ELL Environmental Holdings Limited — Proxy Solicitation & Information Statement 2011

Aug 15, 2011

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.

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.

==> picture [190 x 112] intentionally omitted <==

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

(Stock Code: 0598)

CONTINUING CONNECTED TRANSACTIONS IN RESPECT OF THE DEPOSIT SERVICES UNDER

THE FINANCIAL SERVICES AGREEMENT AND NOTICE OF EXTRAORDINARY GENERAL MEETING

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

==> picture [19 x 19] intentionally omitted <==

A letter of recommendation from the Independent Board Committee is set out on page 12 of this circular and a letter of recommendation from China Merchants Securities (HK) Co., Limited, the independent financial adviser to the Independent Board Committee and the Independent Shareholders is set out on pages 13 to 22 of this circular.

A notice convening the EGM of Sinotrans Limited to be held at No.1 Meeting Room, 12th Floor, Sinotrans Plaza A, A43, Xizhimen Beidajie, Haidian District, Beijing, the PRC (Post Code 100044) on 30 September, 2011 at 9: 30 a.m. is set out on pages 31 to 32 of this circular.

A form of proxy for use at the EGM is enclosed with this circular. If you do not intend to attend the EGM, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return it to Hong Kong registered office of the Company at 21st Floor, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong as soon as possible and in any event not later than twenty-four (24) hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment of it, if you so wish.

15 August, 2011

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . .	12
LETTER FROM CHINA MERCHANTS SECURITIES (HK) CO., LIMITED . . . . .	13
APPENDIX — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31

– i –

DEFINITIONS

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

‘‘associate(s)’’	has the meaning ascribed to it under the Listing Rules;
‘‘Board’’	the board of Directors;
‘‘CBRC’’	China Banking Regulatory Commission;
‘‘Company’’	中國外運股份有限公司 (Sinotrans Limited), a joint stock
	company incorporated in the PRC with limited liability, the H
	Shares of which are listed on the Stock Exchange of Hong Kong
	Limited;
‘‘connected person(s)’’	has the meaning ascribed to it under the Listing Rules;
‘‘controlling	has the meaning ascribed to it under the Listing Rules;
shareholder’’
‘‘Deposit Services’’	the provision of the deposit services by the Finance Company to
	the Company under the Financial Services Agreement;
‘‘Directors’’	the directors of the Company;
‘‘EGM’’	the extraordinary general meeting of the Company to be
	convened at No.1 Meeting Room, 12th Floor, Sinotrans Plaza
	A, A43, Xizhimen Beidajie, Haidian District, Beijing, the PRC
	(Post Code 100044) on 30 September 2011 at 9: 30 a.m.;
‘‘Finance Company’’	Sinotrans & CSC Finance Co. Ltd., a non-wholly owned
	subsidiary of the SINOTRANS & CSC Group, whose 55%
	share capital is held by SINOTRANS & CSC, 10% and 5% of its
	share capital is held by the Company and Sinoair respectively
	and the remaining 30% share capital is held by three subsidiaries
	of SINOTRANS & CSC;
‘‘Financial Services	the Financial Services Agreement entered into between the
Agreement’’	Company and the Finance Company on 26 July 2011;
‘‘Group’’	the Company and its subsidiaries;
‘‘Hong Kong’’	The Hong Kong Special Administrative Region of the PRC;
‘‘IFA’’	China Merchants Securities (HK) Co., Limited, being the
	independent financial adviser appointed by the Company to
	advise the Independent Board Committee and the Independent
	Shareholders in respect of the terms of the Deposit Services
	under the Financial Services Agreement and the annual caps in
	respect thereof;

– 1 –

DEFINITIONS

• ‘‘Independent Board a board committee comprising of the independent non-executive Committee’’ Directors constituted to make recommendations to the Independent Shareholders in respect of the Deposit Services and the annual caps in respect thereof;

• ‘‘Independent has the meaning ascribed to it under the Listing Rules; Shareholders’’

• ‘‘independent third a person who, to the best of the Directors’ knowledge, party’’ information and belief having made all reasonable enquiries, is a third party independent of the Company and its connected persons;

• ‘‘Latest Practicable 11 August 2011, being the latest practicable date prior to the Date’’ printing of this circular for the purpose of ascertaining certain information contained herein;

• ‘‘Listing Rules’’ the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;

• ‘‘Loan Services’’ the loan services to be provided by the Finance Company to the Company pursuant to the Financial Services Agreement;

• ‘‘Other Financial other financial services to be provided by the Finance Company Services’’ to the Company pursuant to the Financial Services Agreement, including but not limited to settlement services, notes services and other financial services within the scope of its operating business;

• ‘‘PBOC’’ 中國人民銀行 (People’s Bank of China);

• ‘‘PRC’’ the People’s Republic of China;

• ‘‘RMB’’ Renminbi, the legal currency of the PRC;

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

• ‘‘Shareholder(s)’’ holder(s) of domestic invested share(s) of RMB1.00 each (‘‘Domestic Share(s)’’) and overseas listed foreign invested share(s) of RMB1.00 (‘‘H Share(s)’’) each in the share capital of the Company;

• ‘‘Shares’’ H Shares and Domestic Shares

• ‘‘subsidiary(ies)’’ has the meaning ascribed to it under the Listing Rules;

– 2 –

DEFINITIONS

‘‘Sinoair’’

Sinotrans Air Transportation Development Corporation Limited, in which the Company owns approximately 63.46% of the issued share capital and the A shares of which are listed on the Shanghai Stock Exchange;

• ‘‘SINOTRANS & CSC’’

• SINOTRANS & CSC Holding Corporation Limited, the controlling shareholder of the Company which directly and indirectly holds in aggregate 59.86% of issued share capital of the Company as at the Latest Practicable Date; and

• ‘‘SINOTRANS & CSC SINOTRANS & CSC and its subsidiaries. Group’’

– 3 –

LETTER FROM THE BOARD

==> picture [190 x 112] intentionally omitted <==

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

(Stock Code: 0598)

Executive Directors: Zhao Huxiang Zhang Jianwei Tao Suyun Li Jianzhang

Non-Executive Directors: Yang Yuntao Liu Jinghua Jerry Hsu Mok Chi Ming Victor

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

Registered Office and Headquarters: Sinotrans Plaza A A43, Xizhimen Beidajie Beijing People’s Republic of China (Post Code 100044)

Principal Place of Business in Hong Kong: 21st Floor, Great Eagle Centre 23 Harbour Road Wanchai Hong Kong

15 August 2011

To the Shareholders

Dear Sir and Madam,

CONTINUING CONNECTED TRANSACTIONS IN RESPECT OF THE DEPOSIT SERVICES UNDER THE FINANCIAL SERVICES AGREEMENT

INTRODUCTION

On 26 July 2011, the Company entered into the Financial Services Agreement with the Finance Company, pursuant to which the Finance Company will provide certain financial services (including the Deposit Services, the Loan Services and the Other Financial Services) to the Group.

– 4 –

LETTER FROM THE BOARD

The purpose of this circular is (i) to provide you with further information in relation to the continuing connected transactions in respect of the Deposit Services contemplated under the Financial Services Agreement; (ii) to set out the opinions and recommendations of the Independent Board Committee and the IFA; and (iii) to give you notice of the EGM at which the resolution set out therein will be proposed. Each of SINOTRANS &CSC and its associates, which hold an aggregate of 2,461,596,200 Domestic Shares and 81,812,000 H Shares as at the Latest Practicable Date, will abstain from voting on the relevant resolution to be proposed at the EGM.

