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Annual Report & Accounts

ESSO MALAYSIA BERHADAn ExxonMobil Subsidiary in Malaysia

On the cover:Esso Malaysia Berhad provides high

quality fuels and products to improve

quality of life. We are committed to

maintaining excellence in safety,

product quality and environmental care

while being a good neighbour in the

local community.

Table of contents

Financial Highlights

Chairman’s Statement

Penyata Pengerusi

Five-Year Summary Charts

Board of Directors /Lembaga Pengarah

Profile of Directors

Corporate Citizenship Highlights

Corporate Information

Corporate Governance

Board Audit Committee Report

Report of the Directors

Financial Statements

Independent Auditors’ Report

Information on Stockholdings

List of Major Properties Owned

Notice of Annual General Meeting

Statement Accompanying Notice ofAnnual General Meeting

Notis Mesyuarat Agung Tahunan

Penyata Yang Dilampirkan BersamaNotis Mesyuarat Agung Tahunan

1

2

5

8

10

12

14

18

19

27

29

32

52

53

54

55

56

57

58

2009 2008 %RM Million RM Million Change

Revenues 8,032 11,735 (32)

Profit / (Loss) after taxation 146 (251) N/A

Earnings / (Loss) per ordinary stock unit (sen) 53.9 (93.1) N/A

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

Total assets employed 2,018 1,754 15

Total shareholders’ funds 513 392 31

Sales volume 88 88 -(thousands of barrels per calendar day)

FINANCIAL HIGHLIGHTS

1

The Annual General Meeting provides shareholders and the participants of our Young Entrepreneur Programme the opportunity to obtain a better understanding of the Company’s operations and financial performance.

Overall, the Company invested RM62 million mainly in retail service station

development and site upgrading programmes to continue to provide a high

quality service station network.

The Industrial Fuels and Liquefied Petroleum Gas (LPG) business remained

profitable reflecting on-going efforts to diversify customer portfolio and

improve supply chain efficiency. In the Lubes and Specialties business,

overall margins strengthened mainly due to a successful pricing strategy,

offsetting the impact of lower sales to the commercial transportation and

general manufacturing sectors.

In the area of corporate citizenship, our goal is to make a difference in the

lives of the community where we live and work. In 2009, we continued our

long-standing tradition of investing in the community by funding a variety of

projects in the key focus areas of education, community welfare and health.

These included awarding scholarships to primary and secondary students

through the ExxonMobil Education and Scholarship Fund, recognising

outstanding young athletes, investing in English, Mathematics, Science and

energy efficiency awareness programmes at the school level and working

with several non-governmental organisations (NGOs) to help women fulfill

their economic potential. A key activity was the 'Week of Caring' in October

where employees and their families volunteered their time and effort to

support worthy community activities.

Our refueling operations at the Kuala Lumpur International Airport received the prestigious ExxonMobil Aviation Global Airport Award and the Regional Airport Award for Asia Pacific.

Our stores offer snacks, beverages and even chicken meals for customers on the go.

ESSO MALAYSIA BERHAD

Business Outlook

Domestic economy has shown signs of recovery

supported by stronger growth performance in the fourth

quarter of 2009. However, looking ahead, the

sustainability of the economic recovery will be subject to

the global economic outlook in 2010. The industry will

remain challenging. Uncertainty in the crude price

environment may result in potential earnings volatility. In

this environment our strategy remains focused on

flawless operations, cost control and product and

service quality, while sustaining our competitive

position.

Board Matters

Mr. Lam Foo Keong, the Company's Executive Treasury

Director, opted to retire after 30 years of service with

ExxonMobil and resigned from the Board on April 1,

2009. Mr. Liam M. Mallon, the Chairman, resigned from

the Board on June 4, 2009 to assume the position of

Vice President of Engineering with ExxonMobil

Production Company in Houston, USA. I was appointed

to succeed Mr. Mallon as Chairman effective the same

day. I would like to place on record our appreciation to

both Mr. Mallon and Mr. Lam for their many invaluable

contributions to the Company.

On behalf of the Board, I would like to thank our

employees for their continued hard work and exemplary

dedication. The petroleum refining and marketing

business remains challenging and the Company's

success is highly dependent on the skills, abilities and

commitment of each employee to deal with and

overcome these challenges. I also express my

sincerest appreciation to our shareholders, dealers and

customers for their continued support of the Company.

Hugh W. Thompson Chairman

April 25, 2010

4 ANNUAL REPORT & ACCOUNTS 2009

We continuously work to improve the safety and health of our employees and contractors. Our objective is to develop and improve the leadership behaviours necessary to achieve safety, health and environmental excellence.

Our RON95 petrol, marketed as synergy 5000, is formulated with a multifunctional detergent additive to neutralise the negative effects of friction in your car‘s engine cylinders.

Penyata Pengerusi

Bagi pihak Lembaga Pengarah, saya dengan sukacitanya melaporkan

prestasi kewangan dan operasi Syarikat bagi tahun berakhir 31 Disember

2009.

Keputusan Kewangan 2009

Syarikat mencatatkan keuntungan selepas cukai sebanyak RM146 juta bagi tahun

2009, berbanding kerugian sebanyak RM251 juta dalam tahun 2008. Peningkatan

keputusan dalam tahun 2009 disumbang oleh hasil keuntungan inventori dan margin

yang lebih kukuh.

Perolehan keseluruhan tahun 2009 adalah sebanyak RM8.0 bilion berbanding

RM11.7 bilion yang dicatat dalam tahun 2008, di mana sebahagian besar

dipengaruhi oleh harga purata produk petroleum yang lebih rendah dalam tahun

2009.

Dividen untuk Tahun Kewangan 2009

Selaras dengan objektif Syarikat untuk menghasilkan pulangan yang wajar kepada

pemegang saham, Lembaga Pengarah telah mengesyorkan dividen akhir 12 sen

ditolak cukai pendapatan Malaysia 25% untuk seunit saham biasa bagi tahun

kewangan 31 Disember 2009.

Ulasan Operasi

Dalam tahun 2009, Loji Penapis Port Dickson telah memproses minyak mentah

dengan purata 63 ribu tong sehari, lebih tinggi dari tahun sebelumnya. Loji penapis

telah meneruskan usaha memperbaiki keanjalan operasinya melalui peningkatan

tahap kegunaan loji untuk membolehkannya memproses pelbagai minyak mentah

dan mengurangkan kos melalui penggunaan tenaga yang lebih cekap serta

amalan terbaik dalam penyenggaraan. Sebagaimana yang dirancang, dalam

tahun ini, Syarikat telah menjalankan kerja-kerja penyenggaraan unit

"powerformer" di loji penapis dengan selamat, melaksanakan pertukaran

spesifikasi bahan bakar kepada Euro 2M dan mula mengeluarkan minyak

petrol RON95 tanpa plumbum. Pada keseluruhannya, loji penapis dan terminal

penyimpanan produk kami telah mengekalkan tahap prestasi operasi yang

mantap tanpa kemalangan kakitangan yang menyebabkan hilang hari

bekerja yang dicatatkan selama 13 tahun berturut-turut di samping kejayaan

merangkul beberapa anugerah termasuk Anugerah Utama dari Persatuan

Keselamatan dan Kesihatan Pekerjaan Malaysia (MSOSH). Syarikat telah

melancarkan beberapa program keselamatan seperti pengukuhan sistem

pengurusan kerja dan kontrak, serta peningkatan kecekapan aplikasi

“Behaviour Based System”. Seiring dengan matlamat Exxon Mobil

Corporation untuk memantapkan tahap kecemerlangan dalam penjagaan

alam sekitar dan selaras dengan slogan “Protect Tomorrow. Today”, Syarikat

telah melaksanakan amalan kerja terbaik dalam mengurangkan pembakaran

gas terbuang dan meningkatkan kualiti efluen di loji penapis kami.

5ANNUAL REPORT & ACCOUNTS 2009

Hugh W. ThompsonPengerusi

Perniagaan runcit kami terus berkembang dengan pembukaan enam stesen

servis baru dalam tahun 2009. Syarikat telah melabur dalam pembelian tapak

perniagaan runcit yang mempunyai pertumbuhan tinggi, meneruskan program

peningkatan jenama untuk menambahbaik dan menaiktaraf stesen servis dan

telah melancarkan minyak petrol RON95 di semua stesen servis kami dengan

sempurna dan mengikut jadual. Di bawah program kad loyalti Smiles, beberapa

aktiviti promosi telah dijalankan sepanjang tahun untuk memberi peluang kepada

pelanggan berjimat dalam keadaan ekonomi yang lembap. Di antaranya, di

bawah program promosi seperti “Cara Baru untuk Berjimat”, ahli Smiles

berpeluang untuk menukar mata ganjaran mereka kepada barangan keperluan

harian seperti beras dan minyak masak dengan harga di bawah paras runcit.

Syarikat telah melabur RM62 juta terutamanya dalam pembangunan dan program

naik taraf stesen servis runcit agar dapat terus menyediakan rangkaian stesen

servis yang bermutu tinggi.

Perniagaan bahan bakar industri dan gas petroleum cecair (LPG) kekal memberi

keuntungan berikutan usaha berterusan bagi mempelbagaikan portfolio

pelanggan dan meningkatkan kecekapan rangkaian bekalan. Margin keseluruhan

perniagaan bahan pelincir dan produk khusus bertambah kukuh terutamanya

disebabkan kejayaan strategi harga, diimbang kesan dari jualan yang lebih rendah

kepada sektor pengangkutan komersial dan pembuatan am.

Dalam usaha untuk menjadi warga korporat yang bertanggungjawab, tumpuan

kami adalah untuk memberi manfaat kepada komuniti di mana kami tinggal dan

beroperasi. Dalam tahun 2009, kami meneruskan tradisi yang telah lama kami

amalkan, di mana kami telah menyumbang kepada komuniti melalui pembiayaan

pelbagai program pendidikan, kebajikan masyarakat dan kesihatan. Ini termasuk

penganugerahan biasiswa kepada pelajar-pelajar sekolah rendah dan menengah

melalui Tabung Pelajaran dan Biasiswa ExxonMobil, menghargai olahragawan

muda cemerlang, membiayai program Bahasa Inggeris, Matematik, Sains dan

program kesedaran tentang kecekapan penggunaan tenaga di peringkat sekolah,

serta bekerjasama dengan beberapa organisasi bukan kerajaan (NGOs) untuk

membantu wanita meningkatkan potensi ekonomi mereka. Program utama

Syarikat adalah perlaksanaan "Minggu Penyayang" dalam bulan Oktober di mana

kakitangan dan keluarga mereka secara sukarela telah meluangkan masa dan

tenaga membantu menjayakan aktiviti kemasyarakatan yang bermanfaat.



Pelanggan-pelanggan boleh menikmati produk dan perkhidmatan berkualiti tinggi dari Syarikat kami.

Prospek Perniagaan

Ekonomi tempatan telah menunjukkan tanda-tanda pemulihan, disokong oleh pencapaian yang lebih kukuh dalam suku tahun keempat 2009. Walau-bagaimanapun, samada pemulihan ekonomi ini akan kekal di masa hadapan atau- pun tidak adalah tertakluk kepada keadaan ekonomi global dalam tahun 2010. Industri ini dijangka akan terus mencabar. Persekitaran harga minyak mentah yang tidak menentu berkemungkinan akan menyebabkan potensi perolehan yang turun naik. Dalam persekitaran sebegini, strategi kami akan tertumpu kepada kesempurnaan operasi, pengawalan kos serta mutu produk dan perkhidmatan, di masa yang sama mengekalkan dayasaing kami.

Hal-hal Lembaga

Encik Lam Foo Keong, Pengarah Eksekutif Perbendaharaan Syarikat, telah memilih untuk bersara setelah berkhidmat dengan ExxonMobil selama 30 tahun, dan telah meletak jawatan sebagai ahli Lembaga Pengarah pada 1 April 2009. Encik Liam M. Mallon, Pengerusi, meletak jawatan sebagai ahli Lembaga pada 4 Jun 2009 untuk memegang jawatan Naib Presiden Kejuruteraan dengan ExxonMobil Production Company di Houston, Amerika Syarikat. Pada tarikh yang sama, saya telah dilantik untuk menggantikan Encik Liam M. Mallon sebagai Pengerusi. Saya ingin merakamkan penghargaan kepada Encik Mallon dan Encik Lam yang telah memberi sumbangan yang amat bernilai kepada Syarikat.

Bagi pihak Syarikat, saya juga ingin merakamkan penghargaan kepada kakitangan kami atas kegigihan dan tahap dedikasi mereka yang tinggi lagi berterusan. Perniagaan penapisan dan pemasaran petroleum akan kekal mencabar dan kejayaan Syarikat bergantung kepada kepakaran, keupayaan dan komitmen setiap kakitangan dalam mengatasi cabaran ini. Saya juga dengan tulus ikhlas merakamkan penghargaan kepada pemegang saham, pengusaha dan pelanggan kami atas sokongan berterusan mereka kepada Syarikat.

Hugh W. ThompsonPengerusi

25 April, 2010

7ANNUAL REPORT & ACCOUNTS 2009

Kami mengstrukturkan pengurusan operasi kami demi mencapai prestasi keselamatan dan alam sekitar yang kukuh.

