2006 Annual Report

Transcription

2006 Annual Report

ESSO MALAYSIA BERHAD
An ExxonMobil Subsidiary in Malaysia
Annual Report & Accounts 2006
Contents
Financial Highlights
1
Chairman’s Statement
2
Penyata Pengerusi
5
Five-Year Summary Charts
8
Board of Directors /
Lembaga Pengarah
10
Profile of Directors
12
Corporate Citizenship Report
14
Corporate Information
18
Corporate Governance
19
Board Audit Committee Report
25
Report of the Directors
27
Report of the Auditors
30
Financial Statements
31
Information on Stockholdings
53
List of Major Properties Owned
54
Notice of Annual General Meeting
55
Statement Accompanying Notice of
Annual General Meeting
56
Notis Mesyuarat Agung Tahunan
57
Penyata Yang Dilampirkan Bersama
58
Cover Picture:
Esso Malaysia Berhad is committed to
meeting Malaysia’s growing energy
needs in an environmentally and
socially responsible manner. We seek
to maintain high standards of safety,
product quality and environmental care
while making positive contributions to
the communities where we operate.
2006
RM Million
2005
RM Million
%
Change
9,336
8,269
13
7
20
(65)
Earnings per ordinary stock unit (sen)
2.6
7.3
(64)
Gross dividend per ordinary stock unit (sen)
12
12
-
2,006
2,123
(6)
634
650
(2)
93
97
(4)
Revenues
Profit after taxation
Total assets employed
Total shareholders’ funds
Sales volume
(thousands of barrels per calendar day)
Shareholders mingled with EMB Directors and obtained a
better understanding of the Company’s operations and
performance at last year’s Annual General Meeting.
1
ANNUAL REPORT & ACCOUNTS 2006
FINANCIAL HIGHLIGHTS
Chairman’s Statement
O
n behalf of the Board of Directors, I am pleased
to report on the financial and operating
performance of the Company for the year ended
December 31, 2006.
EMB and her sister companies swept a
total of seven MSOSH Gold Awards for
safety performance in 2006.
Review of Operations
Operating performance for the year was strong.
Liam M. Mallon
Chairman
2006 Financial Results
The Company recorded an after tax profit of RM7 million
for 2006, compared to RM20 million in 2005, as strong
retail volume growth and improved marketing margins
were offset by the impact of the high cost of low sulfur
crudes on refining margins and adverse inventory
valuation effects.
Revenues in 2006 were RM9.3 billion, an increase of
RM1.1 billion or 13% over the previous year, reflecting
higher product prices.
The price and margin environment in 2006 was
challenging. Crude prices remained volatile across the
year, and refining margins continued to be pressured by
the relatively high cost of light low sulfur crude which the
Port Dickson Refinery is configured to process.
Escalating product costs continued to put pressure on
margins in the industrial business. However, margins for
controlled petroleum products were up significantly
versus the prior year, in part due to a change in product
cost recovery under the Automatic Pricing Mechanism
(APM), which reduced timing impacts.
2
Our plants and terminals maintained high levels of
safety, health and environmental performance and
operating reliability. Port Dickson Refinery and our three
distribution terminals completed 10 years of continuous
operations without an employee lost time injury and won
several gold awards from the Malaysian Society for
Occupational Safety and Health. We also conducted
waste water lagoon desludging work at the refinery to
improve effluent quality.
The Company progressed efforts to diversify its crude
and feedstock mix to improve refinery operating flexibility
and reduce costs. Work also continued on the use of
automated process control, and other equipment and
process upgrades to improve the yield of higher value
products.
The retail business turned in strong operating
performance in 2006, with 8% sales growth in the
controlled petroleum products sector reflecting the
benefits of retail initiatives such as the Smiles driver
reward loyalty card, diesel fleetcard and diesel discount
card programs.
We successfully negotiated new
licensing agreements for company-owned dealer
operated service stations, incorporating increased use
of performance based measures.
The Company
continued to selectively expand its retail network,
investing RM38 million to acquire sites and construct
new service stations in high growth areas.
The Company remains focused on operating cost
management and over 2006 progressed a number of
initiatives to optimise organisational and cost
structures, and rebalance distribution and delivery
models in its various businesses. Efforts to rebalance
our portfolio and focus on the more profitable
segments of those businesses also continued.
The Company maintained its commitment to
contribute to the local community in the areas where
it operates. We supported educational programmes
to promote academic excellence in science, to improve
the use of English and to recognise outstanding young
athletes. Scholarships were awarded to primary and
secondary students through the ExxonMobil
Education and Scholarship Fund. Direct monetary
contributions were also made to assist organisations
such as public libraries and community groups.
Once again our employees did us proud by showing
their spirit of volunteerism in leading and actively
participating in the Community Projects Programme,
Employee Involvement Programme, and ExxonMobil
Young Entrepreneur Programme.
EMB continued to expand its service station network and
Smiles Driver Rewards programme to bring greater value
to customers.
Business Outlook
The prospects for the Malaysian economy in 2007
and beyond remain positive, and the demand for
petroleum products is expected to remain strong.
Nevertheless, the potential for earnings volatility
remains and intense competition will continue. In
this environment we will work to further diversify
refinery feedstocks to increase operating flexibility
and lower crude costs, selectively expand our retail
business, and maintain our focus on product and
service quality, flawless operations and cost control.
Dividends for Financial Year 2006
Management remains confident in the underlying
performance of our business and in the Company's
competitive position in a growing economy. In
recognition of this and of our desire to continue to
provide a steady return to shareholders, the Board
proposes a dividend for the year ended December
31, 2006 of 12 sen less Malaysian income tax at
27% per ordinary stock unit. This matches the
dividend for the 2005 financial year.
3
The profitable lubricants and specialties business
recorded a significant sales volume increase of more
than 60% versus 2005 reflecting a more stable
supply of asphalt. However, the finished lubricants
sector was affected by softer demand and intense
competition. Competition also remained intense in
the industrial fuels and liquefied petroleum gas
(LPG) businesses. The LPG business was further
impacted by the higher cost of cylinders from rising
steel prices.
Board Matters
Y.Bhg. Dato' Rob Fisher resigned from the Board on
September 14, 2006 to accept an appointment as
Vice President of ExxonMobil Development
Company in Houston, Texas. I would like to place on
record our appreciation to Dato' Rob for his many
invaluable contributions as Chairman of the
Company. Effective the same date, the Board
appointed me as Director and Chairman in his
place. I look forward to working closely with my
fellow Board members and fellow employees in this
new role.
Mr. Justin Chow resigned as Joint Company
Secretary effective May 25, 2006. Effective the
same date, the Board appointed Mr. Manoj
Devadasan as Joint Company Secretary. I would
like to thank Justin for his many contributions as
Joint Company Secretary to the Board and look
forward to working with Manoj in his capacity as
Joint Company Secretary.
At the Port Dickson Refinery, technicians constantly
monitor equipment and processes and conduct safety
walk-abouts as part of our unrelenting focus on flawless
operations.
On behalf of the Board, I would also like to thank our
employees for their continued hard work and
dedication. The petroleum refining and marketing
business remains challenging and the Company's
success is fully dependent on the skills, abilities and
commitment of each employee to overcome these
challenges. I also express my appreciation to our
shareholders, dealers and customers for their
continued support of Esso Malaysia Berhad.
Liam M. Mallon
Chairman
February 26, 2007
4
Penyata Pengerusi
B
agi pihak Lembaga Pengarah, dengan
sukacitanya, saya melaporkan prestasi kewangan
dan operasi Syarikat bagi tahun berakhir 31
Disember, 2006.
Keputusan Kewangan 2006
Syarikat telah mencatatkan keuntungan selepas cukai
sebanyak RM7 juta, berbanding RM20 juta pada tahun
2005. Pertumbuhan jualan runcit yang mantap dan
kenaikan margin pasaran telah digugat oleh impak kos
minyak mentah yang tinggi keatas margin penapisan
serta kesan penilaian inventori yang negatif.
Hasil pendapatan dalam tahun 2006 berjumlah RM9.3
bilion, satu pertambahan sebanyak RM1.1 bilion atau
13% berbanding tahun sebelumnya, mencerminkan
kenaikan harga produk.
Persekitaran harga dan margin bagi tahun 2006 adalah
mencabar. Harga minyak mentah terus berubah-ubah
sepanjang tahun, dan margin penapisan terus tertekan
memandangkan Loji Penapisan Port Dickson (PDR)
lebih sesuai untuk memproses minyak mentah "light
crude" yang lebih tinggi harganya. Harga produk yang
terus meningkat juga terus memberi tekanan kepada margin
didalam sektor urusniaga industrial. Walaubagaimanapun,
margin bagi produk petroliam terkawal meningkat dengan
ketara berbanding tahun sebelumnya, antaranya oleh
kerana penukaran dalam proses pengembalian kos
produk dibawah Mekanisma Harga Automatik (APM) yang
mengurangkan impak dari segi masa pengembalian.
Ulasan Operasi
Liam M. Mallon
Pengerusi
Terminal dan loji mengekalkan tahap prestasi dan operasi
keselamatan, kesihatan dan alam sekitar yang tinggi.
PDR dan 3 terminal pengedaran berjaya menyempurnakan
operasi selama 10 tahun berterusan tanpa mengalami
sebarang kecederaan bagi kakitangan dan telah
memenangi beberapa anugerah emas dari Malaysian
Society for Occupational Safety and Health. Syarikat juga
telah menjalankan kerja pembersihan mendapan di PDR
bagi mempertingkatkan kualiti efluen buangan.
Syarikat juga telah terus berusaha untuk mempelbagaikan
campuran minyak mentah dan feedstok bagi terus
mempertingkatkan operasi PDR dan mengurangkan kos.
Usaha juga diteruskan bagi penggunaan proses kawalan
berautomasi dan lain-lain kelengkapan serta peningkatan
proses untuk terus menaikkan pulangan produk bernilai
tinggi.
Urusniaga pemasaran runcit memberi prestasi operasi
yang kukuh pada tahun 2006, dengan 8% pertumbuhan
jualan didalam sektor produk petroliam terkawal
mencerminkan manfaat yang telah dicapai berikutan dari
beberapa inisiatif jualan runcit seperti "Smiles Driver
Reward" dan program kad fleet disel dan kad diskaun
disel.
5
Prestasi operasi bagi tahun 2006 adalah kukuh.
Syarikat juga telah menyelesaikan perundingan dan
menandatangani perjanjian lesen yang baru, bagi stesen
servis milikan syarikat yang dibawah operasi pengusaha,
yang menggabungkan peningkatan penggunaan
langkah-langkah berasaskan prestasi.
Syarikat juga terus mengembangkan, secara terpilih,
rangkaian jualan runcit dengan melaburkan RM38 juta
bagi memperolehi tapak-tapak baru dan membina stesen
servis baru di kawasan pertumbuhan tinggi.
Program Smiles Driver Rewards
memberi banyak kemudahan dan nilai
hebat. Mata ganjaran boleh ditebus
segera untuk pelbagai jenis produk di
stesen servis Esso ataupun untuk
rangkaian ganjaran eksklusif dari
katalog Smiles.
Urusniaga minyak pelincir dan produk khas Syarikat
memberi keuntungan apabila mencatatkan penambahan
jualan yang ketara lebih dari 60% berbanding tahun 2005,
mencerminkan bekalan asphalt yang lebih stabil.
Walaubagaimanapun, sektor minyak pelincir telah
terjejas oleh permintaan yang lembap dan persaingan
yang sengit. Persaingan juga terus sengit didalam
urusniaga bahanapi industrial dan LPG. Urusniaga LPG
juga turut merasai impak kos silinder yang lebih mahal
akibat harga besi keluli yang terus meningkat.