FINANCIAL SERVICES AGREEMENT

Date: 26 July 2011 Parties: (1) the Company (2) the Finance Company

Major Terms

According to the Financial Services Agreement, the Finance Company agrees to provide the following financial services to the Group:

1. Deposit Services: the interest rates of the Deposit Services shall not be lower than the general interest rates set by the PBOC for the same term of deposit in the same period, shall not be lower than the interest rates provided by major commercial banks in the PRC for the same term of deposit in the same period, and shall not be lower than the interest rates provided by the Finance Company to other members of the SINOTRANS & CSC Group for the same term of deposit in the same period;

2. Loan Services: the interest rates of the Loan Services shall not be higher than the interest rates that the Group be provided for the same level of loan by other financial institutions in the PRC in the same period;

3. Other Financial Services:

4. 1) Settlement Services: provides intra-Group settlement services without any charges, and the charge for providing non-Group settlement services shall not be higher than that of other PRC financial institutions which provide comparable services.

5. 2) Notes Services: including but not limited to bank acceptance bill, commercial acceptance bill and related business. The charges of such services shall not be higher than that of other PRC financial institutions which provide comparable products.

6. 3) The charges of providing other financial services by the Finance Company to the Group shall not be higher than those charged by other major PRC financial institutions which provide comparable products.

– 5 –

LETTER FROM THE BOARD

Annual Caps and the Basis of Determination

• Proposed annual caps for[Note][3]

• The remaining period ended

• 31 December, The years ended 31 December 2011 2012 2013 RMB’000

• 1) Maximum daily outstanding balance of 2,300,000[Note][1] 2,300,000[Note][1] 2,300,000[Note][1] deposits placed by the Group with the Finance Company (including accrued interests and handling charges)

• 2) Maximum daily outstanding balance of 3,000,000[Note][2] 3,000,000[Note][2] 3,000,000[Note][2] loans granted by the Finance Company to the Group (including accrued interests and handling charges)

Note:

1. Including the maximum daily outstanding balance of deposits placed by Sinoair with the Finance Company of RMB 300,000,000 (including accrued interests and handling charges);

2. Including the maximum daily outstanding balance of loans granted by the Finance Company to Sinoair of RMB 500,000,000 (including accrued interests and handling charges);

3. Sinoair, the subsidiary of the Company, signed a separate financial services agreement dated on 26 July 2011 with the Finance Company under the framework of the Company’s Financial Services Agreement with the Finance Company according to the related regulations of the Shanghai Stock Exchange, the details of which are set out in the Company’s Overseas Regulatory Announcement issued on 27 July 2011. The terms of such financial services agreement entered into by Sinoair are identical with those of the Financial Services Agreement (save and except the annual caps and requisite shareholders approval to give effect to the agreement). In the event Sinoair cannot obtain the approval from its shareholders at its general meeting for the financial services agreement with the Finance Company, the annual caps will be modified to RMB2,000,000,000 for maximum daily outstanding balance of deposits placed by the Group (excluding Sinoair) with the Finance Company (including accrued interests and handling charges); and RMB2,500,000,000 for maximum daily outstanding balance of loans granted by the Finance Company to the Group (excluding Sinoair) (including accrued interests and handling charges).

– 6 –

LETTER FROM THE BOARD

The caps for provisions of the Deposit Services and the Loan Services are determined principally by reference to the following matters:

1. Historical statistics of the Group in respect of transactions similar to those under the Financial Services Agreement in the past three years:

			RMB’million
Item	2008	2009	2010
Currency fundsNote 1	5,360	4,947	5,534
Interest-bearing debtNote 2	2,071	2,988	4,105

Note:

• 1) Currency funds refers to deposits in the bank and cash on hand of the Group;

• 2) Interest-bearing debt refers to loans the Group received from commercial banks and other non-financial institutions and other corporate borrowings.

• Based on the analysis and research of the market and rational judgment, the Company predicts that the growth rate of global economy in the next three years will maintain in the level of 2%-3%, the growth rate of the Chinese economy will maintain in the level of 7%-8%, and the growth rate of Chinese export will maintain in the level of approximately 8%-10%. This will provide continuously increasing market demands for the Company’s integrated logistics services. The Company will speed up the innovation and elevation of traditional international freight forwarding and shipping agency businesses, enhance competitiveness and profitability, and continue to expand the business scope of project logistics service and contract logistics. Such development will increase the cash flow in operating activities, and result in continuously increasing demands for deposit services and settlement services. At the same time, to ensure the realization of operating targets, the Company will continue to invest in infrastructure such as container yards and container freight stations along the rivers and in the costal areas. The Company will also increase the investment in the capacity of its air transportation and container liner shipping business; and the Company will reinforce the investment of domestic logistics facilities in major economic centers, increase overseas investment and speed up the construction of overseas network. Therefore, the financing requirements of the Company will continuously increase.

Effective and Expiry Date

Except for the Deposit Services and the related annual caps, other transactions and terms under the Financial Services Agreement are effective upon execution of the Financial Services Agreement between Sinotrans and the Finance Company. The Deposit Services and the related annual caps under the Finance Services Agreement will be effective upon obtaining approval from the Independent Shareholders at the EGM. The other transactions

– 7 –

LETTER FROM THE BOARD

and terms under the Financial Services Agreement will remain to be binding between the parties even if approval for the Deposit Services and the related annual caps is not obtained from the Independent Shareholders at the EGM.

The Financial Services Agreement will expire at the end of the third financial year after the effective date.

Reasons For, and Benefits of Entering Into the Financial Services Agreement

The Group is a leading logistics service provider in the PRC whose core businesses include freight forwarding and shipping agency, complemented by supporting businesses in storage and terminal services, marine transportation and other services (mainly engaged in trucking transportation and express services).

The Finance Company is a non-banking financial company incorporated in the PRC on 17 May 2011. Its registered capital is RMB 500 million and its principal business activities include the provision of financial consultation, credit appraisal and other relevant advice and agency services to the members within the SINOTRANS & CSC Group; transaction proceeds receipt service amongst members of the SINOTRANS & CSC Group; provision of guarantee service to the members within the SINOTRANS & CSC Group; bill acceptance and discount services to the members within the SINOTRANS & CSC Group; settlement services by way of internal transfers amongst members within the SINOTRANS & CSC Group and other corresponding settlement services and liquidation planning; deposit services for the members within the SINOTRANS & CSC Group; and interbank lending. The Finance Company has applied to the CBRC for the qualifications to operate self-operating loans and entrusted loans. It can provide relevant loan services after obtaining the approval and authorization of the CBRC.

Having considered the reasons and illustrations set out below, the Directors (including the independent non-executive Directors whose views are set out in the Letter from the Independent Board Committee) are of the view that the Financial Services Agreement was entered into in the ordinary and usual course of business of the Group on normal commercial terms and the terms of which (the maximum daily balance of deposits, including accrued interests and handling charges) are fair and reasonable and in the interests of the Company and the Shareholders as a whole:

• . the terms and conditions that the Finance Company provides to the Company under the Financial Services Agreement are no less favorable than those provided by an independent third party to the Group.

