PCG's 27th Annual General Meeting 22 April 2025 - Q&A

No.

Question

1.

On the HSE management system, I notice that you are 54% Certified on ISO 45001, what is the plan to get it to 100% because as the CEO mentioned rightly so you have system and processes, culture is important but the foundation is the management system.

So, what is the plan to get to 100% certification on the ISO 45001?

Answer:

PCG facilities worldwide adopt PETRONAS HSE Management System (HSEMS) and Responsible Care (RC) Management System to foster a strong HSE culture and achieve high standards of HSE performance. These management systems are designed to develop, implement, maintain, and continuously improve our HSE practices.

In addition, majority of our facilities undertook ISO certification, which is an international standard and serves as a framework for organisations to manage the risks and improve their performance. The certification is voluntary and not a legal requirement. Currently, 87% of PCG manufacturing facilities in Malaysia are certified with ISO 45001:2018 Occupational Health and Safety Management System (OH&SMS). The remaining facilities are expected to be certified by 2029.

No.

Question

1.

To disclose the Total Shareholders' Returns (TSR) of PCG for the past 1,3 and 5 years up to the end of the financial year ended 2024. What would the Board attribute the performance to.

Answer:

The Total Shareholder Return (TSR) of PCG for the last 1, 3 and 5 years are -25.6%, -31.1% and -11.4% respectively. The decline in TSR reflects the decline in profitability and movement in share price faced by PCG due to several external and internal factors.

External factors include global economic uncertainties and increased volatility in energy and product prices, arising from global events such as COVID-19 pandemic, geopolitical tensions, wars and supply chain disruptions. These culminated into slowing demand and thinning spreads following lower product prices. Between 2020 and 2024, over 100 million metric tonnes of new petrochemical production plants were constructed globally, approximately 70% of which are in China. Amid slowing consumer demand, the increased capacity resulted in a demand-supply imbalance in the market.

Internally, the Group's plant utilisation rates were relatively stable despite operational challenges such as equipment issues, feedstock and utilities supply disruptions in addition to meeting statutory plant turnaround schedules. The Group's growth plans faced setbacks due to the delay in Pengerang Integrated Complex as well as the economic downturn in Europe which negatively affected our subsidiary, Perstorp, which was acquired in late 2022.

No.

Question

2.

The Board's views on what are the one or two key critical drivers of TSR for the Company. Would this be return on equity, EPS growth or any other metric? If so, what was the performance of these metrics for the past 1, 3 and 5 years?

Answer:

The Board recognises that PCG's shareholders are attracted to the Group's high operational performance, value creation and strong financial position. In addition to several operational metrics, the Return on Average Capital Employed (ROACE) and Return on Equity (ROE) are internally used to monitor the Group's performance.

The ROACE and ROE for PCG for the last 1, 3 and 5 years are as follows:

Items

ROACE (%)

ROE (%)

1 year 3.9 2.9

3 years 11.3 7.6

5 years 14.4 7.0

The decline of the above metrics is mainly due to adverse market conditions leading to fluctuations in product prices and margin compression amid inflationary cost pressures negatively impacting the Group's profitability.

No.

Question

3.

What are the strategic initiatives that are being put in place by the Company to improve these key drivers and enhance TSR for the next three years?

Answer:

The Company's primary focus is on maintaining resilience and improving ROACE and ROE through the following:

(i) Continued focus on operational excellence by improving efficiency across our production facilities to enhance productivity and products yield;

• (ii) We are leveraging on our proximity to key markets and long-standing relationship with customers to grow our sales volume even in an oversupplied market. We address our customers pain-points and meet their evolving needs to further enhance value creation;

• (iii) We maintain strong financial discipline through cost optimisation and prudent capital expenditures.

Whilst we strengthen our existing business, we are also diligently assessing opportunities for future capacity expansion as well as high-return growth projects to future-proof our portfolio. We are diversifying our products range by growing our specialty chemicals segment to deliver niche, high-performance products tailored to meet diverse customer needs.

No.

Question

4.

