COSCO SHIPPING Development Co., Ltd. — Capital/Financing Update 2011

Oct 20, 2011

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim 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: 02866)

CONNECTED TRANSACTION ACQUISITION OF JOINT VENTURE COMPANY

YS International is a sino-foreign joint venture incorporated in the PRC and owned as to 75% by the Company and 25% by CS Logistics (Overseas).

The Board is pleased to announce that on 20 October 2011, the Company entered into the Equity Transfer Agreement with CS Logistics (Overseas), pursuant to which the Company agreed to acquire 25% equity interest in YS International from CS Logistics (Overseas). The aggregate consideration payable for the said acquisition under the Equity Transfer Agreement is RMB33,879,708.96. Upon the completion of the Equity Transfer Agreement, the Joint Venture Agreement will be terminated as the equity interest in YS International owned by the Company will be increased from its present 75% to 100%, and therefore YS International will become a wholly-owned subsidiary of the Company.

CS Logistics (Overseas) is a wholly-owned subsidiary of China Shipping, the controlling shareholder of the Company, and therefore is a connected person of the Company under Rule 14A.11(4) of the Listing Rules. As such, the Company’s acquisition of 25% equity interest in YS International from CS Logistics (Overseas) under the Equity Transfer Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

Since the relevant applicable percentage ratios set out in the Listing Rules for the Company’s acquisition of 25% equity interest in YS International from CS Logistics (Overseas) under the Equity Transfer Agreement is more than 0.1% but less than 5%, the said acquisition under the Equity Transfer Agreement is subject to the reporting and announcement requirements and is exempt from the independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

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EQUITY TRANSFER AGREEMENT

Date:

20 October 2011

Parties:

(a) the Company (as purchaser); and

(b) CS Logistics (Overseas) (as vendor).

Equity Interests to be Acquired:

CS Logistics (Overseas) shall sell, and the Company shall purchase, 25% equity interest in YS International owned and held by CS Logistics (Overseas).

Upon the completion of the Equity Transfer Agreement, the Joint Venture Agreement will be terminated as the equity interest in YS International owned by the Company will be increased from its present 75% to 100%, and therefore YS International will become a whollyowned subsidiary of the Company.

Consideration:

The aggregate consideration payable for the said acquisition under the Equity Transfer Agreement is RMB33,879,708.96, which shall be payable by the Company under the following manner: (a) the deposit in the amount of RMB10,000,000 paid by the Company to Shanghai United Assets and Equity Exchange shall be returned directly to the Company by Shanghai United Assets and Equity Exchange within 5 working days upon approval of the Equity Transfer Agreement by Shanghai United Assets and Equity Exchange; (b) the aggregate consideration payable under the Equity Transfer Agreement of RMB33,879,708.96 shall be paid in one lump sum by the Company to the designated account of Shanghai United Assets and Equity Exchange within 5 working days upon approvals of the commerce and the foreign exchange administration departments.

The 25% equity interest in YS International was acquired by the Company through an open listing process and a subsequent commercial negotiation conducted through the Shanghai United Assets and Equity Exchange. The Equity Transfer Agreement was negotiated and entered into on an arm’s length basis and on normal commercial terms. The consideration under the Equity Transfer Agreement was determined with reference to YS International’s (a) total asset value and net asset value; (b) financial position; (c) development prospects; and (d) synergy effect on the Company. The said aggregate consideration will be funded from the internal resources of the Company. The original cost of CS Logistics (Overseas) for acquiring 25% equity interest in YS International is RMB29,750,000.

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Increase of Capital Contribution:

The Company agreed to increase its capital contribution in the amount of RMB120,000,000 to YS International by way of cash in proportion to its shareholdings within 20 working days upon the signing of the Equity Transfer Agreement. The Company intends to use its internal resources to satisfy the said capital contribution to YS International.

Completion:

The Equity Transfer Agreement shall be completed upon satisfaction of the following condition precedents:

• (a) the respective parties having duly signed the Equity Transfer Agreement;

• (b) Shanghai United Assets and Equity Exchange having duly reviewed and stamped the Equity Transfer Agreement and issued the equity transaction certificate;

• (c) the internal decision-making body of the Company and CS Logistics (Overseas) having duly approved the Equity Transfer Agreement; and

• (d) the foreign investment approval authority having duly approved the Equity Transfer Agreement.

