2010 Annual Report - Petron

FINANCIAL HIGHLIGHTS 

2010 2009 % 

RM Million RM Million Change 

Revenues 8,427 8,032 5 

Profit after taxation 269 146 84 

Earnings per ordinary stock unit (sen) 99.5 53.9 85 

Gross dividend per ordinary stock unit (sen) 14 12 17 

Total assets employed 2,094 2,018 4 

Total shareholders’ funds 758 513 48 

Sales volume 79 88 (10) 

(thousands of barrels per calendar day) 

The Annual General Meeting provides 

shareholders the opportunity to obtain a 

better understanding of the Company’s 

operations and financial performance. 

EMB was recognised as one of three 

winners in the Energy & Natural 

Resources Industry category in KPMG’s 

annual Shareholder Value Awards 

Programme. The prestigious awards 

recognise companies that deliver the 

highest Economic Profit over Invested 

Capital and are intended to promote 

corporate excellence through enhancing 

levels of disclosure and setting 

explemplary industry good practice. 

ANNUAL REPORT & ACCOUNTS 2010 

1

ESSO MALAYSIA BERHAD 

Five-Year Summary Charts 

REVENUES 

(NET OF GOVERNMENT DUTIES) 

RM MILLION 

PROFIT / (LOSS) AFTER TAX 

RM MILLION 

12,000 

11,735 

300 

269 

10,000 

8,000 

9,336 

9,740 

8,032 

8,427 

200 

100 

57 

146 

6,000 

0 

7 

4,000 

-100 

2,000 

-200 

0 

2006 2007 2008 2009 2010 

-300 

(251) 

2006 2007 2008 2009 2010 

SALES VOLUME 

THOUSANDS OF BARRELS 

PER CALENDAR DAY 

TOTAL THROUGHPUT 

THOUSANDS OF BARRELS 

PER CALENDAR DAY 

100 

93 94 

88 88 

100 

80 

60 

79 

80 

60 

71 

70 

61 

63 

45 

40 

40 

20 

20 

0 

2006 

2007 2008 2009 2010 

0 

2006 2007 2008 2009 

2010 

8 ANNUAL REPORT & ACCOUNTS 2010

CAPITAL EXPENDITURE 

RM MILLION 

TOTAL ASSETS EMPLOYED 

RM MILLION 

Financed by: 

100 

98 

3,000 

2,700 

80 

60 

61 

57 

2,000 

2,006 

1,754 

2,018 

2,094 

40 

38 

37 

1,000 

20 

0 

2006 2007 2008 2009 2010 

0 

2006 2007 2008 2009 


Shareholders’ funds 

Trade payables 

Notes payable and bank borrowings 

Taxes payable, provisions and others 

SHAREHOLDERS’ INFORMATION 

2006 2007 2008 2009 2010 

Earnings/(loss) per ordinary stock unit (sen) 2.6 21.2 (93.1) 53.9 99.5 

Gross dividend per ordinary stock unit (sen) 12 12 12 12 14 

Dividend yield (%) 

4.3 4.3 5.3 5.2 

5.3 

Share price (RM) 

- Highest 

- Lowest 

- Average 

4.06 3.30 2.81 2.86 

2.30 2.02 1.82 1.90 

2.78 2.76 2.27 2.32 

3.03 

2.42 

2.64 

Number of employees at year-end 327 326 318 299 290 


9


Board of Directors/ Lembaga Pengarah 

En. Abu Bakar Siddik Che Embi 

Executive Refinery Director / 

Pengarah Eksekutif Penapisan 

Absent during photo session 

Tidak hadir pada sessi 

penggambaran 

Allahyarhamah Puan Sri 

Junaidah Mohd Said 

Joint Secretary / 

Setiausaha Bersama 

Until / sehingga February 22, 

2011 

SEATED FROM LEFT TO RIGHT 

DUDUK DARI KIRI KE KANAN 

Y. Bhg. Tan Sri Dato’ Dr. Syed Jalaludin 

Syed Salim 

Mr. Hugh W. Thompson 

Chairman / Pengerusi 

Y. Bhg. Tan Sri Abdul Halim Ali 

Y. Bhg. Dato’ Zainal Abidin Putih 

STANDING FROM LEFT TO RIGHT 

BERDIRI DARI KIRI KE KANAN 

Puan Fatimah Merican 

Executive Business Services Director / 

Pengarah Eksekutif Urusan Perniagaan 

Puan Faridah Ali 

Executive Retail Business Director / 

Pengarah Eksekutif Perniagaan 

Jualan Runcit 

Mr. Manoj Devadasan 

Company Secretary / Setiausaha Syarikat 


10 11


Profile of Directors 

Hugh W. Thompson 

Chairman 

B. Sc. (Hons.) Geology, University of Aberdeen, Scotland 

M.Eng (Petroleum Engineering), Heriot-Watt University, Edinburgh, Scotland 

Mr. Hugh W. Thompson, aged 48, a citizen of the United Kingdom, was appointed a Director and 

Chairman of the Company on June 4, 2009. He joined ExxonMobil in 1988 and over the past 22 years has 

held positions of increasing responsibility in assignments ranging from Engineering and Operations 

Management, major project management and strategic business planning. He has spent the majority of 

his career with ExxonMobil in international assignments and has worked in Aberdeen and London in the 

United Kingdom as well as in Louisiana, Texas and California in the United States of America. He was the 

Planning Manager (Planning and Business Analysis) with ExxonMobil Production Company in Houston, 

Texas, United States of America before being appointed the Global Planning Manager for the 

ExxonMobil Production Company; a position he held until his appointment in 2009 as the Chairman of the 

ExxonMobil Subsidiaries in Malaysia. 

Fatimah Merican 

Executive Business Services Director 

Higher National Diploma, Polytechnic of Central London (now University of Westminster) (1976) 

Puan Fatimah Merican, aged 56, a Malaysian, was appointed Business Services Director of the 

Company on December 1, 2008. She joined ExxonMobil Exploration and Production Malaysia Inc. 

(EMEPMI) in 1977. Over her career with the Company she has held various professional and managerial 

positions in the local and global Information Technology organisations of ExxonMobil. Fatimah has also 

completed a rotational assignment in EMEPMI Public Affairs, and foreign assignments with ExxonMobil 

Asia Pacific Pte. Ltd., Singapore and ExxonMobil Limited, Thailand. 

Prior to October 1, 2008, Fatimah Merican was Manager, Downstream/Chemical Applications, Business 

Line Applications, Information Technology, ExxonMobil Business Support Centre Malaysia Sdn. Bhd. in 

Kuala Lumpur. Effective October 1, 2008, she was transferred to Upstream Business Services and 

thereafter appointed Business Services Director. In addition, on October 1, 2010, Fatimah was also 

appointed the Tax Manager of ExxonMobil Subsidiaries in Malaysia; that includes Esso Malaysia 

Berhad. 

Abu Bakar Siddik Che Embi 

Executive Refinery Director 

B.Sc. (Hons.) Chemical Engineering, Leeds University, United Kingdom 

Encik Abu Bakar Siddik Che Embi, aged 58, a Malaysian, was appointed Refinery Director of the 

Company on September 1, 2003. He started his career with the Port Dickson Refinery in 1976 and held 

various technical, operational and supervisory positions in the Refinery until 1990, when he was assigned 

to the Baytown Refinery, Exxon U.S.A., for about three years. In this assignment, he held the position of 

Technical Advisor and a number of leadership roles in the Process Department. Following that, he spent 

six months with Exxon Company International's Refinery Department in Florham Park, New Jersey as 

Refinery Advisor. In 1994, he returned to Malaysia and assumed the position of Deputy Manufacturing 

Manager of the Port Dickson Refinery. In 1995, he was promoted to Manufacturing Manager and held this 

position until 2003, when he was appointed Refinery Director. 

Faridah Ali 

Executive Retail Business Director 

B.Sc. (Hons.) Accounting, University of East Anglia, Norwich, ACA (England & Wales) 

Puan Faridah Ali, aged 46, a Malaysian, was appointed Retail Business Director of the Company on June 

13, 2005. She began her career in ExxonMobil Malaysia Sdn. Bhd., and over the years, held supervisory 

roles in various functions including financial accounting, costing, planning, financial analysis, human 

resources and retail business. In 2000, after the merger of Exxon Corporation and Mobil Corporation in 

the United States of America, she assumed the position of Marketing Support Manager and subsequently 

Business Analysis and Reporting Manager before assuming her current position. 

12 

ANNUAL REPORT & ACCOUNTS 2010

Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim 

Independent / Non-Executive Director and Member of the Board Audit Committee 

P.S.M., D.S.S.A., D.P.M.P., J.S.M. F.A. Sc., B.V.Sc., University of Punjab, M.Phil. and Ph.D., 

University of London, D.Sc., Honoris Causa, University of Hull, U. K., D.Sc., Honoris Causa, Soka 

University, Japan, D.Agriculture Technology, Honoris Causa, Thaksin University, Thailand, D.Sc., 

Honoris Causa, Open University Malaysia. 

Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim, aged 67, a Malaysian and a national science 

laureate, as well as a founder fellow of the Academy of Sciences Malaysia, was appointed Director of the 

Company on February 15, 2000. He had a long illustrious academic carrier in both University of Malaya 

and University Putra Malaysia (UPM) before retiring as Vice Chancellor of UPM in 2001. He was 

responsible for transforming UPM to become one of the leading centres of higher education. As an 

accomplished academician, he has helped found many academic societies and associations, and has 

published over 350 papers in journals and proceedings in the fields of animal science, university 

management and education. For his meritorious career and services, he has received numerous 

awards, decorations and honours nationally as well as internationally. He retired from UPM in April 2001. 

He is the Chairman of Bank Kerjasama Rakyat Malaysia Berhad, Kejuruteraan Samudra Timur Berhad, 

Taylor's Education Berhad and Halal Industry Development Corporation. He is a Director of TAFI 

Industries Berhad and is also the Chancellor of Taylor’s University. 


Independent / Non-Executive Director and Member of the Board Audit Committee 

P.M.N., P.J.N., S.P.M.S., S.I.M.P., D.G.S.M., D.H.M.S., D.S.D.K., J.S.M., K.M.N. 

B.A. (Hons.), University of Malaya 

Y. Bhg. Tan Sri Abdul Halim Ali, aged 67, a Malaysian, was appointed Director of the Company on May 

22, 2001. Upon graduation from University of Malaya, he joined the Ministry of Foreign Affairs in 1966. 

After several domestic and foreign postings, he was appointed the Malaysian Deputy Permanent 

Representative to the United Nations in 1979. He was appointed Ambassador to Vietnam in 1982 and 

returned to Malaysia in 1985 to be Deputy Secretary General in the Ministry of Foreign Affairs before 

being appointed Ambassador to Austria. In 1991, he again returned to Malaysia to be Deputy Secretary 

General I in the Ministry of Foreign Affairs and in 1996 he was promoted to Secretary General. In July 

1998, he was appointed Chief Secretary to the Government, the highest ranking civil service post in the 

country and was responsible for overseeing and coordinating the policies of the government and their 

implementation. He retired as Chief Secretary to the Government in March 2001. He currently is the 

Chairman of the Multimedia Development Corporation and Malaysia Building Society Berhad and he is 

also a Director of Malakoff Corporation Berhad and IJM Corporation Berhad. 

Y. Bhg. Dato' Zainal Abidin Putih 

Independent / Non-Executive Director and Chairman of the Board Audit Committee 

D.S.N.S., J.P., FCA (ICAEW), CA (M), CPA (M) 

Y. Bhg. Dato' Zainal Abidin Putih, aged 65, a Malaysian, was appointed Director of the Company on 

March 6, 2003. Upon qualifying from the Institute of Chartered Accountants in England and Wales, he 

joined the firm of Hanafiah Raslan & Mohamad, which merged with Ernst & Young in July 2002. He has 

extensive experience in audit having worked as a practicing accountant throughout his career 

covering many principal industries including banks, insurance, energy, transport, manufacturing, 

government agencies, plantations, properties, hotels, investment companies and unit trusts. He also 

has a good working knowledge of taxation matters and management consultancy, especially in the 

areas of acquisitions, takeovers, amalgamations, restructuring and public listing of companies. He plays 

an active role in the community and the corporate world being a Past President of the Malaysian Institute 

of Certified Public Accountants. He was also a member of the Malaysian Communication & Multimedia 

Commission, a body set up by the Malaysian government to oversee the orderly development of the 

multimedia and telecommunication industry in Malaysia. He was the Chairman of Pengurusan 

Danaharta Nasional Berhad as well as the Malaysian Accounting Standards Board (MASB). He is 

currently the Chairman of Dutch Lady Milk Industries Berhad and Land & General Berhad. He is also 

a Director of Tenaga Nasional Berhad and a Director of CIMB Group Holdings Berhad, including its 

subsidiaries CIMB Bank Berhad and CIMB Investment Bank Berhad. He is also Chairman of CIMB 

Group's subsidiary Southeast Asia Special Asset Management Berhad. He also acts as a Trustee of 

the National Heart Institute Foundation. 


