COSCO SHIPPING Development Co., Ltd. — Interim / Quarterly Report 2011

Oct 26, 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)

2011 THIRD QUARTERLY REPORT

In accordance with the applicable rules of the Shanghai Stock Exchange of the People’s Republic of China (“ PRC ”) (being the stock exchange on which the A shares of China Shipping Container Lines Company Limited (the “ Company ”) are listed), the quarterly report (“ Quarterly Report ”) of the Company and its subsidiaries (together referred to as the “ Group ”) for the third quarter of 2011 (“ Reporting Period ”) will be published on the Shanghai Stock Exchange on 27 October 2011. The financial information set out in the Quarterly Report was prepared in accordance with the Generally Accepted Accounting Principles of the PRC.

This announcement is made pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

§1 IMPORTANT NOTICES

• 1.1 The board of directors, the supervisory committee, the directors, the supervisors and senior management of the Company warrant that there are no false records or misleading statements contained in or material omissions from this report; and severally and jointly accept responsibility for the truthfulness, accuracy and completeness of the contents in this report.

• 1.2 All members of the board of directors of the Company attended the board of directors meeting.

• 1.3 The third quarterly financial statements of the Company have not been audited.

• 1.4 Mr. Li Shaode, Chairman, the person-in-charge of the Company, Mr. Huang Xiaowen, managing director, Mr. Liu Chong, the person overseeing the accounting operations, and Mr. Zhou Xinmin, the person-in-charge of the accounting department (chief accountant) have declared and warranted the truthfulness and completeness of the financial statements contained in this Quarterly Report.

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§2 BASIC INFORMATION OF THE COMPANY

2.1 Principal accounting data and financial indicators

			Currency: RMB
			Increase/decrease
			at the end of the
			Reporting Period
	As at	As at	as compared
	the end of the	the end of	with the end of
	Reporting Period	previous year	previous year
			(%)
Total assets_(RMB)_	48,337,888,394.24	49,016,125,287.20	-1.38
Owner’s equity
(or equity holders’ equity)
(RMB)	27,237,834,279.24	29,184,938,540.38	-6.67
Net assets per share
attributable to
equity holders
of the Company
(RMB/share)	2.33	2.50	-6.67
		From beginning
		of the year to
		end of the	Increase/decrease
		Reporting	as compared with
		Period (January	the corresponding
		to September)	period of last year
			(%)
Net cash flow from operating
activities_(RMB)_		-1,267,737,980.67	-130.10
Net cash flow per share
from operating activities
(RMB/share)		-0.11	-130.10

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				Increase/decrease
		From beginning		during the
		of	the year to	Reporting
			end of the	Period as
	Reporting Period		Reporting	compared with
	(July to	Period (January		the corresponding
	September)	to September)		period of last year
				(%)
Net profit attributable to
equity holders of the
Company_(RMB)_	-951,229,495.92	-1,581,568,828.62		-144.16
Basic earnings per share
(RMB/share)	-0.0814		-0.1354	-144.16
Basic earnings per share,
excluding extraordinary
gains or losses
(RMB/share)	-0.0821		-0.1407	-146.68
Diluted earnings per share
(RMB/share)	-0.0814		-0.1354	-144.16
Weighted average return				Decreased 11.29
on net assets_(%)_	-3.42		-5.61	percentage points
Weighted average return
on net assets, excluding
extraordinary gains or				Decreased 10.96
losses_(%)_	-3.45		-5.83	percentage points
Excluding extraordinary gains	or losses items and amounts:

	Unit: Yuan Currency: RMB
	Amount from
	the beginning
	of the year
	to the end of the
	Reporting Period
	(January to
Item	September)
Gain/loss from disposal of non-current assets	39,273,426.64
Government grants recognized in the income statement for the period
(exclusive of those that are closely related to the operation of	the
Company and received in a certain amount or fixed quantity according
to the State standards)	25,391,926.01
Gain/loss from external entrusted loans	395,196.75
Other non-operating income/expenses excluding the items above	1,061,688.79
Impact of income tax	-2,629,297.56
Impact of gains or losses of minority interest (after tax)	-1,351,368.59
Total	62,141,572.04

