Shell Refining Company
(Federation of Malaya) Berhad (3926-U) (Incorporated in Malaysia)
07
annual report
A reliability led strategy to sustained
operational excellence means that we expect
to achieve our desired financial and operational
performance by having first quartile reliability
over the long term.
Contents
2
Vision, Mission & Objective
38
Corporate Social Responsibility
3
Corporate Information
40
4
Notice of the 49th Annual
General Meeting
Our Commitment
to Sustainable Development
52
Highlights of the Year
Statement Accompanying Notice
of the 49th Annual General Meeting
54
Corporate Governance
Shell General Business Principles
56
Audit Committee Report
12
Awards & Recognition
59
Corporate Governance Statement
66
Statement on Internal Control
14
Board of Directors
& Management Team
69
Financial Statements
16
Board of Directors
105
Company Properties
18
Directors’ Profile
110
Analysis of Shareholdings
22
Management Team
24
Performance Review
Bahasa Malaysia version
26
Financial Calendar
CD Rom
27
Performance at a Glance
28
Shell in Malaysia
30
Chairman’s Statement
7
8
Proxy Form
2
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Vision
To be the Top Performing
and Most Admired
Refinery in Asia
Mission
Objective
To continuously deliver Shareholder Value by:
We are committed to deliver sustainable
excellence in business performance
by focusing on the following:
• Manufacturing and supplying oil
products and services that satisfy
the needs of our customers
• Benefit our shareholders
• Constantly achieving operational excellence
• Realise the potential of our people
• Conducting our business in a safe,
environmentally sustainable and
economically optimum manner
• Meet our customer requirements
• Employing a diverse, innovative and results
-oriented team motivated to deliver excellence
• Maximise refinery margins
• Safeguard asset integrity
• Deliver structural cost reductions
• Sustain a robust management system
• Deliver continuous sustainable Health,
Safety, Security and Environmental excellence
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
3
Corporate Information
BOARD OF DIRECTORS
C O M PA N Y S E C R E TA R Y
REGISTERED ADDRESS
Chairman,
Pn. Rodziah binti Zainudin
Bangunan Shell Malaysia
Non-Independent and Non-Executive Director
(LS 0008034)
Changkat Semantan
Damansara Heights
Y.Bhg. Dato’ Saw Choo Boon
DSNS
Senior Independent and Non-Executive Director,
Member of Audit Committee
Y.Bhg. Tan Sri Saw Huat Lye
PSM, JMN, PMP
AUDITORS
Messrs PricewaterhouseCoopers
bin YM Raja Bahrin
Independent and Non-Executive Director,
Chairman of Audit Committee
Y.Bhg. Dato’ Jaffar Indot
DSNS, SMS
Tel No. : 03-20959144
Fax No. : 03-20912957
(AF 1146)
1 Sentral, Jalan Travers
Kuala Lumpur Sentral, P.O.Box 10192
BUSINESS ADDRESS
50706 Kuala Lumpur.
Batu 1, Jalan Pantai
71000 Port Dickson
Managing Director and Executive Director
YM Raja Ahmad Murad
50490 Kuala Lumpur.
SHARE REGISTRAR
Symphony Share Registrars Sdn Bhd
Negeri Sembilan.
Tel No. : 06-6471311
Fax No. : 06-6474622
(378993-D)
Level 26, Menara Multi-Purpose
Capital Square, No. 8
AGM HELP DESK
Jalan Munshi Abdullah
Mr. Hardip Singh
50100 Kuala Lumpur.
Tel No. : 03-20912344
Independent and Non-Executive Director,
Tel No. : 603-27212222
Fax No. : 03-20912099
Member of Audit Committee
Fax No. : 603-27212530
Email
Y.Bhg. Dato’ Seri Talaat bin Haji Husain
603-27212531
SPCM, DPCM, DPMP, JSD, PJK, PJM
STOCK EXCHANGE LISTING
Non-Independent and Non-Executive Director
Y.Bhg. Dato’ Mohzani bin Abdul Wahab
DPSJ, SMP, ASDK
Non-Independent and Non-Executive Director
Mr. Mark Owen Stevens
Non-Independent and Non-Executive Director,
Member of Audit Committee
Mr. Thomas Michael Taylor
Main Board of Bursa Malaysia
Securities Berhad
: Hardip.Singh@shell.com
4
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Notice of the 49th Annual General Meeting
NOTICE IS HEREBY GIVEN that the Forty Ninth Annual General Meeting
of Shell Refining Company (Federation of Malaya) Berhad (the “Company”)
will be held on Thursday, 15 May 2008, at 11.00 a.m. at Sime Darby
Convention Centre, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur
to transact the following business:
1.
To receive the Audited Financial Statements of the Company for the financial year ended 31 December 2007 and the
Reports of the Directors and Auditors thereon.
2.
To approve the declaration of a final dividend of Thirty Sen (RM0.30) less Malaysian Income Tax at 26% per unit of
ordinary share of RM1.00 each for the year ended 31 December 2007 as recommended by the Directors.
3.
Resolution 1
To re-elect the following directors who are retiring in accordance with Article 81(3) of the Company’s Articles of
Association and being eligible, offer themselves for re-election:
4.
a) Y. Bhg. Dato’ Mohzani bin Abdul Wahab
Resolution 2
b) YM Raja Ahmad Murad bin YM Raja Bahrin
Resolution 3
c) Mr. Thomas Michael Taylor
Resolution 4
To re-elect the following director who is retiring in accordance with Article 81(9) of the Company’s Articles of Association
and being eligible, offers himself for re-election:
Y. Bhg. Dato’ Seri Talaat bin Haji Husain
5.
Resolution 5
To consider and if thought fit, pass the following ordinary resolution pursuant to Section 129 of the Companies
Act 1965:
“That Y.Bhg. Dato’ Jaffar Indot, a Director who retires in accordance with section 129 of the Companies Act, 1965,
be and is hereby re-appointed as a Director of the Company to hold office until the conclusion of the next Annual
General Meeting.”
6.
To appoint Messrs. PricewaterhouseCoopers as auditors and to authorise the Directors to fix the auditors’
remuneration.
7.
Resolution 6
Resolution 7
As SPECIAL BUSINESS, to consider and, if thought fit, pass the following ordinary resolution:Proposed Renewal of the Existing Shareholders’ Mandate and Proposed New Shareholders’ Mandate for Recurrent
Related Party Transactions of a Revenue or Trading Nature
Resolution 8
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
5
NOTICE OF THE 49TH ANNUAL GENERAL MEETING
“THAT subject to the Companies Act, 1965, the Memorandum and Articles of Association of the Company and the Listing
Requirements of Bursa Malaysia Securities Berhad,
(a) approval be and is hereby given for the Renewal of the Existing Shareholders’ Mandate for the Company to enter into and give
effect to the category of the recurrent arrangements or transactions of a revenue or trading nature from time to time with the
Related Parties, as specified in Section 2.2 of the Circular to Shareholders dated 11 April 2008; and
(b) a New Shareholders’ Mandate be and is hereby granted for the Company to enter into additional recurrent related party
transactions of a revenue or trading nature from time to time with the Related Party, namely as specified in Section 2.2 of the
Circular to Shareholders dated 11 April 2008, provided that such transactions are:(i) recurrent transactions of a revenue or trading nature;
(ii) necessary for the Company’s day-to-day operations;
(iii) carried out in the ordinary course of business on normal commercial terms which are not more favourable to the Related
Parties than those generally available to the public; and
(iv) not to the detriment of minority shareholders;
(the “Mandate”);
That such authority shall commence upon the passing of this resolution and shall continue to be in force until:(i) the conclusion of the next Annual General Meeting of the Company following the Annual General Meeting at which such
mandate was passed, at which time it will lapse, unless the authority is renewed by a resolution passed at the meeting;
(ii) the expiration of the period within which the next Annual General Meeting is required to be held pursuant to Section 143(1)
of the Companies Act, 1965 but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the
Companies Act, 1965; or
(iii) revoked or varied by resolution passed by the shareholders in a general meeting;
whichever is the earlier;
And further that the Directors of the Company be authorised to complete and do all such acts and things (including executing all
such documents as may be required), as they may consider expedient or necessary to give effect to the Mandate”.
BY ORDER OF THE BOARD
Pn. Rodziah binti Zainudin (LS 0008034)
Company Secretary
Kuala Lumpur
11 April 2008
6
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
NOTICE OF THE 49TH ANNUAL GENERAL MEETING
NOTICE OF DIVIDEND ENTITLEMENT
NOTICE is hereby given that a final dividend of Thirty Sen (RM0.30) gross per unit of share less 26% Malaysian Income Tax in respect of the
financial year ended 31 December 2007, if approved by the shareholders, will be paid on 20 June 2008 to Shareholders registered in the Record
of Depositors or Register of Members at the close of business on 6 June 2008.
A Depositor shall qualify for entitlement only in respect of:
a) Shares transferred into the Depositor’s Securities Account before 4.00 pm on 6 June 2008 in respect of share transfers; and
b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad.
N O T E S R E L AT I N G T O P R O X Y:
NOTES TO THE AGENDA
1.
1.
A member of the Company who is entitled to attend and vote at the meeting
may appoint a maximum of two (2) proxies to attend and, on a poll, vote on the
member’s behalf.
2.
A proxy need not be a member of the Company.
3.
The instrument appointing a proxy shall be in writing and signed by the appointor
Pursuant to Sections 169(1) and 174(1) of the Companies Act, 1965 and Article
124 of the Company’s Articles of Association.
2.
Pursuant to Article 112 of the Company’s Articles of Association, the Company
has declared and paid interim dividend and special interim dividend of Forty Sen
(RM0.40) per unit of ordinary share and the Directors of the Company have
recommended a final dividend of Thirty Sen (RM0.30) per unit of ordinary share.
or by his attorney who is authorised in writing. In the case of a corporation, the
This amounts to a total dividend of Seventy Sen (RM0.70) per unit of ordinary
instrument appointing a proxy or proxies must be made under seal or signed by
share for the year 2007. (All amounts referred to are before deduction of income
an officer or an attorney duly authorised.
tax).
4.
The signature to the instrument appointing a proxy or proxies executed outside
Malaysia must be attested by a solicitor, notary public, consul or magistrate.
3.
Re-election is pursuant to Article 81(3) of the Company’s Articles of Association,
which requires the rotation of one-third of the Directors to retire from office at
5.
The instrument appointing a proxy and the power of attorney or other authority
the first Annual General Meeting and at the Annual General Meeting in every
(if any) under which it is signed or notarised must be deposited at the registered
subsequent year provided always that all Directors shall retire from office once at
office of the Company, Company Secretary’s Office, Bangunan Shell Malaysia,
least in each three (3) years, but shall be eligible for re-election.
Changkat Semantan, Damansara Heights, 50490 Kuala Lumpur, not less than
forty eight (48) hours before the time for holding the meeting or adjourned
4.
Pursuant to Article 81(9) of the Company’s Articles of Association, which requires
Directors appointed by the Board to fill casual vacancies during the year to be
meeting.
confirmed by the shareholders in the next following Annual General Meeting.
6.
Only an original proxy form deposited at the registered office of the Company, will
entitle the proxy holder to attend and vote at the meeting. Photocopies of proxy
5.
form will not be accepted for the purposes of the meeting. Additional original
proxy forms are available to members upon request in writing to the Company.
7.
each proxy.
8.
6.
Any nomination of a Director must be made in accordance with the Articles of
Association of the Company.
Pursuant to Section 172(2) of the Companies Act, 1965 and Article 127 of the
Company’s Articles of Association.
Where a member appoints two (2) proxies, the appointment shall be invalid unless
such member specifies the percentage of his/her holding to be represented by
Section 129(6) of the Companies Act 1965 requires Directors above seventy (70)
years of age to be re-appointed by the shareholders every year.
7.
Explanatory notes to Special Business:On 11 April 2008, the Board announced to Bursa Malaysia Securities Berhad that
the Company would like to seek approval of its shareholders for the Proposed
Renewal of the Existing Shareholders’ Mandate and Proposed New Shareholders’
Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature.
The Existing Shareholders’ Mandate, obtained on 8 May 2007, will expire at the
conclusion of the forthcoming Forty Ninth Annual General Meeting to be held on
15 May 2008. For further information, please refer to the Circular to Shareholders
dated 11 April 2008. All defined terms will have the same meaning as defined in
the Circular to Shareholders dated 11 April 2008.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
7
Statement Accompanying Notice of the
49th Annual General Meeting
pursuant to Para 8.28 (2) of the Listing Requirements of Bursa Malaysia Securities Berhad
1. Directors who are standing for re-election at the Forty Ninth Annual
5. Details of Attendance of Directors at Board meetings.
General Meeting of the Company pursuant to Article 81(3) of the
Company’s Articles of Association are:(a) Y.Bhg. Dato’ Mohzani bin Abdul Wahab (Refer to page 20 of
Directors’ profile)
Five Board of Directors Meetings were held during the financial year
ended 31 December 2007. Details of attendance of Directors at the
Board Meetings are as follows:Name of Directors
(b) YM Raja Ahmad Murad bin YM Raja Bahrin (Refer to page 19
No. of meetings
attended
of Directors’ profile)
(c) Mr. Thomas Michael Taylor (Refer to page 21 of Directors’ profile)
2. Director who is standing for re-election at the Forty Ninth Annual
General Meeting of the Company pursuant to Article 81(9) of the
(a) Y.Bhg. Dato’ Saw Choo Boon
5 out of 5 meetings
(b) Y.Bhg. Tan Sri Saw Huat Lye
5 out of 5 meetings
(c) Y.Bhg. Dato’ Jaffar Indot
5 out of 5 meetings
(d) Y.Bhg. Dato’ Seri Talaat bin Haji Husain 2 out of 2 meetings
(Appointed on 1 June 2007)
Company’s Articles of Association is:Y. Bhg. Dato’ Seri Talaat bin Haji Husain (Refer to page 20 of
(e) YM Raja Ahmad Murad
5 out of 5 meetings
bin YM Raja Bahrin
Directors’ profile)
(f)
Y.Bhg. Dato’ Mohzani
5 out of 5 meetings
bin Abdul Wahab
3. Director who is standing for re-election at the Forty Ninth Annual
General Meeting of the Company pursuant to Section 129 of the
(g) Mr. Mark Owen Stevens
Companies Act 1965 is:-
4 out of 5 meetings
(h) Mr. Thomas Michael Taylor
4 out of 5 meetings
Y.Bhg. Dato’ Jaffar Indot (Refer to page 19 of Directors’ profile)
(i)
3 out of 3 meetings
Y.Bhg. Dato’ (Dr) Yahya bin Ismail
(Resigned on 8 May 2007)
4. The place, date and hour of the forthcoming Forty Ninth Annual
General Meeting:
(i) Place: Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1,
60000 Kuala Lumpur, Malaysia.
(ii) Date: Thursday, 15 May 2008.
(iii) Hour: 11.00 am.
6. The 48th Annual General Meeting of the Company for the financial
year ended 31 December 2006 was held at Sime Darby Convention
Centre, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur, Malaysia.
The date, time and purpose of the Annual General Meeting held
was as follows:Date
Time
Tuesday,
11.00 am
8 May 2007
Purpose
To pass the Ordinary Resolutions
including Special Business for the
Proposed
Renewal
of
Existing
Shareholders’ Mandate and Proposed
New
Shareholders’
Mandate
for
Recurrent Related Party Transactions
of a Revenue or Trading Nature.
8
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
SHELL
General Business Principles
We believe that oil and gas will be integral to the global energy needs
for economic development for many decades to come. Our role is to ensure
that we extract and deliver them profitably and in environmentally and
socially responsible ways.
INTRODUCTION
O U R VA L U E S
The Shell General Business Principles govern how each of the Shell
Shell employees share a set of core values - honesty, integrity and respect
companies which make up the Shell Group* conducts its affairs.
for people. We also firmly believe in the fundamental importance of
trust, openness, teamwork and professionalism, and pride in what
The objectives of the Shell Group are to engage efficiently, responsibly
we do.
and profitably in oil, gas, chemicals and other selected businesses and
to participate in the search for and development of other sources of
energy to meet evolving customer needs and the world’s growing
demand for energy.
S U S TA I N A B L E D E V E L O P M E N T
As part of the Business Principles, we commit to contribute to sustainable
development. This requires balancing short and long term interests,
We believe that oil and gas will be integral to the global energy needs for
integrating economic, environmental and social considerations into
economic development for many decades to come. Our role is to ensure
business decision-making.
that we extract and deliver them profitably and in environmentally and
socially responsible ways.
RESPONSIBILITIES
We seek a high standard of performance, maintaining a strong long-
Shell companies recognise five areas of responsibility. It is the duty of
term and growing position in the competitive environments in which
management continuously to assess the priorities and discharge these
we choose to operate.
inseparable responsibilities on the basis of that assessment.
We aim to work closely with our customers, partners and policy-makers
a. To shareholders
to advance more efficient and sustainable use of energy and natural
To protect shareholders’ investment, and provide a long-term return
resources.
competitive with those of other leading companies in the industry.
b. To customers
*Royal Dutch Shell plc and the companies in which it directly or indirectly
To win and maintain customers by developing and providing
owns investments are separate and distinct entities. But in this publication, the
products and services which offer value in terms of price, quality,
collective expressions ‘Shell’ and ‘Shell Group’ may be used for convenience
safety and environmental impact, which are supported by the
where reference is made in general to those companies. Likewise, the words
requisite technological, environmental and commercial expertise.
‘we’, ‘us’, ‘our’, and ‘ourselves’ are used in some places to refer to the companies
of the Shell Group in general. These expressions are also used where no useful
purpose is served by identifying any particular company or companies.
c. To employees
To respect the human rights of our employees and to provide them
with good and safe working conditions, and competitive terms and
conditions of employment.
To promote the development and best use of the talents of our
employees; to create an inclusive work environment where every
employee has an equal opportunity to develop his or her skills and
talents.
Principle 1: Economics
Long-term profitability is essential to achieving our business goals and
to our continued growth. It is a measure both of efficiency and of the
value that customers place on Shell products and services. It supplies
To encourage the involvement of employees in the planning and
the necessary corporate resources for the continuing investment that
direction of their work; to provide them with channels to report
is required to develop and produce future energy supplies to meet
concerns.
customer needs. Without profits and a strong financial foundation, it
would not be possible to fulfill our responsibilities.
We recognise that commercial success depends on the full
commitment of all employees
Criteria for investment and divestment decisions include sustainable
development considerations (economic, social and environmental) and
d. To those with whom we do business
an appraisal of the risks of the investment.
To seek mutually beneficial relationships with contractors, suppliers
and in joint ventures and to promote the application of these
Principle 2: Competition
Shell General Business Principles or equivalent principles in such
Shell companies support free enterprise. We seek to compete fairly and
relationships. The ability to promote these principles effectively will
ethically and within the framework of applicable competition laws; we
be an important factor in the decision to enter into or remain in
will not prevent others from competing freely with us.
such relationships.
e. To society
Principle 3: Business Integrity
To conduct business as responsible corporate members of society,
Shell companies insist on honesty, integrity and fairness in all aspects of
to comply with applicable laws and regulations, to support
our business and expect the same in our relationships with all those with
fundamental human rights in line with the legitimate role of
whom we do business. The direct or indirect offer, payment, soliciting or
business, and to give proper regard to health, safety, security and
acceptance of bribes in any form is unacceptable. Facilitation payments
the environment.
are also bribes and should not be made. Employees must avoid conflicts
of interest between their private activities and their part in the conduct
of company business. Employees must also declare to their employing
company potential conflicts of interest. All business transactions on
behalf of a Shell company must be reflected accurately and fairly in the
accounts of the company in accordance with established procedures
and are subject to audit and disclosure.
10
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Our shared core values of honesty,
integrity and respect for people,
underpin all the work we do
and are the foundation of our
Business Principles.
Principle 4: Political Activities
a. Of companies
Shell companies act in a socially responsible manner within the laws
of the countries in which we operate in pursuit of our legitimate
commercial objectives.
Shell companies do not make payments to political parties,
organizations or their representatives. Shell companies do not take
part in party politics. However, when dealing with governments,
Shell companies have the right and the responsibility to make our
position known on any matters, which affect us, our employees,
our customers, our shareholders or local communities in a manner,
which is in accordance with our values and the Business Principles.
b. Of employees
Where individuals wish to engage in activities in the community,
including standing for election to public office, they will be given
the opportunity to do so where this is appropriate in the light of
local circumstances.
Principle 5: Health, Safety, Security
And The Environment
Shell companies have a systematic approach to health, safety, security
and environmental management in order to achieve continuous
performance improvement.
To this end, Shell companies manage these matters as critical business
activities, set standards and targets for improvement, and measure,
appraise and report performance externally.
We continually look for ways to reduce the environmental impact of
our operations, products and services.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
11
SHELL GENERAL BUSINESS PRINCIPLES
Principle 6: Local Communities
LIVING BY OUR PRINCIPLES
Shell companies aim to be good neighbours by continuously improving
Our shared core values of honesty, integrity and respect for people,
the ways in which we contribute directly or indirectly to the general
underpin all the work we do and are the foundation of our Business
well being of the communities within which we work.
Principles.
We manage the social impacts of our business activities carefully and
The Business Principles apply to all transactions, large or small, and drive
work with others to enhance the benefits to local communities, and to
the behaviour expected of every employee in every Shell Company in
mitigate any negative impacts from our activities.
the conduct of its business at all times.
In addition, Shell companies take a constructive interest in societal
We are judged by how we act. Our reputation will be upheld if we act
matters, directly or indirectly related to our business.
in accordance with the law and the Business Principles. We encourage
our business partners to live by them or by equivalent principles.
Principle 7: Communication And Engagement
We encourage our employees to demonstrate leadership, accountability
Shell companies recognise that regular dialogue and engagement
and teamwork, and through these behaviours, to contribute to the
with our stakeholders is essential. We are committed to reporting of
overall success of Shell.
our performance by providing full relevant information to legitimately
interested parties, subject to any overriding considerations of business
It is the responsibility of management to lead by example, to ensure that
confidentiality.
all employees are aware of these principles, and behave in accordance
with the spirit as well as with the letter of this statement.
In our interactions with employees, business partners and local
communities, we seek to listen and respond to them honestly and
The application of these principles is underpinned by a comprehensive
responsibly.
set of assurance procedures, which are designed to make sure that
our employees understand the principles and confirm that they act in
Principle 8: Compliance
We comply with all applicable laws and regulations of the countries in
which we operate.
accordance with them.
As part of the assurance system, it is also the responsibility of
management to provide employees with safe and confidential channels
to raise concerns and report instances of non-compliance. In turn, it is
the responsibility of Shell employees to report suspected breaches of
the Business Principles to Shell.
The Business Principles have for many years been fundamental to how
we conduct our business and living by them is crucial to our continued
success.
Jeroen van der Veer
Chief Executive
Royal Dutch Shell plc
August 2005
12
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Awards & Recognition
Your Company remained at the forefront of quality,
accounting practices, occupational safety and health
and environmental management, winning awards in these areas,
not only from within the Shell Group but also from governmental
and non-governmental agencies in Malaysia.
EXTERNAL AWARDS
•
MSOSH Grand Award 2006
We are proud to report that our commitment in occupational safety
The highest award presented to the Company by the Malaysian
and health, and environmental management standard has won us the
Society for Occupational Safety and Health (MSOSH) for
following awards:
demonstrating that Occupational Safety and Health excellence is
consistently applied in our business activities. These achievements
•
Laboratory Excellence Award 2007
are the result of the sustained effort and commitment of all Shell
Awarded to your Company’s Laboratory by the Malaysian Institute
staff, our business partners and our contractors.
of Chemistry for demonstrating quality, safety, technical competency
and a high standard of analytical services and integrity. This is also
the sixth consecutive year that we have clinched this award.
•
Prime Minister’s Hibiscus Award 2006/2007,
Notable Achievement in Environmental Performance
First launched in 1996, the Prime Minister’s Hibiscus Award is
•
ACCA Malaysia Environmental & Social Reporting Awards
the premier private sector environmental award for business and
(MESRA) 2006
industry in Malaysia. The Award, previously known as “Hibiscus
Awarded to your Company for the Best Environmental Reporting
Award”, was upgraded to the Prime Minister’s Hibiscus Award,
in an Annual Report to recognise excellence in environmental,
following the approval of the Honorary Prime Minister of Malaysia
social and sustainability reporting. The MESRA award aims to
in June 1998.
identify and reward innovative attempts to communicate corporate
performance, raise awareness in corporate transparency issues
In 2007, your Company was awarded the Notable Achievement
and encourage the uptake of environmental and social reporting.
for the third consecutive time for environmental performance in
Your company has won this award for the second consecutive time.
2005/2006.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
•
13
Prime Minister’s Hibiscus Award 2006/2007,
•
ISO 9001
Negeri Sembilan State Award
Your Company successfully upgraded to ISSO 9001:2000 by SIRIM
For its continued efforts in the area of good environmental practices,
in July 2003 with an expanded scope to include Marine services
your Company was also awarded the Negeri Sembilan State Award
and a recertification audit was successfully conducted in 2007.
that was introduced for the first time in 2007.
•
•
ISO 17025
Malaysian Business CSR 2007 Award (Environment)
Your Company’s laboratory migrated to the new ISO 17025 standard
This inaugural award given by Malaysia’s oldest business publication
in 2001 and recertification audit was successfully conducted in
was presented to your Company for its continued compliance with
2007. This is the highest quality award granted in recognition of
environmental regulations and good environmental management.
the technical competence of a laboratory and with a sound quality
management system in place.
E X T E R N A L C E R T I F I C AT I O N S
As a reflection of sustained efforts, your Company has received
•
Your company achieved OHSAS certification in 2001 and a
certifications from SIRIM QAS International Sdn. Bhd. and Department
recertification audit was successfully conducted in 2007.
of Standards Malaysia.
•
ISO 14001
Your Company achieved ISO14001 certification in September 2000
and a re-certification audit was successfully conducted in 2006.
This international standard sets the guidelines for environmental
management.
OHSAS 18001
•
ISPS
Your Company achieved compliance to International Ship and Port
Facility Security (ISPS) in 2004.
14
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
In order to deliver and grow,
your Company depends greatly
on leadership at every level.
l adership
Board of Directors
& Management Team
16 Board of Directors
18 Directors’ Profile
22 Management Team
16
SEATED, FROM LEFT:
Y.Bhg. Tan Sri Saw Huat Lye
Senior Independent and Non-Executive Director,
Member of Audit Committee
Y.Bhg. Dato’ Jaffar Indot
Independent and Non-Executive Director,
Chairman of Audit Committee
Y.Bhg. Dato’ Saw Choo Boon
Chairman,
Non-Independent and Non-Executive Director
STANDING, FROM LEFT:
Mr. Mark Owen Stevens
Non-Independent and Non-Executive Director
Y.Bhg. Dato’ Mohzani bin Abdul Wahab
Non-Independent and Non-Executive Director
YM Raja Ahmad Murad bin YM Raja Bahrin
Managing Director and Executive Director
Y.Bhg. Dato’ Seri Talaat bin Haji Husain
Independent and Non-Executive Director,
Member of Audit Committee
Mr. Thomas Michael Taylor
Non-Independent and Non-Executive Director
Member of Audit Committee
Rodziah binti Zainudin
Company Secretary
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
board of
17
directors
18
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Directors’ Profile
Y.BHG. DATO’ SAW CHOO BOON
Y.BHG. TAN SRI SAW HUAT LYE
DSNS
PSM, JMN, PMP
Chairman,
Senior Independent and Non-Executive Director,
Non-Independent and Non-Executive Director
Member of Audit Committee
Dato’ Saw Choo Boon, Malaysian, aged 61, is the Chairman of Shell
Malaysia, a post that he has held since 1 March 2006. He was appointed
a Director on 23 February 2006 and Chairman of your Company on 18
May 2006.
