Liaoning Port Co., Ltd. — Proxy Solicitation & Information Statement 2018

Nov 13, 2018

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)

RENEWAL OF EXISTING CONTINUING CONNECTED TRANSACTIONS AND 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 19 of this circular.

A letter from the Independent Board Committee to the Independent Shareholders is set out on pages 20 to 21 of this circular and a letter from TC Capital International Limited, the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 22 to 33 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 Friday, 28 December 2018 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 2018. 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). If you intend to attend the EGM, please complete and return the enclosed reply slip in accordance with the instructions printed thereon as soon as possible and in any event by Friday, 7 December 2018. Whether or not you are able to attend the EGM, please complete, sign and return the form of proxy in accordance with the instructions printed thereon as soon as practicable and in any event no less than 24 hours 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 Hong Kong Companies Ordinance (equivalent to Part 16 of the Hong Kong Companies Ordinance with effect from 3 March 2014) under the English name ‘‘Dalian Port (PDA) Company Limited’’.

13 November 2018

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . .	20
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . .	22
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:

• ‘‘2014 Announcement the Company’s announcement dated 17 March 2014 and the and Circular’’ circular dated 8 April 2014;

• ‘‘2015 Announcement the Company’s announcement dated 26 October 2015 and the and Circular’’ circular dated 9 December 2015;

• ‘‘2017 Announcement’’ the Company’s announcement dated 23 March 2017; ‘‘Announcement’’ the Company’s announcement dated 9 November 2018; ‘‘associate’’ has the meaning ascribed to it under the Listing Rules; ‘‘A Share(s)’’ A Share(s) of RMB1.00 each in the share capital of the Company which is/are listed and traded on the Shanghai Stock Exchange;

• ‘‘Board’’ the board of Directors; ‘‘business day’’ any day on which the Stock Exchange is open for the business of dealing in securities listed thereon;

• ‘‘CCTs’’ the provision of Finance Leasing Services and Deposit 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, which is listed on the Stock Exchange (stock code: 2880) and the Shanghai Stock Exchange (stock code: 601880);

• ‘‘connected person’’ has the meaning ascribed to it under the Listing Rules;

• ‘‘Construction the construction project management services, engineering Management and services and consultancy services provided by Superintendence Supervision Services’’ Company to PDA and its associates or subsidiary(ies) (as the case maybe);

• ‘‘Construction the framework agreement in relation to the construction Management and management and supervision services entered into between Supervision Services Superintendence Company and PDA on 9 November 2018; Agreement’’

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

– 1 –

DEFINITIONS

• ‘‘Deposit Services’’

• depository services to be provided by PDA and its associates or subsidiary(ies) (as the case maybe) to the Group pursuant to the Financial Services Agreement;

• ‘‘Director(s)’’

the director(s) of the Company;

• ‘‘EGM’’ the extraordinary general meeting of the Company, the notice of which is set out on pages EGM-1 to EGM-4 of this circular, and any adjournment thereof;

• ‘‘Factoring Services’’ factoring services to be provided by PDA and its associates or subsidiary(ies) (as the case maybe) 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 on 8 November 2011;

• ‘‘Finance Leasing finance leasing services (including leaseback) provided by PDA Services’’ and its associates or subsidiary(ies) (as the case maybe) to the Group pursuant to the Financial Services Agreement;

• ‘‘Financial Services Agreement’’

• the framework agreement entered into by the Company and PDA on 9 November 2018 in regard to provision of Deposit Services, Loan Services, Factoring Services, Settlement Services and other financial services and Finance Leasing Services by PDA and its associates or subsidiary(ies) (as the case maybe) to the Group;

• ‘‘Group’’

• the Company and its subsidiaries;

• ‘‘H Shares’’

• overseas listed foreign invested ordinary share(s) in the ordinary share capital of the Company, with a nominal value of RMB1.00 each, listed on the Main Board of the Hong Kong Stock Exchange;

• ‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong;

• ‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the People’s Republic of China;

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

• ‘‘Independent Board the independent committee of the Board, the members of which Committee’’ shall consist of the independent non-executive Directors, namely Mr. LAW Man Tat, Mr. WANG Zhifeng and Mr. SUN Xiyun;

