Thank you all for standing by, and welcome to the PETRONAS Chemicals Group corporate briefing. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question at that time, you'll need to press star one on your telephone. I'd now like to hand over to Alia. Thank you. Please go ahead. Thank you, Tara. Good morning, everyone. I'm Zaida Alia, Head of Investor Relations for PETRONAS Chemicals Group. Thank you for joining us this morning. Following yesterday's announcement, today is our analyst briefing to discuss the acquisition of 100% equity interest in Perstorp Holding AB. We have present today our management team, led by Encik Mohd Yusri, our CEO and Managing Director. Our CFO, Azli. Chief Commercial Officer, Shakeel. Head of Strategic Planning and Ventures, Encik Yaacob. He will be assisted by Mr. Todd Allen on the presentation. We also have present our Chief Manufacturing Officer, Kabir, as well as our Head of Special Projects, Encik Akbar, to address questions at the end of the briefing. The presenters will be the speakers I mentioned, and the flow will be a quick presentation to give you a brief on the acquisition and the details of the transaction. Encik Yusri, I shall now hand over to you. Thank you. Thank you, Alia. Good morning, everybody. Welcome to our analyst briefing covering our announcement yesterday. First, let me recap our growth strategy. If you look at the slide. You know, we first developed our growth strategy in 2013. You know, it's a two-pronged strategy with two main levers. First is sustaining strength in basic petrochemical, basically maximizing our cash generators. Second is to diversify into derivatives, specialty chemicals, and solutions. As we move forward, the efforts were further intensified and in 2017, where we started to develop greenfield and brownfield projects to expand the core business. While we start to step out into specialty chemicals via M&A to acquire companies with the right competencies and enabling chemistries within the next three-10 years. As you know, in 2019, we acquired Da Vinci Group or widely known as BRB International, and now we are building on that. BRB International is the largest independent producer and reseller of silicones and lube oil, lube oil additives and chemicals. Essentially, what we have in mind is to build a sizable specialty chemicals platform, a new leg to support us in terms of generating 30% revenue stream from non-traditional business by 2030. With the marketplace dynamic changing, we revalidated our growth strategy in 2019. We have identified, you know, the 13 specialty end market segment in which we wanted to play, and along with that, we have identified the three pathways for specialty chemicals that we want to venture into. The first is food, feed, and nutrition. Second pathways that we are looking at is industrial additives. The third pathways that we're looking at is household, industrial, and institutional care and also personal care. So with that growth strategy set, you know, it's all about executing that, and I think the announcement yesterday marks another milestone in our growth strategy. To do that, I'll allow Yaacob to further introduce a little bit on our acquisition yesterday. Yaacob? Yeah. Thank you, Encik Yusri. Ladies and gentlemen, let me provide some color on the background of Perstorp. As you can see on the slide, basically, Perstorp was established in Sweden in 1881, and it has more than 140 years of experience, and it's a niche global specialty chemical manufacturer specializing in intermediates and specialty chemicals, mainly for the resins and coatings, engineered fluids, and animal nutrition. Perstorp was previously owned by PAI Partners, which is a mid-cap private equity firm based in Paris. For the financial year of 2021, Perstorp has actually achieved a respectable financial result with EUR 1.33 billion of revenue. EUR 248 million of EBITDA, which gave a respectable 18.6% margin. This was the best results in its 140-year-old history. Yeah. Currently, Perstorp operates seven manufacturing sites across the globe, alongside with three R&D centers. Basically, they are Stenungsund and Perstorp, which are in Sweden, Toledo in the States, Waspik in the Netherlands, Castellanza in Italy, Bruchhausen in Germany, as well as one plant in Zibo, China. We also currently have two tolling facilities in Dordrecht, as well as Vercelli in Italy. Yeah. Currently also a new facility in India is under construction and which is expected to be commissioned in the first half of next year. Perstorp also has presence in 26 countries worldwide, with sales predominantly coming from Europe, followed by APAC and America. Driven by a strong 1,450 staff or employees, Perstorp continues to serve 2,600 customers globally through its 130 products offering from 30 product groups, anchored mainly on their proprietary oxo and polyol chemistries. Customer portfolio is also well diversified, with the top 10 representing approximately 19% of their 2021 total sales. Importantly as well, starting from 2017, Perstorp has intensified its commitment towards sustainability and launched its Finite Material Neutral ambition or aspiration with the end goal of switching to alternative resources that are either abundant or renewable, or to close the loops in order to recycle those that are finite. The following two slides will be on the rationale for the acquisition. For this, let me pass over to my colleague, Todd. Yeah. Over to you, Todd. Thank you, Yaacob. Good morning, ladies and gentlemen, and I'm gonna walk you through a little bit about the rationale and benefits of the acquisition. As we look at the slide in front of you, moving from top to bottom, left to right. Perstorp fits as a growth platform for PCG to expand its specialty chemical portfolio. It's a unique company, presents a unique opportunity for PCG to invest in an ESG-focused market leader that is one of the most ideal candidates for the envisioned sizable specialty chemical platform, catalyzing the future growth of PCG. As we look at the market exposure, as we spoke about the study earlier, it derives 80% of its revenue from the 18 identified attractive end markets, which includes surfactants, specialty polymers, specialty films, plastic additives, coatings, preservatives and biocides, and prebiotics and probiotics. It serves the preferred end markets that we have identified, such as paints and coatings, construction, automotive, personal care, food, feed, and nutrition. It has a leadership position in attractive and growing end markets. It's a global number one market position in greater than 50% of its business line portfolio, such as Penta and TMP. It derives approximately 80% of its net revenues from products which are number one to number three in the market position globally and regionally. It is a market leader of low volume, high value specialty products that serve niche and growing