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COSCO SHIPPING Ports Limited
COSCO SHIPPING Ports Limited

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2006 annual results

Date:2007-03-22     Publish:本站

2006 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 solid results performance for the year ended 31st December 2006.

  • Profit before taxNote 1 rose by 10.7% to US$398,835,000
  • Profit attributable to equity holdersNote 1 rose 3.4% to US$346,263,000
  • Profit attributable to equity holders (including Put Options Expense) declined 13.1% to US$291,082,000
  • Earnings per shareNote 1 rose 2.3% to US15.63 cents
  • Earnings per share (including Put Options Expense) decreased 14.0% to US13.14 cents
  • Full-year dividend was US 8.847 cents per share (2005: US 8.650 cents)
  • Dividend payout ratioNote 1 maintained at 56.6% (2005¡G56.6%)
  • Total container terminal throughput rose by 25.7% to 32,791,713 TEUs
  • Total number of berths reached 115 (2005: 100)
  • Container fleet capacity increased 19.9% to 1,250,609 TEUs
  • Overall utilisation rate was 96.2% (2005: 95.5%)
  • Further improved the business model and optimized capital structure by the disposal of 600,082 TEUs of container while maintaining management role in the sold assets
  • The Board was presented the "Director of the year award 2006" by Hong Kong Institute of Directors

Note 1: "Excluding the CIMC Put Options non-cash item"
Pursuant to the guidelines and other relevant documents in relation to the equity division reform of listed companies issued by the People's Republic of China, COSCO Pacific granted 424,106,507 Put Options to holders of the CIMC tradable A-Shares in 2006, as a compensation for their approval to convert the Company's holding of 360,143,203 non-tradable shares to be tradable, representing 16.23% of the total shares outstanding of CIMC. During the year, the net effect of Put Options on the Company's 2006 consolidated income statement was a non-cash expense of approximately US$55,181,000. The exercise price of the Put Options is RMB8.868. The expiry date of the CIMC Put Options will be on 23rd November 2007. The closing price of CIMC A tradable shares was RMB 18.84 on the last trading day of 2006. Upon expiry date of the CIMC Put Options, if no Put Options is exercised by the Grantees or a small number of the Put Options are exercised, the amount of non-cash item that the Group is required to pay under the CIMC Share Reform Proposal will be zero or minimal.

 

Strengthened Business Models

Our mission is to create long-term and sustainable value for our shareholders by providing superior services to our customers through a well-balanced portfolio and network with a major focus on ports and terminals. Our vision is to transform our business model by becoming a leading global port operator and focusing on ports as the principal earnings driver, through further investment by taking majority stakes, thereby maximising enterprise value on the basis of controlling rights, and further improving our business model by converting container leasing into an asset light business.

In 2006, COSCO Pacific bolstered its global business network by further expanding its presence in China and worldwide. This clear and consistent strategy, supported by our enhanced business models, efficient capital investment, rigorous value-management and strict corporate governance, allows us to provide more comprehensive services to our customers and to create long-term enterprise value. For both customers and investors alike, COSCO Pacific is building a larger platform for future growth based on its strengthened business models.

Solid performance in 2006

In 2006, the Company achieved profit attributable to equity holdersNote 1 of US$346,263,000, an increase of 3.4% over the previous year, and earnings per share of US15.63 cents (2005: US15.28 cents). The Board of the Company proposed a final dividend of US4.147 cents per share. Together with the interim dividend of US3.526 cents per share and special interim dividend of US1.174 cents per share, the full year dividend per share was US8.847 cents per share (2005: US8.650 cents). The dividend payout ratio was 56.6% (2005: 56.6%) of profit attributable to equity holders Note 1 of the Company.

COSCO Pacific's solid performance in 2006 reflected the Company's ongoing efforts to build future profit streams through the decisive strengthening of our business models with a strategic focus on becoming a port operator through holding a controlling interest in more ports and terminals and with an "asset light" approach to our container leasing business. We also continue to benefit from the strong growth in the supporting areas of logistics and container manufacturing.

Terminal and related business

According to "Annual Review of Global Container Terminal Operators 2006" published by Drewry Shipping Consultants, COSCO Pacific ranked as the world's fifth largest container terminal operator with a 3.7% global market share. COSCO Pacific further bolstered its global network by acquiring interests in new terminals and increasing its investment in existing terminals. As at 31 December 2006, the Group's total number of berths increased from 100 to 115 in 2006, of which its annual capacity rose from 54,900,000 TEUs to 61,000,000 TEUs.