Syarikat terus memberi fokus dalam pengurusan kos
operasi dan pada tahun 2006 telah menjalankan
beberapa inisiatif untuk mengoptimumkan struktur kos
dan organisasi dan mengimbang semula model-model
pengedaran dan penghantaran dalam pelbagai
urusniaga. Usaha-usaha untuk mengimbang-semula
portfolio dan fokus Syarikat dalam segmen urusniaga
yang lebih menguntungkan juga terus diambil.
Syarikat juga terus mengekalkan komitmen untuk
mencarum kepada komuniti tempatan di kawasankawasan dimana Syarikat beroperasi. Syarikat telah
memberi sokongan terhadap program pendidikan bagi
mempromosi kecemerlangan akademik dalam bidang
sains, mempertingkatkan penggunaan bahasa Inggeris
dan mengiktiraf atlit-atlit muda yang ulung. Biasiswa telah
dianugerahkan kepada pelajar-pelajar sekolah rendah
dan menengah melalui "ExxonMobil Education and
Scholarship Fund". Sumbangan kewangan telah diberi
bagi membantu organisasi-organisasi
seperti
perpustakaan awam dan kumpulan-kumpulan komuniti.
Sekali lagi, Syarikat berbangga dengan kakitangankakitangannya yang telah menunjukkan semangat
sukarelawan dan menerajui serta mengambil bahagian
dengan aktif dalam Program Projek-Projek Komuniti,
Program Penglibatan Kakitangan dan Program
Entreprenur Muda ExxonMobil.
Prospek Perniagaan
Syarikat terus mengembangkan
rangkaian jualan runcit dengan
membina stesen servis baru di kawasan
pertumbuhan tinggi.
6
Prospek ekonomi Malaysia bagi 2007 dan seterusnya
kekal positif, dan permintaan bagi produk-produk
petroliam dijangka akan terus kukuh. Namun begitu,
potensi masih kekal bagi pendapatan yang volatil dan
persaingan hebat akan berterusan. Dalam persekitaran
demikian, Syarikat akan berusaha untuk terus
mempelbagaikan feedstok PDR bagi menambah
fleksibiliti operasi dan mengurangkan kos minyak
mentah, mengembangkan rangkaian jualan runcit secara
terpilih dan mengekalkan fokus keatas kualiti produk dan
perkhidmatan, operasi yang bebas dari sebarang
kecacatan dan mengawal kos.
Dividen bagi Tahun Kewangan 2006
Pihak Pengurusan terus berkeyakinan dengan prestasi
urusniaga Syarikat dan kebolehan daya saing Syarikat
didalam ekonomi yang terus berkembang. Oleh itu dan
mengambil kira hasrat Syarikat untuk memberi satu
pulangan yang berterusan kepada pemegang saham,
Lembaga Pengarah mencadangkan dividen sejumlah
12 sen, ditolak cukai pendapatan sebanyak 27% bagi
setiap saham, bagi tahun berakhir 31 Disember 2006.
Kadar dividen tersebut adalah setanding dengan kadar
dividen bagi tahun 2005.
Di Loji Penapisan Port Dickson, kerja
pembersihan mendapan di lagun sisa air telah
mempertingkatkan kualiti efluen buangan.
Perihal Lembaga Pengarah
Penglibatan kakitangan yang aktif adalah
salah satu kunci kepada rekod keselamatan
yang cemerlang di Loji Penapisan Port
Dickson. Kami memegang pekerja kontrak
kami kepada piawai keselamatan tinggi yang
sama seperti kakitangan kami sendiri.
Y.Bhg. Dato' Rob Fisher meletak jawatan dari Lembaga
Pengarah pada 14 September 2006 untuk menjawat
jawatan sebagai Naib Presiden, ExxonMobil
Development Company di Houston, Texas. Saya ingin
merakamkan penghargaan kepada Dato' Rob diatas
sumbangan-sumbangan beliau sebagai Pengerusi
Syarikat. Lembaga Pengarah telah melantik saya
sebagai Pengarah dan Pengerusi berkuatkuasa tarikh
yang sama. Saya mengalu-alukan peluang bekerja
dengan lebih rapat lagi dengan ahli-ahli Lembaga
Pengarah dan rakan sekerja didalam jawatan baru ini.
Bagi pihak Lembaga Pengarah, saya juga ingin
mengucapkan terima kasih kepada semua kakitangan
kami diatas usaha gigih dan dedikasi mereka yang
berterusan. Urusniaga penapisan dan pemasaran
terus mencabar dan kejayaan Syarikat bergantung
sepenuhnya kepada kemahiran, keupayaan dan
komitmen setiap kakitangan bagi mengatasi cabarancabaran tersebut. Saya juga ingin merakamkan
penghargaan kepada pemegang-pemegang saham,
pengedar-pengedar, pengusaha-pengusaha stesen
minyak, dan pelanggan-pelanggan diatas sokongan
yang berterusan kepada Esso Malaysia Berhad.
Loji Penapisan Port Dickson dan terminal
pengedaran kami berjaya mencatatkan rekod
keselamatan yang baik dengan operasi selama 10
tahun berterusan tanpa mengalami sebarang
kecederaan bagi kakitangan.
Liam M. Mallon
Pengerusi
26 Februari 2007
7
Encik Justin Chow meletak jawatan sebagai
Setiausaha Bersama Syarikat, berkuatkuasa pada 25
Mei 2006. Lembaga Pengarah telah melantik Encik
Manoj Devadasan sebagai Setiausaha Bersama
Syarikat berkuatkuasa tarikh yang sama. Saya
mengucapkan terima kasih kepada Justin diatas
sumbangan-sumbangan beliau sebagai Setiausaha
Bersama Syarikat dan mengalu-alukan peluang
bekerja dengan Manoj sebagai Setiausaha Bersama
Syarikat.
Five-Year Summary Charts
REVENUES
PROFIT AFTER TAX
(NET OF GOVERNMENT DUTIES)
RM MILLION
10000
RM MILLION
80
9,336
8,269
8000
60
60
57
6,198
6000
4,774
4000
40
4,000
2000
0
11
2002
2003
2004
2005
0
2006
2002
2003
2004
7
2005
SALES VOLUME
REFINERY THROUGHPUT
THOUSANDS OF BARRELS
PER CALENDAR DAY
THOUSANDS OF BARRELS
PER CALENDAR DAY
100
98
97
98
97
80
60
60
40
40
20
20
0
2002
2003
2004
2005
2006
100
93
80
20
20
0
2006
8
80
2002
76
2003
75
2004
74
2005
71
2006
CAPITAL EXPENDITURE
TOTAL ASSETS EMPLOYED
RM MILLION
RM MILLION
Financed by:
2500
80
73
2000
62
60
55
2,160
2,123
2004
2005
1,936 1,976
2,006
54
1500
40
38
1000
20
500
0
2002
2003
2004
2005
2002
2006
2003
2006
Shareholders’ funds
Trade payables
Notes payable and bank borrowings
Taxes payable, provisions and others
2002
2003
2004
2005
2006
22.2
21.0
4.0
7.3
2.6
Gross dividend per ordinary stock unit (sen)
10
12
12
12
12
Dividend yield (%)
4.2
5.6
4.6
4.7
4.3
2.89
1.90
2.37
2.52
1.78
2.14
2.93
2.33
2.59
2.82
2.32
2.56
3.76
2.34
2.78
500
488
422
352
327
Share price (RM)
- Highest
- Lowest
- Average
Number of employees at year-end
9
SHAREHOLDERS’ INFORMATION
Board of Directors / Lembaga Pengarah
SEATED FROM LEFT TO RIGHT
DUDUK DARI KIRI KE KANAN
Y. Bhg. Tan Sri Dato’ Dr. Syed Jalaludin
Syed Salim
Mr. Liam M. Mallon
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
Mr. Lam Foo Keong
Executive Treasury Director /
Pengarah Eksekutif Perbendaharaan
Encik Zain C. Willoughby
Executive Financial Director /
Pengarah Eksekutif Kewangan
Puan Faridah Ali
Executive Retail Business Director /
Pengarah Eksekutif Perniagaan
Jualan Runcit
Puan Sri Junaidah Mohd Said
Mr. Manoj Devadasan
Joint Company Secretaries /
Setiausaha-setiausaha Bersama Syarikat
Y. Bhg. Dato’ Robert Fisher
Chairman / Pengerusi
Resigned w.e.f.
September 14, 2006
Meletak jawatan berkuatkuasa
14 September 2006
Encik Abu Bakar Siddik Che Embi
Executive Refinery Director /
Pengarah Eksekutif Penapisan
Absent during photo session
Tidak hadir pada sessi
penggambaran
Mr. Justin Chow
Joint Company Secretary /
Setiausaha Bersama Syarikat
Resigned w.e.f.
May 25, 2006
Meletak jawatan berkuatkuasa
25 Mei 2006
10
11
Profile of Directors
Mr. Liam M. Mallon
Chairman
B.Sc.(Hons.) Mechanical Engineering, Trinity College, Dublin, Ireland;
M.Sc (Hons.) in Petroleum Engineering, Heriot-Watt University, Edinburgh, Scotland.
Mr. Liam M. Mallon, aged 44, an Irish citizen, was appointed Director and Chairman of the Company on September
14, 2006. He started his career with Mobil in 1990 (when he joined the company after 4 years with British Petroleum
and a year with the Chinese National Oil Corporation) and over an 8 year period with Mobil, held a variety of
progressively senior positions with the company where he had opportunity to develop his technical and supervisory
capabilities. From 1998 to 2000, he was the Operations Manager of Mobil Producing Nigeria Unlimited from where he
moved to ExxonMobil in Australia, in the same capacity, until 2003. From 2003 until 2004 he was based in Houston,
Texas as the Global Planning Manager of ExxonMobil Production Company. In December 2004 he was appointed the
President/Lead Country Manager of ExxonMobil Canada Ltd; a position he held until his appointment as the Lead
Country Manager for Malaysia in 2006.
Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim
Independent Non- Executive Director and Alternate Member to Y.Bhg. Tan Sri Abdul Halim Ali and Y.Bhg. Dato' Zainal
Abidin Putih on 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., 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 63, 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 career in both University 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, Kejuteraan Samudra Timur Berhad and Ecofirst Consolidated Berhad,
and a Director of TAFI Industries Berhad. He is also the Chairman of Halal Industry Development Corporation.
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 63, 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 he is also a Director of Cycle & Carriage Bintang Berhad, Malaysia
Building Society Berhad, Malakoff Berhad and LCL Corporation Berhad.
Y. Bhg. Dato' Zainal Abidin Putih
Independent Non-Executive Director and Chairman of the Board Audit Committee
D.S.N.S., FCA (ICAEW), CA (M), CPA (M)
Y. Bhg. Dato' Zainal Abidin Putih, aged 61, 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 the 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 and is the Chairman of the Malaysian Accounting Standards Board (MASB). He is currently a director of
Tenaga Nasional Berhad and a director of Bumiputra-Commerce Holdings Berhad, including its subsidiaries CIMB
Bank Berhad and CIMB Investment Bank Berhad. He also acts as a Trustee of the National Heart Institute
Foundation.
12
Zain C. Willoughby
Executive Financial Director and Member of the Board Audit Committee
B.Sc. (Hons.) Physics, King's College, University of London
Encik Zain C. Willoughby, aged 47, a Malaysian, was appointed Financial Director of the Company on August
10, 2004. He started his career in ExxonMobil when he joined Esso Malaysia Berhad as a Systems Analyst in
1985. During his career, he has held a number of staff and managerial positions within ExxonMobil's
Information Services, Exploration, Controller's, Audit, Treasurer's and Tax organisations. In 1996, he was
assigned to Exxon Mobil Corporation's headquarters in Irving, Texas, as Senior Financial Analyst. His last
assignment in the U.S.A. prior to returning to Malaysia as Treasurer, was as Financial Advisor to ExxonMobil
affiliates in several countries in the Asia-Pacific. He is also presently the Tax Manager of the ExxonMobil
Subsidiaries in Malaysia.
Abu Bakar Siddik Che Embi
Executive Refinery Director
B.Sc. (Hons.) Chemical Engineering, Leeds University, United Kingdom
Encik Abu Bakar Siddik Che Embi, aged 54, 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 Dept. 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)
Lam Foo Keong
Executive Treasury Director and Alternate Member to Encik Zain C. Willoughby on the Board Audit Committee
B. Econs. (Hons.), University of Malaya
Mr. Lam Foo Keong, aged 56, a Malaysian, was appointed Treasury Director of the Company on April 1, 2006.
Upon graduation from the University of Malaya he joined Kassim Chan/Deloitte as an auditor in 1974. He
started his career with Esso Malaysia Berhad in 1975 in Controller's. During his career he has held a number of
supervisory and managerial positions of increasing responsibility in various departments including as
Downstream Financial Reporting Manager, Downstream Controller, Offshore Accounting Manager, Corporate
Finance Manager, Finance & Planning Manager, and Area Business Support Centre Manager. Lam has also
completed overseas assignments with Esso Eastern Inc and Exxon Company, USA Controller's in Houston
and New Orleans and with ExxonMobil Asia Pacific Pte. Ltd.’s Chemical Complex Project in Singapore. He
was appointed Treasurer of the ExxonMobil Subsidiaries in Malaysia on April 1, 2006.
13
Puan Faridah Ali, aged 42, 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 a period of 15 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 South East Asia
Business Analysis and Reporting Manager before assuming her current position.
Corporate Citizenship Highlights
Meeting
Malaysia’s
energy needs
2006 Esso Malaysia Berhad Corporate Citizenship
Highlights
At Esso Malaysia Berhad, we believe that a company that