Tan Sri Saw Huat Lye, Malaysian, aged 73, has been a Director of your
Company since 6 June 1984.
Dato’ Saw Choo Boon holds a B.Sc. Hons (Chemistry) from University
of Malaya. He joined Shell in 1970 as a Refinery Technologist in Shell
Refining Company (Federation of Malaya) Berhad. He then served
in various capacities in manufacturing, supply, trading and planning
in Malaysia, Singapore and Netherlands. In 1996, he was appointed
Managing Director of Shell MDS (Malaysia) Sendirian Berhad. In 19981999, he assumed the positions of Managing Director for Oil Products
(Downstream) Shell Malaysia and Managing Director of Shell Refining
Company (Federation of Malaya) Berhad. In 1999, with the globalisation
of the Shell Oil Products business, he was appointed the Vice-President
of the commercial business in the Asia-Pacific region, and in 2004 he
became the President of Shell Oil Products East. Since 2006 he has
been managing the global marine business and special projects.
Currently, Dato’ Saw Choo Boon chairs the Board of 15 Shell Malaysia
companies: Shell Malaysia Limited, Shell MDS (Malaysia) Sendirian
Berhad, Shell Timur Sdn Bhd, Shell Malaysia Trading Sendirian Berhad,
Shell Information Technology International Sdn Bhd, Shell Gas (LPG)
Malaysia West Sdn Bhd, Sarawak Shell Berhad, Shell Sabah Selatan
Sdn Bhd, Sabah Shell Petroleum Company Ltd, Shell Exploration &
Production Malaysia B.V., Shell Petroleum Malaysia Ltd, Shell Treasury
Malaysia (L) Ltd, Shell New Ventures Malaysia Sdn Bhd (formerly known
as Conoco Jet (Malaysia) Sdn Bhd), Provista Ventures Sdn Bhd (formerly
known as Projet Malaysia Sdn Bhd) and that of your Company.
Dato’ Saw Choo Boon is also a director of Malaysia LNG Dua Sdn Bhd,
Shell Pakistan Limited and Shell Oman Marketing Company.
Tan Sri Saw Huat Lye is an Economics graduate of the University of
Malaya (Singapore) and has attended the Advanced Management
Programme at the Harvard Business School, Boston, USA. He began his
career with the Malayan Home and Foreign Service in 1958 and served
the Malaysian Government in various capacities as Assistant District
Officer in Kinta South, Assistant State Secretary in Perak, Chairman
of the Town Council in Taiping, Assistant Federal Commissioner of
Lands and Deputy Secretary-General in the Ministry of Transport. After
his retirement from the Civil Service in 1971, he was invited by the
Government to set up Malaysian Airline System (MAS) and was its first
General Manager and Chief Executive, commencing in 1971. He retired
from MAS in 1982. He has sat on the Boards of various companies,
including Malaysia-Singapore Airlines, Malaysian Helicopter Services
Bhd, Naluri Corporation Berhad and Development and Commercial
Bank Bhd.
Tan Sri Saw Huat Lye is currently Chairman of Guinness Anchor Bhd
and a director of Edaran Otomobil Nasional Bhd including non-listed
Company, Huay Ferng Sdn. Bhd. He is also a Fellow of the Chartered
Institute of Transport (London) since 1975.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
19
DIRECTORS’ PROFILE
YM RAJA AHMAD MURAD BIN YM RAJA BAHRIN
Y.BHG. DATO’ JAFFAR INDOT
Managing Director and Executive Director
DSNS, SMS
Independent and Non-Executive Director,
Chairman of Audit Committee
Raja Ahmad Murad bin Raja Bahrin, Malaysian, aged 48 years, is the
Managing Director of your Company. He was appointed as Executive
Director of your Company on 14 April 2004 and subsequently as
Managing Director on 1 July 2004.
Dato’ Jaffar Indot, Malaysian, aged 73, has been a Director of your
Company since 10 June 1981.
Dato’ Jaffar Indot joined Shell in 1956 and retired in 1989 after 33 years
of service. During this time, he worked for Shell in Japan and London,
Raja Ahmad Murad has 24 years experience in the oil and gas business.
He graduated from University of Liverpool with a Bachelor of Engineering
(Mechanical) degree and also holds a Diploma in Technology from
Brighton Technical College, both from United Kingdom. He joined
Shell in 1989 as a Facilities Engineer with Sarawak Shell Berhad.
He has held various positions in engineering (project, front-end, design
and construction), human resources, maintenance management and
operations management. Prior to his appointment in your Company, he
had worked with Sabah Shell Petroleum Company Limited and was also
assigned to Shell Eastern Petroleum Pte Ltd, Pulau Bukom in October
2003 for a development assignment in Shell’s manufacturing division.
During his 19 years in Shell, Raja Ahmad Murad has worked in Sarawak
Shell Berhad, Sabah Shell Petroleum Company Limited and Nederlandse
Aardolie Mij BV (The Netherlands). Currently, he is also the Managing
Director of Lutong Refining Company Sdn Bhd and serves as a Trustee
of Kolej Tuanku Jaafar. Prior to joining Shell, he also worked with
Tenaga Nasional Berhad and Esso Production Malaysia Inc.
where he served in various capacities in international oil trading, business
development and public affairs. In 1980 he returned to Malaysia as
Executive Director and Director of Public Affairs for Shell Malaysia, and
in 1983 was appointed Managing Director of Shell Refining Company
(Federation of Malaya) Berhad, Shell Malaysia Trading Sendirian Berhad
and Shell Timur Sdn Bhd. He was the Chairman of Shell Timur Sdn
Bhd from August 1989 to December 1997. He attended the Harvard
Business School International Senior Managers’ Programme, Vevey,
Switzerland in 1983.
Dato’ Jaffar Indot is a director on the Boards of Guinness Anchor
Bhd, Sycal Ventures Bhd, M3nergy Berhad, Melewar Industrial Group
Berhad and FSBM Holdings Bhd. He is also a director of several private
companies involved in HP Financing, Fire Protection and Training.
20
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
DIRECTORS’ PROFILE
Y.BHG. DATO’ SERI TALAAT BIN HAJI HUSAIN
Y.BHG. DATO’ MOHZANI BIN ABDUL WAHAB
SPCM, DPCM, DPMP, JSD, PJK, PJM
DPSJ, SMP, ASDK
Independent and Non-Executive Director,
Non-Independent and Non-Executive Director
Member of Audit Committee
Dato’ Seri Talaat bin Haji Husain, Malaysian, aged 57, was appointed a
Director of Shell Refining Company since 1 June 2007.
Dato’ Seri Talaat obtained his early education at the Malay College
Kuala Kangsar. He holds a Bachelor of Social Sciences (Political Science)
from University of Science Malaysia, a Masters in Professional Studies
(International Planning) from Cornell University, USA and attended
Executive Programs at London Business School and Harvard Business
School. He joined the Malaysian Civil Service in 1973 and started as an
Assistant State Secretary in Penang, and later holding positions in the
Prime Minister’s Department, National Institute for Public Administration
(INTAN), the National Palace and the Ministry of Education. He has also
served as Mayor of Ipoh City before becoming the Secretary General
of the Ministry of Youth and Sports. Prior to his retirement he held
Dato’ Mohzani bin Abdul Wahab, Malaysian, aged 54 years, was
appointed a Director of your Company on 1 August 2001. He is the
Managing Director for Shell Malaysia Trading Sendirian Berhad since
1 November 2001 and on 15 January 2005, he was appointed as the
Managing Director of Shell Timur Sdn. Bhd. He also holds the position
of Shell’s Cluster Retail General Manager for Malaysia, Singapore,
Brunei and Hong Kong. In Malaysia, he is also the Shell Local Senior
Downstream Representative.
A graduate in Economics, majoring in Applied Economics from the
University of Malaya, Kuala Lumpur, Dato’ Mohzani bin Abdul Wahab
joined Shell in 1976. He has held various positions in supply, distribution,
brand & communications, marketing and retail management in Shell’s
Downstream sector, including an assignment in the Philippines. He was
appointed General Manager of Retail in Malaysia in 2000.
the position of Secretary General of the Ministry of Domestic Trade
and Consumer Affairs. Whilst in the Government Service he held the
positions of Chairman of Companies Commission of Malaysia, Board
Member of Malaysian Intellectual Property Corporation, Malaysian
Communication and Multi-Media Corporation and Sepang International
Circuit.
Dato’ Seri Talaat is an Independent Director of Silver Bird Group Berhad
and Konsortium Logistik Berhad besides holding position of Chairman
of several private limited companies. He is also currently a Board
Member of Outward Bound Trust of Malaysia.
Currently, Dato’ Mohzani bin Abdul Wahab sits on the Board of 15
companies: Shell Timur Sdn. Bhd., Shell Malaysia Trading Sendirian
Berhad, Superkad Services Sdn. Bhd., Usaha Rawang Sdn. Bhd.,
Shell Malaysia Limited, Brunei Shell Marketing Company Sdn. Bhd.,
P S Pipeline Sdn. Bhd., P S Terminal Sdn. Bhd., Pertini Vista Sdn. Bhd.,
Shell Gas (LPG) Malaysia West Sdn. Bhd., Shell Gas (LPG) Malaysia East
Sdn. Bhd., Bonuskad Loyalty Sdn. Bhd., Shell New Ventures Malaysia
Sdn. Bhd. (formerly known as Conoco Jet (Malaysia) Sdn. Bhd.),
Provista Ventures Sdn. Bhd. (formerly known as Projet Malaysia Sdn.
Bhd.) and including that of your Company. He also sits as a Director
of the Petroleum Industry of Malaysia Mutual Aid Group (PIMMAG)
and a member of Joint Management Committee (JMC). He serves as a
member of the Investment Panel in Lembaga Tabung Haji.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
21
DIRECTORS’ PROFILE
MR. MARK OWEN STEVENS
MR. THOMAS MICHAEL TAYLOR
Non-Independent and Non-Executive Director
Non-Independent and Non-Executive Director
Member of Audit Committee
Mark Stevens, a British national, aged 51 years, is the Vice President,
Thomas Michael Taylor, a British national, aged 51 years, is the Director
Manufacturing Operations East. He was appointed a Director of your
of Finance, Shell Malaysia and Business Finance Manager - Asia Pacific,
Company on 16 August 2004.
Shell Exploration and Production. He was appointed as a Director of
your Company on 22 November 2004.
A graduate in Chemical Engineering, B.Sc (Engineering) from University
College, London. Mark Stevens joined Shell in 1977 and has extensive
Thomas Michael Taylor holds an MA in Engineering from University
refinery and manufacturing experience with Shell Haven Refinery, United
of Cambridge. He began his career in Shell in November 1984 as an
Kingdom, Shell International Petroleum, The Hague, Shell Europe Oil
Auditor for Shell Expro. Since then, he has served in various senior
Products, United Kingdom and Shell Global Solutions, The Hague.
finance positions in SAGF (a Shell subsidiary in the French West Indies),
Shell Hungary RT, Shell International Ltd and Sakhalin Energy Investment
Currently, Mark Stevens is also a Director of Shell Refining Australia and
Company Ltd in Russia.
of SASREF, Shell and Saudi Aramco’s joint venture refining company
situated in Saudi Arabia.
Currently, Thomas Michael Taylor sits on the Board of 18 companies:
Shell Timur Sdn. Bhd., Shell Malaysia Limited, Shell Malaysia Trading
Sendirian Berhad, Shell Treasury Malaysia (L) Ltd, Sarawak Shell Berhad,
Shell Sabah Selatan Sdn. Bhd., Sabah Shell Petroleum Company Ltd,
Shell Petroleum Malaysia Ltd, Shell Shared Service Centre-Kuala Lumpur
Sdn. Bhd., Shell Exploration and Production Malaysia, B.V., CS Mutiara
Petroleum Sdn. Bhd., Shell People Services Asia Sdn. Bhd., Shell
Information Technology International Sdn. Bhd., Shell New Ventures
Malaysia Sdn. Bhd. (formerly known as Conoco Jet (Malaysia) Sdn. Bhd.),
Provista Ventures Sdn. Bhd. (formerly known as Projet Malaysia Sdn. Bhd.),
Shell China Exploration and Production Company Limited, Shell
Philippines Holdings LLC and including that of your Company. He also
sits as a Director of Mileflame Ltd, a private British Company and is a
Member of the Chartered Institute of Management Accountants.
22
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
FROM LEFT :
Rosly bin Mohammed, Bhabhinder Kaur, Raja Ahmad Murad bin Raja Bahrin, Khairuddin bin Tamby Hashim
management
team
Raja Ahmad Murad bin Raja Bahrin
Position
: Managing Director
Nationality : Malaysian
Education : BEng (Hons) Mechanical Engineering,
University of Liverpool, United Kingdom
Joined Shell : 1989
Rolando Sulit
Position
: Senior Manager, Operations
Nationality : Filipino
Education : Bachelor of Science in Chemical Engineering,
Adamson University, Philippines
Joined Shell : 2005
Arnold Teo
Position
: Senior Manager, Technology
Nationality : Malaysian
Education : BEng (Hons) Chemical Engineering,
National University of Singapore
Joined Shell : 1994
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
23
FROM LEFT :
Rolando Sulit, Islamiah Idris, Siti Nazrah Ahmad Zaiden, Arnold Teo, Leonardus Biezeman
Khairuddin bin Tamby Hashim
Position
: Senior Manager, Engineering
Nationality : Malaysian
Education : Bachelor of Science in Engineering
(Thermal Engineering), Southern Illinois University,
Carbondale, USA.
Joined Shell : 2007
Rosly bin Mohammed
Position
: Manager, Quality, Health, Safety,
Security & Environment
Nationality : Malaysian
Education : Southend-On-Sea College of Technology,
United Kingdom
Joined Shell : 1980
Leonardus Biezeman
Position
: Manager, Economics and Scheduling
Nationality : Dutch
Education : MSc in Mechanical Engineering,
Delft University of Technology, The Netherlands
Joined Shell : 2001
Islamiah Idris
Position
: Manager, Human Resources
Nationality : Malaysian
Education : LLB. Hons, National University Malaysia
Joined Shell : 2005
Bhabhinder Kaur
Position
: Manager, Finance
Nationality : Malaysian
Education : Association of Chartered and Certified Accountants
(ACCA), United Kingdom, Malaysian Institute of
Accountants (MIA), Malaysia and Malaysian Institute
of Taxation (MIT), Malaysia
Joined Shell : 1999
Siti Nazrah Ahmad Zaiden
Position
: Manager, Procurement
Nationality : Malaysian
Education : BSc in Electrical Engineering (Magna cum laude),
University of Bridgeport, United States of America
Joined Shell : 1986
24
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
While we have a reliability led strategy
for operational excellence, we always
ensure that safety is our number one
priority, followed by health, security,
environment and product quality.
reli bility
Performance Review
26 Financial Calendar
27 Performance at a Glance
28 Shell in Malaysia
30 Chairman’s Statement
26
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Financial Calendar
D AT E
ANNOUNCEMENTS
7 May 2007
Announcement of unaudited consolidated First Quarter results for the three months ended 31 March 2007.
8 May 2007
Forty Eighth Annual General Meeting.
24 – 28 May 2007
Book closure for determining the entitlement for the final dividend.
28 May 2007
Date of entitlement to the final dividend of Thirty Eight Sen (RM0.38) per share less 27% income tax for the
financial year ended 31 December 2006.
15 June 2007
Date of payment of the final dividend of Thirty Eight Sen (RM0.38) less 27% income tax.
13 August 2007
Announcement of unaudited consolidated Second Quarter results and half year ended 30 June 2007 including an
interim dividend of Twenty Sen (RM0.20) per share less 27% income tax for the financial year ended
31 December 2007.
3 – 5 September 2007
Book closure for determining the entitlement for the interim dividend.
5 September 2007
Date of entitlement to the interim dividend of Twenty Sen (RM0.20) less 27% income tax.
21 September 2007
Date of payment of the interim dividend of Twenty Sen (RM0.20) less 27% income tax.
1 November 2007
Announcement of unaudited consolidated Third Quarter results for the nine months ended 30 September 2007.
14 February 2008
Announcement of unaudited consolidated Fourth Quarter results for the financial year ended 31 December 2007.
14 February 2008
Announcement of special interim dividend of Twenty Sen (RM0.20) per share and final dividend of Thirty Sen
(RM0.30) per share less 26% income tax for the financial year ended 31 December 2007.
10 – 12 March 2008
Book closure for determining the entitlement for the special dividend.
12 March 2008
Date of entitlement to the special dividend of Twenty Sen (RM0.20) less 26% income tax.
4 April 2008
Date of payment of the special dividend of Twenty Sen (RM0.20) less 26% income tax.
11 April 2008
Issue of Notice of the Forty Ninth Annual General Meeting, Notice of Dividend Payment and Book closure and
Annual Report for the financial year ended 31 December 2007.
15 May 2008
Forty Ninth Annual General Meeting.
4 – 6 June 2008
Book closure for determining the entitlement for the final dividend.
6 June 2008
Date of entitlement to the final dividend of Thirty Sen (RM0.30) less 26% income tax.
20 June 2008
Date of the payment of the final dividend of Thirty Sen (RM0.30) less 26% income tax.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
27
Performance at a Glance
2007
2006
Growth
2005
2004
2003
Rate
R E V E N U E (RM Million)
11,415.1
10,886.8
5%
9,695.1
7,510.5
5,496.9
Profit before taxation
808.2
325.4
148%
681.9
741.9
249.6
Profit for the year
593.2
258.2
130%
522.1
670.3
182.3
Sales volume (thousand barrels per day)
112.0
111.9
0%
113.7
116.4
116.9
Total assets
4,014.0
3,409.0
18%
3,642.0
3,038.0
2,464.0
Trade and other receivables
1,308.6
1,286.6
2%
989.1
903.6
657.5
Oil inventories
1,363.0
807.6
69%
649.0
603.8
361.1
Oil inventories volume (thousand barrels)
4,173.0
3,446.0
21%
3,017.2
3,882.1
2,918.0
904.2
662.0
37%
923.2
622.8
534.6
2,406.0
1,939.8
24%
1,919.2
1,563.4
1,001.0
695.9
-141.7
591%
965.0
437.0
190.4
26.7
42.8
-38%
105.6
33.8
18.6
Earnings
197.74
86.07
130%
174.04
223.45
60.76
Net assets
802.00
646.60
24%
639.70
521.13
333.67
70.00
90.00
-22%
100.00
65.00
25.00
Revenue
B A L A N C E S H E E T (RM Million)
Assets
Liability and Shareholders’ Funds
Trade and other Payables
Shareholders’ funds
C A S H F L O W (RM Million)
Cash generated from operations
Purchase of property, plant and equipments
P E R R M 1 U N I T O F S T O C K (Sen)
Gross Dividends
28
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Shell in Malaysia
Shell seeks to sustain its long-term
A PA R T N E R I N T H I S N AT I O N ’ S G R O W T H
presence in Malaysia: by pursuing
Shell has a 118-year history and presence, and is an integrated energy
high standards of product quality
Shell operates in more than 130 countries in the world. In Malaysia,
company comprising wholly owned, joint venture and public listed
companies. Shell Malaysia engages in three core business sectors,
namely Exploration and Production, Downstream, and Gas and Power
and also has several global, specialised service support hubs located
and service performance,
in the country. Shell employs over 6,000 diverse and talented staff
nationwide while providing material sponsorship and resources in the
striving to meet the expectations
of stakeholders, and contributing
areas of environmental conservation and social development. Shell
Malaysia aspires to be the “Top Performer of First Choice” by operating
its businesses efficiently, responsibly and profitably.
Shell Malaysia aims to maintain a good health, safety and environmental
to the nation’s economic growth
performance it can be proud of, to earn the confidence and trust
of customers, shareholders and society. Its aim is also to be a good
and progress.
neighbour and to contribute to sustainable development. Shell seeks to
sustain its long-term presence in Malaysia: by pursuing high standards
of product quality and service performance, striving to meet the
expectations of stakeholders, and contributing to the nation’s economic
growth and progress.
Your Company, Shell Refining Company (Federation of Malaya) Berhad,
is the only publicly listed company within Shell Malaysia. Your Company
was formed in 1960 as a public listed company and currently has 49%
public participation. It operates with state-of-the-art technology and is
the key petroleum products supplier to Shell’s Downstream businesses
in Malaysia. Your Company’s oil refinery at Port Dickson produces a
comprehensive range of petroleum products, over 80% of which are
consumed within Malaysia.
In 1999 your Company completed its RM1.4 billion investment in
Malaysia’s first Long Residue Catalytic Cracking Unit (“LRCCU”), thereby
transforming what was a medium-sized, relatively simple refinery, into
a world class and modern complex refinery.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
29
FROM TOP:
Our employees’ learning experiences occur in the
form of job assignments and projects.
We reach out to communities in which we operate in.
We constantly look for ways to contribute to the well being
of the community and the wider public.
The LRCCU, which represents an important commitment to your
Company’s future, has quadrupled the refinery’s Liquefied Petroleum
Gas (“LPG”) production and doubled its motor gasoline production.
It has also enabled the refinery to manufacture propylene which is a
highly valued feedstock for the petrochemical industry.
While striving for maximum returns to our shareholders, your
Company also believes in giving equal attention to caring for
our environment and fulfilling our corporate social responsibility
(“CSR”) obligations by contributing to social development in our
community. We actively encourage and support diverse wealth
creation in the community, the development of new skills and
expertise as well as the transfer of new technologies and best
business practices to Malaysia.
Through our sustainable development policy, your Company
integrates the economic, environmental and societal aspects of our
business in order to achieve sustained financial success, safeguard
our environment and develop our reputation as a partner and
provider of first choice for a wide range of audiences including
shareholders, customers, employees and those with whom we do
business, as well as society and future generations - all of whom
expect us to engage with them, listen to them and evolve with
them to meet their changing expectations.
We aspire to be the “Top Performing and Most Admired Refinery
in Asia”, by operating our businesses efficiently, responsibly and
profitably. As we aim for high standards of performance, we also
aspire to establish a long-term presence among the communities we
operate in. As such, we are committed to helping our stakeholders
improve their quality of life, whilst simultaneously contributing to
Malaysia’s advancement and its Vision 2020 goals.
Your Company takes pride in being a responsible and trusted leader
of the business community and a caring and thoughtful member
of society.
30
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Chairman’s
Statement
Sales of Petroleum Products in Malaysia (Million barrels)*
Dear Shareholders,
I am delighted to report that your Company turned in another
120
profitable year as a result of proactive business improvement activities
100
98 97 97 98
84
and stronger refining margins in 2007. In spite of the challenges brought
80
Million bbls
on by volatile global economic conditions, we continued to make
excellent strides forward on all fronts by building upon our culture of
sustainable progress and reliability. The year saw us continuing to drive
growth through a focus on asset integrity, cost reduction and margin
58
60
42
38 38
43
40
optimisation as well as a continued emphasis on health, safety, security
20
and environmental initiatives. On behalf of your Board of Directors,
0
15 14 12 12 13
I am pleased to present the Annual Report of Shell Refining Company
‘03 ‘04 ‘05 ‘06 ‘07
‘03 ‘04 ‘05 ‘06 ‘07
‘03 ‘04 ‘05 ‘06 ‘07
(Federation of Malaya) Berhad for the year ended 31 December 2007.
Retail
Commercial
LPG
*
The figures for 2007 are from Metrix Research Sdn Bhd while the figures for
2003-2006 are from ACNielsen Quarterly Petroleum Sales Report
BUSINESS ENVIRONMENT
In 2007, the global economy experienced volatility for the most part
by robust domestic demand, driven by strong private consumption
due to the fallout from the US sub-prime crisis. Despite lacklustre global
spending and investment activities. The increase in economic activity
economic conditions and a slowing down of the world’s advanced
was also reinforced by an increase in public sector spending. On the
economies, the Asian economies were able to weather the financial
supply side, growth was broad-based with strong growth recorded in
storm and emerge relatively unscathed. In November 2007, challenging
all economic sectors. The mining sector recorded robust performance
global conditions and supply interruptions in major oil producing
with an increase in crude oil output driven mainly by increased
economies led to a dramatic rise in crude oil prices to the year’s peak
production in the deepwater oil fields off Malaysia.
of US$98.83 per barrel (based on the West Texas Intermediate crude
oil prices).
In 2007, the overall domestic demand for petroleum products increased
by 5% over 2006. Sales of automotive gasoil and motor gasoline both
In spite of the challenging business environment, Bank Negara Malaysia
increased by 4% each, while industrial gasoil sales for the Commercial
reported that the Malaysian economy emerged more resilient with gross
sector experienced a marked 19% increase as a result of higher market
domestic product (“GDP”) growth expanding to 6.3% from 5.9%
demand. LPG sales registered a 3% increase in volume in comparison
in 2006. Malaysia’s economic expansion continued to be bolstered
to a 1% reduction in volume in 2006.
The year saw us continuing to drive growth through a keen focus on asset
integrity, cost reduction and margin optimisation as well as a continued
emphasis on health, safety, security and environmental initiatives.
32
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
CHAIRMAN’S STATEMENT
Over the course of the year, refining margins (the difference between
barrel in the preceding year. As a consequence of the higher product
crude oil and refined product prices) rose significantly higher. While
prices relative to crude prices, the average Singapore complex refining
average Tapis and Minas crude prices climbed to US$78 and US$73
margin rose to US$4.14 in 2007 against US$2.95 in 2006. More
per barrel respectively against US$70 and US$65 per barrel in 2006,
sophisticated complex refineries were able to achieve higher margins,
product prices (measured by Means of Platts Singapore or MOPS) also
and your Port Dickson refinery with its Long Residue Catalytic Cracker
increased with MOPS of U97 gasoline averaging US$86 per barrel in
(“LRCC”) configuration and its ability to process a variety of crudes
2007 against an average of US$76 per barrel in 2006. MOPS of gasoil
attained an average refining margin of US$5.79 per barrel in 2007
also rose, averaging US$85 per barrel against an average of US$77 per
against Singapore margin of US$4.14 per barrel.
