THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Orient Overseas (International) Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular

ORIENT OVERSEAS (INTERNATIONAL) LIMITED *

(Incorporated in Bermuda with limited liability)

(Stock code: 316)

VERY SUBSTANTIAL DISPOSAL PROPOSED SALE OF THE ENTIRE ISSUED SHARE CAPITALS OF TSI, CONSOLIDATED TERMINAL HOLDINGS AND GLOBAL

Sole Financial Adviser to Orient Overseas (International) Limited

A notice convening the SGM of the Company to be held at the Concord Room, 8th Floor, Renaissance Harbour View Hotel, 1 Harbour Road, Wanchai, Hong Kong on 19 December 2006 at 10:00 a.m. is set out on pages N-1 to N-2 of this Circular. A form of proxy for use by the Shareholders at the SGM is enclosed and whether or not you intend to attend the SGM in person, you are requested to complete and return it in accordance with the instructions printed thereon and deposit the same with the Company’s branch share registrar, Computershare Hong Kong Investor Services Limited, at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as practicable but in any event not later than 48 hours before the time appointed for holding the SGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM should you so wish.

* For identification purpose only

4 December 2006

			Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			5
APPENDIX I	—	ACCOUNTANTS’ REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
APPENDIX II	—	ADDITIONAL FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . .	II-1
APPENDIX III	—	PRO FORMA FINANCIAL INFORMATION
		OF THE REMAINING GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
APPENDIX IV	—	GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
NOTICE OF SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			N-1

— i —

DEFINITIONS

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

“Aggregate Consideration”

aggregate consideration for the Transaction, being US$2.35 billion (approximately HK$18.33 billion), of which:

(i) US$1.65 billion (approximately HK$12.87 billion) is allocated to the shareholding interest in TSI,
(ii) US$470 million (approximately HK$3.67 billion) is allocated to the shareholding interest in Consolidated Terminal Holdings, and
(iii) US$235 million (approximately HK$1.83 billion) is allocated to the shareholding interest in Global;

“Archmore”

Archmore Limited, a company incorporated in the Republic of Liberia;

“associate(s)”

has the meaning ascribed to it under the Listing Rules;

“Board”

the board of directors of the Company;

“Buyer”
0775150 B.C. Ltd. and 2119601 Ontario Limited, being newly formed subsidiaries of Ontario Teachers’ Pension Plan Board;

“CAD$”

Canadian Dollars, the lawful currency of Canada;
“Circular”
this circular, including the appendices hereto;

“Company” Orient Overseas (International) Limited, a company incorporated in Bermuda; “Completion” completion of the Transaction, and shall mean the Initial Completion and/or the Second Completion where applicable; “CLTI” Consolidated Leasing & Terminals, Inc., a company incorporated in Delaware, U.S.A., which holds the entire issued share capital of Global; “Consolidated Terminal Consolidated (Terminal Holdings) Limited, a company Holdings” incorporated in the British Virgin Islands, which is a whollyowned subsidiary of OOCL Terminals Holdings; “Consolidated Terminal Holdings 500 ordinary shares of par value US$1.00 each, representing Shares” the entire issued share capital of Consolidated Terminal Holdings; “Directors” the directors of the Company;

— 1 —

DEFINITIONS

“Edgemont”	Edgemont Investment Limited, a company incorporated in	the
	Republic of Liberia;
“Fortune Crest”	Fortune Crest Inc., a company incorporated in the British
	Virgin Islands;
“Gala Way”	Gala Way Company Inc., a company incorporated in	the
	British Virgin Islands;
“Global”	Global Terminal & Container Services, Inc., a company
	incorporated in New Jersey, U.S.A., which is a wholly-owned
	subsidiary of CLTI;
“Global Shares”	24,750 shares of common stock of no par value each,
	representing the entire issued share capital of Global;
“Group”	the Company and its subsidiaries;
“HK$”	Hong Kong Dollars, the lawful currency of The Hong Kong
	Special Administrative Region of the People’s Republic	of
	China;
“Initial Completion”	completion, at the option of the Sellers or the Buyer,	in
	respect of the sale and purchase of the TSI Shares and	the
	Global Shares respectively (but not in respect of	the
	Consolidated Terminal Holdings Shares);
“Javier”	Javier Associates Limited, a company incorporated in	the
	British Virgin Islands;
“Latest Practicable Date”	30 November 2006, being the latest practicable date before
	printing of this Circular for ascertaining certain information
	for the purpose of inclusion in this Circular;
“Listing Rules”	The Rules Governing the Listing of Securities on the Main
	Board of the Stock Exchange;
“NYCT”	New York Container Terminal, Inc., a company incorporated
	in New York, U.S.A.;
“Major Shareholders”	Wharncliff Limited and Gala Way Company Inc.;
“Model Code”	Model Code for Securities Transactions by Directors of Listed
	Issuers, as set out in Appendix 10 to the Listing Rules;
“Monterrey”	Monterrey Limited, a company incorporated in the Republic
	of Liberia;

— 2 —

DEFINITIONS

“Mr. Alan Tung”	Mr. Alan Lieh Sing Tung, an Executive Director of	the
	Company; nephew of Mr. C C Tung, Mrs. Peng and Mr. King,
	and son of Mr. C H Tung;
“Mr. C C Tung”	Mr. Chee Chen Tung, an Executive Director, Chairman,
	President and Chief Executive Officer of the Company;
	brother of Mr. C H Tung and Mrs. Peng, brother-in-law of	Mr.
	King and uncle of Mr. Alan Tung;
“Mr. C H Tung”	Mr. Chee Hwa Tung, brother of Mr. C C Tung and Mrs. Peng,
	brother-in-law of Mr. King and father of Mr. Alan Tung;
“Mr. King”	Mr. Roger King, a Non-Executive Director of the Company;
	brother-in-law of Mr. C H Tung, Mr. C C Tung and Mrs. Peng,
	and uncle of Mr. Alan Tung;
“Mrs. Peng”	Mrs. Shirley Shiao Ping Peng, sister of Mr. C H Tung and	Mr.
	C C Tung, sister-in-law of Mr. King and aunt of Mr. Alan
	Tung;
“OOCL Terminals Holdings”	OOCL (Terminals) Holdings Limited, which holds the entire
	issued share capital of Consolidated Terminal Holdings;
“Remaining Group”	the Group immediately after completion of the Transaction;
“Sale Shares”	the TSI Shares, the Consolidated Terminal Holdings Shares
	and the Global Shares;
“Second Completion”	the completion of the sale and purchase of the Consolidated
	Terminal Holdings Shares;
“Sellers”	TSI Holding, OOCL Terminals Holdings and CLTI;
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong);
“SGM”	a special general meeting of the Company to be convened	for
	the Shareholders to consider and, if thought fit, to approve	the
	Transaction;
“Shareholders”	shareholders of the Company;
“Shares”	ordinary shares of US$0.10 each in the share capital of	the
	Company;
“Springfield”	Springfield Corporation, a company incorporated in	the
	Republic of Liberia;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;

— 3 —

DEFINITIONS

“Stock Purchase Agreement”	agreement dated 21 November 2006 entered into between TSI
	Holding, OOCL Terminals Holdings, CLTI, the Company and
	the Buyer relating to the sale and purchase of the Sales
	Shares;
“TEU”	Twenty-foot equivalent container unit;
“THTI”	Tung Holdings (Trustee) Inc., a company wholly-owned by
	Mr. Chee Chen Tung, and which holds the voting rights in
	respect of the shares in the Company held by the Substantial
	Shareholders;
“TSI”	TSI Terminal Systems Inc., a company incorporated in British
	Columbia, Canada, which is a whollyowned subsidiary of TSI
	Holding;
“TSI Holding”	TSI Holding S.A., which holds the entire issued share capital
	of TSI;
“TSI Shares”	233,400 ordinary shares of par value CAD$1.00 each,
	representing the entire issued share capital of TSI;
“Transaction”	the sale by the Sellers and the purchase by the Buyer of the
	Sale Shares subject to the terms and conditions of the Stock
	Purchase Agreement;
“UBS Investment Bank”	UBS Investment Bank is a business group of UBS AG;
“U.S.A.”	United States of America;
“US$”	United States Dollars, the lawful currency of the United
	States of America;
“Wharncliff”	Wharncliff Limited, a company incorporated in the Republic
	of Liberia;
“Winfield”	Winfield Investment Limited, a company incorporated in the
	Republic of Liberia; and
“%”	per cent.

Note: The exchange rates used for reference purpose in this Circular are US$1.00 to HK$7.80 and CAD$1.00 to HK$6.82.

— 4 —

LETTER FROM THE BOARD

ORIENT OVERSEAS (INTERNATIONAL) LIMITED *

(Incorporated in Bermuda with limited liability)

(Stock code: 316)

Executive Directors:

Mr. Chee Chen TUNG (Chairman, President and Chief Executive Officer) Mr. Nicholas David SIMS (Vice President and Chief Financial Officer)

Mr. Philip Yiu Wah CHOW Mr. Alan Lieh Sing TUNG

Non-Executive Directors: Mr. Roger KING Mr. Tsann Rong CHANG

Principal Office:

33rd Floor Harbour Centre 25 Harbour Road Wanchai, Hong Kong

Registered Office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Independent Non-Executive Directors:

Mr. Simon MURRAY

Dr. Victor Kwok King FUNG Prof. Richard Yue Chim WONG

4 December 2006

To the Shareholders of the Company

Dear Sir or Madam,

VERY SUBSTANTIAL DISPOSAL PROPOSED SALE OF THE ENTIRE ISSUED SHARE CAPITALS OF TSI, CONSOLIDATED TERMINAL HOLDINGS AND GLOBAL

INTRODUCTION

On 23 November 2006, the Company announced that the Company, and its indirect wholly owned subsidiaries, TSI Holding, OOCL Terminals Holdings and CLTI had entered into a Stock Purchase Agreement dated 21 November 2006 with the Buyer pursuant to which the Sellers have agreed to sell

* for identification only

— 5 —

LETTER FROM THE BOARD

and the Buyer has agreed to purchase the entire issued share capital of each of TSI, Consolidated Terminal Holdings and Global for an aggregate consideration of US$2.35 billion (approximately HK$18.33 billion). The Buyer has also agreed to assume net debt of approximately US$60 million (approximately HK$468 million).

The entities being sold, directly or through their respective subsidiaries, operate four North American container terminals. TSI Holding is the sole shareholder of TSI, which operates two container terminals in the Port of Vancouver, Canada. OOCL Terminals Holdings is the sole shareholder of Consolidated Terminal Holdings, which through NYCT, an indirect wholly-owned subsidiary of OOCL Terminals Holdings and Consolidated Terminal Holdings, operates a container terminal in the Port of New York, U.S.A. CLTI is the sole shareholder of Global, which owns and operates a container terminal in the Port of New Jersey, U.S.A. They are third party multi-user container terminals and are separate and stand-alone businesses from the main operations of the Group.

After the Transaction, the Group will continue to own and operate its existing terminals at Kaohsiung Container Terminal and Long Beach, California, U.S.A., and maintain its investments in Tianjin Port Alliance International Container Terminal Co., Ltd. and Ningbo Far East Terminal Co. Limited. The Company currently has no plans to dispose of these terminals and investments as it and its alliance partners are the principal users of these terminals.

UBS Investment Bank is acting as the sole financial adviser to the Company in relation to the Transaction.

The purpose of this Circular is:

(a) to provide you with the details on, among other things, the Transaction; and
(b) to give you notice of the SGM to consider and, if thought fit, to approve the Transaction.

THE STOCK PURCHASE AGREEMENT

Date

21 November 2006

Parties involved

(a) TSI Holding
(b) OOCL Terminals Holdings
(c) CLTI
(d) the Company

— 6 —

LETTER FROM THE BOARD

(e) 0775150 B.C. Ltd.
(f) 2119601 Ontario Limited

Subject Matter

The sale and purchase of the Sale Shares.

Consideration

The Aggregate Consideration for the sale and purchase of the Sale Shares is US$2.35 billion (approximately HK$18.33 billion) in cash for 100% of the Sale Shares. Additionally, the Buyer will assume net debt of approximately US$60 million (approximately HK$468 million). The consideration was determined after having conducted an open bidding process.

In the event that the conditions to the sale and purchase of the Sale Shares, other than the consent from the Port Authority of New York and New Jersey (which is a condition to completion of the sale of the Consolidated Terminal Holdings Shares), are satisfied or otherwise waived, the Sellers or the Buyer may elect to proceed to Initial Completion in respect of the sale and purchase of the TSI Shares and the Global Shares and defer completion of the sale and purchase of the Consolidated Terminal Holdings Shares. At Initial Completion payment shall be made in respect of the sale and purchase of the TSI Shares and the Global Shares of an aggregate amount of US$1.88 billion (approximately HK$14.66 billion). In relation to the sale and purchase of the Consolidated Terminal Holdings Shares, to the extent that the parties are subsequently able prior to 31 May 2007 to satisfy the conditions relating to those shares that were outstanding at the Initial Completion, the parties shall proceed to Second Completion and the Buyer shall pay the consideration of US$470 million (approximately HK$3.67 billion) in respect of the purchase of such shares at that time.

In the event that Completion occurs after 31 December 2006, the Buyer shall additionally pay to the Sellers by way of additional consideration an adjustment amount equal to 0.5% per month of the Aggregate Consideration calculated on a daily basis for the period from 31 December 2006 until the day immediately preceding Completion. If the Sellers or the Buyer elect to proceed to Initial Completion after 31 December 2006, the Buyer shall pay to the Sellers at Initial Completion an adjustment amount on the portion of the Aggregate Consideration relating to the TSI Shares and the Global Shares. If the parties subsequently proceed to the Second Completion relating to the Consolidated Terminal Holdings Shares after 31 December 2006, the Buyer shall pay an adjustment to the Sellers at Second Completion on the portion of the Aggregate Consideration relating to the Consolidated Terminal Holdings Shares.

Subject to certain withholding payments pursuant to the Income Tax Act (Canada) in respect of the purchase of the TSI Shares, the Buyer shall pay the Aggregate Consideration at Completion or Initial Completion, if applicable. In the event that TSI Holding qualifies for an exemption under the Income Tax Act (Canada) and a certificate to such effect is received from the Minister of National Revenue (Canada), amounts withheld at Completion or Initial Completion, as the case may be, from the sale of the TSI Shares shall be remitted to TSI Holding on the 30th day following the month in which the sale and purchase of the TSI Shares is completed.

— 7 —

LETTER FROM THE BOARD

Conditions Precedent and Completion

The sale and purchase of the Sale Shares pursuant to the Stock Purchase Agreement are conditional upon the satisfaction or (where applicable) waiver of a number of conditions, including the following:

(i) the representations and warranties made by the Sellers and the Buyer in the Stock Purchase Agreement being true and correct (without regard to materiality) on the date of Completion as if made at that date except to the extent that the failure of such representation and warranties to be so true and correct would not have, or be reasonably likely to have, a material adverse effect on the results of operations, assets, conditions (financial or otherwise), business or liabilities of TSI, Consolidated Terminal Holdings, Global and their respective subsidiaries taken as a whole;
(ii) the Sellers and the Buyer shall have performed all obligations and complied with all covenants in the Stock Purchase Agreement that are required to be performed or complied with by each of them at or prior to the Completion in all material respects;
(iii) completion by the Sellers of a reorganisation of the capital structure, including by way of issuing a new class of shares, and amendments to the organisational or constitutional documents and status of the entities being sold and their subsidiaries for the purposes of facilitating completion of the sale and purchase of the Sale Shares;
(iv) the Shareholders shall have passed an ordinary resolution approving the Transaction;
(v) the waiting period under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have expired or been terminated;
(vi) the Canadian regulatory authorities shall have issued an approval, or the waiting period shall have expired under the Competition Act (Canada), as amended;
(vii) the receipt by the Sellers of written notice from the Committee on Foreign Investment in the U.S.A. (“CFIUS”) that the Transaction is not subject to Section 721 of the Defense Production Act of 1950 effected by Section 5021 of the Omnibus Trade and Competitiveness Act of 1988 (“Exon-Florio”), the determination by CFIUS under §800.502 of Exon-Florio not to undertake an investigation of the Transaction or the determination by the President of the U.S.A. not to exercise its authority under §721 of Exon-Florio with respect to the Transaction;
(viii)the Vancouver Port Authority shall have consented to the change of control resulting from the Transaction, as required under (i) a lease dated as of 1 January 1993 between the Vancouver Port Authority and TSI, as amended, (ii) a lease (Pod 4) dated as of 1 January 2004 between the Vancouver Port Authority and TSI, as amended, and (iii) a lease (Pod 3) dated as of 1 January 2004 between the Vancouver Port Authority and TSI, as amended, and, in each case, certain ancillary documents entered into in connection therewith;

— 8 —

LETTER FROM THE BOARD

(ix) the Port Authority of New York and New Jersey shall have consented to the change of control resulting from the Transaction, as required under an agreement dated as of 30 June 1995 between the Port Authority of New York and New Jersey and NYCT, as amended, and certain ancillary documents entered into in connection therewith.

Conditions (iv) and (v) above may not be waived by the parties. In relation to conditions (i) and (ii), the Sellers’ and the Buyer’s respective representations and warranties and their respective performance of obligations and covenants in the Stock Purchase Agreement may be waived by the other party or parties. Conditions (vi) to (ix) above may be waived by agreement of the parties to the Stock Purchase Agreement. Condition (iii) above may only be waived by the Buyer. Any such waiver must be in writing and signed by authorised representatives of the relevant parties.

Completion shall take place on the third business day following the satisfaction or waiver by the Sellers or the Buyer of the conditions to which its or their obligations are subject, provided that if Completion has not occurred by 31 May 2007, then either the Sellers or the Buyer may terminate the Stock Purchase Agreement.

In the event that the conditions to the sale and purchase of the Sale Shares, other than the consent of the Port Authority of New York and New Jersey (which is a condition to completion of the sale of Consolidated Terminal Holdings Shares), are satisfied or otherwise waived, the Sellers or the Buyer may elect to proceed to Initial Completion and defer completion of the sale and purchase of the Consolidated Terminal Holdings Shares. Thereafter, and until the termination date of 31 May 2007, the Buyer and OOCL Terminals Holdings shall continue to cause to be done all reasonable acts and things as may be necessary, proper or advisable, consistent with applicable laws, to proceed to Second Completion as soon as reasonably practicable, provided that if Second Completion has not occurred by 31 May 2007, then either the Sellers or the Buyer may terminate the Stock Purchase Agreement insofar as it relates to the sale and purchase of the Consolidated Terminal Holdings Shares.

The Company will make an announcement as to the progress of the Completion of the Transaction.

As at the Latest Practicable Date, none of the conditions have yet been fulfilled and/or waived.

The parties to the Stock Purchase Agreement expect that the Completion will take place by the end of the first quarter of 2007.

INFORMATION ON TSI, CONSOLIDATED TERMINAL HOLDINGS AND GLOBAL

As at the date of the Stock Purchase Agreement, TSI Holding, OOCL Terminals Holdings and CLTI held 100% of the issued share capital of each of TSI, Consolidated Terminal Holdings and Global respectively. Following Completion of the Transaction, TSI, Consolidated Terminal Holdings and Global will cease to be subsidiaries of TSI Holding, OOCL Terminals Holdings and CLTI and the Buyer will be the holder of 100% of the issued share capital of each of TSI, Consolidated Terminal Holdings and Global.

— 9 —

LETTER FROM THE BOARD

The audited combined total net assets of the Sale Shares at 30 June 2006 as set out in Appendix I was approximately US$199.9 million (approximately HK$1.56 billion) attributable as follows:-

			million
Global			52.1
Consolidated	Terminal	Holdings	32.1
TSI			115.7

The combined results attributable to the Sale Shares for the year ended 31 December 2004 and for the year ended 31 December 2005 were as follows:

(i) the combined total earnings before interest, tax, depreciation and amortization for the year ended 31 December 2004 was approximately US$66.0 million (approximately HK$514.8 million) and separately as follows:-

			million
Global			11.6
Consolidated	Terminal	Holdings	20.3
TSI			34.1

(ii) the combined total earnings before interest, tax, depreciation and amortization for the year ended 31 December 2005 was approximately US$76.4 million (approximately HK$595.9 million) and separately as follows:-

			million
Global			17.6
Consolidated	Terminal	Holdings	10.4
TSI			48.4

(iii) the combined total net profits for year ended 31 December 2004 before taxation was approximately US$42.8 million (approximately HK$333.8 million); and after taxation, approximately US$28.2 million (approximately HK$220.0 million) and separately as follows:-

Before Taxation

			million
Global			4.6
Consolidated	Terminal	Holdings	16.7
TSI			21.5

— 10 —

LETTER FROM THE BOARD

	After Taxation
		US$ million
	Global	2.8
	Consolidated Terminal Holdings	12.3
	TSI	13.1
(iv)	the combined total net profits for year ended 31 December 2005 before taxation was
	approximately US$45.4 million (approximately HK$354.1 million); and after taxation,
	approximately US$36.1 million (approximately HK$281.6 million) and separately as
	follows:-
	Before Taxation
		US$ million
	Global	11.3
	Consolidated Terminal Holdings	4.4
	TSI	29.7
	After Taxation
		US$ million
	Global	6.6
	Consolidated Terminal Holdings	9.3
	TSI	20.2

The audited consolidated total assets and total liabilities of the Group amounted to approximately US$4,970.9 million (HK$38,773.0 million) and US$2,476.0 million (HK$19,312.8 million) respectively as at 30 June 2006. Upon Completion, the unaudited pro forma total assets and total liabilities of the Remaining Group as at 30 June 2006, will be approximately US$6,774.6 million (HK$52,841.9 million) and US$2,291.7 million (HK$17,875.3 million) respectively.

The financial information contained in this Circular has been prepared in accordance with the Hong Kong Financial Reporting Standards.

— 11 —

LETTER FROM THE BOARD

PROCEEDS FROM THE TRANSACTION

The Company has not currently made any decision as to the use of proceeds from the Transaction, and will undertake a review of the potential uses of proceeds from the Transaction, including expansion of the core businesses of the Group and mechanisms for returning capital to Shareholders such as special dividends and share repurchases. Pending the outcome of the review, the proceeds from the Transaction will be retained by the Company. As the Company expects that Completion will take place by the end of the first quarter of 2007, it anticipates providing further details by the time it releases its full year results in March 2007.

FINANCIAL EFFECT OF AND REASONS FOR THE TRANSACTION

TSI, Consolidated Terminal Holdings and Global operate container terminals in Vancouver, New York and New Jersey. The container terminals recorded a total throughput of 2,567,720 TEUs for the twelve months ended 30 June 2006 and have since experienced strong growth. Major expansion schemes are planned for both Deltaport in the Port of Vancouver and New York Container Terminal in the Port of New York. The container terminals are separate and stand-alone businesses from the main operations of the Group. With the rapid and sustained global growth in container terminal throughput, the market value of these container terminals has risen significantly. The Company believes that the true value of these assets has not been fully recognised in its recent share price and, as a result, the Company is of the view that a disposal of the container terminals at the purchase price will unlock substantial value for the Shareholders.

While the Group is a user of these terminals, it represents only a minority of the total throughput and user contracts are negotiated on an arm’s length and purely commercial basis. The Company has on-going terminal usage contracts with each of the entities being sold, the earliest of which is expiring at the end of 2007. The Company intends to initiate discussions with the Buyer relating to the extension of such arrangements, but any such extension is separate from the Transaction.

Until Completion (or, if applicable, Initial Completion and Second Completion as appropriate), TSI, Consolidated Terminal Holdings and Global are wholly-owned subsidiaries of the Company. Immediately after Completion, (or, if applicable, Initial Completion and Second Completion as appropriate), the Company will no longer hold any interest in the Sale Shares. TSI, Consolidated Terminal Holdings and Global will cease to be subsidiaries of the Company upon Completion (or, if applicable, Initial Completion and Second Completion as appropriate), and their assets and liabilities will no longer be included in the Company’s consolidated balance sheet after Completion (or, if applicable, Initial Completion and Second Completion as appropriate).

Upon Completion, the Company is expected to realise an estimated gain of approximately US$1.98 billion (approximately HK$15.4 billion) (please refer to Note 4(c) in Appendix III) from the Transaction, which is expected to be accounted for in the consolidated financial statements of the Company as set out in the “Consideration” and “Conditions Precedent and Completion” section of this letter. The estimated gain is derived from the Aggregate Consideration less the total of: (i) the net asset value; (ii) estimated expenses; and (iii) taxes relating to Transaction.

Further information regarding the financial effect of the Transaction is set out in Appendix III.

— 12 —

LETTER FROM THE BOARD

INFORMATION OF THE GROUP

The principal business of the Group is container transport and logistics services, ports and terminals and property development and investment.

Orient Overseas Container Line Limited, a wholly owned subsidiary of the Company operating under the trade name OOCL, is one of the world’s largest integrated international transportation, logistics and terminal companies, and is one of Hong Kong’s most recognised global brands. OOCL is one of the leading international carriers serving China, providing the full range of logistics and transportation services throughout the country. It is also an industry leader in the use of information technology and e-commerce to manage the entire cargo process.

The Group’s property development and investment division is focused primarily on opportunities in China. The Group continues to build its development business in the Greater Shanghai area. Its pipeline projects include residential, commercial, retail and hotel products. In addition, the Group holds an eight percent interest in Beijing Orient Plaza, one of Beijing’s most prestigious commercial and office developments in Beijing and wholly owns Wall Street Plaza, a commercial development in New York City. The Group will continue to work towards the creation of a long term and balanced property business for the future.

INFORMATION ON THE BUYER

The Ontario Teachers’ Pension Plan is an independent corporation responsible for investing the CAD$96 billion (approximately HK$654.8 billion) fund and administering the pensions of Ontario’s 163,000 elementary and secondary school teachers and 101,000 retired teachers.

To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, the Buyer and its ultimate beneficial owner are independent third parties, and not connected with any of the directors, chief executive or substantial shareholders of the Company or its subsidiaries, and of their respective associates.

LISTING RULES IMPLICATIONS FOR THE COMPANY

The Transaction constitutes a very substantial disposal of the Company under Chapter 14 of the Listing Rules, and is subject to the approval of the Shareholders at the SGM. No Shareholder is required to abstain from voting at the SGM.

Set out on pages N-1 to N-2 of this Circular is a notice of the SGM to be held at the Concord Room, 8th Floor, Renaissance Harbour View Hotel, 1 Harbour Road, Wanchai, Hong Kong on 19 December 2006 at 10:00 a.m.. Whether or not you intend to attend the SGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar, Computershare Hong Kong Investor Services Limited, at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the SGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM should you so wish.

— 13 —

LETTER FROM THE BOARD

IRREVOCABLE UNDERTAKING(S) FROM MAJOR SHAREHOLDER(S)

At the request of the Buyer, Tung Holdings (Trustee) Inc., which holds the voting rights in respect of Shares held by the Major Shareholders representing approximately 52.19% of the entire issued share capital of the Company, has given an irrevocable undertaking to the Buyer to vote in favour of the resolution to be proposed to the Shareholders to approve the Transaction.

RECOMMENDATION

Having considered the factors and reasons set out herein, the Directors, including the independent non-executive Directors, are of the opinion that the Stock Purchase Agreement is on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the ordinary resolution to be put forward at the SGM.

ADDITIONAL INFORMATION

This document constitutes the Circular which the Company is required to send to you pursuant to the Listing Rules in respect of the Transaction.

Your attention is drawn to the information set out in Appendices I, II, III and IV to this Circular.

Yours faithfully, By order of the Board Chee Chen Tung Chairman

— 14 —

ACCOUNTANTS’ REPORT

APPENDIX I

The following is the text of the accountants’ report from PricewaterhouseCoopers, the auditors and reporting accountants of the Company for each of the three years ended 31st December 2003, 2004 and 2005 and six months ended 30th June 2005 and 2006, prepared for the purpose of incorporation in this circular.

==> picture [92 x 55] intentionally omitted <==

4th December 2006

The Directors

Orient Overseas (International) Limited

Dear Sirs,

We set out below our report on the financial information relating to Orient Overseas (International) Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) for the three years ended 31st December 2003, 2004 and 2005 and six months ended 30th June 2005 and 2006 (the “Relevant Periods”) for inclusion in the circular of the Company dated 4th December 2006 in connection with the sale of the entire issued share capital of each of TSI Terminal Systems Inc., Consolidated (Terminal Holdings) Limited and Global Terminal & Container Services, Inc. (the “Circular”).

The Company was incorporated in Bermuda on 29th July 1986 with limited liability under the Company Act 1981 of Bermuda. As at the date of this report, the Company had direct and indirect interest in the principal subsidiaries as set out on pages I-79 to I-93 of section II below. All companies comprising the Group have adopted 31st December as their financial year end date. We have audited the consolidated financial statements of the Group for each of the three years ended 31st December 2003, 2004 and 2005 and the six months ended 30th June 2006 which have been prepared in accordance with Hong Kong Financial Reporting Standards. No audited consolidated financial statements of the Group have been prepared for the six months ended 30th June 2005.

The financial information as set out in section I to IV below (the “Financial Information”) has been prepared based on audited consolidated financial statements of the Group for each of the three years ended 31st December 2003, 2004 and 2005 and the six months ended 30th June 2006 and the unaudited consolidated financial statements of the Group for the six months ended 30th June 2005 after making such adjustments as are appropriate. The Directors of the Company are responsible for preparing these financial statements which give a true and fair view. In preparing financial statements which give a true and fair view, it is fundamental that appropriate accounting policies are selected and applied consistently.

I-1

ACCOUNTANTS’ REPORT

APPENDIX I

For the purpose of this report, we have examined the audited consolidated financial statements of the Group for the three years ended 31st December 2003, 2004 and 2005 and the six months ended 30th June 2006 and have carried out such additional procedures as are necessary in accordance with the Auditing Guidance 3.340 “Prospectuses and the Reporting Accountants” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). In addition, we have reviewed the consolidated financial statements of the Group for the six months ended 30th June 2005 in accordance with Statement of Auditing Standards 700 “Engagements to review interim financial reports” issued by the HKICPA. A review consists principally of making enquiries of the Group management and applying analytical procedures to the consolidated financial statements and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the consolidated financial statements for the six months ended 30th June 2005.

The Directors of the Company are responsible for the Financial Information. It is our responsibility to form an independent opinion and conclusion, based on our examination and review, on the Financial Information and to report our opinion and conclusion.

In our opinion, the Financial Information, for the purpose of this report and prepared on the basis set out in Section II below, gives a true and fair view of the state of affairs of the Group and the Company as at 31st December 2003, 2004, 2005 and 30th June 2006 and of the consolidated results and cash flows of the Group for the periods then ended. Moreover, on the basis of our review which does not constitute an audit, we are not aware of any material modifications that should be made to the Financial Information for the six months ended 30th June 2005.

