(30th August 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 unaudited consolidated results for the six months ended 30th June 2010.

Solid Performance
For the six months ended 30th June 2010, the Group recorded a revenue of HK$4,120,975,000 (2009: HK$698,269,000), substantially increased by 490% as compared to the first half of 2009. During the period, the profit attributable to the equity holders was HK$341,776,000 (2009: HK$245,778,000), an increase of 39%. Excluding the share of profit of Sino-Ocean Land Holdings Limited (“SOLHL”) of HK$219,368,000, profit attributable to the equity holders increased by 26% to HK$122,408,000 on the same basis. Basic earnings per share were 22.62 HK cents (2009: 16.50 HK cents), increased by 37% as compared to the same period of 2009. The Group’s overall performance was satisfactory.

Dividends
The board of directors of the Company has declared an interim dividend of 2 HK cents per share for the six months ended 30th June 2010 (2009: 1 HK cents per share), up 100% over the same period of last year.

Business Review
Vice Chairman of COSCO International, Mr. Wang Futian said, ‘In the first year following the financial crisis, the trend of world economy is generally upward despite it was volatile and fluctuated during the first half of the year. International trade volumes gradually picked up and China’s import and export volumes surpassed market expectation. Both were conducive to the recovery of the global shipping market. Moreover, the number of global new build vessel deliveries remained high in the first half of 2010. Deliveries from and orderbook on China’s shipbuilders surpassed that of South Korea and ranked the first in the world. All these factors facilitated the growth of the Group’s core shipping service business. The sale volumes of all units of core shipping services business either maintained stable or grew at different extent, in which the newly added unit of marine fuel trading brought forth substantial contribution in revenue while container coatings businesses recorded remarkable growth in sales volume during the period. As a result, profit before income tax from shipping services increased by 23% to HK$161,813,000, resulting in a solid and stable overall performance of the Group for the first half of the year.’

‘In regard to future development, the Group continued to adhere to its strategic positioning in shipping services as its core business and endeavored to seek opportunities for new development. During the period, the Group made a breakthrough in the development of supply of marine equipment and spare parts through establishing Shin Chung Lin Corporation in Japan in February 2010 and completing the acquisition of Xing Yuan (Singapore) Pte Ltd (“Xing Yuan”) in August, which in turn strengthened the platform for the supply network of marine equipment and spare parts. This laid a solid foundation for the future development of the Group, Moreover, with a view to speeding up the development process of core businesses, we have actively researched into divestment of non-core business. On 16th August 2010, we announced our proposal of disposing of SOLHL’s shares. The proceeds of the disposal will be used to finance future development of our core shipping services business. We are currently in discussions with COSCO Group in relation to the possible acquisition of supply of bunker oil businesses. Our aim is to expand the scale of profitability of our marine fuel supply business, so as to become a global leading marine fuel supplier based in Asia.’ Vice Chairman Wang Futian continued.

The performance of the Group’s various key business units in the first half of 2010 is described below:

Shipping Services
Driven by the gradual recovery of international trade volumes, the shipping market revived in the first half of the year. Various shipping markets appeared to regain their momentum in various degrees. Moreover, the amount of global new build vessel deliveries remained high in the first half of 2010 resulted from the significant amount of new build vessels ordered in the past. All of these positive factors facilitated the development of the Group’s core shipping service business. For the six months ended 30th June 2010, segment revenue from the Group’s shipping services was HK$3,897,171,000, representing a remarkable increase of 742% over the corresponding period of 2009. (2009: HK$463,047,000) The increase was mainly attributable to the substantial revenue contribution from the newly added marine fuel trading business and the surge in business volume of container coatings. As for the growth in segment revenue from shipping services, segment profit before income tax from shipping services increased by 23% to HK$161,813,000 (2009: HK$131,849,000).

(1) Ship Trading Agency Services
COSCO International Ship Trading Company Limited (“COSCO Ship Trading”) is engaged in the provision of exclusive agency services relating to shipbuilding, ship trading and agency services relating to chartering for the fleet of COSCO Group, as well as similar agency services for non-COSCO Group shipping companies. The new build vessels ordered through COSCO Ship Trading have been scheduled to be delivered in the coming three years. Though some ship owners kept prudent views in receiving new builds during the period due to uncertain shipping market prospect, resulting in delays on some new build deliveries, the impact was not significant as a whole while most of the new build vessels were built and delivered on schedule. Therefore a stable commission income from new build vessels was recorded. As for second-hand vessels, the Group continued to capture market opportunities derived from the active second-hand vessel trading market and brought forth some contribution to the revenue. During the period, COSCO Ship Trading consummated transactions for the sale and purchase of 28 vessels (including new build vessels and second-hand vessels) (2009: 29 vessels) aggregating 1,333,000 dead weight tonnages (2009: 757,000 dead weight tonnages).