Tapis/Minas
Singapore Refining Margin 2007
USD/bbl
USD/bbl
105 2007 Tapis Avg = USD78/bbl
2007 Minas Avg = USD73/bbl
9 2007 Avg = USD4.14/bbl
7
95
5
85
3
75
1
65
-1
55
-3
45
Jan
‘07
Feb
‘07
Mar
‘07
Apr
‘07
TAPIS
May
‘07
Jun
‘07
Jul
‘07
MINAS
Aug
‘07
Sep
‘07
Oct
‘07
TAPIS AVG
Nov
‘07
Dec
‘07
-5
Jan
‘07
Feb
‘07
MINAS AVG
Mar
‘07
Apr
‘07
May
‘07
Complex
Products Prices (MOPS)
Sep
‘07
Oct
‘07
Nov
‘07
Dec
‘07
Average Complex
USD/bbl
9 2007 Avg = USD5.79/bbl
105
5
95
3
85
1
75
-1
65
-3
U97
Aug
‘07
Simple
125 2007 U97 Avg = USD86/bbl
2007 Gasoil Avg = USD85/bbl
115
Feb
‘07
Jul
‘07
Shell Refining Company - Refining Margin 2007
USD/bbl
55
Jan
‘07
Jun
‘07
Mar
‘07
Apr
‘07
May
‘07
Gasoil
7
Jun
‘07
Jul
‘07
Aug
‘07
Sep
‘07
U97 AVG
Oct
‘07
Nov
‘07
Dec
‘07
Gasoil AVG
-5
Jan
‘07
Feb
‘07
Mar
‘07
Apr
‘07
Complex
May
‘07
Jun
‘07
Jul
‘07
Simple
Aug
‘07
Sep
‘07
Oct
‘07
Nov
‘07
Dec
‘07
Average Complex
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
33
CHAIRMAN’S STATEMENT
P R O D U C T I O N A N D S A L E S R E S U LT S
Shell Refining Company Crude and Feedstock Processed
- Sources of Supply 2007
In 2007, your Company experienced lower operational availability as
a result of unplanned downtime at the Port Dickson refinery (85%
Middle East
17%
availability in 2007 against 90.6% availability in 2006). There was a
Malaysia
32%
shutdown of the LRCC in the first quarter to repair a damaged slide
valve while in the fourth quarter, crude intake was disrupted as a
result of two fires. These incidents have been investigated and actions
taken to prevent further occurrences. As a result of this unplanned
downtime, refinery intake dropped by 8% or by 3.1 million barrels in
2007. Approximately 36.5 million barrels were processed in 2007 in
comparison to 39.6 million barrels in 2006.
Far East & Africa
(excl. Malaysia)
51%
Let me reiterate that your Company continues to implement strict
measures that are essential for ensuring the health and safety of
our employees, the community and the environment we operate in.
We also remain committed to maintaining and enhancing the long-
For the year under review, our total sales volume was maintained at
term reliability and integrity of our core processing assets.
the previous year’s sales volume at approximately 40.9 million barrels,
despite the lower operational availability in 2007. Nevertheless, sales
Your Company’s complex refinery has the capacity to process a wide
proceeds grew by 5% or RM528 million to RM11.4 billion in 2007
range of crudes and produce a wide variety of higher margin products.
against RM10.9 billion in 2006. I am pleased to report that the annual
This flexibility continues to serve us well. In 2007, 26 types of crude
proceeds in 2007 is the highest ever in your Company’s history and was
(inclusive of 7 new types of crude) were successfully processed (17
mainly attributable to higher product prices.
types of crude in 2006).
Shell Refining Company Sales Volume and Refinery Intake
The decision on which crude to procure depends on the relative economic
50
attractiveness of each type of crude. In the past, your Company has
42.8
typically processed 37% to 41% Far East heavy crudes, between 29%
41.2
42.4
40.5
41.5
40
40.9 39.6
40.9
36.5
36.3
crudes. In the year under review, our crude diet consisted of 51% crude
from the Far East and Africa, 32% from Malaysia and 17% from the
Middle East.
Million bbls
and 31% Middle East heavy crudes and 21% to 28% Malaysian light
30
20
10
0
‘03
‘04
Sales Volume
‘05
‘06
Refinery Intake
‘07
34
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
CHAIRMAN’S STATEMENT
Shell Refining Company Sales Proceeds
Shell Refining Company Net Income After Taxation
800
15,000
670
10,887
593
600
9,695
9,000
6,000
RM Million
RM Million
12,000
11,415
7,511
5,497
0
400
258
200
3,000
‘03
‘04
‘05
‘06
‘07
522
0
182
‘03
‘04
‘05
‘06
‘07
In line with high market demand, gasoil and motor gasoline continued
FINANCIAL PERFORMANCE
to be the refinery’s major products in 2007, representing 75% of the
Your Company’s performance in 2007 was impacted by fluctuations in
production.
refining margins and volatility in world oil prices. Despite the vagaries
of the operating environment, your Company posted substantially
Shell Refining Company Sales Turnover (by product) 2007
to RM258 million in 2006. I am delighted to report that this is your
Tops
Propylene
4%
LPG 4%
Company’s second highest ever NIAT and just below our historical
high of RM670 million in 2004. The higher NIAT is the result of higher
5%
LCO
5%
Jet Fuel
7%
higher net income after tax (“NIAT”) of RM593 million in comparison
margins and stockholding gains. The higher after-tax stockholding
Gas Oil
39%
gains of RM295 million in turn were a result of higher oil prices in 2007
in comparison to 2006.
EPS AND DIVIDENDS
As a result of the higher net profit in 2007, our earnings per share in
Motor Gasoline
36%
2007 appreciated to a high of 198 sen from 86 sen in 2006.
For the year ended 31 December 2007, your Board of Directors has
recommended a final dividend of 30 sen per RM1 unit share. Together
with an interim dividend of 20 sen and one special interim dividend
of 20 sen, this brings the total gross dividend payable for the financial
year under review to 70 sen per share. As we grow our business, your
Board maintains its firm intention to sustain an annual dividend level of
at least 50 sen per share (interim plus final) for the foreseeable future,
excluding special interim dividends and subject to financial performance
and cash availability.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
35
CHAIRMAN’S STATEMENT
In the year under review, developments relating to the movements of
B U S I N E S S S T R AT E G Y A N D I M P R O V E M E N T
your Company’s share price were deemed acceptable by the Board.
I N I T I AT I V E S
Going forward, your Company will strive to employ business growth
Your Company continues to employ a well-structured strategy to
strategies that will enhance its performance and profit levels.
sustain its success via the implementation of its Business Improvement
(“BI”) Plan. The aims of the BI Plan remain the same and that is to:
Shell Refining Company Net Earnings Per Share
300
250
•
improve health, safety, security and environmental performance
•
maintain a highly competent and motivated workforce that is able
223.45
to deliver our business plans efficiently
Sen per share
197.74
200
174.04
150
86.07
100
60.76
•
sustain high plant availability through improved reliability
•
enhance margin capture and minimise energy costs
•
drive your Company towards cost leadership through effective
contract management and cost control.
50
0
‘03
‘04
‘05
‘06
‘07
Shell Refining Company Dividends Per Share
MARGIN
100
50
40
Sen per share
80
60
20
20
40
38
35
20
PRODUCTIVITY
25
0
COSTS
20
5
10
12
12
‘03
‘04
‘05
‘06
Interim
*
PEOPLE
30
38
Final
‘07
Special Interim
Various initiatives were implemented in 2007 to achieve these aims.
The Final Dividend of 30 sen per share for 2007 is subject to approval by
shareholders at the Company’s 49th Annual General Meeting
As part of a continuous effort to keep the BI Plan fresh with new
SRC Share Price vs Bursa Malaysia Composite Index (normalised)
ideas, a Business Improvement Review (“BIR”) is held every two years.
In addition, reviews of the BI Plan are held every quarter to keep the
initiative list up-to-date and to prioritise the initiatives to ensure that
140
the available resources are efficiently managed. The next BIR is planned
130
for early 2009.
120
110
100
90
Jan
‘07
Feb
‘07
Mar
‘07
Apr
‘07
May
‘07
Jun
‘07
Composite Index
Jul
‘07
Aug
‘07
Sep
‘07
Oct
‘07
SRC Share Price
Nov
‘07
Dec
‘07
36
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
CHAIRMAN’S STATEMENT
IN RECOGNITION OF BEST PRACTICES
Your Company is an active member of the Port Dickson community.
In 2007, your Company continued to win awards and accolades
It’s contributions to the local community are not just confined to direct
including two prestigious awards at the Prime Minister’s Hibiscus
funding and monetary sponsorships alone. We also provide employment
Awards 2006/2007 event. At this event, we received the “Notable
and business opportunities as well as invest in programmes and initiatives
Achievement in Environmental Performance”, the event’s highest
that aim to raise the socio-economic status of Port Dickson and improve
honour and our third win consecutively. We also had the privilege of
the standard of living and the quality of life in the locality.
becoming the first ever recipient of the newly created “Negeri Sembilan
State Award” and were once again winners for “Best Environmental
In 2007, we organised, supported and participated in programmes
Reporting in an Annual Report” at the ACCA Malaysia Environmental
such as the “SRC-Lions Club PD Beach Cleaning Programme” with
and Social Reporting Awards (“MESRA”) 2006. We also received the
secondary school children from the district and the “We Care We Share”
Institut Kimia Malaysia (“IKM”) “Laboratory Excellence Award” for the
(WCWS) programmes with Down Syndrome children, underprivileged
sixth year running.
orphans and senior citizens. Other community events included an
English language debate, drama and public speaking competition with
We also secured for the first time ever, the coveted MSOSH Grand
secondary school children; a reading programme with the district library;
Award 2006 from the Malaysian Society for Occupational Safety
community and safety dialogues with our fence-line neighbours; joint
and Health (MSOSH). The award is apt recognition of the fact that
road safety campaigns with Jabatan Keselamatan Jalan Raya and the
your Company is consistently demonstrating exemplary standards
Police; and a Merdeka celebration with KEMAS pre-school children.
of occupational safety and health throughout our business activities
and that our people are passionate and committed practitioners of
PEOPLE DEVELOPMENT
occupational safety and health best practices. Our multiple wins also
Our business success is directly linked to our people and their capability to
demonstrate your Company’s openness and commitment towards
meet current and future business challenges. Ensuring your Company’s
ensuring that comprehensive and informative performance reporting,
success requires investment in people development - making sure that
including details of our environmental performance, are disclosed to
it’s people have the right skills to do their jobs and meet business needs.
our shareholders and society.
A learning environment, which facilitates development of new skills
and ways of working, is important to building this capability.
For detailed information on your Company’s achievements, please refer
to our report on sustainable development at pages 40 to 51 of this
Learning at Shell takes the form of an Enterprise First approach
annual report.
designed to create a learning environment that enables individuals and
businesses to build the capabilities essential to winning performance.
S U S TA I N A B L E D E V E L O P M E N T I N I T I AT I V E S
As part of this approach, elements and tools critical to world-class
Your Company fully supports Shell’s General Business Principles that
learning and development have been identified and linked together as
include complying with the Shell Group’s Sustainable Development
part of a global, standardised process.
Management Framework. We are committed to the principle of
sustainable development that meets the needs of the present generation
The Shell Learning & Development (“L&D”) process and its elements
without compromising the ability of future generations to meet their
like the competence framework and individual development plans,
own needs. Our actions are directed by the need to make business
enable capability building by providing a means for individuals to
decisions that give credibility to our sense of economic, social and
assess their competences and identify meaningful actions for ongoing
environmental responsibility and which our stakeholders and society
development. Line managers and human resource professionals play
can hold us accountable for.
key roles in supporting this process to develop Shell people to their
full potential.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
37
CHAIRMAN’S STATEMENT
In line with our commitment to strengthening leadership and deepening
Looking to the future, we anticipate strong product demand and
professionalism throughout your Company, we invested a total of RM2
positive refining margins for your Company, although the level of
million in 2007 to equip our people with the skills, knowledge, and
these margins remains uncertain. Concerns over crude oil availability,
experience they require to deliver optimum business results in their
volatility in oil producing areas, and heightened geopolitical tensions,
current and future jobs.
are expected to linger. In addition, several large refineries are expected
to come onstream in the region and the increase in production will
BUSINESS OUTLOOK
The recent upheavals in global financial markets have clouded economic
impact product prices. Should product prices not move in tandem with
crude oil prices, refining margins will come under pressure.
prospects for 2008. Global growth is expected to moderate as a result
of a likely slowdown in the US economy while the continuing turmoil
M A I N TA I N I N G O U R M O M E N T U M
in the credit markets is also expected to hinder the global economy.
Going forward, we will continue to maintain our momentum while
However, the continued strength of domestic demand in the emerging
realigning our business strategies and refocusing our people and
economies, particularly in the Asian region, is expected to lend support
resources to meet changing market needs and business goals.
to global growth. The resilience of Asia’s economies, especially China
Asset integrity as well as strong people, health, safety, security and
and India’s robust economies is expected to serve as a sufficiently
environmental performance, will continue to be our major priorities.
strong line of economic defence against external shocks. Commodity-
In ensuring astute financial management throughout our operations,
producing countries in particular, will continue to benefit from the
we will proactively pursue cost reduction as well as operational
high commodity prices.
excellence and improvement activities.
Bank Negara Malaysia forecasts that growth prospects for the
I N A P P R E C I AT I O N
Malaysian economy will remain favourable in 2008. Expanding domestic
demand will continue to provide strong support for the economy
while consumption activities are expected to remain resilient in view
of firm labour market conditions and high commodity prices. It is also
anticipated that underlying private business and investment activities
will expand in line with the implementation of projects under the Ninth
Malaysia Plan.
In 2008, your Company will undertake a statutory turnaround of the
LRCC unit. The Complex 2 unit, comprising a crude distiller and a
platformer, is scheduled for a concurrent shutdown. These meticulously
planned activities are aimed at maintaining and enhancing the longterm reliability and integrity of your Company’s core processing assets.
Detailed preparatory work has been completed and we will invest the
effort and resources necessary to ensure that the statutory turnaround
is successful.
On behalf of the Company, my utmost appreciation goes to
our shareholders, the Board of Directors, the Management, our
employees, contractors and all our other stakeholders for your
support, perseverance, dedication and sacrifice in the face of the year’s
challenging business environment. I look forward to your continued
loyalty as we move forward into a new year. I also would like you
to join me in welcoming Dato’ Seri Talaat Husain to the Board.
We look forward to his guidance and expertise. Finally, I would like
to pay tribute to our Senior Independent and Non-Executive Director,
Tan Sri Saw Huat Lye who will be retiring this year after serving your
Company continuously since 6 June 1984. Tan Sri Saw’s guidance for
the last 24 years has been invaluable to the success of your Company
and as the Senior Independent and Non-Executive Director, he has
been a trusted confidant to all stakeholders.
Thank you.
Dato’ Saw Choo Boon
Chairman
38
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
We recognise our stakeholders’ interest
in our business and the need to listen and
respond to them. We continually work together
to ensure alignment with our stakeholders.
syner y
Corporate Social Responsibility
40 Our Commitment to Sustainable Development
52 Highlights of the Year
40
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Our Commitment
to Sustainable Development
Your Company and Sustainable Development
Shell Malaysia subscribes to the principle of sustainable development
that meets the needs of the present generation without compromising
the ability of future generations to meet their own needs. Being part
of Shell Malaysia, your Company subscribes to the same principle of
sustainable development. Our practices are aligned with the systematic
approach adopted by Royal Dutch Shell plc in their own efforts to
implement good health, safety and environmental management
practices. Our actions are guided by the need to make business decisions
that give credence to our sense of economic, social and environmental
responsibilities and by which our stakeholders and society can hold us
accountable.
to establish a long-term presence among the communities we operate
in. As such, we are committed to helping our stakeholders improve
their quality of life, whilst simultaneously contributing to Malaysia’s
advancement and its Vision 2020 goals.
As we journey towards achieving our aspirations, the methods by
which we bring our sustainable development practices into play will be
integral to our success. Our current stance is reflected in the following
practices:
•
We provide our customers with solutions and a variety of energy
products, materials and services, which meet their requirements
economically and which does not cause harm to the environment.
We have to ensure them that our activities, and their support for us,
do not lead to unsustainable social differences but create wealth,
which benefits society as a whole. We need to assure them that
there is a clear path for the future development of our industry,
which will benefit the next generation. With these assurances,
we will really be the company of first choice.
•
We build and maintain a culture of learning and innovation in
which employees can fulfil their potential whilst meeting the most
challenging targets - and have fun at the same time! It is a culture
where we encourage our leaders to inspire others through personal
example, and where the values of honesty, integrity, respect for
people, trust, openness, teamwork and professionalism, can
prosper.
In this day and age, sustainable development does not just involve
environmental preservation or social concern, it must also take into
account economic performance. By the same token, in order to sustain
a healthy bottom-line, we must exhibit strong environmental and social
performance.
Through our sustainable development policy, Shell Malaysia integrates
the economic, environmental and societal aspects of our business in
order to achieve sustained financial success, safeguard our environment
and develop our reputation as a partner and provider of first choice for
a wide range of audiences. Our audiences include our shareholders,
customers, employees and those with whom we do business, as well
as society and future generations - all of whom expect us to engage
with them, listen to them and evolve with them to meet their changing
expectations.
We aspire to be the “The Top Performing and Most Admired Refinery
in Asia”, by operating our businesses efficiently, responsibly and
profitably. As we aim for high standards of performance, we also aspire
We draw upon our companies’ strengths to meet the challenges of the
new millennium with a view to helping people build a better world.
We will therefore continue to invest in projects that exploit worldclass technology, research and development within the highest Health,
Safety, Security and Environment (“HSSE”) standards.
Lost Time Injury Frequency
6
Total Recordable Case Frequency
5
Classification of Incidents (2004 - 2007)
20
OI
15
MTC
4
FAC
10
3
2
5
1
0
0
‘89 ‘90 ‘91 ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07
No Harm to People
Your Company is truly committed to pursue the goal of no harm to
people. This way we aim to have an HSSE performance we can be
proud of, earning the confidence of customers, shareholders and
society at large.
SAFETY IS OUR BUSINESS
Your Company has a systematic approach to HSSE management
designed to ensure compliance with the law and to achieve continuous
performance improvement. Achieving continuous improvement in our
safety performance, including making progress towards our goal of
zero fatalities requires both safe processes and a strong safety culture.
The overall HSSE performance in 2007 was outstanding with your
Company achieving seven million exposure hours without a Loss Time
Incident (LTI) on 13 June 2007. Previously, your company also achieved
six years without an LTI case on 22 May 2007.
There was one Total Recordable Case (“TRC”) for year 2007 bringing
the Total Recordable Case Frequency (“TRCF”) for the year to 0.73.
Altogether there were three first aid cases (FAC), one restricted work
case (also MTC) and five occupational illness incidents (OI).
Our continuous efforts to carry out health promotions to educate and
increase health awareness among employees and contractors, resulted
‘04
‘05
‘06
‘07
in a reduction in the number of First Aid cases from four in 2006 to
three in 2007.
In 2007, there was an improvement in our overall sickness absence rate
for staff compared to the preceding year. The Total Sickness Absence
(“TSA”) rate for 2007 was 1.37% compared to the previous year’s TSA
rate of 1.71%.
To monitor and assess our performance against certain set targets,
Key Performance Indicators (KPI’s) are critical. For example one key
process safety KPI is Loss of Primary Containment (“LOPC”). In the
system for HSSE analysis and learning (“MARSHAL”) this has been
fully implemented. Programmes have also been put in place to enable
continued learning and corrective action plans.
Safe behaviour also depends on staff and contractors being trained and
becoming more competent. Safety competences are being addressed
as part of our broader ‘HSSE competencies programme’ to check that
everyone responsible for tasks with a significant HSSE risk has the
necessary training and skills. Online training to develop staff skills in
HSSE is continuous. Specific training is also provided for high risk areas,
for example in road safety. In line with continuous improvement efforts,
various HSSE campaigns were held in 2007 including the Safety Day
Campaign, Working at Heights Campaign and HSSE Week.
42
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
OUR COMMITMENT TO SUSTAINABLE DEVELOPMENT
POSITIVE INTERVENTION WALK
EMERGENCY RESPONSE EXERCISE PREPAREDNESS
In 2007, Unsafe Act Auditing (“UAA”) activities were renamed “Positive
In 2007, your company held an emergency response exercise which
Intervention Walk” (“PIW”) to eliminate the perception that one was
involved setting up an Emergency Coordination Centre and practical
being audited. PIW foster a more positive reinforcement of good safety
deployment. The exercise was conducted on 26 November 2007, at
behavior and practices. The PIW today advocates the importance of
the Port Dickson SRC Refinery ECC. The full SRC Emergency Response
personal and process safety and encourages a culture of intervention
Team (“ERT”) was mobilised to respond to the emergency scenario. The
and action in day to day operation.
Shell Malaysia Downstream Crisis Management Team (in KL) was also
activated from 1045 to 1200 hours during the exercise to coordinate
HSSE WEEK
emergency response efforts with the ERT.
In 2007, HSSE week was held from 22 October to 26 October. Various
events such as health talks, safety talks, Safety Day II, blood donations,
Deployment drills for SRC Tier 1 Offshore equipment, Containment
HSSE games and competitions as well as booth displays were organised
Oil Spill Response (“OSR”) equipment off the Shell Jetty area and the
to promote good HSSE practices. The response from staff and contractors
PIMMAG shoreline OSR equipment, were conducted in parallel with
was very encouraging.
the Emergency Coordination Centre exercise. The drills were conducted
successfully with no safety incidents.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
43
OUR COMMITMENT TO SUSTAINABLE DEVELOPMENT
Promoting Best Practices
Protecting the Environment
WORKING AND PROMOTING BEST PRACTICES
Your Company minimises the impact
of its operations to the environment
by setting highly challenging
improvement targets to progressively
reduce emissions and discharges
in line with Malaysian Legislation,
Shell Group Strategic Objectives
and other related international
conventions and protocols.
WITH REGULATORY BODIES
In the spirit of cooperation and sharing your Company continually
receives invites from external parties, including regulatory bodies to
share best practices on HSSE.
In 2007 a group of officers from the Department of Occupational Safety
and Health (DOSH), Hazards Divisions had made a familiarisation visit
to the Emergency Coordination Centre. Your Company’s willingness
to share and promote best practices with regulatory bodies such as
DOSH exemplifies our willingness to work for the better good of the
petrochemical industry in general.
SAFETY AND EMERGENCY CONTROL CENTRE (“ECC”)
Both the safety centre and the newly improved ECC continually
attract visitors and auditors in a positive way. Both these facilities are
recognized internally by the Shell group and externally as benchmark
FLARING
facilities and are taken into consideration every time SRC obtains HSSE
awards in 2007.
Online IT facilities and updated communication equipment have been
recently added to the ECC to improve its overall effectiveness.
There are also efforts in place to enhance the content of the revised
DVD safety induction video, which has received good response from
Total Flared Gas
(Complex 1& 2, LRCC)
2007
2006
2005
2004
23,976
42,370
29,763
17,247
MT
MT
MT
MT
In 2007, the refinery registered a significant decrease in flaring
compared to previous years mainly due to the processing of lighter
crudes and slightly lower refinery throughput.
visitors to SRC.
Flaring
Your Company will proactively enhance and upgrade its facilities to
30,000
ex Complex
1&2
25,000
ex LRCCU
address and face future demand and challenges.
HSE AUDITS AND CERTIFICATION
Programme from the Department of Occupational Safety and Health
(DOSH). Your company also underwent recertification of OHSAS 18001
and ISO14001 audits by SIRIM.
20,000
MT
In 2007, SRC received positive feedback on Confined Space Entry
15,000
10,000
5,000
0
‘04
‘05
‘06
‘07
44
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
OUR COMMITMENT TO SUSTAINABLE DEVELOPMENT
Carbon Dioxide Emission
Sulphur Oxide Emission
30
0.20
23.8
24
0.15
22.0
20.2
0.15
19.9
18
0.11
0.11
‘04
‘05
0.11
0.10
12
0.05
6
0
‘04
‘05
‘06
0.00
‘07
kT/100kT Intake
kT/100kT intake
SO
T/100T intake
‘07
Global Warming Potential
EMISSIONS
CO2
‘06
T/100T Intake
2007
2006
2005
2004
22.00
23.8
19.9
20.2
0.11
0.15
0.11
0.11
GWP (kT CO2 Equivalent)
2007
2006
2005
2004
1,148
1,287
1,093
1,178
As part of our Sustainable Development drive, the Shell Group has
devised a method to compare the relative effect of greenhouse gases
(“GHG”) on the climate. The result, a factor known as Global Warming
Sources of air emissions at the refinery could potentially arise from:
Potential (“GWP”), provides relative measurement of the warming
•
Fuel burning or combustion from operations;
influence of a gas relative to that of carbon dioxide over a 100-year
•
Flaring and venting;
time horizon.
•
Evaporation from tanks and equipment during transport and
•
storage of oil products;
Your Company participates in this monitoring effort and started recording
Fugitive releases which occur as a result of a leak from process
its GWP contribution in kilotonnes of Carbon Dioxide Equivalent in
equipment.
2004. In SRC GWP is emitted from gaseous emissions of CO2, Methane
(“CH4”) and Nitrous Oxide (“N2O”) arising from combustion, flaring,
Carbon Dioxide (“CO2”) emissions in 2007 were lower compared to
previous year as a direct consequence of the decreased level of flaring.
venting, storage, fugitive emissions, loading, unloading, unplanned and
planned releases. Hydrofluorocarbon (“HFC”), Sulphur Hexafluoride
The Sulphur Oxide (“SO”) emissions, that are related to feedstock
(“SF6”) and Perfluorocarbon (“PFC”) emissions will also contribute to
processed, decreased significantly compared to 2006 due to the lower
GWP, but the Company does not employ such gases.
sulphur in long residue feed.
In 2007, your Company recorded a GWP of 1,148 kT CO2 equivalent
- 2.5% lower compared to the 2004 baseline performance. The
significant difference between the 2007 and 2006 performance was
attributed mainly to the reduced total flaring due to the processing of
lighter crudes in 2007.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
45
OUR COMMITMENT TO SUSTAINABLE DEVELOPMENT
HALON AND CHLOROFLUOROCARBON (CFC) REMOVAL
Your Company is periodically experiencing spikes of oil and grease in
The refinery has been free of Halon and CFC since April 2000. However,
effluent water. Improvement plans have been developed, presented
the refinery does have Hydrochlorofluorocarbons (“HCFC”) in its
to your Company’s leadership team and executed. The fourth quarter
inventory that will be eliminated by 2015-2020 in accordance with the
of 2007 shows a significant increase in effluent water quality with oil
Montreal Protocol.
and grease in effluent water averaging 6.2 mg/L. The Company also
consistently monitors the seawater quality at the discharge point. The
SPILLS
monitoring result to date has not shown any deviation. Reports of the
In 2007, your Company had two minor internal spill incidents. However,
effluent water and seawater quality are submitted quarterly to the
the total amount of the spills is well below the 1 tonne limit.
Department of Environment.
WASTE MANAGEMENT
MATERIAL AND ENERGY USE
The main sources of solid waste arising from refinery operations are:
•
Spent Catalysts;
Refinery Energy
•
Spent Caustic.
Index (Actual)
Refinery Energy
Quantity (MT)
2007
2006
2005
2004
Spent Catalysts
2,741
2,661
1,655
2,568
Spent Caustic
2,879
2,743
655
833
2007
2006
2005
2004
155.0
169.7
166.9
165.9
162.0
166.3
165.3
159.4
Index (Target)
Your Company is committed to using materials and energy efficiently
in providing its products and services. By setting annual Refinery Energy
Index (“REI”) targets that take into account the year’s operational
EFFLUENTS
Oil in Effluent Water
2007
2006
2005
2004
8.8
7.4
6.6
1.2
(mg/L)
The main discharge to water from our operations is oil in the water that
accompanies oil production. The refinery’s effluent water is discharged
some 1km offshore via a pipeline.
In 2007, the average oil in water concentration was at 8.8 milligrams
per litre (“mg/L”). Although higher than in 2006, it is well within
the legislative limit of 10 mg/L and the limit set by the Malaysian
Environmental Quality Act 1974 Effluent Quality Standard B. This water
is also used as means of firewater supply for the Company.
and maintenance plans, your Company strives to deliver continuous
improvements. In 2007, your Company performed better than expected
and managed to exceed the target by 4.3%.
PUBLIC COMPLAINTS
We take all complaints seriously and respond within 48 hours via
our Public Affairs Policy Office.
