COSCO SHIPPING Development Co., Ltd. — Capital/Financing Update 2008

Dec 23, 2008

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.

==> picture [424 x 94] intentionally omitted <==

(A joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock code: 02866)

ConneCted tranSaCtion aCquiSition of equity intereSt

The Board is pleased to announce that on 23 December 2008, Shanghai Puhai, a wholly-owned subsidiary of the Company, entered into the Agreement with China Shipping to acquire its 51% equity interest in Shanghai Inchon. The consideration payable for the said acquisition under the Agreement is RMB23,128,400.00 (equivalent to approximately HK$25,698,222.22). Upon the completion of the Agreement, Shanghai Inchon will become a subsidiary of the Company.

China Shipping is the Company’s controlling shareholder, holding an approximately 49.03% shareholding interest in the Company, it is therefore a connected person (as defined under the Listing Rules) of the Company. Accordingly, the acquisition constitutes a connected transaction of the Company under the Listing Rules.

As previously announced by the Company on 9 December 2008, Shanghai Puhai entered into an equity transfer agreement with Hang Lim Shipping to acquire its 24.5% equity interest in Shanghai Inchon. As the previous acquisition between Shanghai Puhai and Hang Lim Shipping involves Shanghai Puhai acquiring an equity interest in Shanghai Inchon, a company in which China Shipping was one of the substantial shareholders, holding a 51% equity stake, therefore the previous acquisition constituted a connected transaction of the Company under Rule 14A.13(1)(b)(i) of the Listing Rules. The previous acquisition was exempted from independent shareholders’ approval requirements, but was still subject to the relevant reporting and announcement requirements under the Listing Rules. Under Rule 14A.25 of the Listing Rules, the previous connected transaction described above has been aggregated with this acquisition. Since each of the applicable percentage ratios relating to this acquisition (after the said aggregation) is less than 2.5%, under Rule 14A.32 of the Listing Rules, the acquisition is exempted from the independent shareholders approval requirements, but is still subject to the relevant reporting and announcement requirements under the Listing Rules.

1

a. aCquiSition of equity intereSt under tHe aGreeMent

1. Date: 23 December 2008

2. Parties:

Purchaser: Shanghai Puhai Vendor: China Shipping

1. Equity Interest to be Acquired:

Subject to the satisfaction of the condition precedents under the Agreement, Shanghai Puhai will acquire a 51% equity interest in Shanghai Inchon from China Shipping under the Agreement. Shanghai Inchon is principally engaged in passengers and goods liner transportation.

1. Consideration:

Pursuant to the Agreement, the consideration for the 51% equity interest in Shanghai Inchon to be acquired by Shanghai Puhai is RMB23,128,400.00 (equivalent to approximately HK$25,698,222.22) and is payable in full by Shanghai Puhai to the bank account designated by China Shipping within 5 working days from the effective date of the Agreement. The Agreement shall become effective on the date when the condition precedents mentioned below are satisfied.

The equity interest in Shanghai Inchon was acquired by Shanghai Puhai through an open listing process and a subsequent commercial negotiation conducted through the SHUAEE. The Agreement was negotiated and entered into on an arm’s length basis and on normal commercial terms. The consideration under the Agreement was determined with reference to Shanghai Inchon’s (i) net asset value; (ii) financial position; (iii) development prospects; and (iv) synergy effect on the Company. The said consideration will be funded by the internal resources of Shanghai Puhai.

