Annual Results 2006 China COSCO Holdings Company Limited 29 March 2007 中国远洋
Agenda Highlights Strategy in Place Financial Review Operational Review Group Outlook 2
Highlights 3
Highlights Turnover increased by 6.3% to RMB 50,994 million. Shipping volume increased by 12.7% to 5.1 million TEU. Terminal throughput increased by 25.7% to 32.8 million TEU. Container fleet increased by 19.9% to 1.25 million TEU. Turnover of 3PL logistics increased by 58.9% to RMB 2.2 billion, the 4th consecutive year of growth over 50%. Net profit attributable to equity holders of the Company was RMB 2,031 million. 4
Dividend distribution Goal: To maximize shareholder return FY 2006 RMB 0.09 per share, representing a payout ratio of 29.7% Special Dividend- Issue of Bonus Shares The undistributed profit for the year 2006, together with the Company s accumulated undistributed profit of the previous years will be distributed to the Shareholders on the basis of 1.5 Bonus Shares for each 10 shares of the Company. 5
Strategy in Place 6
Strategy in Place - To be Integrated Shipping and Logistics Services Provider Acquisition of COSCO Logistics 51% of COSCO Logistics was acquired at end of 2006 Solidifies the company s leading position in the industry as an integrated shipping and logistics services provider by expanding operations along the value chain Acquisition of Two Overseas Subsidiaries from the Parent Company To further optimize overseas business network, thus extending its global marketing reach A-Share Offering Expected in June 2007, to issue not more than the higher of 1,500,000,000 A-Shares or 20% of the enlarged issued share capital Establishment of A+H listing platforms will enhance flexibility capital structure in the future Potential Bulk Assets Injection The Company is in negotiation with COSCO Group for the possible acquisition of bulk vessels of COSCO Group. The Board of the Company has authorized management of the Company to conduct a feasibility study and relevant preparation work. 7
Financial Review 8
Summary Profit & Loss RMB million 2006-12-31 2005-12-31 (Restated) Change (%) Turnover 50,994 47,966 6.3% Gross profit 4,974 9,146-45.6% Operating profit 3,356 7,065-52.5% Finance costs (988) (877) 12.7% Share of profits less losses of JCE & Associates 1,450 1,285 12.8% Profit before income tax 4,092 7,679-46.7% Income tax expenses (924) (733) 26.0% Profit after tax 3,168 6,946-54.4% Net profit attributable to equity holders of the Company 2,031 5,582-63.6% EPS (Basic) 0.32989 1.08728-69.7% 9
Summary of Segment Results* RMB million 6% 4% 2005 2006 8% 6% 5,400 5,055 15% 33% 4,800 4,200 3,600 15% 60% 36% 17% 3,000 2,400 1,800 1,200 1,582 1,307 817 1,278 1,785 600 325 364 550 273 0 Container shipping** Container terminals*** Container leasing Logistics Others * Including share of profits less losses of jointly controlled entities and associates; ** Freight forwarding & shipping agency is included in container shipping segment; *** Container terminal s decrease is mainly due to the sale of Shekou Terminal in 2005; 10
Summary Balance Sheet RMB million 2006-12-31 2005-12-31 (Restated) Change (%) Non-current assets 38,123 38,678-1.4% Current assets 17,338 17,335 0.0% Current liabilities 18,195 15,706 15.8% Net current assets/(liabilities) (858) 1,629 N/A Capital and reserves attributable to the equity holders of the Company 18,935 19,453-2.7% Minority interests 8,541 7,472 14.3% Non-current liabilities 9,788 13,382-26.9% Total assets 55,460 56,013-1.0% 11