takes a systematic, results-oriented approach to
promoting and protecting employees, communities and
the environment is likely to be a company that will
succeed over the long term.
To us, corporate citizenship means serving the needs of
millions of Malaysians by supplying reliable and
affordable petroleum products in an environmentally and
socially responsible manner.
This section illustrates our commitment to citizenship and
presents some examples of how Esso Malaysia Berhad
and the ExxonMobil Subsidiaries in Malaysia translate
our values into action.
14
Environmental performance
We are committed to conducting our business with
respect and care for the environment. Our focus is
on continuously improving the environmental
performance of our operations and products we sell.
Central to this approach is our emphasis on
identifying and controlling risks to the environment.
Our environmental performance and initiatives
include:
l
We reinforced the leadership-driven initiative called
“Protect Tomorrow. Today” with the goal to continue
improvements in our environmental performance.
l
Our Port Dickson Refinery applied our Global
Energy Management System Best Practices to
sustain high energy efficiency and further reduced
carbon dioxide and greenhouse gas (GHG)
emissions at the plant. Since 2000, our GHG
emissions have reduced more than 20 per cent.
Although not regulated, the Refinery also worked to
further reduce its Volatile Organic Compound
(VOCs) emissions.
l
The Refinery also undertook major desludging work
on its wastewater lagoon to improve effluent water
quality and further reduce Chemical Oxygen
Demand levels.
l
Since 2001, we have put in place a programme to
upgrade our service stations in Malaysia to reflect
ExxonMobil's global standards for environmental
protection. This includes the installation of early leak
detection system and underground risk
management system which includes tanks and
pipelines.
We are committed to maintaining high standards of
safety, product quality and environmental care. We
continued to enhance our facility integrity
management and execution programmes to
manage risks and help prevent all types of incidents.
Integrity in our operations
The way we conduct our business is as important as
the results themselves and we employ rigorous
controls to ensure the highest levels of performance
in all aspects of corporate governance and
accountability.
l
Our Standards of Business Conduct form the
framework by which Esso Malaysia Berhad and other
ExxonMobil affiliates operate in nearly 200 countries
and territories around the globe.
l
Our Controls Integrity Management System is a
framework for ongoing controls integrity in our day-today business, providing the key attributes of a highly
effective system designed to enable us to fully comply
with regulatory requirements and maintain our high
standards of business ethics.
l
Our Operations Integrity Management System
(OIMS) provides the framework for managing safety,
health, security and environmental risks at all our
facilities. Lloyd’s Register Quality Assurance attested
in 2004 that OIMS meets all requirements of the ISO
14001 and monitors on-going performance annually.
Every day, tank trucks deliver about 400 loads of
petroleum products to almost 300 EMB service
stations across Peninsular Malaysia.
15
Workplace performance
l
Nothing is more important to us than the safety and health of our
employees, contractors, customers and neighbours. We strive for an
incident-free workplace where Nobody Gets Hurt. We are also committed
to providing our workforce with the best career opportunities in our industry
in a healthy workplace, free from any kind of discrimination and
harrassment.
l
We maintained our industry leading position in safety and health
performance. All injuries and "near misses" were fully investigated and
lessons learned were widely communicated and implemented to prevent
similar incidents in the future.
l
Port Dickson Refinery and our three distribution terminals completed 10
years of continuous operations without an employee lost time injury and
won several gold awards from the Malaysian Society for Occupational
Safety and Health.
l
We expanded the use of IMPACT, a reporting system which enables us to
collect and analyse information on health, safety and environmental
incidents.
l
We sustained the behaviour-based safety approach such as job
observation and intervention programmes to strengthen safety
responsibility and to identify and eliminate unsafe behaviours.
l
We updated the Workplace Flexibility Programme to enhance employees'
ability to achieve an effective work-life balance.
l
We continued to offer our employees development opportunities abroad.
At the end of 2006, EMB employees were among 140 Malaysians on
international assignments within ExxonMobil.
U n d e r t h e E x x o n M o b i l Yo u n g
Entrepreneur Programme, students from
participating schools such as SM Tinggi
Port Dickson learn about free enterprise
under the guidance of our employees
and develop leadership skills that
prepare them for future careers.
16
As part of our commitment to high
operational standards, we apply a
rigorous and consistent approach
to test and monitor product safety
and health factors.
EMB employees from Port Dickson Refinery and Kuala
Lumpur were active participants of the Company’s
“Touching Lives Together” community projects
programme last year. Together with their families, they
made a difference in many ways including sprucing up
the Ulu Bendol Recreational Forest, treating
underprivileged children in a “Wishes Come True” dinner
and washing cars to raise funds for Hospis Malaysia.
Community and social performance
EMB has provided scholarships and best
student awards to primary and
secondary students in Negeri Sembilan
through its ExxonMobil Education and
Scholarship Fund for the past 20 years.
We have a long tradition of investing in the community. We have always
considered this an important part of our responsibility as a good
corporate citizen. Our goal is to participate in and support activities that
improve the quality of life for people living in the communities in which we
live and operate.
Beyond the Company's direct monetary contributions to public and community
groups, employees and their families contribute many personal hours to their
communities through employee volunteer programmes such as "Touching
Lives Together", ExxonMobil Young Entrepreneur Programme and ExxonMobil
Employee Involvement Programmme.
In 2006, the ExxonMobil Subsidiaries in Malaysia contributed towards 110
recipient organisations to support programmes that benefit society in the key
areas of the community, education, health, environment and the arts. Some of
the highlights of EMB's contributions include:
l
Funded various educational programmes to promote academic
excellence in science, to improve the use of English and to
recognise outstanding young athletes.
l
Awarded scholarships and best student awards to primary and
secondary students in Negeri Sembilan under the ExxonMobil
Education and Scholarship Fund Programme. Scholarships were
also presented to children of employees, dealers and resellers.
l
EMB employees were among 40 recipients under the Employee
Involvement Programme Awards who each received RM1,500 for
the civic organisations they serve. A total of RM60,000 in grants
were received by the community.
l
EMB employees and their family displayed their volunteerism
spirit in ExxonMobil's "Touching Lives Together" Community
Projects Programme where more than 1,500 employees and their
family members devoted time and energy to carry out 19 projects
to benefit the local community.
17
Corporate Information
Directors
Mr. Liam M. Mallon
(Chairman)
Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim
(Independent Non-Executive Director)
Y. Bhg. Dato' Zainal Abidin Putih
(Executive Financial Director)
(Executive Refinery Director)
Puan Faridah Ali
(Executive Retail Business Director)
Mr. Lam Foo Keong
(Executive Treasury Director)
Joint Secretaries
Puan Sri Junaidah Mohd Said
(LS 0008614)
Mr. Manoj Devadasan
(LS 0006885)
Share Registrar
Tenaga Koperat Sdn. Bhd. (118401-V)
20th Floor, Plaza Permata
Jalan Kampar, off Jalan Tun Razak
50400 Kuala Lumpur
Tel: 03-40416522 Fax: 03-40426352
Auditors
PricewaterhouseCoopers (No. AF-1146)
Chartered Accountants
Kuala Lumpur
Stock Exchange Listing
Main Board of Bursa Malaysia Securities Berhad
Solicitors
Messrs. Raja, Darryl & Loh, Kuala Lumpur
Messrs. Azman, Davidson & Co, Kuala Lumpur
Messrs. Skrine, Kuala Lumpur
Messrs. Lee Hishammuddin Allen & Gledhill,
Kuala Lumpur
Messrs. Shearn Delamore & Co, Kuala Lumpur
Messrs. Zaid Ibrahim & Co, Kuala Lumpur
Registered Office
EMB Company Secretary's Office
Level 29, Menara ExxonMobil
Kuala Lumpur City Centre
50088 Kuala Lumpur
Tel: 03-20533000 Fax: 03-23803473
18
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 core 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 in these regard 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, 2006, 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
Meetings
Number of Board
Audit Committee Meetings
Held
Attended
3*
3*
Nonmember
Nonmember
1*
1*
Nonmember
Nonmember
4
4
-
-
4
4
4
4
Y. Bhg. Dato’ Zainal Abidin Putih
4
4
4
4
4
4
4
4
4
4
Nonmember
Nonmember
Puan Faridah Ali
4
4
Nonmember
Nonmember
3*
3*
-
-
Y. Bhg. Dato’ Robert Fisher
(Resigned as Chairman on September 14, 2006)
Mr. Liam M. Mallon
(Appointed as Chairman with effect from September 14, 2006)
Y. Bhg. Tan Sri Dato’ Dr. Syed Jalaludin Syed Salim
Held
Attended
(Resigned as alternate member to Encik Zain C. Willoughby
on the Board Audit Committee on May 25, 2006)
Mr. Lam Foo Keong
(Appointed as Executive Treasury Director with effect
from April 1, 2006)
(Alternate member to Encik Zain C. Willoughby on the
Board Audit Committee – appointed with effect from May 25, 2006)
* Reflects the number of meetings held during the time the Director held office.
19
(Alternate member to Y. Bhg. Tan Sri Abdul Halim Ali
and Y. Bhg. Dato’ Zainal Abidin Putih on the
Board Audit Committee)
Corporate Governance (Continued)
Board Membership
The Board had 8 members in 2006, with 3 Independent Non-Executive Directors and 5 Executive Directors
(including the Chairman). Y. Bhg. Dato' Robert Fisher accepted an assignment in Houston, Texas, U.S.A. as
Vice President, ExxonMobil Development Company, and resigned as Director and Chairman on September 14,
2006. The Board appointed Mr. Liam M. Mallon as Director and Chairman to succeed Y. Bhg. Dato' Fisher,
effective the same date.
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 namely the Financial Director, the Retail Business Director, the Refinery Director and
the Treasury Director.
Balance in the Board is achieved and maintained with the composition of both Executive and Independent NonExecutive 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 Secretaries, has the authority to retain such outside advisors,
including accountants, legal counsel, 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 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 he 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 Non-Executive Directors, for the Board's consideration and decision.
The current members of the Remuneration Committee are as follows:
1. Mr. Liam M. Mallon (Executive Director) - Chairman
* Encik Zain C. Willoughby (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)
20
Directors' Remuneration
The remuneration received by the Non-Executive Directors in 2006 was recommended by the Board as a whole
and approved by the stockholders at the Annual General Meeting on May 25, 2006.
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.
An analysis of the aggregate Directors' remuneration incurred by the Company for the year ended December
31, 2006 as prescribed under Appendix 9C Part A Item 10(a) of the Listing Requirements of the Bursa Malaysia
Securities Berhad (“BMSB”) is set out below :
FEES
(RM)
EXECUTIVE DIRECTORS
NON-EXECUTIVE DIRECTORS
VALUE OF REMUNERATION
AND OTHERS (RM)
90,000
TOTAL
(RM)
1,449,954
