Dida Inc. - Interim / Quarterly Report 2012

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CONTENT

Management Discussion and Analysis	2
Report on Review of Interim Financial Information	23
Condensed Consolidated Statement of Comprehensive Income	24
Condensed Consolidated Statement of Financial Position	26
Condensed Consolidated Statement of Changes in Equity	28
Condensed Consolidated Statement of Cash Flows	29
Notes to the Interim Financial Information	30

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

ANALYSIS OF INTERNATIONAL AND DOMESTIC SHIPPING MARKETS DURING THE REPORTING PERIOD

The Group is principally engaged in the cargo shipping business. Cargo shipping mainly consists of the shipment of oil and dry bulk cargoes (primarily coal and iron ore), both domestically along the coastal regions of the PRC, and internationally. Currently, the Group is also developing Liquefied Natural Gas (“LNG”) transportation business.

In the first half of 2012, the growth of the global economy slowed down, the global shipping market continued its downturn since 2011, and every market segments experienced a sustained turndown. However, with the continuous increase of the operating costs, the global shipping industry is in an uncommon situation with operational difficulties.

International bulk shipment had been affected by the serious imbalance between the supply and demand of shipping capacity, and therefore the international dry bulk shipping market experienced a sustained turndown. In the first half of 2012, the Baltic Dry Bulk Freight Rate Index (the “BDI”) averaged at 943 points, representing a drop of 31.3% as compared with the same period last year.

As for domestic coastal bulk shipment, it has been adversely affected by several factors such as sluggish demand for coal, increase of hydropower, increase of imported coal, relative high level of coal inventory and high rates of growth in new shipping capacity, hence the domestic coastal bulk shipment market experienced a sustained downturn in the first half of 2012. The Coastal Bulk Freight Index (“CBFI”) averaged at 1,133 points, representing a drop of 21.5% as compared with the same period last year, and the spot rates of the two important coal shipment routes, namely the one from North China to South China and the other one from North China to East China, both decreased over 30% as compared with the same period last year.

As for international oil shipment, affected by factors such as the slowdown of the Chinese economy, the European debt crisis and geopolitics, the global demand for crude oil slowed down and the international oil prices continued to fluctuate at high levels. On the other hand, the international oil shipment market experienced a sustained downturn as a result of increasing excess of international tanker capacity. The Baltic Dirty Tanker Index (“BDTI”) averaged at 775 points, down 4.3% compared with the same period last year. TheWorld Scale Index (“WS”) for the shipping route from the Middle East to Japan, being one of the freight rate indicators for VLCC, daily average was at 55 points for the first half of 2012, sustaining the similar level as compared with the same period last year.

For domestic coastal oil shipment, the onshore crude oil shipping volume, offshore oil shipping volume and the demand of imported crude oil trans-shipment decreased, and the competition of China coastal refined oil shipment intensified.

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

2. DISCUSSION AND ANALYSIS OF OPERATIONS OF THE GROUP DURING THE REPORTING PERIOD

In the first half of 2012, faced with a severe downturn of the market environment, the Group actively developed market sales and enhanced safety management, made great efforts to further decrease operating costs, improve operating efficiency and adjust the fleet composition. As a result, the Group’s operating system worked normally and smoothly, maintaining an overall sound and steady development.

In the first half of 2012, the shipping volume achieved by the Group was 186.2 billion tonne-nautical miles, representing an increase of approximately 12.9% as compared with the same period last year, and the total turnover derived from shipment (after business tax and surplus, the same below) was approximately RMB5,615 million, representing a decrease of approximately 8.6% as compared with the same period last year. Cost of operations was approximately RMB5,851 million, representing an increase of approximately 11.2% as compared with the same period last year. Loss attributable to owners of the Company was approximately RMB495 million, representing a decrease of approximately 172.4% as compared with the same period last year, and basic loss per share was approximately RMB0.1455.

An analysis of the principal operations in terms of products transported is as follows:

Sub-business or sub-product Oil transportation Coal transportation Iron ore transportation Other dry bulk cargoes transportation Total	Operating Turnover (RMB’000) 2,832,421 1,381,043 1,056,551 344,955 5,614,970	Costs Gross profit margin Increase/ decrease in turnover as compared with the same period in 2011 Increase/ decrease in operating costs as compared with the same period in 2011 Increase/ decrease in operating profit as compared with the same period in 2011 (RMB’000) (%) (%) (%) (%) 2,964,348 -4.7% -14.0% 1.9% -16.3% 1,510,146 -9.3% -25.9% 2.6% -30.3% 950,131 10.1% 59.4% 63.0% -1.9% 426,416 -23.6% 7.6% 44.5% -31.6% 5,851,041 -4.2% -8.6% 11.2% -18.6%

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

DISCUSSION AND ANALYSIS OF OPERATIONS OF THE GROUP DURING THE REPORTING PERIOD (Continued)

An analysis of the principal operations in terms of geographical regions is as follows:

		Increase/
		decrease in
		turnover as
		compared with
		the same
Regions	Turnover	period in 2011
	(RMB’000)	(%)
Domestic transportation	2,409,410	-39.4%
International transportation	3,205,560	48.0%

(1) Shipping business - Oil shipments

In the first half of 2012, the international oil shipping market continued to experience a downturn and competition in the domestic oil shipping market became more intense. Under these circumstances, the Group:

A. persisted to implement the “major clients and great co-operation” strategy, consistently implemented the co-operation strategy with major clients such as PetroChina, CNOOC and Sinopec. In the first half of 2012, the shipping volume and the revenue from cargo shipment of the three oil companies amounted approximately 70% of the oil shipping volume and revenue from oil shipment of the Group;
B. enhanced the marketing exploration striving to consolidate its existing market. In the first half of 2012, the market share taken by the Group in domestic crude oil market and offshore crude oil market decreased slightly, while the operating efficiency in international oil shipping market was better than our expectation in early 2012.

In the first half of 2012, the Group achieved a shipping volume of approximately 99.52 billion tonnenautical miles of oil shipment, representing an increase of approximately 7.8% as compared with the same period in 2011, and turnover achieved was approximately RMB2,832 million, representing a decrease of approximately 14.0% as compared with the same period in 2011. An analysis of the transportation volume and turnover in terms of cargo specie is as follows:

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

DISCUSSION AND ANALYSIS OF OPERATIONS OF THE GROUP DURING THE REPORTING PERIOD (Continued)

(1) Shipping business - Oil shipments (Continued)

Transportation volume by specie

Transportation volume by specie
Domestic Crude oil transportation Refined oil transportation International Crude oil transportation Refined oil transportation Total Turnover by cargo specie Domestic Crude oil transportation Refined oil transportation International Crude oil transportation Refined oil transportation Total	In the first half of 2012	In the first half of 2011 Increase/ decrease (billion tonne nautical miles) (%) 15.59 -46.4% 11.29 -42.1% 4.30 -57.9% 76.75 18.8% 64.77 21.6% 11.98 3.5% 92.34 7.8% In the first half of 2011 Increase/ decrease (RMB million) (%) 1,987 -48.2% 1,618 -50.6% 369 -37.7% 1,307 37.9% 834 51.3% 473 14.2% 3,294 -14.0%
	(billion tonne nautical miles)

	8.35
	6.54	11.29 4.30
	1.81
		76.75
	91.17
	78.77	64.77 11.98
	12.40

	99.52


	In the first half of 2012
	(RMB million)

	1,030
	800	1,618 369
	230

	1,802
	1,262	834 473
	540

	2,832

Turnover by cargo specie

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 5

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

DISCUSSION AND ANALYSIS OF OPERATIONS OF THE GROUP DURING THE REPORTING PERIOD (Continued)

(2) Shipping business - Dry bulk shipments

A. Coal shipment

The Group insisted to focus on thermal coal contracts of affreightment (“COA contracts”) and actively expanded its customer base. The Group has signed domestic thermal coal contract of 43.65 million tons and international coal contract of 7.54 million tons for 2012. The COA rates was obviously higher than the spot market rates, though the total COA contract volume and benchmark rates both decreased as compare with those in 2011. In the first half of 2012, the market share of the Group (including its associated companies) in domestic coal shipping market reached 27.4%, representing an increase of 1.4% as compared with the same period last year.

B. Iron ore shipping business

Along with the very large iron ore carriers (“VLOCs”) being delivered successively, the Group currently owns a large ore shipment fleet with 8 VLOCs of 230,000 deadweight tons and 4 VLOCs of 300,000 deadweight tons. In the first half of 2012, the Group achieved a remarkable improvement in both the shipping scale and operating results of import iron ore. In the first half of 2012, 12 VLOCs achieved a turnover of approximately RMB638 million, with an operating gross margin of 30.1%, and became a growth highlight of the Group’s dry bulk operating activities.

In the first half of 2012, the Group achieved a shipping volume of approximately 86.72 billion tonne-nautical miles of dry bulk cargoes, representing an increase of approximately 19.3% as compared with the same period in 2011, and a turnover of approximately RMB2,782 million was achieved, representing a decrease of approximately 2.3% as compared with the same period in 2011. An analysis of the transportation volume and turnover in terms of cargo specie is as follows:

Transportation volume by specie

Domestic Coal transportation Iron ore transportation Other dry bulk cargoes transportation International Coal transportation Iron ore transportation Other dry bulk cargoes transportation(Note) Total		In the first half of 2012 (billion tonne nautical miles) 29.42		In the first half of 2011 Increase/ decrease (billion tonne nautical (%) miles) 30.59 -3.8% 24.70 -3.3% 3.69 -14.1% 2.20 7.3% 42.10 36.1% 4.86 74.3% 23.82 31.2% 13.42 30.9% 72.69 19.3%




		23.89		24.70 3.69 2.20
		3.17
		2.36
				42.10
		8.47		4.86 23.82 13.42
		31.26
		17.57
		86.72

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

DISCUSSION AND ANALYSIS OF OPERATIONS OF THE GROUP DURING THE REPORTING PERIOD (Continued)

(2) Shipping business - Dry bulk shipments (Continued)

Turnover by cargo specie

Domestic Coal transportation Iron ore transportation Other dry bulk cargoes transportation(Note) International Coal transportation Iron ore transportation Other dry bulk cargoes transportation Total		In the first half of 2012 (RMB million) 1,379		In the first half of 2011 Increase/ decrease (RMB million) (%) 1,989 -30.7% 1,704 -35.7% 164 -14.6% 121 19.0% 858 63.5% 160 78.8% 498 84.1% 200 0.0% 2,847 -2.3%



		1,095		1,704 164 121
		140
		144
				858
		286		160 498 200
		917
		200
		2,782

Note: Other dry bulk cargoes include metal ore, non-metallic ore, steel, cement, timber, grain, insecticide, fertilizer and so on except for coal and iron ore.

(3) Cost analysis

In the first half of this year, the Group steadily promoted comprehensive budget management. By adhering to the development approach of “Green, Low Carbon”, the Group thoroughly implemented energy conservation and discharge reduction, and increased incomes and decreased expenditures through different ways:

A. established a fuel management team, strengthened the centralized procurement of fuel and timely purchased fuel oil at locking prices;
B. vigorously implemented the policy of economic speed, appropriate arrangement for repairing vessels and fuel supply;
C. controlled the salaries and costs of crew members, and adjusted the teams of crew and their allowances;
D. disposed the old vessels and single hull tankers ahead of time for their expiry so as to decrease the operating losses therefrom; and
E. strictly implemented comprehensive budget management requirements so as to effectively control port cost, finance cost and administration cost.

