COSCO SHIPPING Holdings Co., Ltd. - Proxy Solicitation & Information Statement 2013

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountants or other professional adviser.

If you have sold or transferred all your shares in China COSCO Holdings Company Limited, you should at once hand this circular to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or the transfer was effected for transmission to the purchaser and transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

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中國遠洋控股股份有限公司 China COSCO Holdings Company Limited[*]

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 1919)

DISCLOSEABLE AND CONNECTED TRANSACTION - DISPOSAL OF ENTIRE EQUITY INTEREST IN COSCO LOGISTICS CO., LTD. AND PROVISION OF GUARANTEES MANDATE

Financial advisers to the Company

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

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A letter from the Board is set out on pages 4 to 11 of this circular. A letter from the Independent Board Committee is set out on pages 12 to 13 of this circular. A letter from the Independent Financial Adviser is set out on pages 14 to 29 of this circular. A notice convening the EGM to be held at Conference Room, 47th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong and Conference Center, Ocean Plaza, 158 Fuxingmennei Avenue, Xicheng District, Beijing, the PRC at 10 a.m. on Friday, 26 April 2013, together with the form of proxy and reply slip, have been despatched to the Shareholders on 12 March 2013. The supplemental notice of the EGM, which includes additional resolutions to be proposed at the EGM, is set out on pages 41 to 43 of this circular.

A revised form of proxy for use at the EGM which contains the additional resolutions to be proposed at the EGM is enclosed with this circular. The revised form of proxy enclosed with this circular shall supercede the form of proxy despatched to the Shareholders on 12 March 2013. Whether or not you intend to attend the EGM, you are requested to complete and return the revised form of proxy enclosed with this circular in accordance with the instructions printed on it. The revised form of proxy should be returned to the Hong Kong H share registrar of the Company, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 24 hours before the time appointed for the EGM or any adjournment of it. If you intend to attend the EGM in person or by proxy, you are required to complete and return the reply slip to the Hong Kong H share registrar of the Company, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong on or before Saturday, 6 April 2013.

Completion and return of the revised form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment of it should you so wish.

* The Company is registered as a non-Hong Kong company under Part XI of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) under its Chinese name “ 中國遠洋控股股份有限公司 ” and its English name “China COSCO Holdings Company Limited”.

2 April 2013

Pages	Pages
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Discloseable and Connected Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Provision of Guarantees Mandate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . .	12
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . . . . . . .	14
APPENDIX I — FINANCIAL INFORMATION OF COSCO LOGISTICS . . . . . . . . . . . . .	30
APPENDIX II — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	35
SUPPLEMENTAL NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	41

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DEFINITIONS

In this circular, the following expressions have the following meanings unless the context otherwise requires:

“Articles of Association”

the articles of association of the Company, as amended from time to time

“Asset Appraisal Report”

the asset appraisal report issued by China Tong Cheng Assets Appraisal Co., Ltd. (中通誠資產評估有限公司) with respect to the appraised value of COSCO Logistics as at 31 December 2012

“associate(s)” has the meaning ascribed to it under the Listing Rules
“Board” the board of Directors
“Business Day(s)”

a day on which banks in the PRC and Hong Kong are generally open for normal banking business

“Company”
China COSCO Holdings Company Limited (中國遠洋控股股份有限公司), a joint stock limited company incorporated in the PRC with limited liability, the H shares of which are listed on the Main Board of the Stock Exchange (Stock code: 1919) and the A shares of which are listed on the Shanghai Stock Exchange (Stock code: 601919)
“Completion Date”
the date of full payment of the Consideration by COSCO to the Company in accordance with the Equity Transfer Agreement
“Consideration”
RMB6.74 billion, being the consideration for the Disposal under the Equity Transfer Agreement
“COSCO”
中國遠洋運輸(集團)總公司 (China Ocean Shipping (Group) Company**), a Chinese State-owned enterprise, the controlling shareholder of the Company owning an aggregate of 52.80% of the total registered capital of the Company as at the Latest Practicable Date
“COSCO Group” COSCO and its associates
“COSCO Logistics” 中國遠洋物流有限公司 (COSCO Logistics Co., Ltd.**), a company established under the laws of the PRC with limited liability, which is owned as to 100% by the Company as at the Latest Practicable Date
“Director(s)” the director(s) of the Company
“Disposal”
the sale and transfer of the 100% equity interest in COSCO Logistics pursuant to the Equity Transfer Agreement

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DEFINITIONS

“EGM” the extraordinary general meeting of the Company to be convened at 10:00 a.m. on Friday, 26 April 2013 at Conference Room, 47th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong and Conference Center, Ocean Plaza, 158 Fuxingmennei Avenue, Xicheng District, Beijing, the PRC to consider, and if thought fit, approve the Disposal, the Equity Transfer Agreement and the mandate for the provision of external guarantees “Equity Transfer Agreement” the equity transfer agreement dated 27 March 2013 entered into between the Company and COSCO in respect of the Disposal “Group” the Company and its subsidiaries

“Hong Kong” the Hong Kong Special Administrative Region of the PRC “HK$” Hong Kong dollar, the lawful currency of Hong Kong

“Independent Board Committee” the independent board committee comprising all the independent non-executive Directors established to advise the Independent Shareholders in respect of terms of the Disposal “Independent Financial Adviser” Platinum Securities Company Limited, a licensed corporation under the SFO licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, being the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the terms of the Disposal

“Independent Shareholders” Shareholders other than COSCO and its associates “Latest Practicable Date” 27 March 2013, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion herein
“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
“PRC” the People’s Republic of China, for the purposes of this announcement, excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan
“PRC GAAP” the Generally Accepted Accounting Principles of the PRC “RMB” Renminbi, the lawful currency of the PRC

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	DEFINITIONS
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“Shareholder(s)”	holder(s) of the shares of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Supervisors”	supervisors of the Company
“Valuation Date”	31 December 2012

** for identification purpose only

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LETTER FROM THE BOARD

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中國遠洋控股股份有限公司 China COSCO Holdings Company Limited[*]

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 1919)

Directors:

Mr. WEI Jiafu [2] (Chairman) Mr. MA Zehua [1] (Vice Chairman) Mr. LI Yunpeng [2] Mr. SUN Yueying [2] Mr. SUN Jiakang [1] Mr. XU Minjie [1] Mr. YE Weilong [2] Mr. JIANG Lijun [1] (President) Mr. TEO Siong Seng [3] Dr. FAN HSU Lai Tai, Rita [3] Mr. KWONG Che Keung, Gordon [3] Mr. Peter Guy BOWIE [3]

Registered Office: 3rd Floor, No.1 Tongda Square Tianjin Port Free Trade Zone Tianjin 300461, the PRC

Head office and principal place of business in Hong Kong: 49th Floor COSCO Tower 183 Queen’s Road Central Hong Kong

1 Executive Director

2 Non-executive Director

3 Independent Non-executive Director

2 April 2013

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION - DISPOSAL OF ENTIRE EQUITY INTEREST IN COSCO LOGISTICS CO., LTD. AND PROVISION OF GUARANTEES MANDATE

INTRODUCTION

Reference is made to the announcement of the Company dated 27 March 2013 in relation to the Equity Transfer Agreement and the proposed mandate for the provision of guarantees.

* The Company is registered as a non-Hong Kong company under Part XI of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) under its Chinese name “ 中國遠洋控股股份有限公司 ” and its English name “China COSCO Holdings Company Limited”.

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LETTER FROM THE BOARD

The notice of the EGM in respect of considering, and if thought fit, passing the ordinary resolution to approve the Disposal and the relevant agreement has been despatched to the Shareholders on 12 March 2013. The supplemental notice of the EGM, which includes additional resolutions for the approval of the terms and execution of the Equity Transfer Agreement and the mandate for the provision of external guarantees, is set out on pages 41 to 43 of this circular.

The purpose of this circular is to provide you with, amongst other things, further details of the Equity Transfer Agreement and the provision of guarantees mandate, a letter of advice from the Independent Board Committee and a letter of recommendation from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Disposal and the Equity Transfer Agreement.

DISCLOSEABLE AND CONNECTED TRANSACTION

1. THE EQUITY TRANSFER AGREEMENT

Set out below are the principal terms of the Equity Transfer Agreement:

Date: 27 March 2013 (after trading hours) Parties: (1) the Company as vendor; and (2) COSCO as purchaser. Subject matter: 100% equity interest in COSCO Logistics Consideration:

Pursuant to the Equity Transfer Agreement, the consideration of approximately RMB6.74 billion shall be paid in cash by COSCO to the Company within 10 days from the day on which all the conditions precedents set out in the Equity Transfer Agreement have been satisfied (or waived by the Company and COSCO in writing).

The Consideration was determined after arm’s length negotiations between the Company and COSCO taking into consideration, inter alia , the following factors:

(1) analysis of the logistics industry in the PRC, including sector outlook, market dynamics and key players;
(2) analysis of market position, asset conditions, historical financial and operational performance and business prospects of COSCO Logistics;
(3) valuation levels of publicly-listed companies engaged in businesses similar to those of COSCO Logistics, including price-to-earnings multiples (P/E) and enterprise value-to-EBITDA multiples (EV/EBITDA), which have been selected after considering factors such as market capitalization, business portfolio, historical financials, business prospects, etc.;

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LETTER FROM THE BOARD

(4) valuation levels of similar historical transactions in the global logistics industry, including price-to-earnings multiples (P/E) and enterprise value-to-EBITDA multiples (EV/EBITDA), which have been selected after considering multiple factors such as nature and size of the transactions, percentage of the equity interest being acquired or disposed of, and the geographical regions of the businesses operations;
(5) the terms of three previous transactions regarding COSCO Logistics, namely (i) the acquisition of equity interest in COSCO Logistics from COSCO and the capital injection into COSCO Logistics by COSCO Pacific Logistics Company Limited in 2003, upon completion of which COSCO Pacific Logistics Company Limited owned a 49% equity interest in COSCO Logistics; (ii) the transfer of 51% equity interest in COSCO Logistics from COSCO to the Company in 2006; and (iii) the transfer of 49% equity interest in COSCO Logistics from COSCO Pacific Logistics Company Limited to the Company in 2009;
(6) the appraised value of COSCO Logistics as at the Valuation Date of approximately RMB7.86 billion as recommended in the Asset Appraisal Report produced by an independent appraiser jointly engaged by the Company and COSCO, which is a requirement for the transfer of state-owned assets under the relevant PRC regulations; and
(7) the amount of distributable profit for the year ended 31 December 2012 declared by COSCO Logistics during the period from the Valuation Date to (but excluding) the signing date of the Equity Transfer Agreement of approximately RMB1.12 billion be paid to the Company.