13


Corporate Citizenship - Highlights 

EMB emerged as a double winner at the STARBiz-ICR 

Malaysia Corporate Responsibility Award 2010 in the 

‘Workplace’ and ‘Community’ categories. It was one of 21 

finalists selected from a shortlist of companies listed on 

Bursa Malaysia and was the only company among the 

finalists with market capitalisation below RM1 billion to win in 

two categories. 

orporate citizenship has long been an integral part of our approach as we conduct our business of 

providing efficient, affordable and environmentally responsible energy to Malaysia. Being a good 

corporate citizen is embedded in every facet of our operations; from ensuring the highest 

standards in safety and health, to protecting the environment, operating with the highest business 

integrity and contributing to the communities where we work. This section describes the corporate 

citizenship efforts and accomplishments of EMB and the other subsidiaries of ExxonMobil in Malaysia. 

Upholding Standards In Corporate Governance and Business Integrity 

Our efforts to be a good corporate citizen are demonstrated on many fronts, but none is more fundamental than setting 

and meeting the highest ethical standards for the way we do business. We support transparency, oppose corruption and 

are committed to honest and ethical behaviour wherever we operate. 

• Our philosophy on business ethics is enshrined in our Standards of Business Conduct which serves as a guide 

toward the highest standards of integrity in all our dealings and every aspect of our operations. These are further 

strengthened by each employee’s annual affirmation of their familiarity with the policies and on-going reviews to 

assess compliance and identify areas for improvement. 

• Our Operations Integrity Management System provides a disciplined framework for controlling and managing 

safety, health, security and environmental risks at all our facilities. It is designed to help minimise operational 

incidents and meets the requirements of the International Organisation for Standardisation’s standard for 

environmental management systems (ISO 14001). 

• In 2010, we conducted refresher training for employees on our business practices to ensure they fully understand 

company expectations. Controls clinics were organised to encourage dialogue on the application of guidelines and 

policies. We also conducted training for employees who interact with government officials or may do so in the future 

to ensure they understand expectations of ethical and honest dealings with governments and obligations to comply 

with competition laws and anti-trust legislation of the United States. 

14 


Safety Excellence - The Number One Priority 

We are committed to maintaining the highest standards of safety and security in our day-to-day operations in order to 

protect the welfare of our employees, contractors, customers and the public. 

Our goal is Hurt-Free, Every Site, Every Day. We enforce strict compliance with safety procedures and management 

systems to achieve this vision. While these systems provide a valuable framework for achieving safety excellence, 

active employee involvement is crucial to maintaining this performance. Safety programmes such as U-See U-Act, Job 

Safety Analysis and a Loss Prevention System reinforce the message of personal accountability towards mitigating risks 

in our operations. These programmes are extended to our contractors and third-party workers to ensure a common 

approach to safety. 

• Port Dickson Refinery continued its outstanding safety performance, achieving eight years Lost Time Incident (LTI) 

free as at April 2010 and six years Total Recordable Incident (TRI) free as at September 2010. The Refinery was 

awarded the ExxonMobil Refining & Supply Safety Excellence Award (Platinum) for the former and ExxonMobil 

Refining & Supply “Nobody Gets Hurt” Special Recognition Award for the latter. The Refinery also received a Gold 

Merit Award from the Malaysian Society for Occupational Safety & Health (MSOSH) for its 2010 occupational safety 

and health performance. 

• Our Distribution terminals achieved flawless operations throughout 2010, recording zero LTI. Our terminals 

business also logged 13.8 years straight without LTI, representing 16.78 million hours worked without incident. Port 

Dickson and Bagan Luar Terminals obtained Gold Awards from MSOSH for their exemplary safety performance 

during the previous 12 months. 

• EMB’s construction services provider, which services ExxonMobil’s Asia Pacific retail business, celebrated eight 

years and five million manhours without LTI. In addition, EMB together with ExxonMobil’s retail businesses in the 

Asia Pacific region, received the ExxonMobil Fuels Marketing President’s Safety Award, which recognised them for 

exceptional overall security, safety, health and environmental performance as well as continuous improvement over 

time. For a number of years, ExxonMobil’s Asia Pacific retail sales group has consistently achieved the lowest total 

recordable incident rate for a retail business. Showing relentless attention to SSH&E, the team posted best-in-class 

employee and contractor recordable rates, a nearly 70% improvement in employee incident rates since 2008, and 

zero environmental incidents in the past two years. 

ANNUAL REPORT & ACCOUNTS 2010 15


Environmental Performance - Protect Tomorrow. Today. 

Protect Tomorrow 

Today 

We are committed to operating our business in an environmentally responsible manner that 

balances the environmental and economic needs of the communities in which we operate. 

In addition to strict compliance with applicable environmental legislation and regulations, 

we continuously seek ways to understand and mitigate the impact of our business on the 

environment. As part of our Protect Tomorrow. Today. initiative, we take active measures at 

all our facilities to reduce emissions, improve energy efficiency, prevent environmental 

incidents and minimise our environmental footprint. 

Port Dickson Refinery achieved exemplary performance in flare reduction with 55 

percent improvement compared to 2009. The site also sustained zero reportable spills 

in 2010 for the second year running. 

 

 

Port Dickson Refinery is also a pace setter in energy conservation through its energy 

efficiency measures, resulting in some RM5 million in cost savings. The Refinery ranks 

in second place among all ExxonMobil refineries throughout Asia Pacific for energy 

efficiency. 

All our distribution terminal storage tanks for gasoline products are equipped with an 

internal floating roof to reduce the release of Volatile Organic Compounds (VOCs) into 

the atmosphere. At the same time, we operate a robust Preventive Maintenance 

Programme for all storage tanks and pipelines to ensure their integrity is maintained, all 

with the goal of zero leaks or spills to the environment. 

Product Safety & Stewardship 

We are dedicated to minimising the risks and impacts associated with the manufacture and 

use of our products, from development through to their end use and ultimate disposal. We 

have processes in place to ensure the quality and high standards of our products. We 

ensure our products are safely delivered to our customers in all sectors and conduct regular 

safety checks of all our equipment. We provide up-to-date product specifications and safe 

handling procedures of the products we sell. 

Our service station dealers are trained in preventive and responsive safety and 

environmental procedures to ensure safety at all our sites and to minimise the impact of any 

security or environmental incident that may occur. 

Supporting Sustainability 

We are committed to supporting our customers’ sustainability efforts by developing 

innovative, high-performance products and services that deliver both business and 

sustainability related benefits. 

 

In 2010, our Lubricants & Specialties business ran a communications campaign with its 

distributors to highlight the measures we are taking on sustainability in our business. 

Specific initiatives include: 

 

 

 

 

 

 

A focus on helping to extend equipment life, and increase efficiencies and 

productivity in order to benefit equipment manufacturers and users alike. 

Working with engine manufacturers to boost fuel economy and lower emissions. 

This also enables marine/truck fleet operators to reduce oil consumption and thus 

resulting in cost savings. Our formulations are also designed with increased fuel 

economy as a primary goal. 

Extending the performance and protection of vehicle engines by developing longer 

lasting lubricants. Our longer lasting synthetic motor oils also cut down on used oil 

volumes. 

Reducing the use of materials through package design enhancements. 

Using fully recyclable road bitumen to conserve building materials. 

Reducing marine fleet oil consumption with a feed rate optimisation programme. 

16 


A Healthy Workplace, A Healthy Business 

We know that the success of our business lies fundamentally in the personal well-being and 

professional growth of our employees. During the year, we ran a number of occupational 

health programmes and initiatives to reduce the risk of occupational injury or illness and to 

raise awareness of the importance of health among employees, contractors and others 

involved in our operations. 

The Ergo Lead / Ergo Contact Network continued its stewardship of the Office Ergonomics 

programme with regular assessment and reviews to ensure that potential injury and 

illness among employees related to ergonomic factors were minimised. An Ergo 

Resource Centre was also opened during the year to help employees learn more about 

preventing illness and injury in the workplace and at home. A Health Week was 

organised for employees featuring a series of talks on health topics with 

demonstrations and presentations on maintaining a healthy lifestyle. 

Nurturing Talent - We recognised the importance of attracting and retaining top performers 

from the broadest possible talent pool to meet our business requirements. We put in place 

fair and responsive succession plans and opportunities for advancement, keeping pace 

with our employees’ progress and achievements in order to identify areas in which they can 

contribute and grow. We encourage a healthy work-life balance, and instill respect for this 

philosophy among our employees and management. 

Equal Treatment - Employees are treated equally regardless of race, religion, gender, 

sexual orientation or impairment due to health conditions. We adopt policies that 

encourage diversity in the work place and practice zero tolerance of all forms of harassment 

in the workplace. 

Developing Potential - We strive to provide our employees with the best career 

opportunities in our industry, including assignments abroad to help foster individual growth 

and achievement. During 2010, a number of EMB employees were among the 100 

Malaysians on international assignments within ExxonMobil. 

Active In The Community 

ExxonMobil has a long tradition of community involvement via employee volunteerism and 

financial contributions. We work with government and non-government bodies and 

community leaders to identify areas of need and make positive contributions through 

projects that bring sustainable, long-term benefits in the areas of human capital 

development, health and safety, energy literacy and corporate governance. 

In 2010, about RM1.3 million was contributed by EMB and other ExxonMobil subsidiaries to 

some 35 organisations to support a number of human capital development, environment, 

safety and health projects. Some of our contributions include: 

ExxonMobil Education & Scholarship Fund for deserving students in Negeri 

 

Sembilan. 

Sports award to recognise outstanding young athletes under the Majlis Sukan 

Sekolah-Sekolah Negeri Sembilan (MSSNS) programme. 

In addition to financial contributions, EMB employees are very much involved in community 

service. Our employees have once again been the driving force behind the success of our 

various employee volunteer programmes during the year which aim to make a difference in 

the lives of the underprivileged. 

ExxonMobil Community Projects Programme: In 2010, EMB employees were part 

of about 650 employees and family members who carried out a total of 14 

community projects at various locations. These included arranging a shopping 

expedition for children from a local orphanage to help them prepare for the new 

school year; and working with children from poor urban communities to help 

generate an understanding of what makes strong families and to build their self 

worth. At Rumah Alam Darul Aminan Orphanage in Senawang, Port Dickson 

Refinery employees and their families carried out a project to upgrade the 

orphanage buildings and gardens and organised a day of activities with the 

resident children. In total, RM220,000 was spent for the year’s programme. 


CORPORATE GOVERNANCE 

The Board of Directors of Esso Malaysia Berhad is committed to ensuring that the highest standards of corporate 

governance are practised throughout the Company. The Board views this as a fundamental part of its responsibilities to 

protect and enhance shareholder value. Accordingly, the Board fully supports the principles laid out in the Malaysian 

Code on Corporate Governance. 

Exxon Mobil Corporation, as the Company's ultimate holding company, has developed a series of policies and 

management systems that are designed to create and support a strong system of corporate governance. The policies 

and management systems have been adopted by the Board and are communicated to the Company's employees, 

contractors and vendors, so that each has a clear understanding of the Company's expectations. 

The policies, which are set out in a Standards of Business Conduct booklet, and the management systems are strictly 

enforced. The Foundation Policies include Business Ethics, Conflicts of Interest, Antitrust, Alcohol and Drug Use, Gifts 

and Entertainment, Harassment in the Workplace and Outside Directorships. The management systems are designed to 

achieve high standards of performance in the areas of safety, operations integrity, internal control and legal and 

environmental compliance. 

The Board and the Board Audit Committee ensure that the policies and the management systems are fully implemented 

and consistently enforced. They are supported by an internal Management Committee and an Audit and Controls 

Committee, both led by the Chairman. 

The Board 

The Board leads and controls the Company. The Board meets at least four times a year, with additional matters resolved 

by way of Circular Resolutions as and when necessary. Each Non-Executive Director is independent and brings 

invaluable judgment to bear on issues of strategy, performance, resource allocation, risk management and standards of 

conduct. 

For the year ended December 31, 2010, four Board and four Board Audit Committee meetings were held. Details of the 

Directors' attendance at these meetings are summarised below: 

Directors Number of Board Number of Board Audit 

Meetings 

Committee Meetings 

Held Attended Held Attended 

Mr. Hugh W. Thompson 4 4 Non-member Non-member 

Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim 4 4 4 4 

Y. Bhg. Tan Sri Abdul Halim Ali 4 4 4 4 

Y. Bhg. Dato' Zainal Abidin Putih 4 4 4 4 

Puan Fatimah Merican 4 4 Non-member Non-member 

Encik Abu Bakar Siddik Che Embi 4 3 Non-member Non-member 

Puan Faridah Ali 4 4 Non-member Non-member 



CORPORATE GOVERNANCE (Continued) 

Board Membership 

The Board had 7 members as at the end of 2010, with 3 Independent Non-Executive Directors and 4 Executive Directors 

(including the Chairman). Together, the Directors form the mind and management of the Company. 