markets. One of the unique things about Perstorp, the technology ownership, robust ownership and value chain integration. The freedom to operate in all of its hydroformylation, oxo and polyol processes required to manufacture the value-adding intermediates and specialty products. It had 36 R&D projects and collaborations with more than 161 partners in fiscal year 2021 alone, thus highlighting its innovation portfolio. It is quasi-backward integrated via pipeline link to the Borealis Stenungsund cracker, which helps deliver a competitive feedstock advantage. When we look at the talented people of Perstorp throughout our engagements, from manager presentations and due diligence processes, including expert sessions and site visits, the management team in the second and third line of employees of Perstorp have fully demonstrated their competence in running the business. This is further embellished by the culturally diverse and inclusive employee background and supports the pivot towards high-margin downstream specialties. As we look at the sustainability focus with the ambition to become Finite Material Neutral, Perstorp has announced clear CO2 reduction targets across Scope one, two, and three that are fully aligned with the Paris Agreement. They also have been approved by the Science Based Targets initiative. The target is to reduce emissions by 46% on Scope one and Scope two, and 28% on Scope three, using 2019 as a baseline. Under the portfolio of Pro-Environment solutions, there are more than 20 different sustainable products developed that serve as green alternative to the existing fossil fuel-derived counterparts in the industry. The finite material neutral ambition set by Perstorp has the end goal of switching to alternative resources that are abundant and renewable or to close the loops in order to recycle those that are finite. Project Air is Perstorp's flagship innovative project to produce 200,000 tons per annum of sustainable methanol starting in 2025 and 2026 to form an infrastructure that is highly competitive cost position for the Pro-Environment polyol production. Perstorp fits as a growth platform for PCG because the growth opportunities and the focus platform to tap into multiple avenues. Three prioritized and faster-growing sunrise markets, namely resins coatings, engineering fluids, and animal nutrition at better than GDP rates. Well-positioned for the significant growth in green products and overall sustainability that may then be further complemented through the inorganic expansion as bolt-ons and expand in newer chemistries to complement the portfolio. The new plant in India will also help secure the long-term presence and footprint in the growth region of Asia. All of these rationale reaffirm Perstorp as the compelling sizable specialty platform candidate for best fit for PCG in the plan to build their growth engine in specialty chemicals. The fundamentals of the company remain robust despite the change in the macro environment. Now, as we focus on the sustainability, which is the slide you see up there now. The Finite Material Neutral ambitions aim to switch to alternative resources that are abundant and/or renewable, or to close the loops in order to recycle those that are finite. In pursuit of the sustainability, Perstorp adheres to established frameworks, as we had just talked about the Paris Agreement, Agenda 2030 and the European Green Deal. From a regulatory perspective, Perstorp is also guided by the EU Chemicals Strategy for Sustainability, as well as the ESG trends in the financial sector. Perstorp has charted sustainability industrial roadmap that aims for specific transformation of raw materials on site-by-site basis to meet the ambition set. As we spoke about Project Air, its flagship innovative project to produce 200,000 tons of sustainable methanol by 2025, 2026 from a large variety of recovered end-of-life streams and green hydrogen, which has an immediate synergy with existing infrastructure at highly competitive cost position for captive Pro-Environment polyol production in Sweden. Perstorp has announced the clear CO2 reductions based on science-based technology, as we spoke of earlier. The target to reduce emissions by 46% in Scope one and two, and 28% by Scope three by 2029, using the 2019 baseline by 2030. These are further complemented by adjacent targets such as reduction of freshwater consumption by 30%, hazardous and non-hazardous waste by 30%, ecotoxic impact by 100%, leading toward a toxic-free environment. Under the Pro-Environment solution, there are more than 20 sustainable products developed that serve as green alternative to the existing fossil fuel-derived counterparts. Highlights include the Voxtar that aims to make up 100% of the Penta offerings in 2026 from 25% today. Evyron for 75% of the TMP in 2026 from 5% in 2021. Neeture for 55% of the neo in 2026 from 2% today in 2021. That concludes the rationale, and I'm gonna turn it over to our CFO, Azli, for the acquisition transaction details. Over to you, Azli. Thank you, Todd. I will cover the next section of the presentation, acquisition details. If we look at the slide, mainly on the segment on the left. The acquisition will be undertaken by PETRONAS Chemicals International B.V. This is our international holding company. For those who are familiar with this entity is the same entity that owns our interest and investment in BRB International. The sale and purchase agreement was signed with Financière Forêt on 14th of May. For your information, Financière Forêt is a unit of PAI Partners, which is a European private equity firm. PCG also co-signed the SPA as a guarantor to the deal to ensure the performance of PCI BV. Moving on to the next, on the right side of the slide. The aggregated purchase price was made following preliminary and final due diligence and risk assessment undertaken by PCG team. The base purchase price of EUR 1.5 billion, equivalent to MYR 7 billion, was derived from all these valuation metrics. As part of the purchase price, it will add up of locked-box interest in the SPA, minus the leakages and any debt payment costs arising from the repayment of the loan at Perstorp. As mentioned by Todd earlier, there's also an India plant earn-out amount of EUR 45 million, which will be payable to the seller upon the project meeting certain milestone. For example, mechanical completion as well as the commercial operations. Lastly, PCIV will also repay all outstanding and unpaid amount or debt at Perstorp upon closing. As at 31 December 2021, that amount is approximately EUR 850 million. Moving on to the next slide. On the basis and justification for the purchase price. The base purchase price of EUR 1.5 billion was derived from Perstorp enterprise value of EUR 2.3 billion. This particular valuation methodology was derived from looking at discounted cash flow, comparable transaction, as well as comparable listed