COSCO SHIPPING Development Co., Ltd. — Capital/Financing Update 2019

Mar 25, 2019

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.

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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)

CONNECTED TRANSACTION DISPOSAL OF EQUITY INTERESTS IN E-SHIPPING

THE EQUITY TRANSFER AGREEMENT

The Board is pleased to announce that, on 25 March 2019, the Company and COSCO SHIPPING Logistics entered into the Equity Transfer Agreement, pursuant to which the Company has agreed to dispose of, and COSCO SHIPPING Logistics has agreed to acquire, 25% of the equity interests in E-Shipping.

IMPLICATIONS UNDER THE LISTING RULES

As at the date of this announcement, COSCO SHIPPING and its associates control or are entitled to exercise control over the voting rights in respect of 4,458,195,175 A Shares and 100,944,000 H Shares, representing approximately 39.02% of the total issued share capital of the Company. Accordingly, COSCO SHIPPING is an indirect controlling shareholder of the Company and therefore a connected person of the Company. COSCO SHIPPING Logistics is a wholly-owned subsidiary of COSCO SHIPPING and therefore is a connected person of the Company.

As one or more of the applicable percentage ratios calculated in accordance with the Listing Rules in respect of the Disposal exceed 0.1% but are less than 5%, the Disposal constitutes a connected transaction of the Company which is subject to the reporting and announcement requirements but is exempt from independent shareholders’ approval requirement under Chapter 14A of the Listing Rules.

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INTRODUCTION

The Board is pleased to announce that, on 25 March 2019, the Company and COSCO SHIPPING Logistics entered into the Equity Transfer Agreement, pursuant to which the Company has agreed to dispose of, and COSCO SHIPPING Logistics has agreed to acquire, 25% of the equity interests in E-Shipping.

THE EQUITY TRANSFER AGREEMENT

The principal terms of the Equity Transfer Agreement are as follows:

Date

25 March 2019

Parties

• (i) the Company (as vendor); and

• (ii) COSCO SHIPPING Logistics (as purchaser).

Subject Matter

Pursuant to the Equity Transfer Agreement, the Company has agreed to dispose of, and COSCO SHIPPING Logistics has agreed to acquire, 25% of the equity interests in E-Shipping, subject to the terms and conditions thereof.

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Consideration

Pursuant to the Equity Transfer Agreement, the Consideration for the Disposal is RMB13,234,350, which shall be payable by COSCO SHIPPING Logistics in cash to the Company in the following manner:

• (i) 50% of the Consideration shall be paid within five days after the date on which the Equity Transfer Agreement becomes effective;

• (ii) 50% of the Consideration shall be paid within five days after the Completion Date.

The Consideration was determined after arm’s length negotiations between the Company and COSCO SHIPPING Logistics parties with reference to the appraised value of the total shareholders’ equity of E-Shipping of approximately RMB52,937,400 as at Valuation Date as set out in the Valuation Report.

Effectiveness

The Equity Transfer Agreement shall become effective upon the approval at the shareholders’ meeting of E-Shipping.

Completion

Completion shall take place upon completion of the registration of change in respect of the Disposal with the relevant industry and commerce administration authority in the PRC, which shall be completed within 30 business days from the date of the Equity Transfer Agreement.

The Company shall be entitled to the profits or losses of E-Shipping in proportion to the existing shareholding of the Company in E-Shipping for the period from the Valuation Date to the Completion Date, provided that:

• (i) if the Completion Date falls on a date which is before the 15th day of a month (including the 15th day of that month), the period for calculating the Company’s entitlement to the profits or losses of E-Shipping shall end on the last day of the previous month; and

• (ii) if the Completion Date falls on a date which is after the 15th day of a month, the period for calculating the Company’s entitlement to the profits or losses of E-Shipping shall end on the last day of that month.

FINANCIAL EFFECT OF THE DISPOSAL

As at the date of this announcement, the Company is interested in 25% of the equity interests in E-Shipping. Upon Completion, the Company will cease to have an interest in E-Shipping and therefore, E-Shipping will cease to be an associate of the Company.

