  No. of RPS  Par  paid-up share  redemption  redeemed  value  Consideration  capital  RM  RM  1July 2012  3,000,000  0.01  Cash  49,210,000  1 August 2012  3,000,000  0.01  Cash  49,180,000
B Tinjar is a 60%-owned subsidiary of B Telok Sengat which in turn is our wholly-owned subsidiary. As at the LPD, B Tinjar does not have any subsidiary or associate. The shareholders of B Tinjar and their respective shareholdings in B Tinjar as at the LPD are set out below: Shareholder No. of ordinary shares % B Telok Sengat 28,800,000 60 Pelita Holdings Sdn Bhd 19,200,000 40 B Kanowit (Company No. 364761-H) B Kanowit was incorporated in Malaysia under the Act on 25 October 1995 as a private limited company under the name of Epic Hectares Sdn Bhd. On 31 December 1996, the company changed its name to Kanowit Oil Palm Plantations Sdn Bhd. On 9 February 2004, the company assumed its present name. B Kanowit is principally involved in cultivation of oil palm and commenced its business on 25 October 1995. The authorised share capital of B Kanowit is RM55,000,000 comprising 50,000,000 ordinary shares of RM1.00 each and 500,000,000 culmulative RPS of RMO.01 each and its issued and paid-up share capital is RM36,560,000 comprising 34,560,000 ordinary shares of RM1.00 each and 200,000,000 culmilative RPS of RMO.01 each. There has been no change in the issued and paid-up share capital of B Kanowit for the past three years preceding the LPD. B Kanowit is a 60%-owned subsidiary of B Telok Sengat which in turn is our wholly-owned subsidiary. As at the LPD, B Kanowit does not have any sUbsidiary or associate. The shareholders of B Kanowit and their respective shareholdings in B Kanowit as at the LPD are set out below: Shareholder No. of ordinary shares % B Telok Sengat 20,736,000 60 Pelita Holdings Sdn Bhd 3,456,000 10 Trustee for NCR owners -Pelita Holdings 10,368,000 30 Sdn Bhd 6. INFORMATION ON OUR GROUP (Cont’d) (xii) (xiii) (xiv) B Eldred (Company No. 1631-0) B Eldred was incorporated in Malaysia under the Companies Ordinances 1940 -1946 on 30 January 1948 as a private limited company under the name of H.W. Evans and Company Limited. On 9 December 1965, the company changed its name to Boustead Trading Limited. On 15 April 1966, the company changed its name to Boustead Trading Sdn Bhd. On 21 March 1984, the company changed its name to Boustead Sales Sdn Berhad. On 10 December 1985, the company changed its name to Boustead Trading (1985) Sdn Berhad. On 24 December 2003, the company assumed its present name. B Eldred is principally involved in operation of oil palm plantation and commenced its business on 30 January 1948. The authorised share capital of B Eldred is RM15,000,000 comprising 15,000,000 ordinary shares of RM1.00 each and its issued and paid-up share capital is RM15,000,000 comprising 15,000,000 ordinary shares of RM1.00 each. There has been no change in the issued and paid-up share capital of B Eldred for the past three years preceding the LPD B Eldred is a wholly-owned subsidiary of B Telok Sengat which in turn is our wholly-owned SUbsidiary. The SUbsidiary of B Eldred as at the LPD is B Sutera, details of which are set out in Sections 6.2.1 (xviii) of this Prospectus. As at the LPD, B Eldred does not have any associate. B Emastulin (Company No. 23852-K) B Emastulin was incorporated in Malaysia under the Act on 8 August 1975 as a private limited company under the name of Emastulin Automobile Sdn Bhd. On 19 January 2004, the company assumed its present name. B Emastulin is principally involved in cultivation and processing of oil palm and commenced its business on 8 August 1975. The authorised share capital of B Emastulin is RM20,000,000 comprising 20,000,000 ordinary shares of RM1.00 each and its issued and paid-up share capital is RM17,000,000 comprising 17,000,000 ordinary shares of RM1.00 each. There has been no change in the issued and paid-up share capital of B Emastulin for the past three years preceding the LPD. B Emastu!in is a wholly-owned subsidiary of B Telok Sengat which in turn is our Wholly-owned subsidiary. As at the LPD, B Emastulin does not have any subsidiary or associate. B Sediii (Company No. 439495-K) B Sedili was incorporated in Malaysia under the Act on 16 July 1997 as a private limited company under the name of Modenmax Sdn Bhd. On 16 December 2003, the company assumed its present name. B Sedili is principally involved in cultivation of oil palm and commenced its business on 1 October 2004. The authorised share capital of B Sedili is RM10,000,000 comprising 10,000,000 ordinary shares of RM1.00 each and its issued and paid-up share capital is RM6,150,000 comprising 6,150,000 ordinary shares of RM1.00 each. 6. INFORMATION ON OUR GROUP (Cont’d) (xv) (xvi) (xvii) There has been no change in the issued and paid-up share capital of B Sedili for the past three years preceding the LPD. B Sedili is our 70%-owned subsidiary. As at the LPD, B Sediii does not have any subsidiary or associate. The shareholders of B Sedili and their respective shareholdings in B Sedili as at the LPD are set out below: Shareholder  No. of ordinary shares  %  BPB  4,305,000  70  Permodalan Darul Ta’zim Sdn Bhd  1,845,000  30  B Trunkline (Company No. 195654-K)
B Trunkline was incorporated in Malaysia under the Act on 28 March 1990 as a private limited company under the name of Trunkline Petroleum Sdn Bhd. On 11 October 1996, the company changed its name to Trunkline Plantations Sdn Bhd. On 4 October 2004, the company assumed its present name. B Trunkline is principally involved in operation of oil palm plantation and commenced its business on 28 March 1990. The authorised share capital of B Trunkline is RM20,000,000 comprising 20,000,000 ordinary shares of RM1.00 each and its issued and paid-up share capital is RM7,OOO,000 comprising 7,000,000 ordinary shares of RM1.00 each. There has been no change in the issued and paid-up share capital of B Trunkline for the past three years preceding the LPD. B Trunkline is our wholly-owned subsidiary. As at the LPD, B Trunkline does not have any subsidiary or associate. BACS (Company No. 116955-V) BACS was incorporated in Malaysia under the Act on 24 March 1984 as a private limited company under the name of Imbak Sdn Bhd. On 10 September 1985, the company changed its name to Boustead Estates Agency (Sabah) Sdn Bhd. On 31 March 2003, the company assumed its present name. BACS is principally involved in provision of management services to estates and commenced its business on 24 March 1984. The authorised share capital of BACS is RM1 ,000,000 comprising 1,000,000 ordinary shares of RM1.00 each and its issued and paid-up share capital is RM500,002 comprising 500,002 ordinary shares of RM1.00 each. There has been no change in the issued and paid-up share capital of BACS for the past three years preceding the LPD. BACS is a wholly-owned subsidiary of BEA which in turn is our wholly-owned subsidiary. As at the LPD, BACS does not have any subsidiary or associate. BASEA (Company No. 244041-T) BASEA was incorporated in Malaysia under the Act on 9 July 1992 as a private limited company under the name of Ponderose Decors Sdn Bhd. On 30 December 1992, the company assumed its present name. BASEA is principally involved in investment holding and commenced its business since 1993. 6. INFORMATION ON OUR GROUP (Cont’d) (xviii) (xix) The authorised share capital of BASEA is RM1,000,000 compnsmg 1,000,000 ordinary shares of RM1.00 each and its issued and paid-up share capital is RM500,000 comprising 500,000 ordinary shares of RM1.00 each. There has been no change in the issued and paid-up share capital of BASEA for the past three years preceding the LPD. BASEA is a wholly-owned sUbsidiary of BEA which in turn is our wholly­owned sUbsidiary. As at the LPD, BASEA does not have any subsidiary or associate. B Sutera (Company No. 3476-A) B Sutera was incorporated in Malaysia under the Act on 12 June 1959 as a private limited company under the name of Muller & Phipps (Malaya) Limited. On 15 April 1966, the company changed its name to Muller & Phipps (Malaya) Sendirian Berhad. On 11 March 1977, the company changed its name to The Getz Corporation (Malaysia) Sdn Bhd. On 12 January 1983, the company changed its name to Boustead Getz Sdn Berhad. On 17 April 1984, the company changed its name to Getz Marketing Services Sdn Bhd. On 23 September 1987, the company changed its name to Boustead Sales and Services Sdn Berhad. On 10 June 2004, the company assumed its present name. B Sutera commenced its business on 12 June 1959. The company was principally involved in the cultivation of oil palm and owned the Hing Lee Estate (currently known as Sutera Estate). B Sutera had ceased operations in 1 April 2011 after the injection of Sutera Estate into BREIT in April 2011. Sutera Estate forms part of the plantation assets pursuant to the IPO. The authorised share capital of B Sutera is Rty15,000,000 comprising 500,000 ordinary shares of RM10.00 each and its issued and paid-up share capital is RM4,250,000 comprising 425,000 ordinary shares of RM10.00 each. There has been no change in the issued and paid-up share capital of B Sutera for the past three years preceding the LPD. B Sutera is a wholly-owned subsidiary of B Eldred which is a wholly-owned subsidiary of B Telok Sengat which in turn is our wholly-owned subsidiary. As at the LPD, B Sutera does not have any SUbsidiary or associate. B Sutera had commenced liquidation on 22 February 2013. The liquidation of B Sutera was part of BPB Group’s plan to minimise administration costs as well as to streamline BPB Group’s structure. BREIT BREIT is currently a private property trust. It was established as a REIT and was constituted pursuant to the Trust Deed and was regulated by the CMSA and the REIT Guidelines. BREIT’s principal activity was to own and invest primarily in plantation assets comprising oil palm estates and palm oil mills with the main objective of providing its investors with stable distribution of income and long term growth in net asset vaiue per unit. BREIT was listed on the Main Market of Bursa Securities on 8 February 2007 as an Islamic income and growth type fund. 6. INFORMATION ON OUR GROUP (Conl’d) On 5 December 2013, the Unitholders of BREIT had approved the BREIT Privatisation and the SUR Exercise at the Unitholders of BREIT’s meeting. In this regard, our Company now holds the entire 335,914,500 Units remaining, representing 100% interest in BREIT. On 30 January 2014, BREIT was converted to a private property trust with our Company being its sole beneficiary and on 19 February 2014, the Units were removed from the Official List of Bursa Securities. As a private property trust, BREIT is no longer a collective investment scheme for the purpose of the REIT Guidelines and hence is not regulated under the CMSA and the REIT Guidelines. BREIT is a private property trust with CIMB Trustee as its trustee that holds certain plantation assets on behalf of our Company as its sole beneficiary. 6.2.2 Our associates (i) AA Resources (Company No, 90455-D) AA Resources was incorporated in Malaysia under the Act on 23 September 1982 as a private limited company under the name of Public Relations Management Sdn Berhad. On 11 July 1986, the company changed its name to Applied Agricultural Research Sdn Bhd. On 25 March 2004, the company assumed its present name. AA Resources is principally involved in the provision of agronomic advisory services, the commercial production of oil palm planting materials and investment holding. AA Resources commenced its business on 1 January 1983. The authorised share capital of AA Resources is RM950,000 comprising 500,000 shares of RM1.00 each and 4,500,000 RPS of RMO.10 each and its paid-up capital is RM750,000 comprising 500,000 ordinary shares of RM1.00 each and 2,500,000 RPS of RMO.10 each. There has been no change in the issued and paid-up share capital of AA Resources for the past three years preceding the LPD. AA Resources is a 50%-owned associate of B Telok Sengat which in turn is our wholly-owned subsidiary. The subsidiaries of AA Resources as at the LPD are AA Research, PT AARI and PT AAR Nusantara, details of which are set out in Sections 6.2.2(ii), (iii) and (Iv) of this Prospectus, respectively. The shareholders of AA Resources and their respective shareholdings in AA Resources as at the LPD are set out below: Shareholder No. of ordinary shares % B TeJok Senga\ 250,000 50 Kuala Lumpur Kepong Berhad 250,000 50 [The rest of this page has been intentionally left blank] 6. INFORMATION ON OUR GROUP (Cont’d) (ii) AA Research (Company No. 636406-X) AA Research was incorporated in Malaysia under the Act on 9 December 2003 as a private limited company under the name of Bridge Avon Sdn Bhd. On 29 March 2004, it assumed its present name. AA Research is principally involved in providing agronomy research services and commenced its business on 9 December 2003. The authorised share capital of AA Research is RM500,000 comprising 500,000 shares of RM1.00 each and its paid-up capital is RM500,000 comprising 500,000 shares of RM1.00 each. There has been no change in the issued and paid-up share capital of AA Research for the past three years preceding the LPD. AA Research is a wholly-owned subsidiary of AA Resources which is an associate of B Telok Sengat which in turn is our wholly-owned subsidiary. As at the LPD, AA Research does not have any subsidiary or associate. (iii) PT AARI (Company Registration No. 09.01.1.74.26236) PT AARI was incorporated in Indonesia under the Law of the Republic of Indonesia Number 40 concerning Limited Liability Companies on 10 September 2007 as a limited company under its present name. PT AARI is principally involved in providing agronomic and advisory services and commenced its business on 1 April 2008. The registered capital of PT AARI is IDR23,496,875,000 comprising 2,575 shares of IDR9,125,000 each and its paid-up capital is IDR12,775,000,000 comprising 1,400 shares of IDR9, 125,000 each. Details of the changes to the issued and paid-up share capital of PT AARI for the past three years preceding the LPD are as follows: Cumulative No. of issued and Date of shares paid-up share allotment alloted Par value Consideration capital lOR lOR 29 November 205 9,125,000 Cash 2,783,125,000 2010 19 November 1,095 9,125,000 Cash 12,775,000,000 2013 PT AARI is a 95% owned subsidiary of AA Resources which is an associate of B Telok Sengat which in turn is our Wholly-owned sUbsidiary. As at the LPD, PT AARI does not have any subsidiary or associate. The shareholders of PT AARI and their respective shareholdings in PT AARI as at the LPD are set out below: Shareholder No. of ordinary shares % AA Resources 1,330 95% Arif Sugandi 70 5% 6. INFORMATION ON OUR GROUP (Cont’d) (iv) PT AAR Nusantara (Company Registration No. 09.03.1.01.78234) PT AAR Nusantara was incorporated in Indonesia under the Law of the Republic of Indonesia No 25/2007 on 14 May 2012 as a limited company under its present name. PT AAR Nusantara is principally involved in the production of oil palm seeds and commenced its business on 16 July 2012. The registered capital of PT AAR Nusantara is IDR30,OOO,000,000 comprising 30,000 shares of IDR1,000,000 each and its paid-up capital is 10,000,000,000 comprising 10,000 shares of IDR1 ,000,000 each. There has been no change in the issued and paid-up share capital of PT AAR Nusantara since the date of incorporation. PT AAR Nusantara is a 50%-owned associate of AA Resources which is an associate of B Telok Sengat which in turn is our wholly-owned subsidiary. As at the LPD, PT AAR Nusantara does not have any subsidiary or associate. The shareholders of PT AAR and their respective shareholdings in PT AAR as at the LPD are set out below: Shareholder No. of ordinary shares % AA Resources 5,000 50 KL Kepong Plantation Holdings Sdn Bhd 1,500 15 PT Perkebunan Nusantara II 3,500 35 Our Group does not have any outstanding warrants, options, convertible securities or uncalled capital as at the date of this Prospectus. None of our Shares and shares capital in our subsidiaries were issued and allotted at a discount or have any special terms. Our issued Shares and issued shares capital in our subsidiaries are fully paid-up. As at the date of this Prospectus, our Group is not involved in any bankruptcy, receivership or similar proceedings. [The rest of this page has been intentionally left blank] 7. BUSINESS OF OUR GROUP 7.1 HISTORY AND BUSINESS OVERVIEW 7.1.1 Overview and history of our business We are one of the most experienced and established upstream oil palm plantation companies in Malaysia and a subsidiary of BHB, one of Malaysia’s oldest and largest diversified conglomerates. Backed by BHB’s presence in the plantations business, we have over 100 years of plantations industry experience and over 50 years of oil palm plantation estate management experience. We are an investment holding company and are involved in the ownership of oil palm plantations. Through our subsidiaries, we are principally involved in the ownership and management of oil palm plantations, cultivation of oil palm and harvesting of its FFBs, and the production and sale of CPO and PK. We also sell oil palm FFBs and provide palm oil mill design and consultancy services. We are also actively involved in oil palm agricultural and agronomic research through our associate company AA Resources. Our involvement in the plantations business is carried out via our wholly-owned subsidiary, BEA, a central agency which provides a range of services such as the management of all plantation activities within our Group, plantation advisory services for oil palm and rubber crops, plantation engineering services, marketing of plantation produce and agronomic research. We own, co-own and lease a total of 41 oil palm plantation estates and 10 palm oil mills in Malaysia with 20 plantation estates in Peninsular Malaysia, 12 in Sabah and 9 in Sarawak. We own and operate four palm oil mills in Peninsular Malaysia, four in Sabah and two in Sarawak. We own, co-own and lease a total 83,635.9 Ha of land out of which we cultivate oil palms and harvest FFBs on 70,991.2 Ha of plantation estate land as follows: By ownership: Own Co-own Lease Total Ha Ha HaHa Planted area 59,847.0 1,427.3 9,716.9 70,991.2 Planting reserve 353.2 353.2 Unplaotable area 5,064.4 430.5 5,494.9 Building siles and roads 1,130.7 16.9 89.2 1,236.8 Others (BUffer zones, nursery, rentice) 5,037.5 47.4 474.9 5,559.8 Total land area 11171,079.6 1211,491.6 11,064.7 83,635.9 By geographical area:  Peninsular  Malaysia  Sabah  Sarawak  Total  Ha  Ha  Ha  Ha  Own  24,478.0  17,296.6  18,072.4  59,847.0  Co-Own  1,427.3  1,427.3  Lease  933.5  8,783.4  9,716.9  Total planted area  26,838.8  26,080.0  18,072.4  70,991.2  Planting reserve  353.2  353.2  Unplantable area  567.7  640.1  4,287.1  5,494.9  Buildin9 siles and roads  393.5  439.3  404.0  1,236.8  Others (Buffer zones,  nursery, rentice)  799.2  944.8  3,815.8  5,559.8  Total land area  28,599.2  28,457.4  11126,579.3  83,635.9
7. BUSINESS OF OUR GROUP (Conl’d) Notes: (1) Inclusive of 14,064.0 Ha in Sarawak which is without titte, of which 12,531.4 Ha has been planted and the remaining 1,532.6 Ha are unplantable areas, building sites and roads, buffer zones, nurseries and rentice. Please refer to Annexure B.I.2 of this Prospectus for further infonnation on the estates owned by our Group (for lands without tittes).
(2) 50% of the plantation land is owned by Felda Holdings Berhad and Felda Marketing Services Sdn Bhd.