• . the Finance Company is a non-banking financial institution authorized and regulated by the PBOC and the CBRC, and provides financial services in compliance with the rules and other operational requirements of these regulatory authorities. The Finance Company will establish its internal control and risk management system, and implement corporate governance guidelines in accordance with the requirements of the CBRC. According to the Administration of the Finance Companies of Enterprise Groups Procedures

– 8 –

LETTER FROM THE BOARD

issued by the CBRC on July 27, 2004 (amendment on December 28, 2006), the Finance Company should meet the following conditions in respect of assetliability ratio:

• a) the capital adequacy ratio is not less than 10%;

• b) the balance of borrowings shall not exceed the total capital;

• c) the total amount of outstanding guarantees provided shall not exceed the total capital;

• d) the short-term securities investment to total capital ratio is not more than 40%;

• e) the long-term investment to total capital ratio is not more than 30%; and

• f) the self-owned fixed assets to total capital ratio is not more than 20%.

• . the Finance Company will provide financial services only to the members within the SINOTRANS &CSC Group and will therefore be exposed to a lower level of potential risk compared to other PRC commercial banks which conduct business with clients of various credit ratings.

• . there is no restriction in the Group’s choice of bank or financial institutions under the Financial Services Agreement. The Group may make its selection according to the charge and quality of services. If the Finance Company provides better services, the Group may (but is not obliged to) utilise its services. With such flexibility under the Financial Services Agreement, the Group will be able to manage its current capital and cash flow position preferably.

• . as the controlling shareholder of the Finance Company, SINOTRANS & CSC has undertaken to the Company on 17 May 2011 that SINOTRANS & CSC will ensure to maintain the effective control over the Finance Company during the terms of the Financial Services Agreement. In the event that the Finance Company has payment difficulties or foreseen to have such problems, SINOTRANS & CSC will increase the relevant capital in accordance with the need or take other means to resolve such problem, and make up for the loss the Company suffers as a result of the failure of the Finance Company to fulfill its obligations under the terms of the Financial Services Agreement, including but not limited to the deposit amount, interest and related resulting costs.

• . the Company directly holds 10% equity interest in and Sinoair holds 5% equity interest in the Finance Company respectively. The Group will therefore benefit from the profits of the Finance Company.

– 9 –

LETTER FROM THE BOARD

• . some risk management measures have been set under the Financial Services Agreement to safeguard the security of the deposits made by the Company in the Finance Company:

• a) the Group has the right to monitor the deposits in the Finance Company from time to time to ensure their security and liquidity; and

• b) in respect of the deposits placed by the Group with the Finance Company, if there occurs any breach of contract or other improper use or non-compliance by the Finance Company which result in the Finance Company not being able to satisfy the free withdrawal requirement of the Group regarding such deposits (including accrued interest), the Group may set-off such amount against the balance of the loans and accrued interest from the Finance Company to the extent permissible under law within three working days after the Company notices of the breach, improper use or non-compliance. However, in respect of the loans obtained by the Group from the Finance Company, if there occurs any default of the Group in the repayment of the loans, the Finance Company may not directly off-set such unpaid loans against the deposits of the Group, even though the Finance Company may pursue legal actions against the Group for such default in accordance with the Financial Services Agreement and applicable law.

• . the Company has also set up an emergency response plan for deposit risk to maintain the security of the Company’s funds in the Finance Company.

Implications under the Listing Rules

SINOTRANS & CSC, the controlling shareholder of the Company, holds 55% equity of the Finance Company. According to the Listing Rules, the Finance Company is a connected person of the Company. Therefore, the Financial Services Agreement and the transactions contemplated thereunder constitute continuing connected transactions of the Company.

As one or more of the applicable percentages calculated in accordance with the Listing Rules in respect of the maximum daily outstanding balance of the Deposit Services will be higher than 5% and the annual caps exceed HK$10,000,000, it is therefore subject to the reporting, annual review, announcement and the approval from Independent Shareholders requirements under Chapter 14A of the Listing Rules.

The provision of the Loan Services by the Finance Company to the Group will amount to financial assistance by a connected person for the benefit of the Group, which is on normal commercial terms (similar or even more favorable than those offered from independent third parties for comparable services in the PRC). Such transaction is exempt under the Listing Rule 14A.65 (4) from related requirements of reporting, annual review, announcement and Independent Shareholders’ approval since no security over the assets of the Group is granted in respect of the loan.

– 10 –

LETTER FROM THE BOARD

In respect of the Other Financial Services to be provided by the Finance Company to the Group under the Financial Services Agreement, it is expected that the applicable percentage ratios will fall within the de minims threshold for exemption set force in the Listing Rules 14A.33. Thus, the provision of the Other Financial Services by the Finance Company to the Group is exempt from the requirements of reporting, annual review, announcement and approval from Independent Shareholders under the Listing Rules. The Company will comply with the applicable requirements of reporting, annual review, announcement and approval from the Independent Shareholders under the Listing Rules if the transaction amount of the Other Financial Services under the Financial Services Agreement would exceed the relevant threshold.

According to Article 125 of the Company Law of the PRC, the director of a listed company affiliated with the enterprise involved in the matters discussed by the Board shall not exercise his own, or represent other directors to exercise voting right for such matters. As the connected Directors including Mr. Zhao Huxiang, Mr. Zhang Jianwei, Ms. Tao Suyun, Mr. Li Jianzhang, Mr. Yang Yuntao, and Ms. Liu Jinghua hold positions in SINOTRANS & CSC, they have abstained from voting in respect of the proposed resolution to approve the Deposit Services and the related annual caps in accordance with the related regulations and laws.

Directors’ Recommendation

Your attention is drawn to the letter from the Independent Board Committee as set out on page 12 of this circular which contains its recommendation to the Independent Shareholders in respect of the ordinary resolution set out in the notice of EGM set out on 31 to 32 of this circular to approve the Deposit Services and the related annual caps. Each of SINOTRANS & CSC and its associates will abstain from voting on the ordinary resolution to be proposed at the EGM.

The advice of the IFA to the Independent Board Committee and the Independent Shareholders as to whether the terms of the Deposit Services and the annual caps in respect thereof are fair and reasonable and in the interest of the Company and its Independent Shareholders as a whole is set out on pages 13 to 22 of this circular.

Further Information

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 Company Secretary

Beijing, 15 August 2011

– 11 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [190 x 112] intentionally omitted <==

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

(Stock Code: 0598)

To the Independent Shareholders

Dear Sir and Madam,

CONTINUING CONNECTED TRANSACTIONS IN RESPECT OF THE DEPOSIT SERVICES UNDER THE FINANCIAL SERVICES AGREEMENT

We have been appointed as members of the Independent Board Committee to advise the Independent Shareholders of Sinotrans Limited (the ‘‘Company’’) in respect of the resolution to approve the Deposit Services and the annual caps in respect thereof, details of which are set out in the ‘‘Letter from the Board’’contained in the circular of the Company (the ‘‘Circular’’) of which this letter forms part. Unless the context otherwise requires, terms defined in the Circular shall have the same meanings when used in this letter.

Your attention is drawn to the ‘‘Letter from the Board’’, the advice of the IFA in its capacity as the IFA to the Independent Board Committee and the Independent Shareholders in respect of whether (i) the terms of the Deposit Services are on normal commercial terms, in the ordinary and usual course of business of the Group, fair and reasonable and in the interest of the Company and its Independent Shareholders as a whole; and (ii) the annual caps to which the Deposit Services are subject are fair and reasonable so far as the Company and the Independent Shareholders are concerned, as set out in the ‘‘Letter from China Merchants Securities (HK) Co., Limited’’ as well as other additional information set out in other parts of the Circular.

