Sampoerna Agro Tbk.

Consolidated Financial Statements

With Independent Auditors’ Report

March 31, 2007 and December 31, 2006

With Comparative Figures for 2005 and 2004

PT SAMPOERNA AGRO Tbk

(FORMERLY PT SELAPAN JAYA)

AND SUBSIDIARIES

WITH COMPARATIVE FIGURES FOR 2005 AND 2004

Table of Contents

Page

Independent Auditors’ Report

Consolidated Balance Sheets ………. 1-2

Consolidated Statements of Income ……….. 3

Consolidated Statements of Changes in Equity ..……….… 4

Consolidated Statements of Cash Flows ……….. 5

Notes to the Consolidated Financial Statements ………. 6-55

Independent Auditors’ Report

Report No. RPC-7296

The Shareholders, Boards of Commissioners and Directors

PT Sampoerna Agro Tbk (formerly PT Selapan Jaya) and Subsidiaries

We have audited the consolidated balance sheets of of PT Sampoerna Agro Tbk (formerly PT Selapan Jaya) (“the Company”) and Subsidiaries (the “Group”) as of March 31, 2007 and December 31, 2006, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for the three months ended March 31, 2007 and the year ended December 31, 2006. These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of certain Subsidiaries, which statements reflect combined total assets accounting for 34.1% of the consolidated total assets as of March 31, 2007, and combined net sales accounting for 14.8% of the consolidated net sales for three months ended March 31, 2007. Those statements were audited by other independent auditors, whose unqualified reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for those entities, is based solely on the reports of the other independent auditors. The consolidated financial statements of PT Sampoerna Agro Tbk (formerly PT Selapan Jaya) and Subsidiaries for the years ended December 31, 2005 and 2004 were audited by Prasetio, Sarwoko & Sandjaja, whose report dated February 28, 2006, expressed an unqualified opinion on those statements. We conducted our audits in accordance with auditing standards established by the Indonesian Institute of Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of the other independent auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of the other independent auditors, the 2007 and 2006 consolidated financial statements referred to above present fairly, in all material respects, the financial position of PT Sampoerna Agro Tbk (formerly PT Selapan Jaya) and Subsidiaries as of March 31, 2007 and December 31, 2006, and the results of their operations and their cash flows for the three months period ended March 31, 2007 and the year ended December 31, 2006 in conformity with generally accepted accounting principles in Indonesia.

figures for 2005 and 2004 have been reissued to include several additional disclosures.

Purwantono, Sarwoko & Sandjaja

Peter Surja

Public Accountant License No. 05.1.0976 May 29, 2007

The accompanying consolidated financial statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Indonesia. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in

December 31,

Notes March 31, 2007 2006 2005 2004

ASSETS

CURRENT ASSETS

Cash and cash equivalents 2e,4 67,888,263 64,237,583 23,146,082 81,515,100 Trade receivables - third parties 5 11,482,572 418,936 1,217,403 515,219

Other receivables 6

Related parties 2q,25 176,910,326 - - -

Third parties 4,721,557 1,112,672 855,903 766,986 Inventories 2f,7 43,788,835 36,708,337 102,209,473 24,805,541 Prepaid taxes 13a 10,080,880 492,673 - 554,979 Prepayments, advances and

other current assets 2g 2,162,029 375,005 383,636 3,315,807

TOTAL CURRENT ASSETS 317,034,462 103,345,206 127,812,497 111, 473,632

NON-CURRENT ASSETS

Advances for Plasma plantations,

net 2k,8 46,970,190 38,118,847 25,235,893 17,265,218 Deferred tax assets, net 13f 16,966,860 4,322,465 3,687,269 6,742,374

Plantation assets: 2h,2j

Mature plantations, (net of accumulated amortization

of Rp107,860,001 in 2007, Rp60,045,789 in 2006, Rp50,682,552 in 2005 and Rp41,842,798 in

2004) 9a 471,526,692 127,642,323 131,210,247 129,580,332 Immature plantations 9b 96,089,320 15,139,360 10,567,271 15,331,641

Fixed assets 2i,2j

(net of accumulated depreciation of Rp236,263,410 and

impairment of Rp7,442,177 in 2007, accumulated depreciation of

Rp196,750,395 in 2006, Rp166,830,611 in 2005,

and Rp134,523,134 in 2004) 10 400,724,093 302,536,622 323,333,980 334,261,284 Deferred land right cost

(net of accumulated amortization

of Rp1,750,859 in 2007, Rp1,126,729 in 2006, Rp868,336 in 2005

and Rp639,676 in 2004) 2m 17,014,360 13,166,517 13,424,911 11,658,021

Goodwill 3 8,804,465 - - -

Claim for tax refund 2o,13d 800,823 4,416,860 3,618,118 -

Deferred charges 2m,15 22,820,544 - - -

Guarantee deposits 4 32,217,395 1,378,500 8,380,500 5,541,000 Nursery 2l 2,520,638 5,377,625 7,873,429 3,804,135

TOTAL NON-CURRENT ASSETS 1,116,455,380 512,099,119 527,331,618 524,184,005

TOTAL ASSETS 1,433,489,842 615,444,325 655,144,115 635,657,637

December 31,

Notes March 31, 2007 2006 2005 2004

LIABILITIES AND

SHAREHOLDERS’ EQUITY CURRENT LIABILITIES

Trade payables 11 54,206,141 36,011,899 51,195,307 18,633,050 Taxes payable 2o,13b 8,739,065 30,074,515 11,768,112 20,757,570 Accrued expenses 14 28,117,136 7,295,656 5,202,100 9,832,511 Sales advances 12 8,134,429 6,218,498 15,350,143 2,167,354 Due to related parties 2q,25a 6,707,641 537,797 25,698 25,698 Current portion of long-term:

Bank loans 15 - 32,125,000 57,000,000 54,579,775 Deferred interest payable 16 - - 2,800,000 4,000,000

TOTAL CURRENT LIABILITIES 105,904,412 112,263,365 143,341,360 109,995,958

LONG-TERM LIABILITIES

Long term debts-net of current portion:

Bank loans 15 1,103,800,000 81,356,285 197,927,531 257,811,758 Deferred interest payable 16 - - 890,614 18,218,335 Provision for employee service

entitlements 2p,17 1,192,473 10,050,823 9,087,296 7,630,135 Other long-term liability 2q,25c 15,925,258 - 5,183,619 5,183,619

TOTAL LONG-TERM LIABILITIES 1,120,917,731 91,407,108 213,089,060 288,843,847

TOTAL LIABILITIES 1,226,822,143 203,670,473 356,430,420 398,839,805

MINORITY INTERESTS IN NET

ASSETS OF SUBSIDIARIES 2b,26a 16,281,243 3,527,154 2,617,617 2,031,241

December 31,

Notes March 31, 2007 2006 2005 2004

SHAREHOLDERS’ EQUITY

Share capital

Authorized – 2,200,000,000 shares at par value per share of Rp500 (full amount) each in 2007 and 2006,

2,000,000,000 shares at par value per share of Rp500 (full amount) in 2005,

and 25,883 shares at par value per share of Rp10,000,000 (full amount) in 2004 Issued and fully paid - 571,460,000 shares in 2007 and 2006,

517,660,000 shares in 2005

and 25,883 shares in 2004 18 285,730,000 285,730,000 258,830,000 258,830,000 Difference in the value of

restructuring transactions of

entities under common control 2s,3,31 (275,971,501) (126,693,758) (126,693,758) (126,693,758) Assets revaluation increment 2i,2j, 10 75,746 75,746 26,975,746 26,975,746 Difference in foreign currency

translation 2a 185,755 - - -

Retained earnings 180,366,456 249,134,710 136,984,090 75,674,603

SHAREHOLDERS’ EQUITY, NET 190,386,456 408,246,698 296,096,078 234,786,591

TOTAL LIABILITIES AND

SHAREHOLDERS’ EQUITY 1,433,489,842 615,444,325 655,144,115 635,657,637

2007 2006 2005 2004

Notes (Three Months) (One Year) (One Year) (One Year)

