DAGANG NEXCHANGE BERHAD (FORMERLY KNOWN AS TIME ENGINEERING BERHAD) REVISED PROPOSALS Page 1 of 25

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1 Page 1 of 25 DAGANG NEXCHANGE BERHAD (FORMERLY KNOWN AS TIME ENGINEERING BERHAD) ( DNeX OR THE COMPANY ) (I) (II) (III) (IV) PROPOSED RIGHTS ISSUE; REVISED PROPOSED SPECIAL ISSUE; REVISED PROPOSED ACQUISITIONS; AND PROPOSED ESOS (COLLECTIVELY REFERRED TO AS THE ) Unless otherwise stated, all capitalised terms and abbreviations used herein shall have the same meanings as those previously defined in our announcement dated 18 June 2014 ( Announcement ). 1. INTRODUCTION We refer to the announcements made on behalf of the Board by AmInvestment Bank on 18 June 2014, 17 September 2014, 18 November 2014, 21 November 2014, 16 February 2015 and 26 February 2015 in relation to the Proposals. Please note that this announcement should be read in conjunction with the Announcement, which is the first announcement in relation to the Proposals that was announced on 18 June 2014, on behalf of the Board by AmInvestment Bank. For information purposes, AmInvestment Bank had on 18 June 2014 announced on behalf of the Board that DNeX wished to undertake the Proposed Rights Issue, Proposed Special Issue, Proposed Acquisitions and Proposed ESOS. DNeX had also on 18 June 2014 entered into a conditional share sale agreement ( SSA ) with Azman bin Karim, Abdul Manaf bin Shariff and Khoo Kok Seng (collectively referred to as the Vendors ) for the Proposed Acquisitions of the 100.0% equity interest in OGPC Sdn Bhd ( OGPC ) and 52.0% equity interest in OGPC O&G Sdn Bhd ( OGPCOG ), a 48.0%-owned associate company of OGPC, for a total purchase consideration of RM203,000,000 ("OGPC Group Purchase Consideration") to be satisfied partially via cash consideration of RM100,000,000 ( Cash Consideration ) and the remaining RM103,000,000 via issuance of 396,153,846 new ordinary shares of RM0.20 DNeX shares ( Share(s) or DNeX Share(s) ) with 198,076,923 Warrants at an issue price of RM0.26 per Share ( Consideration Share(s) ) on the basis of one (1) Warrant for every two (2) new Consideration issued which was fixed by the Board and announced on 18 June On behalf of the Board, AmInvestment Bank wishes to announce that DNeX had on 5 March 2015, entered into a supplemental agreement in relation to the SSA with the Vendors to vary such terms as stipulated in the SSA ("Supplemental SSA") whereby the total purchase consideration of the Proposed Acquisitions will be revised to RM170,000,000 ("Revised OGPC Group Purchase Consideration") to be satisfied partially via cash consideration of RM83,000,000 ( Revised Cash Consideration ) and the remaining RM87,000,000 via issuance of 362,500,000 new DNeX with 181,250,000 Warrants at a revised issue price of RM0.24 per Share ( Revised Consideration Share(s) ) on the basis of one (1) Warrant for every two (2) Revised Consideration issued ( Revised Proposed Acquisitions ). Please refer to Sections 2 and 4 of this announcement for more information on the Revised Proposed Acquisitions and Supplemental SSA respectively. In addition, DNeX has revised the Proposed Special Issue as per the Announcement from 50,000,000 Special Issue together with 25,000,000 Warrants on the basis of one (1) Warrant for every two (2) Special Issue at an issue price of RM0.22 per Special Issue Share to 130,000,000 Special Issue together with 65,000,000 Warrants on the basis of one (1) Warrant for every two (2) Special Issue at an issue price of RM0.22 per Special Issue Share ( Revised Proposed Special Issue ). Please refer to Section 3 of this announcement for more information on the Revised Proposed Special Issue. The Proposed Rights Issue, Revised Proposed Special Issue, Revised Proposed Acquisitions and Proposed ESOS shall be collectively referred to as the Revised Proposals. For avoidance of doubt, the Proposed Rights Issue, Proposed ESOS and the other terms and conditions remain unchanged as per Announcement unless otherwise stated herein.