The functional organisation of the Company provides a system and structure of checks and balances in the decision 

making process. There is a clear division of responsibilities between the Chairman and each of the other Executive 

Directors. 

Balance in the Board is achieved and maintained with the composition of both Executive and Independent Non-Executive 

Directors. In recognition that the Independent Non-Executive Directors have a primary role in providing unbiased and 

independent views, the Company has selectively appointed highly qualified individuals of integrity and character, with 

broad experience and proven business and management expertise. 

Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim is the longest serving Independent Non-Executive Director of the 

Company. Shareholders are at liberty to approach Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim, or any of the other 

Independent Non-Executive Directors, should there be any concerns relating to the Company and its Management. 

Supply of Information 

Information regarding the Company's business and affairs is normally provided to the Board by the Company's 

management and staff and by the Company's independent auditors. Towards meeting this objective, Board meetings are 

structured with a pre-determined agenda. Board papers covering the Company's operational and financial performance, 

strategic plans on any significant matters and developments, together with the minutes of the previous Board and Board 

Audit Committee meetings, are circulated to the Directors (or Members of the Board Audit Committee, as the case may be) 

in advance of each meeting. This allows the Directors time to deliberate on the issues to be raised and discussed at each 

meeting. The Board, in addition to having full access to the advice and services of the Company Secretary, has the 

authority to retain such outside advisors, including accountants, legal counsels, and other experts, as it deems 

appropriate. The fees and expenses of any such advisors will be paid by the Company. 

Appointment and Re-election of Directors 

In accordance with the Company's Articles of Association, the Board can appoint any person to be a Director as and when it 

is deemed necessary. However, consistent with the best practices of the Malaysian Code on Corporate Governance, the 

Nominating Committee makes recommendations to the Board prior to such appointments. Any person so appointed shall 

hold office until the next Annual General Meeting at which time the candidate will be subject to election by the 

shareholders. An election of Directors takes place every year, with each Director retiring from office at least once every 

three years. Directors retiring by rotation are eligible for re-election by the shareholders at the Annual General Meeting. 

Remuneration Committee 

The Remuneration Committee is responsible for the recommendation of the remuneration of the Executive and the 

Independent Non-Executive Directors, for the Board's consideration and decision. 

The current members of the Remuneration Committee are as follows: 

1. Mr. Hugh W. Thompson (Executive Director) - Chairman 

Puan Fatimah Merican (Executive Director) - Alternate Chairman 

2. Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim (Independent Non-Executive Director) 

3. Y. Bhg. Dato' Zainal Abidin Putih (Independent Non-Executive Director) 

Directors' Remuneration 

The remuneration received by the Independent Non-Executive Directors in 2010 was recommended by the Board as a 

whole (with the Independent Non-Executive Directors abstaining from participation in the discussions and voting on the 

matter) and approved by the shareholders at the Annual General Meeting on May 25, 2010. 

With the recommendation of the Remuneration Committee, the Board has adopted Exxon Mobil Corporation's 

compensation system to set the remuneration of Executive Directors. The compensation system took into account the 

performance of each Executive Director and the competitive environment in which the Company operates. The Executive 

Directors took no part in deciding their own remuneration. 

20 



An analysis of the aggregate Directors' remuneration incurred by the Company for the year ended December 31, 2010 as 

prescribed under Appendix 9C Part A Item 11(a) of the Main Market Listing Requirements of the Bursa Malaysia Securities 

Berhad (BMSB) is set out below : 

FEES VALUE OF REMUNERATION 

TOTAL 

(RM) AND OTHERS (RM) 

(RM) 

EXECUTIVE DIRECTORS - 1,359,779 1,359,779 

INDEPENDENT NON-EXECUTIVE 126,000 33,000 159,000 

DIRECTORS 

An analysis of the number of Directors whose remuneration, incurred by the Company, falls in successive bands of 

RM50,000 as prescribed under Appendix 9C Part A Item 11(b) of the Main Market Listing Requirements of the BMSB is set 

out below: 

Remuneration (RM) Number of Executive Number of Non-Executive 

Directors 

Directors 

Less than 50,000 

50,001 - 100,000 3 

100,001 - 150,000 1 

150,001 - 200,000 

200,001 - 250,000 1 

250,001- 300,000 

300,001 - 350,000 1 

350,001 - 400,000 

400,001 - 450,000 

450,000 - 500,000 

500,001 - 550,000 

550,001 - 600,000 

600,001 - 650,000 

650,001 - 700,000 1 

The Company has opted not to disclose each Director's remuneration as the Board considers the information to be 

sensitive and proprietary. 

Nominating Committee 

The Nominating Committee is responsible for the recommendation of candidates for Independent Non-Executive 

Directors and Executive Directors and the recommendation of Directors for Committees, for the Board's consideration and 

decision. 

The Nominating Committee is also responsible for the assessment of the effectiveness of individual Directors, Board 

Committees and the overall Board on an ongoing basis. These assessments, based on a combination of qualitative and 

quantitative factors, were carried out by the Nominating Committee in 2010. The findings and results of these 

assessments by the Nominating Committee were reported to the Board. 

The current members of the Nominating Committee are as follows: 

1. Mr. Hugh W. Thompson (Executive Director) - Chairman 

Puan Fatimah Merican (Executive Director) - Alternate Chairman 

2. Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim (Independent Non-Executive Director) 

3. Y. Bhg. Tan Sri Abdul Halim Ali (Independent Non-Executive Director) 

The Board when setting up the Nominating Committee in 2003 formed the view, which it still holds today, that the Chairman 

of the Company, being an Executive Director, should be a member and Chairman of the Nominating Committee. While the 

composition of the Nominating Committee departs from the Best Practices as outlined in the Malaysian Code on Corporate 

Governance, compliance with which is not compulsory, the Board is of the view that the inclusion of the Chairman of the 

Company provides the Nominating Committee with invaluable perspective on the business and operational needs of the 

Company. Such input is needed in the selection and recommendation of suitable candidates for appointment by the Board, 

as well as in assessing the performance of the Board, Directors and Committees. 

Apart from the Chairman, the Nominating Committee members are all Independent Non-Executive Directors. 


Directors' Training 

The Board places great emphasis on continuous education for Directors. In this regard, the status of each Director's 

continuous education was regularly monitored and reviewed by the Board. The Board had in 2006, adopted the 'Principles 

for Training of Directors of the Company' that sets out the philosophies on and the types and modes of training, that the 

Directors will undertake in each year, to help them serve the Board more effectively. These same Principles were applied 

by the Board in determining the relevant training for Directors of the Company in 2010. 

All Directors on the Board had received or undergone relevant training in 2010. Further details of the training programmes 

attended by the Directors in 2010 are as set out in pages 24 to 26. 

The Company reimburses Directors for costs incurred in attending continuous education programmes. 

The Directors are also briefed at quarterly Board meetings on any significant changes in laws and regulations that are 

relevant to the Company's operations. 

Dialogue between the Company and Investors 

The Board values and encourages dialogue with the shareholders to establish better understanding of the Company's 

objectives and performance. The Annual General Meeting provides an appropriate forum for the shareholders to dialogue 

with the Board. Additionally, queries from investors and potential investors are dealt with by our Investor Relations. The 

Company also has its own website with contact details of a dedicated officer for such purpose. The Company holds open 

discussions with investors and analysts upon request. In this regard, the Company disseminates information in strict 

adherence to the disclosure requirements of the Main Market Listing Requirements of the BMSB. Material information 

relating to the Company is disclosed to the public by way of announcements to the BMSB, as required by the Main Market 

Listing Requirements of the BMSB. 

Annual General Meeting 

At the Annual General Meeting, the Chairman of the Board reviews the progress and performance of the Company with 

the shareholders. A question and answer session is also conducted to allow shareholders the opportunity to question 

Management on the Company's business and the proposed resolutions. The Chairman, the Board members and the 

external auditors are available at the Annual General Meeting to respond to questions. 

Accountability and Audit 

In announcing the quarterly, semi-annual and annual financial statements to the shareholders and the public, the Board 

endeavours to present a balanced and understandable assessment of the Company's financial position and prospects. 

The Board Audit Committee assists the Board by ensuring the accuracy and adequacy of the information announced. 

Internal Control 



The Directors are responsible for the Company's system of internal controls. The system applies to all financial and 

operating activities with the objective of safeguarding the shareholders' investment and the Company's assets. The 

internal control system has clear management support, including the involvement of the Board, and is designed to meet 

the risks to which the Company is exposed. The Board is satisfied with the design of the control system and believes that 

there is compliance with all of the requirements. 

Key elements of the Company's internal control system include: 

1. a comprehensive and clearly documented System of Management Control Standards Manual that establishes the 

core requirements for good controls within the Company. The Manual not only identifies the principal risks faced by 

the Company, but also prescribes the appropriate systems to manage these risks. The Manual also specifies the 

overall control framework, the required control checks and the required checks on the system's effectiveness, 

2. a clearly defined organisational structure with clear lines of accountability and delegation of authority for each level, 

3. annual reviews of the control system, including internal and external audits. The results are reviewed with various 

levels of management and any major concerns are raised to senior management and the Board Audit Committee, 

22 



Internal Control (Continued) 

4. key policies covering, among others, Business Ethics, Conflicts of Interest, Antitrust, Alcohol and Drug Use, Gifts 

and Entertainment, Harassment in the Workplace and Outside Directorships. They include requirements to comply 

with all applicable laws and regulations. These policies are communicated to and acknowledged by employees on 

an annual basis, 

5. a Controls Integrity Management System to assess and sustain the effectiveness of the organisation's system of 

controls; and 

6. a yearly representation of compliance to the internal control system and key policies by the managers of each 

business unit in the Company. Managers are required to document any outstanding control concerns and the 

planned corrective action steps. 

It should be noted that systems of internal controls and risk management are designed to manage rather than eliminate 

the risk of failure to achieve business objectives, and any system can only provide reasonable and not absolute 

assurance against material misstatement or loss. 

Statement of Directors' Responsibility for Preparing the Financial Statements 

The Directors are required by the Companies Act, 1965 and the Main Market Listing Requirements of the BMSB to 

confirm that the financial statements for each financial year have been made out in accordance with the applicable 

approved accounting standards and that they give a true and fair view of the results of the business and state of affairs of 

the Company for the financial year. 

The Directors have carried out their responsibilities by: 

selecting suitable accounting policies and applying them consistently; 

making judgments and estimates that are reasonable and prudent; 

ensuring that all applicable accounting standards have been adhered to; and 

basing the financial statements on a going-concern basis, as the Directors have a reasonable expectation, after 

having made due enquiries, that the Company has adequate resources to continue in operational existence for the 

foreseeable future. 

The Directors are responsible for ensuring that the Company keeps accounting records which disclose with reasonable 

accuracy, the financial position of the Company, enabling the Directors to ensure that the financial statements comply 

with the Companies Act, 1965 and to safeguard the assets of the Company. 

Relationship with Auditors 

The Board has established a formal and transparent relationship with the auditors of the Company. The role of the Board 

Audit Committee in relation to the internal and external auditors is described on pages 27 and 28. 

Material Contracts 

The Company is not and was not a party to any material contracts involving the Directors' interests during the year. 

Further the Company is not and was not a party to any material contracts that are not in its ordinary course of business 

involving its major shareholders' interests during the year. 

Non-Audit Fees 

No non-audit fees were paid or are payable to the external auditors, PricewaterhouseCoopers, by the Company for the 

financial year ended December 31, 2010. 

Other Information 

i) Family Relationship 

None of the Directors have any family relationship with any other Director and/or major shareholder(s) of the 

Company. 

ii) 

Conflicts of Interest 

None of the Directors have any conflicts of interest with the Company. 




Other Information(Continued) 

iii) 

Conviction for offences (excluding traffic offences) 

None of the Directors have been convicted for any offences within the past 10 years. 

iv) Sanctions and/or penalties 

No sanction or penalty has been imposed on the Company, or the Directors or the Management, by 

the relevant regulatory bodies. 

This Statement is made in accordance with the Board of Directors' resolution dated February 25, 2011. 