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

DISCUSSION AND ANALYSIS OF OPERATIONS OF THE GROUP DURING THE REPORTING PERIOD (Continued)

(3) Cost analysis (Continued)

In the first half of 2012, the total operating costs incurred by the Group was RMB5,851 million, representing an increase of 11.2% as compared with the same period in 2011. The composition of the main operating costs are analysed as follows:

Item Fuel cost Port cost Labor cost Lubricants expenses Depreciation Insurance expenses Repair expenses Charter cost Others Total	In the first half of 2012 (RMB million) 2,812 574 758 132 695 126 261 327 166 5,851	In the first half of 2011 Increase/ Decrease Composition Ratio in 2012 (RMB million) (%) (%) 2,376 18.4% 48.0% 489 17.4% 9.8% 645 17.5% 12.9% 132 0.0% 2.2% 838 -17.1% 11.9% 118 6.8% 2.2% 266 -1.9% 4.5% 264 23.9% 5.6% 132 26.0% 2.9% 5,260 11.2% 100.0%

The fuel cost incurred by the Group in the first half of 2012 was approximately RMB2,812 million, representing an increase of 18.4% as compared with the same period in 2011, accounting for 48.0% of the total operating cost. Such change was due to the significant increase of international oil prices as compared with the first half of 2011. The average price of Singapore 380CST fuel in the first half of 2012 increased by 10.6% as compared with the same period in 2011. The Group further enhanced its fuel saving, and in light of the total shipping turnover volume increased by 12.9% compared with the same period in 2011, the total fuel consumption of the Group amounted to 589,800 tons, representing an increase of 4.1% as compared with the same period in 2011. The fuel consumption per thousand nautical miles was 3.17 kg, representing a decrease of 7.8% as compared with that of the same period in 2011.

The Group’s depreciation expenses incurred in the first half year of 2012 amounted to approximately RMB695 million, representing a decrease of 17.1% as compared with that of the same period in 2011, accounting for 11.9% of the total operating costs. The Group has adopted the revised estimated useful life of vessels and the residual values of vessels effective from 1 January 2012, which resulted in a decrease of approximately RMB301 million of depreciation of the Group in the first half of this year.

The charter cost incurred by the Group in the first half of 2012 was approximately RMB327 million, representing an increase of 23.9% as compared with the same period in 2011, accounting for 5.6% of the total operating cost. As at 30 June 2012, the Group chartered in 10 vessels with a total capacity of 1,040,000 deadweight tonnes, including 4 tankers with a capacity of 750,000 deadweight tonnes and 6 bulk vessels with a capacity of 290,000 deadweight tonnes.

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

2. DISCUSSION AND ANALYSIS OF OPERATIONS OF THE GROUP DURING THE REPORTING PERIOD (Continued)

(4) Interests in the jointly-controlled entities’ results

In the first half of 2012, relying on the solid cargo resources of the counter investors, the jointlycontrolled entities’ operating results were relatively stable. The Group has recognised its profits in its jointly-controlled entities of approximately RMB152 million, representing a decrease of 7.4% as compared with the same period in 2011. The main reason for such change was due to the sustained downturn of the domestic dry bulk shipping market in the first half of 2012. The jointly-controlled entities of the Group are mainly engaged in domestic coal transportation, and thus their operating results were adversely affected to a certain degree. In the first half of 2012, the 5 jointly-controlled shipping companies achieved a shipping volume of 61 billion tonne-nautical miles, representing an increase of 31.3% as compared with the same period in 2011. The turnover achieved by the 5 jointly-controlled shipping companies in the first half of 2012 was approximately RMB3,179 million, with a net profit of approximately RMB281 million, representing a decrease of 14.2% and 9.1% respectively as compared with the same period in 2011.

As at 30 June 2012, the 5 jointly-controlled shipping companies owned 50 bulk vessels with a total capacity of 2,560,000 deadweight tonnes and 51 vessels under construction with the capacity of 2,320,000 deadweight tonnes.

The operating results achieved by the 5 jointly-controlled shipping companies in the first half of 2012 are as follows:

	Interest held
	by the	Shipping	Operating
Company name	Company	volume	revenue	Net profit/(loss)
		(billion tone	(RMB’000)	(RMB’000)
		nautical miles)
Shenhua Zhonghai
Marine Co., Limited	49%	39.7	2,150,768	280,898
Shanghai Times
Shipping Co., Limited	50%	15.97	707,180	547
Guangzhou Development
Shipping Co., Limited	50%	3.76	186,468	4,780
Shanghai Friendship
Marine Co., Limited	50%	0.68	57,292	-12,510
Huahai Petrol Transportation
& Trading Co., Limited	50%	0.89	77,553	6,922

In the first half of 2012, the net profit achieved by China Shipping Finance Co., Limited, a non-shipping jointly-controlled entity, with 25% interest held by the Company, was RMB76,630,000.

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

3. FINANCIAL ANALYSIS

(1) Net cash outflow/inflow

The net cash outflow/inflow from operating activities of the Group is RMB221,855,000 and RMB1,148,240,000 for the six months ended 30 June 2012 and 2011 respectively.

(2) Capital commitments

The Group had the following capital commitments at 30 June 2012 of which RMB5,664,987,000 (31 December 2011: RMB6,514,365,000) will be due within one year.

Authorised and contracted for: Construction and purchases of vessels(Note 1) Equity investments(Note 2) Total	30 June 2012 (Unaudited) RMB’000 9,302,727 1,045,796 10,348,523	31 December 2011 (Audited) RMB’000 11,299,626 1,486,735 12,786,361

In addition to the above, the Group’s share of the capital commitments of its associate which are contracted for but not provided amounted to RMB1,453,868,000 (31 December 2011: RMB1,589,308,000). The Group’s share of the capital commitments of its jointly-controlled entity, which are contracted for but not provided amounted to RMB3,437,626,000 (31 December 2011: RMB2,176,696,000); which are authorised but not contracted for amounted to RMB1,204,779,000 (31 December 2011: RMB2,100,538,000).

Note:

(1) According to the construction and purchase agreements entered into by the Group from 2007 to June 2012, these capital commitments will fall due as from 2012 to 2013 respectively.
(2) Included capital commitments in respect of equity investments is the commitment to invest in a jointlycontrolled entity, Shenhua Zhonghai, of RMB1,029,668,000 (31 December 2011: RMB1,470,668,000).

(3) Capital structure

As at 30 June 2012, the equity attributable to the owners of the Company and net debts (as total debt (which includes interest-bearing bank borrowings, notes, other loan and convertible bonds) less cash and cash equivalents) amounted to approximately RMB22,868,825,000 and approximately RMB25,845,902,000 respectively and the debt-to-equity ratio was 113% (31 December 2011: 89%).

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

3. FINANCIAL ANALYSIS (Continued)

(4) Notes, interest-bearing bank and other borrowings

(a) The Group’s notes, interest-bearing bank and other borrowings are analysed as follows:

Annual effective Interest Maturity (%) Current liabilities (i) Bank loans Secured 5% to 10% discount to the People’s Bank of China (“PBC”) Benchmark interest rate, Libor + 0.35% to 3.00% 2013 Unsecured Libor + 0.35% to 4.00% 2013 (ii) Notes Unsecured 4.18% 2012 (iii) Other borrowings Secured 5% discount to the PBC Benchmark interest rate 2013 Unsecured 10% discount to the PBC Benchmark interest rate, 3.50% to 5.85% 2013 Notes, interest- bearing bank and other borrowings —current portion	30 June 2012 (Unaudited) RMB’000 1,081,851 992,985 2,074,836 1,999,108 500 2,505,230 2,505,730 6,579,674	31 December 2011 (Audited) RMB’000 922,423 686,993
		1,609,416
		1,998,038
		— 966,000
		966,000
		4,573,454

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

3. FINANCIAL ANALYSIS (Continued)

(4) Notes, interest-bearing bank and other borrowings (Continued)

s, interest-bearing bank and other borrowings(Continued)
Annual effective Interest Maturity (%) Non-current liabilities (i) Bank loans Secured 5% to 10% discount to the PBC Benchmark interest rate, Libor + 0.38% to 1.60% 2014-2023 Unsecured Libor + 1.35% to 1.70%, 6.80% to 7.05% 2014-2024 (ii) Notes Unsecured 3.90% 2014 (iii) Other borrowings Secured 5% discount to the PBC Benchmark interest rate 2014-2023 Unsecured 10% discount to the PBC Benchmark interest rate, 4.72% to 6.51% 2014-2018 Notes, interest-bearing bank and other borrowings —non-current portion	30 June 2012 (Unaudited) RMB’000 8,199,183 1,105,626 9,304,809 2,996,360 53,100 5,968,811 6,021,911 18,323,080	31 December 2011 (Audited) RMB’000 7,185,601 1,231,826
		8,417,427
		2,995,537
		— 5,341,551
		5,341,551
		16,754,515

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

3. FINANCIAL ANALYSIS (Continued)

(4) Notes, interest-bearing bank and other borrowings (Continued)

(b) As at 30 June 2012, the Group’s notes, interest-bearing bank and other borrowings were repayable as follows:

Analysed into: (i) Bank loans: Within one year or on demand In the second year In the third to fifth year (both years inclusive) Over five years (ii) Notes: Within one year or on demand In the second year In the third to fifth year (both years inclusive) (iii) Other borrowings: Within one year or on demand In the second year In the third to fifth year (both years inclusive) Over five years	30 June 2012 (Unaudited) RMB’000 2,074,836 1,075,327 3,391,644 4,837,838 11,379,645 1,999,108 — 2,996,360 4,995,468 2,505,730 274,540 2,705,771 3,041,600 8,527,641 24,902,754	31 December 2011 (Audited) RMB’000 1,609,416 1,389,529 3,028,983 3,998,915 10,026,843 1,998,038 — 2,995,537 4,993,575 966,000 1,500,000 841,551 3,000,000 6,307,551 21,327,969

The Group’s bank loans are secured by pledges or mortgages of the Group’s 3 vessels under construction (31 December 2011: 9 vessels under construction) and 30 vessels (31 December 2011: 22 vessels) with total net carrying amount of RMB15,131,592,000 (31 December 2011: RMB13,044,293,000) at 30 June 2012.

The carrying amounts of the Group’s notes, interest-bearing bank and other borrowings approximate their fair values.

Except for secured bank loans of RMB8,702,587,000 (31 December 2011: RMB7,788,252,000), unsecured bank loans of RMB1,957,508,000 (31 December 2011: RMB1,861,916,000) and unsecured other borrowings of RMB632,490,000 (31 December 2011: RMB Nil) which are denominated in USD, all other borrowings are denominated in RMB.

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

3. FINANCIAL ANALYSIS (Continued)

(5) Risk on foreign currency

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to USD and Hong Kong Dollar (“HKD”) against RMB. Foreign exchange risk arises from future commercial transactions, and recognised assets and liabilities.

As at 30 June 2012, the Group’s foreign exchange liabilities mainly comprised secured bank loans equivalent to approximately RMB8,702,587,000 (31 December 2011: RMB7,788,252,000), unsecured bank loans equivalent to approximately RMB1,957,508,000 (31 December 2011: RMB1,861,916,000) and unsecured other borrowings equivalent to approximately RMB632,490,000 (31 December 2011: RMB Nil). In addition, the Company would pay dividend for H shares in HKD.

The Group does not have significant exposure to foreign exchange risk.

Given the increasing significance of the Group’s international shipping business, changes in exchange rates will have certain impact on the Group’s profitability. Therefore, the Group will further strengthen its efforts in monitoring and studying exchange rate fluctuations, and will actively implement effective measures to strive to avoid exchange rate fluctuation risks. Firstly, the Group will strive to break even USD for its operations. Secondly, the Group will conscientiously analyze and compare available financial instruments for averting exchange rate risks, so as to hedge and lock in financial costs, and to effectively protect against risks caused by exchange rate fluctuations.

(6) Contingent liabilities

(i) In August 2011, one of the Group’s cargo vessels “Bihuashan” collided with “Li Peng 1”, which sunk “Li Peng 1” afterwards. The Group is in the progress of setting up a Limitation of Liability for Maritime Claims Fund amounting to RMB22,250,000. Since the Group had been insured, all compensations will be borne by the insurance company. As at 30 June 2012, the Group is still in the process of settling all the issues concerned.
(ii) In January 2012, fuel leakage occurred in one of the Group’s tanker “Daiqing 75” during its voyage in Bohai Sea of the PRC. On 30 June 2012, claims on damage caused by the fuel leakage amounted to RMB21,810,000. Since the Company had been insured with PICC Property and Casualty Company Limited and West of England Insurance Services (Luxembourg) S.A., all compensations will be borne by the insurance companies. As at 30 June 2012, the Group was still in the process of settling all the issues concerned.