2 Page 2 of REVISED PROPOSED ACQUISITIONS Pursuant to the Supplemental SSA, the Revised Proposed Acquisitions of the 100.0% equity interest in OGPC and 52.0% equity interest in OGPCOG will be settled for a Revised OGPC Group Purchase Consideration of RM170,000,000, which is to be satisfied partially via Revised Cash Consideration of RM83,000,000 and the remaining RM87,000,000 via issuance of 362,500,000 Revised Consideration with 181,250,000 Warrants at a revised issue price of RM0.24 per Revised Consideration Share on the basis of one (1) Warrant for every two (2) new Consideration issued. The breakdown of the revised purchase consideration for OGPC ( Revised OGPC Purchase Consideration ) for each of the Vendors is as follows:- Vendors No. of OGPC Equity interest in OGPC Revised OGPC Purchase Consideration Cash To be satisfied via DNeX RM RM RM No. of Warrants Azman bin Karim 262, % 86,434,268 42,200,261 44,234,007 92,154,182 Abdul Manaf bin Shariff 87, % 28,811,422 14,066,753 14,744,669 30,718,060 Khoo Kok Seng 150, % 49,391,010 24,114,434 25,276,576 52,659,533 Total 500, % 164,636,700 80,381,448 84,255, ,531,775 The breakdown of the revised purchase consideration for OGPCOG ( Revised OGPCOG Purchase Consideration ) for each of the Vendors is as follows:- Vendors No. of OGPCOG Equity interest in OGPCOG Revised OGPCOG Purchase Consideration Cash To be satisfied via DNeX No. of Warrants RM RM RM Azman bin Karim 300, % 3,094,211 1,510,703 1,583,508 3,298,976 Abdul Manaf bin Shariff 210, % 2,165,948 1,057,493 1,108,455 2,309,281 Khoo Kok Seng 10, % 103,141 50,356 52, ,968 Total 520, % 5,363,300 2,618,552 2,744,748 5,718, Basis and justification of arriving at the Revised OGPC Group Purchase Consideration The Revised OGPC Group Purchase Consideration was arrived at on a willing buyerwilling seller basis after taking into consideration the following factors:- (a) (b) the audited PAT of OGPC and OGPCOG for the FYE 31 December 2013 of RM24.25 million and RM1.03 million respectively. Subsequent to the Announcement, the Accountants Report of OGPC Group for the FYE 31 December 2013 was prepared in compliance with the Malaysian Financial Reporting Standards ( MFRSs ) and International Financial Reporting Standards ( IFRSs ), with OGPC Group audited consolidated PAT at RM25.28 million; any dividend to be paid by OGPC Group (whereby OGPC Group s adjusted consolidated net tangible assets ( NTA ) has been revised to rendered not less than RM44.38 million consisting of a cash balance of not less than RM25.20 million as at the completion date of the Revised Proposed Acquisitions pursuant to the Supplemental SSA). Please refer to Section 4.8 for more information.

3 Page 3 of 25 For information purpose, the SSA dated 18 June 2014 states that any dividend to be paid by OGPC Group whereby OGPC Group s adjusted consolidated NTA would be rendered not less than RM53.00 million consisting of a cash balance of not less than RM30.10 million as at the completion date of the Proposed Acquisitions. In relation to the above, for information purpose, the audited NTA of OGPC and OGPCOG for the FYE 31 December 2013 are RM78.30 million and RM5.74 million respectively. Subsequent to the Announcement, based on the Accountants Report of OGPC Group, the audited consolidated NTA of OGPC Group for the FYE 31 December 2013 is at RM83.56 million. (c) (d) the outlook of the oil and gas ( O&G ) industry in Malaysia and OGPC Group s future business prospects as set out in Sections 6.2 and 6.4 of this announcement respectively; and trading multiples of comparable companies listed on the Main Market of Bursa Securities ( OGPC Group Comparable Companies ) as set out in Appendix I of this announcement. At this juncture, there are no company listed on Bursa Securities that can be considered to be directly comparable to OGPC Group in terms of, amongst others, composition of business activities, production capacity, risk profile, asset base, profit track record, financial position, prospects and competitive environment. However, for illustration purposes only and in order to facilitate the evaluation and assessment of the Revised Proposals by DNeX s shareholders, Protégé Associates Sdn Bhd, being the Independent Market Researcher for DNeX has identified several companies listed on the Main Market of Bursa Securities that are comparable with OGPC Group based on the following criteria:- (i) (ii) (iii) registered a turnover of over RM100 million based on latest financial information; involved in the provision of pumps, valves or compressors; and caters to the O&G industry. The following considerations are taken into account in arriving at the Revised OGPC Group Purchase Consideration:- (e) the Revised OGPC Group Purchase Consideration represents a PER of 8.5 times based on the Accountants Report of OGPC Group s average three (3) financial years from FYE 31 December 2011 to 2013 audited consolidated PAT of approximately RM20 million as follows:- OGPC Group (RM 000) Audited Consolidated PAT for FYE 31 December: , , ,279 Average 19,996 The Revised PER of 8.5 times is lower than the average trading PER of OGPC Group Comparable Companies of times. Based on the Accountants Report of OGPC Group s for the FYE 31 December 2013, the Revised PER is 6.72 times.

4 Page 4 of Basis and justification of arriving at the revised issue price of the Revised Consideration Share For information purposes, the issue price of RM0.26 per Consideration Share which was fixed by the Board and announced on 18 June 2014, after taking into consideration the TERP of RM0.2811, calculated based on the 5D-VWAMP of DNeX up to and including 17 June 2014 of RM0.3238, being the date immediately preceding the date of the execution of the SSA in connection with the Proposed Acquisitions which represents a discount of approximately RM or 7.51% to the TERP of RM On behalf of the Board, AmInvestment Bank wishes to announce that the issue price of RM0.26 per Consideration Share is revised to RM0.24 per Revised Consideration Share after taking into consideration the TERP of RM0.2691, calculated based on the 5D-VWAMP of DNeX up to and including 4 March 2015 of RM0.3046, being the date immediately preceding the date of the execution of the Supplemental SSA in connection with the Revised Proposed Acquisitions which represents a discount of approximately RM or 10.81% to the TERP of RM Source of funding The Company intends to fund the Revised Cash Consideration of the Revised Proposed Acquisitions via the following sources:- Sources of funding RM 000 Proceeds arising from Proposed Rights Issue 83,000 Total 83, Liabilities to be assumed a) OGPC As at 27 February 2015, being the latest practicable date prior to this announcement ( LPD ), OGPC has Multi Option Line facilities from the following financial institutions:- Name of financial institution Facility amount RM 000 Utilisation as at LPD RM 000 CIMB Bank Berhad 7,600 7,023 HSBC Bank Malaysia Berhad 3, Malayan Banking Berhad 3,000 1,599 The above facilities are secured by, amongst others, joint and several guarantees of the Vendors. DNeX Group shall discuss with the respective financial institutions and if required, will provide corporate guarantees for the aforesaid facilities. Save for the aforesaid, there are no liabilities, including contingent liabilities and guarantees to be assumed by DNeX Group pursuant to the acquisition of OGPC. b) OGPCOG CIMB Bank Berhad has granted a Multi Option Line facility of RM3,000,000 to OGPCOG, of which none has been utilised as at LPD. The above facilities are secured by, amongst others, joint and several guarantees of the Vendors. DNeX Group shall discuss with CIMB Bank Berhad and if required, will provide corporate guarantees for the aforesaid facilities.

