Actual attachment send to Henyuan Corporate Affairs E-mail this noon. Questions in BOLD

Attachments file 1: Questions for Hengyuan AGM.

1. REVIEW OF FINANCIAL REPORT 2017.

1. Inventory

a.   Crude oil RM 653,215,000

b.  Petroleum products RM 432,524,000

Less: Reversal/ (allowance) for inventories RM 482,000

RM 433,006,000

c.   Materials RM 24,093,000

Allowance for inventories (RM 369,000) –

RM 23,724,000

Total RM 1,109,945,000

Included within crude oil is stock in transit as at 31 December 2017 of RM 149,492,000.

• Q1. Hengyuan PD site have 11 crude oil tanks. May I know what the total capacity of crude oil tank is?
• Q2. Crude oil RM 653,215,000 is how many barrel and occupied how many % of storage capacity and can last for how many days production requirement?
• Our crude oil supply is partly covered by a 5-year crude oil supply agreement (COSA) with Shell International Eastern Trading Company (SIETCO) signed in 2016.
• Q3. For year 2017 how many millions barrels of crude oil purchased? How many is from (SIETCO)? Any price formula and minimum and maximum quantity off take and credit terms? Each purchased is by what lot size and covered for how many days production requirement?

Our sources of crude supply include Malaysia (32%); Russia (11%), Far East, Middle East and Africa (57%).We have also focused on building more relationships with the crude supply network in the region and globally to benefit from competitive pricing. We successfully negotiated additional crude oil supply with several local and regional crude oil producers and traders.

• Q4. What grade or type of crude from Malaysia (32%), Russia (11%), Far East, Middle East and Africa (57%). What is price difference on these different grades? What is the difference in quality (Sulfur content and etc)?
• Q5. Please give the list of other suppliers and the quantity purchased, credit and payment terms? Example of benefit derived from competitive pricing?

The business improvement tactics delivered a value of USD30.1 million in 2017, with USD22.5 million achieved via crude optimisation, USD3.2 million achieved via product optimisation and another USD4.4 million mainly from business improvement plan and savings from contracting strategies.

• Q6. Please explain how crude optimization able to delivered a value of USD22.5 million?
• Q7. Hengyuan PD site have 78 refined product tanks and with below products production in % for 2017. Please give storage tanks capacity for each products? If keep full can last for how many days supply to customers?

1. 45% - Diesel
2. 7% - Aviation Fuel
3. 31% - Gasoline
4. 2% - Light Naphtha
5. 2% - Propylene
6. 5% - LPG
7. 8%- Fuel oil Component

• Q8.  Please explain how products optimization able to delivered a value of USD 3.2 million?
• Q9.  Petroleum products inventory of RM 432,524,000 can last for how many days of sales delivery?
• Q10. Material RM 24,093,000 can you specify this material stock?

B.TRADE RECEIVABLES

1. Neither past due nor impaired RM 1,017,086,000
2. 1 to 30 days past due but not impaired RM 46,123,000
3. 30 to 180 days past due but not impaired RM 5,191,000
4. More than 180 days past due but not impaired RM 12,878,000

Total RM 1,081,278,000 Impaired RM 1,306,000

The credit terms range between 15 to 30 days.

HRC’s principal market is the domestic market, where over 90% (by volume) of the company’s refined products are sold in Malaysia. The remaining 10% of our production, including naphthalene and propylene, are exported elsewhere in Asia.

We focus on servicing the domestic market, mainly through our 10-year Product Offtake Agreement (POA) with Shell Malaysia Trading Sdn Bhd for gasoline, diesel and aviation fuel, and Shell Timur Sdn Bhd for refined petroleum products. This POA commenced in 2016.

We have also been developing new customers and supply channels, both within Malaysia and in the wider South East Asia region. Further expansion is focused on the best commercial opportunities and financial viability. Our strategy in this regard is to leverage on competitive bidding for long-term deals based on published benchmark pricing.

Refer:  Independent Advice (AmInvestment bank) Circular dated 19 January 2017.

The POA stipulates that products produced by SRC would be primarily sold to the POA Buyer to support the POA Buyer’s marketing activities in Malaysia based on the minimum and maximum contractual limits as set out in the POA. The POA Buyer has the first right of refusal to offtake all products produced above the minimum contractual limit by SRC, subject to the terms and conditions set out in the POA. The POA is for a period of 10 years, commencing from 22 December 2016, being the date of completion of the SPA. The price of products to be supplied by SRC pursuant to the POA is generally determined based on, amongst others, the Mean of Platts Singapore (MOPS) quotation plus a premium as published in Platt’s Asia Pacific/Arab Gulf Marketscan under the heading of “Singapore”.

