Investor
Relations

Proposed Renewal Of Shareholders' Mandate For Recurrent Interested Person Transactions

We refer to item 8 of the Notice of Annual General Meeting of Cosco Corporation (Singapore) Limited (the "Company") dated 2 April 2004 which is an Ordinary Resolution ("Resolution 10") to be proposed at the Annual General Meeting of the Company to be held on 20 April 2004 ("AGM") for the renewal of the Company's shareholders' mandate for recurrent interested person transactions. The purpose of this announcement is to provide shareholders of the Company ("Shareholders") with information relating to Resolution 10.

1. Background

At an extraordinary general meeting of the Company held on 16 May 2003 ("EGM"), the Shareholders had approved a mandate for recurrent interested person transactions for the purposes of Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited ("Listing Manual") to allow the Company and its subsidiaries and associated companies that are considered to be "entities at risk" within the meaning of Chapter 9 of the Listing Manual, to enter in the ordinary course of business into any of the mandated transactions with specified classes of the Company's interested persons, provided that such transactions are made on normal commercial terms, and will not be prejudicial to the interests of the Company and its minority Shareholders, and in accordance with the review procedures for such transactions (the "Shareholders' Mandate").

General information on the listing rules relating to interested person transactions, including the meanings of terms such as "associate", "entity at risk" and "interested person" used in Chapter 9 of the Listing Manual, is set out in Appendix A of this announcement.

2. Renewal of Shareholders' Mandate

Under Chapter 9 of the Listing Manual, a mandate for transactions with interested persons is subject to annual renewal. The Shareholders' Mandate approved at the EGM was expressed to continue in force until the next AGM of the Company which is to be held on 20 April 2004. Accordingly, it is proposed that the Shareholders' Mandate be renewed at the AGM, to continue to be in force, unless earlier revoked or varied by the Company in general meeting, until the next AGM of the Company.

The nature of the interested person transactions and the classes of interested persons in respect of which the Shareholders' Mandate is sought to be renewed remains unchanged. Particulars of the Shareholders' Mandate, including the rationale for, the benefits to be derived by the Company, as well as the review procedures for determining transactions prices with the specified classes of interested persons, are set out in Appendix B of this announcement.

3. Audit Committee's statement

The Audit Committee of the Company confirms that:-

(a) the methods or procedures for determining the transaction prices under the Shareholders' Mandate have not changed since the EGM; and

(b) the methods or procedures referred to in 3(a) above are sufficient to ensure that the transactions will be carried out on normal commercial terms and will not be prejudicial to the interests of the Company and its minority Shareholders.

4. Directors and Substantial shareholders' interests

The interests of the Directors of the Company in the issued share capital of the Company as at 31 December 2003 can be found on pages 26 to 30 of the Company's Annual Report 2003 and the interests of substantial shareholders of the Company in the issued share capital of the Company as at 4 March 2004 can be found on page 92 of the Company's Annual Report 2003.

Cosco Holdings (Singapore) Pte Ltd will abstain, and China Ocean Shipping (Group) Company have undertaken to ensure that their respective associates will abstain, from voting at the forthcoming AGM in respect of the shares of the Company held by them respectively on Resolution 10 relating to the renewal of the Shareholders' Mandate.

5. Recommendation

The Directors who are considered independent for the purposes of the proposed renewal of the Shareholders' Mandate are Mr Tom Yee Lat Shing, Dr Wang Kai Yuen and Mr Er Kwong Wah. They are of the opinion that it is in the interests of the Company, its subsidiaries and associated companies ("CCS IPT Group") to enter into transactions in its normal course of business with the classes of Interested Persons (as described in paragraph 3 of Appendix B) provided that such transactions are made at arm's length, and on normal commercial terms and will not be prejudicial to the interests of the Company and its minority Shareholders and in accordance with the review procedures as set out in paragraph 4 of Appendix B). For reasons set out in paragraphs 1 and 4 of Appendix B, they recommend that Shareholders vote in favour of Resolution 10 for the renewal of Shareholders' Mandate at the forthcoming AGM.

6. Responsibility Statement

The Directors collectively and individually accept responsibility for the accuracy of the information given in this announcement and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and opinions expressed in this announcement are fair and accurate and that there are no material facts the omission of which would make any statement in this announcement misleading.

The Singapore Exchange Securities Trading Limited ("SGX-ST") assumes no responsibility for the correctness of any of the statements made or opinions expressed in this announcement.

Shareholders who are in any doubt as to the action they should take, should consult their stockbrokers or other professional advisers immediately.