The Company and COSCO further agreed that any attributable profits and related rights or attributable losses of COSCO Logistics from the Valuation Date to (and including) the Completion Date, which shall be determined based on the special audited accounts of COSCO Logistics, shall be attributed to or borne by the Company. Any attributable profits and related rights or attributable losses of COSCO Logistics after the Completion Date shall be attributed to or borne by COSCO.

Conditions Precedent:

Completion of the Disposal is conditional upon:

(1) the transfer of state-owned assets as contemplated under the Equity Transfer Agreement having been approved by COSCO according to applicable PRC laws and the filing procedures having been completed;
(2) each of the Company and COSCO having completed their respective internal approval procedures and complied with the disclosure requirements in respect of the execution and performance of the Equity Transfer Agreement in accordance with their respective articles of association and the requirements under the applicable securities regulations;

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LETTER FROM THE BOARD

(3) the parties to the Equity Transfer Agreement having effectively executed all relevant documents, including (i) the Equity Transfer Agreement; and (ii) the sole shareholder resolution of COSCO Logistics approving (a) the Disposal, (b) the dividend payment for the year ended 31 December 2012 and (c) the change of directors and supervisors of COSCO Logistics (if necessary);
(4) no material adverse change having occurred to the business, operations, assets, liabilities etc., of COSCO Logistics since the Valuation Date, save as disclosed by the Company to COSCO before the signing of the Equity Transfer Agreement; and
(5) no breach of terms of the Equity Transfer Agreement having occurred, and the declarations, representations and warranties given by the Company and COSCO as set out in the Equity Transfer Agreement remaining true and accurate.

Completion:

Completion of the Disposal is conditional upon the fulfillment of the above-mentioned conditions precedent on or before 30 June 2013 and full payment of the Consideration. If any of the conditions precedent is not fulfilled on or before 30 June 2013, and the parties fail to agree within 20 Business Days after 30 June 2013 to waive part or all of the conditions precedent, extend the completion date or terminate the Equity Transfer Agreement, the Equity Transfer Agreement will terminate.

Within 30 days from the Completion Date, both parties will proceed with the registration of change of equity holders of COSCO Logistics with the relevant PRC governmental authorities. If COSCO Logistics fail to complete the registration of change of equity holders within 30 days after the Completion Date, and both parties fail to reach an agreement or agree to terminate the Equity Transfer Agreement within 20 Business Days thereafter, the Equity Transfer Agreement will terminate automatically. Upon termination of the Equity Transfer Agreement, the Company shall return the Consideration in full to COSCO within 10 days.

2. REASONS FOR AND BENEFITS OF THE DISPOSAL

As a result of the global macroeconomic downturn and the resulting negative effects to the shipping industry, the Company recorded a net loss for each of the years ended 31 December 2011 and 2012. The Disposal is expected to provide a pre-tax gain of approximately RMB1.96 billion to the Group for 2013. In addition, pursuant to the Equity Transfer Agreement, the Company is entitled to retain any other distributable profit which may be declared by COSCO Logistics on or before the Completion Date. As a result of the above factors, the Disposal is expected to improve the earning performance of the Group in 2013, thus reducing the risk of the Shares being suspended from trading on the A-share market, which is in the best interests of the Shareholders as a whole. At the same time, the proceeds from the Disposal will enhance the level of the Company’s current assets, thereby strengthening its cash position and working capital.

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LETTER FROM THE BOARD

Although the Group recorded a net profit from its logistics business segment for each of the years ended 31 December 2011 and 2012, COSCO Logistics requires a large amount of capital investment in various areas to cope with the recent rapid growth in the logistics industry in the PRC. It is expected that it will take several years for COSCO Logistics to recover all the investment costs, whereas the core shipping business segment of the Group is currently undergoing a historically low tide with strong demand for working capital. Therefore, the Board considers that it may be difficult for the Company to provide continuous and steady injection of capital into COSCO Logistics for its development in the near future. Hence, the Disposal is expected to ease and lessen the Company’s capital commitment in the near future.

Taking into consideration the strategic positioning and continuous development potential of the Group, the management of the Company will consider various possibilities, such as asset acquisition, asset disposal and business cooperation, as well as the possibility to repurchase COSCO Logistics in the future when and where appropriate, and decrease the risk of the Shares being suspended from trading on the A-share market, in order to further protect the interests of the Shareholders as a whole. The management of the Company will carefully consider and evaluate the implementation of such plans after going through its internal approval process. As at the Latest Practicable Date, apart from the Disposal, the Company had no concrete proposals for the implementation of such plans.

Mr. WEI Jiafu, Mr. MA Zehua, Mr. LI Yunpeng, Ms. SUN Yueying, Mr. SUN Jiakang, Mr. XU Minjie, Mr. YE Weilong and Mr. JIANG Lijun are Directors nominated by COSCO and have therefore abstained from voting on the relevant board resolutions approving the Disposal pursuant to the Articles of Association. Save as disclosed above, none of the Directors has a material interest in the Disposal. Other than the above-mentioned Directors, the remaining Directors are the independent non-executive Directors. Based on the advice from the Independent Financial Adviser and the reasons mentioned above, the independent non-executive Directors are of the view that the terms of the Disposal and the Consideration for the Disposal are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole.

3. FINANCIAL INFORMATION OF COSCO LOGISTICS

Based on the audited consolidated accounts of COSCO Logistics prepared in accordance with the PRC GAAP, the value of the total assets, total net assets and net assets attributable to equity holders of COSCO Logistics as at 31 December 2012 were approximately RMB12,708 million, RMB6,260 million and RMB 5,901 million, respectively.

Based on the audited consolidated accounts of COSCO Logistics prepared in accordance with the PRC GAAP, the profits of COSCO Logistics for the two years ended 31 December 2012 were as follows:

			For the year ended	For the year ended
			31 December
			2011	2012
			RMB	RMB
			(audited)	(audited)
Net	profit	before taxation	810 million	829 million
Net	profit	after taxation	602 million	608 million
Net	profit	attributable to the equity holders after taxation	528 million	529 million

For further details of the financial information of COSCO Logistics, please refer to Appendix I to this circular.

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LETTER FROM THE BOARD

4. FINANCIAL EFFECTS OF THE DISPOSAL

Upon completion of the Disposal, the Company is expected to recognize a pre-tax gain of approximately RMB1.96 billion, calculated based on the difference between the consideration of approximately RMB6.74 billion and the net assets value of COSCO Logistics attributable to the Company of approximately RMB4.78 billion (which represents the carrying amount of the net assets of COSCO Logistics attributable to the Company of approximately RMB5.90 billion as at 31 December 2012, less the amount of distributable profits for the year ended 31 December 2012 declared by COSCO Logistics from 1 January 2013 to (but excluding) the date of the Equity Transfer Agreement of approximately RMB1.12 billion).

The Company intends to use the net proceeds from the Disposal for other investment opportunities in the shipping business, for working capital and repayment of bank loans.

Upon completion of the Disposal, COSCO Logistics will cease to be a subsidiary of the Company.

5. LISTING RULES IMPLICATIONS

As all of the applicable percentage ratios (as defined under the Listing Rules) for the Disposal are more than 5% but less than 25%, the Disposal constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules. In addition, COSCO is the controlling shareholder of the Company and hence a connected person of the Company. As such, the Disposal also constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules, which is subject to the reporting, announcement and independent shareholders’ approval requirements. Accordingly, the Company will seek the Independent Shareholders’ approval at the EGM by way of poll for the Equity Transfer Agreement and the transactions contemplated therein.

6. INFORMATION ON THE RELEVANT PARTIES

The Company was established in the PRC on 3 March 2005. The Company, through its various subsidiaries, provides a wide range of container shipping, dry bulk shipping, logistics, terminals and container leasing services covering the whole shipping value chain for both international and domestic customers.

Apart from the business operated by the Group, the main business currently operated by COSCO and its subsidiaries also includes operation of oil tankers and other liquefied bulk cargo shipping, general cargo and special vessel shipping, ship repair and retrofit, ship building, provision of vessel fuels, and provision of financial services, ship trading services and seaman and ship management services, etc. COSCO is a state-owned enterprise under the direct administration of the State-owned Assets Supervision and Administration Commission of the State Council of the PRC (中華人民共和國國務院國有資產監督管理委員會).

COSCO Logistics and its subsidiaries are principally engaged in the businesses of logistics services, including third party logistics, international shipping agency, international multimodal transportation, sea freight forwarding, air freight forwarding, container yards management, warehousing, consolidation, railway, road and barge transportation, project development and management as well as chartering brokerage, etc.

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LETTER FROM THE BOARD

PROVISION OF GUARANTEES MANDATE

Pursuant to the requirements of the applicable rules and regulations, the Rules Governing the Listing of Securities on the Shanghai Stock Exchange and the Articles of Association, if the total amount of guarantees provided by the Group in any form to third parties exceeds 50% of the audited net asset value of the Group under its latest audited financial statements, any provision of the additional guarantees shall require approval of the Shareholders. As the total amount of guarantees provided by the Group to third parties has reached the above-mentioned threshold, the provision of any additional guarantees by the Company requires the approval of the Shareholders. To satisfy the Group’s operations requirements, it is expected that the amount of guarantees to be provided by the Company for the borrowings of its wholly-owned subsidiaries and their subsidiaries for the year ending 31 December 2013 will no more than US$1 billion. A resolution will be proposed at the EGM to consider, and if thought fit, to approve the provision of guarantees to third parties by the Company for the borrowings of its wholly-owned subsidiaries and their subsidiaries of up to US$1 billion.

