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2005 interim results

Date:2005-09-08     Publish:本站

The board of directors (the "Directors") of COSCO Pacific Limited (the "Company" or "COSCO Pacific") is pleased to present the unaudited results of the Company and its subsidiaries (the "Group") for the six months ended 30th June 2005. The unaudited interim results have been reviewed by the Company's Audit Committee.

The past six months saw the global economy maintaining a stable and balanced growth. In the PRC, the implementation of austerity measures by the PRC government, a GDP growth of 9.5% was achieved. The Group's focused efforts to develop the core business in recent years have paid off, resulting in a remarkable performance in the first half.

Profit attributable to equity holders for the period rose to US$214,770,000 from US$93,152,000 a year ago. Earnings per share rose by 126.7% to US9.8111 cents from US4.3272 cents a year ago. In December 2004, the Group completed the acquisition of approximately 16.23% equity interest in China International Marine Containers (Group) Co., Ltd. ("CIMC¡¨), which contributed US$40,236,000 to the Group's net profit for the period (same period of 2004: N/A). Further, the disposal of the Group's 17.5% equity interest in Shekou Container Terminals Ltd. ("Shekou Terminals¡¨) in March this year not only generated a profit of US$61,875,000, but also enable the Group to restructure the investment portfolio to capitalize on the strategic advantage of the Pearl River terminal operations.

  • Turnover increased by 9.4% to US$141,898,000
  • Interim dividend of HK28.1 cents (same period of 2004: HK17.4 cents) per share and special dividend of HK11.3 cents (same period of 2004: Nil) per share were declared
  • Profit attributable to equity holders of the Company rose by 130.6% to US$214,770,000
  • Dividend payout was 51.7% (same period of 2004: 51.6%)
  • Earnings per share grew by 126.7% to US9.8111 cents
  • Container leasing fleet increased by 18.9% to 1,027,954 TEUs, average utilisation rate increased to 96.4% (same period of 2004: 96.0%)
  • Total throughput in container terminal operation increased by 17.6% to 12,129,340 TEUs
  • Investments in 19 terminals with an aggregate of 81 berths

Container Leasing
Benefiting from the growth in PRC trade and the containerisation trend in the transportation industry, the Group achieved satisfactory results in the container leasing operation. As at 30th June 2005, Florens Container Holdings Limited, a wholly owned subsidiary of the Company, and its subsidiaries (collectively referred to as "Florens") owned and operated a container fleet of 1,027,954 TEUs (same period of 2004: 864,568 TEUs), surpassing 1 million TEUs for the first time while recording an increase of 18.9% from a year ago. Florens further escalated its ranking as the fourth largest marine container leasing company (same period of 2004: fifth) with an approximately 10.4% share of the global market (same period of 2004: approximately 9.9%). Average age of the Group's container fleet was 4.28 years (same period of 2004: 4.36 years).

Florens further increased its momentum to penetrate the market while solidifying customer relations. To cope with the increasing demand, Florens purchased 131,838 TEUs new containers (same period of 2004: 90,372 TEUs). While acquiring new containers, Florens also sold 14,833 TEUs (same period of 2004: 28,247 TEUs) of containers returned from COSCON upon expiry of the leases ("Returned Containers"), including those being received before 2005.

Besides providing 10-year container leases to COSCON, the world's seventh largest container ship operator (according to "The Journal of Commerce" dated 27th June 2005), the Group also provided short and long term leases to other international customers ("International Customers"). These International Customers included major global shipping companies. For the six months ended 30th June 2005, the top 20 International Customers accounted for approximately 71.8% (same period of 2004: 75.7%) of the Group's total container rental income from International Customers. The total number of customers reached 233 (same period of 2004: 198).

As at 30th June 2005, the Group leased a total of 362,635 TEUs to COSCON, representing 35.3% of the entire container fleet. Containers available to International Customers totalled 665,319 TEUs, representing 64.7% of the total containers. While containers dedicated for COSCON remained 100% utilised during the period, the overall average utilisation rate of the Group was 96.4% (same period of 2004: 96.0%), well above the industry average of approximately 92.0% (same period of 2004: approximately 91.6%).

During the period, a total of 15,613 TEUs (same period of 2004: 31,820 TEUs) of 10-year containers were returned from COSCON, of which 6,937 TEUs and 8,676 TEUs represented units to be returned on or before 2004 and 2005, respectively. The Group disposed of 14,833 TEUs (same period of 2004: 28,247 TEUs) of Returned Container with a net profit on disposal of US$2,593,000 (same period of 2004: net loss of US$2,753,000).

Container Terminal and Related Operations
During the period, the Group further enhanced its management capability while achieving higher operation efficiency. As a result, terminal throughput and net profit had a remarkable performance.

Boosted by the growth of the China economy, the Group's container terminal business recorded a good growth. As at 30th June 2005, the 11 operating container terminals in which the Group has an interest handled a total of 12,129,340 TEUs during the period, a 17.5% increase from last year.