5 Page 5 of 25 Save as disclosed above, there are no further liabilities, including contingent liabilities and guarantees to be assumed by DNeX Group pursuant to the acquisition of OGPCOG. 2.5 Additional financial commitment required Save for the Revised OGPC Group Purchase Consideration, there are no additional financial commitments required by DNeX to put the business of OGPC Group onstream. 3. REVISED PROPOSED SPECIAL ISSUE DNeX has revised the Proposed Special Issue as per Announcement from 50,000,000 Special Issue together with 25,000,000 Warrants on the basis of one (1) Warrant for every two (2) Special Issue at an issue price of RM0.22 per Special Issue Share to 130,000,000 Special Issue together with 65,000,000 Warrants on the basis of one (1) Warrant for every two (2) Special Issue at an issue price of RM0.22 per Special Issue Share. For avoidance of doubt, other terms and conditions in relation to the Revised Proposed Special Issue remain unchanged as per the Announcement unless otherwise stated herein. 4. SALIENT TERMS OF THE SUPPLEMENTAL SSA Pursuant to the Supplemental SSA, both DNeX and the Vendors have mutually agreed that the SSA shall be amended as follows:- 4.1 by deleting Clause 1.1 Definition of Conditional Period in its entirety in the SSA and replacing the same with: Means the period of fourteen (14) months from the date hereof or such extended period as the Parties may mutually agree in writing as referred to in Clause 3.1 of the Supplemental SSA. 4.2 by deleting Clause 1.1 Definition of Consideration in its entirety in the SSA and replacing the same with: Means the 362,500,000 DNeX at an issue price of RM0.24 together with 181,250,000 Warrants pursuant to the Proposed Acquisition as set out in PART B OF THE FIRST SCHEDULE of the Supplemental SSA. 4.3 by deleting Clause 1.1 Definition of Proposed Acquisition in its entirety in the SSA and replacing the same with: Means the proposed acquisition by the Purchaser of the Sale from the Vendors to be satisfied via payment of RM83,000,000 in cash and issuance of 362,500,000 Consideration together with 181,250,000 Warrants in the proportion set out in the SIXTH OF THE FIRST SCHEDULE (PART B) and upon the terms and subject to the conditions of the Supplemental SSA. 4.4 by deleting Clause 1.1 Definition of Proposed Rights Issue in its entirety in the SSA and replacing the same with: Means the proposed renounceable rights issue of 465,146,809 ordinary shares of RM0.20 each in DNeX ( Rights ) together with 465,146,809 new free detachable warrants ( Warrants or DNeX Warrants ) at an issue price of RM0.21 per Rights Share, on the basis of three (3) Rights together with three (3) Warrants for every five (5) existing DNeX held as at an entitlement date to be determined later.

6 Page 6 of by deleting Clause 1.1 Definition of Proposed Special Issue in its entirety in the SSA and replacing the same with: Means the proposed special issue of 130,000,000 DNeX together with 65,000,000 Warrants on the basis of one (1) Warrant for every two (2) special issue shares at an issue price of RM0.22 per DNeX Share. 4.6 by deleting Clause 1.1 Definition of Purchase Consideration in its entirety in the SSA and replacing the same with: Means the aggregate sum of Ringgit Malaysia One Hundred and Seventy Million (RM170,000,000) Only. 4.7 by deleting Clause 2.2(b) Mode of Payment and Satisfaction in its entirety in the SSA and replacing the same with: (b) (i) (ii) on a day within the Completion Period, the Purchaser shall pay to the Vendors the balance purchase consideration of Ringgit Malaysia One Hundred and Sixty Million (RM160,000,000) Only ( Balance Purchase Consideration ) in the manner set out below:- by the payment from the Purchaser to the Vendor the cash consideration of Ringgit Malaysia Seventy Three Million (RM73,000,000) Only in such proportion as set out against their respective names in the SEVENTH, PART A OF THE FIRST SCHEDULE by way of telegraphic transfer to the Vendors bank account, or a banker s cheque drawn on a Malaysian bank and issued in favour of the Vendor; and allot and issue the Consideration, each credited as fully paid-up and ranking pari passu in all respects with all the then existing shares of the Purchaser in favour of the Vendors in such proportion as set out against their respective names in the PART B OF THE FIRST SCHEDULE of the Supplemental SSA. 4.8 by deleting Clause 5.2(g) Negative Covenants in its entirety in the SSA and replacing the same with: declare any dividend or make any distribution of the capital of the OGPC Group to its members in any way or do or suffer anything whereby its adjusted consolidated net tangible assets would be rendered less than RM44,380,000 consisting of a cash balance of not less than RM25,200,000 as at the Completion Date; Please not that Clause 5.2 Negative Covenants in the SSA starts with the statement Unless otherwise disclosed in writing to the Purchaser prior to the execution of this SSA, the Vendors hereby covenant and undertake with the Purchaser that except as otherwise disclosed in writing to the Purchaser prior to the execution of this SSA or as provided in this SSA, the Vendors shall ensure that they and/or the OGPC Group, (as the case may be) (each in relation to themselves and their capacity as shareholders in the OGPC Group), shall not between the date of this SSA and the Completion Date, without prior written consent of the Purchaser:- [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