Having taken into account the advice of, and the principal factors and reasons considered by the IFA in relation thereto as stated in its letter, we consider the terms of the Deposit Services and the annual caps in respect thereof to be fair and reasonable and are in the interests of the Company and the Independent Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favor of the ordinary resolution to be proposed at the EGM in respect of the Deposit Services and the related annual caps.

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

Beijing, 15 August 2011

– 12 –

LETTER FROM CHINA MERCHANTS SECURITIES (HK) CO., LIMITED

The following is the full text of a letter of advice from China Merchants Securities (HK) Co., Limited, the independent financial adviser to the Independent Board Committee and the Independent Shareholders regarding the Deposit Services, for the purpose of incorporation into this circular.

==> picture [31 x 32] intentionally omitted <==

48th Floor, One Exchange Square, Central, Hong Kong 15 August 2011

• To: The independent board committee and the independent shareholders of Sinotrans Limited

Dear Sirs,

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 respect of the Deposit Services, details of which are set out in the letter from the Board (the ‘‘Board Letter’’) in the circular to the Shareholders dated 15 August 2011 (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 the context requires otherwise.

As referred to in the Board Letter, the Finance Company is owned as to 55% by SINOTRANS & CSC, the ultimate controlling shareholder of the Company which directly and indirectly holds in aggregate 59.86% of the total issued shares of the Company. The Finance Company is therefore a connected person of the Company. The transactions contemplated under the Financial Services Agreement constitute a continuing connected transaction of the Company under the Listing Rules. As the relevant percentage ratios calculated in accordance with Chapter 14A of the Listing Rules for the Deposit Services under the Financial Services Agreement exceed 5% and the total amount of the deposit to be placed thereunder is more than HK$10,000,000, the Deposit Services and the related annual caps (‘‘Proposed Deposit Cap’’) for such deposits are subject to reporting, annual review, announcement and Independent Shareholders’ approval requirements under the Listing Rules. SINOTRANS & CSC and its associates are required to abstain from voting at the EGM in respect of the proposed resolution to approve the Deposit Services (including the annual caps) contemplated under the Financial Services Agreement.

In our capacity as the independent financial adviser to the Independent Board Committee and the Independent Shareholders, our role is to provide you with an advice as to (i) whether the Deposit Services are in the ordinary and usual course of business of the Group, on normal commercial terms, fair and reasonable so far as the Independent

– 13 –

LETTER FROM CHINA MERCHANTS SECURITIES (HK) CO., LIMITED

Shareholders are concerned and in the interests of the Company and the Shareholders as a whole; (ii) whether the Proposed Deposit Cap are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole; and (iii) whether the Independent Shareholders should vote in favour of the resolutions to approve the Deposit Services and the Proposed Deposit Cap at the EGM.

BASIS OF OUR OPINION

In formulating our advice and recommendations, we have relied on the accuracy of the information and facts supplied, and the opinions expressed, by the Company, its Directors and the management of the Group to us. We have assumed that all statements of belief and intention made by the Directors and the management of the Group in the Circular were made after due enquiry. We have also assumed that all information, representations and opinions made or referred to in the Circular were true, accurate and complete at the time they were made and continued to be true at the date of the EGM. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Company, its Directors and the management of the Group, and have been advised by the Directors and the management of the Group that no material facts have been omitted from the information provided and referred to in the Circular.

In rendering our opinions, we have researched, analysed and relied on information from independent third party sources. We have assumed such information to be accurate and reliable and have not carried out any independent verification on the accuracy of such information. Such relevant information provides us with a basis on which we have been able to formulate our independent opinion. We consider that we have reviewed sufficient information to reach an informed view, to justify our reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our recommendation. We have not, however, conducted any form of in-depth investigation into the business affairs, financial position or future prospects of the Group or the counterparty of the Financial Services Agreement and the transactions contemplated thereunder, nor carried out any independent verification of the information supplied, representations made or opinions expressed by the Company, its Directors and the management of the Group.

– 14 –

LETTER FROM CHINA MERCHANTS SECURITIES (HK) CO., LIMITED

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinions and recommendations to the Independent Board Committee and the Independent Shareholders in respect of the Deposit Services, we have taken into consideration the following principal factors and reasons:

1. Background and reasons for the Deposit Services

1.1 Information on the Company

The Company is a leading logistics service provider in PRC whose core business include freight forwarding and shipping agency, complemented by supporting business in storage and terminal services, marine transportation and other services (mainly engaged in trucking transportation and express services).

1.2 Information on Sinoair

Sinoair, a company whose A shares are listed on the Shanghai Stock Exchange, is currently held as to 63.46% by the Company. Sinoair is principally engaged in air cargo freight forwarding and express services.

1.3 Information on the Finance Company

According to the management of the Group, the Finance Company has obtained license for the operation of financial business from the CBRC on 27 April 2011 and was established on 17 May 2011 as a limited liability company in the PRC. It is a nonbank financial institution approved and regulated by the PBOC and CBRC. It is established for the purpose of enhancing the centralised management of funds among the members of SINOTRANS & CSC Group and for improving the fund utilisation efficiency of SINOTRANS & CSC Group as a whole, and is engaged in the provision of financial services which principally include, amongst others, provision of deposit services, loan services, guarantees, intra-group transfer and settlement services, financial services and financing consulting services to member companies. The Finance Company was owned as to 55% by SINOTRANS & CSC, 10% by the Company, 5% by Sinoair and the remaining 30% by three subsidiaries of SINOTRANS & CSC. It has RMB500 million of registered capital and has commenced business activities as at the date of this letter as advised by the management of the Group.

• (i) Risk management measures and internal control environment of the Finance Company

We understand from the management of the Group that the Finance Company has established internal control measures to ensure effective risk management and compliance with laws and regulations, including:

• (a) it has established corporate governance structure to ensure the effectiveness of its internal controls including the establishment of three committees namely, the risk control committee, the credit review committee and the audit committee;

– 15 –

LETTER FROM CHINA MERCHANTS SECURITIES (HK) CO., LIMITED

• (b) it has in place effective internal rules and policies specifically for management and control of operational risk and credit risks. It has its own credit policies and credit approval procedures for loan approvals which are only provided to members of SINOTRANS & CSC Group. It has also implemented various risk management tools to manage and monitor credit risks. The internal audit department assumes an internal independent supervisory role and is responsible for examining and auditing the business operation of other departments; and

• (c) it has in place intra-group check-and-balance mechanisms (such as division of duties, regular and random internal examination, reassessment and upper level supervision) to identify operational irregularities and to ensure the operations are conducted in a legal and effective manner.

We note that the major policies and procedures in relation to risk management and internal control on capital management and financial services established and implemented by the Finance Company are in accordance with the relevant PRC financial services rules and regulations which include Commercial Bank Risks Management Guidelines (商業銀行風險管理指引), Commercial Bank Operational Risks Management Guidelines (商業銀行操作風險管理指引), Commercial Bank Compliance Risks Management Guidelines (商業銀行合規風 險管理指引), Commercial Bank Institutional Clients Credit Risks Management Guidelines (商業銀行集團客戶授信業務風險管理指引), Commercial Bank Account Interest Rate Risks Management Guidelines (商業銀行銀行帳戶利率風 險管理指引), Commercial Bank Internal Control Guidelines (商業銀行內部控制指 引) and Measures for the Administration of the Finance Companies of Enterprise Groups (企業集團財務公司管理辦法).