EXTRAORDINARY GENERAL MEETING

The EGM will be held by the Company for the Shareholders to consider, and if thought fit, passing the ordinary resolutions to approve, inter alia, the Disposal, the Equity Transfer Agreement and the mandate for the provision of external guarantees. COSCO, having a material interest in the Disposal and the Equity Transfer Agreement, and their respective associates, which together hold 5,313,082,844 A Shares and 81,179,500 H Shares, representing in aggregate 52.80% of the total issued share capital of the Company, will abstain from voting on the resolutions in relation to the the Disposal and the Equity Transfer Agreement to be proposed at the EGM. None of the Shareholders has any material interest in the proposed mandate for the provision of guarantees, and accordingly, none of the Shareholders is required to abstain from voting on the relevant resolution to be proposed at the EGM.

The EGM will be held at Conference Room, 47th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong and Conference Center, Ocean Plaza, 158 Fuxingmennei Avenue, Xicheng District, Beijing, the PRC at 10 a.m. on Friday, 26 April 2013.

A notice convening the EGM, together with a proxy form and reply slip, have been despatched to the Shareholders on 12 March 2013. The supplemental notice of the EGM, which includes additional resolutions for the approval of the terms and execution of the Equity Transfer Agreement and the mandate for the provision of external guarantees to be proposed at the EGM, is set out on pages 41 to 43 of this circular. A revised form of proxy for use at the EGM which contains the additional resolutions is enclosed with this circular. The revised form of proxy enclosed with this circular shall supercede the form of proxy despatched to the Shareholders on 12 March 2013. Whether or not you intend to attend the EGM, you are requested to complete and return the revised form of proxy to the Hong Kong H share registrar of the Company, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 24 hours before the time appointed for the EGM or

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LETTER FROM THE BOARD

any adjournment of it. If you intend to attend the EGM, you are required to complete and return the reply slip to the Hong Kong H share registrar of the Company, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong on or before Saturday, 6 April 2013.

Completion and return of the revised form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment of it should you so wish, and completion and return of the reply slip will not affect your right to attend the respective meeting.

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of the Shareholders to be taken at a general meeting of the Company shall be taken by poll. An announcement of the poll results will be made by the Company after the EGM in the manner prescribed under Rule 13.39(5) of the Listing Rules.

RECOMMENDATIONS

Your attention is drawn to the letter from the Independent Board Committee set out on pages 12 to 13 of this circular and the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders set out on pages 14 to 29 of this circular in connection with the Equity Transfer Agreement and the Disposal and the principal factors and reasons considered by the Independent Financial Adviser in arriving at such advice.

The Independent Board Committee, having taken into account the advice of the Independent Financial Adviser, considers that the terms of the Disposal and the Consideration for the Disposal are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the resolutions to be proposed at the EGM to approve the Disposal and the Equity Transfer Agreement.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the Appendices to this circular.

Yours faithfully, By order of the Board China COSCO Holdings Company Limited GUO Huawei

Joint Company Secretary

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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中國遠洋控股股份有限公司 China COSCO Holdings Company Limited[*]

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 1919)

2 April 2013

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION - DISPOSAL OF ENTIRE EQUITY INTEREST IN COSCO LOGISTICS CO., LTD.

We refer to the circular issued by the Company to its Shareholders dated 2 April 2013 (the “ Circular ”) of which this letter forms part. Terms defined in the Circular shall have the same meanings in this letter unless the context otherwise requires.

We have been appointed by the Board to advise the Independent Shareholders as to whether the terms of the Disposal are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole.

Platinum Securities Company Limited has been appointed to act as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Equity Transfer Agreement and the Disposal. The text of the letter of advice from the Independent Financial Adviser containing their recommendations and the principal factors they have taken into account in arriving at their recommendations are set out from pages 14 to 29 of the Circular.

* The Company is registered as a non-Hong Kong company under Part XI of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) under its Chinese name “ 中國遠洋控股股份有限公司 ” and its English name “China COSCO Holdings Company Limited”.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having considered the terms of the Disposal and the advice of the Independent Financial Adviser, we are of the opinion that the terms of the Disposal and the Consideration for the Disposal are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole. We therefore recommend the Independent Shareholders to vote in favour of the resolutions to be proposed at the EGM to approve the Disposal and the Equity Transfer Agreement.

Yours faithfully,

For and on behalf of the Independent Board Committee Mr. TEO Dr. FAN Mr. KWONG Mr. Peter Guy Siong Seng HSU Lai Tai, Rita Che Keung, Gordon BOWIE Independent non-executive Directors

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders for the purpose of incorporation into this circular.

PLATINUM Securities Company Limited 21/F LHT Tower 31 Queen’s Road Central Hong Kong Telephone (852) 2841 7000 Facsimile (852) 2522 2700 Website www.platinum-asia.com

2 April 2013

To the Independent Board Committee and the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION — DISPOSAL OF ENTIRE EQUITY INTEREST IN COSCO LOGISTICS CO., LTD.

INTRODUCTION

We refer to our engagement as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the terms of the Equity Transfer Agreement. Details of the Disposal are contained in the circular of the Company dated 2 April 2013 (the “Circular”). Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

In our capacity as the Independent Financial Adviser, our role is to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Disposal and the Consideration for the Disposal are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole; and to give independent advice to the Independent Board Committee and the Independent Shareholders.

In formulating our opinion, we have relied on the information and facts supplied to us by the Directors and/or management of the Company. We have reviewed, among other things: (I) the Equity Transfer Agreement; (II) the announcements of the Company dated 11 March 2013 and 27 March 2013; (III) the circular of the Company dated 5 October 2006; (IV) the circular of COSCO Pacific Limited dated 17 September 2009; (V) the Asset Appraisal Report prepared by an independent appraiser jointly engaged by COSCO and the Company as at the Valuation Date; (VI) the audited 2011 annual report of the Company (the “2011 Annual Report”); (VII) the 2012 annual results announcement of the Company dated 27 March 2013 (the “2012 Annual Results”); (VIII) the audited 2011 annual report of COSCO Logistics; and (IX) the audited 2012 annual report of COSCO Logistics.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We have assumed that all information, facts, opinions and representations contained in the Circular are true, complete and accurate in all material respects and we have relied on the same. The Directors have confirmed that they take full responsibility for the contents of the Circular and have made all reasonable inquiries that no material facts have been omitted from the information supplied to us.

We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy or completeness of the information of all facts as set out in the Circular and of the information and representations provided to us by the Directors and/or management of the Company. Furthermore, we have no reason to suspect the reasonableness of the opinions and representations expressed by the Directors and/or management of the Company which have been provided to us. In line with normal practice, we have not, however, conducted a verification process of the information supplied to us, nor have we conducted any independent in-depth investigation into the business and affairs of the Company. We consider that we have reviewed sufficient information to enable us to reach an informed view and to provide a reasonable basis for our opinion regarding the Disposal.

We are independent from, and are not associated with the Company or any other party to the Disposal, or their respective substantial shareholder(s) or connected person(s), as defined under the Listing Rules and accordingly, are considered eligible to give independent advice on the Disposal. We will receive a fee from the Company for our role as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Disposal. Apart from this normal professional fee payable to us in connection with this appointment, no arrangements exist whereby we will receive any fees or benefits from the Company or any other party to the Disposal or their respective substantial shareholder(s) or connected person(s), as defined under the Listing Rules.

The Independent Board Committee, comprising Mr. Teo Siong Seng, Dr. Fan Hsu Lai Tai, Rita, Mr. Kwong Che Keung, Gordon, and Mr. Peter Guy Bowie, has been established to advise the Independent Shareholders as to whether the terms of the Disposal and the Consideration for the Disposal are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating and giving our independent financial advice to the Independent Board Committee and the Independent Shareholders, we have taken into account the following principal factors:

1. Background of the Disposal

Reference is made to the announcement of the Company dated 27 March 2013 in relation to the Equity Transfer Agreement. On 27 March 2013 (after trading hours), the Company entered into the Equity Transfer Agreement with COSCO, pursuant to which the Company agreed to sell, and COSCO agreed to purchase, the 100% equity interest in COSCO Logistics at the Consideration of approximately RMB6.74 billion.

2. Information on COSCO Logistics

3. Reasons for and benefits of the Disposal

We note that the reasons for and benefits of the Disposal, as explained by the management of the Company, are mainly as follows:

(a) reducing the risk of the Shares being suspended from trading on the A-share market;

As discussed with the management of the Company, we note that the Company’s net loss of the years 31 December 2011 and 2012 will lead to the labeling of “Special Treatment” by the Shanghai

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Stock Exchange with reference to the listing rules issued by the Shanghai Stock Exchange. In addition, we note that should the Company record a net loss in the year ending 31 December 2013, the Company’s A Shares will be suspended from trading on the A-share market in the Shanghai Stock Exchange.

Based on the discussions with the management of the Company, we concur with the view that the potential suspension of trading of the Company on the A-share market will lead to a negative impact to the share performance at the H-share market as well, including but not limited to (i) the lower level of share liquidity since approximately 75% of the total outstanding Shares will be subject to the suspension of trading on the A-share market; (ii) the suspension of trading on the A-share market will lead to the inability of the Company to utilise A-share market as an equity financing platform; and (iii) the suspension of trading on the A-share market will discourage the investment sentiment of international investors and especially the institutional investors.

As mentioned below in the section headed “Financial impacts of the Disposal”, we consider that the one-off pre-tax gain of approximately RMB1.96 billion will have a positive financial impact on the earnings of the Company.

In conclusion, we are of the view that the Disposal, which will have a positive financial impact on the earnings of the Company, in turn will reduce the risk of the A Shares being suspended from trading the A-share market is in the interest of the Company and Shareholders as a whole.

(b) to ease and lessen the Company’s capital commitment in the near future;

As discussed with the management of the Company, we note that COSCO Logistics is expected to increase its capital expenditure by more than two times in 2013 when compare to 2012.

As COSCO Logistics requires a large amount of capital investment in various areas so as to keep up with the recent growth in the logistics industry in the PRC, the continuous injection of capital into COSCO Logistics will be a heavy burden for the Company given the Company has recorded a net loss since 2011. It is expected that it will take years for COSCO Logistics to recover all the investment costs, whereas the core shipping business segment of the Group is currently undergoing a historically low tide which requires a strong working capital support.

As such, we concur with the management of the Company that the Disposal will ease and lessen the Company’s capital commitment in the near future.

