COSCO SHIPPING Development Co., Ltd. — Capital/Financing Update 2006

Nov 21, 2006

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: Acquisition of Vessels

The Board is pleased to announce that on 20 November 2006, Shanghai Puhai, a non wholly-owned subsidiary of the Company, entered into the Acquisition Agreements with Guangzhou Maritime, whereby Shanghai Puhai has agreed to purchase and Guangzhou Maritime has agreed to sell 7 Container Vessels with an aggregate capacity of 1,470 TEU at a total cash consideration of RMB54,760,000 (equivalent to approximately HK$52,653,846).

Shanghai Puhai is a non wholly-owned subsidiary of the Company and Guangzhou Maritime is a wholly-owned subsidiary of China Shipping, the controlling shareholder of the Company. Therefore, Guangzhou Maritime is a connected person (as defined under the Listing Rules) of the Company and the acquisition of the Container Vessels under the Acquisition Agreements constitutes a connected transaction of the Company under the Listing Rules. However, the aggregate consideration payable for such acquisition is more than 0.1% but less than 2.5% of any of the applicable percentage ratios. Under Rule 14A.32 of the Listing Rules, the Acquisition Agreements are therefore exempted from the independent shareholders’ approval requirements, but are still subject to the relevant reporting and announcement requirements.

1. ACQUISITION AGREEMENTS

(a) Date

20 November 2006

(b) Parties

Seller: Guangzhou Maritime, a wholly-owned subsidiary of China Shipping, the controlling shareholder of the Company

Buyer: Shanghai Puhai, a non wholly-owned subsidiary of the Company. As of the date of this announcement, the Company has an aggregate direct and indirect attributable interest of 99% in Shanghai Puhai

(c) Container Vessels Acquired under the Acquisition Agreements

Pursuant to the Acquisition Agreements, Shanghai Puhai has agreed to purchase and Guangzhou Maritime has agreed to sell 7 Container Vessels with an aggregate capacity of 1,470 TEU. The Container Vessels are currently being bareboat chartered by Guangzhou Maritime to Shanghai Puhai.

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(d) Consideration

Pursuant to the Acquisition Agreements, Shanghai Puhai has agreed to purchase the Container Vessels from Guangzhou Maritime at a total cash consideration of RMB54,760,000 (equivalent to approximately HK$52,653,846). Details of the consideration payable for each Container Vessel are set out below:

Name of Vessel Xiang Qiang Xiang Ling Xiang Heng Xiang Fu Xiang Zhong Xiang Fa Xiang Feng Total:	Capacity Year of Construction (TEU) 210 1986 210 1981 210 1985 210 1987 210 1986 210 1986 210 1985 1,470	Consideration (RMB) 7,890,000 7,700,000 7,700,000 7,990,000 7,890,000 7,890,000 7,700,000
		54,760,000

The Acquisition Agreements were negotiated and entered into on an arm’s length basis and on normal commercial terms. The total consideration of RMB54,760,000 (equivalent to approximately HK$52,653,846) was determined by reference to the aggregate net appraised value of the Container Vessels as at 30 June 2006, which amounted to RMB60,620,400 (equivalent to approximately HK$58,288,846), as set out in an asset valuation report prepared by an independent and duly qualified PRC valuer appointed by Guangzhou Maritime. As stated in the asset valuation report, the original aggregate book value of the Container Vessels was RMB138,000,182 (equivalent to approximately HK$132,692,483) (which the Company understands to be the original purchase cost of the Container Vessels to Guangzhou Maritime) and their net book value as at 30 June 2006 was RMB5,520,007 (equivalent to approximately HK$5,307,699). Given that the Container Vessels are secondhand vessels, the valuer applied the market value method to determine the final net appraised value for the Container Vessels as at 30 June 2006 of RMB60,620,400 (equivalent to approximately HK$58,288,846).

For the two financial years ended 31 December 2004 and 2005, the respective aggregate unaudited net profits before and after taxation and extraordinary items attributable to the Container Vessels were as follows:

				Net Profits Before taxation	Net Profits After taxation
				and extraordinary items	and extraordinary items
For the year ended	31	December	2004	RMB8,880,000	RMB5,952,000
				(equivalent to approximately	(equivalent to approximately
				HK$8,548,000)	HK$5,723,000)
For the year ended	31	December	2005	RMB11,100,000	RMB7,434,200
				(equivalent to approximately	(equivalent to approximately
				HK$10,669,000)	HK$7,148,300)

The above amounts of unaudited net profits have been prepared in accordance with the relevant accounting principles and financial regulations applicable to the PRC enterprises.

(e) Delivery Time

Under the Acquisition Agreements, the Container Vessels shall be delivered to Shanghai Puhai on or before 30 November 2006.

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(f) Payment

Shanghai Puhai is required to pay to Guangzhou Maritime an aggregate deposit of RMB5,476,000 (equivalent to approximately HK$5,265,385), being 10% of the total consideration for the acquisition, within 3 banking days after the signing of the Acquisition Agreements. The remaining 90% of the total cash consideration payable for the Container Vessels shall be paid in full by Shanghai Puhai into the bank account designated by Guangzhou Maritime within 3 calendar days prior to the date of delivery of the Container Vessels. The total consideration will be funded from the internal resources of Shanghai Puhai.

