PEOPLE, COMMUNITY& THE ENVIRONMENT

A strong health, safety and environmentmanagement culture can make all thedifference in winning that critical deal.

Straits Times Annual Safety Performance Awards SpecialJuly 24, 2003

A strong health, safety and environmentmanagement culture can make all thedifference in winning that critical deal.

Straits Times Annual Safety Performance Awards SpecialJuly 24, 2003

SembCorp Marine 200384 SembCorp Marine 2003 85

Manpower

Category No. of Employees Percentage

Management 1,565 29

Support Staff 380 7

Production Workers 3,524 64

Total 5,469 100

In its role to support the company’s strategic thrust, ourHuman Resource Department strove to ensure that wecould recruit and retain sufficient people with therequired competence to achieve the Group’s objectives.As at December 31, 2003 Group manpower stood at5,469.

People

SELECTION AND RECRUITMENT

As a large and established company, we continued to seekcapable and dynamic individuals to join our team, bothlocally and overseas. During the year in review, we steppedup our efforts to attract and recruit promising youngSingaporeans to join our group of companies. Previousefforts in this area had not been successful as local talentswere either overwhelmed with the many career options orcontinued to hold misconceptions of the industry.

At company level and at industry level, we thus focusedon creating awareness and image enhancementprogrammes during the year. We participated at jobfairs at the North West CDC at Chong Pang. We alsogave talks on job opportunities at tertiary institutionsand encouraged students to visit the shipyards.

To draw new talent into our group of shipyards,SembCorp Marine participated in the Learning Expo2003 in December 2003. Organised by the SingaporeWorkforce Development Agency and the Ministry ofManpower, the exhibition, which attracted 42,612 visitors,was graced by guest-of-honour Dr Ng Eng Hen, ActingMinister for Manpower and Minister of State forEducation. SembCorp Marine was among theparticipating marine engineering companies under theexhibition’s “Find a Job” section. Through the variousmultimedia presentation and exhibits on display,interested visitors had the opportunity to gain a betterunderstanding of our operations and career opportunitieswithin the group.

MANAGEMENT-UNION PARTNERSHIP

Our Management continued to work in partnership withthe Union in developing and maintaining harmoniousindustrial relations at all times. Both parties participatedjointly in several events during the year.

Recognition Accorded to Employees and SubcontractorsMore than 3,000 employees and resident contractorsgathered at Jurong Shipyard to celebrate Singapore’sNational Day on August 11, 2003. The event, which wasorganised jointly by Jurong Shipyard and the Shipbuildingand Marine Engineering Employees’ Union, was gracedby guest-of-honour, Mr Tharman Shanmugaratnam, ActingMinister for Education and Member of Parliament forJurong GRC.

At the ceremony, Jurong Shipyard also recognisedemployees and contractors who had made significantcontributions in innovation and safety. The GrandInnovation Award was given to the Project ManagementOffice for devising an innovative and ingeniousprocedure to increase the usage rate of grinding disc,resulting in cost savings of about $190,000 per year.Teams from the Pipefitting Section, Jurong IntegratedServices and Hull Steel Construction were alsorecognised for developing the “Flare Method forHeating Coil”, the “Adjustable Lifting Lug” and the“Bulk Plate Fitting Device” respectively.

The Safety Innovation Team Award Challenge Trophywas clinched by the DOME team from the PipefittingSection who had developed the Dust Purifier, a devicethat reduced dust generated during tank blasting. TheBest Safety Performance Award for the section andsubsidiary company categories was presented to HullPainting Section and JPL Services for achieving a zeroaccident frequency rate throughout the year. And the

Long Service Awards

Service Years No of Recipients

10 years 31

15 years 46

20 years 5

25 years 36

30 years 67

35 years 143

40 years 1

Total 329

Tradecertificate

46%

Others23%

Degree & above10%

Diploma6%

GCE ‘A’ Level2%

GCE ‘O’ Level13%

Educational Level 2002

Tradecertificate

42%

Others28%

Degree & above11%

Diploma7%

GCE ‘A’ Level2%

GCE ‘O’ Level10%

Educational Level 2003

1 to 3 years31%

7 to 9 years11%

10years &above27%

Lessthan 1year13%

Length of Service 2002

4 to 6 years18%

Length of Service 2003

1 to 3 years32%

7 to 9 years13%

10 years & above26%

Less than 1 year9%

4 to 6 years20%

Mechanical and Electrical trade excelled in thesubcontractor trade category with the lowestaccumulative accident frequency rate of 1.2.