7 Page 7 of by deleting Part A of the First Schedule in its entirety in the SSA and replacing the same with: FIRST SECOND THIRD FOURTH FIFTH SIXTH SEVENTH Vendors Existing in OGPC of RM1 Percentage of Held in OGPC Existing in OGPCOG of RM1 each Percentage of Held In OGPCOG Cash Consideration for OGPC Cash Consideration for OGPCOG Aggregate Cash Consideration for OGPC Group (Fifth Column + Sixth Column) No. of DNeX (%) No. of DNeX (%) (RM) (RM) (RM) KHOO KOK SENG 150, % 10, % 24,114,434 50,356 24,164,790 Deposit Sum: 2,911,410 AZMAN BIN KARIM 262, % 300, % 42,200,261 1,510,703 43,710,964 Deposit Sum: 5,266, ABDUL MANAF BIN SHARIFF 87, % 210, % 14,066,753 1,057,493 15,124,246 Deposit Sum: 1,822, Total 500, % 520,000 52% 80,381,448 2,618,552 83,000,000 [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

8 Page 8 of by deleting Part B of the First Schedule in its entirety in the SSA and replacing the same with: FIRST SECOND THIRD FOURTH FIFTH SIXTH Vendors DNeX Consideration for OGPC DNeX Consideration for OGPCOG Aggregate DNeX Consideration for OGPC Group DNeX Warrants Consideration for OGPC DNeX Warrants Consideration for OGPCOG Aggregate DNeX Warrants Consideration for OGPC Group (First Column + Second Column) (Fourth Column + Fifth Column) No. of DNeX No. of DNeX No. of DNeX No. of DNeX No. of DNeX No. of DNeX Warrants Warrants Warrants KHOO KOK SENG 105,319, , ,539,003 52,659, ,968 52,769,501 AZMAN BIN KARIM 184,308,364 6,597, ,906,315 92,154,182 3,298,976 95,453,158 ABDUL MANAF BIN SHARIFF 61,436,120 4,618,562 66,054,682 30,718,060 2,309,281 33,027,341 Total 351,063,550 11,436, ,500, ,531,775 5,718, ,250,000 [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

9 Page 9 of Utilisation of proceeds 5.1 Proposed Rights Issue Based on the issue price of RM0.21 per Rights Share which was fixed by the Board and announced on 18 June 2014 in the Announcement,, the gross proceeds and the expected utilisation of the proceeds to be raised from the Proposed Rights Issue are as follows:- Proposed utilisation of proceeds Note RM 000 Estimated timeframe for utilisation from date of receipt Revised Proposed Acquisitions (a) 83,000 Immediate Working capital and estimated (b) 14,681 Within twenty-four (24) months expenses for the Revised Proposals 97,681 Notes:- (a) RM97.68 million of the proceeds from the Proposed Rights Issue is intended to be utilised for the Revised Cash Consideration of RM83,000,000 in relation to the Revised Proposed Acquisitions as set out in Section 2 of this announcement. (b) Approximately RM9.881 million is proposed to be utilised for which include but are not limited to the funding of DNeX Group s day-to-day operation such as statutory related expenses, utilities and other operating/administration expenses. The estimated expenses of RM4.8 million in relation to the Revised Proposals consists of the professional fees, fees payable to the relevant authorities, printing costs of circulars and abridged prospectuses and other miscellaneous expenses. In any event, if the actual expenses are higher than the amount budgeted, the deficit will be funded out of the portion allocated for working capital requirements. Conversely, if the actual expenses are lower than the amount budgeted, the excess shall be utilised for working capital requirements. The amount of proceeds from the exercise of the Warrants would depend on the actual number of Warrants exercised which will be used to finance future working capital requirements of the Group. For illustrative purposes, the Company will raise approximately RM million if the Warrants are fully exercised at the exercise price of RM0.50 per Warrant which was fixed by the Board and announced on 18 June Revised Proposed Special Issue Based on the issue price of RM0.22 per Special Issue Share which was fixed by the Board and announced on 18 June 2014 in the Announcement, the gross proceeds and the expected utilisation of the proceeds to be raised from the Revised Proposed Special Issue are as follows:- Proposed utilisation of proceeds Note RM 000 Estimated timeframe for utilisation from date of receipt Working capital/future investment (a) 28,600 Within twenty-four (24) months Total 28,600 Note:- (a) The proceeds of approximately RM28.6 million will be utilised for the potential investment project in both energy and trade facilitation businesses. As at the date of this announcement, potential investments projects have not been identified. In the event that no suitable investments are identified by DNeX Group, the entire amount will be utilised for working capital purposes. In tandem with the growth of DNeX Group s business, the working capital is envisaged to be utilised to meet its operational obligations which includes amongst others, payment of creditors and other operating expenses.

