Liaoning Port Co., Ltd. — Proxy Solicitation & Information Statement 2014

Apr 7, 2014

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 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 and reply slip, 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.

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

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

(Stock Code: 2880)

MAJOR AND CONTINUING CONNECTED TRANSACTIONS – FINANCE LEASE AND NOTICE OF EXTRAORDINARY GENERAL MEETING

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

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A letter from the Board is set out on pages 3 to 11 of this circular.

A letter from the Independent Board Committee to the Independent Shareholders is set out on pages 12 to 13 of this circular and a letter from TC Capital Asia Limited, the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 14 to 23 of this circular.

A notice convening the EGM of the Company to be held at Room 109, PDA Group Building, No. 1 Gangwan Street, Zhongshan District, Dalian City, Liaoning Province, PRC on Friday, 23 May 2014 at 10:00 a.m. are set out on pages EGM-1 to EGM-2 of this circular.

A form of proxy and a reply slip for use in connection with the EGM are enclosed herewith and published on the website of the Hong Kong Stock Exchange (http://www.hkexnews.hk). Whether or not you are able to attend the EGM, please complete, sign 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 no later than 20 days and 24 hours, respectively, before the time designated 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 thereof should you so wish.

• The Company is registered as Non-Hong Kong company under Part XI of the previous Companies Ordinance (equivalent to Part 16 of the Companies Ordinance with effect from 3 March 2014) under the English name “Dalian Port (PDA) Company Limited”.

8 April 2014

CONTENTS

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
LETTER FROM INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . .	12
LETTER FROM INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . . .	14
APPENDIX I – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

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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;

• “A Share(s)” the domestic share(s) issued by the Company denominated in RMB and which is(are) listed on the Shanghai Stock Exchange;

• “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, the H Shares and A Shares of which are listed on the main board of the Hong Kong Stock Exchange and the Shanghai Stock Exchange, respectively;

• “connected person” has the meaning ascribed to it under the Listing Rules;

• “controlling shareholder” has the meaning ascribed to it under the Listing Rules;

• “Director(s)” the director(s) of the Company;

• “DLEFL”

• 大連裝備融資租賃有限公司(Dalian Equipment Finance Lease Company Limited), a subsidiary of PDA;

• “DLEFL Finance Lease Agreement”

• the framework finance lease agreement entered into between the Company and DLEFL on 29 October 2013 in relation to the provision of finance lease by DLEFL to the Group;

• “EGM”

• the extraordinary general meeting of the Company to be held at Room 109, PDA Group Building, No. 1 Gangwan Street, Zhongshan District, Dalian City, Liaoning Province, PRC on Friday, 23 May 2014 at 10:00 a.m. (or any adjournment thereof) for considering, among other things, the Finance Lease Agreement and the proposed relevant annual caps;

• “Finance Lease Agreement”

• the framework finance lease agreement entered into between the Company and PDA on 17 March 2014 in relation to the provision of finance lease (including leaseback) by PDA and/or its subsidiaries and/or associates to the members of the Group;

• “Group”

• the Company and its subsidiaries;

• “Hong Kong”

• the Hong Kong Special Administrative Region of the PRC;

• “Hong Kong Stock Exchange”

• The Stock Exchange of Hong Kong Limited;

• “H Share(s)”

the foreign share(s) in the share capital of the Company, with RMB-denominated par value of RMB1.00 each, which is(are) listed on the Hong Kong Stock Exchange;

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DEFINITIONS

• “Independent Board Committee”

• the independent board committee of the Company comprising Mr. Liu Yongze, Mr. Gui Liyi, Mr. Wan Kam To, Peter and Mr. Yu Long, established for the purpose of considering, among other things, the Finance Lease Agreement and the proposed relevant annual caps;

• “Independent Financial Adviser” or “TC Capital”

• TC Capital Asia Limited, the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the transactions contemplated under the Finance Lease Agreement; and a licensed corporation for Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under SFO;

• “Independent Shareholders”

• the Shareholders other than PDA and its associates;

• “Latest Practicable Date”

• 1 April 2014, being the latest practicable date prior to the printing of this circular for ascertaining certain information herein;

• “Listing Rules” The Rules Governing the Listing of Securities on the Hong Kong Stock Exchange;

• “Ocean Harvest”

• “PDA”

• Ocean Harvest Container Co. Limited (榮海豐集裝箱 有限公司), a subsidiary of 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;

• “PRC” or “China” the People’s Republic of China (for the purpose of this circular, excluding Hong Kong, Macau Special Administrative Region of the PRC and Taiwan);

• “RMB”

• Renminbi yuan, the lawful currency of the PRC;

• “SFO”

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

• “Shanghai Stock Exchange”

• the Shanghai Stock Exchange;

• “Shareholder(s)”

• holder(s) of A Shares or H Shares of the Company;

• “substantial shareholder(s)”

• has the meaning ascribed to it under the Listing Rules; and

• “%”

• per cent.

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LETTER FROM THE BOARD

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

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

(Stock Code: 2880)

Directors: Executive Directors: Hui Kai (Chairman) Xu Song Zhu Shiliang Su Chunhua

Registered office: Xingang Commercial Building Dayao Bay Dalian Free Trade Zone PRC

Principal place of business in the PRC:

Non-executive Directors: Xu Jian Zhang Zuogang

Independent Non-executive Directors: Liu Yongze Gui Liyi Wan Kam To, Peter Yu Long

Xingang Commercial Building Jingang Road Dalian International Logistic Park Zone Liaoning Province PRC

8 April 2014

To the Shareholders

Dear Sir or Madam,

MAJOR AND CONTINUING CONNECTED TRANSACTIONS – FINANCE LEASE AND NOTICE OF EXTRAORDINARY GENERAL MEETING

A. INTRODUCTION

Reference is made to the announcement of the Company dated 17 March 2014 in relation to, amongst other things, the Finance Lease Agreement. The purpose of this circular is to set out, among other things, (i) details of the transactions contemplated under the Finance Lease Agreement and the proposed annual caps and (ii) details of the EGM.

• The Company is registered as Non-Hong Kong company under Part XI of the previous Companies Ordinance (equivalent to Part 16 of the Companies Ordinance with effect from 3 March 2014) under the English name “Dalian Port (PDA) Company Limited”.

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LETTER FROM THE BOARD

B. MAJOR AND CONTINUING CONNECTED TRANSACTIONS – FINANCE LEASE

1. Background

Reference is made to the announcement of the Company dated 29 October 2013, in relation to, among other things, the DLEFL Finance Lease Agreement pursuant to which DLEFL, a subsidiary of PDA, agreed to provide finance leasing to the relevant members of the Group. To further explore its source of financing, on 17 March 2014, the Company entered into the Finance Lease Agreement with PDA, pursuant to which PDA agreed to provide, and/or to procure its subsidiaries and/or associates to provide, similar finance leasing (including leaseback) to the members of the Group.

2. The Finance Lease Agreement

Date

17 March 2014

Parties

PDA; and

The Company

Term

For a term of five years ending on 31 December 2018, unless otherwise terminated in accordance with the terms of the Finance Lease Agreement

Major Terms

• (i) PDA agrees to provide, and/or procure its subsidiaries and/or associates to provide, finance lease (including leaseback) to the relevant members of the Group as per their respective requirements in respect of leasing tangible assets, such as machines, equipment and containers on terms no less favourable to them than terms available from independent third parties;

• (ii) lease payable by the relevant members of the Group shall be determined by reference to market price, and the amount and way of payment shall be provided in each individual agreement by the parties thereto; and

• (iii) with respect to each individual finance lease, the relevant member of the Group shall enter into separate written agreements with PDA and/or its subsidiaries and associates, the terms of which are in all material respects consistent with the binding principles, guidelines, terms and conditions contained in the Finance Lease Agreement.