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

3. FINANCIAL ANALYSIS (Continued)

(6) Contingent liabilities (Continued)

(iii) East China LNG Shipping Investment Co. Ltd., a non wholly-owned subsidiary of the Company, holds 30% equity interests in each of Aquarius LNG Shipping Limited (“Aquarius LNG”) and Gemini LNG Shipping Limited (“Gemini LNG”), and North China LNG Shipping Investment Co. Ltd., a non wholly-owned subsidiary of the Company, holds 30% equity interests in each of Capricorn LNG Shipping Limited (“Capricorn LNG”) and Aries LNG Shipping Limited (“Aries LNG”). Each of these four companies entered into Ship Building Contracts for the construction of one LNG vessel each. After the completion of the LNG vessels, these four companies would, in accordance with time charters to be signed, lease the LNG vessels to the following Charterers:

Company name Charterer Aquarius LNG Papua New Guinea Liquefied Natural Gas Global Company LDC Gemini LNG Papua New Guinea Liquefied Natural Gas Global Company LDC Aries LNG Mobil Australia Resources Company Pty Ltd. Capricorn LNG Mobil Australia Resources Company Pty Ltd.

On 15 July 2011, the Company entered into four guaranteed leases (“the lease guarantees”). According to the lease guarantees, the Company irrevocably and unconditionally provided the charterers, successors and transferees of the four companies listed above with guarantee (1) for the four companies to fulfil their respective obligations under the lease term, and (2) to secure 30% of amounts payable to charterers under lease term.

According to the term of lease guarantees and taking into account of the possible increase in the value of the lease commitments and the percentage of shareholdings by the Company in the above four companies, the amount of lease guaranteed by the Company is limited to USD8.2 million (approximately RMB52 million).

The guarantee period is limited to the lease period, which is 20 years.

(7) Events after the Reporting Period

(i) According to the twelfth meeting of the board of the Company (“Board”) held on 20 July 2012, the Board approved a resolution whereby China Shipping Development (Hong Kong) Marine Co., Limited (“CSHK Development”), a wholly owned subsidiary of the Company, shall form a new company to be named China Shipping (Singapore) Petroleum Co. Ltd. (“CSSP”), with China Shipping Container Lines (Hong Kong) Co., Ltd and China Shipping Regional Holdings Sdn Bhd. The registered capital of CSSP is USD5,000,000, CSHK Development will contribute USD250,000 (approximately RMB1,600,000), representing 5% of the registered capital of CSSP.

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 15

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

3. FINANCIAL ANALYSIS (Continued)

(7) Events after the Reporting Period (Continued)

(ii) The issuance of corporate bonds with an aggregate nominal value of RMB5 billion for the Company was approved by the China Securities Regulatory Commission (Zheng Jian Xu Ke [2012] No. 924). This issuance will be carried out in phases. In 2012 (the first phase), nominal value of corporate bonds to be issued amounting to RMB2.5 billion, totalling 25,000,000 bonds at nominal value RMB100 each (“A-Share corporate bonds”). The corporate bonds would be allotted to both the public through the Shanghai Stock Exchange trading system and institutional investors.

The A-Share corporate bonds were issued by the Company on 7 August 2012 and have been listed in Shanghai Stock Exchange since 21 August 2012 comprising 2 types of bonds. The 2 types are RMB1 billion with a term of 3 years and interest bearing at 4.2% per annum, having bond code “122171” and RMB1.5 billion with a term of 10 years and interest bearing at 5.00% per annum, having bond code “122172” respectively.

4. OTHERS

(1) Fleet expansion projects

2 new tankers with a total capacity of 120,000 deadweight tonnes and 10 new bulk vessels with a total capacity of 1,830,000 deadweight tonnes have been delivered for use in the first half of 2012. In addition, the Group disposed of 5 old vessels of 220,000 deadweight tonnes. Following the readjustment to the fleet composition, the current fleet composition of the Group was further optimized, the average single vessel capacity kept on rising and the average age decreased year by year.

As at 30 June 2012, the Group owned 195 vessels with a total capacity of 14,980,000 deadweight tonnes. The composition of the Group’s fleet is as follows:

Tankers Dry bulk vessels Total	Number of vessels 73 122 195	Deadweight tonnes Average age (’000) (years) 6,910 8.8 8,070 14.1 14,980 11.5

As at 30 June 2012, the fleet controlled by the Group comprised 255 vessels with a total capacity of 18,589,000 deadweight tonnes (including the ones chartered in by the Group and those operated by the jointly-controlled entities).

16 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

5. OUTLOOK AND HIGHLIGHTS FOR THE SECOND HALF OF 2012

In the second half of 2012, the growth of global economy will face a more complicated environment, as the European debt crisis is not expected to be solved promptly, and the international oil price is likely to rebound as a result of geopolitical situation in the Middle East. Meanwhile, PRC economic growth will slow down, and demand growth for oil and dry bulk shipment will also slow down. However, there are still a large number of orders for all types of vessels in the shipping market, and the relationship between market demand and supply is not expected to materially improve in the short term. As a result, it is estimated that the shipment market will continue to fluctuate at low levels.

As for oil shipment, the imbalance between market demand and capacity supply in the tanker market is expected to continue in the second half of 2012, and the slow down of tanker shipment will not turnaround again in the short term. For dry bulk shipment, since over one-third of the coastal shipment capacity operates both domestic coastal and international bulk shipment, the relationship between coastal market and international market is getting closer. It is expected that the coastal dry bulk market will follow the international bulk shipment market trend of different types of vessels and will maintain the situation of fluctuations at the lower end of the market.

The directors of the Company (“Directors”) believe that, during the second half of 2012, the prospects of the domestic and overseas shipping market in the PRC will remain grim and as such, it is expected that the Group will make a loss for the 9 month period ending 30 September 2012.

To cope with the current market situation, the Group will focus on the following works in the second half of 2012:

(1) Deepening the management and operating system reform, which is mainly shown as follows:
A. In the first half of 2012, the Company reorganised its dry bulk business and established China Shipping Bulk Carrier Co. Ltd, and China Shipping Bulk Carrier (Shanghai) Co., Ltd. As a result, an intensive and professional management platform has been set up, and the transfer of related assets, liabilities, personnel, business and management has also been completed. In the second half of 2012, the share transfer of each jointly-controlled entity, associate and investee company will be completed when conditions are met, and great efforts will be made in centralising the operations of the dry bulk vessels so as to build-up the “China Shipping Dry Bulk” brand.
B. In respect of the level of each of the professional companies, in order to further strengthen the marketing function, the marketing team and its ability will be fully consolidated, the marketing campaign will be strengthened and a marketing team with ability to breakthrough during the adverse condition will be established.

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

5. OUTLOOK AND HIGHLIGHTS FOR THE SECOND HALF OF 2012 (Continued)

C. Human resource system reform, strengthen personnel cultivation and all staff performance evaluation mechanism. The Group will strive to explore “Three Paths”, namely the path to cultivate ship and onshore personnel exchange, international operating management personnel cultivation path and young cadres career development path, in order to further enhance the standard of management of the Company. At the same time, the Group will intensify the performance evaluation mechanism and enhance its incentive system, with a view to train up the innovative sense, opportunity sense and crisis sense of the staff, as well as stimulate the enthusiasm of the staff to work hard.
(2) Continue to strengthen strategic cooperation with freight customers, consolidate and expand the Company’s transportation market shares for domestic and foreign trade, and reduce operation risks arising from freight rate fluctuations.

In recent years, the Company has actively and consistently implemented strategies of cooperation with major customers, established stable freight sources and achieved expansion in markets, seeking for transformation in its development approach. The Company will create strategic alliance between freight customers and ship owners actively through various means including increasing the formation of joint ventures continuously, entering into long-term COA contracts and increasing the utilization of dedicated berths, in order to maximize economies of scale in shipping capacity and increase the operation efficiency of vessels. For bulk shipments, the Company will continue to strengthen strategic cooperation with major customers such as Shenhua, Huaneng Power, Baosteel, Shougang, China Resources, Shenergy, Shanghai Electric Power and Guangzhou Holdings, and expand the size of shipping capacity within control through joint ventures and other means in order to increase the Group’s capability of control over the coastal electricity and coal transportation markets. For oil shipments, the Company will endeavor to consolidate its presence in coastal markets and strengthen its cooperation with large domestic and foreign petroleum companies to stabilize the basic freight sources, nurture a team of ocean shipping operation talents and enhance the overall efficiencies.

(3) Further strengthen its cost control system and enhancing cost effectiveness. In the second half of the year, the Group will continue strengthening its control over fuel costs, management and other fees, in order to prevent their rebound. Fuel costs are one of the Group’s major costs. The Group will continue to strengthen the management of energy-saving and the use of energy-saving technologies, implement the policy of economic speed and strive to control fuel costs.
(4) Strengthen the competitiveness of the fleet structure. With the expectation of the shipment market with continue to slow down, the Group will further eliminate the outdated and old vessels, on the basis of the disposal of 5 outdated vessels and old vessels in the first half of the year, we expected that 15 vessels will be eliminated in the second half of the year. The Group will adjust the fleet structure scientifically and reasonably to avoid expanding the fleet structure unreasonably and enhance the core competitiveness in the market.
(5) Actively progress in the LNG shipment business. Based on the basis of existing projects, The Group will persist to explore LNG shipment projects by capturing the long term co-operation relationship between the Group, PetroChina and Sinopec.

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

5. OUTLOOK AND HIGHLIGHTS FOR THE SECOND HALF OF 2012 (Continued)

(6) Expand its financing sources to secure development funds for the Company. According to the Group’s shipbuilding plans, the capital expenditure of the Group from 2012 to 2014 is RMB9.39 billion, RMB3.18 billion and RMB0.8 billion respectively. Meanwhile, the associated and joint venture companies of the Group have a strong demand for capital increases. In this connection, the Company will further strengthen co-operation with banks to maintain smooth financing channels. As at the date of this report, RMB2.5 billion of the RMB5 billion corporate bonds of the Company has been successfully issued.
(7) Continue to strengthen safety and security. We will work hard to avoid possibilities of ship collision, carry out anti-piracy, fire prevention and anti-pollution measures, and improve the building and operating of comprehensive security system.

6. OTHER MATTERS

(1) Change of registered address in P.R.C.

The registered address of the Company has been changed to Room A-1015, No. 188 Ye Sheng Road, Yangshan Free Trade Port Area, Shanghai, The People’s Republic of China from 21 August 2012.

(2) Changes in directors, supervisors and senior management

(a) On 16 January 2012, the Company convened the first extraordinary general meeting (“First EGM”) of 2012 of the Company and approved to appoint Mr. Xu Lirong as an executive director of the Company and Mr. Wang Wusheng as a non-executive independent director of the Company.
(b) On 20 February 2012, the Company convened the third meeting of the Board of 2012 and resolved to appoint Mr. Zhuang Deping as the deputy general manager of the Company.
(c) On 20 June 2012, the Company convened the second extraordinary general meeting (“Second EGM”) of 2012 of the Company and elected the members of the Board and the Supervisory Committee of the Company (“Supervisory Committee”) for a new term (excluding the staff representatives of the Supervisory Committee).

At the Second EGM, the re-election of Mr. Li Shaode, Mr. Xu Lirong, Mr. Lin Jianqing, Mr. Wang Daxiong, Mr. Zhang Guofa, Mr. Yan Zhichong and Mr. Qiu Guoxuan as executive Directors, and the re-election of Mr. Zhu Yongguang, Mr. Zhang Jun, Mr. Lu Wenbin and Mr. Wang Wusheng as independent non-executive Directors were approved by the Shareholders.

At the Second EGM, the re-election of Mr. Xu Hui as a supervisor of the Company (“Supervisor”) and the election of Mr. Xu Wenrong and Mr. Zhang Rongbiao as Supervisors were duly approved by the Shareholders. Mr. Xu Wenrong, Mr. Xu Hui, Mr. Zhang Rongbiao, together with Mr. Luo Yuming and Ms. Chen Xiuling, both of which are staff representatives of the Supervisory Committee, constitute the Supervisory Committee of Company.

