Policy, Practices and Proportion of Spending on Locally-based Suppliers at Significant Locations of Operation

The senior management of CNCo considers the various aspects of climate change and our mitigation of its anthropogenic drivers that are relevant to our operations when making purchases.

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CNCo is registered under Singapore’s Approved International Shipping Enterprises (“AIS”) Scheme. This aims at building up a critical mass of shipowners and managers which will eventually develop Singapore into a leading global maritime centre. Under the AIS Scheme, “local spending” is defined as that invoiced by a Singapore registered entity. This is audited by the Singapore Tax Authorities and this is the definition and source of figures that are reported herein.

In 2011 50.26% of CNCo’s total global spend was classified as “local”. However this basic statistic is a little skewed, as of the company’s total spend; fully 43.61% was for fuel and lubricating oil supplied where/when required (often outside Singapore, but invoiced in Singapore), 8.32% was remitted to shipyards as we build new ships to rejuvenate our ships and charter hire invoiced by the charterer from its base country amounted to 15.85%. If these three material line items of non-discretionary spending are excluded, then CNCo’s more discretionary local (non-Fuel, Ship-building, 3rd Party Charter Hire) spend as a percentage of the total (non-Fuel, Ship-building, 3rd Party Charter Hire) spend decreases slightly to 45.12%. This shows that nearly half our total annual spend is in the country of our operational headquarters.

CNCo currently has no explicit policies directing spending to locally-based suppliers. This is a practical acceptance of the fact that as the consumers of the spending; our ships, are continually mobile, so the supply of (non-OEM) products will be driven by the supplies’ delivery location for the vessel as its particular need/s arise.

The company however does have procedures for vendor selection to ensure control is maintained over the quality of goods and service supplied by vendors. This is primarily to ensure that goods affecting either the safety of, or prevention of pollution from, our ships are of suitable quality and are delivered in a timely manner. The procedures require not only that the vendor meets the company’s requirements and ISO or equivalent accreditation, but that those suppliers who have an environmental policy and show a positive attitude to environmental protection will be preferred during the selection process.

We continue to conduct evaluations on all suppliers seeking to be selected or retained as primary vendors and will start to undertake site audits to examine their environmental performance and compliance with safety and MARPOL regulations once we are suitably resourced. In addition, the company follows the recommended best practice of the Swire group and (re-)evaluates at least the top 100 most used vendors every 36 months. It is also planned that in 2013 we will start to conduct a business process review of our purchasing processes to ensure that it is fit for purpose to support our expanding business divisions cost effectively, responsively and responsibly.


Breakdown of Total Expenditure in 2012
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Removing from these figures any distortion caused by a global spend of:

43.61%
for fuel and lube oil resupply worldwide
8.32%
to shipyards for new ships and repairs/maintenance to existing ships
15.84%
to charter third party ships to support our liner business

then:

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