Throughput of container terminals 1H 2005 (TEUs) 1H 2004 (TEUs) Changes over the corresponding period
Pearl River Delta¡¯ 4,256,763 3,571,953 +19.2%
   COSCO-HIT 942,488 803,338 +17.3%
   Yantian Int'l Terminals Phase I, II & III 3,314,275 2,768,615 +19.7%
Yangtze River Delta 3,187,756 3,051,992 +4.4%
   Shanghai Terminal 1,700,115 1,759,440 -3.4%
   Shanghai Pudong Int'l Terminals 1,233,572 1,098,955 +12.2%
   Zhangjiagang Win Hanverky Terminal 180,329 155,753 +15.8%
   Yangzhou Yuanyang Int'l Ports 73,740 37,844 +94.9%
Bohai Rim 4,375,000 3,425,765 +27.7%
   Qingdao Qianwan Terminal 2,616,018 2,141,078 +22.2%
   Qingdao Cosport Terminals 265,206 179,673 +47.6%
   Dalian Port Container Co., Ltd. 1,204,815 969,191 +24.3%
   Yingkou Terminals 288,961 135,823 +112.7%
Overseas region 309,821 274,265 +13.0%
   COSCO-PSA Terminal 309,821 274,265 +13.0%
Total throughput 12,129,340 10,323,975 +17.5%
Throughput of terminals in China mainland 10,877,031 9,246,372 +17.6%

    ¡¯Shekou Terminal of which the Group had an interest, was disposed of on 23rd March 2005.

Expansion of terminal business, further enhancing its position as a leading terminal operator
The Group entered into a JV contract on 28th May 2005 for the establishment of Nanjing Port Longtan Container Co., Ltd ("Nanjing Longtan Terminal") in which the Group owns a 20% interest. Nanjing Longtan will operate Nanjing Longtan Container Port Phase I, which has a total of five berths with a quay length of 910 metres long and a depth alongside of 12 metres. Total area of the terminal is 930,000 square metres with an annual handling capacity of 1,000,000 TEUs. The terminal commenced operation on 26th August 2005.

On 16th April 2005, the Group entered into a Joint Venture Heads of Agreement with Guangzhou Port Group Co., Ltd. to form a joint venture company regarding the construction and operation of the Guangzhou Nansha Container Terminal Phase II. The Group will have an initial interest of 56% in the joint venture company. Six berths will be constructed at Nansha Container Terminal Phase II (the first two berths will be completed and operational in the second half of 2006 and the remaining four will be completed and operational in 2007). The terminal will have a quay length of 2,100 metres and a depth alongside of 17 metres. Total area of the terminal will be 2,730,000 square metres with an annual handling capacity of 4,200,000 TEUs. The terminal will be one of the major strategic terminals where the Group has a majority interest.

Meanwhile, to capitalise on the strategic advantange of the Pearl River Delta Terminals and the opportunity to restructure the investment portfolio, the Group entered into an agreement with China Merchants Holdings (International) Company Limited on 23rd March 2005 for the disposal of its 17.5% interest in Shekou Terminals for a consideration of approximately HK$610,000,000. Gain on disposal of US$61,875,000 which has been booked in the first half of the year.

With all these new business developments and acquisitions in terminal operations, the Group held a total of 19 terminals as of 30th June 2005. These 19 terminals are strategically located in Pearl River Delta, Yangze River Delta, Bohai Rim and major overseas locations. Total 81 berths including 76 berths for containers, 2 berths for automobile, 3 berths for multipurpose. The annual handling capacity is expected to be increased to 40,400,000 TEUs.

Latest Development of the Container Terminal Project
The Group signed a letter of intent with Ningbo Port Group Ltd. and Tianjin Port Group Ltd. respectively in the first half of 2005, to engage in the development and operations of Ningbo Jintangdau Container Terminals and Tianjin North Basin B Container Terminal.

Dalian Port Terminal, in which the Group has a 20% interest, commenced operation on 8th July 2005. In addition, pursuant to the Share Purchase Agreement entered into between the Group and P&O Ports Europe NV on 16th November 2004, in order to introduce an additional partner with liner carrier background to bring more volume to the terminal, the Group sold 5% of its equity interest to CMA CGM Group. The Group has accordingly reduced the shareholding percentage in Antwerp Terminal from 25% to 20% on 5th July 2005. Antwerp Terminal was opened on 6th July 2005 and will commence operations in the middle of September 2005.

Container Handling and Storage
During the period, Plangreat Limited, a wholly owned subsidiary of the Group, and its subsidiaries, engaged in container stevedoring, storage, repairs and drayage services, registered a turnover of US$3,476,000 (same period of 2004: US$3,748,000). The decline of turnover was attributed to a rise in container terminal transhipment, leading to a decrease in container service market.

Logistics Operation
COSCO Logistics continued to step up its efforts to expand its market share achieving business expansion in 2005 in several sectors: household appliances, automobiles, electricity and petrol chemicals.