(c) will enhance the level of the Company’s current assets, thereby strengthening its cash position and working capital;

As discussed with the management of the Company, the Company intends to use part of the net proceeds from the Disposal as working capital.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As mentioned below in the section headed “Financial impacts of the Disposal”, since the Disposal will result in a cash receipt of approximately RMB7.86 billion, being the sum of the Consideration of approximately RMB6.74 billion and the distributable profit of approximately RMB1.12 billion, we consider that the cash position and working capital of the Company will be strengthened upon completion of the Disposal.

As such, we concur with them that the Disposal will enhance the level of the Company’s current assets, thereby strengthening its cash position and working capital.

In addition, based on the discussions we had with the management of the Company, the management will consider various business opportunities, such as asset acquisitions, asset disposal and business cooperation to further improve the financial position of the Company for the financial year of 2013. We consider it is prudent for the management to evaluate other business opportunities in order to further improve the financial position of the Company and we also consider it is in the interests of the Company and the Shareholders as a whole.

In light of the above, we are of the view that the reasons for and benefits of the Disposal are in the interest of the Group and the Shareholders as a whole.

Principal terms of the Disposal

Set out below are the principal terms of the Equity Transfer Agreement:

Date: 27 March 2013 (after trading hours) Parties: (1) the Company as vendor; and (2) COSCO as purchaser. Subject matter: 100% equity interest in COSCO Logistics

Consideration:

Pursuant to the Equity Transfer Agreement, the Consideration of approximately RMB6.74 billion shall be paid in cash by COSCO to the Company within 10 days from the day on which all the conditions precedents set out in the Equity Transfer Agreement have been satisfied (or waived by the Company and COSCO in writing).

The Consideration was determined after arm’s length negotiations between the Company and COSCO taking into consideration, inter alia, the following factors:

(1) analysis of the logistics industry in the PRC, including sector outlook, market dynamics and key players;
(2) analysis of market position, asset conditions, historical financial and operational performance and business prospects of COSCO Logistics;

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(3) valuation levels of publicly-listed companies engaged in businesses similar to those of COSCO Logistics, including price-to-earnings multiples (P/E) and enterprise value-to-EBITDA multiples (EV/EBITDA), which have been selected after considering factors such as market capitalisation, business portfolio, historical financials, business prospects, etc.;
(4) valuation levels of similar historical transactions in the global logistics industry, including P/E and EV/EBITDA, such transactions are selected by considering multiple factors such as nature and size of the transactions, percentage of the equity interest being acquired or disposed of, and the geographical regions in which the logistic businesses are developed;
(5) the terms of three previous transactions regarding COSCO Logistics, namely (i) the acquisition of equity interest in COSCO Logistics from COSCO and the capital injection into COSCO Logistics by COSCO Pacific Logistics Company Limited in 2003, upon completion of which COSCO Pacific Logistics Company Limited owned a 49% equity interest in COSCO Logistics; (ii) the transfer of 51% equity interest in COSCO Logistics from COSCO to the Company in 2006; and (iii) the transfer of 49% equity interest in COSCO Logistics from COSCO Pacific Logistics Company Limited to the Company in 2009;
(6) the appraised value of COSCO Logistics as at the Valuation Date of approximately RMB7.86 billion as recommended in the Asset Appraisal Report produced by an independent appraiser jointly engaged by the Company and COSCO, which is a requirement for the transfer of state-owned assets under the relevant PRC regulations; and
(7) the amount of distributable profit for the year ended 31 December 2012 declared by COSCO Logistics during the period from the Valuation Date to (but excluding) the signing date of the Equity Transfer Agreement of approximately RMB1.12 billion be paid to the Company.

Conditions Precedent:

Completion of the Disposal is conditional upon:

(1) the transfer of state-owned assets as contemplated under the Equity Transfer Agreement having been approved by COSCO according to applicable PRC laws and the filing procedures having been completed;
(2) each of the Company and COSCO having completed their respective internal approval procedures and complied with the disclosure requirements in respect of the execution and performance of the Equity Transfer Agreement in accordance with their respective articles of association and the requirements under the applicable securities regulations;

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(3) the parties to the Equity Transfer Agreement having effectively executed all relevant documents, including (i) the Equity Transfer Agreement; and (ii) the sole shareholder resolution of COSCO Logistics approving (a) the Disposal, (b) the dividend payment for the year ended 31 December 2012 and (c) the change of directors and supervisors of COSCO Logistics (if necessary);
(4) no material adverse change having occurred to the business, operations, assets, liabilities etc., of COSCO Logistics since the Valuation Date, save as disclosed by the Company to COSCO before the signing of the Equity Transfer Agreement; and
(5) no breach of terms of the Equity Transfer Agreement having occurred, and the declarations, representations and warranties given by the Company and COSCO as set out in the Equity Transfer Agreement remaining true and accurate.

Completion:

5. Principal factors considered

As discussed with the management of the Company, the Consideration was determined after arm’s length negotiations between the Company and COSCO with reference to, inter alia, the following factors:

(a) Analysis of COSCO Logistics from various aspects

As discussed with the management of the Company, we understand that the analysis of the logistics industry in the PRC and COSCO Logistics includes, among other things, the sector outlook, market dynamics, key players, asset conditions, historical financial and operational performance and business prospects of COSCO Logistics.

We also understand that although COSCO Logistics is currently one of the market leaders in the logistics industry in China, COSCO Logistics will require large amount of capital on several areas, including (I) operating efficiency; (II) regional development imbalance; (III) network coverage

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

imbalance; (IV) construction of infrastructure; (V) cross-districts and cross-business lines integration; and (VI) business processes optimisation and risk control . These six areas demand a large amount of capital investment. In addition, as discussed with the management of the Company, it is expected that it will take several years for COSCO Logistics to recover all the investment costs.

As stated in the 2011 Annual Report and the 2012 Annual Results, the loss attributable to equity holders of the Company were approximately RMB10,495 million and approximately RMB9,559 million respectively. We consider that continuous injection of capital into COSCO Logistics will be a heavy financial burden to the Group, given the Group was loss-making for the year ended 31 December 2012.

As such, we are of the view that the Disposal will ease and lessen the Group’s capital commitment in the future.

(b) Valuation levels of publicly-listed companies engaged in businesses similar to those of COSCO Logistics

As discussed with the management of the Company, we understand that the valuation multiples used for the determination of the Consideration include P/E and EV/EBITDA, which have been selected after considering factors such as market capitalisation, business portfolio, historical financials and business prospects, etc.

We have obtained and reviewed the list of publicly-listed companies from the Company and considered that these companies, which are globally engaged in businesses similar to those of COSCO Logistics, are comparables to COSCO Logistics.

Nevertheless, since the Company is dual-listed on the Stock Exchange and the Shanghai Stock Exchange (as an A-share listed company), we are of the view that the market valuations of companies listed in Hong Kong and the A-share market (i.e. the Shanghai Stock Exchange and the Shenzhen Stock Exchange) are more appropriate in analysing the Consideration. As such, in an independent attempt to assess the reasonableness of the Consideration, we have compared the valuation multiples of COSCO Logistics (based on its 2012 annual report) with the corresponding available market statistics of the companies listed on the Stock Exchange or in the A-share market, which (I) derive more than 50% of total revenue from logistics business; (II) have their principal businesses based in the PRC; (III) are of a market capitalisation in the range of HK$1 billion — HK$10 billion (or RMB-equivalent); and (IV) have been listed on the respective stock exchange for more than 1 year (the “Comparable Companies”).

One should recognise that due to the unique business strategy and position of each company, it is not practicable to identify a company with the same proportion of revenue contribution as COSCO Logistics. We are of the view that 50% sets a reasonable benchmark for us to conclude that a significant portion of the revenue from a particular company is generated from businesses similar to that of COSCO Logistics, hence, comparable to the latter. The Comparable Companies are selected exhaustively based on the above criteria, which have been identified, to our best endeavour, in our research through public information.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In our assessment, we have considered P/E and EV/EBITDA as our benchmarks, which are both commonly adopted valuation methodologies for logistics companies. For details, please refer to the information as shown in Table 1 below.

TABLE 1 — COMPARABLE COMPANIES ANALYSIS ON P/E AND EV/EBITDA

		P/E (x)	EV/EBITDA (x)
Company name	Ticker	*(Note 1)*	*(Note 2)*
Sinotrans Ltd.	598 HK	8.6	4.0
Chu Kong Shipping Enterprises (Group)
Company Limited	560 HK	10.1	5.7
Sinotrans Air Transportation Development Co.,
Ltd.	600270 CH	12.4	14.2
Jiangsu Feiliks International Logistics Inc.	300240 CH	19.0	11.4
	Maximum	19.0	14.2
	Minimum	8.6	4.0
	Average	12.5	8.8
COSCO Logistics *(Note 3)*		12.7	6.2

Source: Bloomberg and the Circular

Note:

(1) The P/Es of the Comparable Companies are calculated by dividing their respective market capitalisation as at 27 March 2013 by the market estimates of their net profits in 2012 as compiled by Bloomberg.
(2) The EV/EBITDAs of the Comparable Companies are calculated by dividing their respective enterprise value as at 27 March 2013 by the market estimates of their respective earnings before interest, tax, depreciation and amortisation in 2012 as compiled by Bloomberg.
(3) The P/E of COSCO Logistics is calculated by dividing the Consideration by its net profit attributable to equity holders in 2012 (based on its 2012 annual report); whereas the EV/EBIDTA of COSCO Logistics is calculated by dividing its enterprise value (as implied by the net of the Consideration, debt and minority interest, together with the surplus cash) by its earnings before interest, tax, depreciation and amortisation in 2012 (based on its 2012 annual report).

As shown in Table 1 above, the P/Es of the Comparable Companies ranged from 8.6x to 19.0x (the “P/E Range I”) with an average of 12.5x (the “Average P/E I”). The P/E of COSCO Logistics of 12.7x is within the P/E Range I and higher than the Average P/E I.

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In addition, the EV/EBITDAs of the Comparable Companies ranged from 4.0x to 14.2x (the “EV/EBITDA Range”) with an average of 8.8x (the “Average EV/EBITDA”). The EV/EBITDA of COSCO Logistics of 6.2x is lower than the Average EV/EBITDA yet within the EV/EBITDA Range.

In light of the above, we are of the view that the Consideration for the Disposal is fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole.

