Liaoning Port Co., Ltd. — Proxy Solicitation & Information Statement 2015

Dec 9, 2015

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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, professional 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(s) or transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

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)

(1) CONNECTED TRANSACTIONS – INCREASE IN REGISTERED CAPITAL OF FINANCE COMPANY (2) RENEWAL OF EXISTING CONTINUING CONNECTED TRANSACTIONS (3) NEW CONTINUING CONNECTED TRANSACTION AND

(4) NOTICE OF EGM

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

A letter from the Board is set out on pages 6 to 25 of this circular.

A letter from the Independent Board Committee to the Independent Shareholders is set out on pages 26 to 27 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 28 to 44 of this circular.

A notice convening the extraordinary general meeting (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 at 9:00 a.m. on Tuesday, 29 December 2015 was published on the website of The Stock Exchange of Hong Kong Limited (the “ Hong Kong Stock Exchange ”) (http://www.hkexnews.hk) on 13 November 2015. A form of proxy and a reply slip for use in connection with the EGM were enclosed therein 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 not 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”.

9 December 2015

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
LETTER FROM INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . .	26
LETTER FROM INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . . .	28
APPENDIX I – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . .	I-1
APPENDIX II – CERTAIN CONTINUING CONNECTED
TRANSACTIONS REQUIRING INDEPENDENT
SHAREHOLDERS’ APPROVAL UNDER
THE SHANGHAI LISTING RULES . . . . . . . . . . . . . .	II-1
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

– i –

DEFINITIONS

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

• “2012 Announcement and Circular”

the Company’s announcement dated 30 October 2012 and the circular dated 6 December 2012;

• “2013 Announcement”

• the Company’s announcement dated 29 October 2013;

• “2014 Announcement and Circular”

• the Company’s announcement dated 28 August 2014 and the circular dated 15 September 2014;

• “2015 Announcements”

• the Company’s announcement dated 13 January 2015 published on the website of the Shanghai Stock Exchange, overseas regulatory announcement dated 13 January 2015, and the announcement dated 14 August 2015;

• “Announcement”

• the Company’s announcement dated 26 October 2015;

• “associate”

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

• “Board”

• the board of Directors;

• “CCTs”

the provision of Deposit Services and Factoring Services under the Financial Services Agreement;

• “close associates”

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

• “Company”

• 大連港股份有限公司 (Dalian Port (PDA) Company Limited*), a joint stock limited company incorporated in the PRC;

• “connected person”

has the meaning ascribed to it under the Listing Rules;

• “Construction Management and Supervision Services”

• the construction project management services, engineering services and consultancy services provided by 大連港口建設監理諮詢有限公司 (Dalian Port Harbour Construction Superintendence and Consulting Company Limited), a non-wholly owned subsidiary of the Company, to PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules);

– 1 –

DEFINITIONS

• “Construction Management and Supervision Services Agreement”

• the framework agreement in relation to the construction management and supervision services entered into between Superintendence Company and PDA on 26 October 2015;

• “Deposit Services”

• depository services to be provided by PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) to the Group pursuant to the Financial Services Agreement;

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

• “Factoring Services”

• factoring services to be provided by PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) to the Group pursuant to the Financial Services Agreement;

• “Finance Company”

• 大連港集團財務有限公司 (Dalian Port Group Finance Company Limited), a non-bank finance company jointly established by PDA and the Company under the PRC laws;

• “Financial Services Agreement”

• the framework agreement entered into by the Company and PDA on 26 October 2015 in regard to provision of Deposit Services, Loan Services, Factoring Services, and Settlement Services and other financial services by PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) to the Group;

• “First Registered Capital Increase”

• the increase in registered capital of the Finance Company from RMB500 million to RMB1,000 million as memorialized in the Registered Capital Increase Agreement I;

• “Group”

• the Company and its subsidiaries;

• “Hong Kong Stock Exchange”

• The Stock Exchange of Hong Kong Limited;

• “Independent Board Committee”

• the independent committee of the Board, the members of which shall consist of the independent non-executive Directors, namely Mr. WAN Kam To, Peter, Mr. WANG Zhifeng and Mr. SUN Xiyun;

• “Independent Shareholders”

• Shareholders other than PDA and its associates;

– 2 –

DEFINITIONS

• “Latest Practicable Date”

• “Listing Rules”

• “Loan Services”

• “normal commercial terms or better”

• “PDA”

• “PDA Group”

• “PRC”

• “Properties and Equipment Lease (Leasing From)”

• “Properties and Equipment Lease (Leasing To)”

• “Properties and Equipment Lease Agreement”

• 3 December 2015, being the latest practicable date prior to the printing of this circular for ascertaining certain information herein;

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

credit, loan and guarantee services to be provided by PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) to the Group pursuant to the Financial Services Agreement;

has the meaning ascribed to it under the Listing Rules;

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;

• PDA and its subsidiaries;

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

• the lease of certain properties and equipment by PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) to the Group;

• the lease of certain properties and equipment by the Group to PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules);

• the framework agreement in relation to the leasing of properties and equipment entered into between the Company and PDA on 26 October 2015;

– 3 –

DEFINITIONS

• “Purchase of Goods and Services”

the purchase of goods such as diesel oil, and services such as supply of water and heat, production facilities, equipment maintenance, landscaping, catering, medical check, printing, conference services and other related or similar services by the Group from PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules);

• “Purchase of Goods and Services Agreement”

• the framework agreement entered into between the Company and PDA on 26 October 2015 in relation to purchase of goods and services by the Group from PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules);

• “Registered Capital Increase Agreement I”

• the Registered Capital Increase Agreement I entered into between the Company and PDA on 14 August 2015 in respect of the First Registered Capital Increase;

• “Registered Capital Increase Agreement II”

• the Registered Capital Increase Agreement II entered into between the Company and PDA on 26 October 2015 in respect of the Second Registered Capital Increase;

• “RMB”

• Renminbi, the lawful currency of the PRC;

• “Second Registered Capital Increase”

• the increase in registered capital of the Finance Company from RMB1,000 million to RMB2,000 million contemplated under the Registered Capital Increase Agreement II;

• “Settlement Services”

• settlement and clearance services to be provided by PDA and/or its associates to the Group pursuant to the Financial Services Agreement;

• “SFO”

• the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time;

• “Shanghai Listing Rules”

• the Stock Listing Rules of the Shanghai Stock Exchange (上海證券交易所股票上市規則);

• “Shanghai Stock Exchange”

• the Shanghai Stock Exchange;

• “Shareholders” the shareholders of the Company;

– 4 –

DEFINITIONS

• “Superintendence Company”

• “Supply of Goods and Services”

• “Supply of Goods and Services Agreement”

• “Terminal Facilities Design and Construction Services”

• “Terminal Facilities Design and Construction Services Agreement”

“%”

• Dalian Port Harbour Construction Superintendence and Consulting Company Limited (大連港口建設監理 諮詢有限公司), a non-wholly owned subsidiary of the Company;

• the supply of goods such as IT related equipment, spare parts and software, and services such as tugboat services, telecommunications, software development, network maintenance, security, provision of utilities and other similar services by the Group to PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules);

• the framework agreement entered into between the Company and PDA on 26 October 2015 in relation to supply of goods and services by the Group to PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules);

• the provision by PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) of terminal facilities design and construction services (including land filling, dredging, caisson precasting and construction of electricity facilities and other supporting facilities) to the Group;

• the framework agreement in relation to the terminal facilities design and construction services entered into between the Company and PDA on 26 October 2015; and

per cent.

– 5 –

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 SUN Benye

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

Non-executive Directors: XU Jian DONG Yanhong YIN Shihui

Independent Non-executive Directors: WAN Kam To, Peter WANG Zhifeng SUN Xiyun

Place of Business in the PRC: Xingang Commercial Building Jingang Road Dalian International Logistic Park Zone Liaoning Province PRC

9 December 2015

To the Shareholders

Dear Sir or Madam,

(1) CONNECTED TRANSACTIONS – INCREASE IN REGISTERED CAPITAL OF FINANCE COMPANY (2) RENEWAL OF EXISTING CONTINUING CONNECTED TRANSACTIONS (3) NEW CONTINUING CONNECTED TRANSACTION AND

(4) NOTICE OF EGM

A. INTRODUCTION

Reference is made to the Announcement and the 2015 Announcements of the Company in relation to, amongst other things, the First Registered Capital Increase and the Second Registered Capital Increase.

– 6 –

LETTER FROM THE BOARD

Reference is also made to the Announcement, the 2012 Announcement and Circular, the 2013 Announcement and the 2014 Announcement and Circular in relation to certain continuing connected transactions between the Group and PDA and/or its associates, i.e.: (i) Supply of Good and Services; (ii) Purchase of Good and Services; (iii) Deposit Services; and (iv) Factoring Services.

The purpose of this circular is to provide the Shareholders with (i) further information in respect of resolutions regarding the terms of the Registered Capital Increase Agreement II, the Supply of Goods and Services Agreement, the Purchase of Goods and Services Agreement and the CCTs, (ii) recommendations from the Independent Board Committee, (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, (iv) notice of the EGM, and (v) other information as required under the Listing Rules to enable the Shareholders to make their informed decisions as to how to vote at the EGM.

B. REGISTERED CAPITAL INCREASE AGREEMENT II

1. Date

26 October 2015

2. Parties

• (i) The Company; and

• (ii) PDA

3. Major Terms of the Registered Capital Increase Agreement II

Pursuant to the Registered Capital Increase Agreement II, the registered capital of Finance Company shall increase from RMB1,000 million to RMB2,000 million. The Company and PDA shall contribute RMB400 million and RMB600 million, respectively, by way of cash to Finance Company in proportion to their respective equity interests in it.

The amounts of contribution and the terms of the Second Registered Capital Increase under the Registered Capital Increase Agreement II were agreed between the Company and PDA after negotiations at an arm’s length basis and on normal commercial terms or better. The additional registered capital of Finance Company in the sum of RMB400 million shall be paid up by the Company from its internal resources.

Upon completion of the Second Registered Capital Increase, the Company and PDA shall maintain the same proportion of equity interests in Finance Company as before such increase.

– 7 –

LETTER FROM THE BOARD

4. Reasons and benefits for entering into the Registered Capital Increase Agreement II

The Company and PDA entered into an investment agreement on 21 June 2011 to establish Finance Company. As disclosed in the Announcements, the Company and PDA contributed RMB200 million and RMB300 million, respectively, by way of cash to Finance Company in proportion to their respective equity interests in it, and the First Registered Capital Increase was completed on 2 April 2015. Immediately before the Second Registered Capital Increase, the registered capital of Finance Company was RMB1,000 million.

In determining the amount of registered capital increase, the Company considered, amongst others, (i) the People’s Bank of China (中國人民銀行) would offer line of credit to Finance Company based on the amount of its registered capital, and (ii) the anticipated amount of loan needed by members of the Group.

The Second Registered Capital Increase would be conducive to the expansion of credit scale and the improvement of financial services of the Finance Company to increase its return on capital. Finance Company’s business functions will thereby be put into play in a more effective manner, and will be able to provide better services to the Group and achieve better economic benefits. Upon completion of the Second Registered Capital Increase, the registered capital of Finance Company will be RMB2,000 million. The People’s Bank of China (中國人民銀行) will correspondingly increase the line of credit granted to Finance Company to RMB2,000 million, thereby allowing Finance Company to better satisfy the borrowing needs of members of the Group. The increased line of credit from the People’s Bank of China will also allow Finance Company to offer lower interest rates than those offered by state-owned banks on loan to members of the Group and higher interest rates than those offered by state-owned banks on deposit by members of the Group. In addition, the investment business segment of Finance Company will expand in the sense that Finance Company will increase its investments in sound investment products, resulting in a more reasonable asset allocation, a more balanced and optimized revenue structure and a more diverse and stable profit model. This also enables Finance Company to take advantage of short-term idle funds, thereby increase its operation effectiveness.

Furthermore, the Second Registered Capital Increase will be undertaken by the Company and PDA, being the shareholders of Finance Company, on a pro rata basis according to their respective shareholding, and will therefore be fair and reasonable to the Company and consistent with the interests of the Company and its shareholders.

– 8 –

LETTER FROM THE BOARD

In view of the above, the Directors (excluding the independent non-executive Directors whose opinion is stated in the “Letter from the Independent Board Committee” of this circular) consider that it is in the interest of the Company and its Shareholders to fund the additional registered capital requirement of Finance Company by conducting the Second Registered Capital Increase and entering into the Registered Capital Increase Agreement II which are on normal commercial terms or better, fair and reasonable, in the ordinary and usual course of business of the Group, and in the interests of the Company and the Shareholders as a whole.

C. RENEWAL OF EXISTING CONTINUING CONNECTED TRANSACTIONS

Reference is made to the 2012 Announcement and Circular, the 2013 Announcement and the 2014 Announcement and Circular in relation to certain continuing connected transactions between the Group and PDA and/or its associates, i.e.: (i) Supply of Good and Services; (ii) Purchase of Good and Services; and (iii) Deposit Services.

The Supply of Goods and Services Agreement, the Purchase of Goods and Services Agreement and the Financial Services Agreement governing the Supply of Goods and Services, the Purchase of Goods and Services and the provision of Deposit Services will expire on 31 December 2015. On 26 October 2015, the Company has agreed with PDA to renew the existing connected transactions for a term of three years commencing from 1 January 2016 and ending on 31 December 2018. Nevertheless, the Company or PDA is not contractually obligated to supply or purchase goods or services (including financial services) from each other under each of the CCTs.

As at the date of this circular, the annual caps of the above continuing connected transactions for each of the three years ending 31 December 2015 have not been exceeded.

