COSCO SHIPPING Development Co., Ltd. — Capital/Financing Update 2004

Nov 9, 2004

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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China Shipping Container Lines Company Limited[*] (a joint stock limited company incorporated in the People’s Republic of China)

(Stock Code: 2866)

Discloseable Transaction Construction of Vessels

On 8 November, 2004, the Company entered into an agreement with Hudong-Zhonghua and CSSC for the construction of four 8530 TEU container vessels. The total consideration for the construction of the four vessels is approximately US$372 million (equivalent to approximately HK$2,901.6 million). The entering into of the Agreement constitutes a discloseable transaction of the Company under the Listing Rules.

On the same day, the Company entered into an option agreement with Hudong-Zhonghua and CSSC, whereby an option has been granted to the Company for the construction of a fifth 8530 TEU container vessel. The detailed terms of the construction of the fifth vessel shall be agreed between the Company, Hudong-Zhonghua and CSSC within three months of the signing of the Agreement.

General

On 8 November, 2004, the Company (as the buyer) entered into an unconditional agreement with Hudong-Zhonghua and CSSC (as the sellers) for the construction of four 8530 TEU container vessels. The total consideration for the construction of the four vessels is approximately US$372 million (equivalent to approximately HK$2,901.6 million). The entering into of the Agreement constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.

On the same day, the Company entered into an option agreement with Hudong-Zhonghua and CSSC, whereby an option has been granted to the Company for the construction of a fifth 8530 TEU container vessel. The detailed terms of the construction of the fifth vessel shall be agreed between the Company, Hudong-Zhonghua and CSSC within three months of the signing of the Agreement.

Hudong-Zhonghua is a Chinese shipbuilder and to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, CSSC is a state-authorised investment institution holding various Chinese shipbuilders with Hudong-Zhonghua being one of them. To the best of the Directors’ knowledge, information and belief having made all

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reasonable enquiries, Hudong-Zhonghua and CSSC, its ultimate beneficial owner, are independent third parties that are not connected persons of the Company, and are not connected with the Directors, chief executive(s) or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates (as defined under the Listing Rules).

The terms of the Agreement and the Option Agreement were determined on an arm’s length basis and on normal commercial terms, and the Directors, including the independent non-executive Directors, consider them to be fair and reasonable and to be in the interests of the Company and the Shareholders as a whole based on their experience in the container shipping industry.

Terms of the Agreement

The price of each of the four vessels will be payable in Renminbi in four instalments. The first instalment for the four vessels, amounting to 20% of the total price (being a total sum of approximately US$74.4 million (equivalent to approximately HK$580.3 million)), is payable within 15 Business Days upon the signing of the Agreement. The second and third instalments for each vessel, each of which amounting to 15% of the total price (being a sum of approximately US$13.95 million (equivalent to approximately HK$108.8 million)), is payable at various stages of the construction of each vessel and within five Business Days of receipt of the relevant invoice by the Company. The final instalment for each vessel, each of which amounting to 50% of the total price (being a sum of approximately US$46.5 million (equivalent to approximately HK$362.7 million)), is payable within five Business Days of the receipt of all documentation in relation to the completion of each vessel by the Company.

The first vessel is expected to be delivered on or before 31st October, 2007 with the others to be delivered on or before 28th February, 2008, 30th June, 2008 and 31st October, 2008 respectively.

Terms of the Option Agreement

On the same day, the Company entered into the Option Agreement with Hudong-Zhonghua and CSSC, whereby an option with no premium has been granted to the Company for the construction of a fifth 8530 TEU container vessel. The detailed terms of the construction of the fifth vessel, including consideration payable and payment terms, shall be agreed between the Company, Hudong-Zhonghua and CSSC within three months of the signing of the Agreement. Should the Company, Hudong-Zhonghua and CSSC fail to reach an agreement in relation to the construction of the fifth vessel within three months of the signing of the Agreement, the Option Agreement shall terminate and cease to have any effect. Further announcement will be made upon entering into the agreement in relation to the construction of the fifth vessel.

Finance Terms

The Company intends to arrange for bank borrowings for approximately 70% of the total consideration for the construction of the four vessels with the balance to be funded by internal resources. It is expected that the financing will be finalized in the near future. Should such financing not be arranged, the full purchase price of each vessel will be funded from internal resources.