In 2007, your Company recorded 10 public complaints, three more than
in 2006. The complaints were mainly pertaining to smell and noise,
which were promptly responded to by our duty officers. Complaints
are also discussed at the Community dialogue sessions that take place
on a regular basis.
46
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
OUR COMMITMENT TO SUSTAINABLE DEVELOPMENT
In 2007, your Company was awarded a Notable Achievement for the
third consecutive time for environmental performance in 2005/2006.
Your Company also clinched the Negeri Sembilan State Award that was
introduced for the first time in 2007.
MSOSH GRAND AWARD 2006
We received the Malaysian Society for Occupational Safety and Health
(“MSOSH”) Grand Award for demonstrating that occupational safety
and health excellence is consistently applied in our business activities.
This achievement is the result of the sustained efforts and commitment
from all staff, our business partners and our contractors.
Report and Consult
We are highly committed to reporting on our performances to the
general public and will continue to consult our key stakeholders via
dialogues and engagements (be it formally or informally).
COMMUNITY DIALOGUES
As part of our Community Care programme, we conduct regular
dialogues with our residential neighbours. The 2007 dialogue sessions
covered topics such as:
•
Update on refinery operations and activities;
REPORTING ON PERFORMANCE
•
Corporate Social Responsibility;
Your Company will continue to communicate the fact that it is open,
•
HSSE issues and updates on the potential impact of our activities on
transparent and accountable in many forms, one of which is through
the community.
the annual Shell Malaysia Sustainable Development (“SD”) Report,
which includes details of your Company’s progress across a wide and
We have also enhanced the active dialogue process through letter-drops
demanding range of indicators - from greenhouse gas emissions to road
to neighbouring homes and to the local authorities during the refinery’s
safety statistics. Copies of this report are distributed to government
planned and unplanned shutdown periods. From the feedback we
agencies, business partners, opinion leaders, academicians, NGOs,
have received, the letter-drops and dialogue sessions have significantly
contractors and employees. The report is also posted on the Shell
contributed to enhancing the relationship between the neighbouring
Malaysia website at www.shell.com.my.
communities and your Company.
Information on your Company’s performance can also be found on
ENGAGEMENT WITH NGOS
your Company’s corporate website at www.shell.com.my/shellrefining.
Your Company recognises the need to regularly engage its stakeholders
in order to obtain feedback as well as to learn from them. To this end, we
PRIME MINISTER’S HIBISCUS AWARD
conduct regular meetings and dialogues with local non-governmental
First launched in 1996, the Prime Minister’s Hibiscus Award is the
organisations (“NGOs”) who are interested in our activities and who
premier private sector environmental award for business and industry
share common interests and concerns with Shell. In this manner, we are
in Malaysia. The award, previously known as the “Hibiscus Award”,
able to share our experiences and at the same time obtain their views
was upgraded to the Prime Minister’s Hibiscus Award, following the
and feedback. We also jointly organise and sponsor activities with local
approval of the Honorary Prime Minister of Malaysia.
NGOs such as the ones referred to at page 51.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
47
OUR COMMITMENT TO SUSTAINABLE DEVELOPMENT
Promoting Best Practices
ISO 17025 CERTIFICATION
Your Company’s laboratory in Port Dickson continued to demonstrate its
MEETING INTERNATIONAL MANAGEMENT STANDARDS
The Company has been accredited with the following certifications:
•
International Ship and Port Security Code (“ISPS”)
professionalism and high quality management standards by successfully
Your Company attained ISPS certification on 1 July 2004 from the
maintaining its ISO 17025 Certification in 2007. The Department of
Marine Department, the designated authority for Malaysia. The ISPS
Standards Malaysia (“SIRIM”) conducted the audit of the laboratory’s
is a worldwide requirement imposed by SOLAS (Saving of Life at
Quality System and for the first time in the laboratory’s history, no
Sea) to ensure security of ships and port facilities. This certification
Non-Conformities against the standard were recorded. This is due
allows your Company’s port facilities to receive 500-tonne ships on
recognition of the technical competence and the professionalism of
international voyages.
our staff, and the sound management system in place. The laboratory
is accredited for a whole range of refinery product testing processes, all
•
ISO 14001
Your Company attained ISO 14001 certification in September
of which demand the highest precision techniques.
2000 and was successfully re-assessed in 2006 by its certification
Our laboratory also won the 2007 Excellence Award from the Malaysian
body, SIRIM QAS. This international standard sets the guideline for
Institute of Chemistry for the sixth consecutive year. This award aptly
environmental management.
recognises the high standards the laboratory maintains with regard to
safety, analytical services to its customers, quality management and the
•
technical competency of its staff. The laboratory supports both internal
was recertified in 2007 by its certification body, SIRIM QAS.
and external customers such as the PETRONAS Melaka Refinery, the
ESSO Port Dickson Refinery and the Shell depots operating within Shell
OHSAS 18001
Your Company achieved OHSAS 18001 certification in 2001, and
•
ISO 9001
Malaysia’s commercial and retail businesses. This latest recognition is
Your Company was successfully upgraded to ISO 9001:2000 by
a firm acknowledgment that the laboratory’s customers are receiving
SIRIM in 2003 and was recertified in 2007 with an expanded scope
internationally-certified services with the ISO 17025 edge.
to include Marine services.
The laboratory plays an important role in the quality control chain of
•
ISO 17025
our product components and finished products. Malaysian authorities
Your Company’s main laboratory successfully migrated to the new
have highlighted their intent to introduce new product specifications
ISO 17025 standard in 2001 and was recertified in 2007.
for both diesel and gasoline products. The laboratory is as such ready
for the implementation of Euro 2-M specifications.
48
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
OUR COMMITMENT TO SUSTAINABLE DEVELOPMENT
Diversity and Inclusiveness
Diversity means all the ways we differ. It includes visible differences such
as age, gender, ethnicity and physical appearance; as well as underlying
differences such as religion, nationality and education.
Inclusiveness means a workplace where differences are valued; where
everyone has the opportunity to develop skills and talents consistent
with our values and business objectives. The aim is to create an
organisation where people feel involved, respected, connected - where
the richness of ideas, backgrounds and perspectives are harnessed to
create business value.
Our acceptance of diversity and inclusiveness means that your Company
today has a diverse and multi-talented workforce comprising over 300
employees of five nationalities, of which 89% are male and 11%
female. In the Management team, the male composition is 67% whilst
the female composition is 33%.
THE SHELL GROUP DIVERSITY VISION
“A recognised leader in Diversity and Inclusion”.
The Group will benefit from Diversity and Inclusion through
enhanced decision making, increased creativity and innovation,
and better relationships with employees, customers,
suppliers, partners, governments and other stakeholders
– with positive impact on the bottom line.
To nurture Diversity and Inclusiveness (“D&I”) in the workplace, we
need to build awareness, knowledge and understanding to develop
the necessary skills, as well as practice behaviour that is conducive to
changing attitudes and driving organisational change.
D&I WEEK
Your Company is committed to bringing about the organisational
change needed to deliver our Vision.
D&I Week 2007 was launched on 12 November at your Company’s
refinery in Port Dickson. Our aim for the 2007 D&I week was to share
Shell’s experiences with our employees and provide them a better
understanding of D&I at the workplace. During the week, staff were
given the opportunity to participate in learning activities to build a
more inclusive workplace.
EMPLOYEE TRAINING
Your Company believes that to promote development and best use
of employee’s talents, there is a need to create an inclusive work
environment where every employee has an equal opportunity to
develop his or her skills and talents.
Continued success of your Company requires investment in people
development. This is to ensure that our employee’s have the right skills
to do their job and meet the needs of the business. A continual learning
environment, which facilitates development of new skills and methods
of working, is vital in building this capability.
Learning in your Company takes the form of Enterprise First approach
designed to create a learning environment that enables individuals and
the business to build capabilities essential to winning performance.
Your Company uses the Shell Group Learning & Development process
and its elements like the competence framework and individual
development plans, enable capability building by providing a means for
individuals to assess their competence and identify meaningful actions
for ongoing development.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
49
In all that we do, we will balance
our economic ambitions with
a clear commitment to corporate
responsibility.
50
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
OUR COMMITMENT TO SUSTAINABLE DEVELOPMENT
Culture of Sustainable Development
WORK WITH STAKEHOLDERS
Your Company’s operations and presence undoubtedly impact upon
We are committed to promoting
a balanced work-life culture
- and in turn, are invariably affected by many different stakeholders.
We recognise our stakeholders’ interest in our business and the need to
listen and respond to them. In this respect, the Port Dickson community
is fully engaged on our activities via letter-drops and engagement
sessions with neighbours and residents. A communication platform is
in which all Shell employees share
also provided to enable stakeholders to channel any concerns they may
have in a timely and formal manner. The local authorities have held us
the Company’s commitment
in good stead with the proactive role that we embarked on.
to sustainable development.
BENEFITS COMMUNITIES
Your Company is a key member of the local community where it has
a business presence. We are on a constant lookout for appropriate
ways to contribute to the social well being of the community and to the
SOCIAL PERFORMANCE PLAN
wider public, which grant your Company its licence to operate and grow.
Social Performance (“SP”) is about how we address the expectations,
needs, concerns, and perceptions of our neighbours and societies
Our contributions do not always take the form of direct funding and
where we operate. The management of our social impacts and benefits
monetary sponsorships. We also provide employment and business
can have a large impact on achieving business objectives and is one
opportunities, as well as invest in programmes and initiatives to raise
of the key areas through which reputation will be both protected and
the socio-economic status of Port Dickson and improve the locality’s
enhanced. Those impacts can be positive or negative, but how well we
standard of living and quality of life. This non-quantifiable contribution
manage them affects the wellbeing of our neighbours - and ultimately
has been widely acknowledged by the local Government and community
of our business.
leaders.
SP management includes specific activities that must be undertaken
consistently to identify social risks, issues and opportunities. As part of
the Shell Group Guidelines, your Company is required to have a social
performance plan.
The SP Plan helps us to mitigate potential negative impacts and to
deliver real benefits to the community and to the business. It assists
in maintaining and sustaining the environment for present and future
generations. It helps in the treatment of employees with dignity
and respect. It helps in engaging with shareholders, stakeholders,
employees, customers, legislators and officials in an ethical and open
manner.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
51
OUR COMMITMENT TO SUSTAINABLE DEVELOPMENT
We have also supported the government’s call for the increased
BIODIVERSITY
application of the English Language in local schools by sponsoring efforts
Your Company takes the responsibility of protecting and supporting
to promote the use of English in communication by students. Your
biodiversity seriously. Before considering expansion of an existing
Company’s annual ‘We Care We Share’ community care programme
operation, we first check whether the area has been identified as
plays an integral part in fulfilling your Company’s social investment
having high biodiversity value.
objectives by participating in and contributing towards various
charitable causes. In 2007, we organised, supported or participated in
Your Company, which is a part of the Shell Group, has an in-house
the following activities:
online mapping system to help identify environmentally sensitive sites
•
MNS Raptor Watch 2007 at Tanjung Tuan, Port Dickson;
•
Safety Day with local fence line residences;
•
“We Care We Share” programme with 60 senior citizens and
and map them against the existing or planned activities, in order to
get a better understanding of the associated environmental risks. This
enables your Company to identify potential areas of high biodiversity
value at an early stage when developing projects.
handicapped individuals;
•
National Day celebration with 500 KEMAS pre-school children;
Where we are operating in a protected area or other area of high
•
“We Care We Share” programme with 150 Down Syndrome
biodiversity value, we will develop a biodiversity action plan, setting
children;
out how we aim to manage the key biodiversity related issues specific
•
Refinery visit by various NGOs, Government bodies and university
students;
•
•
It is through this that we will work to maintain ecosystems and make a
authorities;
positive contribution towards the conservation of global diversity.
District level English public speaking competition with Port Dickson
District level English debating competition at Sekolah Menengah
Tanah Merah;
•
District level English drama competition at Sekolah Tinggi
Port Dickson;
•
Berbuka Puasa programme with Port Dickson Foundation orphans;
•
Beach Cleaning Campaign with Port Dickson Lions Club and
secondary school students;
•
“We Care We Share” fund raising campaign with Port Dickson
Day Care Centre; and
•
We are committed to early engagement with identified key stakeholders.
Community dialogues with NGOs, neighbours and Government
primary schools;
•
to that project.
Reading Campaign with Port Dickson District Library.
52
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Highlights
15 Jan - Community Update
3 Mar - Interactors Conference
9 Mar - Staff Communication
Session
21 Jul - We Care We Share Programme
1 Sept - KEMAS Pre-School Merdeka Day
6 Sept - F1 Model Car Competition
Celebrations
6 Oct - We Care We Share Programme with
Senior citizens and disabled persons
17 Oct - Community Update
23 Oct - HSSE Week Launch
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
53
of the Year
13 Mar - Community Update
20 Mar - English Language Competition
10 Jun - Piala Perpatih
8 Sept - Safety Day with JKKK
10 Sept - Police Officers’ Visit
5 Oct - SRC Majlis Berbuka Puasa
10 Nov - SRC Hari Raya Open House
1 Dec - SRC-LIONS Beach Cleaning Campaign
Kg. Arab
3 Nov - Shell Retirees Dinner
54
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Your Company has built its business
on a clear commitment to acting with integrity.
Our core values of honesty, integrity and respect
for people are central to our daily operations.
integr ty
Corporate Governance
56 Audit Committee Report
59 Corporate Governance Statement
66 Statement on Internal Control
56
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Audit Committee Report
TERMS OF REFERENCE
Constitution
The Audit Committee was established by your Board of Directors on
22 September 1993 to:
•
•
Assist in discharging your Board’s responsibilities relating to your
Company’s management of internal controls, accounting policies
and financial reporting;
Provide by way of regular meetings, a line of communication
between your Board and your Company’s internal and external
auditors.
Membership
The Audit Committee is appointed by your Board and consists of four
members of which three are Independent and Non-Executive Directors
to comply fully with paragraph 15.10 of the Listing Requirements of
Bursa Malaysia Securities Berhad. The Chairman of the Audit Committee
is one of the appointed Independent and Non-Executive Directors. One
of the Independent Directors is an accountant with more than three
years working experience and a member of the recognised bodies of
the Association of Accountants specified in Part II of the 1st Schedule of
the Accountants Act, 1967.
Authority
The Audit Committee is authorised by your Board to investigate any
matter in discharging its duties and responsibilities within its terms of
reference and shall have unrestricted access to information it requires
from any employee, and all employees are directed to co-operate with
any request made by the Audit Committee.
The Audit Committee is authorised by your Board to obtain outside legal
or other independent professional advice and to secure the attendance
of outsiders with relevant experience and expertise whenever it deems
necessary.
Quorum And Frequency Of Meeting
The quorum for Audit Committee meetings shall be the majority of
Independent and Non-Executive Directors present. Meetings shall
be held at least four times each calendar year, usually preceding the
meetings of your Board of Directors.
The Secretary of the Audit Committee is your Company’s Internal
Audit Manager. The minutes of each meeting are distributed to each
member of the Committee and your Board. The Chairman of the Audit
Committee provides an update of the Audit Committee meeting at the
full Board Meeting.
The Managing Director and the Finance Manager attend the quarterly
meetings although they do not have any voting rights. In addition, the
External Auditors and other appropriate persons may also be invited
to attend the meetings. The Independent and Non-Executive Directors
meet the External Auditors at least once a year to discuss the external
audit findings without any Non-Independent Board member present.
Duties
In discharging its duties and responsibilities, the Audit Committee
shall perform, and where appropriate, report to your Board on the
following:
a) Risk Management & Internal Control
• Consider the Company’s principal risks and evaluate the
effectiveness of the process used to identify, assess and mitigate
the risks
• Evaluate the design and operating effectiveness of the internal
control system for managing the business’s principal risks,
taking into consideration:
• The results of internal audits and other assurance activities
• Business Control Incidents
• Business results, key performance indicators and the degree
to which the business has achieved its objectives
• Consider whether appropriate and timely actions are taken to
identify and address material failings or weaknesses in internal
controls
b) External Audit
• Recommend the appointment and audit fee of the External
Auditors to your Board
• Make appropriate recommendations to your Board on matters
of resignation or dismissal of the External Auditors
• Review and discuss the nature and scope of the external audit
strategy and plan
• Review and discuss issues arising from External Auditors’ interim
and final audit letters to Management, including Management
responses and the External Auditor’s evaluation of the system
of internal controls
• Discuss findings from the interim and final external audits, and
any other matters the External Auditors may wish to discuss (in
the absence of Management, if required)
c) Internal Audit
• Review the scope, function, resources and authority of the
Internal Audit Function in carrying out its work
• Review the risk-based Internal Audit Plans and Programmes
• Ensure co-ordination between the Internal and External
Auditors
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
57
FROM LEFT :
Y.Bhg. Dato’ Jaffar Indot, Mr. Thomas Michael Taylor, Y.Bhg. Dato’ Seri Talaat bin Haji Husain, Y.Bhg. Tan Sri Saw Huat Lye
•
•
•
Review the major findings reported by Internal Audit and follow
up on Management’s implementation of the recommended
actions
Assess performance of services provided by the Internal Audit
Function
Recommend to your Board the Directors’ Statement on Internal
Control and any changes to the said Statement
d) Financial Reporting
Review the quarterly and annual financial statements before
submission to your Board for:
• Any changes in accounting policies and practices
• Compliance with prevailing accounting standards
• Compliance with statutory and regulatory disclosure
requirements
• Any significant adjustments resulting from audits
• Major judgemental matters (e.g. material contingent liabilities)
• The ongoing key assumptions, which underpin the
Management’s business targets
e) Related Party Transactions
• Recommend to your Board matters relating to Related Party
Transactions including disclosures and situations involving
potential conflict of interest that may arise within your
Company, including any transaction, procedure or course of
conduct that raises questions on Management integrity
f) Other Matters
• Consider other issues, as proposed by your Board from time
to time
MEMBERSHIP AND MEETINGS
The Audit Committee held four meetings in 2007. The dates of the
meeting and the attendance records are as follows:
5 Feb
7 May
13 Aug
2007
2007
2007
1 Nov
2007
Dato’ Jaffar Indot
Present
Present
Present
Present
Tan Sri Saw Huat Lye
Present
Present
Present
Present
Dato’ (Dr.) Yahya
bin Ismail
Present
Present
-
-
Present
Present
-
Present
-
-
Present
Present
– Resigned on 8 May 2007
Thomas Michael Taylor
Dato’ Seri Talaat
bin Haji Husain
– Appointed on 1 June 2007
58
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
AUDIT COMMITTEE REPORT
Dato’ Jaffar Indot is the Chairman of the Audit Committee.
Your Company’s Managing Director, Finance Manager, Internal Audit
Manager and the External Auditors (as and when required) were in
attendance at each of these meetings. On 14 February 2008, the
Chairman of the Audit Committee, and the Independent Directors held
a meeting with the External Auditors to discuss the results of the audit,
including matters related to independence of the External Auditors and
the extent of cooperation provided by your Company and its employees
and any other observations they may have during the audit process.
Key highlights including Management responses and close out
recommendations, were presented to the Audit Committee. The annual
Internal Audit/Assurance Plan for 2007 was reviewed and approved for
execution.
The 2007 External Auditors Report on Examination was reviewed and
the issues raised and the Management’s responses were considered
and endorsed. The External Auditors presented the nature, scope and
their approach to future audits for the Audit Committee’s consideration
and approval.
HIGHLIGHTS OF ACTIVITIES
Your Company conducted fourteen internal audits/reviews in 2007
on a range of business processes and regulatory compliance.
NAME OF AUDIT/ REVIEW
PERIOD
CONDUCTED
Jetty Operation Review
Quarter 1, 2007
Global Asset Management Excellence (GAME)
Quarter 1, 2007
Equipment Integrity Compliance Review
The Audit Committee reviewed the quarterly and annual financial results
prior to their presentation to your Board of Directors for compliance
with:
• Provisions of the Companies Act, 1965;
• Listing Requirements of Bursa Malaysia Securities Berhad;
• Applicable approved accounting standards; and
• Other legal and regulatory requirements.
The Audit Committee adopted the Shell Group Risk Management
Manual to safeguard company assets and shareholder investment.
The updated Assurance Plan and the principal risks in achieving your
Company’s business objectives were used to reconfirm your Company’s
Audit and Assurance Plan.
Insurance MARSH Review
Quarter 2, 2007
Technical Safety Review – Hydrotreater 2
Quarter 2, 2007
ISO 9001 Surveilance/Recertification Audit
Quarter 3, 2007
ISO 14001 Surveilance/Recertification Audit
Quarter 3, 2007
OHSAS 18001 Surveilance/Recertification Audit
Quarter 3, 2007
INTERNAL AUDIT FUNCTION
ISO 17025 Surveillance/Recertification Audit
Quarter 3, 2007
Deep Dive Audit on Manufacturing
Quarter 3, 2007
Your Company outsourced the Internal Audit Function to its affiliate
company, Shell Malaysia Limited.
business processes
International Ship & Port Facility Security Review
Quarter 3, 2007
Related Party Transaction Audit
Quarter 3, 2007
Refinery Planning and Scheduling Audit
Quarter 3, 2007
Group Business Assurance Letter Review
Quarter 4, 2007
Financial Control Manual Assurance Review
Quarter 4, 2007
Your Company’s Internal Audit Manager reports to the Audit Committee
and assists in monitoring and updating risks and adequacy of the
internal control system. The Internal Audit Function assists management
to identify, evaluate and update significant risks and develop risk-based
audit plans for approval by the Audit Committee. Its role is to provide
independent assessment and reasonable assurance that the systems of
internal controls are adequate and effective.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
59
Corporate Governance Statement
Your Company is committed to implementing the highest standards
which are designed to ensure that its employees understand the
of corporate governance at all levels. Your Company’s policies and
principles and that they act in accordance with them. Your Company
procedures are upheld by internal controls that are regularly audited
recognises that it is vital that its behaviour matches its intentions.
and reviewed to ensure their effectiveness. These policies and
procedures are based on the Shell General Business Principles (SGBP)
All the elements of this structure - values, principles and the
– a governance blueprint developed by Royal Dutch Shell plc, your
accompanying procedures - are necessary. It is your Company’s firm
Company’s ultimate holding company - that is designed to support a
belief that maintaining the trust and confidence of shareholders,
robust corporate governance system.
employees, customers and other people with whom your Company does
business, as well as the communities in which your refinery is situated,
Your Board of Directors supports the Principles of Corporate Governance
is crucial to its continued growth and success. Your Company intends
as laid out in the Malaysian Code of Corporate Governance (as revised
to merit this trust by conducting itself according to the standards set
in 2007) and is committed to ensuring that the highest standards of
out in these principles. These principles have served your Company well
corporate governance are implemented and maintained throughout
for many years. It is the responsibility of Management to ensure that
in enhancing shareholders’ value and the long term value of your
all employees are aware of these principles, and behave in accordance
Company.
with the spirit as well as the letter of the SGBP.
These principles and practices, supported by existing internal controls
In December 2006, the Code of Conduct was launched with the
processes, are regularly audited and reviewed, to ensure transparency
expectation that every employee carries out his/her duty in accordance
and accountability. Royal Dutch Shell plc, as your Company’s ultimate
with the SGBP guided by a single Code. The thrust of the Code is
holding company, has developed a governance guide, which is a series
premised on both legal and ethical compliance.
of policies and management systems that are designed to support a
strong system of corporate governance. The SGBP, as adopted by your
Board, spells out clearly the key business principles that govern the way
your Company conducts its business.
Shell General Business Principles
Your Board has unequivocally adopted the SGBP, which first came into
being in 1976. The SGBP has remained consistent ever since, because
the core values on which the Principles were originally based have
endured, namely
•
Honesty
•
Integrity
•
Respect for people
Your Company also firmly believes in the fundamental importance of
the promotion of trust, openness, teamwork and professionalism and
pride in what it does. These underlying corporate values determine your
Company’s principles. These principles apply to all transactions, large or
small, and describe the behaviour expected of every employee in your
Company in the conduct of its business. In turn, the application of
these principles is underpinned by procedures within your Company,
BOARD OF DIRECTORS
Your Board is committed to ensuring that the Principles of Corporate
Governance set out in the Malaysian Code of Corporate Governance
are effectively employed in your Company.
Board Composition
Your Board currently consists of eight Directors, namely, a NonExecutive and Non-Independent Chairman, one Executive Director, who
is also the Managing Director, and six other Directors, three of whom
are Independent and Non-Executive Directors, which is in compliance
with paragraph 15.02 of the Listing Requirements of Bursa Malaysia
Securities Berhad.
The roles of the Non-Executive Chairman and the Managing Director are
distinct and separate with their responsibilities clearly defined to ensure
a balance of power and authority. The Non-Executive Chairman is the
Country Chairman of Shell Malaysia and contributes his considerable
experience to your Board. The Independent and Non-Executive Directors,
all of whom are distinguished, respected and experienced present or
past business leaders, play important roles by exercising independent
60
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
CORPORATE GOVERNANCE STATEMENT
judgement and objective participation in the proceedings and decision-making processes of your Board. The presence of the Independent and
Non-Executive Directors is essential in order to ensure that the interests of other parties, such as the minority shareholders, are properly safeguarded.
The other Directors, being senior executives within the Shell Group, also bring with them a wide range of business and financial experience relevant
to your Company. The profile of each Director is given on pages 18 to 21.
Responsibility
Your Board has the overall responsibility for corporate governance and strategic direction of your Company and is entrusted to exercise reasonable
and proper care in utilising your Company’s resources for the best interests of its shareholders and to safeguard your Company’s assets. The
Managing Director, being the only Executive Director of your Company, is primarily responsible for the day-to-day operations of your Company.
In addition, the Managing Director has the principal responsibility of reporting, clarifying and communicating matters relating to day-to-day
operations of your Company to your Board.
All the Directors in office as of 31 December 2007 have attended the Mandatory Accreditation Programme (MAP). Your Board firmly believes in the
continuing education of individual Directors consistent with the requirements of paragraph 15.09 of the Listing Requirements (hereinafter referred
to as “CEP requirements”). Your Board has taken on the onus in reviewing, evaluating and determining the specific and continuous training and
the competency development of individual directors during its meetings resulting in in-house trainings being carried out in addition to participation
in public sessions. Your Directors are also kept up-to-date on changes in the regulatory/legal/commercial risks environment as and when required
through various means.
Details of the Directors attending MAP pursuant to paragraph 15.09 of the Listing Requirements and the in-house trainings, aimed at improving
the Directors’ competency are summarised as follows:
COURSES
Dato’
Dato’ (Dr)
Tan Sri
Dato’
Raja
Dato’
Thomas
Mark
Dato’ Seri
Saw Choo
Yahya bin
Saw Huat
Jaffar
Ahmad
Mohzani
Michael
Owen
Talaat bin
Boon
Ismail
Lye
Indot
Murad
bin Abdul
Taylor
Stevens
bin Raja
Wahab
Bahrin
Business Intelligence
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
within Corporate
Governance &
Directors’ Duties &
Responsibilities.
Innovation
– the Antidote to
Commoditisation
Prevention of
Haji
Husain
Corporate Frauds
Tan Sri Saw Huat Lye additionally attended the seminar on Leading Organisational Change on 21 November 2007.
61
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
CORPORATE GOVERNANCE STATEMENT
Board Meetings
Your Board meets at least four times a year, with additional meetings convened when necessary, where the Managing Director, and members of
the Management team, table and present comprehensive reports for your Board’s information, deliberation and direction. Your Directors have full
and unrestricted access to all information pertaining to your Company’s business or affairs to enable them to discharge their duties. Written reports
on health, safety, security and environment, operational performance and profitability, human resources, business plans and financial highlights are
made available in advance of each Board Meeting to your Directors.