Set out below are the operation conditions in respect of various assets and liabilities ratios required under the Measures for the Administration of the Finance Companies of Enterprise Groups (企業集團財務公司管理辦法) promulgated by the CBRC.

• a) the capital adequacy ratio is not less than 10%;

• b) the balance of borrowings shall not exceed the total capital;

• c) the total amount of outstanding guarantees provided shall not exceed the total capital;

• d) the short-term securities investment to total capital ratio is not more than 40%;

• e) the long-term investment to total capital is not more than 30%; and

• f) the self-owned fixed assets to total capital ratio is not more than 20%.

– 16 –

LETTER FROM CHINA MERCHANTS SECURITIES (HK) CO., LIMITED

• (ii) Assessment of the Finance Company by the Group

As advised by the management of the Group, in assessing the financial risks involved in placing deposits with the Finance Company, the Directors have taken into account the following factors:

• (a) the operations of the Finance Company are subject to the supervision of PBOC and CBRC and are regulated by the relevant PRC financial services rules and regulations;

• (b) the Finance Company has established internal control and risk management systems in accordance with the relevant PRC financial services rules and regulations; and

• (c) the Finance Company is backed by SINOTRANS & CSC. Pursuant to Article 15 under the articles of association of the Finance Company, SINOTRANS & CSC has given an undertaking to CBRC that it will provide support by way of injecting additional capital to the Finance Company if and when the Finance Company has difficulties in meeting its payment obligations. In addition, SINOTRANS & CSC has given an undertaking to the Company that (i) it will ensure to maintain effective control over the Finance Company during the terms of the Financial Services Agreement; and (ii) in the event that the Finance Company has difficulties in fulfilling its payment obligations, SINOTRANS & CSC will make further capital contributions or take other means to resolve such problem, and indemnify the Company for any losses suffered (including but not limited to the capital and interest of the deposits, and any costs incurred) as a result of the non-performance of the Finance Company of its obligations under the Financial Services Agreement.

• (iii) Internal control procedures and corporate governance measures of the Group on the Deposit Services

In order to protect the safeness of the deposits placed with the Finance Company and safeguard the interests of the Group, we understand from the Company that it has drawn up the Emergency Plans for Depository Risks at the Finance Company (在財務公司的存款風險應急處置預案) and will adopt the following internal control procedures and corporate governance measures:

• (a) the establishment of a depository risks prevention group which will be responsible for developing prevention measures and contingency plans for depository risks associated with the Finance Company and the issuance of depository risk evaluation report;

• (b) the Company will closely monitor the operation status of the Finance Company and will test the capital liquidity of the Finance Company in accordance with the regulatory indicators on assets and liabilities ratios as mentioned above;

– 17 –

LETTER FROM CHINA MERCHANTS SECURITIES (HK) CO., LIMITED

• (c) a depository risk reporting mechanism will be in place for the issuance of regular risk reports (on a quarterly basis) and provisional risk reports to the Board. The Finance Company will provide with the Company a report on the daily status of the Group’s deposits with the Finance Company and the financial position of the Finance Company on a quarterly basis within 7 business days after the end of each quarter;

• (d) where there is any depository risks emerged, the Company will call for meeting with the Finance Company and demand the Finance Company to implement remedial measures including postpone or suspend all the new lending activities, recover the capital by selling debentures and request assistance from SINOTRANS & CSC in order to ensure the security and liquidity of the Company’s funds;

• (e) pursuant to the Financial Services Agreement, the Group has the right to monitor the deposits in the Finance Company from time to time so as to ensure their security and liquidity; and

• (f) a copy of Capital Adequacy Ratio Summary Table (資本充足率匯總表), Liquidity Ratio Monitoring Table (流動性比例監測表) and Five Asset Quality Classification Table (資產質量五級分類情況表) submitted by the Finance Company to CBRC will be provided to the Company.

In order to assess the fairness and reasonableness of the internal control and risk management measures as mentioned above, we have reviewed (i) the undertaking letter given by SINOTRANS & CSC to the Company; and (ii) the articles of association of the Finance Company which provide a reasonable assurance that the amount to be deposited by the Group to the Finance Company under the Financial Services Agreement will be safeguarded, and taken into account that the Finance Company is regulated by PBOC and the CBRC. We consider the Directors’ assessment that the above internal control procedures and corporate governance measures to be adopted by the Company are adequate to cover the risks involved in depositing funds with the Finance Company is based on reasonable ground.

1.4 Reasons for and benefits of the Deposit Services

The Finance Company is regulated by the PBOC and the CBRC and provides its services in accordance with the rules and operational requirements of these regulatory authorities. Capital risks are reduced through the introduction of the risk control measures as stated in the paragraph headed ‘‘Risk management measures and internal control environment of the Finance Company’’ above. Pursuant to the relevant regulations, the customers of the Finance Company are limited to entities within SINOTRANS & CSC Group, thereby reducing the risks that the Finance Company may otherwise be exposed to if its customers include other entities unrelated to SINOTRANS & CSC Group as in the case for other financial institutions.

– 18 –

LETTER FROM CHINA MERCHANTS SECURITIES (HK) CO., LIMITED

We have discussed and are advised by the management of the Group that (i) the role of the Finance Company is similar to a cash pooling centre via which funds from different member companies within SINOTRANS & CSC Group are concentrated into the accounts maintained by the Finance Company; and (ii) the purpose of setting up the Finance Company is to, among other things, facilitate handling of the corporate funding and related financial activities of member companies within SINOTRANS & CSC Group. Through the Finance Company (and thereby centralized fund management), member companies within SINOTRANS & CSC Group can enjoy the benefit of improving the fund utilisation efficiency in fund deployment between members of its group. Given that the Finance Company will only provide financial services to members of SINOTRANS & CSC Group, the management of the Group are of the view that the following benefits of obtaining Financial Services from the Finance Company could be enjoyed by the Group: (i) reducing interest costs — given that the PRC laws do not permit companies established in the PRC to extend intra-group loans directly to its subsidiaries and affiliates, the function of the Finance Company helps those member companies with cash surpluses to cover cash-poor members within the Group, which can reduce or eliminate the need for external financing and thereby reducing interest cost; (ii) speeding up settlement processes — as the customer base of the Finance Company is limited to member companies within SINOTRANS & CSC Group, its centralized cash management function would reduce the time of capital in transit and accelerate the turnover of cashflow and reduce transaction costs and expenses, thereby enhancing the quality and efficiency of capital utilization; (iii) improving visibility and control of cash — the Company would be in a better position to monitor and control cashflow and cash position of its member companies within SINOTRANS & CSC Group as compared with other independent financial institutions given the Group will be better informed on the financial position of the Finance Company from time to time according to (c) and (f) of the aforementioned internal control procedures and corporate governance measures under the paragraph headed ‘‘Internal control procedures and corporate governance measures of the Group on the Deposit Services’’ above; and (iv) the Finance Company will only provide financial services to members of SINOTRANS & CSC Group which resulting in the Group’s deposits being exposed to a lower level of potential risk than other PRC commercial banks dealing with customers of various credit ratings.

As the Company intends to deposit certain amounts of its cash balance with the Finance Company and the remaining cash balances will be deposited with other commercial banks in the PRC, we concur with the Company that it will be able to diversify the risk in relation to its deposits by placing the deposits with the Finance Company and other independent financial institutions.

In view of the above, we consider that the entering into the Deposit Services is in the interest of the Company and the Independent Shareholders as a whole.