THOUSANDS OF BARRELSPER CALENDAR DAY

TOTAL THROUGHPUT

2005 2006 20070

20

40

60

80

100

2008

707174

61 63

2009


Five-Year Summary Charts

SALES VOLUMETHOUSANDS OF BARRELSPER CALENDAR DAY

8

2005 2006 2007

REVENUES(NET OF GOVERNMENT DUTIES)RM MILLION

RM MILLIONPROFIT / (LOSS) AFTER TAX

207


-150

0

50

150

-300

146

2005 2006 2007 20080

20

40

60

80

93100

9497

88

2009

88

8,269

0

2,000

6,000

4,000

2005 2006 20082007

9,336

8,000

10,000

12,000 11,735

2009

9,740

(251)

20092008

578,032

ESSO MALAYSIA BERHAD ESSO MALAYSIA BERHAD ESSO MALAYSIA BERHAD


100

SHAREHOLDERS’ INFORMATION

Earnings/(loss) per ordinary stock unit (sen) 7.3 2.6 21.2 (93.1) 53.9

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

Dividend yield (%) 4.7 4.3 4.3 5.3 5.2

Share price (RM) - Highest 2.97 4.06 3.30 2.81 2.86- Lowest 2.31 2.30 2.02 1.82 1.90- Average 2.56 2.78 2.76 2.27 2.32

2005 2006 2007 2008 2009

Number of employees at year-end 352 327 326 318 299

RM MILLIONFinanced by:

TOTAL ASSETS EMPLOYED

Shareholders’ funds

CAPITAL EXPENDITURERM MILLION

Taxes payable, provisions and others

Trade payables

Notes payable and bank borrowings

9

2005 2006 2007 20080

20

40

60

80

38

54

61

37

2009

57

2005 2006 2007 2008

1,000

3,000

2,0002,006

2,123

2,700

1,754

2009

2,018

9 9ANNUAL REPORT & ACCOUNTS 2009

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SEATED FROM LEFT TO RIGHTDUDUK DARI KIRI KE KANANY. Bhg. Dato’ Zainal Abidin PutihY. Bhg. Tan Sri Abdul Halim AliMr. Hugh W. ThompsonChairman / PengerusiY. Bhg. Tan Sri Dato’ Dr. Syed JalaludinSyed Salim

STANDING FROM LEFT TO RIGHTBERDIRI DARI KIRI KE KANANPuan Faridah AliExecutive Retail Business Director /Pengarah Eksekutif PerniagaanJualan RuncitEncik Abu Bakar Siddik Che EmbiExecutive Refinery Director / Pengarah Eksekutif PenapisanPuan Fatimah MericanExecutive Business Services Director / Pengarah Eksekutif Urusan Perniagaan

Puan Sri Junaidah Mohd SaidMr. Manoj DevadasanJoint Secretaries / Setiausaha-setiausaha Bersama

10

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Board of Directors/ Lembaga Pengarah

Mr. Liam M. Mallon Chairman PengerusiResigned w.e.f. June 4, 2009Meletak jawatan berkuatkuasa 4 Jun, 2009

Mr. Lam Foo KeongExecutive Treasury Director Pengarah Eksekutif PerbendaharaanRetired w.e.f. April 1, 2009Bersara berkuatkuasa 1 April, 2009

11

ANNUAL REPORT & ACCOUNTS 2009


Fatimah Merican

Abu Bakar Siddik Che Embi

Faridah Ali

Executive Business Services DirectorHigher National Diploma, Polytechnic of Central London (now University of Westminster) (1976)

Puan Fatimah Merican, aged 55, a Malaysian, was appointed Business Services Director of the Company on December 1, 2008. She joined ExxonMobil Exploration and Production Malaysia Inc. (EMEPMI) in 1977. Over her career with the Company she has held various professional and managerial positions in the local and global Information Technology organisations of ExxonMobil. She also completed a rotational assignment in EMEPMI Public Affairs, and foreign assignments with ExxonMobil Asia Pacific Pte. Ltd., Singapore and ExxonMobil Limited, Thailand.

Prior to October 1, 2008, she was Manager, Downstream/Chemical Applications, Business Line Applications, Information Technology, ExxonMobil Business Support Centre Malaysia Sdn. Bhd. in Kuala Lumpur. Effective October 1, 2008, she was transferred to Upstream Business Services and thereafter appointed Business Services Director.

Executive Refinery DirectorB.Sc. (Hons.) Chemical Engineering, Leeds University, United Kingdom

Encik Abu Bakar Siddik Che Embi, aged 57, a Malaysian, was appointed Refinery Director of the Company on September 1, 2003. He started his career with the Port Dickson Refinery in 1976 and held various technical, operational and supervisory positions in the Refinery until 1990, when he was assigned to the Baytown Refinery, Exxon U.S.A., for about three years. In this assignment, he held the position of Technical Advisor and a number of leadership roles in the Process Department. Following that, he spent six months with Exxon Company International's Refinery Department in Florham Park, New Jersey as Refinery Advisor. In 1994, he returned to Malaysia and assumed the position of Deputy Manufacturing Manager of the Port Dickson Refinery. In 1995, he was promoted to Manufacturing Manager and held this position until 2003, when he was appointed Refinery Director.

Puan Faridah Ali, aged 45, a Malaysian, was appointed Retail Business Director of the Company on June 13, 2005. She began her career in ExxonMobil Malaysia Sdn. Bhd., and over the years, held supervisory roles in various functions including financial accounting, costing, planning, financial analysis, human resources and retail business. In 2000, after the merger of Exxon Corporation and Mobil Corporation in the United States of America, she assumed the position of Marketing Support Manager and subsequently Business Analysis and Reporting Manager before assuming her current position.

Executive Retail Business DirectorB.Sc. (Hons.) Accounting, University of East Anglia, Norwich, ACA (England & Wales)

Hugh W. ThompsonChairmanB. Sc. (Hons.) Geology, University of Aberdeen, ScotlandM.Sc. (Hons.) in Petroleum Engineering, Heriot-Watt University, Edinburgh, Scotland

Mr. Hugh W. Thompson, aged 47, a citizen of the United Kingdom, was appointed Director and Chairman of the Company on June 4, 2009. He joined ExxonMobil in 1988 and over the past 21 years has held positions of increasing responsibility in assignments ranging from Engineering and Operations Management, major project management and strategic business planning. He has spent the majority of his career with ExxonMobil in international assignments and has worked in Aberdeen and London in the United Kingdom as well as in Louisiana, Texas and California in the United States of America. He was the Planning Manager (Planning and Business Analysis) with ExxonMobil Production Company in Houston, Texas, United States of America before being appointed the Global Planning Manager for the ExxonMobil Production Company; a position he held until his appointment in 2009 as the Chairman of the ExxonMobil Subsidiaries in Malaysia.

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

Y. Bhg. Tan Sri Abdul Halim Ali

Y. Bhg. Dato' Zainal Abidin Putih

Independent Non-Executive Director and Member of the Board Audit CommitteeP.S.M., D.S.S.A., D.P.M.P., J.S.M. F.A. Sc., B.V.Sc., University of Punjab, M.Phil. and Ph.D., University of London, D.Sc., Honoris Causa, University of Hull, U. K., D.Sc., Honoris Causa, Soka University, Japan, D.Agriculture Technology, Honoris Causa, Thaksin University, Thailand, D.Sc., Honoris Causa, Open University Malaysia.

Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim, aged 66, a Malaysian and a national science laureate, as well as a founder fellow of the Academy of Sciences Malaysia, was appointed Director of the Company on February 15, 2000. He had a long illustrious academic carrier in both University of Malaya and University Putra Malaysia (UPM) before retiring as Vice Chancellor of UPM in 2001. He was responsible for transforming UPM to become one of the leading centres of higher education. As an accomplished academician, he has helped found many academic societies and associations, and has published over 350 papers in journals and proceedings in the fields of animal science, university management and education. For his meritorious career and services, he has received numerous awards, decorations and honours nationally as well as internationally. He retired from UPM in April 2001. He is the Chairman of Bank Kerjasama Rakyat Malaysia Berhad, Kejuruteraan Samudra Timur Berhad, Taylor's Education Berhad and Halal Industry Development Corporation. He is also a Director of TAFI Industries Berhad.

ndependent Non-Executive Director and Member of the Board Audit CommitteeP.M.N., P.J.N., S.P.M.S., S.I.M.P., D.G.S.M., D.H.M.S., D.S.D.K., J.S.M., K.M.N.B.A. (Hons.), University of Malaya

Y. Bhg. Tan Sri Abdul Halim Ali, aged 66, a Malaysian, was appointed Director of the Company on May 22, 2001. Upon graduation from University of Malaya, he joined the Ministry of Foreign Affairs in 1966. After several domestic and foreign postings, he was appointed the Malaysian Deputy Permanent Representative to the United Nations in 1979. He was appointed Ambassador to Vietnam in 1982 and returned to Malaysia in 1985 to be Deputy Secretary General in the Ministry of Foreign Affairs before being appointed Ambassador to Austria. In 1991, he again returned to Malaysia to be Deputy Secretary General I in the Ministry of Foreign Affairs and in 1996 he was promoted to Secretary General. In July 1998, he was appointed Chief Secretary to the Government, the highest ranking civil service post in the country and was responsible for overseeing and coordinating the policies of the government and their implementation. He retired as Chief Secretary to the Government in March 2001. He currently is the Chairman of the Multimedia Development Corporation and Malaysia Building Society Berhad and he is also a Director of Malakoff Corporation Berhad and IJM Corporation Berhad.

ndependent Non-Executive Director and Chairman of the Board Audit CommitteeD.S.N.S., J.P., FCA (ICAEW), CA (M), CPA (M)

Y. Bhg. Dato' Zainal Abidin Putih, aged 64, a Malaysian, was appointed Director of the Company on March 6, 2003. Upon qualifying from the Institute of Chartered Accountants in England and Wales, he joined the firm of Hanafiah Raslan & Mohamad, which merged with Ernst & Young in July 2002. He has extensive experience in audit having worked as a practicing accountant throughout his career covering many principal industries including banks, insurance, energy, transport, manufacturing, government agencies, plantations, properties, hotels, investment companies and unit trusts. He also has a good working knowledge of taxation matters and management consultancy, especially in the areas of acquisitions, takeovers, amalgamations, restructuring and public listing of companies. He plays an active role in the community and the corporate world being a past president of the Malaysian Institute of Certified Public Accountants. He was also a member of the Malaysian Communication & Multimedia Commission, a body set up by the Malaysian government to oversee the orderly development of the multimedia and telecommunication industry in Malaysia. He was the Chairman of Pengurusan Danaharta Nasional Berhad as well as the Malaysian Accounting Standards Board. He is currently the Chairman of Dutch Lady Milk Industries Berhad. He is also a Director of Tenaga Nasional Berhad and a Director of CIMB Group Holdings Berhad (formerly known as Bumiputra-Commerce Holdings Berhad), including its subsidiaries CIMB Bank Berhad and CIMB Investment Bank Berhad. He is also Chairman of CIMB Group's subsidiary Southeast Asia Special Asset Management Berhad. He also acts as a Trustee of the National Heart Institute Foundation.

I

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13

orporate social responsibility, or corporate citizenship as we like to call it, has long been a tradition

in our 117 year history in Malaysia. At Esso Malaysia Berhad (EMB) we strive to be a leader in

corporate responsibility by operating with integrity, maintaining a steadfast commitment to safety,

health and the environment and observing the highest ethical standards in the way we conduct our

business. We treat our employees and customers with respect and seek to help improve the quality of life in

the community where we operate. This section describes the corporate citizenship efforts and

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

Our success as a corporate citizen begins with a commitment to the highest standards of ethics, corporate governance, financial controls and operations integrity. The way we conduct our business is as important as the results themselves.

Management systems. This commitment to high ethical standards is implemented through our policies and practices in every aspect of our business.

lOur form the foundation for this commitment and provide a common set of ethical standards for employees of EMB and other ExxonMobil affiliates worldwide. These policies, which deal with, among others, Business Ethics, Conflicts of Interest, Antitrust, Alcohol and Drug Use, Gifts and Entertainment, Harassment in the Workplace and Outside Directorships, are strictly enforced. Employees are required to annually confirm that they have read and are familiar with the policies. Our Controls Integrity Management System is a framework for ongoing controls integrity in our day-to-day business.

lOur Operations Integrity Management System (OIMS) provides a framework for controlling and managing safety, health, security and environmental risks at all our facilities. It is designed to help drive all operational incidents to as close to zero as possible and meets the requirements of the International Organisation for Standardisation's standard for environmental management systems (ISO 14001).

lIn 2009, refresher training on our business practices were conducted for employees to ensure they understand company expectations. Controls clinics were organised to encourage dialogue on the application of guidelines and policies. We also conducted training for employees who interact, or may potentially interact, with government officials, to ensure they understand expectations of ethical and honest dealings with governments as well as obligations to comply with competition laws, including antitrust legislation of the United States.

Corporate governance and business integrity

Standards of Business Conduct

Corporate Citizenship Highlights



Corporate social responsibility has been a cornerstone of our business model and has contributed to our long term success.

Environmental performance

Product safety & stewardship

We are committed to operating our business in a way that protects the environment and takes into account the economic and social needs of the communities where we operate. Our environmental management processes are guided by our Protect Tomorrow. Today. initiative which outlines expectations for delivering superior environmental performance and achieving industry leadership in key environmental areas.

Operating safely and ensuring the integrity of our facilities are critical to minimising potentially adverse environmental impacts. We take active measures at our facilities to reduce emissions, improve energy efficiency, prevent environmental incidents and minimise our environmental footprint through various systems and initiatives.

lWithin ExxonMobil's global refining business, the Port Dickson Refinery (PDR) is among the leaders in energy conservation. It sustained high levels of energy efficiency, and reduced greenhouse gas emissions at the plant by applying ExxonMobil's Global Energy Management System Best Practices across all aspects of refinery operations. Operational efficiencies at PDR have resulted in savings of almost RM7 million.

lIn recognition of its accomplishments in energy efficiency, PDR was presented with the ExxonMobil Refining Energy Efficiency Award for first quartile performance and the ExxonMobil Refining Award for best ever performance in energy efficiency for 2009.

lOur service stations continued to be upgraded to ensure the highest standards of environmental protection. This included the installation of an early leak detection system and underground risk management system.

We are dedicated to minimising the risks and impacts associated with the manufacture and use of our products, from its development up to the marketing of these products. We ensure our products are safely delivered to our customers in all sectors and conduct regular safety checks of all our equipment. We provide updates on product specifications as well as guides on safe handling procedures of the products we sell.

Our service station dealers are trained on safety and environmental procedures to ensure safety at our sites and to minimise the impact of any security or environmental incident that may occur. We offer innovative products and services and strive to ensure a pleasant and enjoyable visit for each of our customers. Service station dealers and staff are trained to deal with different customer needs and to address complaints. Hotlines are also available for customers to make their suggestions or communicate their concerns directly to the Company.

