COSCO SHIPPING Development : OVERSEAS REGULATORY ANNOUNCEMENT - DONG FANG INTERNATIONAL CONTAINER (QIDONG) CO., LTD. AUDITED FINANCIAL STATEMENTS FOR 2019 AND 2020

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.

中 遠 海 運 發 展 股 份 有 限 公 司

COSCO SHIPPING Development Co., Ltd.*

(A joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 02866)

OVERSEAS REGULATORY ANNOUNCEMENT

This announcement is made pursuant to Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

The "Dong Fang International Container (Qidong) Co., Ltd. Audited Financial Statements for 2019 and 2020" as published by COSCO SHIPPING Development Co., Ltd. in Chinese on the website of the Shanghai Stock Exchange (www.sse.com.cn) on 29 April 2021 and its English translation extract is enclosed hereto as overseas regulatory announcement for your reference only. In case of any inconsistencies between the Chinese version and the English translation, the Chinese version shall prevail.

By order of the Board

COSCO SHIPPING Development Co., Ltd.

Cai Lei

Joint Company Secretary

29 April 2021

As at the date of this announcement, the Board comprises Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui, being executive Directors, Mr. Huang Jian, Mr. Liang Yanfeng and Mr. Ip Sing Chi, being non-executive Directors, and Mr. Cai Hongping, Ms. Hai Chi Yuet, Mr. Graeme Jack, Mr. Lu Jianzhong and Ms. Zhang Weihua, being independent non-executive Directors.

• The Company is a registered non-Hong Kong company as defined in the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) and it is registered under its Chinese name and under the English name "COSCO SHIPPING Development Co., Ltd.".

AUDITOR'S REPORT

Ernst & Young Hua Ming (2021) Shen Zi No.61227808_B01

Dong Fang International Container (Qidong) Co., Ltd.

To the Board of Dong Fang International Container (Qidong) Co., Ltd.,

I. AUDIT OPINION

We have audited the financial statements of Dong Fang International Container (Qidong) Co., Ltd., which comprise the balance sheet as at 31 December 2019 and 31 December 2020, the income statements, the statements of changes in owners' equity and cash flow statements for 2019 and 2020, and notes to the relevant financial statements.

In our opinion, the financial statements of Dong Fang International Container (Qidong) Co., Ltd. as attached herewith are prepared in accordance with the provisions of Accounting Standards for Business Enterprises to a material extent, and give a fair view of the financial position of Dong Fang International Container (Qidong) Co., Ltd. as at 31 December 2019 and 31 December 2020, and of its operating results and its cash flows for 2019 and 2020.

II. BASIS FOR AUDIT OPINION

We conducted our audit in accordance with the provisions of the Standards on Auditing for Certified Public Accountants in China. Our responsibilities under those standards are further described in the section of Certified Public Accountants' Responsibilities for the Audit of the Financial Statements under this audit report. We are independent of Dong Fang International Container (Qidong) Co., Ltd. in accordance with the Code of Ethics for Certified Public Accountants in China, and we have fulfilled our other ethical responsibilities accordingly. We believe that the audit evidences we have obtained are sufficient and appropriate to provide a basis for our audit opinion.

III. KEY AUDIT MATTERS

Audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for 2019 and 2020. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Set against this background are our responses to these matters and how they are addressed in our audit.

We have performed our responsibilities described in the section of "Certified Public Accountants' Responsibilities for the Audit of the Financial Statements" under this report, which includes the liabilities related to these key audit matters. Correspondingly, our audit includes audit procedures designed to be executed where there are material misstatement risks for these financial statements. The results deriving from our audit, including the procedures to address the following key audit matters, formed a basis for the audit opinion of the financial statements as a whole.

