COSCO SHIPPING Development Co., Ltd. — Capital/Financing Update 2020

Oct 12, 2020

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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中遠海運發展股份有限公司 COSCO SHIPPING Development Co., Ltd.*

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

(Stock Code: 02866)

OVERSEAS REGULATORY ANNOUNCEMENT

This announcement is made pursuant to Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

The “Announcement of COSCO SHIPPING Development Co., Ltd. on the Impact of Dilution on Current Returns of the Major Asset Restructuring and the Measures of the Company” as published by COSCO SHIPPING Development Co., Ltd. in Chinese on the website of the Shanghai Stock Exchange (www.sse.com.cn) on 12 October 2020 is enclosed hereto as overseas regulatory announcement in Chinese and English for your reference only. In case of any inconsistencies between the Chinese version and the English translation, the Chinese version shall prevail.

By order of the Board COSCO SHIPPING Development Co., Ltd. Cai Lei Joint Company Secretary

12 October 2020

As at the date of this announcement, the Board comprises Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui, being executive Directors, Mr. Feng Boming, Mr. Huang Jian and Mr. Liang Yanfeng, being non-executive Directors, and Mr. Cai Hongping, Ms. Hai Chi Yuet, Mr. Graeme Jack, Mr. Lu Jianzhong and Ms. Zhang Weihua, being independent non-executive Directors.

• The Company is a registered non-Hong Kong company as defined under the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) and it is registered under its Chinese name and under the English name “COSCO SHIPPING Development Co., Ltd.”.

Stock Abbreviation: COSCO SHIPPING Development Stock Code: 601866 Announcement No.: Lin 2020-064

COSCO SHIPPING DEVELOPMENT CO., LTD.

ANNOUNCEMENT ON THE IMPACT OF DILUTION ON CURRENT RETURNS OF THE MAJOR ASSET RESTRUCTURING AND THE MEASURES OF THE COMPANY

The board of directors and all directors of the Company warrant that the contents of this announcement do not contain any false information, misleading statement or material omission, and that they shall jointly and severally accept liabilities for the truthfulness, accuracy and completeness of the contents of this announcement.

In order to revitalize unproductive assets to optimize the assets structure, and to protect the interests of all shareholders in particular those of small and medium investors, COSCO SHIPPING Development Co., Ltd. (hereinafter referred to as “COSCO Development”, “Listed Company” or “Company”) intends to sell an aggregate of 350,000,000 A Shares and 295,010,617 H Shares of China International Marine Containers (Group) Co., Ltd. (hereinafter referred to as “CIMC Group”) held by it through , its indirect wholly-owned subsidiaries, Long Honour Investments Limited and COSCO Container Industries Limited, such shares accounting for approximately 17.94% of the total share capital of CIMC Group (hereinafter referred to as “this Transaction”). While this Transaction constitutes a material asset restructuring, it does not constitute a listing through restructuring.

In accordance with, the Opinions of the General Office of the State Council on Further Strengthening the Protection of the Legitimate Rights and Interests of Minority Investors in the Capital Market (Guo Ban Fa [2013] No. 110) (《國務院辦公廳關於進 一步加強資本市場中小投資者合法權益保護工作的意見》（國辦發 [2013]110 號）), the Several Opinions of the State Council on Further Promoting the Healthy Development of the Capital Market (Guo Fa [2014] No. 17) (《國務院關於進一步促 進資本市場健康發展的若干意見》（國發[2014]17號）), and the Guidance Opinion on Matters Pertaining to Dilution of Return for the Current Period Resulting from Initial Offering and Refinancing or Material Asset Restructuring (CSRC Announcement [2015] No. 31) (《關於首發及再融資、重大資產重組攤薄即期回報有關事項的指導意見》 （證監會公告 [2015]31號）) and other regulations and regulatory documents, in order

to protect the interests of the Company and its shareholders, the Company has analyzed the impact of the Transaction on the immediate return dilution, which is explained as follows:

