Press Releases MARC REAFFIRMS THE RATING OF DEGEM BHD’S RM50 MILLION MURABAHAH PARTIALLY UNDERWRITTEN NOTES ISSUANCE FACILITY / ISLAMIC MEDIUM-TERM NOTES PROGRAMME (MUNIF/IMTN) AT MARC-2ID/A+ID

Tuesday, Oct 04, 2005

DeGem Berhad’s (DeGem) RM50.0 million MUNIF/IMTN programme has been reaffirmed at MARC-2ID/A+ID to reflect the Group’s proven track record as one of the leading jewellers in Malaysia. The ratings also took into consideration DeGem’s better than average financial profile characterised by its low gearing and favourable liquidity profile. Moderating factors include the inherent risks of the retail industry and price competition among the existing players.

The Group`s retail business is conducted through its subsidiaries; DeGem Masterpiece Sdn Bhd (DeGem Masterpiece) and Diamond & Platinum Sdn Bhd (D&P). The gold and jewellery sold in DeGem Masterpiece outlets are intended to cater for the higher end market whereas the jewellery sold in D&P caters to the mid and lower end markets as well as the younger age groups. The Group’s retail outlets are currently mainly centred in the Klang Valley which has the highest concentration of potential clientele with relatively high purchasing power.

The Group`s range of jewelleries is tailored to the local market. As such, it is susceptible to the country’s economic swings and changing consumer sentiment. Currently, the export market contributes less than 10% to the Group’s revenue. Export sales are mainly to Indonesia, Hong Kong and Singapore.

The Group’s revenue in FY2004 stood at RM135.3million, representing an 18.7% increase over the previous year’s figure. This was mainly due to higher sales generated arising from the opening of new outlets during that fiscal year. The continued improvement is also attributed to the growth in domestic consumer spending. The Group, however, recorded lower gross profit margin during the year, as a result of stiff competition.

MARC views the Group’s liquidity position favourably. DeGem’s current ratio averaged above 2 times since FY2000. In addition, DeGem’s low debt to equity ratio reflects the Group’s adequate financial flexibility.