ELL Environmental Holdings Limited — Proxy Solicitation & Information Statement 2008

Jul 31, 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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.

==> picture [121 x 65] intentionally omitted <==

SINOTRANS LIMITED 中 國 外 運 股 份 有 限 公 司

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

(Stock Code: 0598)

DISCLOSEABLE AND CONNECTED TRANSACTION

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

A letter from the Board is set out on pages 4 to 8 of this circular. A letter of recommendation from the Independent Board Committee is set out on page 9 of this circular. A letter of recommendation from BOCOM International, the independent financial adviser to the Independent Board Committee and the Independent Shareholders, is set out on page 10 to 15 of this circular.

1 August, 2008

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . .	9
LETTER FROM BOCOM INTERNATIONAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
APPENDIX — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16

– i –

DEFINITIONS

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

• ‘‘Announcement’’ an announcement dated 15 July 2008 of the Company with regard to, among other things, the Acquisition

• ‘‘Acquisition’’ the acquisition of the Aircraft pursuant to the Purchase Agreement

• ‘‘Aircraft’’ one Boeing 747-400F series aircraft (with engines), the subject matter of the Purchase Agreement

• ‘‘associates’’ has the meaning ascribed thereto in the Listing Rules ‘‘Board’’ the board of Directors ‘‘BOCOM BOCOM International (Asia) Limited, a company licensed under International’’ the SFO to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities, is independent financial adviser to the Independent Board Committee and Independent Shareholders in respect of the Acquisition

• ‘‘Company’’ 中國外運股份有限公司 (Sinotrans Limited), whose shares are listed on the Stock Exchange;

• ‘‘Consideration’’ the consideration of US$84,536,206 (equivalent to HK$659,382,406.80) for the Acquisition subject to adjustments pursuant to the Purchase Agreement

• ‘‘Director(s)’’ the director(s) of the Company ‘‘Group’’ the Company and its subsidiaries ‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC; ‘‘Independent Board the independent board committee constituted by all the Committee’’ independent non-executive Directors, being Sun Shuyi, Lu Zhengfei and Miao Yuexin, none of whom has any material interest in the Acquisition

• ‘‘Independent Shareholder(s) who do(es) not have a material interest in the Shareholder(s)’’ Acquisition

• ‘‘Independent Third to the best of the Directors’ knowledge, information and belief Party(ies)’’ having made all reasonable enquiries, a third party independent of the Company and its connected persons

– 1 –

DEFINITIONS

• ‘‘Latest Practicable 29 July 2008, being the latest practicable date for ascertaining Date’’ certain information for inclusion in this Circular

• ‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange

• ‘‘PRC’’ the People’s Republic of China, which for the purpose of this circular excludes Hong Kong, Macau Special Administrative Region, and Taiwan

• ‘‘Purchase Agreement’’ the sale and purchase agreement dated 4 January 2008, as amended by a supplemental agreement dated 27 April 2008, pursuant to which the Purchaser agreed to purchase and the Vendor agreed to sell the Aircraft

• ‘‘Purchaser’’ 銀河國際貨運航空有限公司 (Grandstar Cargo International Co., Ltd.*), a Sino-foreign joint venture company incorporated in the PRC, which is a 51% owned subsidiary of Sinoair and which is an indirect non-wholly owned subsidiary of the Company

• ‘‘RMB’’ Renminbi, the lawful currency of the PRC

• ‘‘SFO’’ The Securities and Futures Ordinance (Cap 571 of the Laws of Hong Kong);

• ‘‘Shareholders’’ shareholders of the Company ‘‘Sinoair’’ Sinotrans Air Transportation Development Co., Ltd., a nonwholly owned subsidiary of the Company, whose A shares are listed on the Shanghai Stock Exchange

• ‘‘Sinotrans Group 中國對外貿易運輸(集團)總公司 (China National Foreign Trade Company’’ Transportation (Group) Corporation*), controlling shareholder of the Company holding 57.93% of the issued share capital of the Company

• ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited

• ‘‘substantial has the meaning ascribed to it under the Listing Rules shareholder’’

• ‘‘Vendor’’ 大韓航空有限公司 (Korean Airlines Co., Ltd.*), a substantial shareholder of the Purchaser holding 25% interest in the Purchaser

• ‘‘HK$’’ Hong Kong dollar(s), the lawful currency of Hong Kong

– 2 –

DEFINITIONS

‘‘US$’’ United States dollar(s), the lawful currency of the United States of America

‘‘%’’ per cent.

For the purpose of this circular, unless otherwise indicated, the exchange rates of US$7.80 = HK$1.00 and RMB0.87 = HK$1.00 have been used for currency translation, where applicable. Such exchange rates are for the purpose of illustration only and do not constitute a representation that any amount in HK$, US$ or RMB have been, could have been or may be converted at such or any other rates or at all.