10 Page 10 of 25 The amount of proceeds from the exercise of the Warrants would depend on the actual number of Warrants exercised, which will be used to finance future working capital requirements of the Group. For illustrative purposes, the Company will raise approximately RM32.50 million if the Warrants are fully exercised at the exercise price of RM0.50 per Warrant which was fixed by the Board and announced on 18 June 2014 in the Announcement. 5.3 Revised Proposed Acquisitions There will be no proceeds to be received by the Company pursuant to the Revised Proposed Acquisitions. The amount of proceeds from the exercise of the Warrants would depend on the actual number of Warrants exercised, which will be used to finance future working capital requirements of the Group. For illustrative purposes, the Company will raise approximately RM90.63 million if the Warrants are fully exercised at the exercise price of RM0.50 per Warrant which was fixed by the Board and announced on 18 June 2014 in the Announcement. 6. INDUSTRY OUTLOOK AND FUTURE PROSPECTS 6.1 General outlook of Malaysia economy Global economic activity continued to expand at a moderate pace in the fourth quarter of Nevertheless, the growth has remained uneven across economies. While the United States economy continued to show broader signs of improvement, economic activity in the euro area and Japan remained subdued. In Asia, growth has been driven by domestic demand and exports. Lower inflation was recorded in most economies with the decline in energy prices reinforcing this trend. The Malaysian economy registered a higher growth of 5.8% in the fourth quarter ( 4Q ) of 2014 (Third Quarter ( 3Q ) 2014: 5.6%), driven mainly by stronger private sector spending. On the supply side, growth was sustained by the major economic sectors, supported by trade and domestic activities. On a quarter-on-quarter seasonally adjusted basis, growth momentum increased to 2.0% (3Q 2014: 0.9%). For the year 2014, the Malaysian economy grew by 6.0%. Domestic demand remained the anchor of growth in the fourth quarter, mainly on account of the improvement in private sector activity. Private investment expanded at a faster pace of 11.2% (3Q 2014: 6.8%), driven by capital spending in the manufacturing and services sectors. Private consumption registered a stronger growth of 7.8% (3Q 2014: 6.7%), supported by stable labour market conditions and continued wage growth. Public consumption expanded at a more moderate pace of 2.7% in the fourth quarter (3Q 2014: 5.3%), due to slower growth in both emoluments and supplies and services. Public investment, however, continued to decline, albeit at a slower pace of 2.1% (3Q 2014: -8.9%), following a smaller contraction in spending on fixed assets by the Federal Government On the supply side, growth in the fourth quarter was supported by major economic sectors. Growth in the services sector was underpinned by expansion across all subsectors. The construction sector remained strong, driven mainly by non-residential and residential sub-sectors, while the mining sector registered a stronger growth due to higher crude oil production. The manufacturing sector continued to expand, supported mainly by the export-oriented industries. However, the agriculture sector recorded a contraction due to lower palm oil production caused by the floods in the eastern states of Peninsular Malaysia. (Source: Quarterly Bulletin, Fourth Quarter 2014, Bank Negara Malaysia)

11 Page 11 of Outlook of the O&G industry in Malaysia In 2013, the O&G industry was valued at RM billion, a 1.9 percent decline from the RM billion achieved in In 2014, the O&G industry has seen the startup of Tapis Enhanced Oil Recovery ( EOR ) project, Malaysia s first large-scale EOR project, the start-up of oil production from a deepwater development namely the Gumusut-Kakap floating platform, and the start-up of natural gas production from Damar field which increases the crude oil supply in Malaysia. While the start-up of new production platform increases the crude oil supply from Malaysia, growth in 2014 is restrained by the slumping crude oil prices which begun around second half of On the global front, increasing crude oil production from United States coupled with underperforming demand from Europe and Japan have resulted in crude oil oversupply and accordingly, weighted on the pricing of the said commodity. In view of the slumping crude oil prices, PETRONAS has announced its intention to cut its capital expenditure for new projects in 2015 by 15 to 20 percent and reduce its operating expenditure by between 25 to 30 percent. Therefore, demand for products and services from the OFSE industry could be adversely affected in the short term (2015 to 2016) should the intended cuts by PETRONAS materialise. On a positive note, demand for oil and gas is projected to be sustainable in long run. OPEC has projected the oil demand to increase by over 21 million barrels per day during the period of , reaching million barrels per day by This indicates the underlying demand for oil and gas as an energy source in the global market. In addition, the long term prospect of the oil and gas industry is supported by an increasing global population and urbanisation that that would drive the energy demand. The UN has projected the global population to grow from 7.2 billion in 2014 to reach 9.6 billion by 2050, of which urban population would increase from 54 percent to 66 percent during the same period. Continuous demand for energy sources would contribute to a sustainable oil and gas industry, and the oil field services and equipment ( OFSE ) industry may benefit from the need of equipment replacement within the oil and gas industry in long run. Moving forward the oil and gas industry is projected to register a compounded annual growth rate ( CAGR ) of 1.5 percent from 2014 to The continuous investment in the oil and gas industry particularly from the entry point projects ( EPPs ) under the Economic Transformation Programme ( ETP ) is expected to provide the impetus for the sustainable growth in the industry. (Source: Independent Market Researcher Report ( IMRR )) We are aware of the concerns among the rakyat, business community and analysts over the impact of the sharp fall in crude oil prices on the domestic economy. Over the last six months, global crude oil prices have plunged more than 50%, among others, due to oversupply amid weak demand. Leveraging advances in technology, shale oil and gas output has risen significantly in the United States. The situation is exacerbated by higher output from non Organisation of the Petroleum Exporting Countries ( OPEC ). OPEC is also not willing to undertake production cuts in order to maintain its market share. The Government has consistently reiterated that crude oil prices are beyond its control. The benchmark Dated Brent crude oil price has dropped to around United States Dollar ( USD ) 60 per barrel on 4 March 2015 and analysts expect oil prices to take quite a while to stabilise.