During the year, the Group's container terminal business continued to grow strongly with throughput up 25.7% to 32,791,713 TEUs. The Group's terminal business in Bohai Rim region performed very well, with aggregate container terminal throughput rose by 43.3% to 13,431,338 TEUs. In the Yangtze River Delta, aggregate container terminal throughput growth was 13.2% on year-to-year basis to 7,732,423 TEUs. In the Pearl River Delta, aggregate throughput growth was up 13.1% on year-to-year basis to 10,400,888 TEUs. The aggregate container terminal throughput of overseas rose 80.2% on year-to-year basis to 1,227,064 TEUs. Net profit contribution for the terminals and related business (excluding the profit on disposal of Shekou Terminal of US$61,875,000 in 2005) rose 2.8% to US$90,520,000 in 2006.

Container Terminal
(As of 31 Dec 06)
2006
(TEUs)
2005
(TEUs)
y-o-y
Bohai Rim
Qingdao Qianwan Container Terminal Co., Ltd.
Qingdao Cosport Intertional Container Terminals Co., Ltd.
Dalian Port Container Co., Ltd.
Dalian Port Container Terminals Co., Ltd.
Tianjin Five Continents International Container Terminal Co., Ltd
Yingkou Container Terminals Company Ltd.
13,431,338
6,770,003
744,276
2,885,276
421,068
1,773,141
837,574
9,370,361
5,443,086
605,791
2,467,465
132,984
87,462
633,573
+43.3%
+24.4%
+22.9%
+16.9%
+216.6%
+1,927.3%
+32.2%
Yangtze River Delta
Shanghai Container Terminals Limited
Shanghai Pudong International Container Terminals Ltd.
Zhangjiagang Win Hanverky Container Terminal Co., Ltd.
Yangzhou Yuanyang International Ports Co., Ltd.
Nanjing Port Longtan Container Co., Ltd.
7,732,423
3,703,460
2,650,007
455,946
222,912
700,098
6,831,502
3,646,732
2,471,840
377,121
157,123
178,686
+13.2%
+1.6%
+7.2%
+20.9%
+41.9%
+291.8%
Pearl River Delta
COSCO-HIT Terminals (Hong Kong) Ltd.
Yantian International Container Terminals Ltd. (Phases I, II, III)
Quanzhou Pacific Container Terminal Co., Ltd.
10,400,888
1,688,697
8,470,919
241,272
 
9,196,652
1,841,193
7,355,459
--
+13.1%
-8.3%
+15.2%
--
Overseas
COSCO-PSA Terminal Private Ltd.
Antwerp Gateway NV
1,227,064
627,894
599,170
681,097
611,013
70,084
+80.2%
+2.8%
+754.9%
Total Throughput in China 29,875,952 23,557,322 +26.8%
Total Throughput 32,791,713 26,079,612 +25.7%

Major transactions

COSCO Pacific continued to expand its global ports network through strategic alliances with leading port authorities, global shipping lines and terminal operators. In China, the Group signed joint venture contracts to capitalise investments in the Quanzhou, Tianjin and Ningbo terminals and obtained a 71.43% equity interest in Quanzhou Pacific Container Terminal Co., Ltd., 30% equity interest in Tianjin Port Euroasia International Container Terminal, as well as a 20% equity interest in Ningbo Yuan Dong Terminals Limited. In addition, the Group acquired a further 10% equity interest in Shanghai Pudong International Container Terminals Ltd. to obtain a total of 30% equity interest.

In order to optimise our business risk in the container leasing and management business and to transform our business model into an asset light one, the Group completed a transaction for the disposal of 600,082 TEUs of containers ("Strategic Disposal of Containers") in June 2006, while maintaining our management role for the sold assets. The total amount received from the buyer amounted to US$869,203,000.

Container leasing and management

COSCO Pacific's container leasing and management businesses are operated and managed by Florens Container Holdings Limited, a wholly owned subsidiary of the Company, and its subsidiaries (collectively referred to as "Florens"), which is ranked third in the world, continued to perform well this year. As at 31st December 2006, the Group's container fleet (including management containers) reached 1,250,609 TEUs, up 19.9% on the previous year. Florens' container average utilisation rate rose to 96.2% in 2006 (2005 : 95.5%), well above the industry average of around 91.8% (2005 : around 90.9%).

During the year, Florens leased 456,877 TEUs (2005 : 377,324 TEUs) to COSCON and 163,851 TEUs (2005 : 630,925 TEUs) to international customers. The drop of leasing containers to international customers was mainly due to the Strategic Disposal of Containers. The total number of management containers rose significantly from 34,603 TEUs by the year end of 2005 to 629,881 TEUs by the year end of 2006.