SALES 2d,19 180,802,987 977,295,367 625,696,438 865,919,471

COST OF SALES 20 137,886,786 728,564,746 458,155,720 632,456,803

GROSS MARGIN 42,916,201 248,730,621 167,540,718 233,462,668

OPERATING EXPENSES 2d,21 25,219,683 56,606,189 46,812,609 30,187,374

OPERATING INCOME 17,696,518 192,124,432 120,728,109 203,275,294

OTHER INCOME (EXPENSES): 2d

Additional severance pay 17 (37,719,064) - - -

Interest expenses 22 (21,810,530) (31,695,517) (41,063,050) (50,931,468) Loss on impairment of assets 2j,10 (7,442,177) - - - Gain (loss) on foreign exchange 2c (75,588) 408,216 (744,987) (355,983) Interest income 23 915,660 4,167,477 3,131,365 6,124,327 Loss on sale of investment 24

in associate company - - - (13,000,000)

Others, net (5,784,686) (2,909,407) (6,679) 2,089,598

Other expenses, net (71,916,385) (30,029,231) (38,683,351) (56,073,526)

INCOME (LOSS) BEFORE CORPORATE INCOME

TAX BENEFIT (EXPENSE) (54,219,867) 162,095,201 82,044,758 147,201,768

CORPORATE INCOME

TAX BENEFIT (EXPENSE) 2o,13c

Current period (1,044,310) (49,150,240) (20,823,195) (28,528,564) Deferred 12,970,900 635,196 (3,055,105) (12,068,570)

CORPORATE INCOME

TAX BENEFIT (EXPENSE) 11,926,590 (48,515,044) (23,878,300) (40,597,134)

INCOME (LOSS) BEFORE

EXTRAORDINARY ITEM (42,293,277) 113,580,157 58,166,458 106,604,634

EXTRAORDINARY ITEM - net of

related tax effect 16 - - 3,729,405 -

INCOME (LOSS) BEFORE MINORITY INTERESTS IN NET INCOME/LOSS

OF SUBSIDIARIES (42,293,277) 113,580,157 61,895,863 106,604,634

MINORITY INTERESTS IN NET INCOME/LOSS OF

SUBSIDIARIES 2b,26b 925,023 (909,537) (586,376) (898,763)

NET INCOME (LOSS) (41,368,254) 112,670,620 61,309,487 105,705,871

BASIC EARNINGS (LOSS) PER

Difference in the

value of

restructuring Retained

transactions of Assets Difference in earnings Total

Pro-forma entities under revaluation Foreign Currency (Accumulated shareholders’

Notes Share capital capital common control increment Translation deficit) equity, net

Balance as of December 31, 2003 258,830,000 (2,216,612) (87,266,274) 26,975,746 - (25,492,138) 170,830,722

Pro-forma effect from additional

share capital subscription - 17,650,000 - - - 17,650,000

Net income for 2004 (one year) - - - - 105,705,871 105,705,871

Pro-forma capital in a Subsidiary’s net income for the period from January 1, 2004 to

October 26, 2004

(prior to the acquisition) - 4,539,130 - - - (4,539,130) -

Adjustment on pro-forma capital in relation to a restructuring transaction of entities under common control

(at the acquisition date) 31 - (19,972,518) (39,427,484) - - - (59,400,002)

Balance as of December 31, 2004 258,830,000 - (126,693,758) 26,975,746 - 75,674,603 234,786,591

Net income for 2005 (one year) - - - 61,309,487 61,309,487

Difference in the

value of

restructuring Retained

transactions of Assets Difference in earnings Total

Pro-forma entities under revaluation Foreign Currency (Accumulated shareholders’

Notes Share capital capital common control increment Translation deficit) equity, net

Issuance of bonus shares through convertion of asset revaluation

increment 26,900,000 - - (26,900,000) - - -

Dividend distribution by Subsidiaries 18 - - - - (520,000) (520,000)

Net income for 2006 (one year) - - - 112,670,620 112,670,620

Balance as of December 31, 2006 285,730,000 - (126,693,758) 75,746 - 249,134,710 408,246,698

Difference in the purchase price of Palma Agro compared to its

net book value 3 - - (275,971,501) - - - (275,971,501 )

Reversal in difference in the value of restructuring transactions of entities under common control due to change common control

shareholders 2s,31 - - 126,693,758 - - (27,400,000) 99,293,758

Difference in foreign currency

translation 2a - - - - 185,755 - 185,755

Net loss for March 2007 (three months) - - - (41,368,254) (41,368,254)

2007 2006 2005 2004

Notes (Three Months) (One Year) (One Year) (One Year)

CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers 172,289,208 985,337,855 638,177,043 857,028,099 Cash paid to suppliers and

employees, and for other

operating expenses (122,735,318) (644,573,920) (483,102,190) (593,543,471)

Cash generated from operations 49,553,890 340,763,935 155,074,853 263,484,628

Severance pay 17 (47,769,887) - - -

Claim for tax refund, net 1,615,220 - - -

Taxes paid (36,649,832) (82,750,163) (62,392,876) (80,196,793)

Net cash provided by (used in)

operating activities (33,250,609) 258,013,772 92,681,977 183,287,835

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of fixed assets 10 (19,697,936) (17,178,792) (21,443,491) (45,755,782) Additions to plantation assets -

immature plantations 9b (2,988,582) (10,045,912) (5,705,299) (4,868,256) Payment for acquisition of

subsidiaries after deducting cash

balances from acquisition date 3 (3,465,217) - - - Additions to advances for

Plasma plantations 8 (1,242,684) (10,081,705) (8,086,284) (5,289,669) Additions to nursery (1,225,029) (2,886,308) (4,351,257) (3,804,135) Payment for land right certificates (763,798) - (1,995,550) (4,242,131) Cash received from acquisition of

subsidiaries 3 12,970,290 - - -

Interest income received 915,660 4,167,476 3,131,365 5,970,671 Proceeds from sale of fixed assets 10 765,000 - 72 1,123,444 Payment for investment in

Binasawit Makmur 31 - - - (59,400,000)

Net cash used in investing activities (14,732,296) (36,025,241) (38,450,444) (116,265,858)

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments of bank loans (113,481,285) (145,136,859) (70,664,001) (47,230,621) Additions in guarantee deposits (16,394,175) (465,000) (873,500) (2,411,000) Interest paid (8,293,492) (32,423,400) (41,063,050) (50,827,767) Refund of invesment credit

in Plasma (7,608,659) (2,801,249) - -

Additions in deferred charges (459,552) - - -

Increase (decrease) in intercompany

balances (465,397) (137,902) - 7,752,716

Proceeds from bank loans 198,336,145 - - 17,146,950

Payment of long-term liability - (5,183,620) - -

Withdrawal of guarantee deposit - 5,251,000 - -

Proceeds from additional share capital in Binasawit Makmur

2007 2006 2005 2004

Notes (Three Months) (One Year) (One Year)

Cash receipts from interest of late

conversion - - - 748,094

Payment of obligation under

capital leases - - - (193,975)

Net cash provided by (used in)

financing activities 51,633,585 (180,897,030) (112,600,551) (57,365,603)

NET INCREASE (DECREASE) IN

CASH AND CASH EQUIVALENTS 3,650,680 41,091,501 (58,369,018) 9,656,374

CASH AND CASH EQUIVALENTS

AT BEGINNING OF PERIOD 64,237,583 23,146,082 81,515,100 71,858,726

CASH AND CASH EQUIVALENTS

AT END OF PERIOD 4 67,888,263 64,237,583 23,146,082 81,515,100

Supplemental information on cashflows Non-cash activities

Bank facility fees deducted

from proceeds of bank loan 15 15,961,750 - - - Acquisition of Subsidiaries

financed by bank loan 3 538,139,000 - - -

Lending to a related party

1. GENERAL

a. PT Sampoerna Agro Tbk (formerly PT Selapan Jaya) (“the Company”)

The Company is a limited liability company established in Indonesia on June 7, 1993, based on Notarial Deed of Tina Chandra Gerung, S.H No. 8. The Articles of Association were approved by the Ministry of Justice and Human Rights under Letter No. C2-1840.HT.01.01.TH.94 dated February 4, 1994, and published in the State Gazette No. 60, Supplement No. 4842 dated July 29, 1994.

Based on Notarial Deed Sutjipto, S.H., M.Kn. No. 52 dated February 16, 2007, the Company changed its name from PT Selapan Jaya to PT Sampoerna Agro. The amendment was approved by the Ministry of Justice and Human Rights under Letter No. W7-02335 HT.01.04-TH.2007 dated March 9, 2007.

The Articles of Association have been amended from time to time, the latest amendment of which was made under Notarial Deed No. 87 of Sutjipto, S.H., M.Kn., dated April 11, 2007 concerning about initial public offering plan, change in the share’s par value by stock split, increase in paid up share capital and changes to comply with Indonesian capital market law, including the change in the Company’s name from PT Sampoerna Agro to PT Sampoerna Agro Tbk.