We sell CPO to palm oil refineries in Malaysia, to be further processed into palm­based edible oils and oleochemicals. Our PK is sold to PK crushing plants in Malaysia for the production of PK products. We also sell FFBs which are harvested from our plantation estates that are not located in close proximity to our mills and during the annual maintenance shutdown periods of our mills, to third party mills in Malaysia. Our CPO and PK production as well as our pro forma revenue for the FYE 31 December 2011, 31 December 2012 and 31 December 2013 are summarised below: FYE 31 December 2011 2012 CPO (MT) 229,623 250,430 238,371 PK (MT) 51,572 56,059 52,927 Revenue (RM’OOO) 948.998 836,745 684,996 We were incorporated as a public limited company under the name The Kuala Sidim Rubber Company, Limited, on 4 July 1946 in the Federation of Malaya (“Malaya”) under the Companies Ordinance 1910. We were at the time involved in the cultivation of rubber and management of rubber plantation estates in Malaya, where our rubber plantations were located in Peninsular Malaya. On 15 April 1966, we changed our name to The Kuala Sidim Rubber Company Berhad. Subsequently, on 12 December 1994, we changed our name to Kuala Sidim Berhad. We assumed our present name on 10 April 2004. In the 1960s, we began converting our rubber crops into oil palm. In July 1969, Barlow Boustead Estates Agency Limited (“BBEA”), a plantation management agency company, became our substantial shareholder and assumed the role of managing agent for our plantation estates. We were listed on both Bursa Securities (formerly known as Kuala Lumpur Stock Exchange (“KLSE”» and the Singapore Stock Exchange (“SES”) on 1 August 1973. Also in 1973, we expanded into agricultural research and advisory services through the establishment of Highland Research Unit Sdn Bhd (“HRU”), a joint venture research unit between Highlands & Lowlands Berhad and Selangor Coconuts Berhad (“SeB”), which was then our listed plantation-based subsidiary, and us. Beginning from the late 1970s through the 1980s, we began acquiring landbank, as well as oil palm plantation estates, in Sabah, including from other plantation estate owners for whom BBEA was acting as the managing agent. Between February 1982 and May 1982, our current holding company, BHB, acquired all the interest held in BBEA from BBEA’s shareholders, including LTAT, Lembaga Tabung Haji, FELDA and members of the Barlow family, and renamed it BEA, after which BEA became a Wholly-owned subsidiary of BHB. In May 1983, BHB acquired all of BEA’s equity interest in our Company. In the meantime, BEA continued to be the managing agent for all our plantation assets. In 1986, we co-founded AA Resources (then known as Applied Agricultural Research Sdn Bhd), also an agricultural research and advisory services unit, in a joint-venture partnership with Kuala Lumpur Kepong Berhad. Further details on AA Resources are set out in Section 6.2.2(i) and Section 7.12 of this Prospectus. In May 1987, we disposed of our entire interest in HRU. 74 7. BUSINESS OF OUR GROUP (Cont’d) In line with the Malaysian government’s aspiration to promote the growth of the then KLSE, we were delisted from SES on 1 January 1990, but remained listed on KLSE. In April 1993, we embarked on a rationalisation exercise together with our parent company BHB and our subsidiaries, SCB and Malakoff Berhad. Following that exercise, we became the principal listed vehicle for the BHB Group’s plantation interests. In March 1994, we disposed virtually our entire interest in Malakoff Berhad but acquired all of the latter’s estates (with the exception of Windsor Estate) and its shareholdings in Ladang Segaria Sdn Bhd. The said acquisition enabled us to expand our directly-owned plantation landbank and consolidate our plantation interests. In 1994, we expanded our oil palm business into Sarawak via a joint venture agreement with LCDA for the development of plantation land in Sarawak. In 1998, we continued our expansion in Sarawak by entering into another joint venture agreement with LCDA via Pelita Holdings Sendirian Berhad, a company nominated by LCDA as a trustee to act on behalf of the NCR landowners. On 29 August 2003, we were delisted from Bursa Securities following a takeover offer made by BHB on 10 March 2003 to acquire all our remaining shares it did not already own at RM6.00 (“Offer Price”) per ordinary share of RM1.00 each in our Company, then known as Kuala Sidim Berhad (“Kuala Sidim Share”). The Offer Price represented a 44% premium to the last transacted market price of RM4.16 per Kuala Sidim Share, being the last transacted market price on the market day prior to the takeover offer by BHB. 7.1.2 Rationale for the privatisation of Kuala Sidim Berhad The market capitalisation of Kuala Sidim Berhad then was approXimately RM518 million, based on the last transacted price of RM4.16 per Kuala Sidim Share on the date the notice of take-over offer was served on our Board. BHB had undertaken the aforesaid take-over offer with the intention of privatising our Company as we did not meet the public shareholding spread prescribed by Bursa Securities. At the time when the aforementioned take-over offer was made, BHB and LTAT, a party deemed acting in concert with BHB, collectively held approximately 78% equity interest in our Company. BHB believed that the market price of our Company then was undervalued by the market, with our market price trading below our audited consolidated net tangible assets during the five years prior to the privatisation and that the Offer Price of the take-over offer was an attractive opportunity for shareholders to divest their investment in Kuala Sidim Berhad at a premium to historical market prices. 7.1.3 Significant events since the delisting of Kuala Sidim Berhad BHB Group had envisaged that the privatisation of our Company would enable the BHB Group to rationalise, consolidate and streamline the plantation activities undertaken by BHB and our Company in stages. Since the privatisation of our Company in 2003, we had embarked on the following areas which we view as criticai factors in improving our working capital and financial performance as well as the efficiency of our asset utilisation: (i) Disposal of our non-core and low yielding plantation assets to focus on viable plantation estates in Malaysia We disposed several non-core estates in Sabah which were either not involved in oil palm plantation or remote oil palm plantations without the economies of scale to warrant the construction of and/or far from palm oil mills. In this connection, in 2005 we disposed our interest in two fringe oil palm plantations estates in Sabah of approximately 930 Ha, namely Ladang Silasuka and Ladang Sungai Manar, which resulted in our Company realising a net gain on disposal of apprOXimately RM20.5 million for the FYE 2005. In 75 7. BUSINESS OF OUR GROUP (Cont’d) 2008, we also disposed approximately 780 acres known as Pulau Bai Estate, which was our coconut estate situated on Pulau Bai island in Sandakan, Sabah which resulted in us realising a net gain on disposal of approximately RM344,000 for the FYE 2008. In 2007, we disposed our 51% stake in Boustead Oil Bulking Sdn Bhd which held our edible oil bulking installation in Butterworth, Pulau Pinang due to the low throughput experienced as surrounding plantation estates increased their on-site storage capacity and direct deliveries to refineries, leading to redundancy in our bUlking capacity. The disposal resulted in our Company realising a net gain on disposal of approximately RM291 ,000 for the FYE 2008. Between 2008 and 2012, we disposed our loss-making subsidiaries involved in oil palm cultivation in Indonesia. In this connection in 2008, we disposed our entire equity interest in our Indonesian subsidiary, PT Anam Koto, which owned approximately 4,790 Ha of plantation land in West Sumatera. The disposal of PT Anam Koto resulted in our Company realising a net gain on disposal of approximately RM13.9 million for the FYE 2008. In 2012, we disposed our entire equity interest in another Indonesian subsidiary, PT Dendymarker Indahlestari, which owned approximately 17,790 Ha of land in South Sumatera with then approximately 4,930 Ha under oil palm cultivation and a 20-tonne per hour palm oil mill. The disposal of PT Dendymarker Indahlestari resulted in our Company realising a net gain on disposal of approximately RM2.7 million in total for the FYE 2012 and FYE 2013. (ii) Asset rationalisation and restructuring exercise to improve our operating efficiency In 2004, we implemented an asset rationalisation and restructuring exercise with the following objectives: (a) to streamline the operations of the estates by region for a leaner and efficient group structure which reduce our operation and administrative cost; and
(b) rebranding of companies with “Boustead” name in order to enhance corporate identity. The restructuring exercise was implemented in the same year we changed our name from Kuala Sidim Berhad to BPB

i.e. year 2004. The said exercise involved, inter-alia, the transfer of the following estates and mills: No. Estates/Mills Slate _Transferor entity Transferee entity 1. Stothard Estate Kedah BPB B Solandra
2. Kedah Oil Palms Kedah Kedah Oil Palms B Solandra Estate Berhad
3. Eldred Estate Johor BPB B Eldred
4. Bebar Estate Pahang Sungai Jernih B Eldred Plantations Sdn Bhd
5. Malakoff Estate Pulau BPB B Rimba Pinang
6. Sungai Segamaha Sabah Segamaha B Rimba Estate and Development Sdn Segamaha Palm Bhd Oil Mill

7. BUSINESS OF OUR GROUP (Cont’d) No. EstatestMilis State Transferor entity Transferee entity 7. Sungai Jernih Pahang Sungai Jernih B Rimba Estate and Sungai Plantations Sdn Bhd Jernih Palm Oil Mill 8. Tabung Tentera Terengganu Perwira Plantations B Rimba Terengganu Estate Sdn Bhd 9. Sutera Estate Sabah Hing Lee Plantations B Sutera Sdn Bhd
10. Nak Estate and Sabah Gradient Holdings B Gradient Nak Palm Oil Mill Sdn Bhd
11. Bumidaya Estate(1 ) Sabah Syarikat Kemajuan B Gradient Bumidaya Sdn Bhd
12. Yaw Lim Estate(1 ) Sabah Yaw Lim Plantations B Gradient Sdn Bhd
13. Segaria Estate and Sabah Ladang Segaria Sdn B Emastulin Segaria Palm Oil Bhd Mill

14. Ladang Tabung Sabah Perwira Plantations B Emastulin Tentera Sabah Sdn Bhd Note: (1) Bumidaya Estate and Yaw Lim Estate are divisions within the Nak Estate Upon completion of the asset rationalisation and restructuring involving the abovementioned estates and mills, the transferor entities, save for BPB, were wound up. (iii) Establishment of new plantation and mills In 2003, we embarked on a joint venture project with Permodalan Darul Ta’zim Sdn Bhd, a whOlly owned investment holding company of the Johor State Government, to develop approximately 1,000 Ha in Kota Tinggi, Johor (Boustead Sediii Estate) into an oil palm plantation under a sub-lease arrangement with Permodaian Darul Ta’zim Sdn. Bhd. In the same year, we acquired the entire equity interest in B Trunkline which increased our land bank under Sungai-Sungai 1 Estate and Sungai-Sungai 2 Estate in Sabah by 2,990 Ha. Further information on the abovementioned estates is set out under Item B.2.1, Annexure B of this Prospectus. We had also invested a total of approximately RM88 million between 2003 and 2006 in the construction of three palm oil mills in Sarawak and Sabah, which contributed to the fOllowing: (i) the increase of our production of CPO from 158,276 MT in FYE 31 December 2002, being the year prior to the privatisation of our Company, to 238,371 MT in FYE 31 December 2013; and
(ii) the increase of our production of PK from 40,490 MT in FYE 31 December 2002 to 52,927 MT in FYE 31 December 2013.

These mills, comprising the Kanowit Palm Oil Mill (2003), Loagan Bunut Paim Oil Mill (2004) and Rimba Nilai Palm Oil Mill (2006), increased our FFB processing capacity by 145 MT per hour or an increase of approximately 54% from our production capacity prior to the privatisation of our Company. 7. BUSINESS OF OUR GROUP (Conl’d) Additionally, we had invested a total of approximately RM87 million between 2003 and 2013 for capital expenditure and improvement work on our 10 mills for the purpose of sustaining the operational efficiency of the mills including maintaining low production loss rates, upgrading of milling capacity, replacement of plant and machinery and improvements to plant design. Further information on the abovementioned mills is set out under Item B.1.4, Annexure B of this Prospectus. In December 2013, we had acquired two parcels of plantation land known as G&G Estate for a total cash consideration of approximately RM185 million. Further information on the abovementioned estate is set out under item B.1.1, Annexure B of this Prospectus. (iv) Unlocking the value of our plantation assets through asset-backed securitisation funding In 2005, we undertook an asset-backed securitisation exercise, which is essentially a financing arrangement which entailed our sale of certain plantation estates and palm oil mills to Golden Crop Returns Berhad (“Golden Crop”), a special purpose vehicle to facilitate a RM742 million Islamic bond issuance (“Sukuk AI-Ijarah”). Our estates and palm oil mills whose values were unlocked via their disposal to Golden Crop pursuant to the asset-backed securitisation exercise were: (a) Kedah Oil Palm, Stothard, Kuala Muda, Malakoff, Sungai Jernih, Segamaha, Sungai-Sungai 1, Sungai-Sungai 2, Kawananan, Nak, and Tabung Tentera Sabah Estates; and
(b) Sungai Jernih, Segamaha, Rimba Nilai and Nak Palm Oil Mills,