• for the purpose of identification

– 3 –

LETTER FROM THE BOARD

==> picture [121 x 65] intentionally omitted <==

SINOTRANS LIMITED 中 國 外 運 股 份 有 限 公 司

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

(Stock Code: 0598)

Executive Directors: Registered Office and Headquarters: Zhao Huxiang Sinotrans Plaza Zhang Jianwei A43, Xizhimen Beidajie Tao Suyun Beijing Li Jianzhang People’s Republic of China 100044 Non-Executive Directors: Yang Yuntao Principal Place of Business in Hong Kong: Liu Jinghua 21st Floor, Great Engle Centre Jerry Hsu 23 Harbour Road Peter Landsiedel Wanchai Hong Kong

Independent Non-Executive Directors: Sun Shuyi Lu Zhengfei Miao Yuexin

To the Shareholders

1 August, 2008

Dear Sir and Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION

INTRODUCTION

The Company announced on 15 July 2008 that it entered into the Purchase Agreement in relation to the Acquisition.

– 4 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with further information on (i) the Acquisition; (ii) the letter of recommendation of BOCOM International, the independent financial adviser to the Independent Board Committee and the Independent Shareholders, in respect of the Acquisition; and (iii) the letter of recommendation of the Independent Board Committee in respect of the Acquisition.

THE PURCHASE AGREEMENT

The Purchaser, a non-wholly owned subsidiary of the Company and Sinoair, entered into an agreement dated 4 January 2008 with the Vendor to purchase the Aircraft. Subsequently, as the delivery of the Aircraft as contemplated under the initial agreement was delayed, the Purchaser and the Vendor entered into a supplemental agreement dated 27 April 2008 to alter the terms of payment and settlement to take into account such delay. The following is a summary of certain terms and information relating to the Purchase Agreement and transaction contemplated thereunder:

Asset to be acquired: The Aircraft (being one Boeing 747-400F series aircraft (with engines)).

Consideration:

US$84,536,206 (equivalent to HK$659,382,406.80).

The Consideration is to be satisfied in cash in two instalments as follows:

• (1) a first instalment in the amount of US$8,453,621 (equivalent to HK$65,938,243.80), was paid by the Purchaser on the date of delivery of the Aircraft; and

• (2) a second instalment in the amount of US$76,082,585 (equivalent to HK$593,444,163) is to be paid by the Purchaser within 1 year after the date of delivery of the Aircraft.

In addition to the Consideration, delivery delay compensation in the aggregate amount of US$985,230 (equivalent to HK$7,684,794) (equivalent to US$18,245 (equivalent to HK$142,311) per day from 6 March 2008 up to the date of delivery of the Aircraft) was paid by the Purchaser on the date of delivery of the Aircraft. Deferral compensation fee payable at the rate of 6.9% per annum on the second instalment from 30 April 2008 to the date of actual payment is to be paid by the Purchaser on payment of the second instalment of the Consideration.

– 5 –

LETTER FROM THE BOARD

The Consideration is arrived at after arm’s length negotiation by reference to the fair market valuation of the Aircraft of US$83 million as at 26 March 2007 by an independent professional valuer plus actual costs incurred since that date for the maintenance and improvement of, and installation of additional machinery on, the Aircraft.

The Consideration will be financed in part (as to US$74.7 million) by external loans to be secured by the Aircraft and guaranteed by as to 51% by Sinoair (being pro rata to its equity interest) and 49% by the Vendor and the balance by internal resources. As of the Latest Practicable Date, the Purchaser has not entered into any agreement with any of the commercial banks for financing the Acquisition.

Based on the information provided by the Vendor, the original purchase cost of the Aircraft by the Vendor amounted to US$144,201,346 (HK$1,124,770,498.80).

Based on the amount of the Consideration, the unaudited consolidated financial statements of the Group and the unaudited financial statements of the Purchaser as at 30 June 2008, the Directors consider that the Acquisition would not have any immediate material impact on the earnings and assets and liabilities of the Group.

Date of Delivery of the 30 April 2008 Aircraft and completion of the Acquisition:

Reasons for the proposed acquisition

The Group is a provider of logistics services in China. It is principally engaged in the business of the provision of freight forwarding, express services and shipping agency services. The Group also provides other support services to its customers including storage and terminal services, trucking and marine transportation services, with an aim to provide its customers fully integrated logistics services.

The Purchaser is a joint venture company set up between the Vendor (principal business of which being international air cargo transaction, aircraft and related machinery repair and aircraft rental services), Sinoair and two Independent Third Parties. The business of the Purchaser is air cargo transportation and related services. The Aircraft is the Purchaser’s first cargo plane which enables the Purchaser to provide domestic and international air cargo transportation and related services, and also to provide flight chartering and hiring services.

– 6 –

LETTER FROM THE BOARD

The Board (including the independent non-executive Directors) are of the view that the terms of the Purchase Agreement are fair and reasonable and are on normal commercial terms. The Directors considered that the Acquisition is in the interest of the Company and in the interests of its Shareholders as a whole.

There has not been any other transaction with the Vendor and its associates which would require aggregation with the Acquisition under Rule 14.22 and Rule 14A.25 of the Listing Rules.