ANNUAL REPORT & ACCOUNTS 2009 15

The Port Dickson Refinery employs a number of technologies and best practices to reduce energy usage and lower greenhouse gas emissions. It was presented with 2 energy efficiency awards for its stellar environmental performance in 2009.



Workplace

We are committed to conducting our business in a manner that protects the safety and health of our employees, contractors, customers and the public. Excellence in safety and health in the workplace is one of our core values.

Workplace safety. We strive for an incident-free workplace and enforce strict compliance with safety procedures and management systems to achieve our vision of Nobody Gets Hurt.

To mitigate operating risks that are inherent in our business, we continue to focus on underlying behaviours - reinforcing the message of safety leadership, personal accountability and procedural compliance - while enhancing our facilities, systems and competencies.

?PDR sustained its excellent safety record and continued to receive recognitions for its outstanding safety performance. It received a Special Recognition Award from the ExxonMobil Refining & Supply President for operating 5 years without a recordable injury to its workforce. It also received the ExxonMobil Asia Pacific Refining & Supply Director's Gold Award for completing 7 years without a Lost Time Incident (LTI). Externally, PDR was recognised with the Malaysian Society for Occupational Safety & Health (MSOSH) Grand Award for the third consecutive year.

?Our Distribution function recorded 12.8 years without an employee or contractor LTI, with our distribution terminals receiving 2 MSOSH Gold Awards for their outstanding SHE performance.

?Our airport operations at the Kuala Lumpur International Airport was chosen from a shortlist of 47 selected airport operations globally to receive the prestigious ExxonMobil Aviation Global Airport of the Year award in recognition of its excellence in operations, flawless performance and continuous improvements. They have also recorded 35 years of LTI-free operations.

?Our Industrial & Wholesale business received the ExxonMobil Fuels Marketing President's Safety award for best performing business segment. Some of their safety initiatives include consistent execution of the Loss Prevention System, Personal Safety Plans for everyone, quality application of safety programmes for our LPG dealers and distributors, as well as a Safety Week for employees.

Workplace health. We carry out numerous occupational health programmes and enhancements to prevent and reduce the risk of occupational injury or illness to employees, contractors and others involved in the company's operations. Programmes such as Alcohol and Drug Use, Fitness-for-Work evaluation and management of injury and illness ensure that our workers are medically fit to carry out their jobs without endangering themselves and others.

In 2009, we implemented an initiative to address injury and illness related to ergonomic factors associated with personnel working in an office environment. It included a globally consistent office ergonomics template to assess proper office configuration as well as observation tools for behaviour-based safety.

Employment policies and practices. We are committed to attracting, developing and retaining the best people from the broadest possible employee pool to meet our business needs. We aim to maintain a safe and productive work environment, enriched by diversity and characterised by trust, open communication and fair treatment. We strive to foster a productive work environment that encourages employee growth and engagement with management.

We uphold a set of policies that reflects our commitment in providing equal employment ?opportunity and a positive workplace. We have zero tolerance for all forms of discrimination and harassment and our Workplace Flexibility Programme helps employees achieve an effective work-life balance.

We strive to provide our employees with the best career opportunities in our industry, ?including assignments abroad for individual growth and achievement. At the end of 2009, EMB employees were among the 120 Malaysians on international assignments within ExxonMobil.

Ensuring the safety and reliability of our operations are fundamental to our business success.

Community development

We have a long tradition of investing in the community through both corporate contributions and employee volunteerism. Partnering with local NGOs and government agencies, we strive to make positive contributions to the communities through projects that bring sustainable, long-term benefits in five key areas - education, welfare and community aid, health, environment and the arts.

In 2009, EMB and the other ExxonMobil subsidiaries in Malaysia contributed to about 100 non-profit organisations. Some of the highlights of our contributions include:

Scholarships and best student awards for deserving students from secondary and ?primary schools in Negeri Sembilan under the ExxonMobil Education and Scholarship Fund.

Funding of educational programmes to promote English and science education, ?improve computer literacy among youth from the rural areas, and sports awards to recognise outstanding young athletes.

Support for health programmes and equipment upgrades such as community ?health programmes at Hospital Tuanku Ja'afar, Seremban.

Beyond direct financial investments, our employees also offer their expertise and personal time to their local communities through our various employee volunteer programmes:

ExxonMobil Young Entrepreneur Programme: 20 employees, including three from ?the PDR, volunteered over a period of six months to help 180 young entrepreneurs from six secondary schools around Klang Valley and Port Dickson learn entrepreneurial skills.

Employee Involvement Programme: 43 employees received RM1,500 each to ?assist the civic organisations that they served. A total of RM66,000 in grants were distributed for educational development, and to youth associations, welfare homes and environmental organisations.

ExxonMobil Community Projects Programme: EMB employees were part of the ?close to 1,000 employees who organised the "Week of Caring". Thirteen community events were carried out at various locations around the Klang Valley and in Port Dickson, targeting welfare homes as well as projects with safety and environmental themes such as a safety helmet campaign for school children, tree planting and river cleaning projects. About RM470,000 was spent for the year's programme, which ended with a Family Day for an estimated 2,500 disabled people and their families from across Malaysia, which was organised in conjunction with World Disabled Day in December 2009.


Community service is a way of life at EMB. Our corporate contributions and employee volunteerism efforts are aimed at creating long-term benefits for the community.

Corporate Information



ESSO MALAYSIA BERHAD (Company No:3927-V)Incorporated in Malaysia

DirectorsMr. Hugh W. Thompson(Chairman)

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

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

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

Puan Fatimah Merican(Executive Business Services Director)

Encik Abu Bakar Siddik Che Embi(Executive Refinery Director)

Puan Faridah Ali(Executive Retail Business Director)

Joint SecretariesPuan Sri Junaidah Mohd Said(LS0008614)

Mr. Manoj Devadasan(LS0006885)

Share RegistrarTricor Investor Services Sdn. Bhd. (118401-V)(formerly known as Tenaga Koperat Sdn. Bhd.)Level 17, The Gardens North TowerMid Valley CityLingkaran Syed Putra59200 Kuala LumpurTel: 603-22643883 Fax: 603-22821886

AuditorsPricewaterhouseCoopers (No. AF-1146)Chartered AccountantsKuala Lumpur

Stock Exchange ListingMain Board of Bursa Malaysia Securities Berhad

SolicitorsMessrs. Raja, Darryl & Loh, Kuala LumpurMessrs. Azman, Davidson & Co, Kuala LumpurMessrs. Skrine, Kuala LumpurMessrs. Lee Hishammuddin Allen & Gledhill,Kuala LumpurMessrs. Shearn Delamore & Co, Kuala LumpurMessrs. Zaid Ibrahim & Co, Kuala Lumpur

Registered Office

EMB Company Secretary's OfficeLevel 29, Menara ExxonMobilKuala Lumpur City Centre50088 Kuala LumpurTel: 603-23803024 Fax: 603-23803473

CORPORATE GOVERNANCE

The Board of Directors of Esso Malaysia Berhad is committed to ensuring that the highest standards of corporate governance are practised throughout the Company. The Board views this as a fundamental part of its responsibilities to protect and enhance shareholder value. Accordingly, the Board fully supports the principles laid out in the Malaysian Code on Corporate Governance.

Exxon Mobil Corporation, as the Company's ultimate holding company, has developed a series of policies and management systems that are designed to create and support a strong system of corporate governance. The policies and management systems have been adopted by the Board and are communicated to the Company's employees, contractors and vendors, so that each has a clear understanding of the Company's expectations.

The policies, which are set out in a Standards of Business Conduct booklet, and the management systems are strictly enforced. The Foundation Policies include Business Ethics, Conflicts of Interest, Antitrust, Alcohol and Drug Use, Gifts and Entertainment, Harassment in the Workplace and Outside Directorships. The management systems are designed to achieve high standards of performance in the areas of safety, operations integrity, internal control and legal and environmental compliance.

The Board and the Board Audit Committee ensure that the policies and the management systems are fully implemented and consistently enforced. They are supported in these regards by an internal Management Committee and an Audit and Controls Committee, both led by the Chairman.

The Board leads and controls the Company. The Board meets at least four times a year, with additional matters resolved by way of Circular Resolutions as and when necessary. Each Non-Executive Director is independent and brings invaluable judgment to bear on issues of strategy, performance, resource allocation, risk management and standards of conduct.

For the year ended December 31, 2009, four Board and four Board Audit Committee meetings were held. Details of the Directors' attendance at these meetings are summarised below:

Directors Number of Board Number of Board AuditMeetings Committee Meetings

Held Attended Held Attended

Mr. Hugh W. Thompson 2* 2 Non-member Non-member(Appointed to the Board w.e.f. June 4, 2009)

Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim 4 3 4 3

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

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

Puan Fatimah Merican 4 4 Non-member Non-member

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

Puan Faridah Ali 4 4 Non-member Non-member

Mr. Liam M. Mallon 2** 1 Non-member Non-member(Resigned from the Board w.e.f. June 4, 2009)

Mr. Lam Foo Keong 1** 1 Non-member Non-member(Resigned from the Board w.e.f. April 1, 2009)

* Reflects number of Board of Directors meetings held following appointment to the Board of Directors** Reflects number of Board of Directors meetings held in the year until resignation

The Board


Board Membership

Supply of Information

Appointment and Re-election of Directors

Remuneration Committee

Directors' Remuneration

The Board had 7 members as at the end of 2009, with 3 Independent Non-Executive Directors and 4 Executive Directors (including the Chairman). Together, the Directors form the mind and management of the Company.

The functional organisation of the Company provides a system and structure of checks and balances in the decision making process. There is a clear division of responsibilities between the Chairman and each of the other Executive Directors.

Balance in the Board is achieved and maintained with the composition of both Executive and Independent Non-Executive Directors. In recognition that the Independent Non-Executive Directors have a primary role in providing unbiased and independent views, the Company has selectively appointed highly qualified individuals of integrity and character, with broad experience and proven business and management expertise.

Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim is the longest serving Independent Non-Executive Director of the Company. Shareholders are at liberty to approach Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim, or any of the other Independent Non-Executive Directors, should there be any concerns relating to the Company and its Management.

Information regarding the Company's business and affairs is normally provided to the Board by the Company's management and staff and by the Company's independent auditors. Towards meeting this objective, Board meetings are structured with a pre-determined agenda. Board papers covering the Company's operational and financial performance, strategic plans on any significant matters and developments, together with the minutes of the previous Board and Board Audit Committee meetings, are circulated to the Directors (or Members of the Board Audit Committee, as the case may be) in advance of each meeting. This allows the Directors time to deliberate on the issues to be raised and discussed at each meeting. The Board, in addition to having full access to the advice and services of the Company Secretaries, has the authority to retain such outside advisors, including accountants, legal counsels, and other experts, as it deems appropriate. The fees and expenses of any such advisors will be paid by the Company.

In accordance with the Company's Articles of Association, the Board can appoint any person to be a Director as and when it is deemed necessary. However, consistent with the best practices of the Malaysian Code on Corporate Governance, the Nominating Committee makes recommendations to the Board prior to such appointments. Any person so appointed shall hold office until the next Annual General Meeting at which time the candidate will be subject to election by the shareholders. An election of Directors takes place every year, with each Director retiring from office at least once every three years. Directors retiring by rotation are eligible for re-election by the shareholders at the Annual General Meeting.

The Remuneration Committee is responsible for the recommendation of the remuneration of the Executive and the Independent Non-Executive Directors, for the Board's consideration and decision.

The current members of the Remuneration Committee are as follows:1. Mr. Hugh W. Thompson (Executive Director) - Chairman

Puan Fatimah Merican (Executive Director) - Alternate Chairman2. Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim (Independent Non-Executive Director) 3. Y. Bhg. Dato' Zainal Abidin Putih (Independent Non-Executive Director)

The remuneration received by the Independent Non-Executive Directors in 2009 was recommended by the Board as a whole (with the Independent Non-Executive Directors abstaining from participation in the discussions and voting on the matter) and approved by the shareholders at the Annual General Meeting on May 29, 2009.

With the recommendation of the Remuneration Committee, the Board has adopted Exxon Mobil Corporation's compensation system to set the remuneration of Executive Directors. The compensation system took into account the performance of each Executive Director and the competitive environment in which the Company operates. The Executive Directors took no part in deciding their own remuneration.

CORPORATE GOVERNANCE (Continued)



An analysis of the aggregate Directors' remuneration incurred by the Company for the year ended December 31, 2009 as prescribed under Appendix 9C Part A Item 10(a) of the Main Market Listing Requirements of the Bursa Malaysia Securities Berhad (“BMSB”) is set out below :

FEES VALUE OF TOTAL(RM) AND (RM)

EXECUTIVE DIRECTORS - 1,486,529 1,486,529

INDEPENDENT NON-EXECUTIVE 108,000 34,000 142,000 DIRECTORS

An analysis of the number of Directors whose remuneration, incurred by the Company, falls in successive bands of RM50,000 as prescribed under Appendix 9C Part A Item 10(b) of the Main Market Listing Requirements of the BMSB is set out below:

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

Less than 50,000 3

50,001 - 100,000 1

100,001 - 150,000 2

150,001 - 200,000 1

200,001 - 250,000

250,001- 300,000 1

300,001 - 350,000

350,001 - 400,000

400,001 - 450,000

450,000 - 500,000

500,001 - 550,000

550,001 - 600,000 1

600,001 - 650,000

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

The Nominating Committee is responsible for the recommendation of candidates for Independent Non-Executive Directors and Executive Directors and the recommendation of Directors for Committees, for the Board's consideration and decision.

The Nominating Committee is also responsible for the assessment of the effectiveness of individual Directors, Board Committees and the overall Board on an ongoing basis. These assessments, based on a combination of qualitative and quantitative factors, were carried out by the Nominating Committee in 2009. The findings and results of these assessments by the Nominating Committee were reported to the Board.

