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40 Financial Review COSCO Corporation (Singapore) Limited Simplified group financial position The financial position of the company during the year under review was stronger than in the previous year. This reflects the Company’s effort to divest itself of its non-core businesses and concentrate in its shipping and ship repair activities. Borrowings The total amount of debts owed by the Company as of 31 December 2004 consisted mainly of long term borrowings of S$135.8 million and short term borrowings of S$26.6 million. After deducting cash and near cash equivalents of S$94 million, the Company has a net debt of S$68.4 million. Gearing With the strong cash flow and a net cash balance of S$68.4 million, the gearing ratio stands at 0.2 times over the shareholders’ fund. This is lower than 0.5 times in FY2003. Financial resources The Group maintained sufficient cash and cash equivalent, internal generated cash flow and access to funding resources through committed banking facilities. The Company maintained flexibility in funding by ensuring that sufficient working capital lines were available for its use as and when needed. Financial Risk management is carried out under policies approved by the Board of Directors. The Board approve guidelines for overall risk management, including policies covering these areas: Foreign currencies rate risk The Company monitors its foreign currency exchange risks closely and will use derivative financial instruments to hedge their exposure when the exposure is significant. Interest rate risk The Company monitors the interest rates on borrowings closely to ensure that the borrowings are maintained at favourable rates, and will use derivative financial instruments to hedge the exposure when the exposure is significant. Credit risk The Company has policies in place to ensure that customers are of adequate financial standing and have appropriate credit history. Prudent liquidity risk management involves maintaining sufficient cash and funding through adequate and available credit facilities. Due to the dynamic nature of the Company’s businesses, the Company maintains flexibility in funding by keeping adequate credit facilities secured with established financial institutions. RISK MANAGEMENT OPERATION The Company takes its operations’ safety measures very seriously. The Company ensures that all safety measures are always in compliance with ISO standards and audits. Spot checks and dialogues at all workplaces are conducted on a regular basis to help maintain high standards of safety.
41 Corporate Governance COSCO Corporation (Singapore) Limited CORPORATE GOVERNANCE STATEMENT This statement describes the corporate governance policies and practices of Cosco Corporation (Singapore) Limited (the “Company”) during the financial year under review. This is in line with the Singapore Exchange Securities Trading Limited (“SGX- ST”) requirement that issuers describe their corporate governance practices with specific reference to the Code of Corporate Governance (the “Code”) in their annual reports. Cosco Corporation (Singapore) Limited (the “Company”) is committed to practising good standards of corporate governance within the Company and its subsidiaries (the “Group”). The Group’s policies and practices are developed in full compliance with statutory and regulatory requirements to enhance transparency and accountability as well as to protect the interests of stakeholders. This is ensured by various self-regulatory and monitoring mechanisms implemented within the Group. BOARD MATTERS Principle 1: The Board’s conduct of its affairs The principal functions of the Board are to guide the corporate strategy and direction of the Company; to ensure effective management and safeguard the quality and integrity of the leadership, and to provide oversight in the proper conduct of the Company’s business. The Board comprises nine directors of whom two are executive directors, four are non-executive and three are non-executive independent directors. It also has four alternate directors to represent directors who are stationed overseas. The profile of the Directors are found on pages 34 and 35 of this Annual Report. The roles of Chairman and the President are undertaken by separate persons so as to create a clear division of responsibilities and maintain an effective oversight. The Board meets regularly to review the business strategies of the Group, and deliberate upon the tactical decisions of the Company and its subsidiaries including acquisitions and disposals. It also meets to review and approve the annual budget, the performance of the business, and the release of the quarterly and year-end results. . Where necessary, additional board meetings are also held on an ad hoc basis to address significant issues and transactions. The Board also meets to review the internal controls of the company and its subsidiaries, the internal and external audit reports, and executive directors’ remuneration. The Board members’ attendance at Board meetings and Board Committee meetings is shown on page 42. Besides attendance at formal meetings, a director’s contribution includes the guidance he provides the Management with, as well as the strategic relationships he brings to the Group. Changes to regulations and accounting standards are monitored closely by Management. Directors receive regular updates on relevant new laws and regulations, and evolving commercial risks and business conditions from the Company’s relevant advisors. Newly appointed directors are provided with background information about the Company and the Group, and are invited to visit the Group’s operations to enrich their understanding of its business operations. The Company’s Articles of Association also provide for at least one third of the Directors to retire from office by rotation at each Annual General Meeting (“AGM”). Retiring directors are eligible for re-election at the AGM. BOARD COMPOSITION AND BALANCE Principle 2: Strong and independent element on the Board The Board comprises the following members: 1. Capt. Wei Jia Fu (Non-Executive) 2. Mr Ji Hai Sheng (Executive) 3. Mdm Yao Hong (Executive) 4. Mr Li Jian Hong (Non-Executive) 5. Mdm Sun Yue Ying (Non-Executive) 6. Mr Zhou Lian Cheng (Non-Executive) 7. Mr Tom Yee Lat Shing (Non-Executive/Independent) 8. Dr Wang Kai Yuen (Non-Executive/Independent) 9. Mr Er Kwong Wah (Non-Executive/Independent) 10. Mr Gu Qi Chang (Alternate to Mr Wei Jia Fu) Resigned on 31/12/2004 11. Mr Li Jian Xiong (Alternate to Mr Li Jian Hong) 12. Mr Ye Bin Lin (Alternate to Ms Sun Yue Ying) 13. Mr Liu De Tian (Alternate to Mr Zhou Lian Cheng) The majority of the directors are non-executive and independent of management. Together with a clear distinction between the roles of the Chairman and the President, this ensures an appropriate balance of power and authority at the top of the Group. The current size of the Board is appropriate for the facilitation of decision making. The Board will continue to review the size of the Board on an ongoing basis. The Board has three board committees, namely an Audit Committee, a Nominating Committee and a Remuneration Committee to assist in the effective discharge of specific functions in the Company. All Committees are chaired by an independent Director and consist mainly of independent directors. COSCO Corporation (Singapore) Limited Annual Report 2004
Page 1 and 2: COSCO Corporation (Singapore) Limit
Page 3 and 4: 01 Corporate Profile COSCO Corporat
Page 5 and 6: 03 Building Scale COSCO Corporation
Page 7 and 8: 05 Increasing Value COSCO Corporati
Page 9 and 10: 07 Growing Opportunities COSCO Corp
Page 11 and 12: 09 At A Glance COSCO Corporation (S
Page 13 and 14: 11 Financial Highlights COSCO Corpo
Page 15 and 16: 13 Chairman’s Letter COSCO Corpor
Page 17 and 18: 15 President’s Statement COSCO Co
Page 19 and 20: 17 President’s Statement COSCO Co
Page 21 and 22: 19 Operations Review & Geographical
Page 23 and 24: 21 Operations Review COSCO Corporat
Page 31 and 32: 29 Inside COSCO Corporation COSCO C
Page 33 and 34: 31 Inside COSCO Corporation COSCO C
Page 35 and 36: 33 Board of Directors COSCO Corpora
Page 37 and 38: 35 Board of Directors’ Profile CO
Page 39 and 40: 37 Corporate Structure COSCO Corpor
Page 41: 39 Financial Review COSCO Corporati
Page 45 and 46: 43 Corporate Governance COSCO Corpo

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