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COSCO CORPORATIONCOSCO CORPORATION(SINGAPORE) LTD(SINGAPORE) LTD
FY2003 Full Year ResultsFY2003 Full Year Results
PresentationPresentation
11 February 200411 February 2004
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Outline of Presentation1. Background & Corporate
Restructuring Exercise2. Operations Review3. Financial Review4. Industry Review
Dry Bulk ShippingShip Repair
NantongDalian
5. Prospects
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New Shareholding Structure ofNew Shareholding Structure ofCOSCO Corporation (S) LtdCOSCO Corporation (S) Ltd
China Ocean Shipping (Group) Company (COSCO)
COSCO HK Group(Non-listed)
COSCO Holding (S) Pte Ltd(Non-listed)
SembCorp Marine(Listed – SGX)
COSCO Coporation (S) Ltd(Listed - SGX)
Temasek Holdings Public
100%
53.77%46.23%
3.7% 55.4%
5.1% 35.8%
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1. Background Information
Listed on SGX Mainboard in October 1993.
55.4% owned by COSCO Holdings (Singapore) Pte Ltd, a 100% subsidiary of China Ocean Shipping (Group) Co.
Headed by President Ji Hai Sheng
Issued capital: 898.2m shares
Estimated free float: 35.8%
Market Capitalisation: $800m (@89cts – 6th Feb 2004)
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Cosco Group
COSCO Corporation (S) Ltd is part of China Ocean Shipping Group Company (COSCO Group), one of China’s top 30 largest conglomerates with over 300 subsidiaries and more than 100 representative offices located overseas.
COSCO Group’s core business is in international shipping, shipping agencies, sea and air freight forwarding, terminals and warehousing, inland haulage, finance and insurance.
COSCO Group’s mandate: To build, own and operate shipping and logistics assets that are strategic to China’s international trade.
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Restructuring Milestones 1Restructuring Milestones 1
Divested stakes in 2 property owning subsidiaries to COSCO Holdings (S) Pte Ltd
Dec 2002
Took delivery of MV Cos KnightNov 2002
Increased stake in Coslink (M) Sdn Bhd from 51% to 82.6% .
Apr 2002
Completed acquisition of 50% stake in COSCO NantongShipyard Co., Ltd for US$14.4m.
Feb 2002
Divested two non-core trading companies, COSCO Trading & COSTO Pte Ltd for $2.25m
Jan 2002
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Restructuring Milestones Restructuring Milestones -- 22
Private Placement of 100m Ordinary SharesMay 2003
Entered into conditional agreement to acquire 40%
stake in COSCO Dalian Shipyard Co., Ltd
Apr 2003
Received delivery of MV Cos Lucky, the Group’s 14th
bulk carrier
Apr 2003
Divested Revo Technologies Co. Ltd to COSCO
Holdings (S) Pte Ltd
Feb 2003
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Restructuring Milestones Restructuring Milestones -- 22
Conditional S/P agreement to build 2 x 55,500DWTHandymax from Nantong Cosco KHI Ship Engineering Co., Ltd
Nov 2003
To lease two 74,000DWT Panamax from Cosco Group from 3Q 2005
Dec 2003
Exercised put option to sell 100% of Cosland (SR) Development to Cosco Holdings (S) Pte Ltd
Dec 2003
Renamed as Cosco Corporation (S) LtdNov 2003
Completion of acquisition of COSCO Dalian Shipyard Co., Ltd
Aug 2003
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Results of RestructuringResults of Restructuring
Sharper focus on shipping & ship related activities
Disciplined divestment of remaining non-core assets
Active acquisition of profitable ship repair businesses in China
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2. Operations Review
Core Group Activities
COSCO Corporation (S) LtdCOSCO Corporation (S) Ltd
ShippingShipping Ship Repairing
Ship Repairing
Marine Engineering
Marine Engineering
Shipping Agencies
Shipping Agencies
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Operations ReviewShipping
Fleet of 14 dry bulk carriers in excess of 700,000 dwt :
• 13 owned and 1 joint ventured.BDI rose by 174% in 2003 and 19% in 2004 to date.