In relation to the shipping agency business, 16 routes were newly added while agency agreements were entered with four shipping companies. On the freight forwarding business, the Group entered into cooperation agreements with two companies, while an agency framework agreement was reached with another company.

The shipping agency business handled 63,380 vessels during the period (same period of 2004: 62,961 vessels), while maintaining its leadership position with a 49.1% share of the PRC market, up 0.67% from a year ago (same period of 2004: 50.6%). The freight forwarding arm handled 197,195,600 tonnes of cargoes during the period (same period of 2004: 186,695,300 tonnes), achieving a 5.6% increase from last year. The sea-freight forwarding agency business also recorded a growth in its marine freight forwarding business; volume went up by 19.6% to 771,620 TEUs (same period of 2004: 645,337 TEUs).

Container Manufacturing
The Group acquired an equity interest of approximately 16.23% in CIMC at the end of last year. CIMC made its maiden contribution in the first half of the year, bringing profit of US$40,236,000 to the Group.

In addition, Shanghai CIMC Reefer Container Co., Ltd., Shanghai CIMC Far East Container Co., Ltd. and Tianjin CIMC North Ocean Container Co., Ltd. also provided the Group with profit contributions for the period.

Container manufacturing factories Shareholding 1H 2005 Production Volume (TEUs) 1H 2004 Production Volume (TEUs) +/-
Shanghai CIMC Reefer Containers Co., Ltd. 20% 23,422 19,149 +22.3%
Shanghai CIMC Far East Container Co., Ltd. 20% 57,879 62,028 -6.7%
Tianjin CIMC North Ocean Container Co., Ltd. 22.5% 72,173 62,041 +16.3%

Other Business
Liu Chong Hing Bank, in which the Group held a 20% interest, made a net profit contribution of US$4,893,000, up 15.3% from last year.

Investor Relations
The Group has long been putting emphasis on investor relations. Through regular interaction with the investors, the Group achieves the objective of bringing the investors fully updated on matters that relate to the Group, such as management philosophy, operating conditions, and corporate strategy. The Group also believes in the value of maintaining both high transparency on corporate matters and high standards on corporate governance, while striving to create shareholders' value.

During the first half of the year, the meetings we had with the investors and relevant parties had a total attendance of 171, up 14.8% from the same period last year. In addition, 11 roadshows and investor forums were conducted with a total attendance of 641, up 102.8% from the same period last year.

We also arranged various visits for the investors to visit our terminals and logistics facilities, enabling them to develop a deeper understanding of our core business and the operating environment. In addition, the Company also releases information via website and emails alerts to the financial market regularly on key events and operational performance data about the Group.

During the period, the Group achieved very good recognition in investor relations. This was demonstrated by the Group being included in many of the important indices in connection with the capital market, and the many awards which the Group has received from the community of institutional investors.

  • In January 2005, rated one of the Top 30 Stock Picks in 2005 by Standard & Poor's.
  • In March 2005, rated as "Listed Enterprise with the Best Investor Relations" by the Institutional Investor Research Group.
  • In April2005, selected as one of the 2000 Top Enterprises in 2005 by Forbes in the US.
  • In April 2005, received the Honourable Mention in the Top Chinese Enterprises with the Best Dividend Policy by FinanceAsia, for the second year in a row.

The global economy will continue to grow in the second half of this year. The appreciation of Reminbi has created an environment for improvement in the world trade and the functioning of China's economy. Although oil price remains high, it has been stabling off. The Sino-US trade dispute has become clear and eased, and China's export will continue to grow at high speed. These environments will all benefit our Company's business.

Within the Group, the container leasing business continued to increase its competitive strengths, with over 1 million TEUs currently in the container fleet, and capacity utilisation continue to be ahead of the market. The market will continue to sustain a moderate growth in the second half, providing the Group with good business opportunities.

The thriving shipping market has continued to boost a substantial increase in the global demand for more ports. With the Group's investment presence in many major ports in the world, such as the PRC, Hong Kong, Asia, and Europe, the Group is well-positioned to take advantage of the growth in throughput in the second half of the year. Coupled with the Group's plan to capture new opportunities in terminal operation, the Group will further increase its market share and overall competitive strengths.

COSCO Logistics will consolidate its advantageous position in the shipping and freight forwarding sector, and develop itself into a leading logistics company with modern logistics backbone.

The container manufacturing division has achieved an excellent result in the first half of the year. With foreign trade in the PRC maintaining a high growth, the division is well-positioned as a market leader to further penetrate the market and increase its competitive strengths.

In conclusion, 2005 is a year of sustained growth for the global economy. Capitalising on its established business strengths, the Group will continue to take an aggressive approach to enhance profitability through expanding its market share in container leasing; terminal operations; logistics, and container manufacturing. Every opportunity will be seized to broaden the income stream, raise operational efficiency, and last but the least, increase contributions to earnings.