In addition, members of the Management are frequently invited to the Board meetings to explain and clarify the items tabled to your Board.
Minutes of each Board meeting are circulated to each Board member prior to confirmation of the minutes in the next Board meeting.
Details of the Directors’ attendance at meetings during 2007 are summarised as follows:
Number of Board Audit
Directors
Number of Board Meetings
#
Held
Attended
Y.Bhg. Dato’ Saw Choo Boon
5
##
Y.Bhg. Dato’ (Dr.) Yahya bin Ismail
YM Raja Ahmad Murad bin YM Raja Bahrin
Committee Meetings
#
General Meetings
Held
Attended
Ordinary
Extraordinary
5
Non-member
Non-member
Yes
Nil
3
3
2
2
Yes
Nil
5
5
Non-member
Non-member
Yes
Nil
Y.Bhg. Tan Sri Saw Huat Lye
5
5
4
4
Yes
Nil
Y.Bhg. Dato’ Jaffar Indot
5
5
4
4
Yes
Nil
Y.Bhg. Dato’ Mohzani bin Abdul Wahab
5
5
Non-member
Non-member
Yes
Nil
Mr. Thomas Michael Taylor
5
4
4
3
No
Nil
Mr. Mark Owen Stevens
5
4
Non-member
Non-member
Yes
Nil
###
2
2
2
2
No
Nil
Y.Bhg. Dato’ Seri Talaat bin Haji Husain
#
Number of meetings held during tenure as Director.
##
Resigned on 8 May 2007.
###
Appointed on 1 June 2007.
Details of place, date and time of the 48th Annual General Meeting:
Place : Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur.
Date : Tuesday, 8 May 2007.
Time : 11.00 a.m.
There were no Extraordinary General Meetings held in 2007.
62
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
CORPORATE GOVERNANCE STATEMENT
Whenever independent professional advice is required by the Directors
Nomination Committee
to carry out their duties, an appropriate external expert may be
The nomination process is formal and transparent, and is in line with
engaged at your Company’s expense. All Directors have access to the
the recommendation of Malaysian Code on Corporate Governance.
advice and services of your Company Secretary, whose appointment
After taking into account the present process and circumstances
and resignation would be subject to Board approval. Your Company
particular to your Company, your Board has elected not to appoint
Secretary regularly informs your Board on the changes to statutory and
a nomination committee. Instead, the Chairman in consultation with
regulatory requirements pertaining to the Directors and your Company.
relevant stakeholders seeks nominations, deliberates and endorses
candidates for appointment as Directors. The nomination process takes
Your Board takes a particular interest in your Company’s role as a
into account the skills, experience, expertise and core competencies
responsible and caring member of the community. To this end, your
the candidates would bring to your Board. Your Board makes the
Board has adopted various initiatives including:
final decision on the appointment of Directors in accordance with
•
promoting the goal of Sustainable Development by adopting
a systematic approach to health, safety and environmental
management; and
•
supporting the implementation of the Social Performance Plan,
which is aimed to increase our social performance levels and benefit
the stakeholders as well as your Company.
your Company’s Articles of Association. The appointment of senior
management is made in consultation with relevant stakeholders and a
non-executive member of your Board.
Directors’ Remuneration
After taking into account the present process and circumstances
particular to your Company, your Board has elected not to appoint a
remuneration committee. Instead, your Board has the Shell Group’s
Appointment and Re-Election of Directors
In accordance with your Company’s Articles of Association, the
Directors may fill any casual vacancy occurring in the Board. The new
appointee shall retain his office until the next Annual General Meeting
of your Company, but is eligible for re-election by the shareholders at
remuneration policy to set the remuneration of the Managing Director.
The remuneration level is also benchmarked internally with other Shell
operating companies in Malaysia based on the level of seniority, individual
performance as well as corporate performance. The Managing Director
does not participate in the setting of his remuneration package.
that meeting.
All Independent Directors are paid directors’ fees. The remuneration
The Articles of Association also provide for retirement by rotation,
where one-third of Directors shall retire from office at least once every
three years but shall be eligible for re-election by the shareholders at
the Annual General Meeting.
received by the Independent and Non-Executive Directors is based
on the competitive market situation, taking into consideration the
Directors’ business and financial experience relevant to your Company.
The determination of Independent and Non-Executive Directors’
fees is a matter for your Company’s Board of Directors as a whole
Section 129 of the Companies Act, 1965, provides that Directors who
are over the age of seventy (70) shall retire at every Annual General
Meeting but may offer themselves up for re-election.
and the Independent and Non-Executive Directors concerned do not
participate in the deliberations and voting on decisions in respect
of their remuneration. Your Board, as a whole, recommends the
remuneration payable to the Independent and Non-Executive Directors
to the shareholders for approval at the general meeting, as and when
required. The remuneration of the Independent Directors was increased
in 2007 as approved by the shareholders during the 2007 Annual
General Meeting.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
63
CORPORATE GOVERNANCE STATEMENT
An analysis of the aggregate Directors’ remuneration paid by your Company for the year ended 31st December 2007 is set out below:
Directors’
Attendance
Contribution
Benefits
& Audit
and other
to Provident
in-kind and
Basic Salary
Fees
fees
Bonus
Fund
Others
Total
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
538
-
-
185
128
30
881
Y.Bhg. Dato’ (Dr.) Yahya bin Ismail
-
22.5
6
-
-
-
28.5
Y.Bhg. Dato’ Jaffar Indot
-
45
10
-
-
-
55
Y.Bhg. Tan Sri Saw Huat Lye
-
45
10
-
-
-
55
Y.Bhg. Dato’ Seri Talaat bin Haji Husain
-
22.5
4
-
-
-
26.5
Name of Directors
Executive
^YM Raja Ahmad Murad bin YM Raja Bahrin
Non-Executive
^ Please note Raja Ahmad Murad’s directors’ interest under Shell’s Performance Share Plan.
The Non-Independent and Non-Executive Directors of your Company receive their remuneration from other Shell companies and do not receive
any form of remuneration from your Company.
The Audit Committee
The Audit Committee of your Board was established in 1993. The Audit Committee comprises of four Directors, three of whom are Independent
and Non-Executive Directors and one of the Independent and Non-Executive Directors chairs the Audit Committee. One of the Directors in the
Audit Committee is a qualified accountant as prescribed by the Malaysian Institute of Accountants. The Managing Director and the Finance
Manager normally attend the Audit Committee meetings.
There were four meetings of the Audit Committee in the financial year 2007, during which presentations on your Company’s state of internal
controls and progress of Assurance Plan were made by the Management. The Independent and Non-Executive Directors of the Audit Committee
meet independently, at least once a year, with the external auditors.
Your Company has also established an internal audit function to obtain sufficient assurance of regular review and appraisal of the effectiveness of
your Company’s internal controls. Your Company’s Internal Audit Manager acts as Secretary to the Audit Committee. The Audit Committee has
wide powers with authority to regulate its own procedures and has its own terms of reference. The Audit Committee’s role, and functions and
activities are set out on pages 56 to 58 of this Annual Report.
ANNUAL REPORT AND ANNUAL GENERAL MEETING
Your Company continues to acknowledge the importance of transparency and accountability to its shareholders and investors in compliance with
the Malaysian Code on Corporate Governance. Your Company uses different channels of communication to provide shareholders, investors and
other stakeholders with information to fulfil these objectives. An important channel to reach shareholders and investors is the Annual Report of
your Company. As such your Company does not only include comprehensive details of the business, financial performance and other activities
of your Company in the Annual Report, but also continually enhances its contents to achieve and maintain the highest standards of corporate
governance.
64
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
CORPORATE GOVERNANCE STATEMENT
In addition, an important forum for communication and dialogue with
S TAT E M E N T O F D I R E C T O R S ’ R E S P O N S I B I L I T Y
shareholders of your Company is the Annual General Meeting. Your
F O R P R E PA R I N G T H E F I N A N C I A L S TAT E M E N T S
Company’s Annual Report contains written clarifications on each item
The Directors are required by the Companies Act, 1965 to prepare
on the agenda of the Annual General Meeting so that shareholders
financial statements for each financial year which have been made in
are suitably briefed on matters to be discussed to enable their effective
accordance with the applicable approved accounting standards and the
participation. The Chairman and your Board encourage shareholders to
provisions of the Companies Act, 1965, which give a true and fair view
attend and participate in the Annual General Meeting. Questions posed
of the state of affairs of your Company at the end of the financial year
are, where possible, answered in detail either at the Annual General
and of the results and cash flows of your Company for the financial
Meeting itself or thereafter. Shareholders are encouraged to raise
year.
queries by contacting your Company at any time throughout the year
and not just at the Annual General Meeting. Your Company’s Registrars
or appropriate officers of your Company will attend to queries in a
prompt and efficient manner.
Financial Reporting
In preparing the financial statements, the Directors have:
•
selected suitable accounting policies and applied them consistently;
•
made judgments and estimates that are reasonable and prudent;
•
ensured that all applicable approved accounting standards and
It is the commitment of your Board to provide a balanced, clear and
meaningful assessment of the financial position and prospect of your
provisions of the Companies Act, 1965 have been followed; and
•
based such statements on a going concern basis as the Directors
Company in all the reports to shareholders and investors. Your Company
have a reasonable expectation, having made enquiries, that your
presents quarterly public financial announcements and they include
Company has adequate resources to continue in operational
details of your Company’s business performance and current issues and
existence for the foreseeable future.
concerns. The Directors scrutinise these announcements at their Board
Meetings prior to publication to ensure that they are accurate and
The Directors are responsible for ensuring that your Company keeps
present a balanced assessment of your Company’s affairs. Your Board
accounting records which disclose with reasonable accuracy the
is assisted by the Audit Committee to oversee the financial reporting
financial position of your Company and which enable them to ensure
process and the quality of financial reporting of your Company. The
that the financial statements comply with the Companies Act, 1965.
Statement by Directors pursuant to Section 169 of the Companies Act,
1965 is set out on page 75 of this Annual Report.
The Directors have overall responsibilities to take the necessary steps
required to safeguard the assets of your Company to prevent and
Investor Relations
detect fraud and other irregularities.
Another key channel of communication with shareholders, investors
and analysts is your Company’s Investor Briefing Session. This regular
event, that commenced in the second quarter of 2004 allows your
INTERNAL CONTROL
Company to have direct communication with the investment community
Your Board continues to maintain a sound system of internal controls
and address issues that investors may have and to explain or clarify
that provides reasonable assurance of effective and efficient operations,
aspects of the business and operations of your Company. This is further
and compliance with laws and regulations, as well as with internal
testimony to your Company’s continued commitment to transparency in
procedures to safeguard shareholder’s investment and your Company’s
reporting and is one of the ways in which your Company supports Bursa
asset. As required by paragraph 15.24 of the Listing Requirements of
Malaysia’s Best Practice in Corporate Disclosures recommendations.
Bursa Malaysia Securities Berhad, the external auditors have reviewed
Your Company’s web-page is another communication tool to provide
this Statement on Internal Control. Their review was performed in
the latest information to the shareholders and investing public.
accordance with Recommended Practice Guide (“RPG”) 5 issued by the
Malaysian Institute of Accountants. Based on their review, the external
auditors have reported to your Board that nothing has come to their
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
65
CORPORATE GOVERNANCE STATEMENT
attention that causes them to believe that this Statement is inconsistent
f) Options, Warrants or Convertible Securities
with their understanding of the process your Board has adopted in
No options, warrants or convertible securities were exercised during
the review of the adequacy and integrity of internal controls of the
the financial year.
Company. RPG 5 does not require the external auditors to and they
did not consider whether this Statement covers all risks and controls,
g) American Depository Receipt (“ADR”) or Global Depository
Receipt (“GDR”) Programme.
or to form an opinion on the effectiveness of the Company’s risk and
Your Company did not sponsor any ADR or GDR programme during
control procedures.
the financial year.
R E L AT I O N S H I P W I T H E X T E R N A L A U D I T O R S
h) Non-Audit Fees
Your Board through the Audit Committee has established a formal
During the financial year, your Company engaged the External
and transparent professional relationship with the external auditors of
Auditors for a number of non-audit activities in the following
your Company. The role of your Board and the Audit Committee in
areas:
relation to the auditors is described on pages 56 to 58. The Chairman
•
of the Audit Committee and the Independent Non-Executive Directors,
met the External Auditors on 14 February 2008 to discuss the external
i)
a) Conflict of Interest
None of the Directors have any family relationship with other
Directors and/or major shareholders of your Company, nor any
personal interest in any business arrangement involving your
Company. None of the Directors have had convictions for any
offences within the past ten years.
b) Material Contracts Awarded to Directors
and substantial Shareholders
None of the Directors and major stockholders had any material
Profit Guarantee
During the financial year, there were no profit guarantees given by
audit findings, without any Non-Independent Directors present.
O T H E R I N F O R M AT I O N
Review of Directors’ Statement on Internal Control (RM22,000)
your Company.
j)
Revaluation Policy on Landed Properties
The Group’s revaluation policy is stated in paragraph C of the
Summary of Significant Accounting Policies.
k) Recurrent Related Party Transactions of Revenue
or Trading Nature
The Recurrent Related Party Transactions of Revenue or Trading
Nature is stated in Note 24 to the Financial Statements.
Signed on behalf of the Board of Directors, in accordance with the
Board of Directors’ resolution dated 14 February 2008.
contract with your Company during the financial year under
review.
c) Sanctions and/or Penalties Imposed
There were no sanctions and/or penalties imposed on your
Company and its Directors by the relevant regulatory bodies during
Y.Bhg. Dato’ Saw Choo Boon
the financial year under review.
Chairman
d) Utilisation of Proceeds
During the financial year, there were no proceeds raised by your
Company from any corporate proposals.
e) Share Buybacks
Your Company did not enter into any share buyback transactions
during the financial year.
YM Raja Ahmad Murad bin YM Raja Bahrin
Managing Director
66
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Statement on Internal Control
INTRODUCTION
Fit-for-purpose risk responses are primarily intended to:
The Listing Requirements of Bursa Malaysia Securities Berhad
•
(Paragraph 15.27(b)) require the Directors to make a statement in the
Company’s annual report about the state of its internal controls. The
Malaysian Code on Corporate Governance (as revised in 2007) further
requires the Board of Directors to ensure that a sound system of internal
controls is maintained to safeguard shareholders’ investment and the
Company’s assets. In pursuance thereof and in accordance with a
desire to adhere to the highest standard of corporate governance, your
Board is pleased to set out below its Statement on Internal Control
that was prepared in accordance with Bursa Malaysia’s Statement on
Internal Control - Guidance for Directors of Public Listed Companies.
Your Board believes the practice of good corporate governance is an
important continuous process.
RESPONSIBILITY
Your Board recognises that good corporate governance has its roots
in sound internal controls and a robust risk management programme.
Your Board affirms its overall responsibility for reviewing the adequacy
and the integrity of your Company’s internal control systems and
management information systems, including systems for compliance
with applicable laws, regulations, rules, directives and guidelines.
Your Board and the Management have ensured that your Company’s
system of internal controls is able to manage the risks to which
your Company is exposed. The objective is not to eliminate risk but
to understand your Company’s significant risks, set boundaries for
risk taking and apply fit-for-purpose risk responses that enable your
Company to achieve its corporate objectives within a managed risk
profile.
Minimise the likelihood of a risk occurring by actively managing the
sources of the risk
•
Mitigate the impact of a risk, often through the application of
some form of alert that the risk has materialised, followed by the
initiation of a contingency or recovery plan to reduce the potential
consequences
Your Board and the Audit Committee are informed of all control
issues pertaining to internal controls and regulatory compliance. It is
imperative to note that any system of internal control can only provide
reasonable, and not absolute, assurance against material misstatement
or loss.
RISK MANAGEMENT
Your Board regards risk management as an integral part of the
business operations. The Company has adopted the Shell Group Risk
Management Manual issued in 2006, and has in place an ongoing
process for identifying, evaluating and managing significant risks
that affect the achievement of your Company’s business objectives.
The changes to your Company’s risk profile, the risk responses and
assurances are documented in the Assurance Plan. The Assurance Plan
is the basis of the risk-based Audit Plans developed for your Company.
The risk profile of your Company is established during risk management
sessions undertaken by the Management, which identifies the
significant risks that your Company is facing. The risk responses and
internal controls that the Directors and Management have taken and or
are taking are documented in the Assurance Plan and Risk Register.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
67
STATEMENT ON INTERNAL CONTROL
The Assurance Plan is reviewed by the Internal Audit Function and by
6. The monitoring by, and reporting to, your Board of every single
the Audit Committee and approved by your Board. The Internal Audit
affixation of the Company’s Common Seal was made in accordance
Function is involved in facilitating the risk assessment process. For each
with the Articles of Association of the Company.
of the risks identified, a risk owner is assigned to ensure appropriate
risk response actions are carried out. Control issues arising from the
assurance process including internal and external audits are discussed
at the Audit Committee. Your Board, as part of the annual strategic
review, considers and approves the Assurance Plan as in previous
7. Provision by your Company’s Management the Letter of Assurances
on an annual basis affirming that appropriate internal business
controls are in place and ensuring compliance with your Company’s
policies.
years, is in line with the requirements of Bursa Malaysia’s Statement
8. Declaration by all employees of your Company on an annual basis
on Internal Control - Guidance for Directors of Public Listed Companies
on any conflict of interest, compliance with the Statement of
and the Malaysian Code of Corporate Governance.
General Business Principles and the Code of Conduct.
9. Declaration by relevant employees on any shareholding and
OTHER KEY ELEMENTS OF INTERNAL CONTROL
movements thereof on any shares of the Company held by such
Apart from risk management and internal audit, the other key elements
employee through annual declaration statements.
of your Company’s internal control systems are described below:
10. An enhanced global system for confidential disclosure, “Shell
1. The adoption of the Shell Statement of General Business Principles
Group’s Global Helpline” is in place for staff to raise concerns
and the Code of Conduct, which governs the standards of conduct
where the interest of the organisation or its stakeholders is at risk,
and prohibits improper behaviour. Any breach of these Principles or
either by a breach of a process or procedure, or where beneficial
the Code is actionable by disciplinary proceedings.
opportunities may be missed.
2. Clearly documented and auditable procedures and manuals in
11. The Senior Independent and Non-Executive Director provides a
respect of financial controls, trading controls, contracting and
secure and confidential channel for concerns conveyed to him
procurement, engineering, operation, human resource, health,
directly by the shareholders and other stakeholders.
safety, security and environment.
3. Documented and auditable “Control Registers” over activities,
which affect your Company’s financial results.
There were no material losses reported during the current financial
year as a result of weaknesses in internal control. The Management of
your Company continues to take measures to strengthen the internal
4. Structured review of financing proposals and business plans before
control environment.
adoption combined with a detailed budgeting process.
5. Regular
and
comprehensive
information
provided
to
the
Management and on a quarterly basis to your Board, covering
financial performance and key business performance indicators.
This statement is made in accordance with the resolution of your Board
of Directors dated 17 March 2008.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
69
Financial
Statements
Directors’ Report
70
Statement by Directors
75
Statutory Declaration
75
Report of the Auditors
76
Income Statement
77
Balance Sheet
78
Statement of Changes in Equity
79
Cash Flow Statement
80
Summary of Significant Accounting Policies
81
Notes to the Financial Statements
88
70
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Directors’ Report
The Directors are pleased to submit their annual report to the members together with the audited financial statements of the Company for the year ended
31 December 2007.
P R I N C I PA L A C T I V I T I E S
The principal activities of the Company consist of refining and manufacturing of petroleum products. There has been no significant change in these activities
during the year.
F I N A N C I A L R E S U LT S
RM’000
Profit for the year
593,218
DIVIDENDS
The dividends paid by the Company since 31 December 2006 were as follows:
RM’000
In respect of the year ended 31 December 2006 as shown in the Directors’ report of that year:
Final gross dividend of 38 sen per RM1 unit of share, less tax at 27%, paid on 15 June 2007.
83,220
In respect of the year ended 31 December 2007:
Interim gross dividend of 20 sen per RM1 unit of share, less tax at 27%,
paid on 21 September 2007 in respect of the quarter ended 30 June 2007.
43,800
The Directors now recommend the payment of a final gross dividend of 30 sen per RM1 unit of share less income tax of 26%, amounting to RM66,600,000
which, subject to the approval of the shareholders at the forthcoming Annual General Meeting of the Company, will be paid on 20 June 2008 to shareholders
registered on the Record of Depositors at the close of business on 6 June 2008.
The Directors have also declared a special dividend of 20 sen per RM1 unit of share, less income tax of 26%, amounting to RM44,400,000 which will be
paid on 4 April 2008 to shareholders registered on the Record of Depositors at the close of business on 12 March 2008.
RESERVES AND PROVISIONS
All material transfers to or from reserves and provisions during the year are shown in the financial statements.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
71
DIRECTORS’ report
DIRECTORS
The Directors who have held office during the period since the date of the last report are as follows:
Dato’ Saw Choo Boon
Dato’ (Dr) Yahya bin Ismail
(Resigned on 8/5/2007)
Dato’ Jaffar Indot
Tan Sri Saw Huat Lye
Dato’ Mohzani bin Abdul Wahab
Dato’ Seri Talaat bin Haji Husain
(Appointed on 1/6/2007)
Raja Ahmad Murad bin Raja Bahrin
Mark Owen Stevens
Thomas Michael Taylor
The Directors retiring by rotation in accordance with Article 81(3) of the Company’s Articles of Association are Dato’ Mohzani bin Abdul Wahab, Raja Ahmad
Murad bin Raja Bahrin and Thomas Michael Taylor, all of whom, being eligible, offer themselves for re-election.
Dato’ Seri Talaat bin Haji Husain who was appointed as Director of the Board under Article 81(9) of the Company’s Articles of Association, retires and being
eligible, offers himself for re-election.
In year 2007, Dato’ Jaffar Indot being over seventy years of age, retired in accordance with Section 129 of the Companies Act, 1965 and offered himself for
re-appointment in accordance with Section 129 (6) of the said Act to hold office until the 49th Annual General Meeting of the Company. For year 2008,
Tan Sri Saw Huat Lye will not offer himself for re-election. Dato’ Jaffar Indot being over seventy years of age, will retire in accordance with Section 129
of the Companies Act, 1965 and offer himself for re-appointment in accordance with Section 129 (6) of the said Act to hold office until the 50th Annual
General Meeting of the Company.
DIRECTORS’ BENEFITS
During and at the end of the year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling
Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate except
for options over shares granted by the Royal Dutch Shell plc to eligible senior executives including certain Directors of the Company.
Long-term incentives
Following the unification of Shell Transport and Trading Company, plc and Royal Dutch Petroleum Company (N.V. Koninklijke Nederlandsche Petroleum
Maatschappij ) in 2005, the share option grants was discontinued and in its place, an amended Long Term Incentive Plan (LTIP) was introduced. For a selected
number of the most senior executives, restricted non-conditional shares were also awarded. The purpose of the changes was to ensure a closer link between
the remuneration of Directors and executives and the performance of the Royal Dutch Shell plc relative to its peers.
72
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
DIRECTORS’ REPORT
DIRECTORS’ BENEFITS (CONTINUED)
Long Term Incentive Plan (LTIP)
Under the LTIP, performance shares are awarded conditionally once a year as shown below.
TSR Rank
Performance shares received
1st
2 5 award
2nd
1.5 5 award
3rd
0.8 5 award
4th or 5th
Nil
Awards will have a face value between zero and two times base award. Awards are subject to performance over a period of at least three years. The shares are
only released if the performance condition is met and if the participant remains in employment during the performance period (subject to certain exceptions,
including retirement). From 2005 onwards, the number of shares that the directors receive will depend on the Total Shareholder Return (TSR) performance
of Royal Dutch Shell plc relative to the other major integrated oil companies.
The actual number of shares the Directors will receive in 2008 will depend on the Royal Dutch Shell plc’s TSR performance over the period 2005 to 2007.
The face value of the conditional performance share award is the number of shares as referred to in Directors’ Long-term Incentive Interest below multiplied
by the share price at the time of the award.
DIRECTORS’ LONG-TERM INCENTIVE INTEREST
Since the end of the previous financial year, no Director of the Company has received or become entitled to receive any benefit (other than benefits disclosed
as Directors’ remuneration in Note 10 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.
The tables below show the LTIP and the share options interest of the Directors in office during 2007. Following the unification, those awards and grants
which were made with respect to Royal Dutch Petroleum Company and Shell Transport and Trading Company, plc shares, have been converted into Royal
Dutch Shell plc share entitlements at the appropriate conversion rates. Other than consequential changes, the terms and conditions applicable to these
awards and grants have generally not been altered as a result of this conversion.
(a)
Interest in options over shares of the Royal Dutch Shell plc.
Interest in options over shares in Royal Dutch Shell plc
Options
Options
outstanding
Options
Options
Options
outstanding
at 1.1.2007
granted
exercised
expired
31.12.2007
Dato’ Saw Choo Boon
64,200
0
47,600
0
16,600
Thomas Michael Taylor
29,105
0
12,038
0
17,067
Dato’ Mohzani bin Abdul Wahab
29,850
0
15,500
0
14,350
Raja Ahmad Murad bin Raja Bahrin
14,150
0
0
0
14,150
Mark Owen Stevens
38,816
0
11,866
0
26,950
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
73
DIRECTORS’ report
DIRECTORS’ LONG-TERM INCENTIVE INTEREST (CONTINUED)
(b)
Direct interest in shares of the Royal Dutch Shell plc.
The Directors’ direct interest in shares of Royal Dutch Petroleum Company and Shell Transport and Trading Company, plc have been converted into
the Royal Dutch Shell plc’s shares entitlements at the appropriate conversion rates.
Direct interest in shares of Royal Dutch Shell plc
Class of
shares
1.1.2007
At
Bought
Sold
31.12.2007
At
Dato’ Saw Choo Boon
1
RDSA
12,625
6,375
0
19,000
Thomas Michael Taylor
2
RDSB
6,000
3,450
0
9,450
Dato’ Mohzani bin Abdul Wahab
1
RDSA
6,400
2,550
0
8,950
Mark Owen Stevens
2
RDSB
16,454
7,517
0
23,971
Raja Ahmad Murad bin Raja Bahrin
1
RDSA
3,700
3,300
0
7,000
According to the register of Directors’ shareholdings, no other Directors in office at the end of the financial year held any interest in shares in and
debentures of the Company or its related corporations.
S TAT U T O R Y I N F O R M AT I O N O N T H E F I N A N C I A L S TAT E M E N T S
Before the income statement and balance sheet were made out, the Directors took reasonable steps:
(a)
to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied
themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and
(b)
to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as shown in the
accounting records of the Company had been written down to an amount which they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:
(a)
which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the
Company inadequate to any substantial extent; or
(b) which would render the values attributed to current assets in the financial statements of the Company misleading; or
(c)
which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Company misleading or inappropriate.
No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the year
which, in the opinion of the Directors, will or may substantially affect the ability of the Company to meet its obligations when they fall due.
At the date of this report, there does not exist:
(a)
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
(b)
any contingent liability of the Company which has arisen since the end of the year.
1
RDSA – Royal Dutch Shell plc Class A shares
2
RDSB – Royal Dutch Shell plc Class B shares
74
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
DIRECTORS’ REPORT
S TAT U T O R Y I N F O R M AT I O N O N T H E F I N A N C I A L S TAT E M E N T S ( C O N T I N U E D )
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 of the Company,
which would render any amount stated in the financial statements misleading.