By Order of the Board
Cosco Corporation (Singapore) Limited

Lawrence Kwan
Secretary
14 April 2004

Appendix A

General Information Relating to Chapter 9 of the Listing Manual

Chapter 9 of the Listing Manual ("Chapter 9") governs transactions in which a listed company or any of its subsidiaries or associated companies (which is known as an "entity at risk") proposes to enter into with a party who is an interested person of the listed company. The purpose is to guard against the risk that interested persons could influence the listed company, its subsidiaries or associated companies to enter into transactions with interested persons that may adversely affect the interests of the listed company or its shareholders.

For the purposes of Chapter 9:-

(a) an "approved exchange" means a stock exchange that has rules which safeguard the interests of shareholders against interested person transactions according to similar principles in Chapter 9;

(b) an "interested person" means a director, chief executive officer or controlling shareholder of the listed company, or an associate of such director, chief executive officer or controlling shareholder;

(c) a "controlling shareholder" is a person who holds directly or indirectly 15% or more of the nominal amount of all voting shares in the listed company (unless otherwise excepted by SGX-ST) or in fact exercises control over the listed company; and

(d) an "associate" in relation to any director, chief executive officer or controlling shareholder (being an individual) means his immediate family (i.e. spouse, child, adopted child, step-child, sibling and parent), the trustees of any trust of which he or his immediate family is a beneficiary or, in the case of a discretionary trust, is a discretionary object, and any company in which he and his immediate family together (directly or indirectly) have an interest of 30% or more. An "associate" in relation to a controlling shareholder (being a company) means any other company which is its subsidiary or holding company or is a subsidiary of such holding company or one in the equity of which it and/or such other company or companies taken together (directly or indirectly) have an interest of 30% or more;

(e) an "entity at risk" means a listed company, a subsidiary of the listed company that is not listed on the SGX-ST or an approved exchange, or an associated company of the listed group that is not listed on the SGX-ST or an approved exchange, provided that the listed group or the listed group and its interested person(s) has control over the associated company; and

(f) an "associated" company means a company in which at least 20% but not more than 50% of its shares are held by the listed company or group.

Save for transactions which are not considered to put the listed company at risk and which are therefore excluded from the ambit of Chapter 9, an immediate announcement and/or shareholders' approval would be required in respect of transactions with interested persons if the value of the transaction is equal to or exceeds certain financial thresholds. In particular, an immediate announcement is required where:-

(a) the value of a proposed transaction is equal to or exceeds 3% of the listed group's latest audited consolidated NTA; or

(b) the aggregate value of all transactions entered into with the same interested person during the same financial year, is equal to or more than 3% of the listed group's latest audited consolidated NTA. An announcement will have to be made immediately of the latest transaction and all future transactions entered into with that same interested person during the financial year,

and shareholders' approval (in addition to an immediate announcement) is required where:-

(c) the value of a proposed transaction is equal to or exceeds 5% of the listed group's latest audited consolidated NTA; or

(d) the aggregate value of all transactions entered into with the same interested person during the same financial year, is equal to or more than 5% of the listed group's latest audited consolidated NTA. The aggregation will exclude any transaction that has been approved by shareholders previously, or is the subject of aggregation with another transaction that has been previously approved by shareholders.

For the purposes of aggregation, interested person transactions below $100,000 each are to be excluded.

For illustration purposes, based on the audited consolidated accounts of the Company and its subsidiary (the "Group") for the financial year ended 31 December 2003, the NTA of the Group was $267,999,579. Accordingly, in relation to the Group, for the purposes of Chapter 9, in the current financial year and until the audited consolidated accounts of the Group are published for the financial year ending 31 December 2004, 5% of the Company's latest consolidated NTA would be $13,399,979.

Part VIII of Chapter 9 allows a listed company to seek a general mandate from its shareholders for recurrent transactions with interested persons of a revenue or trading nature or those necessary for its day-to--day operations such as the purchase and sale of supplies and materials, but not in respect of the purchase or sale of assets, undertakings or businesses. A general mandate granted by Shareholders is subject to annual renewal.


Appendix B

Shareholders' Mandate for Interested Person Transactions

1. Rationale and Benefits

1.1 The principal activities of the CCS IPT Group include providing shipping and shipping-related services such as bulk shipping, ship repairing, marine-related activities and engineering, container depots and ship agency services. The CCS IPT Group also carries on the businesses of general trading and property investment and development.

1.2 China Ocean Shipping (Group) Company ("China Ocean"), a state-owned enterprise registered in the People's Republic of China, is a large multinational corporation with international shipping as its core business. Cosco Holdings (Singapore) Pte Ltd ("Cosco Holdings") is the regional headquarters of China Ocean in South-East Asia. Cosco Holdings is the controlling shareholder of the Company. China Ocean is the holding company of Cosco Holdings.