To ensure the terms, in particular, the pricing terms, of the specific finance lease (including leaseback) to be provided by PDA and/or any of its subsidiaries or associates to the Company and/or any other member of the Group in accordance with the Finance Lease Agreement shall be provided on terms no less favourable to the Company or any other member of the Group than terms available from

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LETTER FROM THE BOARD

independent third parties, the Company has adopted the following rules and internal control mechanism including:

• (i) Tender, quotations and agreement negotiation:

Before entering into individual agreement with a particular leasing company which is a subsidiary or an associate of PDA, the Group shall conduct tender and/or invite several leasing companies to submit quotations or proposals, through which the Group can compare the terms of the agreement (including the lease payable and pricing terms) offered by at least three leasing companies, which are independent of the Company and its connected persons, with the terms offered by PDA or its subsidiaries or associates and the terms offered by the same leasing companies to other independent enterprises. The Group shall then negotiate the pricing terms on the basis that the lease payable by the Group shall not be higher than the rates generally charged on the similar businesses in the market;

• (ii) Review by senior management and the executive Director in charge of the Group’s financial management:

The Company’s financial department has been assigned to be responsible for formulating the proposal for individual agreement based on the tender and negotiation mentioned above. The proposal in writing shall be submitted to the senior management and the executive Director who is charge of the Group’s financial management for review and consideration; and

• (iii) Approval by the Audit Committee of the Board:

The written proposal which has been reviewed by the senior management and the executive Director in charge shall be finally submitted to the Audit Committee of the Board (comprising of one non-executive Director and two independent non-executive Directors) for approval.

Historical Transaction Amount and Estimated Annual Caps

As disclosed above, the Company entered into the DLEFL Finance Lease Agreement on 29 October 2013 pursuant to which DLEFL, a subsidiary of PDA, agreed to provide finance lease to the relevant members of the Group on terms no less favorable to them than terms available from independent third parties. For the year ended 31 December 2013, the actual amount for the transactions under the DLEFL Finance Lease Agreement is RMB1,670,000.

In arriving at the proposed annual caps for the transactions contemplated under the Finance Lease Agreement, the Directors have considered, among other things, the historical transaction amount for the finance leasing with DLEFL, the annual caps for the transactions under the DLEFL Finance Lease Agreement for each of the five years ending 31 December 2014, 2015, 2016, 2017 and 2018 (the “ DLEFL Annual Caps ”), being RMB15,000,000, RMB17,000,000, RMB18,000,000, RMB19,000,000 and RMB20,000,000, respectively, which have been disclosed in the Company’s announcement dated 29 October 2013, the prevalent market conditions (including interest rate of 6.30% per annum, which was the best interest rate quoted by the Company from independent commercial banks), the expected increase in the amount of assets to be arranged with finance lease (including leaseback), and the nature, value and useful life of the relevant assets as detailed below.

(i) Finance lease with DLEFL:

As disclosed in the Company’s announcement dated 29 October 2013, there was no historical finance lease transaction between the Group and

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LETTER FROM THE BOARD

DLEFL prior to the Company entering into the DLEFL Finance Lease Agreement on 29 October 2013. The Group commenced financing lease transaction with DLEFL near the end of 2013, therefore, the Group recorded an actual amount of RMB1,670,000 for the year ended 31 December 2013 for the transaction under the DLEFL Finance Lease Agreement. Although this amount is substantially short of the RMB6.0 million annual cap that the Company initially planned, the shortfall is insignificant as compared to the asset base of the Company. The Company is planning to increase this amount over the years as the Group finance leases a larger portion of its assets.

In arriving at the annual caps for the finance lease with DLEFL under the new Finance Lease Agreement, the Company has added an estimated annual cap increase of RMB40 million in 2014 with an further annual increment of RMB5 million per year in subsequent years on the existing annual cap for finance lease with DLEFL. This increment basis was arrived after considering that the Company’s plan to acquire various port related assets, including two tug boats at an estimated cost of RMB50 million each and four container ships of 6,000 twenty-foot equivalent unit (“ TEU ”) at an estimated cost of RMB80 million each. In view of the Group’s current plan to enter into finance lease with DLEFL in respect of a tug boat and a container ship, for which the Group will incur a total estimated cost of RMB130 million over a five-year period, the Directors are of the view that the estimated annual caps in respect of such finance lease with DLEFL for each of the five years ending 31 December 2018 are fair and reasonable and in the interest of the Company and its Shareholders as a whole.

(ii) Leaseback with DLEFL:

Having considered the current high interest rates of the bank loans in the PRC, and the relatively less interest cost incurred by leaseback than external financing from commercial bank loans, the Company has decided to leaseback its existing assets to finance the operations of the Group. While leasing of assets is highly dependent on the useful life and types of assets to be leased, under the leaseback with DLEFL the Company has packaged various assets of the Group and obtained quotation on a consolidated basis for a three-year tenure. Therefore, the impact of the asset type is minimal and the asset values are consolidated to ensure they are sufficient to meet the leasing requirements.

Based on the annual result for the year ended 31 December 2013 of the Company, the Company has fixed assets of RMB22.2 billion. Current portion of the borrowings during the year consisted of short term borrowings of approximately RMB395 million, and long term borrowing due within one year of approximately RMB316 million and bonds payable within one year of approximately RMB3,209 million. The Company intends to use its assets amounting to RMB2 billion after depreciation for the purposes of a three-year leaseback with repayment of the principal lease amount in 2017. Based on a loan principal amount of RMB2 billion and the aforesaid cost of financing of 6.30% per annum, the annual interest cost would amount to approximately RMB126 million. Consequently, the Directors are of view that the annual caps for the leaseback with DLEFL in the years ending 31 December 2014, 2015 and 2016 are fair and reasonable, taking into account a small buffer has been added into the interest cost of RMB63 million for half a year or RMB126 million for a full year of interest cost. As regards the annual caps for the year ending 31 December 2017, the annual caps was derived based on the RMB2 billion financing principal plus remaining interest cost for the remainder of the three-year tenure.

(iii) Finance lease with Ocean Harvest:

In order to fulfill the significant demand for containers in supporting its business needs, the Company has planned to enter into finance leasing with

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LETTER FROM THE BOARD

Ocean Harvest to finance the construction and purchase of containers. In this connection, the Group has planned to acquire a total of 13,200 TEU containers over the next few years to support the services provided by the Group. Based on the current market prices, the Company expects the aforesaid 13,200 TEU containers would cost approximately RMB177 million.

If the aforesaid containers are leased financed over a four-year period, the Company expects the monthly interest cost to be approximately RMB0.93 million (or an annual interest costs of approximately RMB11.15 million). Aside from the annual interest repayment, the Company intends to annually repay a portion of the principal so that the total repayment amount payable towards the expiry of the finance lease will be lowered. Therefore, in view of the annual principal and interest repayment of approximately RMB13 million per year, and a buffer over the estimated annual financing and repayment requirement (except the amount for 2014 would only be half of the annual amount, assuming the transaction shall take place in the second half of 2014), the Directors are of the view that the annual caps for the years ending 31 December 2014, 2015, 2016 and 2017 in respect of the finance lease with Ocean Harvest are fair and reasonable. In arriving at the estimated annual cap for the year ending 31 December 2018, the Directors have considered the need to account for the repayment of principal and interest cost of approximately RMB5.6 million for the remaining half year of lease tenure in the year ending 31 December 2018.

The following table sets out the historical transaction amount in relation to the transactions and the estimated annual caps for the finance lease (including leaseback) to be provided by PDA and/or its subsidiaries and associates to the Group under the Finance Lease Agreement for each of the five years ending 31 December 2014, 2015, 2016, 2017 and 2018 (including the DLEFL Annual Caps):

Transaction amount for the year ended 31 December 2013 (RMB’000) Finance Lease with DLEFL 1,670 Leaseback with DLEFL – Finance Lease with Ocean Harvest – Total 1,670	2014 (RMB’000) 55,000 78,830 12,400 146,230	Estimated annual caps for the year ending 31 December 2015 2016 2017 (RMB’000) (RMB’000) (RMB’000) 62,000 68,000 74,000 137,000 137,000 2,058,170 27,900 26,800 25,800 226,900 231,800 2,157,970	2018 (RMB’000) 80,000 – 142,300
			222,300

In view of the above, the Directors consider that the proposed annual caps for the transactions contemplated under the Finance Lease Agreement for each of the five years ending 31 December 2014, 2015, 2016, 2017 and 2018 are fair and reasonable and in the interest of the Company and its Shareholders as a whole.