14,000
1,449,954
104,000
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 10(b) of the Listing Requirements of the BMSB is set
out below:
REMUNERATION (RM)
NUMBER OF EXECUTIVE
DIRECTORS
Less than 50,000
50,001 -100,000
100,001-150,000
150,001-200,000
200,001-250,000
250,001-300,000
300,001-350,000
350,001-400,000
400,001-450,000
450,001-500,000
500,001-550,000
550,001-600,000
NUMBER OF NONEXECUTIVE DIRECTORS
3
1
1
2
1
1
The Company has opted not to disclose each Director's remuneration as the Board considers the information to
be sensitive and proprietary.
The Nominating Committee is responsible for the recommendation of candidates for Non-Executive Directors
and Executive Directors and the recommendation of Directors for committees, for the Board's consideration and
decision. The Committee is also responsible for the assessment of the effectiveness of individual Directors and
the overall Board on an ongoing basis.
The current members of the Committee are as follows:
1. Mr. Liam M. Mallon (Executive Director) - Chairman
* Encik Zain C. Willoughby (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)
21
Nominating Committee
Nominating Committee (Continued)
The Committee recommended the appointment of Mr. Lam Foo Keong as Executive Treasury Director with
effect from April 1, 2006 and as the alternate to Encik Zain C. Willoughby on the Board Audit Committee with
effect from May 25, 2006, in place of Puan Faridah Ali. The Committee further recommended the appointment
of Mr. Liam M. Mallon as a Director and Chairman to succeed Y. Bhg. Dato' Robert Fisher with effect from
September 14, 2006.
Directors' Training
As required under the Listing Requirements of the BMSB, Mr. Liam M. Mallon and Mr. Lam Foo Keong attended
the Mandatory Accreditation Programme (MAP) within the prescribed time following their respective
appointments.
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 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.
All Directors on the Board had received or undergone relevant training in 2006.
The Company reimburses Directors for costs incurred in attending the MAP and other 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, the Company has a Public Affairs Department, which
deals with queries from investors and potential investors. The Company also 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 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 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.
22
Internal Control (Continued)
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,
4.
key policies covering Business Ethics, Conflict of Interest, Antitrust, Alcohol and Drug Use, Gift and
Business 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,
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 control 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 have carried out their responsibilities by:
l
selecting suitable accounting policies and applying them consistently;
l
making judgements and estimates that are reasonable and prudent;
l
ensuring that all applicable accounting standards have been adhered to; and
l
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.
23
The Directors are required by the Companies Act, 1965 and the 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.
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 page 25 of this Annual
Report.
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
The amount of non-audit fees paid or payable to the external auditors, PricewaterhouseCoopers, by the
Company for the financial year ended December 31, 2006 is RM2,291.
Other Information
i)
Family Relationship
None of the Directors have any family relationship with any other Director and/or major shareholder of
the Company.
ii)
Conflict of Interest
None of the Directors have any conflicts of interest with the Company.
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 26, 2007.
24
Board Audit Committee Report
MEMBERSHIP AND MEETINGS
The Committee comprises two Independent Non-Executive Directors, and one Executive Director.
following are the Committee members:
The
1.
Y. Bhg. Dato' Zainal Abidin Putih, an Independent Non-Executive Director, who has been elected as
the Chairman of the Committee. His alternate is Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim, an
Independent Non-Executive Director.
2.
Y. Bhg. Tan Sri Abdul Halim Ali, an Independent Non-Executive Director, whose alternate is Y. Bhg. Tan Sri
Dato' Dr. Syed Jalaludin Syed Salim, an Independent Non-Executive Director .
3.
Encik Zain C. Willoughby, an Executive Director, whose alternate is Mr. Lam Foo Keong, who is also
an Executive Director.
A detailed profile of the Committee members can be found on pages 12 and 13.
The Secretary to the Committee is the Controller of the Company.
The Committee had 4 meetings during the last financial year. The details of attendance of each Committee
member have been tabulated under the Corporate Governance Statements section, which can be found on
page 19. Other Directors of the Company and relevant personnel attended some of the Committee meetings by
invitation.
SUMMARY OF ACTIVITIES
During the last financial year, the Committee discharged its functions and carried out its duties as set out in the
Terms of Reference below.
INTERNAL AUDIT
The Company is subject to independent regular and systematic audit reviews of its system of internal controls.
This is to provide reasonable assurance that such systems are operating effectively. The basic framework of the
Company's system of internal controls is described under the Corporate Governance Statements section,
which can be found on pages 22 and 23. The internal audit process covers the audit of all the Company's units
and operations and the annual review with the Committee of audit results and audit plans for the subsequent
year.
The internal audit function is undertaken by a regional internal audit group, ultimately taking functional guidance
from Exxon Mobil Corporation. This structure allows the Company to benefit from the application of global audit
best practices and assures the Company of internal audit independence.
TERMS OF REFERENCE OF THE BOARD AUDIT COMMITTEE
Membership
l
be appointed from members of the Board of Directors (the Board);
l
consist of not less than three in number;
l
comprise, in the majority, independent Directors;
l
elect a Chairman from among their number, who is an independent Director; and
l
not be an alternate Director.
Meetings and Minutes
Meetings of the Committee shall be held regularly, and as often as necessary. Other Directors of the Company
and relevant personnel may only attend the meetings at the invitation of the Committee. If required, the
presence of the external auditors at the meetings of the Committee may be requested. The auditors, both
internal and external, may request the Committee to convene a meeting if one is necessary, to consider any
matter which any of the auditors believe should be brought to the attention of the Directors and/or shareholders
of the Company.
25
The Committee members shall:
Board Audit Committee Report (Continued)
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:
l
to investigate any matter within its terms of reference;
l
to have the resources which are required to perform its duties;
l
to have full and unrestricted access to any information pertaining to the Company;
l
to have unrestricted access to and communication with the external auditors of the Company and internal
auditors;
l
to obtain external legal or other independent professional advice as necessary; and
l
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,
l
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
l
auditors of the Company and internal auditors;
to review and report to the Board the adequacy of the scope, functions and resources of the internal audit
l
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
l
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,
l
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
l
arise within the Company;
to review and report to the Board any removal, resignation, appointment and audit fee of the
l
Company's external auditors;
to review and report to the Board whether there is reason (supported by grounds) to believe
l
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;
l
to report promptly to Bursa Malaysia Securities Berhad (BMSB) matters reported by the Committee to the
l
Board which have not been satisfactorily resolved resulting in a breach of the Listing Requirements
of BMSB; and
to perform such other functions as may be agreed to by the Committee and the Board.
l
This Statement is made in accordance with the Board of Directors' resolution dated February 26, 2007.
26
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, 2006.
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
Retained profits brought forward
Profits available for appropriation
Dividend paid less income tax at 28%
Retained profits carried forward
7,063
507,072
514,135
(23,328)
490,807
DIVIDENDS
The amount of dividends paid since December 31, 2005 are as follows:
RM'000
In respect of the year ended December 31, 2005:
Final dividend per stock unit, paid on June 20, 2006:
Ordinary - 12 sen gross less income tax at 28%
23,328
The Directors propose that a final dividend of 12 sen less income tax at 27% per ordinary stock unit,
amounting to RM23,652,000 be paid for the year ended December 31, 2006.
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
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.
27
Before the income statement and balance sheet were completed, the Directors took reasonable steps:
Report of the Directors (Continued)
STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (Continued)
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.
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. Liam M. Mallon
Y.Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim
Y.Bhg. Tan Sri Abdul Halim Ali
Y.Bhg. Dato' Zainal Abidin Putih
Puan Faridah Ali
Mr.Lam Foo Keong
Y. Bhg. Dato' Robert Fisher
(appointed w.e.f. September 14, 2006)
(appointed w.e.f. April 1, 2006)
(resigned w.e.f. September 14, 2006)
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.
28
Report of the Directors (Continued)
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:
As at
01.01.06
or date of
appointment
Acquired
Sold
As at
31.12.06
8,350
1,550
70
-
6,960
7,350
2,400
70
2,000
(3,960)
(6,000)
(2,400)
(2,000)
11,350
2,900
140
-
Exxon Mobil Corporation
(Ultimate holding company)
- Number of common stock without par value
held by the following Directors:
Mr. Liam M. Mallon
Puan Faridah Ali
Mr. Lam Foo Keong
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.
DIRECTORATE
In accordance with Article 104 and Article 105 of the Company's Articles of Association, En. Abu Bakar
Siddik retires at the forthcoming Annual General Meeting and, being eligible, offers himself for re-election.
In accordance with Article 109 of the Company's Articles of Association, Mr. Liam M. Mallon retires at the
forthcoming Annual General Meeting and, being eligible, offers himself for re-election.
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
In accordance with a resolution of the Board of Directors dated February 26, 2007.
...............................
Liam M. Mallon
Chairman
...............................
Zain C. Willoughby
Financial Director
Kuala Lumpur,
February 26, 2007
29
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
Report of the Auditors
TO THE MEMBERS OF ESSO MALAYSIA BERHAD (Company Number 3927-V)
We have audited the financial statements set out on pages 31 to 51. These financial statements are the
responsibility of the Company's Directors. It is our responsibility to form an independent opinion, based on our
audit, on these financial statements and to report our opinion to you, as a body, in accordance with section 174
of the Companies Act 1965 and for no other purpose. We do not assume responsibility to any other person for
the content of this report.