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 19

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

6. OTHER MATTERS (Continued)

(d) On 29 June 2012, the Company convened the eleventh meeting of the Board of 2012 and resolved to accept the resignation of Mr. Lin Jianqing as an executive director of the Company and to appoint Mr. Ding Nong as an executive Director. The appointment of Mr. Ding Nong as an executive Director will be subject to the Shareholders’ approval at the upcoming extraordinary general meeting of the Company.

(3) Directors’ and supervisors’ interests in contracts

As at 30 June 2012, none of the directors or supervisors of the Company had a material interest, either directly or indirectly, in any contract of significance to the business of the Group to which the Company, its holding company, subsidiaries or fellow subsidiaries was a party.

(4) Directors’ and supervisors’ interests and short positions in shares and underlying shares of the Company

As at 30 June 2012, none of the directors, supervisors, chief executive or their associates had registered an interest or short position in the shares and underlying shares of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance “SFO”) that was required to be recorded pursuant to Section 352 of the SFO, or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (“Model Code”) as set out in Appendix 10 to the Rules Governing the Listing of Securities on the Stock Exchange (“Listing Rules”).

(5) Directors’ and supervisors’ rights to acquire shares or debentures

At no time during the Reporting Period were rights to acquire benefits by means of the acquisition of shares in or debentures of the Company granted to any director or supervisor of the company or their respective spouse or minor children, or were any such rights exercised by them; or was the Company, its holding company, subsidiaries or fellow subsidiaries a party to any arrangement to enable the directors or supervisors to acquire such rights in any other body corporate.

(6) Purchase, sale or redemption of the Company’s listed securities

Neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of its listed securities during the Reporting Period.

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

6. OTHER MATTERS (Continued)

(7) Compliance with the Code on Corporate Governance Practices

The Board is committed to the principles of corporate governance for a transparent, responsible and value-driven management that is focused on enhancing shareholders’ value. In order to reinforce independence, accountability and responsibility, the posts of Chairman of the Board and the CEO are assumed by different individuals so as to maintain independence and balanced judgment and views.

During the Reporting Period, the Company has complied with the code provisions set out in the Code on Corporate Governance Practices set out in the former Appendix 14 of the Listing Rules effective prior to 1 April 2012, and the new Corporate Governance Code set out in the revised Appendix 14 to the Listing Rules, effective since 1 April 2012 throughout the corresponding effective periods. The Company has established four professional committees under the Board, including an audit committee (“Audit Committee”), a remuneration and appraisal committee, a strategy committee and a nomination committee with defined terms of reference.

(8) Audit Committee

In compliance with Rule 3.21 of the Listing Rules, the Company has established the Audit Committee to review the financial reporting procedures and internal control of the Group and to provide guidance thereto. The Audit Committee comprises the four independent non-executive Directors.

The interim results of the Company for the Reporting Period are unaudited but have been reviewed by the Audit Committee.

(9) Remuneration Committee

The remuneration committee of the Company (“Remuneration Committee”) comprises the four independent non-executive Directors. The Remuneration Committee has adopted terms of reference which are in line with the Code on Corporate Governance Practices contained in Appendix 14 of the Listing Rules.

(10) Compliance with the Model Code

The Company has adopted the Model Code set out in Appendix 10 of the Listing Rules as its code of conduct regarding Director’s securities transactions.

Following specific enquiries made with the Directors, supervisors and chief executives of the Company, the Directors have confirmed to the Company that each of them has complied with the Model Code during the six months ended 30 June 2012.

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

6. OTHER MATTERS (Continued)

(11) Employees

The adjustment of employee remuneration is calculated in accordance with the Company’s turnover and profitability and is determined by assessing the correlation between the total salary paid and the economic efficiency of the Company. Under this mechanism, management of employees’ remuneration will be more efficient while employees will be motivated to work hard to bring encouraging results for the Company. Save for the remuneration policy disclosed above, the Company does not maintain any share option scheme for its employees and the employees do not receive any bonus. The Company regularly provides its administrative personnel with training on various subjects, including operation management, foreign languages, computer skills, industry know-how, and policies and laws. Such training may be in different forms, such as seminars, site visits and study tours.

As at 30 June 2012, the Company had 6,493 employees. During the Reporting Period, the total staff cost was approximately RMB843.8 million (The same period in 2011: approximately RMB842.8 million).

(12) Investor Relations

The Company has actively and faithfully performed its duties regarding the disclosure of information and the work on investor relations. The Company has strictly abided by the principles of regulation, accuracy, completeness and timely disclosure of information. The Company has established a designated department for investor relations, which is responsible for the matters concerning investor relations and has formulated the “Investor Relations Management Measures” to regulate the relations with the investors. Through various approaches and channels such as organizing results presentation, roadshow, telephone conference, a corporate website, investors’ visits to the Company and answering the investors’ enquires, the Company’s management strengthened close communications and relationship with the investors and analysts, thereby enhancing investors’ recognition of the Company.

The Company has maintained an investor relations section at its website at www.cnshippingdev.com to disseminate information to its investors and its shareholders on a timely basis.

By order of the Board

China Shipping Development Company Limited Li Shaode Chairman

Shanghai, the PRC 21 August 2012

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

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TO THE BOARD OF DIRECTORS OF CHINA SHIPPING DEVELOPMENT COMPANY LIMITED (Established in the People’s Republic of China as a joint stock company with limited liability)

INTRODUCTION

We have reviewed the interim financial information set out on pages 24 to 60, which comprises the condensed consolidated statement of financial position of China Shipping Development Company Limited (the “Company”) and its subsidiaries (together referred to as the “Group”) as of 30 June 2012 and the related condensed consolidated statement of comprehensive income, statement of changes in equity and statement of cash flows for the six-month period then ended, and certain explanatory notes. The Main Board Listing Rules governing the Listing of Securities on The Stock Exchange of Hong Kong Limited requires the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation and presentation of this interim financial information in accordance with HKAS 34.

Our responsibility is to express a conclusion on this interim financial information based on our review and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

SCOPE OF REVIEW

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Hong Kong Institute of Certified Public Accountants. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information is not prepared, in all material respects, in accordance with HKAS 34.

Baker Tilly Hong Kong Limited

Certified Public Accountants Hong Kong, 21 August 2012 Lo Wing See Practising certificate number P04607

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Period ended 30 June 2012

Note
Revenue
Turnover
4
Operating costs
Gross (loss)/profit
Other income and gains
5
Marketing expenses
Administrative expenses
Other expenses
Share of profits of jointly-controlled entities
Finance costs
6
(LOSS)/PROFIT BEFORE TAX
7
Tax
8
(LOSS)/PROFIT FOR THE PERIOD
OTHER COMPREHENSIVE INCOME/(EXPENSES)
Exchange realignment
Net profit/(loss) on cash flow hedges
Other comprehensive income/(expenses) for the period
Total comprehensive (expenses)/income for the period

For the six months
ended 30 June
2012
2011
(Unaudited)
(Unaudited)
RMB’000
RMB’000
5,614,970
6,141,412
(5,851,041)
(5,260,272)
(236,071)
881,140
119,437
140,653
(26,731)
(23,183)
(166,656)
(135,262)
(22,905)
(14,993)
152,125
164,224
(280,185)
(181,894)
(460,986)
830,685
(169)
(129,483)
(461,155)
701,202
65,311
(137,830)
880
(2,179)
66,191
(140,009)
(394,964)
561,193

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Continued)

Period ended 30 June 2012

Note (Loss)/profit for the period attributable to: Owners of the Company Non-controlling interests Total comprehensive (expenses)/income for the period attributable to: Owners of the Company Non-controlling interests (Loss)/earnings per share 9 – Basic – Diluted	For the six months ended 30 June 2012 2011 (Unaudited) (Unaudited) RMB’000 RMB’000 (495,377) 684,406 34,222 16,796 (461,155) 701,202 (429,539) 544,874 34,575 16,319 (394,964) 561,193 (14.55 cents) 20.10 cents (14.55 cents) 20.10 cents

Details of the dividends payable and proposed for the period are disclosed in note 10 to the interim financial information.

The accompanying notes from pages 30 to 60 form part of the interim financial information.

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Period ended 30 June 2012

Note NON-CURRENT ASSETS Investment properties 11 Property, plant and equipment 11 Investments in associates Investments in jointly-controlled entities Loan receivables Available-for-sale investments Total non-current assets CURRENT ASSETS Bunker oil inventories Trade and bills receivables 12 Prepayments, deposits and other receivables Loan to a shareholder of a subsidiary Cash and cash equivalents Total current assets CURRENT LIABILITIES Trade and bills payables 13 Other payables and accruals Dividend payable Tax payable Current portion of notes, interest-bearing bank and other borrowings 15 Total current liabilities NET CURRENT LIABILITIES TOTAL ASSETS LESS CURRENT LIABILITIES EQUITY Equity attributable to owners of the company Issued capital 17 Reserves Proposed interim/final dividend Non-controlling interests Total equity	30 June 2012 (Unaudited) RMB’000 233,214 44,712,549 — 4,094,394 63,997 4,300 49,108,454 908,123 1,512,414 823,203 49,000 2,774,479 6,067,219 1,135,315 1,283,079 157,850 1,284 6,579,674 9,157,202 (3,089,983) 46,018,471 3,404,553 19,464,272 — 22,868,825 725,259 23,594,084	31 December 2011 (Audited) RMB’000 236,198 41,875,122 — 3,562,519 49,747 4,300 45,727,886 823,961 1,127,945 483,330 49,000 3,376,692 5,860,928 1,073,161 828,385 — 4,463 4,573,454 6,479,463 (618,535) 45,109,351 3,404,552 19,893,810 340,455 23,638,817 702,791 24,341,608

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(Continued)

Period ended 30 June 2012

Note NON-CURRENT LIABILITIES Other loans Derivative financial instruments 14 Notes, interest-bearing bank and other borrowings 15 Convertible bonds 16 Deferred tax liabilities Total non-current liabilities TOTAL EQUITY AND NON-CURRENT LIABILITIES	30 June 2012 (Unaudited) RMB’000 519,627 14,819 18,323,080 3,198,000 368,861 22,424,387 46,018,471	31 December 2011 (Audited) RMB’000 515,603 15,645 16,754,515 3,110,598 371,382 20,767,743 45,109,351

Li Shaode Yan Zhichong Director Director

The accompanying notes from pages 30 to 60 form part of the interim financial information.

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

701,202 (2,179) (137,830)	(461,155) 880 65,311	(461,155) 880 65,311	(461,155) 880 65,311

	34,222 — 353	34,575 — — (12,107)	725,259

	(495,377) 880 64,958	(429,539) 2 (340,455) —	22,868,825

	— — —	— — (340,455) —	—

	(495,377) — —	(495,377) — — —	12,394,932

	— — —	— (1) — —	873,042

	— — 64,956	64,956 — — —	(857,433)

	— — —	— — — —	1,019

	— 880 2	882 — — —	(16,497)

	— — —	— — — —	93,158

	— — —	— — — —	2,860,006

	— — —	— — — —	168,829

	— — —	— 2 — —	3,947,216

— — —	— — —	— 1 — —	3,404,553
Profit for the period Net loss on cash flow hedges Exchange realignment Total comprehensive income for the period Contribution from non-controlling shareholder of subsidiaries Dividend paid At 30 June 2011 (Unaudited) At 1 January 2012

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Period ended 30 June 2012

NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES
INVESTING ACTIVITIES
Proceeds from disposal of property, plant and equipment
Purchases of property, plant and equipment
Dividends received from jointly-controlled entities
Dividends received from available-for-sale investments
Interest received
Investments in jointly-controlled entities
Loans to associates
NET CASH OUTFLOW FROM INVESTING ACTIVITIES
FINANCING ACTIVITIES
Contribution from non-controlling shareholders of subsidiaries
Net cash inflow from notes, bank and other borrowings
Dividend paid
Interest paid
Other financing cash outflow, net
NET CASH INFLOW FROM FINANCING ACTIVITIES
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD
Effect of foreign exchange rate changes, net
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS
Cash and bank balances

For the six months ended 30 June
2012
2011
(Unaudited)
(Unaudited)
RMB’000
RMB’000
(221,855)
1,148,240
125,689
138,303
(3,146,293)
(3,827,964)
11,250
8,470
2,239
—
1,572
—
(441,000)
(245,000)
(14,426)
—
(3,460,969)
(3,926,191)
—
150,288
3,599,926
4,146,151
(194,712)
(578,774)
(293,463)
(190,712)
(689)
(3,780)
3,111,062
3,523,173
(571,762)
745,222
3,376,692
1,061,735
(30,451)
(13,187)
2,774,479
1,793,770
2,774,479
1,793,770

The accompanying notes from pages 30 to 60 form part of the interim financial information.