(c) Valuation levels of similar historical transactions in the global logistics industry

As discussed with the management of the Company, we understand that the management of the Company has considered multiple factors in selecting the similar historical transactions in the global logistics industry, such as nature and size of the transactions, percentage of the equity interest being acquired or disposed of, and the geographical regions of the businesses operations.

We have obtained and reviewed the list of these transactions in the global logistics industry from the management of the Company. We note that the transactions were dated back to as early as February 2009. Despite the fact that they were direct comparable transactions to the Disposal, we consider that these transactions were conducted in other parts of the world and not executed recently. Having said that, we consider that these transactions could provide a reference for the management of the Company in justifying the Consideration.

Again, in an independent attempt to assess the reasonableness of the Consideration, we have focused on and reviewed transactions announced by companies listed on the Stock Exchange over the past three years which (I) were subject to shareholders’ approval under the Listing Rules; and (II) involved acquisition or disposal of equity interests in a logistics company in the PRC (the “Comparable Transactions”).

The Comparable Transactions are selected exhaustively based on the above criteria, which have been identified, to our best endeavour, in our research through public information.

Similarly, in our assessment, we have considered P/E as our benchmark. We have also considered using EV/EBITDA, as another benchmark. However, given the limited financial information on the Comparable Transactions that is publicly available, we are unable to compile the relevant parameters for the computation of the EV/EBITDAs of the Comparable Transactions, thus unable to perform the EV/EBITDA analysis.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The P/E analysis on the Comparable Transactions is shown in Table 2 below.

TABLE 2 — COMPARABLE TRANSACTIONS OVER THE PAST THREE YEARS

			P/E (x) of the
			acquired
Date of announcement	Listed company involved	Stock code	company
31 May 2011	Chu Kong Shipping	560 HK	8.5
	Development Co., Ltd.
31 May 2011	Chu Kong Shipping	560 HK	10.5
	Development Co., Ltd.
11 February 2011	Sino-Tech International	724 HK	N/A
	Holdings Ltd. (Note 1)
28 August 2010	Haier Electronics Group	1169 HK	9.5
	Co., Ltd.
		Maximum	10.5
		Minimum	8.5
		Average	9.5
COSCO Logistics *(Note 2)*			12.7

Source: the Circular and the respective circulars of the Comparable Transactions

Note:

(1) The company acquired was loss-making based on the latest consolidated management accounts prior to the transaction.
(2) The P/E of COSCO Logistics is calculated by dividing the Consideration by its net profit attributable to equity holders in 2012 (based on its 2012 annual report).

As indicated in Table 2 above, the P/Es of the Comparable Transactions ranged from 8.5x to 10.5x (the “P/E Range II”) with an average of 9.5x (the “Average P/E II”). The P/E of COSCO Logistics of 12.7x is higher than the Average P/E II and above the P/E Range II.

The Consideration represents a premium to the historical transaction values of the Comparable Transactions on P/E and a higher consideration is beneficial to the Company.

As such, from the perspective of the Comparable Transactions analysis, we are of the view that the Consideration is fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole.

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(d) The terms of three previous transactions regarding COSCO Logistics

As discussed with the management of the Company, we understand that the three previous transactions that COSCO Logistics selected for the determination of the Consideration (the “Three Transactions”) are namely, (I) the acquisition of equity interest in COSCO Logistics from COSCO and the capital injection into COSCO Logistics by COSCO Pacific Logistics Company Limited in 2003, upon completion of which COSCO Pacific Logistics Company Limited owned a 49% equity interest in COSCO Logistics (the “2003 Transaction”); (II) the transfer of 51% equity interest in COSCO Logistics from COSCO to the Company in 2006 (the “2006 Transaction”); and (III) the transfer of 49% equity interest in COSCO Logistics from COSCO Pacific Logistics Company Limited to the Company in 2009 (the “2009 Transaction”).

We have conducted an analysis on the Three Transactions. Despite the fact that these transactions are directly comparable to the Disposal, we note that all of these transactions were carried out more than 3 years ago. As such, we consider these transactions did not fairly reflect the valuation of COSCO Logistics as of the Valuation Date but could serve as a reference for the management of the Company.

For illustrative purpose, we have done an analysis on the Three Transactions as shown in Table 3 below.

TABLE 3 — ANALYSIS ON THE THREE TRANSACTIONS

			P/E (x)	EV/EBITDA (x)
The	2003 Transaction		13.1	6.3
The	2006 Transaction		13.1	5.2
The	2009 Transaction		11.5	5.9
		Maximum	13.1	6.3
		Minimum	11.5	5.2
		Average	12.6	5.8
The	Disposal		12.7	6.2

Source: the Circular of COSCO Pacific Limited dated 17 September 2009

As illustrated above, both the P/E and EV/EBITDA of the Disposal are higher than the corresponding averages and within the corresponding ranges of the Three Transactions. Although we do not believe that this is a fair comparison as mentioned above, we consider that this provides a reference for the management of the Company and the Independent Shareholders that the valuation of the Disposal is higher than the Three Transactions.

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(e) The appraised value of COSCO Logistics as at the Valuation Date

We understand that the Company and COSCO have jointly engaged China Tong Cheng Assets Appraisal Co., Ltd. (the “Independent Appraiser”) in producing the Asset Appraisal Report with respect to the valuation of COSCO Logistics as at 31 December 2012, in accordance to the requirement for the transfer of state-owned assets under the relevant PRC laws.

To assess the basis in determining the Consideration, we have reviewed the Asset Appraisal Report, discussed with the Independent Appraiser and the management of the Company. We have discussed with the Independent Appraiser and noted that they have considered the market approach and the income approach in appraising COSCO Logistics, which we agree are two commonly adopted valuation methods in valuing the subject assets.

6. Distributable profit

As discussed with the management of the Company, distributable profit for the year ended 31 December 2012 declared by COSCO Logistics during the period from the Valuation Date to (but excluding) the signing date of the Equity Transfer Agreement of approximately RMB1.12 billion shall be paid to the Company.

In addition, we understand from the management of the Company that this distributable profit, as part of the net proceeds from the Disposal, will be used for other investment opportunities in the shipping business, for working capital and repayment of bank loans.

As the distributable profit will be paid by COSCO Logistics to the Company in cash, we concur with the management of the Company that the distributable profit will strengthen the Company’s cash position as well as the Company’s working capital.

As such, we are of the view that the distributable profit declared by COSCO Logistics to the Company is in the interest of the Group and the Shareholders as a whole.

7. Financial impacts of the Disposal

(a) Effect on the NAV and NAV per share

As disclosed in the 2012 Annual Results, the net asset value attributable to the equity holders of the Company as at 31 December 2012 was approximately RMB25,137 million. In accordance with the Equity Transfer Agreement, upon completion, the Consideration amounts to RMB6.74 billion. As the NAV of the Group will be increased by the net of the Consideration and the post-distribution carrying amount of the net assets of COSCO Logistics attributable to the Company at the 2012 Annual Results, the NAV and the NAV per share of the Group will be increased after the Completion.

As such, we consider the Disposal will have a positive effect on the NAV and NAV per share of the Group.

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(b) Effect on the earnings

As disclosed in the 2012 Annual Results, the loss attributable to equity holders of the Company for the year ended 31 December 2012 was approximately RMB9,559 million. In accordance with the Equity Transfer Agreement, upon completion, the Consideration amounts to RMB6.74 billion. As the post-distribution carrying amount of the net assets of COSCO Logistics attributable to the Company is lower than the Consideration, the Company will be able to recognise an one-off pre-tax gain of approximately RMB1.96 billion. Therefore, the one-off pre-tax gain will lower the loss attributable to equity holders of the Company and have a positive financial impact on the earnings of the Group.

As such, we consider the Disposal will have a positive effect on the earnings of the Group.

(c) Effect on the cash and working capital

As discussed with the management of the Company, the Consideration shall be paid in cash by COSCO to the Company within 10 days from the day on which all the conditions precedents set out in the Equity Transfer Agreement have been satisfied (or waived by the Company and COSCO in writing). In addition, the distributable profit for the year ended 31 December 2012 declared by COSCO Logistics during the period from the Valuation Date to (but excluding) the date of the Equity Transfer Agreement of approximately RMB1.12 billion shall be paid to the Company.

As disclosed in the 2012 Annual Results, the Group had current assets of approximately RMB63,114 million (including cash and cash equivalents and restricted bank deposits of approximately RMB46,765 million) and current liabilities of approximately RMB40,413 million as at 31 December 2012. The proceeds from the Disposal is expected to enhance the Company’s current assets. The cash position and working capital, being the net of the current assets and the current liabilities, of the Group will be strengthened upon completion of the Disposal.

As such, we consider the Disposal will have a positive effect on the cash position and the working capital of the Group.

(d) Effect on the net gearing

As discussed with the management of the Company , the Company aims to use the net proceeds from the Disposal for other investment opportunities in shipping business and as working capital as well as to repay bank loans.

As disclosed in the 2012 Annual Results, the Group’s borrowings amounts to approximately RMB93,204 million, the Group’s cash and cash equivalents (including the restricted bank deposits) amounts to approximately RMB46,836 million and the Group has a net debt of approximately RMB46,368 million as at 31 December 2012. Repayment of bank loans will help reduce the net gearing of the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As such, we consider the Disposal will have a positive effect on the net gearing of the Group.

In light of:

(a) the positive effect on the NAV and NAV per share of the Group;
(b) the positive effect on the earnings of the Group;
(c) the positive effect on the cash position and the working capital of the Group; and
(d) the positive effect on the net gearing of the Group,

we are of the view that the Disposal will have a positive financial effect on the Group and is in the interests of the Group and the Shareholders as a whole.

RECOMMENDATION

We have considered the above principal factors and reasons and, in particular, having taken into account the following in arriving at our opinion:

(a) the reasons and benefits of the Disposal are in the interest of the Group and the Shareholders as a whole;
(b) the Disposal will ease and lessen the Group’s capital commitment in the future;
(c) from the perspective of the Comparable Companies analysis, the Consideration is fair and reasonable as far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole;
(d) from the perspective of the Comparable Transactions analysis, the Consideration is fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole;
(e) the distributable profit declared by COSCO Logistics to the Company is in the interest of the Group and the Shareholders as a whole; and
(f) the Disposal will have a positive financial effect on the Group and is in the interest of the Group and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Having considered the above, we are of the view that the terms of the Disposal and the Consideration for the Disposal are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves recommend the Independent Shareholders to vote in favour of the resolutions to be proposed at the EGM to approve the Disposal and the Equity Transfer Agreement.

