Chairman’s Message

Extracted from Annual Report 2008

Dear Shareholders,

2008 — A Year of Strength

2008 was an extraordinary year for COSCO Corporation. With steadfast management, we sailed the COSCO ship on an even keel amidst challenging economic conditions.

For the year under review, we booked a strong increase of revenues by 54% to $3.5 billion. Gross profit grew 3% to $630.1 million in FY2008 while net profit attributable to equity holders was booked at $302.6 million, a decrease of 10%, year on year, due to allowance for impairment of trade and other receivables made in light of the adverse global economic climate and the higher costs incurred in ship building and offshore marine engineering projects. Earnings per share (diluted) amounted to 13.50 cents per share. I am pleased to report that the Board has recommended a first and final dividend of 7.0 cents for the FY2008 which comprises ordinary dividend of 4.0 cents per share and a special dividend of 3.0 cents per ordinary share. We have strived to maintain the same dividend payout despite the challenges in the current economic climate as we firmly believe the future prospects for COSCO Corporation remain bright and are confident of our strong financial position. Meanwhile, our shares continue to be one of the most liquid actively traded counters on the local bourse, which is a testimony of shareholder interest.

Milestones
In FY2008, we showed operational agility and strategic acumen that underscored our development during the year. We expanded our shipyard capacity, further established a solid presence in offshore marine engineering, progressing to more technically sophisticated marine engineering projects, such as Sevan 650 ordered by Norwegian marine company Sevan Marine ASA. In July, we successfully delivered our first FSO project to a Japanese customer whose expectations on the technical and commercial standards of the unit were both met by our shipyard. These milestones of the past year are a true reflection of our innate strength and capabilities that will enable our Group’s further expansion.

Co-ordinated Government Efforts
On the wider horizon, in the face of gloomy economic news, various major financial institutions and corporations are being bailed out by their national governments to prevent their respective economies from further deterioration. The Baltic Dry Index (BDI), a measurement of global freight rates and a leading economic indicator of global economic prospects, elicits signs of recovery from a precipitous low last December. Meanwhile, the Chinese, Japanese, European, and American governments have passed large fiscal stimulus packages. The US Administration recently enacted in February 2009 a record US$787 billion stimulus package aimed at reviving the American economy. It is reassuring that the governments of all major economies are keenly aware that co-ordinated, concrete efforts are essential to adequately address the weakened world economy.

Sustainable Development in COSCO

Despite the challenging external environment, I remain confident in the healthy, sustainable and sound development of all business sectors of COSCO Corporation and in particular, I foresee that our shipyards will remain busy. As at 31 December 2008, our order book stands at US$7.3 billion with progressive deliveries to the first half of 2012.

Financially, we remain strong, with a healthy balance sheet of increased assets and sizeable cash position. The moderating business climate might actually create attractive opportunities for strategic restructuring. We firmly believe in the importance of creating and nurturing competitive advantages and understand that effective strategic positioning will anchor our business and secure our future.

The long term outlook for our business remains bright. Our COSCO Shipyard Group, which oversees six major shipyards in China, is operating at a brisk pace and has reinforced its strong commitment to steer our business forward.

According to the International Energy Agency (IEA) World Energy Outlook 2008 report, energy demands for oil are projected to grow as economic giants China, India, Brazil, Mexico and other populous countries continue their long term development trajectory.

These developments augur well for our offshore marine engineering activities, as there will be demand for oil rigs to tap new, far flung sources of oil. Shipping, likewise, will continue to play a vital role in the infrastructure of the global economy and commerce. In consequence, the demand for new ships and ship repair will also continue.

Conclusion

COSCO Corporation continues to enjoy the confidence and support of the wider COSCO Group in general and the parent company in particular. In meeting the challenges ahead, COSCO Corporation would be able to call on the formidable resources of the COSCO Group. This is a distinct and competitive advantage in today’s environment.

On behalf of the Board of Directors, I welcome on board Mr Jiang Li Jun as our new Vice Chairman and President. With his 34 years of experience in the shipping industry and over 10 years of experience in the management of listed companies, we look forward to his wise and capable leadership.

Finally, I would like to thank the directors for their devotion and advice and I applaud the outstanding efforts made by our staff. To our loyal shareholders, my heartfelt gratitude for your confidence and continued support. Though we are unsure how long this global recession will last, I assure you that together, we will rise to the challenges ahead.

Li Jian Hong
Chairman