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2.2 Total number of equity holders at the end of the Reporting Period and top 10 equity holders of the Company who are not subject to trading moratorium

Unit: share

Total number of equity holders at the end of the Reporting Period_(household)_	Total number of equity holders at the end of the Reporting Period_(household)_	452,042
Top 10 equity holders of the Company who are not subject to trading moratorium
	Number of shares
	not subject
	to trading
	moratorium held
	at the end of the
Name of equity holders (in full)	Reporting Period	Type
China Shipping (Group) Company	5,361,837,500	A share
HKSCC NOMINEES LIMITED	3,727,779,141	H share
China Life Insurance (Group) Company –	53,508,720	A share
Traditional – Ordinary Insurance Products
中國人壽保險（集團）公司－傳統－
普通保險產品
China Life Insurance Company Limited –	48,898,214	A share
Dividend – Individual Dividend – 005L – FH002
Shanghai
中國人壽保險股份有限公司－分紅－
個人分紅－005L－FH002滬
Bank of China – Harvest Shanghai Shenzhen	12,921,410	A share
300 Index Securities Investment Fund
National Social Security Fund 102 Portfolio	10,948,700	A share
全國社保基金一零二組合
Industrial & Commercial Bank of China Limited	9,000,000	A share
– China AMC CSI 300 Index Fund
中國工商銀行股份有限公司－華夏滬深
300指數證券投資基金
Tangshan Fangxin Investment Co., Ltd.	7,135,865	A share
唐山方信投資有限責任公司
China Construction Bank – SSE180 Index	5,473,723	A share
Securities Investment Fund
中國建設銀行－上證180交易型開放式
指數證券投資基金
Northeast Securities – CCB – Northeast	5,000,000	A share
Securities No.3 Thematic Collective Assets
Management Plan
東北證券－建行－東北證券3號主題
投資集合資產管理計劃

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§3 SIGNIFICANT EVENTS

• 3.1 Particulars of material changes in major accounting items and financial indicators of the Company and reasons

• √ Applicable Not Applicable

• 1) The decrease in money capital by 40.44% at the end of the Reporting Period as compared with the beginning of the Reporting Period was mainly due to the increase in the cash outflows from operating activities during the current period as compared with the corresponding period of last year;

• 2) The increase in trade receivables by 39.57% at the end of the Reporting Period as compared with the beginning of the Reporting Period was mainly due to unsettlement of major accounts during the current period;

• 3) The decrease in interest receivables by 59.19% at the end of the Reporting Period as compared with the beginning of the Reporting Period was mainly due to the decrease in money capital during the current period as compared with the corresponding period of last year, resulting in the decrease in interest receivables on bank deposits;

• 4) The increase in inventories by 87.96% at the end of the Reporting Period as compared with the beginning of the Reporting Period was mainly due to the increase in oil price;

• 5) The decrease in receipts in advance by 38.50% at the end of the Reporting Period as compared with the beginning of the Reporting Period was mainly due to the decrease in receipts in advance from customers;

• 6) The increase in loss of retained earnings by 977.02% at the end of the Reporting Period as compared with the beginning of the Reporting Period was mainly due to the dramatic decrease in operating profit of the Company during the current period;

• 7) The decrease in currency translation differences by 41.76% at the end of the Reporting Period as compared with the beginning of the Reporting Period was mainly due to the decrease in foreign exchange rates during the current period;

• 8) The decrease in finance cost by 94.05% during the Reporting Period as compared with the corresponding period of last year was mainly due to the decrease in foreign exchange losses;

• 9) The decrease in losses from impairment of assets by 43.96% during the Reporting Period as compared with the corresponding period of last year was mainly due to the decrease in the degree of increase/decrease in the balance of trade receivables as compared with the corresponding period of last year;

• 10) The decrease in investment income by 60.61% during the Reporting Period as compared with the corresponding period of last year was due to the gains from disposal of equity interest according to the pricing under the share transfer agreement through the share swap of Port of Yantai undertaken by China Shipping Terminal Development Co., Ltd. (a subsidiary of the Company) by exchanging its 35% equity interest in DP World Yantai Company Ltd. for a 3.9% equity interest in Yantai Port Co., Ltd. (煙台港股份有限公 司) during the corresponding period of last year, while no such similar income was generated during the Reporting Period;