– 2 –

DEFINITIONS

• ‘‘Independent Financial TC Capital International Limited, acting as the independent Adviser’’ or financial adviser to advise the Independent Board Committee ‘‘TC Capital’’ and the Independent Shareholders in respect of the CCTs;

• ‘‘Independent Shareholders’’

• Shareholders other than PDA and its associates;

• ‘‘independent third party(ies)’’

• party(ies) not connected with any of the Directors, the supervisors, the chief executive or the substantial shareholders of the Company or any of its subsidiaries or their respective associates;

• ‘‘Latest Practicable 8 November 2018, being the latest practicable date prior to the Date’’ printing of this circular for ascertaining certain information herein;

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

• ‘‘Loan Services’’ credit, loan and guarantee services to be provided by PDA and its associates or subsidiary(ies) (as the case maybe) to the Group pursuant to the Financial Services Agreement;

• ‘‘normal commercial terms or better’’

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

• ‘‘PDA’’

• 大連港集團有限公司 (Dalian Port Group Corporation Limited), the controlling shareholder of the Company and a limited liability company established in the PRC and wholly-owned by 遼寧東北亞港航發展有限公司 (Liaoning North East Asia Gang Hang Development Co., Ltd.) as of the Latest Practicable Date; for further details, please see the announcement of the Company dated 4 November 2018;

• ‘‘PDA Group’’

• PDA and its subsidiaries;

• ‘‘PRC’’

• 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;

• ‘‘Properties and the lease of certain properties and equipment by PDA and its Equipment Lease associates or subsidiary(ies) (as the case maybe) to the Company (Leasing From)’’ and its associates or subsidiary(ies) (as the case maybe);

• ‘‘Properties and Equipment Lease (Leasing To)’’

• the lease of certain properties and equipment by the Company and its associates or subsidiary(ies) (as the case maybe) to PDA and its associates or subsidiary(ies) (as the case maybe);

– 3 –

DEFINITIONS

• ‘‘Properties and the framework agreement in relation to the leasing of properties Equipment Lease and equipment entered into between the Company and PDA on 9 Agreement’’ November 2018;

• ‘‘Purchase of Goods the purchase of goods such as diesel oil, and services such as and Services’’ 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 its associates or subsidiary(ies) (as the case maybe);

• ‘‘Purchase of Goods the framework agreement entered into between the Company and and Services PDA on 9 November 2018 in relation to purchase of goods and Agreement’’ services by the Group from PDA and its associates or subsidiary(ies) (as the case maybe);

• ‘‘RMB’’

• Renminbi, the lawful currency of the PRC;

• ‘‘Settlement Services’’ settlement and clearance 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;

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

• ‘‘Shanghai Stock the Shanghai Stock Exchange; Exchange’’

• ‘‘Shareholders’’

• the shareholders of the Company;

• ‘‘subsidiary’’ has the meaning ascribed to it under the Listing Rules and/or the Shanghai Listing Rules;

• ‘‘substantial has the meaning ascribed thereto in the Listing Rules; shareholder’’

• ‘‘Superintendence 大連港口建設監理諮詢有限公司 (Dalian Port Construction Supervision Company’’ Consulting Co., Ltd.) established in the PRC on 9 January 1993 and a non-wholly owned subsidiary of the Company;

– 4 –

DEFINITIONS

• ‘‘Supply of Goods and the supply of goods such as IT related equipment, spare parts Services’’ 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 its associates or subsidiary(ies) (as the case maybe);

• ‘‘Supply of Goods and the framework agreement entered into between the Company and Services Agreement’’ PDA on 9 November 2018 in relation to supply of goods and services by the Group to PDA and its associates or subsidiary(ies) (as the case maybe);

• ‘‘Terminal Facilities the provision by PDA and its associates or subsidiary(ies) (as the Design and case maybe) of terminal facilities design and construction Construction services (including land filling, dredging, caisson precasting and Services’’ construction of electricity facilities and other supporting facilities) to the Group;

• ‘‘Terminal Facilities the framework agreement in relation to the terminal facilities Design and design and construction services entered into between the Construction Services Company and PDA on 9 November 2018; and Agreement’’

‘‘%’’ per cent.

