Investor
Relations

First Quarter Financial Statement For The Period Ended 31/03/2004

HALF-YEAR AND FULL YEAR RESULTS

corresponding period of the immediately preceding financial year.

(i) Income Statement



	Group
	S$'000		%
	Q1 2004	Q1 2003	Change
Turnover	24,662	21,528	15
Cost of sales	(13,746)	(15,349)	(10)
Gross profit	10,916	6,179	77
Other operating income	279	498	(44)
Distribution costs	(266)	(279)	(5)
Administrative expenses	(2,870)	(2,421)	19
Exceptional items	0	15	NM
Operating profit	8,059	3,992	102
Net finance costs	(3,043)	(2,420)	26
Share of results of associated companies	7,882	2,600	203
Amortisation of goodwill of an associated company	(145)	(145)	0
Profit before tax	12,753	4,027	217
Tax	(1,208)	(883)	37
Profit from ordinary activities	11,545	3,144	267
Minority interest	(158)	(178)	(11)
Net profit	11,387	2,966	284



(ii) Breakdown and Explanatory Notes to Income Statement



	Group
	S$'000		%
	Q1 2004	Q1 2003	Change
Profit before tax is arrived at after (charging)/crediting:
Other income including interest income	383	597	(36)
Interest on borrowings	(1,983)	(2,893)	(31)
Depreciation and amortisation	(6,053)	(5,626)	8
Profit on disposal of property, plant and equipment	1	0	NM
Foreign exchange (loss)/gain	(1,164)	374	NM
The Group's exceptional item comprise the following:
Profit on disposal of a subsidiary	0	15	NM
Adjustment for under provision of tax in respect of prior years:
Income tax	0	(281)	(100)


NOTES:

NM denotes not meaningful.

as at the end of the immediately preceding financial year.

	Group		Company
	S$'000	S$'000	S$'000	S$'000
	31/03/2004	31/12/2003	31/03/2004	31/12/2003
Current assets
Cash and cash equivalents [1]	68,326	86,124	31,772	53,407
Trade and other receivables [2]	40,091	22,672	18,152	2,556
Trading property	615	615	0	0
	109,032	109,411	49,924	55,963
Non-current assets
Non-trade receivables	852	864	0	0
Other investments	556	558	200	200
Investments in associated companies [2]	61,282	69,810	55,967	58,212
Investments in subsidiaries	0	0	169,842	171,054
Investment properties	30,238	30,275	0	0
Property, plant and equipment	343,292	352,774	442	473
Deferred tax assets	201	201	0	0
	436,421	454,482	226,451	229,939
Total assets	545,453	563,893	276,375	285,902
Current liabilities
Trade and other payables	52,262	54,170	24,280	20,399
Borrowings [1]	34,052	43,317	2,716	5,068
Provision	2,436	2,288	0	0
Current tax	955	1,519	642	616
	89,705	101,294	27,638	26,083
Non-current liabilities
Other payables	4,381	4,493	105	107
Borrowings [1]	167,639	183,922	6,500	26,869
Deferred tax	252	252	0	0
	172,272	188,667	6,605	26,976
Total liabilities	261,977	289,961	34,243	53,059
Net assets	283,476	273,932	242,132	232,843
Shareholders' equity
Share capital	179,877	179,648	179,877	179,648
Reserves	23,556	25,780	27,573	27,499
Retained profits	77,253	65,866	34,682	25,696
Total shareholders' equity	280,686	271,294	242,132	232,843
Minority interest	2,790	2,638	0	0
	283,476	273,932	242,132	232,843

NOTES:

[1] The decrease in cash and cash equivalents was due to the repayment of bank loans. This has resulted in a decrease in borrowings.

[2] The increase in trade and other receivables was due to the dividend receivables of S$15,461,000 from associated companies, Cosco (Nantong) Shipyard Co., Ltd ("Cosco Nantong") and Cosco (Dalian) Shipyard Co., Ltd ("Cosco Dalian"). The dividends were declared in Q1 2004 by the two associated companies, thus resulted in a decrease in Investment in associated companies. The dividends will be paid in Q2 2004.