We conducted our audit in accordance with approved Auditing Standards in Malaysia. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by Directors, as well as evaluating the overall financial statements presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion:
(a)
the financial statements have been prepared in accordance with the provisions of the Companies Act,
1965 and MASB approved accounting standards in Malaysia so as to give a true and fair view of:
(i)
the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the
financial statements; and
(ii)
the state of affairs of the Company as at December 31, 2006 and of the results and cash flows
of the Company for the year ended on that date;
and
(b)
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.
PRICEWATERHOUSECOOPERS
(No. AF-1146)
Chartered Accountants
DATO’ AHMAD JOHAN BIN MOHAMMAD RASLAN
No.1867/09/08(J)
Partner of the firm
Kuala Lumpur
February 26, 2007
30
Income Statement
FOR THE YEAR ENDED DECEMBER 31, 2006
Note
2006
RM'000
2005
RM'000
9,336,444
8,269,287
COST OF SALES
(8,958,242)
(7,873,459)
GROSS PROFIT
378,202
395,828
OTHER INCOME
21,372
22,192
(309,480)
(295,538)
(54,608)
(64,137)
REVENUES
5
OPERATING EXPENSES
ADMINISTRATIVE AND OTHER EXPENSES
FINANCE COST
6
(28,264)
(24,195)
PROFIT BEFORE TAX
7
7,222
34,150
10
(159)
(14,422)
7,063
19,728
2.6
7.3
12.0
12.0
TAX EXPENSE
NET PROFIT ATTRIBUTABLE TO
SHAREHOLDERS
11
Proposed final gross dividend less income tax at 27%
(2005: 28%) per ordinary stock unit (sen)
31
Balance Sheet
AS AT DECEMBER 31, 2006
Note
NON CURRENT ASSETS
Property, plant and equipment
Long term assets and receivables
Intangible assets - software
TOTAL NON CURRENT ASSETS
CURRENT ASSETS
Inventories
Assets held for sale
Receivables
Amounts due from related corporations
Deposit, cash and bank balances
Taxation
TOTAL CURRENT ASSETS
CURRENT LIABILITIES
Payables
Provision
Retirement benefits obligations
Amounts due to related corporations
Borrowings (unsecured)
TOTAL CURRENT LIABILITIES
2006
RM'000
2005
RM'000
12
13
14
886,952
332,295
4,731
1,223,978
931,729
324,930
5,680
1,262,339
15
16
17
21
384,522
97,860
233,520
16,787
49,453
782,142
459,863
3,033
112,666
262,902
19,740
2,815
861,019
18
19
20
21
22
188,918
260
398,591
633,778
1,221,547
162,318
2,402
1,198
404,740
743,545
1,314,203
(439,405)
(453,184)
49,258
101,508
150,766
49,510
109,573
159,083
633,807
650,072
135,000
8,000
490,807
633,807
135,000
8,000
507,072
650,072
NET CURRENT LIABILITIES
LESS: NON CURRENT LIABILITIES
Retirement benefits obligations
Deferred taxation
20
23
TOTAL NET ASSETS EMPLOYED
FINANCED BY:
SHARE CAPITAL
RESERVES
RETAINED PROFITS
SHAREHOLDERS' EQUITY
24
25
25
32
Statement of Changes in Equity
Issued and fully paid
ordinary stock of
RM0.50 each Non-distributable
Number of
capital
ordinary Nominal
redemption
stock unit
value
reserves
‘000 RM'000
RM'000
Total
RM'000
270,000
135,000
8,000
510,672
653,672
Net profit
-
-
-
19,728
19,728
Dividends for the year ended
December 31, 2004 (final)
-
-
-
(23,328)
(23,328)
At December 31, 2005
270,000
135,000
8,000
507,072
650,072
At January 1, 2006
270,000
135,000
8,000
507,072
650,072
Net profit
-
-
-
7,063
7,063
Dividends for the year ended
December 31, 2005 (final)
-
-
-
(23,328)
(23,328)
270,000
135,000
8,000
490,807
633,807
At January 1, 2005
Distributable
retained
profits
RM'000
33
Statement of Cash Flows
Note
2006
RM'000
2005
RM'000
7,063
19,728
Adjustments for:
Depreciation on property, plant and equipment
Amortisation of intangible assets
Taxation
Interest income
Interest expense / commercial papers profit elements incurred
Retirement / separation benefits cost
(Gain) / Loss on disposal of property, plant and equipment
Write-off of property, plant and equipment
Unrealised foreign exchange (gain) / loss
66,108
1,907
159
(1,076)
28,264
3,153
2,212
(2,521)
69,092
1,652
14,422
(144)
24,195
10,696
1,150
8,303
(647)
Changes in:
(Increase) / decrease in inventories
(Increase) / decrease in assets held for sale
(Increase) / decrease in receivables
(Increase) / decrease in amounts due from related corporations
Increase / (decrease) in amounts due to related corporations
Increase / (decrease) in payables and provisions
75,341
2,118
14,819
29,382
(6,458)
14,696
(150,700)
167,432
(44,507)
82,361
(84,496)
Cash generated from operations
235,167
118,537
Interest / commercial papers profit elements paid
Interest received
Income taxes paid
Income taxes refund
Retirement / separation benefits paid
(28,277)
1,076
(53,481)
10,454
(4,034)
(24,429)
144
(25,446)
11,627
(16,468)
160,905
63,965
(26,548)
(973)
(3,554)
124
(49,198)
(1,904)
910
7,696
(30,951)
(42,496)
(109,767)
(23,328)
(22,455)
(23,328)
(133,095)
(45,783)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(3,141)
(24,314)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
12,930
37,244
9,789
12,930
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit attributable to shareholders
Net cash from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Purchase of intangible assets
(Increase) / decrease in long term assets and receivables
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
(Repayment of) / proceeds from borrowings - net
Dividends paid to shareholders
Net cash used in financing activities
CASH AND CASH EQUIVALENTS AT END OF YEAR
34
26
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) approved by the Malaysian Accounting Standards Board
(MASB) and the provisions of the Companies Act, 1965.
The preparation of financial statements in conformity with the MASB approved accounting
standards in Malaysia and the provisions of the Companies Act, 1965 requires the Directors to make
judgements, estimates and assumptions that affect the application of policies and reported amounts
of assets and liabilities, income and expenses. These are disclosed in Note 2.
In 2006, the Company adopted the following FRS that are relevant to its operations:
FRS 2
FRS 117
FRS 124
Share-based Payment
Leases
Related Party Disclosures
The adoption of FRS 117 has resulted in a change in the accounting policy as disclosed in Note 4 to the
financial statements. The Directors are of the opinion that any share-based compensation arising under
FRS 2 is not material to the financial statements.
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:
Property, plant and equipment are stated at cost or 1982 valuation less accumulated
depreciation and impairment. No valuation has been conducted since 1982.
The Directors have 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 valuation were
determined by independent professional valuers on the following bases:
Land
Buildings
- Open market value based on existing use
- 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
Plant and equipment
3% - 5%
4% - 10%
Maintenance and repairs are charged to the income statement as incurred. Major renewals
and improvements are capitalised.
35
(a)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(a)
Property, plant and equipment (Continued)
Included in the respective property, plant and equipment classifications, is the Company's
proportionate share of its interest 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 these
facilities. 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)
Intangible assets - software
Intangible assets are stated at cost less accumulated amortisation. Computer software costs are
amortised on a straight-line basis over the estimated useful life of the software, which normally falls
within a range of 10 to 15 years.
(c)
Impairment of 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.
(d)
Assets held for sale
Non-current assets or disposal group are classified as being held for sale if their carrying amount is
recovered principally through a sale transaction rather than through continuing use. These assets are
measured at the lower of carrying amount and fair value less costs to sell upon execution of a binding
sale agreement.
(e)
Operating leases
Leases of assets under which a significant portion of risks and benefits of ownership over the
economic life of the assets is 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.
(f)
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.
36
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(g)
Trade receivables
Trade receivables are carried at anticipated realisable value less provision for impairment.
Bad debts are written off in the year in which they are identified. A provision for impairment of
trade receivables is made based on a review of all outstanding amounts at year end.
(h)
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.
(i)
Provisions
Provisions are recognised when it is probable that an outflow of resources will be required to
settle a present 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.
(j)
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 November 2006. 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 of employment
before the normal retirement age. The liability for separation benefits is recogised when the
Company's commitment is confirmed without any realistic possibility of withdrawal.
37
2.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(k) Share capital
Ordinary stock units with discretionary dividends are classified as equity.
(l)
Dividends
Dividends on ordinary stock units are recognised as liabilities when the dividends are
approved for payment.
(m) Borrowings
Borrowings are recognised based on the principal amounts expected to be repaid upon
maturity. All interest, profit elements on Islamic Commercial Papers (ICP) Programme and
other costs incurred in connection with borrowings are expensed as incurred, except that upfront costs incurred in establishing long term facilities are amortised over the facility
period.
(n) 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 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.
(o)
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 on land and buildings are recognised on an accrual basis.
(p)
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.
(q)
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.
38
3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company's financial results can be significantly affected from time to time by volatility in the market
prices for crude oil and petroleum products. Since international crude oil and petroleum product prices are
denominated in US Dollars, the Company's results can also be affected by fluctuations in foreign exchange
rates. In addition, the Company can be affected by 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.
Given its large size and the long-term nature of its business, we expect that the Company's exposure
to these risks 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.
As a result of the above policies, the Company's purchase and sales transactions and foreign
exchange transactions are generally based on market prices and exchange rates in effect on the day
of each transaction. Interest rates on Company borrowings generally move with daily changes in the
applicable market interest rates.
In addition to the above, the Company is also exposed to credit risk from its trade receivables from
customers. The Company manages this risk 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 computer system.
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.
In addition, the Company continues to optimise the mix in its borrowing facilities to maximize financing
flexibility whilst reducing financing cost. These facilities are short term in nature unless opportunities
arise to secure favourable longer term borrowing facilities. A significant component of these short term
borrowings are available to the Company on a long term basis as described in Note 22.
4. CHANGES IN ACCOUNTING POLICIES AND PRIOR YEAR ADJUSTMENTS
Change in Accounting Policy
The adoption of FRS 117 Leases has resulted in the reclassification of leasehold land from
Property, Plant and Equipment to Prepaid Lease Rentals. In accordance with the standard's
transitional provision, the Company has adopted this standard retrospectively and has retained the
unamortised revalued amount as the carrying amount in the books, for the leasehold lands that had