Deputy Prime Minister, Dr Tony Tan was guest-of-honourat Sembawang Shipyard’s National Day dinnercelebration on August 26, 2003. Dr Tan was also theadviser to the Union, who organised the dinner tocommemorate the shipyard’s 35th Anniversary.

Festivities for Foreign EmployeesNot forgetting the efforts and contributions of foreignemployees, SembCorp Marine held festive luncheonsand dinners in conjunction with the unions during theDeepavali, Hari Raya and Chinese New Year season.The luncheons provided an ideal platform for interaction,further reinforcing the relationship betweenmanagement, union and the workers.

Long Service AwardsThe 2003 Long Service Awards saw a total 329 employeesbeing recognised for their contributions and long serviceto the Group. The largest group comprised 143 recipientsof the 35-year award. One employee was rewarded forthe longest service of 40 years. In addition, 31 employeesreceived the 10-year awards, 46 employees the 15-yearawards, five employees the 20-year awards and 67employees the 30-year awards.

SembCorp Marine 200386 SembCorp Marine 2003 87

MANPOWER TRAINING AND DEVELOPMENT

Recognising people as our greatest asset, trainingand development continued to be a priority inhuman resource management. As a People-Developer-Standard organisation, we maintained structuredtraining and development plans and programmes to ensurethe continued relevance of our employees’ competenciesand skills to the changing nature of our core businesses.

To meet the future challenges and business directionsof the Group, we introduced the Manpower StrategicDevelopment Model to align training skills andcompetencies with current and future business needs.This Model would ensure employee compensationwould be closely linked to skills and competencies. Itwould also provide career mapping to create careerpaths for employees with the potential to be nurturedwith the Group’s business expansion.

The Skills and Competencies MixMatching skills to needs would apply to all levels ofemployees from production floor to senior management.The process would first involve outlining present andnew skills, and test standards and job competencies.From there, we would identify gaps and provide thenecessary training and development programmes toreach the predetermined skills and competencies mixesrequired.

In early 2003, we introduced a pilot project to identifykey leadership and functional competencies formanagement staff, and the skills and certificationrequired. At the production floor level, we commencedskills identification and development in five key trades- welding, steelwork, pipework, electrical and mechanical– and their requisite skills and test standards. Relatedcompensation packages would be restructured to meetthese new standards. Scholarships up to Masters leveland skills-upgrading programmes were developed andintroduced to further bring our employees to higherlevels of competencies.

These projects would be completed by end-2005, andtraining would be carried out concurrently with thecurriculum development.

Group Training ProgrammeGroup training programmes continued to drawparticipation mostly from employees of Jurong Shipyardand Sembawang Shipyard. We planned to encouragemore participation from subsidiaries in 2004.

Courses Participation

6 technical programs from Jurong Shipyard &SEC-1 and 2, NTC-2, NITEC Sembawang Shipyardand SSIC

Be-TOP Quality Module Jurong Shipyard

ISPS Workshop Jurong Shipyard &Sembawang Shipyard

PFSO Workshop Jurong Shipyard, Sembawang Shipyard, SML Shipyard, Jurong SML & PPL Shipyard

People Developer CertificationThe People Developer Standard awarded to us in June1999 was renewed in 2003. The audit team highlighted11 areas of our key strengths and eight areas forimprovement. As our next challenge, we began workingon these areas for improvement in order to strive forthe People Excellence Award in 2004. To this end, werolled out an intranet training site, individual trainingplans and competency-based corporate plans duringthe year.

Technical Skills UpgradingSkill-grading matrices were developed for welding,pipework, steelwork and electrical and mechanical. Anexample is shown in the table below.

Skill Grade Description Skill Standard Skill Certification Knowledge Standard Knowledge Certification

1-8 From From Oxy-fuel From Class 3G Leadership, supervisory SSICGeneral gas cutting NITEC/SEC 1 to Welding procedure (GT/HWT) to CMSWelder to Arc air gouging Class 6GR Welding qualityMaster SMAW-3G Master NITEC Welding productivityWelder 10mm plate to Welding consumables

SMAW-6GR

Skill Grading Matrix for Welder

Scholarship ManagementIn line with the Group’s career enhancement development program, we identified and sponsored a total of 23employees to local and overseas universities for further studies.

Customer-Focused ProgrammesThree classes of the Customer Relations Managementprogramme were conducted during the year, resulting ina customer satisfaction rating of 84 per cent, which washigher than the target of 80 per cent. More training classeswere planned for 2004 to maintain and improve this customersatisfaction rating.