Internal control measures in relation to annual caps

To ensure the proposed annual caps for the transactions under the Finance Lease Agreement will not be exceeded, a designated continuing connected transaction management team established by the Company back in 2006 in connection with the initial public offering its H Shares in Hong Kong will monitor the transactions under the Finance Lease Agreement in

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LETTER FROM THE BOARD

accordance with the terms of the agreement and its Connected Transaction Management Rules adopted by the Board in 2006. The Company will also compile report of continuing connected transaction on a quarterly basis, cross-check the actual amounts against the proposed annual caps, and regularly report to the independent non-executive Directors of the Company to ensure the proposed annual caps will not be exceeded.

3. Reasons and benefits of the Finance Lease Agreement

The Directors believe that, by entering into the Finance Lease Agreement, the Group is able to access an alternative source of financing for its business operations from PDA and/or its subsidiaries or associates in addition to DLEFL with low-cost funds under the current situation with tighter credit conditions. The Directors also consider that PDA and/or its subsidiaries or associates, with its relationship with the Group and deep knowledge of the business of the Group, is able to provide high quality and individualized finance lease services to the Group in a timely manner.

With respect to the five-year term of the Finance Lease Agreement, the Directors have considered the following factors and circumstances to justify the duration of the agreement:

• a. Working capital planning: A longer duration of the Finance Lease Agreement enables the Group to repay the costs of the machines, equipment, containers and other assets over a longer period of time, which in turn allows greater flexibility for the planning of working capital by the relevant members of the Group; and

• b. Useful lives of the relevant assets under the Finance Lease Agreement: The Directors estimated that the useful lives of machines, equipment and containers range from 3 to 15 years, depending on the type of the asset. It is a common feature of a finance lease where the lease term represents a major part of the useful life of the leased item.

The Directors are of the view that the abovementioned factors and circumstances justify a longer duration of the Finance Lease Agreement of 5 years, and are of the view that the duration of the Finance Lease Agreement is in line with the business practices for lease agreements of these asset types, fair and reasonable and in the interest of the Group and the Shareholders as a whole.

Taking into account the major terms of the Finance Lease Agreement as disclosed above, the Directors are of the view that the Finance Lease Agreement was arrived at after arm’s length negotiations between the parties and has been entered into on normal commercial terms in the ordinary and usual course of business of the Group, and the terms of the Finance Lease Agreement including the proposed annual caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole. The Company shall comply with the requirements under the Listing Rules for its future acquisitions of assets where necessary.

4. Effects on the earnings and assets and liabilities of the Company

As mentioned in the paragraph headed “Reasons and benefits of the Finance Lease Agreement”, with entering into the Finance Lease Agreement, the Group is able to access to an alternative source of financing for its business operations with low-cost funds under the current situation with tighter credit conditions, therefore, the Directors believe the finance leasing (including leaseback) contemplated under the agreement will have a positive impact on the Group’s earnings.

The assets and liabilities of the Group shall increase as the funds from the finance leasing (including leaseback) contemplated under the Finance Lease Agreement will be used to repay the Group’s existing bank borrowings and to

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LETTER FROM THE BOARD

supplement working capital. However, the Directors believe that the finance leasing (including leaseback) will not have a significant impact on the assets and liabilities of the Group.

5. Information about the parties

The principal activities of the Group are: (i) the provision of terminal and related logistics services for oil products and liquefied chemicals; (ii) the provision of terminal and related logistics services for containers; (iii) automobile terminal and related logistics services; (iv) ore terminal and related logistics services; (v) general cargo terminal and related logistics services; (vi) bulk grain terminal and related logistics services; (vii) passenger and roll-on, roll-off terminal and related logistics services; and (viii) port value-added services and ancillary port operations.

PDA is principally engaged in port development, port related logistics business, financial services and property development. It is the controlling shareholder of the Company, holding approximately 55.62% of the total issued share capital of the Company as at the Latest Practicable Date.

6. 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, any transaction contemplated under the Finance Lease Agreement constitutes a continuing connected transaction for the Company under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios for the transactions contemplated under the Finance Lease Agreement, on annual basis, exceed 5%, such transactions are subject to the reporting, annual review, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios for the transactions contemplated under the Finance Lease Agreement, on annual basis, exceed 25%but less than 75%, the transactions contemplated under the Finance Lease Agreement also constitute a major transaction for the Company and are subject to reporting, announcement and independent shareholders’ approval requirements under Chapter 14 of the Listing Rules.

Each of Mr. Hui Kai, Mr. Xu Song, Mr. Xu Jian and Mr. Zhang Zuogang, being a Director, also holding a management position with PDA, has abstained from voting on the board resolution approving the Finance Lease Agreement and the proposed annual caps. Save as disclosed above, none of the Directors attending the board meeting has a material interest in the Finance Lease Agreement. PDA and its associates will abstain from voting on the resolutions in relation to the Finance Lease Agreement at the EGM.

The Board has appointed an independent board committee comprising all independent non-executive Directors, namely, Mr. Liu Yongze, Mr. Gui Liyi, Mr. Wan Kam To, Peter and Mr. Yu Long, each of whom has no material interests in the transactions, to consider and advise the Independent Shareholders on the terms of the Finance Lease Agreement and the proposed annual caps for each of the five years ending 31 December 2014, 2015, 2016, 2017 and 2018.

The Independent Financial Adviser has also been appointed to advise the Company’s independent board committee and the Independent Shareholders as to whether the terms of the Finance Lease Agreement and the proposed annual caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

C. EGM

The EGM is to be held at Room 109, PDA Group Building, No. 1 Gangwan Street, Zhongshan District, Dalian City, Liaoning Province, PRC on Friday, 23 May 2014 at 10:00 a.m. to approve the resolutions in relation to the Finance Lease Agreement and the proposed annual caps for each of the five years ending 31 December 2014, 2015, 2016, 2017 and 2018.

Pursuant to Rule 14A.54 of the Listing Rules, any connected person and any shareholder and their associates with a material interest in the Finance Lease Agreement are required to abstain from voting on the resolution in respect of the transactions contemplated thereunder at the EGM. Therefore, PDA, the controlling shareholder of the Company, together with its associates is required to abstain from voting at the EGM in respect of resolutions to approve the Finance Lease Agreement and the proposed annual caps thereunder.

The notice of EGM is set out on pages EGM-1 to EGM-2 of this circular. Whether or not you are able to attend the EGM, please complete and return the reply slip and the proxy form in accordance with the instructions printed thereon as soon as practicable and in any event no later than 20 days and 24 hours, respectively, before the time designated for holding the EGM or any adjournment thereof. Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

In order to determine the holders of H Shares who are entitled to attend the EGM, the H Share register of members of the Company will be closed from Thursday, 24 April 2014 to Friday, 23 May 2014 (both days inclusive), during which no transfer of H Shares will be effected. Holders of H Shares whose names appear on the H Shares register of members as at 24 April 2014 are entitled to attend and vote at the EGM. In order to qualify for attending and voting at the EGM, instruments of transfer accompanied by share certificates and other appropriate documents in respect of transfer of H Shares must be lodged with the Company’s H Share registrar, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 4:30 p.m. on 23 April 2014.

Pursuant to Rule 13.39(4) of the Listing Rules, the votes of the Shareholders at the EGM shall be taken by poll.