We have in the past recommended our views for the Board to reevaluate the Company's 50% dividend payout policy and for the Board to instead take a proactive approach towards capital structure optimisation and cash distribution. Our recommendations were based on the Company's high cash balance, steady generation capacity and manageable gearing level despite fluctuation in profitability. Please explain the Board's view on this matter.

Answer:

At present, there is no plan to revise our current dividend policy.

The consideration for future dividend payment will still be guided by PCG's Dividend Policy with a payout ratio of around 50% of Group PATANCI.

Nevertheless, PCG will continuously evaluate its ability to pay higher dividends depending on the company's performance, working capital and cash requirements for growth projects. This is evident in the Board's decision to approve total dividend payout of 88.5% for FY2024.

No.

Question

5.

Since the acquisition of Perstorp in late 2022, how has PCG tracked the value addition arising from this exercise? In relation to that, is there any further strategic initiatives being considered, in relation to the specialty chemicals segment?

Answer:

Perstorp has made considerable progress in meeting its acquisition rationale. This is evident by the improvement in Perstorp's sales volume, Revenue, EBITDA and Profit After Tax in 2024. Perstorp has also progressed its growth plan with the ongoing commissioning of the ISCC Plus certified Penta and Calcium Formate plant in Bharuch, India. In December 2024, Perstorp expanded their portfolio with the acquisition of OQ Chemicals Nederland B.V, further strengthening its position in the Engineered Fluids segment.

As part of our two-pronged strategy to selectively diversify into derivatives, specialty chemicals and solutions, the Company focuses on expanding the Specialties segment through various growth projects and inorganic approach via acquisition.

We are actively exploring acquisition opportunities to enhance our capabilities, and access to new technologies and products as well as to expand into new markets.

At the moment, we are not considering any acquisition exercise. We will continue to diligently scan and assess potential acquisitions that can grow and fortify PCG particularly opportunities to bolt on BRB and Perstorp.

No.

Question

1.

Request for IAR hardcopy.

2.

Request for Annual Report_ PETRONAS CHEMICAL BHD. Thank you.

3.

Hi, please send me a hard copy of annual report.

4.

Hi, may I request a hard copy of annual report, thanks.

5.

Hi, please send me a hard copy of annual report, thanks

6.

Hi, please send me a hard copy of annual report, thanks.

7.

Hi, may l request a hard copy of annual report, thanks

8.

Pls send printed annual report.

9.

Hi, may l request a hard copy of annual report, thanks.

Answer to question number 1 to 9:

You may request for a printed copy of the Annual Report by login at investor.boardroomlimited.com and select "Request for Annual Report" under the "Investor Services".

No.

Question

10.

Any Virtual Meeting for this year AGM?

11.

Why we cannot have AGM online like we did? It is difficult to adjust again and go to multiple locations just for one Company's AGM.

12.

Why not offer a hybrid AGM format? A hybrid meeting would allow both physical and virtual participation, encouraging more shareholders to attend and engage. Will the management consider implementing hybrid AGMs in the future to improve accessibility and inclusivity?

13.

Virtual AGMs provide significant benefits, especially for shareholders who live far away and may find it difficult to attend in person. Given these advantages, could the company consider reinstating the hybrid mode to ensure broader participation?

14.

Propose hybrid AGM instead of only physical. Please reconsider the plight of shareholders who are outstation, need to apply for leave etc.

15.

Why does this AGM not have online participation? With only on-site AGM, your company is paying more for the meeting and taking away the rights of other shareholders which do not stay in Klang Valley area. Next time, please at least organise a hybrid meeting. Online and onsite.

16.

Will future AGMs offer hybrid or virtual options for shareholders located outside of Kuala Lumpur?

17.

Propose hybrid AGM instead of physical session. Please consider the plight of shareholders who are outstation, need to apply for leave etc. A hybrid meeting would allow both physical and virtual participation, encouraging more shareholders to attend and engage. Will the management consider implementing hybrid AGMs in the future to improve accessibility and inclusivity?

18.

Due to time constraints, I prefer online meeting and remote voting.

Would you consider the suggestion of having physical meeting and virtual meeting to proceed concurrently?

19.

Why there is no a virtual meeting platform provided this time? It would benefit shareholders who are unable to attend the physical meeting in KL for various reasons.

20.

