(23rd March 2010, Hong Kong) COSCO International Holdings Limited (“COSCO International” or the “Company”) (stock code: 00517) and its subsidiaries (“the Group) are pleased to announce its audited consolidated results for the year ended 31st December 2009.

Better Than Expected Results
For the year ended 31st December 2009, the Group recorded a revenue of HK$1,630,055,000 (2008: HK$2,100,937,000), dropped by 22% as compared to the year of 2008. The profit attributable to the equity holders was HK$843,675,000 (2008: 491,015,000), increased by 72%. During the year, excluding the net gains on deemed disposal of partial interest in Sino-Ocean Land Holdings Limited (“SOLHL”) of HK$245,287,000 as a result of its issuance of new shares and the Group’s share of profit of SOLHL amounting to HK$354,481,000 (2008: HK$319,184,000), the profit attributable to the equity holders was HK$243,907,000 (2008: HK$171,831,000), increased by 42% on the same basis. Basic earnings per share were 56.25 HK cents (2008: 33.18 HK cents), increased by 70% as compared to 2008. The Group’s overall results were better than expected.

Dividends
The board of directors of the Company has recommended a final dividend of 8.4 HK cents per share for the twelve months ended 31st December 2009 (2008: a final dividend of 6.4 HK cents per share). Together with the interim dividend of 1.00 HK cent per share, the total dividend for the year of 2009 will be 9.4 HK cents per share (2008: 7.4 HK cents per share), up 27% year-on-year.

Business Review
Managing Director of COSCO International, Mr. Wang Xiaodong said, ‘In 2009, the steep decline in the shipping related markets resulted in difficult operating conditions for the Group with a focus on shipping services under the global financial crisis. Each business segment of the Group was affected in varying degrees. Surrounded by complicated and difficult situations, the Group continuously implemented its strategic positioning initiative for its core business in shipping services and actively consolidated its development. The Group also initiated new development strategies on exploring new market, targeting new customer and developing new businesses, and implemented profit-driven operating objectives. As a result, the Group offset the contraction of certain existing businesses and achieved breakthroughs in a declining market. Profits were realised by each business segment of the Group with various changes in revenue during the year; among which, businesses of sales of marine coatings and ship trading agency recorded significant profit growth. In addition to the profit contribution from SOLHL, an associated company of the Company, the Group managed to achieve growth in its overall results during the year despite a difficult environment in external economies.’

The Group is actively seeking for new development opportunities. During the year, the Group successfully developed and expanded into the business segment of trading and supply of marine fuel and related products. The Group completed the acquisition of 18% equity interest in Double Rich Limited (“Double Rich”) by the end of April 2009 and set up Sinfeng Marine Services Pte. Ltd. (“Sinfeng”) in November 2009 to develop the trading and supply of marine fuel and related products business for customers from non-COSCO Group. The injection of new businesses into the Group further not only consolidated and expanded its shipping services business platform, but expanded the Group’s profit base and accelerated business growth, thus strengthening the Group’s competitive advantages as the leading global shipping services provider.

Performance of the Group’s various key business units in 2009 are described below:

Shipping Services
Impacted by global economic recession and steep decline in international trade, there was a steep decrease in global new build ship contracts and a downtrend in new build vessel prices in 2009. Meanwhile, hampered by the sustained depression in the container shipping market, demand for container coatings also dropped significantly. During the year ended 31st December 2009, the Group’s segment revenue from shipping services amounted to HK$1,109,692,000, decreased by 45% as compared to HK$2,033,051,000 in 2008 and representing 68% of the Group’s total revenue (2008: 97%). However, owing to a large amount of new build vessels delivered in 2009, benefiting the Group’s marine coatings sale and ship trading agency business to achieve significant growth. As a result, together with stable results from other segment and contributions from new segments, profit before income tax from shipping services was HK$324,745,000 (2008: HK$256,739,000), increased by 26% year-on-year.