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LETTER FROM THE BOARD

D. RECOMMENDATIONS

The Independent Board Committee has been appointed to advise the Independent Shareholders in connection with the Finance Lease Agreement and the proposed relevant annual caps. The Independent Board Committee, having considered the terms of the Finance Lease Agreement and the factors and reasons considered by the Independent Financial Adviser and its opinion as stated in its letter of advice, considers that the transactions contemplated under the Finance Lease Agreement and the proposed annual caps for such transactions for each of the five years ending 31 December 2014, 2015, 2016, 2017 and 2018 are fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Group and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favor of the relevant resolution to be proposed at the EGM in respect of the Finance Lease Agreement and the proposed annual caps.

Given that the Directors (including the independent non-executive Directors whose opinion stated in the letter from the Independent Board Committee to the Independent Shareholders set out on pages 12 to 13 of this circular) are of the view that the Finance Lease Agreement were entered into in the ordinary and usual course of business of the Group, and on normal commercial terms, or on terms no less favourable to the Group than terms available from independent third parties, and that the proposed annual caps for such transactions for each of the five years ending 31 December 2014, 2015, 2016, 2017 and 2018 are fair and reasonable and in the interests of the Company and its Shareholders as a whole, the Directors recommend that the Independent Shareholders should vote in favor of the ordinary resolution in respect of the Finance Lease Agreement, as well as the proposed annual caps of such transactions.

Yours faithfully, By Order of the Board Hui Kai Chairman

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LETTER FROM INDEPENDENT BOARD COMMITTEE

The following is the text of the letter of recommendation, prepared for incorporation in this circular, from the Independent Board Committee to Independent Shareholders regarding the Finance Lease Agreement and the proposed annual caps of such transactions. Dalian Port (PDA) Company Limited[*] 大連港股份有限公司

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

(Stock Code: 2880)

8 April 2014

To the Independent Shareholders

Dear Sir or Madam,

MAJOR AND CONTINUING CONNECTED TRANSACTION

We refer to the circular of the Company to its shareholders dated 8 April 2014 (the “ Circular ”), of which this letter forms part. Unless the context requires otherwise, capitalized terms used in this letter will have the same meanings as defined in the Circular.

We have been appointed by the Board as the Independent Board Committee to advise the Independent Shareholders on whether the terms of the Finance Lease Agreement, the transactions contemplated thereunder and the proposed annual caps for such transactions for each of the five years ending 31 December 2014, 2015, 2016, 2017 and 2018 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. TC Capital Asia Limited (“ TC Capital ”) 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 11 of the Circular, which contain, among other things, details of the Finance Lease Agreement and the “Letter from the Independent Financial Adviser” set out on pages 14 to 23 of the Circular, which contains its advice in respect of the terms of the Finance Lease Agreement, the transactions contemplated thereunder and the proposed annual caps for such transactions for each of the five years ending 31 December 2014, 2015, 2016, 2017 and 2018.

As the Independent Board Committee, we have discussed with the management of the Company the reasons for entering into the Finance Lease Agreement, the basis upon which the terms of the Finance Lease Agreement have been determined and the major factors taken into account by the Company in arriving at the proposed annual caps for the transactions contemplated under the Finance Lease Agreement. We have also considered the key factors taken into consideration by the Independent Financial Adviser in forming its opinion regarding the terms of the Finance Lease Agreement, the transactions contemplated thereunder and the proposed annual caps for such transactions for each of the five years ending 31 December 2014, 2015, 2016, 2017 and 2018 as set out in the “Letter from the Independent Financial Adviser” set out on pages 14 to 23 of the Circular, which we urge you to read carefully.

• The Company is registered as Non-Hong Kong company under Part XI of the previous Companies Ordinance (equivalent to Part 16 of the Companies Ordinance with effect from 3 March 2014) under the English name “Dalian Port (PDA) Company Limited”.

– 12 –

LETTER FROM INDEPENDENT BOARD COMMITTEE

Having considered the advice given by the Independent Financial Adviser and key factors in arriving at its advice, we consider that the Finance Lease Agreement were entered into in the Group’s ordinary and usual course of business of the Group and on normal commercial terms, or on terms no less favourable to the Group than terms available from independent third parties, and the terms of the Finance Lease Agreement including the proposed annual caps are 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 favor of the ordinary resolution in respect of the Finance Lease Agreement and the proposed annual caps for such transactions for each of the five years ending 31 December 2014, 2015, 2016, 2017 and 2018.

Yours faithfully, For and on behalf of the Independent Board Committee

Liu Yongze	Gui Liyi	Wan Kam To, Peter	Yu Long
Independent	Independent	Independent	Independent
non-executive	non-executive	non-executive	non-executive
Director	Director	Director	Director

– 13 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

The following is the full text of a letter from TC Capital Asia Limited, the Independent Financial Adviser, for the purpose of inclusion in this circular, to the Independent Board Committee and the Independent Shareholders regarding the Finance Lease Agreement and the proposed annual caps of such transactions.

==> picture [191 x 59] intentionally omitted <==

8 April 2014

The Independent Board Committee and the Independent Shareholders Dalian Port (PDA) Company Limited

Dear Sir/Madam,

MAJOR AND CONTINUING CONNECTED TRANSACTIONS – FINANCE LEASE

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Finance Lease Agreement. Details of the terms of the Finance Lease Agreement are set out in the “Letter from the Board” (the “ Board Letter ”) contained in the circular of the Company dated 8 April 2014 issued to the Shareholders (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular, unless otherwise specified.

Background and terms of Finance Lease Agreement are set out in the Board Letter in the Circular. Our role as independent financial adviser is to give our opinion as to whether the Finance Lease Agreement and the transactions contemplated thereunder are in the interests of the Company, on normal commercial terms, fair and reasonable insofar as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole.

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, any transaction under the Finance Lease Agreement constitutes a continuing connected transaction for the Company under Chapter 14A of the Listing Rules. As one or more of the applicable percentage ratios for the transactions contemplated under the Finance Lease Agreement, on annual basis, exceed 25% but less than 75%, such transactions are subject to, among other things, the reporting, annual review, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

BASIS OF OUR OPINION

In formulating our opinion and recommendation, we have considered, among other things, (i) the Finance Lease Agreement; (ii) the 2013 interim report and the 2013 annual results announcement of the Company dated 27 March 2014; and (iii) other information as set out in the Circular. We have also relied on all relevant information, opinions and facts supplied and represented by the Company, the Directors and the management of the Company. We have assumed that all such information, opinions, facts and representations contained or referred to in the Circular, for which the Company is fully responsible, were

– 14 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

true and accurate in all respects as at the date hereof and may be relied upon. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Company, and the Company has confirmed that no material facts have been withheld or omitted from the information provided and referred to in the Circular, which would make any statement therein misleading.

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

PRINCIPAL FACTORS AND REASONS CONSIDERED IN RELATION TO THE FINANCE LEASE AGREEMENT

In formulating our opinions in respect of the Finance Lease Agreement, we have taken into consideration the following principal factors and reasons:

1. Background

Reference is made to the announcement of the Company dated 29 October 2013, in relation to, among other things, the DLEFL Finance Lease Agreement pursuant to which DLEFL, a subsidiary of PDA, agreed to provide finance leasing to the relevant members of the Group. In order to further explore its source of financing, on 17 March 2014, the Company entered into the Finance Lease Agreement with PDA, pursuant to which PDA agreed to provide, and/or to procure its subsidiaries and/or associates to provide, similar finance leasing (including leaseback) to the members of the Group.

2. Major terms of the Finance Lease Agreement

As set out in the Board Letter, the major terms of the Finance Lease Agreement are as follows:

Date

17 March 2014

Parties

PDA; and

The Company

Term

For a term of five years ending on 31 December 2018, unless otherwise terminated in accordance with the terms of the Finance Lease Agreement

– 15 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Major Terms

• (i) PDA agrees to provide, and/or procure its subsidiaries and/or associates to provide, finance lease (including leaseback) to the relevant members of the Group as per their respective requirements in respect of leasing tangible assets, such as machines, equipment and containers on terms no less favourable to them than terms available from independent third parties;

• (ii) lease payable by the relevant members of the Group shall be determined by reference to market price, and the amount and way of payment shall be provided in each individual agreement by the parties thereto; and

• (iii) with respect to each individual finance lease, the relevant member of the Group shall enter into separate written agreements with PDA and/or its subsidiaries and associates, the terms of which are in all material respects consistent with the binding principles, guidelines, terms and conditions contained in the Finance Lease Agreement.

