Dida Inc. — AGM Information 2014

May 23, 2014

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt about this circular, you should consult appropriate independent advisers.

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

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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CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 中海發展股份有限公司

(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1138)

CONTINUING CONNECTED TRANSACTIONS AND

SUPPLEMENTAL NOTICE OF ANNUAL GENERAL MEETING

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 6 to 16 of this circular.

A letter from the Independent Board Committee is set out on page 17 of this circular.

A letter from the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders, is set ot on pages 18 to 26 of this circular.

A notice convening the AGM of the Company to be held at 2:00 p.m. on Friday, 6 June 2014 at 3rd Floor, Parkview Hotel, 555 Dingxiang Road, Pudong New Area, Shanghai, The People’s Republic of China was published by the Company on 17 April 2014 and a supplemental AGM notice is set out on pages II-1 to II-3 of this circular.

A supplemental proxy form for use at the AGM is enclosed. Whether or not you are able to attend the above meeting, please complete and return the enclosed supplemental proxy form in accordance with the instructions printed thereon as soon as practicable and in any event by not less than 24 hours before the time appointed for the holding of the meeting or any adjournment thereof (i) in case of holders of H Shares, to the Company’s Hong Kong branch share registrar, Hong Kong Registrars Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, (ii) in case of holders of A shares, to the Office of the Secretary to the Board of Directors of the Company at 7th Floor, 670 Dong Da Ming Road, Shanghai, The People’s Republic of China. Completion and return of the supplemental proxy form will not preclude you from attending and voting in person at the meeting or at any adjourned meetings should you so wish.

23 May 2014

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . .	17
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . . . . . . .	18
APPENDIX I — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
APPENDIX II — SUPPLEMENTAL NOTICE OF THE ANNUAL GENERAL
MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1

— i —

DEFINITIONS

“2013 Bareboat Charters” the two bareboat charters dated 21 November 2013 entered into between Dalian Shipping as owner and China Shipping Bulk as charterer in respect of the leasing of the bulk vessels “Qing Feng Ling” and “Shi Long Ling”, details of which are set out in the Company’s announcement dated 21 November 2013 “2013 Framework Agreement” the framework agreement dated 23 December 2013 entered into between China Shipping (Hong Kong) Holdings Co., Limited (a wholly-owned subsidiary of China Shipping) as lessor and China Shipping Bulk as lessee in respect of the leasing of 21 dry bulk vessels, details of which are set out in the Company’s announcement dated 23 December 2013 “Agreed Services” the services to be provided to the Group by China Shipping International pursuant to the Sea Crew Management Agreements “A Shares” PRC-listed Domestic Shares in the share capital of the Company, with a par value of RMB1.00 each, which are subscribed for and traded in RMB and listed on the Shanghai Stock Exchange “Aggregated Transaction” the transactions under the Bareboat Charters and the Previous Charters “AGM” the annual general meeting of the Shareholders to be convened on Friday, 6 June 2014 by the Company to consider and, if thought fit, to approve, among other things, the appointment of Directors “associate” has the meaning ascribed thereto under the Listing Rules “Bareboat Charter the announcement of the Company dated 15 April 2014 in Announcement” connection with the Bareboat Charters “Bareboat Charters” the four bareboat charters dated 15 April 2014 entered into between Dong Fang as owner and CS Bulk (HK) as charterer in respect of the leasing of each of the Bulk Vessels

“Board” the board of Directors

“Bulk Sea Crew Management the sea crew management agreement dated 29 April 2014 Agreement” entered into between China Shipping Bulk and China Shipping International “Bulk Vessels” the four bulk vessels, each with a deadweight tonnage of approximately 64,000 tonnes

— 1 —

DEFINITIONS

• “China Shipping” 中國海運(集團)總公司 (China Shipping (Group) Company), a PRC state-owned enterprise and the controlling shareholder of the Company

• “China Shipping Group” China Shipping and its subsidiaries (excluding the Group) “China Shipping Bulk” China Shipping Bulk Carrier Co., Ltd (中海散貨運輸有限公 司), a limited liability company incorporated in the PRC and a wholly-owned subsidiary of the Company

• “China Shipping International” China Shipping International Ship Management Co., Ltd (中 海國際船舶管理有限公司), a limited liability company incorporated in the PRC and a wholly-owned subsidiary of China Shipping

• “China Shipping Tanker” China Shipping Tanker Co., Ltd (中海油輪運輸有限公司), a limited liability company incorporated in the PRC and a wholly-owned subsidiary of the Company

• “Company” China Shipping Development Company Limited (中海發展股 份有限公司), a joint stock limited company established in the PRC, the H shares of which are listed on the Stock Exchange, and the A Shares of which are listed in Shanghai Stock Exchange

• “connected person” has the meaning as defined in the Listing Rules

• “CS Bulk (HK)” China Shipping Bulk Carrier (Hong Kong) Co., Limited 中海 散貨運輸(香港)有限公司, an indirect wholly-owned subsidiary of the Company

• “Dalian Shipping” Dalian Shipping Group Co., Limited 大連海運集團公司, a wholly-owned subsidiary of China Shipping

• “Directors” directors of the Company

• “Domestic Shares” domestic shares of RMB1.00 each in the registered capital of the Company

• “Dong Fang” Dong Fang International Asset Management Limited* (東方國 際資產管理有限公司) is a company established in Hong Kong and an indirect wholly-owned subsidiary of China Shipping

• “Group” the Company and its subsidiaries

• “H Shares”

• H shares of par value RMB1.00 each in the share capital of the Company, being overseas listed foreign invested shares

• “HK$”

• the lawful currency of Hong Kong

— 2 —

DEFINITIONS

• “Hong Kong”

the Hong Kong Special Administrative Region of the PRC

• “Independent Board Committee”

the committee of the Company comprising all independent non-executive Directors, namely Mr. Zhang Jun, Mr. Wang Wusheng, Mr. Lin Junlai and Mr. Ruan Yongping, established to make recommendation to the Independent Shareholders in relation to the transactions contemplated under the Sea Crew Management Agreements

• “Independent Financial Adviser”

TC Capital Asia Limited, a licensed corporation to carry on Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong), being the independent financial adviser to the Company in respect of the duration of the Bareboat Charters and the independent financial adviser appointed to make the relevant recommendation to the Independent Board Committee and the Independent Shareholders in relation to the transactions contemplated under the Sea Crew Management Agreements

• “Independent Shareholders”

• Shareholders other than China Shipping and its associates (as defined in the Listing Rules)

• “Latest Practicable Date”

• 20 May 2014, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

• “Listing Rules”

• Rules Governing the Listing of Securities on the Stock Exchange

• “RMB”

the lawful currency of the PRC

• “PRC” the People’s Republic of China

• “Sea Crew Management Agreements”

• the Tanker Sea Crew Management Agreement and the Bulk Sea Crew Management Agreement

• “Previous Charters” the 2013 Bareboat Charters and the 2013 Framework Agreement

• “Sea Crew Announcement” the announcement of the Company dated 29 April 2014 in connection with the Sea Crew Management Agreements

• “Shanghai Listing Rules” Rules Governing the Listing of Stocks on Shanghai Stock Exchange

• “Shareholder(s)” shareholder(s) of the Company

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

— 3 —

DEFINITIONS

“Tanker Sea Crew Management	the sea crew management agreement dated 29 April 2014
Agreement”	entered into between China Shipping Tanker and China
	Shipping International
“US$”	the lawful currency of the United States of America

Note: Unless otherwise specified and for illustration purpose only, the conversion of US$ into HK$ is based on the exchange rate US$1.00 = HK$7.80 and the conversion of RMB into HK$ is based on the exchange rate HK$1.00 = RMB0.8064. Such conversion should not be construed as a representation that the currency could actually be converted to HK$ at that rate or at all.

