MARC has reaffirmed the ratings of Sime Darby’s RM1,500 million Al-Murabahah Commercial Papers/ Medium Term Notes (MCP/MMTN) Programme at MARC-1ID/AAAID respectively. The ratings reflect the diversity of the Group’s operations in more than 20 countries; its sound financial profile characterised by solid capitalization and resilient profitability levels; exceptional financial flexibility and continued commitments to enhance core competencies by focussing on their respective core businesses.

Founded in 1910, Sime Darby’s first venture into the plantations business helped expanded the Group into a conglomerate with five core businesses i.e. plantations, motor vehicle, heavy equipment, property and energy through organic growth, acquisitions and continuous rationalisation. Sime Darby is one of Malaysia’s and Southeast Asia’s largest multinational conglomerates with operations in the Asia Pacific region including Malaysia, Australia, Singapore, Hong Kong and People’s Republic of China. The Group’s operations in Malaysia remained as the largest with contributions of more than 30% and 50% to the Group’s revenue and pre-tax profit respectively over the past five fiscal years.

Of the various business segments, the motor vehicle, and heavy equipment segments continue to be major contributors to the Group’s revenue and profitability respectively. With the current favourable operating environment of the oil and gas and shipping industries, the Group’s foray into these sectors augured well.

Going forward, Sime Darby’s results are likely to be boosted by strong performances from the heavy equipment in fiscal year 2006. However, the Group’s performance will be moderated by uncertainties in the motor industry as a result of the NAP, the lacklustre

performance of its general trading, services and other segments exacerbated by the hikes in raw material prices and the competitive operating environments. Other challenges for the Group include the effects of AFTA on its various business segments, especially the manufacturing, motor vehicle assembly and distribution activities and the softening of the property market.

The Group continued to record strong performances with revenue and pre-tax profit of RM18.65 billion and RM1.37 billion respectively in FY2005. Despite the decline in operating profit margin to 7.5% as a result of allowances for doubtful debts, impairments and write-offs, the Group has been able to maintain pre-tax profit above the RM1.0 billion mark with operating profit margin averaging 8.6% and compounded annual revenue growth rate of 9.6% over the past five financial years. Revenue and pre-tax profit for the first half-year ended 31 December 2005 registered RM10.1 billion and RM731.3 million respectively. As further efforts are undertaken to rationalise non-core businesses and divest non-performing operations, the Group is cautiously optimistic that the results of the second half of FY2006 will remain satisfactory. The Group’s cash flow protection measures continue to be relatively resilient.

The Group’s capitalization remained solid despite an increase in debt leverage to 0.29x in FY2005 due to a further increase in borrowings and lower shareholders’ funds as a result of the large goodwill written off. An additional RM500 million of its CP/MTN has been issued in December 2005 to finance capital expenditure and acquisitions bringing total issuance to RM1.0 billion of the RM1.5 billion facility and debt-equity level to 0.36x (based on half-year results).