Listing rules implications

As the Vendor is a substantial shareholder of the Purchaser, a subsidiary of the Company, the Acquisition constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules and is subject to reporting and announcement requirements and approval of the independent shareholders of the Company. As the result of at least one of the five tests are more than 5%, it also constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules. The Company has not announced the Acquisition upon the entering into of the Purchase Agreement as required under Rule 14.34 and Rule 14A.47 of the Listing Rules. However, it has taken steps to make the Announcement and this circular as soon as practicable after the Acquisition came to its notice. Given that the Acquisition has been completed and that the controlling shareholder of the Company, Sinotrans Group Company, which holds 57.93% of the issued share capital of the Company and which is not required under the Listing Rules to abstain from voting on this transaction has confirmed its consent to the transaction, no further shareholders’ meeting to approve the Acquisition is proposed to be held. As at the Latest Practicable Date, the Company is not aware having made all reasonable enquiries that the Vendor and its associates hold any Shares. The Company will comply with the reporting obligations under Rule 14A.45 of the Listing Rules.

RECOMMENDATION

The Board (including the independent non-executive Directors) are of the view that the terms of the Purchase Agreement are fair and reasonable and are on normal commercial terms. The Directors considered that the Acquisition is in the interest of the Company and in the interests of its Shareholders as a whole.

The Independent Board Committee, having taken into account the advice of BOCOM International, considers that the terms of Purchase Agreement and the transactions contemplated thereunder are fair and reasonable and on normal commercial terms so far as the Company and its Shareholders as a whole are concerned and that the Acquisition is in the interests of the Company and its Shareholders as a whole.

Your attention is drawn to the letter from the Independent Board Committee as set out on page 9 of this circular which contains its recommendation to the Independent Shareholders. Your attention is also drawn to the letter of advice from BOCOM International as set out on pages 10 to 15 of this circular, which contains its advice to the Independent Board Committee and the Independent Shareholders.

– 7 –

LETTER FROM THE BOARD

GENERAL

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

Yours faithfully, By order of the Board of Sinotrans Limited Gao Wei Secretary

– 8 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [121 x 65] intentionally omitted <==

SINOTRANS LIMITED 中 國 外 運 股 份 有 限 公 司

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

(Stock Code: 0598)

1 August, 2008

To the Independent Shareholders,

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION

We have been appointed as members of the Independent Board Committee to advise you in connection with the Acquisition, details of which are set out in the letter from the Board in a circular dated 1 August, 2008 issued by the Company to the Shareholders (the ‘‘Circular’’), of which this letter forms a part. The terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

Your attention is drawn to the letter from BOCOM International concerning its advice to us regarding the Acquisition as set out on pages 10 to 15 of the Circular. Having considered the advice given by BOCOM International and the principal factors and reasons taken into consideration by them in arriving at its advice, we are of the opinion that the terms of Purchase Agreement and the transactions contemplated thereunder are fair and reasonable and on normal commercial terms so far as the Company and its Shareholders as a whole are concerned and that the Acquisition is in the ordinary course of business of the Group and is in the interests of the Company and its Shareholders as a whole.

Yours faithfully

For and on behalf of

Independent Board Committee Sun Shuyi, Lu Zhengfei & Miao Yuexin Independent Non-executive Directors

– 9 –

LETTER FROM BOCOM INTERNATIONAL

The following is the text of a letter from BOCOM International to the Independent Shareholders and the Independent Board Committee prepared for the purpose of incorporation in this circular:

1 August 2008

To the Independent Shareholders and the Independent Board Committee of the Company

Dear Sir/Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION

INTRODUCTION

We refer to the appointment by the Company to advise you in respect of the terms of the Purchase Agreement and the transactions contemplated thereunder. Details of the terms of the Purchase Agreement are set out in a circular issued by the Company to its Shareholders dated 1 August 2008 (the ‘‘Circular’’), of which this letter forms part. Capitalized terms used in this letter shall have the same meanings ascribed to them in the Circular unless the context herein otherwise requires.

As referred to in the Letter from the Board as set out on pages 4 to 8 of the Circular, the Purchaser, a non-wholly owned subsidiary of the Company, entered into an agreement dated 4 January 2008 with the Vendor to purchase the Aircraft. Subsequently, as the delivery of the Aircraft as contemplated under the initial agreement was delayed, the Purchaser and the Vendor entered into a supplemental agreement dated 27 April 2008 to alter certain terms of payments and settlement to take into account such delay. Pursuant to the Purchase Agreement, the Purchaser agreed to acquire, and the Vendor agreed to sell, the Aircraft for an aggregate consideration of US$84,536,206 (equivalent to HK$659,382,406.80 or RMB573,662,693.92).

The Vendor is a substantial shareholder of the Purchaser which is a subsidiary of the Company. Therefore, the Acquisition constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is subject to reporting and announcement requirements and approval of the Independent Shareholders of the Company. As the results of at least one of the five tests is more than 5%, the Acquisition also constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules. As the Acquisition has been completed, and the controlling shareholder of the Company, Sinotrans Group Company, which holds 57.93% of the issued share capital of the Company and is not required under the Listing Rules to abstain from voting on the Acquisition, has confirmed its consent to the Acquisition. Therefore, no shareholders’ meeting is proposed to be held for the approval of the Acquisition.