• for identification purposes only

– 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: ZHANG Yiming (Chairman) WEI Minghui

Non-executive Directors: BAI Jingtao XU Song ZHENG Shaoping YIN Shihui

Independent Non-executive Directors: LAW Man Tat WANG Zhifeng SUN Xiyun

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

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

13 November 2018

To the Shareholders

Dear Sir or Madam,

RENEWAL OF EXISTING CONTINUING CONNECTED TRANSACTIONS AND NOTICE OF EGM

A. INTRODUCTION

Reference is made to the Announcement in relation to, amongst other things, the renewal of existing continuing connected transactions.

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

– 6 –

LETTER FROM THE BOARD

Reference is also made to the Announcement, the 2014 Announcement and Circular and the 2015 Announcement and Circular in relation to certain continuing connected transactions between the Group and PDA and/or its associates/subsidiaries, amongst other things: (i) Terminal Facilities Design and Construction Services; (ii) Deposit Services; and (iii) Finance Leasing Services.

The purpose of this circular is to provide the Shareholders with (i) further information in respect of resolutions regarding the terms of the CCTs and the Terminal Facilities Design and Construction Services Agreement and the transactions contemplated thereunder, (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) a 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. RENEWAL OF EXISTING CONTINUING CONNECTED TRANSACTIONS

Reference is made to the 2014 Announcement and Circular and the 2015 Announcement and Circular in relation to certain continuing connected transactions between the Company and/or its subsidiaries and PDA and/or its associates/subsidiaries, amongst other things, (i) Terminal Facilities Design and Construction Services; (ii) Deposit Services; and (iii) Finance Leasing Services.

The financial services agreement, the finance lease agreement and the terminal facilities design and construction services agreement governing the provision of Deposit Services, Finance Leasing Services and Terminal Facilities Design and Construction Services will expire on 31 December 2018. On 9 November 2018, the Company has agreed with PDA to renew the existing connected transactions for a term of three years commencing from 1 January 2019 and ending on 31 December 2021. Nevertheless, the Company or PDA is not contractually obligated to supply or purchase goods or services (including financial services and terminal facilities design and construction services) from each other under each of the continuing connected transactions.

As at the date of this circular, save as disclosed in the 2017 Announcement, the annual caps of the above continuing connected transactions for each of the three years ending 31 December 2018 have not been exceeded. In determining the estimated annual caps for 2019, 2020 and 2021 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 2019, 2020 and 2021 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 the PDA Group (other than

– 7 –

LETTER FROM THE BOARD

the Group) has less than 30% interests, and in either case the Company or the 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.

1. Discloseable and Continuing Connected Transactions Subject to Independent Shareholders’ Approval Requirement

1.1 Financial Services — Finance Leasing Services

Reference is made to the Announcement and the 2014 Announcement and Circular. Pursuant to the finance lease agreement dated 17 March 2014, PDA and/ or its associates/subsidiaries shall provide Finance Leasing Services to the Group on normal commercial terms or better to the Group for a term of five years commencing on 1 January 2014 and ending on 31 December 2018.

To continue receiving Finance Leasing Services and other financial services from PDA and its associates or subsidiary(ies) (as the case maybe), on 9 November 2018, the Company entered into the Financial Services Agreement with PDA for a term of three years commencing on 1 January 2019 and ending on 31 December 2021 subject to compliance with applicable Listing Rule requirements.

Pursuant to Financial Services Agreement, PDA and its associates or subsidiary(ies) (as the case maybe) shall provide Finance Leasing Services to the Group as per their respective requirements in respect of leasing tangible assets, such as machines, equipment and containers on terms no less favourable to them than terms available to independent third parties for a term of three years commencing on 1 January 2019 and ending on 31 December 2021. With respect to each individual finance lease, the relevant member of the Group shall enter into separate written agreements with PDA and its associates or subsidiary(ies) (as the case maybe), the terms of which are in all material respects consistent with the binding principles, guidelines, terms and conditions contained in the Financial Services Agreement.

• a) Pricing

Pursuant to the Financial Services Agreement, the rental payable by the relevant members of the Group shall be determined by reference to market price, and the amount and way of payment shall be provided in each individual agreement by the parties thereto.

