COSCO SHIPPING Development : OVERSEAS REGULATORY ANNOUNCEMENT - DONG FANG INTERNATIONAL CONTAINER (NINGBO) 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 (Ningbo) 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_B03

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

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

I. AUDIT OPINION

We have audited the financial statements of Dong Fang International Container (Ningbo) 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 (Ningbo) 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 (Ningbo) 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 (Ningbo) 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_B03

Dong Fang International Container (Ningbo) 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

Our

audit

procedures

mainly

amount of inventories on the financial

included:

statements

was

RMB130,598,933.96,

representing 10% of the total assets; as at 31

December 2019, the carrying amount of

We obtained an understanding of

inventories on the financial statements was

processes and internal controls of

RMB106,444,000.34, representing 10% of

inventory

impairment

provision;

the total assets.

performed testing on the design

and execution effectiveness of key

internal controls.

The impairment provision of inventories

We

observed

the

stocktaking

was made based on their respective

process to ascertain whether the

estimated net realizable value. The

damaged,

slow-moving

and

assessment of the estimated net realizable

obsolete

inventories

were

value of the inventories was calculated

identified.

based on management's estimates on

selling prices of the inventories, estimated

costs to be incurred upon completion of

We tested the aging analysis of

production, selling expenses and relevant

inventories

by

checking

the

taxes. With respect to the estimated selling

original documents.

price, the selling price of the inventories

will be made reference to their contract

price if they are held for particular

We

evaluated

the

key

contracts. For those without being

assumptions,

such

as

selling

earmarked to a particular contracts or held

prices, costs to be incurred upon

for contracts which were cancelled or

completion, selling expenses, the

modified, the management will base on

relevant taxes, etc., which were

their realisation method to estimate their

used by the management in

respective realisable value.

calculating net realisable value.

Inventory

impairment

losses

involve

For inventories held for particular

significant judgements and estimates by the

contracts,

we

checked

the

management.

Therefore,

inventory

respective contract price on a

impairment provision was identified as a

sampling basis. For those without

key audit matter.

being earmarked to a particular

contracts or held for contracts

which were cancelled or modified,

For disclosure on the accounting policy for

we

inspected

undrlying

inventory

impairment

provision, please

assumptions

used

by

the

refer to Note III.7; for the significant

management

in

estimating

the

judgements and estimates of inventory

recoverable amount and checked

impairment provision, please refer to Note

whether

inventories

were

sold

III.24; for disclosure on the inventory

subsequent to the reporting period

impairment provision, please refer to Note

on a sampling basis.

V.5.

2

AUDITOR'S REPORT (Continued)

Ernst & Young Hua Ming (2021) Shen Zi No.61227808_B03

Dong Fang International Container (Ningbo) 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 is mainly comprises income from container manufacturing and sales. In 2020, the recognized revenue of the Company was RMB 1,322,117,325.89; in 2019, the recognized revenue of the Company was RMB1,188,147,078.49.

Since revenue is one of the key performance indicators of the Company, and the accurate recognition of revenue has a material impact on data of the 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.17; for disclosure on the revenue, please refer to Note V.22.

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_B03

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

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

The management of Dong Fang International Container (Ningbo) 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 determine 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 (Ningbo) Co., Ltd. to continue as a going concern, disclosing, as applicable, matters related to going concern 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 (Ningbo) 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_B03

Dong Fang International Container (Ningbo) 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 (Ningbo) 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 (Ningbo) 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.