I-2

ACCOUNTANTS’ REPORT

APPENDIX I

I. FINANCIAL INFORMATION

Consolidated Profit and Loss Accounts

					Six months ended	Six months ended
		Years ended 31st December			30th	June
	Note	2003	2004	2005	2005	2006
US$’000					(Unaudited)
Turnover	5	3,241,113	4,140,328	4,696,241	2,247,864	2,386,340
Operating costs	6	(2,520,202)	(3,012,758)	(3,534,302)	(1,704,289)	(1,938,936)
Gross profit		720,911	1,127,570	1,161,939	543,575	447,404
Fair value gain from an
investment property		—	—	—	—	75,000
Other operating income	7	36,319	37,090	76,294	28,812	44,045
Other operating expenses	8	(376,402)	(435,652)	(493,307)	(221,351)	(224,299)
Operating profit	11	380,828	729,008	744,926	351,036	342,150
Finance costs	12	(40,184)	(43,787)	(61,659)	(27,199)	(33,273)
Share of profits less
losses of jointly
controlled entities	20	6,615	11,116	6,950	5,609	2,345
Share of loss of an
associated company	21	—	—	(84)	—	(37)
Profit before taxation		347,259	696,337	690,133	329,446	311,185
Taxation	13	(18,098)	(25,739)	(38,842)	(20,489)	(30,629)
Profit for the
year/period		329,161	670,598	651,291	308,957	280,556
Attributable to:
Equity holders of the
Company		329,044	670,449	650,854	308,859	280,500
Minority interests		117	149	437	98	56
		329,161	670,598	651,291	308,957	280,556
Dividends	15	84,330	170,688	169,292	75,261	68,837
Earnings per ordinary
share (US cents)
Basic and diluted	14	54.5	108.5	104.0	49.4	44.8

I-3

ACCOUNTANTS’ REPORT

APPENDIX I

Consolidated Balance Sheets

As at 31st December 2003 2004 2005 1,476,399 2,132,066 2,593,946 100,000 100,000 100,000 3,399 3,110 7,787 24,298 31,255 19,857 — — 7,916 15,820 16,927 21,030 10,960 15,352 8,203 5,145 5,796 6,683 6,788 3,508 13,021 119,202 111,953 101,859 101,898 102,288 93,569	As at 31st December 2003 2004 2005 1,476,399 2,132,066 2,593,946 100,000 100,000 100,000 3,399 3,110 7,787 24,298 31,255 19,857 — — 7,916 15,820 16,927 21,030 10,960 15,352 8,203 5,145 5,796 6,683 6,788 3,508 13,021 119,202 111,953 101,859 101,898 102,288 93,569	As at 31st December 2003 2004 2005 1,476,399 2,132,066 2,593,946 100,000 100,000 100,000 3,399 3,110 7,787 24,298 31,255 19,857 — — 7,916 15,820 16,927 21,030 10,960 15,352 8,203 5,145 5,796 6,683 6,788 3,508 13,021 119,202 111,953 101,859 101,898 102,288 93,569	As at 30th June 2006 2,663,345 175,000 7,751 21,769 14,879 27,804 5,955 6,081 15,611 91,593 86,103
1,863,909 78,224 24,257 310,062 108,165 — 557,239 1,077,947	2,522,255 97,959 30,008 359,497 249,834 — 755,049 1,492,347	2,973,871 181,545 44,511 415,090 237,004 354 962,541 1,841,045	3,115,891
			192,131 66,924 563,471 227,272 992 804,212
			1,855,002
2,941,856	4,014,602	4,814,916	4,970,893
47,018 1,063,736 1,110,754 7,850 1,118,604	56,890 1,752,519 1,809,409 7,808 1,817,217	62,579 2,221,751 2,284,330 8,129 2,292,459	62,579 2,420,283
			2,482,862 12,045
			2,494,907

I-4

ACCOUNTANTS’ REPORT

APPENDIX I

Consolidated Balance Sheets (Continued)

					As at
		As at	31st December		30th June
	Note	2003	2004	2005	2006
US$’000
LIABILITIES
Non-current liabilities
Borrowings	36	1,020,163	1,427,690	1,650,044	1,610,396
Deferred taxation liabilities	23	37,624	40,166	50,204	45,770
Pension and retirement liabilities	24	11,117	14,141	15,080	14,743
		1,068,904	1,481,997	1,715,328	1,670,909
Current liabilities
Creditors and accruals	37	486,244	553,535	603,045	575,899
Derivative financial instruments	32	—	—	4,592	5,182
Borrowings	36	264,945	153,809	188,548	209,486
Current taxation		3,159	8,044	10,944	14,510
		754,348	715,388	807,129	805,077
Total liabilities		1,823,252	2,197,385	2,522,457	2,475,986
Total equity and liabilities		2,941,856	4,014,602	4,814,916	4,970,893
Net current assets		323,599	776,959	1,033,916	1,049,925
Total assets less current liabilities		2,187,508	3,299,214	4,007,787	4,165,816

I-5

ACCOUNTANTS’ REPORT

APPENDIX I

Balance Sheets

As at 31st December 2003 2004 2005 169,482 169,482 169,482 57 75 91	As at 31st December 2003 2004 2005 169,482 169,482 169,482 57 75 91	As at 31st December 2003 2004 2005 169,482 169,482 169,482 57 75 91	As at 30th June 2006 169,482 102
169,539 53 688,368 15,728 704,149	169,557 107 1,012,308 8,515 1,020,930	169,573 53 1,195,708 2,505 1,198,266	169,584
			7 1,187,912 2,352
			1,190,271
873,688	1,190,487	1,367,839	1,359,855
47,018 297,438 344,456 1,219 528,013 529,232	56,890 424,768 481,658 1,604 707,225 708,829	62,579 459,773 522,352 1,587 843,900 845,487	62,579 366,104
			428,683
			1,560 929,612
			931,172
873,688 174,917 344,456	1,190,487 312,101 481,658	1,367,839 352,779 522,352	1,359,855
			259,099
			428,683

I-6

ACCOUNTANTS’ REPORT

APPENDIX I

Consolidated Cash Flow Statements

Years ended 31st December 2003 2004 533,993 852,123 (20,227) (21,308) (15,296) (17,153) (6,304) (6,512) — — (12,355) (27,784)	Years ended 31st December 2003 2004 533,993 852,123 (20,227) (21,308) (15,296) (17,153) (6,304) (6,512) — — (12,355) (27,784)	Six months ended 30th June 2005 2005 2006 (Unaudited) 818,422 341,122 106,045 (25,139) (12,814) (15,101) (32,521) (11,638) (22,166) (5,916) (5,917) (5,293) (661) — — (39,564) (21,081) (19,797) 714,621 289,672 43,688 15,089 2,741 9,949 350 81 424 — — — — — — — — — (302,790) (83,117) (145,864) (6,743) (125) (54) — — — (187) (187) — (8,000) — (7,000) (4,918) — — (35,297) (35,297) — 18,165 15,142 (550) 12,830 5,218 9,732 8,621 (31,452) 10,095 (3,000) — — (9,239) (4,264) (8,505) 8,719 855 7,466 32,748 18,717 27,035 1,277 579 786 18 3 17 — — 4,000 508 267 1,030 (271,849) (110,839) (91,439)	Six months ended 30th June 2005 2005 2006 (Unaudited) 818,422 341,122 106,045 (25,139) (12,814) (15,101) (32,521) (11,638) (22,166) (5,916) (5,917) (5,293) (661) — — (39,564) (21,081) (19,797) 714,621 289,672 43,688 15,089 2,741 9,949 350 81 424 — — — — — — — — — (302,790) (83,117) (145,864) (6,743) (125) (54) — — — (187) (187) — (8,000) — (7,000) (4,918) — — (35,297) (35,297) — 18,165 15,142 (550) 12,830 5,218 9,732 8,621 (31,452) 10,095 (3,000) — — (9,239) (4,264) (8,505) 8,719 855 7,466 32,748 18,717 27,035 1,277 579 786 18 3 17 — — 4,000 508 267 1,030 (271,849) (110,839) (91,439)	Six months ended 30th June 2005 2005 2006 (Unaudited) 818,422 341,122 106,045 (25,139) (12,814) (15,101) (32,521) (11,638) (22,166) (5,916) (5,917) (5,293) (661) — — (39,564) (21,081) (19,797) 714,621 289,672 43,688 15,089 2,741 9,949 350 81 424 — — — — — — — — — (302,790) (83,117) (145,864) (6,743) (125) (54) — — — (187) (187) — (8,000) — (7,000) (4,918) — — (35,297) (35,297) — 18,165 15,142 (550) 12,830 5,218 9,732 8,621 (31,452) 10,095 (3,000) — — (9,239) (4,264) (8,505) 8,719 855 7,466 32,748 18,717 27,035 1,277 579 786 18 3 17 — — 4,000 508 267 1,030 (271,849) (110,839) (91,439)
479,811 90,945 1,812 — 9,500 — (226,163) (258) (10,000) — — — — (795) (53,889) 13,617 (11,825) (2,732) (2,380) 13,660 867 2 — 9,188 (168,451)	779,366 7,679 5,394 1,765 — 137 (425,763) (163) — (98) — — — (15,260) (141,669) 2,169 — (6,992) (394) 20,919 1,224 49 — 18,521 (532,482)	714,621 15,089 350 — — — (302,790) (6,743) — (187) (8,000) (4,918) (35,297) 18,165 12,830 8,621 (3,000) (9,239) 8,719 32,748 1,277 18 — 508 (271,849)	289,672 2,741 81 — — — (83,117) (125) — (187) — — (35,297) 15,142 5,218 (31,452) — (4,264) 855 18,717 579 3 — 267 (110,839)	43,688
				9,949 424 — — — (145,864 (54 — — (7,000 — — (550 9,732 10,095 — (8,505 7,466 27,035 786 17 4,000 1,030
				(91,439

I-7

ACCOUNTANTS’ REPORT

APPENDIX I

Consolidated Cash Flow Statements (Continued)

Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 189,706 338,658 449,605 228,100 84,558 (139,667) (269,900) (477,276) (450,570) (36,023) (7,523) (7,908) (8,511) (8,814) (9,237) (42,469) (100,738) (53,259) (19,067) (28,722) 25,312 (38,908) 35,935 35,039 (35,935) — 152,945 — — — (59,739) — — — — (31,028) (134,585) (177,595) (102,334) (94,031) (255) (191) (225) (225) (253) (65,663) (60,627) (231,326) (317,871) (119,643) 245,697 186,257 211,446 (139,038) (167,394) 301,222 551,653 744,348 744,348 947,370 4,734 6,438 (8,424) (4,925) 8,824 551,653 744,348 947,370 600,385 788,800	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 189,706 338,658 449,605 228,100 84,558 (139,667) (269,900) (477,276) (450,570) (36,023) (7,523) (7,908) (8,511) (8,814) (9,237) (42,469) (100,738) (53,259) (19,067) (28,722) 25,312 (38,908) 35,935 35,039 (35,935) — 152,945 — — — (59,739) — — — — (31,028) (134,585) (177,595) (102,334) (94,031) (255) (191) (225) (225) (253) (65,663) (60,627) (231,326) (317,871) (119,643) 245,697 186,257 211,446 (139,038) (167,394) 301,222 551,653 744,348 744,348 947,370 4,734 6,438 (8,424) (4,925) 8,824 551,653 744,348 947,370 600,385 788,800	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 189,706 338,658 449,605 228,100 84,558 (139,667) (269,900) (477,276) (450,570) (36,023) (7,523) (7,908) (8,511) (8,814) (9,237) (42,469) (100,738) (53,259) (19,067) (28,722) 25,312 (38,908) 35,935 35,039 (35,935) — 152,945 — — — (59,739) — — — — (31,028) (134,585) (177,595) (102,334) (94,031) (255) (191) (225) (225) (253) (65,663) (60,627) (231,326) (317,871) (119,643) 245,697 186,257 211,446 (139,038) (167,394) 301,222 551,653 744,348 744,348 947,370 4,734 6,438 (8,424) (4,925) 8,824 551,653 744,348 947,370 600,385 788,800	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 189,706 338,658 449,605 228,100 84,558 (139,667) (269,900) (477,276) (450,570) (36,023) (7,523) (7,908) (8,511) (8,814) (9,237) (42,469) (100,738) (53,259) (19,067) (28,722) 25,312 (38,908) 35,935 35,039 (35,935) — 152,945 — — — (59,739) — — — — (31,028) (134,585) (177,595) (102,334) (94,031) (255) (191) (225) (225) (253) (65,663) (60,627) (231,326) (317,871) (119,643) 245,697 186,257 211,446 (139,038) (167,394) 301,222 551,653 744,348 744,348 947,370 4,734 6,438 (8,424) (4,925) 8,824 551,653 744,348 947,370 600,385 788,800	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 189,706 338,658 449,605 228,100 84,558 (139,667) (269,900) (477,276) (450,570) (36,023) (7,523) (7,908) (8,511) (8,814) (9,237) (42,469) (100,738) (53,259) (19,067) (28,722) 25,312 (38,908) 35,935 35,039 (35,935) — 152,945 — — — (59,739) — — — — (31,028) (134,585) (177,595) (102,334) (94,031) (255) (191) (225) (225) (253) (65,663) (60,627) (231,326) (317,871) (119,643) 245,697 186,257 211,446 (139,038) (167,394) 301,222 551,653 744,348 744,348 947,370 4,734 6,438 (8,424) (4,925) 8,824 551,653 744,348 947,370 600,385 788,800
(65,663) 245,697 301,222 4,734	(60,627) 186,257 551,653 6,438	(231,326) 211,446 744,348 (8,424)	(317,871) (139,038) 744,348 (4,925)	(119,643
				(167,394 947,370 8,824
551,653	744,348	947,370	600,385

I-8

ACCOUNTANTS’ REPORT

APPENDIX I

Consolidated Statements of Changes in Equity

Share capital 51,714 — (4,696) — — — —	Equity holders Reserves Sub-total 808,729 860,443 12,034 12,034 (55,043) (59,739) 329,044 329,044 (12,929) (12,929) (18,099) (18,099) — —	Equity holders Reserves Sub-total 808,729 860,443 12,034 12,034 (55,043) (59,739) 329,044 329,044 (12,929) (12,929) (18,099) (18,099) — —	Minority interests 7,988 — — 117 — — (255)	Total 868,431 12,034 (59,739) 329,161 (12,929) (18,099) (255) 1,118,604 9,846 152,945 — 670,598 (66,231) (68,354) (191) 1,817,217 (1,363) — 3,134 651,291 (102,334) (75,261) (225) 2,292,459 9,255 2,921 280,556 (94,031) 4,000 (253) 2,494,907
47,018 — 4,700 5,172 — — — — 56,890 — 5,689 — — — — — 62,579 — — — — — —	1,063,736 9,846 148,245 (5,172) 670,449 (66,231) (68,354) — 1,752,519 (1,472) (5,689) 3,134 650,854 (102,334) (75,261) — 2,221,751 9,142 2,921 280,500 (94,031) — —	1,110,754 9,846 152,945 — 670,449 (66,231) (68,354) — 1,809,409 (1,472) — 3,134 650,854 (102,334) (75,261) — 2,284,330 9,142 2,921 280,500 (94,031) — —	7,850 — — — 149 — — (191) 7,808 109 — — 437 — — (225) 8,129 113 — 56 — 4,000 (253)	1,118,604 9,846 152,945 — 670,598 (66,231 (68,354 (191
				1,817,217 (1,363 — 3,134 651,291 (102,334 (75,261 (225
				2,292,459 9,255 2,921 280,556 (94,031 4,000 (253
62,579	2,420,283	2,482,862	12,045

I-9

ACCOUNTANTS’ REPORT

APPENDIX I

Consolidated Statements of Changes in Equity (Continued)

		Equity holders	Equity holders
	Share			Minority
	capital	Reserves	Sub-total	interests	Total
US$’000
For the six months ended
30th June 2005 (unaudited)
At 31st December 2004	56,890	1,752,519	1,809,409	7,808	1,817,217
Currency translation adjustments	—	(4,538)	(4,538)	—	(4,538)
Bonus issue (note 34)	5,689	(5,689)	—	—	—
Profit for the period	—	308,859	308,859	98	308,957
2004 final dividend	—	(102,334)	(102,334)	—	(102,334)
Dividend paid to minority interests	—	—	—	(225)	(225)
At 30th June 2005	62,579	1,948,817	2,011,396	7,681	2,019,077

I-10

ACCOUNTANTS’ REPORT

APPENDIX I

II. NOTES TO THE FINANCIAL INFORMATION

1. General information

Orient Overseas (International) Limited (“the Company”) is a limited liability company incorporated in Bermuda. The address of its registered office is 33rd floor, Harbour Centre, No. 25 Harbour Road, Wanchai, Hong Kong.

The Company has its listing on the Main Board of The Stock Exchange of Hong Kong Limited.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these Financial Information are set out below. These policies have been consistently applied to all the years/periods presented, unless otherwise stated.

2.1 Basis of preparation

The Financial Information have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRS”). The Financial Information have been prepared under the historical cost convention, as modified by the revaluation of investment properties, certain plant and equipment, available-for-sale financial assets, and financial assets and financial liabilities (including derivative financial instruments) at fair value through profit or loss, which are carried at fair value.

The preparation of Financial Information in conformity with HKFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Information, are disclosed in note 4.

The adoption of new/revised HKFRS

In 2006, the Group adopted the new/revised standards and interpretations of new HKFRS below, which are relevant to its operations. These changes in accounting policies did not have significant impact on the Group’s results and financial positions.

HKAS 19 Amendment Actuarial Gains and Losses, Group Plans and Disclosures HKAS 21 Amendment Net Investment in a Foreign Operation HKAS 39 Amendment Cash Flow Hedge Accounting of Forecast Intragroup Transactions HKAS 39 Amendment The Fair Value Option HKAS 39 and HKFRS 4 Amendment Financial Guarantee Contracts HKFRSs 1 & 6 Amendments First-time Adoption of HKFRSs and Exploration for and Evaluation of Mineral Resources HKFRS-Int 4 Determining whether an Arrangement contains a Lease

I-11

ACCOUNTANTS’ REPORT

APPENDIX I

Summary of significant accounting policies (Continued)
2.1 Basis of preparation (Continued)

Standards, interpretations and amendments to published standards that are not yet effective

Certain new standards, amendments and interpretations to existing standards have been published which are relevant to the Group’s operations and financial statements and are mandatory for the Group’s accounting periods beginning on or after 1st January 2007 or later periods but which the Group has not early adopted, as follows:

HKAS 1 Amendment Presentation of Financial Statements: Capital Disclosures HK (IFRIC)-Int 8 Scope of HKFRS 2 HK (IFRIC)-Int 9 Reassessment of Embedded Derivatives HKFRS 7 Financial Instruments: Disclosures

The Group has not early adopted the above standards, amendments and interpretations in the Financial Information during the Relevant Periods and is not yet in a position to state whether substantial changes to the Group’s accounting policies and presentation of the Financial Information will be resulted.

2.2 Consolidation

The Financial Information include the accounts of the Company and its subsidiaries made up to 30th June/31st December.

The Financial Information also include the Group’s attributable share of post-acquisition results and reserves of its jointly controlled entities and associated company.

(a) Subsidiaries

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the consolidated profit and loss account.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

In the Company’s balance sheet the investments in subsidiaries are stated at cost less provision for impairment losses. The results of subsidiaries are recognised by the Company on the basis of dividend received and receivable.

I-12

ACCOUNTANTS’ REPORT

APPENDIX I

2. Summary of significant accounting policies (Continued)

2.2 Consolidation (Continued)

(b) Jointly controlled entities

A jointly controlled entity is a joint venture in respect of which a contractual arrangement is established between the participating venturers and whereby the Group together with the venturers undertake an economic activity which is subject to joint control and none of the venturers has unilateral control over the economic activity. Jointly controlled entities are accounted for under the equity method whereby the Group’s share of profits less losses is included in the consolidated profit and loss account and the Group’s share of net assets is included in the consolidated balance sheet.

(c) Associated companies

Associated companies are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associated companies are accounted for by the equity method of accounting and are initially recognised at cost. The Group’s investment in associated companies includes goodwill (net of any accumulated impairment loss) identified on acquisition.

The Group’s share of its associated companies’ post-acquisition profits or losses is recognised in the consolidated profit and loss account, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associated company equals or exceeds its interest in the associated company, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associated company.

Unrealised gains on transactions between the Group and its associated companies are eliminated to the extent of the Group’s interest in the associated companies. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associated companies have been changed where necessary to ensure consistency with the policies adopted by the Group.

2.3 Property, plant and equipment

All property, plant and equipment are stated at historical cost or valuation less depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the profit and loss account during the financial period in which they are incurred.

No depreciation is provided for vessels under construction and freehold land.

I-13

ACCOUNTANTS’ REPORT

APPENDIX I

2. Summary of significant accounting policies (Continued)

2.3 Property, plant and equipment (Continued)

Depreciation of other property, plant and equipment is calculated using the straight-line method to allocate cost or revalued amounts to their residual values over their estimated useful lives, as follows:

Container vessels 25 years Containers 5 to 12 years Chassis 10 to 12 years Terminal equipment and improvements 10 to 15 years Freehold buildings Not exceeding 75 years Leasehold buildings Over period of the lease Vehicles, furniture, computer and other equipment 3 to 10 years

The residual values of the assets and their useful lives are reviewed and adjusted if appropriate, at each balance sheet date.

The carrying amount of an asset is written down immediately to its recoverable amount if the carrying amount of the asset is greater than its estimated recoverable amount.

Gains and losses on disposals are determined as the difference between the net disposal proceeds and the carrying amounts of the assets and are dealt with in the profit and loss account. Upon disposal of revalued assets, any revaluation reserve is transferred directly to retained profit.

2.4 Investment properties

Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the companies in the Group, is classified as investment property. Investment property comprises freehold land, land held under operating leases and buildings held under finance leases. Land held under operating leases are classified and accounted for as investment property when the rest of the definition of investment property is met. The operating lease is accounted for as if it were a finance lease.

Investment property is measured initially at its cost, including related transaction costs. After initial recognition, investment property is carried at fair value. Fair value is based on valuation carried out annually by Directors or independent external valuers. Changes in fair values are recognised in the profit and loss account.

Investment property held for sale without redevelopment is classified within non-current assets held for sale, under HKFRS 5.

2.5 Vessel repairs and surveys

Upon acquisition of a vessel, the components of the vessel which are required to be replaced at the next dry-docking are identified and their costs are depreciated over the period to the next estimated dry-docking date, usually ranging from three to five years. Costs incurred on subsequent dry-docking of vessels are capitalised and depreciated over the period to the next estimated dry-docking date. When significant dry-docking costs incurred prior to the expiry of the depreciation period, the remaining costs of the previous dry-docking are written off immediately.

I-14

ACCOUNTANTS’ REPORT

APPENDIX I

2. Summary of significant accounting policies (Continued)

2.6 Intangible assets

(a) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary company, associated company or jointly controlled entity at the effective date of acquisition and, in respect of an increase in holding in a subsidiary company, the excess of the cost of acquisition and the carrying amount of the proportion of the minority interests acquired. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associated companies or jointly controlled entities is included in investments in associated companies or jointly controlled entities. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

(b) Computer software

Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Costs that are directly associated with the production of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs include the software development employee costs and an appropriate portion of relevant overheads.

Computer software development costs recognised as assets are stated at cost less accumulated amortisation. Amortisation is calculated on the straight-line basis over their estimated useful life of five years.

2.7 Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation, which are at least tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of the fair value of an asset less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.

2.8 Investments

The Group classifies its investments in the following categories: portfolio investments, loans and receivables and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date.

(a) Portfolio investments

Portfolio investments include financial assets held for trading and those designated at fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the balance sheet date.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets.

I-15

ACCOUNTANTS’ REPORT

APPENDIX I

2. Summary of significant accounting policies (Continued)

2.8 Investments (Continued)

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

Purchases and sales of investments are recognised on trade-date — the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and portfolio investments are subsequently carried at fair value. Loans and receivables are carried at amortised cost using the effective interest method.

Realised and unrealised gains and losses arising from changes in the fair value of the portfolio investments are included in the profit and loss account in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are recognised in equity. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the profit and loss account as gains and losses from investment securities.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances.

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the profit and loss account is removed from equity and recognised in the profit and loss account. Impairment losses recognised in the profit and loss account on equity instruments are not reversed through the profit and loss account.

2.9 Properties under development and for sale

The cost of acquiring land held under operating leases is amortised on a straight-line basis over the lease term. If the property is in the course of development or re-development, the amortisation charge is included as part of the costs of the property under development. In all other cases the amortisation charge for the period is recognised in profit and loss account immediately. In all other respects, inventories in respect of property development activities are carried at the lower of cost and net realisable value.

2.10 Inventories

Inventories mainly comprise bunkers and consumable stores. Inventories are stated at the lower of cost and net realisable value. Cost is calculated on first-in-first out basis. Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses.

I-16

ACCOUNTANTS’ REPORT

APPENDIX I

2. Summary of significant accounting policies (Continued)

2.11 Debtors

Debtors are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of debtors is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the profit and loss account.

2.12 Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks with original maturities of three months or less and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

2.13 Share capital

Ordinary shares are classified as equity. Mandatorily redeemable preference shares are classified as liabilities.

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

Where any Group company purchases the Company’s equity share capital, the consideration paid, including any directly attributable incremental costs, net of income taxes, is deducted from equity attributable to the equity holders of the Company and all the shares are cancelled.

2.14 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds net of transaction costs and the redemption value is recognised in the profit and loss account over the period of the borrowings using the effective interest method.

Preference shares, which are mandatorily redeemable on a specific date, are classified as liabilities. The dividends on these preference shares are recognised in the profit and loss account as finance costs.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.

2.15 Deferred taxation

Deferred taxation is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Financial Information. However, if the deferred taxation arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred taxation is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred taxation asset is realised or the deferred taxation liability is settled.

Deferred taxation assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred taxation is provided on temporary differences arising on investments in subsidiaries, associated companies and jointly controlled entities, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

I-17

ACCOUNTANTS’ REPORT

APPENDIX I

2. Summary of significant accounting policies (Continued)

2.16 Employee benefits

(a) Pension obligations

The Group operates a number of defined benefit and defined contribution pension and retirement benefit schemes in the main countries which the Group operates. These schemes are generally funded by payments from employees and by relevant group companies, taking into account of the recommendations of independent qualified actuaries where require.

For defined benefit pension plans, annual contributions are made in accordance with the advice of qualified actuaries for the funding of retirement benefits in order to build up reserves for each scheme member during the employee’s service life and which are used to pay to the employee or dependent a pension after retirement. Such pension costs are assessed using the projected unit method, under which, the cost of providing pensions is charged to the profit and loss account so as to spread the regular cost over the service lives of employees in accordance with the advice of the actuaries with full valuation of the plans every two to three years. The pension obligations are measured as the present value of the estimated future cash outflows using interest rates of high quality corporate bonds which have terms to maturity approximating the terms of the related liabilities. Plan assets are measured at fair values. Actuarial gains and losses are recognised in the profit and loss account over the expected average remaining service lives of employees to the extent of the amount in excess of 10% of the greater of the present value of the plan obligations and the fair value of plan assets.

Contributions under the defined contribution schemes are recognised as employee benefit expense when they are due and are reduced by contributions forfeited by those employees who leave the scheme prior to vesting fully in the contributions. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

(b) Other post-employment obligations

Some Group companies provide post-retirement healthcare benefits to their retirees. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment using an accounting methodology similar to that for defined benefit pension plans. Actuarial gains and losses arising from experience adjustments, and changes in actuarial assumptions, are recognised in the profit and loss account over the expected average remaining working lives of the related employees. These obligations are valued annually by independent qualified actuaries.

(c) Bonus plans

The Group recognises a liability and an expense for bonuses, based on a formula that takes into consideration the profit attributable to the Company’s shareholders after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

2.17 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

I-18

ACCOUNTANTS’ REPORT

APPENDIX I

2. Summary of significant accounting policies (Continued)

2.18 Segment reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.

2.19 Foreign currency translation

(a) Functional and presentation currency

Items included in the accounts of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The Financial Information are presented in US dollars, which is the Company’s functional and presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss account.

Translation differences on non-monetary items, such as equities held at fair value through profit or loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary items, such as equities classified as available-for-sale financial assets, are included in the fair value reserve in equity.

(c) Group companies

The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
(ii) income and expenses for each profit and loss account are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
(iii) all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is sold, such exchange differences are recognised in the profit and loss account as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

I-19

ACCOUNTANTS’ REPORT

APPENDIX I

Summary of significant accounting policies (Continued)

2.20 Revenue recognition

Revenue comprises the fair value for the sale of services, net of value-added tax, rebates and discounts and after eliminating sales within the Group. Revenue is recognised as follows:-

(a) Freight revenues from the operation of the container transport and logistics business are recognised on a percentage of completion basis, which is determined on the time proportion method of each individual vessel voyage.
(b) Revenues from the operation of container terminals and provision of other services are recognised when services are rendered or on an accruals basis.
(c) Rental income under operating leases is recognised over the periods of the respective leases on a straight-line basis.
(d) Sales of properties are recognised when the risk and rewards of the property have been passed to the customers.
(e) Interest income is recognised on a time-proportion basis using the effective interest method.
(f) Dividend income is recognised when the right to receive payment is established.

2.21 Leases

(a) Operating lease

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases, net of any incentives received from the lessor, are charged to the profit and loss account on a straight-line basis over the period of the lease.

The up-front prepayments made for the leasehold land and land use rights are expensed in the profit and loss account on a straight-line basis over the period of the lease or where there is impairment, the impairment is expensed in the profit and loss account.

(b) Finance lease

Leases of assets where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased assets and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in current and non-current borrowings. The interest element of the finance cost is recognised in the profit and loss account over the lease period so as to produce a constant periodic rate of interest on the remaining balances of the liability for each period.

2.22 Borrowing costs

Borrowing costs are expensed in the profit and loss account in the period in which they are incurred, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale.

I-20

ACCOUNTANTS’ REPORT

APPENDIX I

2. Summary of significant accounting policies (Continued)

2.22 Borrowing costs (Continued)

The capitalisation of borrowing costs as part of the cost of a qualifying assets commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or complete.

2.23 Derivative financial instruments

Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Changes in fair value are recognised in the profit and loss account.

2.24 Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s accounts in the period in which the dividends are approved by the Company’s shareholders.

Financial risk management

3.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest risk and price risk), credit risk, liquidity risk and cash flow interest-rate risk. The Group’s overall risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

(a) Market risk
(i) Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to fluctuation in the exchange rate of foreign currencies to the US dollar. Foreign currency exposures are covered by forward contracts and options whenever appropriate.

(ii) Price risk

The Group is exposed to equity securities price risk because investments held by the Group are classified either as available-for-sale financial assets or as portfolio investments. The Group is not exposed to commodity price risk.

I-21

ACCOUNTANTS’ REPORT

APPENDIX I

3. Financial risk management (Continued)

3.1 Financial risk factors (Continued)

(b) Credit risk

The Group has no significant concentrations of credit risk. It has policies in place to ensure that services are provided to customers with an appropriate credit history. Derivative counterparties and cash transactions are limited to high-credit-quality financial institutions. The extent of the Group’s credit exposure is represented by the aggregate balance of cash and bank balances, portfolio investments, derivative financial instruments, restricted bank balances and other deposits, debtors and prepayments, advance to an investee company, amounts receivable from jointly controlled entities and the corporate guarantee in respect of bank loan facilities extended to an investee company.

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Group aims to maintain flexibility in funding by keeping sufficient cash and cash equivalents.

(d) Cash flow and fair value interest rate risk

The Group’s income and operating cash flows are substantially independent of changes in market interest rate. The Group has a policy to place surplus funds with creditable financial institutions which offer the best return for the Group on a short-term basis.

There are no material fixed rate receivables and borrowings in the Group.

The Group is exposed to cash flow interest rate risk through the impact of rate changes on interest bearing borrowings. These exposures are managed through the use of derivative financial instruments such as interest rate swap.

3.2 Fair value estimation

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price.

Unlisted investments have been valued by reference to the market prices of the underlying investments or by reference to the current market value of similar investments or by reference to the discounted cash flows of the underlying net assets.

The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of foreign exchange forward contracts is determined using forward exchange market rates at the balance sheet date.

The fair values of debtors, cash and cash equivalents, creditors and accruals, current borrowings and balances with subsidiaries, jointly controlled entities and advances to an investee company are assumed to approximate their carrying amount due to the short-term maturities of these assets and liabilities.

The fair values of long-term borrowings are estimated using the expected future payments discounted at market interest rates.

I-22

ACCOUNTANTS’ REPORT

APPENDIX I

4. Critical accounting estimates and judgements

Estimates and judgements used in preparing the accounts are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Income taxes

The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Recognition of deferred tax assets, which principally relate to tax losses, depends on the management’s expectation of future taxable profit that will be available against which tax losses can be utilised. The outcome of their actual utilisation may be different.

(b) Investment property

The fair values of investment properties are determined by independent valuers on an open market for existing use basis. In making the judgement, consideration has been given to assumptions that are mainly based on market conditions existing at the balance sheet date and appropriate capitalisation rates. These estimates are regularly compared to actual market data and actual transactions entered into by the Group.