12 Page 12 of 25 Lower crude oil prices benefit net oil importing countries like Malaysia. For instance, the recent reduction in pump prices of petrol and diesel by 35 sen and 30 sen per litre, respectively will increase the overall disposable income of consumers by RM7.5 billion. Assuming that consumers spend 40% of this amount, it will boost private consumption by RM3 billion. The World Bank estimates that lower crude oil prices will have a positive impact on world Gross Domestic Product ( GDP ). In fact, a 30% decline in oil prices could boost global GDP of up to 0.5%. This bodes well for Malaysia s manufactured products. Further, with the United States economy strengthening, there will be sustained demand for our exports, in particular electrical and electronics ( E&E ) products. In contrast, falling crude oil prices will reduce Government revenue. The revenue is used for development purposes such as building of schools, roads and houses of worship. It is also used for other expenditures such as salaries of civil servants, cost of medicine in Government hospitals, agriculture subsidies and expenditure for security including armed forces, police and RELA. In 2014, Dated Brent reached its highest level at USD115 per barrel on 19 June. Global crude oil prices have since plummeted by more than 50%. Consensus among economists is that the forecast price of USD100 per barrel used in the 2015 Budget is no longer realistic. They now estimate the average oil price in 2015 to range from USD40 to USD70 per barrel. The Government has therefore revised downwards its forecast for the average baseline oil price to USD55 per barrel for Based on the crude oil price of USD100 per barrel, coupled with savings following the implementation of the managed float pricing mechanism for retail fuel prices effective from December 2014, the Government is expected to get an additional operating surplus of RM3.7 billion. If crude oil price remains at USD100 per barrel, the Government will be able to accommodate all the measures announced in Budget 2015 with the fiscal deficit target not exceeding 3% of GDP. However, at the forecast price of USD55 per barrel, there will be a revenue shortfall of RM13.8 billion. If we compare the revised figures with Budget 2015 tabled in October last year, despite the savings of RM10.7 billion from the implementation of the managed float mechanism for retail fuel prices, the Government still faces a revenue shortfall of RM8.3 billion to accommodate the 2015 Budget measures. Without any fiscal measures, the deficit will increase to 3.9% of GDP against the target of 3% for This requires the Government to take measures to reduce the deficit, in line with the Government s commitment towards fiscal consolidation. Therefore, taking into account the revised estimates, we are revising the fiscal deficit target to 3.2% of GDP in This is still lower than the fiscal deficit of 3.5% of GDP in In view of the external factors, we have to acknowledge that we may not be able to achieve the earlier fiscal target of 3% of GDP as announced. Of importance, is our commitment to continue reducing the fiscal deficit from 3.5% of GDP. More importantly, we will not compromise on national development planning as it will enhance productive capacity of the economy. We will not neglect the rakyat s welfare, particularly the bottom 40% of households. (Source: Budget Revision: Full text of Prime Minister's speech, The Star dated 20 January 2015)

13 Page 13 of Outlook of the ICT industry in Malaysia The ICT sector accounted for 9.8% of GDP in This sector will continue to be a key focus for Malaysia and is expected to gain greater momentum driven by the convergence of industries due to digitalisation. The contribution of the ICT industry to GDP is targeted to increase to 10.2% by Greater use of ICT will not only support the growth of the sector but also boost productivity and raise the nation s overall competitiveness. However, to achieve growth, Malaysia needs to shift from being an average producer of general ICT products and services to a niche producer of selected ICT products and services, and progress from a net importer to a net exporter. Issues of lack of product acceptability, weak product branding and lack of cross-discipline expertise will be addressed. (Source: Tenth Malaysia Plan , Chapter 3: Creating the Environment for Unleashing Economic Growth, Economic Planning Unit) 6.4 Future prospects of OGPC Group Moving forward, OGPC Group expects to derive its future revenue from supplying O&G equipment and parts as well as providing support services to world-leading brand names in O&G, petrochemical, power and general industry equipment. In addition to a dedicated workforce of skilled technical personnel to provide its customers with reliable and efficient services, OGPC Group will aim to expand its product range, improve its technical capabilities and maintain its quality operational standards in order to continue ascending excellence service to its clients. (Source: Management of OGPC Group) Barring any unforeseen circumstances, the Board after having considered all the relevant aspects, including the aforementioned industry outlook as well as future prospects of OGPC Group as set out in Sections 6.2 and 6.4 of this announcement, is of the opinion that the Revised Proposed Acquisitions is expected to contribute positively to the future earnings of the Company and to enhance DNeX's shareholders' value in the medium to long term. 7. RISK FACTORS The potential risk factors relating to the Revised Proposed Acquisitions, which may not be exhaustive, are as follows:- 7.1 Risks Relating to Business and Operations a) Dependency on the O&G Industry OGPC Group s revenue was generated from O&G industry through supplying and distributing equipment use in O&G industry. Therefore, OGPC Group s business is dependent on the performance of the industry which is affected by the fluctuations in the market price of hydrocarbons (including crude oil and natural gas). In terms of monthly price movements for 2014, crude oil prices increased from an average of USD102.3 per barrel in January to USD108.4 per barrel in June before slumping from an average of USD105.2 per barrel in July to an average of USD60.6 per barrel in December. More recently, the average price per barrel went as low as under USD58 dollar per barrel in February 2015.