5

AUDITOR'S REPORT (Continued)

Ernst & Young Hua Ming (2021) Shen Zi No.61227808_B03

Dong Fang International Container (Ningbo) 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 (Ningbo) 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	42,248,912.84	60,998,161.54
Accounts receivable	2	352,509,363.28	257,122,162.95
Prepayments	3	166,220,617.80	105,229,215.74
Other receivables	4	210,357,619.98	280,372,341.51
Inventories	5	130,598,933.96	106,444,000.34
Other current assets	6	233,563,090.55		15,477,989.44
Total current assets		1,135,498,538.41	825,643,871.52
Non-current assets
Fixed assets	7	162,785,601.27	165,562,628.36
Construction in progress	8	18,546,623.18	426,724.14
Intangible assets	9	34,954,037.81		35,985,987.53
Total non-current assets		216,286,262.26		201,975,340.03
Total assets		1,351,784,800.67		1,027,619,211.55

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

7

Dong Fang International Container (Ningbo) 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	10	600,000,000.00	352,321,500.00
Bills payable	11	20,032,889.77	-
Accounts payable	12	142,847,314.52	122,544,056.22
Contract liabilities	13	46,237.50	21,470,787.94
Staff remuneration payable	14	75,871,574.03	51,568,721.40
Taxes payable	15	7,700,186.24	4,186,719.52
Other payables	16	21,415,831.46		21,864,930.47
Total current liabilities		867,914,033.52	573,956,715.55
Non-current liabilities
Deferred income	17	1,640,800.00		1,875,200.00
Total non-current liabilities		1,640,800.00		1,875,200.00
Total liabilities		869,554,833.52	575,831,915.55
Owners' equity
Paid-in capital	18	161,633,400.00	161,633,400.00
Capital reserve	19	6,882,388.00	6,882,388.00
Surplus reserve	20	44,553,309.27	41,509,042.15
Retained earnings	21	269,160,869.88		241,762,465.85
Total owners' equity		482,229,967.15	451,787,296.00
Total liabilities and owners'
equity		1,351,784,800.67		1,027,619,211.55

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

8

Dong Fang International Container (Ningbo) Co., Ltd.
INCOME STATEMENT
2019 and 2020				Unit: RMB
	Note V	2020		2019
Operating revenue	22	1,322,117,325.89		1,188,147,078.49
Less: Operating cost	22	1,212,788,128.45		1,183,536,058.38
Taxes and surcharges	23	6,004,188.81		10,064,236.70
Selling expenses	24	44,160.32		22,782,563.05
Administrative expenses	25	36,096,819.80		28,451,079.80
Research and development
expenses	26	2,851,444.92		58,219.07
Finance cost/(income)	27	31,347,330.28		(7,497,815.81 )
Including: Interest expense		18,692,464.20		7,113,955.61
Interest income		2,983,019.22		1,701,488.67
Add: Other gains	28	2,319,566.48		3,259,896.12
Credit impairment losses	29	(8,127.40 )	(9,323.52 )
Asset impairment losses	30	-		(9,996,506.78 )
Gains from disposal of assets	31	27,832.34		29,087.60
Profit/(loss) from operations		35,324,524.73		(55,964,109.28 )
Add: Non-operating income	32	49,300.00		58,637.17
Less: Non-operating expense	33	137,051.73		-
Total profit/(loss)		35,236,773.00		(55,905,472.11 )
Less: Income tax expenses
	35	4,794,101.85		2,207,803.32
Net profit/(loss)		30,442,671.15		(58,113,275.43 )
Total comprehensive
income/(loss)		30,442,671.15		(58,113,275.43 )

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

9

Dong Fang International Container (Ningbo) Co., Ltd.
STATEMENT OF CHANGES IN OWNERS' EQUITY
2019 and 2020					Unit: RMB
2020
	Paid-in capital	Special reserve	Capital reserve	Surplus reserve	Retained profits	Total owners'equity
I. Current year's opening balance	161,633,400.00	-	6,882,388.00	41,509,042.15	241,762,465.85	451,787,296.00

1. Changes during the year

(I)