The current members of the Nominating Committee are as follows:1. Mr. Hugh W. Thompson (Executive Director) - Chairman

Puan Fatimah Merican (Executive Director) - Alternate Chairman 2. Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim (Independent Non-Executive Director) 3. Y. Bhg. Tan Sri Abdul Halim Ali (Independent Non-Executive Director)

The Board when setting up the Nominating Committee in 2003 formed the view, which it still holds today, that the Chairman of the Company, being an Executive Director, should be a member and Chairman of the Nominating Committee. While the composition of the Nominating Committee departs from the Best Practices as outlined in the Malaysian Code on Corporate Governance, compliance with which is not compulsory, the Board is of the view that the inclusion of the Chairman of the Company provides the Nominating Committee with invaluable perspective on the business and operational needs of the Company. Such input is needed in the selection and recommendation of suitable candidates for appointment by the Board, as well as in assessing the performance of the Board, Directors and Committees.

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

REMUNERATIONOTHERS (RM)

Nominating Committee



Directors' Training

Dialogue between the Company and Investors

Annual General Meeting

Accountability and Audit

Internal Control

The Board places great emphasis on continuous education for Directors. In this regard, the status of each Director's continuous education was regularly monitored and reviewed by the Board. The Board had in 2006, adopted the 'Principles for Training of Directors of the Company' that sets out the philosophies on and the types and modes of training, that the Directors will undertake in each year, to help them serve the Board more effectively. These same Principles were applied by the Board in determining the relevant training for Directors of the Company in 2009.

All Directors on the Board had received or undergone relevant training in 2009. Further details of the training programmes attended by the Directors in 2009 are as set out in pages 24 to 26.

The Company reimburses Directors for costs incurred in attending continuous education programmes. Puan Fatimah Merican who was appointed to the Board on December 1, 2008, attended the Mandatory Accreditation Programme on March 24-25, 2009. Mr. Hugh W. Thompson who was appointed to the Board on June 4, 2009 attended the Mandatory Accreditation Programme on September 29-30, 2009.

The Directors are also briefed at quarterly Board meetings on any significant changes in laws and regulations that are relevant to the Company's operations.

The Board values and encourages dialogue with the shareholders to establish better understanding of the Company's objectives and performance. The Annual General Meeting provides an appropriate forum for the shareholders to dialogue with the Board. Additionally, queries from investors and potential investors are dealt with by our Investor Relations. The Company also has its own website with contact details of a dedicated officer for such purpose. The Company holds open discussions with investors and analysts upon request. In this regard, the Company disseminates information in strict adherence to the disclosure requirements of the Main Market Listing Requirements of the BMSB. Material information relating to the Company is disclosed to the public by way of announcements to the BMSB, as required by the Main Market Listing Requirements of the BMSB.

At the Annual General Meeting, the Chairman of the Board reviews the progress and performance of the Company with the shareholders. A question and answer session is also conducted to allow shareholders the opportunity to question Management on the Company's business and the proposed resolutions. The Chairman, the Board members and the external auditors are available at the Annual General Meeting to respond to questions.

In announcing the quarterly, semi-annual and annual financial statements to the shareholders and the public, the Board endeavours to present a balanced and understandable assessment of the Company's financial position and prospects. The Board Audit Committee assists the Board by ensuring the accuracy and adequacy of the information announced.

The Directors are responsible for the Company's system of internal controls. The system applies to all financial and operating activities with the objective of safeguarding the shareholders' investment and the Company's assets. The internal control system has clear management support, including the involvement of the Board, and is designed to meet the risks to which the Company is exposed. The Board is satisfied with the design of the control system and believes that there is compliance with all of the requirements.

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

1. a comprehensive and clearly documented System of Management Control Standards Manual that establishes the core requirements for good controls within the Company. The Manual not only identifies the principal risks faced by the Company, but also prescribes the appropriate systems to manage these risks. The Manual also specifies the overall control framework, the required control checks and the required checks on the system's effectiveness;

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

3. annual reviews of the control system, including internal and external audits. The results are reviewed with various levels of management and any major concerns are raised to senior management and the Board Audit Committee;





Internal Control (Continued)

Statement of Directors' Responsibility for Preparing the Financial Statements

Relationship with Auditors

Material Contracts

Non-Audit Fees

Other Information

4. key policies covering, among others, Business Ethics, Conflicts of Interest, Antitrust, Alcohol and Drug Use, Gifts and Business Entertainment, Harassment in the Workplace and Outside Directorships. They include requirements to comply with all applicable laws and regulations. These policies are communicated to and acknowledged by employees on an annual basis;

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

6. a yearly representation of compliance to the internal control system and key policies by the managers of each business unit in the Company. Managers are required to document any outstanding control concerns and the planned corrective action steps.

It should be noted that systems of internal control and risk management are designed to manage rather than eliminate the risk of failure to achieve business objectives, and any system can only provide reasonable and not absolute assurance against material misstatement or loss.

The Directors are required by the Companies Act, 1965 and the Main Market Listing Requirements of the BMSB to confirm that the financial statements for each financial year have been made out in accordance with the applicable approved accounting standards and that they give a true and fair view of the results of the business and state of affairs of the Company for the financial year.

The Directors have carried out their responsibilities by:

?selecting suitable accounting policies and applying them consistently;

?making judgments and estimates that are reasonable and prudent;

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

?basing the financial statements on a going-concern basis, as the Directors have a reasonable expectation, after having made due enquiries, that the Company has adequate resources to continue in operational existence for the foreseeable future.

The Directors are responsible for ensuring that the Company keeps accounting records which disclose with reasonable accuracy, the financial position of the Company, enabling the Directors to ensure that the financial statements comply with the Companies Act, 1965 and to safeguard the assets of the Company.

The Board has established a formal and transparent relationship with the auditors of the Company. The role of the Board Audit Committee in relation to the internal and external auditors is described on pages 27 and 28.

The Company is not and was not a party to any material contracts involving the Directors' interests during the year. Further the Company is not and was not a party to any material contracts that are not in its ordinary course of business involving its major shareholders' interests during the year.

No non-audit fees were paid or are payable to the external auditors, Pricewaterhouse Coopers, by the Company for the financial year ended December 31, 2009.

i) Family Relationship

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

ii) Conflicts of Interest

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


Other Information(Continued)

iii) Conviction for offences (excluding traffic offences)

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

iv) Sanctions and/or penalties

No sanction or penalty has been imposed on the Company, or the Directors or the Management, by the relevant regulatory bodies.

This Statement is made in accordance with the Board of Directors' resolution dated February 24, 2010.

Training Attended by Directors in 2009Directors / Training Date in 2009 Organiser

Hugh W. Thompson

?ExxonMobil Operational Briefings Jun ExxonMobil

?“Technology & Alternative Energy” (Panel Chairman) – Asian Jun 8-9 PETRONASOil & Gas Conference

?Strategic Management of Emergencies Jul 30 ExxonMobil

?Briefing on MMLR Aug 18 ExxonMobil

?Refinery Operation at PDR Aug 18 ExxonMobil

?Visiting Senior Executives Programme Aug 26 Thunderbirds, Singapore

?Mandatory Accreditation Programme Sep 29-30 Bursatra

Tan Sri Dato' Dr Syed Jalaludin Syed Salim

?Financial Institutions Directors' Education Programme Jan 16 Bank Negara Malaysia

?Ministrial Leadership Lecture – YB Dato' Seri Khaled Nordin Jan 30 Ministry of Higher Education

?Financial Institutions Directors' Education Programme Feb 20-21 Bank Negara Malaysia

?Financial Institutions Directors' Education Programme Mar 20-21 Bank Negara Malaysia

?Transforming from Knowledge Economy to an Innovation Economy Mar 30 EPU, Prime Minister's – Dr Curtis Carlson of Sanford Research Institute International Department

?Financial Institutions Directors' Education Programme Apr 24-25 Bank Negara Malaysia

?Standards of Business Conduct May 19 ExxonMobil

?Governance Trends and Issues – by Prof Mervyn King of King May 21 Bank Negara MalaysiaCommittee on Corporate Governance

?Financial Institutions Directors' Education Programme May 22-23 Bank Negara Malaysia

?Marketing in Turbulent Times by Prof Mark Kotler May 30 Ministry of Higher Education

?Risk Management in Islamic Finance Jun 20 Bank Negara Malaysia

?Managing Economic Crisis by Board Jul 6 Smart Business Consulting

?Briefing on MMLR Amendments Aug 18 ExxonMobil

?Refinery Operations at PDR Aug 18 ExxonMobil

?BNM Financial Industry Conference Nov 17-18 Bank Negara Malaysia

rd?3 Islamic Financial Service Board Public Lecture Nov 23 Bank Negara Malaysia

– Financial Policy and Stability

?BNM High Level Conference on Financial Stability Nov 24 Bank Negara Malaysia




Training Attended by Directors in 2009 (Continued)Directors / Training Date in 2009 Organiser

Tan Sri Abdul Halim Ali

?Ministrial Leadership Lecture Jan 30 Ministry of Higher Education

?Risk Governance Feb 5 Employees Provident Fund

?Leading Changes – What Leaders Really Do Mar 15 Ministry of Higher Education

?Lead without Title Seminar May 13 Ministry of Higher Education


?Innovation Led Economy in Malaysia Jul 21 Ministry of Higher Education


?Refinery Operations at PDR Aug 18 ExxonMobilst

?21 Century Challenges in Financial Services Sep 1 King's College Alumni

?Truth, Lies and Corporate Governance Sep 28-29 Corporate Governance Summit 2009

?Lecture by Sir John Hartnell Bond (Chairman of Vodaphone) Oct 21 Khazanah Nasional

?MINDA Directors Forum 2009 Nov 22-25 MINDA

– Board Response to Turbulent Times

Dato' Zainal Abidin Putih

?Financial Inst Directors Training (Module 3) Jan 16-17 Bank Negara Malaysia

?Market Developments in Islamic Financing and Jan 22 MASB Future of Islamic Financial Reporting

?Forum on IASB – Paper on Financial Statement Presentation Feb 4 MASB

?Financial Inst Directors Training (Module 4) Feb 13-14 Bank Negara Malaysia

?Financial Inst Directors Training (Module 5) Mar 13-14 Bank Negara Malaysia

?2009 IFRS Forum and AOSSG Seminar Apr 16-17 China Accounting Standards Committee

?Public Forum – 2009 IASB (Regional Standard Setter) Apr 28 MASB

?MASB Conference – Accounting Challenges in Turbulent Times Apr 29 MASB

?New Fund Raising & New Board Structure May 8 Securities Commission and Bursa Malaysia

?Commemorative Lecture: What is Bursa Malaysia's Voice to May 14 MICPAEmbrace the Global Meltdown in Confidence?


?FIDE Talk by Prof Mervyn King – Chairman of King Committee on May 21 Bank Negara MalaysiaCorporate Governance on Governance Trends & Issues and PIDM

?Panelist at CG Best Practices Forum for PLCs Jun 11 Securities Commission and Bursa Malaysia



?Insight and Perspective of Malaysia's Industry Leaders Aug 20 Perdana Leadership Foundation

?Khazanah Megatrends Forum Oct 6 Khazanah Nasional

?Lecture by Sir John Hartnell Bond (Chairman of Vodaphone) Oct 21 Khazanah Nasional

?Consumer Sales and Distribution Review Oct 21 CIMB Bank(Keynote Adr: Tun Mahathir Mohamed)

?Lunch Talk by David Eldon (Chairman of DIFC) Oct 27 FIDE / Bank Negara Malaysia

?FIDE Roundtable Nov 2 FIDE / Bank Negara Malaysiast

?1 Meeting of Asian-Oceanian Standard-Setters Group (AOSSG) Nov 4-5 MASB


Directors / Training Date in 2009 Organiser

Fatimah Merican

?Malaysia Gas Business Overview Jan 30 ExxonMobil

?EMEPMI Leadership Workshop Mar 11-12 ExxonMobil

?Ergonomics for Managers and Supervisors Mar 23 ExxonMobil

?Mandatory Accreditation Programme Mar 24-25 Bursatra

?Anti Corruption Summit: Panelist and Speaker Mar 31 ASLI / TI Malaysia

?Overseas Security Advisory Council Briefing Apr 7 AMCHAM and US Embassy

?Advanced ESG Apr 22-24 LINK Associates International


?Asian Oil and Gas Conference – Technology and Alternative Energy Jun 9 PETRONAS

?Combined HUET with EBS and Sea Survival Jun 17 Terengganu Safety Training Centre

?Strategic Management in Emergencies Jul 30 ExxonMobil

?Breakfast Confidentials Aug 12 Paddy Schubert



?Talk by Ambassador Melanne Verveer – Global Women's Issues Dec 4 AMCHAM

?SAP R-3 Training Dec 9 ExxonMobil

?ExxonMobil in Malaysia -Strategies Meeting Dec 14 ExxonMobil

Abu Bakar Siddik Che Embi


?Strategic Management in Emergencies Jul 30 ExxonMobil

?LPS Executive Training Workshop Aug 5-6 ExxonMobil

?Briefing on amendments to MMLR Aug 18 ExxonMobil


?Joint Esso Australia – RRT 'LIP' Exercise Oct 26-29 ExxonMobil

?Worldwide Refinery Managers' Conference Nov 3-5 ExxonMobil

Faridah Ali

?Ergonomics for Managers and Supervisors Mar 23 ExxonMobil

?Advanced ESG Apr 22-24 LINK Associates International


?Lunch talk by Dr. Zeti Aktar on Malaysian Economic Outlook May 18 AMCHAM

?Briefing on amendments to MMLR Aug 18 ExxonMobil


?MPI on Electronic Data Protection Sep 17 ExxonMobil

?Anti-Trust/FCPA/Legal Implication Related to SHE Sep 17 ExxonMobil

?Globesmart Training Oct 26 ExxonMobil

Training Attended by Directors in 2009 (Continued)



Meetings and Minutes (Continued)

Authority

Duties

The Secretary to the Committee shall be appointed by the Committee. The Secretary shall be responsible for the timely issuance of meeting notices together with meeting agenda and any supporting documents in advance of such meeting, for recording, keeping and distributing the minutes of meetings and any other duties ordinarily discharged by a secretary of such Committee.

