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COSCO SHIPPING Ports Limited
COSCO SHIPPING Ports Limited

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2007 Final Results

Date:2008-04-07     Publish:本站

2007 Final Results

The board of directors of COSCO Pacific Limited (“COSCO Pacific” or the “Company”) is pleased to announce that the Company and its subsidiaries (the “Group”) have delivered satisfactory results performance for the year ended 31st December 2007.

 

 ● Profit attributable to equity holders of the Company increased by 47.0% to US$427,768,000
 
 ● Propose a final cash dividend of US3.924 cents (2006: US4.147 cents) and a special final cash dividend of US2.296 cents (2006: Nil). Full-year dividend was US9.406 cents (2006: US8.847 cents) with payout ratio (excluding the financial effect of the CIMC Put Options associated with the CIMC Share Reform) of 56.6% (2006: 56.6%)
 
 ● Ranking as the fifth largest container terminal operator in the world
 ● Increasing the momentum of terminal expansion with the total number of terminal berths increased from 115 to 140 and the total number of container berths in operation was 87 with an annual capacity of 47,450,000 TEUs
 ● Total container terminal throughput rose by 21.5% to 39,832,964 TEUs
 
 ● Ranking as the second largest container leasing company in the world
 ● Total container leasing and management fleet increased by 21.5% to 1,519,671 TEUs
 ● Further improved business operation model and optimised capital structure by the sale of 135,956 TEUs of containers and providing after sale management service
 
 ● Realigned the industrial structure with the sale of the 20% shareholding interest in Chong Hing Bank to concentrate our resources on the development of our core businesses

Solid performance in 2007

The robust Chinese economy and strong international trade in 2007 drove growth of global containerised shipping and provided a favourable environment for COSCO Pacific to grow our terminal, container leasing, management and sale, logistics and container manufacturing businesses. Particularly the terminal business has already become our key earning growth driver.

COSCO Pacific delivered a satisfactory performance in 2007. Our profits attributable to equity holders of the Company were US$427,768,000, an 47.0% increase as compared to US$291,082,000 recorded in 2006. If the financial effect of the CIMC Put Options associated with the CIMC Share ReformNote1 is excluded, the Group’s profit attributable to equity holders of the Company would be US$372,587,000, an 7.6% increase as compared to US$346,263,000 recorded in 2006. Net profits from the terminal business were US$128,267,000, representing an increase of 27.5% compared to the last year and accounting for 45.5% of the profit attributable to equity holdersNote2 compared with 29.0% for 2006. Against this background, we further expanded our terminal business in three main ways; strengthening our presence in the global network through increased investment in new terminal operations; increasing controlling rights in our terminal investments and diversifying our investment in break bulk cargo terminals.

COSCO Pacific has always dedicated its effort to enhancing shareholders return. Maintaining a stable dividend payout ratio is an important policy to deliver the shareholder value created by the Company. The board of directors proposes a final cash dividend this year of US3.924 cents per share (2006: US4.147 cents).A special final cash dividend of US2.296 cents per share (2006: Nil) will also be proposed for the net gain of US$90,742,000 from the disposal of 20% equity interest of Chong Hing Bank. Together with the interim cash dividend of US3.186 cents (2006: interim dividend of US3.526 cents and interim special dividend of US1.174 cents) paid on 21st September, 2007, this represents a full-year cash dividend of US9.406 cents (2006: US8.847 cents). In 2007, the dividend payout ratio was 56.6%Note3 (2006: 56.6%).

Terminal Business

According to Drewry Shipping Consultants’s “Annual Review of Global Container Terminal Operators 2007’’ published in September 2007, COSCO Pacific ranked as the fifth largest operator with a 5% global market share, representing a year-on-year increase of 1.3 percentage points. As of 31st December 2007, the Company had various interests in 27 terminal operations located at 18 ports in China and overseas and involved in the investment, operation and management of 140 berths, among which 87 of which were container berths in operation, with an annual handling capacity amounting to 47,450,000 TEUs.

In 2007, container throughput totaled 39,832,964 TEUs, a 21.5% increase over 2006; among which, the throughput of 16 domestic terminal companies in Mainland China reached 36,040,901 TEUs, a 20.6% increase over 2006. The profit contribution for terminal division rose by 27.5% to US$128,267,000.

__________________________________________________________________________________

Note 1: COSCO Pacific granted 424,106,507 CIMC Put Options to shareholders of the CIMC Tradable A-Shares in 2006. As none of the CIMC Put Options were exercised upon their expiry on 23rd November, 2007, previously made provisions of approximately US$55,181,000 in 2006 had been fully written back in this year.

Note 2: The profit attributable to equity holders excluded the write back of US$55,181,000 of CIMC Put Options and net profit from disposal of 20% equity interest in Chong Hing Bank.