In determining the estimated annual caps for 2016, 2017 and 2018 of the above continuing connected transactions, the Company considered transactions that constituted connected transactions under Chapter 14A of the Listing Rules and/or transactions that constituted connected transactions under the Shanghai Listing Rules, as the relevant caps will be presented to the Company’s independent Shareholders for approval pursuant to the Listing Rules and/or the Shanghai Listing Rules. As regards the estimated annual caps for 2016, 2017 and 2018 of the above continuing connected transactions, the difference between (a) transactions that constituted connected transactions both under Chapter 14A of the Listing Rules and the Shanghai Listing Rules, and (b) transactions that constituted connected transactions only under Chapter 14A of the Listing Rules, is primarily due to the different regulatory scope under the Shanghai Listing Rules, under which legal persons or other companies (being either (a) entities in which the Group has not more than 50% interests, or (b) entities in which PDA Group (other than the Group) has less than 30% interests, and in either case the Company or PDA Group (other than the Group) does not have control over such entities) whose director, supervisor and/or member of senior management is a natural person associated (as defined under the Shanghai Listing Rules) with the Company within the past 12 months will constitute connected persons. Such legal persons or other companies will not constitute connected persons under the Listing Rules.

– 9 –

LETTER FROM THE BOARD

1. Disclosable and Continuing Connected Transactions

1.1 Supply of Goods and Services

Reference is made to the 2012 Announcement and Circular. Pursuant to the supply of goods and services agreement dated 30 October 2012, the Group has been supplying goods such as IT related equipment, spare parts, software and related maintenance supplies, and services such as tugboat services, telecommunications, software development, network maintenance, security, utilities provision and other similar services to PDA and/or its associates.

To continue the Supply of Goods and Services to PDA and/or its associates, on 26 October 2015, the Company entered into a Supply of Goods and Services Agreement with PDA for a term of three years commencing on 1 January 2016 and ending on 31 December 2018. The agreement provides that the Group shall supply goods and services to PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) on normal commercial terms or better to the Group subject to compliance with applicable Listing Rule requirements.

• a) Pricing

Under the Supply of Goods and Services Agreement, the provision of goods and services shall be priced in accordance with the following principles:

• the state price, being the price set by the PRC government (at central or local level) or its relevant departments, such as National Development and Reform Commission (國家發展 和改革委員會), Ministry of Housing and Urban-Rural Development (國家住房和城鄉建設部), Liaoning Province Finance Department (遼寧省財政廳), and Dalian Municipal Government (大連市政府) and as published in publicly available announcements or on their respective websites (“ State Price ”); and

• where there is no State Price, the market price at which the same or comparable types of goods and services are provided to at least two independent third parties in the normal course of business.

– 10 –

LETTER FROM THE BOARD

Historically, the State Price was generally used on providing services such as tugboat services and telecommunications; while the market price was generally used on supplying IT related equipment, spare parts, software and related maintenance supplies, and providing services such as software development, network maintenance and security, as there was no State Price for such supplies. In relation to the pricing policy for each type of goods and services to be supplied, please refer to the table as below. Since the State Price and market price are floating, the Company does not maintain an internal price list for each type of transaction.

Goods or services	Pricing basis
IT related equipment	Market price
Spare parts	Market price
Software	Market price
Software related maintenance	Market price
supplies
Tugboat services	State price
Telecommunications services	State price
Software development services	Market price
Network maintenance services	Market price
Security services	Market price
Utilities provision services	State price

– 11 –

LETTER FROM THE BOARD

• b) Historical figures for each of the two years of 2013, 2014 and the nine months ended 30 September 2015, the estimated amount for the year ending 31 December 2015, annual cap for 2015 and estimated annual caps for each of the three years of 2016, 2017 and 2018

							Estimated
					For		amount
	For the		For the		9 months		for the year
	year ended		year ended		ended		ending		Estimated	Estimated	Estimated
	31 December	31 December		30	September	31 December		Annual cap	annual cap	annual cap	annual cap
	2013		2014		2015		2015	for 2015	for 2016	for 2017	for 2018
	(RMB’000)		(RMB’000)		(RMB’000)		(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
Supply of Goods	218,616(1)		304,045(1)		127,050(1)		314,332(1)	378,977(3)	410,000(5)	410,000(5)	410,000(5)
and Services	(23,919)(2)		(35,062)(2)		(9,926)(2)		(46,509)(2)	(48,171)(4)	(90,000)(6)	(90,000)(6)	(90,000)(6)

Notes:

• (1) The figures relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules and the Shanghai Listing Rules.

• (2) The figures set out in “()” relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules.

• (3) The annual cap for 2015 relates to the annual cap which is the total of that approved by the Shareholders under the Listing Rules and the Shanghai Listing Rules provided that transactions which constitute connected transactions under both sets of rules will only be counted once.

• (4) The annual cap for 2015 relates to the annual cap approved by the Shareholders under the Listing Rules.

• (5) In determining the estimated annual caps for each of the three years ending 31 December 2018, the Company considered transactions that constituted connected transactions both under the Listing Rules and the Shanghai Listing Rules.

• (6) The figures set out in “()” relate to the annual caps for each of the three years ending 31 December 2018 for transactions that will only constitute connected transactions under Chapter 14A of the Listing Rules (the “ Listing Rule Annual Caps ”).

In determining the estimated annual caps for 2016, 2017 and 2018, the Directors have referenced to the historical transaction amount, and considered the anticipated increase in demand for engineering and maintenance services due to the development of the projects at Dayao Bay and Taiping Bay in Dalian, the PRC. The Dayao Bay Port project and the Taiping Bay Port project are projects of modern logistics parks instituted by PDA, and the Group will provide engineering and maintenance services for the support of development of the projects starting from the year of 2016. The expected total investment of the Dayao Bay Port project and Taiping Bay Port project for the upcoming three years will be approximately RMB2.6 billion and RMB11.1 billion,

– 12 –

LETTER FROM THE BOARD

respectively. The Group is expected to provide engineering and maintenance services amounting to approximately RMB27.0 million and RMB53.0 million for the support of development of the Dayao Bay Port project and the Taiping Bay Port project, respectively, for the upcoming three years.

• c) Internal Control

Before entering into specific supply goods and services contract with the potential buyers, at least two quotations from independent third parties will be obtained by the Group and the Group will assess each potential buyer based on the following criteria:

• (i) Pricing terms

• (ii) Payment terms

• (iii) Payment ability (with the assessment on historical payment record of potential buyers)

The specific supply goods and services agreements, screening process, rationale and result on the potential buyers will be documented and submitted to the senior management of the Group for review and comparison against the Company’s pricing policy, and for final approval before entering into specific sales contract with the successful seller.

1.2 Purchase of Goods and Services

Reference is made to the 2012 Announcement and Circular. Pursuant to the purchase of goods and services agreement dated 30 October 2012, the Group has been purchasing goods such as diesel oil, and obtaining services such as spare parts, facilities and equipment maintenance, landscaping, labour, catering, medical check, printing, conference services and other related or similar services from PDA and/or its associates.

To continue the Purchase of Goods and Services from PDA and/or its associates, on 26 October 2015, the Company entered into a Purchase of Goods and Services Agreement with PDA for a term of three years commencing on 1 January 2016 and ending on 31 December 2018. The agreement provides that the Group shall purchase goods and services from PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) on normal commercial terms or better to the Group subject to compliance with applicable Listing Rule requirements.

– 13 –

LETTER FROM THE BOARD

• a) Pricing

Under the Purchase of Goods and Services Agreement, the purchase of goods and services shall be priced in accordance with the following principles:

• the State Price; and

• where there is no State Price, the market price at which the same or comparable types of goods and services are provided from at least two independent third parties in the normal course of business.

Historically, the State Price was generally used on purchasing goods such as diesel oil, and obtaining services such as facilities and equipment maintenance; while the market price was generally used on obtaining services such as landscaping, labour, catering, medical check, printing, conference services and other related or similar services, as there was no State Price for such supplies. In relation to the pricing policy for each type of goods and services to be purchased, please refer to the table as below. The Company does not maintain an internal price list for each type of transaction.

Goods or services	Pricing basis
Diesel oil	State price
Facilities and equipment	State price
maintenance services
Landscaping services	Market price
Catering services	Market price
Medical check services	Market price
Printing services	Market price
Conference services	Market price

– 14 –

LETTER FROM THE BOARD

• b) Historical figures for each of the two years of 2013, 2014 and the nine months ended 30 September 2015, the estimated amount for the year ending 31 December 2015, annual cap for 2015 and estimated annual caps for each of the three years of 2016, 2017 and 2018

							Estimated
					For		amount
	For the		For the		9 months		for the year
	year ended		year ended		ended		ending		Estimated	Estimated	Estimated
	31 December	31 December		30	September	31 December		Annual cap	annual cap	annual cap	annual cap
	2013		2014		2015		2015	for 2015	for 2016	for 2017	for 2018
	(RMB’000)		(RMB’000)		(RMB’000)		(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
Purchase of Goods	105,118(1)		189,353(1)		106,160(1)		168,079(1)	306,098(3)	360,000(5)	470,000(5)	470,000(5)
and Services	(77,865)(2)		(139,663)(2)		(75,203)(2)		(122,493)(2)	(263,234)(4)	(180,000)(6)	(170,000)(6)	(172,000)(6)

Notes:

• (1) The figures relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules and the Shanghai Listing Rules.

• (2) The figures set out in “()” relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules.

• (3) The annual cap for 2015 relates to the annual cap which is the total of that approved by the Shareholders under the Listing Rules and the Shanghai Listing Rules provided that transactions which constitute connected transactions under both sets of rules will only be counted once.

• (4) The annual cap for 2015 relates to the annual cap approved by the Shareholders under the Listing Rules.

• (5) In determining the estimated annual caps for each of the three years ending 31 December 2018, the Company considered transactions that constituted connected transactions both under the Listing Rules and the Shanghai Listing Rules.

• (6) The figures set out in “()” relate to the relevant Listing Rule Annual Caps for each of the three years ending 31 December 2018.

In determining the estimated annual caps for 2016, 2017 and 2018, the Directors have referenced to the historical amount and taken into account, among others, the expected increase in demand for diesel oil attributed to business growth of the Group and the historical price fluctuation and the potential rise in price of diesel oil and petrol in the future. For the two years ended 31 December 2014, the Group contributed approximately RMB51.5 million and RMB100.1 million respectively for the purchase of diesel oil and petrol. For the four years ending 31 December 2018, the Group expects to incur approximately RMB99.2 million, RMB137.7 million, RMB139.0 million and RMB140.3 million, respectively, for the purchase of diesel oil and petrol. In particular, the Group expects the purchase of diesel oil and petrol to

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LETTER FROM THE BOARD

increase by 38.8% from approximately RMB99.2 million in 2015 to RMB137.7 million in 2016 primarily because (i) the average price per ton of diesel oil and petrol decreased by approximately 28.8% in 2015 but is expected to return to the price level of 2014 in 2016, and (ii) the quantity of diesel oil and petrol to be consumed by the Group is expected to increase by approximately 8.0% primarily due to the business growth of the Group.

c) Internal Control

Before entering into specific purchase contract with the potential sellers, at least two quotations from independent third parties will be obtained by the Group and the Group will assess each potential seller based on the following criteria:

• (i) Pricing terms

• (ii) Payment terms

The purchase agreements, screening process, rationale and result on the potential sellers will be documented and submitted to the senior management of the Group for review and comparison against the Company’s pricing policy, and for final approval before entering into specific purchase contract with the successful seller.

2. Major and Continuing Connected Transaction

2.1 Financial Services – Deposit Services

Reference is made to the 2014 Announcement and Circular. Pursuant to the financial services agreement dated 28 August 2014, Finance Company has been providing financial services, including amongst others, Deposit Services to the Group.

To continue receiving Deposit Services from PDA and/or its associates (including Finance Company), on 26 October 2015, the Company entered into a Financial Services Agreement with PDA for a term of three years commencing on 1 January 2016 and ending on 31 December 2018 subject to compliance with applicable Listing Rule requirements.

Pursuant to the Financial Services Agreement, PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) shall provide Deposit Services to the Group on normal commercial terms or better to the Group for a term of three years commencing on 1 January 2016 and ending on 31 December 2018.

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LETTER FROM THE BOARD

• a) Pricing

Pursuant to the Financial Services Agreement, the interest rate payable by PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) to the Group for any deposits should not be lower than the interest rate prescribed by People’s Bank of China (中國人民銀行) for comparable deposits. It should also not be lower than interest rate paid by other major commercial banks in the PRC for comparable deposits, and it should not be lower than interest rate paid by PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) to any member of the PDA Group (other than any member of the Group) for comparable deposits. In addition, the daily closing balance of the Group’s deposit with PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) should not exceed RMB4.0 billion.

• b) Historical figures for each of the two years of 2013, 2014 and the nine months ended 30 September 2015, annual cap for 2015 and estimated annual caps for each of the three years of 2016, 2017 and 2018

Financial Services – Deposit Services (maximum daily closing balance)

		For
For the	For the	9 months
year ended	year ended	ended		Estimated	Estimated	Estimated
31 December	31 December	30 September	Annual cap	annual cap	annual cap	annual cap
2013	2014	2015	for 2015	for 2016	for 2017	for 2018
(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
1,491,809(1)	2,429,552(1)	2,075,654(1)	4,000,000(3)	4,000,000(5)	4,000,000(5)	4,000,000(5)
(1,491,809)(2)	(2,429,552)(2)	(2,075,654)(2)	(4,000,000)(4)	(4,000,000)(6)	(4,000,000)(6)	(4,000,000)(6)
Notes:

• (1) The figures relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules and the Shanghai Listing Rules.

• (2) The figures set out in “()” relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules.

• (3) The annual cap for 2015 relates to the annual cap which is the total of that approved by the Shareholders under the Listing Rules and the Shanghai Listing Rules provided that transactions which constitute connected transactions under both sets of rules will only be counted once.

• (4) The annual cap for 2015 relates to the annual cap approved by the Shareholders under the Listing Rules.

• (5) In determining the estimated annual caps for each of the three years ending 31 December 2018, the Company considered transactions that constituted connected transactions both under the Listing Rules and the Shanghai Listing Rules.

