Liaoning Port Co., Ltd. — Proxy Solicitation & Information Statement 2008

Nov 4, 2008

IMPORTANT

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

If you have sold or transferred all your shares in Dalian Port (PDA) Company Limited, you should at once hand this circular together with the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale 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.

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大連港股份有限公司 Dalian Port (PDA) Company Limited[*]

(a sino-foreign joint stock limited company incorporated in the People’s Republic of China)

(Stock Code: 2880)

CONTINUING CONNECTED TRANSACTIONS AND NOTICE OF THE SECOND EXTRAORDINARY GENERAL MEETING IN 2008

Independent Financial Adviser to

the Independent Board Committee and the Independent Shareholders

A letter from the Independent Board Committee to the Independent Shareholders is set out on pages 10 to 11 of this circular.

A letter from Access Capital Limited, the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 12 to 23 of this circular.

A notice convening the extraordinary general meeting of the shareholders of Dalian Port (PDA) Company Limited to be held at Room 602, PDA Group Building, No. 1 Gangwan Street, Zhongshan District, Dalian City, Liaoning Province, the PRC at 10:00 a.m. on 19 December 2008 is set out in Appendix 2 of this circular.

A form of proxy and a reply slip for use in connection with the extraordinary general meeting are enclosed herewith and published on the website of the Stock Exchange (www.hkex.com.hk). Whether or not you are able to attend the meeting, you are requested to complete and return the reply slip and the form of proxy in accordance with the instructions printed thereon as soon as practicable and in any event not later than 20 days and 24 hours, respectively, before the time designated for holding the meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjourned meeting should you so wish.

• The Company is registered as an oversea company under Par XI of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) under the English name “Dalian Port (PDA) Company Limited”.

4 November 2008

CONTENTS

		Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
**Letter from **	the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
**Letter from **	the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
**Letter from **	the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Appendix 1	– General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24
Appendix 2	– Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . .	29

DEFINITIONS

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

“associate(s)”	has the meaning ascribed to it under the Listing Rules;
“Board”	the board of Directors;
“Company”	大連港股份有限公司(Dalian Port (PDA) Company
	Limited), a sino-foreign joint stock limited company
	incorporated in the PRC with its H shares listed and
	traded on the main board of the Stock Exchange;
“connected person”	has the meaning ascribed to it under the Listing Rules;
“Continuing Connected	the transactions contemplated under the Terminal
Transactions”	Facilities Design and Construction Services Agreement
	and the Comprehensive Services Agreement;
“Continuing Connected	the Terminal Facilities Design and Construction Services
Transactions Agreements”	Agreement and the Comprehensive Services Agreement;
“controlling shareholder”	has the meaning ascribed to it under the Listing Rules;
“Directors”	the directors of the Company;
“EGM”	the extraordinary general meeting of the Company to be
	held at Room 602, PDA Group Building, No. 1 Gangwan
	Street, Zhongshan District, Dalian City, Liaoning
	Province, the PRC at 10:00 a.m. on 19 December 2008, the
	notice of which is set out in Appendix 2 of this circular;
“Group”	the Company and its subsidiaries;
“H shares”	foreign shares in the share capital of the Company, with
	Renminbi-denominated par value of RMB1.00 each
	which are listed and traded on the Stock Exchange;
“HK$”	Hong Kong dollars, the lawful currency of the Hong
	Kong Special Administrative Region;
“Independent Board Committee”	the independent board committee of the Company
	comprising the independent non-executive Directors,
	namely, Mr. Zhang Xianzhi, Mr. Ng Ming Wah, Charles
	and Mr. Wang Zuwen;

– 1 –

DEFINITIONS

“Independent Financial Adviser”	Access Capital Limited, a licensed corporation under the
	SFO which engages in Type 1 (dealing in securities), Type
	4 (advising on securities), Type 6 (advising on corporate
	finance) and Type 9 (asset management) regulated
	activities and the independent financial adviser to the
	Independent Board Committee and the Independent
	Shareholders in respect of the Continuing Connected
	Transactions;
“Independent Shareholders”	Shareholders other than PDA and its associates;
“Latest Practicable Date”	28 October 2008, being the latest practicable date prior to
	the printing of this circular for ascertaining certain
	information contained in this circular;
“Listing Rules”	the Rules Governing the Listing of Securities on The
	Stock Exchange of Hong Kong Limited;
“PDA”	大連港集團有限公司(Dalian Port Corporation Limited),
	the controlling shareholder of the Company and a
	limited liability company established in the PRC and
	wholly-owned by Dalian Municipal Government;
“PRC”	the People’s Republic of China (for the purpose of this
	circular, excluding Hong Kong Special Administrative
	Region, Macau Special Administrative Region and
	Taiwan);
“Prospectus”	the prospectus dated 18 April 2006 and published by
	the Company, in accordance with the Listing Rules in
	the connection with its initial public offering and
	listing on the main board of the Stock Exchange;
“RMB” or “Renminbi”	renminbi, the lawful currency of the PRC;
“SFO”	Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong;
“Shareholders”	the shareholders of the Company;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“subsidiary”	has the meaning ascribed to it under the Listing Rules;
	and
“%”	Percentage.

– 2 –

LETTER FROM THE BOARD

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大連港股份有限公司 Dalian Port (PDA) Company Limited[*]

(a sino-foreign joint stock limited company incorporated in the People’s Republic of China)

(Stock Code: 2880)

Directors:

Executive Directors: Sun Hong Zhang Fengge Jiang Luning Su Chunhua

Registered Office:

Xingang Commercial Building Dayao Bay Dalian Free Trade Zone PRC

Place of Business in PRC:

Non-executive Directors: Lu Jianmin Xu Jian

No. 1 Gangwan Street Zhongshan District Dalian, Liaoning Province PRC

Independent Non-executive Directors: Zhang Xianzhi Ng Ming Wah, Charles Wang Zuwen

4 November 2008

To the Shareholders,

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS AND NOTICE OF THE SECOND EXTRAORDINARY GENERAL MEETING IN 2008

1. INTRODUCTION

Reference is made to the announcement dated 17 October 2008 regarding the Continuing Connected Transactions. The purpose of this circular is to (i) set out the detailed information regarding the Continuing Connected Transactions contemplated under the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement; (ii) to give you the notice of the EGM to consider and approve the proposed ordinary resolutions.

• The Company is registered as an oversea company under Par XI of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) under the English name “Dalian Port (PDA) Company Limited”.