been previously revalued. The last revaluation was conducted in 1982.
39
(a)
4. CHANGES IN ACCOUNTING POLICIES AND PRIOR YEAR ADJUSTMENTS (Continued)
b)
Prior Year Adjustment
The comparative financial statements were restated as follows, consistent with the retrospective
application of FRS 117:
As previously
Effects of
reported
FRS 117 As restated
RM'000
RM'000
RM'000
Balance Sheet as at
31 December 2004
1,090,092
(118,375)
971,717
207,596
118,375
325,971
Income statement for the year ended
31 December 2005
Rental expense for land and buildings
Loss on disposal of property, plant and equipment
70,782
22,407
2,328
(1,690)
1,690
(1,178)
69,092
24,097
1,150
1,048,559
208,100
(116,830)
116,830
931,729
324,930
2006
RM'000
2005
RM'000
Related corporations sales
Third party sales
Turnover
4,572,199
4,749,015
9,321,214
4,227,421
4,027,468
8,254,889
Interest income
Interest income from related parties
Licence fees on land and buildings
851
225
14,154
9,336,444
144
14,254
8,269,287
Balance Sheet as at
31 December 2005
5 . REVENUES
Turnover represents the value of goods sold net of Government duties and taxes of RM31,082,000
(2005: RM6,212,000).
6. FINANCE COST
Interest and profit elements on borrowings (Note 22)
Interest on borrowings from related parties
40
2006
RM'000
2005
RM'000
13,565
14,699
28,264
18,080
6,115
24,195
7.
PROFIT BEFORE TAX
2006
RM'000
2005
RM'000
66,108
1,907
69,092
1,652
157
68
(2,402)
252
8,958,242
117
(610)
4,983
7,873,459
1,425
(15)
1,662
(99)
(15,243)
(2,521)
20,889
282
4,222
(212)
(647)
24,097
270
3,532
-
1,150
2006
RM'000
2005
RM'000
33,795
38,914
4,006
4,708
2,679
474
4,161
45,115
2,860
7,836
4,045
58,363
2006
RM'000
2005
RM'000
90
90
1,190
231
29
1,540
1,081
219
34
1,424
The profit before tax is arrived at after
charging/(crediting) the following items:
Amortisation of intangible assets
Auditors' remuneration:
Current year
Underprovision in prior year
Write-back of provision for customer loyalty programmes
Inventory write-down to net realisable value
Cost of inventories recognised as an expense
Provision for impairment and write-off
of receivables
Bad debts recovered
Foreign exchange (other than on borrowings)
Realised foreign exchange gain
Unrealised foreign exchange (gain)/loss
Rental expense for land and buildings
Hire of plant and machinery
Research and development expense
Loss on disposal of property, plant and
equipment
8. EMPLOYEE BENEFITS EXPENSE
Wages, salaries and bonus
Defined contribution retirement plan Employees Provident Fund
Provision for retirement benefits Defined benefit retirement plan (Note 20)
Separation benefits
Other employee benefits
Non-Executive Directors:
Fees
Executive Directors:
Short-term employee benefits
Retirement benefits
Benefits-in-kind
Included in the above is the Company's allocation of remuneration of Executive Directors employed
by related corporations amounting to RM659,000 (2005: RM490,000). The balance represents
remuneration for Directors employed by the Company included in Note 8.
41
9. DIRECTORS' REMUNERATION
10. TAX EXPENSE
Current taxation
(Over) / under accrual in prior years
Real Property Gains Tax
Deferred taxation (Note 23)
Origination and reversal of temporary differences
Reduction in statutory tax rate
2006
RM'000
2005
RM'000
8,205
(30)
49
16,750
(133)
-
(513)
(7,552)
159
(2,195)
14,422
The Company's effective tax rate differs from the statutory tax rate and is reconciled as follows:
Statutory tax rate
Expenses not deductible for tax purposes
Real Property Gains Tax
Effect on deferred tax of reduction in statutory
tax rate
Reversal of temporary differences no
longer required
Impact from settling prior year taxes
that were under provided
Effective tax rate
2006
%
2005
%
28
77
3
28
16
-
(105)
-
3
(1)
43
(1)
2
(1)
42
In December 2006, the government gazetted a reduction in the statutory tax rate to 27% for the year
ended December 31, 2007. The tax rate reduction to 26% from 2008 that was included in the budget
speech has not been gazetted yet, but is considered substantially enacted. The effects on deferred
taxation of these reductions have been included in the financial statements ended December 31,
2006.
Effective tax rates on non-deductible expenses primarily reflect the varying relationship of the nondeductible expenses (which are relatively fixed over time) to changing levels of profit or loss from
period to period.
11. EARNINGS 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 attributable to shareholders (RM'000)
Number of ordinary stock units in issue ('000)
Basic earnings per stock unit (sen)
42
2006
2005
7,063
270,000
2.6
19,728
270,000
7.3
12. PROPERTY, PLANT AND EQUIPMENT
Freehold
land
RM'000
Buildings
and
improvements
RM'000
Plant
and
equipment
RM'000
Capital
project
in-progress
RM'000
Total
RM'000
205,947
-
157,734
2,963
544,866
6,551
23,182
16,988
931,729
26,502
-
-
46
-
46
-
(296)
(1,911)
15
(5)
15
(2,212)
-
-
(124)
-
(124)
(716)
-
(500)
-
(1,216)
(1,680)
-
7,821
11,237
(19,058)
(1,680)
-
-
(13,636)
(52,472)
-
(66,108)
Net book value
203,551
154,586
507,693
21,122
886,952
Valuation-1982
Cost-Post 1982 net additions
Accumulated depreciation
57,278
146,273
-
15,893
285,154
(146,461)
1,210,507
(702,814)
Net book value
203,551
154,586
507,693
21,122
886,952
Net book value at
December 31, 2006 if assets
had been carried at cost less
depreciation:
153,457
154,586
507,694
21,122
836,859
Valuation-1982
Cost-Post 1982 net additions
Accumulated depreciation
57,994
147,953
-
16,289
275,309
(133,864)
1,209,389
(664,523)
Net book value
205,947
157,734
544,866
23,182
931,729
Net book value at
December 31, 2005 if assets
had been carried at cost less
depreciation:
155,254
157,725
544,866
23,182
881,027
73,171
21,122 1,663,056
- (849,275)
74,283
23,182 1,655,833
- (798,387)
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 RM73,571,000 (2005:
RM76,748,000).
43
Net book value
At January 1, 2006
Additions
Transfers from affiliated
companies
Reclassify from intangible
assets
Write-offs
Transfers to affiliated
companies
Reclassify to assets
held for sale
Reclassify to prepaid
lease rentals
Reclassifications
Depreciation charged to
income statement
13. LONG TERM ASSETS AND RECEIVABLES
Prepaid lease rentals and deposits
Loans to dealers
Employee receivables
Others
2006
RM'000
2005
RM'000
318,047
4,019
1,386
8,843
332,295
309,864
4,657
1,491
8,918
324,930
Included in the above prepaid lease rentals are leasehold lands amounting to RM21,918,000 (2005:
RM22,153,000) for the Company's 20% participating interest in the joint venture assets of MPP.
14. INTANGIBLE ASSETS - SOFTWARE
2006
RM'000
2005
RM'000
Net book value at January 1
Additions
Reclassify to property, plant and equipment
Amortisation charged to income statement
Net book value at December 31
5,680
973
(15)
(1,907)
4,731
5,428
1,904
(1,652)
5,680
At December 31
Cost
Accumulated amortisation
Net book value
11,070
(6,339)
4,731
10,112
(4,432)
5,680
The Company has undertaken major projects to upgrade and integrate its computer systems. The
development and software costs for completed projects have been capitalised.
15. INVENTORIES
Crude oil
Petroleum products
Materials and supplies
2006
RM'000
2005
RM'000
158,638
217,592
8,292
384,522
209,806
241,911
8,146
459,863
2006
RM'000
2005
RM'000
-
902
2,131
3,033
16. ASSETS HELD FOR SALE
Freehold land
Leasehold land
During the year, the sale of assets amounting to RM2,131,000 was aborted and the assets were
reclassified to prepaid lease rentals.
44
17. RECEIVABLES
2006
RM'000
2005
RM'000
89,559
(4,105)
85,454
12,406
97,860
81,051
(4,223)
76,828
35,838
112,666
Trade receivables
Less: Provision for impairment of receivables
Others
Credit terms of trade receivables range from payment in advance 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 Industrial and Lubricants customers. The provision for impairment is considered sufficient to
cover collection losses.
Other receivables are generally those of a non-trade nature. There were no subsidies receivable from
the Government of Malaysia under the Automatic Pricing Mechanism as at December 31, 2006 (2005:
RM18,913,000).
18. PAYABLES
Trade payables
Other payables
2006
RM'000
2005
RM'000
128,119
60,799
188,918
118,480
43,838
162,318
126,497
1,622
128,119
118,372
108
118,480
The currency exposure profile of trade payables is as follows:
Ringgit Malaysia
US Dollar
Other payables are generally those of a non-trade nature that arose from other than the purchase of
crude and petroleum products. Included in other payables is an amount of RM1,207,000 (2005:
RM1,115,000) for payroll liabilities.
45
The credit terms for the Company's trade and other payables are generally 30 days.
19. PROVISION
This comprises customer loyalty programme liability as follows:
At January 1
Net (credit) / charge to the income statement
At December 31
2006
RM'000
2005
RM'000
2,402
(2,402)
-
3,012
(610)
2,402
Customers participating in the programme are awarded points for purchases at participating service
stations and these points are redeemable for the Company's products or gift vouchers. A provision
has been made for the unredeemed and unexpired loyalty points based on past redemption
experience.
The Company introduced a new loyalty programme called Smiles Driver Rewards in June 2005. This
new programme is operated by a related corporation and enables participating customers to earn and
redeem loyalty points at both the Esso and Mobil service stations. The cost of the programme is charged
to the Company as intercompany charges.
The previous loyalty programme ceased in February 2006 and the provision associated with the
unredeemed points was reversed.
20. 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 November 2006 and this exercise showed that the
book provision is sufficient to meet the actuarially determined value of plan benefits.
The changes in the provision for retirement benefits under the defined benefit plan during the year
were as follows:
2006
2005
RM'000
RM'000
At January 1
Net expense charged to the income statement
Payments to separating employees and retirees
Employees transferred to affiliated companies
At December 31
50,708
2,679
(3,560)
(309)
49,518
55,508
2,860
(7,362)
(298)
50,708
35,323
14,195
49,518
34,869
15,839
50,708
260
49,258
49,518
1,198
49,510
50,708
The amounts recognised in the balance sheet are reconciled as follows:
Present value of unfunded obligations
Unrecognised actuarial gains
Net liability
Reflected on the balance sheet as:
Current
Non-current
46
20. RETIREMENT BENEFITS OBLIGATIONS (Continued)
The expense recognised in the income statement is as follows:
Current service cost
Interest cost
Net actuarial gains recognised
Total, included in employee benefits expense (Note 8)
2006
RM'000
2005
RM'000
1,624
2,289
(1,234)
2,679
1,722
2,501
(1,363)
2,860
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
Expected rate of salary increases
2006
%
2005
%
6.3
5.2
6.3
4.7
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.
A 1% higher (lower) discount rate would decrease (increase) the pension liability by RM200,000
(RM300,000).
A 1% higher (lower) salary growth rate would increase (decrease) the pension liability by RM800,000
(RM700,000).
21. AMOUNTS DUE FROM/(TO) RELATED CORPORATIONS
2006
RM'000
2005
RM'000
193,198
40,322
233,520
262,475
427
262,902
(1,943)
(396,648)
(398,591)
(4,574)
(400,166)
(404,740)
2006
RM'000
2005
RM'000
333,778
300,000
633,778
323,545
300,000
120,000
743,545
Ringgit Malaysia
US Dollar
The currency exposure profile of amounts due to related corporations is as follows:
Ringgit Malaysia
US Dollar
These balances are unsecured and are generally settled within one month.
22. BORROWINGS (UNSECURED)
Floating interest rate loans from related corporations
Short-term notes
Bankers acceptances
47
The currency exposure profile of amounts due from related corporations is as follows:
22. BORROWINGS (UNSECURED) (Continued)
The floating interest rate loans from related corporations comprise the following :
(i) A US$100 Million facility secured with ExxonMobil Services (Labuan) Limited. This 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 US$80 Million (2005: US$50 Million) drawndown on this loan for another