The Company was approved as a Domestic Capital Investment Company (“PMDN”) based on the approval of the Capital Investment Coordinating Board (“BKPM”) through Letter No. 336/I/PMDN/1994 dated June 3,1994.

On January 9, 2007, the Company ammended its Articles of Association which were covered by Notarial Deed of Linda Herawati S.H., No. 16 concerning about the change in the Company’s status from Domestic Capital Investment to Foreign Capital Investment.

Based on various letters and permits secured by the Company from local, regional and national government agencies, the Company may develop 25,700 hectares of palm oil plantations in Ogan Komering Ilir, South Sumatera, consisting of 7,200 hectares of its own plantations (referred to as the Nucleus or “Inti”) and 18,500 hectares of Plasma plantations with milling capacity of up to 360 tonnes of fresh fruit bunches per hour. The land right certificate (“Hak Guna Usaha”) for 3,243 hectares of Inti plantations will expire in 2037 but can be renewed up to 2097.

The Company commenced its commercial operations in November 1998 and its head office is located at Jalan Basuki Rahmat No. 788, Palembang, South Sumatera.

b. Subsidiaries

On January 26, 2007, the Company acquired 100% shares of Palma Agro Ltd. (PAL), whereas PAL owned 93.6% shares in PT Sungai Rangit.

On March 30, 2007, the Company acquired 99% shares of PT Sawit Selatan, PT Tania Binatama, PT Sungai Menang, PT Selatanjaya Permai, PT Usaha Agro Indonesia and PT Pertiwi Lenggara Agromas. On March 31, 2007, those Companies are still in development stage.

1. GENERAL (continued) b. Subsidiaries (continued)

The Company’s investment in Subsidiaries after above mentioned acquisitions consist of the following:

Total assets

Percentage of ownership (before elimination)

interest (in million Rp)

Comercial

Subsidiaries operations 2007 2006 2005 2004 2007 2006 2005 2004

PT Telaga Hikmah

("Telaga Hikmah”) 1998 99.45% 99.45% 99.45% 99.45% 213,681 210,751 202,039 199,227 PT Aek Tarum ("Aek Tarum”) 1992 99.00% 99.00% 99.00% 99.00% 131,278 140,834 136,589 119,660 PT Gunung Tua Abadi

("Gunung Tua Abadi”) 1999 98.97% 98.97% 98.97% 98.97% 87,194 84,883 86,477 80,017 PT Mutiara Bunda Jaya

("Mutiara Bunda Jaya”) 2001 99.01% 99.01% 99.01% 99.01% 99,717 152,718 156,901 140,572 PT Binasawit Makmur

(“Binasawit Makmur”) 1999 99.00% 99.00% 99.00% 99.00% 48,416 44,794 43,465 23,100 PT Sawit Selatan

(“Sawit Selatan”) *) - 99.00% - - - 200 - - - PT Sungai Menang

(“Sungai Menang”) *) _{- 99.00% - - - 228 - - -}

PT Tania Binatama

(“Tania Binatama”) *) _{- 99.00% - - - 204 - - -}

PT Selatanjaya Permai

(“Selatanjaya Permai”) *) - 99.00% - - - 200 - - - PT Usaha Agro Indonesia

(“Usaha Agro Indonesia”) *) - 99.00% - - - 255 - - - PT Pertiwi Lenggara Agromas

(“Pertiwi Lenggara Agromas”) *) _{- 99.00% - - - 130 - - -}

Palma Agro Limited, Republic of Seychelles

(“Palma Agro”) - 100.00% - - - 487,953 - - - Palma Agro directly owns shares

In the following subsidiary: PT Sungai Rangit

(“Sungai Rangit”) 1997 93.60% - - - 458,175 - - -

*)

Company still in development stage

Summary of operational activities in Subsidiaries:

Maximum capacity of palm oil mill (tonnes of fresh fruit

Subsidiaries Activities bunches per hour)

Aek Tarum Palm oil and rubber plantations and

palm oil mill operations 60

Mutiara Bunda Jaya Palm oil plantations and palm oil mill operations 80 Telaga Hikmah Palm oil plantations and palm oil mill operations 60 Sungai Rangit Palm oil plantations and palm oil mill operations 30

Gunung Tua Abadi Palm oil plantations -

Binasawit Makmur Palm oil plantations and palm oil seedling -

Palma Agro Holding company and management services -

Rubber plantations and palm oil seedling are located in South Sumatera, while palm oil plantations and palm oil mills are located in South Sumatera and Central Kalimantan.

1. GENERAL (continued) b. Subsidiaries (continued)

The details of subsidiaries land right areas, totaling 49,069.09 hectares, are as follows :

Subsidiaries Hectares Valid until

Aek Tarum 2,189.70 August 16, 2096 *

2,579.90 August 22, 2096 *

825.70 July 6, 2040

0.75 January 24, 2020

Mutiara Bunda Jaya 552.24 May 14, 2097 *

1,268.50 September 17, 2098 *

102.00 November 23, 2039 *

2,790.00 July 6, 2040

73.21 August 6, 2031

Telaga Hikmah 2,668.50 December 31, 2082 *

7,175.60 January 12, 2099

126.00 November 23, 2039

6,034.20 July 6, 2040

Gunung Tua Abadi 3,390.00 April 30, 2098 *

1,642.00 November 23, 2039

Binasawit Makmur 588.97 September 21, 2097 *

Sungai Rangit 13,118.00 September 29, 2036

0.32 September 24, 2030

903.45 March 8, 2036

469.01 June 18, 2038

435.23 September 24, 2038

2,135.81 September 24, 2039

*) Already obtained approval for an extention of 25 years and a renewal for another 35 years.

c. Employees, directors and commissioners

Based on Circular Resolution of Shareholders as covered by Notarial Deed of Sutjipto, S.H. M.Kn. No. 235 dated May 25, 2007, the composition of commissioners and directors of the Company is as follows:

Board of Commissioners: Board of Directors:

Michael Joseph Sampoerna - President Commissioner Goh Cheng Beng - President Director

Ekadharmajanto Kasih - Commissioner Ali Gunawan Budiman - Director

Sugiarta Gandasaputra - Commissioner Yasin Chandra - Director

Phang Cheow Hock - Independent Commissioner Chang Poh Sang - Director

Arief Tarunakarya Sie Eddy Kurniawan - Director

Surowidjojo - Independent Commissioner

On March 31, 2007, December 31, 2006, 2005 and 2004, the Group had 4,127, 2,257, 2,336 and 2,356 permanent employees, respectively (unaudited).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies adopted by the Group conform to generally accepted accounting principles in Indonesia. The significant accounting principles applied consistently in the preparation of the consolidated financial statements for the three months period ended March 31, 2007 and years ended December31, 2006, 2005 and 2004 are as follows:

a. Basis of preparation of consolidated financial statements

The consolidated financial statements have been prepared in accordance with accounting and practices generally accepted in Indonesia, which includes Statements of Financial Accounting Standards (PSAK) issued by the Indonesian Institute of Accountants and Regulations and Guidelines on Financial Statements Presentation set out by the Capital Market Supervisory Agency (BAPEPAM).

The consolidated financial statements, presented in thousands of Rupiah unless otherwise stated, have been prepared on accrual basis, except for statements of cash flows, and using historical costs, except for inventories that are valued at the lower of cost or net realizable values and certain items of fixed assets and mature plantations which were revalued on April 30, 2003. The consolidated statements of cash flows present cash receipts and payments classified into operating, investing and financing activities, and are presented using the direct method.

The reporting currency used in the preparation of the consolidated financial statements is in Rupiah, except for PAL, which has adopted the US Dollar as its fuctional, reporting and recording currency since January 1, 2007. For consolidation purposes, the accounts of PAL are translated into Rupiah amounts on the following basis:

Balance sheet accounts : Prevailing rate of exchange as published by Bank Indonesia at the last banking day as of March 31, 2007 amounting to Rp9,118 (full amount) per US$1.

Income statement accounts : The exchange rates prevailing at the date of transactions.

