ANNUAL REPORT 2012 CONTENTS 01 Our Vision 49 Investor Relations 79 Group Comprehensive 02 Global Footprint 50 Corporate Governance Income Statement 04 Chairman’s Statement 59 Risk Management 80 Statements of Changes in Equity 11 Group Financial Highlights 62 Directories 82 Group Cash Flow Statement 14 Awards and Accolades 66 Financial Calendar 85 Notes to the Financial Statements 18 Corporate Information 67 Financial Statements 160 Share Price Movement Chart 19 Board of Directors 68 Report of the Directors 161 Shareholding Statistics 24 Key Management 74 Statement of Directors 163 Notice of Annual General Meeting 31 Operations Review 75 Independent Auditors’ Report Proxy Form 45 Green Statement 76 Statements of Financial Position 46 Sustainability Report 78 Group Income Statement OUR VISION To be the world’s land transport operator of choice. OUR STRATEGIES Look Beyond the Horizon Grow Our Talent Base FOR SUCCESS Innovate and be receptive to new Set the performance bar above ideas and opportunities industry norms Solve problems in a prompt and Give credit where credit is due effective manner Reward equitably Anticipate and embrace change Do the Right Things – Right Never take our eyes off the ball Deploy people and assets for value enhancement Admit and learn from mistakes OUR CORE VALUES Results Orientation Commitment We will: We will: Set challenging and realistic goals Anticipate our customers’ needs and constantly upgrade Focus on results ourselves to provide them with Identify and solve problems outstanding service Have a sense of urgency Foster an environment of trust by and ownership engaging the communities we serve Reward our shareholders by Integrity and Ethics delivering steady and sustainable results through growth in We will: our businesses Conduct our affairs in a manner Care for our staff by providing consistent with the highest ethical a challenging environment with and professional standards ample opportunities for growth Engage in fair and honest and development. Build on staff business practices capabilities through effective recruitment, training and career Show respect for each other, our planning so as to develop their customers, business partners, full potential. Promote teamwork, suppliers, shareholders, the initiative and creativity authorities and the communities we operate in Stay committed to the authorities by complying with Communicate in a factual, honest regulatory requirements and prompt manner Be open and transparent in our dealings Exhibit strong environmental stewardship ComfortDelGro Annual Report 2012 1 GLOBAL FOOTPRINT ABERDEEN EDINBURGH GLASGOW DUBLIN LIVERPOOL CLIFDEN BIRMINGHAM GALWAY LONDON CORK Cities 32 Countries 7 Employees 20,275 Vehicles 45,749 2 ComfortDelGro Annual Report 2012 BEIJING JILIN CITY SHENYANG YANTAI NANJING SUZHOU SHANGHAI CHONGQING CHENGDU HENGYANG XIAMEN GUANGZHOU NANNING HO CHI MINH CITY PUCHONG KUALA LUMPUR SINGAPORE PERTH SYDNEY CANBERRA QUEANBEYAN MELBOURNE ComfortDelGro Annual Report 2012 3 CHAIRMAN’S STATEMENT REVENUES AT A GLANCE S$2,103.5m S$680.6m S$492.2m S$259.5m S$6.1m S$3.4m Singapore United Kingdom Australia China Vietnam Malaysia & Ireland INTRODUCTION a different set of reasons – of just 1.3%, a quarter of the 2012 was a difficult year with many uncertainties. 5.2% achieved in 2011. Europe’s sovereign debt and banking crises persisted while the economic recovery in the United States The only two certainties in 2012 were the US Presidential (US) – despite the introduction of quantitative easing Election held last November and China’s once-in-a- packages – was a lot slower in coming than earlier hoped. decade leadership transition. The successful re-election Consequently, China’s economy slowed down for the first of President Barack Obama should provide some time, erasing years of double-digit growth. Elsewhere, continuity in US economic policies. This should pose India continued to undergo economic reforms while Japan as good news for the global economy in general and continued to stagnate in a low interest environment. the Asian economy in particular. Additionally, history Australia, which had been a beacon of strong growth, has shown that smooth leadership transitions in China started showing signs of slowdown. In Singapore, we also are usually accompanied by big jumps in government witnessed a reduction in growth – albeit resulting from spending. If so, this will be very encouraging. 