Training of Contractors: 5S Housekeeping and Cost ofQualityAll subcontractors were trained in 5S Housekeeping. Weconducted monthly housekeeping inspection to assess and

maintain the 5S standard. As part of the promotionalactivities, subcontractors continued to maintain theirhousekeeping standards with the “before” and “after”visuals.

We further enrolled four subcontractors for the NationalCost of Quality Programme, who were now at differentstages of implementation. Upon their completion targetedin early 2004, they would receive grants from SPRINGSingapore of up to 70 per cent if they were able to show asaving of three times their investment in the programme.

Ngee Ann Polytechnic 3 1 2 6

Singapore Polytechnic 2 2 2 1 7

University College London 1 1 2

University of Strathclyde 6 6

Newcastle University 1 1

Monash University 1 1

Total 3 3 2 4 1 7 1 2 23

MOT Electrical Mechanical Marine Mechatronics

NavalArchitecture

& MarineEngineering

OSH BizAdmin Total

DevelopingTest

Standards

TrainingProviders

TestingInstitutes

Skills Grading Matrix[Required Competencies &

Modules]

Training Systems and Structure

Evaluation SystemsSkills Standards

DevelopingTradeSkills

Competencies

Skilled Tradesman

Apprentice

GradedApprent-iceshipSystem

toDegreeLevel

Diploma

AdvancedDiploma

Degree

Career Mapping

Bene

fits

Scholarships

Group CentralTraining

MOM

Others

Yard

ASMI

ITE

NITEC ABS SECNSRS ASMI

PayStructure

Empl

oyer

of C

hoic

e

Com

pens

atio

n

Competencies Development

Scholarship Managem

entApprenticeship Program

mesDeveloping

TradeSkills

Standards

WageStructure

ManpowerStrategic

DevelopmentModel

SembCorp Marine 200388 SembCorp Marine 2003 89

Recognising our responsibilities as a good corporatecitizen, we contributed actively to the community atlarge through various support programmes and initiativesin 2003.

Community Care with SchoolBAGThe Group demonstrated its commitment to communitycare and welfare when it contributed $214,805 to 1,094students in 2003 under its ongoing School BookAssistance Grant (SchoolBAG) Scheme. This comparedfavourably to the $175,600 donated to 811 students theyear before.

This scheme offered one-off lump sum financial assistanceto low-income households supporting students fromschools in close proximity to Jurong and SembawangShipyards. These students could use the sum, whichranged from $150 to $300 per student, to defray the costof purchasing school textbooks, uniforms and stationeryfor each new academic year.

In 2003, our contributions went out to 406 students fromPrimary 1 to Primary 3, 393 students from Primary 4 to 6,269 students from secondary schools and 26 students atpre-university level.

Supporting the Community

Seeing Red for a Good CauseTwo Blood Donation Drives were held at our shipyardsas part of the Group’s anniversary celebrations and inconjunction with the Annual Health, Safety andEnvironment Exhibition. A total of 150 employees joinedin the blood donation drives organised by the RedCross.

Corporate VolunteerismThe Group advanced its support for the under-privilegedin Singapore by adopting the Student Care Services -Yishun branch during the year. Student Care Servicesprovided direct social work services to students andfamilies by serving the needs of students from low-income families, students with behavioural and attitudeproblems and students facing some learning difficulties.Our employees volunteered their services for the “Readwith me”, “Homework clinic” and “WebsiteMaintenance” programmes.

Charitable Fund RaisingA series of charitable fund raising activities wereorganised throughout the year. One such activity wasthe Share Programme organised by SembawangShipyard in which the shipyard would contribute $5 forevery $3 donated by employees. A “pasar malam” eventfeaturing stalls selling food and second-hand items,bazaars and auctions was also organised, raising $50,000for Student Care Services - Yishun Branch.

Promoting the ArtsIn our effort to promote the fine arts and bringingBrazilian music to the local Singapore community,SembCorp Marine co-sponsored the Gilberto Gil inConcert in Singapore. Gilberto Gil is a famous and highprofile Brazilian musician. He has been an icon of Brazilianmusic for decades. It was also the first time that hevisited Singapore. We also sponsored the NationalUniversity of Singapore Raffles Hall production and thePeace Concert.

SembCorp Marine’s commitmentto the community, their care andconcern for the well-being of theless advantaged is an echo oftheir core value of CommunityResponsibility. I would like tocommend SembCorp Marine forits commitment as a corporatecitizen in making a difference in thelives of the students who arereceiving the grant. With theirneeds taken care of by the grants,the students can focus on theirschooling and achieve their fullestpotential.

Mr Hawazi Daipi, Parliamentary Secretary, Ministryof Education & Ministry of Manpower at SchoolBAGPresentation Ceremony, December 5, 2003 atJiemin Primary School.