It is estimated that the Group will recognise a gain of approximately RMB12,298,000 from the Disposal, which is calculated based on the difference between (i) the Consideration; and (ii) the carrying value of the 25% equity interests held by the Company in E-Shipping.

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REASONS FOR AND BENEFITS OF THE DISPOSAL

The Group has transformed from a container liner operator into an integrated financial services platform and has since been focusing on the provision of integrated financial services with diversified leasing businesses. The principal business of E-Shipping, being supply chain management, is not in line with the existing principal businesses and future development of the Group, the Disposal will enable the Group to focus on its principal businesses and develop into an integrated shipping financial service platform.

The terms of the Equity Transfer Agreement and the transactions contemplated thereunder were agreed after arm’s length negotiations between the parties thereto. The Board (including the independent non-executive Directors) considers that the terms of the Equity Transfer Agreement and the transactions contemplated thereunder are on normal commercial terms which are fair and reasonable, and are in the interests of the Company and the Shareholders as a whole.

INFORMATION ON THE GROUP

The Company is a joint stock company established under the laws of the PRC with limited liability, the H Shares of which are listed on the Main Board of the Stock Exchange and the A Shares of which are listed on the Shanghai Stock Exchange.

The Group is principally engaged in shipping and industry-related leasing businesses, manufacturing of containers and provision of investment and financial services.

INFORMATION ON COSCO SHIPPING LOGISTICS

COSCO SHIPPING Logistics is a company established under the laws of the PRC with limited liability and is a wholly-owned subsidiary of COSCO SHIPPING. It is principally engaged in the provision of cargo logistics, international freight agency services and related consultancy services.

INFORMATION ON E-SHIPPING

E-Shipping is a company established under the laws of the PRC with limited liability. It is principally engaged in supply chain management specialising in cross-border transport and logistics.

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Based on the financial statements of E-Shipping prepared in accordance with the China Accounting Standard for Business Enterprises, the financial information of E-Shipping for the two years ended 31 December 2016 and 2017 and the three months ended 31 March 2018 were approximately as follows:

	For the year	ended	For the three
	31 December		months ended
	2016	2017	31 March 2018
	(audited)	(audited)	(audited)
	(RMB)	(RMB)	(RMB)
Revenue	52,404,100	143,526,700	27,552,400
Profit/(loss) before taxation	(17,193,000)	(2,748,200)	(3,449,900)
Profit/(Loss) after taxation	(17,193,000)	(2,748,200)	(3,449,900)

The audited net asset value of E-Shipping as at 31 March 2018 was approximately RMB3,745,800.

According to the Valuation Report, the appraised value of the total shareholders’ equity of E-Shipping as at the Valuation Date, being 31 March 2018, was approximately RMB52,937,400, which was determined based on the income approach in accordance with the relevant PRC laws and regulations.

IMPLICATIONS UNDER THE LISTING RULES

As at the date of this announcement, COSCO SHIPPING and its associates control or are entitled to exercise control over the voting rights in respect of 4,458,195,175 A Shares and 100,944,000 H Shares, representing approximately 39.02% of the total issued share capital of the Company. Accordingly, COSCO SHIPPING is an indirect controlling shareholder of the Company and therefore a connected person of the Company. COSCO SHIPPING Logistics is a wholly-owned subsidiary of COSCO SHIPPING and therefore is a connected person of the Company.

As one or more of the applicable percentage ratios calculated in accordance with the Listing Rules in respect of the Disposal exceed 0.1% but are less than 5%, the Disposal constitutes a connected transaction of the Company which is subject to the reporting and announcement requirements but is exempt from independent shareholders’ approval requirement under Chapter 14A of the Listing Rules.