Gains or losses arising from translation of balance sheet and income statements accounts are presented as “Difference in Foreign Currency Translation” in the equity section of the consolidated balance sheet.

b. Basis of consolidation

The consolidated financial statements include the Company’s financial statements and all subsidiaries' financial statements that are controlled by the Company. Control is presumed to exist where more than 50%, directly or indirectly of a subsidiary's voting power, is controlled by the Company; or where the Company is able to govern the financial and operating policies of a subsidiary; or control the removal or appointment of a majority of a subsidiary's board of directors. Significant inter-company balances and transactions, including unrealized profit (loss), have been eliminated to present the financial position and results of operations of the Company and subsidiaries as a single economic entity.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) b. Basis of consolidation (continued)

The proportionate share of the minority shareholders in the equity of the subsidiaries is presented in “Minority Interest in Net Assets of Subsidiaries” in the consolidated balance sheets. When cumulative losses applicable to minority interest exceed the minority shareholders’ interest in the subsidiaries’ equity, the excess is charged against the majority shareholders’ interest, except in rare cases when minority shareholders have a binding obligation to make good on such losses and minority shareholders able to cover those losses. Subsequent profits earned by Subsidiaries under such circumstances that are applicable to the minority interest shall be allocated to the majority interest to the extent minority losses previously absorbed have been fully recovered.

c. Foreign currency transactions and balances

Transactions in currencies other than Rupiah are recorded at the prevailing exchange rates in effect on the date of the transactions.

As of the balance sheet dates, all foreign currency monetary assets and liabilities are translated at the middle exchange rates quoted by Bank Indonesia on those dates. The resulting net foreign exchange gains or losses are recognized in the current period’s statement of income.

The exchange rates used as of March 31, 2007, December 31, 2006, 2005 and 2004 were Rp9,118, Rp9,020, Rp9,830, and 9,290 per US$1 (full amount), respectively.

d. Revenue and expense recognition

Revenue from sale of goods is recognized when the significant risks and rewards of ownership of the goods have been passed to the buyer.

Expenses are recognized when these are incurred (accrual basis) .

e. Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and in bank, and short-term deposits with maturities within three (3) months or less and not pledged as collateral.

f. Inventories

Inventories are stated at the lower of cost or net realizable value.

Cost is determined using the weighted average method and comprises all costs of purchase, costs of conversion and appropriate overheads incurred in bringing the inventory to its present location and condition.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated cost necessary to make the sale.

The Group determines allowance for inventory obsolescence based on a review of the status of individual inventories at the end of the period.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) g. Prepaid expenses

Prepaid expenses are charged to operations over the periods benefited using straight-line method of amortization.

h. Plantation assets

Plantation assets are classified as immature plantations and mature plantations. Immature plantation

All costs relating to the development of the palm oil and rubber plantations for the Group’s own operations (Inti plantations) together with a portion of indirect overheads, including general and administrative expenses incurred, and also interest expenses from loan used in developing immature plantation are capitalized until commercial production is achieved. These costs will be transferred to mature plantations and amortized over the estimated 20 years productive lives of the palm oil and rubber plantations, starting from the commencement of commercial production. Mature plantation

In general, palm oil plantations are considered mature four years after planting and rubber plantations are considered mature five to six years after planting. Actual time to maturity is dependent upon vegetative growth and is assessed by management.

Mature plantations are stated at cost, except for certain mature plantations which are stated at revalued amounts, less accumulated amortization.

i. Fixed assets

Fixed assets are stated at cost, except for certain fixed assets which are stated at revalued amounts, less accumulated depreciation.

Fixed assets, except land, are depreciated using the straight-line method over their estimated useful lives as follows:

Years

Buildings 20

Infrastructures 20

Storage tanks 16

Machinery and equipments 12

Vehicles and heavy equipments 4-8

Office equipments 4-8

Since January 1, 2004, the Group, except Sungai Rangit, changed its depreciation method from the double-declining balance method to the straight-line method for vehicles and heavy equipment and office equipment. The revision to the depreciation method and estimated useful lives was based on a review of the future economic lives of such assets in connection with the revaluation of certain fixed assets of the Company and management’s opinion that the revised depreciation approach more appropriately reflects the utilization of such assets over their estimated economic lives.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) i. Fixed assets (continued)

The cost of repairs and maintenance is charged to expense as incurred; significant renewals or betterments are capitalized. Interest expenses incurred in relation with loan used in constructing the assets are capitalized. When assets are retired or otherwise disposed of, their carrying value and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the current period’s statements of income.

Construction in progress represents the accumulated cost of materials and other costs related to the asset under construction until it is ready to be used. When the asset is complete and ready for its intended use, these costs are transferred to the relevant accounts.

j. Impairment of assets

The recoverable amount of an asset is estimated whenever events or changes in circumstances indicate that its carrying amount may not be fully recoverable. Impairment in asset value, if any, recognized as loss in the current year’s statement of income, unless assets are carried at revalued amounts. Impairment losses on revalued assets are recognized directly against the “Assets Revaluation Increment” for the related assets to the extent that the impairment losses do not exceed the amounts recognized in the assets revaluation increment attributable to such assets. The amount of an impairment loss for a revalued asset which exceeds the amount of the “Assets Revaluation Increment” attributable to such asset is recognized in the current period’s statements of income.

k. Advances (investment credit) for Plasma plantations

Plasma plantations is an Indonesian Government policy to develop the plantations on mutual agreements with smallholders or cooperatives. Group (referred to as “Inti”) can acquire land rights to develop plantations only if they develop plantations for smallholders (Plasma participants) in addition to their own plantations. Inti are required to assist and supervise smallholders in technical matters relating to the plantation and to purchase the fresh fruit bunch (FFB) produced by Plasma plantations at prices determined by the Indonesian Government.

Once developed, the Plasma plantations are transferred to the smallholders at a conversion rate determined by the Government, and where the conversion price might be lower than the carrying value of the Plasma plantation transferred. Therefore, Group determine the allowance for loss on conversion based on a periodic review of the estimated difference between the carrying value of the Plasma plantation and the conversion value. The Plasma farmers are required to sell the fresh fruit bunch to Inti.

Advances for Plasma plantations represent accumulated costs incurred including borrowing costs and indirect overhead costs to develop Plasma areas deducted mainly by the investment credit obtained from the bank. When a Plasma plantation is complete and ready to be transferred or turned-over to the Plasma farmers, the corresponding investment credit from the bank is also transferred to the farmers. The difference between the carrying value of the Plasma plantation and the related investment credit transferred is recognized as gain or loss and is reflected in current period’s statements of income.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) l. Nursery

Cost incurred in the preparation of the nursery, purchase of seedlings and their maintenance are stated at cost. The accumulated cost are transferred to “Immature Plantations” account at the time of planting.

m. Deferred land right cost and Deferred charges

Costs incurred in relation to obtain land rights in the form of “Hak Guna Usaha” (HGU) and “Hak

Guna Bangunan” (HGB) are recorded as “Deferred land right cost”, which are amortized on a

straight-line basis over the term of the related land rights.

Fees incurred in obtaining long-term loan facilities are deferred as part of “Deferred charges”, which are amortized on a straight-line basis over the term of the related facilities. If the Company effectively in a technical or payment default position, which has the consequences that the principle amount of the debt together with accrued interest will become due and payable, the related deferred long-term bank loan administration costs are charged to current operations. Costs and expenses incurred in connection with Initial Public Offering plan are capitalized and recorded as part of “Deferred Expenses” and will be deducted directly from the additional paid in capital resulting from the Initial Public Offering.

n. Leases

Lease transactions are accounted for under the capital lease method if all of the following criteria are met:

(i) The lessee has an option to purchase the leased assets at the end of the lease period at a price mutually agreed upon at the commencement of the lease agreement.

(ii) Total periodic payments plus residual value fully cover the acquisition cost of leased capital goods plus interest there on which is the lessor’s profit.

(iii) Lease period covers a minimum of two years.

Lease transactions that do not meet all of the criteria mentioned above are accounted for under the operating lease method.