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		AUDITOR'S REPORT (Continued)
		Ernst & Young Hua Ming (2021) Shen Zi No.61227808_B01
		Dong Fang International Container (Qidong) Co., Ltd.
	III. KEY AUDIT MATTERS (Continued)
	Key Audit Matter		How Our Audit Addressed the Key
			Audit Matter

Inventory impairment provision

As at 31 December 2020, the carrying amount of inventories on the financial statements was RMB417,351,626.48, representing 12% of the total assets; as at 31 December 2019, the carrying amount of inventories on the financial statements was RMB237,795,780.95, representing 12% of the total assets.

The impairment provision of inventories was made based on their respective estimated net realizable value. The assessment of the estimated net realizable value of the inventories was calculated based on management's estimates on selling prices of the inventories, estimated costs to be incurred upon completion of production, selling expenses and relevant taxes. With respect to the estimated selling price, the selling price of the inventories will be made reference to their contract price if they are held for particular contracts. For those without being earmarked to a particular contract or held for contracts which were cancelled or modified, the management will base on their realisation method to estimate their respective realisable value.

Inventory impairment losses involve significant judgements and estimates by the management. Therefore, inventory impairment provision was identified as a key audit matter.

For disclosure on the accounting policy for inventory impairment provision, please refer to Note III.7; for the significant judgements and estimates of inventory impairment provision, please refer to Note III.26; for disclosure on the inventory impairment provision, please refer to Note V.7.

Our audit procedures mainly included: We obtained an understanding of processes and internal controls of inventory impairment provision; performed testing on the design and execution effectiveness of key internal controls.

We observed the stocktaking process to ascertain whether the damaged, slow-moving and obsolete inventories were identified.

We tested the aging analysis of inventories by checking the original documents.

We evaluated the key assumptions, such as selling prices, costs to be incurred upon completion, selling expenses, the relevant taxes, etc., which were used by the management in calculating net realisable value.

For inventories held for particular contracts, we checked the respective contract price on a sampling basis. For those without being earmarked to a particular contracts or held for contracts which were cancelled or modified, we inspected underlying assumptions used by the management in estimating the recoverable amount and checked whether inventories were sold subsequent to the reporting period on a sampling basis.

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AUDITOR'S REPORT (Continued)

Ernst & Young Hua Ming (2021) Shen Zi No.61227808_B01

Dong Fang International Container (Qidong) Co., Ltd.

III. KEY AUDIT MATTERS (Continued)

	Key Audit Matter			How Our Audit Addressed the Key
				Audit Matter
	Revenue recognition

The revenue of the Company mainly comprises income from container manufacturing and sales. In 2020, the recognized revenue of the Company was RMB4,200,704,608.83; in 2019, the recognized revenue of the Company was RMB2,059,797,744.17.

Since revenue is one of the key performance indicators of the Company, and the accurate recognition of revenue has a material impact on the data of financial statements and various financial indicators of the Company. Therefore, revenue recognition was identified as a key audit matter.

For disclosure on the revenue recognition policy, please refer to Note III.18; for disclosure on the revenue, please refer to Note V.30.

Our audit procedures mainly included: We obtained an understanding of processes and internal controls of revenue recognition; performed testing on the design and execution effectiveness of key internal controls. We inspected the sales contract on a sampling basis to identify the sales business contract and each individual performance obligation, and evaluated whether the point of time when the customer obtains control of the service as judged by the management meets the requirements of the Accounting Standards for Business Enterprises; We performed analytical procedures and detailed tests to review the completeness, authenticity, cut-off of revenue accounting and the accuracy of disclosure.

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AUDITOR'S REPORT (Continued)

Ernst & Young Hua Ming (2021) Shen Zi No.61227808_B01

Dong Fang International Container (Qidong) Co., Ltd.

IV. RESPONSIBILITIES OF THE MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENT

The management of Dong Fang International Container (Qidong) Co., Ltd. is responsible for the preparation of the financial statements that give a fair view in accordance with the provisions of Accounting Standards for Business Enterprises, and for such internal control to be designed, exercised and maintained as the management determines is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error.