– 3 –

LETTER FROM THE BOARD

2. THE CONTINUING CONNECTED TRANSACTIONS

As disclosed in the Prospectus, the Group is a party to various existing continuing connected transactions, including the transactions contemplated under the Terminal Facilities Design and Construction Services Agreement, and Comprehensive Services Agreement, all dated 23 March 2006. In this connection, the Company was granted waivers by the Stock Exchange from strict compliance with the relevant requirements under Chapter 14A of the Listing Rules for a period of three years from 1 January 2006 to 31 December 2008 at the time of listing of H Shares of the Company on the Stock Exchange on 28 April 2006. The Company has agreed with PDA to renew the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement for a term of three years commencing from 1 January 2009 and ending on 31 December 2011 with the principal terms and conditions remaining unchanged.

A. Terminal Facilities Design and Construction Services

(a) Background

As disclosed in the Prospectus, PDA owns the terminal facilities construction asset and business and has, for itself and/or its relevant associates, entered into the Terminal Facilities Design and Construction Services Agreement with the Company (for itself and/or on behalf of its relevant subsidiaries) on 23 March 2006, to provide terminal facilities design and construction services including land filling, dredging, caisson precasting and construction of electricity facilities and other supporting facilities.

The Company has agreed with PDA to renew the Terminal Facilities Design and Construction Services Agreement for a term of three years commencing from 1 January 2009 and ending on 31 December 2011.

(b) Basis of pricing

Under the renewed Terminal Facilities Design and Construction Services Agreement, the price in respect of services provided by PDA and/or its relevant associates shall be determined in accordance with the following pricing principles:

• the price determined with reference to the relevant pricing policy prescribed by the relevant governmental authority (State price);

• where there is no State price, then according to the price at which the same or comparable types of services are provided from independent third parties in the ordinary course of business (market price); and

• where the project is subject to public bidding, the pricing principle established during the open bidding.

– 4 –

LETTER FROM THE BOARD

(c) Historical figures/cap and proposed caps for each of the three years of 2009, 2010 and 2011

			9 months
	Ended 31	Ended 31	ended 30		Proposed	Proposed	Proposed
	December	December	September	Cap for	cap for	cap for	cap for
	2006	2007	2008	2008	2009	2010	2011
	(RMB)	(RMB)	(RMB)	(RMB)	(RMB)	(RMB)	(RMB)
Terminal facilities
design and
construction
services	167,701,000	155,663,000	109,926,300	299,740,000	305,300,000	404,900,000	458,800,000

With reference to certain design and construction services to be provided by PDA in connection with the Company’s proposed construction projects during the three years ending 31 December 2009, 2010 and 2011, and the State prices or (if applicable) the market prices or the prices determined during the open tender period, the Directors expect that the aggregate fees to be paid in cash to PDA for each of the three years ending on 31 December 2009, 2010 and 2011 will not exceed the proposed caps stated above. The increase in demand for such services principally relates to, inter alia, the construction of the new oil tanks at Xingang and the construction of new container berths at Dayao Bay in Dalian.

B. Comprehensive Services

(a) Background

PDA is principally engaged in dry bulk and general cargo terminal operations and also engaged in ancillary terminal operations and services such as supply of electricity and water, provision of landscaping services and conference services. In this connection, the Company (for itself and on behalf of its subsidiaries) and PDA (for itself and on behalf of its relevant associates) have entered into the Comprehensive Services Agreement on 23 March 2006 for a term of three years ending on 31 December 2008.

The Company has agreed with PDA to renew the Comprehensive Services Agreement for a term of three years commencing from 1 January 2009 and ending on 31 December 2011.

– 5 –

LETTER FROM THE BOARD

(b) Basis of pricing

Under the renewed Comprehensive Services Agreement, the price in respect of services provided by PDA and/or its relevant associates shall be determined in accordance with the following pricing principles:

• State price;

• where there is no State price, then according to the relevant market price; and

• where there is no relevant market price, then according to the contract price.

For the purpose of the Comprehensive Services Agreement:

• “State price”

  • means the price set by or with reference to the relevant laws, regulations, determinations, orders and policies issued by the relevant departments of the PRC government or the price set by or with reference to the relevant laws, regulations, determinations, orders and policies issued by the relevant departments of the PRC government plus the actual cost incurred in providing such services;

• “market price” means the price at which the same or comparable types of services are provided by independent third parties in the ordinary course of business; and

• “contract price” means the actual cost incurred in providing such services.

• (c) Historical figures/cap and proposed caps for each of the three years of 2009, 2010 and 2011

			9 months
	Ended 31	Ended 31	ended 30		Proposed	Proposed	Proposed
	December	December	September	Cap for	cap for	cap for	cap for
	2006	2007	2008	2008	2009	2010	2011
	(RMB)	(RMB)	(RMB)	(RMB)	(RMB)	(RMB)	(RMB)
Comprehensive
services	20,693,000	24,468,000	20,086,300	41,750,000	54,950,000	62,840,000	75,680,000

– 6 –

LETTER FROM THE BOARD

The above proposed caps have been determined with reference to the estimated increase in the handling capacity of the relevant terminals and the demand for comprehensive services during the three years ending 31 December 2009, 2010 and 2011, and the expected increase of the State prices or (if applicable) the market prices or the contract price for such services. The Group shall settle the payment of such service fees in cash.

C. Reasons for entering into the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement

PDA has been carrying out terminal operations and ancillary terminal operations for many years and has the terminal-related experiences and expertise. In preparation of the initial public offering of the Company, the Group conducted a reorganisation as a result of which, PDA has retained certain assets and businesses, which are not related to the core business of the Group. Such businesses include the provision of port facilities design and construction services, maintenance services, project management services, supervision services and certain utilities and ancillary services. Taking into account such factors and the operating needs of the Group and from an overall economic perspective, the Directors are of the view that the Group will continue to benefit in retaining PDA and/or its associates to provide such services. Further, all of such transactions have been entered into on terms no less favourable to the Group than terms available from independent third parties. The Directors are of the view that it is in the interests of the Company and the Shareholder as a whole to source such services from PDA and its relevant associates.

3. LISTING RULES IMPLICATIONS

PDA, being the controlling shareholder of the Company, is a connected person of the Company as defined under Rule 14A.11(1) of the Listing Rules. As such, the transactions under the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement constitute continuing connected transactions as defined under Rule 14A.14 of the Listing Rules.