Training Attended by Directors in 2010 

Directors / Training Date in 2010 Organiser 


Upstream Working Group Feb 22 PETRONAS 

Offsite Strategy Planning Mar 2 ExxonMobil 

Operations - ALT Effectiveness Workshop Mar 16 ExxonMobil 

ESG Drill Apr 1 ExxonMobil 

Production Leadership Team Conference Apr 12-15 ExxonMobil - 

Houston, USA 

Annual Safety Forum Apr 19 ExxonMobil 

Data Privacy Laws May 20 ExxonMobil 

Offsite Strategy Meeting May 26 ExxonMobil 

- PUL Alignment Workshop 

Asia Oil & Gas Conference Jun 7-8 PETRONAS 

- Panel Chairman “ The Roundtable Carbon Agenda” 

Upstream Working Group Jun 21 PETRONAS 

Visiting Senior Executive Programme Jun 30 Thunderbirds 

Offsite External Engagement Strategy Conference - 1 Jul 6 ExxonMobil 

Advanced ESG Training Jul 19-21 ExxonMobil 


Upstream Oil & Gas Business in Malaysia Aug 27 ExxonMobil 

Upstream Working Group Oct 4 PETRONAS 

Economic Transformation Programme Roadmap Oct 24 Govt of Malaysia 

Leadership Offsite - Safety Nov 25 ExxonMobil 

Tan Sri Dato' Dr. Syed Jalaludin Syed Salim 


Banking Insight Programme - Prof. Nabil Jun 8-9 Bank Negara Malaysia 


24 



Training Attended by Directors in 2010 (Continued) 


Tan Sri Abdul Halim Ali 

Enhancing Protection for Directors and Officers Jan 26 IJM Corporation Bhd 

in an Escalating Risk Environment 

Financial Instruments Seminar Mar 16-17 Malaysia Building 

- FRS 101, 139, 132, 7 and IFRIC 15 Society Berhad 


Corporate Governance Seminar Mar 25 MSWG 

Leaders building Leaders Jul 13 Ministry of Higher Education 

Seminar of Competition Bill 2010 Aug 5 Rahmat Lim & Partners 

A Contrarian View of Corporate Governance by John Zinkin Sep 30 IJM Corporation Bhd 


Dato' Zainal Abidin Putih 

Talk on Managing Risks in Mortgage Financing Jan 13 Bank Negara Malaysia 

& Cagamas Berhad 

Forum on “The Challenges of Implementing FRS 139” Jan 21 Bursa Malaysia 

Building Organisational Capability for Strategic May 4 Bank Negara Malaysia 

Transformation - Prof. Dave Ulrich 


Building Audit Committees for Tomorrow May 20-21 Bank Negara Malaysia 

- David Brown (Brown Governance) 

Banking Insight Programme - Prof. Nabil Jun 8-9 Bank Negara Malaysia 

Advance Risk Management Programme - David Bobker Jun 21-22 Bank Negara Malaysia 

Capitalize Investment Opportunity Aug 2-5 IBC Asia - Singapore 

- Nuclear Energy Sector in Asia 

Khazanah Megatrend Forum 2010 Oct 4-5 Khazanah Nasional 


BNM Financial Industry Conference 2010 Nov 3 Bank Negara Malaysia 

Annual Management Dialogue Nov 26-27 CIMB 

Faridah Ali 


Work-Life Balance Seminar Jul 8 ExxonMobil 

Antitrust Briefing Jul 23 ExxonMobil 


Professional Development - Supervisors’ Training Sep 22-23 ExxonMobil 

Defensive Driving Oct 6 ExxonMobil/SAMP 

Retail Investments Basis Seminar Oct 14 ExxonMobil 

Project Management Workshop Oct 20-21 ExxonMobil 

Business Practices Review Oct 29 ExxonMobil 

DOSS NTI Workshop Dec 2 ExxonMobil 




Training Attended by Directors in 2010 (Continued) 



SH+E Leadership Workshop by John Gelland Feb 4 ExxonMobil 

Speakers Coalition Media Training by Ray Thompson Mar 18 ExxonMobil 

ESG Drill Apr 1 ExxonMobil 

NIEW Gender Series: Women and New Economic Model Apr 9 Ministry of Women, 

Family and Community 

Development 


Offsite Strategy Meeting May 26 ExxonMobil 

- PUL Alignment Workshop 

Asia Oil & Gas Conference Jun 7-8 PETRONAS 




First Ladies Summit 2010 Oct 1 Govt of Malaysia 

US Security Briefing Oct 14 US Embassy 

Energy Outlook Nov 22 David S Reed 

& ExxonMobil 

Leadership Offsite - Safety Nov 25 ExxonMobil 

Abu Bakar Siddik Che Embi 



26 


Meetings and Minutes (Continued) 

The Secretary to the Committee shall be appointed by the Committee. The Secretary shall be responsible for the timely 

issuance of meeting notices together with meeting agenda and any supporting documents in advance of such meeting, for 

recording, keeping and distributing the minutes of meetings and any other duties ordinarily discharged by a secretary of 

such Committee. 

Authority 

The Committee is authorised by the Board: 

 

 

 

 

 


Board Audit Committee Report (Continued) 

to investigate any matter within its terms of reference; 

to have the resources which are required to perform its duties; 

to have full and unrestricted access to any information pertaining to the Company; 

to have unrestricted access to and communication with the external auditors of the Company and internal auditors; 

to obtain external legal or other independent professional advice as necessary; and 

to convene meetings with the external auditors of the Company, without the attendance of the executive members of 

the Committee, whenever deemed necessary. 

Duties 

The Committee is charged with the following duties: 

to review with the external auditors of the Company and internal auditors, the audit plan of the Company, the 

respective auditors' evaluation of the Company's system of internal accounting controls and the audit report, the 

external auditors' management letter and management's response to such letter, and report the same to the Board; 

to review and report to the Board the assistance given by the Company's employees to the external auditors of the 

Company and internal auditors; 

to review and report to the Board the adequacy of the scope, functions, competency and resources of the internal 

 

audit function and that it has the necessary authority to carry out its work; 

to review and report to the Board the internal audit programme, processes, the results of the internal audit 

programme, processes, or investigation undertaken, and whether or not appropriate action has been taken on the 

recommendations of the internal audit; 

to review and report to the Board the quarterly results and year end financial statements, including the balance sheet 

and profit and loss statement, prior to submission of the statements to the Board for approval, focusing particularly on: 

- changes in existing accounting policies or implementation of new accounting policies; 

- significant and unusual events; 

- compliance with accounting standards and other legal requirements; and 

- the going concern assumption; 

to review and report to the Board any related party transaction and conflict of interest situation that may arise within 

the Company; 

to review and report to the Board any removal, resignation, appointment and audit fee of the Company's external 

 

auditors; 

to review and report to the Board whether there is reason (supported by grounds) to believe that the Company's 

 

external auditors are not suitable for reappointment; 

 

to recommend the nomination of a person or persons as external auditors of the Company; 

to report promptly to Bursa Malaysia Securities Berhad (BMSB) matters reported by the Committee to the Board 

which have not been satisfactorily resolved resulting in a breach of the Main Market Listing Requirements of BMSB ; 

 

and 

to perform such other functions as may be agreed to by the Committee and the Board. 

This Statement is made in accordance with the Board of Directors' resolution dated February 25, 2011. 

28 


REPORT OF THE DIRECTORS 

The Directors are pleased to submit the annual report together with the audited financial statements of the Company for the year 

ended December 31, 2010. 

PRINCIPAL ACTIVITIES 

The Company is a public company incorporated in Malaysia under the Companies Act, 1965 and is listed on the Bursa Malaysia 

Securities Berhad. The Company's principal activities are the manufacturing and marketing of petroleum products in Peninsular 

Malaysia. There has been no significant change in the nature of the Company's activities during the year. 

FINANCIAL RESULTS 

RM'000 

Net profit attributable to shareholders 268,579 

Retained profits brought forward 370,243 

Profits available for appropriation 638,822 

Dividends paid less income tax at 25% (24,300) 

Retained profits carried forward 614,522 

DIVIDENDS 

The amount of dividends paid since December 31, 2009 are as follows: 

RM'000 

In respect of the year ended December 31, 2009: 

Final dividend per stock unit, paid on June 21, 2010: 

Ordinary – 12 sen gross less income tax at 25% 24,300 

The Directors propose that a final dividend of 14 sen less income tax at 25% per ordinary stock unit, amounting to RM28,350,000 

be paid for the year ended December 31, 2010. 

RESERVES AND PROVISIONS 

All material transfers to or from reserves and provisions during the year are shown in the financial statements. 

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS 

Before the statement of comprehensive income and statement of financial position were completed, the Directors took 

reasonable steps: 

1. to satisfy themselves that all receivables had been properly analysed, that bad debts had been written off where 

appropriate and that adequate provision for impairment of receivables had been established; and 

2. to ensure that any current assets, which were unlikely to be realised in the ordinary course of business, were written 

down to the expected realisable amount. 

At the date of this report, the Directors are not aware of any circumstances: 

1. which would make the amounts written off for bad debts or the provision for impairment of receivables in the financial 

statements of the Company inadequate to any substantial extent; or 

2. which would make the values attributed to current assets in the financial statements of the Company misleading; or 

3. which would make adherence to the existing method of valuation of assets or liabilities of the Company misleading or 

inappropriate. 

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after 

the end of the year which, in the opinion of the Directors, will or may affect the ability of the Company to meet its obligations when 

they fall due. 



STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (Continued) 

At the date of this report, there does not exist: 

1. any charge on the assets of the Company which has arisen since the end of the year which secures the liability of any 

other person; or 

2. any contingent liability of the Company which has arisen since the end of the year. 

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial 

statements which would make any amount stated in the financial statements misleading. 

In their opinion: 

1. the results of the Company's operations during the year were not substantially affected by any item, transaction or event 

of a material and unusual nature; and 

2. there has not arisen in the interval between the end of the year and the date of this report any item, transaction or event of 

a material and unusual nature likely to affect substantially the results of the operations of the Company for the year in 

which this report is made. 

DIRECTORS 

The Directors who have held office during the period since the date of the last report are as follows: 

Mr. Hugh W. Thompson 

Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim 



Puan Fatimah Merican 

Encik Abu Bakar Siddik Che Embi 

Puan Faridah Ali 

DIRECTORS' BENEFITS 

Since the end of the previous year, no Director has entered into or received or become entitled to receive a benefit (other than 

benefits disclosed in notes 8 and 9 to the financial statements) by reason of a contract made by the Company or a related 

corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial 

interest. All transactions between the Company or a related corporation and companies in which Directors have interests are 

conducted on an arms-length, commercial basis in the ordinary course of business. 

The Company was not a party to any contract or arrangement during the year and at the end of the year, as envisaged by section 

169(6)(f) of the Companies Act, 1965, which would have enabled any of the Directors to acquire benefits through the acquisition of 

shares in or debentures of the Company or any other body corporate. 

30 


DIRECTORS' INTERESTS IN SHARES 

According to the register of Directors' shareholdings, the interests of Directors who held office at the end of the year in the share 

capital of the Company and its related corporations are as follows: 

Exxon Mobil Corporation 

(Ultimate holding company) 

- Number of common stock without par value 

held by the following Directors: 

As at 

As at 

01.01.10 Acquired Sold 31.12.10 

Mr. Hugh W. Thompson 5,041 6,018 - 11,059 

Puan Fatimah Merican 9,852 6,550 (3,308) 13,094 

Puan Faridah Ali 437 570 (400) 607 

No other Director in office at the end of the year held any interest in the share capital of the Company or its related corporations 

during the year. 

ULTIMATE HOLDING COMPANY 

The Directors regard Exxon Mobil Corporation, a corporation incorporated in the state of New Jersey, United States of America, 

as the ultimate holding company of the Company. 

AUDITORS 

The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. 

In accordance with a resolution of the Board of Directors dated February 25, 2011. 

............................... 


Chairman 

............................... 


Director 

Kuala Lumpur, 

February 25, 2011 



STATEMENT OF COMPREHENSIVE INCOME 

FOR THE YEAR ENDED DECEMBER 31, 2010 

Note 2010 2009 

RM'000 

RM'000 

REVENUES 5 8,427,445 8,032,440 

COST OF SALES (7,650,829) (7,429,880) 

GROSS PROFIT 776,616 602,560 

OTHER INCOME 22,229 22,946 

OPERATING EXPENSES (344,645) (334,522) 

ADMINISTRATIVE AND OTHER EXPENSES (65,311) (67,793) 

FINANCE COST 6 (20,432) (22,195) 

PROFIT/(LOSS) BEFORE TAX 7 368,457 200,996 

TAX (EXPENSE)/BENEFIT 10 (99,878) (55,478) 

NET PROFIT/(LOSS) ATTRIBUTABLE TO 268,579 145,518 

SHAREHOLDERS 

OTHER COMPREHENSIVE INCOME - - 

TOTAL COMPREHENSIVE INCOME 

ATTRIBUTABLE TO SHAREHOLDERS 268,579 145,518 

Earnings/(Loss) per ordinary stock unit (sen) 11 99.5 53.9 

Proposed final gross dividend less income tax at 25% 

(2009: 25%) per ordinary stock unit (sen) 14.0 12.0 

The accompanying notes 1 to 28 form part of these financial statements. 

