Ladies and gentlemen: good afternoon everyone! Today, our presentation will include 4 parts: 1. Results Highlights 2. Market and Business Review 3.

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2 Ladies and gentlemen: good afternoon everyone! Today, our presentation will include 4 parts: 1. Results Highlights 2. Market and Business Review 3. Financial Review 4. Outlook 2

3 First of all, let me briefly go through the interim results of

4 In 1H2016, global political and economic landscape were unstable, while the economic and trade environment did not support the recovery of shipping. Shipping market remain weak while the market sentiment have become more cautious. Facing such complex and challenging business environment, COSCO International adhered to the development, further refined its development strategy, and actively responded to market changes, with focus on marketing services and strengthening lean management, and constantly enhancing service awareness, as well as promoting the transformation and upgrading of the Company, so as to reduce the impact on results caused by the market downturn. In 1H2016, the profit attributable to the equity holders of the Company reached HK$145 mn. The basic earnings per share was 9.45 HK cents. As at the end of June 2016, the Group s net cash on hand reached HK$6.1 bn. Such strong financial position will support the future development of the Company. To appreciate the long term support from our shareholders, the board of directors declared to pay an interim dividend of 4 HK cents per share, representing a dividend payout ratio of 42%. 4

5 Now let s have a review on the shipping services markets and the performance of each of our business segments in 1H

6 In 1H2016, despite the continued weakness in shipping market, the global shipping capacity continued steady growth, and reached 1.75 billion dead weight tonnages (DWT) in total. Such large shipping capacity laid the foundation for the development of shipping services business which mainly serves operating vessels. 6

7 During the period, the global total newbuilding delivery increased by 9% YOY, in which Chinese shipyards delivery reached 17.9 mn DWT, accounted for 35% globally. As for the new contracting, the newbuilding contracting of Chinese shipyards increased YOY to 13.2mn DWT. As at the end of June 2016, Chinese shipyards had newbuilding orderbook on hand of 122 mn DWT. 7

8 In 1H2016, both output and price of new containers in China continued to drop. The total output during the period was 718k TEU, down by 56% YOY, while the average selling price kept falling, declined by 25% YOY. The declines in output and price of new containers directly affected the demand and price of container coatings. 8

9 Ship Trading Agency Services: In 1H2015, the sluggish shipping market led to a continued slowdown of fleet restructuing. Ship owners delayed the delivery of some newbuild vessels, and volume of ship scrapping retreated YOY, coupled with the continuing low ship price, commission income from secondhand vessels and others decreased as compared to the same period of last year. During the period, revenue from ship trading agency services fell by 29% YOY to HK$31.02 mn, and the operating profit declined by 52% YOY to HK$12.94 mn. As at the end of June 2016, COSCO Ship Trading s orderbook on hand reached 97 vessels or mn DWT, which were scheduled for delivery over the coming 3 years. 9

10 Marine Insurance Brokerage: during the period, COSCO Insurance Brokers continued to push forward the development of new customers outside COSCO Shipping Group and innovate services for new non marine insurance products. As a result, it recorded stable results in commission income from insurance brokerage amid weak business environment. Segment revenue from marine insurance brokerage services remained flat at HK$46 mn, and the operating profit slightly down by 3% YOY to HK$32.5mn in 1H

11 Supply of Marine Equipment and Spare Parts: In respond to the decreasing demand of equipment resulted from ship owners cost control measures, COSCO Yuantong continued to step up marketing efforts and developed 40 new customers outside the parent group during the period. In 1H2016, revenue from supply of marine equipment and spare parts slightly slid by 7% YOY to HK$501 mn, and the operating profit remained stable at HK$32.63mn. 11

12 Coatings: Our coatings segment recorded divergent results in 1H2016. COSCO Kansai, a coating manufacturer specialised in the production and sale of container coatings and industrial coatings, recorded a revenue decline of 57% YOY to HK$287mn. Its operating profit decreased by 81% YOY to HK$6.68mn, mainly impacted by the year on year decline in the sales of container coatings. 12

13 Coatings: In 1H2016, sales volume of Jotun COSCO, a coating manufacturer specialised in the production of marine coatings, down by 10% YOY to 48,153 tonnes, impacted from the delay of certain shipbuilding projects. Share of profit slightly down by 2% YOY to HK$47.25 mn. According to its orderbook on hand as at the end of June 2016, Jotun COSCO was going to deliver newbuilding marine coatings to vessels of 39.6 mn DWT over the coming 2 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 35% YOY to HK$56.97 mn during the period. 13

14 Marine Fuel Supply Business: The Company s wholly owned subsidiary Sinfeng Marine Services continued to adopt prudent business strategy. Sales volume of marine fuel in 1H2016 totaled 617k tonnes, up by 23% YOY; and segment revenue declined by 2% YOY to HK$1.39 bn, due to the lower price of marine fuel during the period. The Group s 18% owned associate Double Rich contributed HK$3.05 mn as share of profit during the period, down by 36% YOY, mainly caused by less investment income as compared to the same period of last year. Combined the above two, profit before income tax from marine fuel supply business dropped by 34% YOY to HK$5.32 mn. 14

15 General Trading (mainly asphalt): Sales volume of asphalt grew by 52% YOY to 80k tonnes in 1H2016. But its sales revenue declined by 5% YOY to HK$300 mn due to lower asphalt price. The operating profit slid markedly to HK$6.02 mn, mainly because no reversal of provision for impairment of certain other receivables following the successful collection was recorded in 1H

