Page 46 - HRC_Annual_Report_2023

44 About HRC Value Creation Management Discussion Leadership
& Analysis

FINANCIAL REVIEW

OPERATING INCOME AND EXPENSES

Other income reduced by 38.30% as compared to i.e. Hydrogen Manufacturing Unit and Euro 4 Mogas
FY2022 due to non-recurring liquidated damages claimed. in FY2022. On the other hand, other operating gains
A 6.90% increase in manufacturing expenses during recorded in FY2023 was mainly contributed by favourable
the financial year was mainly attributable to planned mark-to-market effects on commodity swap, offset by
maintenance activities carried out to coincide with the unfavourable exchange rate movement. Finance cost
TA 2023 exercise. Meanwhile, administrative expenses continued to be affected by the interest rate hike, especially
decreased by 13% due to RM12.10 million non-recurring on the USD denominated loans. Taxation in FY2023 was
impairment of equipment made in FY2022. recognised to the extent that it is probable that future
taxable profits will be available for utilisation prior to the
Higher depreciation and amortisation charges, with
an increase of 27.40%, arose from the completion of expiry of the tax benefits.
TA 2023 in the third quarter of 2023 and major projects

TOTAL ASSETS AND LIABILITIES

Total assets decreased by RM984.20 million or 14.90% The valuation basis of these assets is as stated in our
from the previous financial year. Details of total assets of accounting policies.
RM5.60 billion in FY2023 are set out below:
• The Company’s current assets mainly comprise of
• Carrying amount of fixed assets i.e. property, plant and inventories, receivables and bank balances. Current assets
equipment, intangible assets and right-of-use assets of decreased from RM4.30 billion to RM3.30 billion, a drop
RM2.20 billion comprises: of 22.70% as compared to FY2022. The decrease is
mainly due to lower receivables, inventories and bank
CARRYING AMOUNT OF FIXED ASSETS balances as at year end.
Total liabilities decreased by 19.30% or RM1 billion from
RM5.20 billion to RM4.20 billion in FY2023. Further details
are set out below:
• Current liabilities mainly comprise of payables and
borrowings. Trade payables mainly relates to payables
for crude purchases. Lower liabilities is largely due to
settlement of derivative financial liabilities, coupled with
lower crude payables.

• Non-current liabilities mainly comprise of medium term
Mogas (Euro 4M) 41% HDS2 - Hijau 6% notes, which are repayable over a five (5)-year period,
Others 19% Land and Buildings 3% denominated in RM and are secured by way of charges on
HMU 11% E5G 3% the Company’s assets.
TA 2023 8% LRCCU 2%
CAR 7%

CASHFLOW
Cash balance held as at year end remained above RM1 billion to cater for crude purchases payment and working capital.

DIVIDENDS

The Board of Directors assessed the cash flows prior to declaration of dividend in compliance with the Companies Act 2016.
The Board has formed the view that it would not be prudent for the Company to declare any dividends at this juncture, given
the financial performance and volatility of the market. Hence no dividends have been declared for the financial year ended
31 December 2023. The Board will continue to review the dividend prospects, while considering the long-term value creation
for its shareholders. HRC’s Board had on 30 August 2022 approved the Dividend Policy for adoption by the Company.