(c) Pension

The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost or income for pensions include the expected long-term rate of return on the relevant plans assets and the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations.

The expected return on plan assets assumptions is determined on an uniform basis, taking into consideration long-term historical returns, asset allocation and future estimates of long-term investment returns.

The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximately the terms of the related pension liability.

Other key assumptions for pension obligations are based in part on current market conditions.

(d) Property, plant and equipment and intangible assets

Management determines the estimated useful lives and residual values for the Group’s property, plant and equipment and intangible assets. Management will revise the depreciation charge where useful lives and residual values are different to previously estimated, or it will write off or write down technically obsolete or non-strategy assets that have been abandoned or sold.

I-23

ACCOUNTANTS’ REPORT

APPENDIX I

Critical accounting estimates and judgements (Continued)

(e) Provision of operating cost

Operating costs, which mainly comprise cargo, vessel and voyage costs, equipment repositioning cost and terminal operating cost, are recognised on a percentage of completion basis as set out in note 2.20(a). Invoices in relation to these expenses are received approximately up to six months after the expenses have been incurred. Consequently, recognition of operating costs is based on the rendering of services as well as the latest tariff agreed with vendors.

If the actual expenses of a voyage differ from the estimated expenses, this will have an impact on operating cost in future periods. Historically, the Group has not experienced significant deviation from the actual expenses.

5. Turnover and segment information

(a) Turnover

		Years ended		Six months ended	Six months ended
		31st December		30th	June
	2003	2004	2005	2005	2006
US$’000				(Unaudited)
Container transport and logistics	2,898,173	3,748,414	4,229,937	2,030,749	2,124,892
Container terminals	322,406	368,664	443,275	205,956	244,358
Property investment and development	20,534	23,250	23,029	11,159	17,090
	3,241,113	4,140,328	4,696,241	2,247,864	2,386,340

The principal activities of the Group are container transport and logistics, container terminals, property investment and development.

I-24

ACCOUNTANTS’ REPORT

APPENDIX I

5. Turnover and segment information (Continued)

Turnover represents gross freight, charterhire, service and other income from the operation of the container transport and logistics and container terminal businesses, sales of properties and rental income from the investment property.

(b) Segment reporting

For the geographical segment reporting, freight revenues from container transport and logistics are analysed based on the outbound cargoes of each geographical territory. The Directors consider that the nature of the container transport and logistics activities, which cover the world’s major shipping lanes, and the way in which costs are allocated precludes a meaningful allocation of operating profit to specific geographical segments. Accordingly, geographical segment results for container transport and logistics business are not presented.

Unallocated assets under business segment reporting primarily include available-for-sale financial assets, portfolio investments, derivative financial instruments, deferred taxation assets, tax recoverable and cash and bank balances. While unallocated segment liabilities include borrowings, derivative financial instruments, current and deferred taxation liabilities.

Primary reporting — business segment

The segment results for the year ended 31st December 2003 are as follows:

US$’000 Turnover Operating profit Finance costs (note 12) Share of profits less losses of jointly controlled entities (note 20) Profit before taxation Taxation Profit for the year Capital expenditure Depreciation Amortisation	Container transport and logistics 2,898,173 316,215 391,937 98,861 8,928	Terminal Property investment and development Unallocated Elimination 344,740 21,249 — (23,049) 44,127 6,228 14,258 — 23,148 14,901 — — 15,387 168 — — — — — —	Group 3,241,113 380,828 (40,184) 6,615 347,259 (18,098) 329,161 429,986 114,416 8,928

I-25

ACCOUNTANTS’ REPORT

APPENDIX I

Turnover and segment information (Continued)
(b) Segment reporting (Continued)

The segment results for the year ended 31st December 2004 are as follows:

US$’000 Turnover Operating profit Finance costs (note 12) Share of profits less losses of jointly controlled entities (note 20) Profit before taxation Taxation Profit for the year Capital expenditure Depreciation Amortisation	Container transport and logistics 3,748,414 644,997 761,114 120,645 5,594	Terminal Property investment and development Unallocated Elimination 402,837 23,933 — (34,856) 53,641 9,212 21,158 — 45,286 91 — — 24,124 91 — — 572 116 — —	Group 4,140,328 729,008 (43,787) 11,116 696,337 (25,739) 670,598 806,491 144,860 6,282

The segment results for the year ended 31st December 2005 are as follows:

	Container		Property
	transport		investment
	and		and
	logistics	Terminal	development	Unallocated	Elimination	Group
US$’000
Turnover	4,229,937	486,711	23,932	—	(44,339)	4,696,241
Operating profit	648,829	56,375	8,271	31,451	—	744,926
Finance costs (note 12)						(61,659)
Share of profits less losses
of jointly controlled
entities (note 20)						6,950
Share of loss of an
associated company
(note 21)						(84)
Profit before taxation						690,133
Taxation						(38,842)
Profit for the year						651,291
Capital expenditure	540,934	94,489	71	—	—	635,494
Depreciation	122,638	34,607	57	—	—	157,302
Amortisation	4,529	1,234	1,058	—	—	6,821

I-26

ACCOUNTANTS’ REPORT

APPENDIX I

Turnover and segment information (Continued)
(b) Segment reporting (Continued)

The segment results for the six months ended 30th June 2005 are as follows:

	Container		Property
	transport		investment
	and		and
(Unaudited)	logistics	Terminal	development	Unallocated	Elimination	Group
US$’000
Turnover	2,030,749	227,504	11,600	—	(21,989)	2,247,864
Operating profit	309,572	25,571	2,868	13,025	—	351,036
Finance costs (note 12)						(27,199)
Share of profits less losses
of jointly controlled
entities (note 20)						5,609
Profit before taxation						329,446
Taxation						(20,489)
Profit for the period						308,957
Capital expenditure	168,014	19,105	3,967	—	—	191,086
Depreciation	66,259	12,702	26	—	—	78,987
Amortisation	2,587	135	145	—	—	2,867

The segment results for the six months ended 30th June 2006 are as follows:

	Container		Property
	transport		investment
	and		and
	logistics	Terminal	development	Unallocated	Elimination	Group
US$’000
Turnover	2,124,892	270,358	17,422	—	(26,332)	2,386,340
Operating profit	199,353	37,468	80,608	24,721	—	342,150
Finance costs (note 12)						(33,273)
Share of profits less losses
of jointly controlled
entities (note 20)						2,345
Share of loss of an
associated company
(note 21)						(37)
Profit before taxation						311,185
Taxation						(30,629)
Profit for the period						280,556
Capital expenditure	122,553	38,650	74	—	—	161,277
Depreciation	65,360	20,437	194	—	—	85,991
Amortisation	1,573	642	630	—	—	2,845

I-27

ACCOUNTANTS’ REPORT

APPENDIX I

5. Turnover and segment information (Continued)

(b) Segment reporting (Continued)

The segment assets and liabilities at 31st December 2003 are as follows:

US$’000 Segment assets Property, plant and equipment Jointly controlled entities Other assets Total assets Segment liabilities Creditors and accruals Other liabilities Total liabilities	Container transport and logistics 1,259,136 2,777 307,169 (449,305) (107,819)	Container transport and logistics 1,259,136 2,777 307,169 (449,305) (107,819)	Terminal Property investment and development Unallocated 217,253 10 — — 21,521 — 55,519 292,547 785,924	Terminal Property investment and development Unallocated 217,253 10 — — 21,521 — 55,519 292,547 785,924	Terminal Property investment and development Unallocated 217,253 10 — — 21,521 — 55,519 292,547 785,924	Group 1,476,399 24,298 1,441,159 2,941,856 (486,244) (1,337,008) (1,823,252)
		) )	(30,907) (2,798)	(4,300) —	(1,732) (1,226,391)	(486,244 (1,337,008

The segment assets and liabilities at 31st December 2004 are as follows:

US$’000 Segment assets Property, plant and equipment Jointly controlled entities Other assets Total assets Segment liabilities Creditors and accruals Other liabilities Total liabilities	Container transport and logistics 1,892,122 2,957 322,232 (504,335) (10,706)	Container transport and logistics 1,892,122 2,957 322,232 (504,335) (10,706)	Terminal Property investment and development Unallocated 239,740 204 — — 28,298 — 79,830 321,330 1,127,889	Terminal Property investment and development Unallocated 239,740 204 — — 28,298 — 79,830 321,330 1,127,889	Terminal Property investment and development Unallocated 239,740 204 — — 28,298 — 79,830 321,330 1,127,889	Group 2,132,066 31,255 1,851,281 4,014,602 (553,535) (1,643,850) (2,197,385)
		) )	(43,427) (3,435)	(3,385) —	(2,388) (1,629,709)	(553,535 (1,643,850

I-28

ACCOUNTANTS’ REPORT

APPENDIX I

Turnover and segment information (Continued)

(b) Segment reporting (Continued)

The segment assets and liabilities at 31st December 2005 are as follows:

US$’000 Segment assets Property, plant and equipment Jointly controlled entities Associated company Other assets Total assets Segment liabilities Creditors and accruals Other liabilities Total liabilities	Container transport and logistics 2,293,813 4,429 — 380,232 (530,930) (11,352)	Container transport and logistics 2,293,813 4,429 — 380,232 (530,930) (11,352)	Terminal Property investment and development Unallocated 300,009 124 — — 15,428 — 7,916 — — 74,363 411,315 1,327,287	Terminal Property investment and development Unallocated 300,009 124 — — 15,428 — 7,916 — — 74,363 411,315 1,327,287	Terminal Property investment and development Unallocated 300,009 124 — — 15,428 — 7,916 — — 74,363 411,315 1,327,287	Group 2,593,946 19,857 7,916 2,193,197 4,814,916 (603,045) (1,919,412) (2,522,457)
		) )	(55,160) (3,728)	(14,510) —	(2,445) (1,904,332)	(603,045 (1,919,412

The segment assets and liabilities at 30th June 2006 are as follows:

US$’000 Segment assets Property, plant and equipment Jointly controlled entities Associated company Other assets Total assets Segment liabilities Creditors and accruals Other liabilities Total liabilities	Container transport and logistics 2,340,736 4,628 — 427,581 (496,030) (10,671)	Container transport and logistics 2,340,736 4,628 — 427,581 (496,030) (10,671)	Terminal Property investment and development Unallocated 322,392 217 — — 17,141 — 14,879 — — 95,503 609,708 1,138,108	Terminal Property investment and development Unallocated 322,392 217 — — 17,141 — 14,879 — — 95,503 609,708 1,138,108	Terminal Property investment and development Unallocated 322,392 217 — — 17,141 — 14,879 — — 95,503 609,708 1,138,108	Group 2,663,345 21,769 14,879 2,270,900 4,970,893 (575,899) (1,900,087) (2,475,986)
		) )	(60,071) (4,072)	(17,861) —	(1,937) (1,885,344)	(575,899 (1,900,087

I-29

ACCOUNTANTS’ REPORT

APPENDIX I

Turnover and segment information (Continued)

(b) Segment reporting (Continued)

— Secondary reporting geographical segment

The Group’s three business segments operate in four main geographical areas, even though they are managed on a worldwide basis.

Turnover Operating profit/(loss) Capital expenditure 2,043,205 (1,634) 37,230 752,356 42,896 56,430 399,068 — 504 46,484 — 13 — 339,566 335,809 3,241,113 380,828 429,986	Turnover Operating profit/(loss) Capital expenditure 2,043,205 (1,634) 37,230 752,356 42,896 56,430 399,068 — 504 46,484 — 13 — 339,566 335,809 3,241,113 380,828 429,986	Turnover Operating profit/(loss) Capital expenditure 2,043,205 (1,634) 37,230 752,356 42,896 56,430 399,068 — 504 46,484 — 13 — 339,566 335,809 3,241,113 380,828 429,986
		429,986
2,710,669 885,326 480,450 63,883 —	(1,668) 67,571 — — 663,105	20,811 61,069 1,715 70 722,826
4,140,328	729,008	806,491
3,023,294 1,043,771 556,054 73,122 —	468 66,908 — — 677,550	39,333 90,888 751 337 504,185
4,696,241	744,926	635,494
1,449,458 501,231 260,399 36,776 —	(1,595) 30,862 — — 321,769	18,149 22,615 150 35 150,137
2,247,864	351,036	191,086

I-30

ACCOUNTANTS’ REPORT

APPENDIX I

Turnover and segment information (Continued)
(b) Segment reporting (Continued)

US$’000 Six months ended 30th June 2006 Asia North America Europe Australia Unallocated US$’000 Total assets Asia North America Europe Australia Unallocated	Turnover Operating profit/(loss) Capital expenditure 1,464,735 1,131 14,047 609,508 118,989 41,826 257,286 — 460 54,811 — 258 — 222,030 104,686 2,386,340 342,150 161,277 As at 31st December As at 30th June 2003 2004 2005 2006 549,580 240,211 379,907 572,109 420,007 497,820 540,467 628,490 12,882 15,308 21,262 19,841 139 342 627 748 1,959,248 3,260,921 3,872,653 3,749,705 2,941,856 4,014,602 4,814,916 4,970,893	Turnover Operating profit/(loss) Capital expenditure 1,464,735 1,131 14,047 609,508 118,989 41,826 257,286 — 460 54,811 — 258 — 222,030 104,686 2,386,340 342,150 161,277 As at 31st December As at 30th June 2003 2004 2005 2006 549,580 240,211 379,907 572,109 420,007 497,820 540,467 628,490 12,882 15,308 21,262 19,841 139 342 627 748 1,959,248 3,260,921 3,872,653 3,749,705 2,941,856 4,014,602 4,814,916 4,970,893
		161,277
		As at 30th June 2006 572,109 628,490 19,841 748 3,749,705
		4,970,893

Operating profit comprises results from container transport and logistics and investment activities. Whereas total assets mainly comprise vessels, containers, intangible assets, available-for-sale financial assets, portfolio investments, derivative financial instruments, inventories, deferred taxation assets, tax recoverable, cash and bank balances while capital expenditure mainly comprises additions to vessels, containers and intangible assets.
Operating costs

US$’000 Cargo Vessel and voyage Equipment and repositioning Terminal operating Property management and development	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 1,202,549 1,487,425 1,683,380 890,324 972,664 630,005 748,095 965,406 390,277 516,836 445,399 499,756 537,912 260,641 260,837 233,325 268,409 337,161 155,838 180,783 8,924 9,073 10,443 7,209 7,816 2,520,202 3,012,758 3,534,302 1,704,289 1,938,936	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 1,202,549 1,487,425 1,683,380 890,324 972,664 630,005 748,095 965,406 390,277 516,836 445,399 499,756 537,912 260,641 260,837 233,325 268,409 337,161 155,838 180,783 8,924 9,073 10,443 7,209 7,816 2,520,202 3,012,758 3,534,302 1,704,289 1,938,936
		1,938,936

I-31

APPENDIX I

ACCOUNTANTS’ REPORT

7. Other operating income

				Six months ended	Six months ended
	Years	ended 31st	December	30th June
	2003	2004	2005	2005	2006
US$’000				(Unaudited)
Income from available-for-sale
financial assets
— profit on disposal	17	1,862	18	11	26
— dividend income	2	49	18	3	17
Interest income from banks	14,774	18,461	30,105	13,577	21,936
Portfolio investment income
— fair value gain (realised and
unrealised)	4,639	8,183	10,344	4,344	6,934
— interest income	1,183	2,277	2,722	1,316	1,395
— dividend income	867	1,224	1,277	579	786
Gain on interest rate swap contracts	—	—	5,152	7,823	—
Gain on foreign exchange forward contracts	—	—	—	—	5,584
Profit on disposal of a jointly
controlled entity	—	770	—	—	—
Profit on disposal of property,
plant and equipment	1,914	1,768	8,709	143	6,112
Exchange gain	8,095	1,587	13,287	542	—
Others	4,828	909	4,662	474	1,255
	36,319	37,090	76,294	28,812	44,045

The investment income from listed investments for the years ended 31st December 2003, 2004 and 2005 and six months ended 30th June 2005 and 2006 are US$1.4 million, US$2.7 million, US$2.7 million, US$1.4 million and US$1.7 million respectively.

The investment income from unlisted investments for the years ended 31st December 2003, 2004 and 2005 and six months ended 30th June 2005 and 2006 are US$0.6 million, US$0.8 million, US$1.3 million, US$0.4 million and US$0.5 million respectively.

8. Other operating expenses

				Six months ended	Six months ended
	Years	ended 31st	December	30th June
	2003	2004	2005	2005	2006
US$’000				(Unaudited)
Business and administrative	366,692	423,759	476,870	214,735	213,796
Corporate	9,710	11,893	11,845	4,350	4,967
Loss on foreign exchange forward contracts	—	—	4,592	2,266	—
Loss on interest rate swap contracts	—	—	—	—	5,536
	376,402	435,652	493,307	221,351	224,299

I-32

ACCOUNTANTS’ REPORT

APPENDIX I

9. Employee benefit expense

				Six months ended	Six months ended
	Years	ended 31st	December	30th June
	2003	2004	2005	2005	2006
US$’000				(Unaudited)
Wages and salaries
— General and administrative staff	277,564	295,526	302,303	149,385	146,096
— Terminal workers	151,325	226,158	268,439	129,885	148,177
— Crew and seamen	19,631	21,547	25,696	12,989	14,194
	448,520	543,231	596,438	292,259	308,467
Pension and retirement benefits
— Defined contribution plans (note 24)	11,283	14,309	15,296	5,812	6,953
— Defined benefit plans (note 24)	4,962	6,908	7,410	2,354	6,497
	464,765	564,448	619,144	300,425	321,917

Employee benefit expense of US$172.1 million, US$249.6 million, US$295.8 million for the years ended 31st December 2003, 2004 and 2005 and US$143.6 million and US$165.9 million for the six months ended 30th June 2005 and 2006 are included in “operating costs” in the profit and loss account.

I-33

ACCOUNTANTS’ REPORT

APPENDIX I

10. Directors’ and management’s emoluments

(a) Directors’ emoluments

The remuneration of every Director is set out below:

					Employer’s
					contribution
			Discretionary	Other	to provident
Name of Director	Fees	Salary	bonuses	benefits	fund scheme	Total
US$’000
For the year ended
31st December 2003
Mr. C C Tung	106	539	81	—	62	788
Mr. Tsann Rong Chang	—	534	176	15	72	797
Mr. Roger King	—	54	—	—	5	59
Mr. Nicholas D Sims	168	126	—	108	20	422
Mr. Philip Chow	—	37	16	2	5	60
Mr. Robert Suan	—	295	44	—	11	350
Mr. Simon Murray	19	—	—	—	—	19
Dr. Victor K Fung	26	—	—	—	—	26
Prof. Richard Wong	5	—	—	—	—	5
For the year ended
31st December 2004
Mr. C C Tung	106	539	428	—	97	1,170
Mr. Tsann Rong Chang	—	299	1,167	—	141	1,607
Mr. Roger King	—	54	—	—	6	60
Mr. Nicholas D Sims	115	126	277	108	31	657
Mr. Philip Chow	—	450	1,167	120	141	1,878
Mr. Robert Suan	—	229	113	—	16	358
Mr. Simon Murray	19	—	—	—	—	19
Dr. Victor K Fung	26	—	—	—	—	26
Prof. Richard Wong	19	—	—	—	—	19
For the year ended
31st December 2005
Mr. C C Tung	106	539	995	—	154	1,794
Mr. Tsann Rong Chang	—	64	—	—	—	64
Mr. Roger King	—	54	—	—	5	59
Mr. Nicholas D Sims	115	136	697	108	53	1,109
Mr. Philip Chow	—	456	2,396	—	285	3,137
Mr. Alan Tung	—	160	—	—	16	176
Mr. Simon Murray	19	—	—	—	—	19
Dr. Victor K Fung	32	—	—	—	—	32
Prof. Richard Wong	26	—	—	—	—	26
For the six months ended
30th June 2005 (unaudited)
Mr. C C Tung	53	249	995	—	124	1,421
Mr. Tsann Rong Chang	—	32	—	—	—	32
Mr. Roger King	—	25	—	—	3	28
Mr. Nicholas D Sims	58	68	697	54	44	921
Mr. Philip Chow	—	211	2,396	—	251	2,858
Mr. Alan Tung	—	35	—	—	4	39
Mr. Simon Murray	10	—	—	—	—	10
Dr. Victor K Fung	13	—	—	—	—	13
Prof. Richard Wong	10	—	—	—	—	10

I-34

ACCOUNTANTS’ REPORT

APPENDIX I

10. Directors’ and management’s emoluments (Continued)

(a) Directors’ emoluments (Continued)

					Employer’s
					contribution
			Discretionary	Other	to provident
Name of Director	Fees	Salary	bonuses	benefits	fund scheme	Total
US$’000
For the six months ended
30th June 2006
Mr. C C Tung	53	249	976	—	122	1,400
Mr. Tsann Rong Chang	—	32	—	—	—	32
Mr. Roger King	—	25	—	—	3	28
Mr. Nicholas D Sims	58	70	704	57	68	957
Mr. Philip Chow	—	216	2,336	28	245	2,825
Mr. Alan Tung	—	110	115	—	23	248
Mr. Simon Murray	10	—	—	—	—	10
Dr. Victor K Fung	16	—	—	—	—	16
Prof. Richard Wong	13	—	—	—	—	13

During the Relevant Periods, none of the Directors has waived the right to receive their emoluments and no emoluments were paid by the Group to any of the Directors of the Company as an inducement to join or upon joining the Group or as compensation for loss of office.

(b) Five highest paid individuals

The five individuals whose emoluments were the highest in the Group for the years ended 31st December 2003 and 2004 included three Directors and for the year ended 31st December 2005 and for the six months ended 30th June 2005 and 2006 included two Directors whose emoluments are reflected in the analysis presented above. The emoluments payable to the remaining individuals are as follows:

US$’000 Basic salaries, housing allowances, other allowances and benefits in kind Discretionary bonuses Pension costs - defined contribution plans	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 784 653 921 436 452 289 1,167 3,834 3,834 3,737 107 182 475 428 307 1,180 2,002 5,230 4,698 4,496	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 784 653 921 436 452 289 1,167 3,834 3,834 3,737 107 182 475 428 307 1,180 2,002 5,230 4,698 4,496
		4,496

I-35

ACCOUNTANTS’ REPORT

APPENDIX I

10. Directors’ and management’s emoluments (Continued)

(b) Five highest paid individuals (Continued)

The emoluments of the five individuals fell within the following bands:

Emolument bands (US$) 384,601 ~ 448,700 (HK$3,000,001 ~ HK$3,500,000) 512,801 ~ 576,900 (HK$4,000,001 ~ HK$4,500,000) 705,101 ~ 769,200 (HK$5,500,001 ~ HK$6,000,000) 769,201 ~ 833,300 (HK$6,000,001 ~ HK$6,500,000) 833,301 ~ 897,400 (HK$6,500,001 ~ HK$7,000,000) 1,153,801 ~ 1,218,000 (HK$9,000,001 ~ HK$9,500,000) 1,282,001 ~ 1,346,100 (HK$10,000,001 ~ HK$10,500,000) 1,346,101 ~ 1,410,200 (HK$10,500,001 ~ HK$11,000,000) 1,410,201 ~ 1,474,300 (HK$11,000,001 ~ HK$11,500,000) 1,602,501 ~ 1,666,600 (HK$12,500,001 ~ HK$13,000,000) 1,666,601 ~ 1,730,700 (HK$13,000,001 ~ HK$13,500,000) 1,730,701 ~ 1,794,900 (HK$13,500,001 ~ HK$14,000,000) 1,858,901 ~ 1,923,000 (HK$14,500,001 ~ HK$15,000,000) 1,923,001 ~ 1,987,100 (HK$15,000,001 ~ HK$15,500,000) 2,820,501 ~ 2,884,600 (HK$22,000,001 ~ HK$22,500,000) 3,076,901 ~ 3,141,000 (HK$24,000,001 ~ HK$24,500,000)	Number of individuals Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 1 — — — — 1 — — — — 1 — — — — 2 — — — — — 1 — — — — 2 — — — — — — — 1 — — — — 1 — — — 3 1 — 1 2 — — — — — — 1 — — 1 1 — — 1 — — — — — 1 — — — — — 1 1 — — 1 — — 5 5 5 5 5	Number of individuals Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 1 — — — — 1 — — — — 1 — — — — 2 — — — — — 1 — — — — 2 — — — — — — — 1 — — — — 1 — — — 3 1 — 1 2 — — — — — — 1 — — 1 1 — — 1 — — — — — 1 — — — — — 1 1 — — 1 — — 5 5 5 5 5
		5

I-36

ACCOUNTANTS’ REPORT

APPENDIX I

10. Directors’ and management’s emoluments (Continued)

				Six months ended	Six months ended
	Years ended 31st		December	30th June
	2003	2004	2005	2005	2006
US$’000				(Unaudited)
Salaries and other short-term
employee benefits	4,393	8,563	11,792	10,224	10,415
Pension costs
— defined contribution plans	374	757	1,109	980	1,001
	4,767	9,320	12,901	11,204	11,416

The Group usually determines and pays discretionary bonuses to employees (including Directors) around April / May each year based on the actual financial results of the Group for the preceding year. The discretionary bonuses shown above therefore represent actual payments to the Directors and individuals during the current financial year in relation to performance for the preceding year.

I-37

ACCOUNTANTS’ REPORT

APPENDIX I

11. Operating profit

US$’000 Operating profit is arrived at after crediting: Operating lease rental income Land and buildings Reduction in terminal lease rental payments and after charging: Depreciation Owned assets Leased assets Operating lease rental expense Vessels and equipment Land and buildings Rental outgoings in respect of an investment property Exchange loss Amortisation Prepayments of lease premiums Leasehold land and land use rights of properties under development and for sale Intangible assets Auditors’ remuneration Audit Non-audit	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 20,046 22,262 21,974 11,159 11,803 14,254 — — — — 67,750 95,076 117,413 53,231 66,245 46,666 49,784 39,889 25,756 19,746 362,566 399,126 405,442 232,221 222,601 28,751 43,402 47,473 18,607 24,271 10,643 11,231 14,223 7,033 6,032 — — — — 1,061 324 438 504 241 350 — — 1,057 145 630 8,604 5,844 5,260 2,481 1,865 1,825 1,960 2,327 1,058 1,257 854 926 1,559 364 604	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 20,046 22,262 21,974 11,159 11,803 14,254 — — — — 67,750 95,076 117,413 53,231 66,245 46,666 49,784 39,889 25,756 19,746 362,566 399,126 405,442 232,221 222,601 28,751 43,402 47,473 18,607 24,271 10,643 11,231 14,223 7,033 6,032 — — — — 1,061 324 438 504 241 350 — — 1,057 145 630 8,604 5,844 5,260 2,481 1,865 1,825 1,960 2,327 1,058 1,257 854 926 1,559 364 604
		66,245 19,746 222,601 24,271 6,032 1,061 350 630 1,865 1,257 604

Operating lease rental expenses of US$365.1 million, US$418.3 million and US$429.7 million are included in “operating costs” in the profit and loss account for the years ended 31st December 2003, 2004 and 2005 and US$240.0 million and US$235.4 million for the six months ended 30th June 2005 and 2006 respectively.

Operating lease rental expenses of US$26.2 million, US$24.2 million and US$23.2 million are included in “other operating expenses” in the profit and loss account for the years ended 31st December 2003, 2004 and 2005 and US$10.8 million and US$11.5 million for the six months ended 30th June 2005 and 2006 respectively.

I-38

ACCOUNTANTS’ REPORT

APPENDIX I

12. Finance costs

Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 7,747 13,122 17,133 9,041 8,070 12,933 8,641 12,994 3,609 6,179 8,911 11,201 9,528 4,442 4,144 6,435 7,272 23,484 9,469 20,035 36,026 40,236 63,139 26,561 38,428 (2,636) (2,661) (7,082) (2,296) (7,779) 33,390 37,575 56,057 24,265 30,649 6,794 6,212 5,602 2,934 2,624 40,184 43,787 61,659 27,199 33,273	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 7,747 13,122 17,133 9,041 8,070 12,933 8,641 12,994 3,609 6,179 8,911 11,201 9,528 4,442 4,144 6,435 7,272 23,484 9,469 20,035 36,026 40,236 63,139 26,561 38,428 (2,636) (2,661) (7,082) (2,296) (7,779) 33,390 37,575 56,057 24,265 30,649 6,794 6,212 5,602 2,934 2,624 40,184 43,787 61,659 27,199 33,273	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 7,747 13,122 17,133 9,041 8,070 12,933 8,641 12,994 3,609 6,179 8,911 11,201 9,528 4,442 4,144 6,435 7,272 23,484 9,469 20,035 36,026 40,236 63,139 26,561 38,428 (2,636) (2,661) (7,082) (2,296) (7,779) 33,390 37,575 56,057 24,265 30,649 6,794 6,212 5,602 2,934 2,624 40,184 43,787 61,659 27,199 33,273	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 7,747 13,122 17,133 9,041 8,070 12,933 8,641 12,994 3,609 6,179 8,911 11,201 9,528 4,442 4,144 6,435 7,272 23,484 9,469 20,035 36,026 40,236 63,139 26,561 38,428 (2,636) (2,661) (7,082) (2,296) (7,779) 33,390 37,575 56,057 24,265 30,649 6,794 6,212 5,602 2,934 2,624 40,184 43,787 61,659 27,199 33,273	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 7,747 13,122 17,133 9,041 8,070 12,933 8,641 12,994 3,609 6,179 8,911 11,201 9,528 4,442 4,144 6,435 7,272 23,484 9,469 20,035 36,026 40,236 63,139 26,561 38,428 (2,636) (2,661) (7,082) (2,296) (7,779) 33,390 37,575 56,057 24,265 30,649 6,794 6,212 5,602 2,934 2,624 40,184 43,787 61,659 27,199 33,273
36,026 (2,636) 33,390 6,794	40,236 (2,661) 37,575 6,212	63,139 (7,082) 56,057 5,602	26,561 (2,296) 24,265 2,934	38,428 (7,779
				30,649 2,624
40,184	43,787	61,659	27,199

The borrowing cost of the loans to finance the vessels under construction (note 16) and properties under development and for sale (note 28) represents an average capitalisation rate for the years ended 31st December 2003, 2004 and 2005 of approximately of 2.3%, 2.8% and 3.9% respectively and six months ended 30th June 2005 and 2006 of approximately 3.2% and 4.5% respectively.

13. Taxation

				Six months ended	Six months ended
	Years	ended 31st December		30th June
	2003	2004	2005	2005	2006
US$’000				(Unaudited)
Current taxation
Hong Kong profits tax	—	—	1,026	—	768
Overseas taxation	16,349	28,784	25,509	18,367	32,807
	16,349	28,784	26,535	18,367	33,575
Deferred taxation
Hong Kong profits tax	(47)	(1,981)	1,866	—	253
Overseas taxation	1,796	(1,064)	10,441	2,122	(3,199)
	18,098	25,739	38,842	20,489	30,629

I-39

ACCOUNTANTS’ REPORT

APPENDIX I

13. Taxation (Continued)

Taxation has been provided at the appropriate tax rates prevailing in the countries in which the Group operates on the estimated assessable profits for the years/periods. These rates for the years ended 31st December 2003, 2004 and 2005 range from 10% to 53%, 10% to 53% and 3% to 52% and six months ended 30th June 2005 and 2006 range from 10% to 53% and 8% to 52% and the rate applicable for Hong Kong profits tax is 17.5% during the Relevant Periods.