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LETTER FROM THE BOARD

• (6) The figures set out in “()” relate to the relevant Listing Rule Annual Caps for each of the three years ending 31 December 2018.

In determining the estimated annual caps for 2016, 2017 and 2018, the Directors have considered a number of factors, including: (i) the historical figures of the maximum daily closing balance of deposit as shown in the table above, (ii) the cash balance of RMB2.9 billion as at 30 September 2015, (iii) the expected cash inflow from the recent issuance of short term commercial paper of RMB1.0 billion which will be deposited before its deployment for earning interest income, (iv) the expected cash inflow amounting to 10% of the proceeds from the proposed issuance of new H Shares, (v) the possible issuance of various financial instruments in the upcoming three years which proceeds will also be deposited before its deployment for earning interest income, and (vi) the increasing asset and operation scale and the expected increase in cash available for deposit due to the business growth of the Group. Please refer to the announcement of the Company dated 23 October 2015 for details on the recent issuance of short term commercial paper and the announcements of the Company dated 5 May 2015 and 12 October 2015 for details on the proposed issuance of new H Shares.

The Group did not deposit all of its cash balance to the Finance Company historically and did not intend to deposit all of its cash balance to the Finance Company in future. The proposed annual cap of the Deposit Services is set close to the aggregate level of current cash balance and proceeds from the recent issuance of short term commercial paper in order to capture the future increase in cash balance brought by the business growth of the Group.

c) Internal control

In order to ensure minimal credit risk and concentration risk exposure in relation to maintaining a high level of cash deposits with one single finance company, in particular, Finance Company, the Company has appropriate internal controls in place, including:

• the Company, being a shareholder of Finance Company, is able to participate in the major operation decisions and monitor the operating status of Finance Company through shareholder meetings, director meetings and monthly reports;

• the Finance Company has a notification system in place which will send reminders to the business team of the Company with respect to any changes in bank balance, allowing members of the Group to be timely informed of such changes;

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LETTER FROM THE BOARD

• according to the articles of Finance Company, PDA has provided a written undertaking that in the event Finance Company has any issues with its cash flow, PDA will increase its capital in Finance Company, to ensure the capital of members of the Group is not affected.

D. NEW CONTINUING CONNECTED TRANSACTION

1. Financial Services – Factoring Services

Reference is made to the Announcement in relation to the provision of Factoring Services under the Financial Services Agreement by PDA and/or its associates to the Group on normal commercial terms or better to the Group for a term of three years commencing on 1 January 2016 and ending on 31 December 2018. Factoring Services is a service provided by PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) to the Group in which the Group will assign to PDA the sum receivable under any agreement on sales of goods or service contracts. The Factoring Service is recourse in nature and is expected to be utilized by members of the Group with short term cash flow issues.

a) Material terms (including pricing)

The major terms for the provision of Factoring Services under the Financial Services Agreement are as follows:

• the provision of Factoring Services is to be in accordance with the approval by the Ministry of Commerce of PRC and fulfills the applicable law and regulation;

• the terms will be no less favourable to the Group than terms available from independent third parties;

• the interest rate payable by the Group to PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) for the Factoring Services should not be higher than the rate charged by financial institutions in the PRC for comparable factoring services; and it should not be higher than the interest payable by any member of the PDA Group (other than any member of the Group) for comparable factoring services; and

• the daily closing balance of the Group’s Factoring Services provided to the Group by PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) should not exceed RMB1.5 billion.

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LETTER FROM THE BOARD

b) Estimated annual caps for each of the three years of 2016, 2017 and 2018

	Estimated	Estimated	Estimated
	annual cap	annual cap	annual cap
	for 2016	for 2017	for 2018
	(RMB’000)	(RMB’000)	(RMB’000)
Financial Services –
Factoring Services
(maximum daily
closing balance)	1,500,000	1,500,000	1,500,000

In determining the estimated annual caps for 2016, 2017 and 2018, the Directors have considered a number of factors, including: (i) the amount of accounts receivables of members of the Group as published in the latest financial statements of the Group, (ii) the historical monthly fluctuations of the amount of accounts receivables of members of the Group, with the highest month end accounts receivable balance between 31 January 2014 and 30 June 2015 reaching RMB1.1 billion, (iii) the significant increase in revenue of the Group from RMB3.9 billion in 2011 to RMB7.9 billion in 2014, (iv) the expected continuing strong performance of the Group in the upcoming three years, with development plans including development of a comprehensive logistic system and the integration of industrial, trading and commercial sectors, establishment as a brand of supply chain service and introduction of near-port industries, and (v) the amount of cash flow of members of the Group as published in the latest financial statements of the Group.

E. REASON FOR AND BENEFITS OF ENTERING INTO THE CCTS

The Directors believe that the CCTs ensure the operational and business development needs of the Group are effectively met, with terms and conditions of the transactions being not less favourable to the Group than that those available from independent third parties. The terms and conditions of each of the CCTs are on normal commercial terms or better, fair and reasonable and in the interests of the Company and Shareholders as a whole.

Effect on the earnings, assets and liabilities of the Company in relation to the provision of Deposit Services under the Financial Services Agreement

The renewal of financial services pursuant to the Financial Services Agreement will enable the Group to continue to centralize its control and management over the financial resources of the Group and attain diversified sources of funding. Therefore, the Directors are of the view that entering into the Financial Services Agreement overall will have a positive impact on the Group’s earnings as a whole. With respect to the Deposits Services under the Financial Services Agreement, the Directors consider it will not have an impact on the assets and liabilities of the Group.

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LETTER FROM THE BOARD

F. LISTING RULES IMPLICATIONS

1. Increase in Registered Capital of Finance Company

As at the date of this circular, PDA, being the controlling shareholder of the Company, is beneficially interested in 60% of the registered capital of Finance Company. Accordingly, Finance Company is a connected person of the Company and the Registered Capital Increase constituted a connected transaction of the Company under Chapter 14A of the Listing Rules.

As the First Registered Capital Increase and the Second Registered Capital Increase are conducted by the Company with the same party within a 12-month period and are similar in nature, the First Registered Capital Increase and the Second Registered Capital Increase are aggregated for the purpose of classification of connected transactions in accordance with Rule 14A.81 of the Listing Rules.

Since one or more of the applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules) in respect of the First Registered Capital Increase and the Second Registered Capital Increase, in aggregate, exceeded 5%, the Registered Capital Increase Agreement II and the Second Registered Capital Increase contemplated thereunder are subject to the reporting, announcement requirements and independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

2. Renewal of Continuing Connected Transactions and New Continuing Connected Transactions

As at the Latest Practicable Date, PDA is the controlling shareholder of the Company holding 2,458,264,592 Shares, which is approximately 55.54% of the total issued share capital of the Company and is a connected person of the Company under Chapter 14A of the Listing Rules. PDA and its associates also hold 2,458,264,592 Shares, which is approximately 55.54% of the total issued share capital of the Company.

As one or more of the applicable percentage ratios for the Supply of Goods and Services and the Purchase of Goods and Services is, on an annual basis, more than 0.1% but less than 5%, the transactions contemplated under the Supply of Goods and Services Agreement and the Purchase of Goods and Services Agreement are subject to the reporting, annual review and announcement requirements, but exempt from the independent shareholders’ approval requirement under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios for the provision of Factoring Services under the Financial Services Agreement is, on an annual basis, more than 5% and the proposed annual caps for such transactions are more than HK$10,000,000, the provision of Factoring Services under the Financial Services

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LETTER FROM THE BOARD

Agreement is 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 provision of Deposit Services under the Financial Services Agreement is, on an annual basis, more than 25% but less than 75%, the provision of Deposit Services under the Financial Services Agreement constitutes a major transaction of the Company, and is also subject to the reporting, annual review, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The Directors, including the independent non-executive Directors, consider the transactions under the Supply of Goods and Services Agreement and the Purchase of Goods and Services Agreement are in the Group’s ordinary and usual course of business, on normal commercial terms or better to the Group, which are fair and reasonable and in the best interests of the Company and its Shareholders as a whole. The Directors, including the independent non-executive Directors, also consider the proposed annual caps for each of the three years ending 31 December 2016, 2017 and 2018 for the relevant transactions are fair and reasonable.

The Directors (excluding the independent non-executive Directors whose opinion is stated in the “Letter from the Independent Board Committee” of this circular) consider the provision of Deposit Services and Factoring Services under the Financial Services Agreement, as well as the proposed annual caps for the aforementioned transactions for each of the three years ending 31 December 2016, 2017 and 2018 are in the Group’s ordinary and usual course of business, on normal commercial terms or better to the Group, are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

3. General

Each of Mr. Hui Kai, Mr. Xu Song, Mr. Xu Jian, Mr. Dong Yanhong and Mr. Yin Shihui, being a Director also holding a management position or directorship with PDA or its subsidiary (other than the Group), has abstained from voting on the board resolution approving the Registered Capital Increase Agreement II, the CCTs and the transactions contemplated thereunder. Save as disclosed above, none of the Directors attending the board meeting has a material interest in or is required to abstain from voting on the Registered Capital Increase Agreement II, the CCTs and the transactions contemplated thereunder.

The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the Registered Capital Increase Agreement II, the CCTs as well as the proposed annual caps for the aforementioned transactions. An independent financial adviser has also been appointed to advise the Independent Board Committee to the Independent Shareholders on the same. PDA and its associates will abstain from voting on the ordinary resolutions approving the Registered Capital Increase Agreement II, the CCTs as well as the proposed annual caps for the aforementioned transactions at the general meeting to be held by the Company.

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LETTER FROM THE BOARD

Reference is made to the Announcement. Although the transactions contemplated under the Supply of Goods and Services Agreement, the Purchase of Goods and Services Agreement, the Construction Management and Supervision Services Agreement, the Properties and Equipment Lease (Leasing From) under the Properties and Equipment Lease Agreement, the Terminal Facilities Design and Construction Services Agreement, and the provision of Loan Services, Settlement Services and other financial services under the Facilities Services Agreement are exempt from independent shareholders’ approval requirement under Chapter 14A of the Listing Rules, the Company will seek independent shareholders’ approval for the aforementioned agreements and the transactions thereunder as well as the proposed annual caps for each of the transactions pursuant to the requirements under the Shanghai Listing Rules. Details of the resolutions to be passed with respect to the transactions contemplated under the Supply of Goods and Services Agreement, the Purchase of Goods and Services Agreement are set out in the section headed “C.1 Disclosable and Continuing Connected Transactions” of this circular. Details of the resolutions to be passed with respect to the transactions contemplated under the Construction Management and Supervision Services Agreement, the Properties and Equipment Lease (Leasing From) under the Properties and Equipment Lease Agreement, the Terminal Facilities Design and Construction Services Agreement, and the provision of Loan Services, Settlement Services and other financial services under the Facilities Services Agreement are set out in Appendix II of this circular.

In addition, pursuant to the Properties and Equipment Lease Agreement, the Group shall lease properties and equipment to parties which are connected persons as defined under the Shanghai Listing Rules, but not under Chapter 14A of the Listing Rules. As such, the provision of Properties and Equipment Lease (Leasing To) constitutes as a connected transaction under the Shanghai Listing Rules, but not a connected transaction under Chapter 14A of the Listing Rules. The Company will seek independent shareholders’ approval for the provision of Properties and Equipment Lease (Leasing To) under the Properties and Equipment Lease Agreement as well as the proposed annual caps pursuant to the requirements under the Shanghai Listing Rules. Details of the resolution to be passed with respect to the Properties and Equipment Lease (Leasing To) under the Properties and Equipment Lease Agreement are set out in Appendix II to this circular.

G. GENERAL INFORMATION

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 and trade services; (iv) ore terminal and related logistics services; (v) general cargo terminal and related logistics and trading services; (vi) bulk grain terminal and related logistics and trading services; (vii) passenger and roll-on, roll-off terminal and related logistics services; and (viii) port value-added services and ancillary port operations.

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LETTER FROM THE BOARD

Finance Company is a non-bank finance company jointly established by the Company and its controlling shareholder, PDA in the PRC. Finance Company’s main business scope covers providing various financial services, including depository and loan facilities, credit facilities, clearance and settlement of money and credit references, to the Group and the PDA Group. As at 31 October 2015, the total assets of Finance Company amounted to RMB7,373.5 million. The profit before tax and after tax of Finance Company for the year ended 31 December 2014 amounted to RMB117.1 million and RMB87.8 million, respectively. The profit before tax and after tax of Finance Company for the year ended 31 December 2013 amounted to RMB114.1 million and RMB85.6 million, respectively. The Finance Company is considered as an associate in the Company’s accounts.

PDA is principally engaged in port development, financial services and property development. It is the controlling shareholder of the Company holding approximately 54.45% of the total issued share capital of the Company as at the date of this circular.

H. EGM

The EGM is to be held at Room 109, PDA Group Building, No. 1 Gangwan Street, Zhongshan District, Dalian City, Liaoning Province, PRC at 9:00 a.m. on Tuesday, 29 December 2015 to approve, among other things, the resolutions in relation to the Registered Capital Increase Agreement II, the CCTs and the transactions contemplated thereunder as well as the proposed annual caps for each of the transactions.

Pursuant to Rule 14A.70 of the Listing Rules, any connected person and any shareholder and their associates with a material interest in the Registered Capital Increase Agreement II and the CCTs is 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 are required to abstain from voting at the EGM in respect of resolutions to approve the Registered Capital Increase Agreement II, the CCTs and the transactions contemplated thereunder as well as the proposed annual caps for each of the transactions.

The notice of EGM, sets out on pages EGM-1 to EGM-4 of this circular, was published on the website of the Hong Kong Stock Exchange on 13 November 2015, and will be dispatched together with the reply slip and proxy form. 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.

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LETTER FROM THE BOARD

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 Sunday, 29 November 2015 to Tuesday, 29 December 2015 (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 on 30 November 2015 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 shop 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 4:30 p.m. on Friday, 27 November 2015.