(collectively referred to as “Golden Crop Plantation Assets”). We recorded a net gain of approximately RM102.4 million in the FYE 2005 on the abovementioned exercise. As part of the terms of the Sukuk AI-Ijarah, we retained the productive use of the Golden Crop Plantation Assets whereby the Golden Crop Plantation Assets were leased-back to our Group as tenant and were granted options by Golden Crop to buy back the Golden Crop Plantation Assets. Between 2008 and 2012, we had progressively bought back all the Golden Crop Plantation Assets from Golden Crop through the exercise of call options issued by Golden Crop in accordance with the repayment terms of the outstanding Sukuk AI-Ijarah. Malakoff Estate, Bebar Estate and Sutera Estate were among the Golden Crop Plantation Assets which we and BHB had earmarked for injection into BREIT following our progressive exercise of the abovementioned call options in 2008 and 2010. (v) Pioneering the establishment of the first and only plantation-based real estate investment trust in Malaysia with the listing of BREIT Pursuant to the listing of BREIT on the Main Market of Bursa Securities, BHB Group had in 2006 injected six oil palm plantation estates measuring approximately 6,923 Ha into BREIT pursuant to the initial public offering of the Units on the Main Market of Bursa Securities. These estates were Bekoh Estate, Malaya Estate, Kulai Young Estate, Bukit Mertajam Estate, Batu Pekaka Estate and Chamek Estate. Concurrently, we had also injected two estates into BREIT namely, Telok Sengat Estate and Lepan Kabu Estate together with two of our mills, namely, Telok Sengat Palm Oil Mill and Lepan Kabu Palm Oil Mill, which resulted in our Company realising net gain on disposal of approximately RM113.8 million for the FYE 2006 and RM41.2 million for FYE 2007. These assets were leased back from BREIT by BHB 7. BUSINESS OF OUR GROUP (Cont’d) Group and us and managed by our managing agent, BEA. Details of the aforementioned estates and mills are set out in Item B.1, Annexure B of this Prospectus. In 2008, we had injected Malakoff Estate while BHB injected Bebar Estate into BREIT, which resulted in our Company realising a net gain on disposal of approximately RM26.5 million for the FYE 2008. In 2009, we had acquired the entire unitholding of Boustead Properties Berhad in BREIT, thus effectively increasing our beneficial interest in BREIT. In 2010, BHB had injected its Taiping Rubber Plantation Estate and Trong Palm Oil Mill into BREIT. In the same year, we had injected Sutera Estate into BREIT, which resulted in our Company realising a net gain on disposal of approximately RM62.2 million for the FYE 2011. Taiping Rubber Plantation Estate, Trong Palm Oil Mill and Sutera Estate were also respectively leased back by BHB Group from BREIT and managed by our managing agent, BEA. (Vi) Streamlining of BHB Group’s plantation assets under BPB via, amongst others, the BREIT Privatisation BREIT was initially earmarked by BHB to be the vehicle to consolidate BHB Group’s oil palm plantation assets, whereby viable plantation assets held directly by BHB and our Company will be injected into BREIT. As a tenant of the plantation assets leased from BREIT, our Company is to pay rental which is derived from, amongst others, the projected yield per Ha, projected extraction rate and a basis CPO price to be mutually agreed between BREIT and our Company. However, subsequent to its listing, BREIT was faced with many challenges in growing its plantation assets whilst maintaining its dividend yield to its Unitholders in view of the increasing scarcity and high market prices of mature plantation assets with prime yielding trees. Conversely, whilst plantation assets with younger tree profile may be acquired at lower prices, the high cost of maintenance and capital expenditure required for planting and the low yield from such plantation assets may have a dilutive effect on BREIT’s per Unit earnings. Further, BREIT faced the challenge of balancing the need to distribute at least 90% of its distributable earnings to Unitholders in order to qualify for tax exemption of its earnings whilst still being able to retain sufficient funds for expansion. Adapting to the abovementioned constraints, on 16 July 2013, we initiated the BREIT Privatisation to provide an avenue to merge and streamline all of the plantation assets in our Group under one entity, namely us, which will enable us to raise funds and access the equity capital market, as well as proVide us greater financial fiexibility to pursue further growth opportunities. The BREIT Privatisation is expected to result in saving of rental payments moving forward. As an indication of such rental payments, we have paid approximately RM99.6 million, RM90.5 million and RM68.5 million as rental payments to BREIT during the FYE 31 December 2011, 2012 and 2013, respectively. However, BREIT Privatisation is expected to result in a one-off impairment of RM170.4 million for the FYE 31 December 2013 arising from the excess consideration paid pursuant to the BREIT Privatisation against the total net assets of BREIT as at 31 December 2013. On 1 July 2013, we acquired the sub-lease of Resort Estate from Boustead Segaria Sdn Bhd, a subsidiary of BHB, by way of novation of the same by BHB, which increased our Sabah plantation size by approximately 1,150 Ha. Further infornnation on Resort Estate is set out under Item B2.2.1, Annexure B of this Prospectus. As the final step in the streamlining process, we acquired the entire equity interest in BEA from BHB on 1 July 2013, thus consolidating the management nucleus of BHB Group’s entire plantation operations under our Group. Further information on the activities of BEA is set out in Section
6.2.1 (ix) of this Prospectus. 7. BUSINESS OF OUR GROUP (Cont’d) (vii) Unlocking value of plantation land with development value In November 2013, we undertook the Partial Disposal of Balau Estate which involved the disposal of 153.4 Ha of oil palm plantation land in Balau Estate which has been identified to have development potential. Based on a total disposal consideration of RM107.347 million, which was based on an independent valuation conducted on 1 November 2013 of between RM6.50 to RM7.50 per square feet, we realised a gain arising from the Partial Disposal of Balau Estate of approximately RM92.B million for the FYE 31 December 2013. Further details of the Partial Disposal of Balau Estate are set out in Section
15.6.6 and Section 15.6.7 of this Prospectus. 7.1.4 The listing of our Group The abovementioned exercises in Section 7.1.3 had contributed positiveiy to the growth of our audited NA per share, which increased from RMB.52 per share as at 31 December 2002 to RM11.16 per share as at 31 December 2013, based on approximately 124 million outstanding ordinary shares of RM1.00 each in BPB in issue before the Bonus Issue and Share Split. After the Bonus Issue and the Share Split, based on 1,020 million BPB Shares in issue, our pro forma NA per BPB Share as at 31 December 2013 is RM1.36 per BPB Share as compared to the proforma NA per BPB Share of RM1.04 as at 31 December 2002. In conjunction with our IPO, our capital base will increase from approximately 1,020 million BPB Shares to 1,600 million BPB Shares, which will result in our pro forma NA per BPB Share to increase to RM1.43 per BPB Share as at 31 December 2013. In tandem with the lower NA per BPB Share pursuant to the larger capital base, the Final Retail Price is significantly lower as compared to the last transacted price of our shares prior to the privatisation in 2003 of RM4.16 per Kuala Sidim Share. We believe that this will promote the marketability and liquidity in the trading of BPB Shares as up to 41% (before the Over-allotment Option) of the BPB Shares are offered to the retail and institutional investors. The IPO is intended to increase our capital base to a level which will better reflect our current scale of operations and the streamlined assets employed, future plans as well as the prospects arising from the utilization of the IPO proceeds. We believe that the above, along with the public shareholding spread of above 25% of the enlarged paid­up capital of BPB, will help to mitigate the contributory factors resulting in the undervaluation of BPB Shares prior to the privatisation of Kuala Sidim Berhad in 2003. [The rest of this page has been intentionally left blank] 7. BUSINESS OF OUR GROUP (Cont’d) 7.1.5 Key milestones, awards and achievements Since the commencement of business, our Group has achieved the following key achievements and milestones: Year 1946 1960s 1966 1969 1973 1973 1970s -80s 1983 1986 1987 1990 1993 1994 1994 1994 2003 2004 2007 2013 2013 2013 Key milestone Incorporated as a public limited company under the name The Kuala Sidim Rubber Company, Limited Began converting our rubber crops into oil palm Changed our name to The Kuala Sidim Rubber Company Berhad BBEA became our substantial shareholder and assumed the role of managing agent for our plantation estates Listed on both Bursa Securities (formerly known as Kuala Lumpur Stock Exchange) and the Singapore Stock Exchange Established HRU, a joint venture agricultural research unit between Highlands & Lowlands Berhad, SCB and us Began acquiring landbank, as well as oil palm plantation estates, in Sabah BHB acquired all minority interest in BBEA, and renamed it BEA, and all our shares held by BEA were transferred to BHB Co-founded AA Resources, an agricultural research and advisory selVices unit, in a joint-venture partnership with Kuala Lumpur Kepong Berhad Disposed of our entire interest in HRU Delisted from the Singapore Stock Exchange Became the principal listed vehicle for the BHB Group’s plantation interests following rationalisation exercise with BHB, SCB and Malakoff Berhad Expanded our directly-owned plantation landbank and consolidated our plantation interests with acquisition of Malakoff Berhad’s estates Began expanding our oil palm business into Sarawak Changed our name to Kuala Sidim Berhad Delisted from Bursa Securities following a takeover offer by BHB Changed our name t.o BPB BREIT listed on the Main Market of Bursa Securities Acquired BEA from BHB Privatisation of BREIT to merge and streamline all of BHB Group’s plantation assets under our Group Acquired G&G Estate 7. BUSINESS OF OUR GROUP (Cont’d) 7.2 PRINCIPAL ACTIVITIES We are an upstream oil palm plantations company in Malaysia. Through our sUbsidiaries, we are principally involved in the ownership, management and cultivation of oil palm and harvesting of its FFBs, and the production and sale of CPO and PK. We also sell oil paim FFBs and provide palm oil mili design and consultancy services. Through our associate company AA Resources, we are actively involved in oil palm agricultural and agronomic research. 7.2.1 Management and cultivation of oil palm We cultivate 0;1 palms and harvest its FFBs on 70,991.2 Ha of plantation estate land owned, co-owned and leased by us. These oil palm plantation estates comprise 26,838.8 Ha in Peninsular Malaysia, 26,080.0 Ha in Sabah and 18,072.4 Ha in Sarawak. Additionally, we have planting reserve landbank suitable for the cultivation of oil palm totalling 353.2 Ha in Sabah. Details of the plantation estates, which we own, co-own and lease, by region as at the LPD is depicted below: Peninsular Malaysia Sabah Sarawak Total Number of plantation 20 12 9 41 estates Total planted area (Ha) 26,838.8 26,080.0 18,072.4 70,991.2 Planting reserve”) (Ha) 353.2 353.2 Number of mills 4 4 2 10 Note: (1) Planting reserve is reserve land suitable for planting of oii palm As at the LPD, we own, co-own and lease a total of 41 oil palm plantation estates in Malaysia and 10 palm oil milis. We own, co-own and lease 20 plantations in Peninsular Malaysia, 12 in Sabah and 9 in Sarawak. We own and operate four palm oil milis in Peninsular Malaysia, four in Sabah and two in Sarawak. All of our palm oil milis are located on our plantation estate properties which are owned, co-owned and leased by us. Our plantation estates and palm oil milis are owned, co-owned and leased by BPB and various subsidiaries in our Group. For further details on our plantation estates and palm oil milis, please refer to Annexure B of this Prospectus. [The rest of this page has been intentionally left blank] [ Company No.: 1245-M 7. BUSINESS OF OUR GROUP (Cont’d) The map below shows the location of our oil palm plantation estates and mills In Peninsular Malaysia, Sabah and Sarawak. -.

Legend 9. Lepan Kabu 17. Kulai Young 24. Resort Sarawak Peninsular Malaysia 10. Solandra la. Chamek 25. Nak 33. Loagan BUl’1ut 1. SaW Pekska 11. LTI-Terengganu 19. Boustead Sedili 26. Sutera 34. Sungai Lelak 2. Kuala Muda 12. Sungai Jemih 20. Telok Sengat 27. LTT -S.bah 35. Bukit Umau 3. Stothard 13. Behar 2a. Segaria 36. Pedai 4. Kedah Oil Palm 14. Balau Sabah 29. Sungai Segamaha 37. Jih 5. 8ukit Mertajam 15. Bekoh 21. Sungai Sungai 1 30. Bukit Segamaha 3a. Kelimut 6. Malakoff 16. Eldred 22. Sungai Sungai 2 31. lembah Pailan 39. Maong7. TRP 23. Kawananan 32. G&G 40. Mapai8. Malays 41. Sawanl• IEstate with Palm Oil Mill • Estate 83
7. BUSINESS OF OUR GROUP (Cont’d) Our plantation estates are located in the tropical belt of Peninsular Malaysia, Sabah and Sarawak, which are areas with optimum levels of rainfall, and largely situated on fertile mineral soil, conditions ideal for oil palm growth. A summary of the soil and topographical profile of our plantation estates are as follows: Total planted area (Ha) Total (%) Soil type Mineral 67,787.2 95.5 Peat 3,204.0 4.5 70,991.2 100.0 Terrain type Flat (slope class a -2) 21,280.4 30.0 Undulating (slope class 2 • 6) 34,450.5 48.5 Rolling (slope class 6-12) 11,826.5 16.7 Hilly (slope class > 12) 3,433.8 4.8 70,991.2 100.0 Notes: Slope class is defined as follows: Slope class 0 -2 degrees Slope class 2-6 degrees Slope class 6-12 degrees
Slope class > 12 degrees A total of 95.5% of our oil palms are planted on mineral soil, with only 4.5% planted on peat soil, where 99.7%, 100.0% and 82.7% of our plantation estates in Peninsular Malaysia, Sabah and Sarawak, respectively, are planted on mineral soil. A substantial proportion of our plantation estates are also located on flat or undulating terrain, which eases our operations, including planting, upkeep and maintenance as well as harvesting and evacuation of FFBs; thus contributing to our productiVity. A total of 78.5% of our plantation estates are situated on flat or undulating terrain, with 86.2% in Peninsular Malaysia, 65.4% in Sabah and 86.3% in Sarawak. Approximately 16.7% of our plantation estates across Peninsular Malaysia, Sabah and Sarawak are located on rolling terrain, while only 4.8% are situated on hilly terrain. The age profile of our oil palms is depicted as follows: Peninsular Malaysia Sabah Sarawak Total Age Profile Ha % Ha % Ha % Ha Immature 3,519.6 13.1 1,649.6 6.3 88.1 0.5 5,257.2 (0 to 3 years) Young mature 6,786.2 25.3 4,964.2 19.0 0.0 0.0 11,750.4 (4 to 9 years) Prime mature 11,567.4 43.1 13,454.6 51.6 17,101.1 94.6 42,123.1 (10 to 20 years) Past prime 4,340.7 16.2 6,006.1 23.1 883.2 4.9 11,230.1 (21 to 25 years) Replanting 624.9 2.3 5.5 0.0 0.0 0.0 630.4 (> 25 years) Total 26,838.8 100.0 26,080.0 100.0 18,072.4 100.0 70,991.2 % 7.4 16.6 59.3 15.8 0.9 100.0 7. BUSINESS OF OUR GROUP (Cont’d) Oil palms start to mature from around the 4th year after planting and typically reach their peak production period from around the 10th year until approximately 20 years. We classify our young mature oil palms as those aged between four to nine years, and our prime mature oil palms as those aged 10 to 20 years. In general, prime mature oil palms can produce over 25 MT of FFB per Ha per year. As at the LPD, a total of 11,750.4 Ha, or 16.6%, of our planted area were young mature oil palms and 42,123.1 Ha, or 59.3%, were prime mature oil palms. This age protile demonstrates that a combined total of 53,873.5 Ha or 75.9% of our total planted area, were made up of oil palms that are in their peak production years or will soon be entering peak production. Our immature oil palms, those aged zero to three years, accounted for 7.4% of our total planted area, while old oil palms aged between 21 and 25 years made up 15.8% of our total planted area. As at the LPD, 0.9% or 630.4 Ha are older than 25 years and while we adopt a 25-year replanting policy, replanting decisions are reviewed after taking into consideration the following: (a) area that has potential for sale to third party for the purpose of property development;
(b) the need to ensure availability at sufficient supplies of FFBs for mill operations; and
(c) crop productivity e.g., low crop production due to lost at palms as a result of flooding, pest attack and disease infection.

Based on the above, the 630.4 Ha of our oil palms which are older than 25 years old, though due for replanting, were not included as part of our replanting programme for 2013. Though we generally replant crops that are older than 25 years, repianting efforts may be accelerated and may not only involve oil palms that are older than 25 years as a result of one or more of the following instances: (i) yield of our crops dipping below 12 MT per Ha;
(ii) height of crops exceeding 40 feet; or