— 4 —

EXPECTED TIMETABLE

Date of despatch of this circular. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 23 May 2014

Latest time for lodging supplemental proxy forms

for the AGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2:00 p.m. on Thursday, 5 June 2014 Time and date of AGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2:00 p.m., Friday, 6 June 2014

— 5 —

LETTER FROM THE BOARD

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CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 中海發展股份有限公司

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

(Stock Code: 1138)

Executive Directors: Xu Lirong (Chairman) Zhang Guofa Su Min Huang Xiaowen Ding Nong Han Jun Qiu Guoxuan

Registered Office: Room A-1015, No. 188 Ye Sheng Road China (Shanghai) Free Trade Port Area

Principal place of business in Hong Kong: 20/F., Alexandra House 18 Chater Road Central, Hong Kong

Independent Non-Executive Directors:

Zhang Jun Wang Wusheng Lin Junlai Ruan Yongping

23 May 2014

To the Shareholders

Dear Sir/Madam,

CONTINUING CONNECTED TRANSACTIONS

1. INTRODUCTION

Reference is made to the Bareboat Charter Announcement, the Sea Crew Announcement and the notice of AGM dated 17 April 2014 published by the Company.

The purpose of this circular is to provide the Shareholders with further information on the terms of the Bareboat Charters and the Sea Crew Management Agreements and to seek the approval of the Shareholders in the upcoming AGM with respect to, among other things, these agreements and proposals.

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LETTER FROM THE BOARD

2. BAREBOAT CHARTERS

As disclosed in the Bareboat Charter Announcement, CS Bulk (HK) entered into the Bareboat Charters with Dong Fang, whereby CS Bulk (HK) will lease the Bulk Vessels from Dong Fang for a term of 10 years commencing from the date of delivery of the respective Bulk Vessel(s) to CS Bulk (HK) and subject to the Company obtaining independent Shareholders’ approval pursuant to the Shanghai Listing Rules approving the Bareboat Charters. The particulars of the Bareboat Charters are summarised below.

Date

15 April 2014

Parties

CS Bulk (HK) (as charterer) Dong Fang (as owner)

Leasing of the Bulk Vessels

Dong Fang will lease to CS Bulk (HK) 4 bulk vessels with a total capacity of 256,000 deadweight tonnes. The Bulk Vessels are used for international dry bulk transportation and will be managed, operated and maintained under the full control of CS Bulk (HK) during the term of the respective Bareboat Charters.

Charter payment and payment terms

Pursuant to the Bareboat Charters, CS Bulk (HK) will pay Dong Fang annual charter payments of US$2,499,780 (equivalent to approximately HK$19,498,284), being the annual cap for each of the Bareboat Charters respectively, during the charter period of 10 years commencing from the date of delivery of the respective Bulk Vessel(s) to CS Bulk (HK) and subject to the Company obtaining independent Shareholders’ approval pursuant to the Shanghai Listing Rules approving the Bareboat Charters. Such payments are to be made in US dollars subject to adjustments in the event the term of a Bareboat Charter is extended to accommodate the last voyage before redelivery to Dong Fang.

Apart from the payment for the first and the last calendar month being made according to the actual number of chartered days in the month, the charter payments are payable monthly in advance on the first day of each calendar month. The charter payments are calculated by reference to a daily hire rate which is determined taking into account market bareboat charter hire rates for bulk vessels of similar tonnage and specifications published by Clarksons, an independent ship brokerage and research company.

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LETTER FROM THE BOARD

Charter period

The Bareboat Charters will commence from the date of the delivery of the respective Bulk Vessel(s) to CS Bulk (HK) and subject to the Company obtaining the independent Shareholders’ approval approving the Bareboat Charters. The charter period may be adjusted to accommodate the period of the relevant vessel’s last voyage before redelivery to Dong Fang. The Bulk Vessels are expected to be delivered to CS Bulk (HK) during the period between May 2015 to August 2015.

Reasons for and benefits of entering into the Bareboat Charters

The Bareboat Charters are entered into with a view to further expanding the Group’s dry bulk cargo carrying capacity in furtherance of the Group’s long-term strategic aim to maintain steady growth in its cargo transportation business. Compared to expanding the Group’s transportation capacity by way of acquiring bulk vessels, the Bareboat Charters offer an opportunity for the Group to expand its dry bulk cargo fleet without incurring material financing costs such as deposit payments, thereby easing the Group’s capital needs in its expansion.

In arriving at the annual caps, the Directors have considered comparisons of the charter rates under the Bareboat Charters to the charter rates of vessels of similar tonnage as quoted by Clarksons, an independent ship brokerage and research company. Based on such comparison, the Company notes that the current charter rates under the Bareboat Charters are no less favourable to the Company from that offered by independent third parties for similar bulk vessels for the same terms. The Company had also compared against the Group’s current charter rates for similar bulk vessels which are under time charters. Taking into account the Group’s expected management costs for bareboat charters, and based on the aforesaid comparisons, the Directors considered the daily charter rate under the Bareboat Charters (together with the management costs expected to be attributable to operation of the Bulk Vessels) would be comparable or better than the market rates.

The terms of the Bareboat Charters were arrived at after arm’s length negotiations between the parties. Taking into account the above, the Directors (taking into account the advice from the Independent Financial Adviser) are of the view that the terms of the Bareboat Charters are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

View of Independent Financial Adviser on the duration of the Bareboat Charters

Rule 14A.35(1) of the Listing Rules provides that the term of an agreement governing continuing connected transaction must not exceed three years, except in special circumstances which are limited to cases where the nature of the transaction requires the contract to be of a duration longer than three years. Accordingly, the Independent Financial Adviser has been appointed to explain why a longer period for the Bareboat Charters is required and to confirm it is normal business practice for agreements of this type to be of such duration.

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LETTER FROM THE BOARD

As disclosed in the Bareboat Charter Announcement, the Independent Financial Adviser has discussed with the Company and was advised by the Company that marine transportation companies tend to enter into long term bareboat charter agreements to minimize administrative costs, such as inspection charges and repair charges, associated with each bareboat charter. The vessels operated under long term bareboat charters are also better utilized, since the time wasted in delivering and returning such vessels would be reduced. In addition, the Company can also be protected from potential rental price increase under longer term bareboat charters.

The Independent Financial Adviser has performed searches of companies listed on the Stock Exchange that enter into long-term bareboat charters as part of their fleet. Based on the searches, aside from shipping companies that commonly use long-term bareboat charters, other company that requires vessels to ship its goods also enters into long-term bareboat charter agreement. Accordingly, the Independent Financial Adviser is of the view that it is a normal business practice for the chartering of shipping vessels, such as that under the Bareboat Charters, to be of duration longer than three years.

Taking into account the view of the Independent Financial Adviser, the Directors also consider that the duration of 10 years of the Bareboat Charters is fair and reasonable and in the interest of the Shareholders as a whole.