4 ComfortDelGro Annual Report 2012 CORPORATE GOVERNANCE On the issue of the maximum number of directorships (i) Revised Code of Corporate Governance an individual director can assume, we take the In my last Statement, I said that Corporate Singapore position that depending on the employment status was going through the next phase of transformation of the director, the limit should be six. However, for with practically all relevant authorities issuing Directors who wish to exceed this number, a case consultation papers to effect changes. The Monetary can be made to the Chairman for consideration, but Authority of Singapore (MAS) had on 2 May 2012 the Chairman himself will have to observe this ruling approved the bulk of the recommendations submitted strictly. We will also allow Directors to work towards by the Corporate Governance Council (CGC). The final meeting this requirement over a three-year period. Revised Code has included, as originally intended, amendments to the issues of director independence, On director training, we have already advised our board composition, directors in training, multiple Directors of the courses available and that they directorships, alternate directors, remuneration can participate with full payment by the Company. practices and disclosures, risk management and Our Directors have indeed taken advantage of the shareholders’ rights and roles. These took effect on opportunity. We shall continue with the practice. or after 1 July 2012. On remuneration matters, our position is in line with Specifically, the main point of contention between the the Revised Code. Right from the very beginning, MAS and the CGC is the definition of ‘independent the total compensation package of our Managing directors’ linked to the tenure of office of both non- Director/Group Chief Executive Officer (MD/Group executive and former executive directors. While CEO) has been tied to the profitability of the Group, the CGC has recommended that non-executive with the bonus subjected to a cap. Additionally, the directors with nine or more years of service from MD/Group CEO’s bonus formula is also tied to the their first appointments be regarded as non- return on the Group’s shareholders’ funds with the independent, the MAS has modified this and shifted Shareholders taking priority over the MD/Group it to the responsibility of Nominating Committees. CEO’s bonus. With the discontinuation of the Share As for former executive directors who become Option Scheme this year, there are no longer any non-executive directors, the restricted period long-term benefits tied to the package. recommended was three years by CGC while MAS has decided to reduce it to just one year for them to The issue of risk has been dealt fully by the Board and be regarded as independent directors. the Audit Committee. The latter, which now has an enlarged terms of reference, has been renamed the In connection with this particular issue of the Audit and Risk Committee. The bar has been raised status of independence of directors, the MAS also for the Board of Directors in the Revised Code and it modified the definition of threshold substantial is now their direct responsibility to ensure that risks shareholdings from 5% to 10%. The rationale for all are properly identified and managed. Management these modifications and new rulings is linked to the has also taken measures, especially upgrades in accepted recommendation that the percentage of information technology, to aid in this task. independent directors on the Board has to be 50% instead of the existing one-third if the Chairman On the issue of shareholders’ rights and roles, we is independent. have already introduced voting by polls. We also permit Central Provident Fund (CPF) shareholders to Our Nominating Committee and the Board have attend our Shareholders’ Meetings. decided that we will deviate from the nine-year rule. We will examine each Director, whose tenure (ii) Amendments to Singapore Companies Act exceeds nine years on a case-by-case basis, taking The Government announced, on 3 October 2012, its into consideration his/her views on issues discussed decision to accept 192 recommendations and modify and deliberated. We believe that tenure is not of 17 put up by the Steering Committee for Review of critical importance but experience, independence the Companies Act. Eight recommendations have and objectivity of views and contributions are far not been accepted at this point of time. The accepted more important. and modified recommendations represent the largest number of changes to the Act since it was ComfortDelGro Annual Report 2012 5 enacted in 1967. These changes are expected to Leasing’ category at the ARC Annual Report Awards. reduce regulatory burden and compliance costs, At the Singapore Corporate Awards, organised by the provide greater flexibility for companies and improve Securities Investors Association of Singapore, all our corporate governance. three listed companies won awards. Affecting us directly is the fact that directors over 70 THIRD FIVE-YEAR STRATEGIC THRUSTS years will no longer need to subject themselves to AND PLANS re-elections at Annual General Meetings since the On 29 March 2013, we achieved a significant milestone approved amendments do not impose a maximum when we crossed our 10-year mark. In formulating the age limit for directors. On shareholders’ rights and Third Five-Year Cycle (2013–2017) Plans, the Board meetings, the threshold 10% of total voting rights reviewed the performance of the Group in its first decade. have been reduced to 5% to encourage demand I am very pleased to share that we have been growing at a for a poll at meetings. The cut-off timeline for compound annual growth rate (CAGR) of 6.5% in revenue filing of proxies for Shareholders’ Meetings will over the last 10 years.