In preparing the financial statements, the management is responsible for assessing the ability of Dong Fang International Container (Qidong) Co., Ltd. to continue as a going concern, disclosing matters related to going concern, if applicable, and using the going concern basis of accounting unless under the circumstances of liquidation, cessation of operation or lack of other realistic alternatives.

Those charged with governance are responsible for overseeing the financial reporting process of Dong Fang International Container (Qidong) Co., Ltd.

V. CERTIFIED PUBLIC ACCOUNTANTS' RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the Standards on Auditing, we exercise professional judgment and maintain skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management.

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AUDITOR'S REPORT (Continued)

Ernst & Young Hua Ming (2021) Shen Zi No.61227808_B01

Dong Fang International Container (Qidong) Co., Ltd.

V. CERTIFIED PUBLIC ACCOUNTANTS' RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENT (Continued)

As part of an audit in accordance with the Standards of Auditing, we exercise professional judgment and maintain skepticism throughout the audit. We also: (Continued)

1. Conclude on the appropriateness of the management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of Dong Fang International Container (Qidong) Co., Ltd. to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause Dong Fang International Container (Qidong) Co., Ltd. to cease to continue as a going concern.
2. Evaluate the overall presentation (including the disclosures), structure and content of the financial statements, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for 2019 and 2020 and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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AUDITOR'S REPORT (Continued)

Ernst & Young Hua Ming (2021) Shen Zi No.61227808_B01

Dong Fang International Container (Qidong) Co., Ltd.

（No text on this page）

Ernst & Young Hua Ming LLP	Chinese Certified Public Accountant:
	You Fei (尤飞)
	(Project partner)

Chinese Certified Public Accountant:

Zhu Li (朱莉)

Beijing, the PRC

27 April 2021

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Dong Fang International Container (Qidong) Co., Ltd.
BALANCE SHEET
As at 31 December 2019 and 31 December 2020	Unit: RMB
Assets	Note V	31 December 2020	31 December 2019
Current assets
Cash and bank balances	1	337,571,951.69		91,957,232.75
Financial assets held for trading	2	-		25,000,000.00
Bills receivables	3	3,977,318.89		-
Accounts receivable	4	970,073,213.34		306,239,979.19
Prepayments	5	531,931,110.85		83,846,378.18
Other receivables	6	45,352,646.28		240,243,818.80
Inventories	7	417,351,626.48		237,795,780.95
Other current assets	8	143,918,963.63		6,760,761.79
Total current assets		2,450,176,831.16		991,843,951.66
Non-current assets
Fixed assets	9	748,836,776.72		767,513,686.94
Construction in progress	10	23,468,589.51		5,899,675.93
Right-of-use assets	11	8,106,326.56		6,056,711.28
Intangible assets	12	176,592,650.99		173,148,706.16
Long-term deferred expenses	13	311,541.53		1,182,541.67
Other non-current assets	14	45,165,600.00		51,808,680.00
Total non-current assets		1,002,481,485.31		1,005,610,001.98
Total assets		3,452,658,316.47		1,997,453,953.64

The accompanying notes of the financial statements form part of these financial statements

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Dong Fang International Container (Qidong) Co., Ltd.
BALANCE SHEET (Continued)
As at 31 December 2019 and 31 December 2020	Unit: RMB
Liabilities and owners' equity	Note V	31 December 2020	31 December 2019
Current liabilities
Short-term borrowings	15	1,100,000,000.00		300,000,000.00
Bills payable	16	33,533,826.79		-
Accounts payable	17	468,561,999.48		230,506,959.22
Receipts in advance	18	18,500.00		-
Contract liabilities	19	5,392,612.87		4,065,168.01
Staff remuneration payable	20	115,761,244.09		50,438,541.56
Taxes payable	21	8,540,537.64		13,569,685.64
Other payables	22	283,327,713.99		123,909,851.48
Non-current liabilities due within		3,226,710.06		2,253,111.88
one year	23
Total current liabilities		2,018,363,144.92		724,743,317.79
Non-current liabilities		2,787,401.11		2,152,875.32
Lease liabilities	24
Total non-current liabilities		2,787,401.11		2,152,875.32
Total liabilities		2,021,150,546.03		726,896,193.11
Shareholders' equity
Paid-in capital	25	1,409,599,098.23		1,409,599,098.23
Capital reserve	26	975,000.00		975,000.00
Special reserve	27	-		672,693.35
Surplus reserve	28	6,837,007.72		5,270,711.67
Retained profits/(accumulated		14,096,664.49		(145,959,742.72)
losses)	29
Total owners' equity		1,431,507,770.44		1,270,557,760.53
Total liabilities and owners' equity		3,452,658,316.47		1,997,453,953.64