Amount repayable in one year or less, or on demand



As at 31/03/2004

As at 31/12/2003

Secured	Unsecured	Secured	Unsecured
31,336,000	2,716,000	38,249,000	5,068,000



Amount repayable after one year



As at 31/03/2004

As at 31/12/2003

Secured	Unsecured	Secured	Unsecured
161,139,000	6,500,000	176,422,000	7,500,000



Details of any collateral

Secured borrowings are generally secured by the group's leasehold land and buildings, motor vessels, motor vehicles, investment properties and trading property with net book values totalling $367,195,000 (2003: $376,792,000).

the corresponding period of the immediately preceding financial year.

	Group
	S$'000
	Q1 2004	Q1 2003
Cash flow from operating activities
Profit before tax and share of results of associated companies	5,017	1,571
Adjustments for:
Depreciation of property, plant and equipment	5,886	5,588
Depreciation of investment properties	38	38
Profit on disposal of property, plant and equipment	(1)	(22)
Profit on disposal of a subsidiary	0	(15)
Preference dividend (financing)	4	372
Interest expense (financing)	1,979	2,522
Interest income (investing)	(104)	(99)
Operating cash flow before working capital changes	12,819	9,955
Changes in operating assets and liabilities, net of effects from disposal of subsidiaries:
Receivables	(1,997)	18,112
Payables	(2,162)	(1,316)
Exchange differences	198	102
Cash generated from operations	8,858	29,485
Income tax paid	(746)	(465)
Net cash inflow from operating activities	8,112	29,020
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment	1	58
Payments for purchase of property, plant and equipment	(982)	(4,301)
Increase in deferred expenditure	0	(6)
Interest received	101	102
Net cash outflow from investing activities	(880)	(4,147)
Cash flows from financing activities
Repayment of bank loans and other term loans	(24,914)	(19,327)
Proceeds from bank loans and other term loans	13,000	3,484
Repayment of finance lease liabilities	(5)	(5)
Dividends paid to minority shareholders of subsidiaries	0	(738)
Repayment of loan from immediate holding company	0	(6,425)
Proceeds from issue of ordinary shares	87	0
Interest paid	(2,672)	(2,345)
Net cash outflow from financing activities	(14,504)	(25,356)
Net decrease in cash and cash equivalents held	(7,272)	(483)
Cash and cash equivalents at the beginning of the financial period	73,606	21,474
Cash and cash equivalents at the end of the financial period	66,334	20,991
Cash and cash equivalents represented by:
Bank and cash balances	19,875	13,568
Fixed deposits with financial institutions	48,451	17,817
Bank overdrafts	(1,992)	(10,394)
	66,334	20,991

(ii) changes in equity other than those arising from capitalisation issues and
distributions to shareholders, together with a comparative statement for the
corresponding period of the immediately preceding financial year.

	Share capital	Reserves	Retained profits	Total
	S$'000	S$'000	S$'000	S$'000
The Group
Balance at 1 January 2004	179,648	25,780	65,866	271,294
Net loss not recognised in income statement
- Foreign currency translation differences	0	(2,298)	0	(2,298)
Net profit for the financial period	0	0	11,387	11,387
Total recognised losses and gains for the financial period	0	(2,298)	11,387	9,089
Issue of share capital	85	2	0	87
Conversion of RCCPS	144	72	0	216
Balance at 31 March 2004	179,877	23,556	77,253	280,686
Balance at 1 January 2003	124,945	11,025	48,373	184,343
Net gain not recognised in income statement
- Foreign currency translation differences	0	2,487	0	2,487
Net profit for the financial period	0	0	2,966	2,966
Total recognised gains for the financial period	0	2,487	2,966	5,453
Transfer from retained profits to statutory reserve	0	849	(849)	0
Balance at 31 March 2003	124,945	14,361	50,490	189,796
The Company
Balance at 1 January 2004	179,648	27,499	25,697	232,844
Net profit for the financial period	0	0	8,985	8,985
Issue of share capital	85	2	0	87
Conversion of RCCPS	144	72	0	216
Balance at 31 March 2004	179,877	27,573	34,682	242,132
Balance at 1 January 2003	124,945	11,712	29,103	165,760
Net profit for the financial period	0	0	5,220	5,220
Balance at 31 March 2003	124,945	11,712	34,323	170,980

bonus issue, share buy-backs, exercise of share options or warrants, conversion of
other issues of equity securities, issue of shares for cash or as consideration for
acquisition or for any other purpose since the end of the previous period reported
on. State also the number of shares that may be issued on conversion of all the
outstanding convertibles as at the end of the current financial period reported on
and as at the end of the corresponding period of the immediately preceding
financial year.

