Kuala Lumpur, May 25 - In conjunction with Esso Malaysia Berhad's (EMB) Annual General Meeting held today at Menara ExxonMobil, Chairman Rob Fisher made the following opening remarks to shareholders:

"The Company’s business objectives remain unchanged - to profitably grow our petroleum products business in Peninsular Malaysia by meeting consumer demand with high quality products and services.  In pursuing this objective, we strive to conduct our operations with the highest levels of safety performance, operational integrity, business practices and environmental compliance.  We also continue to focus on improving the quality of our products and services, prudently investing in new assets, maintaining tight controls over unit operating costs and increasing profitability in every aspect of our business.  We do this with the overriding objective of providing a competitive financial return to all of our shareholders.

Let me now discuss our financial and operating performance in 2005.

As you will have noticed from our Annual Report, the financial statements contained within it have been restated to reflect the adoption of several new and revised financial reporting standards issued by the Malaysian Accounting Standards Board, as part of efforts towards alignment with international standards. These standards will become mandatory for 2006 financial statements, but have been early adopted by the Company to provide a strong and audited comparison base for the interim statements that will be issued this year.

For 2005, the Company recorded an after tax profit of 20 million Ringgit. This is an improvement of 9 million Ringgit over the previous year. Revenues for the year were 8.3 billion Ringgit, about 30% higher than that in 2004 as a result of higher prices. Sales were about the same year-on-year at 97 thousand barrels a day. 

Our crude costs increased by about 50% during the year causing margins to be squeezed. However, the higher prices generated partially offsetting holding gains on crude and product inventories under the revised accounting standards.

The Port Dickson refinery processed an average of 74 thousand barrels of crude a day in 2005, about the same level as in 2004. Crude runs remained at low levels given the unfavourable refining economics. Margins continued to be under pressure as the relatively higher priced light crude that the refinery is configured to process attracted a market premium price. As part of its margin improvement efforts, the refinery increased its use of alternative feedstocks and additives and continued optimising its operations to improve recovery of high value products. 

In the retail business, retail sales increased during the year from the expanded service station network and benefits generated from the various retail initiatives. Six new stations were opened during the year.  The Company introduced its new Smiles loyalty card in June 2005 replacing the Xchange loyalty card. As we Esso customers know, these cards can now be used for purchases and instant redemptions at both Esso and Mobil stations, thus capitalising on the larger combined service station network and attracting customers to both brands and away from competitors. Your Company was also amongst the first that enabled the new security chip-based credit cards to be accepted at the pump, so that we no longer have to go into the shop to pay for our petrol purchases.

In the industrial business competition remained intense. In response, we continued to selectively restructure our diesel business. The LPG business remained profitable even with market players aggressively attracting dealers through various incentives to grow volumes.

Our lubricants and specialties business turned in a good performance during the year from continued economic expansion and strong sales into the active oil and gas sector.

The country's strong economic growth is expected to continue to fuel the demand for petroleum products, but there are many challenges ahead of us. Crude price volatility has continued into 2006 with crude prices rising close to 80 Dollars per barrel on occasions. Margins are thus expected to continue to be under pressure. In this environment, the Company will remain focused on expanding its strong business position through strategic investments and cost optimisation. At the same time, we must continue to look for improvement opportunities to sustain our competitive position.

In light of the continued strong underlying performance of our business, and the Company's competitive position in a growing economy, the Board has proposed that the Company declare a final dividend of 12 sen less Malaysian income tax at 28% per ordinary stock unit for the year ended December 31, 2005 - the same as last year."rs within its control.