These accompanying financial statements have been signed by:

Legal representative:	Person-in-charge of accounting	Head of the accounting
	affairs:	department:

The accompanying notes of the financial statements form part of these financial statements

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Dong Fang International Container (Qidong) Co., Ltd.
INCOME STATEMENT
2019 and 2020					Unit: RMB
	Note V	2020			2019
Operating revenue	30	4,200,704,608.83			2,059,797,744.17
Less: Operating cost	30	3,858,399,427.10			2,133,752,832.71
Taxes and surcharges	31	9,126,451.47			27,693,541.77
Selling expenses	32	4,019,916.96			9,243,219.11
Administrative expenses	33	103,911,730.37			68,034,351.34
Research and development
expenses	34	9,525,082.94			3,053,393.22
Finance cost	35	61,417,724.67			785,279.36
Including: Interest expense		30,133,417.52			11,806,862.96
Interest income		3,257,225.81			1,644,300.55
Add: Other gains	36	1,417,952.67			3,992,207.35
Investment gains	37	383,325.25			-
Credit impairment losses	38	1,516,393.33			(7,256,902.34)
Asset impairment losses	39	3,779,091.01			(13,000,909.03)
Losses from disposal of assets	40	-			(1,566,552.76)
Profit/(loss) from operations		161,401,037.58			(200,597,030.12)
Add: Non-operating income	41	270,852.31			769,736.91
Less: Non-operating expense	42	49,230.38			55,295,170.46
Total profit/(loss)		161,622,659.51			(255,122,463.67)
Less: Income tax expenses	44	(43.75)		(2,130,455.34)
Net profit/(loss)		161,622,703.26			(252,992,008.33)
Total comprehensive income/(loss)		161,622,703.26			(252,992,008.33)

The accompanying notes of the financial statements form part of these financial statements

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Dong Fang International Container (Qidong) Co., Ltd.
STATEMENT OF CHANGES IN OWNERS' EQUITY
2019 and 2020						Unit: RMB
2020
			Capital	Special		(Accumulated	Total shareholders'
		Paid-in capital	Surplus reserve	losses)/
		reserve	reserve	Retained profits	equity
I.	Current year's	1,409,599,098.23	975,000.00	672,693.35	5,270,711.67	(145,959,742.72)	1,270,557,760.53
II	opening balance
Changes during the year

1. Total comprehensive

(II)	income	-	-	-	-	161,622,703.26	161,622,703.26
Profit distribution

1. Appropriation to

(III)	surplus reserves	-		-	-		1,566,296.05	(1,566,296.05)	-
Special reserve	-		-	5,990,509.03		-	-		5,990,509.03
1.	Accrual
2.	Usage	-		-		(6,663,202.38)		-		-		(6,663,202.38)
III.	Current year's	1,409,599,098.23		975,000.00	-		6,837,007.72	14,096,664.49		1,431,507,770.44
	closing balance
2019
		Paid-in	Capital		Special				(Accumulated	Total
				Surplus reserve		losses)/	shareholders'
		capital	reserve		reserve			Retained profits	equity