14 Page 14 of 25 Cheaper oil should impact expenditure on production and limit the growth in supply. Accordingly, PETRONAS has announced its intention to cut its capital expenditure for new projects in 2015 by 15 to 20 percent. Therefore, demand for products and services from the process control equipment and measurement instruments market could be adversely affected in the short term (2015 to 2016) should the intended cuts by PETRONAS materialise, particularly for market participants supplying to O&G customers who are focused on activities related to exploration and production expansions. Meanwhile, the situation surrounding oil prices remains volatile and nearly impossible to predict going forward. There exists potential for further downside in coming weeks and months as demand drivers remain weak. Although the growth in United States is gaining traction, the Euro Area is still weak while industrial and manufacturing growth in China is slowing. A weaker demand from Japan is also anticipated in 2015 as the country returns some nuclear power plants to service. In addition, the supply situation shows no signs of near-term tightening thereby adding pressure on prices. In November 2014, OPEC announced that it would maintain its current crude oil production quota at 30 million barrels per day and focus on maintaining its market share despite the lower prices. Correspondingly, a combination of increasing supply and lacklustre demand could prevent any significant rally from gaining traction and lead to persistently weaker prices in the coming year. However, prices could also rebound and move higher if any of the factors previously noted begin to reverse or if there is a major geopolitical event that could alter the prevailing dynamics seen for the market. (Source: IMRR) Nonetheless, there will be no assurance that any changes within the O&G industry will not have material impact to OGPC Group s financial performance. b) Subject to fundamental change in PETRONAS policies towards O&G industry PETRONAS current policies in Malaysia towards the O&G industry include the imposition of licensing requirements. Under these policies, only company with valid licenses may supply goods, products and services to the upstream sector of the O&G industry in Malaysia and the PETRONAS group of companies in the downstream sector. In additional to these, PETRONAS policies also restrict the ability of supplies of goods, products and services to operate in Malaysia. These restrictions can require, for instant, foreign suppliers to use Malaysian content in their operations and to operate with a Malaysian partner or company through forming a joint venture with a Malaysian partner or Malaysian company, or by designating a Malaysian partner or Malaysian company as an exclusive agent representing the said foreign entity. OGPC Group s business is primary dependent on licences issued by PETRONAS for the operation, namely O&G equipments supplier, and engineering and technical support services provider. Any fundamental change in PETRONAS policies, which include but not limited to a relaxation or liberalisation of licensing requirements for the provision of goods, products and services related to O&G industry, or permitting foreign suppliers to operate in Malaysia without restrictions, would have a material adverse effect on OGPC Group s business, operation and financial.

15 Page 15 of 25 c) Political and economic risks OGPC Group's financial, business prospects and the industry which it operates in will depend to various extents on the developments in the economy, political and regulatory in Malaysia and other foreign countries. Amongst the economic, political and regulatory factors are the changes in inflation rates, interest rates, war, terrorism activities, riots, expropriations, changes in political leadership and unfavourable changes in the governments' policies in the O&G industry. DNeX Group will continue to implement effective measures such as prudent management and efficient operating procedures to mitigate these factors. However, there can be no assurance that adverse economic, political and regulatory changes cannot be assured of that these will not materially affect DNeX Group's business. d) Availability of skilled workers OGPC Group sources its key equipments and machineries from multiple overseas suppliers, with certain modifications are executed locally to suit the domestic conditions. As such, OGPC Group is not dependent on any particular supplier for the procurement of parts, products, equipments and machineries. Nevertheless, no assurance can be given that any considerable adverse changes in supply and pricing as well as the lead time for delivery of parts, products, equipments and machineries will not affect the future profitability of OGPC Group. As the services business of OGPC Group for the O&G industry is labour intensive in nature, the need for skilled workers with the competitive labour market remained a challenge to various companies in recruiting outstanding staffs in the O&G industry. Nonetheless, OGPC Group has a relatively stable workforce with a lower staff turnover rate, mainly due to its attractive remuneration strategies implemented to attract and retain its personnel. Upon completion of the Revised Proposed Acquisitions, DNeX Group shall also endeavour to ensure the loss of skilled workforce and key personnel of OGPC Group is kept at a minimal level via the Proposed ESOS. 7.2 Risks Relating to the Industry in which OGPC Group Operates a) Reliance on imports Most of the O&G equipments are imported from United Kingdom, United States and Japan. OGPC Group s reliance of imports of these key items may pose a risk to its business in the event of, among others, shortage of supply, delays in shipment, imposition of duties and/or taxes, and increase in transportation costs. A significant proportion of the equipments supplied by OGPC Group for the use in the O&G industry in Malaysia are imported. As such, general problems associated with imports would most likely affect OGPC Group s competitors as its competitors also place reliance on imports. Nonetheless, there can be no assurance that this risk will not have any adverse impact to OGPC Group s operations and financial performance. [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