(iii) planted areas of at least 70 standing palms per Ha affected by crop disease. Based on the above, we have replanted a total area of 1,734.6 Ha during the year 2013 which include oil palms that falls in anyone of the categories above. Our replanting policy is independent of prevailing CPO prices. FFBs produced by the oil palms on our plantation estates are harvested and transported to our palm oil mills, where processing takes place for the production of CPO and PK. As FFBs from the oil palm crops are perishabie and need to be processed as soon as possible for maximum oil yield, we also sell FFBs to third party mills, I.e. those that do not belong to our Group, when FFBs are harvested from our plantation estates that are not located in close proximity to our palm oil mills. As at the LPD, our Balau Estate, Bekoh Estate, Solandra Estate and Eldred Estate sell their harvested FFBs to third party mills as we do not have any nearby mills to these plantation estates. Additionally, some of our other plantation estates also sell harvested FFBs to third party mills during the period of our mills’ annual maintenance shutdown. We also purchase FFBs from third party oil palm plantation estates for processing at our mills, from time to time. This takes place to increase the volume of our FFB processed to improve our utilisation rates for greater cost efficiencies. 7. BUSINESS OF OUR GROUP (Cont’d) A summary of our FFB yield profile is shown below: Annual FFB yield (MT per Ha) for the FYE 31 December 2011 2012 2013
Peninsular Malaysia 20.1 20.9 19.9 Peninsular Malaysia: MPOB benchmarl<(1) 19.2 19.1 19.3 Sabah 17.2 16.9 17.3 Sabah: MPOB benchmarl!’) 22.3 20.4 20.9 Sarawak 13.2 13.6 11.4 Sarawak: MPOB benchmarl!’) 16.8 16.5 16.2 Overall Group 17.0 17.4 16.5 National; MPOB benchmarl!’) 19.7 18.9 19.0 Note: (1) Soun;e: MPOB Overall, our annual Group FFB yields were 17.0 MT per Ha, 17.4 MT per Ha and 16.5 MT per Ha in the FYE 31 December 2011, 31 December 2012 and 31 December 2013, respectively. In terms of FFB yield, our plantation estates in Peninsular Malaysia have fared well, with annual FFB yields averaging at 20.1 MT per Ha in the FYE 31 December 2011, 20.9 MT per Ha in the FYE 31 December 2012, and 19.9 MT per Ha in the FYE 31 December 2013. These yields were higher as compared against the MPOB average for Peninsular Malaysia at 19.2 MT per Ha in 2011,19.1 MT per Ha in 2012 and 19.3 MT per Ha in 2013. Our FFB yields in Sabah stood at 17.2 MT per Ha, 16.9 MT per Ha and 17.3 MT per Ha in the FYE 31 December 2011, 31 December 2012 and 31 December 2013, respectively, which was lower than the MPOB average for Sabah in each of the years under review. The past prime oil palms, being more than 20 years of age, constitute approximateiy 23.1 % of the plantation estate land in Sabah, which produces lower FFB yields compared to prime mature oil palms. Further, harvesting past prime oil palms becomes increasingly difficult due to their height and the shortage of skilled harvesters. Our plantation estates in Sarawak recorded FFB yields of 13.2 MT per Ha, 13.6 MT per Ha and 11.4 MT per Ha in the FYE 31 December 2011,31 December 2012 and 31 December 2013, respectively, which was also lower than the MPOB average for Sarawak in each of the years under review. Our FFB yields in Sarawak have been affected by pockets of conflicts and disputes with certain NCR landowners in our plantation estates since 2009, which has disrupted our operations due to unauthorised harvesting and pilferage of FFBs, as well as field blockades preventing entry of our harvesters, by certain local native parties, arising from these disputes. 7.2.2 Production and sale of CPO and PK We have 10 palm oil mills in Malaysia, of which four are located in Peninsular Malaysia and the remaining six are located in East Malaysia. In Peninsular Malaysia, our palm oil mills are located in Trong (Perak), Kuala Krai (Kelantan), Pekan (Pahang) and Kota Tinggi (Johor); in Sabah, they are located near Semporna, Sandakan, Lahad Datu and Sugut; and in Sarawak, they are located near Miri and Sibu. 7. BUSINESS OF OUR GROUP (Cont’d) Our total palm oil mill processing capacity is 415 MT per hour and 1.96 million MT per year. Our palm oil mill capacities, by region, are as follows: Peninsular Malaysia Sabah Sarawak Total Maximum FFB processing 140.0 170.0 105.0 415.0 capacity per hour (MT per hour) Maximum FFB processing 662,000 805,000 495,000 1,962,000 capacity per year (MT per year) Note: Maximum FFB processing capacity per year is calculated based on mill throughput over 20 operating hours per day over 312 available processing days in a year and a maximum annual FFB rate of11%. FFBs from our plantation estates and FFBs purchased from third parties are transported to these mills for processing for the production of CPO and PK. All our palm oil mills are located on our plantation estates to ensure our FFBs are delivered and processed in the shortest time possible. We sell all of our CPO to downstream refineries in Malaysia for the further processing into palm-based edible oils and other oleochemical products. All of the PK produced by our plantation estates are sold to PK crushing plants in Malaysia for the production of PK products. A summary of our OER and KER is shown as follows: FYE 31 Decem ber  2011  2012  2013  OER (%)  KER (%)  OER (%)  KER (%)  OER (%)  KER (%)  Peninsular Malaysia Peninsular Malaysia: benchmarl/’J Sabah  MPOB  20.15 20.08 20.64  4.63 5.45 4.48  20.63 19.98 21.30  4.65 5.48 4.48  20.76 19.86 21.41  4.63 5.53 4.43  Sabah’ MPOB benchmarlP) Sarawak  20.74 20.77  4.68 4.79  21.02 20.29  4.76 4.94  21.05 1999  4.80 5.06  Sarawak: MPOB benchmark”)  20.58  4.40  20.43  4.35  20.12  4.31  Overall Group National: MPOB benchmark”)  20.51 20.35  4.61 5.07  20.81 20.35  4.66 5.10  20.88 20.25  4.60 5.12
Note: (1) OER and KER benchmark for the FYE 31 December 2011,31 December 2012 and 31 December 2013 are sourced directly from MPOB. Our Group’s OER, from FFBs processed to CPO produced, has improved from 20.51% in the FYE 31 December 2011, to 20.81% in the FYE 31 December 2012, and further to 20.88% in the FYE 31 December 2013. Our overall Group OER has been higher than the national OER average, based on the MPOB benchmark, of 20.35% in 2011, 20.35% in 2012 and 20.25% in 2013. 7. BUSINESS OF OUR GROUP (Cont’d) Our mills in Sabah remain our most productive, with an average OER of 21.12% over the FYE 31 December 2011,31 December 2012 and 31 December 2013, compared to the Sabah MPOB average of 20.94%. Our mills in Peninsular Malaysia averaged 20.51% over the same period compared to the MPOB average for Peninsular Malaysia at 19.97%, while in Sarawak our mills had an average OER of 20.35% against the Sarawak MPOB benchmark of 20.38%. The reason for our higher OER is inherent in our crop, as our selection of planting materials has resulted in larger mesocarp for greater oil yields but smaller-sized kernels. Our overall KER, from FFBs processed to PK produced, has demonstrated a slight fluctuating trend over the FYE 31 December 2011, 31 December 2012 and 31 December 2013, at 4.61% in the FYE 31 December 2011, with an improvement to 4.66% in FYE 31 December 2012, before decreasing again to 4.60% in the FYE 31 December 2013. Compared to the national MPOB benchmark over this same period, our KER has averaged lower. As our production of PK is substantially lower compared to CPO, there has been no significant impact to our financial performance as a result of our lower KER. 7.2.3 Mill engineering and design consultancy services Our vast experience and knowledge in our core business of cultivation of oil palms and the production and sale of CPO and PK have afforded us a reputable standing in the industry and this is evidenced when other industry players have, in the past, consulted us in the design and construction of mills and factories. As such, we, through BEA, are involved in the design, implementation of engineering works and project management of palm oil mills, rubber factories and oil bulking installations. We also provide technical audit and advisory services for oil mills and oil bulking installations. As at the LPD, we have proVided our consultancy services for 39 palm oil mills. 12 rubber factories as well as three palm oil bUlking installations. Among our notable clients for our consultancy services include Samling Group, United Malacca Berhad, Lembaga Tabung Haji and Pertubuhan Peladang-Peladang Negeri Johor (PPNJ). 7.2,4 Oil palm agricultural and agronomic research Through our associate company, AA Resources, we are involved in oil palm agricultural and agronomic research where we focus on improving quality, reducing costs and enhancing overall expertise in soil management and crop production. The areas of research undertaken by AA Resources largely include the breeding and selection of higher yield planting materials, crop protection focused on effective pest management, agronomic research to preserve soil fertility and precision agriculture practices. Further details on our oil palm agricultural and agronomic research are set out in Section 7.12 of this Prospectus. [The rest of this page has been intentionally left blank] 7. BUSINESS OF OUR GROUP (Cont’d) 7.3 PRINCIPAL PRODUCTS AND MARKETS Our principal products are CPO and PK. We also sell FFBs which are harvested from our owned, co-owned and leased plantation estates that are not located in close proximity to our mills, and during the annual maintenance shutdown periods of our mills, to third party mills. All of our CPO, PK and FFBs are sold within Malaysia. As our plantation estates in Sabah processed the highest volumes of FFBs, our mills in Sabah also produced the most CPO and PK during the FYE 31 December 2011, 31 December 2012 and 31 December 2013. Our production of CPO from our mills in Sabah averaged 99,961 MT of CPO over the FYE 31 December 2011,31 December 2012 and 31 December 2013, as compared to 84,925 MT and 54,589 MT in Peninsular Malaysia and Sarawak, respectively. As for PK, our mills in Sabah produced an average of 21,140 MT over the FYE 31 December 2011,31 December 2012 and 31 December 2013, with Peninsular Malaysia and Sarawak recording 19,180 MT and 13,199 MT, respectively. We sell CPO to palm oil refineries in Malaysia, to be further processed into palm-based edible oils and oleochemicals. Our PK is sold to PK crushing plants in Malaysia for the production of PK products. A summary of our FFB production, FFB processed, and CPO and PK production is shown below: Production (MT) FYE 31 December 2011 2012 2013 FFB produced 1,049,110 1,075,604 1,032,173 Peninsular Malaysia 447,899 473,469 452,122 Sabah 353,067 356,613 374,735 Sarawak 248,144 245,522 205,316 FFB processed at mill 1,119,717 1,203,652 1,141,824 Peninsular Malaysia 372,860 440,063 427,964 Sabah 470,583 469,899 479,658 Sarawak 276,274 293,690 234,202 CPO 229,623 250,430 238,371 Peninsular Malaysia 75,138 90,789 88,848 Sabah 97,110 100,056 102,717 Sarawak 57,375 59,585 46,806 PK 51,572 56,059 52,927 Peninsular Malaysia 17,248 20,473 19,819 Sabah 21,097 21,065 21,259 Sarawak 13,227 14,521 11,849 7. BUSINESS OF OUR GROUP (Cont’d) Our pro forma revenue was approximately RM949.0 million for the FYE 31 December 2011, approximately RM836.7 million for the FYE 31 December 2012, and approximately RM685.0 million for the FYE 31 December 2013. The reduction in revenue in the past three years was due to the decline in both CPO and PK prices, which had resulted from a combination of global macroeconomic factors and the demand-supply balance of palm oil. For the FYE 31 December 2012, our average realised CPO price of RM2,901.59 per MT was lower than our average realised price of RM3,287.84 per MT for the FYE 31 December 2011. Our average realised CPO prices for the FYE 31 December 2013 was RM2,352.99 per MT which was relatively the lowest in the past three financial years. Our average realised PK price aiso declined from RM2,202.10 per MT in the FYE 31 December 2011 to RM1,568.12 per MT in the FYE 31 December 2012, and subsequently to RM1,283.96 per MT in the FYE 31 December 2013. Pro forma revenue from the sale of CPO amounted to approximately RM745.0 million, RM699.9 million and RM581.3 million, which accounted for 78.5%,83.7% and 84.9% of our total pro forma revenue, in the FYE 31 December 2011, 31 December 2012 and 31 December 2013, respectively. Pro forma revenue from the sale of PK amounted to approximately RM113.0 million, RM87.3 million and RM68.3 million, which accounted for 11.9%, 10.4% and 10.0% of our total pro forma revenue, in the FYE 31 December 2011, 31 December 2012 and 31 December 2013, respectively. Pro forma revenue from the sale of FFB was relatively low, as we generally harvest FFBs for our palm oil mills. For the FYE 31 December 2011,31 December 2012 and 31 December 2013, our pro forma revenue from the sale of FFB was RM83.6 million, RM45.0 million and RM32.9 million, which accounted for 8.8%, 5.4% and 4.8% of our total pro forma revenue, respectively. Our revenue from other sources such as fees from the provisioning of mill design and consultancy services as well as the sale of motor vehicles from our motor vehicle dealership has been negligible. Our pro forma revenue by product for the FYE 31 December 2010, 31 December 2011 and 31 December 2012 are as follows: Pro forma revenue (RM ‘000) FYE 31 December
2011  2012  2013  CPO  744,984  78.5%  699,907  83.7%  581,306  84.9%  PK  112,959  11.9%  87,338  10.4%  68,344  10.0%  FFB  83,585  8.8%  45,028  5.4%  32,919  4.8%  Others(1)  7,470  0.8%  4,472  0.5%  2,427  0.3%
Total  948,998  100.0%  836,745  100.0%  684,996  100.0%
Note: (1) Others include all other revenue such as revenues from provision of mill design and consultancy services and royalties as well as sales of motor vehicles from our motor vehicle dealership. For infonnation purposes, we had disposed our motor vehicle dealership in the FYE 31 December 2013. Since the FYE 31 December 2011, our operations in Peninsular Malaysia was our highest revenue contributor, generating an average revenue of RM330.8 million over the FYE 31 December 2011,31 December 2012 and 31 December 2013, compared to RM314.7 million and RM178.2 million in Sabah and Sarawak, respectively, over the same period. 7. BUSINESS OF OUR GROUP (Cont’d) Our pro forma revenue by region for the FYE 31 December 2011,31 December 2012 and 31 December 2013 are as follows: Pro forma reVenue (RM’OOO) FYE 31 December 2011 2012 Peninsular Malaysia 374,984 39.5% 328,303 39.2% 288,990 42.2% Sabah 356,305 37.6% 314,090 37.5% 273,573 39.9% Sarawak 217,709 22.9% 194,352 23.2% 122,433 17.9% Total 948,998 100.0% 836,745 100.0% 684,996 100.0% 7.4 COMPETITIVE STRENGTHS AND ADVANTAGES 7.4.1 We are one of the most established and experienced upstream oil palm plantation companies in Malaysia with proven plantation management practices. With over 100 years of plantation management experience, backed by BH B’s presence in the plantations business, we are one of Malaysia’s most established and experienced upstream oil palm plantation companies. Having first ventured into the oil palm business in the 1960s, when we began converting rubber crops into oil palm, we have effectively been an oil palm industry player since the early days of the commercialisation of the industry in Malaysia. Throughout the years, we have developed and established proven plantation management systems, driven by our top-down estate agency management approach which we believe to be unique to our Group. The agency approach was first developed by the British planters, and has been a feature of our Group ever since. This approach comprises an estate management agency that acts as a “command and contro[” centre which is involved in the strategic planning, directing, coordinating and monitoring of operations for the plantation estates and mills that it manages. Each plantation estate and mill has its own operations and management teams, and our estate management agency centrally drives policies and monitors operations, as well as provides advisory services. Over the years, we have also established sound agricultural and management policies, consistent and effective standard operating procedures, as well as adopted operational best practices that have led to our success today. We were one of the first plantation companies to utilise a computerised plantation MIS in 2001 to monitor the performance of our plantation estates and mills. Additionally, we also use GPS, a space-based satellite navigation system, for our plantation mapping, where all our plantations have been digitally-mapped by satellite technology since 1997, Which enhances logistical accuracy for our strategic decisions. These established and proven methods and practices have been gained over time, in our case for over 100 years, which sets us apart from many of our competitors in terms of experience. These practices will continue to ensure that we remain strong and robust in the upstream oil palm industry. 7.4.2 We have oil palm plantations with a maturity and topographical profile that supports increased production. Oil palms reach their prime maturity and peak production period from around 10 to 20 years. Prime mature oil palms can generally produce over 25 MT of FFBs per Ha per year. 7. BUSINESS OF OUR GROUP (Cont’d) As at the LPD, our prime mature palms, those aged between 10 to 20 years, made up approximately 59.3% of our total planted area across Malaysia. A further 16.6% of our palms are young mature palms between the ages of 4 to 9 years, and will begin to reach peak maturity starting from 2014 onwards. Hence, over three­quarters, or 75.9% of our oil palms are in their peak production age, or will soon be entering their peak production age. As at LPD, only 0.9% or 630.4 Ha of our oil palms are older than 25 years and while we adopt a 25-year replanting policy, replanting decisions are reviewed after taking into consideration the factors as highlighted in Section 7.2.1 above. As a result of the age profile of our oil palms, our average FFB yield in Peninsular Malaysia has been consistently higher than the national MPOB benchmark average in each of the FYE 31 December 2011,31 December 2012 and 31 December 2013. In the FYE 31 December 2011, 31 December 2012 and 31 December 2013, our average FFB yield in Peninsular Malaysia was 20.1 MT per Ha, 20.9 MT per Ha and 19.9 MT per Ha respectively while the national MPOB benchmark average was 19.2 MT per Ha, 19.1 MT per Ha and 19.3 MT per Ha, respectively. Our OER has also increased from 20.51% in the FYE 31 December 2011 to 20.81 % in the FYE 31 December 2012, rising to 20.88% in the FYE 31 December 2013. Our OER has been higher than the national MPOB benchmark average in each of our past three FYE 31 December 2011, 31 December 2012 and 31 December 2013. As a substantial majority of our palms are in their peak-production years or will soon enter their peak-production years, we believe that the age profile of our oil palms will support increased production of FFBs, which will lead to subsequent increases in CPO and PK production, which are our key revenue generators. Furthermore, a total of 95.5% at our oil palms are planted on fertile mineral soil, and this is expected to contribute to the productivity of our oil palms. A substantial 78.5% of our plantation estates are also located on flat or undulating terrain, which has a positive impact on our productivity as it eases our operations such as planting, upkeep and maintenance and harvesting. The age maturity and topographical profile of our plantation estates are positive and encouraging, and we believe these are important factors for the sustained growth and success of our Group. 7.4.3 We have a highly experienced and technically strong management team. Our senior management team, headed by our Chief Executive Officer, Fahmy bin Ismail, comprises highly experienced personnel with substantial knowledge and exposure in the oil palm plantation industry. Our Chief Operating Officer, Chow Kok Choy, has approximately 43 years of experience in the oil palm business, having been with our Group since 1970. Our Senior General Manager-Human Resource and Corporate Communication, Dato’ Shoib Abdullah, has 41 years of oil palm experience while our Planting Director, Sharudin Jaffar and our Senior General Manager-Sales and Marketing, Teng Peng Khen have approximately 33 and 38 years of experience in the oil palm industry, respectively. Our Group Engineer, Loh Wai Cheong, has approximately 33 years of oil palm industry experience. All of our management personnel mentioned above have substantial field experience, and thus have intricate knowledge of the operations of our oil palm plantation business. Our Chief Finance Officer, Chin Sup Chien, is also a professionally qualified and experienced accountant, with approximately 23 years of experience in the oil palm industry and 28 years of accounting experience in total. In total, our senior management team has an average 35 years of experience in the oil palm industry. 7. BUSINESS OF OUR GROUP (Cont’d) Our senior management team has also spent a significant part of their careers at our Group, and thus has been instrumental in the growth and success of our plantations business. Additionally, they each possess different functional expertise such as operations, sales and marketing, engineering, finance and accounting, and human resource, and these complementary skills have been critical to the management efficiency of our Group. Our senior management team is supported by 158 management employees consisting of junior and middle management employees from headquarters, estates and mills, with an average of more than 10 years of experience in managing plantation operations. We have identified potential successors to our current senior management team among our middle management employees and these individuals are being nurtured towards senior leadership roles in our Group. We are continuously improving our management team to strengthen their leadership and managerial capabilities that will be critical to the business growth and sustainability of our Group, through the implementation of training programs which entail on-the-job learning, and coaching and mentoring programmes tailored for the employees. 7.4.4 We have an experienced and committed agricultural research unit. Our associate company, AA Resources, is an agricultural research unit which was founded in 1986 and has 27 years of oil palm research experience. Part of our success as an upstream oil palm plantations company can be attributed to the efforts of AA Resources and its many commercialisation successes. We have benefited from the breeding and selection of higher yield planting materials including oil palm clonal seeds, tissue culture ramets and compact palms which have enabled us to produce FFB with higher oil content, as well as to embark on high density planting. Through our collaboration with AA Resources, we commenced commercial scale planting using tissue culture ramets in 1999 and semi-commercial planting of compact palms in 2009. In 2012, we commenced commercial planting using the AA Hybrida 1S, a semi-clonal hybrid seed developed and commercialised by AA Resources that produces palms with more, albeit smaller bunch sizes, FFBs yielding over 20% higher oil content than conventional seeds. AA Resources has also worked extensively on crop protection methods, which we are presently using to combat pests and the Ganoderma disease. Their methods of combining chemical and biological pest control have helped us reduce the use of chemicals, which has contributed to our sustainable management practices. At present, AA Resources is actively researching precision agriculture practices through the use of remote sensing and GIS to allow accurate planning of plantation roads and terrain, and to determine the planting points of new oil palm seedlings. AA Resources is studying the use of UAVs for this purpose. AA Resources is also involved in an oil palm genomic project for the development of genomic markers to produce molecular­based elite planting materials, which will lead to more precise prediction of superior parents for seed production and reduce our seed selection period. We are confident that AA Resources’ research efforts will continue to support our plantation management practices and drive the future growth of our Group, as we strive to increase our efficiency and productivity through higher yielding FFBs and higher oil content. 7.4.5 We adhere strictly to sustainable plantation management practices. Our Group is committed to adopting the best-in-class agricultural and management practices to achieve optimal and sustainable plantation development. Our best management practices for optimal and sustainable plantation development extend across the areas of: 7. BUSINESS OF OUR GROUP (Gonl’d) • Management of new land development projects
• Best-in-class replanting practices
• Field upkeep and weed control
• Soil fertility and conservation
• Integrated pest management
• Water management
• Mechanisation
• Harvesting and crop quality
• Safety, health and environment
• Conservation of biodiversity and unique ecosystems

