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

Jul 2, 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.

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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 5 Vessels

The Board is pleased to announce that on 27 June 2008, Shanghai Puhai (Hong Kong), a subsidiary of the Company, entered into the Master Agreement with the Vendors and the respective Acquisition Agreements with each respective Vendor, whereby Shanghai Puhai (Hong Kong) has agreed to purchase and the Vendors have agreed to sell the Container Vessels with an aggregate capacity of 1930 TEU at a total cash consideration of US$36,520,000 (equivalent to approximately HK$290,618,890).

Shanghai Puhai (Hong Kong) is a subsidiary of the Company. The Vendors are wholly-owned subsidiaries of CSDC. CSDC is in turn owned as to approximately 46.36% by the controlling shareholder of the Company, China Shipping. As the Vendors are associates of the controlling shareholder of the Company, therefore, the Vendors are connected persons of the Company and the Acquisition constitutes a connected transaction of the Company under the Listing Rules.

On 9 July 2007, Shanghai Puhai Shipping Co., Ltd., a subsidiary of the Company, entered into 3 sales and purchase agreements with CSDC in respect of the acquisition of three container vessels at an aggregate consideration of RMB28,000,000 (equivalent to approximately HK$28,865,979 at that time). As CSDC is an associate of the controlling shareholder of the Company, therefore, CSDC is a connected person of the Company and the previous acquisition constituted a connected transaction of the Company under the Listing Rules. The previous acquisition was exempted from the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules. Pursuant to Rule 14A.25 of the Listing Rules, the previous connected transaction described above has been aggregated with the Acquisition. The aggregate consideration payable for the previous acquisition and the Acquisition is more than HK$1,000,000 and each of the applicable percentage ratios (other than the profits ratio) is more than 0.1% but less than 2.5%. Under Rule 14A.32 of the Listing Rules, the Acquisition is therefore exempted from the independent shareholders’ approval requirements, but is still subject to the relevant reporting and announcement requirements.

1. MASTer AgreeMenT And ACquiSiTion AgreeMenTS

(a) date

27 June 2008

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(b) Parties

• Vendors: (i) Xiang Xiu Shipping S.A., which has agreed to sell two vessels called “Xiang Xiu” and “Xiang Zhu”;

  • (ii) Xiang Da Shipping S.A., which has agreed to sell a vessel called “Xiang Da”;

  • (iii) Xiang Xin Shipping S.A., which has agreed to sell a vessel called “Xiang Xin”; and

  • (iv) Xiang Wang Shipping S.A., which has agreed to sell a vessel called “Xiang Wang”.

All of the Vendors are associates of China Shipping, the controlling shareholder of the Company.

Purchaser: Shanghai Puhai (Hong Kong), a subsidiary of the Company.

(c) Container Vessels Acquired under the Master Agreement and the Acquisition Agreements

Pursuant to the Master Agreement and the Acquisition Agreements, Shanghai Puhai (Hong Kong) has agreed to purchase and the Vendors have agreed to sell the Container Vessels with an aggregate capacity of 1930 TEU.

Details of the Container Vessels are set out below:

name of VesselXiang XiuXiang ZhuXiang DaXiang XinXiang WangTotal:	Capacity(Teu)Year ofConstructionConsideration(uS$)(equivalent toapproximatelyHK$)31619945,760,00045,836,933514199811,230,00089,366,10431619945,760,00045,836,93339219956,820,00054,272,20239219956,950,00055,306,716193036,520,000290,618,890

(d) Consideration

Pursuant to the Master Agreement and the Acquisition Agreements, Shanghai Puhai (Hong Kong) has agreed to purchase the Container Vessels from the Vendors at a total cash consideration of US$36,520,000 (equivalent to approximately HK$290,618,890).

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The Master Agreement and each of the Acquisition Agreements were negotiated and entered into on an arm’s length basis and on normal commercial terms. The total consideration of US$36,520,000 (equivalent to approximately HK$290,618,890) was determined by reference to the aggregate net appraised value of the Container Vessels as at 31 May 2008, which amounted to RMB255,648,005 (equivalent to approximately HK$290,627,990), as set out in an asset valuation report prepared by an independent and duly qualified PRC valuer appointed by CSDC based on the replacement cost method. As stated in the asset valuation report, the original aggregate book value of the Container Vessels as at 31 May 2008 was RMB388,175,186.68 (equivalent to approximately HK$441,288,694) (which the Company understands to be the original purchase cost of the Container Vessels to the Vendors) and their net book value as at 31 May 2008 was RMB165,389,473.04 (equivalent to approximately HK$188,019,500).

For the two financial years ended 31 December 2007, the attributable net profit (both before and after tax and extraordinary items) of the Container Vessels were HK$12,863,130.84 and HK$12,920,987.52 respectively. The financial information in relation to the Container Vessels above were prepared based on the Hong Kong Financial Reporting Standards.

(e) delivery Time

The Container Vessels will be delivered to Shanghai Puhai (Hong Kong) on such dates to be agreed between the parties.