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• 11) The increase in loss of operating profit by 146.56% during the Reporting Period as compared with the beginning of the Reporting Period was mainly due to the significant decrease in operating profit of the Company during the current period;

• 12) The increase in non-operating income by 94.23% during the Reporting Period as compared with the corresponding period of last year was mainly due to the increase in income from disposal of containers by the Company during the Reporting Period;

• 13) The decrease in non-operating expenses by 47.27% during the Reporting Period as compared with the corresponding period of last year was mainly due to the decrease in loss from disposal of non-current assets by the Company during the Reporting Period;

• 14) The decrease in total profit by 144.21% during the Reporting Period as compared with the corresponding period of last year was mainly due to the significant decrease in operating profit of the Company;

• 15) The decrease in net profit by 146.18% during the Reporting Period as compared with the corresponding period of last year was mainly due to the significant decrease in operating profit of the Company;

• 16) The decrease in net profit attributable to equity holders of the parent company by 147.56% during the Reporting Period as compared with the corresponding period of last year was mainly due to the significant decrease in operating profit of the Company;

• 17) The increase in gains or losses of minority shareholders by 42.89% during the Reporting Period as compared with the corresponding period of last year was mainly due to the increase in profit of share participation investment unit of minority shareholders;

• 18) The decrease in other total comprehensive income by 140.71% during the Reporting Period as compared with the corresponding period of last year was mainly due to the changes in currency translation differences;

• 19) The decrease in total comprehensive income by 159.78% during the Reporting Period as compared with the corresponding period of last year was mainly due to the significant decrease in operating profit of the Company;

• 20) The decrease in total comprehensive income attributable to equity holders of the parent company by 161.32% during the Reporting Period as compared with the corresponding period of last year was mainly due to the significant decrease in operating profit of the Company;

• 21) The increase in total comprehensive income attributable to minority shareholders by 42.89% during the Reporting Period as compared with the corresponding period of last year was mainly due to the increase in profit of share participation investment unit of minority shareholders;

• 22) The increase in tax refunds received by 276.45% during the Reporting Period as compared with the corresponding period of last year was mainly due to the increase in local tax refunds during the Reporting Period;

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• 23) The decrease in net cash flows from operating activities during the Reporting Period by 130.10% as compared with the corresponding period of last year was mainly due to the decrease in cash revenue and increase in operating expenses during the Reporting Period, resulting in net cash outflows from operating activities;

• 24) The increase in cash proceeds from investment income by 97.46% during the Reporting Period as compared with the corresponding period of last year was mainly due to the dividends received from our investees Yingkou New Century Terminal Co., Ltd. (營口新 世紀碼頭有限公司) and Tianjin Five Continents International Container Terminal Co., Ltd.;

• 25) The decrease in net cash from disposal of fixed assets, intangible assets and other longterm assets by 51.59% during the Reporting Period as compared with the corresponding period of last year was mainly due to the decrease in cash from disposal of fixed assets during the Reporting Period;

• 26) The increase in cash paid for acquisition of fixed assets, intangible assets and other long-term assets by 107.01% during the Reporting Period as compared with the corresponding period of last year was mainly due to the payment for large vessel construction during the Reporting Period;

• 27) The increase in subtotal cash outflows from investment activities by 98.98% during the Reporting Period as compared with the corresponding period of last year was mainly due to the increase in vessel construction and purchase of fixed assets by the Company, which led to the increase in cash outflows from investment activities;

• 28) The decrease in net cash flows from investing activities during the Reporting Period by 105.14% as compared with the corresponding period of last year was mainly due to the increase in vessel construction and purchase of fixed assets by the Company during the Reporting Period, which led to net cash outflows from investing activities;

• 29) The increase in cash inflows from investment by 100% during the Reporting Period as compared with the corresponding period of last year was mainly due to the amount of investment paid by minority shareholders for capital increase of Lianyungang New Oriental Container Terminal Co., Ltd. during the Reporting Period;

• 30) The decrease in cash received from borrowings by 41.40% during the Reporting Period as compared with the corresponding period of last year was mainly due to the decrease in bank borrowings during the Reporting Period as compared with the corresponding period of last year;