16 Page 16 of 25 b) Dependence on major suppliers As a supplier of O&G equipments, OGPC Group relies on its suppliers or principals for the supply of the equipments and services as well as accompanying technologies and knowledge for the installation and service of these equipments. Any severance of these relationships will have a negative impact on OGPC Group s ability to supply the equipments to its customers. OGPC Group has been relatively dependent on its major suppliers or principals for the supply of equipments such as heating system, compressors, pumps, flange, valves, flares and filters from AspenTech, Pentair Group of companies, Clarcor, Applicot, James Walker, FMC Group of companies, Cameron and Thermax Limited. There can be no assurance that OGPC Group will be able to reduce its dependence on these suppliers or principals over time or be able to source for alternative suppliers or principals who supply the required O&G equipments with the same level of quality on a timely basis and based on the same credit terms. If the suppliers or principals are unable to deliver the required products in accordance with the quality that require on time, OGPC Group s distribution and supply chain may be affected which will have a material and adverse effect on its operations and financial performance. Although there is no assurance that OGPC Group will be able to maintain these relationships, it has been dealing with its major suppliers or principals for over ten (10) years. However, OGPC Group seeks to mitigate this risk by continuously maintaining good relationships to ensure minimal disruptions on its supply chain and operations. In addition, there should generally be a lower probability of disruption affecting long-standing strategic relationships. c) Subject to exchange rate fluctuations A significant proportion of OGPC Group s purchases are transacted in foreign currencies such as the USD, whilst its revenue is mainly denominated in RM. There is a financial risk to the business if there is any adverse fluctuation in any one or more currencies transacted by OGPC Group. In such a situation, there is a possibility that OGPC Group could incur foreign exchange losses and/or any of its product pricing may increase which could render it to be less competitive than its competitors. OGPC Group utilises the letter of credit facility which provides it with a degree of protection. In addition, as the RM is currently a managed float since the depegging of the RM, this may prevent any extreme fluctuations of the RM vis-à-vis USD, and hence the effects of any foreign currency risks are less significant and mitigated to a certain extent. OGPC Group management will continue to monitor its foreign exchange exposure by keeping abreast with current political, economic and regulatory conditions of the countries that it work with, both its customers as well as its suppliers. OGPC Group will take the necessary steps required to minimise their exchange rate exposure whenever deemed appropriate. Nevertheless, there is no assurance that any adverse fluctuations in foreign exchange rates would not have a material impact on OGPC Group s financial performance. d) Subject to credit risk of OGPC Group s customers OGPC Group s financial performance and position are dependent, to a certain extent, on the creditworthiness of its customers. If circumstances arise that affect the customer s ability or willingness to pay, OGPC Group may experience payment delays or in more severe cases, OGPC Group may not be able to collect payment from its customers. Accordingly, OGPC Group would have to make provisions for doubtful debts, or incur debt write-offs, which may have an adverse impact on the profitability.

17 Page 17 of 25 Although OGPC Group strives to reduce this risk through its credit evaluation process, there can be no assurance that customer s credit risk will not have an adverse impact on OGPC Group s future financial performance. e) Competition risks Although there are not many local competitors to OGPC Group due to the moderately high barriers of entry to the OFSE industry in Malaysia, OGPC Group may face intense competition from existing foreign competitors providing their services locally and new entrants into the market in the future, both locally and internationally which offer similar products and services. In view of the competitive market environment, OGPC Group has exclusive arrangement to represent world-leading brand names for O&G, petrochemical, power and general industry equipments. Nonetheless, OGPC Group has good reputation in relation to its industrial equipments due to strong brand name in the O&G industry. Nevertheless, there can be no assurance that OGPC Group would be able to sustain its competitiveness against current and future competitors. f) Dependence on key personnel OGPC Group s future prospects will depend upon its capability to attract and retain its key personnel after the Revised Proposed Acquisitions. The loss of key personnel of OGPC Group may have an unfavourable and significant impact on the performance of OGPC Group as the continued achievement of the business is considerably dependent on the management team of OGPC Group. OGPC Group presently enjoys productive working relationships with its management team and will endeavour to continue its effort to maintain such relationships via the Proposed ESOS. DNeX has entered into Management Services Agreements with each of Vendors of OGPC Group to ensure continuity of OGPC Group s business operations. g) Subject to termination of PETRONAS licence OGPC Group is dependent on licence issued by PETRONAS. The licence permits OGPC Group to participate and/or to be considered for the projects in the Malaysian O&G industry. The licence is subject to renewal every three (3) years, and the OGPC Group has thus far, renewed its PETRONAS licence successfully every time. However, there can be no assurance that the licence will be maintained or renewed upon expiry in the future. Failure to obtain, maintain or renew the PETRONAS licence would result in OGPG Group not being able to provide the services to the Malaysian O&G industry, which may have a material adverse effect on the business operations and financial performance of OGPC Group. [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

18 Page 18 of Other Risks a) Industry Risks The DNeX Group is principally involved in information communication technology business. Hence, the Revised Proposed Acquisitions which involves the acquisition of OGPC Group will enhance the DNeX Group s business diversification. However, the performances of OGPC Group are subject to risks inherent in the O&G industry. These may include fluctuation in world prices of oil, competition from foreign players, depletion of natural resources in the Malaysian market, regulatory compliance and dependence on licenses/permits/agency/agreements, shortage of skilled workforce, equipments and machineries, rapid changes in industrial technology, operational health and safety risks, increase in cost of labour and equipments, increase in cost of operations and changes in government policies affecting the O&G industry. Though, DNeX Group seeks to mitigate these risks through its employment of strong technically capable personnel, implementing prudent business strategies and carrying out continuous review of its operations for geographical expansion. However, there is no assurance that any change to the above factors, which are beyond the DNeX Group's control, will not materially affect its business. b) Acquisition risks Though that DNeX Group may benefit from the Revised Proposed Acquisitions, nonetheless, there is no assurance that the anticipated benefits of the Revised Proposed Acquisitions will be materialised or that the DNeX Group will be able to generate satisfactory revenues from the Proposed Acquisitions to compensate the associated acquisition costs incurred, namely the dilution to the EPS of DNeX Group. There is also no assurance that the DNeX Group is able to maintain or improve the standards of quality and services of the business of OGPC Group. However, DNeX has eliminated such risk by adopting prudent investment strategies and engaging independent experts to conduct evaluation and assessment on OGPC Group s current capabilities in terms of assets, equipments and technologies prior to making its investment decisions. c) Non-completion risks The completion of the Revised Proposed Acquisitions is subjected to certain conditions which are beyond the control of DNeX Group, such as the approvals of relevant authorities and shareholders. There is no assurance that the Revised Proposals will be completed as contemplated by DNeX Group. However, DNeX will take reasonable steps that are within its control to ensure that the conditions precedent is fulfilled by the stipulated date. [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]