The Strategic Disposal of Containers generated a net gain of approximately US$50 million and a Finder Fee of approximately US$15 million during the year. A total of approximately US$65 million in exceptional income boosted the net profit contribution from our container leasing and management division by 43.7% to US$166,353,000 in 2006.

Logistics

The Group has 49% interest in COSCO Logistics while China COSCO holds the other 51% interest. With the dynamic economic environment continuing to foster the growth of foreign and domestic enterprises in China, the domestic logistics market is developing further in terms of internationalisation, professionalism and standardisation. COSCO Logistics is actively expanding its third party logistics in the fields of home appliances, automobiles, power supply, petrochemical, convention and exhibition services.

During the year, the shipping agency handled 135,087 vessels, an increase of 0.2% over 2005, and the freight forwarding registered 128,763,073 tons in terms of volume, a rise of 25.7% over the previous year. Third party logistics (3PL)-Home appliance handled 30,716,640 units, and 3PL-Motor handled 562,484 vehicles, a growth rate of 36.0% and 433.2% respectively over 2005. Net profit contribution for the logistics business rose 21.5% to US$11,136,000 in 2006.

COSCO Logistics was ranked Number one in "China's Logistics 100" for the third consecutive year in recognition of its logistics achievements in China.

Container manufacturing

At the beginning of 2006, sales volume and prices of containers were low as the container manufacturing plant remained exposed to market factors subsisting at the end of 2005. Subsequently, the rebound of the container manufacturing market helped CIMC to maintain a profit contribution of US$57,727,000 to the Group. The sale of Shanghai CIMC Far East Container Co., Ltd. generated a profit of US$5,470,000. The net profit contributionNote 1 from our container manufacturing business increased by 24.1% to US$69,715,000 in 2006.

Other investments

The Group has a 20% equity interest in Chong Hing Bank, which contributed net profit of US$12,778,000 to the Group, an increase of 27.4 % from last year.

Investor relations

The corporate philosophy of COSCO Pacific is the continued pursuit of the highest standards of integrity, transparency and professionalism whatever may be the current economic and market conditions. While being committed to maximising shareholders' value and improving corporate profitability, the Company is also determined to ensure the highest standards of corporate governance. In maintaining a high level of transparency and accountability to the shareholders, the Board believes that good corporate governance should benefit our stakeholders.

In 2006, the Company was the proud recipient of awards granted in recognition of our well-governed and well-managed operations. The Board of COSCO Pacific was honoured to be presented the "Directors of The Year" award organised by the Hong Kong Institute of Directors. We were also awarded the "Hong Kong Outstanding Enterprise" by the Economic Digest for the second consecutive year. Moreover, the Company was cited as one of the "Forbes 2000 leading companies in the world" as well as one of the "China Shipping Gazette top 10 enterprises" and was nominated as a Finalist in the "Shipping In-House Team of the Year" in the ALB Hong Kong Law Awards organised by Asian Legal Business, a widely circulated magazine amongst the legal professional in 2006. Finally, the Company was given a highly commended award for our investor relations by IR Asia Magazine.

Change of directorship and authorised representative

On 24th January, 2007, Mr. Xu Minjie was appointed as the Executive Director, Vice Chairman, Managing Director and an authorised representative of the Company. Mr. XU graduated from the Marine Navigation Department of Qingdao Ocean Shipping Mariners College and obtained his Master of Business Administration degree from Shanghai Maritime University and also obtained a Master Degree in Management from Maastricht School of Management in the Netherlands. Mr. XU has accumulated around 30 years of experience in the shipping industry and has demonstrated excellent enterprise operation and management skills. His outstanding vision and management power has been highly appreciated by the industry. After joining the Company in January 2007 as the Vice Chairman and Managing Director, he is responsible for the Company's strategic development, corporate governance and financial management.

Prospects

We have a positive outlook for 2007 based on the continuing recovery of the shipping industry, lower oil prices and a potential reduction of interest rates in U.S., which will likely provide favorable position for the business environment. Rising demand driven by domestic consumption in China will boost its imports to achieve a higher growth rate in 2007. Moreover, it is expected that China's economic growth will remain strong and that the global economy will expand at an even more impressive rate than in 2006. This continued strength of the global economy is positive for all of our businesses including container terminal, container leasing and management, logistics and container manufacturing.

The main engine for the growth of COSCO Pacific will be led by accumulating profit growth momentum of our terminal business and supported by the stable yield of container leasing and management businesses. Our container manufacturing and logistics businesses are set to contribute the stable growth of the Group profits as a whole. With our well-balanced portfolio and strengthened business models, our management team will continue to build on our value creation platform in order to support and enhance COSCO Pacific's position as a global industry leader.