SRL

Business Context and Reporting Period

Company: KHD Humboldt Wedag International Ltd. (Note: Request metadata listed "Scully Royalty Ltd.", but the filing text identifies the registrant as KHD Humboldt Wedag International Ltd.)
Filing Type: Form 6-K (Notice of Annual Meeting and Management Information Circular)
Date: October 2, 2009
Reporting Period: The filing solicits proxies for the Annual Meeting to be held on October 24, 2009. It contains financial and governance data primarily for the fiscal year ended December 31, 2008, and updates through September 25, 2009.

Key Financial Metrics

Revenue, Profit, Cash Flow, Margins, Debt, Liquidity: The filing text does not provide specific values for revenue, net income, operating cash flow, profit margins, total debt, or liquidity ratios. These figures are referenced as being contained in the Company's financial statements and Management's Discussion and Analysis (MD&A) for the year ended December 31, 2008, and the six-month period ended June 30, 2009, which are available separately.

Shareholder Equity and Capital Structure:

• Outstanding Shares: 30,259,911 Common Shares (as of September 18, 2009), excluding 5,875,617 shares held by subsidiaries.
• Major Shareholder: Peter Kellogg beneficially owns 6,283,100 shares (20.8% of the class), though he disclaims beneficial ownership of approximately 18.6% of the shares in public filings.
• Stock Performance: A $100 investment on January 1, 2004, was worth $60.64 by December 31, 2008, compared to $89.68 for the Russell 2000 Index.

Executive Compensation (Fiscal Year 2008):

Auditor Fees (Fiscal Year 2008): Total fees to Deloitte & Touche LLP were approximately Cdn$2.25 million (Audit: Cdn$1.72M; Audit-Related: Cdn$360k; Tax: Cdn$169k).

Material Changes and Corporate Actions

• Management Changes: Jouni Salo was appointed President and CEO effective April 13, 2009. James Busche ceased to hold the position of CEO on the same date. Dr. Kelvin K. Yao resigned as a director effective May 1, 2009, and Gerhard Rolf was appointed to fill the vacancy.
• Compensation Program Restructuring: The Compensation Committee recommended changing the executive incentive program from an equity-based model to a cash-based program for fiscal year 2009. This includes entering into formal employment agreements and cancelling previously granted stock options under the old plan.
• Settlement of Investment: On May 12, 2009, the Company completed an agreement with Mass Financial Corp. for the redemption of preferred shares and payment of accrued dividends.
• Management Services: The Company continues to pay Mass Financial Corp. for management services related to an iron ore mine royalty interest (8% of net royalty income) and general management services in Asia. Total payments to Mass from Jan 1, 2008, to Aug 31, 2009, were approximately $7.7 million ($2.0M for royalty management; $5.7M for general services).

Guidance, Outlook, and Risks

Outlook and Commentary: Management notes that the worldwide economic crisis beginning in the fourth quarter of 2008 negatively impacted the Company's business and share price. Restructuring was required to adapt to rapidly changing market conditions. The Compensation Committee does not consider the share price a strong indicator of performance due to the unusual impact of the financial crisis.

Risks and Contingencies:

• Market Conditions: Ongoing impact of the global economic crisis on industrial and engineering services.
• Related Party Transactions: Significant reliance on Mass Financial Corp. for management services and royalty administration.
• Equity Dilution: 1,579,720 shares reserved for the Option Plan and 1,500,000 shares for the Incentive Plan (though no awards issued under the Incentive Plan as of the filing date).

Important Facts for Investor Verification

• Financial Statements: Verify the specific revenue, profit, and cash flow figures in the separate MD&A for the year ended Dec 31, 2008, and the six months ended June 30, 2009, as they are not detailed in this proxy circular.
• Compensation Shift: Confirm the implementation status of the proposed shift from stock options to cash-based incentives for executives, as this affects future equity dilution and cash burn.
• Mass Financial Relationship: Review the terms of the management services agreement with Mass Financial Corp. to understand the ongoing cash outflows ($7.7M paid in 18 months) and the nature of the iron ore royalty asset.
• Shareholder Voting: Note the record date of September 18, 2009, and the upcoming vote on the re-election of Indrajit Chatterjee and the appointment of Deloitte & Touche LLP.
• Stock Option Status: Verify the number of outstanding options (731,942 as of Sept 25, 2009) and the impact of the proposed cancellation of old options under the new compensation plan.