• Q1.Please gives the detail pricing formula with POA  Shell Malaysia Trading Sdn Bhd for each product, what is the minimum and maximum offtake, what is the credit terms (15 or 30 days) if 30 days can Hengyuan re-negotiate to 15 days. Is payment calculation based on daily delivered amount X {crude spot price (the Mean of Platts Singapore (MOPS) quotation) plus a (crack spread) premium as published in Platt’s Asia Pacific/Arab Gulf Marketscan under the heading of “Singapore”.}  Please show us how to assess to this Mean of Platts Singapore (MOPS) quotation and premium as published in Platt’s Asia Pacific/Arab Gulf Marketscan under the heading of “Singapore”.?
• Q2. Please give a detail breakdown list of receivables RM 1,081,278,000 to which customers, their credit terms and credit limit.
• Q3. Since Hengyun products are fast moving daily consumer products why there all still receivables

1. 1 to 30 days past due but not impaired RM 46,123,000
2. 30 to 180 days past due but not impaired RM 5,191,000
3. More than 180 days past due but not impaired RM 12,878,000
4. Impaired RM 1,306,000

• Q4. Which department is managing these high receivables? Any way to reduce credit terms from 30 to 15 days and cut these receivables to half?

C.OTHER RECEIVABLES AND PREPAYMENTS

2017

Goods and Service Tax (‘GST’) receivable RM 160,235,000

Other receivables RM 3,582,000

Prepayments RM 2,479,000

• Q1. Normally how long it took to claim back the GST? How to improve this receivable collection?

D.CASH AND CASH EQUIVALENTS

Deposits with licensed banks RM 310,000,000

Bank balances RM 202,907,000

Less: Restricted cash RM (20,021,000)

• Q1.Plaese explains; what is restricted cash? What is the different between deposits with licensed bank and bank balance?
• Q2. The bank balance and bank deposits are with which banks? Please give detail amount in each bank?
• Q3. Auditor please explains how you audit and verified the Bank balance and deposits with licensed banks?

E.TRADE AND OTHER PAYABLES

1. Trade payables RM 134,367,000
2. Accruals for crude oil and petroleum products RM 366,613,000
3. Sundry accruals RM 44,517,000
4. Accruals for consumables and services RM 8,526,000
5. Accruals for capital expenditure RM 33,274,000

Total RM 587,297,000

The Company’s trade payables are non-interest bearing, unsecured, except for a balance amounting to RM232,710,000 which is secured by a charge against the Company’s hydrocarbon inventories and receivables as mentioned in Notes 16 and 17. The credit terms for trade payables range from 30 to 45 days

• Q1. Please give a detail breakdown of trade payable to each vendor and payment terms?

F.BORROWINGS

- Term Loan I RM 721,862,000

- Term Loan II RM 483,146,000

Total RM 1,205,008,000

Less: Amount repayable within 12 months (RM 79,103,000)

Amount repayable after 12 months RM 1,125,905,000

The remaining maturities of the borrowings are as follows:

Within 1 year RM 79,103,000

More than 1 year and less than 2 years RM 126,268,000

More than 2 years and less than 5 years RM 999,637,000

Total 1,205,008,000

Secured on 22 Dec 2016:

USD 200,000,000 Term Loan I. The loan is subject to interest at LIBOR + 3.5% per annum. This facility is secured by: A corporate guarantee by Shandong Hengyuan Petrochemical Company Limited.

USD 150,000,000 Term Loan II. The Company is allowed to draw on this facility up to the lesser of USD 150, 000,000 and an amount equivalent to 85% of cash deposits placed by Shandong Hengyuan Petrochemical Company Limited with the lender. The loan is subject to interest at LIBOR + 2.0% per annum.

Refer: NEWS RELEASE

Hengyuan Refining Company Berhad Secures Favourable Financing of RM1.7 billion (USD430 million)

The facilities are segregated into a term loan and a revolving credit line. The term loan will be utilised towards refinancing HRC’s existing term loan and also to partially finance its planned capital expenditure. The revolving credit facility will support the company’s working capital needs. The term loan will be repaid in installments throughout the tenure of the 5 year facility. Approval for the facilities was received from Bank Negara Malaysia on 22 January 2018.

• Q1. This refinancing executed on which date?
• Q2. How much is the term loan and revolving credit line, currency in USD or MYR? What are the terms/conditions and interest rates charge?