companies among its peers. The EUR 2.3 billion is basically translated into EV/EBITDA of 8.3x based on Perstorp's last 12- months EBITDA of EUR 277 million. For your information, Perstorp, although is privately owned, as a private company, they do publish their quarterly results, and you're most welcome to look at Perstorp's Q1 2022 result, which has been published on 11th of May, 2022. We believe the valuation of Perstorp is fairly priced, taking into consideration the prospect of Perstorp, its strategic fit to PCG, and the agreed EV, which is within the valuation range of comparable transaction, comparable listed companies, and discounted cash flow. In deriving the DCF valuation method, the agreed EV is basically within the range of EV derived from PCG management after taking into account Perstorp's projected revenue, margin contribution, cash flow in the medium term for the business plan. For the long term, Perstorp Group is anticipated to surpass the GDP growth projection in its key market. It's also backed by a high margin project, such as in their plan, as well as expansion into green product line. Now let's look at the illustrative financial effect of the acquisition to PCG based on our result on 31 December 2021. In summary, there's a minor effect to the net asset per share, mainly due to the estimated gross transaction cost of MYR 140 million. This transaction will be earnings accretive to PCG based on our EPS of MYR 0.92 per share in 31 December 2021. Post-acquisition, it will bump up to 0.96% per share. Since PCG will repay and settle all loans of Perstorp upon closing, there will not be any effect on gearing to PCG Group as a result of this transaction. The next slide is more on the next step. As you can see from the Bursa announcement that we made yesterday, this proposed transaction is subject to two main conditions. One is the approval of the shareholders of PCG for the proposed acquisition at the EGM to be convened. For this particular purpose, PETRONAS has provided its undertaking to vote in favor of the proposed transaction at the EGM, being PETRONAS the majority shareholder of PCG. The next condition is the antitrust clearance in certain jurisdictions, and this application for the clearances are expected to be made within 20 business days following the date of the SPA, which is 14th May 2022. We also expect the antitrust clearance as well as the EGM to be obtained within four months from the date of the SPA. I think that's basically the end of the slide and our presentation. We would like to open the session for Q&A. Thank you, Azli. Before we go to the Q&A, I would just like to remind our participants that in the interest of time, we would like to ask you to limit the questions specific to the acquisition, that we are discussing today. Given that we are due to announce our first quarter results at the end of next week, we are currently in close period and will not be able to discuss, any matters relating to the results. With that, I shall hand over to the moderator. Tara, over to you. Thank you. We will now begin the question and answer session. If you'd like to ask a question, please press star one on your telephone and wait for your name to be announced. Our first question comes from Ajay Mirchandani at JP Morgan. Please go ahead. Thank you so much for the presentation, and a large amount of details. Three questions from me. The first question was specifically on Perstorp. I did have a look at the website last night, and we have seen a pretty strong improvement in EBITDA over the last few quarters. Maybe some quick color on specifically what has driven that, because if you look at the number historically, it's been relatively stable, but we've seen a big tick up in the last few quarters, and the likely sustainability of that. Just to extend to that, given that 55% of your sales are Europe-led, is there any concerns on sustainability on that? That's my first question. Second question was specifically around feedstock. There were some comments, again, on the website, specifically about animal nutrition seeing some impact of feedstock. Could you maybe briefly run us through what are the key feedstocks that you source from where, and what are we seeing with regards to that impacting profitability? Because at least your recent quarters don't seem to suggest any of that. The third and last question was specifically on the gearing comment that was made by the CFO right at the end. I did wanna clarify. You say there's no change in gearing. Is that because you're going to basically be simplistically merging this into the existing P&L? Or are you gonna be paying down debt and therefore no change? Maybe just I missed that comment. I just wanted to kinda clarify on that component. Just as an extension to that, a quick color on the fixed and floating mix of the debt currently on Perstorp. Thank you. Oh, thank you, Ajay, for the three questions. I'll try to cover one by one, but I think for question number two, I'll probably ask Todd to contribute in. Your first question with regards to EBITDA, yes, we see, as part of our diligence, we see steady increase in EBITDA and revenue for Perstorp. This is basically mainly derived from a combination, particularly on the sales volume as well as the sales price. It has grown steadily over the last five years. If you look at the margin contribution, which is already published in Perstorp's website, as well as their EBITDA margin, it's quite consistent within 15%-20% EBITDA margin. This is basically because Perstorp having the technical knowledge and the customer intimacy, they are able to pretty much pass on any increase in cost to the customer, thereby managing consistent margin contribution and EBITDA margins throughout the cycle. Sorry, if I can just clarify on that. The part which Yes. I struggle a little bit with is 2018, 2019, 2020, 2021 all have first quarter EBITDA roughly in that SEK 450million-SEK 500 million and this quarter's is obviously at SEK 850 million, right? If I'm just looking at that number, there's been a material improvement in the last few quarters, and I'm just trying to, you know, better understand if that's a sustainable kinda improvement, more specifically because the improvement seems more recent. That's where what I wanted to just better understand. Okay. There are basically a lot of initiatives undertaken by Perstorp to derive that figure. You also notice,Ajay, this is not just specific to Perstorp. It also applies to other specific chemical. I mean, you can also look at our results, you know, having followed PCG over the years. We recorded our best result, you know, in quarter four, 2021. Same goes for the rest of the players within the segment. Okay. With regards to feedstock, the question number two, the two big feedstock for Perstorp is basically propylene and methanol, which is a good kind of strategic fit with PCG because we are