COSCO SHIPPING International Hong Kong : 2020 Annual Results

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

(Incorporated in Bermuda with limited liability)

(Stock Code: 00517)

2020 ANNUAL RESULTS

RESULTS AND OPERATION HIGHLIGHTS

• . Profit attributable to equity holders increased by 2% to HK$338,523,000, mainly due to the increase in the profits of core business of shipping services, which was partially offset by the decrease in finance income.

• . Revenue increased by 5% to HK$3,442,894,000, mainly attributable to the increase in revenues from all core business segments.

• . Gross profit increased by 13% to HK$628,531,000. Gross profit margin increased to 18% which was mainly attributable to the improvement in performance of coatings business.

• . Profit before income tax from core business of shipping services increased by 33% to HK$363,305,000.

• . Basic and diluted earnings per share were 22.08 HK cents (2019: 21.57 HK cents). The Board has recommended the payment of a final dividend of 15.5 HK cents per share. Together with the interim dividend of 6.5 HK cents per share, total dividends per share are 22 HK cents. The dividend payout ratio is approximately 100%.

• . The Group had net cash (represented total restricted bank deposits and current deposits and cash and cash equivalents, less short-term borrowings) of HK$6,429,536,000 as at 31st December 2020.

The board of directors (the ''Board'' or the ''Director(s)'') of COSCO SHIPPING International (Hong Kong) Co., Ltd. (the ''Company'' or ''COSCO SHIPPING International (Hong Kong)'') is pleased to announce the audited consolidated results of the Company and its subsidiaries (collectively the ''Group'') for the year ended 31st December 2020.

CONSOLIDATED INCOME STATEMENT For the year ended 31st December 2020

2020

2019

Note

HK$'000

HK$'000

Revenue Cost of sales

3

3,442,894 (2,814,363)

3,265,745 (2,710,535)

Gross profit

Management fee income

Other income and gains/(losses) - net Selling, administrative and general expenses

628,531 555,210

117,328 107,726

4 5

11,933 (23,587)

(625,292) (554,687)Operating profit

132,500 84,662

Finance income Finance costs

Finance income - net

Share of profits of joint ventures Share of profits of associates

6 6 6

137,635 207,849

132,696 203,857

108,807 48,798

31,022 48,431

Profit before income tax

Income tax expenses

405,025 385,748

7

(57,489)

(52,440)

Profit for the yearProfit attributable to:

Equity holders of the Company Non-controlling interests

Earnings per share attributable to equity holders of the Company - basic and diluted, HK cents

347,536 333,308

338,523 330,607

9,013 2,701

347,536 333,308

8

22.08

21.57

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31st December 2020

2020	2019
HK$'000	HK$'000
Profit for the year	347,536	333,308
Other comprehensive income/(losses)
Items that may be reclassified subsequently to profit or loss:
Share of currency translation differences of joint ventures	11,136	(3,230)
Share of currency translation differences of associates	517	210
Share of cash flow hedges of an associate, net of tax	14,143	3,897
Currency translation differences	100,139	(26,300)
Items that will not be reclassified to profit or loss:
Fair value losses on financial assets at fair value through other
comprehensive income, net	(18,961)	(1,453)
Gain on revaluation upon reclassification of property, plant and
equipment and right-of-use assets to investment properties	5,518	7,428
Other comprehensive income/(losses) for the year	112,492	(19,448)
Total comprehensive income for the year	460,028	313,860
Total comprehensive income/(losses) attributable to:
Equity holders of the Company	431,911	317,743
Non-controlling interests	28,117	(3,883)
460,028	313,860

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31st December 2020

2020	2019
Note	HK$'000	HK$'000
ASSETS
Non-current assets
Intangible assets	109,044	105,617
Property, plant and equipment	279,908	281,550
Right-of-use assets	45,459	39,577
Investment properties	144,543	121,261
Investments in joint ventures	562,668	437,419
Investments in associates	167,403	147,693
Financial assets at fair value through other comprehensive income	57,590	76,551
Deferred income tax assets	37,931	43,004
1,404,546	1,252,672
Current assets
Inventories	366,348	305,997
Trade and other receivables	10	1,645,823	1,494,814
Current income tax recoverable	3,330	3,722
Restricted bank deposits	13,600	5,582
Current deposits and cash and cash equivalents	6,505,047	6,314,159
8,534,148	8,124,274
Total assets	9,938,694	9,376,946
EQUITY
Capital and reserves attributable to
the Company's equity holders
Share capital	153,296	153,296
Reserves	7,959,747	7,773,109
8,113,043	7,926,405
Non-controlling interests	314,671	291,814
Total equity	8,427,714	8,218,219
LIABILITIES
Non-current liabilities
Lease liabilities	11	6,194	1,934
Deferred income tax liabilities	83,233	67,743
89,427	69,677
Current liabilities
Trade and other payables	11	951,298	645,594
Contract liabilities	11	358,284	361,896
Current income tax liabilities	18,038	13,778
Short-term borrowings	89,111	61,399
Lease liabilities	11	4,822	6,383
1,421,553	1,089,050
Total liabilities	1,510,980	1,158,727
Total equity and liabilities	9,938,694	9,376,946

NOTES

• 1 GENERAL INFORMATION

  The Group is principally engaged in the provision of shipping services and general trading.