As each of the applicable percentage ratios for the transactions under the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement for each of the threes years of 2009, 2010, and 2011 is more than 2.5% and the proposed annual caps for such transactions are more than HK$10,000,000, such transactions will be subject to the reporting, announcement and independent shareholders’ approval (by way of a poll) requirements under Chapter 14A of the Listing Rules. For the purpose of obtaining the independent shareholders’ approval on such transactions and their respective caps for each of the three years ending on 31 December 2009, 2010, and 2011,the Company will convene an EGM pursuant to the Listing Rules.

– 7 –

LETTER FROM THE BOARD

4. INFORMATION ON THE GROUP AND PDA

The principal activities of the Group are: (i) the provision of terminal and logistics services for oil products and liquefied chemicals; (ii) the provision of terminal and logistics services for containers including sea-to-sea container transshipment services; (iii) the provision of automobile terminal and logistics services; and (iv) the provision of port value-added services including tagging, tallying and IT services.

PDA is principally engaged in dry bulk and general cargo terminal operations, passenger and roll-on and roll-off cargo terminal operations and ancillary terminal operations and is the controlling shareholder of the Company holding approximately 62.09% of the total issued share capital of the Company as at the Latest Practicable Date.

5. GENERAL

The Independent Board Committee comprising all of the independent non-executive Directors of the Company, namely Mr. Zhang Xianzhi, Mr. Ng Ming Wah, Charles and Mr. Wang Zuwen has been formed to advise the Independent Shareholders in relation to the Continuing Connected Transactions. The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Continuing Connected Transactions and the proposed annual caps in relation thereto for the years of 2009, 2010 and 2011 are fair and reasonable.

The Independent Financial Adviser considers the Continuing Connected Transactions are on normal commercial terms and in ordinary course of business. The Independent Financial Adviser also considers the terms of the Continuing Connected Transactions are fair and reasonable and in the interests of the Company and the Shareholders as a whole. The letter from the Independent Financial Adviser is set out on pages 12 to 23 of this circular.

6. EXTRAORDINARY GENERAL MEETING

Pursuant to Rule 14A.54 of the Listing Rules, any connected person and any shareholder and their associates with a material interest in the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement are required to abstain from voting on the relevant resolution at the EGM. Therefore, PDA and its associates are required to abstain from voting on the resolutions in respect of such agreement and the transactions contemplated thereunder at the EGM.

– 8 –

LETTER FROM THE BOARD

The EGM is proposed to be held at Room 602, PDA Group Building, No. 1 Gangwan Street, Zhongshan District, Dalian City, Liaoning Province, PRC at 10:00 a.m. on 19 December 2008, at which resolutions will be tabled to approve: (1) the renewed Terminal Facilities Design and Construction Services Agreement for a term of three years and the proposed annual caps for the three years of 2009, 2010 and 2011; and (2) the renewed Comprehensive Services Agreement for a term of three years and the proposed annual caps for the three years of 2009, 2010 and 2011.

7. RECOMMENDATION

The Directors consider the transactions contemplated under the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement are carried out in the ordinary and usual course of business of the Group and on terms no less favourable to the Group than terms available from independent third parties which are fair and reasonable and in the best interests of the Company and its Shareholders as a whole. The Directors also consider the proposed annual caps for the three years of 2009, 2010 and 2011 for such transactions are fair and reasonable.

The Independent Board Committee, having taken into account, among other things, the advice of the Independent Financial Adviser, considers that the terms of the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement and the proposed annual caps in relation thereto for the years of 2009, 2010, and 2011, are fair and reasonable, on terms no less favourable to the Group than terms available from independent third parties and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors and the Independent Board Committee recommend that the Independent Shareholders should vote in favor of the ordinary resolutions set out in the notice of EGM contained in this circular.

Yours faithfully, SUN Hong Chairman

– 9 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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大連港股份有限公司 Dalian Port (PDA) Company Limited[*]

(a sino-foreign joint stock limited company incorporated in the People’s Republic of China)

(Stock Code: 2880)

4 November 2008

Independent Board Committee:

Mr. Zhang Xianzhi Mr. Ng Ming Wah, Charles Mr. Wang Zuwen

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

We refer to the circular dated 4 November 2008 of the Company (the “Circular”) of which this letter forms part. Terms defined in the Circular have the same meanings herein unless the context otherwise requires.

We have been appointed as members of the Independent Board Committee to consider the terms of the Continuing Connected Transactions (including the proposed relevant annual caps) and to advise the Independent Shareholders whether, in our opinion, the terms of the Continuing Connected Transactions (including the proposed relevant annual caps) are fair and reasonable so far as the Independent Shareholders are concerned and are in the interest of the Company and the Shareholders as a whole. Access Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

Your attention is drawn to the “Letter from the Board” set out on pages 3 to 9 of the Circular which contains, inter alia, information about the Continuing Connected Transactions, and the “Letter from the Independent Financial Adviser” set out on pages 12 to 23 of the Circular which contains its advice in respect of the terms of the Continuing Connected Transactions.

• The Company is registered as an oversea company under Par XI of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) under the English name “Dalian Port (PDA) Company Limited”.

– 10 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

As your Independent Board Committee, we have discussed with the management of the Company the reasons for entering into the Continuing Connected Transaction Agreements and the basis upon which their terms (including the proposed relevant annual caps) have been determined. We have also considered the key factors taken into account by the Independent Financial Adviser in arriving at its opinion regarding the terms of the said agreements as set out in the letter from the Independent Financial Adviser contained in the Circular, which we urge you to read carefully.

Having considered the advice given by the Independent Financial Adviser in arriving at its advice, we consider that the terms of the Continuing Connected Transactions are fair and reasonable so far as the Independent Shareholders are concerned and the Continuing Connected Transactions are in the interests of the Company and the Shareholders as a whole. We also consider that the transactions contemplated under the relevant agreement to be in the usual and ordinary course of business and on terms no less favourable to the Group than terms available from independent third parties and the proposed respective annual caps for the Continuing Connected Transactions to be fair and reasonable and in the interests of the Company and the Shareholders as a whole. We, therefore, recommend the Independent Shareholders to vote in favour of the relevant ordinary resolutions in respect of the Continuing Connected Transactions to be proposed at the EGM.