3. SEA CREW MANAGEMENT AGREEMENTS

As disclosed in the Sea Crew Announcement, China Shipping Tanker and China Shipping Bulk, each a wholly-owned subsidiary of the Company, have entered into the Tanker Sea Crew Management Agreement and the Bulk Sea Crew Management Agreement with China Shipping International respectively, a wholly-owned subsidiary of China Shipping, for the provision of sea crew and related services by China Shipping International to the Group. The particulars of the Sea Crew Management Agreements are summarised below.

Date

29 April 2014

Parties

China Shipping International (as provider of services) China Shipping Tanker (as recipient of services) China Shipping Bulk (as recipient of services)

Provision of Agreed Services

Pursuant to the Sea Crew Management Agreements, China Shipping International agreed to provide to the Group the Agreed Services for the ongoing operations for all vessels owned or bareboat chartered by the Group. Such Agreed Services include:

1. provision of manning and management services of sea crew members;

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LETTER FROM THE BOARD

1. provision of training and education for sea crew members;

2. implementation of policies and procedures to ensure operational safety of sea crew members;

3. maintenance of electronic database of the sea crew members; and

4. coordination of the placement and allocation of sea crew members.

Service Fees

The service fees for the Agreed Services payable by China Shipping Tanker and China Shipping Bulk respectively to China Shipping International under the Sea Crew Management Agreements comprise a number of items: (a) salary of the sea crew members (including basic salary, performance bonus and other allowance); (b) sea crew fees (including recruitment fees, certification fees and body check fees); (c) ancillary fees (including catering and clothing fees); and (d) management fee (including salary of management personnel).

Pursuant to the Sea Crew Management Agreements, the Group shall pay a fixed fee to China Shipping International in accordance with agreed fee schedules, ranging from RMB8,047,700 (approximately HK$9,979,787) to RMB10,224,800 (approximately HK$12,679,563) per year per vessel for the Tanker Sea Crew Management Agreement and ranging from RMB5,963,300 (approximately HK$7,394,965) to RMB7,503,300 (approximately HK$9,304,688) per year per vessel for the Bulk Sea Crew Management Agreement. The aforesaid fixed fee payable to China Shipping International covers all the Agreed Services for each vessel contracted under the Sea Crew Management Agreements. The Agreed Services may not be provided in part and must be purchased as a package covering all such services referred to under the paragraph headed “Provision of Agreed Services” above. In particular, the service fees for each category of the Agreed Services are determined by reference to a number of factors as follows:

• (i) in respect of the provision of manning and management services, implementation of policies and procedures to ensure operational safety of sea crew members; and coordination of the placement and allocation of sea crew members: by reference to the capacity of the vessels, the required number of sea crew members, the estimated working hours of the relevant employees, taking into account the employees’ benefits and the minimum wage requirement under the applicable PRC laws and regulation;

• (ii) in respect of the provision of training and education for sea crew members: by reference to the prices of substantively the same services quoted by China Shipping International to at least three other independent third parties as well as prices of substantively the same services quoted by at least three independent third parties to the Group; and

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LETTER FROM THE BOARD

• (iii) in respect of the maintenance of electronic database of the sea crew members: by reference to the cost of maintaining and running such database, taking into account the initial set up cost of the information system, wages of relevant personnel and prices of substantively the same services quoted by China Shipping International to at least three other independent third parties as well as prices of substantively the same services quoted by at least three independent third parties to the Group.

For the year ending 31 December 2015 (assuming the term of the Sea Crew Management Agreements will be automatically extended), it is expected that the Company may adjust the fee schedules under the Sea Crew Management Agreements with reference to the then requirements and prevailing market prices of the above components.

The Company notes that the service fees payable by the Group to China Shipping International under the Sea Crew Management Agreements are generally comparable (if not better) as a whole to fees payable by the Group to independent third parties and fees payable by the independent third parties to China Shipping International for substantively the same services.

Annual Caps

The Group expects the amount of fees to be incurred for the Agreed Services for the periods concerned under the Sea Crew Management Agreements shall not exceed the amounts set out below.

For the financial year ending	Total value not exceeding
	(’000)
31 December 2014	RMB1,200,000 (approximately
	HK$1,488,095)
31 December 2015*	RMB1,800,000 (approximately
	HK$2,232,143)

• Assuming the term of the Sea Crew Management Agreements will be automatically extended for one further year upon expiry of the initial term.

The above annual caps have been determined based on (i) the historical amounts incurred by the Group in the last three financial years ended 31 December 2013 in connection with its own sea crew costs (such as salary, performance bonus and other benefits) taking into account also the corresponding fees incurred for sea crew management services provided by China Shipping Group; (ii) management’s estimates of the number of vessels expected to operate during the term of the Sea Crew Management Agreements; (iii) agreed fee schedules as disclosed above under the paragraph headed “Service Fees”; and (iv) independent third party fee quotes or quotes provided by China Shipping International to independent third parties for substantively the same services (as the case may be).

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LETTER FROM THE BOARD

For the three years ended 31 December 2013, the historical amounts incurred by the Group in connection with its own sea crew costs (such as salary, performance bonus and other benefits) taking into account the corresponding fees incurred for sea crew management services provided by China Shipping Group were approximately RMB1,452,921,000 (approximately HK$1,801,737,351), RMB1,545,480,000 (approximately HK$1,916,517,857) and RMB1,657,039,000 (approximately HK$2,054,859,871) respectively. Of the above historical amounts incurred by Group, the corresponding fees incurred for sea crew management services provided by China Shipping Group for the three years ended 31 December 2013 were RMB102,479,000 (approximately HK$127,082,093), RMB38,961,000 (approximately HK$48,314,732) and RMB127,284,000 (approximately HK$157,842,262) respectively.

The terms of the Sea Crew Management Agreements were arrived at after arm’s length negotiations between the parties. The Directors are of the view that the terms of the Sea Crew Management Agreements are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Payment Terms

All fees and charges for a particular calendar month where the Agreed Services will be provided by China Shipping International to the Group shall be pre-paid by the Group no later than the 15th day in the previous month. China Shipping International shall settle the fees and charges with reference to the actual services provided by it to the Group in that particular month afterwards.

Term

The initial term of the Sea Crew Management Agreements commences from the date of obtaining the approval of the Independent Shareholders and ends on 31 December 2014. Upon the expiry of the initial term, the Sea Crew Management Agreements will be automatically extended for one year until 31 December 2015 unless the parties agree otherwise one month prior to the expiry of the initial term.

The Sea Crew Management Agreements are conditional upon approval of the Independent Shareholders at the AGM pursuant to the Listing Rules.

Reasons for and benefits of entering into the Sea Crew Management Agreements

As a result of internal reorganization of the Group’s sea crew and the Group’s expected business development going forward, the Group expects that it will require additional sea crew related services going forward.

In order to effectively control costs of sea crew related services and secure a reliable supply of the Agreed Services, each of China Shipping Tanker and China Shipping Bulk has entered into the Tanker Sea Crew Management Agreement and the Bulk Sea Crew Management Agreement with China Shipping International respectively which has the expertise in managing sea crew members who meet the requirements set by international and domestic oil companies, large electric and steel companies

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LETTER FROM THE BOARD

in China and providing relevant manning and training services. The entering into of the Sea Crew Management Agreements will also enable the Group to concentrate its efforts and resources on its main scope of business in order to fully leverage on its advantage to become more competitive in the market.

