MARC has reaffirmed the ratings of Sime Darby’s RM1,500 million Al-Murabahah Commercial Papers/ Medium Term Notes (CP/MTN) at MARC-1ID/AAAID respectively. The reaffirmation of Sime Darby’s corporate debt ratings reflects the diversity of the Group’s business, its solid capitalization, resilient profitability levels, strong cash flow position, exceptional financial flexibility and their continued efforts to enhance their competitiveness by realigning and repositioning themselves in their respective businesses.

Founded in 1910, Sime Darby began its operations as one of the local pioneers in the plantations business. The management team aims to grow the core divisions i.e. plantations, motor, heavy equipment, property and energy by way of organic growth and acquisitions while restructuring the non-core assets. This helps the Group to redeploy existing resources to the core business segments to bring meaningful returns to the Group going forward. Its operations which span across major countries in the Asia Pacific region such as Malaysia, Singapore, Hong Kong, Australia and People’s Republic of China (PRC) have consistently generated pre-tax profit levels above the billion ringgit mark in the past 5 fiscal years, hence placing it as one of Malaysia’s and Southeast Asia’s largest multinational conglomerates.

Of its various business segments, the plantations, motor vehicle and heavy equipment distribution and property business segments continue to be major contributors to the Group’s revenue and profitability. The energy business segment, as expected, continues to grow from strength to strength, aided by substantial progress in a number of oil and gas projects during the year and contributions from newly acquired Jaya Holdings Limited. In the near term, MARC believes that all major business segments will continue to record resilient

results. Sime Darby’s bottom line results are likely to be boosted by high margin earners such as the property and plantations divisions which are expected to record strong performances in 2005. While MARC remains positive on the group’s continued foray in the energy business segment, the performance of its general trading, services and other business segments have remained lacklustre due to hikes in raw material prices and the intense operating environments.

On the back of strong performances from the Group’s core activities, revenue and pre-tax profit in FY2004 grew by 8.6% and 4.6% to RM14.9 billion and RM1.3 billion respectively. Operating profit margins continue to be stable at an average of 8.9% in the last five fiscal years. Geographically, about 33.0% and 63.0% of the Group’s revenue and pre-tax profit respectively were derived from its Malaysian operations. Contributions from overseas were mainly from Hong Kong, Australia and Singapore. The Group’s cash flow protection measures continue to be resilient despite an increase in interest paid during the year. Interim revenue and pre-tax profit as at 31 December 2004 were recorded at RM8.8 billion and RM577.2 million respectively. While interim pre-tax profit was affected by various provisions made during the first half of FY2005, the Group is cautiously optimistic that the results of the second half of this financial year will remain satisfactory.

The Group’s solid capitalization is based upon its huge shareholders’ funds of RM8.4 billion as at 30 June 2004. The debt leverage for the Group continues to be low, at 0.25 times in FY2004. Financial flexibility is exceptional, drawn from the Group’s large market capitalization, strong cash flow position and a comfortable level of unutilized credit lines, which are denominated in various currencies.