– 10 –

LETTER FROM BOCOM INTERNATIONAL

In this connection, the Circular containing, inter-alia, the information relating to the Acquisition, the recommendation from the Independent Board Committee and this letter, is despatched to the Shareholders. In particular, this letter will set out our recommendations to the Independent Board Committee and the Independent Shareholders as to whether the terms of the Purchase Agreement and the transactions contemplated thereunder are fair and reasonable and whether the Acquisition is in the interests of the Company and its Shareholders as a whole.

BASIS OF OUR OPINION

In formulating our opinion and recommendation, we have relied on the accuracy of the information and representations contained in the Circular which have been provided to us by the Directors and the management of the Company and which have been considered to be complete and relevant. We have assumed that all statements, information and representations made or referred to in the Circular, for which the Directors are solely responsible, were true, accurate and complete in all material respects at the time when they were made and will continue to be so as at the date of the Circular is despatched. We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular were reasonably made after due and careful enquiry and were based on honestly held opinions. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and the management of the Company and we have been advised by the Directors and the management of the Company that no material fact has been omitted from the information and representations provided in and referred to in the Circular. We have no reason to suspect that any material information has been withheld by the Directors or the management of the Company. We have not, however, carried out any independent verification of the information provided to us neither by the Directors and the management of the Company, nor have we conducted any independent investigation into the affairs, the business and financial position and the future prospects of each of the members of the Company, the Purchaser and their respective associates. Our opinion is based on the information and representations available to us as of the date this letter. We have no obligation to update our opinion and recommendation to take into account circumstances and events occurring after the date of this letter.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation in relation to the Acquisition, we have taken into consideration the following principal factors and reasons:

1. Background of and reasons for the Acquisition

Business overview of the Group and the Purchaser

The Group is a provider of logistics services in China. It is principally engaged in the provision of freight forwarding, express services and shipping agency services. The Group also provides other support services to its customers including storage and terminal services, trucking and marine transportation services, with an aim to provide its customers fully integrated logistics services.

– 11 –

LETTER FROM BOCOM INTERNATIONAL

The Purchaser is a joint venture company set up between the Vendor (principal business of which being international air cargo transaction, aircraft and related machinery repair and aircraft rental services), Sinoair and two Independent Third Parties. The business of the Purchaser is principally engaged in the business of air cargo transportation and related services.

Reasons for and benefits of the Acquisition

The Aircraft is the first cargo plane acquired by the Purchaser to provide domestic and international air cargo transportation and related services, and also to provide flight chartering and hiring services. As advised by the management of the Group, the Acquisition would enhance the development of the air cargo business of the Purchaser and the Group as a whole.

According to the annual report of Sinoair for the year ended 31 December 2007, the amount of assets attributable to the transportation facilities of Sinoair was approximately RMB145.42 million as at 31 December 2007. Therefore, the Acquisition will strengthen the asset base attributable to the transportation facilities of Sinoair by approximately RMB437.99 million, representing approximately 3.0 times of the abovementioned original asset size of the transportation facilities of Sinoair, which in return, will further strengthen the overall future business development of the Purchaser and the Group as a whole.

According to the World Air Cargo Forecast 2006-2007 (the ‘‘Report’’) published by Boeing Company, a major aircraft manufacturer, it is projected that the world economy would grow at an average annual rate of approximately 3.1% from the period of 2006 to 2025. As one of the major economies in the world, China’s long-term GDP would grow at an average annual rate of approximately 6.8% as forecast in the Report. Stimulated by the growth in the world’s economy, in particular, China’s economy, the Report commented that the world air cargo traffic would expand at an average annual rate of approximately 6.1% in the next two decades. It is further mentioned that the air cargo market in China would continue to lead the world’s air cargo industry in terms of average annual growth rate, with Chinese domestic market and intra-Asia market expanding at an average annual rate of approximately 10.8% and 8.6% respectively.

Taking into the account of (i) the business nature of the Group and the Purchaser; (ii) the enhanced asset base of the Purchaser strengthened by the Acquisition; and (iii) the prospect of the world air cargo industry, we concur with the Directors’ view that the Acquisition is in the interests of the Company and the Shareholders as a whole and the Purchase Agreement has been entered into in the ordinary and usual course of business of the Group.

2. The Consideration

Pursuant to the Purchase Agreement, the Consideration was US$84,536,206 (equivalent to HK$659,382,406.80 or RMB573,662,693.92). As stated in the Letter from the Board, the Consideration was determined after arm’s length negotiations

– 12 –

LETTER FROM BOCOM INTERNATIONAL

between the Purchaser and Vendor with reference to the fair market valuation of the Aircraft at US$83 million as at 26 March 2007 appraised by an independent professional valuer plus actual costs incurred for the maintenance and improvement of, and installation of, additional machinery on the Aircraft.

In assessing the fairness and reasonableness of the Consideration, we have referred to the market valuation of the Aircraft appraised by the independent professional valuer, Avitas, Inc. (‘‘Avitas’’). Based on the valuation report prepared by Avitas, we note that the valuation approach adopted by Avitas was based on the most likely trading price that could be generated by the sale of the Aircraft at the time of valuation, with adjustments made to reflect the actual technical status and maintenance condition of the Aircraft. In valuing the Aircraft, Avitas has made reference to the historical transaction data on aircraft sales, leases and financings; and considered the principal factors, including, but not limited to, the expected growth in air traffic and aircraft surplus.