(g) Completion of the Acquisition

The acquisition will be completed after the total consideration has been paid in full and confirmation letters regarding delivery of and transfer of ownership in the Container Vessels have been signed and sealed by both parties.

2. REASONS FOR AND BENEFITS OF THE ACQUISITION

As there is increase in the demand for large container vessels for the Group’s sub-routes in the domestic coastal regions and in the Southeast Asia and in light of the Group’s need to inaugurate new routes to expand the coverage of its international sub-routes, it is important for the Group to deploy more container vessels with larger capacity which are more appropriate for the sub-routes in the said regions in order to further strengthen its shipping capacity and to satisfy such increasing demand. By increasing the portion of self-owned container vessels in its fleet, the Group will be able to achieve the above objects while effectively control operating costs. The Container Vessels to be acquired have been chartered by Shanghai Puhai on a bareboat basis for many years in the Group’s sub-routes and played an important role in the provision of feeder services. Therefore, the acquisition of such Container Vessels will be beneficial to the Group’s stable and sustainable development. In light of the above, the directors of the Company are of the view that the acquisition of the Container Vessels would be in the interests of the Company and its shareholders as a whole.

The Board (including the independent non-executive directors of the Company) considers that the terms of the Acquisition Agreements (including the consideration) are fair and reasonable, in the interests of the Company and the shareholders of the Company as a whole and the terms of which are on normal commercial terms and no less favourable to the Company than terms available from independent third parties.

3. GENERAL INFORMATION

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

The Guangzhou Maritime is principally engaged in the provision of comprehensive and supporting services for vessels, including bareboat chartering, equipment investment and development, provision of consultancy services in shipping operation and financing and other related and ancillary services.

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Shanghai Puhai is a non wholly-owned subsidiary of the Company and Guangzhou Maritime is a wholly-owned subsidiary of China Shipping, the controlling shareholder of the Company. Therefore, Guangzhou Maritime is a connected person (as defined under the Listing Rules) of the Company and the acquisition of the Container Vessels under the Acquisition Agreements constitutes a connected transaction of the Company under the Listing Rules. However, the aggregate consideration payable for such acquisition is more than 0.1% but less than 2.5% of any of the applicable percentage ratios. Under Rule 14A.32 of the Listing Rules, these Acquisition Agreements are therefore exempted from the independent shareholders’ approval requirements, but are still subject to the relevant reporting and announcement requirements.

DEFINITIONS

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

“Acquisition Agreements”	7 acquisition agreements dated 20 November 2006 entered into between
	Shanghai Puhai and Guangzhou Maritime regarding the sale and
	purchase of the Container Vessels
“Board”	the board of directors of the Company
“China Shipping”	China Shipping (Group) Company (中國海運（集團）總公司), a
	PRC state-owned enterprise and the controlling shareholder of the
	Company
“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 incorporated in the
	PRC and the H shares of which are listed on The Stock Exchange of
	Hong Kong Limited
“Container Vessels”	7 second-hand container vessels to be acquired by Shanghai Puhai under
	the Acquisition Agreements
“Group”	the Company and its subsidiaries
“Guangzhou Maritime”	Guangzhou Maritime Transport (Group) Co., Ltd. (廣州海運（集團）
	有限公司), a limited liability company incorporated in the PRC and
	a wholly-owned subsidiary of China Shipping
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Listing Rules”	the Rules Governing the Listing of Securities on The Stock Exchange
	of Hong Kong Limited
“PRC”	the People’s Republic of China
“RMB”	Renminbi, the lawful currency of the PRC
“Shanghai Puhai”	Shanghai Puhai Shipping Co., Ltd. (上海浦海航運有限公司), a
	limited liability company incorporated in the PRC, which is a non-
	wholly owned subsidiary of the Company. As of the date of this
	announcement, the Company has an aggregate direct and indirect
	attributable interest of 99% in Shanghai Puhai and China Shipping has
	an indirect attributable interest of 1% in Shanghai Puhai

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“TEU”

twenty-foot equivalent units, 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

By order of the Board of China Shipping Container Lines Company Limited Li Shaode Chairman

Shanghai, the People’s Republic of China 20 November 2006

The Board as at the date of this announcement comprises of Mr. Li Shaode, Mr. Jia Hongxiang, Mr. Huang Xiaowen and Mr. Zhao Hongzhou, being executive directors, Mr. Zhang Jianhua, Mr. Wang Daxiong, Mr. Zhang Guofa, Mr. Yao Zuozhi and Mr. Xu Hui, being non-executive directors, and Mr. Hu Hanxiang, Mr. Gu Nianzu, Mr. Wang Zongxi and Mr. Lam Siu Wai, Steven, being independent nonexecutive directors.

The exchange rate adopted in this announcement for illustration purposes only is HK$1.00=RMB1.04

• The Company is registered as an oversea company under Part XI of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) under its Chinese name and 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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