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Ladies and gentlemen: good afternoon everyone!

Welcome to COSCO Shipping International’s 2016 Annual Results Press Conference. I would like to take this opportunity to extend my warmest appreciation for your interest and support to COSCO Shipping International. Thank you.

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First of all, let me briefly go through the annual results of 2016.

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In 2016, world economy has experienced deep adjustment, while international trade growth remained subdued. The international shipping market supply and demand remained unbalanced, while dry bulk shipping index and container freight rate index had hit a record low last year. Facing such severe business environment, COSCO SHIPPING International insisted on the working principles of“ securing steady growth, ensuring profitability, and enhancing service quality and efficiency, and cope with the market changes actively by improving service awareness, seeking new profit drivers and strengthening cost control, so as to maximise the profit.

The Group spared no effort to improve marketing through branding and centralised marketing, and made progress in the business development outside COSCO SHIPPING. In addition, the Company further improved internal management by reducing the levels of management hierarchy, so as to lay a good foundation of flat management and efficient operation of the Company.

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During the year, the Group intensified its effort on risk control and achieved marked results in collection of receivables. The net cash inflow from operating activities reached HK$400 million for the second year in a row. As at the end of 2016, the Group’s net cash reached HK$6.7 billion, such strong financial position supports the future development of the Company. Additionally, it is noteworthy that COSCO SHIPPING International endeavoured to seek the acquisition opportunity to further enlarge the business scale and create synergies through economies of scale. In January 2017, the acquisition of 100% equity interest in CSHT Marine Machinery Suppliers had been completed, which indicated that the Company took a step forward for the establishment of “Shipping Services Industrial Cluster”.

Nevertheless, the prolonged slump of shipping market, especially the contracted demand for new container boxes, together with the plunged new box prices and fierce competition, resulted in poor results of container coatings business. The overall results of the Group recorded a marked decrease. In 2016, the profit attributable to the equity holders was HK$237 mn and the basic earnings per share was 15.45 HK cents.

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To return to the shareholders, the board of directors proposed a final dividend of 5.5 HK cents per share for 2016. Together with the interim dividend of 4 HK cents per share, total dividends amounted to 9.5 HK cents per share. In the meantime, to celebrate the 20th anniversary of COSCO SHIPPING International’s being a listed subsidiary of COSCO SHIPPING (Hong Kong) Co., Limited, the board of directors proposed the payment of a special dividend of 5HK cents per share. The total dividends for 2016 amounted to 14.5 HK cents per share.

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Looking ahead, the global economic growth in 2017 is expected to be faster than that in 2016, which will provide a stronger support for the shipping demand. Although the overall imbalance between the supply and demand sides in the shipping sector still exists, it is expected to be relieved to a certain extent. The shipping market is on the rise and will become more rational. The structural recovery of the industry will further enhance market confidence. The further implementation of China’s “Go Global” strategy and “One Belt, One Road” initiative will present enormous opportunities for Chinese shipping enterprises to develop new markets. COSCO SHIPPING International remains committed to the strategic direction of “Shipping Services Industrial Cluster”, in accordance to the overall strategic plan of COSCO SHIPPING, and strived to achieve intensive marketing and centralized procurement , as well as gather talents. On the one hand, we will run existing businesses with a reforming and innovative mindset, adapt to the changes and timely alter strategies in response to the market trend, as well as seek development opportunities. On the other, we will actively prepare to expand the asset size by putting considerable effort on the study and in search of potential acquisition targets. We hope to achieve strategic upgrade and transformation, as well as to optimise the industrial chain of shipping services, by taking the advantage of listed platform for acquisition and corporate action. COSCO SHIPPING International will aim to become a world class and leading shipping services company in China. We will develop the “Shipping Services Industrial Cluster”which can offer strong supporting services for shipping with independent profit drivers. COSCO SHIPPING International will strive to take concrete action to maximize the returns to the shareholders. Next, Mr. Liu Gang, Managing Director of COSCO SHIPPING International and Mr. Ricky Chan, CFO of COSCO SHIPPING International, will report the results performance of various business segments, and the future development plan of the Company. Firstly, Mr. Liu please.

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Thank you Vice Chairman Zhu. Now let’s have a review on the shipping services markets and the performance of each of our business segments in 2016.

In 2016, despite the continued weakness in shipping market, the global shipping capacity continued steady growth, and reached 1.78 billion dead weight tonnages (DWT) in total. Such large shipping capacity laid the foundation for the development of shipping services businesses which mainly serve operating vessels.

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During the year, the global total newbuilding delivery increased by 3% YOY, in which Chinese shipyards’ delivery reached 36mn DWT, accounted for 36% globally. As for the new contracting, the newbuilding contracting of Chinese shipyards decreased YOY to 16mn DWT. As at the end of 2016, Chinese shipyards had newbuilding orderbook on hand of 96 mn DWT.

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In 2016, both output and price of new containers in China continued to drop. The total output during the year was 1.8mn TEU, down by 27% YOY, while the average selling price recorded a year-on-year decrease of 12%.