As confirmed by Avitas, the valuation approach adopted by them was conformed to those adopted by the International Society of Transport Aircraft Trading (‘‘ISTAT’’). According to information provided by Avitas, we note that Avitas is an ISTAT certified appraiser and has appraised over 2,500 Boeing 747 aircrafts, of which approximately 250 were 747-400F series aircrafts, being the same model of the Aircraft. Notwithstanding the prior valuation assignments conducted for the Vendor, Avitas confirmed that they are independent third party of the Company and its connected persons. Based on the above, we consider that Avitas is qualified and have the relevant experience to appraise the Aircraft.

In reviewing the scope of services provided by Avitas, we note that Avitas did not physically inspect the Aircraft in conducting the valuation. However, Avitas advised that it has been a common approach for them to appraise aircrafts without physical inspection, in particular, for Boeing 747 aircrafts. Avitas further confirmed that they were satisfied with the information given to them and their opinion as to the market valuation of the Aircraft was fairly presented. Based on the above, we have no reason to doubt the fairness and appropriateness of the valuation approach adopted by Avitas in arriving at the valuation of the Aircraft. After analyzing the above fair market valuation of the Aircraft and understanding the basis for the actual costs incurred for the maintenance and improvement of, and installation of, additional machinery on the Aircraft, we concur with the Director’s view that the Consideration is fair and reasonable so far as the Company and its Shareholders as a whole are concerned.

3. Possible financial effects of the Acquisition on the Group

We were advised by the Group that (i) Sinoair would adopt an accounting treatment to proportionately consolidate the accounts of the Purchaser into the accounts of Sinoair; (ii) the Group would fully consolidate the accounts of Sinoair into its accounts. Therefore, the Aircraft will be recorded as an asset of the Purchaser which will be proportionately consolidated into the accounts of Sinoair according to Sinoair’s pro rata equity interest in the Purchaser, and then be consolidated into the accounts of

– 13 –

LETTER FROM BOCOM INTERNATIONAL

the Group. Similarly, the revenue to be generated from the Aircraft and the related expenses to be incurred will be recorded in the results of the Purchaser which will be proportionately consolidated into the results of Sinoair according to Sinoair’s pro rata equity interest in the Purchaser and then be consolidated into the results of the Group.

According to the Letter from the Board, the Consideration will be financed partly by external loans in the approximate amount of US$74.7 million (equivalent to approximately RMB506.9 million) which will be secured by the Aircraft and guaranteed as to 51% by Sinoair (being its pro rata equity interest in the Purchaser) and 49% by the Vendor, with the remaining balance in the approximate amount of RMB68.5 million by internal resources of the Purchaser.

Gearing

According to the 2007 Annual Report of the Group, the Group had outstanding debts of approximately RMB1,309.1 million and the gearing ratio of the Group (derived from total outstanding debts divided by total equity (excluding minority interests of the Group)) was approximately 0.147 as at 31 December 2007. Assuming that the Acquisition and the above mentioned financing were completed on 31 December 2007, the outstanding debts of the Group will be increased by approximately 19.8% and the gearing ratio will be increased to approximately 0.177.

Working capital

As at 31 December 2007, the Group had cash and cash equivalents of approximately RMB4,278.2 million. The balance of the Consideration to be financed by the internal resources of the Purchaser attributable to Sinoair’s pro rata equity interest in the Purchaser was approximately RMB34.9 million, which accounts for approximately 0.8% of the total cash and cash equivalents of the Group as at 31 December 2007. Having considered the future maintenance costs of the Aircraft, and given the Group’s strong cash position, the Directors consider that, and we have no reason to doubt the basis of their view, the Group will have sufficient financial resources to fund the above portion of the Consideration and the future maintenance costs of the Aircraft without affecting the normal operations of the Group.

Given the strong cash position of the Group and the reasons for and the benefits of the Acquisition, we concur with the Directors’ views that the possible increase in the level of indebtedness and gearing of the Group after financing and payment of the Consideration is acceptable.

– 14 –

LETTER FROM BOCOM INTERNATIONAL

RECOMMENDATION

Having taken into account the above principal factors and reasons, we are of the view that the terms of the Purchase Agreement and the transactions contemplated thereunder are fair and reasonable and on normal commercial terms so far as the Company and its Shareholders as a whole are concerned and that the Acquisition is in the ordinary course of business of the Group and is in the interests of the Company and its Shareholders as a whole.

Yours faithfully, For and on behalf of BOCOM International (Asia) Limited Ronald T.L. Wan Managing Director

– 15 –

APPENDIX

GENERAL INFORMATION

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

I. Interests of Directors

As at the Latest Practicable Date, so far as the Directors or supervisor of the Company are aware, none of the Directors or supervisor of the Company has interests and short positions in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange.