one of the largest producer of methanol, fourth largest globally and the largest in Southeast Asia. There we see a lot of potential synergies between PCG and Perstorp post this acquisition. Maybe Todd can chip in after this. With regards to your question number three, we're on gearing ratio. Just like to clarify that upon completion of this deal, which we expect within four months from today, we will settle Perstorp's debt. Upon completion, we will on top of the base purchase price of EUR 1.5 billion, we will allocate around EUR 850 million to pay off Perstorp's debt. Upon completion, Perstorp into PCG will be debt-free, hence why you see there's no change to the gearings of PCG upon completion of this of this deal. I hope that clarifies your question number three, Ajay. Very much. Maybe, for your question number two, I'll invite Todd to chip in. Over to you, Todd. Thank you, Azli. Ajay, thank you for the question. As Azli rightly pointed out, some of the key feedstocks are driven via methanol or the C3 propylene value chain, as well as some ethylene value chain, and in addition to some C4, which are basically Naphtha-based, coming off the cracker as well as being sourced. I mean, the animal nutrition side, as you specifically asked the question, there are components of the animal nutrition with being more of a solution provider of the short chain organic acids that are derived from butyric, as well as propionic in addition to some other particular blends in their portfolio. There is some pressure in that area from rapeseed and other additives that are brought into those particular processes and blended up for a solution providing as a feed additive. Some of that pressure is from some of those ancillary bought products that are used in the blends. Hopefully that gives you some color. Thank you. Our next question comes from Alex Goh at AmBank. Please go ahead. Okay. Thank you very much. I'm actually at Perstorp's website, but I'd just like to know a bit more detail on the group in terms of what is their current capacity production and what is their plant utilization at the moment. All right? The second question is, where do they derive their feedstock from? Is it from Sweden itself? What is the impact from the Russia-Ukraine situation at the moment? Right. My third question is regarding Perstorp's expansion plans. What is their CapEx plans and what would be the production growth expectations over the next two to three years? Thank you, Alex. As you may appreciate, Alex, the specialty chemicals, they are more of margins driven as opposed to volume driven. To answer your questions, its current production capacity is 2.3 MTPA. Million tons. Million tons per annum. With regard to plant utilization, it depends on the demand and cycles for the market. Basically, unlike PCG, where we run our plant flat out based on the availability of feedstock, they are more market driven. This is also to be responsive to the margins contribution and EBITDA contribution per ton in terms of the production and sales. Can you But, uh- Repeat your second question, Alex? Yeah. In terms of first quarter. Do you have any thoughts for, sort of, utilization for first quarter? Just so that we can have, kind of, track. We can only provide you information that publish in Perstorp's website. Currently they do not record their utilization rate. I see. Well, how about the actual output in the first quarter? Do they provide that? Yeah. They do provide their sales volume in their website. You may want to refer to that particular report on the quarterly report. Okay, great. You see here, Alex, you can use their capacity of 2.3 million per annum and translate that to the sales of quarter one to get, you know, an estimate of where they are with respect to rate. From a feedstock perspective, as mentioned, they have seven sites around the world. Two big sites are in Sweden. One of the biggest site in Stenungsund is linked to a cracker, and that's where they source their feedstock from. The other sites, they source feedstock within the region. So far, what we see based on our diligence, there are minimal impact from feedstock perspective on the Russia and Ukraine crisis. If Yaacob and Todd want to add any other color on this question. Yeah. Maybe, just to add on, like what Azli also mentioned earlier on in terms of the feedstock. I think, their main feedstock is basically methanol, which is imported, right? From the market. But then, as rightly mentioned by Mohd Yusri, the Stenungsund plant is connected to the cracker via pipeline. For their C3 is, they are getting it from the neighboring or adjacent plant in Stenungsund. Yeah. I mean, Alex, if you look at Perstorp's quarter one announcement, they do have a statement to say that they expect limited impact from the Russia-Ukraine on their sales and production. Basically in terms of sales, geographic presence is minimally impacted, as well as there's also minimal impact on the source of feedstock to Perstorp arising from this conflict. On your last question, Alex, was it about what is our plan for Perstorp's post-acquisition? Is that right? In terms of the CapEx of Perstorp, you know, what are the expansion plans going forward? You know, how does that translate into their- Okay. Growth in terms of production? Okay. Basically, when you look at the diligence and the high level business plan, they expected to allocate around EUR 100-EUR 200 million every year for growth CapEx and maintenance CapEx. These are basically in terms of capital expenditure, quite small when compared to PCG's capital expenditure. Basically, a specialty chemical, we. They don't build new plants and all that. They basically replace certain units that add value to their products and product lines and improve their margin contribution as opposed to buy, acquire, building a mega plant. That's basically some of the new skill sets and then something new that we explore during the specialty chemicals initiatives. Yeah, maybe if I can add to that. I think one of the flagship project that was mentioned earlier on by Todd, which is Project Air, and that is a sustainable project to basically produce methanol in Stenungsund. I think once that project is FID, then Perstorp will have their own methanol from their own plant rather than buying it from the market. Yeah. I see. All these projects, how much would that add to their production capacity over the next three years, two-three years? We expect, Alex, it will be around 10% of their production capacity over the years. Yeah. I see. Okay, great. Thank you very much. Thank you, Alex. Thank you. Thank you. Our next question comes from Ahmad Usman from Nomura. Please go ahead. Hi. Good morning, everyone. I have some questions here. I just want to check on for the case of your Da Vinci acquisition, right, what has been the success story when it comes to the transition, I mean, and revenue synergies from