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Information about the Group

The Group is principally engaged in the operation and management of international and domestic container marine transportation. Since the first quarter of 2004, the container market has been very busy and the Directors are optimistic of the demand in the shipping market in the remainder of 2004. The Directors also believe that the shipping market will maintain persistent growth in 2005. The Directors are of the view that the construction and ownership of the four 8530 TEU container vessels will enable the Group to take advantage of the business opportunities in the shipping market, enjoy economies of scale, optimize its overall route arrangements and improve its operating efficiency and profitability. As the container vessels will be registered in the PRC, they can be used in the Group’s domestic trade lanes as well as its international trade lanes, thereby allowing the Group the flexibility in the deployment of resources to satisfy international shipping and domestic demand growth, which is one of the Group’s principal strengths as a container shipping company in the PRC.

Under the Listing Rules, the entering into of the Agreement for the construction of the four vessels constitutes a discloseable transaction of the Company. A circular giving details of the transaction under the Agreement will be despatched to the Shareholders, for their information only, in due course.

Definitions

In this announcement, unless the context otherwise requires, the following terms shall have the following meanings:

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“Agreement”	an	agreement	dated	8	November,	2004	entered	into	between
Hudong-Zhonghua	and	CSSC	(as	the	sellers)	and	the	Company	(as
the	buyer)	for	the	construction	of	four	8530	TEU	container	vessels
“Business	Day”	a	day	other	than	Saturdays,	Sundays	and	public	holidays	in	the	PRC
“Company”	China	Shipping	Container	Lines	Company	Limited
(	),	a	joint	stock	limited	company	established
in	the	PRC,	the	shares	of	which	are	listed	on	The	Stock	Exchange	of
Hong	Kong	Limited
“CSSC”	China	State	Shipbuilding	Corporation	(	),	the
ultimate	beneficial	owner	of	Hudong-Zhonghua	which,	to	the	best	of
the	Directors’	knowledge,	information	and	belief	having	made	all
reasonable	enquiries,	is	an	independent	third	party	that	is	not	a
connected	person	of	the	Company,	and	is	not	connected	with	the
Directors,	chief	executive(s)	or	substantial	shareholders	of	the
Company	or	any	of	its	subsidiaries	or	any	of	their	respective
associates	(as	defined	under	the	Listing	Rules)
“Directors”	directors	of	the	Company
“Group”	the	Company	and	its	subsidiaries

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“HK$” Hong Kong dollars, the lawful currency of the Hong Kong Special Administrative Region of the PRC

• “Hudong-Zhonghua” Hudong-Zhonghua Shipbuilding (Group) Co., Ltd. ( ), a Chinese shipbuilder which, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, is an independent third party that is not a connected person of the Company, and is not connected with the Directors, chief executive(s) or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates (as defined under the Listing Rules)

• “Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

• “Option Agreement” an option agreement dated 8 November, 2004 entered into between the Company (as the buyer) and Hudong-Zhonghua and CSSC (as the sellers) for the construction of a fifth 8530 TEU container vessel, the detailed terms of which shall be agreed between the Company, Hudong-Zhonghua and CSSC within three months of the signing of the Agreement

• “PRC” The People’s Republic of China

• “Shareholders” holders of share(s) of the Company

• “TEU” twenty-foot equivalent unit, a standard unit of measurement of the volume of a container with a length of 20 feet, a height of 8 feet and 6 inches and a width of 8 feet

• “US$” United States dollars, the lawful currency of the United States of America

By Order of the Board of Directors China Shipping Container Lines Company Limited Li Kelin Chairman

Shanghai, the People’s Republic of China 8 November, 2004

As at the date of this announcement, the executive Directors are Mr. Li Kelin and Mr. Jia Hongxiang, the non-executive Directors are Mr. Li Shaode, Mr. Zhang Jianhua, Mr. Wang Daxiong and Mr. Wang Xiangyun, and the independent non-executive Directors are Mr. Hu Hanxiang, Mr. Gu Nianzu, Mr. Wang Zongxi and Mr. Lam Siu Wai, Steven.

The exchange rate adopted in this announcement for illustration purpose only is US$1.00 = HK$7.80.

• The Company is registered as an oversea company under Part XI of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) under the English name “China Shipping Container Lines Company Limited”.

Please also refer to the published version of this announcement in South China Morning Post.

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