Segment revenue from ship trading agency services decreased by 6% to HK$61,855,000 as compared with the corresponding period of last year (2009: HK$65,621,000). Segment profit before income tax was HK$46,046,000 (2009: HK$51,877,000), representing a decrease of 11% as compared with the same period of 2009. The decrease was primarily attributable to the lower level of commission income on marine equipment and supplies when compared to the same period of last year.

(2) Marine Insurance Brokerage Services
COSCO (Hong Kong) Insurance Brokers Limited (“HK COSCO Insurance Brokers”) mainly operates intermediary businesses relating to marine insurance and shipping related insurance outside China Mainland. Shenzhen COSCO Insurance Brokers Limited (“SZ COSCO Insurance Brokers”) is engaged in the provision of insurance brokerage services to vessels registered in China Mainland. During the period, given the lingering uncertainty and instability of shipping market, insurance companies’ premium rate remained high but ship owners continued to take stringent measures to control costs. This presented some difficulties for the development of marine insurance brokerage business. By proactively developing the insurance brokerage business for newly delivered vessels of shipping companies, promoting hull and machinery co-insurance business, and safeguarding and expanding businesses outside COSCO Group, new customers and new businesses were developed. The negative impact brought from the prevailing market predicament was largely mitigated. During the period, segment revenue from marine insurance brokerage services was HK$32,869,000 (2009: HK$29,586,000), representing an increase of 11% as compared with the corresponding period of 2009. Segment profit before income tax was HK$21,912,000 (2009: HK$19,233,000), up by 14% over the corresponding period of 2009.

(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 projects at sea, communications systems, shore-based AIS systems, vessel traffic management systems and information management systems for land users. During the period, the marine equipment and spare parts market gradually improved following the shipping market recovery. In addition to the large amount of new build deliveries, shipping companies increased their spending on procurement of supplies and this drove the demand for marine equipment. During the period, Yuantong continued to enhance its communication with the VIP customers in an effort to increase or at least maintain its market share. Meanwhile, Yuantong actively explored and expanded its sales channels and promoted domestic-made spare parts to overseas market. Through these efforts, Yuantong has secured continued growth in its businesses. During the period, segment revenue from the supply of marine equipment and spare parts was HK$222,033,000 (2009: HK$202,519,000), representing an increase of 10% as compared with the same period of 2009. Segment profit before income tax was HK$25,473,000 (2009: HK$20,615,000), representing an increase of 24% as compared with the same period of 2009, in which reversal of provision for trade receivables of HK$3,228,000 (2009: HK$2,195,000) was included.

(4) Production and Sale of Coatings
The coatings business of the Company primarily includes production and sale of container coatings, industrial heavy-duty anti-corrosion coatings and marine 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 period, segment revenue from the production and sale of coatings was HK$498,990,000 (2009: HK$165,321,000), representing an increase of 202% compared with the same period in 2009. This was primarily due to a revival in the sale of container coatings during the period. Segment profit before income tax was HK$48,683,000 (2009: HK$35,762,000), representing an increase of 36% as compared with the corresponding period of 2009.

In the first half of 2010, China’s exports posted steady growth and this resulted in a substantial increase in container shipping demand, driving the swift recovery of the container manufacturing market. During the period, a total of about 900,000 TEUs were manufactured in China, representing about 10-fold increase as compared with that produced in the same period of last year, far surpassing what had been expected at the beginning of the year. The recovery of the container coatings market also exceeded market expectation. In the first half, the total sale volume of container coatings by COSCO Kansai Companies amounted to 24,293 tonnes, representing a significant increase of 1,344% as compared with 1,682 tonnes in the corresponding period of 2009. COSCO Kansai Companies maintained its leading position in China’s container coatings market.

Industrial heavy-duty anti-corrosion coatings of COSCO Kansai Companies are primarily used in the industries of bridges, petrochemical equipment and construction machinery, port machinery and equipment, nuclear power, wind power and civil steel structure, etc. They are the key areas for future development of COSCO Kansai Companies. In the first half of the year, with the launch of policies aimed to boost domestic consumption in China, bridge industry, new energy industries (including nuclear power and wind power) and marine engineering equipment manufacturing industry showed greater demand for industrial coatings. Other industries such as mechanical equipment were also in the process of recovery. However, due to the impact from financial crisis, some infrastructure projects were suspended or delayed since last year. In addition to the keen competition in the industry, COSCO Kansai Companies recorded sales volume of industrial heavy-duty anti-corrosion coatings including workshop primer amounted to 4,491 tonnes (2009: 4,284 tonnes) during the period, representing a slight increase of 5% when compared with the corresponding period of 2009.