The financial information of Shanghai Inchon is set out in the table below:

		audited net profit before taxation of	audited net profit before taxation of	audited net profit	after taxation of
	audited net asset	Shanghai inchon attributable to the equity		Shanghai inchon attributable to the equity
	value of Shanghai	interest to be acquired		interest to be acquired
Consideration for	inchon attributable	(See Note below)		(See Note below)
acquisition of the	to the equity interest	for the financial	for the financial	for the financial	for the financial
equity interest in	to be acquired as at	year ended	year ended	year ended	year ended
Shanghai inchon	31 august 2008	31 december 2006	31 december 2007	31 december 2006	31 december 2007
(RMB)	(RMB)	(RMB)	(RMB)	(RMB)	(RMB)
23,128,400.00	21,052,676.29	6,243,216.74	6,059,122.13	6,255,223.94	5,236,747.18
(equivalent to	(equivalent to	(equivalent to	(equivalent to	(equivalent to	(equivalent to
approximately	approximately	approximately	approximately	approximately	approximately
HK$25,698,222.22)	HK$23,391,862.54)	HK$6,936,907.49)	HK$6,732,357.92)	HK$6,950,248.83)	HK$5,818,607.98)

Note: The above financial figures were prepared in accordance with Generally Accepted Accounting Principles of the PRC.

2

5. Condition Precedents

The Agreement shall become effective upon satisfaction of the following conditions:

• (i) the parties to the Agreement having duly signed the Agreement;

• (ii) SHUAEE having duly reviewed and stamped the Agreement and issued the equity transaction certificate; and

• (iii) the government authorities in charge of commerce having duly approved the acquisition under the Agreement.

• Security Deposit

Shanghai Puhai had paid a security deposit in the sum of RMB6,938,520.00 (equivalent to approximately HK$7,709,466.67) to SHUAEE in order to participate in the open listing process of Shanghai Inchon on 4 December 2008. This security deposit will be transferred to China Shipping on the effective date of the Agreement, as part of the consideration payable by Shanghai Puhai under the Agreement.

1. Price Adjustment Mechanism

During the period from 31 August 2008 to the date of full payment of the consideration under the Agreement (if the date of full payment of the consideration is not the last day of any calendar month, then such period will end on the last day of the calendar month immediately preceding the date of full payment of the consideration), China Shipping will continue to assume all risks relating to any profit or loss of Shanghai Inchon. If the net asset value of Shanghai Inchon on the date of full payment of the consideration under the Agreement exceeds the net asset value of Shanghai Inchon as at 31 August 2008, Shanghai Puhai will pay to China Shipping an amount (such amount shall not exceed RMB2,090,000.00 (equivalent to approximately HK$2,322,222.22)) equal to 51% of such excess. On the other hand, if the amount of the net assets value of Shanghai Inchon on the date of full payment of the consideration under the Agreement is less than the net asset value of Shanghai Inchon as at 31 August 2008, China Shipping will pay to Shanghai Puhai an amount equal to 51% of such shortfall.

B. reaSonS for and BenefitS of tHe aCquiSition

The reasons and benefits of the acquisition are:

1. The goal of Shanghai Puhai is to become a top-tier regional shipping company. To achieve this goal, Shanghai Puhai will further expand its regional network, focusing on the Asian market, especially the Korean market, which is one of the main targets in developing the Asian network. In view of the unique business operation conditions in the Korean market, to minimise risks and to cope with the Korean market as soon as possible, Shanghai Puhai intends to acquire Shanghai Inchon to benefit from its operational experience in the existing Korean routes and its market share, and to use it as a platform to enhance its network and eventually achieving the above goal.

3

1. On the other hand, the acquisition will also help to reduce competition and connected transaction between the Group and the Company’s controlling shareholder, China Shipping, since China Shipping shall cease to hold any equity interest in Shanghai Inchon upon completion of the Agreement.

C. GeneraL inforMation

1. Principal Business Activities

2. (a) China Shipping

China Shipping is a large shipping conglomerate that operates across different regions, sectors and countries.

• (b) Shanghai Puhai

Shanghai (Puhai) is principally engaged in feeder line container transportation business.

• (c) The Company

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

1. Implications under the Listing Rules

China Shipping is the Company’s controlling shareholder, holding an approximately 49.03% shareholding interest in the Company, it is therefore a connected person (as defined under the Listing Rules) of the Company. Accordingly, the acquisition constitutes a connected transaction of the Company under the Listing Rules.