The Committee is authorised by the Board:

to investigate any matter within its terms of reference;?to have the resources which are required to perform its duties;?to have full and unrestricted access to any information pertaining to the Company;?to have unrestricted access to and communication with the external auditors of the Company and internal auditors;?to obtain external legal or other independent professional advice as necessary; and?to convene meetings with the external auditors of the Company, without the attendance of the executive members of ?the Committee, whenever deemed necessary.

The Committee is charged with the following duties:

to review with the external auditors of the Company and internal auditors, the audit plan of the Company, the ?respective auditors' evaluation of the Company's system of internal accounting controls and the audit report, the external auditors' management letter and management's response to such letter, and report the same to the Board;

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

to review and report to the Board the adequacy of the scope, functions, competency and resources of the internal ?audit function and that it has the necessary authority to carry out its work;

to review and report to the Board the internal audit programme, processes, the results of the internal audit ?programme, processes, or investigation undertaken, and whether or not appropriate action has been taken on the recommendations of the internal audit;

to review and report to the Board the quarterly results and year end financial statements, including the balance sheet ?and profit and loss statement, prior to submission of the statements to the Board for approval, focusing particularly on:- changes in existing accounting policies or implementation of new accounting policies;- significant and unusual events;- compliance with accounting standards and other legal requirements; and- the going concern assumption;

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

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

to review and report to the Board whether there is reason (supported by grounds) to believe that the Company's ?external auditors are not suitable for reappointment;

to recommend the nomination of a person or persons as external auditors of the Company;?to report promptly to Bursa Malaysia Securities Berhad (BMSB) matters reported by the Committee to the Board ?which have not been satisfactorily resolved resulting in a breach of the Listing Requirements of BMSB ; and

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

This Statement is made in accordance with the Board of Directors' resolution dated February 24, 2010.

Board Audit Committee Report (Continued)



REPORT OF THE DIRECTORS

The Directors are pleased to submit the annual report together with the audited financial statements of the Company for the year ended December 31, 2009.

PRINCIPAL ACTIVITIES

The Company is a public company incorporated in Malaysia under the Companies Act, 1965 and is listed on the Bursa Malaysia Securities Berhad. The Company's principal activities are the manufacturing and marketing of petroleum products in Peninsular Malaysia. There has been no significant change in the nature of the Company's activities during the year.

FINANCIAL RESULTSRM'000

Net profit attributable to shareholders 145,518Retained profits brought forward 249,025Profits available for appropriation 394,543Dividends paid less income tax at 25% (24,300) Retained profits carried forward 370,243

======

DIVIDENDS

The amount of dividends paid since December 31, 2008 are as follows:RM'000

In respect of the year ended December 31, 2008:

Final dividend per stock unit, paid on June 22, 2009:Ordinary – 12 sen gross less income tax at 25% 24,300

=====

The Directors propose that a final dividend of 12 sen less income tax at 25% per ordinary stock unit, amounting to RM24,300,000 be paid for the year ended December 31, 2009.

RESERVES AND PROVISIONS

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

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS

Before the income statement and balance sheet were completed, the Directors took reasonable steps:

1. to satisfy themselves that all receivables had been properly analysed, that bad debts had been written off where appropriate and that adequate provision for impairment of receivables had been established; and

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

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

1. which would make the amounts written off for bad debts or the provision for impairment of receivables in the financial statements of the Company inadequate to any substantial extent; or

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

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


STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (Continued)

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the year which, in the opinion of the Directors, will or may affect the ability of the Company to meet its obligations when they fall due.

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

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

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

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would make any amount stated in the financial statements misleading.

In their opinion:

1. the results of the Company's operations during the year were not substantially affected by any item, transaction or event of a material and unusual nature; and

2. there has not arisen in the interval between the end of the year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Company for the year in which this report is made.

DIRECTORS

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

Mr. Hugh W. Thompson (appointed w.e.f. June 4, 2009)Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed SalimY. Bhg. Tan Sri Abdul Halim AliY. Bhg. Dato' Zainal Abidin PutihPuan Fatimah Merican Encik Abu Bakar Siddik Che EmbiPuan Faridah AliMr. Liam M. Mallon (resigned w.e.f. June 4, 2009)Mr. Lam Foo Keong (resigned w.e.f. April 1, 2009)

DIRECTORS' BENEFITS

Since the end of the previous year, no Director has entered into or received or become entitled to receive a benefit (other than benefits disclosed in notes 8 and 9 to the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest. All transactions between the Company or a related corporation and companies in which Directors have interests are conducted on an arms-length, commercial basis in the ordinary course of business.

The Company was not a party to any contract or arrangement during the year and at the end of the year, as envisaged by section 169(6)(f) of the Companies Act, 1965, which would have enabled any of the Directors to acquire benefits through the acquisition of shares in or debentures of the Company or any other body corporate.



DIRECTORS' INTERESTS IN SHARES

According to the register of Directors' shareholdings, the interests of Directors who held office at the end of the year in the share capital of the Company and its related corporations are as follows:

As at01.01.09

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

ULTIMATE HOLDING COMPANY

The Directors regard Exxon Mobil Corporation, a corporation incorporated in the state of New Jersey, United States of America, as the ultimate holding company of the Company.

AUDITORS

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

In accordance with a resolution of the Board of Directors dated February 24, 2010.

...............................Hugh W. ThompsonChairman

...............................Fatimah MericanDirector

Kuala Lumpur,February 24, 2010

or date of As at appointment Acquired Sold 31.12.09

Exxon Mobil Corporation (Ultimate holding company) - Number of common stock without par value

held by the following Directors:

Mr. Hugh W. Thompson 3,400 1,641 - 5,041 Puan Fatimah Merican 7,752 6,000 (3,900) 9,852

Puan Faridah Ali 367 70 - 437



INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2009

Note 2009 2008RM'000 RM'000

REVENUES 5 8,032,440 11,735,217

COST OF SALES (7,429,880) (11,671,716)

GROSS PROFIT 602,560 63,501

OTHER INCOME 22,946 23,719

OPERATING EXPENSES (334,522) (317,829)

ADMINISTRATIVE AND OTHER EXPENSES (67,793) (59,706)

FINANCE COST 6 (22,195) (39,410)

PROFIT/(LOSS) BEFORE TAX 7 200,996 (329,725)

TAX (EXPENSE)/BENEFIT 10 (55,478) 78,399

NET PROFIT/(LOSS) ATTRIBUTABLE TO 145,518 (251,326) SHAREHOLDERS

========= =========

Earnings/(Loss) per ordinary stock unit (sen) 11 53.9 (93.1)==== ====

Proposed final gross dividend less income tax at 25%(2008: 25%) per ordinary stock unit (sen) 12.0 12.0

==== ====


BALANCE SHEET

AS AT DECEMBER 31, 2009

Note 2009 2008RM'000 RM'000

NON-CURRENT ASSETSProperty, plant and equipment 12 806,203 828,178Long-term assets and receivables 13 315,310 346,292Intangible assets - software 14 671 1,516TOTAL NON-CURRENT ASSETS 1,122,184 1,175,986

CURRENT ASSETSInventories 15 456,380 298,044Asset held for sale – leasehold land 16 2,552 -Receivables 17 143,924 55,167Amounts due from related corporations 20 181,699 173,739Deposit, cash and bank balances 75,869 15,990Taxation 35,234 34,999TOTAL CURRENT ASSETS 895,658 577,939

CURRENT LIABILITIESPayables 18 135,467 243,023Retirement benefits obligations 19 2,721 2,967Amounts due to related corporations 20 443,040 231,679Borrowings (unsecured) 21 807,950 825,008TOTAL CURRENT LIABILITIES 1,389,178 1,302,677

NET CURRENT LIABILITIES (493,520) (724,738)

LESS: NON-CURRENT LIABILITIESRetirement benefits obligations 19 48,449 47,964Deferred taxation 22 66,972 11,259

115,421 59,223

TOTAL NET ASSETS EMPLOYED 513,243 392,025======== ========

FINANCED BY:SHARE CAPITAL 23 135,000 135,000RESERVES 24 8,000 8,000RETAINED PROFITS 24 370,243 249,025SHAREHOLDERS' EQUITY 513,243 392,025

======== ========



STATEMENT OF CHANGES IN EQUITY


Issued and fully paidordinary stock of

RM0.50 each Non-distributableNumber of capital Distributable

ordinary Nominal redemption retainedstock unit value reserves profits Total

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

At January 1, 2008 270,000 135,000 8,000 524,327 667,327

Net loss - - - (251,326) (251,326)

Dividends for the year endedDecember 31, 2007 (final) - - - (23,976) (23,976)

At December 31, 2008 270,000 135,000 8,000 249,025 392,025

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

Net profit - - - 145,518 145,518

Dividends for the year endedDecember 31, 2008 (final) - - - (24,300) (24,300)

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


Note 2009 2008RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIESNet profit / (loss) attributable to shareholders 145,518 (251,326)Adjustments for:

Depreciation on property, plant and equipment 60,505 61,618Amortisation of intangible assets 845 1,232Tax expense / (benefit) 55,478 (78,399)Interest income (581) (124)Interest expense / commercial papers profit elements incurred 22,195 39,410Retirement / separation benefits cost 4,848 3,566Gain on disposal of assets held for sale (769) -Gain on disposal of property, plant and equipment (294) (1,998)Write-off of property, plant and equipment 2,763 2,210Unrealised foreign exchange (gain) / loss 10,997 (5,022)

Changes in:(Increase) / decrease in inventories (158,336) 364,198(Increase) / decrease in assets held for sale (2,552) 1,820(Increase) / decrease in receivables (88,800) 375,124(Increase) / decrease in amounts due from related corporations (7,960) 192,738Increase / (decrease) in amounts due to related corporations 199,698 (383,073)Increase / (decrease) in payables and provisions (106,254) (24,487)

Cash generated from operations 137,301 297,487

Interest / commercial papers profit elements paid (23,596) (38,394)Interest received 581 124Income taxes paid - (38,791)Income taxes refunded - 53,387Retirement / separation benefits paid (3,943) (2,781)

Net cash from operating activities 110,343 271,032

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment (47,096) (47,719)(Increase) / decrease in long-term assets and receivables 30,982 (20,795)Proceeds from disposal of property, plant and equipment 992 2,646Proceeds from disposal of assets held for sale 5,874 -

Net cash used in investing activities (9,248) (65,868)

CASH FLOWS FROM FINANCING ACTIVITIESRepayment of borrowings – net (17,058) (183,271)Dividends paid to shareholders (24,300) (23,976)

Net cash used in financing activities (41,358) (207,247)

NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 59,737 (2,083)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 8,621 10,704

CASH AND CASH EQUIVALENTS AT END OF YEAR 25 68,358 8,621

STATEMENT OF CASH FLOWS



NOTES TO THE FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

The financial statements of the Company are prepared under the historical cost convention except as disclosed in the summary of significant accounting policies in Note 2. The financial statements comply with the Financial Reporting Standards (FRS) approved by the Malaysian Accounting Standards Board (MASB) for entities other than private entities and the provisions of the Companies Act, 1965.

The preparation of financial statements in conformity with the FRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. It also requires the Directors to make judgements that affect the application of the Company's accounting policies. Although these estimates and judgements are based on the Directors' best knowledge of current events and actions, actual results may differ.

The new standards, amendments to published standards and interpretations to existing standards applicable to the Company that are not yet effective and are not early adopted by the Company, are as follows:

a) Standards effective from January 1, 2010:

lAmendment to FRS 8 Operating Segments.The improvement to the standard clarifies that entities that do not provide information about segment assets to the chief operating decision-maker will no longer need to report this information.

lAmendment to FRS 1 First Time Adoption of Financial Reporting Standards. The amendment allows first time adopter to measure the initial cost of investments in subsidiaries, jointly controlled entities (JCE) and associates either at fair value or the previous carrying amount.

lAmendment to FRS 127 Consolidated and Separate Financial Statements. The amendment mainly deleted the definition of cost method and added new paragraphs pertaining to group reorganisation. This has led to consequential amendments to other FRSs.

lAmendment to FRS 2 Share-Based Payment, which clarifies treatment of vesting conditions and cancellations.

lFRS 101 Presentation of Financial Statements. It prohibits the presentation of items of income and expenses (non-owner changes in equity) in the statement of changes in equity. 'Non-owner changes in equity' are to be presented separately from owner changes in equity in a statement of comprehensive income.

lFRS 123 Borrowing Costs. The new standard requires an entity to capitalise borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset. The option of immediately expensing those borrowing costs is removed.

lAmendments to FRS 132 Financial Instruments: Presentation. The amendments will enable non-corporate shareholders' interests in open ended funds, closed ended funds, co-operatives and partnerships to be presented as equity rather than liabilities.

lAmendments to FRSs contained in the document entitled “Improvements to FRSs (2009)”. The improvements contain amendments to twenty two FRSs which involve changes to presentation, recognition, or measurement and some are changes to terminology with little effect on accounting.

lAmendment to IC Interpretation 9: Reassessment of Embedded Derivatives. The amendment prohibits subsequent reassessment of embedded derivatives unless there is a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract, in which case reassessment is required.

lIC Interpretation 10: Interim Financial Reporting and Impairment. IC Interpretation 10 prohibits the impairment losses recognised in an interim period on goodwill and investments in equity instruments and in financial assets carried at cost to be reversed at a subsequent balance sheet date.

lIC Interpretation 11: FRS 2 Group and Treasury Share Transaction. This Interpretation further clarifies the treatment of transactions/arrangements relating to share-based payment.



