Dida Inc. — Capital/Financing Update 2006

Apr 25, 2006

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims 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

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

Discloseable Transactions Construction of New Vessels

A letter from the Board is set out on pages 3 to 6 of this circular.

21 April, 2006

CONTENTS

Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
**Letter from **	**the **	Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Appendix	—	General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7

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DEFINITIONS

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

“associates” has the meaning ascribed thereto in the Listing Rules “Board” the board of Directors “China Shipping Group” China Shipping (Group) Company ( ), the controlling shareholder of the Company “Construction of New Vessels the transactions contemplated under the Dalian Agreements Transactions” and the Guangzhou Agreements “Dalian Agreements” four unconditional agreements all dated 31 March 2006 and entered into between Dalian Shipyard (as the seller) and the Company through its Hong Kong branch (as the buyer) for the construction of four 298,000 dead weight tonnes VLCCs for the transportation of crude oil “Dalian Shipyard” Dalian Shipbuilding Industry Company Limited ( ), a Chinese shipbuilder which, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, is not a connected person of the Company and is not connected with the Directors, chief executive(s) or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates (as defined under the Listing Rules) “Director(s)” the director(s) of the Company “Group” the Company and its subsidiaries “Guangzhou Agreements” four unconditional agreements all dated 31 March, 2006 and entered into between Guangzhou Shipyard (as the seller) and the Company, or through its Hong Kong branch as the case maybe (both as the buyer) for the construction of four 42,000 dead weight tonnes tankers for the transportation of crude oil and product oil. “Guangzhou Shipyard” Guangzhou Shipyard International Company Limited ( ), a Chinese shipbuilder which, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, is not a connected person of the Company and is not connected with the Directors, chief executive(s) or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates (as defined under the Listing Rules)

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DEFINITIONS

“Hong Kong”	the Hong Kong Special Administrative Region of the	PRC
“Latest Practicable Date”	20 April 2006, 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 of Hong Kong Limited
“PRC”	the People’s Republic of China which, for the purposes of this
	circular, excludes Hong Kong, the Macau	Special
	Administrative Region and Taiwan
“SFO”	Securities and Futures Ordinance (Chapter 571 of the	laws of
	Hong Kong)
“Shareholders(s)”	shareholder(s) of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“RMB”	Renminbi yuan, the lawful currency of the PRC
“HK$”	Hong Kong dollar, the lawful currency of Hong Kong
“US$”	United States dollar, the lawful currency of the United States
“VLCC”	Very Large Crude oil Carrier
“%”	percentage or per centum

For the purpose of this circular, unless otherwise specified, conversion of RMB into HK$ is based on the exchange rate of RMB1.06 = HK$1.00 and conversion of US$ into HK$ is based on the exchange rate of US$1.00 = HK$7.75.

For ease of reference, the names of the PRC-incorporated companies and entitles have been included in this circular in both the Chinese and English languages. In the event of any inconsistency, the Chinese name prevails.

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LETTER FROM THE BOARD

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CHINA SHIPPING DEVELOPMENT COMPANY LIMITED

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

Executive Directors: Li Shaode (Chairman) Wang Daxiong Mao Shijia Yao Zuozhi Wang Kunhe

Independent Non-Executive Directors: Xie Rong Hu Honggao Zhou Zhanqun

Registered Office: 168 Yuanshen Road Shanghai The PRC

Principal place of business in Hong Kong: 20/F., Alexandra House 16-20 Chater Road Central, Hong Kong

21st April, 2006

To the Shareholders

Dear Sir/Madam,

Discloseable Transactions Construction of New Vessels

INTRODUCTION

On 31st March, 2006, the Company entered into the Dalian Agreements with Dalian Shipyard for the construction of four 298,000 dead weight tonnes VLCCs for the transportation of crude oil. The consideration for the construction of the VLCCs is approximately US$408.76 million (equivalent to approximately HK$3,167.89 million). The entering into of the Dalian Agreements constitutes a discloseable transaction of the Company under the Listing Rules.

On 31st March, 2006, the Company entered into the Guangzhou Agreements with Guangzhou Shipyard for the construction of four 42,000 dead weight tonnes tankers for the transportation of crude oil and product oil. The total consideration for the construction of the four tankers is approximately US$148.50 million (equivalent to approximately HK$1,150.88 million). The entering into of the Guangzhou Agreements constitute a discloseable transaction of the Company under the Listing Rules.