SembCorp Marine 200390 SembCorp Marine 2003 91

Health, Safety and Environment (HSE) System

A strong health, safety andenvironment managementculture can make all thedifference in winning that criticaldeal.

Straits Times Annual Safety PerformanceAwards Special July 24, 2003.

We retained our unwavering commitment to promotea safe and healthy work environment for our customers,employees, contractors and the community.

HEALTH & EMPLOYEE WELLNESS

Throughout the year, we organised various recreationalactivities – including soccer, volleyball, bowling andbadminton competition - involving employees,contractors and our customers. These activities help tofoster team spirit and teamwork while encouragingbalanced and healthy lifestyles.

Other activities were organised under the Group’sworkplace health promotion programme. We continuedwith our morning exercise regime involving alllevels of its employees and subcontractors. Apart frompromoting a healthy lifestyle, these morning rituals alsoallowed supervisors to conduct briefings with their workgroups on safety along with the day’s job distribution.

Stay Healthy, Be Happy CampaignIn conjunction with the “Stay Healthy, Be Happy”campaign, Mr Hawazi Daipi, Parliamentary Secretary forMinistry of Education and Ministry of Manpowerofficiated at the launch of Jurong Shipyard’s healthpromotion programme on July 25, 2003.

The launch helped to kick off a series of fun andmeaningful activities to encourage healthy living.Highlights of the campaign included health talks onsmoking cessation, stress management, personalhygiene, food and nutrition and top killer diseases.Health screenings were also conducted for employeesabove 30 years of age. Supporting exhibitions sought

to further educate employees on important healthmatters and to increase employee awareness andknowledge. A “No Smoking Day” was also held onJuly 28 where smokers were encouraged to stub out.To get employees into the momentum of exercise, alow-impact aerobics workout was also organised onSeptember 20, 2003 as part of A.C.T.I.V.E. (All CompaniesTogether In Various Exercises) Day.

Prevention Better than CureDemonstrating our commitment towards employeewelfare and health, a vaccination exercise againstHepatitis A & B was conducted for employees inFebruary 2003. The vaccination exercise was organisedto promote greater awareness of the risks and preventivemeasures of Hepatitis A and B. In March 2003,employees also participated in the health-screeningprogramme conducted by the National KidneyFoundation. Employees underwent several medicaltests, including an examination of their blood cholesterol,indicative of the risk for heart and kidney diseases andurinalysis to assess the chances of contracting diabetes.

Celebrating through GamesVarious friendly tournaments were held to celebrate theGroup’s 40th anniversary and to attract sports enthusiastsamong our employees. Taking part in the matches wereemployees from Jurong Shipyard, Sembawang Shipyard,Jurong Machinery and Automation, Jurong SMLShipyard, Jurong Integrated Services and JPL Services,who trained hard and competed in good spirit.

A volleyball competition was the inaugural event forthe celebrations. Eight teams vied for the Tan Kwi KinVolleyball Challenge Trophy at the Hougang Stadiumheld in April 2003. The following month saw employeespitting their soccer skills for the Heng Chiang GneeChallenge Trophy held at the Ngee Ann PolytechnicCamp David field. The final competition was the bowlingtournament held in July 2003 for different teams viedfor the Lau Cheng Eng Challenge Trophy at the Victor’sSuperbowl. More than just a test of strength and skill,the games were an excellent opportunity for fosteringstronger camaraderie and greater interaction amongGroup employees.

Alert & Vigilant Against SARSProactive action was the best protection against SevereAcute Respiratory Syndrome (SARS). That was whyJurong Shipyard and Sembawang Shipyard and its groupof companies initiated a comprehensive SARS preventionand management system to guard against this potentiallydeadly virus since its outbreak in March 2003. Led bya high-level SARS Management Task Force, the Group

charted out various strategies and action plans to keepthe virus in check.

From there, the shipyards sought to create greaterawareness of SARS through employee education andinformation dissemination as part of its “Educate-Control-Prevent-Monitor” strategy. A series of stringentprecautionary measures were also put in place to protectcustomers, employees, subcontractor employees andstakeholders. These included strict entry checks forpeople and ships entering the yard, daily temperaturemonitoring for all personnel, controls on staff travel,leave and overseas recruitment, implementation of amonitoring, tracking and contact tracing system as wellas daily disinfecting of premises.