As previously announced by the Company on 9 December 2008, Shanghai Puhai entered into an equity transfer agreement with Hang Lim Shipping to acquire its 24.5% equity interest in Shanghai Inchon. As the previous acquisition between Shanghai Puhai and Hang Lim Shipping involves Shanghai Puhai acquiring an equity interest in Shanghai Inchon, a company in which China Shipping was one of the substantial shareholders, holding a 51% equity stake, therefore the previous acquisition constituted a connected transaction of the Company under Rule 14A.13(1)(b)(i) of the Listing Rules. The previous acquisition was exempted from independent shareholders’ approval requirements, but was still subject to the relevant reporting and announcement requirements under the Listing Rules. Under Rule 14A.25 of the Listing Rules, the previous connected transaction described above has been aggregated with this acquisition. Since each of the applicable percentage ratios relating to this acquisition (after the said aggregation) is less than 2.5%, under Rule 14A.32 of the Listing Rules, the acquisition is exempted from the independent shareholders approval requirements, but is still subject to the relevant reporting and announcement requirements under the Listing Rules.

The Board (including the independent non-executive Directors) believes that the terms of the acquisition contemplated under the Agreement (including the consideration) are fair and reasonable, on normal commercial terms and in the interests of the Company and its shareholders as a whole.

4

d. definitionS

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

• “Agreement”

• the equity transfer agreement dated 23 December 2008 entered into between Shanghai Puhai and China Shipping, pursuant to which China Shipping agreed to sell its 51% equity interest in Shanghai Inchon to Shanghai Puhai

• “Board” the board of Directors “China Shipping” China Shipping (Group) Company (中國海運（集團）總公 司), a PRC state-owned enterprise, which is the controlling shareholder of the Company, having an approximately 49.03% shareholding interest

• “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, of which 3,751,000,000 H shares are listed on the Stock Exchange and 7,932,125,000 A shares are listed on the Shanghai Stock Exchange

• “connected person” has the meaning ascribed thereto under the Listing Rules “controlling shareholder” has the meaning ascribed thereto under the Listing Rules

• “Directors” the directors of the Company

• “Group” the Company and its subsidiaries

• “Hang Lim Shipping” Hang Lim Shipping Co., Ltd. (韓國沆林株式會社)

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

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “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 “Shanghai Inchon” Shanghai Inchon International Ferry Co., Ltd. (上海仁川國 際渡輪有限公司), a Sino-foreign joint venture incorporated in the PRC and a non-wholly owned subsidiary of China Shipping

5

“Shanghai Puhai” Shanghai Puhai Marine Transportation Company Limited (上海浦海航運有限公司), a limited liability company incorporated in the PRC, which is a wholly-owned subsidiary of the Company “SHUAEE” Shanghai United Assets and Equity Exchange (上海聯合產 權交易所) “Stock Exchange” The Stock Exchange of Hong Kong Limited “substantial shareholder” has the meaning ascribed thereto under the Listing Rules

By order of the Board of China Shipping Container Lines Company Limited ye yumang Company Secretary

Shanghai, the People’s Republic of China 23 December 2008

The Board as at the date of this announcement comprises of Mr. Li Shaode, Mr. Zhang Guofa, Mr. Huang Xiaowen and Mr. Zhao Hongzhou, being executive Directors, Mr. Ma Zehua, Mr. Zhang Jianhua, Mr. Lin Jianqing, Mr. Wang Daxiong, Mr. Yan Zhichong and Mr. Xu Hui, being nonexecutive Directors, and Mr. Hu Hanxiang, Mr. Jim Poon (also known as Pan Zhanyuan), Mr. Wang Zongxi, Mr. Shen Kangchen and Mr. Shen Zhongying, being independent non-executive Directors.

The exchange rate adopted in this announcement for illustration purposes only is HK$1.00 = RMB0.9.

• The Company is registered as a non-Hong Kong company under Part XI of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) under its Chinese name and under the English name “China Shipping Container Lines Company Limited”.

6