The Group historically employs a significant number of sea crews to operate the vessels of the Group. However, managing a large pool of sea crew is costly in terms of both monetary and human resources of the Company as experienced senior employees have to be assigned to such tasks. By outsourcing the sea crews to a sea crew management company, the Company relieves itself from the tedious task of managing sea crews. Furthermore, the Group will have the flexibility of engaging the required number of sea crews depending on actual needs. This flexibility will in turn result in cost savings to the Group in the long run.

To the extent that the terms offered by independent third parties are better than the terms offered by China Shipping International, the Group expects that it will be able to further negotiate with China Shipping International to ensure that the terms offered by China Shipping International are in line (if not better) with the independent third parties’ offer. In any event, the Company is not obliged to use the Agreed Services provided by China Shipping International.

Internal control and review of annual caps

The Company has put in place internal controls and procedures to ensure that individual transactions pursuant to the Sea Crew Management Agreements will be conducted in accordance with the terms of the Sea Crew Management Agreements that are to be approved by the Independent Shareholders.

In order to ensure the terms provided by China Shipping International are no less favourable than that offered by independent third parties, the Company will invite at least three service providers, which are on a “Qualified Supplier List”, to submit their quotations or proposals through which the Company can compare the terms of those proposals.

The proposals will then be reviewed and approved by the Independent Board Committee to ensure that the terms offered by China Shipping International are no less favourable than those offered by other independent third parties. Moreover, the Company has established a team responsible for reviewing the actual transaction amounts between the Company and China Shipping International periodically to ensure that the actual transaction amounts between the Company and the connected persons of the Company will not exceed the proposed annual cap.

On the basis of the above, the Directors are of the view that the Group has adequate internal controls in place to ensure that the individual transactions are conducted in accordance with the terms of the Sea Crew Management Agreements.

— 13 —

LETTER FROM THE BOARD

Independent Board Committee and Independent Financial Adviser in relation to the Sea Crew Management Agreements

The Independent Board Committee comprising Mr. Zhang Jun, Mr. Wang Wusheng, Mr. Lin Junlai and Mr. Ruan Yongping has been formed to advise the Independent Shareholders, and the Independent Financial Adviser has also been appointed to advise the Independent Board Committee and the Independent Shareholders, as to whether the terms of the transactions under the Sea Crew Management Agreements are fair and reasonable and whether such transactions are in the interests of the Company and its Shareholders as a whole and in respect of the annual caps under the Sea Crew Management Agreements.

4. LISTING RULES IMPLICATIONS

As at the Latest Practicable Date, China Shipping held approximately 46.36% of the total issued share capital of the Company and was the controlling shareholder of the Company. As such, China Shipping is a connected person of the Company within the meaning of the Listing Rules.

Dong Fang is an indirect wholly-owned subsidiary of China Shipping and is therefore a connected person of the Company. Accordingly, the transactions contemplated under the Bareboat Charters constitute continuing connected transactions of the Company. The entering into of the Bareboat Charters shall, for the purpose of the Listing Rules, be aggregated with the Previous Charters.

As the applicable percentage ratios (as defined under the Listing Rules) in respect of the Bareboat Charters (as aggregated) are more than 0.1% but less than 5%, the Bareboat Charters are subject to the reporting, announcement and annual review requirements but do not require approval by the independent Shareholders under Chapter 14A of the Listing Rules. However, pursuant to the requirements of the Shanghai Listing Rules, the Bareboat Charters are required to be approved by independent Shareholders.

Further, pursuant to Rule 14A.35(1) of the Listing Rules, except in special circumstances where the nature of the transaction requires the contract to be of a longer duration, the period of the Bareboat Charters must not exceed three years. Accordingly, TC Capital Asia Limited has been appointed as the independent financial adviser to the Company to explain why a longer period for the Bareboat Charters is required and to confirm it is a normal business practice for agreements of this type to be of such duration as set out in the Bareboat Charter Announcement and this circular.

China Shipping International is a wholly-owned subsidiary of China Shipping and is therefore a connected person of the Company. Accordingly, the transactions pursuant to the Sea Crew Management Agreements constitute continuing connected transactions for the Company.

As the applicable percentage ratios (as defined in the Listing Rules) under Chapter 14A of the Listing Rules in respect of the transactions under the Sea Crew Management Agreements are expected to be more than 5% on an annual basis, such transactions constitute continuing connected transactions of the Company which are subject to the reporting, annual review, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

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LETTER FROM THE BOARD

China Shipping, the controlling shareholder of the Company, and its associates, will abstain from voting at the AGM in relation to the Sea Crew Management Agreements and the Bareboat Charters.

The following Directors, Mr. Xu Lirong, Mr. Zhang Guofa, Ms. Su Min, Mr. Huang Xiaowen and Mr. Ding Nong, being the senior management of China Shipping, have a material interest in the Bareboat Charters and the Sea Crew Management Agreements, and have abstained from voting on the relevant Board resolutions in relation to these transactions.

5. AGM

Under the Listing Rules and the Company Law of the PRC (as the case may be), the Bareboat Charters and the Sea Crew Management Agreements are subject to the approval of the Shareholders. It is proposed that resolutions for, amongst other things, the approval of the Bareboat Charters and the Sea Crew Management Agreements will be put to the Shareholders for their consideration at the AGM. The AGM will be held at 2:00 p.m. on Friday, 6 June 2014 at 3rd Floor, Parkview Hotel, 555 Dingxiang Road, Pudong New Area, Shanghai, the People’s Republic of China. A supplemental notice of the AGM is set out on pages II-1 to II-3 of this circular.

A supplemental proxy form for use at the AGM is enclosed. Whether or not you intend to attend the AGM, you are requested to complete and return the enclosed supplemental proxy form (for use at the AGM) in accordance with the instructions printed thereon as soon as possible to the Company’s Hong Kong H share registrar and transfer office, Hong Kong Registrars Limited, 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (in case of holders of H Shares) or the Office of the Secretary to the Board of Directors of the Company at 7th Floor, 670 Dong Da Ming Road, Shanghai, The People’s Republic of China (in case of holders of A Shares) but in any event not less than 24 hours before the time appointed for the holding of the AGM (or any adjournment thereof). Completion and return of the said supplemental proxy form will not preclude you from attending and voting in person at the AGM or at any adjourned meeting should you so wish.

6. CLOSURE OF H SHARE REGISTER OF MEMBERS OF THE COMPANY

The H Share register of the Company was closed from Tuesday, 6 May 2014 and will be closed until Friday, 6 June 2014 (both days inclusive), during which no transfer of H Shares will be effected. Any holders of H Shares of the Company, whose names appear on the Company’s register of members at the close of business on Friday, 6 June 2014 are entitled to attend and vote at the AGM after completing the registration procedures for attending the meeting.

7. GENERAL INFORMATION

The business scope of China Shipping includes import and export business, trading, coastal and ocean cargo transportation, dry bulk cargo transportation, supply of food for vessels, management of docks and other services in relation to the above.

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LETTER FROM THE BOARD

China Shipping International, a wholly-owned subsidiary of China Shipping, is primarily engaged and specialized in provision of manning and management services of sea crew, technical marine services and training services of sea crew members.

The business scope of the Company includes coastal, ocean and Yangtze River cargo transportation, oil transportation, chartering, cargo agency and cargo transportation agency.

China Shipping Tanker, a wholly-owned subsidiary of the Company, is principally engaged in provision of tanker shipping services.