Our approach to sustainable plantation management practices highlighted above ensures that all aspects of environmental health, economic profitability and social responsibility are taken into consideration, in achieving the objective of providing a strong foundation for RSPO certification and wider market acceptance. ‘ Our Group adopts environmentally friendly techniques for the clearing of oil palm stands for replanting and implements the “zero burn” replanting technique at all of our plantation estates. We have developed the “Telok Sengat Estate Zero Burn Technique” which is environmentally friendly and contributes to sustainable oil palm production by recycling nutrients in the palm biomass. Additionally, this technique also: • Reduces the breeding of rhinoceros beetles and rats by depriving them of suitable breeding sites through the pulverisation of old palms
• Reduces disease inoculums of basal stem rot (BSR) caused by Ganoderma boninense
• Minimises soil degradation
• Improves utilisation of nutrients from the decomposing of palm biomass
• Minimises air pollution caused by open burning
• Facilitates replanting and subsequent field upkeep

Our commitment to sustainable practices is on-going, as in 2013, our Sungai Jernih Business Unit (consisting of the Sungai Jernih Palm Oil Mill and three plantation estates surrounding it, namely Bebar Estate, Sungai Jernih Estate and lIT Terengganu Estate), retained its RSPO certification status. Our Nak Business Unit (comprising the Nak Palm Oil Mill and Nak Estate, Sutera Estate and Resort Estate) in Sabah is expected to attain its RSPO certification in 2014. In total, 6,897 Ha of our plantation estates have RSPO accreditation. 7.4.6 We have strong brand recognition from our association with our parent company BHB. Our parent company, BHB, is one of Malaysia’s oldest and largest diversified conglomerates. The BHB Group has diversified business activities in key sectors of the economy via its six core business divisions. namely Plantation, Property, Pharmaceutical, Heavy Industries, Trading and Industrial, and Finance and Investment. For the FYE 31 December 2013, the BHB Group recorded group revenue of RM11.2 billion and net profit of RM559.8 million. BHB’s long standing reputation can be traced to its roots in 1828 when Edward Boustead founded a company in Singapore involved in import and export, shipping and insurance. With trade growing between Malaya and Singapore and as the Straits of Malacca became more important as a primary waterway between Europe and the Far East, Edward Boustead set up a branch in Penang in 1864. In 1911, the company diversified its business interests and began trading in rubber. Moving up the value chain, it expanded into the management and ownership of rubber estates while exporting sheet rubber and latex and thus has accumulated over 100 years of experience in the plantations industry. 7. BUSINESS OF OUR GROUP (Cont’d) With a history dating back nearly two centuries and involvement in many key industries driving Malaysia’s economy today, BHB is a well-recognised and highly respected corporation. As part of the BHB Group, we benefit from BHB’s industry reputation, both from our customers, suppliers, financiers, investors and other business partners. BHB has grown from strength to strength and is a firm believer in delivering shareholder value. With approximately 15,000 employees, the BHB Group’s consistent and steady growth over the years reflects its commitment to safeguard shareholder interest. 7.4.7 We are well positioned to benefit from growth in the global edible oils market. Our CPO and PK products are sold to palm oil refineries and PK crushing plants for further processing into palm-based edible oils and oleochemical products. The potential for our future revenue growth is promising in line with the increasing demand for edible oils and fats globally, According to the research carried out by the independent market research consultant, Smith Zander, the global demand for edible oils and fats has grown from 113.5 million MT in 2000 to 185.6 million MT in 2012 at a CAGR of 4.2%. Global demand for edible oils and fats is further expected to grow to reach 209.7 million MT by 2015, registering a CAGR of 4.2% between the years 2000 and 2015. The consumption of edible oils and fats are primarily driven by factors such as the growing demand for food rising from population and economic’ growth, the wide range of applications of edible oils and fats, the increasing demand from China and India as the two largest consumer markets and the emergence of Africa and Middle East as key consuming regions. As an upstream producer of CPO that is used to produce edible oils and fats, our growth will remain in tandem with the relatively recession-proof demand for food products. With the ever increasing global population, we believe that we are well­positioned to benefit from this growth. 7.5 FUTURE PLANS AND STRATEGIES 7.5.1 Consolidation and expansion of our plantation assets In 2013, our parent company BHB privatised BREIT to provide an avenue to merge and streamline all of the plantation assets in our Group under one entity, namely BPB, which will enable us to raise funds and access the equity capital market, as well as provide us greater financial flexibility to pursue further growth opportunities. With the consolidation of all our plantation assets, we have the resources and economies of scale to expand our business further, and the opportunity to focus on the long term growth of our Group. As one of Malaysia’s most experienced and established upstream oil palm companies, we intend to remain focused on the upstream plantation business where we will be able to leverage on over 100 years of expertise and know-how backed by BHB’s presence in the plantations business. Over the next five years, we plan to increase our total planted area by approximately 20,000 Ha from the current 70,991.2 Ha. We intend to achieve this through acquisition of existing plantation estates and plantation reserve land primarily in Malaysia, to be carried out in the following phases: (i) acquisition of up to approximately 10,000 Ha of plantation estates and/or plantation reserve land primarily in Malaysia within the next 3 years, which will be firstly funded by the IPO proceeds of RM420 million as outlined in Section 4.8 of the Prospectus, and thereafter if required, by a combination of internally generated funds and/or external financing, including debt instruments; and 7. BUSINESS OF OUR GROUP (Cont’d) (ii) acquisition of another approximately 10,000 Ha of plantation estates and/or plantation reserve land within two years from our initial acquisition as outlined in item (i) above to be funded by future fund-raising exercises, the plan and manner of which will be subject to the Board’s assessment of prevailing factors, including but not limited to, market conditions, cost of funds associated with bank borrowings and/or financial instruments to be issued by our Company as well as the optimal capital structure for our Company. Nevertheless, we may assess opportunities to acquire plantation estates and/or plantation reserve land in Indonesia, on a case-by-case basis. We believe that by selecting the right acquisitions for our Group, we will be able to apply our experience and technical expertise to these new assets. By increasing our planted landbank, we will be able to increase our FFB harvest and ultimately our CPO and PK production to further grow our Group’s revenue and profitability. 7.5.2 Improve our operating efficiency and profitability through greater use of new planting materials We intend to increase overall FFB production and OER through the implementation of, amongst others, improved management of new plantation land development projects and replanting practices; stringent field upkeep and weed control; soil fertility and conservation; integrated pest management; water management; health safety and environmental initiatives and conservation of biodiversity and unique ecosystems. To improve our FFB and oil yield, we have commenced commercial scale planting using ramet materials, now known as AA Vitroa, since 1999 and semi-commercial planting of compact palms in our replanting programme since 2009, both of which were planting materials developed by our associate research company AA Resources. Our ramet materials are palms cloned through tissue culture taken from palms that are most productive, for optimum FFB and oil yields. Compact palms are grown from semi-clonal hybrid seeds used for high density planting, where due to the siower height increment of the palms and shorter length of fronds, we are able to plant up to 160 paims per Ha, compared with approximately 136 to 148 palms per Ha using conventional seeds and ramet materials. Our general planting strategy, since 1999, is to use 20% seeds and 80% ramet materials based on pianted area, where the palms planted from seeds are crucial to ensure proper pollination with the palms planted from ramets. Hence as part of our strategy to increase our crop yield, it is important that we increase our crop count through high density planting, using our compact palms. As at the LPD, we have approximateiy 700 Ha planted with high density planting materials on a semi-commercial scale. Moving forward, we intend to plant 300 to 400 Ha each year with high density compact paims, based on our current seed production. Our research arm AA Resources is presently working on increasing the annual production of compact palm seeds. We believe that high density planting materials is crucial for our expansion, as it will enable us to obtain higher FFB yields, and ultimately CPO production, per Ha of planted area, which will be critical to the future growth of our Group. To augment our seed planting, we commenced planting using the AA Hybrida 1, a hybrid seed produced through “selfing”, which is the pollination of palms within the same tree, selected for “selfing” due to its high productivity, in 2007. 7. BUSINESS OF OUR GROUP (Cont’d) Beginning in 2013, we have begun to increase our use of AA Hybrida 1S, our first fully commercial semi-clonal hYbrid seeds, in our replanting. Prior to 2013, our use of AA Hybrida 1S seeds made up only approximately 20% of total seeds used in replanting, due to the lower production of the AA Hybrida 1 seeds as the seeds were only developed and commercialised in 2012. In 2013, this has been increased to about 80% of total seeds used, and we intend to continue with this ratio in the future. The AA Hybrida 1S seeds were developed by AA Resources and are expected to increase oil yield by over 20%. As at the LPD, our Group’s use of new planting materials, which includes AA Vitroa, AA Hybrida 1, AA Hybrida 1S and high density planting materials, accounted for only approximately 16.0% of our total planted area. As most of our replanting now involves the use of these new planting materials, as well as other planting materials currently being developed by AA Resources, there is substantial upside potential in our FFB and oil yields. AA Resources is presently carrying out on-going research to discover newer clonal seeds and ramet materials to further improve our FFB production and oil yield, including full commercialisation of compact palms and development of bunches with long stalks for easier harvesting. AA Resources is also currently involved in an oil palm genome project to develop genomic markers for assisted breeding selection. We have incorporated this in our selection of elite planting materials which will lead to more precise prediction of superior parents for seed production and subsequently reduction of the seed selection period, factors which will also enable us to improve our production efficiency and oil yields. Based on the current progress of AA Resources’ research, we expect to commence planting these elite planting materials in approximately 10 to 15 years. Our use of new planting materials is critical to our future growth. As we expand and grow our plantation assets, we aim to concurrently increase our FFB yields and OER, as well as improve our oil quality, to enhance our presence and sustainability in the industry and strengthen the financial growth of our Group. 7.5.3 Continuous improvement in best-practice management systems As one of the most experienced and established upstream plantation companies in Malaysia, we adopt industry best practices in our management systems. We will continue to increase the use of motorised FFB cutters or CANTAS to replace the conventional aluminium poles for harvesting FFBs in selected oil palm areas, particularly for palm heights ranging from 3 to 7 metres. As at the LPD, a total of 12,000 Ha are covered by the CANTAS harvesting system. A conventional aluminium pole cutter harvests on average approximately 100 bunches per day, while the CANTAS can harvest up to 400 bunches to 600 bunches per day. Additionally, we are also assessing the use of graphite or carbon fibre harvesting poles for taller palms that exceed 14 metres. To speed up FFB evacuation from the fields to the mills for processing, we have introduced mechanised platform FFB collection through the integration of bin or shunting tractor system. As at the LPD, a total of 40,000 Ha of our Group’s mature areas are using this innovative system. We plan to increase this to 100% of applicable terrain over the next three financial years. We also plan to introduce smaller collection vehicles to reach more difficult terrain. 7. BUSINESS OF OUR GROUP (Cont’d) Precision agriculture is the use of remote sensing and GIS to improve plantation practices, specifically for plantation road and terrain planning for planting purposes. Our associate research arm AA Resources is presently researching precision agriculture techniques for our Group’s use, including the use of UAVs for plantation mapping. The advantage of precision agriculture is that it allows accurate planning of plantation estates, which includes determining the planting points of new oil palm seedlings. More advanced precision agriculture systems can also be used for activities such as oil palm crop inventory and detection of palm diseases. We intend to employ these systems within the next two years, which we believe will further enhance our plantation management practices and our overall productivity. 7.5.4 Expansion into the international market We intend to venture into the intemational market by exporting our CPO when export prices are higher than the domestic market. With the reduction of export duty on crude palm oil products and abolishment of the duty-free export quota by the Government beginning 1 January 2013, our CPO has become more cost competitive in the global markets. At present, our Sales and Marketing team is stUdying and assessing strategies and options to secure customers in the international market. According to the IMR report by Smith Zander, the global demand for edible oils and fats, where CPO is one of the major raw materials, has grown from 113.5 million MT in 2000 to 185.6 million MT in 2012 at a CAGR of 4.2%. Global demand for edible oils and fats is expected to grow to reach 209.7 million MT by 2015, registering a CAGR of 4.2% between the years 2000 and 2015. In addition, palm oil is now the world’s most consumed edible oil, having surpassed soybean oil in global consumption in 2005, Whereby palm oil consumption accounted for 28% of total global consumption of edible oils and fats in 2012. With these prospects in mind, we believe that the international market will offer further incremental growth to our business and financial performance. 7.5.5 Implementation of biogas systems for renewable energy production The Government, through the Performance Delivery Unit of Malaysia (“PEMANDU”) and the Economic Transformation Programme, aims to develop biogas facilities at palm oil mills through one of its Entry Point Projects (“EPP”). This EPP strives to encourage palm oil mills to capture methane generated from palm oil waste and turn the greenhouse gas into clean renewable energy by installing biogas facilities in all mills located in Malaysia by 2020. These mills can use the electricity generated from the biogas facilities for their own consumption, and biogas plants that meet certain requirements, such as the production of a certain minimum level of electricity, will feed any excess electricity into the national power grid, thereby generating additional revenue for the mill. We intend to participate in this initiative as we believe it will contribute to our commitment to being an environmentally responsible plantation company as well as potentially becoming an additional revenue stream in the future. As at the LPD, we are in the planning stages to build our first biogas facility at our Telok Sengat Palm Oil Mill. Over the next three financial years, we intend to build five more biogas facilities in our TRP, Nak, Kanowit, Sungai Jernih and Segamaha Palm Oil Mills. Our ability to sell any excess electricity to the national power grid will depend on the volumes and quality of the feedstock generated from our mill wastes, both POME and EFBs. Nevertheless, we will endeavour to make this initiative a success, for the long term sustainability of the oil palm industry as well as for the benefit of potential commercial gains. 7. BUSINESS OF OUR GROUP (Cont’d) 7.6 MAJOR CUSTOMERS AND MAJOR SUPPLIERS 7.6.1 Major Customers We sell CPO to palm oil refineries in Malaysia, to be further processed into palm­based edible oils and oleochemicals. Our PK is sold to PK crushing plants in Malaysia for the production of PK products. 10thAccording to the PEMANDU in the Malaysia Plan, the palm oil industry is Malaysia’s 4th largest economic contributor and it accounted for a Gross National Income (GNI) of RM53 billion, indicating that, Malaysia has a large downstream palm oil segment. There are 54 palm oil refineries and 45 PK crushing plants based in Malaysia, processing CPO and PK into palm·based edible oils and PKO, respectively. Out of the 54 palm oil refineries, 36 are based in Peninsular Malaysia, 12 in Sabah and 6 in Sarawak. With such a wide base of palm oil refineries throughout Malaysia who purchase CPO as feedstock, we are not dependent on our existing major customers. In total, there are approximately 15 palm oil refineries who are our regular customers, and we continue to maintain business relationships with many of the other palm oil refineries in the country. Furthermore, as part of the Government’s initiatives to increase competitiveness of local palm oil producers, CPO export duty has been lowered and we now also have the option of exporting our CPO to the international market. As such, we do not believe that we are dependent on anyone of our major customers. Notwithstanding these relationships, we believe that our marketing and branding efforts have positioned our brand well in the market thus allowing us to easily target new customers. FYE 31 December Average 2011 2012 2013length of relationship RM RMRM %{1) %(1) %(1)Customer (years) million million million Mewah Oils Sdn >10 years 69.3 7.3 28.3 3.4 71.5 10.4Bhd Mewaholeo >15 years 51.4 5.4 35.5 4.2 77.1 11.3Industries Sdn Bhd Sime Darby Future > 5 years 77.9 8.2 139.1 16.6 81.2 11.9Trading Sdn Bhd Bintulu Edible Oils > 5 years 142.6 15.0 102.1 12.2 49.1 7.2Sdn Bhd Sandakan Edible >15 years 79.0 8.3 88.7 10.6 92.1 13.4Oils Sdn Bhd Note: (1) Percentage of total pro fonna revenue of BPB Group of approximately RM949.0 million, RM83B.7 million and RMB85.0 million for the FYE 31 December 2011, 31 December 2012 and 31 December 2013, respectively. 7.6.2 Major Suppliers Our major supplier (being that contributing more than 10% of our purchases) for the past three consecutive financial years was Agromate (M) Sdn Bhd. All of the purchases from Agromate (M) Sdn Bhd were for fertiliser for our oil palms. Our major supplier is based in Malaysia which has a relatively well developed fertiliser industry owing to the large agricultural industry fuelling the nation’s economy, and consequently, there are numerous fertiliser producers and traders in the country that are able to supply fertiliser and crop nutrient products that meet our quality requirements and specifications. 7. BUSINESS OF OUR GROUP (Gonl’d) As such, we do not believe that we are dependent on our major supplier. Notwithstanding this, we believe that our position as one of Malaysia’s most established oil palm plantation companies, coupled with our parent company BHB’s strength as a prominent conglomerate, we believe we are well placed to secure new suppliers should the need arise. FYE 31 December Average 2011 2012 2013length of relationship RM RMRM %(1) %(1) %(1)Supplier (years) million million million Agromate (M) Sdn > 5 years 75.3 21.8 91.4 24.1 82.5 25.2Bhd Note: (1) Percentage of total purchases of BPB Group of approximately RM345.8 mil/ion, RM378.5 mil/ion and RM327.4 million for the FYE 31 December 2011, 31 December 2012 and 31 December 2013 7.7 TYPES, SOURCES AND AVAILABILITY OF RAW MATERIALS, SPARE PARTS AND CONSUMABLES Our Group’s purchases can be classified into raw materials, spare parts and consumables as well as labour. Our raw materials are planting materials such as oil palm seeds and tissue culture ramets, and FFBs purchased from third party plantation estates. We obtain our planting materials from our associate company, AA Resources, an agricultural research company dedicated to oil palm breeding and selection research. AA Resources has a production capacity of 12.0 million oil palm seeds and 1.5 million tissue culture ramets per year. We purchase FFBs from third party plantation estates to increase the volume of FFBs processed to improve our mill utilisation rates for greater cost efficiencies. All our mills are located in our plantation estates in areas where there are many other plantation estates in close proximity. Some of these plantation estates do not have mills and are in the business of selling FFBs, hence there is generally regularly available supply of FFBs for our mills when needed. While planting materials generally have stable prices, prices of FFBs fluctuate in line with CPO prices. Nevertheless, it should be noted that any changes in prices of FFBs are reflected in our sale of palm oil products and thus, having minimal impact on our profit margin. Our spare parts are procured to replace parts for our machineries and equipments, while contractor services are services obtained for certain major maintenance and refurbishment of these machineries and equipments. Spare parts and contractor services are generally procured from the suppliers of the machineries and equipments. There are many such suppliers in Malaysia supporting the large oil palm industry in the country and spare parts are a relatively stable cost variable. Our consumables are largely made up of supplies for crop management and for operating our machinery and equipment, which are primarily fertiliser and diesel. With a strong domestic oil and gas industry, there is no shortage of fertiliser and diesel suppliers in Malaysia. Diesel and fertiliser prices are generally volatile. Fertilisers, particularly nitrogenous and potash based fertilisers, fluctuate in line with crude oil prices by virtue of its key raw material being a by­product of crude oil and the use of crude oil in its production. Additionally, we secure the services of plantation estate harvesters from third party companies in order to ease hiring of these harvesters as they are mostly foreign workers. We source our estate harvesters from several different third party companies and thus, we are not reliant on any single company for the sourcing of these harvesters. 7. BUSINESS OF OUR GROUP (Cont’d) 7.8 PROCESS FLOW 7.8.1 Planting and harvesting of FFBs The process of planting and harvesting of FFBs is depicted as follows: Raise seedlings / tissue culture Field planting Crop upkeep and maintenance FFB Harvesting FFB collection and transportation to mill Raise seedlings and tissue culture Our planting begins in the nurseries located at our plantation estates, where we plant the germinated seeds and/or raise tissue culture ramets. We obtain seedlings and tissue culture ramets from our associate company AA Resources, who is involved in the R&D of higher yielding planting materials, which can typically improve production yields by over 20% compared to previous generation of planting materials during the 1970s. We raise the seedlings and the tissue culture ramets at the nurseries for about 10 to 14 months before planting them in the fields. Field planting The young oil palms are generally planted approximately 8.8 to 9.1 metres apart, in lines, in a pattern of equilateral triangles, which resulls in approximately to 136 to 148 palms per Ha, and up to 160 palms per Ha if compact palm materials are used. Oil palms generally begin to produce fruit two and a half years after planting in the fields, but the palms only begin to produce commercial harvests approximately three to four years after planting in the fields. Crop upkeep and maintenance From planting in the fields to commercial maturity, effective maintenance of the young oil palms is essential, which we implement though our plantation management system. We try to ensure that our immature oil palms are fertilised regularly and efficiently; that the area surrounding each young oil palm is free from other vegetation and crops which may compete with the oil palm for soil nutrients, water and sunlight; that leguminous cover crop is established to discourage the growth of competing plant life; and that the young oil palms are protected from pests and disease. We use inorganic fertilizers such as urea, rock phosphate and potash to replenish the nutrients absorbed by our mature oil palms. We also use organic fertilisers by re­using by-products from our mills such as POME and EFB.  By re-using our mill by­ products,  we  save  on  the  cost  of  inorganic fertilisers,  while  also  maintaining  environmental balance.
7. BUSINESS OF OUR GROUP (Cont’d) FFB harvesting Oil palms generally begin to produce commercial harvests approximately three years after planting in the fields. We harvest the FFBs only when an appropriate quantity of fruit become detached from the bunches, indicating peak ripeness. Our Group policy for indication of peak ripeness is when there are five loose fruits on the ground below a particular palm. The ripeness of FFBs harvested is critical in maximizing the quality and quantity of palm oil extraction. Our harvesters collect the loose fruits together with the harvested FFBs from the palm to maximise OER and KER. FFB collection and transportation to palm oil mills We collect our FFBs through a combination of manual collection, mechanised infield collection and mechanised platform collection through integration of mechanical grabbers and bin and tractor systems. We have also introduced motorised FFB cutters or CANTAS to replace the conventional aluminium poles for harvesting FFBs in selected oil palm areas, particularly for palm heights ranging from 3 to 7 metres. The labour to land ratio for manual harvesting of FFBs is 1: 18 Ha, while the implementation of CANTAS is able to approximately double the productivity of FFB harvesting to labour to land ratio of 1:32 -37 Ha (depending on terrain). Thereafter, we transport harvested FFBs by tractors and trucks to the palm oil mills located at our plantation estates and aim to process 100% of the fruit within 24 hours after harvesting to minimize the build-up of free fatty acids, which typically reduce the quality of CPO extracted. The transport costs of FFB is significant due to the weight of the bunches, therefore the proximity of our mills to our plantation estates is crucial for enabling us to reduce our cost of transportation as well as maintain the quality of our CPO. Replanting programme In general, we replant oil palms that are over 25 years of age, but replanting efforts may be accelerated as a result of one or more of the following instances, when its FFB yield is below 12 MT per Ha; when the height of crop exceeds 40 feet; or when planted areas of at least 70 standing palms per Ha are affected by crop disease. Our replanting policy is independent of prevailing CPO prices. We practice a strict zero-burn policy during replanting, where the oil palms are pushed-down and chipped away before the chips are pulverised, wherever possible, and used as mulch on the land to be replanted, thereby allowing the biomass from the chips of the oil palms to decompose and return nutrients to the land. Thereafter, we carry outlining (where we align the locations to be planted) and holing (where we prepare the holes) before the new oil palms are planted. We generally practice a three-year maturity phase, which consists of terracing, and chipping, replanting, ground cover and fertiliser management during this period. [The rest of this page has been intentionally left blank] 7. BUSINESS OF OUR GROUP (Cont”d) The following sets out our historical replanting schedule from 2010 to 2013 as well as our indicative future replanting programme from 2014 to 2018. Year Replanting programme (Ha) Historical: 2011(11 2,071.7 2012(11 1,765.1 2013(1) 1,734.6 Future: 2014(‘IP) 2,247.9 201 f’f’)P) 2,127.9 201lJl’)(0) 2,446.3 2011′)(0) 1,957.3 20111′)(0) 1,349.8 Notes: (1) Includes replanting and new planting of oil palm crops
(2) Indicative replanting targets
(3) Includes replanting based on the following conditions:
a. Oil palms older than 25 years;
b. Yield below 12 MTper hectare;
c. Crop height exceeding 40 feet; and
d. Planted areas of at least 70 standing palms per Ha affected by crop disease