Note 3: Before CIMC Put Options financial effect of US$55,181,000.

Bohai Rim presented a most prominent performance, and has become a focus of COSCO Pacific’s terminal expansion in recent years. Container throughput handled by the six terminal joint ventures in Bohai Rim totaled 16,931,145 TEUs, a 26.1% increase over 2006. The throughput of Yangtze River Delta increased by 7.4% to 8,307,080 TEUs. The aggregate throughput of Pearl River Delta and SoutheastCoast increased by 21.6% to 12,649,235 TEUs.

The performance of overseas terminals was satisfactory. COSCO-PSA Terminal in Singapore handled 833,892 TEUs, a 32.8% surge over 2006. The throughput of Antwerp Terminal in Belgium reached 792,459 TEUs, a 32.3% over 2006. Suez Canal Terminal in Egypt, in which the Group has completed its share transfer in October 2007, handled 319,153 TEUs from November to December 2007.

The terminals which we had controlling stakes performed satisfactorily during the year.The container throughput of Zhangjiagang Win Hanverky Terminal increased by 32.0% to reach 601,801 TEUs. The container throughput of Yangzhou Yuanyang Terminal reached 253,772 TEUs, a 13.8% increase over 2006 and its throughput of break-bulk cargo increased by 9.0% to 7,196,428 tons. Since its commissioning in September 2006, performance at Quan Zhou Pacific Terminal has been achieving outstanding performance with throughput in 2007 increased by 255.1% to 856,784 TEUs.

 Operating Container Terminals

2007(TEUs)

2006(TEUs)

y-o-y

 Bohai Rim

16,931,145

13,431,338

+26.1%

 Qingdao Qianwan Container Terminal Co., Ltd.

8,237,501

6,770,003

+21.7%

 Qingdao Cosport International Container Terminals Co., Ltd.

1,005,439

744,276

+35.1%

 Dalian Port Container Co., Ltd.

3,723,833

2,885,276

+29.1%

 Dalian Port Container Terminal Co., Ltd.

850,359

421,068

+102.0%

 Tianjin Five Continents International Container Terminal Co., Ltd.

1,988,456

1,773,141

+12.1%

 Yingkou Container Terminals Company Limited

1,125,557

837,574

+34.4%

 Yangtze River Delta

8,307,080

7,732,423

+7.4%

 Shanghai Container Terminals Limited

3,446,135

3,703,460

-6.9%

 Shanghai Pudong International Container Terminals Limited

2,723,722

2,650,007

+2.8%

 Zhangjiagang Win Hanverky Container Terminal Co., Ltd.

601,801

455,946

+32.0%

 Yangzhou Yuanyang International Ports Co. Ltd.

253,772

222,912

+13.8%

 Nanjing Port Longtan Container Co., Ltd.

950,289

700,098

+35.7%

 Ningbo Yuan Dong Terminals Limited

331,361

N/A

N/A

 Pearl River Delta and SoutheastCoast

12,649,235

10,400,888

+21.6%

 COSCO-HIT Terminals (Hong Kong) Limited

1,846,559

1,688,697

+9.3%

 Yantian International Container Terminals Ltd. (Phases I, II and  III)  

9,368,696

8,470,919

+10.6%

 Guangzhou South China Oceangate Container Terminal Company  Limited

577,196

N/A

N/A

 Quan Zhou Pacific Container Terminal Co., Ltd.

856,784

241,272

+255.1%

 Overseas

1,945,504

1,227,064

+58.5%

 COSCO-PSA Terminal Private Limited

833,892

627,894

+32.8%

 AntwerpGatewayNV

792,459

599,170

+32.3%

 Suez Canal Container Terminal, S.A.E.

319,153

N/A

N/A

 Total container throughput in Mainland China

36,040,901

29,875,952

+20.6%

 Total container throughput

39,832,964

32,791,713

+21.5%


Expanded our terminal portfolio in 2007

In 2007, COSCO Pacific successfully expanded its terminal business by increasing our investments in Qianwan port area of Qingdao and Jiangdu port area of Yangzhou. By acquiring a 70% equity interest in Xiamen Yuanhai Container Terminal Co., Ltd. and a 80% equity interest in Jinjiang Pacific Ports Development Co., Ltd., COSCO Pacific took substantial interests in container terminals in the southeast coast, which will be developed as the fourth largest economic development zone in China. Moreover, a concession agreement was signed between Suez Canal Terminal and Egyptian government for the terminal development of phase II at East Port Said in Egypt.COSCO-PSA Terminal in Singapore increased one additional operational berth according to the related terms of joint venture agreement.