China Shipping Bulk, a wholly-owned subsidiary of the Company, is principally engaged in provision of bulk shipping services.

8. RECOMMENDATION

The Directors (including the independent non-executive Directors) consider that the terms of the transactions pursuant to the Bareboat Charters and the Sea Crew Management Agreements (including the annual caps) to be fair and reasonable and in the interests of the Company and its Shareholders as a whole. Accordingly, the Directors recommend that all Shareholders to vote in favour of the relevant resolutions set out in the supplemental notice of AGM.

Yours faithfully,

China Shipping Development Company Limited Xu Lirong Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

23 May 2014

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CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 中海發展股份有限公司

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

(Stock Code: 1138)

To the Independent Shareholders

Dear Sir/Madam,

CONTINUING CONNECTED TRANSACTIONS

We have been appointed as the Independent Board Committee to advise you in connection with the transactions pursuant to the Tanker Sea Crew Management Agreement and the Bulk Sea Crew Management Agreement, details of which are set out in the Letter from the Board contained in the circular to the shareholders of the Company dated 23 May 2014 (the “ Circular ”), of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein unless the context otherwise requires.

Having considered the transactions pursuant to the Tanker Sea Crew Management Agreement and the Bulk Sea Crew Management Agreement, and the opinion of the Independent Financial Adviser in relation thereto as set out on pages 18 to 26 of the Circular, we are of the opinion that the terms of the transactions pursuant to Tanker Sea Crew Management Agreement and the Bulk Sea Crew Management Agreement and the annual caps are fair and reasonable and such transactions are in the interests of the Company and the Shareholders as a whole. We therefore recommend that you vote in favour of the ordinary resolutions to be proposed at the AGM to approve such transactions and the annual caps.

Yours faithfully,

Lin Junlai Zhang Jun Ruan Yongping Wang Wusheng Independent Independent Independent Independent non-executive Director non-executive Director non-executive Director non-executive Director

— 17 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of the letter of advice from TC Capital Asia Limited, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of incorporation into this circular, setting out its advice to the Independent Board Committee and the Independent Shareholders in respect of the Tanker Sea Crew Management Agreement and the Bulk Sea Crew Management Agreement.

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23 May 2014

The Independent Board Committee and the Independent Shareholders China Shipping Development Company Limited

Dear Sir/Madam,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Sea Crew Management Agreements and the proposed annual caps contemplated thereunder, and the details of which are set out in the “Letter from the Board” (the “ Board Letter ”) contained in the circular of the Company dated 23 May 2014 issued to the Shareholders (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular, unless otherwise specified.

On 29 April 2014, China Shipping Tanker and China Shipping Bulk, each a wholly-owned subsidiary of the Company, entered into the Sea Crew Management Agreements respectively with China Shipping International, a wholly-owned subsidiary of China Shipping, for the provision of sea crew and related services by China Shipping International to the Group.

China Shipping International is a wholly-owned subsidiary of China Shipping, the controlling shareholder of the Company, and is therefore a connected person of the Company. Accordingly, the transactions pursuant to the Sea Crew Management Agreements constitute continuing connected transactions for the Company.

Our role as independent financial adviser is to give our opinion as to whether the Sea Crew Management Agreements and the proposed annual caps are in the interests of the Company, on normal commercial terms, fair and reasonable insofar as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

BASIS OF OPINION

In formulating our opinion and recommendation to the Independent Board Committee and the Independent Shareholders, we have considered and reviewed, among other things, (i) the Sea Crew Management Agreements; (ii) quotations from independent third parties providing sea crew services to the Group; (iii) the 2013 annual report of the Company; and (iv) other information as set out in the Circular.

We have also relied on all relevant information, opinions and facts supplied and represented by the Company, the Directors and the management of the Company. We have assumed that all such information, opinions, facts and representations contained or referred to in the Circular, for which the Company is fully responsible, were true and accurate in all respects as at the date hereof and may be relied upon. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Company, and the Company has confirmed that no material facts have been withheld or omitted from the information provided and referred to in the Circular, which would make any statement therein misleading.

We consider that we have reviewed sufficient information currently available to reach an informed view and to justify our reliance on the accuracy of the information contained in the Circular so as to provide a reasonable basis for our recommendation. We have not, however, carried out independent verification of the information provided by the Directors and the representatives of the Company, nor have we conducted any form of in-depth investigation into the businesses, affairs, operations, financial position or future prospects of the Company, China Shipping International, China Shipping Tanker, China Shipping Bulk, China Shipping and any of their respective subsidiaries and associates.

PRINCIPAL FACTORS AND REASONS CONSIDERED IN RELATION TO THE CONTINUING CONNECTED TRANSACTIONS

In arriving at our recommendation in respect of the Sea Crew Management Agreements and the proposed annual caps, we have taken into consideration the following principal factors and reasons:

I. Background of and reasons for the Sea Crew Management Agreements

The Company is principally engaged in coastal and ocean shipping of crude oil, refined oil, coal and iron ore. During the year ended 2013, the Company has implemented policies, including but not limited to control of salaries and costs of crew member, adjustment of crew teams and their allowances, in order to promote comprehensive budget management. We have discussed such crew adjustment policies with the Company and noted that the execution of the Sea Crew Management Agreements between the Group and China Shipping International is one of the cost control methods under the Company’s planned comprehensive budget management strategies.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

China Shipping International, a wholly-owned subsidiary of China Shipping, is primarily engaged in and specializes in the provision of manning and management services of sea crew, technical marine services and training services of sea crew members (the “ Crew Services ”). China Shipping International has provided Crew Services to reputable international clients since 2004 and has obtained various certifications, such as the A-Grade Sea Crew Service Institution Permit (“甲級船員服務機構許可證”), and the Det Norske Veritas Business Assurance Management System Certificate ISO 9001:2008 on the Provision of Crew Management and Crew Resources Services Provision of Manning Services. Therefore, we concur with the Directors that China Shipping International has the experience and expertise in managing the sea crew members and meet the international requirements for providing relevant manning and training services.

We were also advised by the Directors that it is difficult for the Company to recruit experienced sea crews to accommodate its business development by itself given the harsh working environment of long voyages that results in experienced sea crews not willing prolong their career in the industry. Therefore, the entering into Sea Crew Management Agreement will thus relief the Company from the issue of securing a reliable supply of the Agreed Services and enables the Group to concentrate its efforts and resources on its main scope of business in order to fully leverage on its advantage to become more competitive in the industry.

Having considered the above, we are of the view that the entering into the Sea Crew Management Agreements falls within the ordinary and usual course of business of the Group, is fair and reasonable, and is in the interests of the Company and the Shareholders as a whole.

II. Principal terms of the Sea Crew Management Agreements

Key terms of the Sea Crew Management Agreements are set out below:

Date

29 April 2014

Parties

China Shipping International (as provider of services) China Shipping Tanker (as recipient of services) China Shipping Bulk (as recipient of services)

Provision of Agreed Services

Pursuant to the Sea Crew Management Agreements, China Shipping International agreed to provide to the Group the Agreed Services for the ongoing operations for all vessels owned or bareboat chartered by the Group. Such Agreed Services include:

1. provision of manning and management services of sea crew members;

2. provision of training and education for sea crew members;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

1. implementation of policies and procedures to ensure operational safety of sea crew members;

2. maintenance of electronic database of the sea crew members; and

3. coordination of the placement and allocation of sea crew members.