Yours faithfully,

Zhang Xianzhi Independent non-executive director

Independent Board Committee Ng Ming Wah, Charles Wang Zuwen Independent Independent non-executive director non-executive director

– 11 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Terminal Facilities Design and Construction Services Agreement and Comprehensive Services Agreement and the proposed caps of the underlying transactions prepared for the purpose of incorporation in this circular.

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Suite 606, 6th Floor Bank of America Tower 12 Harcourt Road Central Hong Kong

4 November 2008

• To: The Independent Board Committee and the Independent Shareholders of Dalian Port (PDA) Company Limited

Dear Sirs,

CONTINUING CONNECTED TRANSACTIONS

I. INTRODUCTION

We refer to our appointment as independent financial adviser to advise the Independent Board Committee and the Independent Shareholders with regard to the continuing connected transactions in relation to the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement (i.e. the Continuing Connected Transactions). Details of the Continuing Connected Transactions and the proposed caps for the three years ending 31 December 2011 are contained in the “Letter from the Board” of the circular to the Shareholders dated 4 November 2008 (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 otherwise specifies.

As disclosed in the Prospectus, the Group is party to a number of existing continuing connected transactions, including the transactions contemplated under the Terminal Facilities Design and Construction Services Agreement, and Comprehensive Services Agreement, all dated 23 March 2006. In this connection, the Company was granted waivers by the Stock Exchange from strict compliance with the relevant requirements under Chapter 14A of the Listing Rules for a period of three years from 1 January 2006 to 31 December 2008 at the time of listing of the H Shares of the Company on the Stock Exchange on 28 April 2006. The Company and PDA agreed to renew, amongst other agreements, the Terminal Facilities Design and Construction Services Agreement, and the Comprehensive Services Agreement for a term of three years commencing from 1 January 2009 and ending on 31 December 2011 with the other principal terms and conditions remaining unchanged.

– 12 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As each of the applicable percentage ratios for each of the Continuing Connected Transactions is, on an annual basis, more than 2.5% and the proposed annual caps for such transactions are more than HK$10,000,000, such transactions are subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The Company will convene an EGM in compliance with the requirements of the Listing Rules for the purpose of obtaining independent shareholders’ approval on the transactions contemplated under the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement, respectively, and the proposed annual caps for each of such transactions for the three years ending 31 December 2011.

As at the Latest Practicable Date, PDA beneficially owned approximately 62.09% of the issued share capital of the Company, and will abstain from voting at the EGM to be convened for the approval of the transactions contemplated under the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement, respectively and the proposed annual caps for the Continuing Connected Transactions for the three years ending 31 December 2011.

II. THE INDEPENDENT BOARD COMMITTEE

The Board currently consists of four executive Directors, namely Mr. Sun Hong, Mr. Zhang Fengge, Mr. Jiang Luning and Ms. Su Chunhua, two non-executive Directors, Mr. Lu Jianmin and Mr. Xu Jian, and three independent non-executive Directors, namely Mr. Zhang Xianzhi, Mr. Ng Ming Wah, Charles and Mr. Wang Zuwen.

The Independent Board Committee comprising all of the independent non-executive Directors, namely Mr. Zhang Xianzhi, Mr. Ng Ming Wah, Charles and Mr. Wang Zuwen, has been established to consider the terms of the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement and the proposed annual caps of such transactions for the three years ending 31 December 2011.

We have been appointed to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement were agreed on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole and to give our opinion in relation to the proposed annual caps for each of the Continuing Connected Transactions for the three years ending 31 December 2011 for their consideration when making their recommendation to the Independent Shareholders.

– 13 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

III. BASIS AND ASSUMPTIONS OF THE ADVICE

In formulating our advice, we have relied solely on the statements, information, opinions and representations for matters relating to the Group contained in the Circular and the information and representations provided to us by the Group and/or its senior management staff and/or the Directors. We have assumed that all such statements, information, opinions and representations for matters relating to the Group contained or referred to in the Circular or otherwise provided or made or given by the Group and/or its senior management staff and/or the Directors and for which it is/they are solely responsible were true and accurate and valid at the time they were made and given and continue to be true and valid as at the date of the Circular. We have assumed that all the opinions and representations for matters relating to the Group made or provided by the Directors and/or the senior management staff of the Group contained in the Circular have been reasonably made after due and careful enquiry. We have also sought and obtained confirmation from the Group and/or its senior management staff and/or the Directors that no material facts have been omitted from the information provided and referred to in the Circular.

We consider that we have reviewed all currently available information and documents to enable us to reach an informed view and to justify our reliance on the information provided so as to form a reasonable basis for our opinions. We have no reason to doubt the truth, accuracy and completeness of the statements, information, opinions and representations provided to us by the Group and/or its senior management staff and/or the Directors and their respective advisers or to believe that material information has been withheld or omitted from the information provided to us or referred to in the aforesaid documents. We have not, however, carried out any independent verification of the information provided, nor have we conducted any independent investigation into the business and affairs of the Group or any of its subsidiaries.

IV. PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our recommendation, we have taken into consideration the following principal factors and reasons:

1. Terminal Facilities Design and Construction Services

• 1.1 Background to and reasons for the terminal facilities design and construction services

As disclosed in the Prospectus, PDA owns the terminal facilities construction asset and business and has, for itself and/or its relevant associates, entered into the Terminal Facilities Design and Construction Services Agreement with the Company (for itself and/or on behalf of its relevant subsidiaries) on 23 March 2006, to provide terminal facilities design and construction services including land filling, dredging, caisson precasting and construction of electricity facilities and other supporting facilities.

– 14 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The existing caps set for the terminal facilities design and construction services for the two years ended 31 December 2007 were RMB265,000,000 and RMB223,000,000, respectively, and for the year ending 31 December 2008 is RMB299,740,000 (this revised cap amount was approved by the independent Shareholders on 20 March 2008).

The Company and PDA agreed to renew the Terminal Facilities Design and Construction Services Agreement for a term of three years commencing from 1 January 2009 to 31 December 2011.

• 1.2 Basis for determining the price under the Terminal Facilities Design and Construction Services Agreement

Under the Terminal Facilities Design and Construction Services Agreement, the price in respect of services provided by PDA and/or its relevant associates shall be made in accordance with the following pricing principles:

• the price determined with reference to the relevant pricing policy prescribed by the relevant governmental authority (“State price”);

• where there is no State price, then according to the price at which the same or comparable types of services are provided from independent third parties in the ordinary course of business (“Market price”); and

• where the project is subject to public bidding, the pricing principle established during the open bidding.

