Fiji operations continued their good performance in a difficult economic environment earning profit before tax of F$5,527,409 for the year, down 7.5% on the 2006 profit of F$5,980,450. Profit after tax was similarly down at F$3,811,875 compared to F$4,141,047 in 2006. The Fiji Institute of Accountants adopted the International Financial Reporting Standards effective from 1 January 2007. These 2007 accounts are compliant with this new requirement. This change has resulted in some changes to the figures for 2006. Any reference to 2006 results in the 2007 accounts are to these adjusted figures. This profit was achieved against a slowing Fiji economy that weakened in 2007 resulting from a lack of investor confidence brought on by the Military Coup of December 2006. This saw a decline in exports, the suspension of some aid by donor countries, and surplus liquidity and reducing interest rates in the money markets. The decline in our earnings was forecast in the 2006 report.

The Interim Government has brought forward Fiji's return to democratic rule announcing that elections will be held in March 2009, although there is some scepticism among local and international observers that this date will be achieved. It is expected that economic conditions in Fiji will improve after elections are held which should see a gradual return of investor confidence and the resumption of aid programmes that are particularly important for the sugar industry and rural development.

The economy was estimated to have contracted by 3.9% in 2007 with weak performance in most sectors. The Reserve Bank of Fiji expects to see a turnaround in 2008 and is forecasting growth of 2.2%. The weakening of the economy affected us with new business accepted in 2007 declining by 13% compared to 2006.

Money supply improved in the second quarter of 2007 following the Reserve Bank of Fiji's easing of banks Statutory Reserve Deposit accounts by 1%. This immediately released funds to the market and also had an immediate impact to ease prevailing
high interest rates. These rates declined during the year and have now stabilised at low levels of up to 4% for interest bearing deposits for one year. The Reserve Bank of Fiji's restriction on banks and finance companies lending levels assisted in reducing imports and in stabilising Fiji's foreign reserves at around four months imports.

Visitor arrivals declined marginally in 2007 to 545,000 and are forecast to increase to around 570,000 in 2008 with some of Fiji's traditional markets showing signs of improvement. Two major hotel resort projects were completed during the year, and work on another has stopped because of funding difficulties.

Bad weather conditions adversely affected the sugar industry which resulted in a low harvest of 2.4 million tonnes of cane, down 23% on 2006 with a corresponding decrease in sugar production. The industry continues to struggle and restructure of the industry has slowed with installation of new plant and machinery at the three large mills now in progress and expected to be completed for the 2009 season. Cogeneration (electricity production) an integral part of the reforms is similarly delayed.

Emperor Gold Mines was closed for most of the year before being sold. Export of gold has now recommenced but at lower than previous levels until the mine resumes full production.

We have settled into our new office building in Suva that was formally opened by the Company's former Chairman Sir Henry ToRobert in November. We have been complimented on the quality of the new offices and they project an excellent image for the company that will benefit us in the longer term. We now have ample space for our operations and the building provides a permanent head quarters for our Fiji business.

During the year, plans were finalised to invest in a new warehouse complex in Suva. This will provide secured covered storage for repossessed assets prior to their sale and we expect to be also offering space for document storage once the building is completed, which we expect will be in April 2008. It is appropriate to acknowledge our long serving chairman Sir HenryToRobert who resigned during the year. Sir Henry was chairman of the company for fourteen years from 1993 to 2007. We are grateful for the significant contribution he made to the company's performance during this period.

Whilst we will continue to focus on improving the performance of the company to maximise profitability, with the weakening economy and continuing political uncertainty resulting from the 2006 December Coup, we expect to see continued difficult operating conditions in 2008.