Service Fees

The service fees for the Agreed Services payable by China Shipping Tanker and China Shipping Bulk respectively to China Shipping International under the Sea Crew Management Agreements comprise a number of items: (a) salary of the sea crew members (including basic salary, performance bonus and other allowance); (b) sea crew fees (including recruitment fees, certification fees and body check fees); (c) ancillary fees (including catering and clothing fees); and (d) management fee (including salary of management personnel).

Pursuant to the Sea Crew Management Agreements, the Group shall pay a fixed fee to China Shipping International in accordance with agreed fee schedules, ranging from RMB8,047,700 (approximately HK$9,979,787) to RMB10,224,800 (approximately HK$12,679,563) per year per vessel for the Tanker Sea Crew Management Agreement and ranging from RMB5,963,300 (approximately HK$7,394,965) to RMB7,503,300 (approximately HK$9,304,688) per year per vessel for the Bulk Sea Crew Management Agreement. The aforesaid fixed fee payable to China Shipping International covers all the Agreed Services for each vessel contracted under the Sea Crew Management Agreements. The Agreed Services may not be provided in part and must be purchased as a whole covering all such services referred to under the paragraph headed “Provision of Agreed Services” above. In particular, the service fees for each category of the Agreed Services are determined by reference to a number of factors as follows:

• (i) in respect of the provision of manning and management services, implementation of policies and procedures to ensure operational safety of sea crew members; and coordination of the placement and allocation of sea crew members: by reference to the capacity of the vessels, the required number of sea crew members, the estimated working hours of the relevant employees, taking into account the employees’ benefits and the minimum wage requirement under the applicable PRC laws and regulation;

• (ii) in respect of the provision of training and education for sea crew members: by reference to the prices of substantively the same services quoted by China Shipping International to at least three other independent third parties as well as prices of substantively the same services quoted by at least three independent third parties to the Group; and

• (iii) in respect of the maintenance of electronic database of the sea crew members: by reference to the cost of maintaining and running such database, taking into account the initial set up cost of the information system, wages of relevant personnel and prices of substantively the same services quoted by China Shipping International to at least three other independent third parties as well as prices of substantively the same services quoted by at least three independent third parties to the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

For the year ending 31 December 2015 (assuming the term of the Sea Crew Management Agreements will be automatically extended), it is expected that the Company may adjust the fee schedule under the Sea Crew Management Agreements with reference to the then requirements and prevailing market prices of the above components.

We are of the view that as China Shipping International is required to hire, train, administer, maintain and manage the sea crews, the Agreed Services would have been incurred by China Shipping International in the process of establishing a pool of capable sea crews for a specific vessel. Therefore, the inclusion of the Agreed Services, together with the salary of the sea crews, under the Sea Crew Management Agreements is fair and reasonable.

Payment Terms

All fees and charges for a particular calendar month where the Agreed Services will be provided by China Shipping International to the Group shall be pre-paid by the Group no later than the 15th day in the previous month. China Shipping International shall settle the fees and charges with reference to the actual services provided by it to the Group in that particular month afterwards.

We have reviewed the payment terms of similar services provided by independent third parties to the Group and noted that these service providers also bill the Company on a monthly payment basis with pre-payment required as these service providers would need to incur a cost to recruit the necessary sea crews as well as other administrative cost prior to these sea crews are allowed to board the Company’s vessels. As such, we are of the view that the payment terms of the Sea Crew Management Agreements are on normal commercial terms, fair and reasonable and in the interest of the Company and Shareholders as a whole.

Term

The initial term of the Sea Crew Management Agreements commences from the date of obtaining the approval of the Independent Shareholders and ends on 31 December 2014. Upon the expiry of the initial term, the Sea Crew Management Agreements will be automatically extended for one year until 31 December 2015 unless the parties agree otherwise one month prior to the expiry of the initial term.

III. Pricing Policy of the Sea Crew Management Agreements

As set out in the Board Letter, the service fees of the Agreed Services under the Sea Crew Management Agreements are determined based on several factors as listed in the section headed “ Service Fees ” above.

In accessing the fairness and reasonableness of the fees for Agreed Services under the Sea Crew Management Agreements, we have obtained and reviewed all service proposals submitted to the Company by the independent third parties for the provision of services that are substantially similar to the Agreed Services. As the aforesaid proposals differ slightly in respect of the areas covered by the services, such as exclusion of crew meals, we have adjusted the fees to be in line with each other

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

and noted that the total fees quoted by China Shipping International under the Sea Crew Management Agreements are generally in line with the quotation from the independent third parties, with quotes ranging from a discount of approximately 6.3% to a premium of approximately 5.5% subject to different capacity class of the vessels.

We further discussed with the Company and noted that such fluctuations and the resulting pricing premium arises from various factors, ranging from crew experience to additional crew benefits that China Shipping International pays, such as social security, medical and insurance. Furthermore, as the sea crew provision companies attempt to be competitive, they usually pay the minimal social benefits as required by law, and try to reduce any unnecessary employee cost or benefits. We are of the view that due to the harsh working environment of the sea, paying a slight premium to ensure quality and experienced sea crew is crucial not just for employee satisfaction and the smooth operation of the Company’s vessels, but more importantly the safety of these vessels and the crews on board.

Based on the above analysis, we are of the view that the pricing policy, which includes a slight premium for certain class of vessel in return for better and more experience sea crews, under the Sea Crew Management Agreements are on normal commercial terms, fair and reasonable and in the interest of the Company and the Shareholders as a whole.

IV. Proposed annual caps of the Sea Crew Management Agreements

The table below sets out the proposed annual caps under the under the Sea Crew Management Agreements for the year ending 31 December 2014 and for the year ending 31 December 2015.

	For the year ending
	31 December
(in RMB million)	2014 2015
Aggregate amount payable by the Company to
China Shipping International	1,200.00 1,800.00

As stated in the Board Letter, the proposed annual caps for the years ending 31 December 2014 and 2015 under the Sea Crew Management Agreements have been determined with reference to:

• (i) the historical amounts incurred by the Group in the last three financial years ended 31 December 2013 in connection with its own sea crew costs (such as salary, performance bonus and other benefits) taking into account also the corresponding fees incurred for sea crew management services provided by China Shipping Group;

• (ii) management’s estimates of the number of vessels expected to operate during the term of the Sea Crew Management Agreements;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

• (iii) agreed fee schedules, ranging from RMB8,047,700 (approximately HK$9,979,787) to RMB10,224,800 (approximately HK$12,679,563) per year per vessel for the Tanker Sea Crew Management Agreement and ranging from RMB5,963,300 (approximately HK$7,394,965) to RMB7,503,300 (approximately HK$9,304,688) per year per vessel for the Bulk Sea Crew Management Agreement; and

• (iv) independent third party fee quotes or quotes provided by China Shipping International to independent third parties for substantively the same services (as the case may be).

Based on the historical amounts incurred by the Group for sea crew cost for the three years ended 31 December 2013, the Group has incurred approximately RMB1,452,921,000 (approximately HK$1,801,737,351), RMB1,545,480,000 (approximately HK$1,916,517,857) and RMB1,657,039,000 (approximately HK$2,054,859,871), respectively, which is almost in line with the proposed annual cap together with a small buffer. However, the historical sea crew management service fees paid by the Group to China Shipping Group was substantially lower at RMB102,479,000 (approximately HK$127,082,093), RMB38,961,000 (approximately HK$48,314,732) and RMB127,284,000 (approximately HK$157,842,262) for the three years ended 31 December 2013, respectively. These lower sea crew management service fees involve mainly management services and do not include the actual salary of the sea crews, and thus are not reflective of the actual sea crew costs. The current higher proposed annual caps under the Sea Crew Management Agreements are a result of reorganization to streamline the management of the sea crews, who are now employed under the China Shipping Group.