In the opinion of the Directors:
(a)
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
(b)
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.
U LT I M AT E H O L D I N G C O M PA N Y
Pursuant to Section 169(10) of the Companies Act 1965, the Directors have regarded the Royal Dutch Shell plc, a company incorporated in England and
Wales and has its headquarters in The Hague, as the ultimate holding company.
AUDITORS
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
On behalf of the Board, in accordance with a resolution of the Board of Directors dated 17 March 2008.
RAJA AHMAD MURAD BIN RAJA BAHRIN
DATO’ SAW CHOO BOON
MANAGING DIRECTOR
CHAIRMAN
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
75
Statement by Directors
pursuant to Section 169(15) of the Companies Act, 1965
We, Raja Ahmad Murad Bin Raja Bahrin and Dato’ Saw Choo Boon, two of the Directors of Shell Refining Company (Federation of Malaya) Berhad, state that,
in the opinion of the Directors, the financial statements set out on pages 77 to 104 are drawn up so as to give a true and fair view of the state of affairs of
the Company as at 31 December 2007 and of the results of the Company and of its cash flows for the year ended on that date in accordance with MASB
Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the provisions of the Companies Act, 1965.
On behalf of the Board, in accordance with a resolution of the Board of Directors dated 17 March 2008.
RAJA AHMAD MURAD BIN RAJA BAHRINDATO’ SAW CHOO BOON
MANAGING DIRECTORCHAIRMAN
Statutory Declaration
pursuant to Section 169(16) of the Companies Act, 1965
I, Thomas Michael Taylor, the Director primarily responsible for the financial management of Shell Refining Company (Federation of Malaya) Berhad, do
solemnly and sincerely declare that the financial statements set out on pages 77 to 104 are, in my opinion, 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.
THOMAS MICHAEL TAYLOR
DIRECTOR
Subscribed and solemnly declared by the abovenamed Thomas Michael Taylor at Kuala Lumpur in Malaysia on 17 March 2008, before me.
COMMISSIONER FOR OATHS
76
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Report of the Auditors
to the Members of Shell Refining Company (Federation of Malaya) Berhad (Company No. 3926-U)
We have audited the financial statements set out on pages 77 to 104. 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
the Directors, as well as evaluating the overall financial statement 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 the MASB Approved Accounting
Standards for Entities Other than Private Entities 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 31 December 2007 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
PAULINE HO
(No. AF: 1146)
(No. 2684/11/09 (J))
Chartered Accountants
Partner of the firm
Kuala Lumpur
17 March 2008
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
77
Income Statement
for the year ended 31 December 2007
Note
2007
2006
RM’000
RM’000
Revenue
3
Cost of sales
11,415,110
10,886,840
(10,607,814)
(10,532,675)
807,296
Other operating income
26,740
20,174
Administrative expenses
(35,854)
(43,831)
(7,557)
Gross profit
354,165
Other operating expenses
4
30,060
Finance cost
5
(20,035)
Profit before taxation
6
808,207
Taxation
7
(214,989)
(67,168)
593,218
258,217
Profit for the year
2,434
325,385
Gross dividends per RM1 unit of share (sen)
8
70
90
Earnings per RM1 unit of share (sen) – basic
9
197.74
86.07
The accounting policies on pages 81 to 87 and the notes on pages 88 to 104 form part of these financial statements.
78
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Balance Sheet
as at 31 December 2007
Note
2007
2006
RM’000
RM’000
1,247,716
NON CURRENT ASSETS
Property, plant and equipment
11
1,167,995
Prepaid lease payments
12
2,011
2,031
1,170,006
1,249,747
CURRENT ASSETS
Inventories
13
1,362,973
829,706
Trade receivables
14
39,779
128,685
Other receivables and prepayments
15
6,498
5,288
0
25,023
Tax recoverable
Amounts receivable from related companies
16
1,262,314
1,127,598
Bank balances
17
1,006
43,009
Deposits with licensed banks
17
169,195
0
Derivative financial asset
21
2,260
0
2,844,025
2,159,309
TOTAL ASSETS
4,014,031
3,409,056
300,000
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Share capital 18
300,000
Revaluation reserve
19
15,738
15,738
Retained earnings
2,090,267
1,624,069
2,406,005
1,939,807
80,488
92,943
CURRENT LIABILITIES
Trade and other payables
20
Tax payable
Amounts payable to related companies
16
Short term borrowings
21
52,639
0
771,089
569,076
0
83,880
904,216
745,899
NON CURRENT LIABILITIES
Deferred taxation
22
211,585
227,387
Long term borrowings
21
463,316
493,780
Provision for liabilities
23
0
2,183
Derivative financial liability
21
28,909
0
703,810
723,350
TOTAL EQUITY AND LIABILITIES
4,014,031
3,409,056
The accounting policies on pages 81 to 87 and the notes on pages 88 to 104 form part of these financial statements.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
79
Statement of Changes in Equity
for the year ended 31 December 2007
Issued and fully
paid ordinary
Non-
shares of RM1 each
distributable
Distributable
Number
Nominal
Revaluation
Retained
of shares
value
reserve
earnings
Total
‘000
RM’000
RM’000
RM’000
RM’000
At 1 January 2006
300,000
300,000
15,738
1,603,452
1,919,190
0
0
0
258,217
258,217
(125,280)
Note
Profit for the year ended
31 December 2006
Dividends for the year ended:
– 31 December 2005
8
0
0
0
(125,280)
– 31 December 2006
8
0
0
0
(112,320)
(112,320)
At 31 December 2006
300,000
300,000
15,738
1,624,069
1,939,807
At 1 January 2007
300,000
300,000
15,738
1,624,069
1,939,807
0
0
0
593,218
593,218
(83,220)
Profit for the year ended
31 December 2007
Dividends for the year ended:
– 31 December 2006
8
0
0
0
(83,220)
– 31 December 2007
8
0
0
0
(43,800)
At 31 December 2007
300,000
300,000
15,738
The accounting policies on pages 81 to 87 and the notes on pages 88 to 104 form part of these financial statements.
2,090,267
(43,800)
2,406,005
80
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Cash Flow Statement
for the year ended 31 December 2007
Note
2007
2006
RM’000
RM’000
593,218
258,217
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year
Adjustments for:
214,989
67,168
Depreciation of property, plant and equipment
107,636
110,349
Loss on disposal of property, plant and equipment 0
105
Property, plant and equipment written off
143
Taxation
Interest income
(13,218)
0
(8,310)
Interest expense
20,165
29,662
Net exchange gains – unrealised
(46,820)
(22,107)
Unrealised loss on derivative financial instrument
26,649
0
902,762
435,084
Increase in inventories
(533,267)
(156,578)
Decrease/(increase) in trade and other debtors
87,716
(25,023)
(Decrease)/increase in trade and other creditors
(17,151)
15,420
Decrease/(increase) in amounts receivable from related companies
255,879
(410,651)
695,939
(141,748)
Changes in working capital:
Cash generated from/(used in) operations
Interest received
13,218
Taxation paid
(153,129)
(175,072)
Net cash flow generated from/(used in) operating activities
556,028
(308,510)
Purchase of property, plant and equipment
(26,673)
(42,834)
(169,195)
0
Decommissioning and restoration costs paid
(2,183)
(1,317)
Net cash flow used in investing activities
(198,051)
(44,151)
Interest paid
(19,885)
(28,926)
Repayment of borrowings
(83,880)
0
Dividends paid
(127,020)
(237,189)
Net cash flow used in financing activities
(230,785)
(266,115)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
127,192
(618,776)
CURRENCY TRANSLATION DIFFERENCES
0
(1,091)
43,009
662,876
170,201
43,009
8,310
CASH FLOWS FROM INVESTING ACTIVITIES
Deposit placed with related company
CASH FLOWS FROM FINANCING ACTIVITIES
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
The accounting policies on pages 81 to 87 and the notes on pages 88 to 104 form part of these financial statements.
17
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
81
Summary of Significant Accounting Policies
for the year ended 31 December 2007
Unless otherwise stated, the following accounting policies have been used consistently in dealing with items which are considered material in relation to
the financial statements.
A B A S I S O F P R E PA R AT I O N
The financial statements of the Company have been prepared in accordance with the provisions of the Companies Act 1965 and Financial Reporting
Standards, the MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities.
The financial statements have been prepared under the historical cost convention except as disclosed in this summary of significant accounting
policies.
The preparation of financial statements in conformity with Financial Reporting Standards requires the use of certain critical accounting estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reported period. It also requires Directors to exercise their judgment in
the process of applying the Company’s accounting policies. Although these estimates and judgment are based on the Directors’ best knowledge of
current events and actions, actual results may differ.
(a) Standards, amendments to published standards and interpretations that are applicable to the Company and are effective.
(i)
The new accounting standards, amendments to published standards and interpretations to existing standards effective for the Company’s
financial year ended 31 December 2007 and applicable to the Company is FRS 124 Related Party Disclosures.
(ii)
The Company has adopted a change in accounting policy to recognise standalone derivative financial instruments at fair value at
inception in the financial statements with subsequent changes being recognised in the income statement. Changes in the fair value
of any of these derivative financial instruments are recognised immediately in the income statement within ‘finance cost’. Previously,
derivatives comprising foreign exchange forward contracts entered into were not recognised in the financial statements on inception.
Exchange gains and losses on contracts are recognised when settled at which time they were included in the measurement of the
transactions hedged.
The change in accounting policy has no impact to prior years financial statements as there were no derivative financial instruments
existing at balance sheet date for both financial years 2005 and 2006.
The change in accounting policy has been made in accordance with the transition provisions in the respective standards, amendments to
published standards and interpretations. All standards, amendments and interpretations adopted by the Company require retrospective
application.
82
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
summary of significant accounting policies
for the year ended 31 December 2007
A B A S I S O F P R E PA R AT I O N ( C O N T I N U E D )
(b)
Standards, amendments to published standards and interpretations to existing standards that are applicable to the Company
but not yet effective
The new and revised standards, amendments to published standards and interpretations that are applicable to the Company, but which the
Company has not early adopted, are as follows:
• FRS 107 Cash Flow Statements
• FRS 118 Revenue
• FRS 137 Provisions, Contingent Liabilities and Contingent Assets
These revised standards (effective for accounting periods beginning on or after 1 July 2007) have no significant changes compared to the
original standards. The Company will apply these standards from financial periods beginning on 1 January 2008.
FRS 139 Financial Instruments: Recognition and Measurement (effective date yet to be determined by the Malaysian Accounting Standards
Board). This new standard establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy
and sell non-financial items. Hedge accounting is permitted only under strict circumstances. The Company will apply this standard when
effective. The Company has applied the transitional provision in FRS 139 which exempts entities from disclosing the possible impact arising
from the initial application of this standard on the financial statements of the Company.
B REVENUE RECOGNITION
(i)
Revenue
Revenue represents the invoiced value of refined and partially refined oil products and feedstocks, net of Government taxes.
Revenue is recognised upon delivery of products and acceptance by customers.
(ii)
Other income
Other income comprises mainly of capital and operating expenditure recoveries from related companies and interest income, which are
recognised on an accrual basis.
C P R O P E R T Y, P L A N T A N D E Q U I P M E N T
All property, plant and equipment are initially stated at cost.
Land and buildings are subsequently shown at fair value which is based on a professional valuation in 1990 using the open market value basis for
land, and depreciated replacement cost method for land improvements and building. The land and buildings of the Company have not been revalued
since the last valuation exercise as the Directors have not adopted a policy of regular revaluations of such assets.
Accordingly, the valuation of the revalued assets has not been updated and they continue to be stated at their last revalued amounts less depreciation
as allowed under the transitional provisions issued by the Malaysian Accounting Standards Board (‘MASB’). Surpluses arising on revaluation are credited
to revaluation reserve. Any deficit arising from revaluation is charged against the revaluation reserve to the extent of a previous surplus held in the
revaluation reserve for the same asset. In all other cases, a decrease in carrying amount is charged to income statement. On disposal of revalued
assets, amounts in revaluation reserve relating to those assets are transferred to retained earnings.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
83
summary of significant accounting policies
for the year ended 31 December 2007
C P R O P E R T Y, P L A N T A N D E Q U I P M E N T ( C O N T I N U E D )
All other property, plant and equipment are stated at historical costs less accumulated depreciation.
(i)
No depreciation is provided for freehold land and work-in-progress.
(ii) All other property, plant and equipment are depreciated on a straight line basis calculated to write off their costs, or their revalued amounts,
over their estimated useful lives at the following annual rates:
Land improvements and buildings
2.5% – 5.0%
Plant, machinery, equipment and vehicles
3.3% – 25.0%
Furniture and fittings
7.0% – 20.0%
At each balance sheet date, the Company assesses whether there is any indication of impairment. When an indication of impairment exists, the
carrying amount of the asset is assessed and written down immediately to its recoverable amount. Please refer to accounting policy (P) on impairment
of assets.
Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in the income statement. On disposal
of revalued assets, amounts in revaluation reserve relating to those assets are transferred to retained earnings.
D MAINTENANCE COSTS
Asset replacement costs incurred by the Company for major scheduled maintenance of the refinery are capitalised as part of the refinery assets and
depreciated on a straight line basis over their estimated useful lives, typically the period until the next major scheduled maintenance.
E BORROWINGS
Borrowings are initially recognised based on the proceeds received, net of transaction costs incurred. In subsequent periods, borrowings are stated at
amortised cost using the effective yield method; any difference between proceeds (net of transaction costs) and the redemption value is recognised
in the income statement over the period of the borrowings.
Interest, losses and gains relating to a financial instrument, or a component part, classified as a liability is reported within finance cost in the income
statement.
Interest incurred on external borrowings related to assets under construction is capitalised until the assets are ready for their intended use.
F INVENTORIES
(i)
Inventories are valued at the lower of cost and net realisable value using the first-in-first-out (FIFO) method.
(ii)
Cost in the case of partially refined oil and finished products includes oil, direct materials, labour and an appropriate proportion of fixed and
variable manufacturing overheads.
(iii) Net realisable value is the estimate of selling price in the ordinary course of business, less the cost of completion and selling expenses.
84
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
summary of significant accounting policies
for the year ended 31 December 2007
G R E C E I VA B L E S
Receivables are carried at anticipated realisable value. Bad debts are written off during the year in which they are identified. An estimate is made for
doubtful debts based on a review of all outstanding amounts at year end.
H PROVISIONS
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, when it is probable that an
outflow of resources will be required to settle the obligation, and when a reliable estimate of the amount can be made.
I TA X AT I O N
(i)
Current taxation is based on chargeable profit for the year and represents income tax at current rates.
(ii)
Deferred taxation is recognised in full, using the liability method, on temporary differences arising between the amounts attributed to assets
and liabilities for tax purposes and their carrying amounts in the financial statements.
(iii)
Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary
differences or unused tax losses can be utilised.
(iv)
Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantially enacted by the balance sheet date and are
expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
J FOREIGN CURRENCIES
The basis of accounting for foreign currency transactions is as follows:
(i)
Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which
the entity operates (the “functional currency”). The financial statements are presented in Ringgit Malaysia, which is the Company’s functional
and presentation currency.
(ii)
Transactions and balances
Foreign currency transactions are translated into the functional currency using the prevailing exchange rates at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
Exchange differences arising from the settlement of foreign currency transactions and from the translation of foreign currency monetary assets
and liabilities are included in the income statement.
The principal closing rates used in translation of foreign currency amounts are as follows:
Foreign currency 2007
2006
1 USD
RM 3.31
RM 3.53
1 EURO
RM 4.87
RM 4.64
1 GBP
RM 6.61
RM 6.92
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
85
summary of significant accounting policies
for the year ended 31 December 2007
K EMPLOYEE BENEFITS
(i)
Short term employee benefits
Wages, salaries, paid annual leave, sick leave, bonuses and non-monetary benefits are accrued in the period in which the associated services
are rendered by employees of the Company.
L (ii)
Post-employment benefits
Contributions to the Employees’ Provident Fund, which is a defined contribution plan, are charged to the income statement when incurred.
LEASES
Leases in which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition,
the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to
initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.
All other leases are classified as operating leases and are not recognised on the balance sheet. All lease rentals payable are accounted for on a
straightline basis over the lease term and included in ‘other operating expenses’.
Leasehold land that normally has an indefinite economic life and where title is not expected to pass to the lessee by the end of the lease term is
treated as an operating lease. The payment made on entering into or acquiring a leasehold land is accounted for as prepaid land lease payments at
the balance sheet date. In the case of a lease of land and buildings, the prepaid lease payments are allocated, whenever necessary, between the land
element and the buildings element of the lease at the inception of the lease in proportion to their relative fair value. The prepaid lease payments are
amortised over the lease term in accordance with the pattern of benefits provided.
M C A S H A N D C A S H E Q U I VA L E N T S
Cash and cash equivalents comprise cash, bank balances, deposits with licensed banks, bank overdrafts and short term, highly liquid investments
that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value. Bank overdrafts are included
within short-term borrowings in current liabilities on the balance sheet.
N DIVIDENDS
Dividends on ordinary shares are recognised as liabilities when declared before the balance sheet date. A dividend declared after the balance sheet
date, but before the financial statements are authorised for issue, is not recognised as a liability at the balance sheet date. Upon the dividend becoming
payable, it will be accounted for as a liability.
86
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
summary of significant accounting policies
for the year ended 31 December 2007
O FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another
enterprise.
A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another enterprise, a contractual right
to exchange financial instruments with another enterprise under conditions that are potentially favourable, or an equity instrument of another
enterprise.
A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or to exchange financial
instruments with another enterprise under conditions that are potentially unfavourable.
Financial instruments carried on the balance sheet include cash and bank balances, investments, receivables, payables, leases and borrowings. The
particular recognition methods adopted are disclosed in the individual policy statements associated with each item.
Derivative Financial Instruments
The Company uses standalone derivatives in the management of interest rate and foreign currency risk. These derivative contracts are recognised at
fair value on inception. Changes in the fair value of any of these derivative instruments are recognised immediately in the income statement within
‘finance cost’.
The Company may enter into foreign exchange forward contracts to hedge foreign currency exposures as a result of confirmed receipts or payments
in foreign currency. These instruments are recognised in the financial statements on inception.
The fair value of cross currency interest rate swap which is not traded in an active market is determined using valuation techniques based on
assumptions of market conditions existing at the balance sheet date, including reference to quoted market prices and independent dealer quotes for
similar securities and discounted cash flow methods.
P I M PA I R M E N T O F A S S E T S
Property, plant and equipment and other non-current assets are reviewed for impairment losses whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. Impairment loss is recognised for the amount by which the carrying amount of the asset exceeds
its recoverable amount. The recoverable amount is the higher of an asset net selling price and value in use. For the purposes of assessing impairment,
assets are grouped at the lowest level for which there is separately identifiable cash flows.
The impairment loss is charged to the income statement unless it reverses a previous revaluation in which case it is charged to the revaluation surplus.
Any subsequent increase in recoverable amount is recognised in the income statement unless it reverses an impairment loss on a revalued asset in
which case it is taken to revaluation surplus.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
87
summary of significant accounting policies
for the year ended 31 December 2007
Q C R I T I C A L A C C O U N T I N G E S T I M AT E S A N D A S S U M P T I O N S
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related
actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have material impact to the Company’s
results and financial position are tested for sensitivity to changes in the underlying parameters. The estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.
(i)
Assessment of Assets Useful Lives and Residual Value
Property, plant and equipment are depreciated over its useful life taking into account residual value, where appropriate. The actual useful
lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In reassessing asset useful lives,
factors such as technological innovation and maintenance programmes are taken into account. Residual value assessments consider issues
such as future market conditions, the remaining life of the asset and projected disposal values.
(ii) Fair value of derivatives and other financial instruments
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Company uses
its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at each balance sheet
date. The Company uses discounted cash flow analysis for various financial assets/liabilities that are not traded in active markets.
88
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Notes to the Financial Statements
for the year ended 31 December 2007
1
G E N E R A L I N F O R M AT I O N
The principal activities of the Company consist of refining and manufacturing of petroleum products.
At the end of the year, the total number of employees in the Company was 308 (2006:281).
The ultimate holding company of the Company is Royal Dutch Shell plc, a company incorporated in England and Wales.
The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Main Board of the Bursa Malaysia
Securities Berhad.
The address of the registered office of the Company is:
Bangunan Shell Malaysia
Changkat Semantan
Damansara Heights
50490 Kuala Lumpur
The address of the principal place of business of the Company is:
Batu 1, Jalan Pantai
71000 Port Dickson
Negeri Sembilan
2
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company is exposed to a variety of financial risks, including foreign currency exchange risk, interest rate risk, credit risk, liquidity and cash flow
risk. The Company’s overall financial risk management objective is to ensure the Company creates value for its shareholders. The Company focuses on
the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company. Financial risk
management is carried out through risk reviews, assurance plans, internal control systems, insurance programmes and adherence to the Company’s
Treasury Policy and Procedures.
The Company may enter into foreign exchange forward contracts to manage the exposure to foreign currency risks in receivables and payables. In
addition, financial instruments such as trade receivables, trade payables, short term and long term borrowings arise directly from the Company’s
operations. Straightforward derivative financial instruments are utilised by the Company to manage the exposure to foreign currency and interest
rate risks. The Company does not enter into derivative financial instruments for trading purposes.
(i)
Foreign currency exchange risk
The objectives of the Company’s currency risk management policies are to allow the Company to effectively manage exposures that may arise
from operating activities. The Company is exposed to currency risk as a result of the foreign currency transactions entered into in currencies
other than its functional currency. The Company may enter into foreign exchange swaps and forward contracts to limit its exposure on foreign
currency receivables and payables and on cash flows generated from anticipated transactions denominated in foreign currencies. Swaps are
contractual agreements between two parties to exchange exposures in foreign currency. The Company uses cross currency interest rate swaps
to hedge its long-term borrowings in order to minimise its exposures to movements in foreign currency positions.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
89
notes to the financial statements
for the year ended 31 December 2007
2
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(ii)
Interest rate risk
The Company finances its operations through a mixture of retained earnings and bank borrowings. The interest rate risk arising from
bank borrowings are managed in compliance with the treasury policy of the Company.
(iii)
Credit risk
Credit risk arises when sales are made on deferred credit terms. The Company controls credit risk by setting counterparty limits and ensuring
that sales of products are made only to approved customers with an appropriate credit history. It is the Company’s policy to monitor the
financial standing of the customers on an ongoing basis to ensure that the Company is exposed to minimal credit risk.
The Company places its cash and cash equivalents with a number of creditworthy financial institutions.
(iv)
Liquidity and cash flow risk
The Company ensures that cash is available to meet working capital expenditure and other financing requirements, and that cash flows are
managed efficiently. This is done through reliable cash forecasts to achieve optimal cash management planning. The Company sets a minimum
level of cash to be held on a daily basis and on a planned level for the next 12 months, in order to meet both firm commitments and forecast
obligations. In addition, the Company maintains an adequate amount of short-term credit facilities.
As the Company has no significant interest-bearing assets, the Company’s income and operating cash flows are substantially independent of
changes in market interest rates. The Company’s foreign currency and interest rate risk arises from long-term foreign currency borrowings.
The Company’s policy is to maintain its borrowings at variable rates denominated in its Company’s functional currency and manage foreign
exchange exposures arising from all known material foreign currency commitments as and when they arise.
3
REVENUE
2007
2006
RM’000
RM’000
Sale of oil products
– refined 9,594,703
9,024,632
– partially refined
1,400,526
1,414,192
– feed stocks
419,881
448,016
11,415,110
10,886,840
90
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
notes to the financial statements
for the year ended 31 December 2007
4
O T H E R O P E R AT I N G E X P E N S E S
2007
2006
RM’000
RM’000
Net exchange (gains)/losses
– realised (18,666)
(10,706)
– unrealised
(16,069)
11,923
Other expenses
4,675
6,340
(30,060)
7,557
5
FINANCE COST
2007
2006
RM’000
RM’000
Interest expense
– short term borrowings
– term loans
Commitment fees Unrealised exchange gain on long term loan
Unrealised loss on derivative financial instrument
6
429
2,805
19,736
26,857
3,972
1,934
(30,751)
(34,030)
26,649
0
20,035
(2,434)
P R O F I T B E F O R E TA X AT I O N
2007
2006
RM’000
RM’000
179
The profit before taxation is arrived at after charging/(crediting):
Auditors’ remuneration
– current year
180
– under accrual in prior year
180
0
– Others
22
21
Depreciation of property, plant and equipment
107,636
110,349
Loss on disposal of property, plant and equipment 0
105
Property, plant and equipment written off
Net exchange gains – realised
(18,666)
(10,727)
Net exchange gains – unrealised
(46,820)
(22,107)
Unrealised loss on derivative financial instrument
Interest income
Staff cost
143
26,649
0
0
(13,218)
(8,310)
– Salaries and bonus
37,225
38,260
– Defined contribution retirement plan
5,076
3,774
– Other employee benefits / staff welfare
5,446
3,703
Allowance/(write back of allowance) for doubtful debts
Rental income
Amortisation of prepaid lease payment
376
(1,740)
20
(93)
(1,149)
20
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
91
notes to the financial statements
for the year ended 31 December 2007
7
TA X AT I O N
2007
2006
RM’000
RM’000
230,791
107,237
Current tax
Deferred tax
Current tax
– Current year
– Under accruals in prior years
Deferred tax
– Origination and reversal of temporary differences
(15,802)
(40,069)
214,989
67,168
230,606
107,237
185
0
(15,802)
(40,069)
214,989
67,168
2007
2006
%
%
27
28
(3)
The numerical reconciliation between the effective tax rate and the applicable tax rate is as follows:
Applicable tax rate
Tax effect in respect of:
Income not taxable
0
Expenses not deductible for tax purpose
1
1
Effect of changes in tax rate
(1)
(5)
Effective tax rate
27
21
Subject to agreement by the tax authorities, the Company has a Section 108(6) Account of RM373,364,589 (2006: RM280,812,222) and an Exempt
Income Account of RM918,370,701 (2006: RM918,370,701) as at 31 December 2007. The Company is able to pay out all of its retained earnings
as at 31 December 2007 (2006: all of its retained earnings as at 31 December 2006) without incurring additional tax expense.
The Malaysian Budget 2008 introduced a single tier corporate tax system with effect from the year of assessment 2008. As such, the Section 108 tax
credit as at 31 December 2007 will be available to the Company until such time the credit is fully utilised or upon expiry of the six-year transitional
period on 31 December 2013, whichever is earlier.
92
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
notes to the financial statements
for the year ended 31 December 2007
8
DIVIDENDS
2007
2006
RM’000
RM’000
0
43,200
2005: Special Interim gross dividend of 20 sen per RM1 unit of share
less tax at 28%, paid on 26 April 2006
2006: Final gross dividend of 38 sen per RM1 unit of share
less tax at 27%, paid on 15 June 2007
(2005: 38 sen per RM1 unit of share less tax at 28%)
2006: Special Interim gross dividend of 20 sen per RM 1 unit of share
less tax at 28%, paid on 23 June 2006
83,220
82,080
83,220
125,280
0
43,200
0
43,200
2006: Special Interim gross dividend of 20 sen per RM 1 unit of share
less tax at 28%, paid on 29 September 2006
2007: Interim gross dividend of 20 sen per RM1 unit of share
less tax at 27%, paid on 21 September 2007
(2006: 12 sen per RM1 unit of share less tax at 28%)
43,800
25,920
43,800
112,320
2007: Special Interim gross dividend of 20 sen per RM1 unit of share
less tax at 26% (2006:nil)
44,400
0
2007: Proposed final gross dividend of 30 sen per RM1 unit of share
less tax at 26% (2006: 38 sen per RM1 unit of share less tax at 27%)
Gross dividends per RM1 unit of share
66,600
83,220
154,800
195,540
70 sen
90 sen
These financial statements do not reflect the special interim dividend and proposed final dividend which will be accounted for in the shareholders
equity as an appropriation of retained earnings in the year in which the dividends are approved by the shareholders.