The declines in output and price of new containers directly affected the demand and price of container coatings.

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Segment revenue from shipping services was HK$6.66 bn in 2016, increased by 29% YOY, mainly because of the significant increase in revenue of marine fuel supply business. Profit before income tax (PBT) dropped by 26% to HK$275 mn as compared to 2015, mainly due to the sharp decline of gross profit of container coatings as a result of the severe market condition and fierce competition.

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Let’s look at the various business segments:

Ship Trading Agency Services: In 2016, because of the sluggish shipping market, especially depression in dry bulk shipping market, some shipping companies delayed the delivery of newbuild dry bulk vessels. However, COSCO SHIPPING Ship Trading actively stepped up marketing effort and made some achievements after several times of visit and frequent communication with the customers within and outside COSCO SHIPPING. During the year, commission income from both newbuild and secondhand vessels increased on a year-on-year basis. Revenue from ship trading agency services increased by 16% YOY to HK$98.92 mn, and the operating profit increased by 20% YOY to HK$62.87 mn.

As at the end of December 2016, the newbuild orderbook on hand through COSCO SHIPPING Ship Trading reached 83 vessels or 12.36 mn DWT, which were scheduled for delivery over the coming 3 years.

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Marine Insurance Brokerage: during the year, COSCO Insurance Brokers have achieved good results in non-marine insurance business and business with customers outside COSCO SHIPPING. That resulted in stable commission income from insurance brokerage amid weak business environment.

In 2016, revenue from insurance brokerage services increased by 3% YOY to HK$94.41 mn, and the operating profit increased by 3% YOY to HK$68.12 mn.

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Supply of Marine Equipment and Spare Parts: Shipping companies increased their effort to reduce cost couple with the lowered demand of marine spare parts and repairs due to fleet restructuring. The sales volume of Yuantong was directly affected. Therefore, Yuantong continued to intensify its effort on marketing and successfully increased the number of customers outside COSCO SHIPPING. In addition, Yuantong develop the non-traditional businesses like vessel inspection and overseas repairing services etc, in response to the market changes and customers’ requests. In 2016, revenue from supply of marine equipment and spare parts slightly declined by 3% YOY to HK$1.1 bn, and the operating profit increased by 8% YOY to HK$51.25 mn. The increase was mainly attributable to the enhanced cost control, and there was a HK$1.76 mn reversal of provision for impairment of trade receivables during the year.

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Coatings: Our coatings segment recorded divergent results in 2016.

During the year, the shrinking container manufacturing market demand led to declines in both volume and selling price of newbuild containers. Together with the keen competition among coating manufacturers, COSCO Kansai, which is specialised in the production and sale of container coatings and industrial coatings, recorded a revenue decline of 43% YOY to HK$637 mn. The decrease in sales revenue led to a marked decline in gross profit. However, the reduction of fixed cost was limited. COSCO Kansai recorded an operating loss of HK$22.16mn.

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Coatings: In 2016, since the number of newbuilding contracts of Chinese shipyards and vessels in need of dock repairs decreased, sales volume of Jotun COSCO, which is specialised in the production of marine coatings, down by 18% YOY to 92,814 tonnes. The share of profit slid by 18% YOY to HK$88.24 mn.

According to its orderbook on hand as at the end of December 2016, Jotun COSCO was going to deliver newbuilding marine coatings to vessels of 34.7 mn DWT over the coming 3 years, which would support Jotun COSCO’s sales volume of marine coatings in the future.

Combined the results from the two coatings JVs, profit before income tax from coatings segment decreased by 61% YOY to HK$72.64 mn during the year.

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Marine Fuel Supply Business: The Company’s wholly-owned subsidiary Sinfeng Marine Services continued to adopt prudent business strategy, and develop the business with creditworthy customers. The sales volume of marine fuel increased by 84% YOY to 2.11 mn tonnes. In addition, owing to the rally in oil price starting from the second half of 2016, the segment revenue increased by 71% YOY to HK$4.77 bn.

The Group’s 18%-owned associate Double Rich contributed HK$9.09 mn as share of profit during the year, down by 11% YOY, mainly caused by less investment income as compared to the previous year .

Combined the above two, profit before income tax from marine fuel supply business remained flat, amounting to HK$12.05 mn.

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General Trading (mainly asphalt): Sales volume of asphalt grew by 5% YOY to 181k tonnes in 2016. But its sales revenue declined by 8% YOY to HK$768 mn due to declined asphalt price. The operating profit slid markedly by 65% to HK$9.16 mn, because there was no reversal of provision for impairment of certain other receivables recorded in 2016.

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Next, I invite Mr. Ricky Chan, CFO of COSCO SHIPPING International, to go through the financial review.

In 2016, the Group’s gross profit reached HK$544 mn, down by 21% YOY. The overall gross profit margin dropped by 4.2 percentage points to 7.3%, mainly due to marked decrease in gross profit from container coatings amid its lower selling price and sales volume, and the year-on-year revenue increase in marine fuel and other products with lower gross profit margin.