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION

Period ended 30 June 2012

1. CORPORATE INFORMATION

China Shipping Development Company Limited (the “Company”) is a joint stock company with limited liability established in the People’s Republic of China (the “PRC”). The registered office and principal place of business of the Company is located at Room A-1015, No 188 Ye Sheng Road, Yangshan Free Trade Port Area, Shanghai, the PRC and 670 Dong Da Ming Road, Shanghai, the PRC respectively. During the period, the Company and its subsidiaries (the “Group”) were involved in the following principal activities:

(a) investment holding; and/or

(b) oil and cargo shipment along the PRC coast and international shipment; and/or

(c) vessel chartering.

In the opinion of the directors, the Company’s ultimate holding company is China Shipping (Group) Company (“China Shipping”), a state-owned enterprise established in the PRC.

The H-Shares and A-Shares of the Company are listed on the Main Board of The Stock Exchange of Hong Kong Limited and The Shanghai Stock Exchange respectively.

The interim financial information is presented in Renminbi (“RMB”), which is the functional currency of the Group, and all values are rounded to the nearest thousand except where otherwise indicated.

The interim financial information has been approved for issue by the Board of Directors on 21 August 2012.

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES

2.1 Basis of preparation

The interim financial information has been prepared in accordance with the applicable disclosure requirements of Appendix 16 to The Rules Governing the Listing of Securities (the “HK Listing Rules”) on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

The interim financial information does not include all the information and disclosures required in an annual report, and should be read in conjunction with the Company’s consolidated financial statements for the year ended 31 December 2011 set out in the Company’s 2011 Annual Report.

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (Continued)

2.2 Significant accounting policies

The interim financial information has been prepared on the historical cost basis, except for certain financial instruments, which are measured at fair values, as appropriate.

A number of new or revised Hong Kong Financial Reporting Standards (“HKFRSs”) are effective for the financial year beginning on 1 January 2012. Except as described below (Note 2.3) and the changes in estimates that are required in determining the useful life and residual value of vessels, the same accounting policies, presentation and methods of computation have been followed in this interim financial information for the six months ended 30 June 2012 as were applied in the preparation of the Group’s consolidated financial statements for the year ended 31 December 2011.

2.3 Impact of new and revised HKFRSs and changes in accounting policies

Impact of new and revised HKFRSs

In the current period, the Group has adopted the following new and revised standards, amendments and interpretations (hereinafter collectively referred to as “new and revised HKFRSs”) issued by the HKICPA that are effective and relevant to the Group’s financial year beginning 1 January 2012. The adoption of the new and revised HKFRSs has had no material effect on the interim financial information of the Group for the current and previous accounting periods.

HKFRS 7 Disclosures – Transfers of financial assets HKAS 12 (Amendments) Income taxes – Deferred tax: Recovery of underlying assets

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued) Period ended 30 June 2012

BASIS OF PREPARATION AND ACCOUNTING POLICIES (Continued)
2.3 Impact of new and revised HKFRSs and changes in accounting policies (Continued)

Impact of HKFRSs issued but not yet effective

Improvements to HKFRSs Annual improvements to HKFRSs 2009 – 2011 cycle[2] HKFRS 7 (Amendments) Disclosures – Offsetting financial assets and financial liabilities[2] Disclosures – Mandatory effective date of HKFRS 9 and transition disclosures[4] HKFRS 9 Financial instruments[4] HKFRS 10 Consolidated financial statements[2] HKFRS 11 Joint arrangements[2] HKFRS 12 Disclosure of interests in other entities[2] HKFRS 13 Fair value measurement[2] HKAS 1 (Amendments) Presentation of financial statements – Presentation of items of other comprehensive income[1] HKAS 19 (2011) Employee benefits[2] HKAS 27 (2011) Separate financial statements[2] HKAS 28 (2011) Investments in associates and joint ventures[2] HKAS 32 (Amendments) Presentation offsetting financial assets and financial liabilities[3]

1 Effective for annual periods beginning on or after 1 July 2012.

2 Effective for annual periods beginning on or after 1 January 2013.

3 Effective for annual periods beginning on or after 1 January 2014.

4 Effective for annual periods beginning on or after 1 January 2015.

The Group is in the process of making an assessment of the impact of these new and revised HKFRSs upon initial application. So far, the Group considers that these new and revised HKFRSs are unlikely to have a significant impact on the Group’s results of operations and financial positions.

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

Period ended 30 June 2012

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

3. ESTIMATES

The preparation of interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing the interim financial information, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2011, with the exception of changes in estimates that are required in determining the useful life of vessels and residual values (Note 11).

4. REVENUE AND SEGMENT INFORMATION

Segment information is presented by way of two segment formats: (i) on a primary segment reporting basis, by business segment; and (ii) on a secondary segment reporting basis, by geographical segment.

The Group’s operating businesses are structured and managed separately, according to the nature of their operations and the services they provide. Each of the Group’s business segments represents a strategic business unit that offers services which are subject to risks and returns that are different from those of the other business segments. The Group’s business segments are categorised as follows:

(a) oil shipment; and
(b) dry bulk shipment
coal shipment
iron ore shipment
other dry bulk shipment

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

REVENUE AND SEGMENT INFORMATION (Continued)

Business segments

There is seasonality for the Group’s turnover but the effect is small. An analysis of the Group’s turnover and contribution to the (loss)/profit from operating activities by principal activity and geographical area of operations for the period is set out as follows:

For the six months ended 30 June 2012 2011 (Unaudited) (Unaudited) Turnover Contribution Turnover Contribution RMB’000 RMB’000 RMB’000 RMB’000 2,832,421 (131,927) 3,293,958 384,369	For the six months ended 30 June 2012 2011 (Unaudited) (Unaudited) Turnover Contribution Turnover Contribution RMB’000 RMB’000 RMB’000 RMB’000 2,832,421 (131,927) 3,293,958 384,369	For the six months ended 30 June 2012 2011 (Unaudited) (Unaudited) Turnover Contribution Turnover Contribution RMB’000 RMB’000 RMB’000 RMB’000 2,832,421 (131,927) 3,293,958 384,369	For the six months ended 30 June 2012 2011 (Unaudited) (Unaudited) Turnover Contribution Turnover Contribution RMB’000 RMB’000 RMB’000 RMB’000 2,832,421 (131,927) 3,293,958 384,369
2012
(Unaudited)
Turnover	Contribution
RMB’000	RMB’000


2,832,421	(131,927)

1,381,043	(129,103)	1,864,170 662,649 320,635	391,654 79,620 25,497
1,056,551	106,420
344,955	(81,461)
2,782,549	(104,144)	2,847,454 6,141,412	496,771 881,140 140,653 (23,183) (135,262) (14,993) 164,224 (181,894) 830,685 21,940,184 20,039,016 3,924,944 45,904,144 12,880,393 9,416,496 383,087 22,679,976

5,614,970	(236,071)

	119,437
	(26,731)
	(166,656)
	(22,905)
	152,125
	(280,185)

	(460,986)


	25,554,619
	24,651,085
	4,969,969

	55,175,673


	16,569,375
	14,615,657
	396,557

	31,581,589

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

Period ended 30 June 2012

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

4. REVENUE AND SEGMENT INFORMATION (Continued)

Business segments (Continued)

Segment contribution represent the profit or loss earned by each segment without allocation of central administration costs (including directors’ remuneration), marketing expenses, other expenses, share of profits of jointly-controlled entities, other income and gains and finance costs. This is the measure reported to chief operating decision makers for the purposes of resource allocation and performance assessment.

The carrying value of tanker and dry bulk vessel at 30 June 2012 amounted to RMB20,141,137,000 and RMB18,299,776,000 respectively (31 December 2011: RMB16,439,710,000 and RMB16,514,887,000 respectively).

Geographical segments

By geographical area: Domestic International Other income and gains Marketing expenses Administrative expenses Other expenses Share of profits of jointly-controlled entities Finance costs (Loss)/profit before tax Turnover Total segment turnover Less: inter-company transactions Total consolidated turnover	For the six months ended 30 June 2012 2011 (Unaudited) (Unaudited) Turnover Contribution Turnover Contribution RMB’000 RMB’000 RMB’000 RMB’000 2,409,410 (77,760) 3,976,224 999,836 3,205,560 (158,311) 2,165,188 (118,696) 5,614,970 (236,071) 6,141,412 881,140 119,437 140,653 (26,731) (23,183) (166,656) (135,262) (22,905) (14,993) 152,125 164,224 (280,185) (181,894) (460,986) 830,685 5,614,970 6,141,412 — — 5,614,970 6,141,412
	Turnover
	RMB’000


	2,409,410
	3,205,560

	5,614,970

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

4. REVENUE AND SEGMENT INFORMATION (Continued)

Other information

For the six months ended 30 June 2012

Oil shipment	Dry bulk shipment	Others	Total
RMB’000	RMB’000	RMB’000	RMB’000


948,648	3,132,126	3,030	4,083,804
356,635	353,424	4,597	714,656
1,528	6,444	7,221	15,193
4,518	6,035	17,339	27,892

	For the six months ended 30 June 2011	For the six months ended 30 June 2011	For the six months ended 30 June 2011
		Dry bulk
	Oil shipment	shipment	Others	Total
	RMB’000	RMB’000	RMB’000	RMB’000
Additions to segment
non-current assets	1,753,124	2,986,788	7,019	4,746,931
Depreciation	365,426	479,960	3,829	849,215
(Loss) /gain on disposal of
property, plant and equipment	(39)	115,168	—	115,129
Interest income	2,469	3,064	1,371	6,904

The principal assets employed by the Group are located in the PRC, and accordingly, no segment analysis of assets and expenditure has been prepared.

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

5. OTHER INCOME AND GAINS

Other income Bank interest income Commission income Government subsidies (note) Interest income from loan receivables Rental income from investment properties Others Other gains/(losses) Gain on disposal of property, plant and equipment, net Exchange losses, net Dividends from available-for-sale investments Others Other income and gains	For the six months ended 30 June 2012 2011 (Unaudited) (Unaudited) RMB’000 RMB’000 25,514 6,904 5,861 — 67,933 25,211 2,378 — 6,164 — 2,096 3,664 109,946 35,779 15,193 115,129 (8,687) (10,882) 2,239 — 746 627 9,491 104,874 119,437 140,653

Note: The Group received government subsidies for business development purpose. There were no unfulfilled conditions or contingencies relating to these subsidies.

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

6. FINANCE COSTS

Total finance costs Interest expenses in: – Bank loans and other borrowings repayable within five years – Bank loans and other borrowings repayable over five years – Notes – Hedge loan – Convertible bonds Other loan or borrowings costs and charges Less : Interest capitalised Finance costs	For the six months ended 30 June 2012 2011 (Unaudited) (Unaudited) RMB’000 RMB’000 154,121 141,366 169,711 27,807 101,370 101,301 3,940 5,498 87,405 — — 22,371 516,547 298,343 (236,362) (116,449) 280,185 181,894

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

7. (LOSS)/PROFIT BEFORE TAX

The Group’s (loss)/profit before tax is arrived at after charging/(crediting):

Cost of shipping services rendered:
Bunker oil inventories consumed and port fees
Others (including vessel depreciation and crew expenses)
Depreciation
Operating lease rentals:
Land and buildings
Vessels
Total operating lease rentals
Staff costs (including directors’ remuneration
wages, salaries, pension and crew expenses)
Gain on disposal of property, plant and equipment, net
Provision for bad and doubtful debts
Government subsidies
Dry-docking and repairs

For the six months
ended 30 June
2012
2011
(Unaudited)
(Unaudited)
RMB’000
RMB’000
3,283,883
2,781,465
2,567,158
2,478,807
714,656
849,215
23,319
17,096
326,825
257,614
350,144
274,710
843,819
842,831
(15,193)
(115,129)
—
300
(67,933)
(25,211)
259,679
273,011

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued) Period ended 30 June 2012

8. TAX

(i) Hong Kong Profits Tax

Hong Kong profits tax was not provided for in the interim financial information as the Group did not have any assessable profits arising in Hong Kong during the six months period ended 30 June 2012 and 2011.