9
EARNINGS PER UNIT OF SHARE
Basic earnings per share of the Company is calculated by dividing the profit for the year by the weighted average number of ordinary shares in issue
during the year.
2007
2006
Profit for the year (RM’000)
593,218
258,217
Weighted average number of ordinary shares in issue (‘000)
300,000
300,000
Basic earnings per share (sen)
197.74
86.07
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
93
notes to the financial statements
for the year ended 31 December 2007
1 0 D I R E C T O R S ’ R E M U N E R AT I O N
2007
2006
RM’000
RM’000
Fees
165
119
Salaries and bonus
723
566
Defined contribution retirement plan
128
88
1,016
773
The estimated monetary value of benefits provided to Directors during the year by way of usage of the Company’s assets and the provision of
accommodation and other benefits amounted to RM29,760 (2006: RM36,883).
1 1 P R O P E R T Y, P L A N T A N D E Q U I P M E N T
Plant,
machinery,
equipment
Freehold
Land
and
Work-in-
land
improvements
Buildings
vehicles
progress
Total
2007
RM’000 RM’000
RM’000
RM’000
RM’000
RM’000
Cost or valuation:
At 1 January
2,504,860
– Cost
14,811
15,293
99,057
2,329,044
46,655
– Valuation
35,443
0
4,766
0
0
40,209
50,254
15,293
103,823
2,329,044
46,655
2,545,069
28,058
28,058
Additions
0
0
0
0
Capitalisation
0
0
366
52,145
Written off
0
0
0
At 31 December 50,254
15,293
104,189
2,380,835
Accumulated depreciation:
At 1 January
0
13,037
38,413
Charge for the year
0
326
2,218
Written off
0
0
0
At 31 December 0
13,363
40,631
1,350,784
0
1,404,778
Net book value at 31 December
50,254
1,930
63,558
1,030,051
22,202
1,167,995
Cost or valuation at 31 December:
Cost
14,811
1,930
58,935
1,030,051
22,202
1,127,929
Valuation
35,443
0
4,623
0
0
40,066
50,254
1,930
63,558
1,030,051
22,202
1,167,995
14,391
138
3,792
3
0
18,324
(354)
(52,511)
0
0
(354)
22,202
2,572,773
1,245,903
0
1,297,353
105,092
0
107,636
(211)
0
(211)
Net book value at 31 December
had revalued assets been
carried at cost less depreciation
94
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
notes to the financial statements
for the year ended 31 December 2007
1 1 P R O P E R T Y, P L A N T A N D E Q U I P M E N T ( C O N T I N U E D )
Plant,
machinery,
equipment
Freehold
Land
and
Work-in-
land
improvements
Buildings
vehicles
progress
Total
2006
RM’000 RM’000
RM’000
RM’000
RM’000
RM’000
Cost or valuation:
At 1 January
2,462,135
– Cost
14,811
10,117
111,451
2,264,615
61,141
– Valuation
35,443
0
4,913
0
0
40,356
50,254
10,117
116,364
2,264,615
61,141
2,502,491
42,858
Additions
0
0
0
14,279
28,579
Capitalisation
0
0
14,432
28,633
(43,065)
0
Disposal
0
0
0
(243)
0
(243)
Written off
0
0
0
(37)
0
(37)
Reclassification
0
5,176
(26,973)
21,797
0
0
At 31 December 50,254
15,293
103,823
2,329,044
46,655
2,545,069
Accumulated depreciation:
At 1 January
0
6,840
42,801
1,137,538
0
1,187,179
Charge for the year
0
2,376
3,323
104,650
0
110,349
Disposal
0
0
0
(138)
0
(138)
Written off
0
0
0
(37)
0
(37)
Reclassification
0
3,821
(7,711)
3,890
0
0
At 31 December 0
13,037
38,413
1,245,903
0
1,297,353
Net book value at 31 December
50,254
2,256
65,410
1,083,140
46,655
1,247,716
Cost or valuation at 31 December:
Cost
14,811
2,256
60,644
1,083,141
46,655
1,207,507
Valuation
35,443
0
4,766
0
0
40,209
50,254
2,256
65,410
1,083,141
46,655
1,247,716
14,391
172
3,999
18
0
18,580
Net book value at 31 December
had revalued assets been
carried at cost less depreciation
The valuation of the land and buildings was carried out in 1990 by a firm of professional valuers. The basis of valuation were as follows:
(i)
Freehold land – open market value
(ii)
Land improvements and buildings – depreciated replacement cost
Surplus arising from the valuation has been credited to revaluation reserve (Note 19).
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
95
notes to the financial statements
for the year ended 31 December 2007
1 2 P R E PA I D L E A S E PAY M E N T S
2007
2006
RM’000
RM’000
2,031
2,051
As at 1 January
Amortisation of prepaid lease payment
As at 31 December
1 3 INVENTORIES
(20)
2,011
(20)
2,031
2007
2006
RM’000
RM’000
At cost
Crude oil
916,255
254,193
Partially refined oil
253,419
108,598
Finished products
170,124
179,042
Materials
23,175
22,115
1,362,973
563,948
At realisable value
Crude oil
0
192,410
Partially refined oil
0
66,244
Finished products
0
7,104
0
265,758
1,362,973
829,706
Total
The inventories value for the year includes the write-down to its net realisable value of RM nil (2006: RM13,159,852).
1 4 T R A D E R E C E I VA B L E S
Trade receivables are denominated in Ringgit Malaysia. The credit terms range between 15 to 30 days (2006: 15 to 30 days). The Company controls
credit risk by setting counter party limits and ensuring sales of products are made to customers with appropriate credit history. Due to these factors,
management believes that no additional credit risk beyond amounts allowed for collection losses is inherent in the Company’s trade receivables.
1 5 O T H E R R E C E I VA B L E S A N D P R E PAY M E N T S
2007
2006
RM’000
RM’000
Staff car loan
4,079
2,524
Other receivables
1,916
1,711
Prepayments
503
1,053
6,498
5,288
96
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
notes to the financial statements
for the year ended 31 December 2007
1 6 A M O U N T S R E C E I VA B L E F R O M / PAYA B L E T O R E L AT E D C O M PA N I E S
Amounts receivable from/payable to related companies are unsecured with no fixed terms of repayment.
2007
2006
RM’000
RM’000
1,090,913
1,125,500
Amounts receivable from related companies consist of:
Trade
Non trade
Amounts payable to related companies consist of:
Trade
Non trade
171,401
2,098
1,262,314
1,127,598
757,137
557,040
13,952
12,036
771,089
569,076
Amounts receivable from related companies include deposits placed with a related company of RM169,195,000 (2006: Nil). The average interest rate
per annum that was effective as at balance sheet date was 3.35% (2006: Nil).
1 7 C A S H A N D C A S H E Q U I VA L E N T S
2007
2006
RM’000
RM’000
1,006
43,009
Bank balances
Deposits with licensed banks
169,195
0
170,201
43,009
2007
2006
3.49%
3.19%
The bank balances are deposits held at call with banks and do not bear interest.
The average maturity period of the deposits with licensed banks is 2 days (2006: 2 days).
The average interest rate per annum that was effective as at balance sheet date was:
Deposits with licensed banks
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
97
notes to the financial statements
for the year ended 31 December 2007
1 8 S H A R E C A P I TA L
2007
2006
RM’000
RM’000
Authorised 300,000,000 units of ordinary shares of RM1 each
300,000
300,000
Issued and fully paid 300,000,000 units of ordinary shares of RM1 each
300,000
300,000
1 9 R E VA L U AT I O N R E S E R V E
The revaluation reserve represents the surplus on revaluation of land, land improvements and buildings carried out in 1990 (Note 11) and is not
available for distribution to the shareholders by way of dividends.
2 0 T R A D E A N D O T H E R PAYA B L E S
2007
2006
RM’000
RM’000
Trade payables and accruals
90
7,274
Non-trade payables and accruals
51,517
38,225
Accruals for materials and contract payments
27,770
46,297
Accruals for interest expense
1,015
736
Dividends payable
2 1 96
411
80,488
92,943
BORROWINGS
The Company obtained a USD330,000,000 loan to finance a capital expenditure project in 1997. The original term loan carried interest at rates which
varies according to prevailing SIBOR+0.315%. The repayment of the loan commenced on 15 September 2000 in sixteen quarterly instalments of
USD20,000,000 and a final repayment of USD10,000,000 on 15 September 2004. Starting from 15 December 2001, the repayment of the loan was
revised to nineteen quarterly instalments of USD6,000,000 and a final repayment of USD116,000,000 on 15 September 2006. The interest rate for the
revised period was SIBOR+0.4%. A second revision was done with effect from 15 June 2005 where the repayment of the loan was revised to twenty
quarterly interest repayment and one final repayment of USD140,000,000 after five years. The interest rate for the revised period is SIBOR+0.16%.
Details of the Company’s borrowings as at end of the year are as follows:
2007
2006
RM’000
RM’000
0
83,880
463,316
493,780
Short term borrowings – revolving credit
Long term borrowings – unsecured
98
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
notes to the financial statements
for the year ended 31 December 2007
2 1 BORROWINGS (CONTINUED)
The table below analyses the borrowings and derivative financial liabilities into relevant maturity groupings based on the remaining period at the
balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within
12 months equal their carrying amounts as the impact of discounting is not significant.
Less than
Between
1 year
2 – 4 years
RM’000
RM’000
As at 31 December 2007
Borrowings
Derivative financial instrument
– cross currency interest rate swap As at 31 December 2006
Borrowings
0
(463,316)
2,260
(28,909)
(83,880)
(493,780)
The reduction of the long-term borrowing is due to the appreciation of RM against USD in 2007. The carrying amount of the USD140,000,000 term
loan at the balance sheet date approximated its fair value as it is a floating rate financial liability.
Cross currency interest rate swap (‘CCIRS’)
The Company entered into a cross currency interest rate swap to hedge against the fluctuations in the USD/RM exchange rate on its USD140 million
term loan from 16 February 2007 to 15 June 2010 upon which the Company will pay RM in exchange for receiving USD at a pre-determined exchange
rate of RM3.51 to USD1.00 as at the CCIRS execution date and will pay KLIBOR-0.65% (Kuala Lumpur Interbank Offer Rate) in exchange for receiving
SIBOR+0.16% (Singapore Interbank Offer Rate) on the outstanding principal amounts. The interest exchange occurs quarterly in accordance with the
scheduled repayment of interest on the USD140 million term loan.
The applicable interest rate of the Company’s term loan ranged from 3.42% to 5.86% per annum (2006: 5.19% to 5.61% per annum). After
executing the swap, the Company’s effective interest rate at balance sheet date was 3.81% per annum (2006: Nil).
Financial Instruments
Functional Currency/
Applicable
Total Carrying
Effective
Currency Exposure
Interest rate
Amount
Interest Rate
RM’000
%
Term loan
RM/USD
SIBOR+0.16%
463,316
5.69
CCIRS
RM/USD
KLIBOR-0.65%
26,649
3.81
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
99
notes to the financial statements
for the year ended 31 December 2007
2 2 D E F E R R E D TA X AT I O N
2007
2006
RM’000
RM’000
Deferred tax liabilities
(211,585)
(227,387)
As at 1 January
(227,387)
(267,456)
Credited/(charged) to income statement:
– property, plant and equipment
24,960
36,078
– allowance/(write back of allowance) for doubtful debts
– unrealised (gains)/losses
– other provision
As at 31 December
Deferred tax liabilities (before offsetting)
– property, plant and equipment
– unrealised (gains)/losses
Offsetting
As at 31 December (after offsetting)
Deferred tax assets (before offsetting)
– allowance for doubtful debts
– other provision
Offsetting
As at 31 December (after offsetting) 2 3 PROVISION FOR LIABILITIES
87
(7,515)
(1,730)
(26)
4,176
(159)
15,802
40,069
(211,585)
(227,387)
(207,638)
(232,598)
(4,177)
3,338
230
(211,585)
1,873
(227,387)
225
138
5
1,735
(230)
0
(1,873)
0
2007
2006
RM’000
RM’000
As at 1 January
Utilised during the year
As at 31 December
Decommissioning and site restoration costs was provided in relation to the Company’s manufacturing units.
2,183
3,500
(2,183)
(1,317)
0
2,183
100
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
notes to the financial statements
for the year ended 31 December 2007
2 4 S I G N I F I C A N T R E L AT E D PA R T I E S T R A N S A C T I O N S
In the normal course of business, the Company undertakes transactions on an arm’s length basis, with companies whose ultimate holding company
is Royal Dutch Shell plc. The material related party transactions are described below:
2007
2006
RM’000
RM’000
Income:
Sale of refined products to:
– Shell Malaysia Trading Sendirian Berhad
7,597,356
7,221,444
– Shell International Eastern Trading Co.
1,639,815
1,507,149
– Shell Timur Sdn. Bhd.
1,518,800
1,317,731
– Shell Eastern Chemicals Pte. Limited
419,669
447,624
– The Shell Company of Thailand Limited
61,967
110,767
Tariff revenue on the use of properties/facilities:
– Shell Malaysia Trading Sendirian Berhad
15,126
14,543
Expenses:
Purchase of crude and products from:
– Shell International Eastern Trading Co.
(9,330,165)
(8,951,470)
(1,024,823)
(790,159)
(307,316)
(90,192)
(37,705)
(39,778)
(7,158)
(11,181)
(10,524)
(11,183)
(6,288)
(14,385)
– Sarawak Shell Berhad
– Sabah Shell Petroleum Company Limited
– Shell Lubricants Supply Company
– Shell Eastern Trading (Pte) Ltd
Central management and administrative expenses:
– Shell Malaysia Trading Sendirian Berhad
– Shell International Petroleum Company Limited
Compensation for key management personnel:
– Wages, salaries and bonus
(3,424)
(2,582)
– Allowances
(405)
(272)
– Benefits in kind
(854)
(751)
– Retirement benefits
(803)
(540)
Investment of fund:
– Shell Malaysia Limited
42,988,910
628,945
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
101
notes to the financial statements
for the year ended 31 December 2007
2 4 S I G N I F I C A N T R E L AT E D PA R T I E S T R A N S A C T I O N S ( C O N T I N U E D )
2007
2006
RM’000
RM’000
746,469
Outstanding balances:
– Shell Malaysia Trading Sendirian Berhad
738,437
– Shell Malaysia Limited
169,068
(65)
– Shell Timur Sdn. Bhd.
165,790
156,277
– Shell Eastern Chemicals Pte. Limited
44,031
165,251
– Sabah Shell Petroleum Company Limited
0
3,425
– The Shell Company of Thailand Limited
(4)
0
– Shell Eastern Trading (Pte) Ltd
(719)
(2,775)
– Shell International Petroleum Company Limited
(2,218)
(570)
– Shell Lubricants Supply Company
(6,365)
(3,146)
– Sarawak Shell Berhad
(167,475)
15,562
– Shell International Eastern Trading Co.
(439,337)
(362,600)
2 5 CONTINGENT LIABILITIES
(a)
In December 1996, employees were given the option of either remaining in the Shell Malaysia Retirement Benefit Fund (‘SMRBF’) or transferring
to a defined contribution scheme (‘DCS’). In conjunction with this, certain assets of the SMRBF were transferred to the Shell Malaysia Provident
Fund (‘SMPF’). The transfers were effective 1 May 1997. Arising from the transfer of assets from the SMRBF to the SMPF, the Company has
provided guarantees to members in relation to:
(i)
the capital sum transferred;
(ii)
a minimum return of 2.5% per annum on that capital sum; and
(iii)
death in service benefits.
The Company, as a Member Company of the SMPF, has supported the resolution of the Founding Company that the SMPF shall come to an
end on 31 December 2003 (‘Closure Date’) and for members’ balances in SMPF as at Closure Date be transferred to the Employees’ Provident
Fund. With this transfer, the Company no longer provides guarantees to members in relation to item (i) and (ii). Death in service benefits for
the ex-SMRBF members will continue to be guaranteed by the Company.
Based on the information currently available, it is not possible to estimate the likely outcome of the liabilities with regards to death in service
benefits as the liabilities are dependent on individual circumstances.
(b) The Company is a member of two oil spill funds, namely the Contract Regarding a Supplement to Tanker Liability for Oil Pollution (CRISTAL)
Fund and the International Oil Pollution Compensation (IOPC) 1992 Fund. The purpose of the Funds are to help compensate parties that suffer
financial loss as a result of oil spill from tankers. The members make contributions to the Funds depending on specific global oil spill incidents
which give rise to payments of compensation by the Funds. As at the date of this report, there are no material claims outstanding.
102
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
notes to the financial statements
for the year ended 31 December 2007
2 6 C A P I TA L C O M M I T M E N T S
Approved capital expenditure for property, plant and equipment not provided for in the financial statements are as follows:
2007
2006
RM’000
RM’000
Approved and contracted for
3,190
3,665
Approved but not contracted for
4,940
3,052
2 7 S E G M E N TA L I N F O R M AT I O N
The Company is principally engaged in the oil and gas industry namely refining and manufacturing of petroleum products in Malaysia. Accordingly,
no segmental information is considered necessary for analysis by industry segments or by geographical segment.
2 8 FINANCIAL INSTRUMENTS
(i)
Credit risk
As at 31 December 2007, approximately RM707,634,467 (2006: RM627,080,211) and RM165,823,646 (2006: RM157,609,444) of the
Company’s total receivables were from Shell Malaysia Trading Sendirian Berhad and Shell Timur Sendirian Berhad respectively.
These receivables represent approximately 67% (2006: 62%) of the Company’s total receivables. These receivables are denominated in Ringgit
Malaysia and are current balances as at the date of this report. There is no significant concentration of credit risk from amounts receivable
outside the Shell group of companies.
The credit terms of trade receivables range from 15 to 45 days (2006: 15 to 45 days).
The Company’s trade payables are unsecured. The credit terms for trade payables range from 30 to 45 days (2006: 30 to 45 days).
(ii)
Fair values
The carrying amounts of financial assets and liabilities of the Company at the balance sheet date approximated their fair values.
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
103
notes to the financial statements
for the year ended 31 December 2007
2 8 FINANCIAL INSTRUMENTS (CONTINUED)
(iii)
Balances denominated in foreign currencies
The currency exposure of financial assets and financial liabilities of the Company that are not denominated in the functional currency are set
out below.
(RM’000 equivalent)
Amounts receivable from related companies
Bank balances
Amounts payable to related companies
Trade and other payables
Long term borrowings
GBP
Others
186,369
0
107
0
257
0
0
(RM’000 equivalent)
Other receivables and prepayments
Amounts receivable from related companies
Bank balances
Amounts payable to related companies
Trade and other payables
Long term borrowings
0
(572,291)
(2,357)
(1,499)
(12)
(40,400)
(411)
(125)
(866)
(463,316)
EURO
(889,381)
Balances as at 31.12.2007
USD
0
(2,768)
0
(1,517)
0
(878)
Balances as at 31.12.2006
USD
EURO
GBP
Others
348
0
0
0
327,578
1,112
0
5
25,138
0
0
0
(497,618)
0
(19,066)
(35)
(25,992)
(146)
(9,631)
(2,041)
(493,780)
0
0
0
(664,326)
966
(28,697)
(2,071)
104
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
notes to the financial statements
for the year ended 31 December 2007
2 9 R E C L A S S I F I C AT I O N O F P R I O R Y E A R C O M PA R AT I V E
The presentation and classification of items in the current year’s financial statements are consistent with the previous financial year except as disclosed
below.
The reclassification of prior year comparative did not affect the recognition and measurement of the Company’s net assets. Expenses previously included
in operating expenses of RM47,751,000 are now presented within cost of sales and expenses previously included under administrative expenses of
RM4,588,000 are now presented within cost of sales for the cumulative year. Net exchange gain on the long term borrowings of RM34,030,000
previously under other operating expenses is now presented within finance cost.
The Directors are of the opinion that this classification better reflects the operating activities of the Company.
As previously stated
Reclassification
2006
2006
2006
RM’000
RM’000
RM’000
Cost of sales
(10,480,336)
Administrative expenses
Other operating expenses
Finance cost
3 0 A P P R O VA L O F F I N A N C I A L S TAT E M E N T S
The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 17 March 2008.
As restated
(52,339)
(10,532,675)
(48,419)
4,588
(43,831)
(21,278)
13,721
(7,557)
(31,596)
34,030
2,434
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
105
Company Properties
as at 31 December 2007
No
Tenure
Address
Land area
Description
(square feet)
Age of
Date of last
properties/
valuation
Land NBV
buildings
Freehold
1236-1238 CT
76,964
A club house
43 years
01.01.1991
1,077
Refinery
44 years
01.01.1991
22,194
Oil spill
43 years
01.01.1991
262
2159-2161 87
and training
Jln Resthouse,
centre
Building
Net book
NBV
value
RM’000
RM’000
1,952
3,029
51,227
75,351
486
748
NBV
RM’000
1.
Land
Improvement
RM’000
Port Dickson
2.
Freehold
Lot 3 HS(D) 1310,
6,284,183
1,930
Jln Pantai, Port Dickson
3.
Freehold
Lot 138, GN 893,
39,116
P.Dickson
response
centre
4.
Freehold
Lot 798 EMR 238,
49,959
Refinery
19 years
01.01.1991
140
140
242,847
Refinery
20 years
01.01.1991
687
687
247,072
Refinery
20 years
01.01.1991
694
694
98,010
Refinery
21 years
01.01.1991
314
314
112,490
Refinery
21 years
01.01.1991
360
360
130,685
Refinery
12 years
31.08.2000
480
480
100,729
Crude tank
12 years
31.08.2000
593
593
20 years
01.01.1991
423
423
20 years
01.01.1991
681
681
21 years
01.01.1991
379
379
21 years
01.01.1991
454
454
21 years
01.01.1991
398
398
Kg Arab, P.Dickson
5.
Freehold
Lot 196 EMR 621,
Kg Gelam, P.Dickson
6.
Freehold
Lot 195 EMR 620,
Kg Gelam, P.Dickson
7.
Freehold
Lot 765 EMR 287,
P.Dickson
8.
Freehold
Lot 598 EMR 319,
Kg Arang-arang,
P.Dickson
9.