– 19 –

LETTER FROM CHINA MERCHANTS SECURITIES (HK) CO., LIMITED

2. Principal terms of the Deposit Services

The Financial Services Agreement (including the Deposit Services which is subject to approval by the Independent Shareholders) will expire at the end of the third financial year after its execution. Sinoair signed a separate financial services agreement dated 26 July 2011 with the Finance Company under the framework of the Company’s Financial Services Agreement with the Finance Company according to the related regulations of the Shanghai Stock Exchange. The terms of such financial services agreement entered into by Sinoair are identical with those of the Financial Services Agreement (save and except the annual caps and requisite shareholders approval to give effect to the agreement). In the event that Sinoair does not obtain the approval from its Shareholders at the Shareholders General Meeting to sign the Financial Services Agreement, the proposed annual caps would be modified to RMB2,000,000,000 for maximum daily outstanding balance of deposits placed or to be placed by the Group (excluding Sinoair) with the Finance Company (including accrued interests and handling charges).

Pursuant to the Financial Services Agreement, (a) the interest rates of deposit service; (i) shall not be lower than the general interest rates set by the PBOC for the same term of deposit in the same period; (ii) shall not be lower than the interest rates provided by major commercial banks for the same term of deposit in the same period; (iii) shall not be lower than the interest rates provided by the Finance Company to other members of the SINOTRANS & CSC Group for the same term of deposit in the same period; and (b) if there occurs any breach of the contract or other improper use or non-compliance by the Finance Company, which results in the Finance Company not being able to meet the Group’s free withdrawal requirement regarding such deposits (including accrued interest), the Group may set off such amount against the balance of the loans and accrued interest from the Finance Company to the extent permissible under law within three working days after the Company’s notices of the breach, other improper use or non-compliance.

The management of the Group advised that the Group has not give priority right to use the financial services (to the extent up to a maximum amount as stated in the Financial Services Agreement) provided by the Finance Company, but with information of market rates and in view of its own interests, has the unilateral right to determine whether or not to accept the terms offered by the Finance Company, and may obtain relevant financial services from other financial institutions. Therefore, we are of the view that the Financial Services Agreement does not preclude the Group from using similar services provided by other financial institutions and the right of the Group to choose among different financial institutions in the market is protected.

Given that (i) the Company is not under any obligation to obtain, among other things, deposit services from the Finance Company and may obtain such services based on its business needs; (ii) in the event that the Company to obtain deposit services from the Finance Company, the Finance Company shall accept deposit from the Group at an interest rate not less than the standard deposit rate promulgated by the PBOC from time to time, or the interest rate as may be offered by licensed commercial banks to the Company for the same type of deposits; (iii) the undertaking provided by SINOTRANS & CSC as mentioned above; and (iv) the Directors are of the opinion that the Financial Services Agreement have

– 20 –

LETTER FROM CHINA MERCHANTS SECURITIES (HK) CO., LIMITED

been negotiated at arm’s length and on normal commercial terms, and on terms that are fair and reasonable and in the interests of the Company and its Shareholders as a whole, we are of the view that the terms in relation to Deposit Services are fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole as the Deposit Services allow the Group to have a wider range of choices in relation to the use of deposit services on terms at least as favourable as those offered by commercial banks.

3. Proposed Deposit Cap

The maximum daily outstanding balance of deposits (including accrued interest and handling charges) to be placed by the Group (including Sinoair) with the Finance Company during the term of the Financial Services Agreement are proposed to be RMB2.3 billion.

As stated in the Board Letter, the Proposed Deposit Cap was determined with reference to, amongst others: (i) the historical statistics of the Group in respect of transactions similar to those under the Financial Services Agreement in the past three years; and (ii) the expected increasing market demands for the Company’s integrated logistics services and hence its business development will increase the cash flow in operating activities which results in continuously increasing demands for deposit services.

In assessing the fairness and reasonableness of the Proposed Deposit Cap, we have discussed with the management of the Group on the basis for determining the Proposed Deposit Cap, the Group’s cash position and its expected increase in the volume of cashflow for the three years ending 31 December 2013.

According to the latest annual report of the Group for the year ended 31 December 2010 (the ‘‘2010 Annual Report’’), revenue of the Group improved to approximately RMB42,546.8 million, representing an increase of approximately 54% as compared to 2009 of approximately RMB27,635.0 million. As discussed in the 2010 Annual Report, the overall concept of the Group’s future developments is to fully leverage on market recovery opportunities, accelerate business and structural transformation and expand and intensify spending in logistics facilities to achieve a rapid growth in scale and profit of the Company. In addition, the Group further develops the geographical coverage of business through acquisitions of business networks and assets from its parent company in 2010. The management of the Group considered the abovementioned expansion plans will bring in significant expansion of operational scale and improvement in operational performance of the Group in coming years, and the continuous growth in China’s economy will continue to drive the demand of integrated logistics services.

As advised by the management of the Group, it intends to deposit not more than 50% of its cash and bank balance with the Finance Company and the remaining cash balances will be deposited to other commercial banks so that not all the funds of the Group will be put into one finance company only and it will be able to diversify the risk in relation to its deposits and hence the default risk will be lowered. The maximum daily outstanding balance of deposits (including accrued interest and handling charges) to be placed by the Group (including Sinoair) with the Finance Company accounts for approximately 49%, 46% and 43% of the Group’s expected cash and bank balances of approximately RMB4.7 billion, RMB5.0 billion and RMB5.35 billion for the three years ending 31 December 2013

– 21 –

LETTER FROM CHINA MERCHANTS SECURITIES (HK) CO., LIMITED

respectively. We note that the Group had approximately RMB5.7 billion cash and bank balances as at 31 December 2010. As advised by the management of the Group, the Proposed Deposit Cap and the expected cash and bank balances for the three years ending 31 December 2013 were determined by taking into account of, among others, the expected increasing market demands for the Group’s integrated logistics services in 2011–2015 under the support of the China’s 12th five-year plan, during which it is estimated that the China’s GDP will grow by 7–8% per annum. According to the National Bureau of Statistics of China, the annual growth rate of the GDP in the PRC for the year 2008, 2009 and 2010 are approximately 9.6%, 9.2% and 10.3%, respectively. As discussed, given stronger operational scale and improving performance is expected, resulted sales increase and thus growth of the volume of cashflow will intensify the demand for the Deposit Services. Further, the Proposed Deposit Cap is lower than the maximum daily outstanding balance for loans to be provided by the Finance Company to the Group of RMB3 billion during the term of the Financial Services Agreement. Accordingly, in principle, the Group has limited net exposures in financial losses regarding the use of the proposed deposit services.

Having considered the above, including the basis of determination of the Proposed Deposit Cap, coupled with (i) future plans of the Company; and (ii) continuous growth in China economy, we are of the view that the Proposed Deposit Cap is reasonably determined.

RECOMMENDATION

Having considered the above principal factors and reasons, we are of opinion that the Deposit Services are conducted in the ordinary and usual course of business of the Company and the terms of the Deposit Services and the Proposed Deposit Cap are on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned, and are in the interests of the Company and the Independent Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolutions to approve the Deposit Services and the Proposed Deposit Cap contemplated therein to be proposed at the EGM.