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

I. RECOMMENDATIONS

The Independent Board Committee has been appointed to advise the Independent Shareholders in connection with the transactions under the Registered Capital Increase Agreement II and the CCTs. The Independent Board Committee, having considered the terms of the Registered Capital Increase Agreement II and the CCTs, 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 Registered Capital Increase Agreement II and the CCTs are on normal commercial terms or better and fair and reasonable so far as the Independent Shareholders are concerned, and is in the interests of the Company 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 Registered Capital Increase Agreement II, the CCTs and the transactions contemplated thereunder.

Given that the Directors (including the independent non-executive Directors whose opinion stated in the “Letter from the Independent Board Committee” of this circular) are of the view that the Registered Capital Increase Agreement II and the CCTs were entered into in the ordinary and usual course of business of the Group with terms that are on normal commercial terms or better, 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 Registered Capital Increase Agreement II, the CCTs and the transactions contemplated thereunder.

Yours faithfully, By Order of the Board HUI Kai Chairman

• The Company is registered as a 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”.

– 25 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> 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)

9 December 2015

To the Independent Shareholders

Dear Sir or Madam,

(1) CONNECTED TRANSACTIONS – INCREASE IN REGISTERED CAPITAL OF FINANCE COMPANY (2) RENEWAL OF EXISTING CONTINUING CONNECTED TRANSACTIONS AND (3) NEW CONTINUING CONNECTED TRANSACTION

We refer to the circular dated 9 December 2015 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 by the Board as the Independent Board Committee to advise the Independent Shareholders on whether the terms of the Registered Capital Increase Agreement II, the CCTs and the transactions contemplated thereunder, as well as the proposed annual caps for such transactions are on normal commercial terms or better and fair and reasonable so far as the Independent Shareholders are concerned and as to whether the Independent Shareholders should approve or disapprove the ordinary resolutions in relation to the Registered Capital Increase Agreement II, the CCTs and the transactions contemplated thereunder to be proposed at the EGM. TC Capital Asia 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” contained in this Circular, which contain, among other things, details of the Registered Capital Increase Agreement II and the CCTs, and the “Letter from Independent Financial Adviser” contained in this Circular, which contains its advice in respect of (a) the terms of the Registered Capital Increase Agreement II, (b) the terms of the CCTs, and the proposed annual caps for each of the transactions for each of the three years ending 31 December 2016, 2017 and 2018.

• 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”.

– 26 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

As the Independent Board Committee, we have discussed with the management of the Company the reasons for entering into the Registered Capital Increase Agreement II and the CCTs, the basis upon which the terms of the Registered Capital Increase Agreement II and the CCTs have been determined, and the major factors taken into account by the Company in arriving at the proposed annual caps for such transactions. We have also considered the key factors taken into consideration by the Independent Financial Adviser in forming its opinion regarding the terms of the Registered Capital Increase Agreement II and the CCTs (including the proposed annual caps for each of the transactions) 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 terms of the Registered Capital Increase Agreement II, the CCTs and the transactions contemplated thereunder and the advice and opinion of TC Capital in relation thereto, we are of the opinion that:

• (a) the Registered Capital Increase Agreement II was entered into in the Group’s ordinary and usual course of business, on normal commercial terms or better, fair and reasonable so far as the Independent Shareholders are concerned and is in the interest of the Shareholders and the Company as a whole; and

• (b) the CCTs and the transactions contemplated thereunder were entered into in the Group’s ordinary and usual course of business, on normal commercial terms or better, fair and reasonable and are in the interest of the Shareholders and the Company as a whole.

We therefore recommend that you vote in favour of the ordinary resolutions to be proposed at the EGM in respect of the Registered Capital Increase Agreement II, the CCTs and all the matters contemplated thereunder.

Yours faithfully,

For and on behalf of the Independent Board Committee

WAN Kam To, Peter	WANG Zhifeng	SUN Xiyun
Independent non-executive	Independent non-executive	Independent non-executive
Director	Director	Director

– 27 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Set out below is the text of a letter received from TC Capital, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the transactions contemplated under the Registered Capital Increase Agreement II, the Deposit Services and the Factoring Services contemplated under the New Financial Services Agreement, and the proposed annual caps thereunder.

9 December 2015

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

Dear Sirs,

DISCLOSEABLE AND CONNECTED TRANSACTION AND MAJOR AND CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the independent Shareholders in respect of (i) the terms of the second increase in registered capital of Finance Company (the “ Second Registered Capital Increase ”) under the Registered Capital Increase Agreement II entered into between the Company and PDA, (ii) the terms of the deposit services provided by PDA and/or its relevant associates to the Group (the “ Deposit Services ”) and the terms of the factoring services provided by PDA and/or its relevant associates to the Group (the “ Factoring Services ”) under the financial services agreement entered into between the Company and PDA (the “ New Financial Services Agreement ”) and (iii) the proposed annual caps contemplated under the Deposit Services and the Factoring Services under the New Financial Services Agreement for the three years ended 31 December 2018 (the “ Proposed Annual Caps ”).

Details of the Registered Capital Increase Agreement II and the New Financial Services Agreement are set out in the letter from the Board (the “ Board Letter ”) contained in the circular to the Shareholders dated 9 December 2015 (the “ Circular ”), of which this letter forms part. Capitalized terms used in this letter have the same meanings as those defined in the Circular unless the context otherwise requires.

References are made to the announcement dated 14 August 2015 in relation to increase in registered capital of Finance Company (the “ First Registered Capital Increase ”) from RMB500.0 million to RMB1,000.0 million under the registered capital increase agreement (the “ Registered Capital Increase Agreement I ”). On 26 October 2015, the Company and PDA entered into Registered Capital Increase Agreement II to increase the registered capital of Finance Company from RMB1,000.0 million to RMB2,000.0

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

million, by contributing RMB400.0 million and RMB600.0 million respectively, by way of cash to Finance Company in proportion to their respective equity interests in Finance Company.

References are further made to the announcement dated 28 August 2014 and the circular dated 15 September 2014, in relation to the financial services agreement (the “ Old Financial Services Agreement ”) entered into between the Company and Finance Company of which Finance Company shall provide to the Group a range of financial services including the deposit services, the loan services, the settlement services and other financial services for one year from 1 January 2015 to 31 December 2015. On 26 October 2015, the Company and PDA entered into New Financial Services Agreement to renew the financial services contemplated under the Old Financial Services Agreement and include the Factoring Services into the scope of the New Financial Services Agreement for a period from 1 January 2016 to 31 December 2018.

PDA, being the controlling shareholder of the Company, is therefore a connected person of the Company as defined under Rule 14A.11(1) of the Hong Kong Listing Rules. As such, the Registered Capital Increase Agreement II constitute connected transaction; and the New Financial Services Agreement constitute continuing connected transactions as defined under Chapter 14A of the Listing Rules.

Given that both the Registered Capital Increase Agreement I and the Registered Capital Increase Agreement II were entered into between the Company and PDA within a 12-month period and are related to each other, the transaction contemplated under the Registered Capital Increase Agreement II would have to be aggregated with the transaction of the Registered Capital Increase Agreement I pursuant to Rule 14A.81 of the Listing Rules. Since the applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules) in respect of the transactions aggregated under the Registered Capital Increase Agreement I and the Registered Capital Increase Agreement II exceed 5%, the Registered Capital Increase Agreement II is subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Furthermore, as one or more of the applicable percentage ratios for the Deposit Services and Factoring Services contemplated under the New Financial Services Agreement exceed 5%, such transactions are subject to, among other things, the reporting, annual review, announcement and independent shareholders’ approval requirements under Chapter 14A of the Hong Kong Listing Rules.

Mr. Wan Kam To, Peter, Mr, Wang Zhifeng and Mr Sun Xiyun, the independent non-executive Directors, have been appointed as members of the Independent Board Committee to advise the independent Shareholders as to whether (i) the terms of the Registered Capital Increase Agreement II, (ii) the terms of the Deposit Services and Factoring Services contemplated under New Financial Services Agreement and (iii) the Proposed Annual Caps are in the ordinary and usual course of business of the Group, on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole; and how to vote on the relevant resolution at the EGM. As the independent financial adviser, our role is to give an independent opinion and recommendation to the Independent Board Committee and the independent Shareholders in this regard.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR OPINION

As at the Latest Practicable Date, we were independent from and not connected with the Group pursuant to Rule 13.84 of the Listing Rules. In addition to the appointment as the Independent Financial Adviser, TC Capital Asia Limited in the last two years was appointed by the Company as the independent financial adviser in respect of (i) the continuing connected transactions as set out in the circular of the Company to the Shareholders dated on September 15, 2014 and (ii) the continuing connected transaction as set out in the circular of the Company to the Shareholders dated on April 8, 2014. Apart from the normal advisory fee payable to us in connection with our appointment as the Independent Financial Adviser, no arrangement exists whereby we shall receive any other fees or benefits from the Company.

In formulating our recommendation, we have considered and reviewed, among other things, (i) the Registered Capital Increase Agreement II; (ii) the New Financial Services Agreement; (iii) the interim reports of the Company for the six months ended 30 June 2014 and 2015; (iv) the annual report of the Company for the year ended 31 December 2014 and (v) other information as set out in the Circular. We have also relied on 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 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, nor have we conducted any form of in-depth investigation into the businesses, affairs, operations, financial position or future prospects of each of the Company, the Group, PDA and Finance Company, and any of their respective subsidiaries and associates.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

I. Registered Capital Increase Agreement II

In assessing whether the Registered Capital Increase Agreement II is entered in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders, we have taken into consideration the following factors and reasons:

• A. Background and Financial Information of Finance Company

Finance Company is a non-bank finance company jointly established by the Company and its controlling shareholder, PDA in the PRC in 2011. Finance Company’s main business scope covers various financial services, including depository and loan facilities, credit facilities, clearance and settlement of money and credit references, exclusive to the PDA Group and the Group only but not to independent third parties.

We have obtained and reviewed the audited financial statements (prepared in accordance with the PRC Generally Accepted Accounting Principles) of Finance Company since its establishment in 2011. We noted that Finance Company has made profits each year since its establishment and its net profits increased from approximately RMB40.6 million in 2012 to approximately RMB87.8 million in 2014 with a stable net profit margin of 66.2%, 66.5% and 66.2% for the three years ended 31 December 2014 and its return on equity had also increased from 7.5% in 2012 to 12.3% in 2014.

The total assets of Finance Company had consistently increased from approximately RMB2,431.4 million as at 31 December 2012 to approximately RMB3,317.7 million as at 31 December 2013 and to approximately RMB4,910.8 million as at 31 December 2014. Correspondingly its total equity to shareholders had also increased from approximately RMB540.9 million as at 31 December 2012 to approximately RMB626.5 million as at 31 December 2013 and to approximately RMB714.3 million as at 31 December 2014.

We also understand that the Finance Company is subject to supervision by the China Banking Regulatory Commission (“ CBRC ”) in accordance to Measures for the Administration of Finance Companies of Enterprise Groups (企業集團財務公司管理 辦法) and the CBRC will carry out regular examinations of the audited financial statements and other relevant materials required to be filed by the Finance Company as well as on-site inspections and interviews with the senior management

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

of the Finance Company. The Finance Company must also comply with a set of financial ratios requirements. We have compared the financial ratios of Finance Company prepared by the management of the Finance Company with such requirement as illustrated as the table below:

		As at
	Regulatory	30 September
	requirements	2015	Compliance
Capital adequacy ratio	≥10%	29.6%	Yes
Loans from banks and	≤100%	0.0%	Yes
financial institutions to
total capital
Investment in short-term	≤40%	30.4%	Yes
securities to total capital
Investment in long-term	≤30%	–	Yes
securities to total capital
Outstanding amount being	≤100%	–	Yes
guaranteed to total
capital
Self-owned assets to total	≤20%	0.1%	Yes
equity

As shown in the table above, Finance Company complied with all the ratio requirements as at 30 September 2015. We have also been advised by the Directors that to their best knowledge and after making reasonable enquiry, up to the Latest Practicable Date, there is no record of non-compliance with relevant laws, rules or regulations of the PRC on Finance Company.

Given (i) the sound historical financial performance in particularly stable profit margin and improving return on equity as well as the healthy financial position of Finance Company, (ii) the continuing compliance with regulation set by PBOC and the CBRC of Finance Company since its establishment, (iii) the increase in registered capital of Finance Company in return further support the working capital needs for the Group’s daily operation, we concur with the view of Directors that the Second Capital Increase will be able to further expand the business of Finance Company and therefore the Company, as its shareholder, will be also expected to benefit from, among others, its strong return on investment for shareholders.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

II. Deposit Services and Factoring Services contemplated under the New Financial Services Agreement

In assessing whether the Deposit Services and Factoring Services contemplated under the New Financial Services Agreement are entered in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders, we have taken into consideration the following factors and reasons:

• A. Background and Financial Information of Finance Company

As discussed with the management of the Company, we understand that the Deposit Services will be provided by the Finance Company. Please refer to the sub-section headed “I. Registered Capital Increase Agreement II – Background and Financial Information of Finance Company” under this section.

• B. Background and Financial Information of Xinghai International Commercial Factoring (Tianjin) Co., Ltd. (the “ Factoring Company ”)

As discussed with the management of the Company, we understand that the Factoring Services will be provided by the Factoring Company.

Factoring Company was incorporated in July 2012 with registered capital of RMB110.0 million and is currently owned by PDA. Factoring Company is principally engaged in trade financing including management, settlement and collection of clients’ account receivable.

We have obtained and reviewed the audited financial statements (prepared in accordance with the PRC Generally Accepted Accounting Principles) of Factoring Company for the year ended 31 December 2014. The total assets and total equity of Factoring Company was approximately RMB364.8 million and approximately RMB116.4 million as at 31 December 2014.

• C. Quality financial services provided by Finance Company since 2012

According to our discussion with the management of the Company, Finance Company has been providing stable and high quality deposit services to the members of the Group since 2012. We understand that Finance Company does not collect handling fee for external payment and confirmation of deposit, account management fee from the Company.