I. Impact of the Transaction on the Earnings Per Share of the Company

According to the financial reports of the Listed Company for 2019 and 2018, which have been audited by ShineWing Certified Public Accountants (Special General Partnership) (信永中和會計師事務所（特殊普通合夥） ) and unqualified Audit Reports (XYZH/2020BJA130001, XYZH/2019BJA130296) thereon have been issued, the unaudited financial reports of the Listed Company for the first six months of 2020 and the Review Report of COSCO SHIPPING Development Co., Ltd. (January to June 2020 and Year 2019) (XYZH/2020BJA131138) reviewed and issued by ShineWing Certified Public Accountants (Special General Partnership), the main financial indicators of the Listed Company before and after the Transaction are shown in the following table:

Unit: RMB 0’000

Items	30 June 2020/For the first six months of 2020	30 June 2020/For the first six months of 2020	30 June 2020/For the first six months of 2020	31 December 2019/2019	31 December 2019/2019	31 December 2019/2019
	Before the Transaction	After the Transaction (Pro Forma)	Changes	Before the Transaction	After the Transaction (Pro Forma)	Changes
Total assets	15,156,851.42	15,151,537.63	-5,313.78	14,449,411.78	14,426,787.89	-22,623.90
Total liabilities	12,755,959.28	12,730,227.12	-25,732.16	12,028,639.94	12,001,571.03	-27,068.91
Gearing ratio	84.16%	84.02%	-0.14%	83.25%	83.19%	-0.06%
Total equity attributable to owners of the parent	2,400,892.14	2,421,310.51	20,418.38	2,420,771.85	2,425,216.86	4,445.01
Total operating revenue	784,115.49	784,115.49	-	1,422,911.25	1,422,911.25	-

Items	30 June 2020/For the first six months of 2020	30 June 2020/For the first six months of 2020	30 June 2020/For the first six months of 2020	31 December 2019/2019	31 December 2019/2019	31 December 2019/2019
	Before the Transaction	After the Transaction (Pro Forma)	Changes	Before the Transaction	After the Transaction (Pro Forma)	Changes
Operating profit (Loss is listed with “-”)	96,124.07	101,926.67	5,802.60	196,691.60	173,717.66	-22,973.94
Total profit (Loss is listed with “- ”)	95,231.14	101,033.74	5,802.60	194,287.56	171,313.62	-22,973.94
Net profit (Net loss is listed with “- ”)	85,331.57	89,408.26	4,076.69	174,312.65	149,739.43	-24,573.22
Net profit attributable to shareholders of the parent (Net loss is listed with “- ”)	85,331.57	89,408.26	4,076.69	174,312.65	149,739.43	-24,573.22
Basic earnings per share (RMB per share)	0.0593	0.0621	0.0028	0.1283	0.1102	-0.0181
Diluted earnings per share (RMB per share)	0.0593	0.0621	0.0028	0.1283	0.1102	-0.0181

Based on the analysis in the above table, the basic earnings per share and diluted earnings per share for 2019 were both RMB 0.1283 per share before the completion of the Transaction, and were both RMB 0.1102 per share after the completion of the Transaction, representing a slight decrease of RMB 0.0181 per share; and the basic earnings per share and diluted earnings per share for the first six months of 2020 were both RMB 0.0593 per share before the completion of the Transaction, and were both RMB 0.0621 per share after the completion of the Transaction, representing a slight increase of RMB 0.0028 per share.

The Transaction will help the Listed Company to improve its financial situation, revitalize the existing assets, focus on its principal businesses and align with its development strategies, thereby safeguarding the interests of shareholders of the Listed Company.

II. Measures taken by the Company for immediate dilution of return under the Transaction

In order to prevent the risk of dilution of the Company’s current returns which may be caused by this Transaction, the Company will take the following remedial measures:

i. Focus on principal businesses and improve sustainable profitability

The sale of shares of CIMC by the Company is made after the Company comprehensively considered its development plan, financial status, asset structure and other factors. After the Transaction, the Company will further optimize its business mix, focus on its own principal businesses, continue to build an industrial cluster centered on shipping and related industrial leasing, container manufacturing, investment and related services to enhance the Company's sustainable profitability.

ii. Continuously improve corporate governance to provide institutional guarantees for development of the Company

