Dear Colleagues,

Happy New Year - welcome back to those who have been away on holiday.

I write to you all today to inform you of some developments involving Shell Refining Company (Federation of Malaya) Berhad (“SRC”). Poor refining margins and refining overcapacity has put SRC under significant financial pressure.

In September 2014, the SRC Board undertook a structured review of the company’s resilience in a persistently low margin environment. The review explored various options; including potential repositioning that will enable SRC to provide shareholders’ returns.

Today, SRC announced the outcome of the review to Bursa Malaysia. Based on the results of the review, the Board has concluded that margins are expected to remain depressed. As a result, the Board is investigating long-term options in the best interest of SRC and strengthening its financial performance. This includes, but is not limited to:
• The potential sale of the assets;
• Conversion of operations to a storage terminal;
• And/or other viable options.

Any decision regarding the long term strategy will take time and once a decision is made, it will require approval from shareholders. As such, until a decision is made, SRC’s focus and operations remain unchanged.

It is important to make clear that the remaining Shell businesses, including all Downstream businesses in Malaysia are not affected by this announcement.

If you have questions on the subject, please email them to SRCPD-SRC-corporate-affairs@shell.com. Shell has a long and dynamic presence in Malaysia and I am confident in our potential and future here. As a company, we will continue to focus our efforts on delivering value to all of our stakeholders.
Regards,
Iain Lo
Chairman, Shell Malaysia