Yours faithfully, For and on behalf of

Platinum Securities Company Limited Ian Ramsay Lenny Li Director and Head of Corporate Finance Director

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APPENDIX I

FINANCIAL INFORMATION OF COSCO LOGISTICS

The following financial information of COSCO Logistics is mainly extracted from the Auditors’ Report XYZH/2012A2003 issued by Shinewing Certified Public Accountants. Shinewing Certified Public Accountants stated in the report that “In our opinion, the financial statements present fairly, in all material respects, the consolidated and company’s financial position of COSCO Logistics as at 31 December 2012, and their financial performance and cash flows for the year then ended in accordance with the requirements of Accounting Standards for Business Enterprises.”

1. Consolidated Balance Sheet

		Unit: RMB
Item	At end of 2012	At beginning of 2012
Current assets:
Cash and bank deposits	3,799,665,256.73	4,137,347,099.39
Financial assets held for trading	—	—
Notes receivable	103,387,793.73	167,605,354.93
Trade receivables	4,253,186,156.41	2,428,359,716.72
Prepayments	385,348,921.43	1,033,324,865.28
Interest receivable	5,587,190.40	4,387,989.92
Dividends receivable	53,648,855.45	69,046,150.44
Other receivables	310,717,411.54	208,215,200.38
Inventories	114,268,649.29	961,698,167.35
Non-current assets due within one year	—	—
Other current assets	—	—
Total current assets	9,025,810,234.98	9,009,984,544.41
Non-current assets:
Financial assets available-for-sale	118,099,242.93	125,739,243.80
Investments held-to-maturity	—	—
Long-term receivables	—	—
Long-term equity investments	1,155,241,905.78	1,046,505,388.76
Investment properties	23,536,287.82	18,701,856.52
Fixed assets	1,879,311,899.43	1,415,012,116.91
Construction in progress	177,969,980.51	606,577,454.18
Project materials	—	—
Disposal of fixed assets	—	—
Intangible assets	283,362,103.72	279,309,579.88
Development expenses	—	—
Goodwill	—	—
Long-term unamortized expenses	26,726,264.32	26,377,966.00
Deferred income tax assets	18,168,762.53	19,608,032.66
Other non-current assets	—
Total non-current assets	3,682,416,447.04	3,537,831,638.71
Total assets	12,708,226,682.02	12,547,816,183.12

— 30 —

FINANCIAL INFORMATION OF COSCO LOGISTICS

APPENDIX I

		Unit: RMB
Item	At end of 2012	At beginning of 2012
Current liabilities:
Short-term borrowings	377,049,729.36	145,157,792.67
Financial liabilities held for trading	—	—
Notes payable	1,660,919,317.40	1,373,329,925.29
Trade payables	2,407,072,986.42	2,032,468,560.91
Advance receipts	1,143,098,206.96	2,332,077,192.83
Staff remuneration payable	329,263,846.09	353,434,006.89
Tax payable	101,828,060.34	129,493,153.58
Interest payable	254,539.36	—
Dividends payable	23,021,707.10	19,302,841.58
Other payables	312,591,846.88	380,381,185.77
Non-current liabilities due within one year	—	—
Other current liabilities	—	—
Total current liabilities	6,355,100,239.91	6,765,644,659.52
Non-current liabilities:
Long-term borrowings	—	—
Bonds payables	—	—
Long-term payables	—	—
Special payables	—	—
Accrued liabilities	46,700,000.00	26,000,000.00
Deferred income tax liabilities	23,493,948.59	25,522,891.40
Other non-current liabilities	23,094,100.55	19,905,788.40
Total non-current liabilities	93,288,049.14	71,428,679.80
Total liabilities	6,448,388,289.05	6,837,073,339.32
Shareholders’ equity:
Paid-in capital	3,183,029,850.75	3,183,029,850.75
Capital reserve	684,886,267.07	671,508,162.11
Less: Treasury shares	—	—
Surplus reserve	260,933,780.90	250,005,886.57
Undistributed profits	1,801,540,288.88	1,283,725,716.55
Exchange difference in foreign currency statements	-29,117,900.82	-28,784,159.88
Total equity attributable to owners of the company	5,901,272,286.78	5,359,485,456.10
Minority interests	358,566,106.19	351,257,387.70
Total owner’s equity	6,259,838,392.97	5,710,742,843.80
Total liabilities and owner’s equity	12,708,226,682.02	12,547,816,183.12

— 31 —

FINANCIAL INFORMATION OF COSCO LOGISTICS

APPENDIX I

2. Consolidated Income Statement

		Unit: RMB
Item	2012	2011
I. Operating revenue	9,275,402,703.00	6,395,805,903.22
II. Total operating costs	8,685,827,480.40	5,819,299,628.57
Of which: Operating costs	7,470,178,972.33	4,697,040,301.82
Business taxes and surcharges	145,292,844.63	157,004,223.24
Cost of sales	—	—
Administrative expenses	972,126,900.74	967,274,544.92
Finance costs	-35,320,611.72	-12,515,864.50
Impairment loss on assets	133,549,374.42	10,496,423.09
Add: Gains from changes in fair value	1,600,526.60	7,300,960.52
Investment income	205,183,078.97	166,647,371.77
Of which: Share of profit of associates and joint ventures	190,232,148.04	156,688,785.53
III. Operating profit	796,358,828.17	750,454,606.94
Add: Non-operating income	90,712,285.59	87,568,631.38
Less: Non-operating expenses	57,765,745.57	27,767,857.90
IV. Total profit	829,305,368.19	810,255,380.42
Less: Income tax expenses	221,021,856.04	208,609,548.60
V. Net profit	608,283,512.15	601,645,831.82
Net profit attributable to owners of the company	528,742,466.66	527,664,806.32
Minority interests	79,541,045.49	73,981,025.50
VI. Earnings per share:	—	—
(I) Basic earnings per share	—	—
(II) Diluted earnings per share	—	—
VII. Other comprehensive income	10,493,553.05	-106,934,387.21
VIII. Total comprehensive income	618,777,065.20	494,711,444.61
Total comprehensive income attributable to shareholders
of the company	541,786,830.68	431,520,285.14
Total comprehensive income attributable to minority
interests	76,990,234.52	63,191,159.47

— 32 —

FINANCIAL INFORMATION OF COSCO LOGISTICS

APPENDIX I

3. Consolidated Statement of Cash Flows

		Unit: RMB
Item	2012	2011
I. Cash flows from operating activities:
Cash received from sales of goods and provision of
services	32,034,511,877.04	31,755,517,181.34
Net cash inflows from disposal of financial assets held for
trading	—	—
Tax refunds received	8,969,391.56	2,858,847.92
Other cash received relating to operating activities	22,608,550,557.82	19,504,510,559.27
Sub-total of cash inflows from operating activities	54,652,031,826.42	51,262,886,588.53
Cash paid for purchase of goods and services	30,388,980,158.19	29,444,549,410.12
Cash paid to or paid for employees	1,317,617,717.52	1,307,456,777.60
Taxes and surcharges paid	467,153,306.79	366,339,384.13
Other cash paid relating to operating activities	22,916,634,386.92	19,361,114,105.60
Sub-total of cash outflows from operating activities	55,090,385,569.42	50,479,459,677.45
Net cash flows from operating activities	-438,353,743.00	783,426,911.08
II. Cash flows from investing activities:
Cash received from disinvestments	2,588,610.21	2,000.00
Investment income received	160,565,193.07	94,039,672.36
Net cash received from disposal of fixed assets, intangible
assets and other long-term assets	11,521,984.64	12,342,956.57
Net cash received from disposal of subsidiaries and other
business units	—	61,519,979.59
Other cash received relating to investing activities	—	18,385,494.15
Subtotal of cash inflows from investing activities	174,675,787.92	186,290,102.67
Cash paid for purchase and construction of fixed assets,
intangible assets and other long-term assets	286,112,415.59	262,609,387.30
Cash paid for investments	3,763,996.00	63,747,264.84
Net cash paid for acquisition of subsidiaries and other
business units	—	—
Other cash paid relating to investing activities	—	1,206.99
Subtotal of cash outflows from investing activities	289,876,411.59	326,357,859.13
Net cash flows from investing activities	-115,200,623.67	-140,067,756.46

— 33 —

FINANCIAL INFORMATION OF COSCO LOGISTICS

APPENDIX I

		Unit: RMB
Item	2012	2011
III. Cash flows from financing activities
Cash received from capital contributions	1,200,000.00	12,715,000.00
Of which: Cash received from capital contributions from
minority interests of subsidiaries	1,200,000.00	12,715,000.00
Cash received from borrowings	826,540,110.97	172,980,088.27
Other cash received relating to financing activities	4,000,000.00	7,000,000.00
Subtotal of cash inflows from financing activities	831,740,110.97	192,695,088.27
Cash paid for debts repayment	593,338,246.72	209,230,220.71
Cash paid for distribution of dividends and profits or
interests payment	75,883,203.56	74,053,632.80
Of which: Dividends and profits distributed to minority
interests of subsidiaries	62,751,318.43	66,287,585.30
Other cash paid relating to financing activities	142,570.94	615,165.49
Subtotal of cash outflows from financing activities	669,364,021.22	283,899,019.00
Net cash flows from financing activities	162,376,089.75	-91,203,930.73
IV. Effect of change in foreign exchange rates on cash
and cash equivalents	-10,735,911.19	-25,301,012.41
V. Net increase in cash and cash equivalents	-401,914,188.11	526,854,211.48
Add: Cash and cash equivalents at beginning of year	3,755,554,442.94	3,228,700,231.46
VI. Cash and cash equivalents at end of year	3,353,640,254.83	3,755,554,442.94

— 34 —

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors’ and Supervisors interests or short positions in the Shares

Save as disclosed in this section, as at the Latest Practicable Date, none of the Directors, Supervisors and chief executive of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of Part XV of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (“Model Code”) as set out in Appendix 10 to the Listing Rules to be notified to the Company and the Stock Exchange.