Refer; Wang, YouDe, Chairman of Hengyuan Refining Company Berhad, said, the sealing of the bilateral agreements with the three prominent banks today accords HRC with a more favourable and flexible financing scheme to enhance our cash and debt management while providing us with additional financing required to fuel our planned upgrades and maintenance projects for the refinery.”

• Q3. Please explain how this refinancing provide HRC with a more favourable and flexible financing scheme to enhance our cash and debt management? What are the projected financial gain/saving from this refinancing for year 2018 and throughout the tenure of the 5 year facility?

2. Review of Quarterly report 2017.

Summary of those unaudited different from Audited 2017

 RM, 000         Unaudited        Q1         Q2           Q3             Q4             total           Audited

Administrative expenses  (6,495)    (9,841)    (10,235)   (26,031)   (52,602)    ( 54,993)

Finance cost                       (16,539)  (16,497)  (16,302)   (16,732)   (66,070)    (63,679)

Other gains/ (losses)          6,221     (24,243)    51,761    46,655      80,394       80,932

Taxation                                                                                   (63,743)   (63,743)    (43,743)

Profit after taxation             279,485    84,407    361,176   183,553    909,221     929,759

Refer 2016 report: Our Company’s administrative expenses in 2016 also saw some reduction as the global and functional support from Shell affiliates tapered off in the second half of the year.

• Q1. Please explain what are Admin expenses? Why Q4 increase to RM 26,031,000 and why the difference between unaudited and audited result? Why 2017 (RM 54,993,000) and 2016 (RM 46,021,000)?
• Q2. Finance cost why unaudited and audited result different?
• Q3. Other operation gains/ (Losses) Please explain why Q2 negative and the rest positive?
• Q4. Why taxation unaudited and audited result difference by RM 20,000,000?
• Q5. For financial year end 2018 any more tax credits? Or need to pay tax on net profit?

3. MANAGEMENT DISCUSSION & ANALYSIS

A. Production volume 39.7 million barrels and products % as follow:

1. 45% - Diesel
2. 7% - Aviation Fuel
3. 31% - Gasoline
4. 2% - Light Naphtha
5. 2% - Propylene
6. 5% - LPG
7. 8%- Fuel oil Component

• Q1. Sales volume 41.104 million barrels with revenue of RM11, 583,000,000 please give products % in revenue.
• Q2. For every barrel of crude oil feed what is the total products will we get?
• Q3. 31%-Gasoline; Please breakdown how many % from Reformers and how many % from Long Residue Catalytic Cracker Unit (LRCCU)?

With total production quantity of 39,700,000 bbl, the 31%- gasoline will be 12,307,000 bbl or 12,307,000/8.45 = 1,456,450 MT

• Q4. With Euro 4 M Mogas project with capacity of 1.15 million MT this capacity is how many % above the gasoline production from the LRCCU?
• Q5. What will be the increase in production cost when running Euro 4M Mogas?
• Q6. Will there be any capacity increase or reduction when Atlas II project and Euro 4M Mogas are completed and operational?
• Q7. Will Euro 4M Mogas sell at a certain premium to current 2M Mogas?

Refer: Announcement dated 16 June 2017.

The Euro 4M plant is an integrated complex, which has been designed to desulphurise the full range Cat Cracked Gasoline (CCG) produced by our Long Residue Catalytic Cracking Unit (LRCCU). The design uses a combination of hydro-processing and liquid-liquid extraction technology, commercially proven and licensed by reputable technology licensors. The technology is also being used successfully by Shandong Hengyuan Petrochemical Company Limited in its Shandong based refinery and chemical complex which produces Euro 6 grade mogas. The plant will have a capacity of 1.15 million tonnes per annum. This investment ensures HRC is well placed to meet the Euro 4M mogas specifications mandated by the Malaysian regulatory authorities by 1 October 2018. The Euro 4M plant can be further upgraded to produce Euro 5M mogas when the specification change is mandated, which is expected to be from 2025 onwards. As such, this investment underpins HRC’s commitment to deliver high quality products to its customers and to long term sustainable refining in Malaysia.

The Total Investment Cost for the project is USD135 million +/- 10 %.( RM590 million)

The project is expected to come on-stream by the 2nd half of 2018

RISK: Management is currently mitigating unexpected delays due to the manufacturing of a major piece of equipment. The risk is that this delay extends beyond the regulatory date we target to be able to produce Euro 4M Mogas. In such a scenario, our customer can choose to import their required product using HRC’s facilities as contractually outlined in our POA. In doing so, HRC’s financial performance during the period pending the production of EURO 4M Mogas will be significantly impacted Management is reviewing the project progress weekly to ensure challenges and hurdles are effectively dealt with to meet the regulatory timeline. We are currently exploring options to minimise the impact of this delay on our production and revenue.