3. Pricing policies of the Finance Lease Agreement

We have reviewed the Finance Lease Agreement and conducted discussions with the management of the Company regarding the major terms therein. We note that, based on the terms of the Finance Lease Agreement, PDA agrees to provide, and/or procure its subsidiaries and/or associates to provide, finance lease (including leaseback) to the relevant members of the Group as per their respective requirements in respect of leasing machines, equipment and containers on terms no less favourable to them than terms available from independent third parties.

Based on our discussions with the management of the Company and the information provided, we understand that the Company has sought for the same finance leasing services from independent third parties, including Bank of Communications Financial Leasing Co., Ltd. and CCB Financial Leasing Corporation Limited (the “ Leasing Companies ”). Due to the different types of assets to be financed, the Company has informed us that they will compare offers from independent third parties for the same asset classes with interest rates and payment terms/tenure as the key determinants. Currently, the Company has quoted financing of various assets that is planned to be financed and the interest rates offered are higher than that quoted from PDA. In addition, under the quotation from the Leasing Companies, the Company has to repay the interest and principal quarterly, while under the terms of the Finance Lease Agreement, only interest is to be repaid quarterly and the principal is to be repaid at maturity or early redeemed in full. This provides the Company a higher flexibility and lessens the financial burden of principal repayment that could put unnecessary strain on the Company’s cash flow.

In consideration of the lower financing cost and better repayment terms, we are of the view that the terms of the Finance Lease Agreement is fair and reasonable and in the interests of the Company and its Shareholders as a whole.

– 16 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

4. Reasons for and benefit of the Finance Lease Agreement

As stated in the Board Letter, by entering into the Finance Lease Agreement, the Group is able to access to an alternative source of financing for its business operations from PDA and/or its subsidiaries or associates in addition to DLEFL with low-cost funds under the current situation with tighter credit conditions. The Directors also consider that PDA and/or its subsidiaries or associates, with its relationship with the Group and deep knowledge of the business of the Group, is able to provide high quality and individualized finance lease services to the Group in a timely manner.

We are of the view that finance leasing of fixed assets are common strategies used to fund a company’s asset purchase, in particular equipment, machinery or fixed assets that financial institutions are comfortable in accepting as collateral. As the Company intends to finance the acquisition of machines, equipment and containers using finance leasing, we are of the view that the use of finance leasing is in the ordinary and usual course of business of the Company. Furthermore, the terms of the Finance Lease Agreement is better compared to those offered by independent third party banks resulting in entering of the Finance Lease Agreement to be fair and reasonable and in the interests of the Company and its Shareholders as a whole.

5. The Annual Cap

Set out below are the proposed finance lease amounts to be provided by PDA to the Company for each of the five years ending 31 December 2014, 2015, 2016, 2017 and 2018:

	Transaction
	amount
	for the year
	ended		Estimated annual		caps
	31 December 2013Note	2014	for the year ending 31 2015 2016		December 2017	2018
	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
Finance Lease with DLEFL	1,670	55,000	62,000	68,000	74,000	80,000
Leaseback with DLEFL	–	78,830	137,000	137,000	2,058,170	–
Finance Lease with Ocean
Harvest	–	12,400	27,900	26,800	25,800	142,300
Total	1,670	146,230	226,900	231,800	2,157,970	222,300

Note: The DLEFL Finance Lease Agreement is a new arrangement which was signed on 29 October 2013. Other than the transaction amount for the year ended 31 December 2013 as disclosed above, there are no historical transactions recorded between the Company and DLEFL for the year ended 31 December 2011 and 2012.

As advised by the Company, in arriving at the proposed annual caps for the transactions contemplated under the Finance Lease Agreement, the Directors have considered, among other things, the historical transaction amount for the finance leasing with DLEFL, the annual caps for the transactions under the DLEFL Finance Lease Agreement which have been disclosed in the Company’s announcement dated 29 October 2013, the prevalent market conditions (including interest rate of bank loans), the current construction progress and future construction plan of the Company, the expected increase in the amount of assets to be arranged with finance lease (including leaseback), and the nature, value and useful life of the relevant assets.

In assessing the fairness and reasonableness of the proposed annual caps, we have discussed with the management of the Company and have used an interest rate of 6.3% per annum, which was the best rate obtained by the Company from independent commercial banks recently, in determining the annual caps of the above transactions and arrived at the following conclusions:

– 17 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Finance Lease with DLEFL

The finance lease with DLEFL was entered into by the Company in 29 October 2013 after noting that it is in the interest of the Company to commence financing activities from DLEFL at a better rate than independent commercial banks. As the continuing connected transaction just started at the end of 2013, there is minimal transaction amounting to approximately RMB1.7 million worth of assets being financed by DLEFL. Although this amount is substantially short of the RMB6.0 million annual cap that the Company has initially planned, the shortfall is insignificant compare to the asset based of the Company. The Company is planning to increase this amount over the years as the Company finance leases a larger portion of its assets.

The annual caps for the existing DLEFL Finance Lease Agreement for each of the five years ending 31 December 2014, 2015, 2016, 2017 and 2018 (the “ DLEFL Annual Caps ”), being RMB15,000,000, RMB17,000,000, RMB18,000,000, RMB19,000,000 and RMB20,000,000, respectively, have been disclosed in the Company’s announcement dated 29 October 2013. In arriving at the annual caps for the finance lease with DLEFL under the new Finance Lease Agreement, the Company has added an estimated annual cap increase of RMB40 million in 2014 with an increment of RMB5 million per year on to the existing DLEFL Annual Caps. This increment basis was arrived after considering that the Company intends to acquire various port related assets, including 2 tug boats at an estimated cost of RMB50 million each and 4 container ships of 6,000 twenty-foot equivalent unit (“ TEU ”) at an estimated cost of RMB80 million each.

The Company currently plans to finance a tug boat and a container ship utilising finance lease from DLEFL. We have calculated and noted that if the Company decided to finance lease a tug boat and a container ship with a total estimated cost of RMB130 million over a 5 year period, its financing cost would be approximately RMB30 million per year. As for the remaining 4 vessels, the Company has not decided on their financing method and will decide on the appropriate financing method as and when the Company decides to place the order for these vessel, taking into consideration the then financing market and other alternative fundings available to the Company. Therefore, in view of the ships may be purchase over the years and payments may be in tranches, we are of the view that the annual cap increase for finance lease with DLEFL is fair and reasonable and in the interest of the Company and Shareholders as a whole.

Leaseback with DLEFL

Due to the current high interest rates in the PRC, the Company has noted that they will incur less interest cost if they leaseback their assets instead of borrowing from commercial banks, in particular Bank of China, Industrial and Commercial Bank of China, China Construction Bank and Bank of Communications, who have either quoted interest rates higher than that of the leaseback or conditions that is not acceptable to the Company. Therefore, the Company has decided to leaseback its existing assets to finance the operations of the Company. While leasing of assets is highly dependent on the useful life and types of assets to be leased, under the leaseback with DLEFL, the Company has packaged the various assets of the Group and obtained quotation on a consolidated basis for a 3 year tenure. Therefore, the impact of the asset type is minimal and the asset values are consolidated to ensure they are sufficient to meet the leasing requirements.