(1) Ship Trading Agency Services
COSCO International Ship Trading Company Limited (“COSCO Ship Trading”) is engaged in provision of exclusive agency services relating to shipbuilding, ship trading and agency services relating to chartering for the COSCO Group, as well as similar agency services to non-COSCO Group shipping companies. As impacted by the financial crisis, there are some cases of delayed new build vessel delivery or cancellation of certain new build ship orders during the year. Benefiting from the prosperous growth of the shipping market and shipbuilding market in the past few years, the new build vessels ordered through the Group are scheduled to be delivered in the coming three to four years. It resulted in a solid growth in commission income from the Group’s ship trading agency services. Meanwhile, COSCO Ship Trading also actively developed the ship trading business with non-COSCO Group shipping companies and seized the opportunities to develop the second-hand vessel and retired vessel market. In 2009, COSCO Ship Trading consummated transactions for the sale and purchase of 64 vessels (2008: 59 vessels). Segment revenue from ship trading agency services increased by 16% to HK$151,953,000 (2008: HK$131,111,000), as compared to the previous year. Segment profit before income tax was HK$116,167,000 (2008: HK$89,305,000), representing an increase of 30% as compared to last year.

(2) Marine Insurance Brokerage Services
COSCO (Hong Kong) Insurance Brokers Limited (“HK COSCO Insurance Brokers”) mainly operates intermediary businesses in relation to marine insurance and ship owner’s liability insurance outside China Mainland. Shenzhen COSCO Insurance Brokers Limited (“SZ COSCO Insurance Brokers”) is engaged in provision of insurance brokerage services to the vessels registered in China Mainland. In 2009, insurance companies generally raised premium which exerted difficulties on insurance brokerage business. The Group retained existing customers through enhanced services and accomplished great achievements in the development of hull and machinery co-insurance business. Its efforts offset the negative effect brought by the prevailing market predicament to a certain extent. During the year, segment revenue from marine insurance brokerage services was HK$67,140,000 (2008: HK$65,682,000), representing an increase of 2% as compared to the previous year. Segment profit before income tax was HK$47,659,000 (2008: HK$43,684,000), up by 9% as compared to last year.

(3) Supply of Marine Equipment and Spare Parts
Yuantong Marine Service Co. Limited (“Yuantong”) is principally engaged in the sales and installation of marine equipment and spare parts for existing and new build vessels, as well as oil drilling project at sea, communications systems, shore-based AIS systems, vessel traffic management systems and information management systems for land users. During the year, various shipping companies greatly reduced their procurement of spare parts and many equipment manufacturers directly sold their products to customers, affecting the marine equipment and spare parts supply businesses. The Group forged closer communication and relationship with big customers, actively developed its sales channels to promote domestic-made spare parts to overseas market and expanded into new markets. In addition to some deliveries of the new build vessel equipment business in 2009 based on the orders of the previous years, the Group offset the impact of the decrease in the spare parts supply business. During the year, segment revenue from the supply of marine equipment and spare parts was HK$445,063,000, representing a decrease of 2% as compared to HK$455,182,000 in 2008. Segment profit before income tax increased by 45% to HK$37,139,000 (2008: HK$25,551,000), including fair value gains on investment properties amounting to HK$4,000,000 (2008: fair value losses of HK$3,600,000) and reversal of provision for impairment of trade receivables, net of provision, of HK$855,000 (2008: provision for impairment of trade receivables, net of reversal, of HK$5,451,000) upon collection of trade debts.

(4) Production and Sale of Coatings
COSCO Kansai Paint & Chemicals (Tianjin) Co., Ltd., COSCO Kansai Paint & Chemicals (Shanghai) Co., Ltd. and COSCO Kansai Paint & Chemicals (Zhuhai) Co., Ltd.(collectively known as “COSCO Kansai Companies”) are principally engaged in the production and sale of container coatings and industrial heavy-duty anti-corrosion coatings. The Group’s jointly controlled entity, Jotun COSCO Marine Coatings (HK) Limited (“Jotun COSCO”), is principally engaged in the production and sale of marine coatings. During the year, segment revenue from production and sale of coatings was HK$399,971,000 (2008: HK$1,381,076,000), representing a decrease of 71% as compared to 2008, mainly due to the sale slump of container coatings during the year. However, segment profit before income tax increased by 15% to HK$113,114,000 (2008: HK$98,199,000), as a result of the significant growth of the sale of marine coatings which offset the negative impact of reduced demands for container coatings.