– 16 –

APPENDIX

GENERAL INFORMATION

II. Interests of Shareholders discloseable pursuant to the SFO

As at the Latest Practicable Date, so far as is known to the Directors or supervisor of the Company and based on the Company’s register required to be maintained pursuant to section 336 of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), the following persons (other than a Director or supervisor of the Company) had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or who were, directly or indirectly, interested in 10 per cent. 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 members of the Group are as follows:

(a) Interests in the Shares

					% of the	% of the	% of the
					Company’s	Company’s	Company’s
	Number	of Shares	held (Class of	Shares)	issued total	total issued	total issued
		Short	Lending	Nature	domestic	H share	share
Name of Shareholders	Long position	position	pool	of Interests	share capital	capital	capital
China National Foreign	2,461,596,200	—	—	Beneficial	100		57.93
Trade Transportation	(Domestic			owner
(Group) (Note 1)	Shares)
Deutsche Post AG (Note 2) 237,468,000		—	—	Controlled		13.30	5.59
	(H Shares)			corporation
Franklin Templeton	105,275,000	—	—	Investment		5.89	2.48
Investments Corp.	(H Shares)			Manager
JP Morgan Chase & Co.	90,258,550	—	—	Controlled		5.05	2.12
(Note 3)	(H Shares)			Corporation
	—	—	86,042,550	Custodian		4.81	2.03
			(H Shares)	corporation/
				approved
				lending
				agent
The Bank of New York	89,975,800	—	—	Controlled		5.03	2.12
Mellon Corporation	(H Shares)			corporation

• The Bank of New York Mellon Corporation (Note 4)

• Note 1: Zhao Huxiang, Zhang Jianwei, Tao Suyun, Li Jianzhang, Yang Yuntao and Liu Jinghua are directors or employees of China National Foreign Trade Transportation Group which is the controlling shareholder of the Company.

• Note 2: This includes 201,852,000 Shares held by Deutsche Post Beteilgungen GmBH (‘‘Deutsche GmBH’’) and 35,616,000 shares held by Exel Hong Kong Limited (‘‘Exel’’). Deutsche GmBH and Exel are both 100% held by Deutsche Post AG.

• Note 3: This includes 86,042,550 Shares held by JPMorgan Chase Bank, N.A., 4,161,000 Shares held by J.P. Morgan Whitefriars Inc. and 55,000 Shares held by Bear Stearns International Limited. JPMorgan Chase Bank, N.A., J.P. Morgan Whitefriars Inc. and Bear Stearns International Limited are all 100% held by JP Morgan Chase & Co.

– 17 –

APPENDIX

GENERAL INFORMATION

Note 4: These Shares are directly held by The Boston Company Asset Management LLC (‘‘Boston’’), and the ultimate holding company of Boston is The Bank of New York Mellon Corporation.

(b) Substantial Shareholders of other members of the Group

As at the Latest Practicable Date, save as disclosed below and so far as is known to the Directors or supervisor of the Company, no person (not being a Director or supervisor of the Company) was 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 the other members of the Group.

Name of entities holding 10% or more interest in a Interest in member of the Group relevant company Name of subsidiary of the Company 大韓航空有限公司 25% 銀河國際貨運航空有限公司 (Korean Airlines Co., Ltd.) (Grandstar Cargo International Co., Ltd.) 香港金發船務有限公司 33% 上海華發國際貨運有限公司 (Golden Shipping Co., Ltd) (Shanghai Huafa International Transportation Co., Ltd.) 上海森華貨運經營有限公司 10% 華發騰飛國際貨運有限公司 (Shanghai Shumhua Freight (Huafa Tanefei International Forwarding Operation Transportation Company Limited) Company Limited) 日本通運株式會社 49% 上海通運國際物流有限公司 (Nippon Express Co., Ltd.) (Shanghai Express International Co., Ltd.) 美國致遠航運有限公司國致遠航運有限公司致遠航運有限公司遠航運有限公司航運有限公司運有限公司有限公司限公司公司司 45% 寧波致遠國際貨運有限公司 (South East World Wide (Ningbo Southeast International Limited) Freight Company Limited)

美國致遠航運有限公司國致遠航運有限公司致遠航運有限公司遠航運有限公司航運有限公司運有限公司有限公司限公司公司司 (South East World Wide Limited)

30% 江蘇時運國際貨運有限公司 (Jiangsu Fortunate International Company Limited)

新加坡太平船務有限公司 (Pacific International Lines (Pte) Ltd.)

40% 上海華星國際集裝箱貨運有限公司 (Shanghai Huasing International Container Freight Transportation Co., Ltd.) 45% 寧波太平國際貿易聯運有限公司 (Ningbo Taiping International Trade Transportation Company Limited)

– 18 –

APPENDIX

GENERAL INFORMATION

Name of entities holding 10% or more interest in a member of the Group

運坡工貿公司 (Yuno Gongmao Corp.)

寧波新世紀國際投資有限公司 (Ningbo New Century International Investment Company Limited)

寧波大港貨櫃有限公司 (Ningbo Dagang Container Company Limited)

以星航運中國有限公司 (ZIM Israel Navigation (China) Company Limited)

怡和船務代理（中國）有限公司 (Yihe Shipping Agency (China) Company Limited)

寧波泛洋國際貨運代理有限公司 職工持股會 (Ningbo Transocean International Forwarding Agency Ningbo Co. Ltd.)