1. BASIS OF PREPARATION (Continued)

lIC Interpretation 13: Customer Loyalty Programmes. This Interpretation explains how entities that grant loyalty award points to its customers should account for their obligation to provide free or discounted goods or services if and when the customers redeem the points.

lIC Interpretation 14: FRS 119 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. This Interpretation provides guidance on assessing the limit in FRS 119 on the amount of the surplus that can be recognised as an asset.

lStandards on financial instruments. The Company has applied transitional provision which exempts entities from disclosing possible impact arising from initial application of the following standards:

- FRS 7 Financial Instruments: Disclosures - Amendment to FRS 7 Financial Instruments: Disclosures - FRS 139 Financial Instruments: Recognition and Measurement- Amendment to FRS 139 Financial Instruments: Recognition and Measurement

The Company will apply the above mentioned standards, amendments and interpretations from financial period beginning January 1, 2010. The adoptions of these standards are not expected to have a material impact on the financial position of the Company.

b) Standards effective from July 1, 2010:

lFRS 1 First-time Adoption of Financial Reporting Standards. This is a revision to existing FRS 1 merely to improve the structure of the standard.

lFRS 127 Consolidated and Separate Financial Statements. The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses.

lIC Interpretation 17: Distributions of Non-cash Assets to Owners. It provides guidance on accounting for arrangements whereby an entity distributes non-cash assets to shareholders either as a distribution of reserves or as dividends.

lAmendment to FRS 2 Share-based Payment. It clarifies that contributions of a business on formation of a joint venture and common control transactions are outside the scope of FRS 2.

lAmendment to FRS 5 Non-current Assets Held for Sale and Discontinued Operations. It clarifies that all of a subsidiary's assets and liabilities are classified as held for sale if a partial disposal sale plan results in loss of control. Relevant disclosure should be made for this subsidiary if the definition of a discontinued operation is met.

lAmendment to FRS 138 Intangible Assets. It clarifies that a group of complementary intangible assets acquired in a business combination is recognised as a single asset if the individual asset has similar useful lives.

lAmendment to IC 9: Reassessment of Embedded Derivatives. The amendments clarify that the Interpretation does not apply to embedded derivatives in contracts acquired in a business combination, businesses under common control or the formation of a joint venture.

The Company will apply the above standards, amendments and interpretations from financial period beginning January 1, 2011. The adoptions of these standards are not expected to have a material impact on the financial position of the Company.

The remaining standards and interpretations that are issued but not yet effective are not relevant to the Company's operations.



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(a) Property, plant and equipment

Property, plant and equipment are stated at cost or 1982 valuation less accumulated depreciation and impairment. No valuation has been conducted since 1982.

The Directors have applied the transitional provisions of FRS 116 on Property, Plant and Equipment when MASB first issued the standard in 2000, which allowed property, plant and equipment to be stated at their prevailing valuations less depreciation. The valuations were determined by independent professional valuers on the following bases:

Land - Open market value based on existing useBuildings - Depreciated replacement cost

No depreciation is provided on freehold land and capital projects that are in progress. Buildings and improvements and plant and equipment are depreciated on a straight-line basis to write-off the cost or valuation of the assets to their residual values, over the term of their estimated service lives. The residual values and service lives are reviewed at each balance sheet date.

The principal annual rates of depreciation used are as follows:

Buildings and improvements 3% - 5%Plant and equipment 4% - 10%

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

Included in the respective property, plant and equipment classifications, is the Company's proportionate share of its interest in the joint venture assets of the Multi Product Pipeline System and related distribution terminal facilities (MPP). The Company has a 20% participating interest in these facilities. The accounting policy adopted for these jointly controlled assets is consistent with those adopted for the Company's 100% owned property, plant and equipment.

(b) Intangible assets - software

Intangible assets are stated at cost less accumulated amortisation. Computer software costs are amortised on a straight-line basis over the estimated useful life of the software, which normally falls within a range of 10 to 15 years.

(c) Impairment of assets

The carrying amounts of assets are reviewed annually to determine whether there is any indication that the carrying amounts may not be recoverable. If such an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to its recoverable amount. The recoverable amount is the higher of the asset's fair value less costs to sell and value in use and is determined for the cash generating unit to which the asset belongs. Impairment is measured by the amount the carrying value exceeds the recoverable amount. Impairment loss and its subsequent reversal are taken to the income statement.

(d) Assets held for sale

Non-current assets or disposal group are classified as being held for sale if their carrying amount is recovered principally through a sale transaction rather than through continuing use. These assets are measured at the lower of carrying amount and fair value less costs to sell upon execution of a binding sale agreement.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(e) Operating leases

Leases of assets under which a significant portion of risks and benefits of ownership over the economic life of the assets is effectively retained by the lessor are classified as operating leases. Prepaid lease rentals on service station sites made under operating leases are charged to the income statement on a straight-line basis over the period of the lease. Payments for all other operating leases are charged to the income statement in the year to which they relate.

(f) Inventories

Crude oil and petroleum product inventories are valued at the lower of cost and net realisable value. Cost includes all applicable purchase costs and production overheads and is determined on the first-in first-out (FIFO) basis. Materials and supplies are valued at cost, determined on a weighted average basis, and a deduction is made for obsolete and slow moving stocks.

(g) Trade receivables

Trade receivables are carried at anticipated realisable value less provision for impairment. Bad debts are written off in the year in which they are identified. A provision for impairment of trade receivables is made based on a review of all outstanding amounts at year end.

(h) Cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents include bank balances, deposits held at call with banks and cash in hand less bank overdrafts. To be included, these items must be readily convertible to cash and must not be subject to a significant risk of a change in value.

(i) Provisions

Provisions are recognised when it is probable that an outflow of resources will be required to settle a present obligation, and when a reliable estimate of the amount can be made. The provisions are reviewed at year end and adjusted to reflect the current best estimate.

(j) Employee / separation benefits

(i) Short-term employee benefits

Wages, salaries, bonuses, and non-monetary benefits are accrued in the year in which the associated services are rendered by employees of the Company.

(ii) Retirement benefits

(a) Defined contribution retirement plan

The Company's contribution to the national defined contribution plan, the Employees Provident Fund, is recognised in the income statement as incurred.

(b) Retirement benefits

national employees. The liability for employees' retirement benefits is determined based on a periodic independent actuarial reappraisal of the plan assumptions. This is based on the schedule of benefits stipulated in the Company's retirement benefits plan. The most recent reappraisal was carried out in December 2009. The projected unit credit method is used to calculate the actuarial plan benefits based on the estimated years of service and employees' projected compensation during their last year of employment. The liability recognised in the balance sheet represents the present value of the defined benefit obligations adjusted for unrecognised actuarial gains or losses and past service cost. Actuarial gains or losses are amortised on a straight-line basis over the average remaining service life of employees expected to receive the plan benefits.

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



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(j) Employee / separation benefits (Continued)

(iii) Separation benefits

Separation benefits are payments due to employees as a result of the separation of employment before the normal retirement age. The liability for separation benefits is recognised when the Company's commitment is confirmed without any realistic possibility of withdrawal.

(k) Share capital

Ordinary stock units with discretionary dividends are classified as equity.

(l) Dividends

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

(m) Borrowings

Borrowings are recognised based on the principal amounts expected to be repaid upon maturity. All interest, profit elements on Islamic Commercial Papers (ICP) Programme and other costs incurred in connection with borrowings are expensed as incurred, except that up-front costs incurred in establishing long-term facilities are amortised over the facility period.

(n) Taxation

The taxation charge in the income statement comprises current and deferred taxes. Current taxes are calculated by applying current tax rates to the chargeable income for the year.

Deferred taxes are calculated at the balance sheet date on all material temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available to absorb the deductible temporary differences. Tax rates enacted or substantively enacted by the balance sheet date are used to calculate deferred taxes.

(o) Revenue recognition

Income from the sale of goods is recognised upon delivery of goods and acceptance by customers net of returns, discounts and allowances, in accordance with the terms of sale. Interest and other income on land and buildings are recognised on an accrual basis.

(p) Research and development

Expenditures on research and development are recognised as expense except when there is sufficient certainty that the development efforts will result in future economic benefits for the Company, in which case these costs are capitalised.

(q) Foreign currencies

The functional currency of the Company is Ringgit Malaysia. Transactions arising in foreign currencies are translated into Ringgit Malaysia at the approximate rates of exchange on the transaction dates. Transactions uncompleted at the balance sheet date are translated at the closing exchange rates. Foreign currency exchange gains and losses resulting from the translation and settlement of foreign currency transactions are included in the income statement.


3. CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS

The Company makes accounting estimates and assumptions concerning the future which may differ from actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are:

(a) Estimated useful lives and residual values of property, plant and equipment

Property, plant and equipment are depreciated on a straight line basis over the term of their useful service lives taking into account residual values where appropriate. The estimated useful lives of these assets should be reflective of factors such as service life experience on the facilities and their maintenance programmes. The useful lives and residual values of assets are reviewed, and adjusted if appropriate, at each balance sheet date. The significant accounting policy for property, plant and equipment is disclosed in Note 2.

(b) Retirement Benefits Obligations

The present value of the retirement benefits obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining net cost (income) for the retirement benefits include the discount rate used to determine the present value of estimated cash outflows expected to be required to settle the retirement benefits obligations, and salary growth rate. Any changes in these assumptions will impact the carrying amount of retirement benefits obligations. Refer to Note 19 for the sensitivity of the overall pension liability to changes in the discount rate and salary growth rate.

4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company's financial results can be significantly affected from time to time by volatility in the market prices for crude oil and petroleum products. Since international crude oil and petroleum product prices are denominated in US Dollars, the Company's results can also be affected by fluctuations in foreign exchange rates. In addition, the Company can be affected by fluctuations in market interest rates as the Company's operations are financed through a mixture of retained profits and borrowings. The borrowings are generally based on floating interest rates unless opportunities arise for competitive fixed rate financing.

Given its large size and the long-term nature of its business, we expect that the Company's exposure to these risks will be moderated over time. As such, the Company discourages the use of financial derivative instruments to manage these risks. The Company believes that the administrative and financial costs to execute and control the use of derivatives typically outweigh the potential benefits. Any derivative transaction would require senior management approval and periodic review. Speculative derivative activity is strictly prohibited.

As a result of the above policies, the Company's purchase and sales transactions and foreign exchange transactions are generally based on market prices and exchange rates in effect on the day of each transaction. Interest rates on Company borrowings generally move with daily changes in the applicable market interest rates.

In addition to the above, the Company is also exposed to credit risk from its trade receivables from customers. The Company manages this risk by strict adherence to a set of credit policies and procedures whereby customers are thoroughly assessed and risk rated. Daily credit monitoring is an integral part of the credit management process that is administered within the Company's financial and operating computer system.

The Company is consistently in a net current liability position as retail sales to service stations are on cash terms whilst purchases, which are mostly intercompany in nature, are on credit terms. This improves the Company's return on capital employed by effectively reducing its exposure to uncollected trade receivables.

In addition, the Company continues to optimise the mix in its borrowing facilities to maximise financing flexibility whilst reducing financing cost. These facilities are short-term in nature unless opportunities arise to secure favourable longer term borrowing facilities. A significant component of these short-term borrowings are available to the Company on a long-term basis as described in Note 21.



5. REVENUES2009 2008

RM'000 RM'000

Related corporations sales 3,443,027 5,126,922Third party sales 4,563,919 6,586,488Turnover 8,006,946 11,713,410Interest income

Related parties 579 52Others 2 72

Licence fees on land and buildings 24,913 21,6838,032,440 11,735,217======== ========

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

6. FINANCE COST2009 2008

RM'000 RM'000Interest and profit elements on borrowings (Note 21)

Related parties 14,318 20,032Others 7,877 19,378

22,195 39,410====== ======

7. PROFIT/(LOSS) BEFORE TAX2009 2008

RM'000 RM'000The profit/(loss) before tax is arrived at after(crediting)/charging the following items:

Depreciation on property, plant and equipment 60,505 61,618Amortisation of intangible assets 845 1,232Auditors' remuneration 164 160Inventory write-down to net realisable value 1,560 178Cost of inventories recognised as an expense 7,429,880 11,671,716Provision for impairment and write-off

of receivables 488 580Bad debts recovered (127) (230)Foreign exchange (other than on borrowings)

Realised foreign exchange (gain)/loss (12,809) 4,409Unrealised foreign exchange (gain)/loss 10,997 (5,022)Rental expense for land and buildings 15,991 16,108

Hire of plant and machinery 355 246Research and development expense 4,289 3,339Gain on disposal of property, plant and

equipment (294) (1,998)Gain on disposal of assets held for sale (769) -

8. EMPLOYEE BENEFITS EXPENSE2009 2008

RM'000 RM'000

Wages, salaries and bonus 39,112 36,769Defined contribution retirement plan -

Employees Provident Fund 4,778 4,541Provision for retirement benefits -

Defined benefit retirement plan (Note 19) 3,803 2,649Separation benefits 1,045 917Other employee benefits 6,406 5,800

55,144 50,676===== =====


9. DIRECTORS' REMUNERATION2009 2008

RM'000 RM'000

Non-Executive Directors:Fees 108 108

Executive Directors:Short-term employee benefits 1,156 1,130Retirement benefits 282 283Benefits-in-kind 49 40

1,595 1,561===== =====

Included in the above is the remuneration of Executive Directors employed by related corporations allocated to the Company amounting to RM487,000 (2008: RM554,000). The balance represents remuneration for Directors employed by the Company included in Note 8.

10. TAX EXPENSE/(BENEFIT)2009 2008

RM'000 RM'000Current taxation - -(Over) / under accrual in prior years

- Income tax (115) (1,083)- Real Property Gains Tax (120) 95

Deferred taxation (Note 22)Origination and reversal of temporary differences 55,713 (77,382)Reduction in statutory tax rate - (29)

55,478 (78,399)===== ======

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

2009 2008% %

Statutory tax rate 25 26Expenses not deductible for tax purposes 3 (1)Effect on deferred tax of reduction in statutory

tax rate - (1) Effective tax rate 28 24

==== ====

The statutory tax rate has been reduced to 25% for the year ended December 31, 2009 (2008: 26%) as earlier gazetted by the Government in December 2007.

Effective tax rates on non-deductible expenses primarily reflect the varying relationship of the non-deductible expenses (which are relatively fixed over time) to changing levels of profit or loss from period to period.

11. EARNINGS/(LOSS) PER ORDINARY STOCK UNIT

Earnings per ordinary stock unit is calculated by dividing the net profit or loss attributable to shareholders by the number of ordinary stock units in issue during the year.