Freehold
Lot194 GM1397,
P.Dickson
10. Freehold
Lot596 GM1247,
P.Dickson
11. Freehold
Lot 703 EMR 340,
farm
132,030
P.Dickson
12. Freehold
Lot 3984 Grant
farm
212,590
17001, P.Dickson
13. Freehold
Lot 595 EMR 316,
Crude tank
Crude tank
farm
118,439
Kg Arang-arang,
Crude tank
farm
P.Dickson
14. Freehold
Lot 599 EMR 320,
141,570
Kg Arang-arang,
Crude tank
farm
P.Dickson
15. Freehold
Lot 600 EMR 321,
Kg Arang-arang,
P.Dickson
124,146
Crude tank
farm
106
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Company Properties
as at 31 December 2007
No
Tenure
Address
Land area
Description
(square feet)
Age of
Date of last
properties/
valuation
Land NBV
buildings
Lot 601 EMR 322,
141,047
Kg Arang-arang,
Crude tank
Building
Net book
NBV
value
RM’000
RM’000
NBV
RM’000
16. Freehold
Land
Improvement
RM’000
21 years
01.01.1991
451
451
21 years
01.01.1991
331
331
21 years
01.01.1991
397
397
10 years
31.08.2000
1,259
1,259
11 years
31.08.2000
727
727
11 years
31.08.2000
1,216
1,216
12 years
31.08.2000
1,705
1,705
18 years
01.01.1991
585
585
18 years
01.01.1991
907
907
18 years
01.01.1991
466
466
18 years
01.01.1991
359
359
19 years
01.01.1991
443
443
19 years
01.01.1991
332
332
20 years
01.01.1991
620
620
20 years
01.01.1991
577
577
16 years
01.01.1991
431
431
16 years
01.01.1991
2,172
2,172
farm
P.Dickson
17. Freehold
Lot 602 EMR 323,
103,455
Kg Arang-arang,
Crude tank
farm
P.Dickson
18. Freehold
Lot 594 EMR 315,
123,884
P.Dickson
19. Freehold
Lot704 EMR 341,
farm
188,799
P.Dickson
20. Freehold
Lot950 GM1325,
Lot3985 G17002,
104,819
Lot834 G8652,
212,544
Lot 888 EMR 640,
Lot 1323 EMR 641,
115,173
Lot 2254 EMR 771,
178,596
Lot 6672 HS(M) 868,
91,737
Lots 3042-3 EMR 73,
59,383
Lots 3040-1 EMR
148,104
Lot 191 EMR 553,
120,334
Lot 190 EMR 552,
134,491
Lot 909 Grant
131,769
Lots 178-180
Grant 1087-1089,
P.Dickson
for pipeline to
jetty
86,766
10047, P.Dickson
32. Freehold
for pipeline to
jetty
Kg Gelam, P.Dickson
31. Freehold
for pipeline to
jetty
Kg Gelam, P.Dickson
30. Freehold
for pipeline to
jetty
742, P.Dickson
29. Freehold
for pipeline to
jetty
Kg Gelam, P.Dickson
28. Freehold
for pipeline to
jetty
Kg Gelam, P.Dickson
27. Freehold
for pipeline to
jetty
P.Dickson
26. Freehold
for pipeline to
jetty
P.Dickson
25. Freehold
Crude tank
farm
P.Dickson
24. Freehold
Crude tank
farm
348,481
P.Dickson
23. Freehold
Crude tank
farm
P.Dickson
22. Freehold
Crude tank
farm
P.Dickson
21. Freehold
Crude tank
for pipeline to
jetty
448,668
for pipeline to
jetty
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
107
Company Properties
as at 31 December 2007
No
Tenure
Address
Land area
Description
(square feet)
Age of
Date of last
properties/
valuation
Land NBV
buildings
Lot 1300 EMR 867,
88,481
Kg Gelam, P.Dickson
34. Freehold
Lot 651 EMR 196,
for pipeline to
Building
Net book
NBV
value
RM’000
RM’000
NBV
RM’000
33. Freehold
Land
Improvement
RM’000
17 years
01.01.1991
403
403
LPG VESSEL
21 years
01.01.1991
492
492
Refinery Buffer
11 years
30.04.2001
86
86
11 years
30.04.2001
86
86
11 years
30.04.2001
86
86
11 years
30.04.2001
86
86
11 years
30.04.2001
86
86
11 years
30.04.2001
210
210
11 years
30.04.2001
148
148
11 years
30.04.2001
221
221
11 years
30.04.2001
181
181
11 years
30.04.2001
173
173
11 years
30.04.2001
209
209
11 years
30.04.2001
121
121
11 years
30.04.2001
44
44
11 years
30.04.2001
5
5
11 years
30.04.2001
166
166
11 years
30.04.2001
172
172
jetty
153,810
Kg Arang-arang ,
P.Dickson
35. Freehold
Lot2193/23 HSM281,
1,259
P.Dickson
36. Freehold
Lot2193/24 HSM282,
Zone
1,259
P.Dickson
37. Freehold
Lot2193/25 HSM283,
Zone
1,259
P.Dickson
38. Freehold
Lot2193/49 HSM307,
Lot2193/50 HSM308,
1,259
Lot4961 GM475,
1,259
Lot4962 GM476,
5,769
Lot4963 GM477,
4,058
Lot4964 GM478,
Lot4965 GM479
463
Lot4966 GM480,
4,736
Lot4967 GM481,
Lot5402 GM345,
3,326
Lot4968 GM482,
1,066
Lot5403 GM346,
151
Lot5404 GM347,
P.Dickson
Refinery Buffer
Zone
4,026
P.Dickson
50. Freehold
Refinery Buffer
Zone
P.Dickson
49. Freehold
Refinery Buffer
Zone
P.Dickson
48. Freehold
Refinery Buffer
Zone
P.Dickson
47. Freehold
Refinery Buffer
Zone
5,726
P.Dickson
46. Freehold
Refinery Buffer
Zone
Port Dickson
45. Freehold
Refinery Buffer
Zone
P.Dickson
44. Freehold
Refinery Buffer
Zone
6,060
P.Dickson
43. Freehold
Refinery Buffer
Zone
P.Dickson
42. Freehold
Refinery Buffer
Zone
P.Dickson
41. Freehold
Refinery Buffer
Zone
P.Dickson
40. Freehold
Refinery Buffer
Zone
P.Dickson
39. Freehold
Refinery Buffer
Refinery Buffer
Zone
4,176
Refinery Buffer
Zone
108
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Company Properties
as at 31 December 2007
No
Tenure
Address
Land area
Description
(square feet)
Age of
Date of last
properties/
valuation
Land NBV
buildings
Lot5405 GM348,
4,176
P.Dickson
52. Freehold
Lot5406 GM349,
Lot5407 GM350,
4,176
Lot2193/26 HSM284,
Lot2193/51 HSM309,
1,259
1,259
P.Dickson
56. Freehold
Lot2193/52 HSM310,
Pt3541, Kg Gelam,
1,259
PT4521-4540,
2,002
PT4543, Kg Gelam,
40,236
Lot 1126 Grant
172
172
11 years
30.04.2001
172
172
11 years
30.04.2001
172
172
Refinery Buffer
11 years
30.04.2001
86
86
Zone
11 years
Refinery Buffer
11 years
30.04.2001
86
86
11 years
30.04.2001
86
86
14 years
31.08.2000
20
20
14 years
31.08.2000
398
398
14 years
31.08.2000
61
61
Refinery Buffer
Refinery Buffer
Refinery Buffer
Refinery Buffer
Refinery Buffer
Zone
6,135
P.Dickson
60. Freehold
30.04.2001
Zone
Kg Gelam, P.Dickson
59. Freehold
11 years
Zone
P.Dickson
58. Freehold
RM’000
Zone
P.Dickson
57. Freehold
RM’000
RM’000
Zone
P.Dickson
55. Freehold
value
Zone
4,176
P.Dickson
54. Freehold
Net book
NBV
Zone
P.Dickson
53. Freehold
Refinery Buffer
Building
NBV
RM’000
51. Freehold
Land
Improvement
Refinery Buffer
Zone
97,738
Reserved land
19 years
01.01.1991
313
313
86,858
Reserved land
20 years
01.01.1991
278
278
78,952
Reserved land
20 years
01.01.1991
253
253
148,626
Reserved land
21 years
01.01.1991
475
475
99,360
Reserved land
21 years
01.01.1991
318
318
216,449
Reserved land
21 years
01.01.1991
688
688
10097, P.Dickson
61. Freehold
Lot 2314 GM 203,
Kg Arang-arang,
P.Dickson
62. Freehold
Lot 643 EMR 330,
Kg Arang-arang,
P.Dickson
63. Freehold
Lot 652 EMR 197,
Kg Arang-arang,
P.Dickson
64. Freehold
Lot 774 EMR 629,
Kg Paya, P.Dickson
65. Freehold
Lot 1553 EMR 671,
Kg Paya, P.Dickson
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
109
Company Properties
as at 31 December 2007
No
Tenure
Address
Land area
Description
(square feet)
Age of
Date of last
properties/
valuation
Land NBV
buildings
Lot 775 CT 1769,
Building
Net book
NBV
value
RM’000
RM’000
NBV
RM’000
66. Freehold
Land
Improvement
RM’000
104,805
Reserved land
21 years
01.01.1991
336
336
107,539
Reserved land
15 years
03.09.1991
311
311
98,010
Reserved land
15 years
03.09.1991
283
283
47,866
Reserved land
43 years
01.01.1991
397
397
13,629
Reserved land
44 years
01.01.1991
256
256
17,739
Reserved land
44 years
01.01.1991
1
1
Jetty land
16 years
10.04.2004
2,011
P.Dickson
67. Freehold
Lot 580 EMR 225,
P.Dickson
68. Freehold
Lot 581 EMR 226,
P.Dickson
69. Freehold
Lot1312 PT4372,
lot1313 PT4373,
lot1314 PT4374,
lot1317 PT4377,
lot1318 PT4388,
lot764 P.Dickson
70. Freehold
Lot 9055
PT4382/9056 PT4383
P.Dickson (partial lots
of lot 701)
71. Freehold
Lot 9060
PT4387/9061 PT4388
P.Dickson (partial lots
of lot 701)
72. Leasehold PW1390 Mukim Port
2,822,688
9,894
11,905
63,558
117,753
Dickson
15,141,964
52,265
1,930
110
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Analysis of Shareholdings
as at 31 March 2008
Size of Holdings
No. of Holders
No. of Shares
%
Malaysia
Foreign
Malaysia
Foreign
Malaysia
Foreign
218
2
2,305
26
0.00
0.00
100-1,000
2,833
170
2,179,902
149,500
0.73
0.05
1,001-10,000
3,031
686
11,317,237
3,007,831
3.77
1.00
442
222
12,645,319
5,780,788
4.22
1.93
53
45
33,905,400
15,617,292
11.30
5.21
2
1
62,394,400
153,000,000
20.80
51.00
6,579
1,126
122,444,563
177,555,437
40.81
59.19
1-99
10,001-100,000
100,001-14,999,999(*)
15,000,000 and above(**)
TOTAL
GRAND TOTAL
No. of Holders
No. of Shares
%
7,705
300,000,000
100.00
REMARK: *Less than 5% of Issued Shares
**5% and above of Issued Shares
Authorised Capital
: RM300,000,000.00
Issued and Paid-up Capital : RM300,000,000.00
Class of Shares
: Ordinary share of RM1.00 each
Voting right
: One vote per ordinary share held
LIST OF TOP 30 SHAREHOLDERS
Total no. of shareholders
30
Total shareholdings
251,712,237
Total percentage
83.9%
LIST OF TOP 30 SHAREHOLDERS
No. Account No.
Name
Investor ID
Shareholdings
%
1.
207-001-024831513
Citigroup Nominees (Asing) Sdn Bhd for Shell
Overseas Holdings Limited
263875D
153,000,000
51.00
2.
226-001-004488797
Employees Provident Fund Board
EPFACT1991
44,385,100
14.80
3.
245-001-019638741
Amanah Raya Nominees (Tempatan) Sdn Bhd
for Skim Amanah Saham Bumiputra
434217U
18,009,300
6.00
4.
257-001-037151271
Valuecap Sdn Bhd
595989V
7,589,300
2.53
5.
205-001-025845835
Malaysia Nominees (Tempatan) Sendirian Berhad for
Great Eastern Life Assurance (Malaysia) Berhad (Par 1)
6193K
4,016,000
1.34
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
111
Analysis of Shareholdings
as at 31 March 2008
LIST OF TOP 30 SHAREHOLDERS (Cont’d)
No. Account No.
Name
Investor ID
Shareholdings
%
6.
260-001-043765304
Kumpulan Wang Persaraan (DiPerbadankan)
KWAPACT6622007
3,693,800
1.23
7.
245-001-019638717
Amanah Raya Nominees (Tempatan) Sdn Bhd
for Amanah Saham Wawasan 2020
434217U
3,520,500
1.17
8.
209-001-021330287
Cartaban Nominees (Asing) Sdn. Bhd.-Government
of Singapore Investment Corporation Pte Ltd for
Government of Singapore (C)
263367W
2,380,100
0.79
9.
206-001-022024434
HSBC Nominees (Tempatan) Sdn Bhd-Nomura Asset
Mgmt Malaysia for Employees Provident Fund
258854D
2,223,200
0.74
10. 245-001-031302672
Amanah Raya Nominees (Tempatan) Sdn Bhd
for Amanah Saham Malaysia
434217U
1,120,000
0.37
11. 057-002-010766673
Universiti Malaya
UOMACTNO441961
995,000
0.33
12. 209-001-026473371
Cartaban Nominees (Asing) Sdn. Bhd.-Government
of Singapore Investment Corporation Pte Ltd for
Monetary Authority of Singapore (H)
263367W
943,125
0.31
13. 209-001-035427459
Cartaban Nominees (Asing) Sdn. Bhd., Investors
Bank and Trust Company for Ishares, Inc.
263367W
882,000
0.29
14. 205-001-024068207
Malaysia Nominees (Tempatan) Sendirian Berhad for
Lee Foundation, States of Malaya (00-00197-000)
6193K
790,000
0.26
15. 206-001-043591155
HSBC Nominees (Asing) Sdn Bhd -Exempt AN
for JPMorgan Chase Bank, National Association
(Netherlands)
4381U
768,818
0.26
16. 207-001-044600708
Citigroup Nominees (Asing) Sdn. Bhd. for Exempt AN
for Mellon Bank (Mellon)
263875D
695,300
0.23
17. 205-001-034087676
Malaysia Nominees (Tempatan) Sendirian Berhad for
Great Eastern Life Assurance (Malaysia) Berhad (Par 2)
6193K
669,000
0.22
18. 206-001-043591288
HSBC Nominees (Asing) Sdn Bhd -Exempt AN for
JPMorgan Chase Bank, National Association (Taiwan)
4381U
580,400
0.19
19. 206-001-026754374
HSBC Nominees (Asing) Sdn Bhd-BBH and Co Boston
for Vanguard Emerging Markets Stock Index Fund
4381U
566,944
0.19
20. 056-004-024805566
Ke-Zan Nominees (Asing) Sdn Bhd, Kim Eng
Securities (Private) Limited for Chow Cho Poon Pte Ltd
257871M
530,000
0.18
21. 073-007-034742809
Tham Tatt Yow @ Tham Ah Chye
420411-10-5271
(0487773)
530,000
0.18
22. 065-001-043565290
CIMSEC Nominees (Asing) Sdn Bhd –Exempt AN
for CIMB-GK Securities Pte Ltd (Retail Clients)
265422M
505,750
0.17
112
Shell Refining Company (Federation of Malaya) Berhad (3926-U)
Analysis of Shareholdings
as at 31 March 2008
LIST OF TOP 30 SHAREHOLDERS (Cont’d)
No. Account No.
Name
Investor ID
Shareholdings
%
23. 065-003-044224251
Heng Lee and Company Sdn. Bhd.
750W
450,000
0.15
24. 245-001-033601618
Amanah Raya Nominees (Tempatan) Sdn Bhd
for Amanah Saham Didik
434217U
440,300
0.15
25. 206-001-024008484
HSBC Nominees (Asing) Sdn Bhd, HSBC SG
for Singapore Investments Pte Ltd
4381U
425,000
0.14
26. 205-001-036914042
Malaysia Nominees (Tempatan) Sendirian Berhad
for Great Eastern Life Assurance (Malaysia) Berhad
(Non Par 1)
6193K
420,600
0.14
27. 056-004-024806234
Ke-Zan Nominees (Asing) Sdn Bhd, Kim Eng
Securities (Private) Limited for Lee Tung Company
Pte Ltd
257871M
410,000
0.14
28. 209-001-043406503
Cartaban Nominees (Asing) Sdn. Bhd-The Governor
and Company of the Bank of Ireland for Ishares
Public Limited Company
263367W
407,700
0.14
29. 066-001-044630473
HLG Nominee (Asing) Sdn Bhd –Exempt an for UOB
Kay Hian Pte Ltd (A/C Clients)
250883D
387,700
0.13
30. 245-001-036921997
Amanah Raya Nominees (Tempatan) Sdn Bhd
for Dana Islamiah Affin
434217U
377,300
0.13
251,712,237
83.90%
Investor ID
Shareholdings
%
263875D
156,123,009
52.04
EPFACT1991
44,385,100
14.80
434217U
24,115,000
8.04
224,623,109
74.88
Investor ID
Shareholdings
%
263875D
153,000,000
51.00
434217U
18,009,300
6.00
171,009,300
57.00
TOTAL
S u b sta n tial S hareholders H oldi n g s
(5% and above)
No. Account No.
Name
1.
207-001-001830843
#
2.
226-001-004488797
Employees Provident Fund Board
3.
245-001-019638717
##
Citigroup Nominees (Asing) Sdn Bhd
Amanah Raya Nominees (Tempatan) Sdn Bhd
TOTAL
Citigroup Nominees (Asing) Sdn Bhd for Shell Overseas Holdings Limited
#
Amanah Raya Nominees (Tempatan) Sdn Bhd for Skim Amanah Saham Bumiputra
##
Account No.
#
207-001-024831513
##
245-001-019638741
TOTAL
Proxy Form
Original only
SHELL REFINING COMPANY
(Federation of Malaya) Berhad (3926-U)
(Incorporated in Malaysia)
(Please see notes below)
No. of shares held:
CDS account no.:
Serial number:
To: Board of Directors
I/We
NRIC No./Co. No.:
of
being Member/Members of Shell Refining Company (Federation of Malaya) Berhad, hereby appoint
NRIC No.
failing him/them
OR
NRIC No.:
OR failing him/them,
the Chairman of the Meeting as my / our proxy to vote for me / us on my / our behalf at the Forty Ninth Annual General Meeting of the Company
to be held at Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Thursday, 15 May 2008 at 11.00 am and at any
adjournment thereof.
Signature of Witness
Signature of Member or Common Seal­­­­­­­­­­­­­­­­­­­­­­­
Name in Full
Address
Date
day of
2008.
AGENDA 1
1. To receive the Audited Financial Statements of the Company for the year ended 31 December 2007 together with the Reports of the
Directors and Auditors thereon.
My / our proxy is to vote on the Resolutions as indicated by an “X” in the appropriate spaces below. If this form is returned without any indication
as to how the proxy shall vote, the proxy shall vote and abstain as he/she thinks fit.
AGENDA 2-7
Resolution
For
2. To approve the declaration of a final dividend of Thirty Sen (RM0.30) less Malaysian Income Tax
at 26% per unit of ordinary share of RM1.00 each for the year ended 31 December 2007 as
Resolution 1
recommended by the Directors. 3. To re-elect the following directors who are retiring in accordance with Article 81(3) of the
Company’s Articles of Association and being eligible, offer themselves for re-election:
a) Y.Bhg. Dato’ Mohzani bin Abdul Wahab
Resolution 2
b) YM Raja Ahmad Murad bin YM Raja Bahrin
Resolution 3
c) Mr. Thomas Michael Taylor
Resolution 4
4. To re-elect the following director who is retiring in accordance with Article 81(9) of the Company’s
Articles of Association and being eligible, offers himself for re-election:
Y.Bhg. Dato’ Seri Talaat bin Haji Husain
Resolution 5
5. To consider and if thought fit, pass the following resolution pursuant to Section 129 of the
Companies Act 1965:
“That Y.Bhg. Dato’ Jaffar Indot, a Director who retires in accordance with section 129 of the
Companies Act, 1965, be and is hereby re-appointed as a Director of the Company to hold office
Resolution 6
until the conclusion of the next Annual General Meeting.” Against
Resolution
For
Against
6. To appoint Messrs PricewaterhouseCoopers as auditors and to authorise the Directors to fix the
Resolution 7
auditors’ remuneration. 7. As SPECIAL BUSINESS, to consider and, if thought fit, pass the following ordinary resolution: Proposed Renewal of the Existing Shareholders’ Mandate and Proposed New Shareholders’
Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature.
Resolution 8
THAT subject to the Companies Act, 1965, the Memorandum and Articles of Association of the Company and the Listing Requirements of the
Bursa Malaysia Securities Berhad,
a) approval be and is hereby given for the Renewal of the Existing Shareholders’ Mandate for the Company to enter into and give effect to
the category of the recurrent arrangements or transactions of a revenue or trading nature from time to time with the Related Parties, as
specified in Section 2.2 of the Circular to Shareholders dated 11 April 2008; and
b) a New Shareholders’ Mandate be and is hereby granted for the Company to enter into additional recurrent related party transactions of a
revenue or trading nature from time to time with the Related Party, namely as specified in Section 2.2 of the Circular to Shareholders dated
11 April 2008, provided that such transactions are:(i) recurrent transactions of a revenue or trading nature;
(ii) necessary for the company’s day-to-day operations;
(iii) carried out in the ordinary course of business on normal commercial terms which are not more favourable to the Related Parties than
those generally available to the public; and
(iv) are not to the detriment of minority shareholders;
(the “Mandate”);
THAT such authority shall commence upon the passing of this resolution and shall continue to be in force until:(i) the conclusion of the next Annual General Meeting of the Company following the Annual General Meeting at which such mandate was
passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed;
(ii) the expiration of the period within which the next Annual General Meeting after the date it is required to be held pursuant to Section
143(1) of the Companies Act, 1965 but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the
Companies Act, 1965; or
(iii) revoked or varied by resolution passed by the shareholders in general meeting;
whichever is the earlier;
And further that the Directors of the Company be authorised to complete and do all such acts and things (including executing all such
documents as may be required) as they may consider expedient or necessary to give effect to the Mandate.
NOTES:
1. A member of the Company who is entitled to attend and vote at the meeting may appoint a maximum of two (2) proxies to attend and, on a poll, vote on the member’s
behalf.
2. A proxy need not be a member of the Company.
3. The instrument appointing a proxy shall be in writing and signed by the appointor or by his attorney who is authorized in writing. In the case of a corporation, the instrument
appointing a proxy or proxies must be made under seal or signed by an officer or an attorney duly authorised.
4. The signature to the instrument appointing a proxy or proxies executed outside Malaysia must be attested by a solicitor, notary public, consul or magistrate.
5. The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed or notarised must be deposited at the registered office of the
Company, Company Secretary’s Office, Bangunan Shell Malaysia, Changkat Semantan, Damansara Heights, 50490 Kuala Lumpur, not less than forty eight (48) hours before
the time for holding the meeting or adjourned meeting.
6. Only an original proxy form deposited at the registered office of the Company, will entitle the proxy holder to attend and vote at the meeting. Photocopies of proxy form will
not be accepted for the purposes of the meeting. Additional original proxy forms are available to members upon request in writing to the Company.
7. Where a member appoints two (2) proxies, the appointment shall be invalid unless such member specifies the percentage of his/her holding to be represented by each
proxy.
8. Any nomination of a Director must be made in accordance with the Articles of Association of the Company.
Borang Proksi
Asal sahaja
SHELL REFINING COMPANY
(Federation of Malaya) Berhad (3926-U)
(Diperbadankan di Malaysia)
(Sila lihat nota di bawah)
Bil. saham dipegang:
No. Akaun CDS:
Nombor Siri:
Kepada: Lembaga Pengarah
Saya/Kami
No. KP./ No. Syarikat:
dari
sebagai ahli Shell Refining Company (Federation of Malaya) Berhad, dengan ini melantik
No. KP
ATAU
jika dia/mereka tidak hadir
No. KP
ATAU
jika dia/mereka tidak hadir, Pengerusi Mesyuarat sebagai proksi saya/kami untuk mengundi bagi pihak saya/kami di Mesyuarat Agung Tahunan
Keempat Puluh Sembilan Syarikat yang akan diadakan di Pusat Konvensyen Sime Darby, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur pada hari
Khamis, 15 Mei 2008 pada jam 11.00 pagi dan pada sebarang penangguhannya.
Tandatangan Saksi
Tandatangan Ahli atau Cap Syarikat­­­­­­­­­­­­­­­­­­­­­­­
Nama Penuh
Alamat
Tarikh
haribulan
2008.
AGENDA 1
1. Untuk menerima pakai Penyata Kewangan Teraudit Syarikat bagi tahun kewangan berakhir 31 Disember 2007 serta Laporan Pengarah dan
Juruaudit.
Proksi saya / kami hendaklah mengundi bagi resolusi seperti yang ditandakan dengan “X” dalam ruang yang disediakan di bawah. Jika borang ini
dipulangkan tanpa sebarang tanda tentang cara proksi akan mengundi, proksi akan mengundi atau mengecualikan diri atas budi bicaranya sendiri.
AGENDA 2-7
Resolusi
Menyokong
2. Untuk meluluskan perisytiharan dividen akhir Tiga Puluh Sen (RM0.30) ditolak Cukai Pendapatan
Malaysia 26% seunit saham biasa RM1.00 sesaham bagi tahun berakhir 31 Disember 2007
Resolusi 1
seperti yang disyorkan oleh Pengarah. 3. Untuk memilih semula para pengarah berikut yang bersara menurut Artikel 81 (3) Tataurusan
Pertubuhan Syarikat dan oleh kerana layak, menawarkan diri mereka untuk dipilih semula:
a) Y.Bhg. Dato’ Mohzani bin Abdul Wahab
Resolusi 2
b) YM Raja Ahmad Murad bin YM Raja Bahrin
Resolusi 3
c) En. Thomas Michael Taylor
Resolusi 4
4. Untuk memilih semula pengarah berikut yang bersara menurut Artikel 81 (9) Tataurusan
Pertubuhan Syarikat, dan oleh kerana layak, menawarkan dirinya untuk dipilih semula:
Y.Bhg. Dato’ Seri Talaat bin Haji Husain
Resolusi 5
5. Untuk mempertimbangkan dan jika dianggap wajar, meluluskan resolusi biasa menurut Seksyen
129 Akta Syarikat 1965:
“Bahawa Y.Bhg. Dato’ Jaffar Indot, seorang Pengarah yang bersara menurut seksyen 129
Akta Syarikat, 1965, adalah dan dengan ini dilantik semula sebagai Pengarah Syarikat untuk
memegang jawatan sehingga tamatnya Mesyuarat Agung Tahunan yang akan datang.” Resolusi 6
Menentang
Resolusi
Menyokong
Menentang
6. Melantik Tetuan PricewaterhouseCoopers sebagai juruaudit dan membenarkan Pengarah
Resolusi 7
menetapkan yuran juruaudit. 7. Sebagai URUSAN KHAS, untuk mempertimbangkan dan jika dianggap wajar, meluluskan resolusi
biasa yang berikut: Cadangan Memperbaharui Mandat Pemegang Saham yang sedia ada dan Cadangan Mandat
Pemegang Saham Baru bagi Urus Niaga Berulang dengan Pihak Berkaitan yang berbentuk Hasil
Resolusi 8
atau Perdagangan.
BAHAWA tertakluk kepada Akta Syarikat 1965, Memorandum dan Tataurusan Pertubuhan Syarikat and Keperluan Penyenaraian Bursa
Malaysia Securities Berhad,
a) kelulusan adalah dan dengan ini diberikan untuk Memperbaharui Mandat Pemegang Saham sedia ada supaya Syarikat dapat memeterai
dan melaksanakan kategori urusan atau urus niaga berulang berbentuk hasil atau perdagangan dari masa ke masa dengan Pihak Berkaitan,
seperti yang dinyatakan dalam Seksyen 2.2 Pekelilng kepada Pemegang Saham bertarikh 11 April 2008; dan
b) Mandat Pemegang Saham baru adalah dan dengan ini diberikan oleh Syarikat untuk melaksanakan urus niaga berulang tambahan dengan
pihak berkaitan yang berbentuk hasil atau perdagangan dari masa ke masa dengan Pihak Berkaitan, iaitu seperti yang dinyatakan dalam
Seksyen 2.2 Pekeliling kepada Pemegang Saham bertarih 11 April 2008, dengan syarat urus niaga tersebut adalah:(i) urus niaga berulang berbentuk hasil atau perdagangan;
(ii) perlu bagi operasi harian Syarikat;
(iii) dijalankan dalam urusan perniagaan biasa berasaskan terma komersil biasa yang bukan lebih baik kepada Pihak Berkaitan berbanding
yang ditawarkan kepada umum; dan
(iv) tidak menjejaskan kepentingan pemegang saham minoriti;
(“Mandat”);
BAHAWA kuasa tersebut akan bermula selepas resolusi ini diluluskan dan akan terus berkuatkuasa sehingga:(i) berakhirnya Mesyuarat Agung Tahunan Syarikat yang akan datang selepas Mesyuarat Agung Tahunan di mana mandat tersebut
diluluskan, dan mandat akan luput pada waktu itu, melainkan kuasa tersebut diperbaharui menerusi resolusi yang diluluskan pada
mesyuarat tersebut;
(ii) tamat tempoh di mana Mesyuarat Agung Tahunan akan datang yang perlu diadakan menurut Seksyen 143(1) Akta Syarikat 1965, tetapi
tidak akan dilanjutkan sehingga lanjutan yang dibenarkan menurut Seksyen 143(2) Akta Syarikat, 1965; atau
(iii) dibatalkan atau diubah menerusi resolusi yang diluluskan oleh pemegang saham di sebuah mesyuarat agung;
yang mana lebih awal;
Dan bahawa Pengarah Syarikat diberi kuasa untuk menyempurnakan dan melakukan segala tindakan dan perkara (termasuk menandatangani
semua dokumen yang diperlukan) yang dianggap wajar atau perlu untuk menguatkuasakan Mandat.
NOTA:
1. Seorang ahli Syarikat yang layak untuk hadir dan mengundi di mesyuarat boleh melantik tidak lebih daripada dua (2) proksi untuk hadir, dan mengundi bagi pihak ahli tersebut
menerusi undian.
2. Seorang proksi tidak semestinya seorang ahli Syarikat.
3. Instrumen untuk melantik proksi hendaklah dibuat secara bertulis dan ditandatangani oleh pihak yang melantik atau oleh peguamnya yang diberi kuasa secara bertulis. Bagi
syarikat, instrumen melantik proksi mesti dimeterai atau ditandatangani oleh pegawai atau peguam yang diberi kuasa dengan sewajarnya.
4. Tandatangan bagi instrumen untuk melantik proksi yang dibuat di luar Malaysia mesti diperakui oleh peguam, saksi awam, konsul atau majistret.
5. Instrumen melantik proksi dan surat kuasa wakil atau pemberian kuasa lain (jika ada) yang ditandatangani dan diperakui hendaklah diserahkan ke pejabat berdaftar Syarikat,
Pejabat Setiausaha Syarikat, Bangunan Shell Malaysia, Changkat Semantan, Damansara Heights, 50490 Kuala Lumpur, tidak kurang daripada empat puluh lapan jam (48) jam
sebelum masa mesyuarat diadakan atau ditangguhkan.
6. Hanya borang proksi asal yang diserahkan di pejabat berdaftar Syarikat akan melayakkan pemegang proksi untuk hadir dan mengundi di mesyuarat. Salinan foto borang
proksi tidak akan diterima untuk tujuan mesyuarat. Borang proksi asal tambahan akan diberikan kepada ahli atas permintaan yang dibuat secara bertulis kepada Syarikat.
7. Sekiranya ahli melantik dua (2) proksi, pelantikan tersebut tidak sah melainkan ahli tersebut menetapkan peratus pegangan yang diwakili oleh setiap proksi.
8. Sebarang pencalonan Pengarah mesti dibuat menurut Tataurusan Pertubuhan Syarikat.
www.shell.com.my