– 18 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Based on the annual results of the Company for the year ended 31 December 2013, the Company has non-current assets of approximately RMB22.2 billion. Current portion of the borrowings during the year consists of short term borrowings of approximately RMB395 million and long term borrowing due within 1 year of approximately RMB3,209 million. The Company has provided us with a complete list of assets amounting to approximately RMB2 billion after depreciation, which they intend to use for the purpose of a 3 years leaseback with repayment of the principal lease amount in 2017. Based on a loan principal amount of RMB2 billion and the aforesaid cost of financing of 6.30% per annum, the annual interest cost would amount to approximately RMB126 million. Consequently, we are of the view that the annual caps for the leaseback with DLEFL in the years 2014 to 2016 is fair and reasonable taking into account a small buffer is added into the interest cost of RMB63 million for half a year or RMB126 million for a full year of interest cost. As for the year 2017, the annual cap was derived based on the RMB2 billion financing principal plus remaining interest cost for the remainder of the 3 years tenure. We have also reviewed the asset list and are of the view that the proposed leaseback with DLEFL and the annual caps have been determined with adequate basis. Therefore, we are of the view that the annual caps for the leaseback with DLEFL are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

Finance Lease with Ocean Harvest

The finance leasing with Ocean Harvest is aimed at financing the construction and purchase of containers. As a port operator, the Company requires significant amount of containers to meet the shipping requirements of its customers. As such, the Company has planned to acquire a total of 13,200 TEU containers over the next few years to support the services provided by the port. Based on current market prices, the aforesaid 13,200 TEU containers would cost approximately RMB177 million.

We have calculated and noted that if the aforesaid containers are finance leased over a 4 year period based on the 6.3% per annum aforesaid interest rate, its per month interest cost would be approximately RMB0.93 million or RMB11.15 million per year. Aside from repayment of the interest annually, the Company also intends to repay a portion of the principal to lower the total repayment towards the end of the financing period. Therefore, in view of the annual repayment of interest plus principal of approximately RMB13 million a year, we are of the view that the annual caps with a buffer over the estimated annual financing and repayment requirement (with the exception of 2014 whereby the amount is half assuming this exercise only starts during the 2nd half of 2014), for finance lease with Ocean Harvest is fair and reasonable for the years ending 31 December 2014 to 2017.

As for the year ending 31 December 2018, the Company indicated that they would repay the principal together with the remaining 6 months interest of the lease tenure. We have calculated based on the above calculation, the remaining value of the loan after 3.5 years of financing installments, which will reduce the principal amount of RMB177 million by approximately RMB45 million to approximately RMB132 million. As the proposed annual cap for 2018 will need to account for the remaining half year of interest cost of approximately RMB5.6 million, we are of the view that the annual cap for the year ended 31 December 2018, is fair and reasonable.

Therefore, we are of the view that the annual caps of the finance leasing with Ocean Harvest for each of the 5 years from 2014 to 2018 is fair and reasonable and in the interest of the Company and Shareholders as a whole.

– 19 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

6. Duration of the Finance Lease Agreement

In considering whether the duration of the Finance Lease Agreement is the normal business practice for agreements of this type, we have considered the following principal factors and reasons:

A. Working capital planning

By entering into the Finance Lease Agreement with longer duration, the Group’s payments on the costs of the machines, equipment and containers are allowed to be effected over a longer period. Thus, it would be easier for the relevant members of the Group to acquire the machines, equipment and containers under a sixty three-month lease than a three-year lease as the lease payment under a three-year lease would be higher and create a greater stress to the planning of working capital by the relevant members of the Group.

B. Useful lives of machines, equipment, containers and vessels

The Directors estimate that the useful lives of machines, equipment, containers and vessels of the Company currently range from 3 to 15 years, depending on the type of asset. It is one of the typical features of a finance lease that the lease term represents a major part of the leased item’s useful life. As advised by the management of the Company, the Company plans to acquire 2 tug boats, 4 container ships and a significant amount of containers over the next few years to support the services provided by the Group. Therefore, we are of the view that it is fair and reasonable, and a normal business practice to lease these machines, equipment, containers and vessels of the Company, which have useful lives ranging from 3 to 15 years, for periods longer than three years.

C. Lease transactions of companies listed on the Stock Exchange

We have performed a search of finance leases transactions involving equipment, machinery and vessels during the period from 1 January 2011 to 1 January 2014 which were entered into by companies operating in the port or marine industry and such transactions have been announced on the website of the Stock Exchange. The search results are summarized in the following table:

	Stock	Announcement	Finance leased	Lease
Company	Code	Date	assets	Period
Cosco Pacific	1199	30 October 2012	Gantry cranes &	8 years
Limited			packaged
			substations
Cosco Pacific	1199	8 June 2012	Empty container	8 years
Limited			stacking
			machine
Sinotrans Shipping	368	4 January 2011	Vessel	5 years
Limited
China International	2039	12 September 2013	Vessel	17 years
Marine Containers
(Group) Company
Limited

– 20 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

	Stock	Announcement	Finance leased	Lease
Company	Code	Date	assets	Period
China International	2039	24 July 2013	Vessel	17 years
Marine Containers
(Group) Company
Limited
China International	2039	3 July 2013	Vessel	17 years
Marine Containers
(Group) Company
Limited
China COSCO	1919	30 October 2012	Container	8 years
Holdings
Company Limited
China COSCO	1919	8 June 2012	Container	8 years
Holdings
Company Limited

Based on the aforesaid search, we have discovered that the lease terms of these companies range from 5 to 17 years, depending on the asset types. Machinery and equipment are leased for a period of 8 years, vessels range from 5 to 17 years, and containers are leased for 8 years. If the average and median of these lease periods are calculated, an average of 11 years and a median of 8 years would be obtained. Accordingly, we are of the view that leases of more than three years is a normal business practice for lease financing and their period of financing varies according to different asset types. As such, we are of the view that it is a normal business practice for the Finance Lease Agreement, which involves assets similar to those listed in the table above to have periods longer than 3 years.

Having considered the principal factors and reasons as discussed above, we are of the view that the duration of the Finance Lease Agreement, which is longer than 3 years is in line with normal business practices for lease agreements of these asset types.

7. Internal control procedures of the Company to supervise and monitor compliance of the pricing terms and the proposed annual caps will not be exceeded

• Pricing terms

In order to ensure the prices offered by PDA is no less favorable than that offered by independent third parties to the Company, the Company will adopt the following rules and internal control mechanism including:

• (i) Tender, quotations and agreement negotiation: Before entering into individual agreement with a particular leasing company which is a subsidiary or an associate of PDA, the Group shall conduct tender and/or invite several leasing companies to submit quotations or proposals, through which the Group can compare the terms of the agreement (including the lease payable and pricing terms) offered by at least three leasing companies, which are independent of the Company and its connected persons, with the terms offered by PDA or its subsidiaries or associates and the terms offered by the same leasing companies to other independent enterprises. The Group shall then negotiate the pricing terms on the basis that the lease payable by the Group shall not be higher than the rates generally charged on the similar businesses in the market;

– 21 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

• (ii) Review by senior management and the executive Director in charge of the Group’s financial management: The Company’s financial department has been assigned to be responsible for formulating the proposal for individual agreement based on the tender and negotiation mentioned above. The proposal in writing shall be submitted to the senior management and the executive Director who is charge of the Group’s financial management for review and consideration; and

• (iii) Approval by the Audit Committee of the Board: The written proposal which has been reviewed by the senior management and the executive Director in charge shall be finally submitted to the Audit Committee of the Board (comprising of one non-executive Director and two independent non-executive Directors) for approval.

We are of the view that the tender and quotation process will ensure that the Company will obtain a fair market rate, under which the Company will negotiate with PDA for a better than market price. Senior management and the executive Director in charge of the financial management of the Group will then supervise and ensure that continuing connected transaction based on the agreements are fully complied with. This process is further reviewed by the Audit Committee of the Board who will approve these continuing connected transactions. As the Company has multiple control mechanisms to ensure the full compliance of the pricing of the transactions under the Finance Lease Agreement, we are of the view that the Company has or will have sufficient control procedures in place to ensure pricing terms of the agreements under the Finance Lease Agreement will be in full compliant.