Having considered the above in particular (i) the strong financial background of the Finance Company and Factoring Company, (ii) the familiarity of Finance Company with the Group’s operation, (iii) the quality deposit services provided by Finance Company to the Company, and (iv) being part of the PDA Group in December 2014, Factoring Company are able to obtain and share information among the members of the PDA Group effectively and therefore enhance operation and service efficiency in providing Factoring Services to the Group, we are of the view that the Deposit Services and Factoring Services contemplated under the New Financial Services Agreement are entered in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

PRINCIPAL TERMS OF THE REGISTERED CAPITAL INCREASE AGREEMENT II, DEPOSIT SERVICES AND FACTORING SERVICES CONTEMPLATED UNDER THE NEW FINANCIAL SERVICES AGREEMENT

I. Registered Capital Increase Agreement II

Set out below the major terms of the Registered Capital Increase Agreement II:

Date : 26 October 2015 Parties : (1) The Company; and (2) PDA Major Terms : (i) The registered capital of Finance Company shall increase from RMB1,000 million to RMB2,000 million. The Company and PDA shall contribute RMB400 million and RMB600 million, respectively, by way of cash to Finance Company in proportion to their respective equity interests in it.

• (ii) Upon completion of the Second Registered Capital Increase, the Company and PDA shall maintain the same proportion of equity interests in Finance Company as before such increase.

We have obtained and exanimated the Registered Capital Increase Agreement I and we noted that, other than the amount of registered capital increase, the terms of the Registered Capital Increase Agreement I do not have material difference in comparison with the Registered Capital Increase Agreement II. In assessing the fairness and reasonableness of the terms of the Registered Capital Increase Agreement II, we have discussed with the management of the Company and we understand that the amount of RMB1,000 million of Second Registered Capital Increase was negotiated between the Group and PDA in relation to the proposed expansion of operation of the Finance Company in the upcoming years. We also understand that by the completion of the Second Registered Capital Increase, the Finance Company are able to further expand its operation scale in a considerable extent. In particular, we are advised by the Company that the loan and investment scale will increase by approximately 28.2% and approximately 75% from existing approximately RMB2,840 million and RMB520 million to approximately RMB3,640 million and RMB910 million respectively. Also the guarantee and interbank lending amount will further increase by approximately 69.2% and approximately 300% from existing approximately RMB1,300 million and RMB500 million to approximately RMB 2,200 million and RMB 2,000 million respectively. We have obtained and reviewed the basis and calculation prepared by the Company in arriving the above estimated expansion of the Finance Company after the Second Registered Capital Increase, among the other things, relevant rules and regulations governing the loan, investment, guarantee and interbank lending scale of finance companies of enterprise groups in China such as Measures for the Administration of Finance Companies of Enterprise Groups (企業集團財 務公司管理辦法), Measures for the Administration of Interbank Lending (同業拆借管理辦 法) and PBOC guidance and we are of the view that such estimation are being made by the management of the Company after due and careful consideration.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

Given (i) the Second Registered Capital Increase enable further expansion of the Finance Company, (ii) the strong historical financial performance of Finance Company as discussed in previous section, and (iii) the Second Registered Capital Increase was undertaken by the shareholders of Finance Company pro-rata according to their percentage shareholding, we are of the view that the Second Registered Capital Increase was therefore fair and reasonable to the Company and consistent with the interests of the Company and its shareholders.

II. Deposit Services and Factoring Services contemplated under the New Financial Services Agreement

Set out below the major terms of the Deposit Services and Factoring Services contemplated under the New Financial Services Agreement:

Deposit Services

• Date : 26 October 2015 Parties : (1) The Company; and (2) PDA

• Scope of : (i) depository services in accordance with the rules and Deposit regulations prescribed by the PBOC, including Services current deposit, fixed term deposit, call deposit and agreement deposit;

• (ii) the interest rate payable by PDA and/or its associates to the Group for any deposits should not be lower than the interest rate prescribed by PBOC for comparable deposits; it should also not be lower than interest rate paid by other major commercial banks in the PRC for comparable deposits; and it should not be lower than interest rate paid by Finance Company to any member of the PDA Group (other than any member of the Group) for comparable deposits;

• (iii) the daily closing balance of the Group’s deposit with PDA and/or its associates should not exceed RMB4.0 billion.

Duration : From 1 January 2016 to and including 31 December 2018.

We have obtained and exanimated the Old Financial Services Agreement and we noted that the terms of the deposit services contemplated under the Old Financial Services Agreement do not have material difference in comparison with the Deposit Services.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

Factoring Services

• Date : 26 October 2015 Parties : (1) The Company; and (2) PDA

• Scope of : (i) factoring services in accordance with the approval by Factoring the Ministry of Commerce of PRC and fulfilled the Services applicable law and regulation, and the terms are not less favourable than terms available from independent third parties;

• (ii) the interest rate payable by the Group to PDA and/or its associates for the factoring services should not be higher than the rate charged by financial institutions in the PRC for comparable factoring services; and it should not be higher than the interest payable by any member of the PDA Group (other than any member of the Group) for comparable factoring services;

• (iii) the factoring amount in aggregate shall not exceed RMB1.5 billion for each year.

• Duration : For a term of three years, commencing on 1 January 2016 and ending on 31 December 2018.

In assessing the effectiveness of internal control imposed by the Group in ensuring that (i) the interest rates payable by PDA and/or its associates to the Group for any deposits shall not be lower than the interest rate prescribed by PBOC for comparable deposits; the interest rate paid by other major commercial banks in the PRC for comparable deposits; and the interest rate paid by Finance Company to any member of the PDA Group (other than any member of the Group) for comparable deposits under the Deposit Services, and (ii) the interest rate payable by the Group to PDA and/or its associates for the factoring services should not be higher than the rate charged by financial institutions in the PRC for comparable factoring services; and it should not be higher than the interest payable by any member of the PDA Group (other than any member of the Group) for comparable factoring services under the Factoring Services, we have obtained and reviewed the internal control measures provided by the Group of which are summarized as below:

Quotations and agreement negotiation: Before entering into any individual agreement with PDA and/or its associates for Deposit Services or Factoring Services respectively, the Group shall invite several commercial banks to provide quotations or proposals, through which the Group can compare the terms of the agreement (including the interest rate) offered by at least three independent commercial banks in the PRC, with the terms offered by Finance Company or Factoring Company. The Group will also request Finance Company or Factoring Company to provide information about the terms (including the interest rate) offered by it to PDA and/or its subsidiaries or associates (other than the members of the Group) for comparison

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

purposes; The Group shall then negotiate the terms on the basis that the interest rate available to the Group shall not be less favorable to the Group than the rates generally available on the similar transactions in the market, and not be less favorable to the Group than any member of the PDA Group (other than any member of the Group) as well as not be lower than the interest rate prescribed by PBOC (for Deposit Services only) for comparable deposits;

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

While assessing the effectiveness of above mentioned internal control imposed by the Group, we have obtained and reviewed sample deposit terms offered by Independent Third Parties and Finance Company under the Old Financial Services Agreement. We note that the deposit terms offered by Finance Company to the Group are no less favourable to the Group than the deposit terms available from Independent Third Parties.

Given that (i) there are sufficient internal procedures for the Group to ensure that the deposit interest rates to be offered by the PDA and/or its associates to the Group will not be lower than the interest rates of offered by independent third parties, the PBOC’s benchmark interest rate, or interest rates of major commercial banks in the PRC for similar deposits of similar term; (ii) the terms of the Deposit Services are materially the same as the those under the Old Financial Services Agreement and (iii) there are sufficient internal procedures for the Group to ensure that the interest rate payable by the Group to PDA and/or its associates for the factoring services will not be higher than the rate charged by financial institutions in the PRC or the interest payable by any member of the PDA Group (other than any member of the Group) for comparable factoring services, we are of the view that the pricing standard of Deposit Services and Factoring Services under the Financial Services Agreement is on normal commercial term, fair and reasonable so far as the Company and the Independent Shareholders are concerned, and in the interests of the Company and the Shareholders as a whole.

After taking into the above factors, we are of the view that the major terms of (i) the Registered Capital Increase Agreement II, (ii) the Deposit Services and Factoring Services contemplated under the New Financial Services Agreement are normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

PROPOSED ANNUAL CAPS

I. Deposit Services contemplated under the New Financial Services Agreement

The table below sets forth (i) the existing annual caps of the deposit services under the previous financial services agreement dated 27 October 2011 entered into between the Company and the preparation committee of Finance Company for the three years ending December 31, 2014, (ii) the existing annual cap of the deposit services under the Old Financial Services Agreement for the year ended December 31, 2015, (iii) the historical maximum daily closing balance of the deposit services under both agreements, and (iv) the proposed annual caps under the Deposit Services:

			For the	year ended 31 December
	2012	2013	2014	2015	2016	2017	2018
				(RMB million)
Annual monetary cap	4,000	4,000	4,000	4,000	4,000	4,000	4,000
Maximum daily closing	1,556	1,492	2,430	2,076	N/A	N/A	N/A
balance				(Jan – Sep)

In assessing the reasonableness and fairness of the proposed annual caps under the Deposit Services, we have discussed with the management of the Company on the treasury requirements of the Group. We have also reviewed the latest published financial statements of the Group.

As at 30 September 2015, being the date of which the latest financial statements of the Group were published, the Group has cash at bank and in hand amounted to approximately RMB2,889.8 million. We noted that the proposed annual caps under the Deposit Services for 2016, 2017 and 2018 represented 138.4% of the Group’s cash at bank and in hand as at 30 September 2015, possibly suggesting that the Group may have difficulties in fully utilizing the proposed annual caps. Nevertheless, by referring to the Company’s announcement dated 23 October 2015 (the “ CP Announcement ”) in relation to the successful issuance of the second tranche of short-term commercial paper (the “ CP Issue ”) of RMB1,000 million, we understand that the cash balance of the Company will further increase correspondingly. As discussed with the management of the Company, we understand that such proceed would be deposited with the Finance Company before its deployment for earning interest income. Taken into account of the CP Issue, the proposed annual caps of the Deposit Services for 2016, 2017 and 2018 represented approximately 102.8% of the Group’s cash at bank and in hand.

To further assess the reasonableness of the proposed annual caps of the Deposit Services, we have identified listed companies in Hong Kong (the “ Comparable Companies ”) receiving deposit services provided by finance companies held by parent companies, with their respective circulars published from 1 May 2015 (approximately six months prior to the entering into of the New Financial Services Agreement). We consider the list of Comparable Companies presented below to be a complete and comprehensive list according to our research on the website of the Stock Exchange based on the above criteria and is able to depict a more recent market practice in determining the terms of deposit services provided by the related parties of the Comparable Companies and allow us to judge whether the proposed annual caps of the Deposit Services are fair and reasonable in a timely fashion manner. We have in particular reviewed the proposed

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

maximum daily deposit balances to be placed by the Comparable Companies with their respective finance companies, and the Comparable Companies’ cash balance, including cash and cash equivalent, bank balances and time deposit (the “ Cash Balance ”) according to their latest published financial reports prior to the publish date of their respective circulars. The Comparable Companies have obtained their respective independent shareholders’ approval on such maximum daily deposit balances. Based on our review, the results are highlighted in the following table:

				Maximum daily
				deposit balance as
		Maximum daily		a percentage of
Name of Comparable Companies	Date of circular	deposit balance	Cash Balance	Cash Balance
		(RMB million)	(RMB million)	(%)
		(A)	(B)	(A/B)
		(Note 1)
SINOPEC Engineering (Group) Co.,	15 September 2015	9,000.0	10,052.3	89.5%
Ltd., (stock code: 2386)
Zhaojin Mining Industry Company	31 August 2015	2,500.0	1,607.3	155.5%
Limited (stock code: 1818)
China National Materials Company	25 August 2015	7,000.0	9,858.2	71.0%
Limited (stock code: 1893)
China Southern Airlines Company	9 June 2015	8,000.0	14,467.0	55.3%
Limited (stock code: 1055)
Zhejiang Expressway Co., Ltd.	4 May 2015	2,500.0	4,063.0	61.5%
(stock code: 576)
			Mean	94.4%
			Maximum	155.5%
			Minimum	55.3%
Proposed annual caps of the Deposit		RMB4,000.0 million	RMB3,889.8 million	102.8%
Services			(Note 2)

Source: Latest published financial reports and circulars of the Comparable Companies

Notes:

1. For ease of our comparison, we have taken the average of the maximum daily deposit balances in case such balances varies with the terms of the respective agreement entered by the Comparable Companies

2. Taken into account the completion of the CP Issue

As shown above, the proposed maximum daily deposit balances of the Comparable Companies represent approximately 55.3% to 155.5% of their respective Cash Balance, with the mean of 94.4% and the proposed annual caps of the Deposit Services, representing approximately 102.8% of the sum of the Group’s total cash balances as at 30 September 2015 and the completion of the CP Issue, falls within the above range.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

As advised by the management of the Company, though the Group did not deposit all of its cash balance to the Finance Company historically and did not intend to deposit all of its cash balance to the Finance Company in future, the proposed annual cap of the Deposit Services is set close to the aggregate level of current cash balance and proceed from the CP Issue in order to capture the future increase in cash balance brought by the business growth of the Group which in turn principally affected by the development of port service industry in Dalian.

In assessing the development of port service industry in Dalian, China, we refer to National Bureau of Statistics that the aggregate cargo throughput of coastal port in Dalian has been increased from 314.0 million tons in 2010 to 423.4 million tons in 2014, or a 34.8% increase, which is similar to the real GDP growth of China of 36.3% in the same period. In light of the steady growth in the economy of China in future, we are of the view that the development of port service industry in Dalian will be increased correspondingly.