(ii) PRC Corporate Income Tax

On 16 March 2007, the National People’s Congress approved the Corporate Income Tax Law of the PRC (the “New CIT Law”). The Company is entitled to a preferential income tax rate of 18%-24% effective from 1 January 2008. The existing preferential tax rate currently enjoyed by the Company is gradually transited to the new standard rate of 25% over a five-year transitional period. Accordingly, PRC corporate income tax of the Company has been provided at the rate of 25% (2011: 24%) on the estimated assessable profits for the period.

Non-resident enterprises without an establishment or a place of business in the PRC or which have an establishment or a place of business in the PRC but which relevant income is not effectively connected with the establishment or a place of business in the PRC, will be subject to withholding tax at the rate of 10% (unless reduced by treaty) on various types of passive income such as dividends derived from sources within the PRC (the “New Tax Law”). The Group has already assessed the impact of the New Tax Law regarding this withholding tax and considered the New Tax Law would not have a significant impact on the results of operations and financial position of the Group.

Group: Hong Kong PRC – Charge for the period – Under/(over) provision in prior years Deferred tax Total tax charge for the period	For the six months ended 30 June 2012 2011 (Unaudited) (Unaudited) RMB’000 RMB’000 — — 1,721 151,712 969 (425) (2,521) (21,804) 169 129,483

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

Period ended 30 June 2012

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

9. (LOSS)/EARNINGS PER SHARE

(a) Basic (loss)/earnings per share

Basic (loss)/earnings per share is calculated by dividing the (loss)/profit attributable to owners of the Company by the weighted average number of ordinary shares in issue during the period.

(Loss) /profit attributable to owners of the Company (RMB’000) Weighted average number of ordinary shares in issue (thousands) Basic (loss)/earnings per share (RMB cents per share)	For the six months ended 30 June 2012 2011 (Unaudited) (Unaudited) (495,377) 684,406 3,404,553 3,404,552 (14.55) 20.10	For the six months ended 30 June 2012 2011 (Unaudited) (Unaudited) (495,377) 684,406 3,404,553 3,404,552 (14.55) 20.10

(b) Diluted (loss)/earnings per share

As the Company does not have any potential dilutive ordinary shares during the period ended 30 June 2012 (six months ended 30 June 2011: RMB Nil), diluted loss per share is the same as basic loss per share.

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

10. DIVIDEND

The directors do not recommend the payment of an interim dividend (six months ended 30 June 2011: RMB Nil).

11. INVESTMENT PROPERTIES AND PROPERTY, PLANT AND EQUIPMENT

During the period, addition to construction in progress amounting to RMB3,902,779,000 (six months ended 30 June 2011 : RMB4,738,136,000).

During the period, the construction of three tankers at cost of RMB1,028,189,000 and ten dry bulk vessels at cost of RMB5,189,772,000 (six months ended 30 June 2011: One tanker at cost of RMB895,530,000 and ten dry bulk vessels at cost of RMB3,353,591,000) were completed and were transferred from construction in progress to vessels. Two tankers with net carrying amount of RMB71,461,000 (six months ended 30 June 2011: Three tankers with net carrying amount of RMB121,209,000) completed repairs, and have been put into operation. Meanwhile, no used vessel was acquired during these periods.

During the period, four dry bulk vessels and one tanker with net carrying amount of RMB77,176,000 and RMB28,815,000 respectively (six months ended 30 June 2011: six dry bulk vessels with net carrying amount of RMB23,000,000) were disposed.

During the period, the Group adjusted the estimated useful life of vessels from the range of 17 to 25 years to 25 years. Residual values of vessels were adjusted from USD180 (approximately RMB1,350) per light displacement ton to USD470 (approximately RMB2,960) per light displacement ton. As a result of these changes in accounting estimates, the depreciation decreased by approximately RMB300,897,000 for the period and will also decrease by approximately RMB601,794,000 for year ended 31 December 2012.

During the period, investment properties with carrying amount of RMB233,214,000 (six months ended 30 June 2011: RMB189,610,000) were leased.

The investment properties comprise of commercial buildings located at 670 Dong Da Ming Road, Shanghai, the PRC, held under medium term lease.

Investment properties are stated at cost less accumulated depreciation and impairment losses. Depreciation is provided to write off the cost of investment properties over their estimated useful lives using the straight line method.

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

Period ended 30 June 2012

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

12. TRADE AND BILLS RECEIVABLES

The carrying amounts of trade and bills receivables approximate their fair values.

An aged analysis of the trade and bills receivables is as follows:

1 - 3 months 4 - 6 months 7 - 9 months 10 - 12 months 1 - 2 years	30 June 2012 (Unaudited) Balance Percentage RMB’000 % 1,315,876 88 187,054 12 3,178 — 3,187 — 3,119 — 1,512,414 100	31 December 2011 (Audited) Balance Percentage RMB’000 % 1,110,985 98 12,604 1 4,047 1 309 — — — 1,127,945 100	31 December 2011 (Audited) Balance Percentage RMB’000 % 1,110,985 98 12,604 1 4,047 1 309 — — — 1,127,945 100
	Balance
	RMB’000

	1,315,876
	187,054
	3,178
	3,187
	3,119
			100
	1,512,414

The Group normally allows an average credit period of 30 days to its major customers. In view of the fact that the Group’s trade and bills receivables relate to a large number of diversified customers, there is no significant concentration of credit risk. Trade receivables are non-interest-bearing.

13. TRADE AND BILLS PAYABLES

The carrying amounts of trade and bills payables approximate their fair values.

Ageing analysis of trade and bills payables is as follows:

1 - 3 months 4 - 6 months 7 - 9 months 10 - 12 months 1 - 2 years Over 2 years	30 June 2012 (Unaudited) Balance Percentage RMB’000 % 921,223 81 139,498 12 17,922 2 39,112 3 15,402 2 2,158 — 1,135,315 100	31 December 2011 (Audited) Balance Percentage RMB’000 % 611,989 57 363,898 34 61,871 6 25,986 2 8,049 1 1,368 — 1,073,161 100	31 December 2011 (Audited) Balance Percentage RMB’000 % 611,989 57 363,898 34 61,871 6 25,986 2 8,049 1 1,368 — 1,073,161 100
	Balance
	RMB’000

	921,223
	139,498
	17,922
	39,112
	15,402
	2,158
			100
	1,135,315

The trade payables are non-interest-bearing and are normally settled in 1 - 3 months.

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

14. DERIVATIVE FINANCIAL INSTRUMENTS

Carried at fair value Cash flow hedges: – Interest rate swap agreements	30 June 2012 (Unaudited) RMB’000 14,819	31 December 2011 (Audited) RMB’000 15,645

As at 30 June 2012, the Group held two interest rate swap agreements, the total notional principal amount of the two interest rate swap agreements was USD114,093,333 (approximately RMB721,611,000). The interest rate swap agreements, with maturity in January and September 2016 are designated as cash flow hedges in respect of the bank borrowings with floating interest rates.

During the current period, the floating interest rates of the bank loans were LIBOR + 0.42% or 0.45% (31 December 2011: LIBOR + 0.42% or 0.45%). The gains and losses for the interest rate swap agreements during the period are as follows:

Total fair value gain/(loss) included in the hedging reserve Hedge loan interest included in finance costs Total losses on cash flow hedges of interest rate swap agreements for the current period	For the six months ended 30 June 2012 2011 (Unaudited) (Unaudited) RMB’000 RMB’000 880 (2,179) (3,940) (5,498) (3,060) (7,677)

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

Period ended 30 June 2012

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

15. NOTES, INTEREST-BEARING BANK AND OTHER BORROWINGS

(a) The Group’s notes, interest-bearing bank and other borrowings are analysed as follows:

Annual effective interest (%)
Maturity
Current liabilities
(i)
Bank loans
Secured
5% to 10% discount to the People’s
Bank of China (“PBC”) Benchmark
interest rate, Libor + 0.35% to 3.00%
2013
Unsecured
Libor + 0.35% to 4.00%
2013
(ii)
Notes
Unsecured
4.18%
2012
(iii)
Other borrowings
Secured
5% discount to the PBC Benchmark
interest rate
2013
Unsecured
10% discount to the PBC Benchmark
interest rate, 3.50% to 5.85%
2013
Notes, interest-bearing
bank and
other borrowings
– current portion

30 June
2012
31 December
2011
(Unaudited)
(Audited)
RMB’000
RMB’000
1,081,851
922,423
992,985
686,993
2,074,836
1,609,416
1,999,108
1,998,038
500
—
2,505,230
966,000
2,505,730
966,000
6,579,674
4,573,454

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

NOTES, INTEREST-BEARING BANK AND OTHER BORROWINGS (Continued)
(a) The Group’s notes, interest-bearing bank and other borrowings are analysed as follows: (Continued)

Annual effective interest (%)
Maturity
Non-current liabilities
(i)
Bank loans
Secured
5% to 10% discount to the PBC
Benchmark interest rate, Libor +
0.38% to 1.60%
2014-2023
Unsecured
Libor + 1.35% to 1.70%, 6.80% to
7.05%
2014-2024
(ii)
Notes
Unsecured
3.90%
2014
(iii)
Other borrowings
Secured
5% discount to the PBC Benchmark
interest rate
2014-2023
Unsecured
10% discount to the PBC Benchmark
interest rate, 4.72% to 6.51%
2014-2018
Notes, interest-bearing
bank and
other borrowings
– non-current portion

30 June
2012
31 December
2011
(Unaudited)
(Audited)
RMB’000
RMB’000
8,199,183
7,185,601
1,105,626
1,231,826
9,304,809
8,417,427
2,996,360
2,995,537
53,100
—
5,968,811
5,341,551
6,021,911
5,341,551
18,323,080
16,754,515

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

Period ended 30 June 2012

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

15. NOTES, INTEREST-BEARING BANK AND OTHER BORROWINGS (Continued)

(b) As at 30 June 2012, the Group’s notes, interest-bearing bank and other borrowings were repayable as follows:

Analysed into: (i) Bank loans: Within one year or on demand In the second year In the third to fifth year (both years inclusive) Over five years (ii) Notes: Within one year or on demand In the second year In the third to fifth year (both years inclusive) (iii) Other borrowings: Within one year or on demand In the second year In the third to fifth year (both years inclusive) Over five years	30 June 2012 (Unaudited) RMB’000 2,074,836 1,075,327 3,391,644 4,837,838 11,379,645 1,999,108 — 2,996,360 4,995,468 2,505,730 274,540 2,705,771 3,041,600 8,527,641 24,902,754	31 December 2011 (Audited) RMB’000 1,609,416 1,389,529 3,028,983 3,998,915 10,026,843 1,998,038 — 2,995,537 4,993,575 966,000 1,500,000 841,551 3,000,000 6,307,551 21,327,969

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

15. NOTES, INTEREST-BEARING BANK AND OTHER BORROWINGS (Continued)

The carrying amounts of the Group’s notes, interest-bearing bank and other borrowings approximate their fair values.

Except for secured bank loans of RMB8,702,587,000 (31 December 2011: RMB7,788,252,000), unsecured bank loans of RMB1,957,508,000 (31 December 2011: RMB1,861,916,000) and unsecured other borrowings of RMB632,490,000 (31 December 2011: RMBNil) which are denominated in USD, all other borrowings are denominated in RMB.

16. CONVERTIBLE BONDS

Convertible bonds	30 June 2012 (Unaudited) RMB’000 3,198,000	31 December 2011 (Audited) RMB’000 3,110,598

Convertible bonds amounting to RMB3,950,000,000 were issued on 1 August 2011, with a term of 6 years, by 39,500,000 number of bonds at nominal value of RMB100 each (the “Bonds”). The Bonds are convertible into A-shares of the Company at anytime between six months after the date of issue of the Bonds and the maturity date of the Bonds, being 2 February 2012 to 1 August 2017, at initial conversion price of RMB8.7 per share.