• Q8. Is this project on turnkey basic or on technology licensing? What are the contract and payment terms? Any penalties for project delay? So far is the cost within budget?
• Q9. Unexpected delays due to the manufacturing of a major piece of equipment. What is this equipment? Who is the manufacturer? Can Hengyuan claims compensation from manufacturer?
• Q10. What will be the new target day of completion?
• Q11. What are the options explored to minimize the impact of production and revenue? Will use Light low sulfur crudes as feed material able to produce Euro 4M  Mogas?

DOE has mandated that refineries are to comply with Euro 5 gasoil (Diesel) specifications by 1 September 2020. Since our next turnaround is only planned for 2022, we will need to undertake project tie-ins during the upcoming MTA 2018 window. Front end studies and licensor selection are now in progress to enable the timely identification of tie-in points.

Refer: AmInvestment Bank Independent Advice Circular is dated 19 January 2017

For diesel, the current Euro 2M specification will directly move from Euro 2M to Euro 5 starting 2020. Like petrol, the main change comprises the sulphur specification, which will reduce from 500 ppm (Euro 2M) to 10 ppm (Euro 5). For diesel, limits to the amount of heavier components have also been set in the Euro 5 specification in order to reduce pollution. This is expressed by limitations in density, the distillation curve and the polycyclic aromatic hydrocarbons. Although the recently completed diesel processing unit of SRC (Project Hijau) in 2013 has the capability to produce against this new specification, some additional investment will be required.

• Q12. What is the current sulphur content of Diesel, Aviation Fuel, Gasoline from Reformers and from LRCCU?
• Q13.  Project Hijau, Gasoil Treater (44% of Net book fixed assets of RM777 millions) done in 2013 able to produce Euro 5 gasoil? If not, what this project Hijau for?
• Q14. Front end studies and licensor selection are now in progress to enable the timely identification of tie-in points. What is the plan CAPEX?

Since the successful acquisition of a 51% equity stake in HRC via Malaysia Hengyuan International Limited in December 2016, the synergy between the SHPC Group and our Company has been good. HRC’s business complements the SHPC Group’s existing portfolio, which enables SHPC to establish a strategic presence in Southeast Asia. SHPC continues to support HRC through their experience and technical expertise to ensure that our Company continues to deliver high-performance products and enhance profitability.

• Q15. Please list down what are the synergies achieved so far?

The CCS refining margin in 2017 was USD7.17 per barrel in comparison to a lower margin of USD4.06 per barrel in 2016. The FIFO margin was USD8.39/bbl, including stockholding gains of USD1.22/bbl in 2017, compared to FIFO margin of USD5.46/bbl in 2016, which includes a stockholding gain of USD1.46/bbl.

Stockholding Gains / Losses Oil price movements impact financial performance because HRC holds on average 30 to 40 days of inventories.

• Q16. The PD storage capacity can hold how many days stock? Is this 30-40 days crude inventories refer to from the time crude oil confirmed purchase till it is use to produce the products (FIFO) and delivered to customer? Does this mean stockholding gain of USD1.22/bbl in 2017 is average monthly price increase of crude for 2017?
• Q17. What is the breakeven FIFO margin? Is our cost cheaper than our competitors in Malaysia or even the China refinery?

Refer Petronm: The Refinery has a crude distillation capacity of 88,000 barrels per day (bpd). The Complex is equipped with a crude distillation unit, a naphtha hydro treating unit, two semi-regeneration reformer units, and a kerosene hydro treating unit.

Crude (predominantly light low sulfur crudes) is imported and processed to produce a wide range of petroleum products that includes Gasoline (U95), Jet fuel, Diesel, LPG, and Low-Sulphur Waxy Residue (LSWR).

Our top-of-the line fuels, Blaze 100RON Euro 4M, Blaze 97RON Euro 4M, Blaze 95RON, Turbo Diesel Euro 5 and Diesel Max. Start the design for a new Diesel Hydrotreater (DHT) to comply with Euro 5 diesel standards by 2020.

• Q18. Compare Hengyuan Mix crudes and Petronm Light low sulfur crudes delivered PD what is the cost per barrel difference? What is the processing cost difference in mix crudes and light low sulfur crudes?