The tax of the Group’s profit before taxation differs from the theoretical amount that would arise using the applicable tax rate, being the weighted average of rates prevailing in the territories in which the Group operates, as follows:

US$’000 Profit before taxation Share of profits less losses of jointly controlled entities Share of loss of an associated company Tax calculated at applicable tax rate Income not subject to tax Expenses not deductible for tax purposes Tax losses not recognised Temporary differences not recognised Utilisation of previously unrecognised tax losses Utilisation of previously unrecognised temporary differences Recognition of previously unrecognised deferred tax assets Recognition of previously unrecognised temporary differences Change in tax rates Withholding tax Other items	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 347,259 696,337 690,133 329,446 311,185 (6,615) (11,116) (6,950) (5,609) (2,345) — — 84 — 37 340,644 685,221 683,267 323,837 308,877 70,532 134,033 149,084 73,484 97,579 (63,490) (112,470) (119,911) (62,494) (80,779) 14,695 9,913 18,100 11,732 13,932 3,756 2,768 2,193 675 1,025 2,813 (57) (2,640) 580 804 (11,043) (7,403) (4,434) (984) (493) — (665) (2,761) (1,772) (2,015) (523) (1,981) — — — (254) (156) 11 — — 40 — (793) 9 16 935 1,381 198 3 267 637 376 (205) (744) 293 18,098 25,739 38,842 20,489 30,629	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 347,259 696,337 690,133 329,446 311,185 (6,615) (11,116) (6,950) (5,609) (2,345) — — 84 — 37 340,644 685,221 683,267 323,837 308,877 70,532 134,033 149,084 73,484 97,579 (63,490) (112,470) (119,911) (62,494) (80,779) 14,695 9,913 18,100 11,732 13,932 3,756 2,768 2,193 675 1,025 2,813 (57) (2,640) 580 804 (11,043) (7,403) (4,434) (984) (493) — (665) (2,761) (1,772) (2,015) (523) (1,981) — — — (254) (156) 11 — — 40 — (793) 9 16 935 1,381 198 3 267 637 376 (205) (744) 293 18,098 25,739 38,842 20,489 30,629	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 347,259 696,337 690,133 329,446 311,185 (6,615) (11,116) (6,950) (5,609) (2,345) — — 84 — 37 340,644 685,221 683,267 323,837 308,877 70,532 134,033 149,084 73,484 97,579 (63,490) (112,470) (119,911) (62,494) (80,779) 14,695 9,913 18,100 11,732 13,932 3,756 2,768 2,193 675 1,025 2,813 (57) (2,640) 580 804 (11,043) (7,403) (4,434) (984) (493) — (665) (2,761) (1,772) (2,015) (523) (1,981) — — — (254) (156) 11 — — 40 — (793) 9 16 935 1,381 198 3 267 637 376 (205) (744) 293 18,098 25,739 38,842 20,489 30,629	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 347,259 696,337 690,133 329,446 311,185 (6,615) (11,116) (6,950) (5,609) (2,345) — — 84 — 37 340,644 685,221 683,267 323,837 308,877 70,532 134,033 149,084 73,484 97,579 (63,490) (112,470) (119,911) (62,494) (80,779) 14,695 9,913 18,100 11,732 13,932 3,756 2,768 2,193 675 1,025 2,813 (57) (2,640) 580 804 (11,043) (7,403) (4,434) (984) (493) — (665) (2,761) (1,772) (2,015) (523) (1,981) — — — (254) (156) 11 — — 40 — (793) 9 16 935 1,381 198 3 267 637 376 (205) (744) 293 18,098 25,739 38,842 20,489 30,629	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 347,259 696,337 690,133 329,446 311,185 (6,615) (11,116) (6,950) (5,609) (2,345) — — 84 — 37 340,644 685,221 683,267 323,837 308,877 70,532 134,033 149,084 73,484 97,579 (63,490) (112,470) (119,911) (62,494) (80,779) 14,695 9,913 18,100 11,732 13,932 3,756 2,768 2,193 675 1,025 2,813 (57) (2,640) 580 804 (11,043) (7,403) (4,434) (984) (493) — (665) (2,761) (1,772) (2,015) (523) (1,981) — — — (254) (156) 11 — — 40 — (793) 9 16 935 1,381 198 3 267 637 376 (205) (744) 293 18,098 25,739 38,842 20,489 30,629
	70,532 (63,490) 14,695 3,756 2,813 (11,043) — (523) (254) 40 935 637	134,033 (112,470) 9,913 2,768 (57) (7,403) (665) (1,981) (156) — 1,381 376	149,084 (119,911) 18,100 2,193 (2,640) (4,434) (2,761) — 11 (793) 198 (205)	73,484 (62,494) 11,732 675 580 (984) (1,772) — — 9 3 (744)	97,579 (80,779 13,932 1,025 804 (493 (2,015 — — 16 267 293
	18,098	25,739	38,842	20,489

I-40

ACCOUNTANTS’ REPORT

APPENDIX I

14. Earnings per ordinary share

The calculation of basic and diluted earnings per ordinary share for the years ended 31st December 2003, 2004 and 2005 is based on the profit attributable to equity holders of US$329.0 million, US$670.4 million and US$650.9 million respectively and for the six months ended 30th June 2005 and 2006 of US$308.9 million and US$280.5 million respectively and the weighted average number of 603.3 million, 618.0 million and 625.8 million respectively as at 31st December 2003, 2004 and 2005 and 625.8 million as at 30th June 2005 and 2006 after adjusting for the bonus issue ordinary shares in issue during the Relevant Periods.

The basic and diluted earnings per ordinary share are the same since there are no potential dilutive shares.

15. Dividends

				Six months ended	Six months ended	Six months ended
	Years	ended 31st	December	30th June
	2003	2004	2005	2005		2006
US$’000				(Unaudited)
Interim paid of US3.85 cents/
US10.91 cents/US12.00 cents/
US12.00 cents and proposed of
US11.00 cents per ordinary share	18,099	68,354	75,261	75,261	68,837
Final paid of US11.64 cents/
US16.36 cents/US15.00 cents/
nil/nil per ordinary share	66,231	102,334	94,031	—		—
	84,330	170,688	169,292	75,261	68,837

I-41

APPENDIX I

ACCOUNTANTS’ REPORT

					Total				1,950,635	28,424	413,773	—	(143,547)	2,249,285		701,627	11,359	114,416	(54,516)	772,886		1,476,399	1,249,008			384,080	239,288
	Vehicles,	furnitures,	computer and	other	equipment				102,827	3,607	19,363	—	(17,478)	108,319		83,859	2,127	6,687	(17,225)	75,448		32,871	18,968			607	465
Buildings	under	medium-term	leasehold	land outside	Hong Kong				22,990	80	—	—	(2,711)	20,359		6,757	46	1,488	(1,866)	6,425		13,934	16,233			—	—
	Freehold	land and	buildings	outside	Hong Kong				53,368	239	—	—	—	53,607		23,188	39	1,645	—	24,872		28,735	30,180			—	—
		Terminal	equipment	and	improvements				223,053	23,455	49,397	—	(8,044)	287,861		86,276	8,568	17,657	(6,829)	105,672		182,189	136,777			77,620	57,882
					Chassis				109,931	1,043	9,204	—	—	120,178		76,867	579	7,039	—	84,485		35,693	33,064			26,913	24,181
					Containers				344,377	—	115,720	—	(17,232)	442,865		139,023	—	44,037	(14,522)	168,538		274,327	205,354			125,867	156,760
			Vessels	under	construction				164,836	—	219,105	(211,657)	—	172,284		—	—	—	—	—		172,284	164,836			—	—
				Container	vessels				929,253	—	984	211,657	(98,082)	1,043,812		285,657	—	35,863	(14,074)	307,446		736,366	643,596			153,073	—
						US$’000	Group	Cost or valuation	At 31st December 2002	Changes in exchange rates	Additions	Reclassification	Disposals	At 31st December 2003	Accumulated depreciation	At 31st December 2002	Changes in exchange rates	Charge for the year	Disposals	At 31st December 2003	Net book amount	At 31st December 2003	At 31st December 2002	Net book amount of leased	assets	At 31st December 2003	At 31st December 2002

I-42

APPENDIX I

ACCOUNTANTS’ REPORT

					Total				2,249,285		13,056	799,499	—	(26,114)	3,035,726		772,886		6,117	144,860	(20,203)	903,660		2,132,066	1,476,399			682,288	384,080
	Vehicles,	furnitures,	computer and	other	equipment				108,319		2,155	24,767	—	(8,718)	126,523		75,448		1,386	10,910	(6,216)	81,528		44,995	32,871			352	607
Buildings	under	medium-term	leasehold	land outside	Hong Kong				20,359		90	—	—	(650)	19,799		6,425		32	1,356	(650)	7,163		12,636	13,934			—	—
	Freehold	land and	buildings	outside	Hong Kong				53,607		26	—	—	—	53,633		24,872		16	1,889	—	26,777		26,856	28,735			—	—
		Terminal	equipment	and	improvements				287,861		10,300	38,916	—	(2,403)	334,674		105,672		4,489	20,085	(1,517)	128,729		205,945	182,189			68,071	77,620
					Chassis				120,178		485	17,610	—	(515)	137,758		84,485		194	8,187	(271)	92,595		45,163	35,693			23,449	26,913
					Containers				442,865		—	189,946	—	(13,828)	618,983		168,538		—	55,518	(11,549)	212,507		406,476	274,327			61,608	125,867
			Vessels	under	construction				172,284		—	528,260	(320,294)	—	380,250		—		—	—	—	—		380,250	172,284			144,620	—
				Container	vessels				1,043,812		—	—	320,294	—	1,364,106		307,446		—	46,915	—	354,361		1,009,745	736,366			384,188	153,073
						US$’000	Group	Cost or valuation	At 31st December 2003	Currency translation	adjustments	Additions	Reclassification	Disposals	At 31st December 2004	Accumulated depreciation	At 31st December 2003	Currency translation	adjustments	Charge for the year	Disposals	At 31st December 2004	Net book amount	At 31st December 2004	At 31st December 2003	Net book amount of leased	assets	At 31st December 2004	At 31st December 2003

I-43

APPENDIX I

ACCOUNTANTS’ REPORT

					Total				3,035,726		7,121	621,337	—	(35,977)	3,628,207		903,660		2,896	157,302	(29,597)	1,034,261		2,593,946	2,132,066			1,196,333	682,288
	Vehicles,	furnitures,	computer and	other	equipment				126,523		(244)	26,608	—	(6,828)	146,059		81,528		(88)	16,707	(6,613)	91,534		54,525	44,995			1,819	352
Buildings	under	medium-term	leasehold	land outside	Hong Kong				19,799		439	4,704	—	(67)	24,875		7,163		138	1,274	(67)	8,508		16,367	12,636			—	—
	Freehold	land and	buildings	outside	Hong Kong				53,633		(73)	2,437	—	(167)	55,830		26,777		(33)	1,974	—	28,718		27,112	26,856			—	—
		Terminal	equipment	and	improvements				334,674		6,727	78,927	—	(10,504)	409,824		128,729		2,745	28,134	(8,381)	151,227		258,597	205,945			76,768	68,071
					Chassis				137,758		272	13,462	—	(1,458)	150,034		92,595		134	7,916	(385)	100,260		49,774	45,163			17,708	23,449
					Containers				618,983		—	87,311	—	(16,953)	689,341		212,507		—	40,945	(14,151)	239,301		450,040	406,476			54,982	61,608
			Vessels	under	construction				380,250		—	389,789	(145,026)	—	625,013		—		—	—	—	—		625,013	380,250			534,749	144,620
	Container	vessels and	capitalised	dry-docking	cost				1,364,106		—	18,099	145,026	—	1,527,231		354,361		—	60,352	—	414,713		1,112,518	1,009,745			510,307	384,188
						US$’000	Group	Cost or valuation	At 31st December 2004	Currency translation	adjustments	Additions	Reclassification	Disposals	At 31st December 2005	Accumulated depreciation	At 31st December 2004	Currency translation	adjustments	Charge for the year	Disposals	At 31st December 2005	Net book amount	At 31st December 2005	At 31st December 2004	Net book amount of leased	assets	At 31st December 2005	At 31st December 2004

I-44

APPENDIX I

ACCOUNTANTS’ REPORT

					Total				3,628,207		11,645	152,772	—	(48,410)	3,744,214		1,034,261		5,190	85,991	(44,573)	1,080,869		2,663,345	2,593,946			1,187,654	1,196,333
	Vehicles,	furnitures,	computer and	other	equipment				146,059		1,672	10,848	—	(30,872)	127,707		91,534		975	9,634	(30,804)	71,339		56,368	54,525			2,351	1,819
Buildings	under	medium-term	leasehold	land outside	Hong Kong				24,875		19	6,942	—	(156)	31,680		8,508		119	1,057	(14)	9,670		22,010	16,367			—	—
	Freehold	land and	buildings	outside Hong	Kong				55,830		195	3,110	—	—	59,135		28,718		60	324	—	29,102		30,033	27,112			—	—
		Terminal	equipment	and	improvements				409,824		9,373	31,916	—	(1,116)	449,997		151,227		3,849	18,130	(1,015)	172,191		277,806	258,597			85,779	76,768
					Chassis				150,034		386	2,504	—	(1,768)	151,156		100,260		187	3,956	(555)	103,848		47,308	49,774			14,613	17,708
					Containers				689,341		—	66,666	—	(14,498)	741,509		239,301		—	25,157	(12,185)	252,273		489,236	450,040			43,019	54,982
			Vessels	under	construction				625,013		—	28,062	(71,159)	—	581,916		—		—	—	—	—		581,916	625,013			470,357	534,749
	Container	vessels and	capitalised	dry-docking	costs				1,527,231		—	2,724	71,159	—	1,601,114		414,713		—	27,733	—	442,446		1,158,668	1,112,518			571,535	510,307
						US$’000	Group	Cost or valuation	At 31st December 2005	Currency translation	adjustments	Additions	Reclassification	Disposals	At 30th June 2006	Accumulated depreciation	At 31st December 2005	Currency translation	adjustments	Charge for the period	Disposals	At 30th June 2006	Net book amount	At 30th June 2006	At 31st December 2005	Net book amount of leased	assets	At 30th June 2006	At 31st December 2005

I-45

ACCOUNTANTS’ REPORT

APPENDIX I

Property, plant and equipment (Continued)
(a) Container vessels as at 31st December 2003, 2004 and 2005 and 30th June 2006 include three vessels which were previously operated under finance lease terms and direct ownership was acquired by the Group in May 1990. These vessels are carried at Directors’ valuation, representing the then purchase consideration which was determined by reference to professional valuations on a cum-charter open market basis of US$87.0 million. Subsequent revaluations of these vessels are not required to be made in accordance with paragraph 80A of Hong Kong Accounting Standard 16 “Property, plant and equipment”. Had these vessels been carried at cost, the net book amount of the container vessels as at 31st December 2003, 2004 and 2005 and 30th June 2006 would have been reduced by US$2.7 million, US$2.3 million, US$1.9 million and US$1.7 million respectively.
(b) Apart from the container vessels mentioned under (a) above, all other property, plant and equipment are carried at cost.
(c) The aggregate net book amount of assets as at 31st December 2003, 2004 and 2005 and 30th June 2006 pledged as securities for loans amounts to US$899.0 million, US$906.3 million, US$447.0 million and US$510.2 million respectively. Specific charges on vessels of the Group include legal mortgages and assignments of insurance claims and charterhire income relating to these vessels.
(d) Interest costs of US$1.6 million, US$1.3 million, US$4.5 million respectively during the years ended 31st December 2003, 2004 and 2005 and US$1.7 million and US$6.1 million respectively during the six months ended 30th June 2005 and 2006 were capitalised as part of vessels under construction.
(e) Depreciation charge of US$104.6 million, US$130.7 million and US$117.4 million respectively during the years ended 31st December 2003, 2004 and 2005 and US$70.0 million and US$75.0 million respectively during the six months ended 30th June 2005 and 2006 has been expensed in operating cost and US$9.7 million, US$14.2 million and US$39.9 million respectively for the years ended 31st December 2003, 2004 and 2005 and US$8.9 million and US$10.9 million respectively for the six months ended 30th June 2005 and 2006 in business and administrative expenses.
Investment property

US$’000 Group Balance at beginning of year/period Additions Fair value gain Balance at end of year/period	As at 31st December 2003 2004 90,000 100,000 10,000 — — — 100,000 100,000	2005 100,000 — — 100,000	As at 30th June 2006 100,000 — 75,000
			175,000

The investment property, “Wall Street Plaza”, a commercial property located at 88, Pine Street, New York, USA. The property is situated on three parcels of freehold land, two of which are wholly owned by the Group. The freehold interest in the third parcel, representing approximately 10% of the site, is owned 50% by the Group and under a long-term lease to the Group expiring in the year 2066. The property is stated at Directors’ valuation as at 31st December 2003, 2004 and 2005 of US$100.0 million and as at 30th June of US$175.0 million, by reference to a professional valuation made by independent valuers, on an open market basis.

The investment property is pledged for bank borrowings as at 31st December 2003, 2004 and 2005 and 30th June 2006.

I-46

ACCOUNTANTS’ REPORT

APPENDIX I

18. Prepayments of lease premiums

The Group’s interests in leasehold land and land use rights represent prepaid operating lease payments and their net book values are analysed as follows:

US$’000 Group Medium-term lease outside Hong Kong Balance at beginning of year/period Currency translation adjustments Additions Disposals Amortisation Balance at end of year/period	As at 31st December 2003 2004 3,399 3,110	As at 31st December 2003 2004 3,399 3,110	2005 7,787	As at 30th June 2006 7,751
	3,430 293 — — (324)	3,399 286 — (137) (438)	3,110 263 4,918 — (504)	7,787 314 — — (350)
	3,399	3,110	7,787	7,751

Amortisation for the years ended 31st December 2003, 2004 and 2005 of US$0.3 million, US$0.4 million and US$0.5 million respectively and for the six months ended 30th June 2005 and 2006 of US$0.2 million and US$0.4 million respectively are included in “other operating expenses” in the profit and loss account.

19. Subsidiaries

					As at
		As	at 31st December		30th June
	2003		2004	2005	2006
US$’000
Company
Unlisted shares, at cost less provision	169,482		169,482	169,482	169,482
Amounts due from subsidiaries	688,368		1,012,308	1,195,708	1,187,912
Amounts due to subsidiaries	528,013		707,225	843,900	929,612

The amounts due from and to subsidiaries are interest free, unsecured and have no specific terms of repayment.

Particulars of the principal subsidiaries are shown on pages I-79 to I-93.

I-47

ACCOUNTANTS’ REPORT

APPENDIX I

20. Jointly controlled entities

US$’000 Group Beginning of the year/period Share of jointly controlled entities’ results — Profit before taxation — Taxation Currency translation adjustments Additions Repayment of investment Disposals Dividend received End of the year/period Share of net assets Amounts receivable/(payable)	As at 31st December 2003 2004 24,631 12,558 12,662 15,518 (6,047) (4,402) 31,246 23,674 — (1) — 98 (9,500) — — 9,546 (9,188) (18,521) 12,558 14,796	As at 31st December 2003 2004 24,631 12,558 12,662 15,518 (6,047) (4,402) 31,246 23,674 — (1) — 98 (9,500) — — 9,546 (9,188) (18,521) 12,558 14,796	2005 14,796 10,043 (3,093) 21,746 138 187 — — (508) 21,563	As at 30th June 2006 21,563 3,147 (802) 23,908 47 — — — (1,030) 22,925 22,925 (1,156) 21,769
	12,558 11,740	14,796 16,459	21,563 (1,706)	22,925 (1,156
	24,298	31,255	19,857

The amounts payable and receivable are unsecured, interest free and have no specific repayment terms.

I-48

ACCOUNTANTS’ REPORT

APPENDIX I

20. Jointly controlled entities (Continued)

The Group’s share of assets, liabilities and results of the jointly controlled entities is summarised below:

US$’000 Non-current assets Current assets Current liabilities Non-current liabilities Income Expenses Capital commitment	As at 31st December 2003 2004 30,361 957 48,320 63,121 (40,628) (48,247) (25,495) (1,035) 12,558 14,796 33,764 44,565 (27,149) (33,449) 25 34	2005 870 53,755 (33,062) — 21,563 22,584 (15,634) 28	As at 30th June 2006 734 50,171 (27,980) — 22,925 7,361 (5,016) 20

Particulars of the principal jointly controlled entities are shown on page I-93.

21. Associated company

US$’000 Group Beginning of the year/period Share of net assets Additions Share of associated company’s results — Loss for the year/period End of the year/period	As at 31st December 2003 2004 — — — — — — — —	2005 — 8,000 (84) 7,916	As at 30th June 2006 7,916 7,000 (37) 14,879

I-49

ACCOUNTANTS’ REPORT

APPENDIX I

21. Associated company (Continued)

The Group’s share of assets, liabilities and results of the associated company is summarised as follows:

US$’000 Non-current assets Current assets Current liabilities Income Expenses Capital commitment	As at 31st December 2003 2004 — — — — — — — — — — — — — —	2005 6,905 1,020 (9) 7,916 4 (88) 20,422	As at 30th June 2006 18,198 7,749 (11,068) 14,879 18 (55) 34,955

Particulars of the associated company are shown on page I-93.

22. Intangible assets

	Computer software
	development costs
US$’000
Group
At 1st January 2003
Cost	42,123
Accumulated amortisation	(23,912)
Net book amount	18,211
Year ended 31st December 2003
Opening net book amount	18,211
Additions	6,213
Amortisation	(8,604)
Closing net book amount	15,820
At 31st December 2003
Cost	48,336
Accumulated amortisation	(32,516)
Net book amount	15,820

I-50

APPENDIX I

ACCOUNTANTS’ REPORT

22. Intangible assets (Continued)

	Computer software
	development costs
US$’000
Year ended 31st December 2004
Opening net book amount	15,820
Currency translation adjustments	1
Additions	6,992
Write-off	(42)
Amortisation	(5,844)
Closing net book amount	16,927
At 31st December 2004
Cost	55,287
Accumulated amortisation	(38,360)
Net book amount	16,927
Year ended 31st December 2005
Opening net book amount	16,927
Currency translation adjustments	124
Additions	9,239
Amortisation	(5,260)
Closing net book amount	21,030
At 31st December 2005
Cost	64,339
Accumulated amortisation	(43,309)
Net book amount	21,030
Period ended 30th June 2006
Opening net book amount	21,030
Currency translation adjustments	134
Additions	8,505
Amortisation	(1,865)
Closing net book amount	27,804
At 30th June 2006
Cost	73,050
Accumulated amortisation	(45,246)
Net book amount	27,804

Computer software development costs mainly comprise internally generated capitalised software development costs.

Amortisation for the years ended 31st December 2003, 2004 and 2005 of US$8.6 million, US$5.8 million and US$5.3 million respectively and for the six months ended 30th June 2005 and 2006 of US$3.7 million and US$1.9 million respectively is included in “other operating expenses” in the profit and loss account.

I-51

ACCOUNTANTS’ REPORT

APPENDIX I

23. Deferred taxation assets/(liabilities)

US$’000 Group Deferred taxation assets Deferred taxation liabilities	As at 31st December 2003 2004 10,960 15,352 (37,624) (40,166) (26,664) (24,814)	2005 8,203 (50,204) (42,001)	As at 30th June 2006 5,955 (45,770) (39,815)

Deferred taxation assets and liabilities are offset when there is a legal right to set off current taxation assets with current taxation liabilities and when the deferred taxation relates to the same authority. The above assets/(liabilities) shown in the consolidated balance sheet are determined after appropriate offsetting of the relevant amounts and include the following:

				As at
	As at 31st December			30th June
	2003	2004	2005	2006
US$’000
Deferred taxation assets to be recovered after more
than twelve months	4,455	10,178	3,568	213
Deferred taxation liabilities to be settled after more
than twelve months	(37,396)	(39,699)	(49,913)	(45,101)

I-52

ACCOUNTANTS’ REPORT

APPENDIX I

23. Deferred taxation assets/(liabilities) (Continued)

Deferred taxation is calculated in full on temporary differences under the liability method using applicable tax rates prevailing in the countries in which the Group operates. Movements on the deferred taxation account are as follows:

	Depreciation	Revenue
	allowances	expenditure	Tax losses	Pensions	Total
US$’000
Deferred taxation assets
At 31st December 2002	93	5,554	3,132	952	9,731
Currency translation adjustments	—	255	8	—	263
Credited/(charged) to profit and loss
account	(93)	1,521	740	589	2,757
At 31st December 2003	—	7,330	3,880	1,541	12,751
Currency translation adjustments	—	140	(83)	—	57
Credited/(charged) to profit and loss
account	—	5,880	1,112	(333)	6,659
At 31st December 2004	—	13,350	4,909	1,208	19,467
Currency translation adjustments	—	(336)	(184)	—	(520)
Change in tax rates	—	85	—	23	108
Credited/(charged) to profit and loss
account	—	(6,118)	(3,672)	662	(9,128)
At 31st December 2005	—	6,981	1,053	1,893	9,927
Currency translation adjustments	—	(207)	264	—	57
Credited/(charged) to profit and loss
account	—	4,209	(253)	(379)	3,577
At 30th June 2006	—	10,983	1,064	1,514	13,561

I-53

APPENDIX I

ACCOUNTANTS’ REPORT

23. Deferred taxation assets/(liabilities) (Continued)

Depreciation allowances Revaluation US$’000 Deferred taxation liabilities At 31st December 2002 12,687 18,836 Currency translation adjustments 2,489 — Charged/(credited) to profit and loss account 4,095 577 At 31st December 2003 19,271 19,413 Currency translation adjustments 1,193 — Charged/(credited) to profit and loss account 3,319 384 At 31st December 2004 23,783 19,797 Currency translation adjustments 1,350 — Change in tax rates (685) — Acquisition of a subsidiary — 3,803 Charged to profit and loss account 1,759 1,420 At 31st December 2005 26,207 25,020 Currency translation adjustments 817 — Charged to profit and loss account 303 — At 30th June 2006 27,327 25,020	Depreciation allowances Revaluation US$’000 Deferred taxation liabilities At 31st December 2002 12,687 18,836 Currency translation adjustments 2,489 — Charged/(credited) to profit and loss account 4,095 577 At 31st December 2003 19,271 19,413 Currency translation adjustments 1,193 — Charged/(credited) to profit and loss account 3,319 384 At 31st December 2004 23,783 19,797 Currency translation adjustments 1,350 — Change in tax rates (685) — Acquisition of a subsidiary — 3,803 Charged to profit and loss account 1,759 1,420 At 31st December 2005 26,207 25,020 Currency translation adjustments 817 — Charged to profit and loss account 303 — At 30th June 2006 27,327 25,020	Pensions 808 89 (166)	Total 32,331 2,578 4,506 39,415 1,252 3,614 44,281 1,350 (685) 3,803 3,179 51,928 817 631 53,376
19,271 1,193 3,319 23,783 1,350 (685) — 1,759 26,207 817 303	19,413 — 384 19,797 — — 3,803 1,420 25,020 — —	731 59 (89) 701 — — — — 701 — 328	39,415 1,252 3,614
			44,281 1,350 (685 3,803 3,179
			51,928 817 631
27,327	25,020	1,029

Deferred taxation assets as at 31st December 2003, 2004 and 2005 and 30th June 2006 of US$33.2 million, US$21.0 million, US$19.9 million and US$20.7 million respectively arising from unused tax losses as at 31st December 2003, 2004, 2005 and 30th June 2006 of US$164.2 million, US$101.2 million, US$100.1 million and US$103.1 million respectively have not been recognised. Unused tax losses as at 31st December 2003, 2004 and 2005 and 30th June 2006 of US$162.0 million, US$94.8 million, US$91.7 million and US$96.1 million respectively have no expiry date and the balance will expire at various dates up to and including 2010.

Deferred taxation liabilities as at 31st December 2003, 2004, 2005 and 30th June 2006 of US$7.0 million, US$11.5 million, US$18.5 million and US$34.9 million respectively on temporary differences associated with investments in subsidiaries as at 31st December 2003, 2004 and 2005 and 30th June 2006 of US$105.5 million, US$133.8 million, US$180.1 million and US$237.8 million respectively have not been recognised as there is no current intention of remitting the retained profit of these subsidiaries to the holding companies.

I-54

ACCOUNTANTS’ REPORT

APPENDIX I

24. Pension and retirement assets

The Group operates a number of defined benefits and defined contribution pension and retirement schemes in the main countries in which the Group operates. The total charges to the profit and loss account for the years ended 31st December 2003, 2004 and 2005 were US$16.2 million, US$21.2 million and US$22.7 million and for the six months ended 30th June 2005 and 2006 were US$8.2 million and US$13.5 million respectively.

Defined contribution schemes

The principal defined contribution schemes are operated in Hong Kong, the USA and Canada. These schemes cover approximately 72%, 73% and 76% for the years ended 31st December 2003, 2004 and 2005 and 80% for the six months ended 30th June 2006 of the Group’s employees. Contributions to the defined contribution schemes, all the assets of which are held in trust funds separate from the Group, are based on a percentage of employee’s salary, depending upon the length of service of the employee, but the Group’s contributions to certain schemes may be reduced by contributions forfeited by those employees who leave the schemes prior to vesting fully in those contributions. The charges for the defined contribution schemes to the profit and loss account during the years/periods are as follows:

				Six months ended	Six months ended
	Years	ended 31st December		30th June
	2003	2004	2005	2005	2006
US$’000				(Unaudited)
Group
Contributions to the schemes	11,332	14,346	15,364	5,812	6,976
Forfeitures utilised	(49)	(37)	(68)	—	(23)
	11,283	14,309	15,296	5,812	6,953

Contributions totalling US$2.2 million, US$2.2 million and US$2.8 million for the years ended 31st December 2003, 2004 and 2005 and US$2.5 million for the six months ended 30th June 2006 were payable to the fund at the balance sheet date.

Defined benefit schemes

The principal defined benefit schemes are operated in the USA, United Kingdom and Canada. The defined benefit schemes cover approximately 14%, 13% and 11% for the years ended 31st December 2003, 2004 and 2005 and 8% for the six months ended 30th June 2006 of the Group’s employees and are fully funded, with the exception of two smaller schemes and certain post retirement benefits. The assets of the funded schemes are held in trust funds separate from the Group. Contributions to these schemes are assessed in accordance with the advice of qualified actuaries in compliance with local practice and regulations. The actuarial assumptions used to calculate the projected benefit obligations of the Group’s pension schemes vary according to the economic conditions of the country in which they are situated. Actuary valuations for these schemes are carried out by independent professionally qualified actuaries ranging between two to three years.