16 Next, I invite Mr. Ricky Chan, CFO of COSCO International, to go through the financial review. 16

17 In 1H2016, the Group s gross profit reached HK$250 mn, down by 33% YOY. The overall gross profit margin dropped by 2.5 percentage points to 9.7%, as a result of lessened gross profit from container coatings amid the lower selling price and sales volume, as well as the year onyear decline in commission income from ship trading agency which has high gross profit margin. Other income and gains decreased significantly to HK$14.63 mn, mainly because two special items are excluded during the period, i.e. a reversal of provision for impairment of other receivables of HK$18.98 mn in general trading segment, and the government subsidy income of HK$23.33 mn granted to COSCO Kansai by the Governments of Shanghai city and Baoshan District. Finance income decreased by 34% YOY to HK$44.59 mn, mainly due to lessened interest income generated from the cash on hand. During the period, the return on cash reached 1.44%, which was 81 basis points higher than the 3 month USD LIBOR rate as at the end of June

18 Profit Breakdown: In 1H2016, profit before income tax from coatings business accounted for 34% 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, contributed 49% in total; marine fuel supply business contributed 3%; general trading contributed 2%; and the others (mainly finance income) contributed 12%. The composition of the Company s overall profit is fairly diversified. 18

19 Balance Sheet: As at the end of June 2016, COSCO International had total asset of HK$9.38 bn, total liability was HK$1.29 bn, and total equity excluding non controlling interests was HK$7.72 bn. After deducting bank borrowings from total deposits and cash, the Group had net cash of HK$6.14 bn. 19

20 Cash Flow: During the period, net cash inflow from operating activities was HK$19.14 mn, mainly because of the decreased operating profit as compared to the same period last year. Net cash generated from investing activities was HK$44.83 mn, declined as compared to 1H2015, because of lessened dividends and interest income received from a joint venture as compared to the corresponding period last year. Net cash outflow from financing activities of HK$157 mn, slightly dropped year on year, mainly attributable to the less dividend expense and repayment of bank loans as compared to 1H2015. Exchange loss on cash and cash equivalents amounted to HK$4.1mn, mainly due to the depreciation of RMB currency during the period. My financial review comes to an end. Thank you! 20

21 Thank you Ricky. Now let me brief you the outlook. As Vice Chairman Zhu just made a detailed briefing on the macro situation and the development vision of COSCO International, I won t repeat it. I would like to report the key initiatives to be taken by the senior management in 2H

22 Firstly, to maintain steady development by improving service ability and strengthening existing businesses. As for ship trading agency, we will help ship owners and shipyards negotiate well, so as to ensure smooth delivery of newbuildings and scrapping of obsolete vessels; As for insurance brokerage, we will keep up the good work of hull & machinery insurance and war risk insurance, and at the same time step up efforts to further expand sales channels and service coverage; As for marine equipment and spare parts supply, we will provide better customized services to improve service quality, and reduce procurement cost while strengthening global purchasing by leveraging cooperation with other sizable peer SOEs; As for coatings business, we will try to increase sales of container coatings and solidify the market leadership, and with great marketing efforts for marine coatings, to win over more orders of newbuildings marine coatings with better profitability and increase the sales contribution from maintenance and repair marine coatings; As for marine fuel supply, we will continue with prudent operations and carefully develop new customers while preserving the existing quality customers. 22

23 Secondly, COSCO International will achieve the intensive development by strengthening internal management, rigid cost control and improving efficiency. The Company will introduce flat management which lessens the hierarchies of management and legal entities. The Company will strengthen risk management on potential project to reduce risk exposure, and monitor foreign currency risk and customer credit risk. Besides, the Company will reinforce the production management by optimizing and consolidating the operation flow to ensure the reliability of the product quality. It will analyze the cost drivers in great details in terms of the procurement, manufacture and logistic, so as to controlthe productioncostand to improve the productivity. Thirdly, to encourage innovation by nurturing the creative mindset of service and marketing so as to further improve service quality: as for ship trading agency and marine equipment and spare parts supply business, we will accelerate the transformation and upgrade of existing business with the focus on expanding sales outside the Group; asfor marine insurance brokerage, we will accelerate the growthof non marine insurance business by actively developing new service products; as for coatings, we will uphold the eco friendly attitude and promote the application and upgrade of eco friendly coatingproducts. The last but not least, to seek for leap development upon the most direct and major opportunity from the establishment of China COSCO Shipping Corporation, which has become the largest shipping conglomerate in the world controlling a total capacity of mn DWT or 1,114 vessels, ranking the world s No.1. Therefore, COSCO International now has the potential to transform from serving certain companies to serving the entire sector. According to the request of the board of directors, COSCO International will go for the road of specialisation and economy of scale by seeking the opportunity of merging business of similar nature within the Group as well as other businesses along the value chain outside the Group, so as to gradually enlarge its shipping services business coverage and enhance its service and support ability, which will improve the overall competitiveness of vessel fleet. We management team will spare no effort to fulfill our duties and missions, diligently striving for the leaping development of COSCO International, and create greater returns for shareholders. 23

24 This is the end of the presentation of COSCO International s 2016 interim results. Thank you. 24

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