32 


STATEMENT OF FINANCIAL POSITION 

AS AT DECEMBER 31, 2010 


RM'000 

RM'000 

NON-CURRENT ASSETS 

Property, plant and equipment 12 830,244 806,203 

Long-term assets 13 308,714 315,310 

Intangible assets - software 14 148 671 

TOTAL NON-CURRENT ASSETS 1,139,106 1,122,184 

CURRENT ASSETS 

Inventories 15 468,109 456,380 

Assets held for sale – leasehold land - 2,552 

Receivables 16 243,830 143,924 

Amounts due from related corporations 19 140,417 181,699 

Deposit, cash and bank balances 102,261 75,869 

Taxation - 35,234 

TOTAL CURRENT ASSETS 954,617 895,658 

CURRENT LIABILITIES 

Payables 17 142,327 135,467 

Retirement benefits obligations 18 1,006 2,721 

Amounts due to related corporations 19 396,907 443,040 

Borrowings (unsecured) 20 616,307 807,950 

Taxation 54,257 - 

TOTAL CURRENT LIABILITIES 1,210,804 1,389,178 

NET CURRENT LIABILITIES (256,187) (493,520) 

LESS: NON-CURRENT LIABILITIES 

Retirement benefits obligations 18 50,383 48,449 

Deferred taxation 21 75,014 66,972 

125,397 115,421 

TOTAL NET ASSETS EMPLOYED 757,522 513,243 

FINANCED BY: 

SHARE CAPITAL 22 135,000 135,000 

RESERVES 23 8,000 8,000 

RETAINED PROFITS 23 614,522 370,243 

SHAREHOLDERS' EQUITY 757,522 513,243 




STATEMENT OF CHANGES IN EQUITY 


Issued and fully paid 

ordinary stock of 

RM0.50 each Non-distributable 

Number of capital Distributable 

ordinary Nominal redemption retained 

stock unit value reserves profits Total 

'000 RM'000 RM'000 RM'000 RM'000 

At January 1, 2009 270,000 135,000 8,000 249,025 392,025 

Net profit - - - 145,518 145,518 

Dividends for the year ended 

December 31, 2008 (final) - - - (24,300) (24,300) 

At December 31, 2009 270,000 135,000 8,000 370,243 513,243 

At January 1, 2010 270,000 135,000 8,000 370,243 513,243 

Net profit - - - 268,579 268,579 

Dividends for the year ended 

December 31, 2009 (final) - - - (24,300) (24,300) 

At December 31, 2010 270,000 135,000 8,000 614,522 757,522 


34 


STATEMENT OF CASH FLOWS 



RM’000 

RM’000 

CASH FLOWS FROM OPERATING ACTIVITIES 

Net profit / (loss) attributable to shareholders 268,579 145,518 

Adjustments for: 

Depreciation on property, plant and equipment 58,767 60,505 

Amortisation of intangible assets 523 845 

Tax expense / (benefit) 99,878 55,478 

Interest income (2,691) (581) 

Interest expense / commercial papers profit elements incurred 20,432 22,195 

Retirement / separation benefits cost 3,995 4,848 

(Gain) / loss on disposal of assets held for sale (659) (769) 

(Gain) / loss on disposal of property, plant and equipment 109 (294) 

Write-off of property, plant and equipment 3,976 2,763 

Unrealised foreign exchange (gain) / loss (7,813) 10,997 

Changes in: 

(Increase) / decrease in inventories (11,729) (158,336) 

(Increase) / decrease in assets held for sale - (2,552) 

(Increase) / decrease in receivables (99,843) (88,800) 

(Increase) / decrease in amounts due from related corporations 41,282 (7,960) 

Increase / (decrease) in amounts due to related corporations (38,430) 199,698 

Increase / (decrease) in payables and provisions 6,682 (106,254) 

Cash generated from operations 343,058 137,301 

Interest / commercial papers profit elements paid (20,495) (23,596) 

Interest received 2,691 581 

Income taxes paid (37,580) - 

Income taxes refunded 35,235 - 

Retirement / separation benefits paid (3,666) (3,943) 

Net cash from operating activities 319,243 110,343 

CASH FLOWS FROM INVESTING ACTIVITIES 

Purchase of property, plant and equipment (87,853) (47,096) 

(Increase) / decrease in long-term assets 6,596 30,982 

Proceeds from disposal of property, plant and equipment 960 992 

Proceeds from disposal of assets held for sale 3,211 5,874 

Net cash used in investing activities (77,086) (9,248) 

CASH FLOWS FROM FINANCING ACTIVITIES 

Repayment of borrowings – net (191,643) (17,058) 

Dividends paid to shareholders (24,300) (24,300) 

Net cash used in financing activities (215,943) (41,358) 

NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 26,214 59,737 

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 68,358 8,621 

CASH AND CASH EQUIVALENTS AT END OF YEAR 24 94,572 68,358 




NOTES TO THE FINANCIAL STATEMENTS 

1. BASIS OF PREPARATION 

The financial statements of the Company are prepared under the historical cost convention except as disclosed in the 

summary of significant accounting policies in Note 2. The financial statements comply with the Financial Reporting 

Standards (FRS) in Malaysia and the provisions of the Companies Act, 1965. 

The preparation of financial statements in conformity with the FRS requires the use of certain critical accounting estimates 

and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and the disclosure of 

contingent assets and liabilities. It also requires the Directors to make judgements that affect the application of the 

Company's accounting policies. Although these estimates and judgements are based on the Directors' best knowledge of 

current events and actions, actual results may differ. 

The financial statements have been approved for issues in accordance with a resolution of the Board of Directors dated 

February 25, 2011. 

a) Standards, amendments to published standards and interpretations that are applicable to the 

Company and are effective 

The new accounting standards, amendments to published standards and interpretations to existing 

standards effective for the financial period beginning January 1, 2010 and applicable to the Company are as 

follows: 

• Amendment to FRS 1 First Time Adoption of Financial Reporting Standards 

• Amendments to FRS 2 Share-Based Payment Vesting Conditions and Cancellations 

• FRS 8 Operating Segments and Amendment to FRS 8 Operating Segments 

• FRS 101 (Revised) Presentation of Financial Statements 

• FRS 123 (Revised) Borrowing Costs 

• Amendment to FRS 127 Consolidated and Separate Financial Statements 

• Amendments to FRS 132 Financial Instruments: Presentation 

• Amendments to FRS 132 Financial Instruments: Presentation (paragraphs 95A, 97AA and 97AB) 

relating to classification of the compound financial instrument into its liability and equity elements when 

the entity first applies FRS 139 Financial Instruments: Recognition and Measurement 

• Amendments to FRSs contained in the document entitled “Improvements to FRSs (2009)”. The 

improvements contain amendments to twenty two FRSs which involves changes to presentation, 

recognition, or measurement and some are changes to terminology with little effect on accounting 

• IC Interpretation 9 and Amendment to IC Interpretation 9: Reassessment of Embedded Derivatives 

• IC Interpretation 10: Interim Financial Reporting and Impairment 

• IC Interpretation 11: FRS 2 Group and Treasury Share Transaction 

• IC Interpretation 13: Customer Loyalty Programmes 

• IC Interpretation 14: FRS 119 The Limit of a Defined Benefit Asset, Minimum Funding Requirements 

and their Interaction 

• FRS 7 Financial Instruments: Disclosures and Amendment to FRS 7 Financial Instruments: 

Disclosures 

• FRS 139 Financial Instruments: Recognition and Measurement and Amendment to FRS 139 

Financial Instruments: Recognition and Measurement. 

36 


1. BASIS OF PREPARATION (Continued) 

a) Standards, amendments to published standards and interpretations that are applicable to the Company 

and are effective (Continued) 

The adoption of all the standards and interpretations above do not have any material impact on the financial 

position of the Company. All changes in accounting policies have been made in accordance with the adoption of 

all the standards which do not result in significant changes in accounting policies and disclosures, except as 

disclosed below: 

• FRS 8 Operating Segments and Amendment to FRS 8 Operating Segments. FRS 8 replaces FRS 1142004 

Segment Reporting. The new standard requires a ‘management approach’, under which segment 

information is presented on the same basis as that used for internal reporting purposes. The amendment 

to the standard clarifies that entities that do not provide information about segment assets to the chief 

operating decision-maker will no longer need to report this information. The Company determined that the 

operating segment was unchanged as previously identified under 1142004 

and additional disclosures about 

the segment is shown in Note 25. Comparative information has been presented in conformity with the 

transitional requirements of such standard. 

• FRS 101 (Revised) Presentation of Financial Statements. It prohibits the presentation of items of income 

and expenses (non-owner changes in equity) in the statement of changes in equity. ‘Non-owner changes 

in equity’ are to be presented separately from owner changes in equity in a statement of comprehensive 

income. 

• FRS 123 (Revised) Borrowing Costs. The new standard requires an entity to capitalise borrowing costs 

that are directly attributable to the acquisition, construction or production of a qualifying asset. Previously 

the Company immediately recognised all borrowing costs as an expense. 

• FRS 139 Financial Instruments: Recognition and Measurement and Amendment to FRS 139 Financial 

Instruments: Recognition and Measurement. On adoption of FRS 139, the Company measures financial 

assets and financial liabilities initially at fair value and subsequently carried at amortised cost using the 

effective interest rate method. 

The remaining standards and interpretations that are effective for financial period beginning January 1, 2010 are 

not applicable to the Company’s operations. 

b) Standards, amendments to published standards and interpretations to existing standards that are 

applicable to the Company but not yet effective 

The new standards, amendments to published standards and interpretations to existing standards applicable to 

the Company that will be effective but have not been early adopted by the Company, are as follows: 

i) Standards effective from March 1, 2010 

• Amendment to FRS 132 Financial Instruments: Presentation (paragraphs 11, 16 and 97E of FRS 

132) relating to Classification of Rights Issues. The amendments require that rights issues be 

classified as equity regardless of the currency in which the exercise price is denominated, provided 

certain conditions are met. 

ii) Standards effective from July 1, 2010 

• FRS 1 First-time Adoption of Financial Reporting Standards. This is a revision to the existing FRS 1 

merely to improve the structure of the standard. 

• FRS 127 Consolidated and Separate Financial Statements. The revised standard requires the 

effects of all transactions with non-controlling interests to be recorded in equity if there is no change 

in control and these transactions will no longer result in goodwill or gains and losses. 

• IC Interpretation 17: Distributions of Non-cash Assets to Owners. It provides guidance on 

accounting for arrangements whereby an entity distributes non-cash assets to shareholders either 

as a distribution of reserves or as dividends. 

• Amendments to FRS 2 Share-based Payment. It clarifies that contributions of a business on 

formation of a joint venture and common control transactions are outside the scope of FRS 2. 

• Amendments to FRS 5 Non-current Assets Held for Sale and Discontinued Operations. It clarifies 

that all of a subsidiary’s assets and liabilities are classified as held for sale if a partial disposal sale 

plan results in loss of control. 



1. BASIS OF PREPARATION (Continued) 

b) Standards, amendments to published standards and interpretations to existing standards that are 

applicable to the Company but not yet are effective (Continued) 

ii) 

Standards effective from July 1, 2010 (Continued) 

• Amendment to FRS 138 Intangible Assets. It clarifies that a group of complementary intangible 

assets acquired in a business combination is recognised as a single asset if the individual asset 

has similar useful lives. 

• Amendment to IC 9:Reassessment of Embedded Derivatives. The amendments clarify that the 

Interpretation does not apply to embedded derivatives in contracts acquired in a business 

combination, businesses under common control or the formation of a joint venture. 

iii) Standards effective from January 1, 2011 

• Amendment to FRS 1 (Limited Exemption from Comparative FRS 7 Disclosures for First-time 

Adopters) relieves first-time adopters of FRS from providing the additional disclosures required 

from the amendments to FRS 7. 

• Amendments to FRS 7 (Improving Disclosures about Financial Instruments) reinforce existing 

principles for disclosures about liquidity risk and require enhance disclosures about fair value 

measurements. 

• Amendment to FRS 1 (Additional Exemptions for First-time Adopters) exempts oil and gas 

entities using the full cost method from retrospective application of FRS for its oil and gas assets. 

• Amendments to FRS 2 (Group Cash-Settled Share-based Payment Transactions) clarify that an 

entity must account for goods or services received in a share-based payment arrangement 

regardless of which entity in the group settles the transaction and whether the settlement is in 

shares or cash. 

• Amendment to IC Interpretation 4: Determining whether an Arrangement contains a Lease 

clarifies that although an arrangement does not take the legal form of a lease, it is a lease when 

the fulfilment of the arrangement is dependent on the use of a specific asset and the 

arrangement to convey a right to use the asset. 

• Amendment to IC Interpretation 18: Transfers of Assets from Customers clarifies that if an entity 

receives property, plant and equipment (PPE) and such PPE meet the definition of an asset, it 

shall recognise it in accordance with FRS 116 Property, Plant and Equipment. 

The Company will apply the above standards, amendments and interpretations from financial period 

beginning January 1, 2011. The adoptions of these standards are not expected to have a material impact on 

the financial position of the Company. 

The remaining standards and interpretations that are issued but not yet effective are not applicable to the 

Company’s operations. 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Unless otherwise stated, the following accounting policies adopted by the Company are consistent with those adopted in 

previous years: 

(a) 

Property, plant and equipment 

Property, plant and equipment are stated at cost or 1982 valuation less accumulated depreciation and impairment. 