• 1.3 Basis for determining the proposed cap amounts of the the terminal facilities design and construction services for each of the three years ending 31 December 2011

Terminal Facilities Design and Construction Services (Historical figures and caps)

Year	Existing cap	Actual value
	(RMB)	(RMB)
2006	265,000,000	167,701,000
2007	223,000,000	155,663,000
2008	299,740,000	109,926,3001

Note:

1. Based on management account of the Company, for the nine months ended 30 September 2008

– 15 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

	**Proposed **	caps
			Year-on-year
Year		Proposed cap	increase
		(RMB)	(%)
2009		305,300,000	Not applicable
2010		404,900,000	32.62%
2011		458,800,000	13.31%

As stated in the “Letter from the Board” for the two years ended 31 December 2007, the aggregate value of the terminal facilities design and construction services provided by PDA and/or its relevant associates to the Group were approximately RMB167,701,000 and RMB155,663,000 respectively, which did not exceed the respective cap amounts of RMB265,000,000 and RMB223,000,000.

Furthermore, the actual value of the terminal facilities design and construction services provided by PDA and/or its relevant associates to the Group for the nine months ended 30 September 2008 amounted to approximately RMB109,926,300, representing approximately 36.7% of the existing cap of RMB299,740,000. We understand from the management of the Company that the reason for the under utilisation of the existing cap for the year ending 31 December 2008 is mainly attributable to the delay in planned construction of certain projects of the Group, namely Xin Gang 18-21# Berths Project (新港18-21#泊位工程), Xin Gang Sewerage and Marine Ballast Water Project (新港污水及船舶壓艙水), and Dahua Heat Supply Pipeline Project* (大化供熱管線工程). We further understand from the management of the Company that the majority of the construction of the above-mentioned projects will be postponed and is currently scheduled to take place in 2009. Therefore, in determining the proposed caps under the Terminal Facilities Design and Construction Services Agreement for the financial year ending 31 December 2009, the Company has also taken into account the estimated usage of the terminal facilities design and construction services for the postponed projects.

We have reviewed the latest planned schedule of construction work to be carried out during the period from year 2009 to 2011. According to the latest planned schedule of construction work, there are nine construction projects in year 2009 (comprising six existing construction projects which are expected to be carried forward from 2008 and three new construction projects scheduled to take place in 2009), eleven construction projects in year 2010 (comprising seven existing construction projects which are expected to be carried forward from 2009 and four new construction projects scheduled to take place in 2010) and eight construction projects in 2011 (comprising seven existing construction projects which are expected to be carried forward from 2010 and one new construction project scheduled to take place in 2011). In

* For identification purpose only

– 16 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

arriving at the proposed caps for each of the three financial years ending 31 December 2011, the Company has also taken into account of the above information from the latest planned schedule of construction work and the growth trend of traffic throughput of the Group in recent years, as illustrated in the following table:

Increasing volume of business handled in recent years

The following table sets out the throughputs of crude oil, liquefied chemicals and containers handled by the Group from year 2005 to 2007.

The oil/liquefied chemicals throughput handled by the Group

	2005	2006	2007
Crude Oil (’000 tonnes)	18,259	20,890	22,882
Refined Oil (’000 tonnes)	13,187	10,968	10,345
Liquefied chemicals (’000 tonnes)	524	879	1,175
Total (’000 tonnes)	31,970	32,737	34,402
Growth rate (%)	5.26%	2.40%	5.09%

The container throughput handled by the Group

	2005	2006	2007
Foreign Trade (’000 TEU)	2,382	2,818	3,328
Domestic Trade (’000 TEU)	216	328	396
Total (’000 TEU)	2,598	3,146	3,724
Growth rate (%)	19.61%	21.09%	18.37%

“TEU” – Twenty-foot equivalent unit

Source: The Company’s annual report 2006 and annual report 2007

As indicated above, the total oil/chemicals throughput handled by the Group increased from approximately 32.0 million tonnes in 2005 to approximately 34.4 million tonnes in 2007, representing a compound growth rate of approximately 3.73%. As stated in the Company’s 2007 annual report, the Group has maintained its leading position in the container terminal and related logistics business of north-eastern China, handling a total container throughput of approximately 3.724 million TEUs in 2007 (approximately 3.146 million TEUs in 2006), representing a year-on-year increase of approximately 18.4% over 2006 (a year-on-year increase of approximately 21.1% over 2005).

Based on a publication of the National Bureau of Statistics of China dated 17 July 2008, for the first six months of 2008, the year-on-year growth of gross domestic product of the PRC has been estimated at approximately 10.4% after deducting price factors, while the year-on-year growth in the value of exports was estimated at approximately 21.9% for the same period.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In assessing the fairness of the proposed annual caps for each of the three financial years ending 31 December 2011, we have reviewed the information and materials supplied by the management of the Company and noted that the proposed annual caps for each of the three financial years ending 31 December 2011 is arrived at with reference to (i) the internal schedule of construction work for each of the three financial years ending 31 December 2011 (including the construction of the above mentioned projects); and (ii) pricing policy as stated above.

Taking into account (i) the work schedules for the period from 2009 to 2011 as described above; (ii) the basis for the annual caps for each of the three financial years ending 31 December 2011 as described above; and (iii) the market environment in north-eastern China, we are of the view that the proposed annual caps for each of the three financial years ending 31 December 2011 of RMB305,300,000, RMB404,900,000 and RMB458,800,000, respectively, under the Terminal Facilities Design and Construction Services Agreement are fair and reasonable.

2. Comprehensive Services

• 2.1 Background to and reasons for the comprehensive services

As disclosed in the Prospectus, PDA has retained certain assets and businesses, which are not related to the core business of the Group. Such businesses include the provision of certain utilities and ancillary services such as supply of electricity and water and provision of landscaping services and conference services. In this connection, the Company (for itself and on behalf of its subsidiaries) and PDA (for itself and on behalf of its relevant associates) have entered into the Comprehensive Services Agreement on 23 March 2006.

The existing caps set for the comprehensive services for the two years ended 31 December 2007 were RMB22,500,000 and RMB29,750,000, respectively, and for the year ending 31 December 2008 is RMB41,750,000 (this revised cap amount was approved by the then independent Shareholders on 20 March 2008).