During Q1 2004, the issued and paid-up capital of the Company increased by $229,352 from $179,647,532 to $179,876,884. This was due to:

• the allotment and issue of 721,760 ordinary shares of $0.20 each as a result of the conversion of RCCPS (31/03/2003: Nil); and
• the allotment and issue of 425,000 ordinary shares of $0.20 each from the exercise of option under the Cosco Group Employees' Share Option Scheme (31/03/2003: Nil).

The outstanding share options under the Cosco Group Employees' Share Option Scheme as at 31 March 2004 was 6,165,000 (31/03/2003: 9,340,000).

which auditing standard or practice.

The figures have not been audited or reviewed.

any qualifications or emphasis of a matter).

Not Applicable

issuer's most recently audited annual financial statements have been applied.

The Group has adopted the same accounting policies and method of computation in the financial statements for the current period compared with the audited financial statements for the financial year ended 31 December 2003.

including any required by an accounting standard, what has changed, as well as
the reasons for, and the effect of, the change.

Not Applicable

on and the corresponding period of the immediately preceding financial year,
after deducting any provision for preference dividends.

	Group
	Q1 2004	Q1 2003
(i) Based on the weighted average number of ordinary shares on issue	1.27 cents	0.47 cents
(ii) On a fully diluted basis	1.26 cents	0.42 cents

NOTES:

The earnings per ordinary share is calculated by dividing the consolidated profit after taxation, minority interests and preference dividend by the weighted average number of ordinary shares in issue during the period.

The fully diluted earnings per share is arrived at after taking into consideration the potential ordinary shares arising from the exercise of outstanding share options and Redeemable Cumulative Convertible Preference Shares (RCCPS) which would dilute the basic earnings per share. Share options had been excluded for Q1 2003 computation as the effect was anti-dilutive.

capital of the issuer at the end of the:-

(a) current financial period reported on; and
(b) immediately preceding financial year.

	Group		Company
	31/03/2004	31/12/2003	Q31/03/2004	31/12/2003
Net asset value per ordinary share	31.21 cents	30.20 cents	26.92 cents	25.92 cents

understanding of the group's business. It must include a discussion of the
following:-

(a) any significant factors that affected the turnover, costs, and earnings of the
group for the current financial period reported on, including (where applicable)
seasonal or cyclical factors; and

(b) any material factors that affected the cash flow, working capital, assets or
liabilities of the group during the current financial period reported on.

Overview

Following the restructuring undertaken in 2002 and 2003 to divest non-shipping related assets and expand core activities, the Group is now focused on its core businesses in dry bulk shipping, shipping agency and ship repair.

Turnover

In Q1 2004, Group turnover grew 15% to $24.7 million. Charter income from dry bulk shipping, which constituted the majority of Group turnover in this quarter, rose 30% as compared to the previous corresponding period. The increase was mainly due to higher charter rates contracted by the Group's 13 dry bulk carriers when their charter agreements were renewed in FY2003.

Profitability

The higher charter income in Q1 2004 resulted in gross profit rising 77% to $11 million. This led to a gross margin expansion from 28.7% in the previous period to 44.2%.

Due to the expansion of core businesses, administrative expenses were 19% higher than the corresponding period. Although interest on borrowings declined 31% to $2 million, the foreign exchange loss of $1.2 million which was attributed to the weakening of the United States dollar against the Singapore dollar, has resulted in a 26% increase in net finance costs to $3 million in Q1 2004.

The Group's share of profits from associates is derived from its investments in two large shipyards in China: a 50% stake in Cosco (Nantong) Shipyard Co., Ltd ("Cosco Nantong") acquired in February 2002 and a 40% stake in Cosco (Dalian) Shipyard Co., Ltd ("Cosco Dalian") acquired in August 2003.