(f) Payment

Shanghai Puhai (Hong Kong) is required to pay an aggregate deposit to the Vendors in the amount of 50% of the total consideration for the Acquisition (i.e. US$18,260,000) (equivalent to approximately HK$145,309,445), within 3 banking days after the signing of the Master Agreement and Acquisition Agreements by wire transfer. The remaining 50% of the total consideration payable for the Acquisition shall be paid to the Vendors within one month after the date when the deposit is paid. The consideration for the Acquisition will be funded by the internal resources and bank borrowings of the Group.

(g) Completion of the Acquisition

The title to each Container Vessel will be transferred to Shanghai Puhai (Hong Kong) upon the payment of the respective deposit.

2. reASonS for And BenefiTS of THe ACquiSiTion

The Container Vessels to be acquired have been chartered by the Group on a bareboat basis for many years and deployed in the Group’s sub-routes. They have played an important role in the provision of feeder services. Therefore, the Acquisition 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 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 Master Agreement and 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.

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3. generAl inforMATion

The Group is principally engaged in the operation and management of international and domestic container marine transportation. The Vendors are principally engaged in owning of the Container Vessels.

Shanghai Puhai (Hong Kong) is a subsidiary of the Company. The Vendors are wholly-owned subsidiaries of CSDC. CSDC is in turn owned as to approximately 46.36% by the controlling shareholder of the Company, China Shipping. As the Vendors are associates of the controlling shareholder of the Company, therefore, the Vendors are connected persons of the Company and the Acquisition constitutes a connected transaction of the Company under the Listing Rules.

On 9 July 2007, Shanghai Puhai Shipping Co., Ltd., a subsidiary of the Company, entered into 3 sales and purchase agreements with CSDC in respect of the acquisition of three container vessels at an aggregate consideration of RMB28,000,000 (equivalent to approximately HK$28,865,979 at that time). As CSDC is an associate of the controlling shareholder of the Company, therefore, CSDC is a connected person of the Company and the previous acquisition constituted a connected transaction of the Company under the Listing Rules. The previous acquisition was exempted from the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules. Pursuant to Rule 14A.25 of the Listing Rules, the previous connected transaction described above has been aggregated with the Acquisition. The aggregate consideration payable for the previous acquisition and the Acquisition is more than HK$1,000,000 and each of the applicable percentage ratios (other than the profits ratio) is more than 0.1% but less than 2.5%. Under Rule 14A.32 of the Listing Rules, the Acquisition is therefore exempted from the independent shareholders’ approval requirements, but is 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”	the acquisition of the Container Vessels by Shanghai Puhai (Hong
	Kong) from the Vendors under the Master Agreement and the
	Acquisition Agreements
“Acquisition Agreements”	the 5 acquisition agreements all dated 27 June 2008 entered into
	between Shanghai Puhai (Hong Kong) and each respective Vendor
	regarding the acquisition of the respective Container Vessels
“associate”	has the meaning ascribed thereto under the Listing Rules
“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

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“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, 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(s)”	has the meaning ascribed thereto under the Listing Rules
“container vessels”	5 second-hand container vessels to be acquired by Shanghai Puhai
	(Hong Kong) under the Master Agreement and the Acquisition
	Agreements, which are “Xiang Xiu”, “Xiang Zhu”, “Xiang Da”,
	“Xiang Xin” and “Xiang Wang”
“controlling shareholder”	has the meaning ascribed thereto under the Listing Rules
“CSDC”	China Shipping Development Company Limited (中海發展股份
	有限公司), a limited liability company incorporated in the PRC
	whose H shares and A shares are listed on the Stock Exchange and
	the Shanghai Stock Exchange respectively, and in which China
	Shipping has an approximately 46.36% shareholding interest
“Group”	the Company and its subsidiaries
“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
“Master Agreement”	the master acquisition agreement dated 27 June 2008 entered into
	between Shanghai Puhai (Hong Kong) and the Vendors regarding
	the sale and purchase of the Container Vessels
“PRC”	the People’s Republic of China
“RMB”	Renminbi, the lawful currency of the PRC
“Shanghai Puhai (Hong Kong)”	Shanghai Puhai Marine Transportation (Hong Kong) Company
	Limited（上海浦海航運（香港）有限公司）, a limited liability
	company incorporated in Hong Kong, which is a subsidiary of the
	Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“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

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“US$”

United States dollars, the lawful currency of the United States of America

“Vendors”

Xiang Xiu Shipping S.A., Xiang Da Shipping S.A., Xiang Xin Shipping S.A. and Xiang Wang Shipping S.A., which are all wholly-owned subsidiaries of CSDC incorporated in the Republic of Panama

By order of the Board of China Shipping Container lines Company limited li Shaode Chairman

Shanghai, the People’s Republic of China 30 June 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. Yao Zuozhi and Mr. Xu Hui, being non-executive 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 rates adopted in this announcement for illustration purposes only are HK$1.00 = RMB0.87964 and US$1.00 = RMB7.00.

• 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”.

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