• Leased on 1+1 year duration.All 14 charter contracts will be renewed in 2004 at
higher freight rates.
• Average age of fleet: 11 years.
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Operations ReviewM V Cos Knight
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Operations ReviewShip Repair
Contributions from COSCO Nantong & Dalian shipyards resulted in the 273% growth in associate income to $17.6 million in FY 2003
In FY2003, COSCO shipyards accounted for 13.8% of total ship repair in China.
Over 90% of ship repair customers are foreign registered ship owners.
Acquisition of Cosco Dalian was completed in August 2003
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Location of Cosco ShipyardsLocation of Cosco Shipyards
Tianjin
Dalian
Nantong
Shanghai
Xiamen
Guangzhou
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Shipyard Facilities of Nantong & Dalian
1 (80,000 dwt)NilDry dock
62Repair berths
2 (180,000 & 80,000 dwt)
2 (150,000 &80,000 dwt)Floating docks
350,000 m2210,000 m2Land area
1.6 km1.1 kmCoastline
COSCO Dalian
COSCO NantongOperating Facilities
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Shipyard Facilities of Dalian
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180,000 180,000 DWT Floating DockDWT Floating Dock
Shipyard Facilities of Dalian
880,000 DWT Floating Dock0,000 DWT Floating Dock
Dry Dock
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Shipyard Facilities of Nantong
80,000 DWT Floating Dock
150,000 DWT Floating Dock
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Completed Jobs - Nantong
Conversion of Container Vessel
Oil Rig
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Completed Jobs - Dalian
BargeLength – 125mTonnage – 15,500 DWT
Dry Dock Caisson
Conversion of bulk carrier
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Work In Progress - Dalian
Oil PlatformWill be completed in April 2004
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Ship Repair Cost Ranking
170/180USA110/115Baltic/Russia150/160Scandinavia140/150North Europe110/115Balkans/Turkey125/130Mediterranean110/115South Africa100/105Middle East
250Japan60/75Indonesia50/65The PRC
105/110South Korea100Singapore%Country
Source : Marine Log Magazine Website
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China’s Ship Repair Market
Source: China Ship Industry Association Jan 2004
20.0620.6522.9525.8526.5930.1041.2949.38 67.9171.19
Year 2003 USD million
79106548231
Year 2002Ranking
COSCO (Guangzhou) Shipyard Co., LtdHuarun Dadong Dockyard CoShanghai ShipyardGuangzhou Wenchong Shipyard Co., LtdBeihai ShipyardChina Shipping ShipyardShanhaiguang ShipyardChengxi ShipyardCOSCO (Dalian) Shipyard Co., LtdCOSCO (Nantong) Shipyard Co., Ltd
Top 10 Companies
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Operations ReviewShipping Agencies
COSCO Corporation (Singapore) Ltd
SINGAPORE70% owned Costar
Shipping Pte Ltd
MALAYSIA82.6% owned Coslink (M)
Sdn Bhd
Provides agency services for full container and break-bulk liner services in both Singapore and Malaysia.
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Operations ReviewMarine Engineering
COSCO Marine Engineering Singapore provides 24-hour marine engineering and ship repair services in Singapore.
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3. Financial Review3. Financial ReviewFY2003FY2003
-29%15.210.8Finance costs
363%6.530.1Profit Before Tax
30%27.435.6Gross Profit
523%3.924.3Net Profit
273%4.717.6Associates
36%17.523.8Operating Profit
-10%102.491.9Turnover
% +/-FY2002FY2003($m)
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Financial Review – FY2003
Restructuring-related disposal of property companies resulted in decline in group turnover.
Full year contribution from 50% Cosco (Nantong) and 5-month from 40% Cosco (Dalian) = 273% jump in associates to $17.6m.