(i) Long positions in the Shares, underlying Shares and debentures of the Company:

				Approximate
			Number of H	percentage of
		Nature of	Shares of the	total issued H
Name of Director	Capacity	interests	Company	share capital
FAN HSU Lai Tai, Rita	Beneficial owner	Personal	10,000	0.0004%
Peter Guy BOWIE	Beneficial owner	Personal	15,000	0.0006%
				Approximate
			Number of A	percentage of
Name of		Nature of	Shares of the	total issued A
Director/Supervisor	Capacity	interests	Company	share capital
LI Yunpeng	Beneficial owner	Family	3,000	0.00004%
LUO Jiulian	Beneficial owner	Family	1,000	0.00001%

— 35 —

GENERAL INFORMATION

APPENDIX II

(ii) Long positions in shares, underlying shares and debentures of associated corporations of the Company:

					Percentage
	Name of			Number of	of total
Name of associated	Director/		Nature of	ordinary	issued share
corporation	Supervisor	Capacity	interests	shares	capital
COSCO Corporation	WEI Jiafu	Beneficial	Personal	1,520,000	0.07%
(Singapore)		owner
Limited
COSCO Corporation	SUN Yueying	Beneficial	Personal	600,000	0.03%
(Singapore)		owner
Limited
COSCO Pacific	KWANG Che	Beneficial	Personal	250,000	0.009%
Limited	Keung, Gordon	owner

(iii) Long positions in the underlying shares of equity derivatives of the Company:

A share appreciation rights plan (the “Share Appreciation Rights Plan”) was adopted by the Company, which was designed to align the interests of Directors, Supervisors and senior management of the Company with the Company’s operating results and the Company’s share value. The issuance of share appreciation rights does not involve any issuance of new shares.

As at the Latest Practicable Date, the share appreciation rights held by the Directors and Supervisors are set out below:

Name of Director/
Supervisor
Capacity
Nature of
interest
Exercise price
WEI Jiafu
Beneficial owner
Personal
HK$3.195
HK$3.588
HK$9.540
SUN Yueying
Beneficial owner
Personal
HK$3.195
HK$3.588
HK$9.540

Number of units of share appreciation rights
Outstanding
as at
1 January
2013
Granted during
the period
Exercised/
lapsed during
the period
Transfer
(to)/from
other category
during the
period
Outstanding
as at the
Latest
Practicable
Date
Approximate
% of issued
share capital
of the H
shares of the
Company as at
the Latest
Practicable
Date
Note
680,000
—
—
—
680,000
0.03%
(1)
900,000
—
—
—
900,000
0.03%
(2)
880,000
—
—
—
880,000
0.03%
(3)
450,000
—
—
—
450,000
0.02%
(1)
600,000
—
—
—
600,000
0.02%
(2)
580,000
—
—
—
580,000
0.02%
(3)

— 36 —

APPENDIX II

GENERAL INFORMATION

Number of units of share appreciation rights

									Approximate
									% of issued
									share capital
									of the H
							Transfer	Outstanding	shares of the
				Outstanding			(to)/from	as at the	Company as at
				as at		Exercised/	other category	Latest	the Latest
Name of Director/		Nature of		1 January	Granted during	lapsed during	during the	Practicable	Practicable
Supervisor	Capacity	interest	Exercise price	2013	the period	the period	period	Date	Date	Note
SUN Jiakang	Beneficial owner	Personal	HK$3.195	375,000	—	—	—	375,000	0.01%	(1)
			HK$3.588	500,000	—	—	—	500,000	0.02%	(2)
			HK$9.540	480,000	—	—	—	480,000	0.02%	(3)
XU Minjie	Beneficial owner	Personal	HK$3.195	75,000	—	—	—	75,000	0.003%	(1)
			HK$3.588	90,000	—	—	—	90,000	0.003%	(2)
LI Yunpeng	Beneficial owner	Personal	HK$3.195	450,000	—	—	—	450,000	0.02%	(1)
			HK$3.588	600,000	—	—	—	600,000	0.02%	(2)
			HK$9.540	580,000	—	—	—	580,000	0.02%	(3)
MA Jianhua	Beneficial owner	Personal	HK$9.540	480,000	—	—	—	480,000	0.02%	(3)
GAO Ping	Beneficial owner	Personal	HK$3.195	100,000	—	—	—	100,000	0.004%	(1)
			HK$3.588	90,000	—	—	—	90,000	0.003%	(2)
			HK$9.540	85,000	—	—	—	85,000	0.003%	(3)
YE Weilong	Beneficial owner	Personal	HK$9.540	480,000	—	—	—	480,000	0.02%	(3)

Notes:

(1) The share appreciation rights were granted by the Company in units with each unit representing one H-Share pursuant to the Share Appreciation Rights Plan. At each of the last day of the third, fourth, fifth and sixth anniversary of the date of grant (i.e. 16 December 2005), the total number of the share appreciation rights exercisable shall not exceed 25%, 50%, 75% and 100%, respectively, of each of the total share appreciation rights granted. The share appreciation rights are exercisable at HK$3.195 per unit according to its terms between 16 December 2007 and 15 December 2015.
(2) The share appreciation rights were granted by the Company in units with each unit representing one H-Share pursuant to the Share Appreciation Rights Plan. At each of the last day of the third, fourth, fifth and sixth anniversary of the date of grant (i.e. 5 October 2006), the total number of the share appreciation rights exercisable shall not exceed 25%, 50%, 75% and 100%, respectively, of each of the total share appreciation rights granted. The share appreciation rights are exercisable at HK$3.588 per unit according to its terms between 5 October 2008 and 4 October 2016.
(3) The share appreciation rights were granted by the Company in units with each unit representing one H-Share pursuant to the Share Appreciation Rights Plan. At each of the last day of the third, fourth, fifth and sixth anniversary of the date of grant (i.e. 4 June 2007), the total number of the share appreciation rights exercisable shall not exceed 25%, 50%, 75% and 100%, respectively, of each of the total share appreciation rights granted. The share appreciation rights are exercisable at HK$9.540 per unit according to its terms between 4 June 2009 and 3 June 2017.

— 37 —

GENERAL INFORMATION

APPENDIX II

(iv) Long positions in underlying shares of equity derivatives of associated corporations of the Company:

The share options granted to the Directors and Supervisors by the associated corporations of the Company as at the Latest Practicable Date are set out below:

								Number	of share options	of share options	of share options
																Percentage
															of	total issued
						Transferred									share capital
						(to)/from								Outstanding	of associated
					Outstanding		other				Cancelled/			as at the		corporation
					as at	categories		Granted	Exercised			Lapsed		Latest	as at the Latest
Name of associated	Name of Director/		Nature of	Exercise	1 January	during the		during the	during the		during the			Practicable		Practicable
corporation	Supervisor	Capacity	interests	price	2013		period	period	period			period		Date		Date	Note
COSCO Pacific Limited	SUN Jiakang	Beneficial	Personal	HK$13.75	700,000		—	—		—			—	700,000		0.03%	(1)
		owner
	XU Minjie	Beneficial	Personal	HK$19.30	800,000		—	—		—			—	800,000		0.03%	(2)
		owner
COSCO International	WEI Jiafu	Beneficial	Personal	HK$ 1.37	1,200,000		—	—		—	(1,200,000)			0		0.00%	(3)
Holdings Limited		owner
	SUN Jiakang	Beneficial	Personal	HK$ 1.37	800,000		—	—		—			—	800,000		0.05%	(3)
		owner

Notes:

(1) The share options were granted by COSCO Pacific Limited on 1 December 2004 under the 2003 Share Option Scheme at an exercise price of HK$13.75. The options are exercisable at any time within ten years from the commencement date which is the date on which an offer is accepted or deemed to be accepted by the grantee pursuant to the 2003 Share Option Scheme (“Commencement Date”). The Commencement Date of the options of the grantees was from 1 December 2004.
(2) The share options were granted by COSCO Pacific Limited on 19 April 2007 under the 2003 Share Option Scheme at an exercise price of HK$19.30. The options are exercisable at any time within ten years from the Commencement Date. The Commencement Date of the options of the grantees was from 19 April 2007.
(3) These share options were granted on 2 December 2004 pursuant to the Share Option Scheme of COSCO International Holdings Limited, an associated corporation of the Company, and can be exercised at HK$1.37 per share at any time between 29 December 2004 and 28 December 2014.

— 38 —

GENERAL INFORMATION

APPENDIX II

Save as disclosed above, as at Latest Practicable Date, none of the Directors, Supervisors or chief executives of the Company had any interests or short positions in any shares or underlying shares or interests in debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO), or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange.

(b) Competing Interests

As at the Latest Practicable Date, so far as the Directors are aware, none of the Directors or Supervisors nor their respective associates had any interest in any business, which competes or may compete, either directly or indirectly, with the business of the Group.

(c) Directors’ and Supervisors’ Interests in assets of the Group

As at the Latest Practicable Date, so far as the Directors are aware, none of the Directors or Supervisors nor their respective associates had any direct or indirect interests in any assets which have been acquired, disposed of or leased to, or which are proposed to be acquired, disposed of or leased to, any member of the Group since 31 December 2012, being the date to which the latest published audited consolidated financial statements of the Group were made up.

(d) Directors’ and Supervisors’ interests in contracts of the Group

As at the Latest Practicable Date, none of the Directors or Supervisors was materially interested in any contract or arrangement, which was significant in relation to the business of the Group.

3. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors or Supervisors of the Company had entered or proposed to enter into a service contract with any member of the Group which will not expire or is not determinable within one year without payment of compensation (other than statutory compensation).

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2012, being the date to which the latest published audited consolidated financial statements of the Group were made up.

— 39 —

GENERAL INFORMATION

APPENDIX II

5. EXPERT

The following is the qualification of the professional adviser who has given its opinion or advice which is contained in this circular:

Name Qualification Platinum Securities a licensed corporation under the SFO licensed to carry out Company Limited Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

As at the Latest Practicable Date, Platinum Securities Company Limited did not have any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

Platinum Securities Company Limited has given and has not withdrawn its consent to the issue of this circular with the inclusion herein of its letter of advice and references to its names and its advice in the form and context in which they appear.

As at the Latest Practicable Date, Platinum Securities Company Limited did not have any direct or indirect interests in any assets which have been acquired, disposed of or leased to, or which are proposed to be acquired, disposed of by or leased to, any member of the Group since 31 December 2012, being the date to which the latest published audited consolidated financial statements of the Group were made up.