• 31) The decrease in the subtotal cash inflows from financing activities by 39.95% during the Reporting Period as compared with the corresponding period of last year was mainly due to the decrease in bank borrowings during the Reporting Period as compared with the corresponding period of last year;

• 32) The decrease in cash paid for debts by 56.67% during the Reporting Period as compared with the corresponding period of last year was mainly due to the decrease in loan repayments during the Reporting Period as compared with the corresponding period of last year;

• 33) The increase in cash paid for dividends, profit distribution or interests during the Reporting Period by 38.05% as compared with the corresponding period of last year was mainly due to the increase in dividends paid by China Shipping Terminal Development Co., Ltd. to the investors and the interests due during the Reporting Period;

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• 34) The increase in dividends and profit paid to minority shareholders by subsidiaries by 100.35% during the Reporting Period as compared with the corresponding period of last year was mainly due to the dividends paid to the investors by Shanghai Container Terminals Limited and Lianyungang Xin San Li Container Terminals Limited （連雲港 鑫三利集裝箱碼頭公司）during the Reporting Period;

• 35) The decrease in subtotal cash outflows from financing activities during the Reporting Period as compared with the corresponding period of last year by 47.37% was mainly due to the decrease in repayment of loans during the Reporting Period as compared with the corresponding period of last year;

• 36) The increase in impact on cash caused by changes in foreign exchange rates by 831.35% during the Reporting Period as compared with the corresponding period of last year was mainly due to the decrease in foreign exchange rates during the Reporting Period;

• 37) The decrease in increase of cash and cash equivalents by 230.94% at the end of the Reporting Period as compared with the corresponding period of last year was mainly due to the increase in vessel construction and purchase of fixed assets as well as the decrease in cash inflows from operating activities and borrowings during the current period;

• 38) The decrease in the balance of cash and cash equivalents by 37.98% at the end of the Reporting Period as compared with the corresponding period of last year was mainly due to the increase in operating outflows, vessel construction and purchase of fixed assets as well as the decrease in cash inflows from operating activities and borrowings during the current period.

• 3.2 Analysis and explanation on the progress of significant events and their impact and resolutions

Applicable √ Not Applicable

• 3.3 Performance of undertakings given by the Company, the shareholders and the actual controlling person

• √ Applicable Not Applicable

Non-competition undertakings

On 29 August 2007, China Shipping (Group) Company (“ China Shipping ”), the controlling shareholder of the Company made non-competition undertakings to the Company that:

1. it shall, or shall procure the subsidiaries controlled by it, to take effective steps not to engage in or participate in any business which may compete with the container shipping business or related businesses currently carried on by the Company or any subsidiaries controlled by the Company, nor to hold any right or interest in the said businesses. If there is an opportunity for China Shipping or any subsidiaries controlled by it to participate in any container shipping business or related businesses currently principally engaged in by the Company or any subsidiaries controlled by it, or in any project in relation to the businesses in which the Company or any subsidiaries controlled by it shall in the future principally engage, China Shipping shall, or shall procure the subsidiaries controlled by it, to grant to the Company or any subsidiaries controlled by it the priority to participate in the said business or project.

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1. China Shipping will fully indemnify the Company and/or the subsidiaries controlled by the Company against all losses, damage and costs incurred by the Company as a result of any breach of the undertakings by China Shipping and/or the subsidiaries controlled by it set forth above.

During the Reporting Period, China Shipping did not breach the undertakings as stated above.

• 3.4 Disclosure as to, and reason for, the warning in respect of forecast of a probable loss in respect of the accumulated net profit from the beginning of next year to the end of the next Reporting Period or any significant changes in profit as compared with that of the corresponding period of last year

Applicable √ Not applicable

3.5 Implementation of cash dividends distribution policy during the Reporting Period

There was no cash dividends distribution during the Reporting Period.

CAUTION STATEMENT

The board of directors wishes to remind investors that the above extracts from the Quarterly Report are prepared on the basis of the Group’s internal information and management accounts and have not been reviewed or audited by the auditors. Investors are cautioned against market risks and should not rely unduly on the extracts from the Quarterly Report stated above. In addition, investors are advised to exercise caution when dealing in the shares of the Company.

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

Shanghai, the PRC 26 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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