Other income and gains decreased YOY significantly to HK$35 mn, mainly because two special items were excluded during the year, i.e. a reversal of provision for impairment of other receivables of HK$18.57 mn in general trading segment, and the government subsidy income of HK$50.47 mn granted to COSCO Kansai by the Governments of Shanghai city and Baoshan District in 2015.

Other expense and losses down by 59%, as a result of an exchange loss of HK$7.4 mn made in 2016, which was less than that of HK$41.82 mn made in 2015.

Finance income decreased by 21% YOY to HK$91 mn, mainly due to lessened interest income generated from the cash on hand. During the year, the return on cash reached 1.4%, which was 40 basis points higher than the 3-month USD LIBOR rate as at the end of 2016.

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Profit Breakdown: In 2016, due to drop in profit contribution from coatings segment, its profit before income tax accounted for 24% of the Group’s total. The profit contribution from the three traditional shipping services businesses which mainly serve ship owners, including ship trading agency, marine insurance brokerage, and supply of marine equipment and spare parts, increased to 63% in total; marine fuel supply business contributed 4%; general trading contributed 2%; and the others (mainly finance income) contributed 7%. The composition of the Company’s overall profit was fairly diversified.

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Balance Sheet: As at the end of 2016, COSCO SHIPPING International had total asset of HK$9.39 bn, total liability was HK$1.34 bn, and total equity excluding non-controlling interests was HK$7.7 bn.

After deducting bank borrowings from total deposits and cash, the Group had net cash of HK$6.65 bn.

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Cash Flow: During the year, net cash inflow from operating activities was HK$401 mn, mainly resulted from the year-on-year decrease in trade receivables.

Net cash used in investing activities was HK$39 mn, declined as compared to 2015, because of decreased expenditure in purchase of plant and equipment after the new plant in Shanghai started operation in 2016.

Net cash outflow from financing activities of HK$172 mn, dropped year-on-year, mainly attributable to the less dividend expense as compared to 2015.

My financial review comes to an end. Thank you!

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Thank you Ricky. Now let me brief you the prospects in 2017. As Vice Chairman Zhu just made a detailed briefing on the macro situation and the development vision of COSCO SHIPPING International, I won’t repeat it. I would like to report the key initiatives to be taken by the senior management.

In 2017, opportunities will come along with challenges. COSCO SHIPPING International will plan for the future with its present foothold. While pondering over the enhancement of core competitiveness and propelling its sustainable and sound development, the Company will insist on carrying out three initiatives, i.e. to insist on making profits as the first objective, to insist on improving management as the first base and to insist on development as the top priority. Therefore, the Company will make great effort to the three aspects of work as listed below: Firstly, to increase profit for existing business. Faltering performance is the major problem that the Company is facing currently. In 2017, the Company will step up effort on innovating services and marketing idea, and improving quality of service. For ship trading agency services, we will increase the effort on developing customers outside COSCO Shipping, as well as boosting business transformation and upgrading; for marine insurance brokerage services, we will actively intensify development of non-marine insurance products so as to achieve rapid growth in non-marine insurance brokerage business; for the supply of marine equipment and spare parts, we will carry out strategies of centralised marketing and marketing to the top executives so as to gain more market share; for production and sale of coatings, we will uphold the green concept to push forward the application and upgrading of water based and green coating products, and to gain market share though market promotion and high quality services. Secondly, to enhance the level of corporate governance. We will strengthen internal management, control cost rigidly and improve efficiency, as well as to make sure the Company operate in compliance with the laws and regulations, and set up a sound legal risk management mechanism. We will introduce flat management which can lessen the hierarchies of management and number of legal entities. We will also strengthen management on risky projects to reduce risk exposure. We will monitor foreign currency risk and customer credit risk. Besides, we will reinforce the production management by optimising and consolidating the operation workflow to ensure the reliability of the product quality. In addition, we will prevent any kind of waste strictly by severe control of management cost and selling expense, so as to build up the work philosophy of “maximising profit by cost saving”. Thirdly, to achieve business integration and expansion. COSCO SHIPPING International will actively acquire and merge other shipping service related assets within COSCO SHIPPING. Simultaneously we will expand the business outside COSCO SHIPPING and inject potential projects which are related to the existing businesses in due course, so as to enlarge the business coverage and strive for the leap development of the Company. 26

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COSCO SHIPPING International will take advantage of specialisation and economy of scale to refine the scope of shipping services, and optimise the boundary and content of shipping services, so as to help the fleet improve its competitive edges in all aspects. Our management team will spare no effort to fulfill our duties and missions, and give top priority to develop shipping service industrial cluster with a greater sense of urgency, aiming to become the third party integrated shipping service provider with decent profitability as soon as possible. This is the end of the presentation of COSCO SHIPPING International’s 2016 annual results. Thank you.

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