Rising Above

CORPORATE GOVERNANCE REPORTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2007The Group has operations in Singapore and the People’s Republic of China (“PRC”). The Chairman oversees the Group operation. Theexecutive responsibilities of various head office functions in Singapore are carried out by the executive directors of the Company whilethe CEO is primarily responsible for operations in the PRC subsidiaries. These roles are separated to ensure an appropriate balance ofpower, increased accountability and greater capacity of the Board for independent decision making.The Chairman has nearly 40 years of experiences in the shipbuilding industry. He is responsible for strategic business developmentdecisions, leading the Board and facilitating its effectiveness. The CEO was appointed in June 2006. He brings with him more than20 years of industry experiences in design, production and management of offshore projects and bears executive responsibility for thePRC operation. The Chairman and the CEO are not related.The Board is provided with quarterly management accounts, project progress and operational reports. The annual budget, quarterlyfinancial results and updated forecasts are presented to the Board for approval. As a general rule, board papers are sent to directorsat least three working days in advance in order for directors to be adequately prepared for each meeting. Senior management attendsboard meetings to answer any queries from the Board. The directors also have unrestricted access to the Group’s senior managementat all times.The Company Secretary attends all Board meetings and ensures the Board procedures are followed. It is the Company Secretary’sresponsibility to ensure that the Company complies with the requirements of the Companies Act. The Company’s Articles of Association(“Articles”) provide that the appointment or removal of the Company Secretary is subject to approval of the Board.The directors, whether as a group or individually, seek independent professional advice relating to the Group’s affairs when necessaryin the furtherance of their duties, at the Group’s expense.Nomination Committee (“NC”)Principle 4: Formal and transparent process for appointment of new directorsPrinciple 5: Formal assessment of the effectiveness of the Board and contribution of each directorThe Nomination Committee is set up in January 2008 and had one meeting since then. It is chaired by Mr. Ang Kong Hua. The otherNC members are Mr. Brian Chang and Mr. Sum Soon Lim. The NC has a written Terms of Reference endorsed by the Board that setsout its duties and responsibilities.The appointments and re-appointments of directors are done through a transparent process. The NC ascertains whether all nonexecutivedirectors are independent and that directors have devoted sufficient time and attention to the Group’s affairs. The NCevaluates the Board’s performance as a whole, and the performance of individual directors, based on certain performance criteria,including qualitative and quantitative factors such as performance of principal functions and fiduciary duties, level of participation inmeetings, guidance provided to management, and attendance at meetings.Under the Articles, each director is required to retire at least once in every three years by rotation and all newly appointed directors haveto retire at the Annual General Meeting (“AGM”) following their appointment. The retiring directors are eligible to offer themselvesfor re-election.The NC is also responsible for determining annually, the independence of the directors. In doing so, the NC takes into account thecircumstances set forth in Guideline 2.1 of the 2005 Code and any other salient factors. Following the annual review, Mr. Ang KongHua, Mr. Francis James Reidy and Mr. Sum Soon Lim are endorsed to be independent.The NC is satisfied that sufficient time and attention are being given by the directors to the affairs of the Group, notwithstandingthat some of the directors have multiple board representations, and there is no need to implement internal guidelines to address theircompeting time commitments. The matter is reviewed on an annual basis by the NC.30 YANTAI RAFFLES SHIPYARD LIMITED