Ms. Sun Yueying, Mr. Wang Daxiong, Mr. Liu Chong and Mr. Xu Hui, all being executive Directors, hold directorship(s) or act as senior management in COSCO SHIPPING and its associates, and Mr. Feng Boming, Mr. Huang Jian and Mr. Liang Yanfeng, all being non-executive Directors, were nominated by COSCO SHIPPING to the Board. Accordingly, Ms. Sun Yueying, Mr. Wang Daxiong, Mr. Liu Chong, Mr. Xu Hui, Mr. Feng Boming, Mr. Huang Jian and Mr. Liang Yanfeng have abstained from voting on the relevant Board resolution approving the Equity Transfer Agreement and the transactions contemplated thereunder. Save as aforementioned, none of the other Directors has a material interest in the Equity Transfer Agreement and the transactions contemplated thereunder and therefore no other Director has abstained from voting on such Board resolution.

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DEFINITIONS

Unless the context requires otherwise, capitalised terms used in this announcement shall have the meanings as follow:

“A Share(s)”	the domestic share(s) in the ordinary share capital of the Company with
	a par value of RMB1.00 each, which are listed on the Shanghai Stock
	Exchange
“Board”	the board of directors of the Company
“Company”	COSCO SHIPPING Development Co., Ltd.* (中遠海運發展股份有限
	公司), a joint stock company established under the laws of the PRC
	with limited liability, the H Shares and A Shares of which are listed on
	the Main Board of the Hong Kong Stock Exchange (Stock Code: 2866)
	and the Shanghai Stock Exchange (Stock Code: 601866), respectively
“Completion”	the completion of the Disposal in accordance with the terms and
	conditions of the Equity Transfer Agreement
“Completion Date”	the date of the Completion
“connected person”	has the meaning ascribed to it under the Listing Rules
“controlling shareholder”	has the meaning ascribed to it under the Listing Rules
“Consideration”	the consideration in the amount of RMB13,234,350 payable by COSCO
	SHIPPING Logistics to the Company for the Disposal under the Equity
	Transfer Agreement
“COSCO SHIPPING”	China COSCO Shipping Corporation Limited#(中國遠洋海運集團
	有限公司), a PRC state-owned enterprise and an indirect controlling
	shareholder of the Company
“COSCO SHIPPING	COSCO SHIPPING Logistics Co., Ltd.#(中遠海運物流有限公司), a
Logistics”	company established under the laws of the PRC with limited liability
	and a wholly-owned subsidiary of COSCO SHIPPING
“Director(s)”	director(s) of the Company
“Disposal”	the disposal of the 25% equity interests in E-shipping by the Company
	to COSCO SHIPPING Logistics pursuant to the Equity Transfer
	Agreement
“Equity Transfer	the equity transfer agreement dated 25 March 2019 entered into by the
Agreement”	Company and COSCO SHIPPING Logistics in relation to the Disposal
“E-Shipping”	E-Shipping Global Supply Chain Management (Shenzhen) Co., Ltd.#
	(深圳一海通全球供應鏈管理有限公司), a company established under
	the laws of the PRC with limited liability and an associate of the
	Company as at the date of this announcement

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“Group”	the Company and its subsidiaries
“H Share(s)”	the overseas listed foreign share(s) in the ordinary share capital of the
	Company with a par value of RMB1.00 each, which are listed on the
	Main Board of the Stock Exchange
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Hong Kong Stock	The Stock Exchange of Hong Kong Limited
Exchange”
“Listing Rules”	the Rules Governing the Listing of Securities on The Stock Exchange
	of Hong Kong Limited
“PRC”	the People’s Republic of China which, for the purpose of this
	announcement, excludes Hong Kong, the Macau Special Administrative
	Region of the People’s Republic of China and Taiwan
“RMB”	Renminbi, the lawful currency of the PRC
“Share(s)”	A Share(s) and H Share(s)
“Shareholder(s)”	holder(s) of the Share(s)
“Valuation Date”	31 March 2018
“Valuation Report”	the valuation report dated 10 January 2019 prepared by China Tong
	Cheng Assets Appraisal Co., Ltd.#(中通誠資產評估有限公司), an
	independent valuer, in respect of E-Shipping, with the valuation date
	being 31 March 2018
“%”	per cent

By order of the Board COSCO SHIPPING Development Co., Ltd. Yu Zhen Company Secretary

Shanghai, the People’s Republic of China 25 March 2019

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

• The Company is a registered non-Hong Kong company as defined under 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.”.

For identification purposes only.

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