In assessing the fairness and reasonableness of the proposed annual caps under the Sea Crew Management Agreements, we have calculated the number of vessels expected to operate during the term of the Sea Crew Management Agreements and the fee schedule with fees vary with reference to the capacity of the vessels and the required number of sea crew members, of which are also stipulated in the Sea Crew Management Agreements.

Based on our calculation of 134 bulk cargo vessel and 74 tankers of various sizes multiplied by their respective fees, the total annual service fee payable from the Company to China Shipping International is approximately RMB1,534 million. The difference of approximately RMB276 million between the proposed annual cap of RMB1,800 million for the year ending 31 December 2015 and the expected service fee payable by the Company to China Shipping International represents a buffer for unexpected needs to employ additional sea crews or additional vessels under the terms of Sea Crew Management Agreements. In respect of the proposed annual cap for the year ending 31 December 2014, the annual cap has been pro-rated to reflect the approximate 8 months remaining of this year.

Having considered the rationale and calculation of the proposed annual caps for the Sea Crew Management Agreements above, we are of the view that the proposed annual caps are fair and reasonable, and in the interest of the Company and the Shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

V. Internal control and review of the annual caps

We have obtained and reviewed the handbook from the Company, pursuant to which the internal procedure of the Company in dealing and transact with the connected persons of the Company is stipulated.

We have reviewed these internal control policies of the Company in regards to their procedure on the terms of the Sea Crew Management Agreements. In order to ensure the terms provided by China Shipping International to be no less favourable than that offered by independent third parties, the Company will invite at least three service providers, which are on a “Qualified Supplier List”, to submit their quotations or proposals through which the Company can compare the terms of those proposals.

The proposals will then be reviewed and approved by the Independent Board Committee to ensure that the terms offered by the connected persons of the Company are no less favourable than those offered by other independent third parties. Moreover, the Company has established a team responsible for reviewing the actual transaction amount between the Company and the connected persons of the Company periodically to ensure that the actual transaction amount between the Company and the connected persons of the Company did not exceed the proposed annual cap.

As the Company has multiple control mechanisms to ensure (i) the service proposal provided by the connected persons of the Company is no less favourable than that offered by independent third parties to the Company and (ii) the actual transaction amount between the Company and the connected persons of the Company can be closely monitored to ensure they do not exceed the proposed annual cap, we are of the view that the Company has sufficient control procedures in place to ensure that the transactions will be conducted in accordance with the terms under the Sea Crew Management Agreements.

VI. Other reasons and benefits of the Sea Crew Management Agreements

Outsourcing of the Group’s sea crews

The Group historically employs a significant number of sea crews to operate the vessels of the Group. However, managing a large pool of sea crew is costly in terms of both monetary and human resource of the Company as experienced senior employees have to be assigned to such tasks. By outsourcing the sea crews to a sea crew management company, the Company relieves itself from the tedious task of managing sea crews. Furthermore, the Group will have the flexibility of engaging the required number of sea crews depending on actual needs. This flexibility will in turn result in cost savings to the Group in the long run.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Familiarity with the Group’s vessels

Sea crews of China Shipping International are employees under the China Shipping group of companies and some of these sea crews have been operating ships under China Shipping for a significant period. Given their long term service with the Group or China Shipping, these sea crews are familiar with the vessels and operation procedures of the vessels under the Group. As safety is a key concern of vessel operations, familiarity with the vessels and its operation procedures is of paramount importance to ensure both the cargo and its crews arrive at its destination safely.

High turnover rate of crew provided by independent third party providers

As presented by the Company, sea crews provided by the independent third parties have a comparatively high turnover rate. Considering that these independent third parties profit only from provision of sea crew, they therefore have a tendency to maximize their profit at the expense of employees’ salaries. Therefore, it is understandable that employees of these companies tend to leave when a better offer is obtained. The high turnover rate also presents additional risk to the vessel operation, including familiarity with the vessel and crew disobedience. These factors directly affect the safety of the vessel operation and the reputation of the Company.

RECOMMENDATION

Having considered the principal factors and reasons as discussed above, in particular while the prices quoted by China Shipping International under certain circumstances do exceed the prices quoted from independent third party marginally, there are significant benefits and safety that can accrue from the use of China Shipping International, with related risk significantly reduced, we are of the view that the Sea Crew Management Agreements are entered into in the ordinary course of business of the Company, on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Accordingly, we recommend that the Independent Board Committee advise the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the upcoming AGM to approve the Sea Crew Management Agreements and the proposed annual caps contemplated thereunder.

Yours faithfully, For and on behalf of TC Capital Asia Limited Edward Wu Managing Director

— 26 —

GENERAL INFORMATION

APPENDIX I

1. RESPONSIBILITY STATEMENT

This circular for which 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 aspects 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

Directors’ Interests and Short Positions

As at the Latest Practicable Date, none of the Directors and chief executives and supervisors, nor their associates, had any interest and 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 to be notified to the Company and the Stock Exchange which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 and the Stock Exchange under the provisions of Divisions 7 and 8 of Part XV of the SFO or pursuant to the Model Code for Securities Transactions by Directors of Listed Companies as set out in appendix 10 of the Listing Rules to be notified to the Company and the Stock Exchange or which are required, pursuant to section 352 of the SFO, to be entered in the register referred to therein.

Directors’ Interest in Any Asset Acquired, Disposed or Leased

None of the Directors has had any material interest, direct or indirect, in any asset which, since 31 December 2013, being the date to which the latest audited consolidated financial statements of the Group have been made up, had been acquired or disposed of by or leased to any member of the Group or was proposed to be acquired or disposed of by or leased to any member of the Group.

Directors’ Service Contracts

As at the Latest Practicable Date, none of the Directors had entered into, or proposed to enter into, any service contracts with the Company or any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

Directors’ Interest in Contracts

No contracts of significance to which the Company, any of its holding companies, fellow subsidiaries or subsidiaries was a party and in which a Director had a material interest (other than common directorship with China Shipping) and which is significant to the Group’s business, whether directly or indirectly, subsisted at the date of this circular. None of the Directors or their respective associates has any competing interest (as would be required to be disclosed under Rule 8.10 of the Listing Rules if each of them were a controller shareholder of the Company for the purpose of the Listing Rules).

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GENERAL INFORMATION

APPENDIX I

3. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial position or trading prospects of the Group since 31 December 2013, being the date to which the latest audited financial statements of the Group were made up.

4. CONSENT AND EXPERT

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

Name Qualification TC Capital Asia Limited Independent Financial Adviser and a licensed corporation to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

The Independent Financial Adviser has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and/or opinions and/or the references to its name in the form and context in which it respectively appears.

As at the Latest Practicable Date, (i) the Independent Financial Adviser did not have any interest, either direct or indirect, in any assets which had been, since 31 December 2013, being the date to which the latest published audited financial statements of the Company were made up, acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group; and (ii) the Independent Financial Adviser did not have any shareholding interests in any member of the Group and it did not have any right, whether legally enforceable or not, to subscribe for or nominate persons to subscribe for securities of any members of the Group.