1. Current year's opening

balance

1,409,599,098.23

975,000.00

-

5,185,247.78

107,117,729.50

1,522,877,075.51

1. Changes during the year

1. Total comprehensive

(II)	loss	-	-	-	-	(252,992,008.33)	(252,992,008.33)
Profit distribution

1. Appropriation to

(III)	surplus reserves	-	-	-		85,463.89	(85,463.89)		-
Special reserve	-	-	2,262,315.20		-	-			2,262,315.20
1.	Accrual
2.	Usage	-		-		(1,589,621.85)		-		-			(1,589,621.85)
III.	Current year's	1,409,599,098.23		975,000.00		672,693.35			5,270,711.67		(145,959,742.72)		1,270,557,760.53
	closing balance

The accompanying notes of the financial statements form part of these financial statements

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Dong Fang International Container (Qidong) Co., Ltd.
STATEMENT OF CASH FLOWS
2019 and 2020					Unit: RMB
	Note V	2020			2019
I. Cash flow from operating activities
Cash received from sales of goods and		3,653,241,131.53			2,556,921,654.75
provision of services		198,370,496.61			200,126,056.89
Tax rebates received
Other cash received relating to		150,943,232.08			8,914,026.99
operating activities	45
Sub-total of cash inflow from operating		4,002,554,860.22			2,765,961,738.63
activities
Cash paid for goods purchased and		4,333,758,387.07			2,176,384,753.38
service rendered		249,970,734.26			191,883,758.04
Cash paid to and on behalf of
employees		14,451,765.25			24,211,333.17
Taxes paid
Other cash paid for activities relating to		45,344,430.13			34,334,616.09
operation activities	45
Sub-total of cash outflow from		4,643,525,316.71			2,426,814,460.68
operating activities
Net cash flows from operating		(640,970,456.49)		339,147,277.95
activities	46
II. Cash flow from investment activities
Cash received from sales and		425,000,000.00			-
redemption of investments
Net cash received from disposal of
fixed assets, intangible assets and		101,320.83			22,350,432.99
other long-term assets
Cash received from investment income		383,325.25			-
Other cash received relating to	45	333,363,863.23			103,656.20
investment activities
Sub-total of cash inflow from		758,848,509.31			22,454,089.19
investment activities
Cash paid for purchase of fixed assets,
intangible assets and other long-term		65,914,332.29			30,225,504.68
assets
Cash paid for investment		400,000,000.00			25,000,000.00
Other cash paid related to investment	45	166,646,121.05			195,333,600.00
activities
Sub-total of cash outflow from		632,560,453.34			250,559,104.68
investment activities
Net cash flow from investment		126,288,055.97			(228,105,015.49)
activities

The accompanying notes of the financial statements form part of these financial statements

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Dong Fang International Container (Qidong) Co., Ltd.
STATEMENT OF CASH FLOWS (Continued)
2019 and 2020	Unit: RMB

	Note V
III. Cash flow from financing activities
Cash received from borrowings
Sub-total of cash inflow from
financing activities
Cash paid for repayment of debts
Cash payments for dividend and
profit distribution or interest
repayment
Other cash paid related to
financing activities	45
Sub-total of cash outflow from
financing activities
Net cash flow from financing
activities
IV. Effect on cash and cash equivalents
due to changes in foreign
exchange rates
V. Net increase/(decrease) in cash and
cash equivalents
Add: Balance of cash and cash
equivalents at the beginning of
the year
VI. Balance of cash and cash
equivalents at the end of the year	46

20202019

1,710,000,000.00 756,695,818.60

1,710,000,000.00 756,695,818.60

910,000,000.00 714,614,724.49

29,119,580.56 11,544,691.16

688,073.40 156,278,934.73

939,807,653.96 882,438,350.38

770,192,346.04 (125,742,531.78)

(9,750,962.06)543,887.29

245,758,983.46 (14,156,382.03)

91,812,968.23 105,969,350.26

337,571,951.69 91,812,968.23

The accompanying notes of the financial statements form part of these financial statements

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