No valuation has been conducted since 1982. 

38 


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 

(a) 

Property, plant and equipment (Continued) 

The Directors applied the transitional provisions of FRS 116 on Property, Plant and Equipment when MASB first issued 

the standard in 2000, which allowed property, plant and equipment to be stated at their prevailing valuations less 

depreciation. The valuations were determined by independent professional valuers on the following bases: 

Land - Open market value based on existing use 

Buildings - Depreciated replacement cost 

No depreciation is provided on freehold land and capital projects that are in progress. Buildings and improvements and 

plant and equipment are depreciated on a straight-line basis to write-off the cost or valuation of the assets to their 

residual values, over the term of their estimated service lives. The residual values and service lives are reviewed at 

each balance sheet date. 

The principal annual rates of depreciation used are as follows: 

Buildings and improvements 3% - 5% 

Plant and equipment 4% - 10% 

Maintenance and repairs are charged to the income statement as incurred. Major renewals and improvements are 

capitalised. 

Included in the respective property, plant and equipment classifications, is the Company's proportionate share in the 

joint venture assets of the Multi Product Pipeline System and related distribution terminal facilities (MPP). The 

Company has a 20% participating interest in the MPP. The accounting policy adopted for these jointly controlled assets 

is consistent with those adopted for the Company's 100% owned property, plant and equipment. 

(b) 

Financial assets 

The Company’s financial assets are loans and receivables. The Company has loans and receivables which are nonderivative 

financial assets with fixed or determinable payments that are not quoted in an active market. They are 

included in current assets, except for financial assets with maturities greater than 12 months after the end of the 

reporting period. These are classified as non-current assets. Such assets are recognised initially at fair value and 

subsequently at amortised cost using the effective interest method, less any impairment losses. 

Loans and receivables comprise trade and other receivables, amount due from related corporations and cash and 

cash equivalents (Note 2 (f)). 

(c) 

Impairment of assets 

(i) 

Non-financial assets 

The carrying amounts of assets are reviewed annually to determine whether there is any indication that the 

carrying amounts may not be recoverable. If such an indication of impairment exists, the carrying amount of the 

asset is assessed and written down immediately to its recoverable amount. The recoverable amount is the higher 

of the asset's fair value less costs to sell and value in use and is determined for the cash generating unit to which 

the asset belongs. Impairment is measured by the amount the carrying value exceeds the recoverable amount. 

Impairment loss and its subsequent reversal are taken to the income statement. 

(ii) 

Financial assets carried at amortised cost 

A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial 

recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that 

asset that can be estimated reliably. 

Objective evidence that financial assets are impaired includes significant financial difficulty of the issuer or 

obligor, a breach of contract, such as a default or delinquency by a debtor, restructuring of an amount due to the 

Company on terms that the Company would not consider otherwise and indications that a debtor will enter 

bankruptcy or receivership. 




(d) 

Operating leases 

Leases of assets under which a significant portion of risks and benefits of ownership over the economic life of the 

assets are effectively retained by the lessor are classified as operating leases. Prepaid lease rentals on service 

station sites made under operating leases are charged to the income statement on a straight-line basis over the 

period of the lease. Payments for all other operating leases are charged to the income statement in the year to which 

they relate. 

(e) 

Inventories 

Crude oil and petroleum product inventories are valued at the lower of cost and net realisable value. Cost includes all 

applicable purchase costs and production overheads and is determined on the first-in first-out (FIFO) basis. Materials 

and supplies are valued at cost, determined on a weighted average basis, and a deduction is made for obsolete and 

slow moving stocks. 

(f) 

Cash and cash equivalents 

For the purposes of the cash flow statement, cash and cash equivalents include bank balances, deposits held at call 

with banks and cash in hand less bank overdrafts. To be included, these items must be readily convertible to cash 

and must not be subject to a significant risk of a change in value. 

(g) 

Provisions 

Provisions are recognised when it is probable that an outflow of resources will be required to settle a present legal or 

constructive obligation, and when a reliable estimate of the amount can be made. The provisions are reviewed at year 

end and adjusted to reflect the current best estimate. 

(h) 

Employee / separation benefits 

(i) 

Short-term employee benefits 

Wages, salaries, bonuses, and non-monetary benefits are accrued in the year in which the associated 

services are rendered by employees of the Company. 

(ii) 

Retirement benefits 

(a) 

Defined contribution retirement plan 

The Company's contribution to the national defined contribution plan, the Employees Provident Fund, 

is recognised in the income statement as incurred. 

(b) 

Retirement benefits 

The Company operates an unfunded defined benefit retirement plan for its regular national 

employees. The liability for employees' retirement benefits is determined based on a periodic 

independent actuarial reappraisal of the plan assumptions. This is based on the schedule of benefits 

stipulated in the Company's retirement benefits plan. The most recent reappraisal was carried out in 

December 2009. The projected unit credit method is used to calculate the actuarial plan benefits 

based on the estimated years of service and employees' projected compensation during their last year 

of employment. The liability recognised in the balance sheet represents the present value of the 

defined benefit obligations adjusted for unrecognised actuarial gains or losses and past service cost. 

Actuarial gains or losses are amortised on a straight-line basis over the average remaining service life 

of employees expected to receive the plan benefits. 

(iii) 

Separation benefits 

Separation benefits are payments due to employees as a result of the separation from employment before the 

normal retirement age. The liability for separation benefits is recognised when the Company's commitment is 

confirmed without any realistic possibility of withdrawal. 

40 



(i) 

Share capital 

Ordinary stock units with discretionary dividends are classified as equity. 

(j) 

Dividends 

Dividends on ordinary stock units are recognised as liabilities when the dividends are approved for payment. 

(k) 

Trade and other payables 

Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course 

of business from suppliers. Trade and other payables are recognised initially at fair value and subsequently at 

amortised cost using the effective interest method. 

(l) 

Borrowings 

Borrowings are recognised initially at fair value, net of transaction costs incurred, and are subsequently carried at 

amotised cost. All interest, profit elements on Islamic Commercial Papers (ICP) Programme and other costs incurred 

in connection with borrowings are expensed as incurred, except that up-front costs incurred in establishing long-term 

facilities are amortised over the facility period. With the adoption of FRS 123 Borrowing Costs, borrowing costs 

relating to qualifying assets for which the commencement date for capitalisation is on or after January 1, 2010, should 

be capitalised. The change had no material impact on the financial position of the Company. 

(m) 

Taxation 

The taxation charge in the income statement comprises current and deferred taxes. Current taxes are calculated by 

applying current tax rates to the chargeable income for the year. 

Deferred taxes are calculated at the balance sheet date on all material temporary differences between the tax bases 

of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets and liabilities are 

offset when there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income 

taxes levied by the same tax authority on either the taxable entity, or different taxable entity where there is an intention 

to settle the balances on a net basis. 

Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available to absorb the 

deductible temporary differences. Tax rates enacted or substantively enacted by the balance sheet date are used to 

calculate deferred taxes. 

(n) 

Revenue recognition 

Income from the sale of goods is recognised upon delivery of goods and acceptance by customers net of returns, 

discounts and allowances, in accordance with the terms of sale. Interest and other income are recognised on an 

accrual basis. 

(o) 

Research and development 

Expenditures on research and development are recognised as expense except when there is sufficient certainty that 

the development efforts will result in future economic benefits for the Company, in which case these costs are 

capitalised. 

(p) 

Foreign currencies 

The functional currency of the Company is Ringgit Malaysia. Transactions arising in foreign currencies are translated 

into Ringgit Malaysia at the approximate rates of exchange on the transaction dates. Transactions uncompleted at the 

balance sheet date are translated at the closing exchange rates. Foreign currency exchange gains and losses 

resulting from the translation and settlement of foreign currency transactions are included in the income statement. 




(q) 

Segment reporting 

Segment reporting is consistent with the internal reporting to the Company’s chief operating decision maker, 

represented by a committee responsible for allocating resources and assessing performance of the operating 

segment. 

(r) 

Fair value estimation 

The carrying amount of current receivables and payables, carried at amortised cost, approximate their fair values. 

3. CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS 

The Company makes accounting estimates and assumptions concerning the future which may differ from actual results. 

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of 

assets and liabilities within the next financial year are: 

(a) 

Estimated useful lives and residual values of property, plant and equipment 

Property, plant and equipment are depreciated on a straight line basis over the term of their useful service lives taking 

into account residual values where appropriate. The estimated useful lives of these assets should be reflective of 

factors such as service life experience on the facilities and their maintenance programmes. The useful lives and 

residual values of assets are reviewed, and adjusted if appropriate, at each balance sheet date. The significant 

accounting policy for property, plant and equipment is disclosed in Note 2. 

(b) 

Retirement Benefits Obligations 

The present value of the retirement benefits obligations depends on a number of factors that are determined on an 

actuarial basis using a number of assumptions. The assumptions used in determining net cost (income) for the 

retirement benefits include the discount rate used to determine the present value of estimated cash outflows 

expected to be required to settle the retirement benefits obligations, and salary growth rate. Any changes in these 

assumptions will impact the carrying amount of retirement benefits obligations. Refer to Note 18 for the sensitivity of 

the overall pension liability to changes in the discount rate and salary growth rate. 

4. FINANCIAL RISK MANAGEMENT 

a) Market Risk 

Given the size and long-term nature of its business, the Company expects that exposure to market risk arising from 

changes in currency rate and interest rate will be moderated over time. As such, the Company discourages the use of 

financial derivative instruments to manage these risks. The Company believes that the administrative and financial 

costs to execute and control the use of derivatives typically outweigh the potential benefits. Any derivative 

transaction would require senior management approval and periodic review. Speculative derivative activity is strictly 

prohibited. 

(i) 

Currency risk 

The Company’s activities are exposed to currency risk primarily arising from US dollar denominated crude 

purchases. A strengthening of the Ringgit would result in a favorable impact to profitability due to credit terms 

for payments for crude purchases. The Company has no other significant short-term or long-term 

transactions denominated in foreign currencies as at December 31, 2010. 

A 10% depreciation / appreciation of the USD against the Ringgit would result in an approximate decrease / 

increase in pre-tax profit of RM39 million (2009: RM41 million) with all other variables held constant. 

42 


4. FINANCIAL RISK MANAGEMENT (Continued) 

a) Market Risk (Continued) 

(ii) 

Interest rate risk 

The Company is exposed to fluctuations in market interest rates as the Company’s operations are financed 

through a mixture of retained profits and borrowings. 

The borrowings are generally based on floating interest rates unless opportunities arise for competitive fixed 

rate financing. The Company’s financing arrangements are typically tracked against the Overnight Policy 

Rate (OPR) or Kuala Lumpur Interbank Offered Rate (KLIBOR). A rise in the major benchmark rates would 

result in a higher interest expense and vice versa. The impact of a 10-basis-point change in interest rate 

affecting the Company’s borrowing would not be material to the Company’s financial statements. 

b) Credit Risk 

Credit risk primarily arises from cash and cash equivalents, and credit exposures to trade customers. The Company 

places its surplus cash with a sister affiliate, ExxonMobil Malaysia Sdn. Bhd., which has been assessed as low risk 

due to overall strength of ExxonMobil group. From time to time, the Company has deposit placement with 

independently rated banks with a minimum rating of AAA by local rating agency, or equivalent. 

The Company manages credit exposure to trade customers by strict adherence to a set of credit policies and 

procedures whereby customers are thoroughly assessed and risk rated. Daily credit monitoring is an integral part of 

the credit management process that is administered within the Company’s financial and operating system. Risk 

evaluations are performed internally including reviews of financial positions, business success indicators, past 

experience and other factors. Individual risk limits are set based on the internal ratings in accordance with guidelines 

set by management. Risk categories are established for individual customers based on internal credit guidelines 

ranging from very low to very high risk. The risk categories are intended to reflect the risk of payment default by a 

customer and are similar to the rating scales established by external rating agencies. 

The Company is consistently in a net current liability position as retail sales to service stations are on cash terms 

whilst purchases, which are mostly intercompany in nature, are on credit terms. This improves the Company’s return 

on capital employed by effectively reducing its exposure to uncollected trade receivables. 

c) Liquidity Risk 

The Company manages liquidity risk by maintaining sufficient cash and cash equivalent balance, third party 

borrowing facilities and inter-company financing arrangements. The Company reviews its revolving credit facilities 

on a periodic basis and continues to receive support from both local and foreign financial institutions. The existing 

Islamic Commercial Paper Program has continued enjoying competitive rates relative to other available 

arrangements. In addition, the Company has subscribed to the fund pooling arrangements made available by its 

sister affiliate, ExxonMobil Malaysia Sdn. Bhd. This inter-company financing arrangement allows the Company to 

either draw cash from the pool in the event of a shortfall, or place cash into the pool in the event of excess, at 

competitive interest rates on a daily basis. 

The Company continues to optimise the mix of its borrowing facilities to maximise financing flexibility whilst reducing 

financing cost. These facilities are short-term in nature unless opportunities arise to secure favorable longer term 

borrowing facilities. 