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LETTER FROM THE BOARD

DALIAN AGREEMENTS

On 31 March 2006, the Company through its Hong Kong branch (as the buyer) entered into the Dalian Agreements with Dalian Shipyard (as the seller) for the construction of four 298,000 dead weight tonnes VLCCs for transportation of crude oil. The consideration for the construction of the VLCCs is approximately US$408.76 million (equivalent to approximately HK$3,167.89 million). The consideration is determined by reference to the market price of similar vessels. The entering into of the Dalian Agreements constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.

Dalian Shipyard is a Chinese shipbuilder. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Dalian Shipyard and its ultimate beneficial owner are third parties independent of the Company and connected persons of the Company. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Dalian Shipyard and its ultimate beneficial owner are also independent of Guangzhou Shipyard and its ultimate beneficial owner.

The terms of the Dalian Agreements were determined on an arm’s length basis and are on normal commercial terms. The Directors, including the independent non-executive Directors, consider them to be fair and reasonable and to be in the interests of the Company and the Shareholders as a whole based on their experience in the crude oil vessel transportation industry.

Terms of the Dalian Agreements

The price of each of the four Dalian Shipyard VLCCs will be payable in US$ in 5 instalments at various stages of the construction of the relevant VLCCs:

• (i) for the first instalment, to pay 20% of the price within 15 business days after the Dalian Agreements was entered into;

• (ii) for the second, third and forth instalment, to pay 20% of the price within 5 business days of the receipt of the relevant invoice issued by Dalian Shipyard;

• (iii) for the final instalment, to pay 20% of the price within 5 business days of the receipt of all documentation in relation to completion of the VLCCs by Dalian Shipyard.

The first VLCC is expected to be delivered in or before June 2009. The second VLCC is expected to be delivered in or before September 2009. The third VLCC is expected to be delivered in or before November 2009. The fourth VLCC is expected to be delivered in or before December 2009. As at the Latest Practicable Date, only the first instalment of 20% of the consideration of the Dalian Agreements has been made.

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LETTER FROM THE BOARD

GUANGZHOU AGREEMENTS

On 31 March 2006, the Company, or through its Hong Kong branch as the case may be, both as the buyer, entered into the Guangzhou Agreements with Guangzhou Shipyard (as the seller) for the construction of four 42,000 dead weight tonnes tankers for the transportation of crude oil and product oil. The total consideration for the construction of the four tankers is approximately US$148.50 million (equivalent to approximately HK$1,150.88 million). The consideration is determined by reference to the market price of similar vessels. The entering into of the Guangzhou Agreements constitutes discloseable transactions of the Company under Chapter 14 of the Listing Rules.

Guangzhou Shipyard is a Chinese shipbuilder. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Guangzhou Shipyard and its ultimate beneficial owner are third parties independent of the Company and connected persons of the Company. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Guangzhou Shipyard and its ultimate beneficial owner are also independent of Dalian Shipyard and its ultimate beneficial owner.

The terms of the Guangzhou Agreements were determined on an arm’s length basis and are on normal commercial terms. The Directors, including the independent non-executive Directors, consider them to be fair and reasonable and to be in the interests of the Company and the Shareholders as a whole based on their experience in the crude oil and product oil vessel transportation industry.

Terms of the Guangzhou Agreements

The price of each of the four Guangzhou Shipyard tankers will be payable in either RMB or US$, as the case may be. Relevant payments are payable in 5 instalments at various stages of the construction of the relevant vessel:

• (i) for the first instalment, to pay 20% of the price within 15 business days after the Guangzhou Agreements was entered into;

• (ii) for the second, third and forth instalment, to pay 20% of the price within 7 business days of the receipt of the relevant invoice issued by Guangzhou Shipyard;

• (iii) for the final instalment, to pay 20% of the price within 7 business days of the receipt of all documentation in relation to completion of the relevant tankers by Guangzhou Shipyard.

The first tanker is expected to be delivered in or before October 2007. The second tanker is expected to be delivered in or before December 2008. The third tanker is expected to be delivered in or before August 2009. The fourth tanker is expected to be delivered in or before November 2009. As at the Latest Practicable Date, only the first instalment of 20% of the consideration of the Guangzhou Agreements has been made.