Hampered by the sustained depression in the container shipping market, market demand for new containers in 2009 declined abruptly and orders for new containers decreased sharply. This led to a significant drop in demand for container coatings. During the year, total sales volume of container coatings from COSCO Kansai Companies amounted to 3,835 tonnes, representing a significant decrease of 92% as compared with 51,034 tonnes in 2008.

As some industrial coatings projects were suspended or delayed due to reduction in the export equipment in China resulted from global economy recession in 2009, as well as price competition was intensified in the industry, COSCO Kansai Companies recorded sales volume of industrial heavy-duty anti-corrosion coatings of 7,087 tonnes during the year, representing a decrease of 30% as compared to 10,091 tonnes in 2008. The Group formulated the operating strategy of “Making great effort to explore the industrial coatings market while consolidating the container coatings market”, thus laying a solid foundation for future development.

Jotun COSCO is principally engaged in the production and sale of marine coatings in China (including the China Mainland, Hong Kong and Macau Special Administrative Regions). As a result of numerous new build vessels delivery in 2009 and market exploration efforts paid off in a relatively significant scale, sales volume of marine coatings of Jotun COSCO amounted to 64,000,000 litres (equivalent to approximately 92,800 tonnes), representing an increase of 29% as compared to 49,665,000 litres (equivalent to approximately 72,014 tonnes) in 2008. During the year, share of result of Jotun COSCO was HK$101,488,000 (2008: HK$43,787,000), representing a significant year-on-year increase of 132%.

(5) Trading and Supply of Marine Fuel and Related Products
Sinfeng is primarily engaged in provision of marine fuel supply, and trading and related brokerage services of fuel oil and oil related products for customers from non-COSCO Group. Sinfeng has established extensive and good business cooperation relationship with the local offices of the famous international oil companies, shipping companies and ship owners. Currently, its business network primarily covers Singapore, Malaysia, major ports in the Far East region such as Hong Kong, Shanghai and Qingdao; as well as major ports in Europe and America, such as Rotterdam, New York and Long Beach, etc. The setting up of Sinfeng signified that the Group had been determined to expand into the business of trading and supply of marine fuel and related products, which will further enlarge the economic scale and scope of the shipping services of the Group. Since Sinfeng was established on 18th November 2009, its total sales volume of marine fuel and related products amounted to 11,960 tonnes. During the year, segment revenue from trading and supply of marine fuel and related products was HK$45,565,000 and segment profit before income tax was HK$10,666,000.

In addition, the Group completed the acquisition of 18% equity interest in Double Rich by the end of April 2009. Double Rich is principally engaged in trading of bunker oil and oil products and provision of bunker oil supply services in Hong Kong, and is specialised in sourcing products like light diesels and fuel oil. Its key customers or end users are ship owners and ship operators. During the year, the profit of Double Rich attributable to the Group was HK$10,522,000.

General Trading
COSCO International Trading Company Limited (“CITC”) became a wholly-owned subsidiary of the Company since December 2008. CITC is principally engaged in trading of asphalt, trading of general marine equipment and marine supplies, as well as other comprehensive trading. CITC is familiar with the China Mainland’s market and the market operations and has abundant experience in international trade. It has steady suppliers and stable market share, which will generate synergies with the Group’s shipping services businesses, serving an important platform for the Group to tap into the China Mainland’s market. During the year, segment revenue from general trading was HK$515,366,000. Segment profit before income tax was HK$731,000.

Property Investments
In 2009, the segment revenue from property investments was HK$4,997,000 (2008: HK$67,886,000), decreased by 93% as compared to 2008, which was derived from the sale of 12 carparking spaces in Fragrant Garden in Shanghai. The Group still had a significant and stable share of profit from the equity investment in SOLHL. As a result, segment profit before income tax soared 68% to HK$636,149,000 (2008: HK$379,315,000).