6. MISCELLANEOUS

(1) The joint company secretaries of the Company are Dr. GUO Huawei and Ms. HUNG Man, Michelle. Dr. GUO Huawei is a senior economist. Ms. HUNG Man, Michelle is a practicing solicitor of the High Court of the Hong Kong Special Administrative Region of the PRC and is qualified in England and Wales.
(2) The registered office of the Company is located at 3rd Floor, No.1 Tongda Square, Tianjin Port Free Trade Zone, Tianjin 300461, the PRC. The head office and principal place of business of the Company in Hong Kong is located at 49th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong.
(3) The Hong Kong H share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited located at Units 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

7. DOCUMENTS FOR INSPECTION

A copy of the Equity Transfer Agreement will be made available for inspection during normal business hours at the Company’s principal place of business in Hong Kong at 49th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong from the date of this circular up to and including the date of the EGM.

— 40 —

SUPPLEMENTAL NOTICE OF EGM

==> picture [76 x 62] intentionally omitted <==

中國遠洋控股股份有限公司 China COSCO Holdings Company Limited[*]

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock code : 1919)

SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING

Reference is made to the notice of extraordinary general meeting (the “ Notice ”) dated 12 March 2013 which sets out the details of the extraordinary general meeting (the “ EGM ”) of China COSCO Holdings Company Limited (the “ Company ”, together with its subsidiaries, the “ Group ”) to be held at 10:00 a.m. on Friday, 26 April 2013 at Conference Room, 47th Floor, COSCO Tower, 183 Queen’s Road Central, Hong Kong and Conference Center, Ocean Plaza, 158 Fuxingmennei Avenue, Xicheng District, Beijing, the PRC.

The Company received two ex tempore proposals from China Ocean Shipping (Group) Company (being the controlling shareholder holding an aggregate of approximately 52.80% of the total share capital of the Company) for consideration at the EGM.

SUPPLEMENTAL NOTICE IS HEREBY GIVEN that the EGM will be held as originally scheduled. In addition to the resolution set out in the Notice dated 12 March 2013, the following resolutions will be considered and approved as ordinary resolutions (with or without modifications):

ADDITIONAL ORDINARY RESOLUTIONS

“ THAT the terms of the equity transfer agreement dated 27 March 2013 entered into between the Company and 中國遠洋運輸(集團)總公司 (China Ocean Shipping (Group) Company) in respect of the disposal of 100% equity interest in COSCO Logistics Co., Ltd. (中國遠洋物流有限公司), details of which are set out in the circular of the Company dated 2 April 2013, and the execution thereof, be and are hereby approved and confirmed.”

** For identification purpose only

— 41 —

SUPPLEMENTAL NOTICE OF EGM

“ THAT the provision of guarantees to third parties by the Company for its wholly-owned subsidiaries and their subsidiaries of an amount of up to US$1 billion to satisfy the operations requirements of the Group be and are hereby approved, and any one director of the Company be and is hereby authorised to approve, sign or execute all such documents, instruments and agreements, and to take such steps, as he/she may consider necessary or appropriate to give effect to or in connection with the provision of above-mentioned guarantees.”

By Order of the Board China COSCO Holdings Company Limited Guo Huawei Joint Company Secretary

Beijing, the People’s Republic of China 2 April 2013

Notes:

Save for the inclusion of the additional proposed resolutions, there are no other changes to the resolution set out in the Notice dated 12 March 2013. For details in relation to the other resolutions to be considered at the EGM, please refer to the Notice dated 12 March 2013.
Since the form of proxy sent together with the Notice dated 12 March 2013 (the “ First Form of Proxy ”) does not contain the additional proposed resolutions as set out in this supplemental notice of EGM, a revised form of proxy (the “ Revised Form of Proxy ”) has been prepared and is enclosed with this supplemental notice of EGM.
Whether or not you intend to attend the EGM, you are requested to complete and return the Revised Form of Proxy in accordance with the instructions printed on it. The proxy form(s) should be returned to the Hong Kong H share registrar of the Company, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 24 hours before the time appointed for the EGM or any adjournment thereof.
If you have not lodged the First Form of Proxy in accordance with the instructions printed thereon, you are requested to lodge the Revised Form of Proxy if you wish to appoint proxies to attend the EGM on your behalf. In this case, the First Form of Proxy should not be lodged.
If you have already lodged the First Form of Proxy in accordance with the instructions printed thereon, you should note that:
(i) If no Revised Form of Proxy is lodged in accordance with the instructions printed thereon, the First Form of Proxy will be treated as a valid form of proxy lodged by you if duly completed. The proxy appointed under the First Form of Proxy will also be entitled to vote in accordance with the instructions previously given by your at your discretion (if no such instructions are given) on any resolution properly put to the EGM, including the additional proposed resolutions as set out in this supplemental notice of EGM.

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SUPPLEMENTAL NOTICE OF EGM

(ii) If the Revised Form of Proxy is lodged in accordance with the instructions printed thereon at or before 24 hours before the time appointed for the EGM or any adjournment thereof, the Revised Form of Proxy will revoke and supersede the First Form of Proxy previously lodged by you. The Revised Form of Proxy will be treated as a valid form of proxy lodged by you if duly completed.
(iii) If the Revised Form of Proxy is lodged after 24 hours before the time appointed for the EGM or any adjournment thereof, the Revised Form of Proxy will be deemed invalid. It will not revoke the First Form of Proxy previously lodged by you. The First Form of Proxy will be treated as a valid form of proxy lodged by you if duly completed. The proxy appointed under the First Form of Proxy will also be entitled to vote in accordance with the instructions previously given by you at your discretion (if no such instructions are given) on any resolution properly put to the EGM, including the additional proposed resolutions as set out in this supplemental notice of EGM.
Completion and return of the First Form of Proxy and/or the Revised Form of Proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.
The reply slip sent to the Shareholders on 12 March 2013 will be a valid reply slip for the EGM.
As at the date hereof, the directors of the Company are Mr. WEI Jiafu[2] (Chairman), Mr. MA Zehua[1] (Vice Chairman), Mr. LI Yunpeng[2] , Ms. SUN Yueying[2] , Mr. SUN Jiakang[1] , Mr. XU Minjie[1] , Mr. YE Weilong[2] , Mr. JIANG Lijun[1] (President), Mr. TEO Siong Seng[3] , Dr. FAN HSU Lai Tai, Rita[3] , Mr. KWONG Che Keung, Gordon[3] and Mr. Peter Guy BOWIE[3] .
1 Executive director
2 Non-executive director
3 Independent non-executivedirector
The Company is registered as a non-Hong Kong company under Part XI of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) under its Chinese name “ 中國遠洋控股股份有限公司 ” and its English name “China COSCO Holdings Company Limited”.

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AI assistant

COSCO SHIPPING Holdings Co., Ltd. — Proxy Solicitation & Information Statement 2013

50267_rns_2013-04-01_2170b30c-8431-4d12-9a47-a90edb0798be.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

中國遠洋控股股份有限公司 China COSCO Holdings Company Limited[*]

DISCLOSEABLE AND CONNECTED TRANSACTION - DISPOSAL OF ENTIRE EQUITY INTEREST IN COSCO LOGISTICS CO., LTD. AND PROVISION OF GUARANTEES MANDATE

Financial advisers to the Company

CONTENTS

DEFINITIONS

DEFINITIONS

中國遠洋控股股份有限公司 China COSCO Holdings Company Limited[*]

(Stock Code: 1919)

DISCLOSEABLE AND CONNECTED TRANSACTION - DISPOSAL OF ENTIRE EQUITY INTEREST IN COSCO LOGISTICS CO., LTD. AND PROVISION OF GUARANTEES MANDATE

INTRODUCTION

LETTER FROM THE BOARD

DISCLOSEABLE AND CONNECTED TRANSACTION

1. THE EQUITY TRANSFER AGREEMENT

LETTER FROM THE BOARD

Conditions Precedent:

LETTER FROM THE BOARD

Completion:

2. REASONS FOR AND BENEFITS OF THE DISPOSAL

LETTER FROM THE BOARD

3. FINANCIAL INFORMATION OF COSCO LOGISTICS

LETTER FROM THE BOARD

4. FINANCIAL EFFECTS OF THE DISPOSAL

5. LISTING RULES IMPLICATIONS

6. INFORMATION ON THE RELEVANT PARTIES

LETTER FROM THE BOARD

PROVISION OF GUARANTEES MANDATE

EXTRAORDINARY GENERAL MEETING

LETTER FROM THE BOARD

RECOMMENDATIONS

ADDITIONAL INFORMATION

中國遠洋控股股份有限公司 China COSCO Holdings Company Limited[*]

DISCLOSEABLE AND CONNECTED TRANSACTION - DISPOSAL OF ENTIRE EQUITY INTEREST IN COSCO LOGISTICS CO., LTD.

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

DISCLOSEABLE AND CONNECTED TRANSACTION — DISPOSAL OF ENTIRE EQUITY INTEREST IN COSCO LOGISTICS CO., LTD.

INTRODUCTION

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background of the Disposal

2. Information on COSCO Logistics

3. Reasons for and benefits of the Disposal

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Conditions Precedent:

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Completion:

5. Principal factors considered

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

TABLE 1 — COMPARABLE COMPANIES ANALYSIS ON P/E AND EV/EBITDA

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(c) Valuation levels of similar historical transactions in the global logistics industry

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

TABLE 2 — COMPARABLE TRANSACTIONS OVER THE PAST THREE YEARS

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

6. Distributable profit

7. Financial impacts of the Disposal

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(b) Effect on the earnings

(c) Effect on the cash and working capital

(d) Effect on the net gearing

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

APPENDIX I

FINANCIAL INFORMATION OF COSCO LOGISTICS

1. Consolidated Balance Sheet

APPENDIX I

2. Consolidated Income Statement

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS

(a) Directors’ and Supervisors interests or short positions in the Shares

(iii) Long positions in the underlying shares of equity derivatives of the Company:

GENERAL INFORMATION

(b) Competing Interests

(c) Directors’ and Supervisors’ Interests in assets of the Group

COSCO SHIPPING Holdings Co., Ltd. Proxy Solicitation & Information Statement 2013