SembCorp Marine 200392 SembCorp Marine 2003 93

SAFETY

Safety-first at all times continued to be our corporatepolicy as safety performances were constantly used asa proxy indicator of a shipyard’s productivity. This yearin review saw the Group maintaining its efforts to ensuresafe practices, procedures and equipment, enhancingconfidence and work satisfaction among employees.

Adopting International Best PracticesTo achieve the desired HSE standards, our shipyards adoptedinternational best practices, taking its cue from oil majorssuch as ChevronTexaco, Shell, BP, BHP and ExxonMobil.It also benchmarked against international standards.

Sembawang Shipyard, for example, continued to adoptthe International Safety Rating System by Det NorskeVeritas, a management system testing, certification andverification agency, for 10 years. Audited annually,Sembawang Shipyard attained a Level 8 rating (Level 10is the best attainable) in March 2003. Rating requirementsestablished clear standards for staff, and the annual auditsencouraged vigilance. Under the OHSAS 18001, twosurveillance audits were carried out in Jurong Shipyard byABS Quality Evaluation Inc. The OHSAS 18001 was anoccupational health and safety assessment series,complying with the Singapore legislation and internationalstandards related to the Oil Companies InternationalMarine Forum. These certifications demonstrated ourshipyards’ commitment to ensuring quality managementin a safe and healthy working environment through closesupervision and periodic auditing.

Shipyards ISO 14001 Certification ISO 9001 Certification OHSAS 18001 Certification

Jurong Shipyard - 1995 ABS Quality Evaluation Inc 2002 ABS Quality2003 Recertification Evaluation Inc 2003 Recertification

Sembawang Shipyard 2002 Det Norske Veritas 1996 Det Norske Veritas Safety Rating System Level 8 rating2003 Recertification 2003 Recertification by Det Norske Veritas

Jurong SML/SML Shipyard - 1994 Det Norske Veritas -2003 Recertification

Jurong Marine Contractors - 1995 ISO 9002 -Certification International2003* Recertification

* previously ISO 9002: 1994

ENVIRONMENTAL PRESERVATION AND PROTECTION

Sembawang Shipyard was the first shipyard in South EastAsia to achieve the ISO 14001 Environmental System Awardby Det Norske Veritas in 2002. In March 2003, it receivedthe recertification. The recertification was a firmendorsement of the shipyard’s commitment and effortstowards environmental preservation and protection.

“Green Wave” Environmental Care Project for SchoolsOur “Green Wave” Environmental Care Project launchedin January 2003 for students at primary schools up totertiary levels. The project, organised by SembawangShipyard in conjunction with the Ministry of Education,sought to influence young minds to think and act forenvironmental protection and improvement. Moreimportantly, it aimed to set students on a life-longinterest and concern for the environment.

A total of 17 awards were presented by Mr Lim SweeSay, Minister for the Environment to the winning teamsin November 2003. Expanding on the programme,prize sponsorships in the next year would draw theparticipation of Shell Trading and BP Shipping. Winnersat the junior college up to tertiary levels would enjoymonth-long development attachments at one of thesponsoring companies and at Sembawang Shipyard.

Recycling of Used Copper SlagAt industry level, JPL Industries, the environmental armof SembCorp Marine was set up with the objective ofpioneering the collection and recycling of used copperslag, the single source of waste generated from shipyardsin Singapore. Each year some 300,000 tonnes of copperslag would be used for abrasive blasting in shipyards.During blasting process, copper slag grit would break

into smaller particles and gets contaminated or mixedwith rusts and paints. Prior to setting up of JPL Industries,the waste copper slag with all the contaminants wereremoved by licensed disposal contractors for dumpingand these posed problems in land scarce Singapore.The company had succeeded in recycling the usedcopper slag to the extent that it no longer posed anenvironmental problem.

Security: International Port and Ship Security Code (ISPS)During the year, our group of shipyards began workingtowards International Port and Ship Security codecertification. So far approval of Jurong SML, SMLShipyard, Sembawang Shipyard and Jurong Shipyard’sfacility security procedures and plans were certified bythe Maritime and Port Authority of Singapore well aheadof Singapore’s earlier deadline of April 1, 2004 and theofficial International Maritime Organisation’s deadlineof July 1, 2004. The achievement of the ISPS certificationsdemonstrated our shipyards’ security preparedness andpro-activity as security was an important aspect of ourbusiness deliverables especially our customer clienteleincluded oil majors and major international shippingcompanies.

Shipyard Recognised Security Organisation Date of Award of Certification

Jurong SML Control Risk Group February 26, 2004

SML Shipyard Control Risk Group February 26, 2004

Sembawang Shipyard CISCO Singapore February 27, 2004

Jurong Shipyard CISCO Singapore March 12, 2004