I-55

ACCOUNTANTS’ REPORT

APPENDIX I

24. Pension and retirement assets (Continued)

Defined benefit schemes (Continued)

The net assets/(liabilities) for the defined benefit schemes are recognised in the balance sheets as follows:

As at 31st December 2003 2004 229,844 251,100 (263,382) (299,283)	As at 31st December 2003 2004 229,844 251,100 (263,382) (299,283)	2005 244,176 (302,554)	As at 30th June 2006 261,118 (315,303) (54,185) (10,189) 52,476 3,000 236 (8,662) 6,081 (14,743) (8,662)
(33,538) (5,682) 31,902 841 505	(48,183) (8,943) 45,059 3,476 246	(58,378) (9,677) 56,218 3,205 235	(54,185 (10,189 52,476 3,000 236
(5,972)	(8,345)	(8,397)
5,145 (11,117)	5,796 (14,141)	6,683 (15,080)	6,081 (14,743
(5,972)	(8,345)	(8,397)

Movements of the net liabilities during the years/periods are as follows:

US$’000 Balance at beginning of year/period Currency translation adjustments Net expense recognised in profit and loss account Contributions paid Balance at end of year/period	As at 31st December 2003 2004 (3,618) (5,972) (352) (159) (4,962) (6,908) 2,960 4,694 (5,972) (8,345)	2005 (8,345) 235 (7,410) 7,123 (8,397)	As at 30th June 2006 (8,397) (43) (6,497) 6,275 (8,662)

I-56

ACCOUNTANTS’ REPORT

APPENDIX I

24. Pension and retirement assets (Continued)

Defined benefit schemes (Continued)

The charges for the defined benefit schemes are recognised in the profit and loss account as follows:

US$’000 Current service cost Interest cost Expected return on plan assets Amortisation of past service cost Net actuarial loss Loss on curtailments and settlements Net expense recognised for the year/period	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 3,536 4,188 4,417 1,559 2,639 13,726 15,029 14,257 7,081 7,614 (12,956) (14,175) (13,035) (6,746) (7,112) 185 390 379 178 2,486 353 602 1,392 282 870 118 874 — — — 4,962 6,908 7,410 2,354 6,497	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 3,536 4,188 4,417 1,559 2,639 13,726 15,029 14,257 7,081 7,614 (12,956) (14,175) (13,035) (6,746) (7,112) 185 390 379 178 2,486 353 602 1,392 282 870 118 874 — — — 4,962 6,908 7,410 2,354 6,497
		6,497

The main actuarial assumptions made for the principal defined benefit schemes were as follows:

				Six months ended	Six months ended	Six months ended
	Years	ended 31st	December	30th June
	2003	2004	2005	2005		2006
				(Unaudited)
Discount rate	1 to 8%	2 to 8%	2 to 6%	2 to 8%	2	to 6%
Expected return on plan assets	2 to 8%	1 to 8%	1 to 8%	1 to 8%	1	to 6%
Expected future salary increases	3 to 7%	3 to 8%	3 to 5%	3 to 8%	3	to 4%
Actual return on plan assets
(US$’000)	20,885	16,862	25,955	8,962		6,232

I-57

ACCOUNTANTS’ REPORT

APPENDIX I

25. Available-for-sale financial assets

US$’000 Group Beginning of the year/period Currency translation adjustments Additions Disposals Change in fair value transferred to equity End of the year/period	As at 31st December 2003 2004 8,333 6,788 (8) (199) 258 163 (1,795) (3,244) — — 6,788 3,508	2005 3,508 (32) 6,743 (332) 3,134 13,021	As at 30th June 2006 13,021 13 54 (398) 2,921
			15,611

Available-for-sale financial assets include the following:

US$’000 Group Listed equity securities: Hong Kong Overseas Market value of listed equity securities Unlisted equity securities Unlisted debt securities Others	As at 31st December 2003 2004 — — 7 7	As at 31st December 2003 2004 — — 7 7	2005 7,833 7	As at 30th June 2006 9,522 7
	7 1,280 — 5,501	7 1,278 4 2,219	7,840 2,991 3 2,187	9,529 4,223 2 1,857
	6,788	3,508	13,021	15,611

I-58

ACCOUNTANTS’ REPORT

APPENDIX I

26. Restricted bank balances and other deposits

US$’000 Group Restricted bank balances Other deposits	As at 31st December 2003 2004 107,377 100,128 11,825 11,825 119,202 111,953	2005 87,034 14,825 101,859	As at 30th June 2006 76,768 14,825
			91,593

The restricted bank balances as at 31st December 2003, 2004, 2005 and 30th June 2006 of US$107.4 million, US$100.1 million, US$87.0 million and US$76.8 million respectively which are funds pledged as securities for banking facilities, redeemable preference shares redemption (note 36) and performance under leasing arrangements or required to be utilised for specific purposes.

The effective interest rate on restricted bank balances and other deposits for the years ended 31st December 2003, 2004 and 2005 were 6.5%, 6.5% and 6.3% and for the six months ended 30th June 2006 was 6.2%; these balances have an average maturity of 6.7 years, 5.7 years, 4.7 years and 4.2 years.

The carrying amounts of the Group’s restricted bank balances and other deposits are mainly denominated in US dollar.

27. Other non-current assets

Other non-current assets include an advance to an investee company as at 31st December 2003, 2004, 2005 and 30th June 2006 of US$92.4 million, US$92.4 million, US$85.5 million and US$79.0 million respectively which are interest free, unsecured and have no specific terms of repayment.

I-59

ACCOUNTANTS’ REPORT

APPENDIX I

28. Properties under development and for sale

As at 31st December 2003 2004 78,224 97,959 — — 78,224 97,959	As at 31st December 2003 2004 78,224 97,959 — — 78,224 97,959	2005 178,698 2,847 181,545	As at 30th June 2006 192,131 —
			192,131
1,159 77,065	4,592 93,367	71,199 110,346	70,820 121,311
78,224	97,959	181,545	192,131

Interest costs of US$1.0 million, US$1.4 million and US$2.6 million respectively during the years ended 31st December 2003, 2004 and 2005 and US$1.3 million and US$1.6 million respectively for the six months ended 30th June 2005 and 2006 were capitalised as part of properties under development and for sale.

Amortisation of leasehold land and land use rights of US$1.1 million during the year ended 31st December 2005 and US$0.1 million and US$0.6 million respectively during the six months ended 30th June 2005 and 2006 were capitalised as part of development costs.

The properties under development are held at medium-term lease outside Hong Kong.

Bank borrowings are secured on properties under development with the carrying amount as at 31st December 2003, 2004, 2005 and 30th June 2006 of US$78.2 million, US$80.3 million, US$85.3 million and US$94.0 million respectively.

29. Inventories

US$’000 Group Bunker Consumable stores	As at 31st December 2003 2004 18,319 23,690 5,938 6,318 24,257 30,008	2005 35,546 8,965 44,511	As at 30th June 2006 56,431 10,493
			66,924

The cost of inventories recognised as expense and included in operating cost for the years ended 31st December 2003, 2004 and 2005 amounts to US$225.8 million, US$285.6 million and US$425.0 million respectively and for the six months ended 30th June 2005 and 2006 amount to US$184.5 million and US$287.7 million respectively.

I-60

ACCOUNTANTS’ REPORT

APPENDIX I

30. Debtors and prepayments

US$’000 Group Trade receivables Less: provision for impairment Trade receivables - net Other debtors Prepayments Utility and other deposits Tax recoverable	As at 31st December 2003 2004 227,843 256,485 (12,693) (9,334)	As at 31st December 2003 2004 227,843 256,485 (12,693) (9,334)	2005 284,319 (7,502)	As at 30th June 2006 306,810 (6,869)
	215,150 26,901 48,611 17,301 2,099	247,151 42,663 54,122 9,577 5,984	276,817 47,254 65,061 3,384 22,574	299,941 47,611 199,643 3,914 12,362
	310,062	359,497	415,090	563,471

Trade receivables as at 31st December 2003, 2004, 2005 and 30th June 2006 of US$164.1 million, US$184.7 million, US$219.2 million and US$217.5 million respectively were assigned to a third party trustee company which holds these receivables in favour of the Group and an independent third party sponsored by a bank. Under the arrangement, trade receivables as at 31st December 2003, 2004, 2005 and 30th June 2006 of US$109.5 million, US$109.5 million, US$110.0 million and US$110.0 million held in the trustee company were securities for a loan of US$99.5 million, US$99.5 million, US$100.0 million and US$100.0 million respectively as at 31st December 2003, 2004, 2005 and 30th June 2006.

Trade receivables are normally due for payment on presentation of invoices or granted with an approved credit period ranging mainly from 10 to 45 days. Trade receivables with overdue balances are requested to settle all outstanding balances before any further credit is granted.

The ageing analysis of the Group’s trade receivables, net of provision for impairment, prepared in accordance with the due date of invoices, is as follows:

US$’000 Below one month Two to three months Four to six months Over six months	As at 31st December 2003 2004 194,084 215,128 19,575 26,750 1,162 5,123 329 150 215,150 247,151	2005 246,099 25,912 4,797 9 276,817	As at 30th June 2006 281,979 16,702 1,234 26
			299,941

There is no concentration of credit risk with respect to trade receivables, as the Group has a large number of customers, internationally dispersed.

I-61

ACCOUNTANTS’ REPORT

APPENDIX I

30. Debtors and prepayments (Continued)

The carrying amounts of the Group’s trade receivables are mainly denominated in US dollar.

The Group has recognised a loss of US$1.3 million, US$5.1 million and US$0.4 million respectively during the years ended 31st December 2003, 2004 and 2005 and US$0.9 million and US$0.4 million respectively during the six months ended 30th June 2005 and 2006 in respect of the impairment of its trade receivables. The loss has been included in “other operating expenses” in the profit and loss account.

31. Portfolio investments

US$’000 Group Listed equity securities Hong Kong Overseas Market value of listed equity securities Listed debt securities Hong Kong Overseas Unlisted debt securities Unit trust Money market instruments Derivative financial instruments US$’000 Group Assets/(liabilities) Interest rate swap contracts Foreign exchange forward contracts	As at 31st December 2003 2004 5,670 14,183 3,968 4,369	As at 31st December 2003 2004 5,670 14,183 3,968 4,369	2005 25,273 4,435	As at 30th June 2006 27,050 4,385 31,435 6,634 40,553 3,566 3,388 141,696 227,272 As at 30th June 2006 (5,182) 992
	9,638 — 35,539 — 3,056 59,932	18,552 2,080 40,187 — 3,117 185,898	29,708 6,972 43,978 3,588 3,325 149,433	31,435 6,634 40,553 3,566 3,388 141,696
	108,165 249,834 As at 31st December 2003 2004 — — — —		237,004 2005 354 (4,592)

32. Derivative financial instruments

I-62

ACCOUNTANTS’ REPORT

APPENDIX I

33. Cash and bank balances

US$’000 Group Cash at bank and in hand Short-term bank deposits	As at 31st December 2003 2004 177,001 93,506 380,238 661,543 557,239 755,049	2005 342,099 620,442 962,541	As at 30th June 2006 283,398 520,814
			804,212

The effective interest rate on short-term bank deposits as at 31st December 2003, 2004, 2005 and 30th June 2006 was 1.2%, 2.3%, 4.3% and 5.2% respectively; these deposits have an average maturity of 11 days, 14 days, 12 days and 22 days.

Short-term deposit as at 31st December 2003, 2004, 2005 and 30th June 2006 of US$8.4 million, US$8.8 million, US$49.2 million and US$9.7 million respectively are funds pledged for redeemable preference shares redemption and a bank loan (note 36).

The carrying amounts of the Group’s cash and bank balances are mainly denominated in US dollar.

						As at
		As	at 31st December		30th June
	2003		2004	2005		2006
US$’000
Company
Cash at bank and in hand	10,937		5,862	796		911
Short-term bank deposits	4,791		2,653	1,709		1,441
	15,728		8,515	2,505		2,352

I-63

ACCOUNTANTS’ REPORT

APPENDIX I

34. Share capital

US$’000
Authorised:
900,000,000 ordinary shares of US$0.10 each
65,000,000 convertible redeemable preferred shares
of US$1 each
50,000,000 redeemable preferred shares of US$1
each
Issued and fully paid:
At 1st January 2003
— repurchase of own shares
At 31st December 2003
— proceeds from shares issued
— bonus issue
At 31st December 2004
— bonus issue
At 31st December 2005 and 30th June 2006

As at 31st December
As at
30th June
2003
2004
2005
2006
90,000
90,000
90,000
90,000
65,000
65,000
65,000
65,000
50,000
50,000
50,000
50,000
205,000
205,000
205,000
205,000
Number of shares
Ordinary shares
(thousands)
US$’000
517,142
51,714
(46,957)
(4,696)
470,185
47,018
47,000
4,700
51,718
5,172
568,903
56,890
56,890
5,689
625,793
62,579

I-64

APPENDIX	APPENDIX	I																ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT	ACCOUNTANTS’ REPORT
					Total		808,729		12,034	(55,043)	329,044	(12,929)	(18,099)	1,063,736		9,847	(1)	148,245	(5,172)	670,449	(66,231)	(68,354)	1,752,519
				Retained	profit		672,593		—	—	329,044	(12,929)	(18,099)	970,609		—	—	—	—	670,449	(66,231)	(68,354)	1,506,473
		Foreign	exchange	translation	reserve		(57,171)		12,034	—	—	—	—	(45,137)		9,847	(1)	—	—	—	—	—	(35,291)
	Asset revaluation reserve	Available-	for-sale	financial	Vessels assets		9,948 —		— —	— —	— —	— —	— —	9,948 —		— —	— —	— —	— —	— —	— —	— —	9,948 —
			Capital	redemption	reserve		—		—	4,696	—	—	—	4,696		—	—	—	—	—	—	—	4,696
				Contributed	surplus		148,286		—	(59,739)	—	—	—	88,547		—	—	—	—	—	—	—	88,547
				Share	premium		35,073		—	—	—	—	—	35,073		—	—	148,245	(5,172)	—	—	—	178,146
Reserves	Group					US$’000	Balance at 31st December 2002	Currency translation adjustments	— Group	Repurchase of own shares	Profit for the year	2002 final dividend	2003 interim dividend	Balance at 31st December 2003	Currency translation adjustments	— Group	— Jointly controlled entities	Issue of new shares	Bonus issue	Profit for the year	2003 final dividend	2004 interim dividend	Balance at 31st December 2004

I-65

APPENDIX	APPENDIX	I															ACCOUNTANTS’	ACCOUNTANTS’	ACCOUNTANTS’	ACCOUNTANTS’	ACCOUNTANTS’	ACCOUNTANTS’	ACCOUNTANTS’
					Total		1,752,519		(1,610)	138	(5,689)	3,134	650,854	(102,334)	(75,261)	2,221,751		9,095	47	2,921	280,500	(94,031)	2,420,283
				Retained	profit		1,506,473		—	—	—	—	650,854	(102,334)	(75,261)	1,979,732		—	—	—	280,500	(94,031)	2,166,201
		Foreign	exchange	translation	reserve		(35,291)		(1,610)	138	—	—	—	—	—	(36,763)		9,095	47	—	—	—	(27,621)
	Asset revaluation reserve	Available-	for-sale	financial	Vessels assets		9,948 —		— —	— —	— —	— 3,134	— —	— —	— —	9,948 3,134		— —	— —	— 2,921	— —	— —	9,948 6,055
			Capital	redemption	reserve		4,696		—	—	—	—	—	—	—	4,696		—	—	—	—	—	4,696
				Contributed	surplus		88,547		—	—	—	—	—	—	—	88,547		—	—	—	—	—	88,547
				Share	premium		178,146		—	—	(5,689)	—	—	—	—	172,457		—	—	—	—	—	172,457
Reserves (Continued)	Group (Continued)					US$’000	Balance at 31st December 2004	Currency translation adjustments	— Group	— Jointly controlled entities	Bonus issue	Change in fair value	Profit for the year	2004 final dividend	2005 interim dividend	Balance at 31st December 2005	Currency translation adjustments	— Group	— Jointly controlled entities	Change in fair value	Profit for the period	2005 final dividend	At 30th June 2006

I-66

ACCOUNTANTS’ REPORT

APPENDIX I

35. Reserves (Continued)

Company

			Capital
	Share	Contributed	redemption	Retained
	premium	surplus	reserve	profit	Total
US$’000
Balance at 31st December 2002	35,073	148,286	—	200,652	384,011
Repurchase of own shares	—	(59,739)	4,696	—	(55,043)
Loss for the year	—	—	—	(502)	(502)
2002 final dividend	—	—	—	(12,929)	(12,929)
2003 interim dividend	—	—	—	(18,099)	(18,099)
Balance at 31st December 2003	35,073	88,547	4,696	169,122	297,438
Issue of new shares	148,245	—	—	—	148,245
Bonus issue	(5,172)	—	—	—	(5,172)
Profit for the year	—	—	—	118,842	118,842
2003 final dividend	—	—	—	(66,231)	(66,231)
2004 interim dividend	—	—	—	(68,354)	(68,354)
Balance at 31st December 2004	178,146	88,547	4,696	153,379	424,768
Bonus issue	(5,689)	—	—	—	(5,689)
Profit for the year	—	—	—	218,289	218,289
2004 final dividend	—	—	—	(102,334)	(102,334)
2005 interim dividend	—	—	—	(75,261)	(75,261)
Balance at 31st December 2005	172,457	88,547	4,696	194,073	459,773
Profit for the period	—	—	—	362	362
2005 final dividend	—	—	—	(94,031)	(94,031)
Balance at 30th June 2006	172,457	88,547	4,696	100,404	366,104

The loss attributable to shareholders for the year ended 31st December 2003 is dealt with in the accounts of the Company to the extent of US$0.5 million.

The profit attributable to shareholders for the years ended 31st December 2004 and 2005 and six months ended 30th June 2005 and 2006 is dealt with in the accounts of the Company to the extent of US$118.8 million, US$218.3 million, US$101.1 million and US$0.4 million respectively.

Under the Companies Act of Bermuda and the Bye-laws of the Company, the contributed surplus is also distributable. Accordingly, total distributable reserves of the Company as at 31st December 2003, 2004, 2005 and 30th June 2006 amount to US$257.7 million, US$241.9 million, US$282.6 million and US$189.0 million respectively before the final dividend paid of US$66.2 million, US$102.3 million and US$94.0 million respectively for the years ended 31st December 2003, 2004 and 2005 and proposed interim dividend of US$68.8 million for the six months ended 30th June 2006 (note 15).

I-67

ACCOUNTANTS’ REPORT

APPENDIX I

36. Borrowings

As at 31st December 2003 2004 439,909 610,319 45,140 7,968 108,148 105,334 2,202 1,148 83,262 74,751 341,502 628,170	As at 31st December 2003 2004 439,909 610,319 45,140 7,968 108,148 105,334 2,202 1,148 83,262 74,751 341,502 628,170	2005 356,870 — 106,020 — 65,514 1,121,640	As at 30th June 2006 376,805 — 105,320 — 55,834 1,072,437
1,020,163 50 182,922 15,890 6,893 378 7,908 50,904 264,945	1,427,690 85 98,639 2,656 4,063 1,496 8,511 38,359 153,809	1,650,044 82 120,894 — 3,896 6,840 9,237 47,599 188,548	1,610,396
			152 122,503 — 2,668 1,340 9,680 73,143
			209,486
1,285,108	1,581,499	1,838,592	1,819,882

I-68

ACCOUNTANTS’ REPORT

APPENDIX I

36. Borrowings (Continued)

The maturity of borrowings is as follows:

Bank loans Bank overdrafts 198,812 50 80,401 — 63,258 — 64,833 — 66,302 — 210,255 — 683,861 50	Bank loans Bank overdrafts 198,812 50 80,401 — 63,258 — 64,833 — 66,302 — 210,255 — 683,861 50	Other loans Redeemable preference shares and premium 7,271 7,908 5,268 8,511 4,659 9,237 487 9,680 430 10,145 99,506 45,689 117,621 91,170	Other loans Redeemable preference shares and premium 7,271 7,908 5,268 8,511 4,659 9,237 487 9,680 430 10,145 99,506 45,689 117,621 91,170	Finance Present value 50,904 34,431 73,351 44,527 8,439 180,754 392,406	leases Minimum payments 65,593 47,452 84,068 51,211 13,254 225,932
					487,510
225,317 458,544	50 —	17,779 99,842	— 91,170	190,317 202,089
683,861	50	117,621	91,170	392,406
101,295 104,778 114,375 83,958 123,975 191,201	85 — — — — —	5,559 4,945 710 654 229 99,944	8,511 9,237 9,680 10,145 10,632 35,057	38,359 62,078 57,865 18,796 24,897 464,534	61,993 83,308 74,969 33,537 38,338 615,018
719,582	85	112,041	83,262	666,529	907,163
348,228 371,354	85 —	12,097 99,944	— 83,262	141,682 524,847
719,582	85	112,041	83,262	666,529

I-69

ACCOUNTANTS’ REPORT

APPENDIX I

Borrowings (Continued)

Bank loans Bank overdrafts 120,894 82 83,914 — 52,383 — 45,680 — 93,271 — 81,622 — 477,764 82	Bank loans Bank overdrafts 120,894 82 83,914 — 52,383 — 45,680 — 93,271 — 81,622 — 477,764 82	Other loans Redeemable preference shares and premium 10,736 9,237 1,392 9,680 1,362 10,145 939 10,632 100,932 11,142 1,395 23,915 116,756 74,751	Other loans Redeemable preference shares and premium 10,736 9,237 1,392 9,680 1,362 10,145 939 10,632 100,932 11,142 1,395 23,915 116,756 74,751	Finance Present value 47,599 82,714 48,304 54,741 35,593 900,288 1,169,239	leases Minimum payments 82,096 107,791 89,869 90,141 73,120 1,286,451
					1,729,468
140,110 337,654	82 —	115,361 1,395	— 74,751	111,668 1,057,571
477,764	82	116,756	74,751	1,169,239
122,503 64,911 56,513 103,726 62,296 89,359	152 — — — — —	4,008 1,389 1,138 100,931 931 931	9,680 10,145 10,632 11,142 11,677 12,238	73,143 52,413 52,892 44,849 34,720 887,563	124,757 103,893 101,561 92,338 80,873 1,319,013
499,308	152	109,328	65,514	1,145,580	1,822,435
408,814 90,494	152 —	108,397 931	— 65,514	98,061 1,047,519
499,308	152	109,328	65,514	1,145,580

I-70

ACCOUNTANTS’ REPORT

APPENDIX I

36. Borrowings (Continued)

The effective interest rates at the balance sheet date were as follows:

					As at			As at	As at
				31st	December	2003		31st December 2004
				US$	Can$	Other	US$	Can$	£	Other
Bank loans				2.1%	—	—	3.5%	—	—	—
Other loans				6.9%	4.6%	—	3.4%	2.4%	—	—
Redeemable preference shares and premium				7.1%	—	—	7.1%	—	—	—
Finance lease obligations				3.6%	7.0%	5.0%	3.7%	6.0%	2.9%	5.0%
		As at		31st December 2005				As at 30th June 2006
	US$	Can$		£	Rmb	Other	US$	Can$	£	Other
Bank loans	5.4%	5.0%		—	4.7%	—	6.3%	6.0%	—	—
Other loans	4.8%	2.4%		—	—	—	5.6%	—	—	—
Redeemable preference
shares and premium	7.1%		—	—	—	—	7.1%	—	—	—
Finance lease obligations	5.0%	7.5%		4.9%	—	5.3%	5.9%	7.5%	5.8%	6.0%

The carrying amounts and fair values of the non-current borrowings are as follows:

		Carrying amounts	Carrying amounts	Carrying amounts			Fair values	Fair values
					As at				As at
	As	at 31st December		30th June		As	at 31st December		30th June
	2003	2004	2005		2006	2003	2004	2005	2006
US$’000
Bank loans	485,049	618,287	356,870		376,805	485,049	618,287	356,870	376,805
Other loans	110,350	106,482	106,020		105,320	110,620	106,682	106,045	105,320
Redeemable preference
shares and premium	83,262	74,751	65,514		55,834	100,352	83,883	68,169	56,354
Finance lease obligations	341,502	628,170 1,121,640		1,072,437		355,535	637,458	1,124,310	1,073,050
	1,020,163	1,427,690 1,650,044		1,610,396		1,051,556	1,446,310	1,655,394	1,611,529

The fair values are based on cash flows discounted using a rate based on the borrowing rate as at 31st December 2003, 2004 and 2005 of 2.4%, 3.8% and 5.8% and as at 30th June 2006 of 6.7%.

The carrying amounts of short-term borrowings approximate their fair values.

I-71

ACCOUNTANTS’ REPORT

APPENDIX I

36. Borrowings (Continued)

The carrying amounts of the Group’s borrowings are denominated in the following currencies:

US$’000 US dollar Pound sterling Canadian dollar Renminbi Other currencies	As at 31st December 2003 2004 1,244,459 1,480,542 — 67,314 40,594 33,604 — — 55 39 1,285,108 1,581,499	2005 1,697,510 59,080 45,938 35,935 129 1,838,592	As at 30th June 2006 1,716,562 60,866 42,346 — 108
			1,819,882

Of the total US$1,285.1 million, US$1,581.4 million, US$1,838.6 million, US$1,819.7 million debt outstanding as at 31st December 2003, 2004, 2005 and 30th June 2006, US$241.4 million and US$202.9 million, US$174.1 million and US$154.3 million was fixed rate debt. The remaining borrowings of US$1,043.7 million, US$ 1,378.5 million, US$1,664.5 million and US$ 1,665.4 million as at 31st December 2003, 2004, 2005 and 30th June 2006 was subject to floating interest rates.

Note: In June 2002, the Group entered into, inter alia, a Shareholders Agreement, as subsequently amended, with, inter alias, two unrelated third parties (together the “Preference Shareholders”) in relation to a subsidiary. Under the Shareholders Agreement, the Preference Shareholders acquired from the Group 90 cumulative preference shares (the “Preference Shares”) of[=] C 150 each in this subsidiary and contributed an aggregate of US$100.0 million less the nominal value of the Preference Shares as share premium (the “Premium”). The Preference Shareholders are entitled to receive annual dividends of 7.08% per annum on the aggregate amount of the nominal value of the Preference Shares and Premium outstanding from time to time. To the extent permitted by local law, the Preference Shareholders may propose a repayment of the Premium annually, provided that such repayment does not exceed a maximum percentage specified in the Shareholders Agreement.

37. Creditors and accruals

				As at
		As at 31st December		30th June
	2003	2004	2005	2006
US$’000
Group
Trade payables	141,199	164,823	160,927	187,943
Other creditors	30,877	33,071	52,296	55,220
Accrued expenses	278,095	335,047	365,730	310,502
Deferred revenue	36,073	20,594	24,092	22,234
	486,244	553,535	603,045	575,899

I-72

ACCOUNTANTS’ REPORT

APPENDIX I

37. Creditors and accruals (Continued)

The ageing analysis of the Group’s trade payables, prepared in accordance with date of invoices, is as follows:

US$’000 Below one month Two to three months Four to six months Over six months	As at 31st December 2003 2004 82,741 132,763 52,559 25,906 2,402 1,326 3,497 4,828 141,199 164,823	2005 121,595 34,373 1,848 3,111 160,927	As at 30th June 2006 154,754 26,757 4,955 1,477
			187,943

The carrying amounts of the Group’s trade payables are denominated in the following currencies:

US$’000 US dollar Canadian dollar Hong Kong dollar Other currencies	As at 31st December 2003 2004 63,110 90,848 13,986 17,022 12,654 18,153 51,449 38,800 141,199 164,823	2005 73,792 22,707 19,534 44,894 160,927	As at 30th June 2006 70,323 30,855 21,354 65,411
			187,943

Commitments

Group

(a) Capital commitments

							As at
					As at 31st December		30th June
				2003	2004	2005	2006
US$’000
Contracted	but	not	provided for	653,597	456,945	284,618	287,759
Authorised	but	not	contracted for	214,770	386,128	459,899	212,348
				868,367	843,073	744,517	500,107

I-73

ACCOUNTANTS’ REPORT

APPENDIX I

38. Commitments (Continued)

(b) Operating lease commitments

The future aggregate minimum lease rental expense under non-cancellable operating leases are payable in the following years/period:

	Vessels and	Land and
	equipment	buildings	Total
US$’000
As at 31st December 2003
2004	219,425	41,487	260,912
2005	174,986	36,280	211,266
2006	165,582	31,653	197,235
2007	159,902	31,062	190,964
2008	161,857	30,060	191,917
2009 onwards	995,849	413,386	1,409,235
	1,877,601	583,928	2,461,529
As at 31st December 2004
2005	284,061	43,140	327,201
2006	219,178	36,879	256,057
2007	178,381	35,411	213,792
2008	166,108	34,254	200,362
2009	140,958	32,488	173,446
2010 onwards	860,081	381,104	1,241,185
	1,848,767	563,276	2,412,043
As at 31st December 2005
2006	248,103	45,050	293,153
2007	202,084	41,661	243,745
2008	190,560	37,608	228,168
2009	141,181	34,395	175,576
2010	108,562	32,987	141,549
2011 onwards	762,690	363,012	1,125,702
	1,653,180	554,713	2,207,893
As at 30th June 2006
2006/07	294,886	48,189	343,075
2007/08	217,670	43,619	261,289
2008/09	171,998	39,373	211,371
2009/10	121,220	36,309	157,529
2010/11	102,694	34,872	137,566
2011/12 onwards	711,422	371,990	1,083,412
	1,619,890	574,352	2,194,242

I-74

ACCOUNTANTS’ REPORT

APPENDIX I

Commitments (Continued)
(c) Operating lease rental receivable

The future aggregate minimum lease rental income on land and buildings under non-cancellable operating leases are receivable in the following years/period:

US$’000 2004 2005 2006 2007 2008 2009 2010 2011 onwards	As at 31st December 2003 2004 19,328 — 19,718 19,934 18,714 19,673 17,195 18,458 16,073 17,547 13,034 14,794 6,238 10,100 15,273 24,170 125,573 124,676	2005 — — 19,770 18,986 18,071 14,948 11,061 26,463 109,299	As at 30th June 2006 — — — 20,723 20,597 19,681 16,559 42,999
			120,559

Contingent liabilities

Group

The Group has given corporate guarantee as at 31st December 2003, 2004, 2005 and 30th June 2006 of approximately US$22.0 million, US$28.0 million, US$43.1 million and US$43.1 million respectively in respect of bank loan facilities extended to an investee company. At 31st December 2003, 2004, 2005 and 30th June 2006, the amount utilised by the investee company is US$22.0 million, US$28.0 million, US$33.9 million and US$32.5 million respectively.

Company

(a) The Company has given guarantees as at 31st December 2003, 2004, 2005 and 30th June 2006 of approximately US$1,052.1 million, US$1,338.4 million, US$1,287.1 million and US$1,379.0 million respectively for its subsidiaries and approximately US$22.0 million, US$28.0 million, US$43.1 million and US$43.1 million respectively as at 31st December 2003, 2004, 2005 and 30th June 2006 for an investee company in respect of loans, finance lease obligations and bank overdraft facilities. At 31st December 2003, 2004, 2005 and 30th June 2006, the amounts utilised by the subsidiaries and the investee company are US$965.7 million, US$1,197.0 million, US$1,283.7 million and US$1,375.9 million respectively and US$22.0 million, US$28.0 million, US$33.9 million and US$32.5 million respectively.
(b) The Company has given guarantees for its subsidiaries in respect of future payment of operating lease rentals amounting to US$246.3 million, US$216.8 million and US$172.5 million respectively as at 31st December 2003, 2004 and 2005 and US$195.8 million as at 30th June 2006.