 

 Terminal investments in 2007

 

Shareholdings

Container terminal

Break-bulk cargo terminal

No. of berths

Throughput(TEUs)

No. of berths

Throughput(Tons)

 Qingdao New Qianwan Container  Terminal Co., Ltd.

16%

10

6,000,000

--

--

 Xiamen Yuanhai Container Terminal  Co., Ltd.

70%

4

2,800,000

--

--

 Jinjiang Pacific Ports Development Co.,  Ltd.

80%

2

800,000

3

4,200,000

 Yangzhou Yuanyang International Ports  Co., Ltd.

55.59%

--

--

2

1,850,000

 Suez Canal Container Terminal S.A.E.

20%

4

2,550,000

--

--

 Total

 

20

12,150,000

5

6,050,000

During the year, we added a total of 25 berths, including 20 container berths and 5 break-bulk cargo berths, in our terminal portfolio by new acquisition and expansion of existing terminal operations. Starting from next year, together with the commencement of construction of Tianjin Port Euroasia Terminal on 20th September 2007, the above new berths will gradually commence operation. Furthermore, a letter of intent was also signed for acquiring interests in FuzhouPort Group. Further cooperation is being discussed.

In 2007, a total of 15 berths of our existing terminal portfolio commenced operation. It included the 6 berths of Guangzhou South China Oceangate Terminal. These 6 berths became operational with 2 berths in March and 4 berths in September.Another 1 berth of Ningbo Yuan Dong Terminals, which commenced operation in March, 2 berths of Yantian Terminal Phase III, which commenced operation in March and September, and 4 operating berths of Suez Canal Terminal, of which the transfer of the share was completed in October. No. 1 and No. 2 berths at the Jiangdu port area of Yangzhou also commenced operation in December. With the full year operation in 2008, these 15 newly operational berths will contribute as an organic throughput growth engine of our terminal division in 2008. Moreover, 1 additional berth of COSCO-PSA Terminal in Singapore commenced operation in January 2008.

Container Leasing, Management and Sale Business

COSCO Pacific’s container leasing, management and sale businesses are operated and managed by Florens Container Holdings Limited, a wholly owned subsidiary of the Company, and its subsidiaries (“Florens’’). Facing with fierce competition in the market, Florens has continued to maintain the leading position by making prompt adjustments of the operation strategies and fully exerting its potential. Profit contribution from the container leasing, management and sale businesses dropped by 36.0% to US$117,994,000.

As at 31st December 2007, the Group owned and managed the container fleet of 1,519,671 TEUs, a year-on-year increase of 21.5%, and ranked as the world’s second largest container leasing operator with an approximately 13.2% of the global market share. The average utilization rate over the year was 94.5% (2006: 96.2%), which was higher than the industry average of approximately 93.0% (2006: 91.8%). The slight decrease in utilization rate was mainly due to the purchase of approximately 58,000 TEUs of containers by Florens strategically in advance since the fourth quarter of 2007 in response to the upward trend of container price and the container demand from our customers in the first quarter of 2008. Average age of the container fleet was 3.75 years (2006: 4 years).

In order to further optimise and enhance the operation model and minimise the operation risks of the container leasing business, sale and managed back model had gradually been developed. In 2007, a profit before tax of US$25,975,000 was generated from the sale and managed back of 135,956 TEUs (as amended) of containers and the cash consideration of US$241,139,000 (including the receipt of US$2,337,000 deal management fee) was received. As at 31st December 2007, the size of the managed container fleet increased to 762,618 TEUs (2006: 629,881 TEUs), representing 50.2% (2006: 50.4%) of the total fleet. The size of owned container fleet amounted to 757,053 TEUs (2006: 620,728 TEUs), representing 49.8% (2006: 49.6%) of the total fleet, of which 517,311 TEUs (2006: 456,877 TEUs) were leased to COSCON while 239,742 TEUs (2006: 163,851 TEUs) were available to international customers.

While expanding the container sale and managed back business, Florens continued to expand the size of its owned container fleet. Newly purchased containers in the year amounted to 326,715 TEUs, a 21.8% increase as compared with last year, in which newly acquired containers for COSCON and other international customers were 112,754 TEUs and 213,961 TEUs respectively, representing 34.5% and 65.5% of the total purchase of the year respectively. As at 31st December 2007, the number of customers rose to 280 (2006: 270).

During the year, COSCON returned 51,464 TEUs (2006: 43,981 TEUs) of containers upon expiry of the 10-years leases. Total returned containers of 56,759 TEUs (2006: 48,071 TEUs) were disposed of for the year, of which 51,365 TEUs (2006: 47,624 TEUs) of containers were returned from COSCON in or before 2007 upon the expiry of the 10-years leases. Net profit on disposal of old containers was US$6,583,000 (2006: US$ 8,794,000).