Please consider hybrid AGM in future.

21.

Dear Chairman, kindly arrange the online meeting again. I am far away and would love to join as well.

No.

Question

22.

Is there possible to have hybrid AGM next year?

23.

Request to have this AGM in hybrid format i.e. physical and online. This allows shareholders from outside KL area to participate without incurring much travel costs and time. And those who are working. I hope can make it mandatory to have hybrid AGMs. In fact, this should be considered a basic ESG requirement - for better Governance, it's essential to facilitate shareholders participation in AGMs and provide avenue to ask questions, regardless of where they are from.

24.

Please hold your future AGMs/EGMs using hybrid mode in order for more shareholders to attend them. Thanks.

25.

Please hold your future AGMs/EGMs using hybrid mode in order for more shareholders to attend them. Thanks.

26.

Please hold your future AGMs/EGMs using hybrid mode in order for more shareholders to attend them. Thanks.

27.

Please hold the AGMs/EGMs in hybrid mode in order to allow more shareholders to attend it.

28.

Why is this AGM being conducted only in person rather than offering hybrid option? A hybrid option would improve participation for shareholders unable to attend onsite. Please share the rational and do hold the next AGM on hybrid mode.

29.

Mr. Chairman and Board, for future AGMs kindly consider holding it on hybrid platform. Thank you.

30.

Hope the company will consider holding a hybrid meeting so that senior citizen shareholders like me with legs problem and also shareholders staying outside KL and Selangor will still be able to participate. Thank you.

31.

I would like to request the company to consider holding a hybrid meeting so that shareholders like me staying outside KL and Selangor will be able to participate also. Thank you.

32.

I would like to request the company to consider holding a hybrid AGM/EGM so that shareholders staying outside KL and Selangor like me will also be able to participate in the meeting. Thank you.

33.

I would like to request the company to hold a hybrid meeting to enable shareholders outside KL and Selangor to be able to participate also. Thank you.

34.

Hope the company will consider holding a hybrid AGM/EGM so that shareholders staying outside KL and Selangor will also be able to participate in the meeting. Thank you.

Answer to question 10 to 34:

A physical AGM promotes better shareholder engagement and face-to-face interaction, fostering trust and transparency. Moreover, physical AGM allows shareholders to ask impromptu questions or seek clarification immediately.

Hosting hybrid AGMs can be more costly, involving tech platforms, live streaming, and real-time voting systems as well as the manpower to manage both physical and hybrid platforms. Nonetheless, PCG will explore the feasibility of holding a hybrid AGM in the future.

No.

Question

35.

I am one of your shareholders. This is my first time attending a physical meeting, so I am not very sure on the process. May I know how do I register to attend the physical meeting? Thanks.

36.

Hello, I am referring to the PETRONAS Chemicals Group Berhad AGM which will be held on Tuesday 22 April at KLCC Convention Centre. Do I need to bring any documents upon registration for the AGM? Thanks.

37.

How do I register to attend your AGM, I am a shareholder.

38.

Good morning, Sir/Madam, I hope the company will consider virtual AGM for those who can't attend physically. Please let me know in advance so that I can register to attend the event. Thank you for the understanding.

Answer to question 35 to 38:

Shareholders whose name appears on the Record of Depositors as at 16 April 2025 shall be entitled to attend the Annual General Meeting.

Pre-registration is not required for the shareholders, you will only be required to produce your original MyKad/ Identification Card or passport (for foreigners) on the day of the AGM during registration.

Details of which is available in the Administrative Guide on PCG's corporate website.

No.

Question

39.

Is parking provided for the above AGM at the KLCC convention parking area? Please advise.

40.

Dear Sir/ Madam, Greetings! For the AGM on 22 April 2025, may I ask if the parking at KLCC (basement parking) is free for shareholders attending the event? If yes, could you guide me to the easiest way to the basement parking entrance and how to validate my parking ticket/ Touch n' Go? Appreciate your kind assistance.

Answer:

Parking is available at the Kuala Lumpur Convention Centre (basement parking) at your own cost.

PCG will not reimburse any parking costs incurred and shall not bear any responsibilities for lost parking token(s).