For Q1 2004, income from associates rose 203% to $7.9 million. Due to more effective cost management, Cosco Nantong increased its contribution over the previous period, whereas Cosco Dalian made its maiden Q1 contribution. To date, the net contribution from Cosco Nantong amounted to $20.71 million, which represented 84% of its investment cost. If the present level of profitability is maintained, the Group will be able to fully recover its investment cost in Cosco Nantong by the end of FY2004, an investment period of less than three years.

Tax expense in Q1 2004 was 37% higher than the previous corresponding quarter due to contributions from Cosco Dalian and Cosco Nantong. The effective tax rate of 9.4% is lower than the statutory tax rate of 20% was due to higher tax exempt shipping profits and concessionary tax rate enjoyed by Cosco Nantong and Cosco Dalian. With higher charter income from firmer freight rates and strong contributions from both shipyards in China, Group's net profit rose 284% to $11.4 million in Q1 2004.

shareholders, any variance between it and the actual results.

The Group's results for Q1 2004 is in line with the commentary made in paragraph 10 of the Group's Full Year Financial Statement and Dividend Announcement released on 11 February 2004.

competitive conditions of the industry in which the group operates and any
known factors or events that may affect the group in the next reporting period
and the next 12 months.

The increase in the BDI in 2003 enabled the Group's bulk carrier fleet to renew their charter agreements at higher freight rates during the year. In Q1 2004, 2 vessels renewed their charter agreements at higher rates. The Group expects the renewal of its existing charter agreements in 2004 at higher rates. The shipping income for FY 2004 is expected to be higher as compared with FY 2003.

The Group's share of profits from associates in FY2004 is expected to increase due to a full year contribution from Cosco Dalian as well as capacity expansion at Cosco Nantong. The Group is committed to expanding its core businesses of dry bulk shipping and ship repair, and will continue to evaluate suitable opportunities in these areas for investment.

Barring unforeseen circumstances, the Group expects net profit for Q2 2004 and FY 2004 to be higher than their previous corresponding periods.

(a) Current Financial Period Reported On

Any dividend declared for the current financial period reported on? None
(b) Corresponding Period of the Immediately Preceding Financial Year

Any dividend declared for the corresponding period of the immediately preceding financial year? None

(c) Date payable

Not Applicable


(d) Books closure date

Not Applicable

The directors do not recommend the payment of interim dividend on the ordinary shares for the current financial period.

The dividend of 5.7 cents per RCCPS par value S$0.01 less 20% Singapore Income Tax will be paid on 16 November 2004 in accordance with the terms of the preference shares.

(This part is not applicable to Q1, Q2, Q3 or Half Year Results)

group) in the form presented in the issuer's most recently audited annual financial
statements, with comparative information for the immediately preceding year.

Not Applicable

contributions to turnover and earnings by the business or geographical segments.

Not Applicable

Not Applicable

full year and its previous full year.

Total Annual Dividend (Refer to Para 16 of Appendix 7.2 for the required details)



	Latest Full Year ()	Previous Full Year ()
Ordinary
Preference	0	0
Total:

Pursuant to Rule 907 of the Listing Manual, the following interested person transactions were entered into during the financial period:




Name of interested person	Aggregate value of all interested person transaction during the financial period under review (excluding transactions less than $100,000 and transactions conducted under shareholders' mandate pursuant to Rule 920)	Aggregate value of all interested person transactions conducted under shareholders' mandate pursuant to Rule 920 (excluding transactions less than $100,000)
	S$'000	S$'000
Between Subsidiaries and:
Cosco Container Lines		3,296
Cosco Bulk Carrier Co.		208
Cosco Chartering and Shipbroking (UK) Ltd		2,247
Guangzhou Ocean Crew Co.		441
Qingdao Ocean Crew Co.		331
Shanghai Ocean Crew Co.		552
		7,075
Between Associated companies of the Group and:
Cosco Shipyard Group Co., Ltd		360
Cosco Nantong Steel Co., Ltd		472
		832