Assets under capital leases are recognized at the present value of the lease payments at the beginning of the lease term including residual value (option price) to be paid at the end of the lease period. The related lease liabilities are presented in the balance sheet as “Obligation under capital leases”. Depreciation is computed based on the same policies as for fixed assets.

o. Corporate income tax

Current tax expense is provided based on the estimated taxable income for the year. Deferred tax assets and liabilities are recognized for temporary differences between the financial and the tax bases of assets and liabilities at each reporting date. This method also requires the recognition of future tax benefits, such as the carry-forward of unused tax losses, to the extent that realization of such benefits is probable.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) o. Corporate income tax (continued)

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Amendments to tax obligations are recorded when an assessment is received or, if appealed against by the Group, when the result of the appeal is determined.

p. Provision for employee service entitlements

The Group has applied Statement of Financial Accounting Standards (SFAS) No. 24 (Revised 2004), “Employees’ Benefits” to recognize employee benefits liabilities in accordance with Labor Law No. 13/2003 dated March 25, 2003 (the Law). This statement requires the Company to provide all employee benefits under formal and informal plans or agreements, under legislative requirements or through industry arrangements, including post-employment benefits, short-term and other long-term employee benefits, termination benefits and equity compensation benefits. The calculation of liability of employees benefits based on the Law is determined using the “Projected Unit Credit” actuarial method. Actuarial gains or losses are recognized as income or expense when the net cumulative unrecognized actuarial gains and losses at the end of the previous reporting year exceeded 10% of the defined benefit obligation at that date. These gains or losses are recognized on a straight-line basis over the expected average remaining working lives of the employees.

q. Transactions with related parties

The Group have transactions with entities which are regarded as having a special relationship as defined under SFAS No. 7, “Related Party Disclosure”. Significant transactions with related parties, whether or not conducted under normal terms and conditions similar to those with non-related parties are disclosed in the notes to consolidated financial statements.

r. Use of estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimations and assumptions that affect amounts reported therein. Due to the inherent uncertainty in making estimates, actual results reported in future periods may be based on amounts that differ from those estimates.

s. Restructuring under common control

Restructuring transactions of entities under common control are accounted for in accordance with PSAK No. 38, “Accounting for Restructuring of Entities under Common Control”. Under this standard, transactions between entities under common control are carried out within the framework of reorganizing entities under the same group and does not constitute a change of ownership based on the economic substance of such transactions, thus, no gain or loss is recognized in the group or to the individual entity within the same group. The underlying object of the restructuring transaction must be recorded at its book value and such transaction is accounted for as a business combination using the pooling-of-interests method. Under the pooling-of-interest method, the financial statements of the restructured company is presented as if the acquired

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) s. Restructuring under common control (continued)

The difference between the par value of issued share capital or cash payment made by the Company to acquire the Subsidiaries with the Company’s interests in the net assets of such Subsidiaries is recognized as “Difference in the Value of Restructuring Transactions of Entities Under Common Control”, a component of shareholders’ equity. The difference in value of restructuring transactions of entities under common control resulting from past acquisition of Subisidiaries is realized to the related accounts in accordance with SFAS No. 22 “Accounting for Business Combination” when the transacting parties are no longer under common control.

t. Troubled debt restructuring

Troubled debt restructuring is recorded in accordance with SFAS No. 54, “Accounting for Troubled Debt Restructuring”. Net gain arising from trouble debt restructuring is presented as the “Extraordinary Item”, net of the related income tax effect.

u. Segment information

The primary segment information of the Company and Subsidiaries is presented based business segments since the financial information used by management in evaluating the performance and determining the allocation of resources is based on the segment information relating to CPO, PK and other by-products. These segments are considered by management to have significant effects on the Group’s risks and rates of return. In relation to the acquisition of Palma Agro, there is secondary segment information. Sungai Rangit, the operating subsidiary of Palma Agro, has the business operations in Central Kalimantan, while the Company’s and other Subsidiaries have the business operations in South Sumatera.

v. Basic net earnings (loss) per share

Basic net earnings (loss) per share is computed by dividing net income with the weighted average number of shares outstanding during the year, after considering retroactive effect of a stock split which took place on April 13, 2007 and a distribution of shares bonus from “Asset Revaluation Increment" on September 18, 2006 (Note 18), amounting to 1,428,650,000 shares in 2007, 2006, 2005 and 2004. . The Company does not have securities with potential dilutive effects. Therefore, fully diluted earnings per share is not computed.

3. ACQUISITION OF SUBSIDIARIES Acquisition of Palma Agro Ltd. (PAL)

On January 26, 2007, the Company acquired 100% ownership interest in PAL from Carlton Services Limited and Mayfair Trust Group with a purchase price amounting to US$59,000,000 or equivalent to Rp538,139,000. PAL is a holding company, established in Republic of Seychelles, and owns 93.6% shares of Sungai Rangit, another company engaged in palm oil plantation in Central Kalimantan. The Company, Carlton Services Limited and Mayfair Trust Group were considered as entities under common control. Accordingly, this transaction has been accounted for in accordance with PSAK No. 38 “Accounting for Restructuring of Entities under Common Control” as described in Note 2s. The difference between PAL’s book value (after taking up the carrying value of its investment in Sungai Rangit) with the purchase price amounting to Rp275,971,501, was presented as part of equity in the 2007 consolidated balance sheet as part of the account “Difference in the value of restructuring transactions of entities under common control”

The details arising from the acquisition of PAL is computed as follows:

Net book value of assets acquired 262,167,499

Difference in the value of restructuring

transactions of entities under common control 275,971,501

Purchase price, financed by bank loan (Note 15) 538,139,000

Cash balance received from the acquisition 12,970,290

The audited accounts of PAL and Sungai Rangit as of December 31, 2006 were used as the basis to determine the net book value of their assets for the above calculation The accounts of PAL and Sungai Rangit in 2006 and prior periods were not retroactively consolidated to the acounts of the Company since PAL and Sungai Rangit, together with the Company, were not under common control during those periods.

Acquisition of PT Sawit Selatan, PT Tania Binatama, PT Sungai Menang, PT Selatanjaya Permai, PT Pertiwi Lenggara Agromas and PT Usaha Agro Indonesia

On March 30, 2007, the Company acquired 99% ownership interest in six (6) non-operating companies (hereafter named Subsidiaries), which own land permits to develop plantation, as follows:

a. PT Sawit Selatan, PT Tania Binatama, PT Sungai Menang, PT Selatanjaya Permai were acquired from PT Nitiagro Lestari, a Company’s shareholder, with the purchase price amounting to Rp3,465,000.

b. PT Pertiwi Lenggara Agromas was acquired from PT Wahana Sekar Agro and PT Berkah Sawitri Nusantara with purchase price amounting to Rp4,950.

c. PT Usaha Agro Indonesia was acquired from Hendra Prasetya and Aris Budiraharjo with purchase price amounting to Rp4,950.

Prior to the acquisition by the Company, those companies except for PT Usaha Agro Indonesia (UAI) were under common control of Sampoerna Group. Accordingly, these transactions have been accounted for in accordance with PSAK No. 38 “Accounting for Restructuring of Entities under Common Control” as described in Note 2s. There is no difference between purchase price and the carrying value of the investment of Sampoerna Group in these Subsidiaries. The goodwill totaling to Rp9,267,695, which resulted from the initial acquisition of these companies (except UAI) by

3. ACQUISITION OF SUBSIDIARIES (continued)

Acquisition of PT Sawit Selatan, PT Tania Binatama, PT Sungai Menang, PT Selatanjaya Permai, PT Pertiwi Lenggara Agromas and PT Usaha Agro Indonesia (continued)

Purchase of UAI was accounted for using purchase method, which resulted to goodwill amounting to Rp162, that will be amortized over 5 years.

The cash flows arising from the acquisitions of those companies are as follows:

Total assets 842,283

Total liabilities (6,635,241)

Net book value of assets acquired (5,792,958)

Goodwill obtained from initial acquisition by the Sampoerna Group

and goodwill UAI 9,267,858

Total purchase price 3,474,900

Less: cash balance received from acquisition (9,683)

Payments for the acquisitions, net of cash

balance of acquired subsidiaries received from acquisition 3,465,217

The audited accounts of those newly acquired subsidiaries as of December 31, 2006 were used as the basis to determine net book value of their assets for the above calculation.

The accounts of 6 Subsidiaries mentioned above in 2006 and prior periods were not retroactively consolidated to the accounts of the Company since these Subsidiaries together with the Company were not under common control during those periods.

