The Company successfully captured business opportunities throughout the year as the global shipping market continued its robust and rapid growth in 2007. The Company was able to quickly meet the rising fleet demands for its shipping services. During the year, the Company established a foundation for continued growth by solidifying its shipping services, the core business of the Company, through gradually divesting its non-core businesses. As a result of active restructuring of businesses, development of new clientele and greater marketing efforts, turnover derived from shipping services businesses accounted for 89% of the Company and its subsidiaries’ total turnover for the year.

A prime example of this foundation is SOLHL, a well branded and highly profitable property developer, whose listing on the SEHK on 28th September 2007 raised a gross proceeds of HK$11.59 billion. As the largest shareholder of SOLHL, the Company’s profitability and asset base in 2007 were greatly increased by this successful listing. The Company will maintain its interest in SOLHL and remains committed towards further development of the shipping services businesses as its core business.

Outlook Prospects
In view of the subprime crisis in the United States, the escalating oil prices and increasing inflationary pressures worldwide, the International Monetary Fund has forecast that global economic growth will slow down to approximately 3.7% in 2008. Despite the grim picture in the United States, China and other Asian countries will maintain their economic growth momentum, while the global trading volume in 2008 is expected to grow at a rate similar to that of 2007. In particular, the coal shipping market worldwide will benefit from China’s transformation into a coal importing country as a result of the decision of the government of The People’s Republic of China (the “PRC”) to cancel the tariff on coal imports as well as to reduce the tax rebate on coal exports. Moreover, China’s robust demand for raw materials including ores, as well as the steadily increasing number of European and Asian shipping routes will provide growth momentum for both the shipping and shipbuilding industries, which will further benefit the growth in demand for shipping services.

COSCO and COSCO (Hong Kong) Group Limited will remain committed as in the past, to support the Company through the injection of shipping related businesses and assets. The Company will also actively identify new investment opportunities in order to pursue high and prudent growth. The Company has five development initiatives in 2008: expanding our business steadily, creating a more distinctive image as a shipping services provider, strengthening management, extending the network, as well as expanding the business through synergy and consolidation among both COSCO Group and non-COSCO Group entities. Through these initiatives, the Company will further enhance its competitiveness in the shipping services market and thereby achieve steady growth in turnover, profit and market capitalization.

During the year, the Company made great strides in its business performance and corporate governance during the year and was awarded for the first time the prize of “Hong Kong Outstanding Enterprise Parade 2007” by Economic Digest. In future, the Company will continue to implement measures to further strengthen its corporate governance and overall risk management.

As COSCO, the Company’s ultimate controlling holding company, has become a member of the United Nations Global Compact and World Business Council for Sustainable Development since 2006, the Company took a number of measures during the year to further improve its social responsibility practices in the areas of staff ethics, environmental protection and occupational safety. Meanwhile, the Company actively lowered the consumption of raw materials and other resources during coatings production through lean management, and further enhanced the safety management system with the help of regular emergency drills and production safety conferences among its subsidiaries.

I would like to take this opportunity to express my sincere gratitude to the shareholders and business partners for their continued support, to all members of the Board and the employees for their diligent services to the Company.

Zhang Fusheng
Chairman