The Company and PDA agreed to renew the Comprehensive Services Agreements for a term of three years commencing from 1 January 2009 to 31 December 2011.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

• 2.2 Basis for determining the price under the Comprehensive Services Agreement

Under the Comprehensive Services Agreement, the price in respect of services provided by PDA and/or its relevant associates shall be determined in accordance with the following pricing principles:

• state price;

• where there is no state price, then according to the relevant market price; and

• where there is no relevant market price, then according to the contract price.

For the purpose of the Comprehensive Services Agreement:

• “state price” means the price set by or with reference to the relevant laws, regulations, determinations, orders and policies issued by the relevant departments of the PRC government or the price set by or with reference to the relevant laws, regulations, determinations, orders and policies issued by the relevant departments of the PRC government plus the actual cost incurred in providing such services;

• “market price” means the price at which the same or comparable types of services are provided from independent third parties in the ordinary course of business; and

• “contract price” means the actual cost incurred in providing such services.

• 2.3 Basis for determining the proposed cap amounts of the comprehensive services for each of the three years ending 31 December 2011

Comprehensive Services Agreement (Historical figures and caps)

Year	Existing cap	Actual value
	(RMB)	(RMB)
2006	22,500,000	20,693,000
2007	29,750,000	24,468,000
2008	41,750,000	20,086,3001

Note:

1. Based on management account of the Company, for the nine months ended 30 September 2008

– 19 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Proposed caps

	Proposed caps
		Year-on-year
Year	Proposed cap	increase
	(RMB)	(%)
2009	54,950,000	Not applicable
2010	62,840,000	14.36%
2011	75,680,000	20.43%

The figures for the comprehensive services for the two years ended 31 December 2007 were approximately RMB20,693,000 and RMB24,468,000, respectively, representing approximately 92.0% and 82.2% of the respective cap for the two years ended 31 December 2007.

For the nine months ended 30 September 2008, the actual value of comprehensive services amounted to approximately RMB20,086,300, representing approximately 48.1% of the existing cap of RMB41,750,000 for the year ending 31 December 2008. We have discussed with the management of the Company and understand that the current utilisation rate is attributable to the seasonality nature of the expenses, notably heating and electricity related expenses which tend to be consumed at a higher rate during the last quarter of the year.

Based on information provided by the Company, set out below is the breakdown of the comprehensive services comprising the existing cap for the year ending 31 December 2008 and the proposed annual caps for the three years ending 31 December 2011:

Provision of utilities/ ancillary services Electricity/water Telephone Heating/transportation Landscaping Labours (boiler room) Others Total Year-on-year increase_(%)_	For the year ending 31 December 2009 (RMB’000) 32,550 1,440 3,510 2,770 3,130 11,550 54,950 Not applicable	For the year ending 31 December 2010 (RMB’000) 38,790 1,570 3,830 3,090 3,510 12,050 62,840 14.36%	For the year ending 31 December 2011 (RMB’000) 48,520 1,870 4,100 3,090 3,930 14,170
			75,680
			20.43%

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The increase in the proposed cap limit from the existing cap for 2008 is primarily due to the increase in demand for electricity and water supply, and other services (including accommodation, management fees, information technology equipment/software related expenses) mainly brought by the expansion of tugging business and terminal facilities of the Group, and the expected increase in prices for electricity and water supply, and other services.

As stated in the 2007 annual report of the Company, the aggregate number of tugging hours of the Group for the year ended 31 December 2007 was 55,015, an increase of approximately 9.7% over 2006. The main drivers of the growth of tugging hours were the growth of throughput of Dalian port, the business expansion of peripheral shipyards and the expansion of markets outside Dalian port.

For the first six months in 2008, the Group expanded the tugging services in ports outside Dalian. According to the interim report of the Company for the six month ended 30 June 2008, the revenue from port value-added services amounted to approximately RMB135,891,000, which represented an increase of approximately RMB23,767,000 or by approximately 21.2% over the same period in 2007. This revenue increase was mainly caused by the growth of revenue in tugging business and software development business.

Based on the figures of 2007 and 2008 (for the nine months ended 30 September 2008), and taking into account of the above mentioned reasons, the Company proposes the annual caps for the three years ending 31 December 2011 in relation to the comprehensive services to be RMB54,950,000, RMB62,840,000 and RMB75,680,000, respectively.

In assessing the fairness of the proposed annual caps for the three years ending 31 December 2011, we have reviewed the information supplied by the management of the Company and noted that the proposed annual caps for the next three years under the Comprehensive Agreement have been arrived at with reference to (i) the internal estimation; (ii) the continuing development of the business of the Group; (iii) the commencement of operation of new terminal facilities at Xin Gang; and (iv) pricing policy as stated above.

Taking into account (i) the basis for the proposed annual caps for each of the three years ending 31 December 2011; (ii) the market environment mentioned above coupled with the increasing throughput volume of Dalian port and the expansion of tugging business; and (iii) the commencement of operation of new terminal facilities, we are of the view that the proposed annual caps under the Comprehensive Services Agreement are justifiable and fair and reasonable.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3. Reasons for entering into the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement

PDA has been carrying out terminal operations and ancillary terminal operations for many years and has the requisite terminal related experiences and expertise. In preparation of the initial public offering of the Company, the Group has undergone a reorganisation. As a result of such reorganisation, PDA has retained certain assets and businesses, which are not related to the core business of the Group. Such businesses include the provision of port facilities design and construction services, maintenance services, project management services, supervision services and certain utilities and ancillary services. The Directors are of the view that given the extensive experience in the terminal facilities design and construction services and comprehensive services, PDA can provide quality services to meet the Group’s demand in the above mentioned services as well as to accommodate the Group’s cost control. Taking into account the above and the operating needs of the Group and from an economic prospective, the Directors are of the view that, it benefits the Group to continue to retain PDA and/or its associates to provide such services. Besides, all of such transactions have been entered into on terms no less favourable to the Group than terms available from independent third parties. Therefore, the Directors are of the view that it is in the interests of the Company and the Shareholders as a whole to source such services from PDA and its relevant associates.

Given that (i) the services under the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement are normal and basic infrastructural support to the Group’s business and in the ordinary and usual course of business of the Group; and (ii) the prices under the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement are determined under the relevant pricing policies, accordingly, we concur with the view of the Directors that the services provided under the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement are in the ordinary and usual course of business of the Group and on normal commercial terms and are in the interests of the Company and the Shareholders as a whole.

