COSCO SHIPPING Development Co., Ltd. — Capital/Financing Update 2005

Apr 8, 2005

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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(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 2866)

Connected Transaction: Purchase of a Vessel and

Unusual Volume Movement

On 7 April 2005, the Company entered into the Sale and Purchase Agreement with CSI and CSGIT, under which the Company has agreed to acquire the Vessel from CSI at a cash consideration of RMB71,001,000 (equivalent to approximately HK$66,982,075). An agency fee of RMB104,275 (equivalent to approximately HK$98,373) is to be paid in cash by the Company to CSGIT.

The Sale and Purchase Agreement constitutes a connected transaction of the Company under the Listing Rules. However, the consideration payable (including the agency fee) for the purchase of the Vessel does not exceed 2.5% of any of the applicable percentage ratios. Under Rule 14A.32 of the Listing Rules, the Sale and Purchase Agreement is therefore exempted from the independent shareholders’ approval requirement applicable to connected transactions under the Listing Rules, but is still subject to the relevant disclosure requirements.

The directors of the Company have noted the recent increase in the trading volume of the shares of the Company. Save as disclosed below, the directors of the Company wish to state that they are not aware of any reasons for such increase.

1. THE SALE AND PURCHASE AGREEMENT

(a) Date: 7 April 2005

(b) Parties: The Company, as purchaser

CSI, as vendor

CSGIT, as the handling agent of the transaction

(c) The Vessel: The oil tanker manufactured in March 1976, which was modified by CSI in December 2004 into a container vessel M/C Xiang Teng (向騰 ) with a container capacity of 1270 TEU. Under the relevant PRC notice, after March 2010, the Company will not be permitted to operate the Vessel in the PRC, but can still use it in other countries or sell it to a third party

Asset to be transferred

Under the Sale and Purchase Agreement, the Company has agreed to purchase the Vessel from CSI at a cash consideration of RMB71,001,000 (equivalent to approximately HK$66,982,075). CSGIT, as the handling agent of the transaction, will be responsible for the preparation and filing of the necessary registration documents to effect the transfer of the Vessel to the Company. An agency fee of RMB104,275 (equivalent to approximately HK$98,373) is to be paid in cash by the Company to CSGIT. The Sale and Purchase Agreement does not contain any condition precedents.

Consideration

Under the Sale and Purchase Agreement, the consideration payable for the Vessel shall be paid in cash by the Company in the following manner:

• (i) RMB30,180,600 (equivalent to approximately HK$28,472,264) to CSI within 5 banking days after signing the Sale and Purchase Agreement;

• (ii) RMB33,534,000 (equivalent to approximately HK$31,635,849) to CSI within 15 banking days after signing the Sale and Purchase Agreement;

• (iii) RMB4,968,000 (equivalent to approximately HK$4,686,792) to CSI within 30 banking days after signing the Sale and Purchase Agreement; and

• (iv) RMB2,318,400 (equivalent to approximately HK$2,187,170) to CSI and RMB104,275 (equivalent to approximately HK$98,373) to CSGIT within 5 banking days after delivery of the Vessel to the Company.

The Vessel was originally purchased by CSI on 23 January 2005 from CSDC, a subsidiary of China Shipping. The total cost paid by CSI for the Vessel was RMB71,045,839 (equivalent to approximately HK$67,024,376).

The consideration of RMB71,001,000 (equivalent to approximately HK$66,982,075) payable by the Company for the purchase of the Vessel was determined based on the appraised value of the Vessel as at 28 February 2005, which amounted to RMB70,431,100 (equivalent to approximately HK$66,444,434) as set out in an asset valuation report based on the replacement cost of the Vessel prepared by an independent and duly qualified PRC valuer appointed by CSI. Such consideration will be funded from the Company’s internal resources.

Delivery

The Vessel is expected to be delivered on or before 11 April 2005.

Reason for the acquisition

As there is increase in the demand for container spaces in the Company’s domestic trade lanes, the Company intends to deploy the Vessel in such trade lanes in order to further strengthen its shipping capacity and to satisfy such increasing demand. The directors of the Company believe that the Vessel will further strengthen the domestic container marine transportation services capabilities

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of the Group. Although the Company currently has no plan to purchase additional vessels from the China Shipping Group, it will, from time to time, assess the market operating environment to determine whether additional vessel(s) will be acquired from the China Shipping Group. The Company considers that negotiations with members of the China Shipping Group (e.g. CSI and CSGIT) to be generally more convenient and the purchase price offered by CSI is generally cheaper than that offered by independent third parties for vessels of similar age, type and capacity available in the market.

In light of the above, the directors of the Company (including the independent non-executive directors) believe that the terms of the Sale and Purchase Agreement are fair and reasonable, in the interest of the shareholders of the Company as a whole and no less favourable to the Company than terms available from independent third parties.

2. GENERAL

The Group is principally engaged in the operation and management of international and domestic container marine transportation.

