Press Releases MARC REAFFIRMS THE RATING OF TH GROUP BHD’S (“THG”) RM150 MILLION AL-BAI BITHAMAN AJIL ISLAMIC DEBT SECURITIES (BaIDS) AT AID

Wednesday, Aug 10, 2005

The rating of TH Group Berhad’s (THG) RM150 million BaIDS is reaffirmed at AID reflecting THG’s continued strong results on the back of steady growth in revenue and profit stemming from the good performance of its plantation and construction divisions. Some of the moderating factors include volatility in CPO prices, seasonal factors affecting crop production, cyclical developments in the domestic construction sector and the group’s exposure to various venture capital investments.

TH Group is involved in oil palm plantations, contracting services (timber extraction and construction), technology and healthcare services. Plantation remained as THG’s core business and will continue to be so, going forward. The strong CPO prices coupled with an increase in crop production while maintaining its OER in 2004 boosted the group’s plantation revenue by 19.1% to RM159 million. Currently, THG has 11,544 hectares of planted oil palm of which 81.5% are prime matured trees. Fresh fruit bunches (FFB) yield has been on an upward trend for the past five years and continues to be above the industry average. In 2004, FFB yield was at 324,753MT averaging 28.7MT per hectare and oil extraction rate (OER) was recorded at 21.55%.

In FY2004, THG’s construction division recorded revenue of RM135 million with pre-tax contribution doubling to RM9.9 million compared to the previous year. Contribution from this division amounted to 44.7% of the group’s total revenue. Projects completed during 2004 that contributed significantly towards the division’s revenue include Pitas hospital in Sabah, the staff quarters, community amenities and infrastructure works for the new Kluang Prison in Johor, 525 units of double storey low-cost housing in Kinarut and Sandakan, residential bungalows and condovilla units in Mont Kiara, Kuala Lumpur and 230 two-storey residential units in Shah Alam. As at 31 May 2005, the outstanding construction order book stood at approximately RM514.4 million.

The venture capital division’s total net carrying investments value to date stood at RM43.8 million after provisions for the diminution/write-offs of RM13.3 million in FY2004 as part of precautionary measures taken. In the near future, this division is not expected to make further investments.

Pursuant to the acquisition of Asiaprise Biotech Sdn Bhd, which owns the NCI Cancer Hospital (formerly known as the Nilai Cancer Institute), healthcare is now one of THG’s core businesses. It is expected that the strategic move into the healthcare industry will enhance the group’s bottom line in the medium to long term evident by its maiden contribution to the group’s revenue of RM3.3 million or 0.9% in FY2004.

The group’s cash flow position strengthened to 5.6x in FY2004 from 0.3x in FY2003 mainly due to improving profitability. Debt leverage fell slightly to 0.51x, well below the covenanted level of 1.25x as a result of an increase in shareholder’s funds coupled with a reduction in THG’s total debt. As scheduled, THG redeemed RM20 million of its primary notes on 24 January 2005.