V. RECOMMENDATION

After having considered the above principal factors and reasons, namely (i) the background and reasons for the Continuing Connected Transactions for the three years ending 31 December 2011; and (ii) the proposed annual cap amounts for each of the Continuing Connected Transactions for the three years ending 31 December 2011, we are of the view that the terms of the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement (together with the respective cap amounts) are on normal commercial terms, in the ordinary and usual course of business of the Group and are fair and reasonable so far as the Shareholders are concerned and are in the interests of the Group and the Independent Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend to the Independent Shareholders

– 22 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

to vote in favour of the ordinary resolutions in relation to the renewal of the Terminal Facilities Design and Construction Services Agreement and the Comprehensive Services Agreement (together with the respective annual cap amounts for the three years ending 31 December 2011) at the EGM.

Yours faithfully For and on behalf of Access Capital Limited Jimmy Chung Principal Director

– 23 –

APPENDIX 1

GENERAL INFORMATION

RESPONSIBILITY STATEMENT

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

DISCLOSURE OF INTERESTS

1. Directors, supervisors or chief executive’s interests in securities

As at the Latest Practicable Date, as far as the Company was aware, none of the Directors or chief executive or supervisors of the Company had any interest or short position in the shares, underlying shares or debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies to be notified to the Company and the Stock Exchange.

2. Substantial shareholders’ and other persons’ interests in securities

As at the Latest Practicable Date, so far as was known to any Director or the chief executive of the Company, the persons, other than a Director or chief executive or a supervisor of the Company, who had an interest or a short position in the shares or the 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 were directly or indirectly, interested in 10% or more of the nominal value of any class of share capital (including any options in respect of such capital) carrying rights to vote in all circumstances at general meetings of any other member of the Group were as follows:

		Number of shares/		Percentage of	Percentage of
	Class of	underlying		relevant class	total share
Name of Shareholder	shares	shares held	Capacity	of share capital1	capital2
Dalian Port	Domestic	1,816,815,000	Beneficial	97.50%	62.09%
Corporation	shares	(long position)	owner
Limited
Nippon Yusen	H shares	114,800,000	Interest of	10.80%	3.92%
Kabushiki Kaisha		(long position)	controlled
			corporation
N.Y.K. Line Group	H shares	114,800,000	Interest of	10.80%	3.92%
(Hong Kong)		(long position)	controlled
Limited			corporation

– 24 –

APPENDIX 1

GENERAL INFORMATION

		Number of shares/		Percentage of	Percentage of
	Class of	underlying		relevant class	total share
Name of Shareholder	shares	shares held	Capacity	of share capital1	capital2
N.Y.K. Line (Hong	H shares	114,800,000	Beneficial owner	10.80%	3.92%
Kong) Limited		(long position)
Capital Research and	H shares	95,634,000	Beneficial owner	9.00%	3.27%
Management		(long position)
Company
Fidelity International	H Shares	85,198,000	Beneficial owner	8.02%	2.91%
Limited		(long position)
The National Social	H shares	82,426,000	Beneficial owner	7.76%	2.82%
Security Fund		(long position)
Council
of the PRC
China Shipping	H shares	73,610,000	Interest of	6.92%	2.52%
(Group) Co., Ltd.		(long position)	controlled
			corporation
China Shipping	H shares	73,610,000	Interest of	6.92%	2.52%
(Hong Kong)		(long position)	controlled
Holdings			corporation
Co, Limited
China Shipping	H shares	73,610,000	Beneficial owner	6.92%	2.52%
Terminal		(long position)
Development
(Hong Kong)
Company Limited
Indus Capital	H shares	64,341,200	Interest of	6.06%	2.20%
Partners, LLC		(long position)	controlled
			corporation
Kasowitz Sheldon	H shares	64,341,200	Interest of	6.06%	2.20%
Fenton		(long position)	controlled
			corporation
Kowitz David Nathan	H shares	64,341,200	Beneficial owner	6.06%	2.20%
		(long position)
Schroder Investment	H shares	53,250,000	Beneficial owner	5.01%	1.82%
Management		(long position)
(Hong Kong)
Limited

– 25 –

APPENDIX 1

GENERAL INFORMATION

Notes:

1. The relevant class of share capital: Domestic shares – 1,863,400,000 shares, H shares – 1,062,600,000 shares.

2. Total share capital: 2,926,000,000 shares.

Save as disclosed herein, so far as is known to any of the Directors or chief executive, as at the Latest Practicable Date, no other person (not being a Director or chief executive or a supervisor of the Company) had an interest or a short position in the shares or the 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 which were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital (including any options in respect of such capital) carrying rights to vote in all circumstances at general meetings of any other member of the Group.

SERVICE CONTRACT

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

COMPETING INTEREST

As at the Latest Practicable Date, none of the Directors and their respective associates had any interest in a business which competes or is likely to compete directly or indirectly with any business of the Group.

DIRECTORS’ INTERESTS IN THE GROUP’S ASSETS OR CONTRACTS

As at the Latest Practicable Date, none of the Directors, supervisors, proposed directors or proposed supervisors of the Company had any interest in any assets which have been since 31 December 2007 (being the date to which the latest published audited accounts of the Company were made up) acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group. As at the Latest Practicable Date, none of the Directors or supervisors is materially interested in any contract or arrangement subsisting at the Latest Practicable Date which is significant in relation to the business of the Group.

PROCEDURES FOR DEMANDING A POLL BY SHAREHOLDERS

Pursuant to the articles of association of the Company, a voting shall be made at the shareholders meeting by a show of hands unless a poll is demanded before or after any vote by a show of hands. A poll may be demanded by (i) the chairman of the meeting, (ii) at least two Shareholders or proxies of such Shareholders with voting rights, and (iii) one or more Shareholders including proxy or proxies of such Shareholders accounting individually or jointly 10% or more of the Company shares with voting right(s). Issues to vote by poll concerning election of the chairman or suspension of a meeting shall be taken

– 26 –

APPENDIX 1

GENERAL INFORMATION

forthwith. Other issues, the chairman shall determine the time for taking such poll and the meeting can go on with discussion of other matters. The result of such voting shall also be regarded as the resolution adopted at the meeting. A person who has made a request for voting by poll can withdraw it.

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 2007, being the date of the latest published audited financial statements of the Company.

CONSENT

As at the date of this circular, Access Capital Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and reference to its name and opinion in the form and context in which it appears in this circular.