 

7.8.2 CPO and PK production FFBs produced on our plantation estates are harvested and transported to our mills, where processing takes place for the recovery of PK and extraction of CPO. A typical process flow is depicted below. FFB reception FFB sterilisation FFB stripping C­’N.”‘—-‘====:::;—–‘=====;;:====~~==’-~:””:”:”‘:-=-___,_,~emelextraction~—-‘-;–,…C-I -­airn oil crartrication , $MIl
p..lma’;”‘_—,-J:~===;=r:1=;====~1.”:m~_____, Kernel recovery CFertiliser I compostpurification ___J~__ Palm kernel ,—I__c_po__J Steam and power generation ~ 7. BUSINESS OF OUR GROUP (Cont’d) FFB reception Harvested FFBs are loaded onto trucks, lorries or trailers in plantation estates and transported to our Group’s palm oil mills. At the mills, the weight of the loaded vehicles are recorded prior to and post unloading of the FFBs into hoppers at the ramp station. FFBs are then unloaded from the ramp directly into cages parked beneath the ramp or transferred to the cages by means of drag-bar type conveyors. Cages loaded with FFBs are shuttled into the steriliser in batches. At our mills that utilise tilting sterilisers, FFBs are fed directly into the sterilisers by conveyors. FFB sterilisation The sterilisation is carried out in horizontal/tilting type sterilisers where FFBs are cooked at a steam pressure of 3 barg. Sterilisation deactivates the fruit enzyme in FFBs which causes the rise of free fatty acids and prepares FFBs for downstream processing. This process also facilitates the purification of palm oil by coagulating nitrogenous and mucilaginous matters, thereby preventing the formation of emulsion during the purification of crude palm oil, and also the extraction of CPO by freeing the fruits from the bunch stalks and by breaking the oil cells in the mesocarp. Our sterilisers are equipped with programmable automatic control systems to ensure accurate and proper sterilisation for a duration of 60 minutes to 90 minutes. FFB stripping Post sterilisation, the FFB filled cages are discharged from the sterilisers and their contents are emptied through a rotating tipper into conveyors which convey the sterilised fruit bunches into a threshing machine. The threshers function to separate fruitlets from sterilised bunch stalks. Separated fruitlets are then transported via screw conveyors and bucket elevators to the digesting/pressing station. A crushing and secondary threshing process is employed to recover fruitlets from hard or poorly sterilised bunches which are difficult to strip. EFBs are returned to the plantation estates and used as fertiliser mulch as they still contain high levels of potash and nutrients. Oil extraction The fruitlets from the threshers are passed into digestors and life steam injection to complete the breaking of oil cells through slow moving rotating stirring arms. The fruit mass from the digestors passes to the screw press where crude oil is pressed out using screw worms through holes in the side walls of the press cage, leaving pressed cake consisting of fibre and nuts. The resulting products from pressing are crude oil, fibre and nuts. The crude oil consisting of palm oil, water and dirt is passed to the oil clarification station. Fibre is loosened from nuts by a cake breaker conveyor and separated through a depericarping winnowing system, and thereafter pneumatically conveyed to the boiler as solid waste fuel. Lastly, the nuts are graded into different sizes and cracked in ripple mills while kernels are recovered in the kernei plants. 7. BUSINESS OF OUR GROUP (Cont’d) Palm oil clarification I purification The palm oil clarification or purification process begins in the crude oil tank at the extraction station where purifiers, sludge separators/decanters and screens are installed and ends at the vacuum dryer where the resultant product is finished or purified CPO. Decanters are used to remove semi-solid sludge in an effort to reduce the burden on the effluent treatment system and reduce the moisture level of the sludge. Kernel recovery The conditioning of the nuts begins in the sterilisers while the separation takes place in the screw press. The fibre and nuts further pass through a cake breaker conveyor which agitates and separates them while removing moisture. The fibre and nuts then pass through a pneumatic separation winnowing column where fibre is blown into a cyclone close to the boiler and the nuts pass down a polishing drum which removes any present dirt or fibrous material. The nuts are further conditioned in nut silos before being cracked in ripple mills. The cracked mixture is separated in double winnowing separating columns for dry separation or in hydroclones or claybaths for wet separation. Kernels pass through a kernel silo dryer which acts to normalise its moisture content in order to minimize the development of free fatty acids during storage and shipment. Empty bunch pressing and shredding Empty bunch presses and shredders may be installed to further recover oil and kernel, and at the same time, reduce moisture content to approximately 35% so that these bunches can be used as additional solid waste fuel for steam and power generation in other downstream processes. Pressed empty bunches can be further shredded and used as a medium for composting. Steam and power generation Solid waste fuel in the form of shell, fibre and pressed empty bunches which are by­products of our milling process are used as fuel for the boiler which generates steam and power for other downstream processes. [The rest of this page has been intentionally left blank) 7. BUSINESS OF OUR GROUP (Cont’d) 7.9 UTILISATION RATE Our CPO processing utilisation rate ranged from 58.0% to 62.0% for the Group over the FYE 31 December 2011,31 December 2012 and 31 December 2013. The following sets out our maximum processing capacity and utilisation rates for the FYE 31 December 2011, 31 December 2012 and 31 December 2013. Actual FFB MaxFFB MaxFFB processed in Utilisation processing processing FYE 31 rate in FYE No. of capacity per capacity per December 31 December Mills hour year 2011 2011 (MT) (MT) (MT) (%) Peninsular Malaysia 4 140.0 662,000 372,860 56.3 Sabah 4 170.0 805,000 470,583 58.5 Sarawak 2 105.0 495,000 276,274 55.8 Total 10 415.0 1,962,000 1,119,717 57.1 Note: Maximum FFB processing capacity per year is calculated based on 20 operating hours per day over 312 available processing days in a year and a maximum monthly FFB rate of 11%. Actual FFB Max FFB Max FFB processed in Utilisation processing processing FYE 31 rate in FYE No. of capacity per capacity per December 31 December Mills hour year 2012 2012 (MT) (MT) (MT) (%J Peninsular Malaysia 4 140.0 662,000 440,063 66.5 Sabah 4 170.0 805,000 469,899 58,4 Sarawak 2 105.0 495,000 293,690 59.3 Total 10 415.0 1,962,000 1,203,652 61.3 Note: Maximum FFB processing capacity per year is calculated based on 20 operating hours per day over 312 available processing days in a year and a maximum monthly FFB rate of 11%. Actual FFB Max FFB MaxFFB processed In Utilisation processing processing FYE 31 rate in FYE No. of capacity per capacity per December 31 December Mills hour year 2013 2013 (MT) (MT) (MT) (%) Peninsular Malaysia 4 140 662,000 427,964 64.6% Sabah 4 170 805,000 479,658 59.6% Sarawak 2 105 495,000 234,202 47.3% Total 10 415 1,962,000 1,141,824 58.2% Note: Maximum FFB processing capacity per year is calculated based on 20 operating hours per day over 312 available processing days in a year and a maximum monthly FFB rate of 11%. 106 7. BUSINESS OF OUR GROUP (Cont’d) 7.10 TECHNOLOGIES USED We employ progressive planting, harvesting and processing methods and technologies to improve crop yield, milling performance and extraction rates as well as to reduce operating cost. The technologies that we adopt as part of our operations include the following: Planting and harvesting of FFBs Mechanisation We implement mechanisation programmes that are aimed at increasing the land to labour ratio in our plantation estates in an effort to improve workers’ productivity, crop quality and crop evacuation from the fields. We have enhanced our mechanisation efforts by introducing motorised FFB cutters or CANTAS to replace the conventional aluminium poles for harvesting FFBs in selected oil palm areas, particularly for crops ranging from three to seven metres in height. To date, a total of 12,000 Ha are covered by the CANTAS harvesting system. We are assessing the use of graphite harvesting poles for taller palms that exceed 14 metres. To speed up FFB evacuation from the plantation estates to the mills for processing, we have also introduced the bin system which incorporates the mechanised infield system for FFB collection. A total of 40,000 Ha of our Group’s mature areas use this innovative system. CPO and PK production It is our strategy to continue to adopt new and proven technologies which can further improve oil and palm kernel recovery rates and to minimise losses in the milling process. (i) Sterilisation We have incorporated the concept of indexer system in our palm oil mills. The indexer system is a fully automated FFB cage shunting system using hydraulic power cylinder for pushing and pulling the FFB cages from the FFB feeding area into the steriliser for cooking and to subsequently send the FFB cages out to the stripping station. The system enables our mills to use larger FFB cages and at the same time reduces the number of workers required. At present, three of our palm oil mills are fitted with this system. All the sterilisers in our mills are also equipped with programmable automatic control system to ensure proper and accurate sterilisation to minimise oil loss as well as heat loss from the generated steam. Further, to be on par with new developments in the palm oil industry, we have upgraded our Segaria Palm Oil Mill’s conventional horizontal-type steriliser station into a tilting-type sterilisation system which reduces much of the machinery associated with the conventional horizontal-type steriliser, leading to cost savings in terms of manpower requirements and maintenance. To better manage heat and power generation at our steam boilers, we have also installed the back pressure automatic control system at all of our mills to control steam feeding into the steriliser stations and maintain steam pressure. This has helped to improve the steam and energy balance during operations. 7. BUSINESS OF OUR GROUP (Cont’d) (ii) Threshing In conventional palm oil mills, the sterilised bunches are passed through the rotating stripper to separate fruitlets from the sterilised stalks. The EFBs are then conveyed to the EFB hopper and returned to our plantation estates as fertiliser mulch. In our palm oil mills, we have adopted a double threshing system. The partially stripped bunches from the first rotating stripper are then passed through a bunch crusher and a second rotating stripper to further retrieve the leftover fruitlets. (iii) Clarification We are in the process of adopting a simplified oil recovery system in the mill clarification plant using the decanter system. This will reduce dependency on manpower and eliminate the use of some of the machinery required. One of our palm oil mills has been using the decanter system for last three years. We plan to install more decanter systems in our mills in the future. (Iv) Effluent Treatment We are committed to ensure that our activities have minimal impact on the environment. To ensure this, we have employed the effluent extended aeration system at 2 of our palm oil mills in order to meet the Department of Environment’s (DOE) requirement to further reduce the biological oxygen demand to below 20 parts per million. We treat all of our POME using the lagoon (pond) system. The two-phase system, namely the anaerobic and aerobic digestion, result in digested solid build-up in the ponds. We have installed several units of continuous solid removal machines or effluent dewatering systems in our palm oil mills to minimise solid build-up in the ponds. 7.11 MODES OF MARKETING AND SALES Our Group markets and sells CPO, PK and FFB. Our sales and marketing efforts are led by Teng Peng Khen, our Senior General Manager of Sales and Marketing, and assisted by a General Manager, a Marketing Executive and six supporting staff. Our sales and distribution network extends across the ten palm oil mills in our Group. All our sales are currently generated from customers based in Malaysia. Additionally, we now have the option of exporting our CPO to foreign customers following the Government’s recent decision to lower duties on exported CPO in an effort to increase the competitiveness of local palm oil producers. Sales policies We adopt a flexible sales policy of selling current month plus three months forward, and this allows us to lock in our forward sales in a falling market and to abstain from forward sales in a rising market. Forward sales exceeding three months are subject to Board approval. PK payments are made in advance by our customers prior to loading the PK on our customer’s trucks in PeninSUlar Malaysia. In East Malaysia, PK payments are made post-delivery of PK to our customer’s factories. We believe in employing flexible and dynamic marketing and sales practices which allow us to respond to changes in varied variables, including changes in Government policies, currency exchange rates, weather, supply and demand dynamics of other competing vegetable oils and other market conditions. 7. BUSINESS OF OUR GROUP (Cont’d) Sales guidelines We sell our CPO and PK directly to reputable palm oil refineries and PK crushing plants without going through brokers, thus allowing us to save on incurring additional fees for brokerage expenses. Additionally, we avoid selling to dealers and middlemen as palm oil refineries are viewed as financially sound customers with their respective installed capex. This practice has allowed us to avoid bad debt over the years, even during sharp falls in CPO prices. Sales procedures We currently sell CPO and PK on bid and offer basis and through negotiated contracts on long term basis in Sabah and Sarawak. The sales of our Group’s CPO are on standard terms as agreed between the MPOA and PORAM. All sales, including copies of contracts, are lodged with the MPOA and the MPOB within 24 hours. We have tightened our sales procedures by ensuring that all sales conducted via telephones must be negotiated in the presence of a senior officer in our Trading Room. Sales tools We subscribe to the REUTERS’ Trader for Commodities Advanced tool which gives us 24 hours market information on CPO and other major vegetable oils traded in global markets. We also subscribe to 01 L WORLD for in-depth market research on palm oil and other major vegetable oils. Additionally, we also sit on the MPOA Market Committee which exchanges market information amongst plantation companies on a monthly basis. 7.12 RESEARCH AND DEVELOPMENT (“R&D”) Our R&D efforts carried out through our associate agricultural research company AA Resources, drive the growth and sustainability of our Group as we maintain our focus on improving quality, reducing costs and enhancing overall expertise in soil management and crop production. We co-founded AA Resources, then known as Applied AgricUltural Research Sdn Bhd, in 1986 via our then subsidiaries SCB and Malakoff Berhad, as a 50:50 joint venture with Kuala Lumpur Kepong Berhad. AA Resources was incorporated in 1982 as Public Relations Management Sdn Bhd. We acquired our interest in AA Resources from SCB and Malakoff Berhad following our rationalisation exercise in 1993 involving BHB, SCB and Malakoff Berhad. AA Resources’ main office is located in Kota Damansara, Selangor, and it has laboratories and substations located in Ijok and Semenyih, Selangor; Paloh, Johor; Serdang, Kedah; Muaadzam Shah, Pahang; and Kunak, Sabah. It also has an administrative office in Pekan Baru, Indonesia managed by its 100%-owned subsidiary, PT AAR. Our R&D at AA Resources is centred on the following research areas: 7.12.1 Breeding and selection of higher yield planting materials Our research into the development of new planting materials include oil palm clonal seeds, tissue culture ramets and compact (i.e. small, balanced stature) palms. The research in cloning the best of Dura and Pisifera palms and tissue culture ramets is intended to produce higher yielding FFB with better oil content. In this respect, AA Resources successfully developed and commercialised tissue culture ramet planting materials in 1999, which was then branded as AA Vitroa in 2009. Ramets are identical oil palm offsprings produced through the cloning of the original productive palm using the tissue culture method. In 2007, AA Resources developed and commercialised the AA Hybrida 1, a hybrid seed produced through “selfing”, which is the pollination of palms within the same tree, selected for “selfing” due to its high productivity. In 2012, AA Resources successfully developed the AA Hybrida 1S semi­clonal hybrid seed which produces oil palms with more, albeit smaller bunches, FFBs yielding over 20% higher oil content than conventional seeds. 7. BUSINESS OF OUR GROUP (Cont’d) In addition to developing hybrid seeds and ramets for higher oil yield, AA Resources developed hybrid seeds for compact palms used for high density planting in 2009, where due to the slower height increment of the oil palms and shorter length of fronds, we are able to plant up to 160 oil palms per Ha, compared with approximately 136 to 148 oil palms per Ha using conventional planting materials. The plant breeders at AA Resources is committed to continuously improving oil yields even further, apart from secondary characteristics such as higher carotene content in the oil and longer bunch stalks. AA Resources’ production capacity in Malaysia is approximately 12.0 million seeds and 1.5 million tissue culture ramets per year. Our long term R&D breeding plan is to produce elite planting materials using marker assisted genome-wide selected palms from molecular marker assisted breeding selection. This will lead to more precise predictions of superior parents for seed production and reduce the selection period. We are participating in an oil palm genomic project with a consortium of research organisations led by the Centre de cooperation Internationale en Recherche Agronomique pour Ie Developpement (“CIRAD”), or Centre for Agricultural Research for Development, for the development of genomic resources that can be applied in our molecular assisted selection in oil palm breeding. We are also collaborating with University of Nottingham, UK as well as the Malaysia Campus towards the development of a molecular tool box to verify the purity of oil palm seedlings. 7.12.2 Crop protection focused on effective pest management Our crop protection R&D focuses on three main pests which are common in the oil palm industry, namely rats, rhinoceros beetles and leaf-eating caterpillars; and the palm disease caused by the fungal pathogen Ganoderma boninense. AA Resources’ R&D team has conducted trials of chemical and biological protection solutions for adoption in our plantation estates. Chemical protection involves the use of pesticides and insecticides, while biological protection uses predators, pheromones and parasites to control pests. Our emphasis is naturally to emphasise on biological systems as it is less damaging to the environment. 7.12.3 Agronomic research to preserve soil fertility AA Resources’ R&D team carries out agronomic research focusing on soil health, soil fertility, moisture conservation and optimum fertiliser requirement. Our agronomic research also studies the composting of palm EFB by microbes, and uses it as substitute for inorganic fertilisers, where the beneficial microbes have proven functional actiVities to improve soil fertility. 7.12.4 Precision agricUlture AA Resources’ R&D efforts also include researching the use of remote sensing and GIS to improve plantation practices, specifically for plantation road and terrain planning for planting purposes. At present, we are studying the use of UAVs for plantation mapping and identification of agro-management issues in the plantation estates, which allows accurate planning of plantation roads and determines the planting points of new oil palm seedlings, as well as implementing site-specific practices to maximise the growth and production of oil palm. The advantage of precision agriCUlture is to maximise the growth and production of oil palm in the plantation estates where variable rate applicators are used to match inputs and outputs or site specific requirements of each planting block. 110 7. BUSINESS OF OUR GROUP (Cont’d) Among AA Resources’ key R&D achievements include, but are not limited to, the following: Research area Achievement Breeding and • Developed AA Vitroa tissue culture ramets selection of Developed and trademarked hybrid seed AA Hybrida 1 •planting material • Developed and trademarked semi-clonal hybrid seed AA Hybrida 1S, which produces oil palms with more, albeit smaller bunches, FFBs yielding over 20% higher oil content than conventional seeds
• Developed compact palms for high density planting
• Developed protocol for large scale propagation of oil palm through tissue cutture method