In light of the historical growth of aggregate cargo throughput of coastal port in Dalian (i.e. 34.8% increase in aggregate cargo throughput from 2010 to 2014) and steady growth in the economy of China in future, we are of the view that the proposed annual cap of the Deposit Services might be in a certain extent less than the total cash balance of the Group in future (e.g. assuming the aggregate level of current cash balance and proceed from the CP Issue will increase correspond to the historical growth of aggregate cargo throughput of coastal port in Dalian from 2010 to 2014, the available cash balance of the Group will be at RMB3,890 million x (1+34.8%) = RMB5,244 million) and therefore we are of the view that the proposed annual cap of the Deposit Services are set by the Company in a conservative manner.

Being a finance company of enterprise groups, Finance Company is subject to strict supervision by the CBRC in accordance to Measures for the Administration of Finance Companies of Enterprise Groups (企業集團財務公司管理辦法) and the CBRC will carry out regular examinations of the audited financial statements and other relevant materials required to be filed by the Finance Company as well as on-site inspections and interviews with the senior management of the Finance Company, we are therefore of the view that the credit risk borne by the Company in depositing most of its liquid fund into Finance Company is relatively low.

Also, according to the terms of the Deposit Services contemplated under the New Financial Services Agreement, the Group has the right but not the obligation to place deposit with PDA and/or its relevant associates and it is at its liberty to deposit any amount of sum within the approved annual caps. In any event the interest offered by independent third parties are more favorable or the Group would consider to mitigate the concentration risk of its deposit, the Group is allowed to place the deposit with the independent third parties. We are of the view that such flexible mechanism can mitigate the concentration risk borne by the Company. Nevertheless, taking into account that the deposit interest rates to be offered by the PDA and/or its relevant associates to the Group will not be lower than the interest rates of offered by independent third parties, the PBOC’s benchmark interest rate, or interest rates of major commercial banks in the PRC for similar deposits of similar term, it is justifiable to prescribe an annual cap to allow the Group to gain interest should such opportunity arises.

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

Taking into account of (i) the estimated cash inflow from the CP Issue; (ii) the Group is neither obliged nor committed to utilize the Deposit Services of the PDA and/or its relevant associates; (iii) the ratio of proposed annual caps for the Deposit Services to Cash Balance for the Group fall within the range of that of the Comparable Companies; (iv) the favorable interest rate offered by the PDA and/or its relevant associates to the Group under the New Financial Services Agreement and (v) the expected business growth of the Group, we are of the view that the proposed annual caps for the Deposit Services under the New Financial Services Agreement are fair and reasonable so far as the Company and the Independent Shareholders are concerned.

II. Factoring Services contemplated under the New Financial Services Agreement

The proposed annual caps of the Factoring Services are RMB1,500 million for the three years ended 2018. There is no historical transaction of factoring services between the Group and any parties (including PDA and/or its relevant associates) in the last three financial years.

In assessing the reasonableness and fairness of the proposed annual caps for the Factoring Services, we have reviewed the latest published financial statements of the Group and have discussed with the management of the Company on the expected continued growth of the business of the Company.

As at 30 September 2015, being the date of which the latest financial statements of the Group were published, the Group has accounts receivable amounted to approximately RMB898.4 million. We noted that the proposed annual caps under the Factoring Services for 2016, 2017 and 2018 represented 167.0% of the Group’s accounts receivable as at 30 September 2015. Nevertheless, we note that the proposed annual caps represented the maximum closing balance throughout a year, during which the accounts receivable balance of the Group may fluctuate considerably from the amount stated in the interim financial statements, which represented only a snapshot of the financial position throughout the half year. We have obtained the monthly accounts receivable balance of the Group from 31 January 2014 to 30 June 2015 and we noted that the highest month end balance of the Group’s accounts receivable reached approximately RMB1,050 million. The proposed annual caps under the Factoring Services are set approximately 42.9% higher than the such highest month end balance of the Group’s accounts receivable from 31 January 2014 to 30 June 2015, possibly suggesting that the Group may have difficulties in fully utilizing the proposed annual caps. Nevertheless, taken into account the historical 3 years period performance of the Group by referring to its annual reports of which such period is the same as the effective period of the Factoring Service, the revenue of the Group has increased from approximately RMB3,955.4 million in 2011 to approximately RMB7,942.5 million in 2014 or an increase of approximately 100.8%. Also, the most recent performance of the Group remained strong. As disclosed in the Company’s interim report 2015, the Group’s revenue recorded an increase of 24.2% from approximately RMB3,297.9 million for the six months ended 30 June 2014 to approximately RMB4,097.5 million for the six months ended 30 June 2015. According to the management discussion and analysis in Company’s the interim report 2015, the Group will continue to promote the development of a comprehensive logistic system and the integration of industrial, trading and commercial sectors. Furthermore, it will establish itself as a brand of supply chain service

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

and introduce near-port industries while develop new finance service model and expand the application of information technology. The Group will strive to integrate and promote the development of various industries including logistics, trade, finance and information industries, thereby boosting the transition and upgrade of ports. Though the Group did not intend to assign all its account receivables to PDA, based on the historical strong performance (i.e. 100.8% increase in revenue from 2011 to 2014) and the positive outlook of the Group’s business, we are therefore of the view that the expansion of the operating scale and the improvement in the Group’s financial performance has helped lift the demand for the usage of the Factoring Services and the proposed annual cap of the Factoring Services might be in a certain extent less than the total account receivables of the Group in future (e.g. assuming the highest month end balance of the Group’s accounts receivable of the Group from 31 January 2014 to 30 June 2015 will increase correspond to the historical revenue growth of the Group from 2011 to 2014, the available account receivables of the Group will be at RMB1,050 million x (1+100.8%) = RMB2,108 million) and therefore we are of the view that the proposed annual caps of the Factoring Services of RMB1,500.0 million are set by the Company in a conservative manner.

Taking into account of the expected business growth of the Group and therefore expected increase in its account receivable as well as the demand for the usage of Factoring Services, we are of the view that the proposed annual caps for the Factoring Services under the New Financial Services Agreement are fair and reasonable so far as the Company and the Independent Shareholders are concerned.

CONTINUING CONNECTED TRANSACTIONS REQUIREMENTS UNDER THE LISTING RULES

Pursuant to Rules 14A.55 to 14A.59 of the Listing Rules, the transactions contemplated under Registered Capital Increase Agreement II, the Deposit Services and the Factoring Services contemplated under the New Financial Services Agreement (the “ Continuing Connected Transactions ”) are subject to the following annual review requirements:

• (a) each year the independent non-executive Directors must review the Continuing Connected Transactions and confirm in the annual report whether the Continuing Connected Transactions have been entered into:

• (i) in the ordinary and usual course of business of the Group;

• (ii) on normal commercial terms or better; and

• (iii) according to the agreement governing them on terms that are fair and reasonable and in the interests of the Shareholders as a whole;

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LETTER FROM INDEPENDENT FINANCIAL ADVISER

• (b) each year the auditors of the Company must provide a letter to the Board (with a copy provided to the Stock Exchange at least ten business days prior to the bulk printing of the Company’s annual report) confirming whether anything has come to their attention that causes them to believe that the Continuing Connected Transactions:

• (i) has not been approved by the Board;

• (ii) was not, in all material respects, in accordance with the pricing policies of the Group (if applicable);

• (iii) was not entered into, in all material respects, in accordance with the relevant agreement governing the Continuing Connected Transactions; and

• (iv) has exceeded the Proposed Annual Caps;

• (c) the Company must allow, and ensure that the relevant counterparties to the Continuing Connected Transactions allow, the Company’s auditors sufficient access to their records for the purpose of the reporting on the Continuing Connected Transactions as set out in paragraph (b); and

• (d) the Company must promptly notify the Stock Exchange and publish an announcement if the independent non-executive Directors and/or auditors of the Company cannot confirm the matters as required.

In light of the above reporting requirements attached to the Continuing Connected Transactions, we are of the view that appropriate measures will be in place to monitor the conduct of the Continuing Connected Transactions and assist to safeguard the interests of the independent Shareholders.

RECOMMENDATION

Having considered the principal reasons and factors referred to above, we are of the opinion that the entering into of (i) the Registered Capital Increase Agreement II, (ii) the Deposit Services and Factoring Services contemplated under the New Financial Services Agreement are in the ordinary and usual course of business of the Group and in the interests of the Company and the independent Shareholders as a whole, and the terms of (i) the Registered Capital Increase Agreement II, (ii) the Deposit Services and Factoring Services contemplated under the New Financial Services Agreement are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and the basis in determining the Proposed Annual Caps is fair and reasonable so far as the Company and the independent Shareholders are concerned.

– 43 –

LETTER FROM INDEPENDENT FINANCIAL ADVISER

Accordingly, we advise the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolutions to be proposed at the forthcoming EGM to approve the Registered Capital Increase Agreement II, the Deposit Services and Factoring Services contemplated under the New Financial Services Agreement, and to approve the Proposed Annual Caps.

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

Note: Mr. Edward Wu of TC Capital Asia Limited is a responsible officer licensed under the SFO to engage in Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities having over 14 years of experience in investment banking and corporate finance.

– 44 –

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 to the best of their knowledge and belief that the information contained in this circular is accurate and complete in all material respects and not misleading and 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 2012, 2013 and 2014 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):

• (i) annual report of the Company for the year ended 31 December 2014 published on 23 April 2015 (page 57 to page 207);

• (ii) annual report of the Company for the year ended 31 December 2013 published on 28 April 2014 (page 57 to page 217); and

• (iii) annual report of the Company for the year ended 31 December 2012 published on 24 April 2013 (page 63 to page 217).

3. STATEMENT OF INDEBTEDNESS

As at the close of business of 30 September 2015, the Group had outstanding borrowings of approximately RMB11,301.5 million comprising pledged bank loans of approximately RMB2,556.1 million, unsecured bank loans of approximately RMB899.0 million, outstanding financial leases of approximately RMB50.4 million and other guaranteed bonds of approximately RMB7,796.0 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 30 September 2015.

– I-1 –

APPENDIX I

GENERAL INFORMATION

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.

5. FINANCIAL AND TRADING PROSPECTS

As disclosed in announcement of the Company dated 23 April 2015 in relation to the annual results of the Group for the year ended 31 December 2014, the Group’s operations achieved sound growth in 2014. During the first half of 2015, the Group’s major business segments performed well. As disclosed in the Company’s announcement of 18 August 2015 of its interim results for the six months ended 30 June 2015, the Group recorded revenue and net profit attributable to owners of the Company of RMB4,097.5 million and RMB286.1 million, respectively.

In view of the recovery in domestic economy and the improvement in foreign trade, and the continued support of the PRC central government to the port industries as well as the continued implementation of the initiatives 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 the second half of 2015.

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, so far as it is known to the Company, the following Director had interests or short positions in the shares or underlying shares of the Company:

				Approximate
				percentage of	Approximate
				the relevant	percentage of
	Class of	Number of		class of share	the total share
Name	Shares	Shares(1)	Capacity	capital(2)	capital(3)
Mr. Dong Yanhong	H Shares	130,000 (L)	Beneficial Owner	0.004%	0.01%

– I-2 –

APPENDIX I

GENERAL INFORMATION

Save as disclosed above, 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 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 share	the total share
Shareholders	Shares	Shares(1)	Capacity	capital(2)	capital(3)
Dalian Port Corporation	A Shares	2,308,806,592 (L)	Beneficial owner	68.65%	52.16%
Limited(4)
	H Shares	149,458,000 (L)	Beneficial owner	14.07%	3.38%
N.Y.K. Line (Hong	H Shares	114,800,000 (L)	Beneficial owner	10.80%	2.59%
Kong) Limited
N.Y.K. Line Group	H Shares	114,800,000 (L)	Interest of	10.80%	2.59%
(Hong Kong) Limited			controlled
			corporation
Nippon Yusen	H Shares	114,800,000 (L)	Interest of	10.80%	2.59%
Kabushiki Kaisha			controlled
			corporation
China Shipping (Group)	H Shares	73,610,000 (L)	Beneficial owner	6.93%	1.66%
Co., Ltd.

– I-3 –

APPENDIX I

GENERAL INFORMATION

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, Mr. Dong Yanhong and Mr. Yin Shihui, being a Director, also holds a management position or directorship 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. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group which does not expire or is not determinable by such member of the Group within one year without payment of compensation (other than statutory compensation).

8. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors, or their respective close associates had any interests in a business which competes or was likely to compete, either directly or indirectly, with the business of the Group and which was required to be disclosed pursuant to Rule 8.10 of the Listing Rules.

9. DIRECTOR’S OR SUPERVISOR’S INTERESTS 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, supervisors of the Company had any interest in any assets which has been, since 31 December 2014 (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, to the best knowledge and information of the Directors, none of the Directors or supervisors was materially interested in any contract or arrangement subsisting at the Latest Practicable Date which is significant in relation to the business of the Group.

– I-4 –

APPENDIX I

GENERAL INFORMATION

10. 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 Asia Limited A licensed corporation under the SFO to engage in type 1 (dealing in securities) and type 6 (advising on corporate finance) of the regulated activities as set out in schedule 5 of the SFO

TC Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and/or report, as the case may be, and references to its name and logo 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 2014, the date to which the latest audited financial statements of the Group were made up; and was not beneficially interested in the share 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.

11. MATERIAL ADVERSE CHANGE

The Directors confirm that there was no material adverse change in the financial or trading position of the Group since 31 December 2014 (being the date to which the latest published audited financial statements of the Company were made up).

12. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration proceedings of material importance and there is no litigation or claim of material importance known to the Directors to be pending or threatened by or against any member of the Group.

– I-5 –

APPENDIX I

GENERAL INFORMATION

13. 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:

• (i) the fixed asset purchase agreement entered into between the Company and PDA on 13 January 2015 pursuant to which the Company agreed to purchase certain fixed assets from PDA for a total cash consideration of RMB11.4 million;

• (ii) the agreement entered into between the Company and PDA on 29 April 2014 pursuant to which the Company agreed to transfer the sea use rights in respect of an area of 81.3837 hectares to PDA for a cash consideration of RMB274.7 million; and

• (iii) the finance lease agreement entered into between the Company and PDA on 17 March 2014 in relation to the provision of finance leasing (including leaseback) by PDA and/or its associates to 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 place of business of the Company is at Xinggang 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 shop 1712-1716, 17th 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.