Annual caps

As advised by the management of the Company, to ensure the proposed annual caps for the transactions under the Finance Lease Agreement will not be exceeded, a designated continuing connected transaction management team established by the Company back in 2006 in connection with the initial public offering of its H Shares in Hong Kong will monitor the transactions under the Finance Lease Agreement in accordance with the terms of the agreement and its Connected Transaction Management Rules adopted by the Board in 2006. The Company will also compile a report of continuing connected transactions on a quarterly basis, cross-check the actual amounts against the annual caps, and regularly report to the independent non-executive Directors of the Company to ensure the annual caps will not be exceeded.

In relation to the above, we have discussed with the Company and noted that the Company will ensure sufficient buffer exists in every quarter to meet the proposed transactions to be entered into every quarter. The Company has been in compliance with their annual continuing connected transaction caps and we are of the view that their designated continuing connected transaction management team is capable of ensuring that the annual caps will not be exceeded. As such, we are of the view that there are sufficient measures in place to ensure that continuing connected transactions to be entered into under the Finance Lease Agreement is fair and reasonable, on normal commercial terms, and in the interest of the Company and Shareholders as a whole.

– 22 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

Having considered the principal factors and reasons described above, in particular (i) the interest rates obtained from independent commercial banks are higher than the rates that could be offered by finance companies of PDA; (ii) the Group’s significant loan requirement, which can be supported by the large asset base available in the Group; and (iii) the finance lease of periods longer than 3 years and in line with the respective assets useful life is a common practice in the industry for issuing finance leases, we are of the opinion that the terms of the Finance Lease Agreement including the proposed annual caps are on normal commercial terms and are fair and reasonable as far as the interests of the Independent Shareholders are concerned, and in the interests of the Company and its Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to approve the Finance Lease Agreement and the related annual caps at the EGM.

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

– 23 –

APPENDIX I

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

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

2. FINANCIAL INFORMATION OF THE GROUP

The audited consolidated financial statements of the Group for each of the years ended 31 December 2010, 2011 and 2012 together with the relevant notes to the financial statements can be found in the respective annual reports of the Company, which have been published on the websites of the Hong Kong Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.dlport.cn). Please also see below the hyperlinks to the said annual reports:

• (i) annual report of the Company for the year ended 31 December 2010 (pages 76 to 177) at http://www.hkexnews.hk/listedco/listconews/SEHK/2011/0426/LTN20110426182.pdf;

• (ii) annual report of the Company for the year ended 31 December 2011 (pages 62 to 209) at http://www.hkexnews.hk/listedco/listconews/SEHK/2012/0425/LTN20120425062.pdf; and

• (iii) annual report of the Company for the year ended 31 December 2012 (pages 63 to 217) at http://www.hkexnews.hk/listedco/listconews/SEHK/2013/0424/LTN20130424249.pdf.

3. STATEMENT OF INDEBTEDNESS

As at the close of business of 28 February 2014, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had outstanding borrowings of approximately RMB9,902 million comprising secured bank loans of approximately RMB321 million, unsecured bank loans of approximately RMB1,865 million, issued and outstanding medium-term notes of approximately RMB2,748 million, outstanding financial leases of approximately RMB3 million and other unsecured obligations of approximately RMB4,965 million

Save as disclosed above and apart from intra-group liabilities and normal accounts payable in the ordinary course of business, the Group did not have any other loan capital issued and outstanding or agreed to be issued but unissued, loans, bank overdrafts or other similar indebtedness, financial lease or hire purchase commitment, liabilities under acceptances (other than normal trade bills) or acceptance credits, mortgage, charges, guarantees or other material contingent liabilities as at the close of business on 28 February 2014.

4. WORKING CAPITAL

Taking into account the financial resources available to the Group, the Directors are of the opinion that the Group has sufficient working capital for its present requirements, that is for at least the next 12 months from the date of this circular.

– I-1 –

APPENDIX I

GENERAL INFORMATION

5. FINANCIAL AND TRADING PROSPECTS

As disclosed in announcement of the Company dated 27 March 2014 in relation to the annual results of the Group for the year ended 31 December 2013, the Group’s operations achieved sound growth in 2013. The Group recorded revenue and net profit attributable to owners of the parent of RMB6,982 million and RMB683 million, respectively, according to its consolidated financial statements for the year ended 31 December 2013 prepared in accordance with China Accounting Standards for Business Enterprises.

In view of the ongoing recovery of the world economy and the continued implementation of the initiatives of the PRC central government to revitalize the economy of the Group’s hinterland, i.e. northeastern China, and to develop the coastal economic zone of Liaoning province, the Group remains cautiously positive about the trading prospects of the Group for 2014 taken as a whole.

6. DISCLOSURE OF INTERESTS

(a) Interests and short positions of Directors, supervisors and chief executives of the Company in shares, underlying shares and debentures

As at the Latest Practicable Date, as far as the Company was aware, none of the Directors, supervisors or chief executive of the Company had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which should be recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise should be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO and the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Hong Kong Listing Rule (the “Model Code”).

(b) Interests and short positions of substantial shareholders of the Company in shares, underlying shares and debentures

As at the Latest Practicable Date, so far as is known to the Company, the following persons or entities, other than the Directors, supervisors or chief executive of the Company, had interests or short positions in the shares or 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 as recorded in the register required to be kept by the Company under section 336 of the SFO:

				Approximate
				percentage of	Approximate
				the relevant	percentage of
Name of Substantial	Class of	Number of		class of	the total
Shareholders	Shares	**Shares(1) **	Capacity	share capital(2)	share capital(3)
Dalian Port Corporation Limited(4)	A Shares	2,408,745,000(L)	Beneficial owner	71.62%	54.42%
	H Shares	53,000,000 (L)	Beneficial owner	4.98%	1.20%
N.Y.K. Line (Hong	H Shares	114,800,000	Beneficial owner	10.80%	2.59%
Kong) Limited		(L)
N.Y.K. Line Group	H Shares	114,800,000	Interest of	10.80%	2.59%
(Hong Kong) Limited		(L)	controlled
			corporation
Nippon Yusen	H Shares	114,800,000	Interest of	10.80%	2.59%
Kabushiki Kaisha		(L)	controlled
			corporation

– I-2 –

APPENDIX I

GENERAL INFORMATION

				Approximate
				percentage of	Approximate
				the relevant	percentage of
Name of Substantial	Class of	Number of		class of	the total
Shareholders	Shares	**Shares(1) **	Capacity	share capital(2)	share capital(3)
China Shipping (Hong	H Shares	73,610,000 (L)	Beneficial owner	6.92%	1.66%
Kong) Holdings
Co. Ltd.
China Shipping	H Shares	73,610,000 (L)	Interest of	6.92%	1.66%
Terminal			controlled
Development			corporation
(Hong Kong)
Company Limited
China Shipping	H Shares	73,610,000 (L)	Interest of	6.92%	1.66%
(Group) Co., Ltd.			controlled
			corporation
Macquarie Group	H Shares	63,638,090(L)	Beneficial owner	5.98%	1.44%
Limited

Notes:

• (1) (L) – Long position; (S) – Short position; (P) – Lending pool

• (2) Number of Shares in the relevant class of share capital of the Company as at the Latest Practicable Date: A Shares – 3,363,400,000; H Shares – 1,062,600,000

• (3) Total number of Shares in the share capital of the Company as at the Latest Practicable Date: 4,426,000,000

• (4) Each of Mr. Hui Kai, Mr. Xu Song, Mr. Xu Jian and Mr. Zhang Zuogang, being a Director, also holding a management position with PDA.

Save as disclosed above, as at the Latest Practicable Date, so far as known to the Company, no other person had an interest or short position in the shares of the Company which would fall to be disclosed to the Company and the Hong Kong Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or as recorded in the register required to be kept by the Company under section 336 of the SFO.