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

QUALIFICATION OF EXPERTS

The following are the qualifications of the professional adviser who have given opinion or advice contained in this circular:

Name Qualification

Access Capital Limited A licensed corporation under the SFO which engages in Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities.

MISCELLANEOUS

• (a) The joint company secretaries of the Company are Ms. Ma Jinru and Mr. Lee Kin Yu, Arthur. Mr. Lee is a member of the American Institute of Certified Public Accountants and the Hong Kong Institute of Certified Public Accountants.

• (b) The registered office of the Company is at Xingang Commercial Building, Dayao Bay, Dalian Free Trade Zone, the PRC. The place of business of the Company is at No.1, Gangwan Street, Zhongshan District, Dalian, Liaoning Province, the PRC, Postal Code: 116004. The branch share registrar of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited at Rooms 1712-16 Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

– 27 –

APPENDIX 1

GENERAL INFORMATION

• (c) The English text of this document shall prevail over the Chinese text in the case of inconsistency.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the offices of Morrison & Foerster at Edinburgh Tower, 41/F, The Landmark, 15 Queen’s Road Central, Hong Kong during normal business hours on any business day from the date of this circular until 28 November 2008:

• (a) the Continuing Connected Transactions Agreements;

• (b) the letter from the Independent Board Committee dated 4 November 2008, the text of which is set out on pages 10 to 11 of this circular;

• (c) the letter from Access Capital Limited dated 4 November 2008, the text of which is set out on pages 12 to 23 of this circular; and

• (d) the consent letter from Access Capital Limited referred to in the paragraph headed “Consent” in this Appendix.

– 28 –

APPENDIX 2 NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [77 x 34] intentionally omitted <==

==> picture [90 x 23] intentionally omitted <==

大連港股份有限公司 Dalian Port (PDA) Company Limited[*]

(a sino-foreign joint stock limited company incorporated in the People’s Republic of China)

(Stock Code: 2880)

NOTICE OF THE SECOND EXTRAORDINARY GENERAL MEETING IN 2008

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (“EGM”) of Dalian Port (PDA) Company Limited (the “Company”) will be held at Room 602, PDA Group Building, No. 1 Gangwan Street, Zhongshan District, Dalian, Liaoning Province, the PRC at 10:00 a.m. on 19 December 2008, for the purposes of considering and, if thought fit, approving and ratifying the following matters:

ORDINARY RESOLUTIONS

1. approve the renewed Terminal Facilities Design and Construction Services Agreement entered into between the Company and Dalian Port Corporation Limited (“PDA”) for a term of three years commencing from 1 January 2009 and ending on 31 December 2011 and the proposed relevant annual caps; and

2. approve the renewed Comprehensive Services Agreement entered into between the Company and PDA for a term of three years commencing from 1 January 2009 and ending on 31 December 2011 and the proposed relevant annual caps.

By Order of the Board of Directors MA Jinru LEE Kin Yu, Arthur Joint Company Secretaries

4 November 2008

* The Company is registered as an oversea company under Par XI of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) under the English name “Dalian Port (PDA) Company Limited”.

– 29 –

APPENDIX 2 NOTICE OF EXTRAORDINARY GENERAL MEETING

Notes:

1. Each shareholder entitled to attend and vote at the EGM is entitled to appoint one or more proxies to attend and vote on his/her behalf at the EGM. A proxy needs not be a shareholder of the Company. With respect to any shareholder who has appointed more than one proxy, the proxy holders may only vote on a poll. The shareholder shall have one vote for each share that they hold.

2. In order to determine the list of shareholders who are entitled to attend the EGM, the registers of members of the Company will be closed from 19 November 2008 to 19 December 2008, (both days inclusive), during which no share transfer will be registered. Holders of the H Shares and the Domestic Shares whose names appear on the registers of members as at 4:30 p.m. of 19 November 2008 are entitled to attend the EGM. In order to attend and vote at the EGM, holders of H Shares whose transfers have not been registered shall deposit the transfer documents together with the relevant share certificates at the H share registrar of the Company, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 4:30 p.m. on 18 November 2008.

The instruments appointing a proxy must be in writing under the hand of a shareholder or his/her attorney duly authorized in writing. If the shareholder is a corporation, that instrument must be either under the company seal or under the hand of its director or duly authorized attorney. If that instrument is signed by an attorney of the shareholder, the power of attorney authorising that attorney to sign or other authorization documents must be notarized.

The proxy form together with the power of attorney or other authorization document (if any) must be deposited at the office of Board of Directors at No.1, Gangwan Street, Zhongshan District, Dalian, Liaoning Province, the PRC for holders of the Domestic Shares and at the H share registrar, Computershare Hong Kong Investor Services Limited at the address as stated in Note 2 above for holders of the H Shares not less than 24 hours before the time fixed for holding the EGM or any adjournment thereof (as the case may be).

Completion and return of the form of proxy will not preclude shareholders from attending and voting in person at the meeting or any adjourned meeting should you so wish.

Shareholders who intend to attend the EGM in person or by proxy should return the reply slip to the office of the Board of Directors at the address as stated in Note 6 below on or before 5:00 p.m. on 28 November 2008 by hand, by post or by fax.

Shareholders attending the meeting in person or by proxy are required to present their identity certification. If the attending shareholders is a corporation, its legal representative or person authorized by the board or other decision making authority is required to present a copy of the relevant resolution of the board/or other decision making authority approving him/her to attend the meeting on behalf of such corporation.

The contact details of the office of the Board of Directors are as follows:

Room 616, PDA Building No.1, Gangwan Street Zhongshan District Dalian, Liaoning Province PRC Postal Code: 116004 Telephone No.: +86 411 8279 8566-801/811 Facsimile No.: +86 411 8279 8566-805/+86 411 8279 8108

1. The EGM is expected to last for half a day and shareholders (in person or by proxy) attending the meeting shall be responsible for their own transportation and accommodation expenses.

2. The existing Board of Directors of the Company comprises four executive directors, namely Mr. SUN Hong, Mr. ZHANG Fengge, Mr. JIANG Luning and Ms. SU Chunhua, two non-executive directors, namely Mr. LU Jianmin, Mr. Xu Jian, and three independent non-executive directors, namely Mr. ZHANG Xianzhi, Mr. Ng Ming Wah, Charles and Mr. Wang Zuwen.

– 30 –