Jotun COSCO is principally engaged in the production and sale of marine coatings in China including China Mainland and the Hong Kong and Macau Special Administrative Region. During the period, China’s shipbuilding market maintained its positive trend and a great number of new build vessels were delivered, leading to an increase in the sales volume of new build vessel coatings. The sales volume of marine coatings of Jotun COSCO amounted to 33,680,000 litres (equivalent to approximately 48,836 tonnes) (2009: 28,377,000 litres, equivalent to approximately 41,147 tonnes, representing an increase of 19% as compared with the same period of 2009. The sales volume of new build vessel coatings amounted to 25,460,000 litres(equivalent to approximately 36,917 tonnes), an increase of 20% over the same period of last year, which fulfilled the supply of coatings for new build vessels aggregating 7,700,000 dead weight tonnages. Sales volume of coatings for repair and maintenance was 8,220,000 litres (equivalent to approximately 11,919 tonnes), up 14% as compared with the same period of 2009. Jotun COSCO continued to maintain its leading position in China’s marine coatings market. As at 30th June 2010, Jotun COSCO had marine coating contracts on hand for new build vessels amounting to 38,360,000 dead weight tonnages pending delivery. During the period, the Group’s share of results from Jotun COSCO was HK$39,058,000 (2009: HK$36,219,000), increased by 8% as compared with the corresponding period of 2009.

(5) Trading and Supply of Marine Fuel and Related Products
Sinfeng Marine Services Pte Ltd. (“Sinfeng”) is primarily engaged in provision of marine fuel supply, trading of marine fuel and related products and broker services for customers which are not members of COSCO Group. Sinfeng has established extensive business relationships with the famous international oil companies, shipping companies and ship owners which had representative offices in Singapore. Currently, its business network primarily covers Singapore and Malaysia, major ports in the Far East region such as Hong Kong and Shanghai, etc, as well as major ports in Europe and America, such as Rotterdam, Long Beach and Oakland, etc. On the business expansion front, Sinfeng successfully secured several new customers in Europe and Taiwan and build up long-term cooperation relationship by benchmarking itself against worldwide advanced enterprises in the industry and using innovative market development and marketing initiatives. This laid a sound foundation for the Group’s future development. In the first half of the year, the total sale volume of marine fuel and related products was 842,588 tonnes.

In addition, the Group owned an 18% equity interest in Double Rich Limited (“Double Rich”), which is principally engaged in the trading of fuel oil and oil products and provision of bunker oil supply services in Hong Kong. It specialises in sourcing products such as light diesels and fuel oil. Its key customers or end users are ship owners and ship operators. During the period, the profit of Double Rich attributable to the Group was HK$5,523,000, representing an increase of 27% over the corresponding period of last year (2009: HK$4,362,000).

During the period, segment revenue from the trading and supply of marine fuel and related products was HK$3,081,424,000. Segment profit before income tax was HK$19,699,000.

General Trading
COSCO International Trading Company Limited (“CITC”) is a wholly-owned subsidiary of the Company. CITC is principally engaged in the trading of asphalt, general marine equipment and marine supplies, as well as other comprehensive trading. It serves as an important platform for the Group to tap into the China Mainland market. In the first half of 2010, sales of asphalt from CITIC amounted to 48,493 tonnes (2009: 42,858 tonnes), representing an increase of 13% over the corresponding period of 2009. Whilst endeavouring to fulfill tasks in respect of the successfully tendered projects, CITIC continued to expand its presence in the asphalt market in privileged areas such as Yunnan, Guizhou and Sichuan. In the first half of the year, CITC successfully tendered for several railway construction projects in these regions. During the period, segment revenue from general trading was HK$295,218,000 (2009: HK$232,794,000), representing an increase of 27% over the corresponding period of last year. Segment profit before income tax was HK$12,661,000 (2009: HK$4,724,000), representing an increase of 168% as compared to the same period of 2009. The increase was partly attributable to a gain of HK$5,028,000 on disposal of an investment property realised by CITC.

Property Investments
In the first half of 2010, segment revenue from property investments was HK$127,000 (2009: HK$2,552,000), mainly derived from the sale of the remaining one car parking space in the Fragrant Garden in Shanghai, decreased by 95% as compared with the same period of 2009. Segment profit before income tax from property investments was HK$219,005,000 (2009: HK$159,032,000), representing an increase of 38% as compared to the same period of 2009. This stemmed from the profit contribution of SOLHL, an associated company of the Company.