ATLAS II Project is a critical operation that will take place during MTA 2018. The project is to replace the LRCC catalyst regenerator top dome and the top dome internals to enable continued and efficient operation of the product up grader unit as the current system will be reaching its end-of-life parameters in 2018. ATLAS II project is executed in partnership with contractors that have experience in the manufacturing and installation of similar units elsewhere.

MTA 2018 will be challenging in terms of personal and process safety, as we would have some 3,000 contractors working on site. We have prepared ourselves to ensure safe working conditions at all times and compliance to all operations and performance standards during this exceptional and intense exercise.

• Q19. Atlas II project (CAPEX RM110 million, USD25 million +/- 10%) what are the contract and payment terms? Is this cost include the project execution? So far is the cost within budget?

Refer 2016 report: Our Company continued to focus on cost reduction initiatives which included further optimisation of catalyst utilisation and costs which formed a significant spend in our operating expense.

• Q20. Any cost saving on catalyst optimisation achieved in 2017? Will ATLAS II completion have further cost saving on catalyst optimization?

Refer: Mr. Surya Gunawan bin Suharman (Manager, Corporate Affairs and Government Relation) replied dated 4 April 2018.

The major turnaround (MTA) will start in August. We will halt production for 45 to 90 days max but business will still be operating as usual. Please note that we are with 11 crude oil tanks, 78 refined product tanks & our own jetty to ensure continuation of supply that we have booked at a preferred rate to ensure our margin are protected during the period.

• Q21. What is the quantity booked for this (MTA) period? How to ensure our margin is protected?

Refer: As an independent refiner, HRC is cognisant of refining margins and foreign exchange (FX) risks that could hamper our financial performance. The decision to hedge and limit the risk exposure from these market movements is to achieve a more consistent financial performance.

• Q22. For 2018 what will be the plan for Refining margin hedge? Forward foreign currency hedge? Forward priced commodity hedge? In term of % hedge?

Refer: AmInvestment Bank Independent Advice Circular is dated 19 January 2017

We understand that SRC in 2014 did not find it viable to carry out the upgrades required for Euro 4M and Euro 5 fuel specifications resulting in an impairment to the Company’s assets of RM460.9 million in the audited financial statements for the FYE 31 December 2014. The impairment was due to the lower estimated future cash flows as SRC’s products had to be exported to countries with lower fuel standards thereby incurring higher transportation costs, coupled with a finite lifespan of the refinery plant production without capital investment for Euro 4M and Euro 5 fuels. Discussion on a potential reversal of the impairment loss is set out further below.

• Q23. With the completion of Atlas II and Euro 4M Mogas project will board able to recover this RM 460.9 million impairment loss in the audited financial statements for the FYE 31 December 2014?
• Q24. Any advantage or disadvantage in Tax credit, cash flow and etc to claim back this impairment loss?
• Q25. The POA with Shell Malaysia Trading Sdn Bhd  for a period of 10 years, commencing from 22 December 2016 will safeguard sell till 22 Dec 2026. After this period will Hengyuan able to compete with China refinery products flooding the SEA market?

4. CORPORATE GOVERNANCE REPORT

A. Practice 11.2

Large companies are encouraged to adopt integrated reporting based on a globally recognised framework.

• Suggestion 1: To publish in company website monthly summary of:
• Month opening stock include Crude oil and finished products inventories
• Full month crude received. Average cost USD per barrel.
• Full month Products dispatched.
• Month average refining margin USD per barrel.
• Month average stockholding gains/losses USD per barrel.

B. Practice 12.3

Listed companies with a large number of shareholders or which have meetings in remote locations should leverage technology to facilitate– including voting in absentia; and remote shareholders’ participation at General Meetings.

• Suggestion 2: The AGM minutes to be published in the company website.

5. THE PROPOSED SHARE BUY-BACK.

3. RATIONALE FOR THE PROPOSED SHARE BUY-BACK

3.2 The Company may be able to stabilise the price of HRC Shares in the open market and thereby supporting its fundamental values.

Share price

Month                                   High (RM)                 Low (RM)

Apr 2017                              3.97                           3.56                                      

May 2017                             6.30                           3.76                          

Jun 2017                              6.20                           4.86

Jul 2017                               7.99                           5.33

Aug 2017                              8.68                           6.95

Sep 2017                             8.46                           7.60

Oct 2017                               8.59                           7.92

Nov 2017                             10.98                          8.36

Dec 2017                             19.20                         10.94

Jan 2018                              18.66                         11.32

Feb 2018                              15.68                         12.14

Mar 2018                              13.10                          7.45

I fully support and agree with the above proposal and will vote FOR during the AGM.