On 17 May 2012, the Company declared a 2011 final dividend of RMB0.1 per share (before tax). According to the terms of issuance of the Bonds and relevant regulations by China Securities Regulatory Commission, the Company changed the conversion price from RMB8.7 per share to RMB8.6 per share effective from 1 June 2012.

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

Period ended 30 June 2012

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

16. CONVERTIBLE BONDS (Continued)

If the Bonds have not been converted, they will be redeemed at 105% (with the last interest) of par value within five trading days after the maturity of the Bonds. The Bonds bear interest at 0.5% for the first year, 0.7% for the second year, 0.9% for the third year, 1.3% for the fourth year, 1.6% for the fifth year and 2% for the sixth year. The interests are payable annually in arrears on 1 August of each year.

Within the last two years of the Bonds, if the closing price of A-share is traded at lower of 70% of the initial conversion price for thirty consecutive trading days, the Bonds holders are entitled a one-off right to request the Company to redeem the Bonds wholly or partially at par, with interest accrued on that day.

The fair value of the liability component included in the Bonds, was calculated using a market interest rate for an equivalent non-convertible bond. The residual amount, representing the value of the equity conversion component, is included in shareholders’ equity in convertible bond equity reserve. The effective interest rate of the liability component is 5.6% (31 December 2011: 5.6%) per annum.

The movement of the Bonds recognised in the interim financial information is set out below:

Carrying amount on initial recognition Equity component on initial recognition Liability component on initial recognition Interest charge Carrying amount at 31 December 2011 Interest charge Effect of conversion of the Bonds on liability component Carrying amount at 30 June 2012	RMB’000 3,912,372 (873,043) 3,039,329 71,269 3,110,598 87,405 (3) 3,198,000

The fair value and effective interest rate of the liability component of the Bonds at 30 June 2012 is RMB3,198,000,000 (31 December 2011: RMB3,110,598,000) and 5.6% (31 December 2011: 5.6%) per annum respectively.

Interest expense of RMB87,405,000 (30 June 2011: RMB Nil) has been recognised in the condensed consolidated statement of comprehensive income in respect of the Bonds for the year ended 30 June 2012.

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

17. ISSUED CAPITAL

Registered, issued and fully paid: Listed H-Shares of RMB1.00 each At 1 January and 30 June Listed A-Shares of RMB1.00 each At 1 January Conversion of convertible bonds At 30 June Total capital	2012 (Unaudited) Number of shares RMB’000 1,296,000,000 1,296,000 2,108,552,270 2,108,552 343 1 2,108,552,613 2,108,553 3,404,552,613 3,404,553	2011 (Unaudited) Number of shares RMB’000 1,296,000,000 1,296,000 2,108,552,270 2,108,552 — — 2,108,552,270 2,108,552 3,404,552,270 3,404,552	2011 (Unaudited) Number of shares RMB’000 1,296,000,000 1,296,000 2,108,552,270 2,108,552 — — 2,108,552,270 2,108,552 3,404,552,270 3,404,552
	Number of
	shares




	1,296,000,000
			2,108,552 —

	2,108,552,270
	343
			2,108,552
	2,108,552,613
			3,404,552
	3,404,552,613

Convertible bonds: convertible bonds converted during the six months period to 30 June 2012 resulted in 343 shares being issued (six months ended 30 June 2011: RMB Nil). The related conversion price was RMB8.7 (six months ended 30 June 2011: RMB Nil) per share.

All of the ordinary shares were circulated without trading restriction at the period end date.

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

18. OPERATING LEASE ARRANGEMENT

(a) As lessor

The Group leases certain of its vessels under operating lease arrangements, with leases negotiated for terms ranging from 1 to 3 years.

As at 30 June 2012, the Group had total future minimum lease rental receivables under non-cancellable operating leases falling due as follows:

Within one year In the second to fifth year, inclusive	30 June 2012 (Unaudited) RMB’000 105,173 27,509 132,682	31 December 2011 (Audited) RMB’000 114,273 60,984 175,257

(b) As lessee

The Group entered into non-cancellable operating lease arrangements on vessels, vehicles and buildings. The leases are negotiated for terms ranging from 1 to 15 years.

As at 30 June 2012, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

Within one year In the second to fifth year, inclusive After five years	30 June 2012 (Unaudited) RMB’000 497,804 1,502,008 3,205,239 5,205,051	31 December 2011 (Audited) RMB’000 957,084 1,290,907 2,789,870 5,037,861

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

19. CONTINGENT LIABILITIES

(i) In August 2011, one of the Group’s cargo vessels “Bihuashan” collided with “Li Peng 1”, which caused “Li Peng 1” sunk afterwards. The Group is in a progress to setup a Limitation of Liability for Maritime Claims amounting to RMB22,250,000. Since the Group had been insured, all compensations will be borne by the insurance company. As at 30 June 2012, the Group is still in the process of settling all the issues concerned.
(ii) In January 2012, fuel leakage occurred in one of the Group’s tanker “Daiqing 75” during its voyage in Bohai Sea of the PRC. On 30 June 2012, claims on damage caused by the fuel leakage is RMB21,810,000. Since the Company had been insured with PICC Property and Casualty Company Limited and West of England Insurance Services (Luxembourg) S.A., all compensations will be borne by the insurance companies. As at 30 June 2012, the Group was still in the process of settling all the issues concerned.
(iii) East China LNG Shipping Investment Co. Ltd., a non wholly-owned subsidiary of the Company, holds 30% equity interests in each of Aquarius LNG Shipping Limited (“Aquarius LNG”) and Gemini LNG Shipping Limited (“Gemini LNG”), and North China LNG Shipping Investment Co. Ltd., a non whollyowned subsidiary of the Company, holds 30% equity interests in each of Capricorn LNG Shipping Limited (“Capricorn LNG”) and Aries LNG Shipping Limited (“Aries LNG”). Each of these four companies as set out below entered into Ship Building Contracts for the construction of one LNG vessel each. After the completion of the LNG vessels, four companies would, in accordance with time charters to be signed, lease the LNG vessels to the following Charterers:

Company name	Charterer
Aquarius LNG	Papua New Guinea Liquefied Natural Gas
	Global Company LDC
Gemini LNG	Papua New Guinea Liquefied Natural Gas
	Global Company LDC
Aries LNG	Mobil Australia Resources Company Pty Ltd.
Capricorn LNG	Mobil Australia Resources Company Pty Ltd.

Accordingly to the term of lease guarantees and taking into account of the possible increase in the value of the lease commitments and the percentage of shareholdings by the Company in the above four companies, the amount of lease guaranteed by the Company is limited to USD8.2 million (approximately RMB52 million).

The guarantee period is limited to that of the lease period, which is 20 years.

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

20. CAPITAL COMMITMENTS

In addition to the operating lease commitments detailed in note 18 above, the Group had the following capital commitments at 30 June 2012 of which RMB5,664,987,000 (31 December 2011: RMB6,514,365,000) will be due within one year.

Authorised and contracted for: Construction and purchases of vessels (Note 1) Equity investments (Note 2)	30 June 2012 (Unaudited) RMB’000 9,302,727 1,045,796 10,348,523	31 December 2011 (Audited) RMB’000 11,299,626 1,486,735 12,786,361

Note:

(1) According to the construction and purchase agreements entered into by the Group from 2007 to June 2012, these capital commitments will fall due as from 2012 to 2013 respectively.
(2) Included capital commitments in respect of equity investments is the commitment to invest in a jointly-controlled entity, Shenhua Zhonghai, of RMB1,029,668,000 (31 December 2011: RMB1,470,668,000).

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

21. RELATED PARTY TRANSACTIONS

In addition to the transactions and balances detailed elsewhere in the interim financial information, business transactions between the Group and its holding company, fellow subsidiaries, jointly-controlled entities as well as related parties for the periods, which are also considered by directors as related party transactions, are set out as below:

(1) A services agreement signed in October 2009 between the Company and China Shipping became effective subsequent to the approval by the independent shareholders at an extraordinary general meeting hold on 22 December 2009. Pursuant to the services agreement entered into in 2009, China Shipping, its subsidiaries or jointly-controlled entities will provide to the Group the necessary supporting shipping materials and services for the ongoing operating of the Group, including the provision of drydocking and repairs services, lubricating oil, fresh water supplies, raw materials and bunker oil, as well as other services. The service agreement is effective for 3 years from 1 January 2010 to 31 December 2012. The fees for the agreed supplies and services payable to China Shipping, were determined with reference to, depending on applicability and availability, any one among the state-fixed price, market price or cost.

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

21. RELATED PARTY TRANSACTIONS (Continued)

(1) (Continued)

Further details of the principal amounts paid by the Group to China Shipping, its subsidiaries or jointlycontrolled entities in respect of the services agreement for the period ended 30 June 2012 and 2011 are set out below:

Pricing basis Dry-docking, repairs, coating and vessels restructuring expenses State-fixed prices or market prices Supply of lubricating oil, fresh water supplies, raw materials, bunker oil, mechanical and electrical engineering, ship stores and repairs and maintenance services for life boats Market prices Greasiness treatment, maintenance of telecommunication and navigational services State-fixed prices Crew expenses Market prices Accommodation, lodging, medical services and transportation for employees State-fixed prices or market prices Miscellaneous management services Market prices Shipping and freight forwarding agency commissions Market prices Services fees on sale and purchase of vessels, accessories and other equipment Market prices	For the six months ended 30 June 2012 2011 Total value Total value (Unaudited) (Unaudited) RMB’000 RMB’000 128,887 66,791 1,035,503 1,409,074 21,609 21,764 14,646 24,196 6,120 2,476 11,617 12,843 49,063 54,179 994 4,437	For the six months ended 30 June 2012 2011 Total value Total value (Unaudited) (Unaudited) RMB’000 RMB’000 128,887 66,791 1,035,503 1,409,074 21,609 21,764 14,646 24,196 6,120 2,476 11,617 12,843 49,063 54,179 994 4,437

In connection with the above transactions and for other operating purposes, the Group made prepayments or advances to subsidiaries and jointly-controlled entities of China Shipping from time to time.

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued) Period ended 30 June 2012

21. RELATED PARTY TRANSACTIONS (Continued)

(2) Except for the related party transactions outlined above, details of the Group’s related party transactions with the holding company, fellow subsidiaries, jointly-controlled entities, associates and related companies are as follows:

Notes Vessel chartering charges paid (i) Vessel chartering income received Sale of vessels (ii) Rental income received Purchases of vessels (iii) Shipment income Loan Interest income Loan interest payment (iv)	For the six months ended 30 June 2012 2011 (Unaudited) (Unaudited) RMB’000 RMB’000 29,240 18,208 12,008 2,250 32,543 — 4,182 3,300 572,121 812,438 367,455 465,716 815 — 218,585 96,997

The Group has entered into the following agreements:

(i) On 22 December 2011, China Shipping (Hong Kong) Holdings Co., Limited (“CSHK”) and Xi Chuan Shipping S.A., an indirectly wholly-owned subsidiary of the Company, entered into a bare-boat charter contract where CSHK, will lease the tanker “Song Lin Wan” to Xi Chuan Shipping S.A. for a term of one year commencing from 1 January 2012 to 31 December 2012. The aggregate payment is up to USD4,392,000.

On 4 May 2009, Guangzhou Maritime Transport (Group) Co. Ltd (“Guangzhou Maritime”) and the Group entered into three bare-boats charter contract where Guangzhou Maritime will lease 3 vessels to the Company for a term of 3 years commencing from 4 May 2009 to 4 May 2012. The aggregate payment is RMB3,600,000 per annum.

(ii) The Company and Shanghai Shipping Group Company Digang Dili Recovery Company Limited (“Digang Dili”) entered into two sale and purchase agreements on 30 May 2012 whereby the Company agreed to sell and Digang Dili agreed to purchase two bulk vessels. The total consideration for the sale of the two vessels is approximately RMB32,543,000.

Digang Dili paid to the Company in cash a sum of RMB16,263,000 and RMB16,280,000 as consideration for the sale of the first bulk vessel “Hong Qi 202” and the second bulk vessel “Hong Qi 203” respectively. The net book value of the two bulk vessels is RMB8,848,000 and RMB8,848,000 respectively.