Details of which is available in the Administrative Guide on PCG's corporate website.

No.

Question

41.

Please schedule the meeting to other day as it clashes with other meeting.

Answer:

Unfortunately, the Company is not able to reschedule the AGM. The notice of AGM was given within the stipulated timeframe.

It was advertised in the Star and Berita Harian newspapers and dispatched to shareholders on 21 March 2025, being more than 30 days' notice.

No.

Question

42.

What is the process of:

• a) choosing KPMG PLT as Auditors of the Company for the financial year ending 31 December 2025; and

• b) to authorise the Directors to fix their remuneration?

Answer:

The Board Audit Committee (BAC) assessed the performance, suitability and independence of KPMG PLT based on the following 4 key areas which are (i) independence, objectivity and professionalism (ii) quality of engagement team and services, (iii) adequacy of resources and (iv) quality of communication.

Being satisfied with KPMG PLT's audit quality, performance, competency and resources provided to the Group, the Board recommended the re-appointment of KPMG PLT as auditors of the Company for the financial year ending 31 December 2025. Additionally, the lead auditor is also subject to rotation every 7 years. This is aligned with the Malaysian Institute of Accountant By-Laws.

Pursuant to the Companies Act 2016, the Company is seeking the shareholders' approval to authorise the directors to fix the auditors' remuneration.

No.

Question

43.

Kindly explain the needs of increase of Directors' fees from RM288,000 to RM360,000 per annum (increase of 25%) for the Non-Executive Chairman and from RM144,000 to RM240,000 per annum (increase of 66.67%) for each of the Non-Executive Directors since the monthly Directors' fees currently is already RM24,000 per month for each of the Non-Executive Chairman and RM12,000 per month for each of the Non-Executive Directors. Thank you.

44.

Share price reflect company performance, since it does not perform as the price had drop so much, Director Fees and benefit should not increase. RM3 million fees and benefits are very high.

45.

Resolution 3 proposes increases in Non-Executive Director fees based on a 2023 benchmarking exercise. Could the Board provide more context on the peer group used for this comparison and further justify the proposed fee levels, particularly in light of the 26% decline in Profit After Tax during FY2024?

46.

Comments & Question pertaining to Ordinary Resolution 3 of 27th AGM of PETRONAS Chemicals Group Berhad. Let me start by thanking the entire PCG team for their contribution. I believe good performance should be rewarded proportionately to motivate continuous performance. However, rewards to Directors, Management & team players that contribute positively to the performance of the company should be positively correlated to the return to the shareholders.

In this regard, do not the Board & Top Management of PCG feel that it is insensitive to propose a hike in Chairman & Directors' fees of 25% & 67% respectively under the following circumstances:

• 1. The share price of the company has been tumbling since the peak in May 2022 (-75%) and - 63% from October 2023 eroding shareholders' value significantly;

• 2. PCG experienced a 30.7% decrease in net profit in 2024 compared to the following year despite a 7% increase in revenue over the same period; and

• 3. The interim dividend announced in February 2025, merely a month before the proposed hike in directors' fee, was 45% lower year-on-year.

We are not demanding pay cuts to make up for forex loss etc. Just wait until measures put in place to improve performance, operating efficiency & treasury management to show proven results (i.e. increase in profit aligned with increase in revenue) before proposing a hike in directors' fees. Thank you.

Answer to question number 43 to 46:

The Company's Directors' Remuneration Packages were last reviewed in 2018 and due for reassessment on whether the current remuneration structure remains appropriate.

An independent consultant was engaged to undertake a benchmarking exercise on the Non-Executive Chairman and Non-Executive Directors' (NEDs) remuneration. Based on the benchmarking analysis, the Company is positioned in the lower quartile (bottom 25%) of the remuneration level. Thus, the revised Directors' Remuneration was proposed, considering the following: a) Fair remuneration to balance the Company's financial capacity and retain the right Board composition.

b) Risks associated with director's fiduciary duties and accountability, reflecting the complexity of the Company's business and operations. The revised Directors' remuneration ensures that compensation aligns with the scope and complexity of their roles and responsibilities.

With the proposed increase, the fees are still below the middle quartile when compared to the peer companies.