The rating assigned to Kumpulan Guthrie Berhad’s (Guthrie) proposed RM150 million Underwritten Murabahah Commercial Papers reflects the Group’s strong position as one of the country’s leading plantation players cum property developer with vast land banks in Malaysia and Indonesia; its sound financial profile and strong financial flexibility. Moderating factors to the rating include the cyclical nature of the two main businesses the Group is involved in, namely palm oil and property development as well as cross-border implications in terms of its operations in Indonesia.

Guthrie’s current paid-up capital stands at around RM1.0 billion with 73.48% of its shareholding held by the Permodalan Nasional Berhad Group. Total shareholders’ funds stood at approximately RM4.5 billion as at December 2004. As at end December 2004, Guthrie’s Malaysian and Indonesian plantations’ total oil palm planted area stood at around 261,856 hectares. Guthrie Property Development Holding Berhad (GPDH), a subsidiary of Guthrie, is principally involved in property development activities. GPDH is widely recognized as a reputable and leading property developer in the country with commendable track record of quality and timely completion of its property developments. Amongst GPDH’s major on-going developments are Bukit Jelutong, Bukit Subang and Sungai Kapar Indah.

The Plantation and Property divisions remain as core revenue drivers of the Guthrie Group, contributing 62% and 22% respectively to total revenue in fiscal year 2004.

Based on FY2004 audited accounts, Guthrie’s debt leverage ratio rose to 0.74x but remains manageable considering an average gearing of 0.63x over the last five fiscal years. Going forward, debt servicing capacity remains strong supported by improving cash flow generation, driven mainly by steady or rising output as well as relatively lower aggregate cost of production.

The Group exhibits robust financial profile based upon its large asset base and strong liquidity/financial flexibility as demonstrated by proven access to the domestic as well as international capital markets. Based on the interim results as at 30 June 2005, cash and cash equivalents stood at a healthy RM902.9 million. Moving forward, Guthrie expects increasing contributions particularly from the Indonesian operations whilst its holding of substantial and attractive land banks are readily available for disposal if there is a need to supplement the Group’s operational cash flow.

The Group is currently making revisions to the earlier rationalization exercise to streamline its core operations. Meanwhile, its on-going exercise involving the divestment of non-core activities is expected to follow through in the current year with the sale of some of its manufacturing companies.