2009 2008

Net profit/(loss) attributable to shareholders (RM'000) 145,518 (251,326)Number of ordinary stock units in issue ('000) 270,000 270,000Basic earnings/(loss) per stock unit (sen) 53.9 (93.1)

====== ======



12. PROPERTY, PLANT AND EQUIPMENTBuildings Plant Capital

Freehold and and projectland improvements equipment in-progress Total

RM'000 RM'000 RM'000 RM'000 RM'000Net book valueAt January 1, 2009 206,084 141,230 440,203 40,661 828,178Additions - 4,618 2,415 40,063 47,096Disposals (118) - (60) - (178)Write-offs - (386) (2,377) - (2,763)Reclassify to assets

held for sales (2,782) (1,437) (886) - (5,105)Transfer to affiliate - - (520) - (520)Reclassifications - 14,638 16,841 (31,479) -Depreciation charged to

income statement - (14,606) (45,899) - (60,505)Net book value ------------ ------------ ------------ ------------ ------------At December 31, 2009 203,184 144,057 409,717 49,245 806,203

======= ======= ======= ======= =======

At December 31, 2009Valuation-1982 57,267 15,770 - - 73,037Cost-Post 1982 net additions 145,917 312,600 1,215,105 49,245 1,722,867Accumulated depreciation - (184,313) (805,388) - (989,701)

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

======= ======= ======= ======= =======

Net book value atDecember 31, 2009 if assetshad been carried at cost less depreciation: 153,355 144,057 409,717 49,245 756,374

======= ====== ======= ======= =======

At December 31, 2008Valuation-1982 57,278 15,819 - - 73,097Cost-Post 1982 net additions 148,806 298,824 1,216,677 40,661 1,704,968Accumulated depreciation - (173,413) (776,474) - (949,887)

------------ ------------- ------------ ------------ ------------Net book value 206,084 141,230 440,203 40,661 828,178

======= ======= ======= ======= =======

Net book value atDecember 31, 2008 if assetshad been carried at cost less depreciation: 156,247 141,230 440,203 40,661 778,341

======= ======= ======= ======= =======

Included in the above Property, Plant and Equipment is the net book value for the Company's 20% participating interest in the joint venture assets of MPP amounting to RM67,705,000 (2008: RM71,261,000).

13. LONG-TERM ASSETS AND RECEIVABLES2009 2008

RM'000 RM'000

Prepaid lease rentals 278,446 295,713Deposits 2,210 2,289Loans and marketing assistance to dealers 27,922 40,215Employee receivables 124 323Others 6,608 7,752

315,310 346,292======= =======

Included in the above prepaid lease rentals are leasehold land amounting to RM20,977,000 (2008: RM21,447,000) for the Company's 20% participating interest in the joint venture assets of MPP.


14. INTANGIBLE ASSETS - SOFTWARE2009 2008

RM'000 RM'000

At December 31Cost 11,070 11,070Accumulated amortisation (10,399) (9,554)Net book value 671 1,516

====== =====

15. INVENTORIES2009 2008

RM'000 RM'000

Crude oil 197,205 135,098Petroleum products 250,940 154,053Materials and supplies 8,235 8,893

456,380 298,044====== ======

Petroleum products:At cost 176,615 110,379At net realisable value 74,325 43,674

250,940 154,053====== ======

16. ASSETS HELD FOR SALE

Included in assets held for sale are leasehold land in the amount of RM2,552,000 (2008: Nil). The assets are no longer considered suitable for continuing use in service stations development and are expected to be disposed in 2010.

17. RECEIVABLES 2009 2008

RM'000 RM'000

Trade receivables 68,883 35,355Less: Provision for impairment of receivables (3,023) (3,182)

65,860 32,173Others 78,064 22,994

143,924 55,167====== ======

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

At the balance sheet date, the concentration of credit risk with respect to trade receivables is mainly from Supply and Lubricants customers. The provision for impairment is considered sufficient to cover collection losses.

Other receivables are generally those of a non-trade nature. Included in the current year balance is an amount of RM59,573,178 (2008: RM4,197,000) for subsidies receivable from the Government of Malaysia under the Automatic Pricing Mechanism.


18. PAYABLES2009 2008

RM'000 RM'000

Trade payables 73,139 177,870Other payables 62,328 65,153

135,467 243,023====== ======

The currency exposure profile of trade payables is as follows:

Ringgit Malaysia 72,633 158,121US Dollar 506 19,749

73,139 177,870====== ======

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

Other payables are generally those of a non-trade nature that arose from other than the purchase of crude and petroleum products. Included in other payables is an amount of RM1,261,000 (2008: RM2,202,000) for payroll liabilities.

19. RETIREMENT BENEFITS OBLIGATIONS

The Company operates an unfunded defined benefit retirement plan for its regular national employees. The plan assumptions are reappraised by an independent actuary every three years. The latest actuarial reappraisal was carried out in December 2009.

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

2009 2008RM'000 RM'000

At January 1 50,931 51,259Net expense charged to the income statement 3,803 2,649Payments to separating employees and retirees (2,898) (1,864)Employees transferred to affiliated companies (666) (1,113)At December 31 51,170 50,931

======= ======

The amounts recognised in the balance sheet are reconciled as follows:

Present value of unfunded obligations 40,613 40,461Unrecognised actuarial gains 10,557 10,470Net liability 51,170 50,931

===== =====

Reflected on the balance sheet as:

Current 2,721 2,967Non-current 48,449 47,964

51,170 50,931===== ======

The movement in the present value of unfunded obligations are as follows:

At January 1 40,461 36,882Current service cost 1,943 1,706Interest cost 2,570 2,189Actuarial (gain)/loss (797) 2,661Benefits paid (2,898) (1,864)Intercompany transfers (666) (1,113)At December 31 40,613 40,461

===== =====



19. RETIREMENT BENEFITS OBLIGATIONS (Continued)

The expense recognised in the income statement is as follows:2009 2008

RM'000 RM'000

Current service cost 1,943 1,706Interest cost 2,570 2,189Net actuarial gains recognised (710) (1,246)Total, included in employee benefits expense (Note 8) 3,803 2,649

===== ======

The charge to the income statement is included in the operating expenses and administrative and other expenses.

The principal actuarial assumptions used were as follows:2009 2008

% %

Discount rate 6.3 6.0Expected rate of salary increases 5.2 5.5

The discount rate used is based on investment grade private debt securities with tenure approximating the tenure of the pension liability. The salary growth rate takes into account market factors such as inflation rate.

A 1% higher (lower) discount rate would decrease (increase) the pension liability by approximately RM300,000 (RM300,000).

A 1% higher (lower) salary growth rate would increase (decrease) the pension liability by approximately RM900,000 (RM800,000).

2009 2008RM'000 RM'000

Present value of unfunded obligations 40,613 40,461Experience (gain)/loss adjustments on plan liabilities (797) 2,661

20. AMOUNTS DUE FROM/(TO) RELATED CORPORATIONS

The currency exposure profile of amounts due from related corporations is as follows:

2009 2008RM'000 RM'000

Ringgit Malaysia 156,760 173,739US Dollar 24,939 -

181,699 173,739====== ======

The currency exposure profile of amounts due to related corporations is as follows:

2009 2008RM'000 RM'000

Ringgit Malaysia (11,312) (6,008)US Dollar (431,728) (225,671)

(443,040) (231,679)

====== =======

These balances are unsecured and are generally settled within one month.



21. BORROWINGS (UNSECURED)2009 2008

RM'000 RM'000

Floating interest rate loans from related corporations 507,950 525,008Short-term notes 300,000 300,000

807,950 825,008======= =======

The floating interest rate loans from related corporations comprise the following:

(i) Two US$100 Million facilities with ExxonMobil Services (Labuan) Limited. Each of these facilities is a one-year facility with an option for annual rollover at each year-end that could extend the facility until 2011. The Company has rolled-over the total of US$200 Million (2008: US$100 Million) on these two facilities, including US$140 Million drawdown to-date, for another year to December 31, 2010. The principal outstanding in Ringgit Malaysia is fixed at the time of loan draw down thereby insulating the Company against foreign currency fluctuations.

(ii) A RM285 Million loan/deposit facility with ExxonMobil Malaysia Sdn. Bhd. (EMMSB). In 2005, RM185 Million loan/deposit facility was obtained from ExxonMobil Exploration and Production Malaysia Inc. (EMEPMI). The facility allows the Company to borrow short-term loans or place short-term deposits with EMEPMI to better manage cash surpluses and shortages. This is a one-year facility with an option for annual renewal of the facility at each year-end.

In September 2006, EMEPMI assigned its rights and benefits there under to EMMSB. In December 2008, the loan/deposit principal was increased to RM285 Million. The Company has renewed the facility for another year to December 31, 2010.

The short-term notes were issued under a RM300 Million 7-year Islamic Commercial Papers (ICP) Programme, based on the principles of Bai' Inah. The ICP Programme which is available until May 2011, allows for the Company to issue short-term notes of between 14 days and 12 months tenure through competitive tender by the tender panel members or through private placement.

Interest rates and profit elements for the Company's borrowings and deposit placements depend on the lenders' cost of funds, and generally vary with the Kuala Lumpur interbank rates. The interest rates/profit elements on loans and deposits ranged from 1.8% to 3.7% per annum during the year (2008: 3.0% to 3.9%).

22. DEFERRED TAXATION 2009 2008

RM'000 RM'000

At January 1 11,259 88,670Credited to the income statement (Note 10) 55,713 (77,411)At December 31 66,972 11,259

====== ======

The components of deferred tax amounts after appropriate offsetting are as follows:

Deferred tax liabilities:subject to income tax 66,972 11,259

====== ======

The components of deferred tax assets and liabilities prior to offsetting are as follows:

Subject to income taxDeferred tax assets:Provision for retirement benefits (6,291) (6,646)Tax losses (9,452) (67,020)Property, plant and equipment- unused capital allowances - (6,549)Others (533) -

(16,276) (80,215)====== ======

Deferred tax liabilities:Property, plant and equipment 83,248 89,412Others - 2,062

83,248 91,474====== ======


22. DEFERRED TAXATION (Continued)

At year end 2009, the Company applied the tax rate of 25% on the temporary differences (2008: 25%).

The deferred tax assets are recognised for tax loss carry-forwards as management considered it probable that future taxable profits will be available against the unused tax losses.

23. SHARE CAPITAL 2009 2008

RM'000 RM'000Authorised:300,000,000 ordinary shares of RM0.50 each 150,000 150,000

====== ======

Issued and fully paid:270,000,000 ordinary stock units of RM0.50 each 135,000 135,000

====== ======

24. RESERVES 2009 2008

RM'000 RM'000

Capital redemption reserve (non-distributable) 8,000 8,000Retained profits (distributable) 370,243 249,025

378,243 257,025====== ======

The Company has sufficient tax credits under Section 108 of the Income Tax Act, 1967 (ITA) to frank approximately RM345,931,335 (2008: RM393,957,000) of the retained profits as at December 31, 2009 if paid out as dividends in 2010.

The Finance Act 2007 introduced a single tier company income tax system which took effect from year of assessment 2008. Under the single tier system, tax on company profits is a final tax, and dividends distributed to shareholders will be exempted from tax. All companies will automatically move to the single tier tax system on January 1, 2014 even if they still have a credit balance in the Section 108 account as at December 31, 2013. As such, the Section 108 tax credit as at December 31, 2009 are available to the Company until such time the credit is fully utilised or upon expiry of the six-year period on December 31, 2013, whichever is earlier. Additionally, subject to the approval of the tax authorities, the Company has a tax exempt account available to frank tax exempt dividends up to approximately RM209,000,000 (2008: RM209,000,000).

25. CASH AND CASH EQUIVALENTS 2009 2008

RM'000 RM'000

Deposit with a related corporation (Note 21) 61,344 -Deposit, cash and bank balances 14,525 15,990Less: Deposit with a licensed bank included in the above (7,511) (7,369)

68,358 8,621====== ======

Deposit with a licensed bank represents monies held in accordance with the sale and purchase agreement relating to the Company's purchase of a participating interest in the MPP. The amount will be utilised for payment to the Inland Revenue Board in respect of the vendors' real property gains taxes.

26. SIGNIFICANT RELATED PARTY DISCLOSURES

The Company is a subsidiary of ExxonMobil International Holdings Incorporated, whose ultimate holding company is Exxon Mobil Corporation. Both corporations are incorporated in the United States of America. Exxon Mobil Corporation is regarded by the Directors as the ultimate holding company of the Company. Therefore, Exxon Mobil Corporation and its other subsidiaries are considered as related parties to the Company.

In the normal course of business, the Company undertakes, on an arms-length basis, a variety of transactions with these related parties. Such transactions include the sales and purchases of products and the sharing of services and facilities at cost apportioned on a mutually agreed basis.

In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are



26. SIGNIFICANT RELATED PARTY DISCLOSURES (Continued)

other significant related party transactions. These were transacted with Exxon Mobil Corporation's other subsidiaries.

2009 2008RM'000 RM'000

Purchases of crude oil from ExxonMobil Exploration and Production Malaysia Inc. 4,839,305 6,330,014

========= =========

Purchases of petroleum products from: ExxonMobil Asia Pacific Pte. Ltd. 1,527,356 2,993,532ExxonMobil Malaysia Sdn. Bhd. 773,952 995,958Others 79,757 77,219

======== ========

Sales of petroleum products to:ExxonMobil Asia Pacific Pte. Ltd. 1,559,337 2,004,130ExxonMobil Malaysia Sdn. Bhd. 1,655,966 2,872,716ExxonMobil Borneo Sdn. Bhd. 212,808 221,625Others 14,916 28,451

======== =======

Central management, shared facilities and services costsmainly with ExxonMobil Asia Pacific Pte. Ltd., ExxonMobil Business Support Centre Malaysia Sdn. Bhd.and ExxonMobil Exploration and Production Malaysia Inc.

Charged from: 114,683 98,852Charged to: (2,318) (3,135)

112,365 95,717======= =======

At year end 2009 and 2008 respectively, the amounts due to and from related corporations are mainly in relation to the above described transactions.

Directors of the Company who are the key management personnel are also considered as related parties to the Company. Their compensation are disclosed in Note 9 to the financial statements.