 Hengyuan market share price is very volatile due to suspect manipulation.

Investment Banker issuing hundred millions of Call Warrants without holding significant share in Hengyuan.

Example: Maybank investment Bank Berhad

Hengyuan - CJ issue size 100,000,000. Ratio 20:1

Hengyuan - CI issue size 100,000,000. Ratio 20:1

Hengyuan - CQ issue size 100,000,000. Ratio 30:1

Hengyuan - CR issue size 100,000,000. Ratio 25:1

LIST OF TOP 30 SHAREHOLDERS AS AT 19 MARCH 2018

Maybank investment Bank Berhad only holds 2,184,000 shares.

• Q1. Any rule and regulation regarding issuing of call warrant?
• Q2. Small free float of Hengyuan shares: With issue share capital of 300,000,000 shares and public shareholding spread of approximately 48.98 % or 146,940,000 shares. Hence many syndicates were feeding greed to push up the price, after they have sold their shares then spreading (false news) fear to push down the price and collect back cheaply and repeat the vicious circle of greed and fear again. These robbers had robbed many innocent investors of their life saving. This had to be stopped. I suggest board decide now to increase issue share capital with share split, bonus share, free warrant and ESOS?

6. Dividend.

Ordinary Resolution 11 and Ordinary Resolution 12

11. Requisitioned resolution to approve a final single tier dividend of 43.5 cents per share in respect of the financial year end 31 December 2017.

12. Requisitioned resolution to approve a formal dividend policy of allocating at least 15% of the Company’s profit after tax, excluding exceptional items to be distributed to its shareholders as dividend payment.

Pursuant to Sections 131 and 132 of the Companies Act 2016, the Board wishes to highlight that the distribution of dividend to shareholders can only be made if the following conditions are met:

– the distribution of dividend can only be made out of the Company’s profits available if the Company is solvent;

– the Directors must authorise the distribution of dividend before it is made by the Company to its shareholders; and

– the distribution of dividend can only be made if the Directors are satisfied that the Company will be solvent and is able to pay its debts as and when the debts become due within twelve months immediately after the distribution of dividend is made to its shareholders.

Having considered the proposal and conducted a solvency test on the Company by taking into account the liquidity and cash flow projection of the Company for a period of 12 months, the Board has formed the view that the Company may not be able to satisfy the solvency position within 12 months following the proposed distribution of dividend if it is made to the shareholders and hence, any distribution of dividend of such a quantum will be in contravention of Sections 131 and 132 of the Companies Act 2016.

Recommendation

For the reasons stated above, the Board considers that the Ordinary Resolution 11 and Ordinary Resolution 12 are not in the best interests of the Company as a whole, and therefore recommends that you vote against Ordinary Resolution 11 and Ordinary Resolution 12.

• Q1. Many companies listed in Bursa do have a formal dividend policy as this dividend policy is not something new or unusual. Please clarify Ordinary Resolution 12 is not in the best interests of the Company as a whole. This consideration applied only for financial year end 2017 as in future when things improve Board will consider a formal dividend policy?
• Q2. Please present the solvency test calculation during the AGM and I shall present my fair and objective opinion and let everyone judge for themselves whether to vote for or against resolution 11 and 12.

 

Note: My fair and objective opinion as follow:

HENGYUAN:

CURRENT ASSET = RM 2,875,154,000

CURRENT LIABILITIES = RM 695,412,000

NON-CURRENT LIABILITIES = RM 1,167,947,000

Ratio:

1. Current assets/Current liabilities= 2,875,154/695,412 = 4.13
2. Current assets/Non-current liabilities=2,875,154/1,167,947= 2.46
3. Current asset/Total liabilities= 2,875,154/(695,412+1,167,947) = 1.57

PETRONM

CURRENT ASSET = RM 1,596,977,000

CURRENT LIABILITIES = RM 1,111,499,000

NON-CURRENT LIABILITIES = RM 99,738,000

Ratio:

1. Current assets/Current liabilities= 1,596,977/1,111,499 = 1.43
2. Current assets/Non-current liabilities=1,596,977/99,738= 16.01
3. Current asset/Total liabilities= 1,596,977/(1,111,499+99,738) = 1.31

Final Dividend 25 cents per share

In the Board opinion comparing these two companies:

• Which Company may not be able to satisfy the solvency position within 12 months following the proposed distribution of dividend if it is made to the shareholders?