寧波船務代理有限公司 職工持股會 (China Marine Shipping Agency Ningbo Co. Ltd. Employee Shareholding Society)

寧波外運國際貨運代理有限公司 職工持股會 (Sinotrans Ningbo International Freight Forward Agency Co., Ltd. Employee Shareholding Society)

寧波外運國際集裝箱貨運 有限公司職工持股會 (Sinotrans Ningbo International Container Transportation Company Limited Employee Shareholding Society)

Interest in relevant company Name of subsidiary of the Company

• 10% 上海星明集裝箱倉儲有限公司 (Shanghai Shengming Container Storage Company Limited)

• 24.5% 寧波大港新世紀貨櫃有限公司 (Ningbo Dagang New Century Container Company Limited)

• 24.5% 寧波大港新世紀貨櫃有限公司 (Ningbo Dagang New Century Container Company Limited)

• 49% 上海運星國際船務代理有限公司 (Shanghai Yunsheng International Shipping Agency Company Limited)

• 49% 上海怡定和國際船務代理有限公司 (Shanghai Yidinghe International Shipping Agency)

• 40% 寧波泛洋國際貨運代理有限公司 (Ningbo Transocean International Forwarding Agency Company Limited)

• 40% 寧波船務代理有限公司 (China Marine Shipping Agency Ningbo Co., Ltd.)

40% 寧波外運國際貨運代理有限公司 (Sinotrans Ningbo International Freight Forwarding Agency Co., Ltd.)

40% 寧波外運國際集裝箱貨運有限公司 (Sinotrans Ningbo International Container Transportation Company Limited)

– 19 –

APPENDIX

GENERAL INFORMATION

Name of entities holding 10% or more interest in a Interest in member of the Group relevant company Name of subsidiary of the Company

廣東省食品進出口集團公司 (Guangdong Foodstuffs Imp & Exp (Group) Corporation)

20% 佛山中外運倉碼有限公司 (Sinotrans Foshan Warehouse and Terminal Company Limited)

廣東省南海食品進出口有限公司 (Guangdong Nanhai Foodstuffs Company Limited)

• 25% 佛山中外運倉碼有限公司 (Sinotrans Foshan Warehouse and Terminal Company Limited)

錦和有限公司 (Jinhe Co., Ltd.)

35% 江門中外運倉碼有限公司 (Jiangmen Foreign Trade Terminal Co., Ltd.)

35% 江門外海運輸實業有限公司 (Jiangmen Foreign Transportation & Enterprises Company Limited)

中山市歧江工業發展有限公司 (Zhongshan Qijiang Industry Development Co., Ltd.)

40.564% 中山廣運貨運有限公司 (Zhongshan Sinoway Transportation Corp., Ltd.)

福州市國有資產經營公司 (Fuzhou City State-owned Assets Management Company)

30% 福州大裕保稅倉儲有限公司 (Fuzhou Davu Bonded Storage Company Limited)

日本山九株式會社 (Sankyu Inc.)

40% 天津天山國際貨運有限公司 (Tianjin Tianshan International Freight Forwarding Company Limited)

濟南大運物流有限公司 (Jnan Da Yun Logistics Co., Ltd.)

20% 山東中外運力神起重運輸有限公司 (Shandong Sinotrans Lishen Hoisting and Transporting Company Limited)

COTECNA INSPECTION S.A.

• 49% 中瑞檢驗有限公司 (Sino-Swiss Inspection Co., Ltd.)

馬士基(中國)有限公司 (MAERSK China Company Limited)

• 49% 上海中歐船務代理有限公司 (Shanghai Zhongau Shipping Agency Company Limited)

韓進海運有限公司 (Hanjin Sea Freight Forwarding Company Limited)

• 49% 上海星翰船務代理有限公司 (Shanghai Shenhan Shipping Agency Company Limited)

– 20 –

APPENDIX

GENERAL INFORMATION

Name of entities holding
10% or more interest in a	Interest in
member of the Group	relevant company	Name of subsidiary of the Company
上海虹光實業有限公司	10%	上海華服商貿有限公司
(Shanghai Honkwong Shiye		(Shanghai Huafu Commercial
Company Limited)		Co., Ltd.)
寧波外運國際航空貨運有限責任	40%	寧波外運國際航空有限公司
公司職工持股會		(Ningbo Sinotrans International
(Ningbo Sinotrans		Air Freight Forwarding Company
International Air Freight		Limited)
Forwarding Corp. Ltd.
Employee Shareholding
Society)
北京雲鷺商貿有限公司	40%	大連京大國際貨運代理公司
(Beijing Yunlu Shangmao		(Dalian JD Cargo International
Company Limited)		Co., Ltd.)

Save as disclosed above, the Directors of the Company are not aware that there is any person (other than a Director or chief executive of the Company) who, as at the Latest Practicable Date, had an interest or short position in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is, directly or indirectly, interested in 10 per cent. or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at a general meeting of any other member of the Group.

As at the Latest Practicable Date:

• (i) none of the Directors had any direct or indirect interests in any assets which have since 31st December, 2007 (being the date to which the latest published audited consolidated financial statements of the Group were made up) been acquired or disposed of by or leased to any members of the Group, or are proposed to be acquired or disposed of by or leased to any members of the Group;

• (ii) none of the Directors was materially interested in any contracts or arrangements entered into by any members of the Group subsisting as at the Latest Practicable Date which is significant in relation to the business of the Group.