(a) CSDC CSDC is a limited liability company incorporated in the PRC. CSDC is principally engaged in the business of costal, ocean and Yangtze River cargo transportation, oil transportation, international passenger transportation, chartering, cargo agency and cargo transportation agency.

• (b) CSI

  • CSI is a limited liability company incorporated in the PRC. CSI is principally engaged in the business of ship repair, ship construction, purchase of second hand ships, ship dismantling and ship leasing.

• (c) CSGIT

CSGIT is a limited liability company incorporated in the PRC. CSGIT is principally engaged in the business of import, export, trading of goods and technologies and provision of agency services.

• (d) Connected transactions China Shipping, being the controlling shareholder of the Company, is a connected person of the Company. CSI and CSGIT, both being members of the China Shipping Group, are therefore also connected persons of the Company.

The Sale and Purchase Agreement constitutes a connected transaction of the Company under the Listing Rules. However, the consideration payable (including the agency fee) for the purchase of the Vessel does not exceed 2.5% of any of the applicable percentage ratios. Under Rule 14A.32 of the Listing Rules, the Sale and Purchase Agreement is therefore exempted from the independent shareholders’ approval requirements applicable to connected transactions under the Listing Rules, but is still subject to the relevant disclosure requirements.

The directors of the Company (including the independent non-executive directors) are of the view that the transaction contemplated under the Sale and Purchase Agreement is on normal commercial terms, has been entered into in the ordinary and usual course of the Group’s business and is fair and reasonable and in the interests of the Company and its shareholders as a whole.

3. UNUSUAL VOLUME MOVEMENT

This statement is made at the request of The Stock Exchange of Hong Kong Limited.

The directors of the Company have noted the recent increase in the trading volume of the shares of the Company. Save as disclosed above, the directors of the Company wish to state that they are not aware of any reasons for such increase.

The directors of the Company also confirm that, save as disclosed above, there are no negotiations or agreements relating to intended acquisitions or realisations which are discloseable under rule 13.23, neither is the board of directors aware of any matter discloseable under the general obligation imposed by rule 13.09, which is or may be of a price-sensitive nature.

Made by the order of the board of directors of the Company, the directors of which individually and jointly accept responsibility for the accuracy of this statement.

4. DEFINITIONS

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

“China Shipping”	China Shipping (Group) Company (中國海運(集團)總公司), a Chinese state-owned enterprise,
	which is the controlling shareholder of the Company, holding a 59.87% shareholding interest in
	the Company
“China Shipping Group”	China Shipping and its subsidiaries (excluding the Group)
“Company”	China Shipping Container Lines Company Limited (中海集裝箱運輸股份有限公司), a joint
	stock limited company established in the PRC with limited liability, of which 2,420,000,000 H
	shares are listed on The Stock Exchange of Hong Kong Limited
“CSDC”	China Shipping Development Company Limited (中海發展股份有限公司), a joint stock limited
	company incorporated with limited liability under the laws of the PRC and a subsidiary of China
	Shipping
“CSGIT”	China Shipping Group International Trading Company Limited (中海集團國際貿易有限公
	司), a limited liability company incorporated in the PRC and a wholly owned subsidiary of
	China Shipping
“CSI”	China Shipping Industry Co., Ltd. (中海工業有限公司), a limited liability company
	incorporated in the PRC and a member of the China Shipping Group
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	Hong Kong Special Administrative Region of the People’s Republic of China
“Listing Rules”	the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
“percentage ratios”	has the meaning ascribed to such term under the Listing Rules
“PRC”	the People’s Republic of China
“RMB”	Renminbi, the lawful currency of the PRC
“Sale and Purchase	the sale and purchase agreement dated 7 April 2005 entered into between the Company,
Agreement”	CSI and CSGIT

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“TEU”

“Vessel”

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

the oil tanker manufactured in March 1976, which was modified by CSI in December 2004 into a container vessel M/C Xiang Teng (向騰 ) with a container capacity of 1270 TEU. Under the relevant PRC notice, after March 2010, the Company will not be permitted to operate the Vessel in the PRC, but can still use it in other countries or sell it to a third party

By order of the board of directors China Shipping Container Lines Company Limited Li Kelin Chairman

Shanghai, the People’s Republic of China 7 April 2005

The board of directors of the Company as at the date of this announcement comprises of Mr. Li Kelin, Mr. Jia Hongxiang, Mr. Huang Xiaowen and Mr. Zhao Hongzhou, being executive directors, Mr. Li Shaode, Mr. Zhang Jianhua, Mr. Wang Daxiong, Mr. Yan Mingyi and Mr. Zhang Guofa, being non-executive directors, and Mr. Hu Hanxiang, Mr. Gu Nianzu, Mr. Wang Zongxi and Mr. Lam Siu Wai, Steven, being independent non-executive directors.

The exchange rate adopted in this announcement for illustration purposes only is HK$1.00 = RMB1.06.

* 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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