REASONS FOR AND BENEFITS OF ENTERING INTO THE EQUITY TRANSFER AGREEMENT

The reasons for and benefits of the said acquisition under the Equity Transfer Agreement are to strengthen the management, unify the operation, integrate and optimise the resource allocation and reduce connected transactions.

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

INFORMATION ON THE PARTIES TO THE EQUITY TRANSFER AGREEMENT

The Company

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

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CS Logistics (Overseas)

The CS Logistics (Overseas) is principally engaged in logistics, storage finance lease and project investment and development.

INFORMATION ON YS INTERNATIONAL

YS International is principally engaged in pile-up, transfer, distribution, assembly and dismantlement of containers, precooling of frozen containers, remodification, repair, renewing and cleaning of containers, relevant services for loading and unloading of goods, ordinary process and package and consultation, the leasing of container and warehouse.

Based on the audited financial statements of YS International, which were prepared in accordance with the PRC GAAP, its audited net profit/(loss) before and after taxation and extraordinary items attributable to the 25% equity interest to be acquired in YS International for the two financial years ended 31 December 2009 and 2010, respectively, was as follows:

	For the year ended	For the year ended
	31 December 2009	31 December 2010
	RMB	RMB
Audited net profit/(loss) before taxation and	(448,854.6350)	(2,541,310.5050)
extraordinary items of YS International
attributable to the 25% equity interest
to be acquired in YS International
Audited net profit/(loss) after taxation and	551,145.2575	(2,571,198.0525)
extraordinary items of YS International
attributable to the 25% equity interest to
be acquired in YS International

The audited total asset value and net asset value of YS International, based on the PRC GAAP, as at 31 December 2010 were RMB224,878,280.20 and RMB106,310,612.97, respectively.

IMPLICATIONS UNDER THE LISTING RULES

CS Logistics (Overseas) is a wholly-owned subsidiary of China Shipping, the controlling shareholder of the Company, and therefore is a connected person of the Company under Rule 14A.11(4) of the Listing Rules. As such, the Company’s acquisition of 25% equity interest in YS International from CS Logistics (Overseas) under the Equity Transfer Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

Since the relevant applicable percentage ratios set out in the Listing Rules for the Company’s acquisition of 25% equity interest in YS International from CS Logistics (Overseas) under the Equity Transfer Agreement is more than 0.1% but less than 5%, the said acquisition under the Equity Transfer Agreement is subject to the reporting and announcement requirements and is exempted from the independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

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In view of their relationship with China Shipping and their respective material interests in the transactions contemplated under Equity Transfer Agreement, Mr. Li Shaode, Mr. Zhang Guofa and Mr. Huang Xiaowen (being executive Directors), Mr. Zhang Jianhua, Mr. Lin Jianqing, Mr. Wang Daxiong, Mr. Zhang Rongbiao and Mr. Xu Hui (being non-executive Directors) have abstained from voting on the Board’s resolution in relation to the transactions contemplated under the Equity Transfer Agreement.

DEFINITIONS

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

“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 47.03% 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
“CS Logistics (Overseas)”	China Shipping Logistics (Overseas) Co., Ltd. (中海物流（海
	外）有限公司), a limited liability company incorporated in Hong
	Kong and a wholly-owned subsidiary of China Shipping
“Directors”	the directors of the Company
“Equity Transfer	the equity transfer agreement entered into between the Company
Agreement”	and CS Logistics (Overseas) on 20 October 2011
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Joint Venture Agreement”	a joint venture agreement entered into between the Company
	and CS Logistics (Overseas) dated 10 June 2010 regarding YS
	International as currently in force
“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
“PRC GAAP”	the Generally Accepted Accounting Principles of the PRC

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Renminbi, the lawful currency of the PRC

“RMB”

“Stock Exchange”

The Stock Exchange of Hong Kong Limited

“YS International”

Shanghai China Shipping YangShan International Container LandWarehousing Co., Ltd. (上海中海洋山國際集裝箱儲運有限公司), a sino-foreign joint venture incorporated in the PRC

By Order of the Board China Shipping Container Lines Company Limited Ye Yumang Company Secretary

Shanghai, the PRC 20 October 2011

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. Zhang Jianhua, Mr. Lin Jianqing, Mr. Wang Daxiong, Mr. Zhang Rongbiao and Mr. Xu Hui, being non-executive Directors, and Mr. Shen Kangchen, Mr. Jim Poon (also known as Pan Zhanyuan), Mr. Shen Zhongying, Mr. Wu Daqi and Ms. Zhang Nan, being independent non-executive Directors.

• 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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