  The Company is a limited liability company incorporated in Bermuda and its shares are listed on The Stock Exchange of Hong Kong Limited (the ''Stock Exchange''). The address of its principal place of business is 47th Floor, COSCO Tower, 183 Queen's Road Central, Hong Kong.

  The ultimate holding company of the Company is 中國遠 洋海運集團有限公司 (China COSCO Shipping Corporation Limited*) (''COSCO SHIPPING''), a state-owned enterprise in the People's Republic of China (the ''PRC'').

  These consolidated financial statements are presented in Hong Kong dollars, unless otherwise stated.

• 2 BASIS OF PREPARATION AND ACCOUNTING POLICIES

  The consolidated financial statements of the Company have been prepared in accordance with Hong Kong Financial Reporting Standards (''HKFRSs'') issued by the Hong Kong Institute of Certified Public Accountants (''HKICPA''). The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets at fair value through other comprehensive income (''FVOCI'') and investment properties, which are carried at fair value.

  (a) Adoption of amendments to existing standards

In 2020, the Group has adopted the following amendments to existing standards issued by the HKICPA, which are relevant to its operations:

Effective for accounting periods beginning on or after

Conceptual Framework for	Revised Conceptual Framework for Financial	1st January 2020
Financial Reporting 2018	Reporting
Amendments to HKAS 1	Definition of Material	1st January 2020
and HKAS 8
Amendments to HKFRS 3	Definition of a Business	1st January 2020

The adoption of the above amendments to existing standards did not result in any substantial changes to the Group's accounting policies and had no significant impact on the results and the financial position of the Group.

(b) Amendments to existing standards those are not yet effective

The following amendments to existing standards have been published by the HKICPA and are relevant to the Group's operations. They are not yet effective for accounting periods beginning on 1st January 2020 and have not been early adopted by the Group.

Effective for accounting periods beginning on or after

Annual improvements	Annual Improvements to HKFRSs 2018-2020	1st January 2022
projects
Amendments to HKFRS 3,	Narrow-scope Amendments	1st January 2022
HKAS 16 and HKAS 37
Amendments to HKAS 1	Classification of Liabilities as Current or Non-current	1st January 2023
Amendments to HKFRS 10	Sale or Contribution of Assets between an Investor and	To be determined
and HKAS 28	its Associate or Joint Venture

The Group has already commenced an assessment of the related impact of adopting the above amendments to existing standards. The adoption of these amendments to existing standards is not expected to have any significant impact on the results and the financial position of the Group.

3 REVENUE AND SEGMENT INFORMATION

Turnover, representing revenue, recognised at a point in time, during the year is as follows:

2020	2019
HK$'000	HK$'000
Sale of coatings	1,085,028	1,002,416
Sale of marine equipment and spare parts	1,315,925	1,262,058
Commission income from ship trading agency	90,934	84,978
Commission income from insurance brokerage	92,207	83,396
Sale of marine fuel and other products	70,404	47,033
Sale of asphalt and other products	788,396	785,864
3,442,894	3,265,745

The chief operating decision-maker has been identified as the executive directors. The executive directors review the Group's internal reports in order to make decisions about resources to be allocated to the segment and assess its performance. Management considers the business from a product perspective and has identified the following reportable segments on the basis of these reports:

Reportable segments	Business activities
Coatings	Production and sale of coatings, and holding of investments in joint ventures,
namely Jotun COSCO Marine Coatings (HK) Limited (''Jotun COSCO'')
and 常熟耐素 生物材料科技有限公司 (Nasurfar Biomaterial Technology
(Changshu) Co., Ltd.*) (''Nasurfar Changshu'')
Marine equipment and spare parts	Trading of marine equipment and spare parts, and holding of investments in
joint ventures
Ship trading agency	Provision of agency services relating to shipbuilding, ship trading and
bareboat charter business, and holding of investments in a joint venture
and an associate
Insurance brokerage	Provision of insurance brokerage services
Marine fuel and other products	Trading of marine fuel and other related products, and holding of investment
in an associate, namely Double Rich Limited (''Double Rich'')
General trading	Trading, storage, processing and supply of asphalt and other products, and
holding of investments in associates

Others mainly comprise the holding of Group's financial assets at FVOCI.

Management assesses the performance of the operating segments based on a measure of profit before income tax.