5. MISCELLANEOUS

In the event of inconsistency, the English version of this circular shall prevail over the Chinese version.

6. DOCUMENTS FOR INSPECTION

Copies of the following documents will be available for inspection at the office of Reed Smith Richards Butler at 20/F., Alexandra House, 18 Chater Road, Central, Hong Kong during normal business hours on any weekday (except public holidays) from the date of this circular up to and including Friday, 6 June 2014:

• (a) the letter from the Independent Board Committee to the Independent Shareholders, the text of which is set out in page 17 of this circular;

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GENERAL INFORMATION

APPENDIX I

• (b) the letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, the text of which is set out in pages 18 to 26 of this circular;

• (c) the Bareboat Charters;

• (d) the Tanker Sea Crew Management Agreement; and

• (e) the Bulk Sea Crew Management Agreement.

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APPENDIX II SUPPLEMENTAL NOTICE OF THE ANNUAL GENERAL MEETING

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CHINA SHIPPING DEVELOPMENT COMPANY LIMITED 中海發展股份有限公司

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

(Stock Code: 1138)

SUPPLEMENTAL NOTICE OF THE ANNUAL GENERAL MEETING

Notice dated 17 April 2014 had been given by the Company to convene the annual general meeting (the “ AGM ”) of China Shipping Development Company Limited (the “ Company ”) to be held at 2:00 p.m. on Friday, 6 June 2014 at 3rd Floor, Parkview Hotel, 555 Dingxiang Road, Pudong New Area, Shanghai, The People’s Republic of China to consider and, if thought fit, pass the resolutions set out therein. This notice is a supplemental notice following the despatch of the Company’s circular dated 23 May 2014 (the “ Circular ”) setting out the resolutions to be passed at the AGM:

Ordinary Resolutions

• “12. to approve the four bareboat charters dated 15 April 2014 (the “ Bareboat Charters ”) entered into between Dong Fang International Asset Management Limited (東方國際資產 管理有限公司) as owner and China Shipping Bulk Carrier (Hong Kong) Co., Limited 中海 散貨運輸(香港)有限公司 as charterer and the transactions contemplated thereunder (including the relevant annual caps); and to authorise the directors of the Company (“ Directors* ”) to exercise all powers which they consider necessary and do such other acts and things and execute such other documents which in their opinion may be necessary or desirable to implement the transactions contemplated under the Bareboat Charters.

• to approve, ratify and confirm the tanker sea crew management agreement dated 29 April 2014 (the “ Tanker Sea Crew Management Agreement ”) entered into between China Shipping International Ship Management Co., Ltd 中海國際船舶管理有限公司 as provider of services and China Shipping Tanker Co., Ltd 中海油輪運輸有限公司 as recipient of services and the transactions contemplated thereunder (including the relevant annual caps); and to authorize the Directors to exercise all powers which they consider necessary and do such other acts and things and execute such other documents which in their opinion may be necessary or desirable to implement the transactions contemplated under the Tanker Sea Crew Management Agreement.

• to approve, ratify and confirm the bulk sea crew management agreement dated 29 April 2014 (the “ Bulk Sea Crew Management Agreement ”) entered into between China Shipping International Ship Management Co., Ltd 中海國際船舶管理有限公司 as provider of services and China Shipping Bulk Carrier Co., Ltd 中海散貨運輸有限公司 as recipient

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APPENDIX II SUPPLEMENTAL NOTICE OF THE ANNUAL GENERAL MEETING

of services and the transactions contemplated thereunder (including the relevant annual caps); and to authorize the Directors to exercise all powers which they consider necessary and do such other acts and things and execute such other documents which in their opinion may be necessary or desirable to implement the transactions contemplated under the Bulk Sea Crew Management Agreement.”

By Order of the Board China Shipping Development Company Limited Yao Qiaohong Company Secretary

23 May 2014 Shanghai The People’s Republic of China

• for identification purposes only

Notes:

• (A) Please refer to the notice of the AGM dated 17 April 2014 for Resolutions 1 to 11.

• (B) Details of the Office of the Secretary to the Board of Directors of the Company are as follows:

7th Floor, 670 Dong Da Ming Road, Shanghai, The People’s Republic of China Postal Code: 200080 Tel: 86(21) 6596 6666 Fax: 86(21) 6596 6160

• (C) Each holder of H Shares who has the right to attend and vote at the AGM is entitled to appoint in writing one or more proxies, whether that proxy is a shareholder or not, to attend and vote on his behalf at the AGM.

• (D) The instrument appointing a proxy must be in writing under the hand of the appointor or his attorney duly authorised in writing. If that instrument is signed by an attorney of the appointor, the power of attorney authorising that attorney to sign, or other documents of authorisation, must be notarially certified.

• (E) For holders of H Shares, the form of proxy, and if the form of proxy is signed by a person under a power of attorney or other authority on behalf of the appointor, a notarially certified copy of that power of attorney or other authority, must be delivered to the Company’s H share registrar, Hong Kong Registrars Limited, 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, not less than 24 hours before the time appointed for holding the AGM (or any adjournment thereof) in order for such documents to be valid.

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APPENDIX II SUPPLEMENTAL NOTICE OF THE ANNUAL GENERAL MEETING

• (F) Each holder of A Shares is entitled to appoint in writing one or more proxies, whether a shareholder or not, to attend and vote on its behalf at the AGM. Note (C) also applies to holders of A Shares, except that the supplemental proxy form or other documents of authority must be delivered to the Office of the Secretary to the Board of Directors, the address of which is set out in Note (B) above, not less than 24 hours before the time appointed for holding the AGM (or any adjournment thereof) in order for such documents to be valid.

• (G) If a proxy attends the AGM on behalf of a shareholder, he should produce his identity card and the instrument signed by the proxy or his legal representative, which specifies the date of its issuance. If the legal representative of a shareholder which shareholder is a legal person attends the AGM, such legal representative should produce his identity card and valid documents evidencing his capacity as such legal representative. If a shareholder which is a legal person appoints a company representative other than its legal representative to attend the AGM, such representative should produce his identity card and an authorization instrument affixed with the seal of that shareholder (which is a legal person) and duly signed by its legal representative.

• (H) The Company has on this date issued to Shareholders a supplemental proxy form. If you intend to appoint a proxy, you should complete and return the enclosed supplemental proxy form in accordance with the instructions printed thereon and return it at least 24 hours before the time stipulated for convening the AGM or any adjourned meeting (as circumstances require). If you have already validly appointed a proxy to act for you at the AGM but have not completed and returned the supplemental proxy form, your proxy will have the right to vote at his/her discretion. Completion and return of the supplemental proxy form will not preclude you from attending, and voting at, the AGM.

• (I) The AGM is expected to last for an hour. Shareholders attending the AGM are responsible for their own transportation and accommodation expenses.

• (J) As at the date of this circular, the Board of Directors of the Company comprises Mr. Xu Lirong, Mr. Zhang Guofa, Ms. Su Min, Mr. Huang Xiaowen, Mr. Ding Nong, Mr. Han Jun and Mr. Qiu Guoxuan as executive Directors, Mr. Zhang Jun, Mr. Wang Wusheng, Mr. Lin Junlai and Mr. Ruan Yongping as independent non-executive Directors.

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