4. CASH AND CASH EQUIVALENTS

December 31,

March 31, 2007 2006 2005 2004

Cash on hand 461,537 307,483 359,371 190,390

Cash in banks: Rupiah

PT Bank Mandiri (Persero) Tbk 31,256,886 10,962,003 4,000,171 7,024,869

PT Bank Rakyat Indonesia

(Persero) Tbk 2,086,395 2,464,217 6,318,131 822,466

PT Bank Central Asia Tbk 1,431,143 - - -

PT Bank Negara Indonesia

(Persero) Tbk 52,181 3,433 - -

PT Bank Danamon Indonesia Tbk 46,971 1,628 - -

PT Bank UOB Buana Tbk (formerly

PT Bank Buana Indonesia Tbk) 29,389 27,778,519 11,763,812 22,795,908

PT Bank Pembangunan Daerah 18,328 - - -

PT Bank Sumatera Selatan - - - 490

US Dollar

PT Bank Mandiri (Persero) Tbk 30,793,858 9,933,332 110,123 298,658

PT Bank UOB Buana Tbk (formerly

4. CASH AND CASH EQUIVALENTS (continued)

December 31,

March 31, 2007 2006 2005 2004

Time deposits: Rupiah

PT Bank Negara Indonesia (Persero) Tbk 1,000,000 - - -

PT Bank Mandiri (Persero) Tbk 18,460 - - 21,000,000

PT Bank UOB Buana Tbk (formerly

PT Bank Buana Indonesia Tbk) - - - 27,000,000

US Dollar

PT Bank UOB Buana Tbk (formerly

PT Bank Buana Indonesia Tbk) - - 108,130 1,960,190

Total 67,888,263 64,237,583 23,146,082 81,515,100

Average annual interest rates on time deposits were as follows:

2007 2006 2005 2004

Time deposits in Rupiah 7.92% 10.56% 9.25% 5.91%

Time deposits in US Dollar 3.81% 3.67% 1.95% 0.71%

The restricted time deposits, which were recorded as part of “Guarantee Deposits” in 2007, 2006, 2005 and 2004 consolidated balance sheets, mainly consist of cash placed to guarantee sales transactions, bank loans and past years tax liabilities of a newly acquired Subisdiary . The details of restricted time deposits are as follows:

December 31,

March 31, 2007 2006 2005 2004

Sungai Rangit 15,847,654 - - -

Mutiara Bunda Jaya 9,684,000 40,000 2,006,000 40,000

Telaga Hikmah 6,563,500 1,338,500 873,500 -

Aek Tarum - - 3,281,000 3,281,000

The Company - - 1,970,000 1,970,000

Gunung Tua Abadi - - 250,000 250,000

Total 32,095,154 1,378,500 8,380,500 5,541,000

5. TRADE RECEIVABLES – THIRD PARTIES

December 31,

March 31, 2007 2006 2005 2004

PT Sari Dumai Sejati 7,754,659 - - -

PT Kalimantan Sawit Kusuma 3,657,913 - - -

Pacific Rim Plantation Services Pte. Ltd. - 168,936 - -

PT Sutomo Agrindo Mas - - 457,257 -

PT Sinar Jaya Inti Mulya - - 760,146 -

Plantation Officials - - - 515,219

Others 70,000 250,000 - -

Total 11,482,572 418,936 1,217,403 515,219

5. TRADE RECEIVABLES – THIRD PARTIES (continued)

Trade receivables in foreign currency amounted to US$18,729 in 2006. All trade receivables will due in 30 days.

Management believes that all trade receivables are fully collectible, and no provision for losses is necessary.

6. OTHER RECEIVABLES

December 31,

March 31, 2007 2006 2005 2004

Third parties:

Loan to employees 426,602 633,343 464,182 294,997

Due from Plasma participants 145,536 156,559 113,649 12,215

Interest receivable - - - 153,656

Others (Note 13g) 4,149,419 322,770 278,072 306,118

Total 4,721,557 1,112,672 855,903 766,986

Related parties

Venture Max Resources Pte., Ltd.,

Singapore (Notes 15 and 25d) 159,610,590 - -

PT Sampoerna Bio Energi (Note 25e) 17,299,736 - - -

Total 176,910,326 - - -

Management believes that all other receivables are fully collectible, and hence no provision for loss allowance is necessary.

7. INVENTORIES

December 31,

March 31, 2007 2006 2005 2004

Finished goods:

Crude palm oil (CPO) 7,465,624 10,975,748 55,169,586 5,269,631

Palm kernel (PK) 2,760,153 1,847,118 9,405,756 3,510,337

Finished goods of CPO and PK

(Note 20) 10,225,777 12,822,866 64,575,342 8,779,968

Fertilizers, spare parts and

maintenance supplies 28,359,163 17,931,371 30,693,900 12,936,029

Germinated seeds (Note 20) 4,488,480 5,227,965 5,803,019 2,131,189

Fresh fruit bunches (FFB) (Note 20) 615,184 637,740 420,863 446,404

Rubber slabs and clumps 100,231 88,395 315,809 477,972

Goods in transit - - 400,540 33,979

Total 43,788,835 36,708,337 102,209,473 24,805,541

7. INVENTORIES (continued)

As of March 31, 2007, December 31, 2006, 2005 and 2004, all inventories were covered by insurance against losses from fire and other risks under blanket policies with insurance coverage totalling Rp148,782,073, Rp114,782,073, Rp78,896,992 and Rp109,042,393, respectively, which in the management’s opinion is adequate to cover possible losses from such risks.

Management believes that inventories are realizable, hence no provision for inventory obsolescence is necessary.

8. ADVANCES FOR PLASMA PLANTATIONS – NET

December 31,

March 31, 2007 2006 2005 2004

Advances for Plasma plantations

Beginning balance 47,715,493 40,804,323 46,934,129 72,695,734

Additions:

Development cost 1,242,684 10,081,705 8,086,284 5,289,669

Capitalized expenses (Note 22) 89,843 1,313,181 2,292,379 2,369,673

Deductions:

Plasma plantations transferred to Plasma participants at

the conversion price - (4,483,716) (13,652,863) (20,449,576)

Excessive advances over

the conversion price - - (2,855,606) (12,971,371)

Ending balance 49,048,020 47,715,493 40,804,323 46,934,129

Provision for Plasma plantations

Beginning balance 2,077,830 2,077,830 4,817,827 17,789,198

Addition - - 115,609 -

Write-off of the excessive advances - - (2,855,606) (12,971,371)

Ending balance 2,077,830 2,077,830 2,077,830 4,817,827

Advances, net after provision 46,970,190 45,637,663 38,726,493 42,116,302

Investment credit

Beginning balance 7,518,816 13,490,600 24,851,084 42,930,987

Addition: Capitalized interest (Note 22) 89,843 1,313,181 2,292,379 2,369,673

Refund to the Bank (7,608,659) (2,801,249) - -

Assigned to Plasma participants - (4,483,716) (13,652,863) (20,449,576)

Ending balance - 7,518,816 13,490,600 24,851,084

Net 46,970,190 38,118,847 25,235,893 17,265,218

Advances for Plasma plantations

Management believes that the provision for Plasma plantations is adequate to cover possible losses arising from unrecoverable Plasma plantations.

The Company is developing Plasma plantations under an “Anak Angkat Bapak Angkat” (AABA) scheme and financed in the form of “Kredit Usaha Kecil” (KUK) and “Kredit Koperasi Primer untuk

8. ADVANCES FOR PLASMA PLANTATIONS – NET (continued)

Aek Tarum and Mutiara Bunda Jaya are or have been involved in Plasma schemes implemented under Indonesian Government guidelines whereby companies assume responsibility for developing plantations to the productive stage for transfer to Plasma participants under a PIR-Trans

(“Perkebunan Inti Rakyat - Transmigrasi”) scheme.

Telaga Hikmah has been developing Plasma plantation under KKPA scheme.

Once the plantation areas reach the production stage, these areas will be transferred to Plasma participants who will receive two hectares each.

The Company

The Plasma plantations costs as of March 31, 2007, represent the cost of development of 1,316 (2006: 1,316, 2005: 1,142 and 2004:1,094) hectares of Plasma areas, for approximately 658 (2005: 571 and 2004: 547) Plasma participants. The Company, on behalf of Plasma participants, is in the process of obtaining bank financing for the new Plasma areas through the “Kredit Koperasi Primer

Anggota” program.

Mutiara Bunda Jaya

Mutiara Bunda Jaya is involved in developing 8,296 hectares of Plasma palm oil plantations for 4,273 farmers in the vicinity of the Inti plantation area. Following approval from PT Bank Rakyat Indonesia (Persero) Tbk (BRI), the Company has transferred Plasma loan facility to Plasma participants amounting to Rp5,517,088 for 560 hectares to 280 Plasma participants in 2005 and amounting to Rp20,449,576 for 2,308 hectares to 1,154 Plasma participants in 2004.

The write-off of provision for Plasma plantations in 2005 and 2004 represents the excess of Plasma development cost over the amount of Plasma loan (investment credit) assigned to Plasma participants, resulting in a realized loss of Rp2,855,606 and Rp12,971,371, respectively.