III. Directors’ interests in competing business

Two of the non-executive Directors, namely Mr. Jerry Hsu and Peter Landsiedel are considered to have interests in other business apart from the Group’s business, which competes or likely to compete, either directly or indirectly with the Group’s business as at the Latest Practicable Date, within the meaning of the Listing Rules.

– 21 –

APPENDIX

GENERAL INFORMATION

They are all representatives nominated by the Strategic Investors of the Company (namely DHL Worldwide Express BV (‘‘DHL’’) and Exel plc. (‘‘Exel’’) (collectively, the ‘‘Strategic Investors’’).

DHL is a member of the Deutsche Post World Net Group whose business operations are global mail, express delivery, logistics and financial services serving both in Europe and around the world.

Exel is a UK listed, FTSE 100 company, which provides supply chain management solutions to its customers around the world. Exel’s range of logistics solutions encompasses the whole supply chain from design and consulting through freight forwarding, warehousing and distribution services to integrated information management and e-commerce support. In 2005, Excel has agreed to be taken over by Deutsche Post World Net Group.

While, for the purposes of the Listing Rules, each of Mr. Jerry Hsu and Peter Landsiedel is considered to have interests (by way of minority equity interests or stock options or directorships) in competing businesses (i.e. those of the Strategic Investors, each being a major international company in the transportation and logistics industry), the Company has been and continues to carry on its business, management and operation independently of and at arms length from, those businesses and through its joint venture and cooperation arrangements with those Strategic Investors.

Zhao Huxiang, Zhang Jianwei, Tao Suyun, Li Jianzhang, Yang Yuntao and Liu Jinghua are directors or employees of Sinotrans Group Company which is the controlling shareholder of the Company. Certain subsidiaries of Sinotrans Group Company engage in the Group’s ‘‘core businesses’’ (namely freight forwarding, express services and shipping agency operations) in certain ‘‘core strategic regions’’ of the Group in the PRC which have only nominal operations which are the same as or similar to the ‘‘core businesses’’ of the Group. Details of the competition between Sinotrans Group Company and the Group and the Non-competition Agreement entered into between Sinotrans Group Company and the Company on 14 January 2003 are referred to in the section headed ‘‘Relationship with Sinotrans Group Company’’ in the prospectus of the Company dated 29 January 2003. The Company has also announced in its announcement dated 11 October 2007 that it proposes to acquire certain subsidiaries from the Sinotrans Group Company situated in the ‘‘core strategic regions’’.

Save as disclosed above, as at the Latest Practicable Date, so far as is known to the Directors or supervisor of the Company, no other Directors or any of their respective associates had any interests in a business, which competes or may compete with the business of the Group.

– 22 –

APPENDIX

GENERAL INFORMATION

3. DIRECTORS’ SERVICE CONTRACTS

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

4. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31st December, 2007, being the date up to which the latest published audited financial statements of the Group were made up.

5. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or claims of material importance and, so far as the Directors are aware, there was no litigation or claims of material importance known to the Directors to be pending or threatened by or against the Company or any of its subsidiaries.

6. MISCELLANEOUS

• (a) The secretary of the Company is Gao Wei.

• (b) Given that the operations of the Company are based in the PRC, it has difficulties in finding a suitable candidate who could act as the qualified accountant of the Company as required under rule 3.24 of the Listing Rules. As at the Latest Practicable Date, the Company is still in the process of looking for a suitable candidate to that position.

• (c) The registered office and headquarters of the Company is situated at A43, Xizhimen Beidajie, Beijing, People’s Republic of China, 100044. The principal place of business of the Company in Hong Kong is situated at 21st Floor, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong.

• (d) The share registrars of the Company is Computershare Hong Kong Investor Services Limited at Room 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East,Wanchai, Hong Kong.

In any event of inconsistency, the English language text of this circular shall prevail over the Chinese language text.

– 23 –

APPENDIX

GENERAL INFORMATION

7. EXPERT AND CONSENT

The following is the qualification of the expert who has given opinion or advice which are contained in this circular:

Name

Qualification

BOCOM International company licensed under the SFO to carry out Type 1 (Asia) Limited (dealing in securities) and Type 6 (advising on corporate finance) regulated activities

As at the Latest Practicable Date, BOCOM International did not have:

• (a) any direct or indirect interest in any assets which have since 31st December, 2007 (being the date to which the latest published audited accounts of the Company were made up) been 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

• (b) any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

BOCOM International has given and has not withdrawn their consent to the issue of this circular with the inclusion of their reports or letters, as the case may be, and reference to its name in the form and context in which they respectively appear.

8. DOCUMENTS AVAILABLE FOR INSPECTION

A copy of the Purchase Agreement is available for inspection at the office of Richards Butler in association with Reed Smith LLP in Hong Kong at 20th Floor, Alexandra House, 16–20 Chater Road, Central, Hong Kong up to and including 14 days after the despatch of this circular.

– 24 –