Crop • Established existence of differential aggressiveness of Ganoderma, management critical for screening of oil palm for tolerance against it • Identified causal fungi causing leaf spot disease Agronomy • Patented AA+ plastic mulch, a plastic mUlch cover used for covering one-off application of fertiliser lasting one year and locks in beneficial moisture for an oil palm • Developed proprietary system to compute optimum fertiliser efficiency
• Developed an agronomy management software to assess performance of oil palm plantations

Precision • Developed methods to utilise GIS, GPS and remote sensing for agriculture plantation mapping Moving forward, AA Resources aims to increase annual seed production in Malaysia to about 10.0 million seeds. Tissue culture ramets will likely be maintained at 1.0 million per year unless certain tissue abnormality issues can be resolved and labour dependency for tissue CUlturing can be reduced. AA Resources’ key future R&D initiatives include, but are not limited to, the following: Estimated timeline for implementation/ commercial Research area Research plans planting Breeding and • Evaluate and commercialise AA Hybrida II • 2015-2018 selection of • Evaluate and commercialise AA Hybrida III 2023-2028•planting material • Develop Ganoderma tolerance palms • 2013-2020
• Improve tissue culture success rates • 2013-2018
• Develop seeds through genome marker • 2023-2028 selection

Crop • Evaluate and develop biological control of pests • 2013-2020 management • Use pathogens to cause disease to Ganoderma • 2013-2015 fungus Agronomy • Improve fertiliser use efficiencies • 2013-2018 • Develop methods to conserve soil moisture • 2013-2018 Precision • Develop protocol for use of UAV in plantation • 2013-2015 agriculture mapping Our Group incurred R&D expenses of RM7.5 million, RM8.4 million and RM10.8 million which translates to approximately 0.8%, 1.0% and 1.6% of the total pro forma revenue of our Group for the FYE 31 December 2011, 31 December 2012 and 31 December 2013, respectively. 7. BUSINESS OF OUR GROUP (Cont’d) 7.13 SEASONALlTY/CYCLlCALlTY The harvest of FFBs at our plantation estates tend to increase in the second half of the year as a result of rainfall patterns in Malaysia. which typically lead to a greater supply of CPO and PK during the second half of the year as FFB is processed following its harvest. There is no seasonality in the demand for CPO and PK as global demand for edible oils is generally consistent throughout the year. 7.14 INTERRUPTION TO BUSINESS AND OPERATIONS Since 2009. pockets of our operations at the Kelimut Estate. Maong Estate and Bukit Limau Estate have been affected by conflicts and disputes resuiting from claims of NCR land rights on certain parcels of land within these estates. Arising from these conflicts and disputes. there have been unauthorised harvesting and pilferage of FFBs. as well as field blockades preventing entry of our harvesters. by certain local native parties. As a result. our FFB harvests from these three estates in Sarawak have been affected. Our estimated total losses arising from the unauthorised harvesting and pilferage of FFBs at the Kelimut Estate. Maong Estate and Bukit Limau Estate for the FYE 31 December 2012 and 31 December 2013 are approximately RM2.5 million (representing 4.728 MT of FFB) and RM9.1 million (representing 21.345 MT of FFB). respectively. The increase in the unauthorised harvesting in the FYE 31 December 2013 in Kelimut Estate. Maong Estate and Bukit Limau Estate was due to. amongst others. the following: (a) the increase in harvesting of FFBs by native communities in the areas under dispute during the ongoing protracted legal proceedings where there is currently a stay of execution granted by the Sibu High Court. This is in connection with B Kanowit’s appeal on the Sibu High Court decision on 30 April 2012 in favour of the natives in respect of their claims on NCR lands within Kelimut Estate and Maong Estate; and
(b) the full year’s impact of illegal harvesting in 2013 following the injunction filed by B Tinjar with the Miri High Court in June and August 2012. The injunction was filed to restrain certain native communities in Bukit Limau Estate from. among others, entering and occupying Bukit Limau Estate as well as harvesting FFBs in Bukit Limau Estate pursuant to the provisional leases held by B Tinjar for Bukit Limau Estate. The said injunction had also aggravated certain native communities in Bukit Limau Estate and led to the spread of illegal blockades within Bukit Limau Estate. which grew from approximately 89 Ha in early 2012 to approximately 1.806 Ha by the end of2012.

While efforts are being taken to increase the security measures in the areas affected by unauthorised harvesting and pilferage of FFBs, and we may yet seek an amicable solution with the claimants of NCR land rights to avoid further disruptions to our plantation operations in the areas concerned. these disputes are also currently being heard in the courts. For further details. see Sections 5.2.3 and 15.5 of this Prospectus. 7.15 QUALITY CONTROL, CERTIFICATIONS AND RECOGINITION We adopt stringent quality control practices at each stage of the production process to ensure that the quality of our products meet customer expectations. It is our policy to be recognised by our customers and the industry as a reliable supplier of quality palm products and services that not only meets but exceeds expectations. Our quality management practices extend across the supply chain of our operations. from crop cultivation to CPO and PK production as well as purchasing and the marketing and distribution of FFB. CPO and PK. The implementation of a holistic quality management system allows us to ensure that FFB quality is monitored and controlled from the field to the mills in all our plantation estates. 7. BUSINESS OF OUR GROUP (Cont’d) Our quality control practices at the plantation estates are focused on harvesting and crop quality. We strive to achieve harvesting rounds no less than 2.5 limes a month as optimum harvesting rounds can minimise percentages of over-ripe bunches which are the cause of crop loss and poor quality of CPO. Our harvesters are also trained to identify and harvest ripe fruit bunches, and ensure that all loose fruits are collected. We implement a policy whereby all harvested crop must be transported to the mill within 24 hours for processing. Harvested FFBs also undergo quality inspections prior to being transported to mills. These measures ensure high quality of FFBs, Which in turn will yield high OER and KER as well as low free fatty acid oil. Quality control at our mills is implemented through a series of quality management practices that we define as Good Milling Practices (GMP). Throughout the production of CPO and PK and prior to product distribution to customers, our products must pass the various quality control inspections outlined in our standard operating procedures and conform to international standards. Each of our palm oil mills has its own quality control team to monitor quality of products, ensure efficiency of the production process and to minimise product losses. Over the years, we have also established sound agricultural and management policies, consistent and effective standard operating procedures, as well as adopted operational best practices that has led to our success today. In 1997 we embarked on an exercise to digitally­map our plantation estates using GPS, a space-based satellite navigation system. This led to the design of our own computerised plantation MIS. The MIS is a management tool that is tailored for precision farming where individual plantation performances (e.g. yield maps and profit margin analysis) and status of activities taking place at plantation estates (e.g. pruning, manuring and weeding schedule) can be viewed at headquarters. In 2008, we implemented the Crop Quality Continuous Improvement Program (CQCIP) with the aim of improving performance at our mills. Under this program, the Mill Coordinating Committee (MCM) meets monthly to review mill performance and take appropriate corrective action to improve productivity. Performance audits are carried out on underperforming mills to identify key improvement areas and key success factors from best performance mills are adopted at the underperforming mills to boost productivity. Critical areas of concern are escalated to the Performance Management Committee (PMC) which comprises representatives from the estates, mills and headquarters. Records of our plantation performance are recorded on our MIS by AA Resources. Our strong commitment to quality is evident in our adoption of a structured and holistic Quality Management System that is certified under IS09001 :2008. As at the LPD, eight of our ten mills are certified with the IS09001 :2008 Quality Management Standards. The remaining two mills. namely Lepan Kabu Palm Oil Mill and Rimba Nilai Palm Oil Mill are working towards the certification of ISO standards in 2014. Amongst the eight mills, six were accredited with ISO standards over a decade ago, while the remaining two mills were accredited since 2005 and 2007, respectively. Year First Awarded Latest Year Renewed Processing facility 1998 2013 B Rlmba Nllal, Segamaha Palm 011 Mill 1998 2013 B Rimba Nllal, Sungal Jernih Palm 011 Mill 1995 2013 B Telok Sengat, Telok Sengat Palm Oil Mill 2005 2011 B Kanowit Oil Mill, Kanowlt Palm 011 Mill 1995 2012 B Emastulln, Segarla Palm Oil Mill 2003 2012 B Telok Sengat, TRP Palm 011 Mill 2003 2012 B Gradient, Nak Palm Oil Mill 2007 2013 BTinjar, Loagan Bunul Mill 7.16 OCCUPATIONAL SAFETY, HEALTH AND ENVIRONMENT We are committed to ensuring and maintaining high standards of health and safety of our workforce, as well as preserving the environment. We believe that these are important aspects for a sustainable palm oil business. 7. BUSINESS OF OUR GROUP (Cont’d) 7.16.1 Occupational safety and health We place great emphasis on the occupational safety and health of our employees by ensuring that our premises are clean and safe working environments. We adhere to various health, safety and food safety laws and regulations which protect our workers, customers and consumers of our products. We have developed specific Occupational Safety and Health Administration guidelines which are adhered to by all our plantation estates and mills. We take several measures to prevent likely accidents and occupational illnesses. We also have a Hospital Assistance Programme in place that provides free medical treatment, safety, health and environmental programs for surrounding communities. Our health, safety and food safety policies are reviewed periodically and we are committed towards improving existing activities for total compliance of the relevant laws and regulations governing occupational safety and health. Additionally, Our premises are subject to regular inspections by Government authorities. 7.16.2 Environment Sustainable agricultural practices We are committed to adopting sustainable agricultural practices in our daily operations where all aspects of environmental health, economic profitability and social responsibility are deemed equally important. We firmly believe in conservation efforts aimed at protecting the environment’and have been committed to develop and cement best practices that lead to the sustainability of our Group’s business. To this end, we have implemented several policies and agronomic practices in order to work towards a sustainable future including: (i) zero-burning policy which is aimed at preserving good air quality;
(ii) soil and water conservation management which is aimed at preventing soil degradation, environmental pollution and improving water use efficiency, thereby obtaining maximum sustained level of production from a given area of land;