1.3 Due to the size of the China Ocean and Cosco Holdings groups of companies and the fact that they are substantially involved in the shipping industry, certain members of the CCS IPT Group will in the ordinary course of business enter into certain recurrent transactions with certain classes of Interested Persons (as defined in paragraph 3 of this Appendix B) ("Recurrent IPTs") and with some degree of frequency. In addition to these Recurrent IPTs, the CCS IPT Group shall also continue to enter into similar transactions with unrelated third parties in the ordinary course of its business as long as it is in the interest of the CCS IPT Group to do so.

1.4 The Shareholders' Mandate will enhance the CCS IPT Group's ability to pursue business opportunities which are time-sensitive in nature, and eliminate the need for the Company to announce, or to announce and convene separate general meetings on each occasion to seek Shareholders' prior approval for each separate Recurrent IPT. This will substantially reduce the expenses associated with the convening of general meetings on an ad hoc basis, improve administrative efficiency considerably, and enable the CCS IPT Group to enjoy the benefits of the synergy arising from familiarity with the business practices of, and the kind and choice of goods and services provided by the Interested Persons.

2. Nature and Scope of the Recurrent IPTs

The Shareholders' Mandate will apply to the following types of transactions which certain members of the CCS IPT Group are likely to enter into with the interested persons in the normal course of the business of the CCS IPT Group:-

(a) provision and obtaining of charter of vessels;
(b) purchase of bunker and other supplies to vessels;
(c) hire of crew to operate vessels;
(d) repair of vessels;
(e) trading in petroleum and related products;
(f) vessel trading and brokerage;
(g) general trading of commodities;
(h) obtaining of oil storage;
(i) provision and obtaining of shipping agency and related activities;
(j) provision of rental or leasing of office space and residential properties;
(k) obtaining of legal counsel and insurance services; and
(l) obtaining of staff training services.

The CCS IPT Group will benefit from having access to competitive quotes from its interested persons in addition to obtaining quotes from, or transacting with, non-interested persons. In addition, the CCS IPT Group will derive operational synergy from the expertise and experience of the Interested Persons in the shipping industry by having access to services such as staff training.

Transactions with interested persons which do not fall within the ambit of the Shareholders' Mandate shall be subject to the relevant provisions of Chapter 9.

3. Classes of Interested Persons

The Shareholders' Mandate will apply to the transactions (as described in paragraph 2 of this Appendix B) between any company within the CCS IPT Group and the following classes of interested persons ("Interested Persons"):-

(a) China Ocean and its associates; and

(b) Cosco Holdings and its associates.


4. Review Procedures for Recurrent IPTs

The Company has established the following guidelines for the review and approval of Recurrent IPTs under the Shareholders' Mandate:-

4.1 The following guidelines will be followed to assess whether the terms of the Recurrent IPTs are carried out at arm's length and on normal commercial terms:-

(a) when purchasing goods and/or obtaining services from an Interested Person, quotations or market rates will be obtained from the Interested Person and at least two other unrelated third parties (where possible or available) in respect of substantially similar types of transactions; and

(b) when selling goods and/or providing services to an Interested Person, the prices and terms of at least two other recent sales to unrelated third parties or market rates (where possible or available) shall be taken into account.

Recurrent IPTs will not be approved unless they are in accordance with the usual industry practice and business policies of the CCS IPT Group and the pricing and terms of the Recurrent IPTs are not, in transactions where the CCS IPT Group purchases or sells goods and/or obtains or provides services from/to Interested Persons, less favourable to the CCS IPT Group than those available in other substantially similar types of transactions between the CCS IPT Group and unrelated third parties after taking into account factors (where applicable) such as, but not limited to, pricing, quality of goods, standard of services and suitability of time schedules, preferential rates, rebates or discounts accorded for bulk sales or purchases. The approval and review procedures for Recurrent IPTs are set out in paragraphs 4.3 and 4.4 below.

4.2 In the event that it is not possible to obtain market rates or quotations in accordance with the guidelines set out in paragraph 4.1 from unrelated third parties (for example, where there are no suppliers for certain goods or for a specified quantity, or type which the CCS IPT Group requires) to determine whether the terms of the Recurrent IPT are more or less favourable than that of the aggregate terms quoted by unrelated third parties, factors such as the quality of goods, standard of services and suitability of time schedules and, where applicable, preferential rates, rebates or discounts accorded for bulk sales or purchases will be taken into and given due and proper consideration and the Recurrent IPT will be subject to the review and approval procedures as stated in paragraphs 4.3 and 4.4 below.