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LETTER FROM THE BOARD

Finance Terms and Effect

The construction of the vessels under the Dalian Agreements and the Guangzhou Agreements will be funded partly by bank borrowings and partly by internal resources. The consideration for the Guangzhou Agreements will be funded by internal resources as to 100% of the consideration. As for the consideration for the Dalian Agreements, approximately 80% of the consideration will be funded by bank borrowings and approximately 20% by internal resources.

The Dalian Agreements would be largely funded by long-term bank borrowings. Money will be drawn down as and when required for each instalment payment. As such liability will be matched by the corresponding asset, the transactions are not expected to have a material adverse impact on the net assets of the Group. As such the Directors do not expect the long-term bank borrowings to have any significant immediate financial impact of the Group. As at the Latest Practicable Date, 20% of the consideration payable under the Dalian Agreements have been paid. This payment was funded by internal resources as a prepayment. Other instalments for the Dalian Agreements will be paid in accordance with the construction progress of the vessels under the Dalian Agreements. As such future financial impact on the Group will depend on progress of the construction of the vessels and cannot be quantified at present. Further, the Directors do not expect there to be any significant immediate financial impact on the Group resulting from the Construction of New Vessels Transactions. The expected expenses of the vessels include finance charge and repair and maintenance, the sums of which cannot be estimated at present but for reference purposes. In addition, the Vessels will also be depreciated in accordance with the Group’s accounting policy, currently at approximately 4.36% of the purchase price, per annum.

In relation to the Dalian Agreements, the Company proposes to novate the Dalian Agreements in respect of each vessel to its indirect wholly owned subsidiaries, who, in turn, will take out the relevant loan facilities from certain banks to finance the Group’s commitments under the Dalian Agreements. The Company intends to rent the four VLCCs on completion from its indirect wholly owned subsidiaries. The rental amount together with the vessels themselves will be the subject of security under the relevant loan facility agreements with the banks.

Information about the Group and reasons for the constructions

The business scope of the Group includes: coastal, ocean and Yangtze River cargo transportation, container transportation, oil transportation, international passenger transportation, chartering, cargo agency and cargo transportation agency. 2005 has been a very strong year for the crude oil transportation market. The Directors are optimistic of the demand in such market in 2006. The Directors are of the view that the construction and ownership of the vessels mentioned above will enable the Group to take advantage of the business opportunities in the shipping market, enjoy economies of scale, optimize its overall route arrangements and improve its operating efficiency and profitability.

General

As at the date of this circular, the Board comprises of Mr. Li Shaode, Mr. Wang Daxiong, Mr. Mao Shijia, Mr. Yao Zuozhi and Mr. Wang Kunhe as executive Directors, Mr. Xie Rong, Mr. Hu Honggao and Mr. Zhou Zhanqun as independent non-executive Directors.

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. DISCLOSURE OF INTERESTS

Directors’ Interests and Short Positions

As at the Latest Practicable Date, none of the Directors and chief executives, 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 of Part XV of the SFO and to be notified to the Company 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, Disposal or Leased

None of the Directors has had any material interest, direct or indirect, in any asset which, since 31 December 2005, being the date to which the latest audited consolidated financial statements of the Group have been made up, had been acquired 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

Each of Mr. Li Shaode, Mr. Wang Daxiong, Mr. Yao Zuozhi, all executive Directors, has entered into a service contract with the Company for a period of three (3) year commencing from 28 May 2003, unless terminated by not less than three (3) months’ notice in writing served by either party. The above Directors’ service contracts do not specify the Directors’ emoluments.

Mr. Mao Shijia an executive Directors, has entered into a service contract with the Company for a period commencing from 1st March 2005 to 27th May 2006 unless terminated by not less than 3 months’ notice in writing served by either party. Mr. Mao Shijia’s annual emoluments was RMB637,000 for the year ended 31 December 2005. The amount of his emoluments was based on his performance in the previous year.

