INTERIM RESULTS

The Board of Directors of Singamas Container Holdings Limited (the "Company") are pleased to announce the unaudited consolidated interim results of the Company and its subsidiaries (together the "Group") for the six months ended 30th June, 1998 together with comparative figures for the corresponding period of 1997 as follows:

Notes:

1. Basis of preparation of financial statements

The Company and some of its major subsidiaries have changed their reporting currency from the Hong Kong dollar ("HKD") to United States dollar ("USD") with effect from 1st January 1997. The directors consider it is more appropriate to prepare the Company's financial statements in USD as the Group's transactions are mostly denominated in that currency.

2. Turnover

Turnover represents revenue from container manufacturing, container depot and terminal, and mid-stream operations.

3. Taxation

Hong Kong profits tax has been calculated at the rate of 16% (1997: 16.5%) on the estimated assessable profits for the six months ended 30th June, 1998. Overseas taxation has been calculated on the estimated assessable profits for the period at the rates prevailing in the countries in which the Group operates.

4. Earnings per share

The calculation of earnings per share is based on earnings of US$504,000 (1997: US$175,000) and the weighted average number of 456,001,760 ordinary shares in issue (1997: 456,000,982 ordinary shares) throughout the period.

Fully diluted earnings per share is not shown as the effect of dilution from the exercise of share options is not material.

BUSINESS REVIEW

For the six months ended 30th June, 1998, the Group achieved a consolidated sales of US$75,255,000 and a consolidated profit after taxation and minority interests of US$504,000, exceeded the same period in 1997 by 9.7% and 188%, respectively. The encouraging results were mainly due to the Group's implementation of effective cost control measures, improvement in productivity and restructuring of operations.

The devaluation of Asian currencies has had minimal impact on the Group, since the majority of the Group's operating activities, particularly revenue, are transacted in USD. The change in reporting currency for the preparation of its financial statements from the HKD to USD in 1997 was to more accurately reflect the economic substance of the Group's financial performance.

Container Manufacturing Operations

Container manufacturing is the Group's core business accounted for 82% of its total turnover. For the six months ended 30th June, 1998, the Group's container manufacturing operations achieved consolidated sales of US$61,752,000, representing an increase of 19.7% as compared to the same period last year. Profit before taxation and minority interests was US$1,087,000, 40.8% higher than last year.

The recent economic downturn in Asia has put price pressure on orders received. During the first half of 1998, average selling prices of containers reduced by 5.5% as compared to 1997. The imbalance in trade flow in the region and the fall in selling prices boosted container demand, and sales volume increased considerably.

• Shanghai Pacific International Container Co., Ltd. produced 21,015 twenty-foot equivalent units ("TEUs") during the period under review (1997 : 17,611 TEUs). Orders are booked up to October.

• Singamas Container Industry Co., Ltd. produced 1,750 TEUs, increased by 5.7% from the same period last year, and orders are booked until November.

• Affected by the global downturn in the refrigerated container ("reefer") leasing industry and the increased number of competitors in the market of the People's Republic of China (the "PRC"), demand for reefer remained weak. Sales of Shanghai Reeferco Container Co., Ltd., however, improved considerably and orders are booked until October. 676 units of reefer were produced in the first half of 1998 (1997 : 542 units).

• P.T. Java Pacific Container Factory ("Java Pacific") was not affected by the recent social and political unrest in the Republic of Indonesia ("Indonesia"). Nevertheless, due to the changing social and political conditions in Indonesia, Java Pacific proceeded cautiously with its expansion plan, and maintained a production capacity averaged at 1,400 TEUs per month as compared to its plan of 2,000 TEUs.

• Xiamen Pacific Container Manufacturing Co., Ltd. managed to turnaround from a loss position and attained a profit of US$111,000 after the Group took over management in January 1998. This improvement in performance was mainly attributable to the Group's good management, quality product, well established marketing network and close working relationship with and assistance from our PRC joint venture partner.

Container Depot and Terminal Operations

During the first half of 1998, the Group's container depot and terminal operations attained sales of US$8,704,000, as compared to last year's US$9,831,000, and registered a small loss before taxation and minority interests of US$21,000 against a profit of US$695,000 last year. Unfavourable results were mainly from the Hong Kong depot operations.

• The Group's empty container storage business in Hong Kong was affected by the imbalanced trade flow. Many empty containers were repositioned to the PRC and other South East Asian countries, and the Group's Hong Kong depots registered sales of US$4,452,000, declined by 19% from the first half of 1997, resulting in a loss before taxation and minority interests of US$467,000.

• Business of the Group's PRC container terminals was relatively stable. Sales and profit before taxation and minority interests for the period under review were registered at US$4,251,000 (1997: US$4,335,000) and US$446,000 (1997: US$487,000), respectively.

Mid-Stream Operation

After years of effort by the management, the mid-stream operation achieved profit in the first half of 1998. The restructuring which took place in November 1997 proved to be effective as it successfully lowered the total operating costs of the mid-stream operation by more than 70%. Despite sales reduced from US$7,212,000 to US$4,799,000, substantial cut in costs allowed it to generate a profit before taxation and minority interests of US$274,000 against a loss of US$720,000 in the same period of 1997. The Group is confident that the mid-stream operation will continue to contribute positively.

YEAR 2000 COMPLIANCE

The Group has set up a Steering Committee (the "Committee") to assess the impact of Year 2000 on the Group's operations, and to formulate a Year 2000 compliance programme ("Programme"). The Committee reports regularly to the Board of Directors and to the Group Audit Committee. Based on the reports given by the Committee, the Board is satisfied that the risks associated with the Year 2000 compliance to the Group are expected to be minimal.

The Programme involves testing of all relevant systems to ensure that they are Year 2000 compliant. It also includes planned replacement by mid-1999 of a small number of the Group's systems, which are not Year 2000 compliant. The Group, however, is aiming for the majority of its systems to be Year 2000 compliant by the end of 1998. Full implementation and completion of the Programme is targeted at June 1999. The overall progress of the Programme is on schedule.

PROSPECTS

• Continue to focus on its existing business of container manufacturing, container depot and terminal and mid-stream operations. The Group will continue to expand its customer base and market coverage, and at the same time exercise stringent cost control, enhance production efficiency and improve quality of service. The Group is confident to maintain its market competitiveness and profitability bearing any unforeseeable circumstance.

• The Group will cautiously monitor the business environment and examine each investment plan individually, so as to safeguard the interests of our shareholders. The Group is fully confident that once the business environment has improved, the Group will be in a position to provide better returns to our shareholders.

INTERIM DIVIDEND

The directors of the Company have resolved not to declare any interim dividend for the six months ended 30th June, 1998 as working capital is required by the Company to finance its daily operations, which will benefit the Company's long term profitability.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

Neither the Company nor any of its subsidiaries have purchased, sold or redeemed any of the Company's listed securities during the period.

COMPLIANCE WITH THE CODE OF BEST PRACTICE

None of the directors of the Company is aware of any information that would reasonably indicate that the Company is not, or was not for any part of the accounting period covered by this interim report, in compliance with the Code of Best Practice as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

On Behalf of the Board
Chang Yun Chung
Chairman

Hong Kong, 24th August, 1998

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