Total segment liabilities

Profit or loss items:

Segment revenue Inter-segment revenueRevenue from external customersSegment operating profit/(loss) Finance income

Finance costs

Share of profits of joint ventures Share of profits of associatesSegment profit before income tax Income tax expenses

Segment profit after income tax

Balance sheet items:

Total segment assets

Total segment assets include: - Joint ventures - Associates

Other items:

Depreciation and amortisation, net of amount capitalised

Reversal of provision for impairment of inventories, net Provision for impairment of trade receivables, net

Government subsidy income Additions to non-current assets

(other than financial assets at FVOCI and deferred income tax assets)

1,085,028

1,085,028 -

1,701,953 546,340 - 398,810

Coatings HK$'000

(240) 106,201 -

114,438

123,166 (8,728)

22,496

14,153 (1,214)

16,726 479

(7,835)

1,883

Marine equipment and spare parts HK$'000

1,315,925

1,315,925 -

1,381,139 319,196 363,543

73,295 661 (1,100) 1,270 -

74,126 (11,396)

62,730

11,434 - 623,038

10,053

344 (4,157)

7,016

-

trading agency HK$'000

Shipping services	trading	Others
Ship	Marine fuel
and other
products	Total
HK$'000	HK$'000	HK$'000	HK$'000
70,404	2,655,422	788,396	-
-	(924)	-	-
70,404	2,654,498	788,396	-
(2,004)	222,388	12,258	2,770
128	4,156	268	-
(2)	(1,446)	(3,856)	-
-	108,807	-	-
29,329	29,400	1,622	-
27,451	363,305	10,292	2,770
-	(54,552)	(2,103)	-
27,451	308,753	8,189	2,770
204,414	3,970,245	722,454	54,856
-	562,668	-	-
156,262	158,603	8,800	-
309	1,308,911	190,349	-
-	30,028	6,287	-
-	(7,835)	-	-
-	14,497	1,773	-
-	(6,449)	(230)	-
-	15,150	4,231	-

73,706 64,856 (22,662) (11,766)

72,038 214,716

90,934 92,207

51,044 53,090

90,976 93,089

70,397 63,974

1,336 71

3,165

1,914 974

4,894 2,341

280

(12) (92)

(42) (882)

- - -

Insurance brokerage HK$'000

Year ended and as at 31st December 2020
Inter-
General	segment
elimination	Total
HK$'000	HK$'000
(924)	3,442,894
924	-
-	3,442,894
-	237,416
(380)	4,044
380	(4,922)
-	108,807
-	31,022
-	376,367
-	(56,655)
-	319,712
(162,960)	4,584,595
-	562,668
-	167,403
(162,960)	1,336,300
-	36,315
-	(7,835)
-	16,270
-	(6,679)
-	19,381

- -

- -

236

- -

(1,078)

49

Year ended and as at 31st December 2019

Shipping servicesCoatingsMarine equipment and spare parts

Ship trading agency

Insurance brokerage

Marine fuel and other products

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

Profit or loss items:

Segment revenue Inter-segment revenueRevenue from external customersSegment operating profit/(loss) Finance income

Finance costs

Share of profits of joint ventures Share of profits of associatesSegment profit before income tax Income tax expenses

Segment profit after income tax

Balance sheet items:

Total segment assets

Total segment assets include: - Joint ventures - Associates

Total segment liabilities

Other items:

Depreciation and amortisation, net of amount capitalised Reversal of provision for impairment of inventories, net Reversal of provision for impairment of trade receivables, net

Government subsidy income Additions to non-current assets

(other than financial assets at FVOCI and deferred income tax assets)

General tradingOthersInter-segment elimination

TotalTotal

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

1,002,416 -

1,262,329

(271)

84,978 -

84,246

(850)

47,033 -

2,481,002

(1,121)

789,214 (3,350)

- -

(4,471) 4,471

3,265,745 -

1,002,416

1,262,058

84,978 53,254 2,071

83,396 56,103 2,476 (120)

47,033

2,479,881

785,864 - - 3,265,745

771 1,163 (146) 47,280 -

67,461 476 (1,687)

(21) 691 13

(4,070)

58 (583)

173,519

9,290 1,048 (4,944)

3,219 - 186,028

6,244

- -

(418) 6,874

(2,557)

418 (7,083)

827 -

- -

- 47,070 42,475 -

48,798

- - - 48,798

47,083

1,348 - - 48,431

49,068 (10,416)

67,077 (10,912)

56,008 (18,012)

58,459 (10,677)

273,087 (50,017)

6,742 (2,062)

3,219 - 283,048

- - (52,079)

38,652

56,165

37,996

47,782

42,475

223,070

4,680

3,219 - 230,969

1,369,790

1,268,441

249,308

294,956

188,549

3,371,044 437,419 140,153 1,040,751

657,157

74,121 (174,646) 3,927,676

424,665 - 242,697

9,482 - 583,640

3,272 2,129 55,847

- - 157,988

- 138,024 579

- - - 437,419

7,540 - - 147,693

165,341

-

(174,646) 1,031,446

18,466

7,221

216

236

- -

26,139

2,685 - - 28,824

(1,115)

-

-

-

(1,115) - - - (1,115)

(544) (1,898)

(293)

- -

- -

- -

(837) - - - (837)

-

(1,898) - - - (1,898)

11,758

3,071

-

287

-

15,116

3,995 - - 19,111