PCG, which is based in Malaysia. Can we see that happening? Because from what I've seen in the past, there's not been anything material yet, but could this be a different story from this acquisition of Perstorp? That's one. Also, as a follow-up on. Sorry. The next question is on the Shariah status. Although not related, with this acquisition, can we get some assurance that it will be paid out from the non-Shariah cash balance rather than the Shariah, so there is no risk of being booted out of the Shariah status? That's the second question. Then also the other question is with regards to the rationale of the seller. What was the rationale for the sale of this company to PCG? Then the other question. There's quite a few questions actually. The other question is with regards to valuation. I'm sorry, with regards to funding option. Other than cash, could you possibly explore other funding options basically to optimize your capital structure? That's all. Thanks. Thanks, Ahmad. Yusri here. I think I'll take first your first question. I think if you look at BRB, you talk about success stories. You know, if you deep dive into our results, currently BRB's contribution to our EBITDA is small, so that's why you cannot see in our other segment. If you look at how we have integrated BRB into our group for the past year and a half, we have been able to double the EBITDA. We have started to expand and accelerate their growth. We have announced the commercial operations of the new blending plant, basically replication of their unit in Kuantan, Pahang. We are following what we plan to do from that acquisition. It will be similar to Perstorp, but in terms of size, this is more substantial. This is 10 x the size of BRB International, and this is what they call it, a substantial specialty platform for us to build on. On itself, Perstorp alone, you know, you can see their EBITDA and so it adds 28% to our EBITDA immediately, and we will be following the same what they call this strategy of delivering the current business plan of Perstorp and accelerating and improving their growth aspiration and growth aspect. Okay. For the second question, Ahmad, your second question with regard to the Shariah status. Like what we intimated with the analysts and others before, we had engaged the Securities Commission Malaysia on this matter. Based on our engagement, we are quite confident that we are still in the Shariah status list of company. Although the list from the SC will only be out next week, and to be exact, 27th May. On the same day as our quarter one 2022 result announcement. Just to also be transparent, since you asked, this funding for this particular acquisition will be sourced from our mainly dollar account, dollar holdings, dollar-denominated cash. That will also particularly, you know, reduce the impact of the Shariah status as well. On top of that, ever since 31st December 2021, we have also collected, you know, the Shariah and conventional balance and split, and that balance has already been well below 30% as opposed to the threshold of 33%. On your second or on your third question, what is the rationale for the seller to sell Perstorp to PCG? As I mentioned earlier, Perstorp is currently owned by PAI Partners, which is a private equity firm, mainly located in Europe. Being a private equity, they do not hold investment for too long. You know, unlike other private equity funds, PAI tend to take a lot of strategic move in terms of growing its portfolio companies. They believe that Perstorp is in much better hands with a strategic buyer like PCG, where we can integrate our molecules seamlessly with Perstorp, hence the merits for PAI to sell Perstorp to PCG. On your last question with regard to funding option, whether we can explore other funding options instead of 100% cash. If you look at the Bursa announcement, we do contemplate to fund this particular acquisition entirely from our cash balance, simply because we can afford to. We have a massive cash balance without sacrificing our OpEx commitment, CapEx commitment, and our dividend commitments to our shareholders. As and when we see the opportunity to optimize our capital structure, we will do so. I hope those answers your question, Ahmad. Yeah. Just two more questions. I presume there's no profit guarantee for this acquisition. You can just answer a simple yes or no on that. Last question is, did you guys explore Allnex earlier by any chance? I know it's been acquired by PTTGC. I was just wondering whether you have actually explored on that part as well. Okay. Ahmad, can you repeat your first question? Profit guarantee. Yeah. First question is whether there's any profit guarantee on this acquisition? Profit guarantee. Yeah. Okay. To be short and sweet, there's none. No profit guarantee. Okay From the acquisition. You can see also from appendix one of the Bursa announcement, the key highlights of the SPA, that there's no mentioning about any profit guarantee. Because I thought it was referring to a net guarantee. I mean, for the purpose of this deal, PCG is the guarantor for PCI BV for this deal. As I mentioned earlier, PETRONAS, as the majority shareholder of PCG, has also provided its undertaking to vote in favor of the transaction at the EGM. These are all to provide certainty on the deal. On your second questions, with regards to Allnex, I mean, like what Yusri mentioned, we have been scouting for sizable specialty chemical platform, you know, over the past five years. Allnex, you know, one of the candidates that we have looked so far. You know, rightly pointed out, PTTGC acquired Allnex last year, July, at 12.2x EBITDA. In comparison to this deal, we believe, you know, our deal is fairly valued. Okay. I won't take up too long. I'll just pass over the queue to others. Thank you. Thank you, Ahmad. Our next question comes from Vivek Rajamani at Morgan Stanley. Please go ahead. Hi. This is Mayank from Morgan Stanley. A couple of questions from my end. The first one was, can you just give us a bit of an EBITDA breakdown by individual subsegments for Perstorp? What percentage comes from where? How much is paints and coatings? How much is Agrichem? And how much are those other subdivisions on plastics, et cetera? That was one, first question. The second question was, if you look at, I think Perstorp had done an acquisition some time back. I just wanted to understand whether it's integrated and how much has been the EBITDA impact of that coming through, in the first quarter of this year. The last question from a management perspective was in terms of, alignment for the management against PCG, is there anything that has been talked about from a compensation, et cetera, perspective as well? Thanks, Mayank. Yusri, I'll take maybe the third question first. I think for now, the intention is for us to keep Perstorp and preserve it as an individual entity, so similar as what we did with BRB