Mr. Wang Kunhe, an executive Director, has entered into a service contract with the Company for a term commencing from 17th August, 2004 to 27th May, 2006 unless terminated by not less than three (3) months’ notice in writing served by either party. Mr. Wan Kunhe’s annual emoluments was RMB783,000 for the year ended 31 December 2005. The amount of his emoluments was based on his performance in the previous year.

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GENERAL INFORMATION

APPENDIX

Mr. Xie Rong, Mr. Hu Honggao and Mr. Zhou Zhanqun, all independent non-executive Directors, have entered into service contracts with the Company for a term commencing from 28th May 2003 to 27th May 2006, unless terminated by less than (3) months’ notice in writing served by either party.

The annual emoluments for each independent non-executive Director for the year ended 31 December 2005 was RMB60,000. The independent non-executive Directors’ emoluments, which are determined by the Board, are based on the experience and expertise of the Directors and the business of the Group.

Save as disclosed above, none of the Directors has or is proposed to have a service contract with the Company or any of its subsidiaries which is not determinable by the Group within one (1) year without the payment of compensation other than statutory compensation.

These Directors are not entitled to any compensation if their respective service contracts are to be terminated by the Group.

Details of proposed service contracts of directors and proposed directors are set out in the Company’s announcement dated 10 April 2006 in relation to the fourth meeting of the Board in 2006.

Directors’ Interest in Contract

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 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 with the Group (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).

Substantial Shareholders

As at the Latest Practicable Date, so far as known to any Directors or chief executive of the Company, the following persons (other than a Director or chief executive of the Company) had, or were deemed or taken to have interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or, who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or had any option in respect of such capital:

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GENERAL INFORMATION

APPENDIX

				Percentage of	Percentage
				total number	of total
		Class of	Number of	of the relevant	number of
**Name **	of shareholders	shares	shares	class of shares	issued shares
Group	Company (Note)	Domestic	1,578,500,000	77.76%	47.46%
		shares

• Note : Mr. Li Shaode is the vice president and party secretary of Group Company. Mr. Wang Daxiong is the vice president of Group Company. Mr. Yao Zuozhi is the Secretary of the Party Committee of Guangzhou BOMTA, which is a wholly owned subsidiary of the Group Company.

Save as disclosed above, so far as is known to the Directors or chief executives of the Company, no other person (not being a Director or chief executive of the Company) who had any interests or short positions in shares or underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange, under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or held any option in respect of such capital.

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 31st December, 2005, the date to which the latest audited financial statements of the Group were made up.

4. LITIGATION

Neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration of material importance and no litigation or claim of material importance known to the Directors to be pending or threatened by or against the Company or any of its subsidiaries.

5. MISCELLANEOUS

• (i) The legal address and head office of the Company is at 168 Yuanshen Road, Shanghai, The People’s Republic of China.

• (ii) The principal place of business of the Company in Hong Kong 20/F., Alexandra House, 16-20 Chater Road, Central, Hong Kong.

• (iii) The Company’s branch share registrar and transfer office in Hong Kong is at Hong Kong Registrars Limited at Rooms 1712-1716, 17th Floor, Hopewell Cnetre, 183 Queen’s Road East, Wanchai, Hong Kong.

• (iv) The secretary of the Company is Ms. Yao Qiaohong. Ms. Yao Qiaohong obtained a company secretary training certificate from the Shanghai Stock Exchange.

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GENERAL INFORMATION

APPENDIX

• (v) Mr. Wang Kangtian, being a PRC qualified accountant, is the qualified accountant of the Company appointed under Rules 3.24 of the Listing Rules. Mr. Wang Kangtian is able to meet the requirement as set out in Rule 3.24 of the Listing Rules except that he is not a fellow or associate of the Hong Kong Society of Accountants (now known as the Hong Kong Institute of Certified Public Accountants) (“HKICPA”) or a similar body of accountants recognized by HKICPA for the purpose of granting exemptions form the examination requirement for membership of HKICPA. The Stock Exchange has agreed to grant a three-year conditional waiver to the Company from strict compliance with Rule 3.24 of the Listing Rules commencing from 28th December, 2004. The Company has appointed Mr. Li Chung Kwong, Andrew who is a fellow member of the HKICPA to assist Mr. Wang from 28 December, 2004 to 27 December, 2007.

• (vi) In the event of inconsistency, the English language text of this circular shall prevail over the Chinese language text.

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