– I-6 –

APPENDIX I

GENERAL INFORMATION

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 2012, 2013 and 2014 respectively;

• (c) the interim report for the six months ended 30 June 2015;

• (d) the letter from the Independent Board Committee, the text of which is set out on pages 26 to 27 of this circular;

• (e) the letter of advice from TC Capital to the Independent Board Committee and Independent Shareholders, the text of which is set out on pages 28 to 44 of this circular;

• (f) each of the material contracts as set out under the section headed “13. Material Contracts”;

• (g) the Registered Capital Increase Agreement II;

• (h) the Financial Services Agreement;

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

• (j) this circular.

– I-7 –

APPENDIX II CERTAIN CONTINUING CONNECTED TRANSACTIONS REQUIRING INDEPENDENT SHAREHOLDERS’ APPROVAL UNDER THE SHANGHAI LISTING RULES

Details of resolutions in relation to transactions contemplated under the Construction Management and Supervision Services Agreement, the Properties and Equipment Lease (Leasing From) under the Properties and Equipment Lease Agreement, the Properties and Equipment Lease (Leasing To) under the Properties and Equipment Lease Agreement, the Terminal Facilities Design and Construction Services Agreement, and the provision of Loan Services, Settlement Services and other financial services under the Facilities Services Agreement are as follows:

I. SUMMARY OF THE TRANSACTIONS

1. Financial Services

Pursuant to the financial services agreement dated 28 August 2014, Finance Company has been providing financial services, including Deposit Services, Loan Services and Settlement Services and other financial services to the Group.

To continue receiving Deposit Services, Loan Services and Settlement Services and other financial services from PDA and/or its associates (including Finance Company), on 26 October 2015, the Company entered into a Financial Services Agreement with PDA for a term of three years commencing on 1 January 2016 and ending on 31 December 2018.

1.1 Loan Services

Pursuant to the Financial Services Agreement, PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) shall provide Loan Services to the Group on normal commercial terms or better to the Group for a term of three years commencing on 1 January 2016 and ending on 31 December 2018. The Loan Services will not be secured by the Group’s assets.

a) Pricing

Pursuant to the Financial Services Agreement, the interest rate for any loan provided by PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) to the Group should not be higher than the rate charged by major commercial banks in the PRC for comparable loans; and it should not be higher than the interest payable by any member of the PDA Group (other than any member of the Group) to PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) for comparable loans. In addition, the daily closing balance of the Group’s loan with PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) should not exceed RMB5.0 billion.

– II-1 –

APPENDIX II CERTAIN CONTINUING CONNECTED TRANSACTIONS REQUIRING INDEPENDENT SHAREHOLDERS’ APPROVAL UNDER THE SHANGHAI LISTING RULES

• b) Historical figures for each of the two years of 2013 and 2014 and the nine months ended 30 September 2015, annual cap for 2015 and estimated annual caps for each of the three years of 2016, 2017 and 2018

Financial Services – Loan Services (maximum daily closing balance)

		For
For the	For the	9 months
year ended	year ended	ended		Estimated	Estimated	Estimated
31 December	31 December	30 September	Annual cap	annual cap	annual cap	annual cap
2013	2014	2015	for 2015	for 2016	for 2017	for 2018
(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
787,000(1)	785,500(1)	707,289(1)	5,000,000(3)	5,000,000(5)	5,000,000(5)	5,000,000(5)
(787,000)(2)	(785,500)(2)	(707,289)(2)	(5,000,000)(4)	(5,000,000)(6)	(5,000,000)(6)	(5,000,000)(6)

Notes:

• (1) The figures relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules and the Shanghai Listing Rules.

• (2) The figures set out in “()” relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules.

• (3) The annual cap for 2015 relates to the annual cap which is the total of that approved by the Shareholders under the Listing Rules and the Shanghai Listing Rules provided that transactions which constitute connected transactions under both sets of rules will only be counted once.

• (4) The annual cap for 2015 relates to the annual cap approved by the Shareholders under the Listing Rules.

• (5) In determining the estimated annual caps for each of the three years ending 31 December 2018, the Company considered transactions that constituted connected transactions both under the Listing Rules and the Shanghai Listing Rules.

• (6) The figures set out in “()” relate to the relevant Listing Rule Annual Caps for each of the three years ending 31 December 2018.

In determining the estimated annual caps for 2016, 2017 and 2018, the Directors have considered (i) the historical figures of the maximum daily outstanding balance of loans (including accrued interest and handling fee) for the Loan Services as shown in the table above, (ii) the Group’s working capital needs, (iii) the expected transfer of approximately RMB3.2 billion of loan currently maintained at other commercial banks to the Finance Company, and (iv) financial ability of PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) for providing loan or credit to, and guarantee for the Group.

– II-2 –

APPENDIX II CERTAIN CONTINUING CONNECTED TRANSACTIONS REQUIRING INDEPENDENT SHAREHOLDERS’ APPROVAL UNDER THE SHANGHAI LISTING RULES

• 1.2 Settlement Services and other financial services

Pursuant to the Financial Services Agreement, PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) shall provide Settlement Services and other financial services to the Group on normal commercial terms or better to the Group for a term of three years commencing on 1 January 2016 and ending on 31 December 2018.

a) Pricing

Pursuant to the Financial Services Agreement, the Company expects that the total annual fees payable by the Group to PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) for Settlement Services and other financial services will not exceed RMB30.0 million per year for each of the three years ending 31 December 2016, 2017 and 2018. Settlement Services are provided by PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) free of any service charge.

• b) Historical figures for each of the two years of 2013 and 2014 and the nine months ended 30 September 2015, annual cap for 2015 and estimated annual caps for each of the three years of 2016, 2017 and 2018

• Financial Services – Other Services

		For
For the	For the	9 months
year ended	year ended	ended		Estimated	Estimated	Estimated
31 December	31 December	30 September	Annual cap	annual cap	annual cap	annual cap
2013	2014	2015	for 2015	for 2016	for 2017	for 2018
(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
120(1)	320(1)	350(1)	3,000(3)	25,000(5)	28,000(5)	30,000(5)
(120)(2)	(320)(2)	(350)(2)	(3,000)(4)	(25,000)(6)	(28,000)(6)	(30,000)(6)

Notes:

• (1) The figures relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules and the Shanghai Listing Rules.

• (2) The figures set out in “()” relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules.

• (3) The annual cap for 2015 relates to the annual cap which is the total of that approved by the Shareholders under the Listing Rules and the Shanghai Listing Rules provided that transactions which constitute connected transactions under both sets of rules will only be counted once.

– II-3 –

APPENDIX II

CERTAIN CONTINUING CONNECTED TRANSACTIONS REQUIRING INDEPENDENT SHAREHOLDERS’ APPROVAL UNDER THE SHANGHAI LISTING RULES

• (4) The annual cap for 2015 relates to the annual cap approved by the Shareholders under the Listing Rules.

• (5) In determining the estimated annual caps for each of the three years ending 31 December 2018, the Company considered transactions that constituted connected transactions both under the Listing Rules and the Shanghai Listing Rules.

• (6) The figures set out in “()” relate to the relevant Listing Rule Annual Caps for each of the three years ending 31 December 2018.

As the Settlement Services shall be provided free of any service charge, the estimated annual caps for 2016, 2017 and 2018 is determined in connection with the proposed other financial services, which mainly include the provision of entrusted loan and non-finance guarantee. The Directors have considered a number of factors in determining the estimated annual caps, including: (i) the historical amounts of handling fees as shown in the table above, (ii) the expected amount of approximately RMB15.0 million in 2016 in relation to the handling fees for the provision of non-finance guarantee and entrusted loan, (iii) the expected introduction of foreign exchange business in 2016 which will generate handling fees of approximately RMB10.0 million, (iii) the expected introduction of new financial services such as provision of secured financing, and bank acceptance bill, and (iv) the operational and financial needs of the Group in the coming years.

2. Construction Management and Supervision Services

Pursuant to the construction management and supervision services agreement dated 30 October 2012, Superintendence Company, a subsidiary of the Company, has been providing Construction Management and Supervision Services to PDA and/or its associates.

To continue the provision of Construction Management and Supervision Services, on 26 October 2015, Superintendence Company entered into a Construction Management and Supervision Services Agreement with PDA for a term of three years commencing on 1 January 2016 and ending on 31 December 2018. The agreement provides that Superintendence Company shall provide Construction Management and Supervision Services to PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) on normal commercial terms or better to the Group.

– II-4 –

APPENDIX II CERTAIN CONTINUING CONNECTED TRANSACTIONS REQUIRING INDEPENDENT SHAREHOLDERS’ APPROVAL UNDER THE SHANGHAI LISTING RULES

a) Pricing

Under the Construction Management and Supervision Services Agreement, the provision of Construction Management and Supervision Services shall be priced in accordance with the state price, being the price set by the PRC government (at central or local level) or its relevant departments, such as National Development and Reform Commission (國家發展和改革委員 會), Ministry of Housing and Urban-Rural Development (國家住房和城鄉建設 部), Liaoning Province Finance Department (遼寧省財政廳), and Dalian Municipal Government (大連市政府), and as published in publicly available announcements or on their respective websites.

• b) Historical figures for each of the two years of 2013 and 2014 and the nine months ended 30 September 2015, annual cap for 2015 and estimated annual caps for each of the three years of 2016, 2017 and 2018

			For
	For the	For the	9 months
	year ended	year ended	ended		Estimated	Estimated	Estimated
	31 December	31 December	30 September	Annual cap	annual cap	annual cap	annual cap
	2013	2014	2015	for 2015	for 2016	for 2017	for 2018
	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
Construction Management
Services and Supervision	40,100(1)	47,000(1)	34,896(1)	54,926(3)	91,000(5)	65,000(5)	60,000(5)
Services	(25,632)(2)	(42,742)(2)	(33,501)(2)	(42,900)(4)	(91,000)(6)	(65,000)(6)	(60,000)(6)

Notes:

• (1) The figures relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules and the Shanghai Listing Rules.

• (2) The figures set out in “()” relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules.

• (3) The annual cap for 2015 relates to the annual cap which is the total of that approved by the Shareholders under the Listing Rules and the Shanghai Listing Rules provided that transactions which constitute connected transactions under both sets of rules will only be counted once.

• (4) The annual cap for 2015 relates to the annual cap approved by the Shareholders under the Listing Rules.

• (5) In determining the estimated annual caps for each of the three years ending 31 December 2018, the Company considered transactions that constituted connected transactions both under the Listing Rules and the Shanghai Listing Rules.

• (6) The figures set out in “()” relate to the relevant Listing Rule Annual Caps for each of the three years ending 31 December 2018.

– II-5 –

APPENDIX II CERTAIN CONTINUING CONNECTED TRANSACTIONS REQUIRING INDEPENDENT SHAREHOLDERS’ APPROVAL UNDER THE SHANGHAI LISTING RULES

In determining the estimated annual caps for 2016, 2017 and 2018, the Directors have considered the historical transaction amounts of the Construction Supervision Services and the Construction Management Services, and the anticipated demand of construction-related supervision and management services required by PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) mainly attributable to the development of the projects at Taiping Bay situated in Dalian, the PRC. The Company anticipates that the major work for projects at Taiping Bay will be completed in 2016 and the amount of work to be completed will gradually reduce from 2016 to 2018. The Group is expected to provide construction-related supervision and management services amounting to approximately RMB123.8 million for the support of development of the Taiping Bay Port project for the upcoming three years.

3. Properties and Equipment Lease

3.1 Leasing From

Pursuant to the properties and equipment lease agreement dated 30 October 2012, the Group has been leasing properties and equipment from PDA and/or its associates.

To continue with the properties and equipment leasing arrangement between the Group and PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules), on 26 October 2015, the Company entered into a Properties and Equipment Lease Agreement with PDA for a term of three years commencing on 1 January 2016 and ending on 31 December 2018. The agreement provides that the Group shall lease properties and equipment from PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) on normal commercial terms or better to the Group.

a) Pricing

Under the Properties and Equipment Lease Agreement, rental fee shall be at market price. The market price will be determined by obtaining at least two quotations from independent third parties in relation to the leasing of the same or comparable types of equipment or properties within the vicinity.

– II-6 –

APPENDIX II CERTAIN CONTINUING CONNECTED TRANSACTIONS REQUIRING INDEPENDENT SHAREHOLDERS’ APPROVAL UNDER THE SHANGHAI LISTING RULES

• b) Historical figures for each of the two years of 2013 and 2014 and the nine months ended 30 September 2015, annual cap for 2015 and estimated annual caps for each of the three years of 2016, 2017 and 2018

Rental paid/payable

		For
For the	For the	9 months
year ended	year ended	ended		Estimated	Estimated	Estimated
31 December	31 December	30 September	Annual cap	annual cap	annual cap	annual cap
2013	2014	2015	for 2015	for 2016	for 2017	for 2018
(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
188,530(1)	211,810(1)	183,760(1)	275,319(3)	290,000(5)	290,000(5)	300,000(5)
(44,473)(2)	(42,427)(2)	(34,280)(2)	(47,899)(4)	(68,500)(6)	(68,500)(6)	(73,500)(6)

Notes:

• (1) The figures relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules and the Shanghai Listing Rules.

• (2) The figures set out in “()” relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules.

• (3) The annual cap for 2015 relates to the annual cap which is the total of that approved by the Shareholders under the Listing Rules and the Shanghai Listing Rules provided that transactions which constitute connected transactions under both sets of rules will only be counted once.

• (4) The annual cap for 2015 relates to the annual cap approved by the Shareholders under the Listing Rules.

• (5) In determining the estimated annual caps for each of the three years ending 31 December 2018, the Company considered transactions that constituted connected transactions both under the Listing Rules and the Shanghai Listing Rules.