International. They remain independent within the PCG Group. Even the management and so on remain status quo and will run and operate the acquisition as a standalone subsidiary within the group. The first and second questions are. No, maybe for Mayank, for the EBITDA, they do publish their EBITDA in their quarter one results announcement last week. In terms of split based on whether it's resin coating, engineering fluid, and animal nutrition, I don't think they publish it by EBITDA. Based on our diligence, majority of the EBITDA are contributed into coatings and resin, as well as the advanced engineering fluids, as opposed to animal nutrition. All three key segments are EBITDA positive. Got it. To follow up on this point, can you just give us an idea of how much integration from a volume perspective will you have with Perstorp on methanol and propylene if you were to kind of take that into account today? Obviously, you will not directly sell, but I'm just saying from a volume perspective, what will be the level of integration you will get to more downstream? Okay. Yeah. I mean, if you look at our story when we acquired BRB, we did a chemical replication in Malaysia by bringing or by building the blending plant in Gebeng. These are one of the success story that we want to replicate for the post-acquisition of Perstorp. I mentioned earlier that majority of their feedstock, methanol and propylene, we do have potentially surplus propylene coming out from Pengerang, as well as being one of the largest methanol producer in Southeast Asia and globally. That's where we see a lot of synergies with Perstorp. One is the immediate one, post-acquisition may be to look at chemical replication of Perstorp's business and operations into Southeast Asia, where we believe there has a growing untapped market in specialty chemicals in this region. I think that that's basically some of the thing that we are exploring. Okay. Got it. Okay. Thank you. Thank you. Our next question comes from Ian Lee at Allianz Global Investors. Please go ahead. Thank you very much. Can you hear me? Hello? Yes, Ian, we can hear you. Okay. Thank you. Yeah. We can hear you. Thank you. Thank you very much for that. Yeah, I just want to get more clarity in terms of the very first question I would ask, and that regards to the earnings increase by Perstorp. You know, I mean, that's a significant increase from first quarter. I understand when usually said that you know the whole industry is benefited. There's also the comment from the management that you know some of the pricing that we're seeing is not sustainable. How did you get comfort to invest it so that you know what you're buying is not being at the top of the cycle in terms of the earnings? Thank you, Ian, for the question. Yes, I think if I were to summarize the question, it's more on the sustainability of earnings of Perstorp moving forward, whether. Correct. We are buying Perstorp at the top of the cycle, is it? Yeah. Okay. I think to answer that, Ian, we've looked as part of our due diligence, we look at the cash flow profile, earnings profile for the past five years as well as for the next five and ten years of Perstorp. Looking at their funnel of growth pipeline moving forward and earnings and the quality of earnings based on our diligence. We are quite confident that based on their specialty chemicals initiative, where they are able to preserve the margin contribution by passing over any increase in feedstock to their customers, they are able to generate the stable EBITDA margins throughout the cycle. With the growth pipeline, we believe Perstorp earnings will continue to grow quarter to quarter and year by year, especially with the potential synergy with PCG post-acquisition. I also wanna. I think, you know, I mean, the big question is always pricing, right? Pricing has been driving a lot of the revenue and profit growth over the last, you know, 6-9 months. The question then, of course, is, you know, I'm just wondering if there is anything specific, whether there's a new plant by Perstorp which brought, you know, a significant increase in terms of earnings. I just want to get a sense of that. Maybe that sustainability. That's fine. Okay. I get where you're coming from in terms of, you know, looking at where we are in terms of that cycle. Yeah. Right. No, my second que- Sorry, Ian. Yeah. Sorry. If I may add, if you look at where Perstorp is when they started this year, if you look at their Pro-Environment product slates, you know, Penta is now at 25%, TMP at 5%. That is a new revenue stream with a different EBITDA margin that they have added. That strengthens their earnings a bit, but that is not the only one. That is what we believe that can be sustainable, and which is not- That's it. Mm-hmm. at the top of the market. That's it. Okay. That's one element if you know. Thank you. Okay. That helps. The second question is really on the sustainability drive. I mean, you know, Perstorp seems to be a very pro-environmental company in terms of the products, you know, whether it's Scope one, Scope two, or Scope three. How can you leverage that and bring that back into the PETRONAS Chemicals business? I mean, what is there anything that you can do? Because this comes to the direct side of synergies, right? M&A, we like to tie to the four companies which buy, you know, 1 + 1 is 2.5 or three, right? Well, just 1 + 1 = 2. Can you maybe share with us in terms of the synergy? You mentioned new markets in Asian, which you can, you know, look at the products, which can help. That, that's great. Can you also share with us in terms of whether there's the environmental side, the sustainability side, and what other synergies that you can bring into the bigger company? Yeah. Maybe I'll take that. Yeah, Yusri here. I think first and foremost is in bringing in a new bio sustainable product line into our portfolio. That's one, and maybe then start replicating that to this region, to this market. Secondly is Perstorp in their operation in Europe are comparatively to PCG, are a bit more advanced in some of the sustainability framework and sustainability practices. Those are immediate replications that we can do and bring it up on best practices to our operations within PCG's context. Finally, if we look at where Perstorp wants to go in their flagship project, Project Air, that we talk about, that is a sustainable methanol 200,000 ton methanol producer. As you know, we are a huge methanol producer, and those would definitely, you know, bring leverage and bring synergy to what we can do moving forward within our methanol portfolio. Those are some of the few examples that we see. Mm-hmm. Although there are, if you look at in terms of the framework of how Perstorp is driving their ESG, that's definitely something that would, you know, be leveraged towards PCG and vice versa in what we're doing also within our CO2 capture and so on