Yours faithfully,

For and on behalf of

China Merchants Securities (HK) Co., Limited Tony Wu Managing Director & Head of Investment Banking Department

– 22 –

APPENDIX

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

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

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

				Approximate%
				of the	Approximate%	Approximate%
				Company’s	of the	of the
				issued total	Company’s	Company’s
	Number of Shares	held (Class of Shares)		domestic share	total issued H	total issued
Name of Shareholder	— Long position	— Lending pool	Nature of Interest	capital	share capital	share capital
中國外運長航集團有限公司	2,461,596,200(L)		Beneficial owner	100%		57.93%
SINOTRANS & CSC Holding	(Domestic Shares)
Corporation Limited (Note 1)
	81,812,000 (L)		Controlled		4.58%	1.93%
	(H Shares)		Corporation

– 23 –

APPENDIX

GENERAL INFORMATION

				Approximate%
				of the	Approximate%	Approximate%
				Company’s	of the	of the
				issued total	Company’s	Company’s
	Number of Shares	held (Class of Shares)		domestic share	total issued H	total issued
Name of Shareholder	— Long position	— Lending pool	Nature of Interest	capital	share capital	share capital
Deutsche Post AG (Note2)	237,468,000(L)		Controlled		13.30%	5.59%
	(H Shares)		corporation
The Bank of New York Mellon	161,059,722(L)		Controlled		9.01%	3.79%
Corporation (Note3)	(H Shares)		corporation
		91,852,522(P)			5.14%	2.16%
		(H Shares)
Franklin Templeton Investments Corp.	157,230,536(L)		Investment		8.80%	3.70%
	(H Shares)		Manager
Brandes Investment Partners, L.P.	143,410,364(L)		Investment		8.02%	3.37%
	(H Shares)		Manager
JPMorgan Chase & Co. (Note 4)	128,790,900(L)		Controlled		7.21%	3.03%
	(H Shares)		corporation
		126,479,900(P)	Custodian		7.08%	2.98%
		(H Shares)
Templeton Asset Management Limited	107,132,850(L)		Investment		5.99%	2.52%
	(H Shares)		Manager
Templeton Investment Counsel, LLC	93,443,000(L)		Investment		5.23%	2.20%
	(H Shares)		Manager

• *Notes: (L) Long Position, (S) Short Positions, (P) Lending Pool

Notes:

1. Zhao Huxiang, Zhang Jianwei, Tao Suyun, Li Jianzhang, Yang Yuntao and LiuJinghua are directors or employees of SINOTRANS & CSC which is the controlling shareholder of the Company. The 81,812,000 H Shares are held by SINOTRANS (HONGKONG) HOLDINGS LTD., a wholly-owned subsidiary of SINOTRANS & CSC.

2. This includes 201,852,000 H Shares held by Deutsche Post Beteilgungen GmBH (‘‘Deutsche GmBH’’) and 35,616,000 shares held by DHL Supply Chain (Hong Kong) Limited. Deutsche GmBH and DHL Supply Chain (Hong Kong) Limited are both 100% held by Deutsche Post AG.

3. These Shares are directly held by The Bank of New York Mellon, a wholly-owned subsidiary of The Bank of New York Mellon Corporation.

4. This includes 126,479,900 H Shares held by JPMorgan Chase Bank, N.A. and 2,311,000 H Shares held by J.P. Morgan Whitefriars Inc., JPMorgan Chase Bank, N.A. and J.P. Morgan Whitefriars Inc. are all 100% held by JP Morgan Chase & Co.

– 24 –

APPENDIX

GENERAL INFORMATION

(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.

Interest Name of entities holding 10% or more in relevant interest in a member of the Group company Name of subsidiary of the Company 濟南大運物流有限公司 20% 中國外運大件物流有限公司 (Jinan Da Yun Logistics Co., Ltd.) (Sinotrans Heavy-lift Logistics) 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.) 韓亞株式會社 13% 銀河國際貨運航空有限公司 (Hana Capital Co., Ltd.) (Grandstar Cargo International Co., Ltd.) 新韓株式會社 11% 銀河國際貨運航空有限公司 (Shinhan Capital 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.) 10% 上海中外運化工國際物流有限公司 (Sinotrans Shanghai Chemical International Logistics 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 Forwarding (Huafa Tanefei International Operation Company Limited) Transportation 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.) 新加坡太平船務有限公司 40% 上海華星國際集裝箱貨運有限公司 (Pacific International Lines (Pte) Ltd.) (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)

– 25 –

APPENDIX

GENERAL INFORMATION

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

蘇州高新技術產業股份有限公司 (Suzhou New District New & Hi-Tech Industrial Co., Ltd.)

蘇州高新區經濟發展集團總公司 (Suzhou New District Economy Development (Group) Corporation)

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)

以星綜合航運有限公司 (Zim Integrated Shipping Services Ltd.)

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

阿聯船務代理（香港）有限公司 (Alian Shipping Agency (Hong Kong) 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)

Interest in relevant company Name of subsidiary of the Company 27% 寧波保稅區太平倉儲有限公司 (Ningbo Free Trade Zone Taiping Warehouse Co., Ltd.) 40% 中外運高新物流（蘇州）有限公司 (Sinotrans Gaoxin Logistics (Suzhou) Ltd.) 25% 蘇州新區報關有限公司 (Suzhou New District Customs Broker Co., Ltd.) 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)

• 49% 上海中外運阿聯船舶代理有限公司 (Sinotrans Shanghai Alian Shipping Agency Company Limited)

• 49% 寧波中外運阿聯船舶代理有限公司 (Sinotrans Ningbo Alian Shipping Agency Company Limited)

• 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.)

– 26 –

APPENDIX

GENERAL INFORMATION

Interest Name of entities holding 10% or more in relevant interest in a member of the Group company Name of subsidiary of the Company 寧波外運國際集裝箱貨運有限公司 40% 寧波外運國際集裝箱貨運有限公司 職工持股會 (Sinotrans Ningbo International (Sinotrans Ningbo International Container Container Transportation Company Transportation Company Limited Limited) Employee Shareholding Society) 廣東省食品進出口集團公司 20% 佛山中外運倉碼有限公司 (Guangdong Foodstuffs Imp & Exp (Sinotrans Foshan Company Limited) (Group) Corporation) 廣東省南海食品進出口有限公司 25% 佛山中外運倉碼有限公司 (Guangdong Nanhai Foodstuffs Company (Sinotrans Foshan Warehousing & Limited) Terminal Company Limited) 錦和有限公司 35% 江門中外運倉碼有限公司 (Jinhe Co., Ltd.) (Sinotrans Guangdong Jiangmen Warehousing & Terminal Co., Ltd.) 35% 江門外海運輸實業有限公司 (Jiangmen Foreign Transportation & Enterprises Co., Ltd.) 中山市岐江工業發展有限公司 40.546% 中山中外運倉碼有限公司 (Zhongshan Qijiang Industry Development (Sinotrans Zhongshan Warehousing & Co., Ltd.) Terminal Corp., Ltd.) 東莞市石龍鎮工業總公司 20% 東莞中外運物流有限公司 (Dongguan Shilong Town Industry Co., (Sinotrans Dongguan Logistics Co., Ltd.) Ltd.) 大新華輪船（烟臺）有限公司 49% 青島中外運大新華國際集裝箱倉儲 (Grand China Shipping (Yantai) Co. Ltd.) 有限公司 (Sinotrans Qingdao Yanhai International Container and Storage Company Limited) 香港遠升有限公司 25% 青島聯通報關有限公司 (Lailon Enterprises Ltd.) (Qingdao Liantong Customs Broker Co., Ltd.) 25% 山東中外運弘志物流有限公司 (Sinotrans Shandong Hongzhi Logistics Co. Ltd.) 25% 青島金運航空貨運代理有限公司 (Qingdao Jinyun Air Cargo Freight Forwarding Co. Ltd.)