• (6) The figures set out in “()” relate to the relevant Listing Rule Annual Caps for each of the three years ending 31 December 2018.

The estimated aggregate rentals to be paid by the Group for each of 2016, 2017 and 2018 were determined with the anticipated increase in market rate for renting properties, the land required for the Group’s business growth and expansion.

– II-7 –

APPENDIX II CERTAIN CONTINUING CONNECTED TRANSACTIONS REQUIRING INDEPENDENT SHAREHOLDERS’ APPROVAL UNDER THE SHANGHAI LISTING RULES

3.2 Leasing To

Pursuant to the Properties and Equipment Lease Agreement, the Group shall lease properties and equipment to PDA’s associates on normal commercial terms or better to the Group for a term of three years commencing on 1 January 2016 and ending on 31 December 2018. The relevant associates of PDA are connected persons as defined under the Shanghai Listing Rules, but not under Chapter 14A of the Listing Rules. Such associates are either (a) entities in which the Group has not more than 50% interests, or (b) entities in which PDA Group (other than the Group) has less than 30% interests, and in either case the Company or PDA Group (other than the Group) does not have control over such entities, and whose director, supervisor and/or member of senior management is a natural person associated (as defined under the Shanghai Listing Rules) with the Company within the past 12 months.

a) Pricing

Under the Properties and Equipment Lease Agreement, rental fee shall be at market price. The market price will be determined by making reference to at least two quotations provided (i) by the Group to independent third parties, or (ii) by independent third parties to PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules), in relation to the leasing of the same or comparable types of equipment or properties within the vicinity.

• b) Historical figures for each of the two years of 2013 and 2014 and the nine months ended 30 September 2015, annual cap for 2015 and estimated annual caps for each of the three years of 2016, 2017 and 2018

Rental received/ receivable

		For
For the	For the	9 months
year ended	year ended	ended		Estimated	Estimated	Estimated
31 December	31 December	30 September	Annual cap	annual cap	annual cap	annual cap
2013	2014	2015	for 2015	for 2016	for 2017	for 2018
(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
97,400(1)	141,436(1)	106,810(1)	195,180(3)	200,000(5)	200,000(5)	200,000(5)
(0)(2)	(0)(2)	(0)(2)	(0)(4)	(0)(6)	(0)(6)	(0)(6)

Notes:

• (1) The figures relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules and the Shanghai Listing Rules.

• (2) The figures set out in “()” relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules.

– II-8 –

APPENDIX II CERTAIN CONTINUING CONNECTED TRANSACTIONS REQUIRING INDEPENDENT SHAREHOLDERS’ APPROVAL UNDER THE SHANGHAI LISTING RULES

• (3) The annual cap for 2015 relates to the annual cap which is the total of that approved by the Shareholders under the Listing Rules and the Shanghai Listing Rules provided that transactions which constitute connected transactions under both sets of rules will only be counted once.

• (4) The annual cap for 2015 relates to the annual cap approved by the Shareholders under the Listing Rules.

• (5) In determining the estimated annual caps for each of the three years ending 31 December 2018, the Company considered transactions that constituted connected transactions both under the Listing Rules and the Shanghai Listing Rules.

• (6) The figures set out in “()” relate to the relevant Listing Rule Annual Caps for each of the three years ending 31 December 2018.

The estimated aggregate rentals to be paid by the Group for each of 2016, 2017 and 2018 were determined with the anticipated increase in market rate for renting properties, the land required for the Group’s business growth and expansion.

4. Terminal Facilities Design and Construction Services

Pursuant to the terminal facilities design and construction services agreement dated 30 October 2012, PDA and/or its associates have been providing Terminal Facilities Design and Construction Services to the Group. PDA and/or its associates are continually engaged by the Group to provide Terminal Facilities Design and Construction Services to terminal facilities of the Group which are under construction, and the Terminal Facilities Design and Construction Services provided constitute only a portion of the services required for the design and construction of such terminal facilities. As such, it is considered as a continuing connected transaction under Chapter 14A of the Listing Rules.

To continue receiving Terminal Facilities Design and Construction Services from PDA and/or its associates, on 26 October 2015, the Company entered into a Terminal Facilities Design and Construction Services Agreement with PDA for a term of three years commencing on 1 January 2016 and ending on 31 December 2018. The agreement provides that PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) shall provide Terminal Facilities Design and Construction Services to the Group on normal commercial terms or better to the Group than terms available to independent third parties.

a) Pricing

Under the Terminal Facilities Design and Construction Services Agreement, the provision of Terminal Facilities Design and Construction Services by PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) shall be attained through public bidding, whereby the price will be determined through the bidding process.

– II-9 –

APPENDIX II CERTAIN CONTINUING CONNECTED TRANSACTIONS REQUIRING INDEPENDENT SHAREHOLDERS’ APPROVAL UNDER THE SHANGHAI LISTING RULES

• b) Historical figures for each of the two years of 2013 and 2014 and the nine months ended 30 September 2015, annual cap for 2015 and estimated annual caps for each of the three years of 2016, 2017 and 2018

			For
	For the	For the	9 months
	year ended	year ended	ended		Estimated	Estimated	Estimated
	31 December	31 December	30 September	Annual cap	annual cap	annual cap	annual cap
	2013	2014	2015	for 2015	for 2016	for 2017	for 2018
	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
Terminal Facilities Design and	233,910(1)	96,136(1)	3,435(1)	276,528(3)	260,000(5)	200,000(5)	130,000(5)
Construction Services	(196,480)(2)	(94,539)(2)	(3,435)(2)	(228,800)(4)	(255,600)(6)	(196,320)(6)	(126,240)(6)

Notes:

• (1) The figures relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules and the Shanghai Listing Rules.

• (2) The figures set out in “()” relate to transactions that constituted or will constitute connected transactions under Chapter 14A of the Listing Rules.

• (3) The annual cap for 2015 relates to the annual cap which is the total of that approved by the Shareholders under the Listing Rules and the Shanghai Listing Rules provided that transactions which constitute connected transactions under both sets of rules will only be counted once.

• (4) The annual cap for 2015 relates to the annual cap approved by the Shareholders under the Listing Rules.

• (5) In determining the estimated annual caps for each of the three years ending 31 December 2018, the Company considered transactions that constituted connected transactions both under the Listing Rules and the Shanghai Listing Rules.

• (6) The figures set out in “()” relate to the relevant Listing Rule Annual Caps for each of the three years ending 31 December 2018.

In determining the estimated annual caps for 2016, 2017 and 2018, the Directors have considered (i) historical amount of the services provided by PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules), (ii) the Group’s investment plan, including construction of the Dalian Bay integrated transportation infrastructure and the expansion of 21# berth, with total investment amount of approximately RMB475.8 million and RMB164.2 million, respectively, (iii) the expected construction works for the Dalian Bay integrated transportation infrastructure and the expansion of 21# berth to be undertaken by PDA and/or its associates (as defined in the Listing Rules and/or the Shanghai Listing Rules) which amounts to approximately RMB450.0 million in the next three years.

– II-10 –

APPENDIX II CERTAIN CONTINUING CONNECTED TRANSACTIONS REQUIRING INDEPENDENT SHAREHOLDERS’ APPROVAL UNDER THE SHANGHAI LISTING RULES

II. REASONS AND BENEFITS OF ENTERING INTO THE TRANSACTIONS

The Directors believe that the transactions mentioned in section I above ensure the operational and business development needs of the Group are effectively met, with terms and conditions of the transactions being not less favourable to the Group than that those available from independent third parties. The terms and conditions of each of the transactions mentioned in section I above are on normal commercial terms or better, fair and reasonable and in the interests of the Company and Shareholders as a whole.

III. OPINION OF THE BOARD

On 23 October 2015, the Board has approved, amongst others, the transactions contemplated under the Construction Management and Supervision Services Agreement, the Properties and Equipment Lease (Leasing From) under the Properties and Equipment Lease Agreement, the Properties and Equipment Lease (Leasing To) under the Properties and Equipment Lease Agreement, the Terminal Facilities Design and Construction Services Agreement, and the provision of Loan Services, Settlement Services and other financial services under the Facilities Services Agreement, as well as the proposed annual caps for such transactions.

– II-11 –

NOTICE OF EGM

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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)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the extraordinary general meeting (“ EGM ”) of 大連港股份有限公司 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 at 9:00 a.m. on Tuesday, 29 December 2015 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 announcement of the Company dated 26 October 2015.

A circular containing, among other things, a letter of advice from the independent financial adviser to both the Independent Board Committee and the Independent Shareholders and a letter of recommendation from the Independent Board Committee to the Independent Shareholders and the details of the transactions contemplated in the following resolutions will be dispatched to the Shareholders on or before 10 December 2015 in accordance with the Listing Rules.

ORDINARY RESOLUTIONS

1. the Registered Capital Increase Agreement II and the Second Registered Capital Increase contemplated thereunder be and are hereby approved, confirmed and ratified, and authorize the Board or any executive director of the Company to do all such acts and things and execute all such documents and to take all such steps as it considers necessary or expedient or desirable in connection with or to give effect to the agreement;

2. the Construction Management and Supervision Agreement and the transactions contemplated thereunder, and the related proposed annual caps be and are hereby approved, confirmed and ratified, and authorize the Board or any executive director of the Company to do all such acts and things and execute all such documents and to take all such steps as it considers necessary or expedient or desirable in connection with or to give effect to the agreement;

– EGM-1 –

NOTICE OF EGM

1. the Supply of Goods and Services Agreement and the transactions contemplated thereunder, and the related proposed annual caps: (including the annual caps for each of the three years ending 31 December 2018 for transactions that will only constitute connected transactions under Chapter 14A of the Listing Rules (the “ Listing Rule Annual Caps ”)) be and are hereby approved, confirmed and ratified, and authorize the Board or any executive director of the Company to do all such acts and things and execute all such documents and to take all such steps as it considers necessary or expedient or desirable in connection with or to give effect to the agreement;

2. the Purchase of Goods and Services Agreement and the transactions contemplated thereunder, and the related proposed annual caps (including the relevant Listing Rule Annual Caps) be and are hereby approved, confirmed and ratified, and authorize the Board or any executive director of the Company to do all such acts and things and execute all such documents and to take all such steps as it considers necessary or expedient or desirable in connection with or to give effect to the agreement;

3. the provision of Properties and Equipment Lease (Leasing From) under the Properties and Equipment Lease Agreement and the related proposed annual caps be and are hereby approved, confirmed and ratified, and authorize the Board or any executive director of the Company to do all such acts and things and execute all such documents and to take all such steps as it considers necessary or expedient or desirable in connection with or to give effect to the agreement;

4. the provision of Properties and Equipment Lease (Leasing To) under the Properties and Equipment Lease Agreement and the related proposed annual caps be and are hereby approved, confirmed and ratified, and authorize the Board or any executive director of the Company to do all such acts and things and execute all such documents and to take all such steps as it considers necessary or expedient or desirable in connection with or to give effect to the agreement;

5. the Terminal Facilities Design and Construction Services Agreement and the transactions contemplated thereunder, and the related proposed annual caps be and are hereby approved, confirmed and ratified, and authorize the Board or any executive director of the Company to do all such acts and things and execute all such documents and to take all such steps as it considers necessary or expedient or desirable in connection with or to give effect to the agreement;

– EGM-2 –

NOTICE OF EGM

1. the provision of Deposit Services under the Financial Services Agreement and the related proposed annual caps (including the relevant Listing Rule Annual Caps) be and are hereby approved, confirmed and ratified, and authorize the Board or any executive director of the Company to do all such acts and things and execute all such documents and to take all such steps as it considers necessary or expedient or desirable in connection with or to give effect to the agreement;

2. the provision of Loan Services under the Financial Services Agreement and the related proposed annual caps be and are hereby approved, confirmed and ratified, and authorize the Board or any executive director of the Company to do all such acts and things and execute all such documents and to take all such steps as it considers necessary or expedient or desirable in connection with or to give effect to the agreement;

3. the provision of Factoring Services under the Financial Services Agreement and the related proposed annual caps be and are hereby approved, confirmed and ratified, and authorize the Board or any executive director of the Company to do all such acts and things and execute all such documents and to take all such steps as it considers necessary or expedient or desirable in connection with or to give effect to the agreement; and

4. the provision of Settlement Services and other financial services under the Financial Services Agreement and the related proposed annual caps be and are hereby approved, confirmed and ratified, and authorize the Board or any executive director of the Company to do all such acts and things and execute all such documents and to take all such steps as it considers necessary or expedient or desirable in connection with or to give effect to the agreement.

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

13 November 2015

Notes:

1. Pursuant to Rule 13.39(4) of the Listing Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, 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.

– EGM-3 –

NOTICE OF EGM

1. In order to determine the holders of H Shares who are entitled to attend the EGM, the H Share registers of members of the Company shall be closed from Sunday, 29 November 2015 to Tuesday, 29 December 2015 (both days inclusive), during which no transfer of H Shares will be registered. Holders of H Share whose names appear on the registers of members on 30 November 2015 are entitled to attend the EGM. In order to be entitled to attend and vote at the EGM, holders of H Shares whose transfers have not been registered shall lodge the transfer documents together with the relevant share certificates at the H Share registrar of the Company, Computershare Hong Kong Investor Services Limited, at Shop 1712-1716, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 4:30 p.m. on Friday, 27 November 2015.

2. 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.

3. 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 7 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).

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 such Shareholders so wish.

1. Shareholders who intend to attend the EGM in person or by proxy should return the reply slip to the office of the Board at the address as stated in Note 7 below on or before 9 December 2015 by hand, by post or by fax.

2. 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 9901 Facsimile No.: 86 411 8759 9854

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 and SUN Benye

Non-executive directors: XU Jian, DONG Yanhong and YIN Shihui

Independent non-executive directors: WAN Kam To, Peter, WANG Zhifeng and SUN Xiyun

• 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-4 –