Cash Flow Statement RMB million Cash & Cash Equivalents -Beginning 2006-12-31 9,970 2005-12-31 (Restated) 6,731 Cash Inflow (outflow) Generated from operating activities Generated from/ (used in) investing activities 1,646 2,031 6,342 (7,817) (Used in) / generated from financing activities (5,775) 4,810 Exchange Difference Net increase in cash and cash equivalents Cash & Cash Equivalents-Closing (76) (2,098) 7,796 (96) 3,335 9,970 12
Capital Expenditure RMB million 2006 2007 Purchase of container vessels 888 2,846 Investments in terminals 2,193 3,402 Purchase of containers 3,830 2,789 Investments in logistics N.A. 609 Others 1,214 3,295 Total 8,126 12,942 13
Operational Review 14
Container Shipping Shipping Volume by Market 000 TEUs 1,600 1,400 1,200 1,000 800 10.1% 1,303 1,184 20.5% 1,003 1,209 1,393 7.8% 1,501 16% 5% 31% 2005 26% 22% 16% 5% 30% 714 17.9% 842 2006 25% 24% 600 400 200 6.5% 241 257 0 Trans-pacific Asia-Europe Intra-Asia Other International PRC Utilization(%) Trans-Pacific* Asia-Europe* Intra-Asia Other International PRC 2006 96.3 104.7 90.0 92.2 84.9 2005 100.6 107.9 78.2 94.1 90.1 * Outbound routes only 15
Container Shipping Turnover by Market RMB million 2005 2006 15,000 14,000 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 6.76% 12,527 13,374 9,154 6.43% 9,743 0.38% 5,936 5,958 19% 8% 5% 29% -2.55% 2,573 2,508 39% 8% 5% 18% 29% 9.94% 1,433 1,576 40% Trans-Pacific Asia-Europe Intra-Asia Other International PRC Unit Income (RMB/TEU) Trans-Pacific Asia-Eurpoe Intra-Asia 16 Other International PRC Average of Total 2006 10,264 8,062 3,970 9,777 1,870 6,487 2005 10,581 9,131 4,262 10,684 2,006 6,974 Change% -3.0% -11.7% -6.9% -8.5% -6.8% -7.0%
Container Shipping New Capacity Absorbed Nominal capacity (TEU) Total capacity* =399,237 TEU 84,880 21% 92,732 23% 24,247 6% 197,378 50% 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Future Capacity 461,297 399,237 566,008 520,986 2006 Delivered Vessels 593,136 2006 2007 2008 2009 2010 Owned Chartered Date of Delivery Capacity (TEU) Deployed market 2006.02.22 9,449 Asia-Europe 5001TEU 3001TEU 5000TEU * As of Dec. 31, 2006 1000TEU 1001TEU 3000TEU 2006.03.20 2006.04.06 2006.04.28 2006.05.12 2006.06.08 9,449 8,204 9,449 8,204 9,449 Asia-Europe Asia-Europe Asia-Europe Asia-Europe Asia-Europe 17 2006. 07.06 9,449 Asia-Europe
Container Terminals Strong Throughput Growth THROUGHPUT (TEU) Shareholding No. of Berth FY 2006 y-o-y FY 2005 PEARL RIVER DELTA 29 10,400,888 13.1% 9,196,652 COSCO-HIT Terminal 50% 2 1,688,697-8.3% 1,841,193 Yantian Int l Terminals (Phases I,II,III) 4.5%-5% 15 8,470,919 15.2% 7,355,459 Quanzhou Pacific Terminal 71.43% 5/1 241,272 Guangzhou Nansha Port Phase II 39% 6 YANGTZE RIVER DELTA 36 7,732,423 13.2% 6,831,502 Shanghai Terminals 10% 10 3,703,460 1.6% 3,646,732 Shanghai Pudong Terminals 30% 3 2,650,007 7.2% 2,471,840 Zhangjiagang Win Hanverky Terminal 51% 3 455,946 20.9% 377,121 Yangzhou Yuanyang Int l Port 55.59% 2/3 222,912 41.9% 157,123 Nanjing Port Longtan Int l Terminal 20% 5 700,098 291.8% 178,686 Shanghai Yangshang Port Phase II 10% 4 Ningbo Yuan dong Terminal 20% 5 Zhenjiang jinyuan Port Pahse II 25% 1 BOHAI RIM 38 13,431,338 43.3% 9,370,361 Qingdao Qianwan Terminal (Phase II, III) 20% 11 6,770,003 24.4% 5,443,086 