– 27 –

APPENDIX

GENERAL INFORMATION

	Interest
Name of entities holding 10% or more	in relevant
interest in a member of the Group	company	Name of subsidiary of the Company
日本東海運株式會社	30%	青島遠東儲運有限公司
(Azuma Shipping Co., Ltd.)		(Qingdao Sinotrans-Azuma Logistics
		Co., Ltd.)
日本山九株式會社	40%	天津天山國際貨運有限公司
(Sankyu Inc.)		(Tianjin Tianshan International Freight
		Forwarding Company Limited)
福州市國有資產經營公司	30%	福州中外運大裕保稅倉儲有限公司
(Fuzhou City State-owned Assets		(Fuzhou Davu Bonded Storage
Management Company)		Company Limited)
韓進海運株式會社	49%	上海星瀚船務代理有限公司
(Hanjin Shipping Company Limited)		(Shanghai Shenhan Shipping Agency
		Company Limited)
北京雲海鷺商貿有限公司	40%	大連京大國際貨運代理有限公司
(Beijing Yunhailu Shangmao Company		(Dalian JD Cargo International Co.,
Limited)		Ltd.)
成都高新投資集團有限公司	45.71%	成都保稅物流投資有限公司
(Chengdu New District Investment Group		(Chengdu Bonded Logistics Investment
Corporation)		Company Limited)

Save as disclosed above, the Directors 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 31 December 2010 (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.

– 28 –

APPENDIX

GENERAL INFORMATION

III. Directors’ interests in competing business

Jerry Hsu (a non-executive Director) and Mok Chiming Victor (a non-executive Director) 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. They are representatives nominated by DHL Worldwide Express BV and DHL Supply Chain (Hong Kong) Limited (Collectively, ‘‘DHL Entities’’) respectively, the Strategic Investors of the Company (the ‘‘Strategic Investors’’).

Each of the DHL Entities 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.

While, for the purposes of the Listing Rules, Jerry Hsu and Mok Chiming Victor are considered to have interests (by way of minority equity interests or stock options or directorships) in competing businesses (i.e. those of the Strategic Investor, 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 the Strategic Investor.

Zhao Huxiang, Zhang Jianwei, Tao Suyun, Li Jianzhang, Yang Yuntao and Liu Jinghua are directors or employees of SINOTRANS & CSC which is the controlling shareholder of the Company. Certain subsidiaries of SINOTRANS & CSC Group engage in the Group’s ‘‘core businesses’’ (namely freight forwarding 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 & CSC Group and the Group and the noncompetition agreement entered into between SINOTRANS & CSC Group and the Company on 14 January 2003 are referred to in the section headed ‘‘Relationship with SINOTRANS & CSC Group’’ in the prospectus of the Company dated 29 January 2003.

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.

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 employer within one year without payment of compensation (other than statutory compensation)).

– 29 –

APPENDIX

GENERAL INFORMATION

4. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2010, being the date up to which the latest published audited consolidated financial statements of the Group were made up.

5. EXPERT

The following is the qualification of the IFA, which has given its opinion or advice which is contained in this circular:

Name Qualification

China Merchants Securities a licensed corporation authorised to carry out Type 1 (HK) Co., Limited (dealing in securities), Type 2(dealing in futures contracts), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO

As at the Latest Practicable Date, the IFA did not have:

• (a) any direct or indirect interest in any assets which have 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 since 31 December 2010(being the date to which the latest published audited consolidated financial statements of the Group were made up); 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.

The IFA has given and has not withdrawn its consent to the issue of this circular with the inclusion of its letter and reference to its name in the form and context in which they respectively appear.

6. MISCELLANEOUS

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

7. DOCUMENTS AVAILABLE FOR INSPECTION

A copy of the Financial Services Agreement will be available for inspection during normal business hours on any weekday (except public holidays) at the office of Reed Smith Richards Butler at 20th Floor, Alexandra House, 18 Chater Road, Central, Hong Kong from the date of this circular, for a period of 14 days.

– 30 –

NOTICE OF EGM

==> picture [190 x 112] intentionally omitted <==

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

(Stock Code: 0598)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the extraordinary general meeting (the ‘‘EGM’’) of Sinotrans Limited (the ‘‘Company’’) will be held at No.1 Meeting Room, 12th Floor, Sinotrans Plaza A, A43, Xizhimen Beidajie, Haidian District, Beijing, the People’s Republic of China (Post Code 100044) on 30 September, 2011 at 9: 30 a.m. for the purpose of considering and, if thought fit, passing, with or without modifications, the following ordinary resolution of the Company:

ORDINARY RESOLUTION

‘‘THAT:

• (A) the deposit services (the ‘‘Deposit Services’’) to be provided by Sinotrans & CSC Finance Co. Ltd. (the ‘‘Finance Company’’) to the Company and its subsidiaries (the ‘‘Group’’) under the financial services agreement (the ‘‘Financial Services Agreement’’, a copy of which is produced to the meeting marked ‘‘A’’ and initialled by the Chairman for the purpose of identification), entered into between the Company and the Finance Company on 26 July 2011 and the annual caps for each of the three years ending 31 December 2011, 2012 and 2013 in respect of the receipt of the Deposit Services by the Group from the Finance Company in accordance with the terms of the Financial Services Agreement be and are hereby approved; and

• (B) the directors of the Company be and are hereby authorised to take all actions and execute all documents which they deem necessary, desirable or appropriate in order to implement or give effect to the Deposit Services contemplated under the Financial Services Agreement.’’

By order of the Board of Sinotrans Limited Gao Wei Company Secretary

Beijing, 15 August, 2011

– 31 –

NOTICE OF EGM

Notes:

1. The register of members of the Company will be closed from30 August, 2011 to 30 September, 2011, both days inclusive, during which period no share transfers will be registered. The purpose of the book closure is to allow the Company to determine who shall qualify to attend and vote at the EGM. The record date for the purpose of such determination shall be 30 September, 2011. To qualify for attendance at the EGM, all transfers accompanied by the relevant share certificates must be lodged with the Company’s H Share Registrar in Hong Kong, Computershare Hong Kong Investor Services Limited of Shops 1712-1716, 17/F., Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, not later than 4: 30 p.m. on 29 August, 2011, for registration.

2. Shareholders intending to attend the EGM shall give written notice of the same to the Company, which shall be lodged at the registered office of the Company on or before 4: 30 p.m. on 9 September, 2011.

3. Shareholders entitled to attend and vote at the EGM are entitled to appoint one or more persons (whether or not a shareholder of the Company) as their proxy to attend and vote on behalf of themselves.

4. In order to be valid, the form of proxy, together with a duly notarized power of attorney or other document of authority, if any, under which the form is signed must be deposited at the registered office of the Company not later than 24 hours before the time for holding the EGM.

5. As at the date of this announcement, Zhao Huxiang, Zhang Jianwei, Tao Suyun and Li Jianzhang are executive directors of the Company; Yang Yuntao, Liu Jinghua, Jerry Hsu and Mok Chi Ming Victor are non-executive directors of the Company; and Sun Shuyi, Lu Zhengfei and Miao Yuexin are independent non-executive directors of the Company.

– 32 –