I-75

ACCOUNTANTS’ REPORT

APPENDIX I

40. Notes to consolidated cash flow statements

(a) Reconciliation of operating profit to cash generated from operations

US$’000 Operating profit Interest income Dividend income from portfolio investments Depreciation Fair value gain from an investment property Profit on disposal of property, plant and equipment Income from available-for-sale financial assets Profit on disposal of available-for- sale financial assets Profit on disposal of a jointly controlled entity Intangible assets written off Amortisation of intangible assets Amortisation of prepayments of lease premiums and leasehold land and land use rights Net gain on derivative financial instruments Increase/(decrease) in net pension liabilities Operating profit before working capital changes Increase in properties under development and for sale Increase in inventories Increase in debtors and prepayments Increase/(decrease) in creditors and accruals Increase in net derivative financial instruments Cash generated from operations	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 380,828 729,008 744,926 351,036 342,150 (15,957) (20,738) (32,827) (14,893) (23,331) (867) (1,224) (1,277) (579) (786) 114,416 144,860 157,302 78,987 85,991 — — — — (75,000) (1,914) (1,768) (8,709) (143) (6,112) (2) (49) (18) (3) (17) (17) (1,862) (18) (11) (26) — (770) — — — — 42 — — — 8,604 5,844 5,260 2,481 1,865 324 438 1,561 386 980 — — (560) (5,557) (48) 2,354 2,373 52 (46) 265 487,769 856,154 865,692 411,658 325,931 (12,611) (18,365) (32,124) (12,020) (9,538) (4,774) (5,751) (14,503) (10,147) (22,413) (38,092) (45,731) (38,847) (31,200) (162,297) 101,701 65,816 33,406 (17,169) (25,638) — — 4,798 — — 533,993 852,123 818,422 341,122 106,045	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 380,828 729,008 744,926 351,036 342,150 (15,957) (20,738) (32,827) (14,893) (23,331) (867) (1,224) (1,277) (579) (786) 114,416 144,860 157,302 78,987 85,991 — — — — (75,000) (1,914) (1,768) (8,709) (143) (6,112) (2) (49) (18) (3) (17) (17) (1,862) (18) (11) (26) — (770) — — — — 42 — — — 8,604 5,844 5,260 2,481 1,865 324 438 1,561 386 980 — — (560) (5,557) (48) 2,354 2,373 52 (46) 265 487,769 856,154 865,692 411,658 325,931 (12,611) (18,365) (32,124) (12,020) (9,538) (4,774) (5,751) (14,503) (10,147) (22,413) (38,092) (45,731) (38,847) (31,200) (162,297) 101,701 65,816 33,406 (17,169) (25,638) — — 4,798 — — 533,993 852,123 818,422 341,122 106,045	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 380,828 729,008 744,926 351,036 342,150 (15,957) (20,738) (32,827) (14,893) (23,331) (867) (1,224) (1,277) (579) (786) 114,416 144,860 157,302 78,987 85,991 — — — — (75,000) (1,914) (1,768) (8,709) (143) (6,112) (2) (49) (18) (3) (17) (17) (1,862) (18) (11) (26) — (770) — — — — 42 — — — 8,604 5,844 5,260 2,481 1,865 324 438 1,561 386 980 — — (560) (5,557) (48) 2,354 2,373 52 (46) 265 487,769 856,154 865,692 411,658 325,931 (12,611) (18,365) (32,124) (12,020) (9,538) (4,774) (5,751) (14,503) (10,147) (22,413) (38,092) (45,731) (38,847) (31,200) (162,297) 101,701 65,816 33,406 (17,169) (25,638) — — 4,798 — — 533,993 852,123 818,422 341,122 106,045	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 380,828 729,008 744,926 351,036 342,150 (15,957) (20,738) (32,827) (14,893) (23,331) (867) (1,224) (1,277) (579) (786) 114,416 144,860 157,302 78,987 85,991 — — — — (75,000) (1,914) (1,768) (8,709) (143) (6,112) (2) (49) (18) (3) (17) (17) (1,862) (18) (11) (26) — (770) — — — — 42 — — — 8,604 5,844 5,260 2,481 1,865 324 438 1,561 386 980 — — (560) (5,557) (48) 2,354 2,373 52 (46) 265 487,769 856,154 865,692 411,658 325,931 (12,611) (18,365) (32,124) (12,020) (9,538) (4,774) (5,751) (14,503) (10,147) (22,413) (38,092) (45,731) (38,847) (31,200) (162,297) 101,701 65,816 33,406 (17,169) (25,638) — — 4,798 — — 533,993 852,123 818,422 341,122 106,045	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 380,828 729,008 744,926 351,036 342,150 (15,957) (20,738) (32,827) (14,893) (23,331) (867) (1,224) (1,277) (579) (786) 114,416 144,860 157,302 78,987 85,991 — — — — (75,000) (1,914) (1,768) (8,709) (143) (6,112) (2) (49) (18) (3) (17) (17) (1,862) (18) (11) (26) — (770) — — — — 42 — — — 8,604 5,844 5,260 2,481 1,865 324 438 1,561 386 980 — — (560) (5,557) (48) 2,354 2,373 52 (46) 265 487,769 856,154 865,692 411,658 325,931 (12,611) (18,365) (32,124) (12,020) (9,538) (4,774) (5,751) (14,503) (10,147) (22,413) (38,092) (45,731) (38,847) (31,200) (162,297) 101,701 65,816 33,406 (17,169) (25,638) — — 4,798 — — 533,993 852,123 818,422 341,122 106,045
	487,769 (12,611) (4,774) (38,092) 101,701 —	856,154 (18,365) (5,751) (45,731) 65,816 —	865,692 (32,124) (14,503) (38,847) 33,406 4,798	411,658 (12,020) (10,147) (31,200) (17,169) —	325,931 (9,538 (22,413 (162,297 (25,638 —
	533,993	852,123	818,422	341,122

I-76

ACCOUNTANTS’ REPORT

APPENDIX I

40. Notes to consolidated cash flow statements (Continued)

(b) Analysis of changes in financing

		Capital
		redemption
		reserve and
	Share capital	contributed	Minority
	and premium	surplus	interests	Borrowings	Total
US$’000
At 31st December 2002	86,787	148,286	7,988	1,062,448	1,305,509
Currency translation adjustments	—	—	—	7,735	7,735
Inception of finance leases	—	—	—	189,516	189,516
Repurchase of own shares	(4,696)	(55,043)	—	—	(59,739)
Minority interests’ share of profit	—	—	117	—	117
Dividends paid to minority interests	—	—	(255)	—	(255)
Net cash from financing	—	—	—	10,359	10,359
At 31st December 2003	82,091	93,243	7,850	1,270,058	1,453,242
Currency translation adjustments	—	—	—	2,707	2,707
Inception of finance leases	—	—	—	372,445	372,445
Issue of new shares	152,945	—	—	—	152,945
Minority interests’ share of profit	—	—	149	—	149
Dividends paid to minority interests	—	—	(191)	—	(191)
Net cash used in financing	—	—	—	(63,796)	(63,796)
At 31st December 2004	235,036	93,243	7,808	1,581,414	1,917,501
Currency translation adjustments	—	—	109	(3,420)	(3,311)
Inception of finance leases	—	—	—	314,022	314,022
Minority interests’ share of profit	—	—	437	—	437
Dividends paid to minority interests	—	—	(225)	—	(225)
Net cash used in financing	—	—	—	(53,506)	(53,506)
At 31st December 2005	235,036	93,243	8,129	1,838,510	2,174,918
Currency translation adjustments	—	—	113	5,772	5,885
Inception of finance leases	—	—	—	807	807
Contribution from minority interests	—	—	4,000	—	4,000
Minority interests’ share of profit	—	—	56	—	56
Dividends paid to minority interests	—	—	(253)	—	(253)
Net cash used in financing	—	—	—	(25,359)	(25,359)
At 30th June 2006	235,036	93,243	12,045	1,819,730	2,160,054

I-77

ACCOUNTANTS’ REPORT

APPENDIX I

Notes to consolidated cash flow statements (Continued)
(c) Acquisition of a subsidiary company

On 7th April 2005, the Group entered into a sale and purchase agreement to acquire 100% equity interest of Shanghai Waigaoqiao Xuhui Clubhouse Co Ltd (“SWXCCL”), which principally engaged in operating a clubhouse in Shanghai. It is the management’s intention to redevelop the site to a service apartment and retail complex.

The consideration for the acquisition was US$35.4 million, comprising US$17.5 million, being the consideration for the purchase of the 100% equity interest of SWXCCL, and US$17.9 million, being the consideration for the purchase of the advances from the previous shareholders. The acquired subsidiary contributed revenue of US$0.2 million and net loss of US$0.6 million to the Group since acquisition. If the acquisition had occurred on 1st January 2005, the revenue and net loss of the acquired subsidiary would have been US$0.2 million and US$0.8 million respectively.

The subsidiary acquired during 2005 contributed US$0.2 million to the Group’s net cash from operating activities.

Particulars of the assets and liabilities acquired are as follows:

US$’000 Properties under development and for sale Deferred income and other taxation liabilities Debtors and prepayments Cash and bank balances Creditors and accruals Net assets acquired Purchase consideration settled in cash Cash and bank balances acquired Cash outflow on acquisition	Fair value 49,962 (14,649) 77 84 (93) 35,381	Carrying amount 18,653 — 77 84 (93) 18,721
	35,381 (84)
	35,297

(d) Analysis of cash and cash equivalents

	As at 31st December	As at 31st December		As at 30th June	As at 30th June
	2003	2004	2005	2005	2006
US$’000				(Unaudited)
Bank balances and deposits maturing
within three months from the date
of placement	551,703	744,433	947,452	600,437	788,952
Bank overdrafts	(50)	(85)	(82)	(52)	(152)
	551,653	744,348	947,370	600,385	788,800

I-78

ACCOUNTANTS’ REPORT

APPENDIX I

Principal Subsidiaries, Associated Company and Jointly Controlled Entities

				Percentage of equity	Percentage of equity	Percentage of equity	Percentage of equity
					attributable to
					the Group
	Particulars of							At
	issued share						30th
	and loan	Principal	Country of	At	31st December		June
Name of Company	capital	activities	incorporation	2003	2004	2005	2006
Subsidiaries
Beaufort Shipping Ltd	500 shares of no	Ship owning	Liberia †	100	100	100		100
	par value
	US$5,000
Cargo System Warehouse	3,000 shares of	Equipment owning	Hong Kong	100	100	100		100
and Transport Ltd	HK$100 each
	HK$300,000
Consolidated Leasing &	1 share of no	Equipment owning	USA	100	100	100		100
Terminals, Inc.	par value	and leasing
	US$100
Containers No. 1 Inc.	10,000 shares of	Equipment owning	Marshall	100	100	100		100
	no par value	and leasing	Islands
	US$100,000
Dongguan Orient Container	Registered	Container depot	China *	100	100	100		100
Co Ltd	capital
	HK$29,000,000
Far Gain Investment Ltd	2 shares of	Investment holding	Hong Kong	100	100	100		100
	HK$1 each
	HK$2
Global Terminal &	24,750 shares of	Terminal operating	USA	100	100	100		100
Container Services, Inc.	no par value
	US$5,500,000
Glory Top Investment Ltd	10,000 shares of	Portfolio	Hong Kong	N/A	100	100		100
	HK$1 each	investment
	HK$10,000
Goodlink Shipping Ltd	500 shares of no	Ship chartering	Liberia †	100	100	100		100
	par value
	US$5,000
Hai Dong Transportation	100,000 shares	Container transport	Hong Kong	100	100	100		100
Co Ltd	of HK$1 each
	HK$100,000

I-79

ACCOUNTANTS’ REPORT

APPENDIX I

Principal Subsidiaries, Associated Company and Jointly Controlled Entities (Continued)

				Percentage of equity	Percentage of equity	Percentage of equity	Percentage of equity
					attributable to
					the Group
	Particulars of							At
	issued share						30th
	and loan	Principal	Country of	At	31st December		June
Name of Company	capital	activities	incorporation	2003	2004	2005	2006
Subsidiaries (Continued)
Hillingdon Steamship and	200 shares of	Investment holding	Bermuda	100	100	100		100
Navigation Company Ltd	US$100 each
	US$20,000
Howland Hook Leasing	1,000,000	Terminal	USA	100	100	100		100
Corporation	common stock	equipment owning
	of US$1 each	and leasing
	US$1,000,000
Island Securing and	1,000 shares of	Lashing and	USA	100	100	100		100
Maintenance, Inc.	no par value	maintenance of
	US$10,000	container
		equipment
Joyocean Navigation Ltd	500 shares of no	Ship chartering	Liberia †	100	100	100		100
	par value
	US$5,000
Kenwake Ltd	1,600,000 shares	Investment holding	United	100	100	100		100
	of £1 each		Kingdom
	520,000 5%			100	100	100		100
	cumulative
	preference
	shares of
	£1 each
	£2,120,000
Kunshan Guangting	Registered	Property	China *	N/A	100	100		100
Property Co Ltd	capital	development
	US$20,000,000
Kunshan Orient Overseas	Registered	Property	China *	N/A	100	100		100
Kunan Property Co Ltd	capital	development
	RMB160,000,000
Laronda Company Ltd	5,000 shares of	Portfolio	British	100	100	100		100
	US$1 each	investment	Virgin
	US$5,000		Islands

I-80

ACCOUNTANTS’ REPORT

APPENDIX I

Principal Subsidiaries, Associated Company and Jointly Controlled Entities (Continued)

				Percentage of equity	Percentage of equity	Percentage of equity	Percentage of equity
					attributable to
					the Group
	Particulars of							At
	issued share						30th
	and loan	Principal	Country of	At	31st December		June
Name of Company	capital	activities	incorporation	2003	2004	2005	2006
Subsidiaries (Continued)
Long Beach Container	5,000 shares of	Terminal operating	USA	100	100	100		100
Terminal, Inc.	no par value
	US$500,000
Longtex Investment Ltd	2 shares of	Investment holding	Hong Kong	100	100	100		100
	HK$1 each
	HK$2
Loyalton Shipping Ltd	500 shares of no	Ship owning	Marshall	100	100	100		100
	par value		Islands
	US$5,000
Millerian Company Ltd	5,000 shares of	Portfolio	British	100	100	100		100
	US$1 each	investment	Virgin
	US$5,000		Islands
New York Container	100 common	Terminal operating	USA	N/A	100	100		100
Terminal, Inc.	stock of
	US$0.1 each
	12,200 preferred			N/A	100	100		100
	stock of
	US$0.1 each
	US$1,230
Newcontainer No. 9	500 shares of no	Ship owning	Marshall	100	100	100		100
(Marshall Islands)	par value		Islands
Shipping Inc.	US$5,000
Newcontainer No. 10	500 shares of no	Ship owning	Marshall	100	100	100		100
(Marshall Islands)	par value		Islands
Shipping Inc.	US$5,000
Newcontainer No. 15	500 shares of no	Ship owning	Marshall	100	100	100		100
(Marshall Islands)	par value		Islands
Shipping Inc.	US$5,000
Newcontainer No. 22	500 shares of no	Ship owning	Marshall	100	100	100		100
(Marshall Islands)	par value		Islands
Shipping Inc.	US$5,000

I-81

ACCOUNTANTS’ REPORT

APPENDIX I

Principal Subsidiaries, Associated Company and Jointly Controlled Entities (Continued)

				Percentage of equity	Percentage of equity	Percentage of equity	Percentage of equity
					attributable to
					the Group
	Particulars of							At
	issued share						30th
	and loan	Principal	Country of	At	31st December		June
Name of Company	capital	activities	incorporation	2003	2004	2005	2006
Subsidiaries (Continued)
Newcontainer No. 23	500 shares of no	Ship owning	Marshall	100	100	100		100
(Marshall Islands)	par value		Islands
Shipping Inc.	US$5,000
Newcontainer No. 25	500 shares of no	Ship owning	Marshall	100	100	100		100
(Marshall Islands)	par value		Islands
Shipping Inc.	US$5,000
Newcontainer No. 26	500 shares of no	Ship owning	Marshall	100	100	100		100
(Marshall Islands)	par value		Islands
Shipping Inc.	US$5,000
Newcontainer No. 27	500 shares of no	Ship owning	Marshall	N/A	100	100		100
(Marshall Islands)	par value		Islands
Shipping Inc.	US$5,000
Newcontainer No. 28	500 shares of no	Ship owning	Marshall	N/A	100	100		100
(Marshall Islands)	par value		Islands
Shipping Inc.	US$5,000
Newcontainer No. 29	500 shares of no	Ship owning	Marshall	N/A	100	100		100
(Marshall Islands)	par value		Islands
Shipping Inc.	US$5,000
Newcontainer No. 30	500 shares of no	Ship owning	Marshall	N/A	100	100		100
(Marshall Islands)	par value		Islands
Shipping Inc.	US$5,000
Newcontainer No. 31	500 shares of no	Ship owning	Marshall	N/A	100	100		100
(Marshall Islands)	par value		Islands
Shipping Inc.	US$5,000
Newcontainer No. 32	500 shares of no	Ship owning	Marshall	N/A	100	100		100
(Marshall Islands)	par value		Islands
Shipping Inc.	US$5,000
Newcontainer No. 1	500 shares of no	Ship owning	Liberia †	100	100	100		100
Shipping Inc.	par value
	US$5,000

I-82

ACCOUNTANTS’ REPORT

APPENDIX I

Principal Subsidiaries, Associated Company and Jointly Controlled Entities (Continued)

				Percentage of equity	Percentage of equity	Percentage of equity	Percentage of equity
					attributable to
					the Group
	Particulars of							At
	issued share						30th
	and loan	Principal	Country of	At	31st December		June
Name of Company	capital	activities	incorporation	2003	2004	2005	2006
Subsidiaries (Continued)
Newcontainer No. 2	500 shares of no	Ship owning	Liberia †	100	100	100		100
Shipping Inc.	par value
	US$5,000
Newcontainer No. 3	500 shares of no	Ship owning	Liberia †	100	100	100		100
Shipping Inc.	par value
	US$5,000
Newcontainer No. 4	500 shares of no	Ship owning	Liberia †	100	100	100		100
Shipping Inc.	par value
	US$5,000
Newcontainer No. 5	500 shares of no	Ship owning	Liberia †	100	100	100		100
Shipping Inc.	par value
	US$5,000
Newcontainer No. 6	500 shares of no	Ship owning	Liberia †	100	100	100		100
Shipping Inc.	par value
	US$5,000
Newcontainer No. 7	500 shares of no	Ship owning	Liberia †	100	100	100		100
Shipping Inc.	par value
	US$5,000
OLL Logistics (Malaysia)	10,000 shares of	Logistics, cargo	Malaysia	N/A	N/A	100		100
Sdn Bhd	RM1 each	consolidation and
	RM10,000	forwarding
OOCL (Asia Pacific) Ltd	2 shares of	Liner territorial	Hong Kong	100	100	100		100
	HK$1 each	office
	HK$2
OOCL (Assets) Holdings	500 shares of no	Investment holding	Liberia †	100	100	100		100
Inc.	par value
	US$5,000
OOCL (Assets USA)	50,000 shares of	Investment holding	Liberia †	100	100	100		100
Holdings Inc.	US$1 each
	US$50,000

I-83

ACCOUNTANTS’ REPORT

APPENDIX I

Principal Subsidiaries, Associated Company and Jointly Controlled Entities (Continued)

				Percentage of equity	Percentage of equity	Percentage of equity	Percentage of equity
					attributable to
					the Group
	Particulars of							At
	issued share						30th
	and loan	Principal	Country of	At	31st December		June
Name of Company	capital	activities	incorporation	2003	2004	2005	2006
Subsidiaries (Continued)
OOCL (Australia) Pty Ltd	200,000 shares	Liner agency	Australia	100	100	100		100
	of A$1 each
	A$200,000
OOCL (Benelux) NV	226,271 shares	Liner agency	Belgium	100	100	100		100
	of no par value
	C= 609,799
OOCL (Canada) Inc.	10,000 shares of	Liner agency	Canada	100	100	100		100
	no par value
	C$91,000
OOCL (China) Investment	2 shares of	Investment holding	Hong Kong	100	100	100		100
Ltd	HK$1 each
	HK$2
OOCL (Denmark) A/S	1,000 shares of	Liner agency	Denmark	100	100	100		100
	DKK500 each
	DKK500,000
OOCL (Deutschland)	Registered	Liner agency	Germany	100	100	100		100
GmbH	capital
	C= 130,000
OOCL (Europe) Ltd	5,000,000 shares	Investment holding	United	100	100	100		100
	of £1 each	and liner territorial	Kingdom
	£5,000,000	office
OOCL (Finland) Ltd Oy	150 shares of	Liner agency	Finland	100	100	100		100
	C= 16.82 each
	C= 2,522.82
OOCL (France) SA	60,000 shares of	Liner agency	France	100	100	100		100
	C= 15.24 each
	C= 914,694.10
OOCL (HK) Ltd	500 shares of	Liner agency	Hong Kong	100	100	100		100
	HK$100 each
	HK$50,000

I-84

ACCOUNTANTS’ REPORT

APPENDIX I

Principal Subsidiaries, Associated Company and Jointly Controlled Entities (Continued)

				Percentage of equity	Percentage of equity	Percentage of equity	Percentage of equity
					attributable to
					the Group
	Particulars of							At
	issued share						30th
	and loan	Principal	Country of	At	31st December		June
Name of Company	capital	activities	incorporation	2003	2004	2005	2006
Subsidiaries (Continued)
OOCL (India) Private Ltd	1,000 shares of	Liner agency	India	100	100	100		100
	Rs100 each
	Rs100,000
OOCL (Ireland) Ltd	100 shares of	Liner agency	Ireland	100	100	100		100
	C= 1.25 each
	C= 125
OOCL (Italy) S.r.l.	1 quota of	Liner agency	Italy	N/A	N/A	100		100
	C= 10,000 each
	C= 10,000
OOCL (Japan) Ltd	160,000 shares	Liner agency	Japan	100	100	100		100
	of Yen500 each
	Yen80,000,000
OOCL (Korea) Ltd	16,000 shares of	Liner agency	Korea	100	100	100		100
	Won10,000 each
	Won160,000,000
OOCL (Liners) Holdings	2 shares of	Investment holding	Hong Kong	100	100	100		100
Ltd	HK$1 each
	HK$2
OOCL (Logistics) Holdings	10,000 shares of	Investment holding	British	100	100	100		100
Ltd	US$1 each		Virgin
	US$10,000		Islands
OOCL (Macau) Ltd	50 quotas of	Liner agency	Macau	100	100	100		100
	MOP1,000 each
	MOP50,000
OOCL (Philippines) Inc.	55,000 common	Liner agency	Philippines	100	100	100		100
	stock of Peso100
	each
	Peso5,500,000

I-85

ACCOUNTANTS’ REPORT

APPENDIX I

Principal Subsidiaries, Associated Company and Jointly Controlled Entities (Continued)

				Percentage of equity	Percentage of equity	Percentage of equity	Percentage of equity
					attributable to
					the Group
	Particulars of							At
	issued share						30th
	and loan	Principal	Country of	At	31st December		June
Name of Company	capital	activities	incorporation	2003	2004	2005	2006
Subsidiaries (Continued)
OOCL (Portugal), Lda	1 quota of C= 500	Liner agency	Portugal	N/A	N/A	100		100
	each
	1 quota of
	C= 24,500 each			N/A	N/A	100		100
	C= 25,000
OOCL (Russia) Ltd	1 participatory	Liner agency	Russia	100	100	100		100
	share of
	Rub10,000 each
	Rub10,000
OOCL (Singapore) Pte Ltd	100,000 shares	Liner agency	Singapore	100	100	100		100
	of S$1 each
	S$100,000
OOCL (Sweden) AB	100,000 shares	Liner agency	Sweden	N/A	100	100		100
	of SEK1 each
	SEK100,000
OOCL (Switzerland) AG	200,000 shares	Liner agency	Switzerland	N/A	N/A	100		100
	of CHF1 each
	CHF200,000
OOCL (Taiwan) Co Ltd	10,000,000	Liner agency	Taiwan	100	100	100		100
	shares of NT$10
	each
	NT$100,000,000
OOCL (UK) Ltd	3,100,000 shares	Liner agency	United	100	100	100		100
	of £10 each		Kingdom
	£31,000,000
	(2003 and 2004:
	1,100,000 shares
	of £10 each
	£11,000,000)
OOCL (USA) Inc.	1,030 shares of	Liner agency	USA	100	100	100		100
	US$1 each
	US$1,030

I-86

ACCOUNTANTS’ REPORT

APPENDIX I

Principal Subsidiaries, Associated Company and Jointly Controlled Entities (Continued)

				Percentage of equity	Percentage of equity	Percentage of equity	Percentage of equity
					attributable to
					the Group
	Particulars of							At
	issued share						30th
	and loan	Principal	Country of	At	31st December		June
Name of Company	capital	activities	incorporation	2003	2004	2005	2006
Subsidiaries (Continued)
OOCL China Domestics	Registered	Freight agency and	China �	100	100	100		100
Ltd	capital	cargo consolidation
	RMB21,250,000
OOCL Logistics (Asia	200 shares of	Investment holding,	Bermuda	100	100	100		100
Pacific) Ltd	US$100 each	trans-portation and
	US$20,000	logistics
OOCL Logistics (China)	Registered	Logistics, cargo	China *	100	100	100		100
Ltd	capital	consolidation and
	US$3,400,000	forwarding
OOCL Logistics (Europe)	2 shares of £1	Logistics, cargo	United	100	100	100		100
Ltd	each	consolidation and	Kingdom
	£2	forwarding
OOCL Logistics (Hong	50,000 shares of	Logistics, cargo	Hong Kong	100	100	100		100
Kong) Ltd	HK$10 each	consolidation and
	HK$500,000	forwarding
OOCL Logistics (India)	35,000 shares of	Logistics, cargo	India	N/A	N/A	100		100
Private Ltd	Rupees100 each	consolidation and
	Rupees3,500,000	forwarding
OOCL Logistics (Japan)	200 shares of	Logistics, cargo	Japan	100	100	100		100
Ltd	Yen50,000 each	consolidation and
	Yen10,000,000	forwarding
OOCL Logistics (Korea)	30,000 shares of	Logistics, cargo	Korea	100	100	100		100
Ltd	Won10,000 each	consolidation and
	Won300,000,000	forwarding
OOCL Logistics	2 shares of S$1	Logistics, cargo	Singapore	100	100	100		100
(Singapore) Pte Ltd	each	consolidation and
	S$2	forwarding
OOCL Logistics (Taiwan)	750,000 shares	Logistics, cargo	Taiwan	100	100	100		100
Ltd	of NT$10 each	consolidation and
	NT$7,500,000	forwarding

I-87

ACCOUNTANTS’ REPORT

APPENDIX I

Principal Subsidiaries, Associated Company and Jointly Controlled Entities (Continued)

					Percentage of equity	Percentage of equity	Percentage of equity	Percentage of equity
						attributable to
						the Group
		Particulars of							At
		issued share						30th
		and loan	Principal	Country of	At	31st December		June
	Name of Company	capital	activities	incorporation	2003	2004	2005	2006
	Subsidiaries (Continued)
	OOCL Logistics (USA) Inc.	100 shares of no	Logistics, cargo	USA	100	100	100		100
		par value	consolidation and
		US$200	forwarding
	OOCL Logistics	Registered	Transportation and	China *	N/A	N/A	100		100
	Warehousing and	capital	Logistics services
	Transportation (Dalian)	US$200,000
	Co Ltd
	OOCL Logistics	Registered	Transportation and	China *	N/A	N/A	100		100
	Warehousing and	capital	logistics services
	Transportation (Tianjin)	US$3,200,000
	Co Ltd
	OOCL Logistics	Registered	Transportation and	China *	N/A	100	100		100
	Warehousing and	capital	logistics services
	Transportation	US$1,000,000
	(Shanghai) Co Ltd
	OOCL Shipping BV	30 ordinary	Ship management	Netherlands	100	100	100		100
		shares of	and chartering
		C= 150 each
		90 cumulative			—	—	—		—
		preference
		shares of
		C= 150 each
		C= 18,000
	OOCL Ships (Marshall	500 shares of no	Ship chartering	Marshall	100	100	100		100
	Islands) Ltd	par value		Islands
		US$5,000
#	OOCL Transport &	169,477,152	Investment holding	Bermuda	100	100	100		100
	Logistics Holdings Ltd	shares of US$1
		each
		US$169,477,152
#	OOIL (Investments) Inc.	500 shares of no	Investment holding	Liberia †	100	100	100		100
		par value
		US$5,000

I-88

ACCOUNTANTS’ REPORT

APPENDIX I

Principal Subsidiaries, Associated Company and Jointly Controlled Entities (Continued)

				Percentage of equity	Percentage of equity	Percentage of equity	Percentage of equity
					attributable to
					the Group
	Particulars of							At
	issued share						30th
	and loan	Principal	Country of	At	31st December		June
Name of Company	capital	activities	incorporation	2003	2004	2005	2006
Subsidiaries (Continued)
Orient Container No. 1	500 shares of no	Ship owning	Marshall	100	100	100		100
(Marshall Islands)	par value		Islands
Shipping Inc.	US$5,000
Orient Container No. 3	500 shares of no	Ship owning	Marshall	100	100	100		100
(Marshall Islands)	par value		Islands
Shipping Inc.	US$5,000
Orient Container No. 4	100 shares of no	Ship owning	Liberia †	100	100	100		100
Shipping Inc.	par value
	US$100
Orient Overseas (Shanghai)	Registered	Investment holding	China *	100	100	100		100
Investment Co Ltd	capital
	US$44,250,000
Orient Overseas Associates	Limited	Property owning	USA	100	100	100		100
	partnership
Orient Overseas Building	10 shares of no	Property owning	USA	100	100	100		100
Corp.	par value
	US$150,000
Orient Overseas Container	Registered	Liner agency	China *	100	100	100		100
Line (China) Co Ltd	capital
	US$2,680,000
Orient Overseas Container	66,000,000	Investment holding	United	100	100	100		100
Line (Europe) Ltd	shares of £1		Kingdom
	each
	£66,000,000
Orient Overseas Container	100,000 shares	Liner agency	Malaysia	100	100	100		100
Line (Malaysia) Sdn Bhd	of RM1 each
	RM100,000
Orient Overseas Container	3,100 shares of	Liner agency	Spain	N/A	N/A	100		100
Line (Spain), S.L.	C= 1 each
	C= 3,100

I-89

ACCOUNTANTS’ REPORT

APPENDIX I

Principal Subsidiaries, Associated Company and Jointly Controlled Entities (Continued)

					Percentage of equity	Percentage of equity	Percentage of equity	Percentage of equity
						attributable to
						the Group
		Particulars of							At
		issued share						30th
		and loan	Principal	Country of	At	31st December		June
	Name of Company	capital	activities	incorporation	2003	2004	2005	2006
	Subsidiaries (Continued)
	Orient Overseas Container	5,000 shares of	Container transport	Cayman	100	100	100		100
	Line (UK) Ltd	US$1 each	and ship	Islands
		US$5,000	management
	Orient Overseas Container	500 shares of no	Investment holding	Liberia †	100	100	100		100
	Line Inc.	par value
		US$25,000,000
	Orient Overseas Container	10,000 shares of	Container transport	Hong Kong	100	100	100		100
	Line Ltd	HK$100 each
		HK$1,000,000
#	Orient Overseas	10,000 shares of	Investment holding	Hong Kong	100	100	100		100
	Developments Ltd	HK$10 each
		HK$100,000
	Orient Overseas Property	Registered	Property	China *	100	100	100		100
	(Shanghai) Co Ltd	capital	development
		US$2,100,000
	Senning Property Ltd	1,000 shares of	Property	British	N/A	N/A	100		100
		US$1 each	development	Virgin
		US$1,000		Islands
	Shanghai OOCL Container	Registered	Container depot	China §	60	60	60		60
	Transportation Co Ltd	capital
		US$9,350,000
	Shanghai Orient Overseas	Registered	Property	China *	N/A	N/A	100		100
	Huangpu Real Estate Co	capital	development
	Ltd	US$30,000,000
	Shanghai Orient Overseas	Registered	Property	China §	88	88	88		88
	Yongye Real Estate Co	capital	development
	Ltd	US$30,000,000
	Shanghai Waigaoqiao	Registered	Property	China *	N/A	N/A	100		100
	Xuhui Club Co Ltd	capital	development
		RMB36,784,864.6

I-90

ACCOUNTANTS’ REPORT

APPENDIX I

Principal Subsidiaries, Associated Company and Jointly Controlled Entities (Continued)

				Percentage of equity	Percentage of equity	Percentage of equity	Percentage of equity
					attributable to
					the Group
	Particulars of							At
	issued share						30th
	and loan	Principal	Country of	At	31st December		June
Name of Company	capital	activities	incorporation	2003	2004	2005	2006
Subsidiaries (Continued)
Soberry Investments Ltd	5,000 shares of	Portfolio	British	100	100	100		100
	US$1 each	investment	Virgin
	US$5,000		Islands
Surbiton Ltd	500 shares of no	Portfolio	Liberia †	100	100	100		100
	par value	investment
	US$5,000
Treasure King Shipping Ltd	500 shares of no	Ship chartering	Liberia †	100	100	100		100
	par value
	US$5,000
TSI Terminal Systems Inc.	233,400 shares	Terminal operating	Canada	100	100	100		100
	of C$1 each
	C$233,400

I-91

ACCOUNTANTS’ REPORT

APPENDIX I

Principal Subsidiaries, Associated Company and Jointly Controlled Entities (Continued)

				Percentage of equity	Percentage of equity	Percentage of equity	Percentage of equity
					attributable to
					the Group
	Particulars of							At
	issued share						30th
	and loan	Principal	Country of	At	31st December		June
Name of Company	capital	activities	incorporation	2003	2004	2005	2006
Subsidiaries (Continued)
Wall Street Plaza, Inc.	40 class A	Investment holding	USA	100	100	100		100
	common stock
	of US$1 each
	160 class B			100	100	100		100
	common stock
	of US$1 each
	20,000 12%			100	100	100		100
	series A non-
	cumulative non-
	voting preferred
	stock of
	US$1,000 each
	18,000 11%			100	100	100		100
	series B non-
	cumulative non-
	voting preferred
	stock of
	US$1,000 each
	19,500 12%			100	100	100		100
	series C non-
	cumulative non-
	voting preferred
	stock of
	US$1,000 each
	19,000 12%			100	100	100		100
	series D non-
	cumulative non-
	voting preferred
	stock of
	US$1,000 each
	US$76,500,200

I-92

ACCOUNTANTS’ REPORT

APPENDIX I

Principal Subsidiaries, Associated Company and Jointly Controlled Entities (Continued)

				Percentage of equity	Percentage of equity	Percentage of equity	Percentage of equity
					attributable to
					the Group
	Particulars of							At
	issued share						30th
	and loan	Principal	Country of	At	31st December		June
Name of Company	capital	activities	incorporation	2003	2004	2005	2006
Wayton Ltd	2 shares of	Ship owning	Hong Kong	100	100	100		100
	HK$1 each
	HK$2
Subsidiaries (Continued)
Wealth Capital Corporation	500 shares of no	Investment holding	Liberia †	100	100	100		100
	par value
	US$5,000
Associated Company
Tianjin Port Alliance	Registered	Terminal operating	China §	N/A	N/A	20		20
International Container	capital
Terminal Co Ltd	US$40,000,000
Jointly controlled entities
OOCL (UAE) LLC	300 shares of	Liner agency	Dubai	N/A	N/A	49		49
	AED1,000 each
	AED300,000
OOCL (Vietnam) Co Ltd	Legal capital	Liner agency	Vietnam	49	49	49		49
	US$500,000
Qingdao Orient	Registered	Container depot	China §	59	59	59		59
International Container	capital
Storage & Transportation	RMB69,900,000
Co Ltd
Shanghai Orient Overseas	Registered	Property	China §	47.5	47.5	47.5	47.5
Xujiahui Real Estate Co	capital	development
Ltd	US$10,000,000

Direct subsidiaries of the Company.