Benefit from restructuring: net profit +523% to record $24.3m. Reward to shareholders: higher dividend +42.8% and 1-for-5 bonus share issue
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Balance Sheet HighlightsBalance Sheet Highlights
0.9x2.7xInterest cover
28.7cts29.8ctsNTA / share
1.29x0.51xNet Gearing
441.3454.5Fixed Assets
32.486.1Cash
274.1226.2Bank Borrowings
186.9273.9Shareholders Funds
Dec 2002Dec 2003
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Balance Sheet ReviewBalance Sheet Review
Good, steady cash flow from shippingHigh interest cover
Bank borrowings reduced by:• Sale of non-core properties• Share placement
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4. Industry ReviewDry Bulk Shipping
90% of total cargo transported worldwide is shipped by sea.
Baltic Freight Index • launched in 1985, • it is a composite average of the Handymax,
Panamax and Capesize dry indices.
Baltic Dry Index (BDI) • rose 174% in 2003 & 18% to 6 Feb 2004
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Industry Review
Ship RepairGlobal ship repair industry has been buoyant since 2001, with yards reporting strong demand and modest price increases.*
Strong demand due to:• Ageing shipping fleet profiles;• More demanding class and other regulatory requirements;• Absorption of repair yards into the conversion sector;• Lack of new ship repair capacity.
* According to London based Drewy Shipping Consultants
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Industry Review
Ship Repair
COSCO NantongRanked No. ONE in earning of foreign vessels repairs revenue
COSCO DalianRanked No. Two in earning of foreign vessels repairs revenue
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Types of Ships
Capesize
Panamax
Handysize / Handymax
80,000+ dwt
50 - 79,999 dwt
10 - 49,999 dwt
Size (deadweight
tonnes)
565
1,215
3,753
Number in world fleet
10.2%
22.0%
67.8%
% of world fleet (by vessel)
Iron ore and coal
Iron ore, coal, grain
Variety of Goods
Types of cargo
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Baltic Dry Index (from 2001)
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Bulk Carrier Fleet Deliveries & Orders1997 - 2004
Source: Intercargo Annual Review 2002
0
5
10
15
20
25D
WT
Tonn
es
Delivered 19 11 13 13 21 8Ordered 9 10 6
1997 1998 1999 2000 2001 2002 2003 2004
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Market Conditions for Bulk Shipping
BDI has remained firm, up 174% in 2003 & 18% to 6 Feb 2004
Quantity of dry bulk cargo remains high.
Reduction in capacity expected from 2002 onwards as order indications have been weak for dry bulk carriers.
Impact: BDI expected to be more stable as demand for cargo space and available capacity will be better matched. Benefit existing players like COSCO Corporation.
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5.5. Group ProspectsGroup ProspectsShipping & AgenciesShipping & Agencies
Firmer freight rates has benefited charter renewals for the Group’s bulk carriers
Higher renewal rates will impact group results in FY 2004.
Earnings from new ships: MV COS Knight and MV COS Lucky will contribute to current year profits.
New buildings will be added to fleet over next 2 years
Agency businesses continue to provide strong and steady income.
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Ship RepairShip repair sector in China will continue to grow due to low costs and growth of China’s foreign trade.
More foreign vessels will undertake ship repair at China shipyards.
Purchase of COSCO Dalian and COSCO Nantongwill expose Group to growth opportunities in China ship repair segment.
Both shipyards will have a full year contribution to FY2004.
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Current Year ProspectsCurrent Year Prospects
Continue to focus on core business of dry bulk shipping and ship repair.
Expansion of bulk cargo fleet in near future.
Firmer BDI (up 174% in 2003) has continued to rise 18% to 6 Feb2004. At current levels, all 14 charter agreements will be renewed at higher rates.
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Current Year ProspectsCurrent Year Prospects
Associate companies from shipyards will remain strong in FY2004.
Exploring more shipyard acquisition opportunities in China.
With higher charter rates and profits from China ship yards, profit momentum of FY2003 should continue into FY2004. Group net profit in FY2004 to be higher than FY2003.
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COSCO COSCO -- 5 Year Price Chart5 Year Price Chart
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2003 / 2004 Price Chart2003 / 2004 Price Chart
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Conclusion
Restructuring & divestment almost completed in
last two years
Focus on core businesses
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Contact us at :Contact us at :www.cosco.com.www.cosco.com.sgsg
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Thank YouThank You