The Company has established and improved a corporate governance structure, standardized operations, and has a complete independent operation mechanism for the shareholders’ general meeting, board of directors, supervisory committee and management. It has set up a highly efficient and capable organization and functional structure that are compatible with the Company’s production and operation and can operate independently. The Company has formulated corresponding duties and responsibilities, and the responsibilities of each functional units are clear and restricted mutually. The Company’s

organizational structure is reasonable and effective. There are clearly distinguished, restricted mutually, and operated smoothly in powers and responsibilities between the shareholders’ general meeting, the board of directors, the supervisory committee, and the management, forming a relatively reasonable, complete and effective corporate governance and management framework. The Company will continue to strictly abide by the Company Law, the Securities Law and other relevant laws, regulations, and regulatory documents, continuously improve the governance structure, effectively protect the rights and interests of investors, especially small and medium-sized investors, and thus provide institutional guarantees for development of the Company.

iii. Strictly implement profit distribution policies and strength investor return mechanisms

The Company will strictly implement the Company Law, the Notice on Further Implementing Issues Related to Cash Dividends of Listed Companies (《關於 進一步落實上市公司現金分紅有關事項的通知》) and the Guidelines for the Supervision of Listed Companies No. 3 - Cash Dividends of Listed Companies (《上市公司監管指引第3號－上市公司現金分紅》) and other relevant laws, regulations and regulatory documents, and follow the provisions on profit distribution in the Articles of Association, continue to implement a sustainable, stable and active profit distribution policy, further improve the profit distribution system, and actively promote profits distribution to shareholders when the conditions for profit distribution are met, increase the implementation of continuous, stable, and scientific returns to investors, so as to effectively protect the legitimate rights and interests of public investors.

III. The undertakings of the Company’s controlling shareholder in relation to the remedial measures for immediate dilution of return under the Transaction

In order to prevent the risk of dilution of current returns and safeguard the Company's interests and the legal rights and interests of investors, each of immediate and intermediate controlling shareholders of the Company, China Shipping Group Company Limited and China COSCO SHIPPING Corporation Limited respectively, undertake the following:

"1. The company will not ultra vires interfere with the operation and management activities of COSCO Shipping Development, and will not infringe on the interests of COSCO Shipping Development.

1. The company effectively performs the relevant return replenishment measures formulated by the Company and this undertaking. If this undertaking is breached or this undertaking is refused to be perform, which has caused losses to the Company or investors, the company agrees to assume the corresponding legal liability in accordance with laws, regulations and relevant provisions of the securities regulatory authority.

2. From the date of the issue of this undertaking to the completion of this major asset reorganization of the Company, if the China Securities Regulatory Commission (hereinafter referred to as the “CSRC”) makes other new regulatory requirements on return replenishment measures and its undertakings, and when the above undertakings cannot meet the requirements of the CSRC, the company will then undertake to issue a supplementary undertaking in accordance with recent regulations of the CSRC."

IV. The undertakings of the directors and senior management of the Company in relation to the remedial measures for immediate dilution of return under the Transaction

In order to prevent the risk of dilution of current returns and safeguard the interests of the Company and the legal rights and interests of investors, the directors and senior management of the Company have undertaken as follows:

“1. I undertake not to transfer benefits to other units or individuals without replenishment or on unfair terms, and will not harm the Company's interests by other means.

1. I undertake to restrain my duty consumption behavior.

2. I undertake not to use the Company's assets to engage in investment and consumption activities that are not related to my performance of duties.

3. I undertake that the remuneration system formulated by the board of directors or the remuneration and appraisal committee is linked to the implementation of the Company's return replenishment measures.

4. I undertake that the exercise conditions of the Company's equity incentives are linked to the Company's implementation of the replenishment measures.

5. From the date of the issue of this undertaking to the completion of the Transaction of the Company, if the CSRC makes other new regulatory requirements on the return replenishment measures and its undertakings, and the above undertakings cannot meet the requirements of the CSR, I undertake that I will then issue a supplementary undertaking in accordance with recent regulations of the CSRC.

6. I undertake to effectively perform the return replenishment measures formulated by the Company and the undertakings made for such return replenishment measures. If these undertakings are breached and cause losses to the Company or investors, I am willing to assume the replenishment responsibility to the Company or investors by law."

Announcement of the captioned matters is hereby given.

Board of Directors COSCO SHIPPING Development Co., Ltd 12 October 2020