Logistics Business

Profit contribution from COSCO Logistics, 49% owned by COSCO Pacific, for the year amounted to US$19,236,000, a 6.0% increase as compared with the corresponding period last year. Major businesses of COSCO Logistics such as shipping agency, freight forwarding, modern logistics and project logistics performed excellently during the year. They provided quality services to the customers, further enhanced the 50% market share in China in respect of shipping agency, accelerated the development of freight forwarding business and obtained contracts of construction of several major logistics projects.

Container Manufacturing Business

In 2007, as a result of the volatile pricing of raw materials, net profit from Shanghai CIMC Reefer Containers Co., Ltd. and Tianjin CIMC North Ocean Container Co., Ltd. to the Group decreased to US$1,188,000 (2006: US$8,882,000). As at 31st December 2007, COSCO Pacific has a 16.54% shareholding interest in CIMC. As a result of increasing investment income, net profit from CIMC rose by 16.4% to US$67,168,000 (2006: US$57,727,000).

COSCO Pacific granted 424,106,507 put options to shareholders of the CIMC Tradeable A-Shares in 2006. As none of the put options was exercised upon its expiry on 23rd November, 2007, the provision approximately of US$55,181,000 made in 2006 was fully reversed.

During the period from 10th December 2007 to 24th March 2008, COSCO Container Industries Limited, a wholly-owned subsidiary of the Company, acquired a total of 148,320,037 B shares of CIMC (representing approximately 5.57% of the issued share capital of CIMC) on the Shenzhen Stock Exchange in the PRC at an aggregate cash consideration of approximately HK$2,139,058,000. Together with the 432,171,843 A shares of CIMC (representing approximately 16.23% of the issued share capital of CIMC) held by the Group, the Group’s interest in CIMC has increased to approximately 21.80%. As at 31st December 2007, the Group held 432,171,843 A shares and 8,342,010 B shares in CIMC, representing approximately 16.54% of the issued share capital of CIMC.

The Company considers that the B shares of CIMC acquired at the level of pricing at which the acquisition was made is a good investment for the Group, and that the acquisition increased the Group’s shareholding of CIMC and its percentage share of the results of the CIMC group, and will strengthen the Group’s capability in container related businesses, improve the allocation of resources of the Group and contribute to the continued development of the Group’s businesses.

Disposal of Non-core Business

The Company’s business structure was further improved by the disposal of non-core business. Net profit attributable to the disposal of 20% of equity interest in Chong Hing Bank of US$90,742,000, which has realised approximately of US$268,474,000 in cash. The cash consideration is to be used mainly for investments in core businesses and distribution of special final dividend.

Awards

In 2007, COSCO Pacific engaged in many activities aimed at encouraging better corporate governance standards in the market. We were the lead sponsor of the Directors of the Year Awards 2007 organized by Hong Kong Institute of Directors. Our efforts to improve corporate governance were acknowledged by the industry and the capital markets. We were received several recognitions including “The Forbes Global 2000” for the 3rd consecutive year and awarded “Hong Kong Outstanding Enterprises” by Economic Digest for three consecutive year; the Company also won “Best Corporate Award” by The Asset magazine and “Corporate Governance Asia Recognition Awards” by Corporate Governance Asia magazine. The Company was awarded “Hong Kong In-House Team of the Year” and “Shipping In-House Team of the Year” by Asian Legal Business (ALB), a well recognized professional magazine. We also won the “Best Investor Relations Award” from IR magazine.

 Prospects

2008 will be a year full of challenges and opportunities. Global economic growth will be further slowed by the deteriorating US economy. However, the Chinese economy will still be stimulated by strong growth in domestic consumption and China’s import trade is expected to maintain a solid upward trend. As a result, we expect domestic cargo volume to increase and containerised shipping is likely to also increase amid such favourable conditions. Meanwhile, Chinese economic growth will remain healthy under proper control by the government’s macro-economic tightening policies. All told, the China factor will definitely provide excellent opportunities for the further development of COSCO Pacific.

Focusing on ports and terminals as the principal earnings driver and the largest profit center of COSCO Pacific, we are dedicated to strengthening our terminal portfolio so as to build a stronger and a larger platform for the business.Enjoying a high degree of synergy with our parent company, COSCO Pacific is gaining footholds as it establishes a global terminal network strategically located in China and overseas. In turn we are able to provide superior services to our customers around the world. We aim to maintain our leading position as a global port operator through further investment; taking majority stakes and thereby maximizing enterprise value and profitability through controlling interests.

In parallel, we continue to strengthen our container leasing business and expand our container management services with an asset light business model. The objectives of COSCO Pacific are fourfold: to grow a stronger portfolio of business operations, to maintain our position as a market leader, to further enhance our profitability and to maximize our shareholder returns.