within PCG itself. That's great. My last question relates to the talent within Perstorp. I mean, obviously within private equity, and we know that private equity managers try to drive the assets very hard. My question then comes down to is how do you retain talent? These individuals seem very hungry. So how do we retain that talent? Secondly is are there concerns that because private equity tends to drive these assets hard, there's been underinvestments in the underlying assets? Thank you. Okay. Thanks for that question. Yes. As mentioned by Azli earlier, PAI, which is the private equity owner of Perstorp, it's not the way when we did our diligence, is not a typical PE owner. They also took some strategic view. You see Perstorp's history, you saw growth and also transformation of the group within PAI's ownership. They have taken some strategic steps and strategic view with respect to Perstorp as a company. Okay. That's from a group perspective. When we look at the talent, because of the history, because of the view of PAI, you see a very what do you call this? Invested employees and talents of Perstorp, and we like what we saw. These talents are committed to the company. These talents are a proof that it is not a typical PE owned company that is for the sake of getting in and getting out. These talent are invested and this talent we believe will be able to help us grow the company in the longer run. Okay. Great. Thank you. Thank you very much for that. Thank you. Our next question comes from Ajay Mirchandani at JP Morgan. Please go ahead. Thank you. Three follow-ups from me, gentlemen. The first one was specifically on your very EU-heavy exposure of sales volumes. Given it's at 55%, any quick comments specifically on, you know, any interim weakness given what we're seeing with, you know, recession concerns, energy, cost spikes, et cetera? Just as an extension to that question, maybe some quick color on the top five or top 10 customer concentration, and kinda key sectors, or segments involved there. Second question was just to the comment that was made earlier, specifically on the Pro-Environment sustainable product suite, where if I heard this correctly, you said this does make better margins, better profitability. A quick sense of how much of a margin premium do these products have, maybe some color on that. The third and last one is I just wanted to kinda understand what was the current weighted average cost of debt for Perstorp today. Thank you. Thank you, Ajay, for your questions. On your first question on EU concentration, you really point out that around 50% of their sales basically in Europe. In your question is more driven by the cost spike based on what happened. As you look at the quarter one 2022 Perstorp's result, they have registered even better quarter compared to quarter four and quarter three last year. You know, we see there's a huge potential of Perstorp as the European markets opens up and then, you know, prices and economic activity starts to pick up. We see a lot of benefits from concentration in European market. With regards to question number two in terms of product portfolio. Sorry. Just to close out on question one, any perspective on? Yeah. You know, the customer concentration mix, the top five, top 10, and which are the key kinda subsectors involved there? Yeah. I think they're quite fairly distributed. I think Todd mentioned earlier that their top 10 customers contribute to around 20% of the revenue. They're quite well spread out, and it's quite diverse. There's no dependency on one single customer. That is basically what we find out from our due diligence. Subsector mix, roughly, again, maybe top two or three key subsectors, which are your consumers. They're basically more on resins and coating and engineering fluids. Okay. On the second and third question. On the second question with regards to premium margin. Basically what we've discovered from the diligence. The Pro-Environment product typically command or we can, you know, expect 10%-15% higher than other conventional products. That's basically the margin uplift in margin that Perstorp expected to achieve from its Pro-Environment products. This is EBITDA margin. On your third question. 10%-15% premium? It depends product by product or on average. I think in terms of generally, in terms of sales price- Yeah. It's basically it can command 10%-15% higher than the conventional product lines. Understand. Weighted average cost of debt, please. It's basically the cost, the average cost of debt is around 5%-6%, which we believe is fairly expensive, you know, because it's probably owned by a private equity. It's kind of highly geared as well. That's why we see the benefit of settling the loan upon completion. You know, based on PCG's own credit standing, we can gear up, potentially, Perstorp with a much more attractive financing facility like what we did for BRB post-acquisition. Excellent. Thank you so much. Thank you, Ajay. Our next question comes from Hie Ming Kong at UOB. Please go ahead. Hi, good morning. Thanks for the briefing, guys. I just have a few questions. Okay. My first question is on PCG. Can we expect any more large M&A as moving forward? Or should we reasonably expect that this is the only large M&A that you would do for this year, and there shouldn't be any more of this size? My second question is, you talked about synergies earlier. Can we have maybe a general ballpark on what is your assessment on the value of the synergies that you can reap from the two entities combined, you know, including not just in terms of the markets that you can tap on, revenues, but also on, you know, let's say cost savings in terms of feedstock as well? In regards to this, can we reasonably expect, for example, do you require them to set up a facility base in Malaysia, perhaps in Penang? My last question, third and last question is, I think earlier you touched on PAI, you know, the private equity firm which has been instrumental in transforming Perstorp to, you know, where it is today in terms of the portfolio. I did see, you know, well, on quick Google that, you know, in the past, you know, there were some transactions as well, you know, Perstorp, where PAI did some transactions of Perstorp's selling some of Perstorp business to PTT as well. Overall, I think my question for this is that, you know, for this acquisition, should we be concerned from the investor's point of view, where, you know, the switching of say the business direction or the culture from PAI to the new owner, which is PETRONAS, towards the existing staff and the business direction of Perstorp? Should we be concerned on that, or are the interests in terms of the business direction are quite aligned between the old owners and the new owners? Yeah. That's all for my questions. Thank you, Ming. There's four questions. I'll answer the first question with regards to any more large