year to December 31, 2007. The principal outstanding in Ringgit Malaysia is fixed at the time of loan
draw down thereby insulating the Company against foreign currency fluctuations.
(ii) A RM185 Million loan/deposit facility secured in 2005 with ExxonMobil Exploration and Production
Malaysia Inc. (EMEPMI). The facility allows the Company to borrow short-term loans or place shortterm 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 year-end.
In September 2006, EMEPMI assigned its rights and benefits thereunder to ExxonMobil Malaysia
Sdn. Bhd. The Company has renewed the facility for another year to December 31, 2007.
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 short-term 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 2.9% to 4.0% per annum during the year (2005:
2.7% to 4.1%).
23. DEFERRED TAXATION
At January 1
Credited to the income statement (Note 10)
At December 31
2006
RM'000
2005
RM'000
109,573
(8,065)
101,508
111,768
(2,195)
109,573
The components of deferred tax amounts after appropriate offsetting are as follows:
Deferred tax liabilities:
subject to income tax
subject to real property gains tax
99,003
2,505
101,508
107,038
2,535
109,573
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
Others
Excess of capital allowances over depreciation
Others
Subject to real property gains tax
48
(8,004)
(171)
(8,175)
(8,964)
(862)
(9,826)
106,497
681
107,178
116,683
181
116,864
2,505
2,535
23. DEFERRED TAXATION (Continued)
At year end 2006, the Company applied the tax rate of 27% on the temporary differences that are
expected to be reversed in 2007, and 26% on the balance of the temporary differences.
24. SHARE CAPITAL
2006
RM'000
2005
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
2006
RM'000
2005
RM'000
8,000
490,807
498,807
8,000
507,072
515,072
25. RESERVES
Capital redemption reserve (non-distributable)
Retained profits (distributable)
The Company has sufficient tax credits under Section 108 of the Income Tax Act, 1967 to frank up to
approximately RM422,954,000 (2005: RM335,767,000) of the retained profits as at December 31,
2006 if paid out as dividends. 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 RM208,000,000
(2005: RM207,000,000).
26. CASH AND CASH EQUIVALENTS
Deposit, cash and bank balances
Less: Deposit with a licensed bank included in the above
2006
RM'000
2005
RM'000
16,787
(6,998)
9,789
19,740
(6,810)
12,930
27. 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.
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.
49
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.
27. SIGNIFICANT RELATED PARTY DISCLOSURES (Continued)
2006
RM'000
2005
RM'000
Purchases of crude oil from ExxonMobil Exploration
and Production Malaysia Inc.
5,599,786
5,862,083
Purchases of petroleum products from:
ExxonMobil Asia Pacific Pte. Ltd.
ExxonMobil Malaysia Sdn. Bhd.
Others
1,843,785
704,167
37,661
1,318,219
581,664
-
Sales of petroleum products to:
ExxonMobil Asia Pacific Pte. Ltd.
ExxonMobil Malaysia Sdn. Bhd.
ExxonMobil Borneo Sdn. Bhd.
Others
1,756,307
2,406,775
384,753
24,364
1,936,348
1,804,725
482,746
-
82,122
(1,506)
80,616
81,127
(16,746)
64,381
Central management, shared facilities and services costs
mainly between ExxonMobil Asia Pacific Pte. Ltd.,
ExxonMobil Business Support Centre Malaysia Sdn. Bhd.
and ExxonMobil Exploration and Production Malaysia Inc.
Charged from:
Charged to:
At year end 2006 and 2005 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 are disclosed in Note 9 to the financial statements.
28. COMMITMENTS FOR CAPITAL EXPENDITURES
Commitments for the purchase of property, plant
and equipment authorised by the Directors but
not provided for in the financial statements:
Contracted
Not contracted
2006
RM'000
2005
RM'000
11,497
1,471
12,968
12,522
2,407
14,929
Included in the above are contracted commitments for the joint venture assets of the MPP amounting
to RM5,424,000 (2005: RM8,008,000).
29. CONTINGENT LIABILITIES (UNSECURED)
Guarantees to third parties to secure housing and
car loans for employees under the Company's
benefits plan
Litigation and other claims against the Company
50
2006
RM'000
2005
RM'000
323
323
1
150
151
29. CONTINGENT LIABILITIES (UNSECURED) (Continued)
Litigation and other claims against the Company in 2006 comprise a court case filed by a vendor on a
dispute over a land deal. In 2005, the amount included a court case filed by a haulage contractor for
alleged damages in relation to a contract termination.
In addition to the above, EMB's sister affiliate, ExxonMobil Exploration and Production Malaysia Inc.
(EMEPMI), has been in litigation with the Malaysian Inland Revenue Board (MIRB) since 1999.The
litigation primarily involves disallowed income tax deductions for withholding tax payments on services
provided to EMEPMI by other Exxon Mobil affiliates during the tax years 1983 to 1991. The Company
agreed in 1999 with the MIRB to be bound by the final outcome of the litigation between EMEPMI and
MIRB as the issues and facts are similar. In 2003, the High Court, sitting as an appellate court,
dismissed EMEPMI's appeal on the matters. EMEPMI subsequently filed a notice of appeal to, and is
currently awaiting a hearing before the Court of Appeal. The amount of the contingent liability in relation
to this case is not disclosed as it is still a subject to be determined by the Court and such diclosure may
be prejudicial to the Company's dispute on the subject matter. In the event that the Court of Appeal were to
rule against EMEPMI, such ruling is not expected to have a materially adverse effect on the Company's
operations or financial condition.
Litigation and other claims are reviewed by legal experts to assess the likelihood of the Company's
liability.
30. LEASING COMMITMENTS
2006
RM'000
2005
RM'000
12,854
41,480
2,531
56,865
10,034
24,304
7,950
42,288
17,130
40,690
As at balance sheet date, leasing commitments under
non-cancellable operating leases are as follows:
Within 1 year
After 1 year but within 5 years
After 5 years
Leasing commitments where milestone payments are
dependent upon approvals from relevant authorities
or the occurrence of events as specified under the said
lease agreements
31. COMPARATIVE FIGURES
32. APPROVAL OF FINANCIAL STATEMENTS
The financial statements have been approved for issue in accordance with a resolution of the Board of
Directors on February 26, 2007.
51
The 2005 financial statements have been restated upon adoption of the FRS as indicated in Note 1 to
ensure comparability with the 2006 financial year.
STATEMENT BY DIRECTORS PURSUANT TO
SECTION 169(15) OF THE COMPANIES ACT, 1965
We, Liam M. Mallon 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 31 to 51 are drawn up so as to give a true and
fair view of the state of affairs of the Company as at December 31, 2006 and of the results of the Company and
its cash flows for the year ended on that date in accordance with MASB approved accounting standards in
Malaysia and the provisions of the Companies Act, 1965.
In accordance with a resolution of the Board of Directors dated February 26, 2007.
...............................
Liam M. Mallon
.........................................................
Y.Bhg. Dato' Zainal Abidin Putih
Kuala Lumpur,
February 26, 2007
STATUTORY DECLARATION PURSUANT TO
SECTION 169(16) OF THE COMPANIES ACT, 1965
I, Zain C. Willoughby, the Director primarily responsible for the financial management of Esso Malaysia Berhad,
do solemnly and sincerely declare that the financial statements set out on pages 31 to 51, 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.
.......................................
Zain C. Willoughby
Subscribed and solemnly declared by the above named Zain C. Willoughby at Kuala Lumpur in Malaysia on
February 26, 2007 before me,
.......................................
Commissioner for Oaths
Kuala Lumpur
52
Information on Stockholdings
As at March 19, 2007
Class of stocks: Ordinary stock unit (RM0.50)
Voting right: One vote per stock unit
Size of
Holdings
No. of
Stockholders
% of
Stockholders
Number of
Units Held
% of Issued
Capital
292
3,956
6,041
1,071
66
1
2.5554
34.6198
52.8660
9.3725
0.5776
0.0088
15,024
3,712,793
24,025,549
28,201,440
38,545,194
175,500,000
0.0056
1.3751
8.8984
10.4450
14.2760
65.0000
11,427
100.00
270,000,000
100.0000
No. of
Units Held
% of Issued
Capital
175,500,000
10,028,400
3,282,700
65.0000
3.7142
1.2158
2,312,000
0.8563
1,660,000
1,510,000
1,330,000
1,143,204
0.6148
0.5592
0.4926
0.4234
1,075,000
881,500
0.3981
0.3265
850,000
825,500
807,000
673,900
0.3148
0.3057
0.2989
0.2496
660,000
0.2444
500,000
500,000
488,800
473,270
0.1852
0.1852
0.1810
0.1753
450,000
354,900
0.1667
0.1314
347,000
0.1285
340,000
315,400
0.1259
0.1168
313,640
0.1162
300,000
298,100
0.1111
0.1104
280,000
273,000
0.1037
0.1011
265,000
208,038,314
0.0981
77.0512
175,500,000
65.0000
Less than 100
100
1,000
1,001
10,000
10,001 100,000
100,001 - 13,499,999
13,500,000 and above
TOTAL
THIRTY LARGEST STOCKHOLDERS
Name
1. ExxonMobil International Holdings Inc.
2. Employees Provident Fund Board
3. Mayban Securities Nominees (Tempatan) Sdn Bhd
(UOB-Kay Hian Pte Ltd for Deva Dassan Solomon)
4. Amanah Raya Nominees (Tempatan) Sdn Bhd
(Skim Amanah Saham Bumiputera)
5.
6.
7.
8.
Johan Enterprise Sdn Bhd
Kumpulan Wang Amanah Pencen
Universiti Malaya
CIMSEC Nominees (Asing) Sdn Bhd
(Exempt AN for CIMB-GK Securities Pte Ltd (Retail Clients))
9. Permodalan Nasional Berhad
10. Citigroup Nominees (Asing) Sdn Bhd
(CBNY for DFA Emerging Markets Fund)
11.
12.
13.
14.
Tham Tatt Yow @ Tham Ah Chye
Chen Chin Peng
Chen Chin Peng
RHB Nominees (Tempatan) Sdn Bhd
(RHB Asset Management Sdn Bhd for Pertubuhan Kebangsaan Melayu Bersatu atau UMNO)
15. Asia Life (M) Berhad
(As beneficial owner (PF))
16.
17.
18.
19.
Yim Why Meng @ Zen Why Meng
Quarry Lane Sdn Bhd
Eng Guan Chan Sdn Bhd
HLG Nominees (Asing) Sdn Bhd
(Exempt AN for UOB-Kay Hian Pte Ltd (A/C Clients))
20. Yeoh Kean Hua
(CBNY for DFA Emerging Markets Small Caps Series)
22. Asia Life (M) Berhad
(As beneficial owner (NPF))
23. Neoh Choo Ee & Company Sdn Bhd
(Exempt AN for Merrill Lynch Pierce Fenner & Smith Incorporated (Foreign))
25. HDM Nominees (Asing) Sdn Bhd
(UOB-Kay Hian Pte Ltd for Ong Yoke Khee)
26. Kim Poh Holdings Sdn Bhd
27. OSK Nominees (Tempatan) Sdn Bhd
(Pledged Securities Account for Goh Sin Bong)
28. New Tong Fong Plywood Sdn Bhd
(Pledged Securities Account for Deva Dassan Solomon (473163))
30. Ong Boo Goh
SUBSTANTIAL STOCKHOLDER
1. ExxonMobil International Holdings Inc
53
List of Major Properties Owned
FEDERAL TERRITORY
Tenure L.A. (sq m) Description of Properties
Acquisition Date Expiry Date Age Net Book Value
Lot 18113 Mukim Petaling, Kuala Lumpur (EWLINK) F
2,974
Service Station
01.01.2004
3
6,433,359
Lot 26494, Mukim Petaling, Wilayah Persekutuan
F
5,669
Service Station
01.05.1995
12
6,025,748
Lot 199 & 200, Section 96, Kuala Lumpur
F
2,017
Service Station
01.08.1993
14
5,352,813
F
3,697
Service Station
30.04.2002
5
5,389,331
L
2,787
Service Station
31.12.2001
30.06.2099
11
6,394,623
L
4,047
Service Station
06.01.2004
09.06.2103
3
6,392,032
Lots 95-125, 128, Lot 2328-2338, Bagan Luar
F
43,780
Storage & Dist. Plant
01.12.1962
45
11,309,559
Esso Jalan Jelawat
L
3,693
Service Station
01.07.2003
4
7,017,441
Mukim Port Dickson
F
1,631,970
Refinery
01.06.1984
23
11,170,079
MPP and KVDT
L
784,000
MPP/KVDT Facilities
01.03.2001
6
19,544,529
SELANGOR
HSD 72700 & 72701 MK Sg. Buloh, Esso Meru 2
Esso Jln Kebun South Bound, Batu 3 Puchong,
Shah Alam
Esso Puncak Jalil H.S.D(D) 201983
P.T.62357 Mukim & District of Petaling, Selangor
PENANG
18.08.2073
NEGERI SEMBILAN
Lots 2645 & 2647, Mukim of Port Dickson
(Lot 2646 & 2648), 1926-1930, 1593-1595, 1805,
1838, 1803, 1836, 1757, 2278 & 1222,
54
30
01.02.2100
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the forty-eighth Annual General Meeting of the Company will be held at the
TRAINING CENTRE, LEVEL 18, MENARA EXXONMOBIL, KUALA LUMPUR CITY CENTRE, 50088 KUALA
LUMPUR on Wednesday, May 23, 2007 at 10:30a.m. for the purpose of transacting the following business:
1.
To receive and adopt the Company's Audited Accounts for the year ended December 31, 2006 and
the Directors' and Auditors' Reports thereon.
2.
To approve the declaration of a final dividend of 12 sen less Malaysian Income Tax at 27% per
ordinary stock unit of 50 sen each for the year ended December 31, 2006.
3.
To re-elect Encik Abu Bakar Siddik, a Director retiring in accordance with Articles 104 and 105 of the
Company's Articles of Association.
4.
To re-elect Mr. Liam M. Mallon, a Director retiring in accordance with Article 109 of the Company's
Articles of Association.
5.
To approve the payment of Directors’ fees for the Independent Non-Executive Directors.
6.
To re-appoint Messrs. PricewaterhouseCoopers as Auditors of the Company and to authorise the
Directors to determine their remuneration.
7.
To transact any other ordinary business of the Company.
NOTICE OF BOOK CLOSURE
NOTICE IS HEREBY GIVEN that stockholders who are registered in the Register of Members and Record of
Depositors as at the close of business on June 1, 2007, shall be entitled to the final dividend which, if approved,
will be paid on June 20, 2007.
A depositor shall qualify for entitlement only in respect of:
a)
Securities transferred to the Depositor’s Securities Account before 4.00p.m. on June 1, 2007 in
respect of transfers;
b)
Securities deposited into the Depositor's Securities Account before 12:30p.m. on May 30, 2007 in
respect of securities which are exempted from mandatory deposit; and
c)
Securities bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the
Rules of Bursa Malaysia Securities Berhad.
By order of the Board
Puan Sri Junaidah Mohd Said (LS0008614)
Manoj Devadasan (LS0006885)
Joint Company Secretaries
Kuala Lumpur
April 23, 2007
Note:
A member of the Company entitled to attend and vote at the general meeting is entitled to appoint a proxy to attend and vote instead of the
member. A proxy need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965, shall not apply to the
Company. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at
least one proxy in respect of each securities account it holds with ordinary stock units of the Company, standing to the credit of the said securities
account. The instrument appointing a proxy must be deposited at the Share Registrar's office at Tenaga Koperat Sdn Bhd, 20th Floor, Plaza
Permata (formerly known as IGB Plaza), Jalan Kampar, off Jalan Tun Razak, 50400 Kuala Lumpur, not less than 48 hours before the time set for
the meeting.
On the day of the Annual General Meeting:
1. Registration counters (located at the Ground Floor of Menara ExxonMobil) will be opened from 9:00 a.m. and will close at 10:20 a.m.
2. Refreshments will be served before the Annual General Meeting at the Eatery located on Level 6 of Menara ExxonMobil, from 9:00 a.m. to
10:20 a.m.
55
STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING
1.
Directors standing for re-election
(i) Encik Abu Bakar Siddik retires by rotation and is eligible for re-election pursuant to Articles
104 and 105 of the Company's Articles of Association.
(ii) Mr. Liam M. Mallon appointed since the last Annual General Meeting, retires, and is eligible for
re-election pursuant to Article 109 of the Company's Articles of Association.
2.
Details of Directors standing for re-election
(i)
Profiles
The profiles of the Directors standing for re-election are set out in pages 12 and 13 of this
Annual Report.
(ii) Statement of shareholdings
None of the Directors standing for re-election held shares in the Company.
(iii) Family relationship
None of the Directors standing for re-election have any family relationship with any Director
and/or major shareholder of the Company.
(iv) Conflict of interest
None of the Directors standing for re-election have any conflict of interest with the Company.
(v) Conviction for offences (excluding traffic offences)
None of the Directors standing for re-election have been convicted for offences within the past
10 years.
56
ADALAH DENGAN INI DIBERITAHU bahawa Mesyuarat Agung Tahunan yang ke-empat puluh lapan bagi
Esso Malaysia Berhad akan diadakan di PUSAT LATIHAN, ARAS 18, MENARA EXXONMOBIL, KUALA
LUMPUR CITY CENTER, 50088 KUALA LUMPUR pada hari Rabu, 23 Mei 2007 jam 10:30 pagi dengan tujuan
mengendalikan urusan-urusan berikut:
1.
Menerima dan meluluskan akaun-akaun Syarikat yang telah diaudit bagi tahun berakhir 31 Disember
2006, Lapuran Pengarah serta Lapuran Juruaudit mengenainya.
2.
Meluluskan pengisytiharan dividen akhir sebanyak 12 sen tertakluk kepada cukai pendapatan
Malaysia pada kadar 27% untuk setiap unit stok biasa yang bernilai 50 sen seunit bagi tahun berakhir
31 Disember 2006.
3.
Memilih semula Encik Abu Bakar Siddik, Pengarah yang bersara mengikut Artikel 104 dan Artikel 105
Tataurusan Pertubuhan Syarikat.
4.
Memilih semula Encik Liam M. Mallon, Pengarah yang bersara mengikut Artikel 109 Tataurusan
Pertubuhan Syarikat.
5.
Meluluskan ganjaran Pengarah-pengarah Bebas bukan Eksekutif.
6.
Melantik semula Tetuan PricewaterhouseCoopers sebagai Juruaudit Syarikat dan memberi kuasa
kepada Pengarah-pengarah untuk menetapkan imbuhan mereka.
7.
Menguruskan lain-lain urusan biasa Syarikat.
NOTIS PENUTUPAN BUKU-BUKU
DENGAN INI DIBERITAHU bahawa pemegang-pemegang saham yang berdaftar di buku daftar ahli Syarikat
dan Rekod Pendeposit pada akhir perniagaan, 1 Jun 2007, adalah layak untuk menerima dividen akhir dimana,
jika diluluskan, akan dibayar pada 20 Jun 2007.
Seseorang pendeposit hanya layak menerima dividen berhubung dengan:
a)
Sekuriti-sekuriti yang dipindahkan kepada Akaun Sekuriti Pendeposit sebelum 4:00 petang pada 1 Jun
2007 bagi pemindahan biasa;
b)
Sekuriti-sekuriti yang didepositkan di dalam Akaun Sekuriti Pendeposit sebelum 12:30 petang pada 30
Mei 2007 bagi sekuriti-sekuriti yang dikecualikan dari deposit mandatory; dan
c)
Sekuriti-sekuriti yang dibeli di Bursa Malaysia Securities Berhad berserta hak kelayakan menurut
Peraturan Bursa Malaysia Securities Berhad.
Dengan Perintah Lembaga Pengarah
Puan Sri Junaidah Mohd Said (LS 0008614)
Manoj Devadasan (LS0006885)
Setiausaha-setiausaha Bersama Syarikat
Kuala Lumpur
23 April 2007
Nota:
Seorang ahli Syarikat yang berhak hadir dan mengundi di mesyuarat agung adalah berhak melantik seorang proksi untuk hadir bagi pihak ahli.
Proksi itu tidak semestinya seorang ahli Syarikat dan peruntukan Seksyen 149(1)(b) Akta Syarikat 1965 tidak berkenaan ke atas Syarikat.
Seorang ahli yang juga nomini yang sah seperti yang didefinisikan di bawah Securities Industry (Central Depositories) Act 1991 boleh melantik
sekurang-kurangnya seorang proksi untuk setiap akaun sekuriti yang dipegang dengan unit stok biasa Syarikat, yang dikreditkan di dalam
akaun sekuriti tersebut. Surat perlantikan proksi hendaklah diserahkan di pejabat pendaftar saham iaitu di Tenaga Koperat Sdn. Bhd., Tingkat
20, Plaza Permata (dahulu dikenali sebagai IGB Plaza), Jalan Kampar, off Jalan Tun Razak, 50400 Kuala Lumpur tidak lewat dari 48 jam
sebelum waktu mesyuarat yang telah ditetapkan.
Pada hari Mesyuarat Agung Tahunan:
1. Kaunter pendaftaran (bertempat di Aras Bawah, Menara ExxonMobil) akan dibuka bermula pada jam 9:00 pagi dan ditutup pada jam
10:20 pagi.
2. Jamuan akan disediakan sebelum Mesyuarat Agung Tahunan bertempat di Dewan Makan, Aras 6, Menara ExxonMobil bermula pada jam
9:00 pagi hingga jam 10:20 pagi.
57
PENYATA YANG DILAMPIRKAN BERSAMA NOTIS MESYUARAT AGUNG TAHUNAN
1.
Pengarah-pengarah yang bersedia untuk dipilih semula
(i) Encik Abu Bakar Siddik bersara megikut giliran dan layak untuk dipilih semula menurut Artikel
104 dan Artikel 105 Tataurusan Pertubuhan Syarikat.
(ii) Encik Liam M. Mallon, dilantik semenjak Mesyuarat Agung Tahunan yang lepas, akan
bersara, dan layak untuk dipilih semula menurut Artikel 109 Tataurusan Pertubuhan Syarikat.
2.
Butir-butir lanjut mengenai Pengarah-pengarah yang bersedia untuk dipilih semula
(i)
Profil
Butir-butir lanjut mengenail Pengarah-pengarah yang bersedia untuk dipilih semula tercatat di
mukasurat 12 dan 13 Lapuran Tahunan ini.
(ii) Penyata pemegangan saham
Pengarah-pengarah yang bersedia untuk dipilih semula tidak mempunyai sebarang saham di
dalam Syarikat.
(iii) Hubungan kekeluargaan
Pengarah-pengarah yang bersedia untuk dipilih semula tidak mempunyai hubungan
kekeluargaan sesama Pengarah-pengarah yang lain atau pemegang saham terbesar Syarikat.
(iv) Percanggahan kepentingan
Pengarah-pengarah yang bersedia untuk dipilih semula tidak mempunyai percanggahan
kepentingan di dalam Syarikat.
(v) Kesalahan-kesalahan yang disabitkan (selain daripada kesalahan lalulintas)
Pengarah-pengarah yang bersedia untuk dipilih semula tidak disabitkan kesalahan-kesalahan
dalam tempoh 10 tahun yang lepas.
58
( Company No. 3927-V )
( Incorporated in Malaysia )
PROXY
FORM
CDS account no. of auhorised nominee
I / We _________________________________________________ (name of stockholders per NRIC,in capital letters)
IC No./ID No./Company No.______________________________ (new)________________________________ (old)
of ________________________________________________________________________________(full address)
being a member(s) of the abovenamed Company, hereby appoint __________________________________________
(name of proxy as per NRIC in capital letters) IC No. _______________________(new)_____________________(old)
of ________________________________________________________________________________(full address)
or failing him/her __________________________________________________(name of proxy as per NRIC in capital
letters) IC No. ________________________________(new)___________________________(old) of ____________
_____________________________________________________________________(full address) or failing him/her
the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the 48th Annual General Meeting
of the Company to be held at the Training Centre, Level 18, Menara ExxonMobil, Kuala Lumpur City Centre, 50088
Kuala Lumpur at 10.30 a.m on Wednesday, May 23, 2007 and at each and every adjournment thereof.
My /our proxy is to vote as indicated below:
Agenda Item
For
1. To receive and adopt the Company's Audited Accounts for
the year ended December 31, 2006
Resolution 1
2. To approve the declaration of final dividends
Resolution 2
3. Re-elect Encik Abu Bakar Siddik as Director
Resolution 3
4. Re-elect Mr. Liam M. Mallon as Director
Resolution 4
5. Approve payment of Directors' fees for Independent
Non-Executive Directors
Resolution 5
6. Re-appoint Messrs. PricewaterhouseCoopers as Auditors and
authorise the Directors to determine their remuneration
Resolution 6
Against
(Please indicate with an “X” in the spaces provided how you wish your vote to be cast. If you do not do so, the proxy will vote or
abstain from voting at his / her discretion)
__________________________
Signature / Common Seal
Number of stocks held :
_________________________________
Date :
_________________________________
Notes
The instrument appointing a proxy must be deposited at the Registrars Office at Tenaga Koperat Sdn Bhd, 20th Floor Plaza Permata (formerly
known as IGB Plaza), Jalan Kampar off Jalan Tun Razak, 50400 Kuala Lumpur, not less than forty eight (48) hours before the time fixed for the
meeting.
THE REST OF THE NOTES ARE SUBJECT TO COMPANY'S MEMORANDUM AND ARTICLES OF ASSOCIATION
Fold this flap for sealing
Then fold here
AFFIX
STAMP
The Share Registrars
TENAGA KOPERAT SDN. BHD. (118401-V)
20th Floor, Plaza Permata (Formerly known as IGB Plaza)
Jalan Kampar, Off Jalan Tun Razak,
50400 Kuala Lumpur
P.O. Box 12216, 50770 Kuala Lumpur
1st fold here
(Company No.3927-V)
(Incorporated in Malaysia)
An ExxonMobil Subsidiary in Malaysia

2006 Annual Report

Transcription

Similar documents

Citrawarna Malaysia

Brief - Juwita Suwito

January 2014 Newsletter - Fresno Police Department Credit Union

Koperasi Kastam Diraja Malaysia Berhad (KOSKAM)

The Soft Skills of Nursing

DPS - Cyberjaya University College of Medical Sciences

Flag Off Ceremony, Malaysia, 10th September 2009

Danmarks Eksportråd

company profile

Teenage Issues and Challenges