Total comprehensive income

-

-

-

-

30,442,671.15

30,442,671.15

1. Profit distribution

1.	Appropriation to surplus reserves	-	-		-		3,044,267.12		(3,044,267.12 )	-
(III)	Special reserve
1.	Accrual	-	3,088,147.08		-		-		-		3,088,147.08
2.	Usage	-		(3,088,147.08 )	-		-		-		(3,088,147.08 )
III.	Current year's closing balance	161,633,400.00		-		6,882,388.00		44,553,309.27		269,160,869.88		482,229,967.15
2019
		Paid-in capital		Special reserve	Capital reserve	Surplus reserve	Retained profits	Total owners' equity
I.	Current year's opening balance	161,633,400.00	-		6,882,388.00	41,509,042.15	299,875,741.28	509,900,571.43

1. Changes during the year

(I)

Total comprehensive loss

-

-

-

-

(58,113,275.43 )

(58,113,275.43 )

1. Special reserve

1.	Accrual	-	1,681,282.25		-	-	-	1,681,282.25
2.	Usage	-		(1,681,282.25 )	-	-	-	(1,681,282.25 )
III.	Current year's closing balance	161,633,400.00		-		6,882,388.00		41,509,042.15		241,762,465.85		451,787,296.00

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

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Dong Fang International Container (Ningbo) Co., Ltd.
CASH FLOW STATEMENT
2019 and 2020		Unit: RMB
Note V	2020	2019

1. Cash flow from operating activities:

	Cash received from sales of goods and
	provision of services		1,221,381,330.53		1,292,384,336.98
	Tax rebates received		92,018,193.41		102,716,963.34
	Other cash received relating to operating
	activities	36	12,746,127.89		12,702,607.04
	Sub-total of cash inflow from operating
	activities		1,326,145,651.83		1,407,803,907.36
	Cash paid for goods purchased and
	service rendered		1,238,836,366.05		1,274,328,368.45
	Cash paid to and on behalf of employees		138,305,888.08		133,375,652.73
	Taxes paid		7,331,639.48		16,882,576.81
	Other cash paid relating to operation
	activities	36	184,357,799.76		71,608,380.55
	Sub-total of cash outflow from operating
	activities		1,568,831,693.37		1,496,194,978.54
	Net cash flows from operating activities	37	(242,686,041.54 )	(88,391,071.18 )
II.	Cash flow from investment activities:
	Net cash received from disposal of fixed
	assets, intangible assets and other
	long-term assets		203,963.28		63,769.31
	Other cash received relating to
	investment activities	36	436,313,400.00		-
	Sub-total of cash inflow from investment
	activities		436,517,363.28		63,769.31
	Cash paid for purchase of fixed assets,
	intangible assets and other long-term
	assets		29,423,527.13		23,839,968.53
	Other cash paid related to investment
	activities	36	410,346,532.38		230,214,600.00
	Sub-total of cash outflow from
	investment activities		439,770,059.51		254,054,568.53
	Net cash flow from investment activities		(3,252,696.23 )	(253,990,799.22 )

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

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Dong Fang International Container (Ningbo) Co., Ltd.
INCOME STATEMENT
2019 and 2020		Unit: RMB
Note V	2020	2019

1. Cash flow from financing activities:

	Cash received from borrowings		1,200,000,000.00		392,375,650.00
	Sub-total of cash inflow from financing
	activities		1,200,000,000.00		392,375,650.00
	Cash paid for repayment of debts		952,549,500.00		174,165,330.00
	Cash payments for dividend and profit
	distribution or interest repayment		18,692,464.20		7,113,955.61
	Sub-total of cash outflow from financing
	activities		971,241,964.20		181,279,285.61
	Net cash flow from financing activities		228,758,035.80		211,096,364.39
IV.	Effect on cash and cash equivalents due to
	changes in foreign exchange rates		(1,568,546.73 )	142,049.23
V.	Net decrease in cash and cash equivalents		(18,749,248.70 )	(131,143,456.78 )
	Add: Balance of cash and cash equivalents
	at the beginning of the year		60,878,161.54		192,021,618.32
VI.	Balance of cash and cash equivalents at the
	end of the year	37	42,128,912.84		60,878,161.54

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

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