Liquidity risk may also arise if debtors are not able to settle obligations to the Company within the normal credit term. 

To manage this risk, the Company periodically assesses the financial viability of debtors and may require certain 

debtors to provide bank guarantees or other security. 

d) Capital Risk 

The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going 

concern in order to provide returns to shareholders and benefits to other stakeholders. 

In the future, in order to maintain an appropriate capital structure, the Company may consider adjusting the amount of 

dividends paid to shareholders, returning capital to shareholders, issuing new shares or selling assets to reduce debt. 

There were no changes in the Company’s approach to capital management during the year. 



5. REVENUES 

2010 2009 

RM'000 

RM'000 

Related corporations sales 3,145,708 3,443,027 

Third party sales 5,252,842 4,563,919 

Turnover 8,398,550 8,006,946 

Interest income 

Related parties 2,579 579 

Others 112 2 

Licence fees 26,204 24,913 

8,427,445 8,032,440 

Turnover represents the value of goods sold inclusive of subsidies and net of Government duties and taxes. 

6. FINANCE COST 


RM'000 

RM'000 

Interest and profit elements on borrowings (Note 20) 

Related parties 13,293 14,318 

Others 7,139 7,877 

20,432 22,195 

7. PROFIT/(LOSS) BEFORE TAX 


RM'000 

RM'000 

The profit/(loss) before tax is arrived at after 

(crediting)/charging the following items: 

Depreciation on property, plant and equipment 58,767 60,505 

Amortisation of intangible assets 523 845 

Auditors' remuneration 

- Current 164 164 

- Non-recurring 25 - 

Inventory write-down to net realisable value - 1,560 

Cost of inventories recognised as an expense 7,687,855 7,429,880 

Provision for impairment and write-off 

of receivables 234 488 

Reversal of provision for impairment 

of receivables (47) (127) 

Foreign exchange (other than on borrowings) 

Realised foreign exchange (gain)/loss (34,668) (12,809) 

Unrealised foreign exchange (gain)/loss (7,813) 10,997 

Rental expense for land and buildings 16,612 15,991 

Hire of plant and machinery 184 355 

Research and development expense 2,250 4,289 

(Gain)/Loss on disposal of property, plant and 

equipment 109 (294) 

(Gain)/Loss on disposal of assets held for sale (659) (769) 

8. EMPLOYEE BENEFITS EXPENSE 


RM'000 

RM'000 

Wages, salaries and bonus 39,056 39,112 

Defined contribution retirement plan - 

Employees Provident Fund 4,791 4,778 

Provision for retirement benefits - 

Defined benefit retirement plan (Note 18) 3,937 3,803 

Separation benefits 58 1,045 

Other employee benefits 5,105 6,406 

52,947 55,144 

44 


9. DIRECTORS' REMUNERATION 


RM'000 

RM'000 

Non-Executive Directors: 

Fees 126 108 

Executive Directors: 

Short-term employee benefits 1,048 1,156 

Retirement benefits 273 282 

Benefits-in-kind 39 49 

1,486 1,595 

Included in the above is the remuneration of Executive Directors employed by related corporations allocated to the 

Company amounting to RM351,000 (2009: RM487,000). The balance represents remuneration for Directors employed by 

the Company included in Note 8. 

10. TAX EXPENSE/(BENEFIT) 


RM'000 

RM'000 

Current taxation 91,837 - 

(Over) / under accrual in prior years 

- Income tax - (115) 

- Real Property Gains Tax (1) (120) 

Deferred taxation (Note 21) 

Origination and reversal of temporary differences 8,042 55,713 

99,878 55,478 

The Company's effective tax rate differs from the statutory tax rate and is reconciled as follows: 


% % 

Statutory tax rate 25 25 

Expenses not deductible for tax purposes 2 3 

Effective tax rate 27 28 

Effective tax rates on non-deductible expenses primarily reflect the varying relationship of the non-deductible expenses 

(which are relatively fixed over time) to changing levels of profit or loss from period to period. 

11. EARNINGS/(LOSS) PER ORDINARY STOCK UNIT 

Earnings per ordinary stock unit is calculated by dividing the net profit or loss attributable to shareholders by the number of 

ordinary stock units in issue during the year. 


Net profit/(loss) attributable to shareholders (RM'000) 268,579 145,518 

Number of ordinary stock units in issue ('000) 270,000 270,000 

Basic and diluted earnings/(loss) per stock unit (sen) 99.5 53.9 



12. PROPERTY, PLANT AND EQUIPMENT 

Buildings Plant Capital 

Freehold and and project 

land improvements equipment in-progress Total 

RM'000 RM'000 RM'000 RM'000 RM'000 

Net book value 

At January 1, 2010 203,184 144,057 409,717 49,245 806,203 

Additions - 9,341 19,031 59,481 87,853 

Disposals (52) (55) (805) - (912) 

Write-offs - (1,046) (2,876) (54) (3,976) 

Transfer to affiliate - - (157) - (157) 

Reclassifications - 16,132 26,702 (42,834) - 

Depreciation charged to 

income statement - (15,542) (43,225) - (58,767) 


At December 31, 2010 203,132 152,887 408,387 65,838 830,244 

At December 31, 2010 

Valuation-1982 57,267 15,361 - - 72,628 

Cost-Post 1982 net additions 145,865 335,528 1,101,186 65,838 1,648,417 

Accumulated depreciation - (198,002) (692,799) - (890,801) 

Net book value 203,132 152,887 408,387 65,838 830,244 

Net book value at 

December 31, 2010 if assets 

had been carried at cost less 

depreciation: 153,303 152,887 408,387 65,838 780,415 


At January 1, 2009 206,084 141,230 440,203 40,661 828,178 

Additions - 4,618 2,415 40,063 47,096 

Disposals (118) - (60) - (178) 

Write-offs - (386) (2,377) - (2,763) 

Reclassify to assets 

held for sales (2,782) (1,437) (886) - (5,105) 

Transfer to affiliate - - (520) - (520) 

Reclassifications - 14,638 16,841 (31,479) - 

Depreciation charged to 

income statement - (14,606) (45,899) - (60,505) 


At December 31, 2009 203,184 144,057 409,717 49,245 806,203 

At December 31, 2009 

Valuation-1982 57,267 15,770 - - 73,037 

Cost-Post 1982 net additions 145,917 312,600 1,215,105 49,245 1,722,867 

Accumulated depreciation - (184,313) (805,388) - (989,701) 

Net book value 203,184 144,057 409,717 49,245 806,203 

Net book value at 

December 31, 2009 if assets 

had been carried at cost less 

depreciation: 153,355 144,057 409,717 49,245 756,374 

Included in the above Property, Plant and Equipment is the net book value for the Company's 20% participating interest in 

the joint venture assets of MPP amounting to RM63,576,000 (2009: RM67,705,000). 

46 


13. LONG-TERM ASSETS 


RM'000 

RM'000 

Prepaid lease rentals 273,677 278,446 

Deposits 1,706 2,210 

Loans and marketing assistance to dealers 28,339 27,922 

Others 4,992 6,732 

308,714 315,310 

Included in the above prepaid lease rentals are leasehold land amounting to RM20,741,000 (2009: RM20,977,000) for the 

Company's 20% participating interest in the joint venture assets of MPP. 

14. INTANGIBLE ASSETS - SOFTWARE 


RM'000 

RM'000 

At December 31 

Cost 11,070 11,070 

Accumulated amortisation (10,922) (10,399) 

Net book value 148 671 

15. INVENTORIES 


RM'000 

RM'000 

Crude oil 166,333 197,205 

Petroleum products 293,238 250,940 

Materials and supplies 8,538 8,235 

Total inventories at lower of cost and net realisable value 468,109 456,380 

16. RECEIVABLES 


RM'000 

RM'000 

Trade receivables 75,546 68,883 

Less: Provision for impairment of receivables (3,163) (3,023) 

72,383 65,860 

Others 171,447 78,064 

243,830 143,924 

Credit terms of trade receivables range from payment in advance to generally up to 90 days. All the receivables are in 

Ringgit Malaysia. 

At the balance sheet date, the concentration of credit risk with respect to trade receivables is mainly from Supply and 

Industrial customers. The provision for impairment of receivables s considered sufficient to cover collection losses. 

Other receivables are generally those of a non-trade nature. Included in the current year balance is an amount of 

RM152,939,651 (2009: RM59,573,178) for subsidies receivable from the Government of Malaysia under the Automatic 

Pricing Mechanism. 



16. RECEIVABLES (Continued) 

The ageing analysis of these trade receivables is as follows: 


RM'000 

RM'000 

Current 71,863 65,727 

Overdue and not impaired: 

Less than 3 months 362 35 

3 to 6 months - 54 

6 to 12 months 96 - 

Over 12 months 62 44 

Overdue and impaired: 

Over 12 months 3,163 3,023 

75,546 68,883 

Less: Provision for impairment of receivables (3,163) (3,023) 

72,383 65,860 

As at December 31, 2010, provisions were made for impaired trade receivables of RM3,163,000 (2009: RM3,023,000). 

These primarily relate to a few industrial customers which are in financial difficulty, and represent the amount in excess of 

value of collaterals which have been claimed. The Company believes that the unimpaired amounts are still collectable, 

based on historic payment behaviour and customers’ credit ratings. 

Movements of the provision for impairment of receivables are as follows: 


RM'000 

RM'000 

At 1 January 3,023 3,182 

Provision for impairment 222 - 

Receivables written off during the year (35) (32) 

Reversal of provision for impairment (47) (127) 

At 31 December 3,163 3,023 

The maximum exposure to credit risk at the reporting date is the carrying value of receivables mentioned above. The 

Company holds collaterals in the form of bank guarantees, letters of credit, cash deposits and other credit enhancements 

such as corporate guarantees and registered charges over lands to secure most of these trade receivables. 

The Company believes that apart from the above, no impairment is necessary in respect of trade receivables that are not 

past due, which relates to customers with good payment records with the Company. 

17. PAYABLES 


RM'000 

RM'000 

Trade payables 74,174 73,139 

Other payables 68,153 62,328 

142,327 135,467 

The currency exposure profile of trade payables is as follows: 

Ringgit Malaysia 73,555 72,633 

US Dollar 619 506 

74,174 73,139 

The credit terms for the Company's trade and other payables are generally 30 days. 

Other payables are generally those of a non-trade nature that arose from transactions other than the purchase of crude and 

petroleum products. Included in other payables is an amount of RM1,277,000 (2009: RM1,261,000) for payroll liabilities. 

48 


18. RETIREMENT BENEFITS OBLIGATIONS 

The Company operates an unfunded defined benefit retirement plan for its regular national employees. The plan 

assumptions are reappraised by an independent actuary every three years. The latest actuarial reappraisal was carried out 

in December 2009. 

The changes in the provision for retirement benefits under the defined benefit plan during the year were as follows: 

At January 1 51,170 50,931 

Net expense charged to the income statement 3,937 3,803 

Payments to separating employees and retirees (3,608) (2,898) 

Employees transferred to affiliated companies (110) (666) 

At December 31 51,389 51,170 

The amounts recognised in the balance sheet are reconciled as follows: 

Present value of unfunded obligations 43,459 40,613 

Unrecognised actuarial gains 7,930 10,557 

Net liability 51,389 51,170 

Reflected on the balance sheet as: 


RM'000 

RM'000 

Current 1,006 2,721 

Non-current 50,383 48,449 

51,389 51,170 

The movement in the present value of unfunded obligations are as follows: 


RM'000 

RM'000 

At January 1 40,613 40,461 

Current service cost 1,918 1,943 

Interest cost 2,534 2,570 

Actuarial (gain)/loss 2,112 (797) 

Benefits paid (3,608) (2,898) 

Intercompany transfers (110) (666) 

At December 31 43,459 40,613 

The expense recognised in the income statement is as follows: 

Current service cost 1,918 1,943 

Interest cost 2,534 2,570 

Net actuarial gains recognised (515) (710) 

Total, included in employee benefits expense (Note 8) 3,937 3,803 

The charge to the income statement is included in the operating expenses and administrative and other expenses. 

The principal actuarial assumptions used were as follows: 


% % 

Discount rate 6.3 6.3 

Expected rate of salary increases 5.2 5.2 

The discount rate used is based on investment grade private debt securities with tenure approximating the tenure of the 

pension liability. The salary growth rate takes into account market factors such as inflation rate. 



18. RETIREMENT BENEFITS OBLIGATIONS (Continued) 

A 1% higher (lower) discount rate would decrease (increase) the pension liability by approximately RM300,000 

(RM300,000). 

A 1% higher (lower) salary growth rate would increase (decrease) the pension liability by approximately RM900,000 

(RM800,000). 