(1) Investment in an Associated Company of SOLHL 
As at 31st December 2009, the Group held 16.85% equity interest in SOLHL, the shares of which were listed on The Stock Exchange of Hong Kong Limited. SOLHL held 100% interest in Sino-Ocean Land Limited (“SOLL”). SOLL is one of the largest property developers in Beijing and the Pan-Bohai Rim Area with a diversified portfolio of property development projects and property investments. Besides having a leading position in Beijing and the Pan-Bohai Rim Area, SOLL also expands into the regions with rapid economic growth such as the Pearl River Delta and the Yangtze River Delta. Benefited from the PRC Government’s implementation of appropriately loose monetary policy which supported credit extension, together with the influx of international funds into China’s real estate market, the year 2009 saw a significant increase in sales area and sales volume of commodity housing throughout China. During the year, the Group’s share of profit from SOLHL was HK$354,481,000 (2008: HK$319,184,000), increased by 11% as compared to 2008. In addition, net gains on deemed disposal of partial interest in SOLHL arising from its issue of new shares in 2009 was HK$245,287,000.

Corporate Governance and Social Responsibility
With a view to enhancing its standards of corporate governance, the Group has persistently strived to strictly comply with relevant rules and regulations and attained certain improvements on perfecting and increasing its level of information disclosure. COSCO International was awarded as one of the top five companies in the ranking of Financial Disclosure Procedures in the Greater China region in 2009 Investor Relations Global Rankings. The Group’s 2008 Annual Report won four awards in the shipping services category in the 23rd International ARC Awards Competition. In addition, the Company revamped its corporate website during the year so as to help shareholders, investors and stakeholders better understand the Group’s financial status, business operations and governance culture. The Company’s website won the Bronze Award in the category of the “Redesign/ Relaunch: Stakeholders Communications” in the 9th International iNOVA Awards Competition. During the year, COSCO International actively fulfilled good corporate citizenship. The Company was awarded Caring Company Logo 2009/2010 by the Hong Kong Council of Social Service in recognition of its efforts and contributions in three aspects, i.e. “Giving”, “Caring for the Employees” and “Caring for the Environmental” last year.

Outlook
International trade volumes are expected to regain growth momentum in the year 2010 amid a gradually recovering global economy. Despite this, there are uncertainties still lurking in the market. The reviving pace of trade volume growth is expected to be limited and there is still a long journey back to a prosperous economy. The upward trend of China’s economy continues to flourish, accompanied by the strengthened efforts and further implementation of government policies to boost domestic demands and improve people’s livelihood. People’s confidence in the China market will gradually be reinforced. Although many difficulties and challenges remain with numerous factors that influence and complicate the situation, the business environment is still generally favourable.

In the first year of the post-financial crisis era, it is estimated that the imbalance in supply and demand of the shipping market will continue. The large number of new build vessels ordered by ship owners when the shipping market peaked in the previous few years has begun to be delivered in recent years. The fact that the resulting overcapacity creates an imbalance situation is now seen likely to extend over a period longer than that required for the international trade volumes to recover. Owing to this, new build contracts around the world in 2010 may not increase significantly as compared to 2009. The overall shipping market may continue to recover, but it will be accompanied by intensifying competition. Nevertheless, the PRC Government’s continued initiatives to stimulate the economy and the promulgation of policies such as the “Plan for Readjustment and Revitalisation of the Shipping Building Industry” may help stabilise the shipping industry and shipbuilding industry in a broader extent. In addition, given the previous backlogs, 2010 and 2011 will be still the peak period for new build vessel delivery. These factors shall be favourable to the Group, as our core businesses are based upon the shipping services industry.

Looking forward, the prospects of the industry are challenging yet not short of opportunities. The Group will continue to implement its strategic development positioning, proactively implement opportunity management and strengthen its innovative development model. The Group aims to achieve leaping growth of its core businesses of shipping services through the expansion and optimisation of its existing businesses and strengthening capital operation. The Group will accurately observe market situation and closely monitor the launchings and adjustments of policies relevant to shipping services sector. In response to changes in market dynamics, the Group will proactively carry out timely adjustments to its business strategies and further enhance its profitability during the post-financial crisis era. Meanwhile, under the full support of COSCO and COSCO (Hong Kong) Group Limited, the Group will actively identify and explore internal and external resources in both domestic and international markets. The Group will continue to consolidate existing businesses while expanding it shipping services and its service network, as well as enhancing its core competitiveness through business integration and capital operation. The Group aims to globalise its shipping services and strives to become a specialised and leading shipping services provider which creates larger value for shareholders.

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