(iii) drainage and water management which is aimed at ensuring well-aerated root zones for effective root functions and minimising the potential effects of floods; and (iv) integrated pest management in plantation estate which is aimed at minimising the frequency and quantity of synthetic pesticides for sustainable management of oil palm pests. We are a member of the RSPO, an ongoing international initiative focused on making good agricultural practices a standard for sustainable palm oil. In 2011, we instituted a ten-year programme to ensure that all our oil palm plantation business units obtain RSPO certification by the year 2021. Our Sungai Jernih Business Unit was the first unit in our Group to receive RSPO certification in 2011. Our Nak Business Unit in Sandakan is expected to attain jts RSPO certification in 2014. In total, 6,898 Ha of our plantation estates have RSPO accreditation. Year Processing facility Quality certifications Awarding body 2011 B Rimba Nilai, Sungai RSPO Principles & SGS (Malaysia) Sdn Bhd Jernih Business Unit Criteria (200?) for the Sustainable Palm Oil Production for the period of 12 September 2011 to 11 September 2016 7. BUSINESS OF OUR GROUP (Cont’d) 7.17 EMPLOYEES As at the LPD, we had a total of 75 full-time employees that were based at our headquarters. The following table depicts the details of these employees: Total number of full-time employees at the Head Average year(s) of service as at Office the LPD FYE 31 December As at <1 1-5 6-10 >10 Department 2011 2012 2013 the LPD year years years years Estates 12 13 14 141 5 2 6 Planting 10 9 77 1 6Advisors(‘) Group 12 12 11 121 110Engineering Finance & 2222 24 25 3 74 11Accounts Marketing 7 7 55 14 Human 3333 3Resources Generall 10 10 99 4 14Secretarial Total 76 76 73 755 17 9 44 Note: (1) Planting Advisors are full-time employees based at our head office who provide plantation advisory services to our oil palm plantation estates, whereby they carry out operational and financial audits of the estates under their purview once every six months and findings from these audits are submitted to the senior management ofBPB for further action. Our Group also has an additional 11 employees under service contracts as at the LPD, of which 8 are senior and middle management employees. Details of these employees are depicted in the following table: Total number of service contract employees at the Average year(s) of service as at Head Office the LPD FYE 31 December <1  1-5  6 -10  > 10  Department  2011  2012  2013  As at LPD  year  years  years  years  Estates  1  1  2  2  2  Planting Advisors(1 j  1  1  1  1  1  Group Engineering  2  2  2  2  2  Finance Accounts  and  2  2  1  1  Marketing  1  1  2  2  2  Human Resources  1  1  1  1  1  General  2  2  3  2  2  Total  10  10  12  11  11
7. BUSINESS OF OUR GROUP (Cont’d) Note: (1) Planting Advisors are full-time employees based at our head office who provide plantation advisory services to our oif palm plantation estates, whereby they carry out operational and financial audits of the estates under their purview once every six months and findings from these audits are submitted to the senior management of BPB for further action. As at the LPD, our Group had a total of 9,814 employees comprising 5,535 full-time employees and 4,279 contract/temporary workers in the plantation estates and mills, of which 6,232 are foreign workers. Details of our full-time employees in the plantation estates and mills are illustrated in the following table: Total number of full-time employees in estates and Average year(s) of service as at mills the LPD FYE 31 December Department  2011  2012  2013  As at the LPD  <1 year  1-5 years  6 -10 years  >10 years  Administration  896  942  954  421  33  117  84  187  Operations  308  326  349  484  72  211  116  85  Field Total  2,744 3,948  2,924 4,192  3,085 -­4,388  4,463 5,535  873 978  1,901 2,229  793 –­993  – 106 1,335
7.18 LABOUR UNION Our plantation estate workers in Peninsular Malaysia are members of the NUPW. Meanwhile, our clerical, health, medical and technical staff at our plantation estates in Peninsular Malaysia are members of the All Malayan Estates Staff Union (AMESU). None of our employees in Sabah and Sarawak belong to any labour unions. 7.19 LABOUR DISPUTE There have been no material employee or labour disputes in the FYE 31 December 2011, 31 December 2012 and 31 December 2013. 7.20 TRAINING AND DEVELOPMENT We regularly invest in programmes that promote employee advancement and meet our specific business needs while continuously enhancing the qualifications of our staff so as to maintain and enhance our competitiveness and our know-how as we continue to grow. We provide our employees with opportunities to participate in externally conducted training programmes, such as those relating to various aspects of our business operations, crop productivity, resource management and work safety. The following table provides details of the recent training programmes attended by our employees: Type of training Traini.C-n…g’–~_ Organiser Industry seminars Malaysian International Palm Oil Congress MPOB (PIPOC) 2013 Competitive Strategies During Low The Incorporated Society of Commodity Prices Planters 116 7. BUSINESS OF OUR GROUP (Cont’d) Type of training Training Organiser Technical training General management training PIPOC Green Opportunities from the Golden Crop Palm and Lauric Oils Conference and Exhibition Price Outlook (POC) 2013 CEO Forum 2013 10th Natsem Confronting Management Challenges in the Oil Palm Industry International Seminar on Oil Palm Breeding Import & Export Customs Procedure Seminar on Assessing Soil Microbial Biodiversity: Agriculture & Environment SOILS 2013 : Good Agriculture Practice (GAP) for Soil Health Sustainability Mosta Best Practices Workshop on Scientific Writing Plant Nutrition for Nutrient and Food Security Oil Palm Practical Innovative Technologies 2013 Area Security Advisors MPOA Alfin Investment Conference Series 2013 (Politics and Business-The Malaysia Connection) Effective Quality Management Representative Effective Management Review Corrective Action & Preventive Action ISO 9001 :2008 Internal Auditing Team Building Lead Auditor Training ISO 9001 :2008 QMS MPOB Bursa Malaysia Derivatives Berhad Perdana Leadership Foundation The Incorporated Society of Planters The International Society for Oil Palm Breeders and MPOB Pacific Leadership Development MPOB Malaysian Society of Soil Science Malaysian Oil Scientists’ and Technologists’ Association International Plant Nutrition Colloquium (IPNC) Malaysian Oil Scientists’ and Technologists’ Association MPOA Alfin Bank Berhad SIRIM Berhad SIRIM Berhad SIRiM Berhad SIRIM Berhad X Power Event Management SIRIM Berhad 7. BUSINESS OF OUR GROUP (Gont’d) Type oftraining Finance & accounting ­Regulatory training HR-related training Occupational safely and health training Training Advoc’a-“c”y-s-e-s-sc-io-‘-n-o-n-d'”i”sc”-;I-os”u-r-e-s-‘-fo-r”-;C”‘h”””‘i-ef;­Executive Officers/Chief Financial Officers Getting Ready for IFRS Convergence Write like a Professional Placement Test for English Course The Employees Provident Fund (EPF) Act 1991 & Employees’ Social Security Act (SOCSO) 1969 Seminar on Taxation Human Resources Development Fund (HRDF) Conference & Exhibition 2013 Empioyers’ Obligation Under the Income Tax Act 1967 Basic Occupational First Aid and CPR Training Course Customised Combined Drill Organiser Bursa Securities PwC Malaysia Alistair King Training British Council Institute of Professional Advancement Lembaga HasH Dalam Negeri Malaysia -Malaysian Employers Federation Pembanguan Sumber Manusia Berhad Malayan Agriculture Producers Association Academy of Safety and Emergency Care Sdn Bhd Academy of Safety and Emergency Care Sdn Bhd 7.21 MATERIAL PROPERTIES AND MATERIAL EQUIPMENT Details of material properties owned by our Group or leased/tenanted by our Group and our material equipment are set out in Annexure B of this Prospectus. 7.22 TECHNOLOGY AND INTELLECTUAL PROPERTY As at the LPD, we do not have any brand names, patents, trademarks, technical assistance agreements, franchises and other intellectual property rights. [The rest of this page has been intentionally left blank] 7. BUSINESS OF OUR GROUP (Conl’d) 7.23 GOVERNING LAWS AND REGULATIONS The laws and regulations in relation to the palm oil industry are mainly governed by the following: 7.23.1 Ministry of Plantation Industries and Commodities The Ministry of Plantation Industries and Commodities is responsible for the development of the primary commodity sector of the economy, which among others, includes palm oil. The Ministry of Plantation Industries and Commodities is empowered to make regulations for the palm oil industry of Malaysia. 7.23.2 Governing laws and regulations relating to palm oil industry The cultivation, movement, sale, purchase and milling of the palm fruit as well as the sale, movement and purchase of CPO and PK in Malaysia are governed by, amongst others, the following legislations: (i) Malaysian Palm Oil Board Act, 1998 (UMPOB Act”) MPOB Act empowers MPOB to govern and regulate every aspect of palm oil business. The MPOB Act emphasises on the composition and the powers of the MPOB. The establishment of the MPOB is to promote and develop the oil palm industry of Malaysia and to develop national objectives, policies and priorities for the orderly development and administration of the oil palm industry of Malaysia. Furthermore, the MPOB is also responsible for regulating, registering and coordinating all activities relating to planting, production, harvesting, extraction, processing, storage, transportation, use, consumption and marketing of oil palm and its products. Hence, our Group has a duty to work hand in hand with the MPOB to ensure the objective can be achieved and will benefit the country. Our Group will have to comply with regulations passed by the MPOB, where applicable. (ii) Palm Oil Industry (Licensing) Regulations, 2005 Pursuant to the Section 78 of the MPOB Act, the Palm Oil Industry (Licensing) Regulations regulate the palm oil licensed activities. These regulations prescribe the procedures and the relevant forms for applications for licences to produce, sell, store, purchase, export or import of oil palm planting material, oil palm fruit, PK and other palm oil produce. As our Group’s main business revolves around oil palm plantation, these regulations must be adhered to ensure smooth and legitimate operations whether in producing or manufacturing palm products. Our Group’s obligation is to monitor all existing licences and apply for renewal if necessary. (iii) MPOB (Quality) Regulations, 2005 The purpose of MPOB (Quality) Regulations is to control and determine the quality of all activities in the palm oil industry. This includes, inter alia, production and management of oil palm planting material; grading and milling of oil palm fruit; and processing, handling, storage, transportation of palm oil products. Quality declarations for the export, import and intemal trade of palm oil products shall be made to the MPOB in order to determine whether such product conform to the type and quality of palm oil products that may be sold, exported and imported or to those specified in the contract for sale relating to such product. Furthermore, the MPOB may set conditions on the sale of palm oil products. 7. BUSINESS OF OUR GROUP (Cont’d) (iv)
(v)
(vi)

(vii) (Viii) Our Group shall refer to the guidelines stated in the MPOB (Quality) Regulations to ensure the quality of the palm oil product. MPOB (Registration of Contracts) Regulations, 2005 The diverse nature of our Group’s business in oil palm plantation estate involves a lot of highly dependent contracts to maintain a sustainable business model. The MPOB (Registration of Contracts) Regulations provide for the registration of contracts in relation to the sale and purchase of oil palm products and the details of such contracts (other than contracts for palm oleochemicals which need not be registered but not including international contracts for export of palm oleochemicals). It is a requirement to ensure such contracts are specifically tailored for palm oil business. The MPOB must be informed of such contracts based on the procedures laid out under these regulations. MPOB (Compounding of Offences) Regulations, 2005 Under the MPOB (Compounding of Offences) Regulations, all offences committed under the MPOB Act and regUlations enacted under the MPOB Act that are specified in this regulation, may be compounded by the Director­General of the MPOB. Due to the complexity of process and nature of the palm oil business, it is important for our Group to distinguish the act or conduct which amounts to an offence. Industrial Co-ordination Act, 1975 Under the Industrial Co-ordination Act, 1975 and the Industrial Co-ordination (Exemption) Order, 1976, a licence is required for any manufacturing activity with shareholders’ funds of RM2.5 million and above and/or manufacturing activity employing 75 or more full-time paid employees. A licence will have to be obtained for the manufacture of specified products at each separate manufacturing site. Licences are typically issued in accordance with national economic and social objectives and to promote the orderly development of manufacturing activities in Malaysia. They are issued by the MITI, subject to conditions of the licence and are non-transferable save with the prior approval of MIT!. Control of Supplies Act, 1961 The Control of Supplies Act, 1961 governs the law on controlled article in Malaysia. Cooking oil, fertiliser and sugar are products that have been gazetted as controlled article in Malaysia. Pursuant to the Control of Supplies RegUlations, 1974, a licence is required for any person to deal, by wholesale or retail, in any schedUled article (which includes a controlled article as defined in this act and is specified in Part 1 of the Schedule) or to manufacture any scheduled article. The Controller of Supplies has the authority in enforcing the rules and regulations as provided in this act. As our Group’s main business revolves around the palm oil business, this will prevent any misuse or speCUlation on the controlled article and prevent black market operations with regards to palm oil industry. Price Control and Anti Profiteering Act, 2011 (“PCAPA”) The PCAPA replaced the Price Control Act, 1946 (“PCA”) and came into force on 1 April 2011. The PCAPA provides for the control of prices of goods Whereby the MDTCC may, among other things, determine the maximum, minimum or fixed prices for the manufacturing, producing, Wholesaling or retailing of goods. 7. BUSINESS OF OUR GROUP (Cont’d) In addition, the Price Advisory Council shall advise the Minister of MDTCC on issues relating to profiteering and the Minister of MDTCC shall prescribe the mechanism to determine whether profit is unreasonably high. The Price Controller is empowered to investigate and enforce the provisions of the PCAPA including any person making unreasonably high profits by selling, supplying or offering to sell or supply goods. 7.23.3 Other relevant Malaysian legislation (i) Factories and Machinery Act, 1967 (“FMA”) The FMA governs the occupational safety, health and welfare of persons working in a factory. The FMA also governs the registration and inspection of the machines used in a factory. The FMA and the regulations enacted under it is the cornerstone legislation for occupational, safety and health improvement in the manufacturing industry, mining, quarrying and construction industries, apart from the general duties to employees under the Occupational Safety and Health Act, 1994. Under the FMA, our Group has a duty to maintain the standards of safety, health and welfare of our factories and our factory workers. In addition, our Group must ensure that the machineries used are in good condition and must be registered. (ii) Occupational Safety and Health Act, 1994 (“OSHA”) Under the OSHA, we have a general duty to our employees to provide and maintain the plants and systems of work that are, so far as is practicable, safe and without risks to health, provide information, instruction, training and supervision to ensure, so far as is practicable, the safety and health of our employees at work, and to provide a working environment, which is as far as possible safe, without risks to health, and adequate as regards facilities for their welfare at work. We also have a duty to ensure, so far as is practicable, that other persons, not being our employees, who may be affected thereby are not thereby exposed to risks to their safety or health. As we employ 9,814 full-time and contract/temporary employees working in estates and mills we are obliged under the OSHA to employ a safety and health officer, who is tasked with ensuring the due observance of the statutory obligations as regards to workplace health and safety and the promotion of a safe conduct of work at the place work. We have also set up a health and safety committee. which we consult in promoting and developing measure to ensure the safety and health at the place of work of the employees, and in checking the effectiveness of such measures. (iii) EQA The EQA restricts pollution of the atmosphere, noise pollution, pollution of the soil, pollution of inland waters without a licence, prohibits the discharge of oil into Malaysian waters without licence, discharge of wastes into Malaysian waters without a licence, and prohibits open burning. The agency responsible for implementing and monitoring Malaysian’s environmental regulations and policies is the Malaysian Department of Environment and the local environmental authority. 7. BUSINESS OF OUR GROUP (Cont’d) (iv) Employment Act, 1955 The Employment Act, 1955 governs the law on the employment contracts entered into between employer and employee in Peninsular Malaysia and Federal Territory of Labuan, Malaysia. Our Group employs a vast amount of workers in management as well as at operational level. Furthermore, our Group’s business is highly dependent on foreign labour and contractors in maintaining an efficient operation. As such, the Employment Act, 1955 is important as it stipulates the laws on foreign workers and contractors. Please refer to Annexure A of this Prospectus for details of our material licenses, permits and approvals. 7.24 DEPENDENCY ON COMMERCIAL CONTRACTS As at the LPD, there are no commercial contracts (inclUding informal arrangements or understandings) which have been entered into by our Group of which our Group is highly dependent upon. [The rest of this page has been intentionally left blank]

 

 

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