RM'000 

RM'000 

Present value of unfunded obligations 43,459 40,613 

Experience (gain)/loss adjustments on plan liabilities 2,112 (797) 

19. AMOUNTS DUE FROM/(TO) RELATED CORPORATIONS 

The currency exposure profile of amounts due from related corporations is as follows: 


RM'000 

RM'000 

Ringgit Malaysia 140,253 156,760 

US Dollar 164 24,939 

140,417 181,699 

The currency exposure profile of amounts due to related corporations is as follows: 

Ringgit Malaysia (4,145) (11,312) 

US Dollar (392,762) (431,728) 

(396,907) (443,040) 

These balances are unsecured and are generally settled within one month. 


RM'000 

RM'000 

20. BORROWINGS (UNSECURED) 


RM'000 

RM'000 

Floating interest rate loans from related corporations 366,307 507,950 

Short-term notes 250,000 300,000 

616,307 807,950 

The floating interest rate loans from related corporations comprise the following: 

(i) 

(ii) 

Two US$100 Million facilities with ExxonMobil Services (Labuan) Limited. Each of these facilities is a one-year 

facility with an option for annual rollover at each year-end that could extend the facility until 2011. The Company has 

rolled-over the total of US$200 Million on these two facilities, including US$100 Million drawdown to-date, for 

another year to December 31, 2011. The repayment of this loan is in Ringgit equivalent at the time of the loan 

drawdown. 

A RM285 Million loan/deposit facility with ExxonMobil Malaysia Sdn. Bhd. (EMMSB). In 2005, a RM185 Million 

loan/deposit facility was obtained from ExxonMobil Exploration and Production Malaysia Inc. (EMEPMI). The 

facility allows the Company to borrow short-term loans or place short-term deposits with EMEPMI to better manage 

cash surpluses and shortages. This is a one-year facility with an option for annual renewal of the facility at each yearend. 

In September 2006, EMEPMI assigned its rights and benefits thereunder to EMMSB. In December 2008, the 

loan/deposit principal was increased to RM285 Million. The Company has renewed the facility for another year to 

December 31, 2011. 

50 


20. BORROWINGS (UNSECURED)(Continued) 

The short-term notes were issued under a RM300 Million 7-year Islamic Commercial Papers (ICP) Programme, based on 

the principles of Bai' Inah. The ICP Programme which is available until May 2011, allows for the Company to issue shortterm 

notes of between 14 days and 12 months tenure through competitive tender by the tender panel members or through 

private placement. 

Interest rates and profit elements for the Company's borrowings and deposit placements depend on the lenders' cost of 

funds, and generally vary with the Kuala Lumpur interbank rates. The interest rates/profit elements on loans and deposits 

ranged from 2.0% to 3.2% per annum during the year (2009: 1.8% to 3.7%). 

21. DEFERRED TAXATION 


RM'000 

RM'000 

At January 1 66,972 11,259 

Charged/(Credited) to the income statement (Note 10) 8,042 55,713 

At December 31 75,014 66,972 

The components of deferred tax amounts after appropriate offsetting are as follows: 

Deferred tax liabilities: 

subject to income tax 75,014 66,972 

The components of deferred tax assets and liabilities prior to offsetting are as follows: 

Subject to income tax 

Deferred tax assets: 

Provision for retirement benefits (5,947) (6,291) 

Tax losses - (9,452) 

Others - (533) 

(5,947) (16,276) 

Deferred tax liabilities: 

Property, plant and equipment 79,391 83,248 

Others 1,570 - 

80,961 83,248 

At year end 2010, the Company applied the tax rate of 25% on the temporary differences (2009: 25%). 

22. SHARE CAPITAL 


RM'000 

RM'000 

Authorised: 

300,000,000 ordinary shares of RM0.50 each 150,000 150,000 

Issued and fully paid: 

270,000,000 ordinary stock units of RM0.50 each 135,000 135,000 



23. RESERVES 


RM'000 

RM'000 

Capital redemption reserve (non-distributable) 8,000 8,000 

Retained profits (distributable) 614,522 370,243 

622,522 378,243 

The Company has sufficient tax credits under Section 108 of the Income Tax Act, 1967 (ITA) to frank approximately 

RM321,631,335 (2009: RM345,931,335) of the retained profits as at December 31, 2010 if paid out as dividends in 2011. 

The Finance Act 2007 introduced a single tier company income tax system which took effect from year of assessment 2008. 

Under the single tier system, tax on company profits is a final tax, and dividends distributed to shareholders will be exempted 

from tax. All companies will automatically move to the single tier tax system on January 1, 2014 even if they still have a 

credit balance in the Section 108 account as at December 31, 2013. As such, the Section 108 tax credit as at December 31, 

2010 is available to the Company until such time the credit is fully utilised or upon expiry of the five-year period on December 

31, 2013, whichever is earlier. Additionally, subject to the approval of the tax authorities, the Company has a tax exempt 

account available to frank tax exempt dividends up to approximately RM209,000,000 (2009: RM209,000,000). 

24. CASH AND CASH EQUIVALENTS 


RM'000 

RM'000 

Deposit with a related corporation (Note 20) 82,651 61,344 

Deposit, cash and bank balances 19,610 14,525 

Less: Deposit with a licensed bank included in the above (7,689) (7,511) 

94,572 68,358 

Deposit with a licensed bank represents monies held in accordance with the sale and purchase agreement relating to the 

Company's purchase of a participating interest in the MPP. The amount will be utilised for payment to the Inland Revenue 

Board in respect of the vendors' real property gains taxes. 

25. SEGMENTAL INFORMATION 

The Company is organised as one integrated business segment which operates to manufacture and sell petroleum 

products. These integrated activities are known across the petroleum industry as the Downstream segment. As such, the 

assets and liabilities are disclosed within the financial statements as one segment. 

Revenues are mainly derived from the sale of petroleum products to domestic customers including its affiliates and 

competitors, and sales to ExxonMobil Asia Pacific Pte. Ltd. (EMAPPL), Singapore. A breakdown of the revenues by 

geographical location is as follows: 

Singapore 1,344,114 1,559,337 

Domestic 7,083,331 6,473,103 

Total External Revenues 8,427,445 8,032,440 

Approximately RM3,095,359,000 (2009: RM3,215,303,000) of the revenues are derived from two major customers whom 

are the related parties to the Company. 

All non-current assets of the Company are located in Malaysia. 


RM'000 

RM'000 

26. SIGNIFICANT RELATED PARTY DISCLOSURES 

The Company is a subsidiary of ExxonMobil International Holdings Incorporated, whose ultimate holding company is Exxon 

Mobil Corporation. Both corporations are incorporated in the United States of America. Exxon Mobil Corporation is 

regarded by the Directors as the ultimate holding company of the Company. Therefore, Exxon Mobil Corporation and its 

other subsidiaries are considered as related parties to the Company. 

In the normal course of business, the Company undertakes, on an arms-length basis, a variety of transactions with these 

related parties. Such transactions include the sales and purchases of products and the sharing of services and facilities at 

cost apportioned on a mutually agreed basis. 

52 


26. SIGNIFICANT RELATED PARTY DISCLOSURES (Continued) 

In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant 

related party transactions. These were transacted with Exxon Mobil Corporation's other subsidiaries. 


RM'000 

RM'000 

Purchases of crude oil from ExxonMobil Exploration 

and Production Malaysia Inc. 3,867,192 4,839,305 

Purchases of petroleum products from: 

ExxonMobil Asia Pacific Pte. Ltd. 2,491,655 1,527,356 

ExxonMobil Malaysia Sdn. Bhd. 837,486 773,952 

Others 77,836 79,757 

Sales of petroleum products to: 

ExxonMobil Asia Pacific Pte. Ltd. 1,344,114 1,559,337 

ExxonMobil Malaysia Sdn. Bhd. 1,751,245 1,655,966 

ExxonMobil Borneo Sdn. Bhd. 50,349 212,808 

Others - 14,916 

Central management, shared facilities and services costs 

mainly with ExxonMobil Asia Pacific Pte. Ltd., 

ExxonMobil Business Support Centre Malaysia Sdn. Bhd. 

and ExxonMobil Exploration and Production Malaysia Inc. 

Charged from: 114,658 114,683 

Charged to: (2,151) (2,318) 

112,507 112,365 

At year end 2010 and 2009 respectively, the amounts due to and from related corporations are mainly in relation to the above 

described transactions. 

Directors of the Company who are the key management personnel are also considered as related parties to the Company. 

Their compensation is disclosed in Note 9 to the financial statements. 

27. COMMITMENTS FOR CAPITAL EXPENDITURES 


RM'000 

RM'000 

Commitments for the purchase of property, plant 

and equipment authorised by the Directors but 

not provided for in the financial statements: 

Contracted 13,261 15,316 

Not contracted 9,082 9,098 

22,343 24,414 

Included in the above are contracted commitments for the joint venture assets of the MPP amounting to RM2,656,889 (2009: 

RM2,758,620). 

28. LEASING COMMITMENTS 


RM'000 

RM'000 

As at balance sheet date, leasing commitments under 

non-cancellable operating leases are as follows: 

Within 1 year 12,576 20,314 

After 1 year but within 5 years 5,021 8,649 

After 5 years 1,451 180 

19,048 29,143 



29. SUPPLEMENTARY INFORMATION DISCLOSED PURSUANT TO BURSA MALAYSIA SECURITIES BERHAD LISTING 

REQUIREMENTS 

The following analysis of realised and unrealised retained profits at the legal entity level is prepared in accordance with 

Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure 

Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants 

whilst the disclosure is based on the prescribed format by the Bursa Malaysia Securities Berhad. 

Total retained profits: 


RM'000 

- realised 681,723 

- unrealised (67,201) 

Total retained profits 614,522 

The disclosure of realised and unrealised profits/(losses) above is solely for compliance with the directive issued by the 

Bursa Malaysia Securities Berhad and should not be used for any other purpose. 

54 


STATEMENT BY DIRECTORS PURSUANT TO 

SECTION 169(15) OF THE COMPANIES ACT, 1965 

We, Hugh W. Thompson and Dato' Zainal Abidin Putih, two of the Directors of Esso Malaysia Berhad, state that in the opinion of 

the Directors, the financial statements set out on pages 32 to 53 are drawn up so as to give a true and fair view of the state of affairs 

of the Company as at December 31, 2010 and of the results of the Company and its cash flows for the year ended on that date in 

accordance with Financial Reporting Standards in Malaysia and the provisions of the Companies Act, 1965. 

In accordance with a resolution of the Board of Directors dated February 25, 2011. 

............................... 


......................................................... 


Kuala Lumpur, 


STATUTORY DECLARATION PURSUANT TO 

SECTION 169(16) OF THE COMPANIES ACT, 1965 

I, Naili Akmal Mohamad, the officer primarily responsible for the financial management of Esso Malaysia Berhad, do solemnly and 

sincerely declare that the financial statements set out on pages 32 to 53, are to the best of my knowledge and belief correct and I 

make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory 

Declarations Act, 1960. 

....................................... 

Naili Akmal Mohamad 

Subscribed and solemnly declared by the above named Naili Akmal Mohamad at Kuala Lumpur in Malaysia on February 25, 2011 

before me, 

....................................... 

Commissioner for Oaths 

Kuala Lumpur 



INDEPENDENT AUDITORS’ REPORT 

TO THE MEMBERS OF ESSO MALAYSIA BERHAD 

(Company Number 3927V) 

REPORT ON THE FINANCIAL STATEMENTS 

We have audited the financial statements of Esso Malaysia Berhad, on pages 32 to 53 which comprise the statement of financial 

position as at 31 December 2010, and the statements of comprehensive income, changes in equity and cash flow for the year 

then ended, and a summary of significant accounting policies and other explanatory notes, as set out on Notes 1 to 28. 

Directors’ Responsibility for the Financial Statements 

The directors of the Company are responsible for the preparation and fair presentation of these financial statements in 

accordance with Financial Reporting Standards in Malaysia and the Companies Act, 1965. This responsibility includes: 

designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements 

that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; 

and making accounting estimates that are reasonable in the circumstances. 

Auditors’ Responsibility 

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in 

accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements 

and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material 

misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. 

The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial 

statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the 

Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate 

in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An 

audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates 

made by the directors, as well as evaluating the overall presentation of the financial statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 

Opinion 

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards in 

Malaysia and the Companies Act, 1965 so as to give a true and fair view of the financial position of the Company as of 31 

December 2010 and of its financial performance and cash flows for the year then ended. 

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS 

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report that, in our opinion, the accounting 

and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the 

provisions of the Act. 

OTHER REPORTING RESPONSIBILITIES 

The supplementary information on Note 29 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not 

part of the financial statements. The Directors are responsible for the preparation of the supplementary information in 

accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of 

Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of 

Accountants (”MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary 

information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia 

Securities Berhad. 

OTHER MATTERS 

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 

in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. 

PRICEWATERHOUSECOOPERS 

(No. AF: 1146) 

Chartered Accountants 

Eric Ooi Lip Aun 

No. 1517/06/12(J) 

Chartered Accountant 

56 

Kuala Lumpur

2010 Annual Report - Petron

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