PRESS RELEASE

Following the Shell Refining Company (FOM) Berhad Board of Directors’ Meeting, held in Kuala Lumpur on 24th November 2000, the Chairman, Datuk Lim Haw-Kuang made the following announcement.

PERFORMANCE

In the 1st three quarters of 2000, 28.5 million barrels of Crude and feedstock were processed at the Shell Refinery Company (FOM) Bhd., Port Dickson, some 2% higher than in the corresponding period of 1999.

The volume of sales reached 30.5 million barrels, up marginally on the corresponding period in 1999. Turnover for the period increased by 75%, due to better refinery margins.

Refinery margins moved from a level of US$3.36/bbl in the 1st quarter to an average of US$1.48/bbl in the 2nd quarter before climbing to US$4.16/bbl in the 3rd quarter, resulting in higher after tax profit of RM31.7mln in the latest quarter compared to RM 3.5 million and RM41.2 million for the 2nd quarter and 1st quarter periods, respectively. The 3rd quarter results also included a charge of RM27.8 million (before tax) representing the full amortisation of the deferred exchange difference, in compliance with the requirements of the MASB (Paper No 6).

The recovery of refinery margins coupled with the excellent performance of the Long Residue Catalytic Cracker Unit (LRCCU), which began operations in June of last year, have doubled the Company’s year to date gross margin compared to the corresponding period in 1999. 

The Company reached 13.6 million man-hours worked without a lost time injury by the end of September. It’s Environmental Management Systems were also accredited under the ISO14001 by SIRIM in this quarter. The Company is now committed to achieving OHSAS18001 accreditation for its Occupational Health and Safety Management Systems next year.

PROSPECTS FOR THE REST OF 2000

Refining capacity in the region remains in surplus to demand and, although economic growth is returning, the economic sentiment in the region is cautious. The company remains exposed to changing economic forces and refinery margins are expected to be volatile in the short term. The investment in the LRCCU has provided the company with the flexibility to maximise value generation, minimise costs and maintain its competitive position in the market place over the longer term.

	

	NOTES TO THE QUARTERLY REPORT ‑ 30 SEPTEMBER 2000 

1	ACCOUNTING POLICIES

	The quarterly financial statements under review have been prepared using the same accounting policies and methods of computation as were used in preparation of the Company’s published 1999 annual accounts except for in the treatment of deferred exchange differences (MASB 6).

Adoption of MASB 6 requires that foreign exchange differences from long term borrowings be written-off in the period in which they arose. Prior to this, the exchange differences were deferred and amortised over the life of the borrowings. During the financial quarter ending 30 September 2000, the balance of deferred exchange differences amounting to RM27.8m were written-off against the Profit and Loss Account.

2	EXCEPTIONAL ITEMS

	The Company has nothing to disclose as regards exceptional items in the quarterly financial statements under review.
	
3	EXTRAORDINARY ITEMS

	The Company has nothing to disclose as regards extraordinary items in the quarterly financial statements under review.

4	TAXATION 

	Taxation for the period ending 30 September 2000 comprises solely deferred tax and does not include any adjustment component in respect of prior years.

5	PRE-ACQUISITION PROFITS

	The Company has nothing to disclose with respect to pre-acquisition profits in the quarterly financial statements under review.

6	PROFIT ON SALE OF INVESTMENTS AND PROPERTIES

	The Company has nothing to disclose with respect to profit on sale of investments and/or properties (other than fixed assets in the normal course of business) in the quarterly financial statements under review.

7	INVESTMENT IN, AND PURCHASE AND DISPOSAL OF QUOTED SECURITIES

a) 	The Company has not undertaken any purchase or disposal of quoted securities during the current financial period ending 30 September 2000.
b) 	The Company does not have any investments in quoted shares as at end of the 30 September 2000. 

8	CHANGES IN COMPOSITION OF COMPANY

	There has been no change to the composition of the Company including business combination, acquisition, disposal of subsidiaries and long term investments, restructuring and discontinuing operations.

9	CORPORATE PROPOSALS

	The Company does not have anything to report as regards the status of corporate proposals.

	NOTES TO THE QUARTERLY REPORT ‑ 30 SEPTEMBER 2000 (CONT’D)

10	SEASONALITY AND CYCLICALITY

	The Company’s operation is not affected by any seasonal or cyclical factors.

11	DEBT AND EQUITY SECURITIES
	
	The Company has nothing to disclose with respect to issuance and repayment of debt and equity securities, share buy-backs, share cancellations, shares held as treasury shares and resale of treasury shares for the current financial year to date.

12	BORROWINGS 
			
	The Company has a USD310,000,000 term loan outstanding which used to finance a capital expenditure project. The current 	(payable within 12 months) portion of the loan is M304,000,000. The loan is not secured 	against any of the Company’s assets. Details of the Company’s borrowings as at end of the period are as follows:

		RM'000	

	Short term borrowings	50,823
	Current portion of term loan	304,000	
	Term loan (unsecured) less current portion	874,000

13	CONTINGENT LIABILITIES

	The Company has provided guarantees for the principal of third party loans granted to its employees amounting to RM84,000.        

	Arising from the transfer of assets from the Shell Malaysia Retirement Benefit Fund to the Shell Malaysia Provident Fund on 1 May 1997, the Company has provided guarantees in relation to:

a) 	the capital sum transferred;
b) 	a minimum return of 2.5% per annum on that capital sum; and
c) 	the associated death in service benefits.

These guarantees are not secured against any of the Company’s assets.

14	OFF BALANCE SHEET FINANCIAL INSTRUMENTS

	The Company does not have any off-balance sheet financial instruments to disclose.

15	MATERIAL PENDING LITIGATION

	There is no material pending litigation against the Company.

16 	SEGMENTAL INFORMATION

	The Company is principally engaged in the oil and gas industry namely refining and manufacturing of petroleum products. Accordingly, no segmental information is considered necessary for analysis by industry segments.

	
	
	NOTES TO THE QUARTERLY REPORT ‑ 30 SEPTEMBER 2000 (CONT’D)

17	QUARTERLY PROFIT BEFORE TAXATION

	The increase in quarterly profit before taxation as compared to the previous quarter is due to the stronger refinery margins partially offset by the full amortisation of the deferred exchange difference (see accompanying Press Release).

18	COMPANY PERFORMANCE

	A review of the Company’s performance in the reporting period is provided for in the accompanying Press Release.

19	CURRENT YEAR PROSPECTS
	
	A commentary on the Company’s current year prospects is provided for in the accompanying Press Release.

20	FINAL QUARTER NOTES

	The Company has nothing to disclose with respect to:

a) 	variance of actual profit from forecast profit
b) 	shortfall in the profit guarantee

21	DIVIDEND

	The Company has nothing to disclose with respect to dividend declared in the quarterly financial statements under review.