Telaga Hikmah

Advances for Plasma plantations in which Telaga Hikmah represent expenditures related to the development of Plasma palm oil plantations still in the development stage. Based on the restructuring agreement between the Telaga Hikmah and Bank Rakyat Indonesia (Persero) Tbk (BRI) No. R.479-MEN/DPB/AKH/08/2000 dated August 21, 2000, Telaga Hikmah’s commitment to develop Plasma areas was reduced from 15,000 hectares to 5,000 hectares. As of March 31, 2007, Telaga Hikmah had planted 3,684 hectares for 1,842 Plasma participants.

Following approval from BRI, the Company has transferred Plasma loan facility to Plasma participants amounting to Rp4,483,716 for 248 hectares to 124 Plasma participants in 2006 and amounting to Rp8,135,775 for 450 hectares to 225 Plasma participants in 2005.

8. ADVANCES FOR PLASMA PLANTATIONS – NET (continued) Investment credit

PT Bank Rakyat Indonesia (Persero) Tbk (BRI)

On November 1, 1989 and May 28, 1996, Mutiara Bunda Jaya and Telaga Hikmah obtained Plasma loans from BRI for the development of 8,238 hectares and 15,000 hectares of Plasma palm oil plantations, respectively. The maximum Plasma loan facilities for Mutiara Bunda Jaya and Telaga Hikmah were Rp72,673,158 (including interest during the four years grace period amounting to Rp25,650,000) and Rp112,068,000 (including interest during construction of Rp40,955,400), respectively. Mutiara Bunda Jaya’s Plasma loan is to be repaid through 2001 and the loan facility for Telaga Hikmah is to be repaid within 16 years through December 31, 2012, including a grace period of seven years through March 31, 2003.

Mutiara Bunda Jaya

On January 29, 2003, BRI through Letter No. R.063-ADK/DKR/01/2003, approved a restructuring program for its Plasma loan to Mutiara Bunda Jaya. Under this restructuring program, the conversion of Plasma areas of 8,238 hectares of Plasma palm oil plantations to 4,273 smallholders is due to be fully made by December 31, 2003. As of December 31, 2005, Mutiara Bunda Jaya has not converted Plasma area of 310 hectares. In this regard, BRI asked MBJ to repay the corresponding Plasma loan amounting to Rp2,801,249 which was fully settled in March 2006.

As of March 31, 2007, Mutiara Bunda Jaya is still in the process of negotiation with Plasma participants to convert the area by using local government assistance as mediator.

In 2005 and 2004, Mutiara Bunda Jaya has transferred Plasma loan facility to Plasma participants amounting to Rp5,517,088 and Rp20,449,576, respectively. As of March 31, 2007, total Plasma loan had been transferred to plasma participants amounting to Rp69,871,909.

The Plasma loan bears annual interest at the rate of 14% in 2006 and 2005 and between 15.75% to 16% in 2004.

Telaga Hikmah

On August 21, 2000, BRI through Letter No. R.479-MEN/DPB/AKH/08/2000, approved a restructuring program for its Plasma loan in Telaga Hikmah. Under the restructuring arrangement, the maximum facilities were changed from Rp112,068,000 to Rp101,646,000 which consists of principal of Rp53,796,000 and interest during construction of Rp47,850,000. The commitment for Plasma development under the loan was reduced from 15,000 hectares to 5,000 hectares. Under this restructuring program, the conversion of Plasma areas to smallholders is due to be made by December 31, 2004. The loan is to be repaid by Plasma participants on a quarterly basis within five years, commencing in the first quarter of 2007. The Plasma loan bears floating interest rates ranging from 12% to 14% in 2006, from 12% to 15% in 2005 and 14.62% to 17.02% in 2004.

The loan is to be repaid by Plasma participants on a quarterly basis within five years, commencing in the first quarter of 2007. The Plasma Loan bears floating interest rates ranging from 12% to 14% in 2006 from 12% to 15% in 2005 and 14.62% and 17.02% in 2004.

In 2006 and 2005, Telaga Hikmah has transferred Plasma loan facility to Plasma participants amounting to Rp4,483,716 and Rp8,135,775, respectively. As of March 31, 2007, total Plasma loan had been transferred to plasma participants amounting to Rp94,127,184.

9. PLANTATION ASSETS

Plantation assets are classified as immature and mature plantations.

a. Mature plantations

March 31, 2007

Beginning Ending

balance Additions Deduction balance

At cost:

Palm oil plantations 186,665,552 391,698,581 - 578,364,133

Rubber plantations 1,022,560 - - 1,022,560

Total 187,688,112 391,698,581 - 579,386,693

Accumulated amortization:

Palm oil plantations 59,739,021 47,801,430 - 107,540,451

Rubber plantations 306,768 12,782 - 319,550

Total 60,045,789 47,814,212 - 107,860,001

Net book value 127,642,323 471,526,692

December 31, 2006

Beginning Ending

balance Additions Deduction balance

At cost:

Palm oil plantations 180,870,239 5,795,313 - 186,665,552

Rubber plantations 1,022,560 - - 1,022,560

Total 181,892,799 5,795,313 - 187,688,112

Accumulated amortization:

Palm oil plantations 50,426,912 9,312,109 - 59,739,021

Rubber plantations 255,640 51,128 - 306,768

Total 50,682,552 9,363,237 - 60,045,789

Net book value 131,210,247 127,642,323

December 31, 2005

Beginning Ending

balance Additions Deduction balance

At cost:

Palm oil plantations 170,400,570 10,469,669 - 180,870,239

Rubber plantations 1,022,560 - - 1,022,560

Total 171,423,130 10,469,669 - 181,892,799

Accumulated amortization:

Palm oil plantations 41,638,286 8,788,626 - 50,426,912

Rubber plantations 204,512 51,128 - 255,640

Total 41,842,798 8,839,754 - 50,682,552

9. PLANTATION ASSETS (continued) a. Mature plantations (continued)

December 31, 2004

Beginning Ending

balance Additions Deduction balance

At cost:

Palm oil plantations 170,400,570 - - 170,400,570

Rubber plantations 1,022,560 - - 1,022,560

Total 171,423,130 - - 171,423,130

Accumulated amortization:

Palm oil plantations 32,165,173 9,473,113 - 41,638,286

Rubber plantations 153,384 51,128 - 204,512

Total 32,318,557 9,524,241 - 41,842,798

Net book value 139,104,573 129,580,332

Additions to mature plantations in 2007 included Palma Agro’s acquisition cost of Sungai Rangit’s mature plantations amounting to Rp13,305,714 net of amortization of Rp665,286. It also included Sungai Rangit’s beginning balance of mature plantations which was as follows:

Cost 275,074,607

Accumulated depreciation (39,902,712)

Net book value 235,171,895

Additions to mature plantation in 2007, included the realization of the difference in value of restructuring transactions of entities under common control amounting to Rp99,293,758 due to changes in controlling shareholders (Note 2s and 31).

Sungai Rangit has Partnership Plantation with carrying value of Rp47,458,719 (1,809 ha) as of March 31, 2007 (Note 27f).

b. Immature plantations

The immature plantations represents costs incurred relating to the development of the Group’s palm and rubber plantations (Inti plantations) such as land clearing, planting, fertilizing and other maintenance activities until the palm oil and rubber areas are considered mature (Note 2h). The movement of immature plantations is as follows:

December 31,

March 31, 2007 2006 2005 2004

Beginning balance 15,139,360 10,567,271 15,331,641 10,463,385

Development costs 77,111,635 10,045,912 5,705,299 4,868,256

Transferred from nursery 3,838,325 321,490 - -

Transferred to mature plantations - (5,795,313) (10,469,669) -

28. OTHER RELEVANT INFORMATIONS (continued)

In 2004 (In hectares)

Plasma Inti

Palm oil Rubber

Planted area:

Mature 35,662 15,452 183

Immature 1,895 1,877 -

37,557 17,329 183

Transferred to Plasma participants (34,088) - -

Not yet planted - 7,314 -

Roads, building sites, etc. - 1,719 -

Total 3,469 26,362 183

29. SEGMENT INFORMATION

Primary segment information

Details of business segment of the Company are as follows:

2007 (Three Months)

CPO and PK Others Consolidated

Sales 164,918,379 15,884,608 180,802,987

Cost of sales 130,454,672 7,432,114 137,886,786

Segment result 34,463,707 8,452,494 42,916,201

Unallocated operating expenses 25,219,683

Operating income 17,696,518

Additional severance pay (37,719,064 )

Interest expense (21,810,530 )