Companies incorporated in Liberia but redomiciled to the Marshall Islands.
Wholly foreign-owned enterprise.
§ Sino-foreign equity joint venture enterprise
Domestic joint venture enterprise.

I-93

ACCOUNTANTS’ REPORT

APPENDIX I

III. EVENT AFTER THE BALANCE SHEET DATE

On 23rd November 2006, the Company announced that the Company and its indirect wholly owned subsidiaries, TSI Holding S.A. (“TSI Holding”), OOCL (Terminals) Holdings Limited (“OOCL Terminals Holdings”) and Consolidated Leasing & Terminal, Inc. (“CLTI”) (collectively referred to as the “Sellers”) entered into a Stock Purchase Agreement dated 21st November 2006 with 0775150 B.C. Ltd. and 2119601 Ontario Limited, being newly-formed subsidiaries of Ontario Teachers’ Pension Plan Board (the “Buyer”) pursuant to which the Buyer has agreed to purchase and the Sellers have agreed to sell the entire issued share capital of each of TSI Terminal Systems Inc. (“TSI”)., Consolidated (Terminal Holdings) Limited (“Consolidated Terminal Holdings”) and Global Terminal & Container Services, Inc. (“Global”) (collectively referred to as the “Disposal Group”) for an aggregate consideration of US$2.35 billion.

The Disposal Group, directly or through their respective subsidiaries, operate four North American container terminals. TSI Holding is the sole shareholder of TSI, which operates two container terminals in the Port of Vancouver, Canada. OOCL Terminals Holdings is the sole shareholder of Consolidated Terminal Holdings, which through New York Container Terminal Inc., an indirect wholly-owned subsidiary of OOCL Terminals Holdings and Consolidated Terminal Holdings, operates a container terminal in the Port of New York, USA. CLTI is the sole shareholder of Global, which owns and operates a container terminal in the Port of New Jersey, U.S.A.

The revenues, expenses and results, assets and liabilities, and cash flows in relation to the Disposal Group are set out as follows:

(a) Revenues, expenses and results

Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 273,359 322,149 393,117 184,902 235,204 (196,056) (229,041) (288,269) (136,890) (170,839) 77,303 93,108 104,848 48,012 64,365 156 200 950 252 1,509 (42,404) (45,170) (54,435) (25,321) (30,484) 35,055 48,138 51,363 22,943 35,390 (6,072) (5,377) (5,915) (2,832) (3,206) 28,983 42,761 45,448 20,111 32,184 (8,855) (14,582) (9,355) (8,106) (12,657) 20,128 28,179 36,093 12,005 19,527	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 273,359 322,149 393,117 184,902 235,204 (196,056) (229,041) (288,269) (136,890) (170,839) 77,303 93,108 104,848 48,012 64,365 156 200 950 252 1,509 (42,404) (45,170) (54,435) (25,321) (30,484) 35,055 48,138 51,363 22,943 35,390 (6,072) (5,377) (5,915) (2,832) (3,206) 28,983 42,761 45,448 20,111 32,184 (8,855) (14,582) (9,355) (8,106) (12,657) 20,128 28,179 36,093 12,005 19,527	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 273,359 322,149 393,117 184,902 235,204 (196,056) (229,041) (288,269) (136,890) (170,839) 77,303 93,108 104,848 48,012 64,365 156 200 950 252 1,509 (42,404) (45,170) (54,435) (25,321) (30,484) 35,055 48,138 51,363 22,943 35,390 (6,072) (5,377) (5,915) (2,832) (3,206) 28,983 42,761 45,448 20,111 32,184 (8,855) (14,582) (9,355) (8,106) (12,657) 20,128 28,179 36,093 12,005 19,527	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 273,359 322,149 393,117 184,902 235,204 (196,056) (229,041) (288,269) (136,890) (170,839) 77,303 93,108 104,848 48,012 64,365 156 200 950 252 1,509 (42,404) (45,170) (54,435) (25,321) (30,484) 35,055 48,138 51,363 22,943 35,390 (6,072) (5,377) (5,915) (2,832) (3,206) 28,983 42,761 45,448 20,111 32,184 (8,855) (14,582) (9,355) (8,106) (12,657) 20,128 28,179 36,093 12,005 19,527	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 273,359 322,149 393,117 184,902 235,204 (196,056) (229,041) (288,269) (136,890) (170,839) 77,303 93,108 104,848 48,012 64,365 156 200 950 252 1,509 (42,404) (45,170) (54,435) (25,321) (30,484) 35,055 48,138 51,363 22,943 35,390 (6,072) (5,377) (5,915) (2,832) (3,206) 28,983 42,761 45,448 20,111 32,184 (8,855) (14,582) (9,355) (8,106) (12,657) 20,128 28,179 36,093 12,005 19,527
77,303 156 (42,404) 35,055 (6,072) 28,983 (8,855)	93,108 200 (45,170) 48,138 (5,377) 42,761 (14,582)	104,848 950 (54,435) 51,363 (5,915) 45,448 (9,355)	48,012 252 (25,321) 22,943 (2,832) 20,111 (8,106)	64,365 1,509 (30,484
				35,390 (3,206
				32,184 (12,657
20,128	28,179	36,093	12,005

I-94

ACCOUNTANTS’ REPORT

APPENDIX I

III. EVENT AFTER THE BALANCE SHEET DATE (Continued)

(b) Assets and liabilities

As at 31st December As at 30th June 2003 2004 2005 2005 2006 (Unaudited) 166,332 189,699 224,139 188,812 244,596 443 530 2,083 302 2,166 — 1,842 2,310 1,842 3,398 852 — 745 — 408 1,292 1,692 2,559 1,927 2,662 1,122 3,217 3,072 3,236 3,072 713 671 629 650 608	As at 31st December As at 30th June 2003 2004 2005 2005 2006 (Unaudited) 166,332 189,699 224,139 188,812 244,596 443 530 2,083 302 2,166 — 1,842 2,310 1,842 3,398 852 — 745 — 408 1,292 1,692 2,559 1,927 2,662 1,122 3,217 3,072 3,236 3,072 713 671 629 650 608	As at 31st December As at 30th June 2003 2004 2005 2005 2006 (Unaudited) 166,332 189,699 224,139 188,812 244,596 443 530 2,083 302 2,166 — 1,842 2,310 1,842 3,398 852 — 745 — 408 1,292 1,692 2,559 1,927 2,662 1,122 3,217 3,072 3,236 3,072 713 671 629 650 608	As at 31st December As at 30th June 2003 2004 2005 2005 2006 (Unaudited) 166,332 189,699 224,139 188,812 244,596 443 530 2,083 302 2,166 — 1,842 2,310 1,842 3,398 852 — 745 — 408 1,292 1,692 2,559 1,927 2,662 1,122 3,217 3,072 3,236 3,072 713 671 629 650 608	As at 31st December As at 30th June 2003 2004 2005 2005 2006 (Unaudited) 166,332 189,699 224,139 188,812 244,596 443 530 2,083 302 2,166 — 1,842 2,310 1,842 3,398 852 — 745 — 408 1,292 1,692 2,559 1,927 2,662 1,122 3,217 3,072 3,236 3,072 713 671 629 650 608
170,754 46,093 6,838 6,916 59,847	197,651 65,779 6,310 16,343 88,432	235,537 66,458 4,702 45,650 116,810	196,769 64,247 6,514 41,190 111,951	256,910
				83,915 5,507 37,780
				127,202
230,601	286,083	352,347	308,720	384,112

I-95

ACCOUNTANTS’ REPORT

APPENDIX I

III. EVENT AFTER THE BALANCE SHEET DATE (Continued)

(b) Assets and liabilities (Continued)

As at 31st December As at 30th June 2003 2004 2005 2005 2006 (Unaudited) 56,742 57,005 83,734 80,832 75,303 16,515 19,648 19,259 19,987 20,246 2,798 3,435 3,728 3,447 4,072	As at 31st December As at 30th June 2003 2004 2005 2005 2006 (Unaudited) 56,742 57,005 83,734 80,832 75,303 16,515 19,648 19,259 19,987 20,246 2,798 3,435 3,728 3,447 4,072	As at 31st December As at 30th June 2003 2004 2005 2005 2006 (Unaudited) 56,742 57,005 83,734 80,832 75,303 16,515 19,648 19,259 19,987 20,246 2,798 3,435 3,728 3,447 4,072	As at 31st December As at 30th June 2003 2004 2005 2005 2006 (Unaudited) 56,742 57,005 83,734 80,832 75,303 16,515 19,648 19,259 19,987 20,246 2,798 3,435 3,728 3,447 4,072	As at 31st December As at 30th June 2003 2004 2005 2005 2006 (Unaudited) 56,742 57,005 83,734 80,832 75,303 16,515 19,648 19,259 19,987 20,246 2,798 3,435 3,728 3,447 4,072
76,055 23,862 9,937 23,126 — 56,925	80,088 31,467 21,710 12,124 2,866 68,167	106,721 40,414 2,901 24,208 2,850 70,373	104,266 30,748 2,922 20,342 2,066 56,078	99,621
				43,246 2,776 33,448 5,171
				84,641
132,980	148,255	177,094	160,344	184,262

I-96

ACCOUNTANTS’ REPORT

APPENDIX I

III. EVENT AFTER THE BALANCE SHEET DATE (Continued)

(c) Cash flows

Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 34,736 77,823 72,027 14,941 30,129 (1,005) (696) (714) (252) (711) (5,025) (4,710) (5,333) (2,635) (2,647) (5,541) (13,230) (15,614) (7,682) (7,049) 23,165 59,187 50,366 4,372 19,722 523 2,663 456 121 831 (17,218) (35,238) (55,961) (9,174) (28,270) — — (1,297) — (1,389) — (2,372) (1,620) — — 42 42 42 21 21 (122) (2,095) 120 (44) — 67 102 934 246 776 (16,708) (36,898) (57,326) (8,830) (28,031)	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 34,736 77,823 72,027 14,941 30,129 (1,005) (696) (714) (252) (711) (5,025) (4,710) (5,333) (2,635) (2,647) (5,541) (13,230) (15,614) (7,682) (7,049) 23,165 59,187 50,366 4,372 19,722 523 2,663 456 121 831 (17,218) (35,238) (55,961) (9,174) (28,270) — — (1,297) — (1,389) — (2,372) (1,620) — — 42 42 42 21 21 (122) (2,095) 120 (44) — 67 102 934 246 776 (16,708) (36,898) (57,326) (8,830) (28,031)	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 34,736 77,823 72,027 14,941 30,129 (1,005) (696) (714) (252) (711) (5,025) (4,710) (5,333) (2,635) (2,647) (5,541) (13,230) (15,614) (7,682) (7,049) 23,165 59,187 50,366 4,372 19,722 523 2,663 456 121 831 (17,218) (35,238) (55,961) (9,174) (28,270) — — (1,297) — (1,389) — (2,372) (1,620) — — 42 42 42 21 21 (122) (2,095) 120 (44) — 67 102 934 246 776 (16,708) (36,898) (57,326) (8,830) (28,031)	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 34,736 77,823 72,027 14,941 30,129 (1,005) (696) (714) (252) (711) (5,025) (4,710) (5,333) (2,635) (2,647) (5,541) (13,230) (15,614) (7,682) (7,049) 23,165 59,187 50,366 4,372 19,722 523 2,663 456 121 831 (17,218) (35,238) (55,961) (9,174) (28,270) — — (1,297) — (1,389) — (2,372) (1,620) — — 42 42 42 21 21 (122) (2,095) 120 (44) — 67 102 934 246 776 (16,708) (36,898) (57,326) (8,830) (28,031)	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 34,736 77,823 72,027 14,941 30,129 (1,005) (696) (714) (252) (711) (5,025) (4,710) (5,333) (2,635) (2,647) (5,541) (13,230) (15,614) (7,682) (7,049) 23,165 59,187 50,366 4,372 19,722 523 2,663 456 121 831 (17,218) (35,238) (55,961) (9,174) (28,270) — — (1,297) — (1,389) — (2,372) (1,620) — — 42 42 42 21 21 (122) (2,095) 120 (44) — 67 102 934 246 776 (16,708) (36,898) (57,326) (8,830) (28,031)
23,165 523 (17,218) — — 42 (122) 67 (16,708)	59,187 2,663 (35,238) — (2,372) 42 (2,095) 102 (36,898)	50,366 456 (55,961) (1,297) (1,620) 42 120 934 (57,326)	4,372 121 (9,174) — — 21 (44) 246 (8,830)	19,722
				831 (28,270 (1,389 — 21 — 776
				(28,031

I-97

ACCOUNTANTS’ REPORT

APPENDIX I

III. EVENT AFTER THE BALANCE SHEET DATE (Continued)

Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 4,644 16,694 64,185 36,577 12,495 (6,362) (2,628) (1,588) (1,467) (9,135) (8,975) (24,676) (24,960) (5,426) (4,757) (1,246) (4,350) — — — (11,939) (14,960) 37,637 29,684 (1,397) (5,482) 7,329 30,677 25,226 (9,706) 10,763 6,941 16,368 16,368 45,650 1,660 2,098 (1,395) (404) 1,836 6,941 16,368 45,650 41,190 37,780	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 4,644 16,694 64,185 36,577 12,495 (6,362) (2,628) (1,588) (1,467) (9,135) (8,975) (24,676) (24,960) (5,426) (4,757) (1,246) (4,350) — — — (11,939) (14,960) 37,637 29,684 (1,397) (5,482) 7,329 30,677 25,226 (9,706) 10,763 6,941 16,368 16,368 45,650 1,660 2,098 (1,395) (404) 1,836 6,941 16,368 45,650 41,190 37,780	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 4,644 16,694 64,185 36,577 12,495 (6,362) (2,628) (1,588) (1,467) (9,135) (8,975) (24,676) (24,960) (5,426) (4,757) (1,246) (4,350) — — — (11,939) (14,960) 37,637 29,684 (1,397) (5,482) 7,329 30,677 25,226 (9,706) 10,763 6,941 16,368 16,368 45,650 1,660 2,098 (1,395) (404) 1,836 6,941 16,368 45,650 41,190 37,780	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 4,644 16,694 64,185 36,577 12,495 (6,362) (2,628) (1,588) (1,467) (9,135) (8,975) (24,676) (24,960) (5,426) (4,757) (1,246) (4,350) — — — (11,939) (14,960) 37,637 29,684 (1,397) (5,482) 7,329 30,677 25,226 (9,706) 10,763 6,941 16,368 16,368 45,650 1,660 2,098 (1,395) (404) 1,836 6,941 16,368 45,650 41,190 37,780	Years ended 31st December Six months ended 30th June 2003 2004 2005 2005 2006 (Unaudited) 4,644 16,694 64,185 36,577 12,495 (6,362) (2,628) (1,588) (1,467) (9,135) (8,975) (24,676) (24,960) (5,426) (4,757) (1,246) (4,350) — — — (11,939) (14,960) 37,637 29,684 (1,397) (5,482) 7,329 30,677 25,226 (9,706) 10,763 6,941 16,368 16,368 45,650 1,660 2,098 (1,395) (404) 1,836 6,941 16,368 45,650 41,190 37,780
(11,939) (5,482) 10,763 1,660	(14,960) 7,329 6,941 2,098	37,637 30,677 16,368 (1,395)	29,684 25,226 16,368 (404)	(1,397
				(9,706 45,650 1,836
6,941	16,368	45,650	41,190

IV. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared for the Company and its subsidiaries in respect of any period subsequent to 30th June 2006 and up to the date of this report.

Yours faithfully,

PricewaterhouseCoopers

Certified Public Accountants Hong Kong

I-98

ADDITIONAL FINANCIAL INFORMATION

APPENDIX II

1. INDEBTEDNESS

Borrowings

At the close of business on 31st October 2006, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the Group had total borrowings of approximately US$1,997.9 million, comprising bank loans and other loans of approximately US$669.6 million, redeemable preference shares and premium (Note) of approximately US$65.5 million and obligations under finance leases of approximately US$1,262.8 million. Approximately US$1.5 million of the borrowings were unsecured, and the remaining balance of approximately US$1,996.4 million were secured by legal charges over certain properties, plant and equipment, restricted bank balances, properties under development and for sale, debtors and prepayment and the investment property of the Group.

Of the Group’s borrowings, 5.2% were denominated in currencies other than US Dollars. The Group’s bank loans, other loans, redeemable preference shares and finance lease obligations carry interest at fixed rates, ranging from 3.5% to 9.7% per annum, or variable rates, varying from 0% to 2.0% over stipulated market rates per annum.

The maturity profiles of the Group’s total borrowings as at 31st October 2006 are set out as follows:

	US$ million	US$ million
Bank loans repayable
Within one year	128.2
Between one and two years	71.6
Between two and five years	235.4
After five years	126.4
		561.6
Other loans repayable
Within one year	3.1
Between one and two years	1.4
Between two and five years	102.8
After five years	0.7

108.0

II-1

ADDITIONAL FINANCIAL INFORMATION

APPENDIX II

1. INDEBTEDNESS (Continued)

Borrowings (Continued)

US$ million US$ million Redeemable preference shares and premium (Note) repayable Within one year 9.7 Between one and two years 10.1 Between two and five years 33.5 After five years 12.2 65.5 Obligations under finanace leases repayable Within one year 75.2 Between one and two years 66.7 Between two and five years 166.3 After five years 954.6 1,262.8 1,997.9	US$ million US$ million Redeemable preference shares and premium (Note) repayable Within one year 9.7 Between one and two years 10.1 Between two and five years 33.5 After five years 12.2 65.5 Obligations under finanace leases repayable Within one year 75.2 Between one and two years 66.7 Between two and five years 166.3 After five years 954.6 1,262.8 1,997.9	US$ million US$ million Redeemable preference shares and premium (Note) repayable Within one year 9.7 Between one and two years 10.1 Between two and five years 33.5 After five years 12.2 65.5 Obligations under finanace leases repayable Within one year 75.2 Between one and two years 66.7 Between two and five years 166.3 After five years 954.6 1,262.8 1,997.9
	75.2 66.7 166.3 954.6	65.5 1,262.8
		1,997.9

Note: In June 2002, the Group entered into, inter alia, a Shareholders Agreement, as subsequently amended, with, inter alios, two unrelated third parties (together the “Preference Shareholders”) in relation to a subsidiary. Under the Shareholders Agreement, the Preference Shareholders acquired from the Group 90 cumulative preference shares (the “Preference Shares”) of[=] C 150 each in this subsidiary and contributed an aggregate of US$100.0 million less the nominal value of the Preference Shares as share premium (the “Premium”). The Preference Shareholders are entitled to receive annual dividends of 7.08% per annum on the aggregate amount of the nominal value of the Preference Shares and Premium outstanding from time to time. To the extent permitted by local law, the Preference Shareholders may propose a repayment of the Premium annually, provided that such repayment does not exceed a maximum percentage specified in the Shareholders Agreement.

Contingent Liabilities

The Group has given corporate guarantee of approximately US$43.1 million in respect of bank loan facilities extended to an investee company. At 31st October 2006, the amount utilised by the investee company is US$32.5 million.

II-2

ADDITIONAL FINANCIAL INFORMATION

APPENDIX II

1. INDEBTEDNESS (Continued)

Disclaimer

Save as aforesaid and apart from intra-group liabilities, the Group did not have any debt securities, any other outstanding loan capital, any other borrowings or indebtedness in the nature of borrowings including bank overdrafts and liabilities under acceptance (other than normal trade bills) or other similar indebtedness, debentures, mortgages, charges, loans, acceptance credits, hire purchase commitments, guarantees or other material contingent liabilities at the close of business on 31st October 2006.

For the purpose of the above statement of indebtedness, foreign currency amounts have been translated into US Dollars at the rates of exchange prevailing at the close of business on 31st October 2006.

2. WORKING CAPITAL

Taking into account financial resources available to the Group, including internally generated funds, available banking facilities and the estimated net proceeds from the Transaction, the Directors are of the opinion that the Group will have sufficient working capital for its present requirements.

3. ACQUISITION OF SUBSIDIARIES

There was no significant acquisition of subsidiaries or associated companies during the interim period.

4. LIQUIDITY AND FINANCIAL RESOURCES

Assuming that the Transaction had taken place on 30th June 2006, the shareholders’ funds of the Remaining Group, including the profit generated during the six months ended 30th June 2006, gain (net of estimated expenses and tax directly attributable) on the Transaction, would be approximately US$4,470.8 million.

The Remaining Group’s borrowings as at 30th June 2006 would be approximately US$1,711.1 million, out of which, approximately US$176.0 million would be repayable within 12 months. The Remaining Group’s gearing ratio as at 30th June 2006 would be approximately 0.38, which was calculated based on the Remaining Group’s borrowings and shareholders’ funds of approximately US$4,470.8 million. Of the Remaining Group’s borrowings as at 30th June 2006, approximately 3.6% would be denominated in foreign currencies.

The Remaining Group’s cash and cash equivalent as at 30th June 2006 would be approximately US$2,938.8 million, of which approximately US$2,850.3 million would be held in US Dollars and approximately equivalent to US$88.5 million would be held in foreign currencies.

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to fluctuation in the exchange rate of foreign currencies to the US Dollar. Foreign currency exposures are covered by forward contracts and options whenever appropriate.

II-3

ADDITIONAL FINANCIAL INFORMATION

APPENDIX II

4. LIQUIDITY AND FINANCIAL RESOURCES (Continued)

The Group is not exposed to equity securities and commodity price risk.

The Group exercises prudent liquidity risk management to ensure the maintenance of sufficient cash and cash equivalents, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Group aims to maintain flexibility in funding by keeping sufficient cash and cash equivalents.

The Group has a policy to place surplus funds with creditable financial institutions which offer the best return for the Group on a short-term basis. The Group is exposed to interest rate risk through the impact of rate changes on interest bearing borrowings. These exposures are managed through the use of derivative financial instruments such as interest rate swap.

The maturity profiles of the outstanding borrowings of the Remaining Group as at 30th June 2006 were analysed as follows:

	US$ million
Maturity profiles:
Borrowings repayable
Within one year	176.0	10.3%
Between one and two years	109.9	6.4%
Between two and five years	458.1	26.8%
After five years	967.1	56.5%
	1,711.1
Secured	1,710.9	100.0%
Unsecured	0.2	0.0%
	1,711.1

Save for the US$43.1 million guarantee in respect of bank loan facilities extended to an investee company, the Remaining Group had no other contingent liability as at 30th June 2006.

There was no change in the capital structure of the Remaining Group during the six months ended 30th June 2006. No option had been granted during the period and there was no option outstanding as at 30th June 2006.

During the six months ended 30th June 2006, there was no purchase, sale or redemption by the Company, or any of its subsidiary companies, of the Company’s listed securities.

II-4

ADDITIONAL FINANCIAL INFORMATION

APPENDIX II

5. SEGMENTAL INFORMATION

The principal activities of the Group are container transport and logistics, container terminal, property investment and development. Container transport and logistics include global containerised shipping services in major trade lanes, covering Trans-Pacific, Transatlantic, Asia/Europe, Asia/Australia and Intra-Asia trades, and integrated services over the management and control of effective storage and flow of goods. In accordance with the Group’s internal financial reporting and operating activities, the primary segment reporting is by business segments and the secondary segment reporting is by geographical segments. For the geographical segment reporting, freight revenues from container transport and logistics are analysed based on the outbound cargoes of each geographical territory. The Directors consider that the nature of the container transport and logistics activities, which cover the world’s major shipping lanes, and the way in which costs are allocated precludes a meaningful allocation of operating profit to specific geographical segments. Accordingly, geographical segment results for container transport and logistics business are not presented.

6. EMPLOYEES

As at 30th June 2006 the Group has 6,492 full time employees whose salary and benefit levels are maintained at competitive levels. Employees are rewarded on a performance related basis within the general policy and framework of the Group’s salary and discretionary bonus schemes based on the performance of the Company which are regularly reviewed. Other benefits are also provided including medical insurance and pension funds and social and recreational activities are arranged around the world.

The principal defined contribution schemes are operated in Hong Kong, the USA and Canada. These schemes cover approximately 80% of the Group’s employees. Contributions to the defined contribution schemes, all the assets of which are held in trust funds separate from the Group, are based on a percentage of employee’s salary, depending upon the length of service of the employee, but the Group’s contributions to certain schemes may be reduced by contributions forfeited by those employees who leave the schemes prior to vesting fully in those contributions.

II-5

ADDITIONAL FINANCIAL INFORMATION

APPENDIX II

6. EMPLOYEES (Continued)

The principal defined benefit schemes are operated in the USA, United Kingdom and Canada. The defined benefit schemes cover approximately 8% of the Group’s employees and are fully funded, with the exception of two smaller schemes and certain post retirement benefits. The assets of the funded schemes are held in trust funds separate from the Group. Contributions to these schemes are assessed in accordance with the advice of qualified actuaries in compliance with local practice and regulations. The actuarial assumptions used to calculate the projected benefit obligations of the Group’s pension schemes vary according to the economic conditions of the country in which they are situated. Actuary valuations for these schemes are carried out by independent professionally qualified actuaries ranging between two to three years.

II-6

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

A. UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is an illustrative and pro forma consolidated balance sheet, consolidated profit and loss account and consolidated cash flow statement of the Group which has been prepared on the basis of the notes set out below for the purpose of illustrating the effect of the Transaction as if it had taken place on 30th June 2006 for the pro forma consolidated balance sheet and 1st January 2006 for the pro forma consolidated profit and loss account and consolidated cash flow statement. This pro forma financial information has been prepared for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the financial position and financial results of the Group had the Transaction been completed as at 30th June 2006 and 1st January 2006 respectively or at any future date.