4.3 All Recurrent IPTs are subject to the following approval procedures:-

(a) Any Recurrent IPT the value of which is less than 1.0% of the Group's latest audited NTA shall be reviewed and approved by the chief executive officer/general manager or the next most senior personnel in the operational hierarchy (the "Officer-in-Charge") of the relevant member of the CCS IPT Group involved in the Recurrent IPT (who is not interested in the particular Recurrent IPT) based on the review procedures outlined in paragraphs 4.1 and 4.2 above. The Officer-in-Charge may at his discretion obtain independent advice or valuations from external or professional sources.

In the event that the Officer-in-Charge is unable to review and approve the Recurrent IPT based on the review procedures outlined in paragraphs 4.1 and 4.2, he shall refer the approval of such Recurrent IPT to any director of the Company who shall not be interested in the Recurrent IPT. The Officer-in-Charge shall compile and tabulate all the Recurrent IPTs entered into under this approval procedure outlining, amongst others, the basis of determining the transaction prices and the rationale for entering into the Recurrent IPT and submit the same to the Audit Committee for quarterly review.

(b) Any Recurrent IPT the value of which is equal to or above 1.0% of the Group's latest audited NTA but less than 3.0% of the Group's latest audited NTA shall be reviewed and approved by the President of the Company or, in his absence or if he has an interest in the Recurrent IPT, a director of the Company who shall not be interested in the Recurrent IPT. The President of the Company or such other director of the Company may at his discretion obtain independent advice or valuations from external or professional sources.

(c) Any Recurrent IPTs with a series of transactions of the same type entered into with the same Interested Person during the same financial year the aggregate value of which is equal to or above 3.0% of the Group's latest audited NTA, the next Recurrent IPT of the same type with the same Interested Person shall be reviewed and approved by the majority of the Audit Committee, other than members of the Audit Committee who have an interest in the Recurrent IPT. The Audit Committee may at its discretion obtain independent advice or valuations from external or professional sources. Subsequent Recurrent IPTs of the same type with the same Interested Person will revert to the approval procedures outlined in paragraph 4.3 and re-commence aggregation of transaction amounts starting from nil for the purpose of this particular approval procedure.

(d) At each quarterly review of the Recurrent IPTs by the Audit Committee members, should any Recurrent IPTs with a series of transactions of the same type entered into with the same Interested Person during the same financial year, the aggregate value of which is less than 3% of the Group's latest NTA, the Audit Committee members may choose to re-commence aggregation of transaction amounts starting from nil for the purpose of the approval procedure outlined in (c) above.

(e) Any Recurrent IPT the value of which is equal to or above 3% of the Group's latest audited NTA will be reviewed and approved by the majority of the Audit Committee, other than the members of the Audit Committee who have an interest in the Recurrent IPT, which may at its discretion obtain independent advice or valuations from external or professional sources.

4.4 All Recurrent IPTs will be duly documented and the records thereof will be reviewed quarterly by or at the direction of the Audit Committee and the Audit Committee will report on the same to the Directors of the Company to ensure that such transactions are carried out at arm's length and on normal commercial terms (the "Recurrent IPT Register"). If a member of the Audit Committee has an interest in a Recurrent IPT to be reviewed by the Audit Committee, he will abstain from making any recommendation and any decision-making in respect of that transaction and the review and approval of that transaction will be undertaken by the remaining members of the Audit Committee.

4.5 The Recurrent IPT Register shall outline all the Recurrent IPTs entered into by the CCS IPT Group and shall include all information pertinent to the evaluation of such Recurrent IPTs such as, but not limited to, the identity of the Interested Person, the amount of the Recurrent IPT, the basis of determining the transaction prices and supporting evidence (where available) as to whether such Recurrent IPTs are conducted in line with guidelines outlined above.

4.6 Recurrent IPT Register shall be prepared, maintained and monitored by a personnel of the Company (who shall not be interested in any of the Recurrent IPTs) who is duly delegated to do so by the Audit Committee and reviewed by external auditors.

4.7 The Group's internal and external auditors shall assist the Audit Committee in the review and carry out such tests as they deem necessary on the Recurrent IPTs entered into pursuant to the Shareholders' Mandate.

4.8 Pursuant to Rule 920(1)(a)(i) of the Listing Manual, disclosure will be made in the annual report of the Company of the aggregate value of all Recurrent IPTs conducted with Interested Persons pursuant to the Shareholders' Mandate during the financial year under review, and in the annual reports for the subsequent financial years during which the Shareholders' Mandate is in force, in the form set out in Rule 907 of the Listing Manual.

4.9 Pursuant to Rule 920(1)(a)(ii) of the Listing Manual, the aggregate value of Recurrent IPTs conducted with Interested Persons pursuant to the Shareholders' Mandate for the financial periods which it is required to report on pursuant to Rule 705 of the Listing Manual within the time required for the announcement of such report, in the form set out in Rule 907 of the Listing Manual.