7. COMPETING INTEREST OF DIRECTORS

As at the Latest Practicable Date, the Directors were not aware of any of the Directors or their respective associates was interested in any business which competes or is likely to compete, either directly or indirectly, with the business of the Group.

8. MATERIAL ADVERSE CHANGE

The Directors confirm that, as at the Latest Practicable Date, they were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2013, being the date to which the latest published audited consolidated financial statements of the Company were made up.

9. LITIGATION

As at the Latest Practicable Date, to the best knowledge and information of the Directors, none of the members of the Group were engaged in any litigation or claims of material importance and no litigation or claims of material importance were known to the Directors to be pending or threatened against any member of the Group.

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APPENDIX I

GENERAL INFORMATION

10. DIRECTORS’ SERVICE CONTRACT

As at the Latest Practicable Date, none of the Directors and supervisors had any existing or proposed service contracts with 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).

11. MATERIAL INTERESTS OF DIRECTORS IN THE GROUP’S ASSETS OR CONTRACTS

As at the Latest Practicable Date, to the best knowledge and information of the Directors, none of the Directors and supervisors had any direct or indirect interest in any assets which had been acquired or disposed of by or leased to any member of the Group or proposed to be so acquired, disposed of by or leased to any member of the Group since 31 December 2013, being the date to which the latest published audited accounts of the Company were made up.

As at the Latest Practicable Date, to the best knowledge and information of the Directors, none of the Directors and supervisors was materially interested in any contract or arrangement entered into by any member of the Group, which was subsisting and significant in relation to the business of the Group.

12. MATERIAL CONTRACTS

The following contracts (not being contracts in the ordinary course of business) were entered into by members of the Group within the two years immediately preceding the Latest Practicable Date and are material:

• (a) the equity transfer agreement dated 30 October 2012 entered into between the Company and PDA in respect of the transfer of the entire equity interest in 大連港石化有限公司 (Dalian Port Petrochemical Co., Ltd.) by the Company to PDA for a total cash consideration of RMB596 million; and

• (b) the equity transfer agreement dated 27 June 2012 entered into between the Company and PDA in respect of the transfer of 45% equity interest in 大連長興 島港口投資發展有限公司 (Dalian Changxing Island Port Investment and Development Co., Ltd.) by PDA to the Company for a total cash consideration RMB313,147,800.

13. EXPERT’S QUALIFICATION AND CONSENT

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

Name Qualification TC Capital A corporation licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

As at the date of this circular, TC Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name and opinion in the form and context in which they appear.

As at the Latest Practicable Date, TC Capital did not have any direct or indirect interest in any assets which had been acquired, disposed of by, or leased to any member of the Group, or was proposed to be acquired, or disposed of by, or leased to any member of the Group, since 31 December 2013, the date to which the latest audited financial statements of the Group were made up; and was not beneficially interested in the share

– I-4 –

APPENDIX I

GENERAL INFORMATION

capital of any member of the Group and did not have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

14. GENERAL

• (a) The joint company secretaries of the Company are Ms. Gui Yuchan 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 situated at Xingang Commercial Building, Dayao Bay, Dalian Free Trade Zone, PRC. The principal place of business of the Company in the PRC is at Xingang Commercial Building, Jingang Road, Dalian International Logistic Park Zone, Liaoning Province, PRC.

• (c) The branch share registrar of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

• (d) The English text of this circular shall prevail over the Chinese text in case of any inconsistency.

15. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at Edinburgh Tower, 33/F, The Landmark, 15 Queen’s Road Central, Hong Kong during normal business hours on any business day (i.e., from 9:30 a.m. to 5:00 p.m. on Monday to Friday) for a period of 14 days from the date of this circular:

• (a) the articles of association of the Company;

• (b) the annual reports of the Company for the three financial years ended 31 December 2011, 2012 and 2013 respectively;

• (c) the letter from the Independent Board Committee, the text of which is set out on pages 12 to 13 of this circular;

• (d) the letter of advice from TC Capital Asia Limited to the Independent Board Committee and Independent Shareholders, the text of which is set out on pages 14 to 23 of this circular;

• (e) the material contracts referred to in the paragraph headed “Material Contracts” in this appendix;

• (f) the Finance Lease Agreement;

• (g) the DLEFL Finance Lease Agreement;

• (h) the written consent referred to in the paragraph headed “Expert’s Qualification and Consent” in this appendix; and

• (i) this circular.

– I-5 –

NOTICE OF EGM

==> picture [101 x 64] intentionally omitted <==

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

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

(Stock Code: 2880)

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the extraordinary general meeting (“ EGM ”) of Dalian Port (PDA) Company Limited[] (the “ Company ”) will be held at Room 109, PDA Group Building, No. 1 Gangwan Street, Zhongshan District, Dalian City, Liaoning Province, PRC on Friday, 23 May 2014 at 10:00 a.m. for the purposes of considering and, if thought fit, passing (with or without modifications) the following resolutions. Unless otherwise indicated, capitalized terms used herein shall have the same meanings as defined in the circular of the Company dated 8 April 2014 (the “ Circular* ”).

ORDINARY RESOLUTION

1. “To consider and approve the Finance Lease Agreement, the continuing connected transactions contemplated thereunder and the related proposed annual caps for each of the five years ending 31 December 2014, 2015, 2016, 2017 and 2018, and authorization for any one of the Directors to take such steps as he/she may consider are of administrative nature and ancillary to the implementation of the agreement.”

By Order of the Board GUI Yuchan LEE Kin Yu, Arthur Joint Company Secretaries

8 April 2014

Notes:

1. Pursuant to rule 13.39(4) of the Listing Rules, votes of the Shareholders at the EGM shall be taken by poll.

2. Any Shareholder entitled to attend and vote at the EGM is entitled to appoint one or more proxies to attend and vote on his/her/its behalf at the EGM. A proxy need not be a Shareholder. Shareholders shall have one vote for each Share that they hold.

3. In order to determine the holders of H Shares who are entitled to attend the EGM, the H Share register of members of the Company will be closed from Thursday, 24 April 2014 to Friday, 23 May 2014 (both days inclusive), during which no transfer of H Shares will be effected. Holders of H Shares whose names appear on the H Shares register of members as at 24 April 2014 are entitled to attend and vote at the EGM. In order to qualify for attending and voting at the EGM, instruments of transfer accompanied by share certificates and other appropriate documents in respect of transfer of H Shares must be lodged with the Company’s H Share registrar, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 4:30 p.m. on 23 April 2014.

4. The instruments appointing a proxy must be in writing under the hand of the 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 authorizing that attorney to sign or other authorization documents must be notarized.

5. The Company is registered as Non-Hong Kong company under Part XI of the previous Companies Ordinance (equivalent to Part 16 of the Companies Ordinance with effect from 3 March 2014) under the English name “Dalian Port (PDA) Company Limited”.

– EGM-1 –

NOTICE OF EGM

1. The proxy form together with the power of attorney or other authorization document (if any) must be deposited at the office of Board, at the address as stated in Note 6 below for holders of the A Shares and at the H Share registrar, Computershare Hong Kong Investor Services Limited at the address as stated in Note 3 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).

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

3. Shareholders who intend to attend the EGM in person or by proxy should return the reply slip by hand, by post or by fax to the office of the Board at the address as stated in Note 6 below no later than 20 days before the date of the EGM.

4. The contact details of the office of the Board are as follows:

26/F Xingang Commercial Building Jingang Road Dalian International Logistic Park Zone Liaoning Province PRC Postal Code: 116601 Telephone No.: 86 411 8759 9899/8759 9727 Facsimile No.: 86 411 8759 9897

1. Shareholders or their proxies attending the EGM shall be responsible for their own transportation and accommodation expenses.

As at the date of this notice, the Board comprises of:

Executive directors: HUI Kai, XU Song, ZHU Shiliang and SU Chunhua Non-executive director: XU Jian and ZHANG Zuogang Independent non-executive LIU Yongze, GUI Liyi, WAN Kam To, Peter and directors: YU Long

– EGM-2 –