Loss on impairment of fixed assets (7,442,177 )

Interest income 915,660

Foreign exchange loss (75,588 )

Others, net (5,784,686 )

Corporate income tax benefit, net 11,926,590

Minority interest in net income of

Subsidiaries 925,023

Net loss (41,368,254 )

Segment assets 1,375,981,871 48,703,506 1,424,685,377

Unallocated assets 8,804,465

Total assets 1,433,489,842

29. SEGMENT INFORMATION (continued)

Primary segment information (continued)

2006 (One Year)

CPO and PK Others Consolidated

Sales 945,031,372 32,263,995 977,295,367

Cost of sales 719,728,967 8,835,779 728,564,746

Segment result 225,302,405 23,428,216 248,730,621

Unallocated operating expenses 56,606,189

Operating income 192,124,432

Interest expense (31,695,517 )

Interest income 4,167,477

Foreign exchange gain 408,216

Others, net (2,909,407 )

Corporate income tax expenses, net (48,515,044 )

Minority interest in net income of

Subsidiaries (909,537 )

Net income 112,670,620

Segment assets 498,580,574 116,863,751 615,444,325

Segment liabilities 194,287,965 9,382,508 203,670,473

Other information:

Capital expenditure 35,964,980 4,227,737 40,192,717 2005 (One Year)

CPO and PK Others Consolidated

Sales 595,753,984 29,942,454 625,696,438

Cost of sales 451,151,105 7,004,615 458,155,720

Segment result 144,602,879 22,937,839 167,540,718

Unallocated operating expenses 46,812,609

Operating income 120,728,109

Interest expense (41,063,050 )

Interest income 3,131,365

Foreign exchange loss (744,987 )

Others, net (6,679 )

Corporate income tax expenses, net (23,878,300 )

Minority interest in net income of

subsidiaries (586,376 )

Extraordinary income 3,729,405

Net income 61,309,487

29. SEGMENT INFORMATION (continued)

Primary segment information (continued)

2005 (One Year)

CPO and PK Others Consolidated

Segment assets 540,417,340 114,726,775 655,144,115

Segment liabilities 314,664,421 41,765,999 356,430,420

Other information:

Capital expenditure 29,659,496 11,922,385 41,581,881

2004 (One Year)

CPO and PK Others Consolidated

Sales 861,863,481 4,055,990 865,919,471

Cost of sales 628,817,420 3,639,383 632,456,803

Segment result 233,046,061 416,607 233,462,668

Unallocated operating expenses 30,187,374

Operating income 203,275,294

Interest expense (50,931,468 )

Loss on disposal of investment (13,000,000 )

Interest income 6,124,327

Foreign exchange loss (355,983 )

Others, net 2,089,598

Corporate income tax expense, net (40,597,134 )

Minority interest in net income of subsidiaries (898,763 )

Net income 105,705,871

Segment assets 534,028,979 101,628,658 635,657,637

Segment liabilities 363,264,130 35,575,675 398,839,805

Other information:

Capital expenditure 53,824,755 10,135,218 63,959,973

Secondary segment information

Information concerning the Group’s geographical segment is as follows:

2007

South Sumatera Central Kalimantan Consolidated

Sales 153,999,104 26,803,883 180,802,987

Segment assets 945,536,651 487,953,191 1,433,489,842

30. ECONOMIC CONDITIONS

The operations of the Group may be affected by future economic conditions in Indonesia that may contribute to volatility in currency values and negatively impact economic growth. Economic improvements and sustained recovery are dependent upon several factors, such as fiscal and monetary action being undertaken by the Government and others, actions that are beyond the control of the Group.

31. RESTRUCTURING UNDER COMMON CONTROL TRANSACTION

On July 29, 2003, the Company acquired 99% ownership interests in Aek Tarum (AT), Mutiara Bunda Jaya (MBJ), Telaga Hikmah (TH) and Gunung Tua Abadi (GTA), which are all entities under common control (Notes 1 and 2s) by issuing 16,153 shares of the Company to the shareholders of AT, MBJ, TH and GTA at nominal value. The difference amounting to Rp87,266,274 between the nominal value of issued share capital of the Company of Rp161,530,000 and the Company’s interest in the net assets of such companies of Rp74,263,726, was recognized as “Difference in the Value of Restructuring Transactions of Entities Under Common Control”, under shareholders’ equity in consolidated balance sheets.

On October 27, 2004, the Company acquired 99% ownership interest in Binasawit Makmur (BSM) with a cash payment of Rp59,400,002 (Notes 1 and 2s). The difference amounting to Rp39,427,484 between the cash payment made by the Company of Rp59,400,002 and the Company’s interest in the net asset of BSM of Rp19,972,518, was recognized as “Difference in the Value of Restructuring Transactions of Entities Under Common Control”, under shareholders’ equity in consolidated balance sheets.

As a consequence of the change in the common control of the Company in January 2007 (Note 18), the aforementioned transactions have been re-accounted for using purchase method, whereas assets and liabilities of the aforementioned Subsidiaries were revalued at their fair values when the transfer of ownership occurred in accordance with SFAS No. 22, “Accounting for Business Combination”. Accordingly, the “Difference in the Value of Restructuring Transactions of Entities Under Common Control” which was previously incurred from the aforementioned restructuring transactions have been adjusted to become part of the value of the mature plantations of the Company (Note 9a). The related amortization of Rp27,400,000 have been adjusted to retained earnings.

32. SUBSEQUENT EVENTS

a. Based on notarial deed No. 87 of Sutjipto S.H., M.Kn., dated April 11, 2007, the shareholders have resolved to approve the Company’s plan to go Initial Public Offering, change the Company’s par value per share, increase the issued and fully paid share capital, and change the Company’s articles of association to be in conformity with Indonesia capital market law (Note 18). This shareholders’ resolution has been approved by the Ministry of Justice and Human Rights with its letter No. W7-04137 HT.01.04-TH.2007 dated April 13, 2007 (Notes 1a and 18).

32. SUBSEQUENT EVENTS (continued)

b. Based on Circular Resolution of Shareholders as covered by Notarial Deed No. 235 of Sutjipto S.H. M.Kn, dated May 25, 2007, the composition of commissioners and directors of the Company is as follows:

Board of Commissioners: Board of Directors:

Michael Joseph Sampoerna - President Commissioner Goh Cheng Beng - President Director Ekadharmajanto Kasih - Commissioner Ali Gunawan Budiman - Director

Sugiarta Gandasaputra - Commissioner Yasin Chandra - Director

Phang Cheow Hock - Independent Commissioner Chang Poh Sang - Director

Arief Tarunakarya Sie Eddy Kurniawan - Director

Surowidjojo - Independent Commissioner

c. On May 28, 2007, the management agreement with Venture Max Resources Pte., Ltd. was revoked

(Note 27e) .

33. RECLASSIFICATIONS

Certain accounts in the 2005 and 2004 consolidated financial statements have been reclassified to conform to the presentation of 2007 financial statements. The reclassifications are as follows:

2005 2005

Previously reported Reclassifications As reclassified

Assets

Immature plantations 18,440,700 (7,873,429) 10,567,271

Nursery - 7,873,429 7,873,429

2004 2004

Previously reported Reclassifications As reclassified

Assets

Other receivables 756,532 10,454 766,986

Advances for Plasma plantations, net 17,210,928 54,290 17,265,218

Immature plantations 19,200,520 (64,744) 19,135,776

34. REISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS

The Company has reissued the consolidated financial statements for the three months ended March 31, 2007 and the year ended December 31, 2006 with comparative figures for 2005 and 2004. The consolidated financial statements for the three months ended March 31, 2007 and the year ended December 31, 2006 were audited by Purwantono, Sarwoko & Sandjaja, an independent accounting firm with its independent auditors’ report No. RPC-7137 dated May 4, 2007. The consolidated financial statements for the year ended December 31, 2005 and 2004 were audited by Prasetio, Sarwoko &

Sandjaja. In connection with the Company’s plan to conduct an Initial Public Offering of its maximum ordinary

shares of 461,350,000, the consolidated financial statements for the three months ended March 31, 2007 and the year ended December 31, 2006 with comparative figures for 2005 and 2004 have been reissued to include several additional disclosures.

35. COMPLETION OF THE CONSOLIDATED FINANCIAL STATEMENTS

The management of PT Sampoerna Agro Tbk (formerly PT Selapan Jaya) and Subsidiaries are responsible for the preparation of the consolidated financial statements that were completed on May 29, 2007.