(1) Investment in an Associated Company of SOLHL
As at 30th June 2010, the Group held a 16.85% equity interest in SOLHL, the shares of which were listed on the Stock Exchange. SOLHL is principally engaged in the development of medium to high-end residential properties and premium grade office buildings, retail properties, serviced apartments and hotels. With a leading position in Beijing and the Pan-Bohai Rim Area, It also expanded into the regions with rapid economic growth such as the Pearl River Delta and the Yangtze River Delta. During the period, the Group’s share of profit from SOLHL was HK$219,368,000 (2009: HK$148,832,000), representing an increase of 47% as compared to the same period of 2009.

Subsequent events
1. On 31st May 2010, Yuantong entered into a share transfer agreement with COSCO Holdings (Singapore) Pte Ltd and Hai Feng Marine (Private) Limited for the acquisition of the entire equity interest in Xing Yuan (Singapore) Pte Ltd at a consideration of S$850,000. The acquisition of the shares was approved by the independent shareholders of the Company on 20th July 2010 and was completed on 12th August 2010.

2. On 16th August 2010, the Company announced that its intention to dispose of 949,937,399 shares of SOLHL held by the Group, which represented 16.85% of the existing issued share capital of SOLHL. The Company intends to seek approval from shareholders to grant the directors of the Company the mandate to dispose of SOLHL’s shares subject to the prevailing market conditions within the twelve months from the date of passing of the relevant resolution at a special general meeting. Apart from placing through block trades to independent third parties via the placing agent, and/or the Company may dispose of SOLHL’s shares in the open market. A circular is expected to be dispatched to the shareholders on or before 13th September 2010.

Corporate Social Responsibility & Awards
With a view to fulfilling good corporate citizenship, the Group puts much effort in promoting environmental protection and supports charitable activities. COSCO International was awarded the Caring Company Logo for the past two consecutive years by the Hong Kong Council of Social Service in recognition of its efforts and contributions in three areas, i.e. “Giving”, “Caring for the Employees” and “Caring for the Environment”. The Company joined in WWF-Hong Kong as a corporate member to support environmental protection and low carbon office. COSCO Kansai Paint & Chemicals Co., Ltd., a subsidiary of the Company, was awarded “The Top 10 Foreign Industrial Coatings Brands of China 2009”.

Outlook
It is expected a more complicated market situation will prevail in the second half of 2010. Although International Monetary Fund has revised up the prediction of global economic growth for 2010 to 4.6% recently, the global economy is overshadowed by the European sovereign debt crisis and affected by the worsening trade protectionism in major economic entities in the world. China Mainland’s economic growth is expected to slowdown as the macroeconomic control policy will gradually take effect in the second half of the year. Despite many uncertainties amid global economy recovery, the global economy will show a positive direction.

In the shipping market, it is unlikely that global new build vessel orders will continue to grow as rapidly as in the past given a significant supply over the demand. Despite this, market demand gradually rallied and freight rates and trade volumes picked up significantly while the gap between the demand and supply of shipping capacity narrowed. It is expected that this year and the coming year will be the peak period for new build vessel delivery. Though some uncertainties still exist which may lead to a fluctuating shipping market, the shipping market will show a positive development amid the volatilities and will see an overall continued recovery in 2010 which will be better than that last year. The overall outlook for the container manufacturing market is positive despite uncertainty in the second half of the year. It is expected that the volume of new containers will continue to return to a relative high level for the whole year and will spur demand for container coatings.

Looking forward, despite many uncertainties associated with the complicated prevailing shipping and related services market situation, the Group will commit itself to market development and to seek new breakthroughs in the existing businesses during their courses of development. The Group will leverage on the overseas supply network of marine equipment and create synergies with other business units of the shipping services segment so as to further enhance its profitability in the future. In addition, the Group will divest its non-core business through the disposal of its interest in SOLHL under appropriate market conditions and will make use of the proceeds for the development of the core shipping services businesses. By acquiring sizable and influential projects both within and outside COSCO Group, the Group will optimise its asset structure and develop a supply chain of shipping services which are of high relevance, sharing common resources as well as cyclically complementary. The position of COSCO International in the shipping services industry will be consolidated and strengthened to a large extent. The Group’s capability for sustainable development will be further enhanced. Under the full support of COSCO and COSCO (Hong Kong) Group Limited, COSCO International will strive to achieve its vision of becoming a specialised shipping services provider on a large scale with “competitive advantages” and “comprehensive shipping services offerings” to create the best values for the shareholders.

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