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

21. RELATED PARTY TRANSACTIONS (Continued)

(2) (Continued)

(iii) On 28 September 2010, the Company entered into 12 agreements with China Shipping Industrial Co., Ltd. (“CS Industrial”) and China Shipping Industrial (Jiangsu) Co., Ltd. (“CS Industrial (Jiangsu)”), both are fellow subsidiaries of the Company, for the construction of 12 vessels for the transportation of coal and other bulk cargo. The total consideration for the construction of the vessels is RMB2,553,600,000.

On 13 January 2012, China Shipping Development (Hong Kong) Marine Co., Limited, a wholly owned subsidiary of the Company, entered into an agreement with CS Industrial and CS Industrial (Jiangsu) for the construction of a vessel for the transportation of crude oil and refined oil. The total consideration for the construction of the vessel is approximately USD53,280,000.

On 15 June 2012, Shanghai Yinhua Shipping Co., Limited, a subsidiary of the Company, entered into an agreement with CS Industrial (Jiangsu) for the construction of a bulk vessel for the transportation of coal and other dry bulk cargo. The total consideration for the construction of the bulk vessel is RMB182,800,000.

During the period, the total consideration paid for the construction in progress of the vessels is approximately RMB572,121,000.

(iv) At the 2010 second board meeting held on 26 March 2010, the Company has passed the resolution of entering into the entrusted loan agreement with China Shipping and China Shipping Finance Co., Limited (“CS Finance”) whereby China Shipping entrusted CS Finance to provide a three-year loan in the amount of RMB1,300,000,000 to the Company. The loan is used to pay for the construction of 57,300 deadweight tons vessel. The interest rate is a preferential rate determined by the commercial bank interest rate on the date of drawdown of such loan by the Company. Interest payments are to be settled every quarter of the year, with the last interest payment date being the maturity date of the entrusted loan when the outstanding principal amount will also be repaid.

On 30 March 2010, the Company entered into a loan agreement with CS Finance whereby CS Finance provided a five-year loan in the amount up to RMB1,500,000,000 to the Company. The loan is used to finance the construction of 22 vessels. The interest rate is the preferential rate determined by applying a 10% discount to the 5-year term benchmark interest rate as published by the PBC on the date of drawdown of such loan by the Company, and interest will be adjusted annually. Interest payments are to be settled every quarter of the year and the principal would be repaid on 1 April 2015.

On 21 June 2011, the Company entered into a loan agreement with CS Finance whereby CS Finance provided a one-year loan in the amount up to RMB150,000,000 to the Company. The loan is used to finance business operation. The interest rate is fixed at 6.31% per annum and the principal would be repaid on 22 June 2012.

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

21. RELATED PARTY TRANSACTIONS (Continued)

(2) (Continued)

(iv) (Continued)

In August 2011, the Company entered into the first entrusted loan agreement with China Shipping and CS Finance whereby China Shipping entrusted CS Finance to provide a loan in the amount of RMB3,000,000,000 to the Company and the second entrusted loan agreement with Guangzhou Maritime and CS Finance whereby Guangzhou Maritime entrusted CS Finance to provide a loan in the amount of RMB400,000,000 to the Company.

The first entrusted loan has a term of seven years commenced from 9 August 2011 and ending on 8 August 2018. The interest rate is 6.51% per annum. CS Finance will also charge an administrative fee of RMB300,000 per annum.

The second entrusted loan has a term of one year commenced from 9 August 2011 and ending on 8 August 2012. The interest rate is 6.56% per annum. CS Finance will also charge a one-off administrative fee of RMB40,000.

On 23 December 2011, the Company entered into a loan agreement with CS Finance whereby CS Finance provided a one-year loan in the amount up to RMB200,000,000 to the Company. The loan is used to finance business operation. The interest rate is fixed at 6.56% per annum and the principal would be repaid on 24 December 2012.

On 26 March 2012, the Company entered into the entrusted loan agreement with China Shipping and CS Finance whereby China Shipping entrusted CS Finance to provide a loan in the amount of RMB2,000,000,000 to the Company. The loan has a term of three years commencing from 26 March 2012 and ending on 26 March 2015 at 5.02% per annum. CS Finance will also charge a one-off administrative fee of RMB600,000.

The related interest expenses RMB218,585,000 for the period ended 30 June 2012 have been included in the finance cost.

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

21. RELATED PARTY TRANSACTIONS (Continued)

(3) In October 2009, the Group has entered into the “Financial Services Framework Agreement” with China Shipping. The agreement has been passed at an extraordinary general meeting which was held on 22 December 2009. Pursuant to which China Shipping shall procure CS Finance to provide the Group with a range of financial services including (i) deposit services; (ii) loan services; (iii) settlement services and (iv) other financial services as approved by China Banking Regulatory commission. The Financial Services Framework Agreement will be effective for a term of 3 years commencing from the date when all the following conditions precedent under the Financial Services Framework Agreement are satisfied to the day immediately before the third anniversary of the commencement date.

(i) the legal representative or authorised person between the China Shipping and the Company have signed and stamped the Companies chops;
(ii) the resolution has been approved by the independent shareholder;
(iii) CS Finance has received its “Business Registration Certificate” and “Financial Certificate”; and
(iv) on the ground that the relevant laws and regulations (including the “Listing Rules”) have been fulfilled, except either party address not to continue the transactions, the “Financial Services Framework Agreement” will automatically renewed for a period of three years period ended.
(4) Outstanding balances with related parties
(i) Loan receivables represent loans to associates, which are unsecured, bear interests at LIBOR plus 3.3% to 4.8% over 3 months LIBOR per annum and repayable in year 2030 to year 2031.
(ii) Included in trade and bill receivables are the amounts due from jointly-controlled entities and fellow subsidiaries amounting RMB115,176,000 (31 December 2011: RMB61,314,000).
(iii) Included in prepayments, deposits and other receivables are the amounts due from fellow subsidiaries amounting RMB182,632,000 (31 December 2011: RMB211,139,000).
(iv) Included in cash and cash equivalent represents an amount of RMB747,477,000 (31 December 2011: RMB209,470,000) of bank balance deposited with CS Finance, a jointly-controlled entity of the company.
(v) Included in trade and bills payables are the amounts due to fellow subsidiaries amounting RMB442,347,000 (31 December 2011: RMB614,627,000).
(vi) Included in other payables and accruals are the amounts due to fellow subsidiaries amounting RMB45,274,000 (31 December 2011: RMB50,671,000).

Interim Report 2012 CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION (Continued)

Period ended 30 June 2012

21. RELATED PARTY TRANSACTIONS (Continued)

(4) Outstanding balances with related parties (Continued)
(vii) Included in other borrowings represent an amount of RMB1,595,151,000 (31 December 2011: RMB1,607,551,000) were borrowed from CS Finance, a jointly-controlled entity of the Company. As at 30 June 2012, the current and non-current portion of this borrowing amounted to RMB573,240,000 (31 December 2011: RMB566,000,000) and RMB1,021,911,000 (31 December 2011: RMB1,041,551,000) respectively.

Included in other borrowings represent an amount of RMB6,932,490,000 (31 December 2011: RMB4,300,000,000) were borrowed from the Company’s ultimate holding company. As at 30 June 2012, the current and non-current portion of this borrowing amounted to RMB1,932,490,000 (31 December 2011: RMB Nil) and RMB5,000,000,000 (31 December 2011: RMB4,300,000,000) respectively.

Included in other borrowings represent an amount of RMB Nil (31 December 2011: RMB400,000,000) were borrowed from Guangzhou Maritime, a fellow subsidiary of the Company. As at 30 June 2012, the current portion of this borrowing amounted to RMB Nil (31 December 2011: RMB400,000,000).

For further details please refer to note 21(2)(iv).

The amounts due from/(to) jointly-controlled entities and fellow subsidiaries are unsecured, noninterest bearing and repayable on demand.

22. EVENTS AFTER THE REPORTING PERIOD

(1) According to the twelfth Board meeting of the Company held on 20 July 2012, the Board approved a resolution whereby China Shipping Development (Hong Kong) Marine Co., Limited (“CSHK Development”), a wholly owned subsidiary of the Company, shall form a new company to be named China Shipping (Singapore) Petroleum Co. Ltd. (“CSSP”), with China Shipping Container Lines (Hong Kong) Co., Ltd and China Shipping Regional Holdings Sdn Bhd. The registered capital of CSSP is USD5,000,000, CSHK Development will contribute USD250,000 (approximately RMB1,600,000), representing 5% of the registered capital of CSSP.
(2) The issuance of corporate bonds with an aggregate nominal value of RMB5 billion for the Company was approved by China Securities Regulatory Commission (Zheng Jian Xu Ke [2012] No. 924). This issuance will be carried out in phases. In 2012 (the first phase), nominal value of corporate bonds to be issued amounting to RMB2.5 billion, totaling 25,000,000 bonds at nominal value RMB100 each (“A-Share corporate bonds”). The corporate bonds would be allotted to both the public through the Shanghai Stock Exchange trading system and institutional investors.

CHINA SHIPPING DEVELOPMENT COMPANY LIMITED Interim Report 2012

AI assistant

Dida Inc. — Interim / Quarterly Report 2012

50671_rns_2012-09-03_4f0ba279-3e11-455a-b56f-27c1ef0ee44d.pdf

MANAGEMENT DISCUSSION AND ANALYSIS

2. DISCUSSION AND ANALYSIS OF OPERATIONS OF THE GROUP DURING THE REPORTING PERIOD

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

(1) Shipping business - Oil shipments

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

(1) Shipping business - Oil shipments (Continued)

Transportation volume by specie

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

(2) Shipping business - Dry bulk shipments

A. Coal shipment

B. Iron ore shipping business

Transportation volume by specie

(2) Shipping business - Dry bulk shipments (Continued)

(3) Cost analysis

(3) Cost analysis (Continued)

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

2. DISCUSSION AND ANALYSIS OF OPERATIONS OF THE GROUP DURING THE REPORTING PERIOD (Continued)

(4) Interests in the jointly-controlled entities’ results

3. FINANCIAL ANALYSIS

(1) Net cash outflow/inflow

(2) Capital commitments

Note:

(3) Capital structure

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

3. FINANCIAL ANALYSIS (Continued)

(4) Notes, interest-bearing bank and other borrowings

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

3. FINANCIAL ANALYSIS (Continued)

(4) Notes, interest-bearing bank and other borrowings (Continued)

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

3. FINANCIAL ANALYSIS (Continued)

(4) Notes, interest-bearing bank and other borrowings (Continued)

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

3. FINANCIAL ANALYSIS (Continued)

(5) Risk on foreign currency

(6) Contingent liabilities

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

3. FINANCIAL ANALYSIS (Continued)

(6) Contingent liabilities (Continued)

(7) Events after the Reporting Period

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

3. FINANCIAL ANALYSIS (Continued)

(7) Events after the Reporting Period (Continued)

4. OTHERS

(1) Fleet expansion projects

5. OUTLOOK AND HIGHLIGHTS FOR THE SECOND HALF OF 2012

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

5. OUTLOOK AND HIGHLIGHTS FOR THE SECOND HALF OF 2012 (Continued)

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

5. OUTLOOK AND HIGHLIGHTS FOR THE SECOND HALF OF 2012 (Continued)

6. OTHER MATTERS

(1) Change of registered address in P.R.C.

(2) Changes in directors, supervisors and senior management

6. OTHER MATTERS (Continued)

(3) Directors’ and supervisors’ interests in contracts

(4) Directors’ and supervisors’ interests and short positions in shares and underlying shares of the Company

(5) Directors’ and supervisors’ rights to acquire shares or debentures

(6) Purchase, sale or redemption of the Company’s listed securities

6. OTHER MATTERS (Continued)

(7) Compliance with the Code on Corporate Governance Practices

(8) Audit Committee

(9) Remuneration Committee

(10) Compliance with the Model Code

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

6. OTHER MATTERS (Continued)

(11) Employees

(12) Investor Relations

By order of the Board

INTRODUCTION

SCOPE OF REVIEW

CONCLUSION

Baker Tilly Hong Kong Limited

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Dida Inc. Interim / Quarterly Report 2012