27. COMMITMENTS FOR CAPITAL EXPENDITURES2009 2008

RM'000 RM'000Commitments for the purchase of property, plantand equipment authorised by the Directors butnot provided for in the financial statements:

Contracted 15,316 12,323Not contracted 9,098 2,712

24,414 15,035===== =====

Included in the above are contracted commitments for the joint venture assets of the MPP amounting to RM2,758,620 (2008: RM2,034,000).

28. LEASING COMMITMENTS2009 2008

RM'000 RM'000As at balance sheet date, leasing commitments under non-cancellable operating leases are as follows:

Within 1 year 20,314 27,253After 1 year but within 5 years 8,649 21,261After 5 years 180 1,282

29,143 49,796===== =====

29. APPROVAL OF FINANCIAL STATEMENTS

The financial statements have been approved for issue in accordance with a resolution of the Board of Directors dated February 24, 2010.


STATEMENT BY DIRECTORS PURSUANT TOSECTION 169(15) OF THE COMPANIES ACT, 1965

We, Hugh W. Thompson and Dato' Zainal Abidin Putih, two of the Directors of Esso Malaysia Berhad, state that in the opinion of the Directors, the financial statements set out on pages 32 to 50 are drawn up so as to give a true and fair view of the state of affairs of the Company as at December 31, 2009 and of the results of the Company and its cash flows for the year ended on that date in accordance with Financial Reporting Standards approved by MASB for entities other than private entities and the provisions of the Companies Act, 1965.

In accordance with a resolution of the Board of Directors dated February 24, 2010.

...............................Hugh W. Thompson

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

Kuala Lumpur,February 24, 2010

STATUTORY DECLARATION PURSUANT TOSECTION 169(16) OF THE COMPANIES ACT, 1965

I, Naili Akmal Mohamad, the officer primarily responsible for the financial management of Esso Malaysia Berhad, do solemnly and sincerely declare that the financial statements set out on pages 32 to 50, are to the best of my knowledge and belief correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

.......................................Naili Akmal Mohamad

Subscribed and solemnly declared by the above named Naili Akmal Mohamad at Kuala Lumpur in Malaysia on February 24, 2010 before me,

.......................................Commissioner for OathsKuala Lumpur



INDEPENDENT AUDITORS' REPORTTO THE MEMBERS OF ESSO MALAYSIA BERHAD

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Esso Malaysia Berhad, which comprise the balance sheet as at 31 December 2009, and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 32 to 50.

Directors' Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the Companies Act, 1965. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the Companies Act, 1965 so as to give a true and fair view of the financial position of the Company as of 31 December 2009 and of its financial performance and cash flows for the year then ended.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report that, in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

PRICEWATERHOUSECOOPERS Eric Ooi Lip Aun(No. AF: 1146) No.1517/06/10(J)Chartered Accountants Chartered Accountant

Kuala LumpurFebruary 24, 2010


Information on StockholdingsAs at March 18, 2010

Class of stocks: Ordinary stock unit (RM0.50)Voting rights: One vote per stock unit

Size of Holdings No. of Stockholders % of Stockholders No. of Units Held % of Issued Capital

Less than 100 316 2.8432 15,797 0.005100 - 1,000 3,619 32.5625 3,376,162 1.2501,001 - 10,000 5,913 53.2031 23,937,355 8.86410,001 - 100,000 1,185 10.6622 33,386,228 12.364100,001 - 13,499,999 80 0.71980 33,784,458 12.51213,500,000 and above 1 0.00890 175,500,000 65.000

11,114 100.0000 270,000,000 100.000

THIRTY LARGEST STOCKHOLDERSAs at March 18, 2010

NAME No. of Units Held % of Issued Capital

1. EXXONMOBIL INTERNATIONAL HOLDINGS INC. 175,500,000 65.0002. KUMPULAN WANG PERSARAAN (DIPERBADANKAN) 5,070,000 1.8773. THAM TATT YOW @ THAM AH CHYE 3,880,000 1.4374. JOHAN ENTERPRISE SDN. BHD. 1,660,000 0.6145. ALLIANCE GROUP NOMINEES (TEMPATAN) SDN BHD 1,312,100 0.485

PLEDGED SECURITIES ACCOUNT FOR DEVA DASSAN SOLOMON (8041850)

6. CITIGROUP NOMINEES (ASING) SDN BHD 1,180,264 0.437EXEMPT AN FOR OCBC SECURITIES PRIVATE LIMITED (CLIENT A/C-NR)

7. CIMSEC NOMINEES (ASING) SDN BHD 1,151,164 0.426EXEMPT AN FOR CIMB-GK SECURITIES PTE LTD (RETAIL CLIENTS)

8. CITIGROUP NOMINEES (ASING) SDN BHD 954,100 0.353CBNY FOR DIMENSIONAL EMERGING MARKETS VALUE FUND

9. DEVA DASSAN SOLOMON 859,000 0.31810. HLB NOMINEES (TEMPATAN) SDN BHD 815,500 0.302

PLEDGED SECURITIES ACCOUNT FOR DEVA DASSAN SOLOMON

11. NEOH CHOO EE & COMPANY SDN. BERHAD 600,000 0.22212. CHEN CHIN PENG 597,000 0.22113. KOPERASI SRI NILAM BERHAD 586,000 0.21714. CARTABAN NOMINEES (TEMPATAN) SDN BHD 500,000 0.185

AXA AFFIN GENERAL INSURANCE BERHAD15. YIM WHY MENG @ ZEN WHY MENG 500,000 0.18516. CITIGROUP NOMINEES (TEMPATAN) SDN BHD 469,700 0.173

PLEDGED SECURITIES ACCOUNT FOR DEVA DASSAN SOLOMON (473163)

17. HLG NOMINEE (ASING) SDN BHD 461,310 0.170EXEMPT AN FOR UOB KAY HIAN PTE LTD (A/C CLIENTS)

18. ENG GUAN CHAN SDN. BERHAD 453,800 0.16819. YEOH KEAN HUA 450,000 0.16620. CITIGROUP NOMINEES (ASING) SDN BHD 420,600 0.155

CBNY FOR DFA EMERGING MARKETS SMALL CAP SERIES

21. MOHD ARIS @ NIK ARIFF BIN NIK HASSAN 392,000 0.14522. CITIGROUP NOMINEES (ASING) SDN BHD 358,400 0.132

EXEMPT AN FOR MERRILL LYNCH PIERCE FENNER & SMITH INCORPORATED (FOREIGN)

23. PROMSERV ENGINEERING SDN BHD 351,700 0.13024. MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 330,000 0.122

PLEDGED SECURITIES ACCOUNT FOR DR DEVA DASSAN SOLOMON (01-00030-000)

25. CHEN CHIH LIANG 300,000 0.11126. CHEN HERH NAN 300,000 0.11127. CHEN SHIUH YUAN 300,000 0.11128. KIM POH HOLDINGS SDN BHD 300,000 0.11129. PROMSERV SDN.BHD. 298,300 0.11030. HDM NOMINEES (ASING) SDN BHD 295,040 0.109

UOB KAY HIAN PTE LTD FOR ONG YONG KHEE

200,645,978 74.303

SUBSTANTIAL STOCKHOLDER(S)As at March 18, 2010

1. EXXONMOBIL INTERNATIONAL HOLDINGS INC. 175,500,000 65.000


Tenure L.A.(sq m) Description of Properties Acquisition Date Expiry Date Age Net Book Value

FEDERAL TERRITORY (RM)

Lot 18113, Mukim Petaling, Kuala Lumpur (EWLINK) F 2,974 Service Station 01.01.2004 6 6,228,433

Lot 26494, Mukim Petaling, Wilayah Persekutuan F 5,669 Service Station 01.05.1995 15 5,842,493

PT 8085 H.S.(D) 107245 Mukim Setapak, WP F 2,992 Service Station 01.01.2008 2 7,526,610

SELANGOR

HSD 72700 & 72701 MK Sg. Buloh, Esso Meru 2 F 3,697 Service Station 30.04.2002 8 5,300,315

Esso Puncak Jalil H.S.(D) 201983 P.T.62357 L 4,047 Service Station 06.01.2004 09.06.2103 6 6,103,475Mukim & District of Petaling, Selangor

Esso Jln Kebun South Bound, Batu 3 Puchong, L 2,787 Service Station 01.12.1996 30.06.2099 14 5,916,649Shah Alam

PENANG

Lots 95-125, 128, Lot 2328-2338, Bagan Luar F 43,780 Storage & Dist. Plant Revalued in 1982 50 11,247,145

Esso Jalan Jelawat L 3,693 Service Station 01.07.2003 18.08.2073 7 6,531,385

NEGERI SEMBILAN

Lots 2645 & 2647, Mukim of Port Dickson F 1,631,970 Refinery Revalued in 1982 50 10,641,825(Lot 2646 & 2648), 1926-1930, 1593-1595, 1805,1838, 1803, 1836, 1757, 2278 & 1222Mukim Port Dickson

MPP and KVDT L 784,000 MPP/KVDT Facilities 01.03.2001 01.02.2100 9 19,780,421

List of Major Properties Owned



Statement Accompanying Notice of Annual General Meeting

1. Directors standing for election / re-election

?Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin bin Syed Salim, retires by rotation and is eligible for re-election pursuant to Articles 104 and 105 of the Company's Articles of Association.

?Encik Abu Bakar Siddik bin Che Embi, retires by rotation and is eligible for re-election pursuant to Articles 104 and 105 of the Company's Articles of Association.

?Mr. Hugh W. Thompson, retires and is eligible for election pursuant to Article 109 of the Company's Articles of Association.

2. Details of Directors standing for election / re-election

(i) Profiles

The profiles of the Directors standing for election / re-election are set out in pages 12 and 13 of the Annual Report.

(ii) Statement of shareholdings

None of the Directors standing for election / re-election held shares in the Company.

(iii) Family relationship

None of the Directors standing for election / re-election have any family relationship with any Director and / or major shareholder of the Company.

(iv) Conflicts of Interest

None of the Directors standing for election / re-election have any conflicts of interest with the Company.

(v) Conviction for offences (excluding traffic offences)

None of the Directors standing for election / re-election have been convicted for offences within the past 10 years.

3. Special Resolution to amend Articles of Association

The Special Resolution to amend Article 141 of the Company's Articles of Association is to provide for the introduction by Bursa Malaysia Securities Berhad (“Bursa”) of the eDividend payment structure that is targeted for implementation by Bursa effective September 1, 2010. The amendment will enable the Company to make dividend payments directly into bank accounts of stockholders. Article 141, following amendment (by inserting a provision for electronic means of dividend payment; as highlighted in italics below), will read as follows:

Dividend payable by cheque or electronic means

141. Any dividend or other moneys payable in cash on or in respect of a share may be paid by cheque or warrant sent through the post to the registered address of the Member or person entitled thereto, or, if several persons are registered as joint holders of the share or are entitled thereto in consequence of the death or bankruptcy of the holder to any one of such persons or to such persons and such address as such persons may by writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent or to such person as the holder or joint holders or person or persons entitled to the share in consequence of the death or bankruptcy of the holder may direct and payment of the cheque if purporting to be endorsed or the receipt of any such person shall be a good discharge to the Company. Every such cheque or warrant shall be sent at the risk of the person entitled to the money represented thereby.

Subject to the provisions of any applicable laws, the Rules of the Central Depository and / or Listing Requirements of the Stock Exchange, all as may be issued or amended from time to time, dividend may also be paid, via electronic, or other, means into a bank account of the Member.

56

P R O X Y F O R M

CDS Account No. of Authorised Nominee

I / We __________________________________________________(

NRIC / Company No._______________________(new)________________________(old)

of ________________________________________________________________________________(full address)

being a member / members of the Company, hereby appoint __________________________________________________

(name of proxy) NRIC/Company No. ___________________________________(new)_____________________(old)

of ________________________________________________________________________________(full address)

or failing whom __________________________________________________________(full name in Block Capitals)

NRIC / Company No. _______________________________________(new)_________________________________(old) of _____________________________________________________________________________________(full address) as my/our Proxy to attend and vote for me / us on my / our behalf at the Annual General Meeting of the Company to be

held on Tuesday, May 25, 2010 at 10:30a.m and at any adjournment thereof.

My instruction to my / our proxy is as follows:

Resolutions: For Against

1. Receive and adopt Company's Audited Accounts

2. Approve the declaration of dividend

3. (a)

(b)

4.

5. 6.

7.

8. Any other business

(Please indicate an “X” in the spaces provided on how you wish your vote to be cast. If you do not, the proxy will vote or abstain from voting at his / her discretion)

__________________________Signature / Common Seal

Number of stocks held : _________________________________

Date : _________________________________

Notes:

Name of Company/Business / individuals full name in

Block Capitals as per NRIC),

Re-elect Y. Bhg. Tan Sri Dato' Dr. Syed Jalaludin Syed Salim

Re-elect En. Abu Bakar Siddik Che Embi

To elect Mr. Hugh W. Thompson

Approve payment of Directors' fees for Independent Non-Executive Directors

Re-appoint PricewaterhouseCoopers as Auditors and authorize the Directors to determine their remuneration

Amendment to Articles of Association (Article 141)

? A Member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy to attend and vote instead of the Member. ?In the case of a corporation, the Proxy Form must be executed under the corporation's Common Seal or under the hand of an officer or attorney duly ?authorised.

A proxy need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. Where a ?member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one proxy in respect of each securities account it holds with ordinary stock units of the Company, standing to its credit of the said securities account. The instrument appointing a proxy must be deposited at the Share Registrar's office at Tricor Investor Services Sdn Bhd, Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, not less than 48 hours before the time set for the meeting.

ESSO MALAYSIA BERHAD( Company No. 3927-V )

( Incorporated in Malaysia )

AFFIX STAMP

The Share Registrar of Esso Malaysia Berhad, (118401-V)

Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur

Tricor Investor Services Sdn Bhd

1st fold here

Then fold here

Fold this flap for sealing

ESSO MALAYSIA BERHAD (Company No.3927-V)

(Incorporated in Malaysia) An ExxonMobil Subsidiary in Malaysia

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