M&A deals. Our last M&A was in 2019. That's for BRB. What Yusri mentioned earlier, what we plan to do post-acquisition is to preserve and grow Perstorp. We want Perstorp to deliver its business plan as we diligenced during our due diligence, and that's the plan that we want to focus on post-acquisition. Whether there'll be another large M&A transaction, I mean, as we speak, at the moment, I cannot promise that for the next 5 or 10 years. As we continue to grow our portfolio into specialty chemicals, there may be a few bolt-on M&A that we could pursue. Those M&A would potentially be of a smaller nature to bolt on Perstorp and BRB further as part of PETRONAS's specialty chemicals portfolio. On your second question with regards to value of synergies, yes, as part of our diligence, we do value potential synergies that we can reap from this acquisition. I think that one, we keep it close to our chest. We want to, you know, like I mentioned earlier, focus on Perstorp delivering its business plan. One of the things, a few synergies that we talk about is basically chemical replication into Southeast Asia, leveraging on our feedstock, methanol and propylene and other part of intermediate petrochemical product that could be beneficial for Perstorp as we grow Perstorp's customer base more on Southeast Asia as well as Asia Pacific. Your third question, will PCG expect PETRONAS to set up in Malaysia? I think this is covered in my you know answers previously. This is one of the few things that we will expect in terms of chemical replication to Southeast Asia. Your last question with regards to any concern to integrate Perstorp into PCG after PAI's transformation on the company. As you may expect, a private equity, their involvement in Perstorp mainly limited to their board membership in Perstorp. There's 2 directors in Perstorp from PAI. There's no secondees from PAI into the management, so the management are being kept within Perstorp, and this is the same management that will be acquired from this deal. The same kind of a culture management that they have, you know, that we have witnessed will be the same management that we will inherit post-acquisition. Yeah. Yeah. If I may add, Ming Kong, I think you see here. Yep. I've mentioned it earlier when I was talking about the talent, and we believe the culture of the company that we're acquiring is quite similar, and there's not going to be a clash of culture, and the assimilation or integration of the two companies into PCG's group of companies would be seamless, and for us to ensure that the company continues to move in the right direction. All right. Got it. Thank you. Thank you so much. Thank you. Our final question comes from Piyanan Panichkul from UBS. Please go ahead. Yeah. Thanks for letting me in. I just have three quick questions and can I ask it one by one please? The first one is to follow up the management retention question. I wonder if there's any lockup period for management at Perstorp, and also R&D specialists are there? Currently, there's no lockup period at the moment, Piyanan. We're not ruling out offering a retention package to selected management based on their, you know, criticality of positions. Yeah. Post-closure. Post completion of the deal. Okay. Second question is regarding the balance sheet and performance of Perstorp in the past two years. What really drive the high debt and negative return earning at the company now? Was it just CapEx M&A or is there any large dividend payout? If you look at the revenue or volume of the company, I wonder what was the volume growth in 2021, please? Okay. When it gets to your balance sheet, I mean, you rightly pointed out that the company as it stands now is quite highly geared. I think gearing is about 80/20, if I'm not mistaken. That's also mainly driven by the high interest expense, and that was impacted in terms of their net earnings. This is where we believe PCG could be, you know, could be adding value to Perstorp in the sense that, you know, upon settlement of all the loans at Perstorp, we could drive the earnings potential of Perstorp by, you know, injecting slightly more attractive, you know, financing instrument that can improve their balance sheet a bit as well as potentially fund Perstorp's moving forward to cater for their growth potentials. Do you have any volume growth number for 2021, please? I can only make disclosure based on what Perstorp has disclosed, and not anything more than that. Currently, they do not disclose their sales growth by quarter. I think we can potentially explore disclosing that post-closing. Maybe I can ask it generally, what really drives the increase? Yeah. In revenue for over the past year? Was it just margin increase or is there any significant project startup at all? Okay. This, basically, like what Yusri mentioned, it derives from, you know, a lot of new projects initiative. They did have a expanded capacity in their plant in Zibo in China that generated additional revenue. There's also few new products, especially on the Pro-Environment product that Perstorp has introduced over the past two years that have garnered a lot of incremental revenue and incremental margin per product segment that has contributed a lot to Perstorp's earnings. Okay, thank you. Last question, you know, regarding your top product. It's quite impressive to see that, you know, 80% of your pro-product has a top three market share. But if I take a look at the specifically for the coating segment, what is the top product that drive revenue or EBITDA for Perstorp? And could you comment, you know, in terms of market share, what was the market share rank or the market share of that product and how fragmented the market is for this top product, please? Thank you so much. Thank you, Pang. For this, I may need Todd, if you can provide some color on the questions. Thank you, Azli. As we take a look at their top products in general, the polyol segment has been a very robust and growing segment where they have a leading edge in products like TMP, as well as their neopentyl glycol. Then we take a look at where they are with potentially some of their other key products in the growing markets, like 2-ethylhexanoic acid, leading positions in safety glass and high-rise glass, as an additive in those spaces. That'll give you some color of their key end market and key products that they're continuing to grow and take advantage of the trends in the marketplace. Thank you. Thank you, Pang. Thank you, everyone. We have no further questions, so I will hand back to Alia for closing comments. Thank you. Thank you, Tara. Thank you, ladies and gentlemen, for your questions and for your participation today. Do reach out to us via email or call should you have any follow-up questions. For the analysts, kindly share your reports once they are published. Thank you, everyone, and have a nice day today. We'll see you again next week.