Qingdao Cosport Terminals 50% 1 744,276 22.9% 605,791 Dalian Port Container Co. 8.13% 9 2,885,276 16.9% 2,467,465 Dalian Port Terminal 20% 6 421,068 216.6% 132,984 Yingkou Terminals 50% 2 837,574 32.2% 633,573 Tianjian Five Continents Terminal 14% 4 1,773,141 1927.3% 87,462 Dalian Automobile Terminal 30% 2 Tianjin Port Euroasia Terminal 30% 3 OVERSEAS 12 1,227,064 80.2% 681,097 COSCO-PSA Terminal 49% 2 627,894 2.8% 611,013 Antwerp Terminal 20% 6 599,170 754.9% 70,084 Suez Canal Terminal 20% 4 Total throughput 115 32,791,713 25.7% 26,079,612 18
Container Terminals New Terminal Investments in 2006 Berths Capacity TEUs Pearl River Delta Quanzhou Pacific Terminal 5 2.0 mil 1 1.0 mil tons Bohai Rim Yangtze River Delta Pearl River Delta & South East Coast Yangtze River Delta Ningbo Yuan Dong Terminals 5 2.1 mil (No. 7-11 of Phase IV & V in Beilun) Yangzhou Yuanyang Terminal 1 0.2 mil Bohai Rim Tianjin Port Euroasia Terminal 3 1.8 mil (No.5-7 in North Port Basin) Total 15 6.1 mil 19
Container Leasing Increase Global Market Share The world s third largest container leasing company 11.9% global market share Container fleet capacity (Mil TEUs) CAGR: 15.2% 1.04 1.25 0.92 0.81 0.71 2002 2003 2004 2005 2006 Market share 9.3% 9.7% 10.1% 10.9% 11.9% Utilization rate 93.4% 95.2% 97.0% 95.5% 96.2% Industry average 83.0% 89.0% 92.0% 90.9% 91.8% Long term leasing 83% 82% 82% 84% 90% Short term leasing 17% 18% 18% 16% 10% 20
Logistics Steady Growth FY 2006 Y-o-Y FY 2005 Revenue (billion) 10.2 15.3% 8.8 Segment results (million) 364 12.2% 325 3PL-Home appliance (million units) 30.7 36.0% 22.6 3PL-Automobile (No. of vehicles) 562,484 433.2% 105,499 Shipping agency vessels handled (vessels) 135,087 0.2% 134,781 Freight forwarding (TEU) 1,929,944 18.2% 1,632,242 21
Logistics Recent Projects Home Appliances Signed general service agreement with Kelon and Hisense, extending logistics services across China Explored new clients, such as Skyworth, Konca, Suning etc. Automobile Signed agreement with Toyota, Beijing Auto, Benz-DaimlerChrysler etc., consolidating its market share. Power Supply Won bid for Pakistan Chashma and Qinshan nuclear power station projects, further enhancing domestic and international influence. Successfully finished transportation of Qinghai-Tibet railway facilities. Chemical Products Signed agreement with Fujian Refining & Ethylene Project, the largest such project so far in China. Won bid for oversized equipment logistics for India Reliance Project. 22
Group Outlook 23
Group Outlook Container Shipping Further expand and optimize fleet size and structure Stringently control cost especially transshipment costs and inland costs Improve yield management via Global Key Account marketing strategy Terminal Operations Further strengthen container terminal network with major focus on China Build long-term cooperative relationships with strategic global customers Expand investment in selective terminals worldwide Container Leasing Maintain current market share and leading position Optimize container structure to increase profitability Expand business in container management Logistics Expand Investments to control strategic resources Further concentrate on high value-added services Market to large strategic clients and build long-term relationships with them 24
China COSCO An Integrated Shipping and Logistics Services Provider 25