I. Unaudited Pro Forma Consolidated Balance Sheet

Unadjusted consolidated balance sheet of the Group as at 30th June 2006 US$’000 ASSETS Non-current assets Property, plant and equipment 2,663,345 Investment property 175,000 Prepayments of lease premiums 7,751 Jointly controlled entities 21,769 Associated company 14,879 Intangible assets 27,804 Deferred taxation assets 5,955 Pension and retirement assets 6,081 Available-for-sale financial assets 15,611 Restricted bank balances and other deposits 91,593 Other non-current assets 86,103 3,115,891	Unadjusted consolidated balance sheet of the Group as at 30th June 2006 US$’000 ASSETS Non-current assets Property, plant and equipment 2,663,345 Investment property 175,000 Prepayments of lease premiums 7,751 Jointly controlled entities 21,769 Associated company 14,879 Intangible assets 27,804 Deferred taxation assets 5,955 Pension and retirement assets 6,081 Available-for-sale financial assets 15,611 Restricted bank balances and other deposits 91,593 Other non-current assets 86,103 3,115,891	Unadjusted consolidated balance sheet of the Group as at 30th June 2006 US$’000 ASSETS Non-current assets Property, plant and equipment 2,663,345 Investment property 175,000 Prepayments of lease premiums 7,751 Jointly controlled entities 21,769 Associated company 14,879 Intangible assets 27,804 Deferred taxation assets 5,955 Pension and retirement assets 6,081 Available-for-sale financial assets 15,611 Restricted bank balances and other deposits 91,593 Other non-current assets 86,103 3,115,891	Pro forma adjustments Pro forma Remaining	Pro forma adjustments Pro forma Remaining
			Group Note (a) Note (b) Note (c) (244,596) 2,418,749 175,000 (2,166) 5,585 21,769 14,879 (3,398) 24,406 (408) 5,547 (2,662) 3,419 15,611 (3,072) 88,521 (608) 85,495 2,858,981
	3,115,891			2,858,981

III-1

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

I. Unaudited Pro Forma Consolidated Balance Sheet (Continued)

Unadjusted consolidated balance sheet of the Group as at 30th June 2006 US$’000 Current assets Properties under development and for sale 192,131 Inventories 66,924 Debtors and prepayments 563,471 Amounts receivable from group companies — Portfolio investments 227,272 Derivative financial instruments 992 Cash and bank balances 804,212 1,855,002 Total assets 4,970,893 EQUITY Equity holders Share capital 62,579 Reserves 2,420,283 — 2,482,862 Minority interests 12,045 Total equity 2,494,907	Unadjusted consolidated balance sheet of the Group as at 30th June 2006 US$’000 Current assets Properties under development and for sale 192,131 Inventories 66,924 Debtors and prepayments 563,471 Amounts receivable from group companies — Portfolio investments 227,272 Derivative financial instruments 992 Cash and bank balances 804,212 1,855,002 Total assets 4,970,893 EQUITY Equity holders Share capital 62,579 Reserves 2,420,283 — 2,482,862 Minority interests 12,045 Total equity 2,494,907	Unadjusted consolidated balance sheet of the Group as at 30th June 2006 US$’000 Current assets Properties under development and for sale 192,131 Inventories 66,924 Debtors and prepayments 563,471 Amounts receivable from group companies — Portfolio investments 227,272 Derivative financial instruments 992 Cash and bank balances 804,212 1,855,002 Total assets 4,970,893 EQUITY Equity holders Share capital 62,579 Reserves 2,420,283 — 2,482,862 Minority interests 12,045 Total equity 2,494,907
	Group Note (a) Note (b) Note (c) 192,131 66,924 (83,915) (5,507) 474,049 (5,507) 5,507 — 227,272 992 (37,780) 2,187,800 2,954,232 3,915,600
1,855,002		3,915,600
4,970,893
62,579		62,579
2,420,283 —	(199,850) 199,850 1,987,950	4,408,233

2,482,862 12,045 2,494,907		4,470,812 12,045
		4,482,857

III-2

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

I. Unaudited Pro Forma Consolidated Balance Sheet (Continued)

Unadjusted consolidated balance sheet of the Group as at 30th June 2006 US$’000 LIABILITIES Non-current liabilities Borrowings 1,610,396 Deferred taxation liabilities 45,770 Pension and retirement liabilities 14,743 1,670,909 Current liabilities Creditors and accruals 575,899 Amounts payable to group companies — Derivative financial instruments 5,182 Borrowings 209,486 Current taxation 14,510 805,077 Total liabilities 2,475,986 Total equity and liabilities 4,970,893 Net current assets 1,049,925 Total assets less current liabilities 4,165,816	Pro forma adjustments Pro forma Remaining	Pro forma adjustments Pro forma Remaining
	Group Note (a) Note (b) Note (c) (75,303) 1,535,093 (20,246) 25,524 (4,072) 10,671 1,571,288 (43,246) (2,776) 529,877 (2,776) 2,776 — 5,182 (33,448) 176,038 (5,171) 9,339 720,436 2,291,724
1,670,909		1,571,288
575,899 — 5,182 209,486 14,510		529,877 — 5,182 176,038 9,339
805,077		720,436
2,475,986		2,291,724
4,970,893 1,049,925 4,165,816		6,774,581
		3,195,164
		6,054,145

III-3

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

II. Unaudited Pro Forma Consolidated Profit and Loss Account

Unadjusted consolidated profit and loss account of the Group for the six months ended 30th June 2006 US$’000 Turnover 2,386,340 Operating costs (1,938,936) Gross profit 447,404 Fair value gain from an investment property 75,000 Gain on disposal of subsidiaries — Other operating income 44,045 Other operating expenses (224,299) Operating profit 342,150 Finance costs (33,273) Share of profits less losses of jointly controlled entities 2,345 Share of loss of an associated company (37) Profit before taxation 311,185 Taxation (30,629) Profit for the period 280,556	Unadjusted consolidated profit and loss account of the Group for the six months ended 30th June 2006 US$’000 Turnover 2,386,340 Operating costs (1,938,936) Gross profit 447,404 Fair value gain from an investment property 75,000 Gain on disposal of subsidiaries — Other operating income 44,045 Other operating expenses (224,299) Operating profit 342,150 Finance costs (33,273) Share of profits less losses of jointly controlled entities 2,345 Share of loss of an associated company (37) Profit before taxation 311,185 Taxation (30,629) Profit for the period 280,556	Pro forma adjustments Pro forma Remaining Group Note (d) Note (e) Note (f) (235,204) 26,000 2,177,136 170,839 (26,000) (1,794,097) 383,039 75,000 2,091,447 2,091,447 (1,509) 42,536 30,484 (193,815) 2,398,207 3,206 (30,067) 2,345 (37) 2,370,448 12,657 (78,900) (96,872) 2,273,576	Pro forma adjustments Pro forma Remaining Group Note (d) Note (e) Note (f) (235,204) 26,000 2,177,136 170,839 (26,000) (1,794,097) 383,039 75,000 2,091,447 2,091,447 (1,509) 42,536 30,484 (193,815) 2,398,207 3,206 (30,067) 2,345 (37) 2,370,448 12,657 (78,900) (96,872) 2,273,576
	) ) ) ) )	Remaining Group Note (d) Note (e) Note (f) (235,204) 26,000 2,177,136 170,839 (26,000) (1,794,097 383,039 75,000 2,091,447 2,091,447 (1,509) 42,536 30,484 (193,815 2,398,207 3,206 (30,067 2,345 (37 2,370,448 12,657 (78,900) (96,872
447,404 75,000 — 44,045 (224,299			383,039 75,000 2,091,447 42,536 (193,815
342,150 (33,273 2,345 (37			2,398,207 (30,067 2,345 (37
311,185 (30,629			2,370,448 (96,872
280,556

III-4

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

III. Unaudited Pro Forma Consolidated Cash Flow Statement

Unadjusted consolidated

cash flow statement of the Group for the six months ended 30th June 2006 US$’000 Cash flows from operating activities Cash generated from operations 106,045 Interest paid (15,101) Interest element of finance lease rental payments (22,166) Dividend on preference shares (5,293) Overseas tax paid (19,797) Net cash from operating activities 43,688 Cash flows from investing activities Sale of property, plant and equipment 9,949 Sale of available-for-sale financial assets 424 Purchase of property, plant and equipment (145,864) Purchase of available-for-sale financial assets (54) Investment in an associated company (7,000) Disposal of subsidiaries — Increase in amounts due by jointly controlled entities (550) Decrease in portfolio investments 9,732 Decrease in bank deposits maturing more than three months from the date of placement 10,095 Purchase of intangible assets (8,505) Decrease in other non-current assets 7,466 Interest received 27,035	cash flow statement of the Group for the six months ended 30th June 2006 US$’000 Cash flows from operating activities Cash generated from operations 106,045 Interest paid (15,101) Interest element of finance lease rental payments (22,166) Dividend on preference shares (5,293) Overseas tax paid (19,797) Net cash from operating activities 43,688 Cash flows from investing activities Sale of property, plant and equipment 9,949 Sale of available-for-sale financial assets 424 Purchase of property, plant and equipment (145,864) Purchase of available-for-sale financial assets (54) Investment in an associated company (7,000) Disposal of subsidiaries — Increase in amounts due by jointly controlled entities (550) Decrease in portfolio investments 9,732 Decrease in bank deposits maturing more than three months from the date of placement 10,095 Purchase of intangible assets (8,505) Decrease in other non-current assets 7,466 Interest received 27,035	Pro forma adjustments Pro forma Remaining Group Note (g) Note (h) (30,129) 75,916 711 (14,390) 2,647 (19,519) (5,293) 7,049 (12,748) 23,966 (831) 9,118 424 28,270 (117,594) (54) (7,000) 2,187,800 2,187,800 (550) 9,732 10,095 1,389 (7,116) (21) 7,445 (776) 26,259	Pro forma adjustments Pro forma Remaining Group Note (g) Note (h) (30,129) 75,916 711 (14,390) 2,647 (19,519) (5,293) 7,049 (12,748) 23,966 (831) 9,118 424 28,270 (117,594) (54) (7,000) 2,187,800 2,187,800 (550) 9,732 10,095 1,389 (7,116) (21) 7,445 (776) 26,259
	) ) ) )	Remaining Group Note (g) Note (h) (30,129) 75,916 711 (14,390 2,647 (19,519 (5,293 7,049 (12,748 23,966
43,688			23,966
9,949 424 (145,864) (54) (7,000) — (550) 9,732 10,095 (8,505) 7,466 27,035		(831) 28,270 2,187,800 1,389 (21) (776)

III-5

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

III. Unaudited Pro Forma Consolidated Cash Flow Statement (Continued)

Unadjusted consolidated cash flow statement of the Group for the six months ended 30th June 2006 US$’000 Cash flows from investing activities (Continued) Dividends received from portfolio investments 786 Income from available-for-sale financial assets 17 Contribution from minority interests 4,000 Dividend received from jointly controlled entities 1,030 Net cash (used in)/from investing activities (91,439) Cash flows from financing activities New loans 84,558 Repayment of loans (36,023) Redemption of preference shares (9,237) Capital element of finance lease rental payments (28,722) Decrease in short-term bank loans (35,935) Dividends paid to shareholders (94,031) Dividends paid to minority interests (253) Net cash used in financing activities (119,643) Net (decrease)/increase in cash and cash equivalents (167,394) Cash and cash equivalents at beginning of period 947,370 Currency translation adjustments 8,824 Cash and cash equivalents at end of period 788,800	Unadjusted consolidated cash flow statement of the Group for the six months ended 30th June 2006 US$’000 Cash flows from investing activities (Continued) Dividends received from portfolio investments 786 Income from available-for-sale financial assets 17 Contribution from minority interests 4,000 Dividend received from jointly controlled entities 1,030 Net cash (used in)/from investing activities (91,439) Cash flows from financing activities New loans 84,558 Repayment of loans (36,023) Redemption of preference shares (9,237) Capital element of finance lease rental payments (28,722) Decrease in short-term bank loans (35,935) Dividends paid to shareholders (94,031) Dividends paid to minority interests (253) Net cash used in financing activities (119,643) Net (decrease)/increase in cash and cash equivalents (167,394) Cash and cash equivalents at beginning of period 947,370 Currency translation adjustments 8,824 Cash and cash equivalents at end of period 788,800	Pro forma adjustments Pro forma Remaining Group Note (g) Note (h) 786 17 4,000 1,030 2,124,392 (12,495) 72,063 9,135 (26,888) (9,237) 4,757 (23,965) (35,935) (94,031) (253) (118,246) 9,706 2,187,800 2,030,112 (45,650) 901,720 (1,836) 6,988 2,938,820	Pro forma adjustments Pro forma Remaining Group Note (g) Note (h) 786 17 4,000 1,030 2,124,392 (12,495) 72,063 9,135 (26,888) (9,237) 4,757 (23,965) (35,935) (94,031) (253) (118,246) 9,706 2,187,800 2,030,112 (45,650) 901,720 (1,836) 6,988 2,938,820
	) ) ) ) ) ) ) ) )	Remaining Group Note (g) Note (h) 786 17 4,000 1,030 2,124,392 (12,495) 72,063 9,135 (26,888 (9,237 4,757 (23,965 (35,935 (94,031 (253 (118,246 9,706 2,187,800 2,030,112 (45,650) 901,720 (1,836) 6,988
(91,439			2,124,392
84,558 (36,023 (9,237 (28,722 (35,935 (94,031 (253			72,063 (26,888 (9,237 (23,965 (35,935 (94,031 (253
(119,643			(118,246
(167,394 947,370 8,824			2,030,112 901,720 6,988
788,800

III-6

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

III. Unaudited Pro Forma Consolidated Cash Flow Statement (Continued)

Unadjusted consolidated cash flow statement of the Group for the six months ended 30th June 2006 US$’000 Analysis of cash and cash equivalents Bank balances and deposits maturing within three months from the date of placement 788,952 Overdrafts (152) 788,800	Unadjusted consolidated cash flow statement of the Group for the six months ended 30th June 2006 US$’000 Analysis of cash and cash equivalents Bank balances and deposits maturing within three months from the date of placement 788,952 Overdrafts (152) 788,800	Unadjusted consolidated cash flow statement of the Group for the six months ended 30th June 2006 US$’000 Analysis of cash and cash equivalents Bank balances and deposits maturing within three months from the date of placement 788,952 Overdrafts (152) 788,800	Pro forma adjustments Pro forma Remaining Group Note (g) Note (h) (37,780) 2,187,800 2,938,972 (152) 2,938,820
		)	Remaining Group Note (g) Note (h) (37,780) 2,187,800 2,938,972 (152
	788,800

IV. Notes to the Unaudited Pro Forma Financial Information

Notes:

(a) The adjustment reflects the de-consolidation of the assets and liabilities of TSI, Global and Consolidated Terminal Holdings (collectively referred to as the “Disposal Group”), assuming that the Transaction had been taken place on 30th June 2006.
(b) The adjustment reflects the reclassification of amounts receivable from /payable to group companies of the Disposal Group as at 30th June 2006.
(c) The adjustment reflects (i) the cash consideration amounting to US$2,350,000,000 less estimated expenses and tax directly attributable to the Transaction, resulting in a net cash inflow of US$2,187,800,000, and (ii) the estimated gain of US$1,987,950,000 resulted from the Transaction, assuming that the Transaction had been taken place on 30th June 2006. The cash consideration of US$2,350,000,000 does not take into account any adjustment as set out under the header “Consideration” in the Letter From The Board of the Circular as the adjustment is conditional upon the Completion occurs after 31st December 2006. Had only the Initial Completion taken place on 30th June 2006, the gain on disposal (net of corresponding taxation) would be reduced by US$421 million.
(d) The adjustment reflects the de-consolidation of the results of the Disposal Group for the six months ended 30th June 2006, assuming that the Transaction had been taken place on 1st January 2006.
(e) The adjustment reflects the reversal of elimination of intragroup transactions between the Group and the Disposal Group, assuming that the Transaction had been taken place on 1st January 2006. The liner business of the Group has been using the terminals of the Disposal Group at rates agreed on an arm’s length basis. Upon completion of the Transaction, the Group will continue using the terminals of the Disposal Group and this adjustment has a continuing effect on the Group.
(f) The adjustment reflects the estimated gain of US$2,091,447,000 and corresponding estimated tax of US$78,900,000 resulted from the Transaction, assuming that the Transaction had been taken place on 1st January 2006. Had only the Initial Completion taken place on 1st January 2006, the gain on disposal (net of corresponding taxation) would be reduced by US$424 million.

III-7

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

IV. Notes to the Unaudited Pro Forma Financial Information (Continued)

Notes:

(g) The adjustment reflects the exclusion of the cash flows of the Disposal Group for the six months ended 30th June 2006, assuming that the Transaction had been taken place on 1st January 2006.
(h) The adjustment reflects the cash consideration net of estimated expenses and tax directly attributable to the Transaction received of US$2,187,800,000 assuming that the Transaction had been taken place on 1st January 2006.
(i) The business operation of the Disposal Group is subject to insignificant seasonal fluctuation.
(j) No adjustment has been made to reflect any trading result or other transaction of the Group and the Disposal Group entered into subsequent to 30th June 2006.
(k) The final amount of consideration (detail as set out under the header “Consideration” in the Letter From The Board of this Circular), assets and liabilities of the Disposal Group and the gain and corresponding taxation of the Transaction will be different from those amounts as presented above.

III-8

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

B. REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of a report received from the auditors and reporting accountants of the Company, PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this Circular.

==> picture [92 x 55] intentionally omitted <==

REPORT FROM ACCOUNTANTS ON UNAUDITED PRO FORMA FINANCIAL INFORMATION TO THE DIRECTORS OF ORIENT OVERSEAS (INTERNATIONAL) LIMITED

We report on the unaudited pro forma financial information of Orient Overseas (International) Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) set out on pages III-1 to III-8 under the heading of “Unaudited Pro Forma Financial Information” (the “Unaudited Pro Forma Financial Information”) in Appendix III of the Company’s circular dated 4th December 2006, in connection with the sale of the entire issued share capital of each of TSI Terminal Systems Inc., Consolidated (Terminal Holdings) Limited and Global Terminal & Container Services, Inc. (the “Transaction”) by the Company (the “Circular”). The Unaudited Pro Forma Financial Information has been prepared by the Directors of the Company, for illustrative purposes only, to provide information about how the Transaction might have affected the relevant financial information of the Group. The basis of preparation of the Unaudited Pro Forma Financial Information is set out on pages III-1 to III-8 of the Circular.

Respective Responsibilities of Directors of the Company and Reporting Accountants

It is the responsibility solely of the Directors of the Company to prepare the Unaudited Pro Forma Financial Information in accordance with rule 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

It is our responsibility to form an opinion, as required by rule 4.29(7) of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

III-9

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Basis of Opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the HKICPA. Our work, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted consolidated balance sheet of the Group as at 30th June 2006, unadjusted consolidated profit and loss account and unadjusted consolidated cash flow statement of the Group for the six months ended 30th June 2006 with the financial information of the Group for the six months ended 30th June 2006 as set out in Appendix I of this Circular, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information with the Directors of the Company.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information has been properly compiled by the Directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to rule 4.29(1) of the Listing Rules.

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgements and assumptions of the Directors of the Company, and because of its hypothetical nature, it does not provide any assurance or indication that any event will take place in the future and may not be indicative of:

the financial position of the Group as at 30th June 2006 or any future date, or
the results and cash flows of the Group for the six months ended 30th June 2006 or any future periods.

Opinion

In our opinion:

a) the Unaudited Pro Forma Financial Information has been properly compiled by the Directors of the Company on the basis stated;
b) such basis is consistent with the accounting policies of the Group; and
c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to rule 4.29(1) of the Listing Rules.

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong, 4th December 2006

III-10

GENERAL INFORMATION

APPENDIX IV

1. RESPONSIBILITY STATEMENT

This Circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this Circular and confirm, having made all reasonable enquiries that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the Shares, the underlying Shares and the debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which were required to be: (a) notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) entered in the register kept by the Company pursuant to Section 352 of the SFO; or (c) notified to the Company and the Stock Exchange pursuant to the Model Code contained in the Listing Rules, were as follows:

Name Direct Interests	Other Interests Total Number of Shares Interested (inLong
	Position) Percentage Beneficial Voting
Chee Chen Tung — Roger King — Tsann Rong Chang 612,731 Nicholas David Sims 55,660 Philip Yiu Wah Chow 79,600 Simon Murray 65,000	97,811,011 (Note 1) 326,627,577 (Notes 2 & 3) 424,438,588 67.82% 97,811,011 (Note 1) — 97,811,011 15.62% — — 612,731 0.09% — — 55,660 0.01% — — 79,600 0.01% 57,200 (Note 4) — 122,200 0.02%

Notes:

Mr. C C Tung and Mr. King have an interest in a trust which, through Springfield, holds 97,811,011 Shares. Of such Shares, Springfield has an indirect interest in 30,765,425 Shares in which Monterrey has a direct interest, and Springfield has a direct interest in 67,045,586 Shares.
Wharncliff, a company owned by a discretionary trust established by Mrs. Peng, holds 278,165,570 Shares and the voting rights in respect of such holdings are held by Mr. C C Tung through THTI. Gala Way, a company owned by the discretionary trust established by Mrs. Peng, holds 48,462,007 Shares and the voting rights in respect of such holdings are held by Mr. C C Tung through THTI.

IV-1

GENERAL INFORMATION

APPENDIX IV

Wharncliff, Gala Way, Springfield and Monterrey together are referred to as the controlling shareholders.
Mr. Simon Murray has gifted 57,200 Shares to the Simon Murray Family 1985 Trust, a discretionary trust of which he is the settlor.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or the chief executive of the Company had any interests or short positions in the Shares, the underlying Shares and the debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be: (a) notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO); or (b) entered in the register kept by the Company pursuant to Section 352 of the SFO; or (c) notified to the Company and the Stock Exchange pursuant to the Model Code.

3. SUBSTANTIAL SHAREHOLDERS’ INTEREST

As at the Latest Practicable Date and so far as is known to the Directors and chief executive of the Company, the following persons (other than a Director or chief executive of the Company) had interests or short positions in the Shares and the underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept under Section 336 of the SFO:

		Number
		of Shares
		Interested (in
Name	Nature of Interest	Long Position)	Percentage
Bermuda Trust Company Limited	Trustee	424,438,588	67.82%
		(Note 1)
Shirley Shiao Ping Peng	Founder of a	326,627,577	52.19%
	discretionary trust	(Note 2)
Fortune Crest Inc.	Indirect	326,627,577	52.19%
		(Note 2)
Winfield Investment Limited	Indirect	326,627,577	52.19%
		(Notes 2&3)
Tung Holdings (Trustee) Inc.	Voting	326,627,577	52.19%
		(Note 4)
Wharncliff Limited	Direct	278,165,570	44.45%
		(Notes 2&5)
Chee Hwa Tung	Indirect	97,836,242	15.63%
		(Note 6)

IV-2

GENERAL INFORMATION

APPENDIX IV

		Number
		of Shares
		Interested (in
Name	Nature of Interest	Long Position)	Percentage
Springfield Corporation	Direct and Indirect	97,811,011	15.62%
		(Note 6)
Archduke Corporation	Beneficiary of	97,811,011	15.62%
	a trust	(Note 7)
Phoenix Corporation	Beneficiary of	97,811,011	15.62%
	a trust	(Note 7)
Archmore Limited	Beneficiary of	97,811,011	15.62%
	a trust	(Note 8)
Edgemont Investment Limited	Indirect	97,811,011	15.62%
		(Note 9)
Javier Associates Limited	Indirect	97,811,011	15.62%
		(Note 10)
Gala Way Company Inc.	Direct	48,462,007	7.74%
		(Notes 2&5)
Monterrey Limited	Direct	30,765,425	4.91%
		(Notes 6&11)

Notes:

Bermuda Trust Company Limited has an indirect interest in the same Shares in which Fortune Crest and Springfield, wholly owned subsidiaries of Bermuda Trust Company Limited, have an interest.
Mrs. Peng established the discretionary trust which, through Winfield, a wholly owned subsidiary of Fortune Crest, holds 326,627,577 Shares, 278,165,570 of which are owned by Wharncliff and 48,462,007 of which are owned by Gala Way.
Winfield has an indirect interest in the same Shares in which Wharncliff and Gala Way have an interest.
THTI is a company wholly owned by Mr. C C Tung.
Wharncliff and Gala Way are wholly owned subsidiaries of Winfield.
Mr. C H Tung has an interest in the trust which, through Springfield, holds 97,811,011 Shares. Of such Shares, Springfield has an indirect interest in the same 30,765,425 Shares in which Monterrey has a direct interest, and Springfield has a direct interest in 67,045,586 Shares. Mrs. Betty Hung Ping Tung (spouse of Mr. C H Tung, sister-in-law of Mr. C C Tung, Mrs. Peng and Mr. King, and mother of Mr. Alan Tung) owns 25,231 Shares.

IV-3

GENERAL INFORMATION

APPENDIX IV

Archduke Corporation and Phoenix Corporation, companies which are wholly owned by Mr. C C Tung, have an interest in the trust which, through Springfield, holds 97,811,011 Shares.
Archmore, a company which is wholly owned by Edgemont, has an interest in the trust which, through Springfield, holds 97,811,011 Shares.
Edgemont has an indirect interest in the same Shares in which Archmore, a wholly owned subsidiary of Edgemont, has an interest.
Javier, a company which is wholly owned by Mr. C C Tung, has an indirect interest in the same Shares in which Edgemont, a wholly owned subsidiary of Javier, has an interest.
Monterrey is a wholly owned subsidiary of Springfield.

Save as disclosed above, as at the Latest Practicable Date, the Company has not been notified by any person (other than a Director or chief executive of the Company) who had interests or short positions in the Shares and the underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or in any options in respect of such capital.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or the chief executive of the Company was a director or an employee of a company which had an interest or short position in the Shares and the underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

4. SERVICE CONTRACT

Mr. Nicholas David Sims has a service contract with the Company which will expire on 21 October 2007. None of the Directors has entered into any service contract with the Company or any of its subsidiaries which is not determinable by the Company within one year without any payment of compensation, other than statutory compensation.

5. SECRETARY AND QUALIFIED ACCOUNTANT

The Secretary of the Company is Ms. Lammy Chee Fun Lee, Barrister and the Qualified Accountant of the Company is Mr. Kit Man Fung, member of Hong Kong Institute of Certified Public Accountants.

6. LITIGATION

As at the Latest Practicable Date, no litigation or claim of material importance is known to the Directors to be pending or threatened against any member of the Group.

IV-4

GENERAL INFORMATION

APPENDIX IV

7. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors and their respective associates (as defined in the Listing Rules) had any interest in a business, which competes or may compete with the business of the Group.

8. OTHER INTERESTS OF DIRECTORS IN CONTRACTS

None of the Directors is materially interested in any contract or arrangement subsisting as at the date of this Circular which is significant in relation to the business of the Group.

9. DIRECTORS’ INTERESTS IN GROUP ASSETS

As at the Latest Practicable Date, none of the Directors has or has had any interest, direct or indirect, in any assets which have been, since 30 June 2006, being the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

10. MATERIAL ADVERSE CHANGE

The Directors confirm that, as at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 30 June 2006, being the date to which the latest published audited accounts of the Group were made up.

11. MATERIAL CONTRACTS

Other than the Stock Purchase Agreement, the Group has not entered into any material contract (not being contracts entered into in the ordinary course of business) within the two years immediately preceding the date of this Circular.

12. PROCEDURE FOR DEMANDING A POLL BY SHAREHOLDERS

Pursuant to Bye-law 66, at any general meeting every Shareholder present in person or by proxy or by attorney or (being a corporation) is present by a representative duly authorised under Section 78 of the Bermuda Companies Act 1981 as amended, shall have one vote on a show of hands and every Shareholder present in person or by proxy shall have one vote for every fully paid share of which he is the holder on a poll. A resolution put to the vote of a meeting shall be decided on a show of hands unless voting by way of poll is required by the Listing Rules or is demanded pursuant to the Listing Rules or the provisions of the Bye-laws before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll.

Voting by poll may be demanded:

(a) by the Chairman; or

IV-5

GENERAL INFORMATION

APPENDIX IV

(b) by at least three Shareholders present in person or by proxy for the time being entitled to vote at the meeting; or
(c) by a Shareholder or Shareholders present in person or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or
(d) by a Shareholder or Shareholders present in person or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right; or
(e) if required by the Listing Rules.

A demand for voting by poll by a person as proxy for a Shareholder shall be deemed to be the same as a demand by the Shareholder concerned.

On a poll, votes may be given either personally or by proxy and a person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way pursuant to Bye-laws 71 and 72.

13. EXPERTS AND CONSENTS

(a) The following are the qualification of the expert who has been named in this Circular:

Name Qualification

PricewaterhouseCoopers Certified Public Accountants

(b) PricewaterhouseCoopers, as at the Latest Practicable Date, did not have any direct or indirect shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

PricewaterhouseCoopers has given and has not withdrawn its written consent to the issue of this Circular with the inclusion of their letters and reports and references to their name in the form and context in which they are included.

PricewaterhouseCoopers does not have any interest, direct or indirect, in any assets which has been acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired or disposed of by or leased to any member of the Group.

IV-6

GENERAL INFORMATION

APPENDIX IV

14. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection by Shareholders during normal business hours at the principal office of the Company in Hong Kong at 33rd Floor, Harbour Centre, 25 Harbour Road, Wanchai, Hong Kong on weekdays other than Saturdays and public holidays up to and including 22 December 2006:

(a) the Memorandum of Association and Bye-laws of the Company;
(b) circular to Shareholders dated 4 August 2006 issued by the Company regarding Discloseable Transaction — Construction of Four Vessels;
(c) circular to Shareholders dated 13 November 2006 issued by the Company regarding Discloseable Transaction — Construction of Four Vessels;
(d) the accountants’ report, the text of which is set out in Appendix I to this Circular, together with the statement of adjustments;
(e) the report from PricewaterhouseCoopers on the pro forma financial information of the Remaining Group, the text of which is set out in Appendix III to this Circular;
(f) the written consent referred to in the section headed “Experts and Consents” referred to in Appendix IV to this Circular;
(g) audited financial statements of the Group for the two financial years ended 31 December 2004 and 31 December 2005;
(h) the Stock Purchase Agreement; and
(i) service contract of Mr. Nicholas David Sims, an Executive Director of the Company.

15. MISCELLANEOUS

The principal registrar of the Company is Butterfield Fund Services (Bermuda) Limited at Rosebank Centre, 11 Bermudiana Road, Pembroke, Bermuda and the branch registrar of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

The English text of this Circular shall prevail over the Chinese text.

IV-7

NOTICE OF SGM

ORIENT OVERSEAS (INTERNATIONAL) LIMITED *

(Incorporated in Bermuda with limited liability)

(Stock code: 316)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE is hereby given that the Special General Meeting of ORIENT OVERSEAS (INTERNATIONAL) LIMITED (the “Company”) will be held at the Concord Room, 8th Floor, Renaissance Harbour View Hotel, 1 Harbour Road, Wanchai, Hong Kong on Tuesday, 19 December 2006 at 10:00 a.m. for the purpose of considering and, if thought fit, passing the following resolution with or without amendments as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“THAT

(a) the stock purchase agreement dated 21 November 2006 (the “ Stock Purchase Agreement ”) entered into between TSI Holding S.A., OOCL (Terminals) Holdings Limited, Consolidated Leasing & Terminals, Inc., indirect wholly owned subsidiaries of the Company (together the “Sellers”); the Company; and 0775150 B.C. Ltd. and 2119601 Ontario Limited (together the “Buyer”) in relation to the sale of the entire issued share capitals of TSI Terminal Systems Inc., Consolidated (Terminal Holdings) Limited and Global Terminal & Container Services, Inc. by the Sellers to the Buyer, a copy of which has been produced to this meeting marked “A” and signed by the Chairman of this meeting for identification purpose, be and is hereby approved, ratified and confirmed; and
(b) any one Director or the Company Secretary of the Company be and is hereby authorised to execute all such documents and/or to do all such acts on behalf of the Company as he/she may consider necessary, desirable or expedient for the purpose of, or in connection with, the implementation and completion of the Stock Purchase Agreement and the transactions contemplated therein.”

By Order of the Board Lammy Lee Company Secretary

Hong Kong, 4 December 2006

N-1

NOTICE OF SGM

Notes:

(i) Any member of the Company entitled to attend and vote at the meeting (or at any adjournment thereof) is entitled to appoint a proxy or proxies to attend and vote on his behalf in accordance with the Bye-laws of the Company. A proxy need not be a member of the Company.
(ii) Where there are joint registered holders of any share, any one of such persons may vote at the meeting, either personally or by proxy, in respect of such share as if he were solely entitled thereto; but if more than one of such joint holders shall be present at the meeting personally or by proxy, that one of the holders so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.
(iii) A proxy form is enclosed and in order to be valid, the proxy form must be deposited at the Company’s branch share registrar, Computershare Hong Kong Investor Services Limited, at 46th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong together with the power of attorney or other authority (if any) under which it is signed (or a certified copy thereof) as soon as possible but in any event not less than 48 hours before the time appointed for holding the Special General Meeting or any adjournment thereof.
(iv) The Chinese translation of this notice is for reference only. In case of any inconsistency, the English version shall prevail.
for identification only

N-2

AI assistant

L.K. Technology Holdings Limited — Proxy Solicitation & Information Statement 2006

49296_rns_2006-12-04_dacd5614-6914-4d2f-a932-077a0fe47562.pdf

**ORIENT OVERSEAS (INTERNATIONAL) LIMITED ***

VERY SUBSTANTIAL DISPOSAL PROPOSED SALE OF THE ENTIRE ISSUED SHARE CAPITALS OF TSI, CONSOLIDATED TERMINAL HOLDINGS AND GLOBAL

Sole Financial Adviser to Orient Overseas (International) Limited

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

**ORIENT OVERSEAS (INTERNATIONAL) LIMITED ***

Executive Directors:

Independent Non-Executive Directors:

VERY SUBSTANTIAL DISPOSAL PROPOSED SALE OF THE ENTIRE ISSUED SHARE CAPITALS OF TSI, CONSOLIDATED TERMINAL HOLDINGS AND GLOBAL

INTRODUCTION

LETTER FROM THE BOARD

THE STOCK PURCHASE AGREEMENT

Date

Parties involved

Subject Matter

Consideration

LETTER FROM THE BOARD

Conditions Precedent and Completion

LETTER FROM THE BOARD

INFORMATION ON TSI, CONSOLIDATED TERMINAL HOLDINGS AND GLOBAL

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

PROCEEDS FROM THE TRANSACTION

FINANCIAL EFFECT OF AND REASONS FOR THE TRANSACTION

INFORMATION OF THE GROUP

INFORMATION ON THE BUYER

LISTING RULES IMPLICATIONS FOR THE COMPANY

IRREVOCABLE UNDERTAKING(S) FROM MAJOR SHAREHOLDER(S)

RECOMMENDATION

ADDITIONAL INFORMATION

4th December 2006

The Directors

APPENDIX I

I. FINANCIAL INFORMATION

Consolidated Profit and Loss Accounts

Consolidated Balance Sheets

Consolidated Balance Sheets (Continued)

Balance Sheets

Consolidated Cash Flow Statements

Consolidated Cash Flow Statements (Continued)

Consolidated Statements of Changes in Equity

Consolidated Statements of Changes in Equity (Continued)

II. NOTES TO THE FINANCIAL INFORMATION

1. General information

2. Summary of significant accounting policies

2.1 Basis of preparation

The adoption of new/revised HKFRS

Standards, interpretations and amendments to published standards that are not yet effective

2.2 Consolidation

(a) Subsidiaries

2. Summary of significant accounting policies (Continued)

2.2 Consolidation (Continued)

(b) Jointly controlled entities

(c) Associated companies

2.3 Property, plant and equipment

2. Summary of significant accounting policies (Continued)

2.3 Property, plant and equipment (Continued)

2.4 Investment properties

2.5 Vessel repairs and surveys

2. Summary of significant accounting policies (Continued)

2.6 Intangible assets

(a) Goodwill

(b) Computer software

2.7 Impairment of non-financial assets

2.8 Investments

(a) Portfolio investments

(b) Loans and receivables

2. Summary of significant accounting policies (Continued)

2.8 Investments (Continued)

2.9 Properties under development and for sale

2.10 Inventories

2. Summary of significant accounting policies (Continued)

2.11 Debtors

L.K. Technology Holdings Limited Proxy Solicitation & Information Statement 2006

ORIENT OVERSEAS (INTERNATIONAL) LIMITED *

ORIENT OVERSEAS (INTERNATIONAL) LIMITED *