– 8 –

LETTER FROM THE BOARD

• b) Historical figures for each of the two years of 2016, 2017 and the nine months ended 30 September 2018, annual cap for 2018 and estimated annual caps for each of the three years of 2019, 2020 and 2021

							Estimated
							amount
	For the		For the		For 9		for the
	year ended		year ended	months ended			year ending		Estimated	Estimated	Estimated
	31 December	31 December		30 September		31 December		Annual cap	annual cap	annual cap	annual cap
	2016		2017		2018		2018	for 2018	for 2019	for 2020	for 2021
	(RMB’000)		(RMB’000)		(RMB’000)		(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
Financial Services —	1,061,760(1)		1,051,070(1)		3,700(1)		4,530(1)	222,300(3)	1,140,000(5)	1,120,000(5)	1,120,000(5)
Finance Leasing	(1,061,760)(2)		(1,051,070)(2)		(3,700)(2)		(4,530)(2)	(222,300)(4)	(1,140,000)(6)	(1,120,000)(6)	(1,120,000)(6)
Services

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 2018 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 2018 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 2021, 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 2021 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 2019, 2020 and 2021, the Directors have considered a number of factors, among other things, (i) the historical transaction amount for the Finance Leasing Services with PDA and its associates or subsidiary(ies) (as the case maybe) as shown in the table above, (ii) the current market conditions (including interest rate), (iii) the expected increase in the amount of assets to be arranged with finance leasing services (including leaseback), and (iv) the nature, value and useful life of the relevant assets.

– 9 –

LETTER FROM THE BOARD

c) Internal control

Before entering into a specific finance leasing services contract with PDA and its associates or subsidiary(ies) (as the case maybe), at least two quotations from independent third parties will be obtained by the Group and the Group will assess each counter party based on the following criteria:

• (i) the Group will review whether lessors shall have relevant qualifications and other approval documents for the finance leasing services; and

• (ii) the Group will ensure that the Group will decide the title, specification, model, quantity, performance of assets to be leased, free of influence from lessors.

2. Major and/or Continuing Connected Transactions Subject to Independent Shareholders’ Approval Requirement

2.1 Financial Services — Deposit Services

Reference is made to the Announcement and the 2015 Announcement and Circular. Pursuant to the financial services agreement dated 26 October 2015, PDA and its associates or subsidiary(ies) (as the case maybe) have been providing financial services, including Deposit Services, Loan Services, Factoring Services, Settlement Services and other financial services and Finance Leasing Services to the Group.

Pursuant to the Financial Services Agreement, PDA and its associates or subsidiary(ies) (as the case maybe) 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 2019 and ending on 31 December 2021.

a) Pricing

Pursuant to the Financial Services Agreement, the interest rate payable by PDA and its associates or subsidiary(ies) (as the case maybe) 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, ‘‘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 PDA and its associates or subsidiary(ies) (as the case maybe) 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 its associates or subsidiary(ies) (as the case maybe) should not exceed RMB4.0 billion.

– 10 –

LETTER FROM THE BOARD

• b) Historical figures for each of the two years of 2016, 2017 and the nine months ended 30 September 2018, annual cap for 2018 and estimated annual caps for each of the three years of 2019, 2020 and 2021

							Estimated
							amount
	For the		For the		For 9		for the
	year ended		year ended	months ended			year ending		Estimated	Estimated	Estimated
	31 December	31 December		30 September		31 December		Annual cap	annual cap	annual cap	annual cap
	2016		2017		2018		2018	for 2018	for 2019	for 2020	for 2021
	(RMB’000)		(RMB’000)		(RMB’000)		(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
Financial Services —	2,943,170(1)		3,164,850(1)		3,706,720(1)		3,706,720(1)	4,000,000(3)	4,000,000(5)	4,000,000(5)	4,000,000(5)
Deposit Services	(2,943,170)(2)		(3,164,850)(2)		(3,706,720)(2)		(3,706,720)(2)	(4,000,000)(4)	(4,000,000)(6)	(4,000,000)(6)	(4,000,000)(6)
(maximum daily
closing balance)

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 2018 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 2018 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 2021, 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 2021.

In determining the estimated annual caps for 2019, 2020 and 2021, 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 RMB6,747.9 million as at 30 September 2018; (iii) increasing asset and operation scale and the expected amount of cash of the Group available for deposit, and (iv) the expected financing cash inflow from future financing plans.

– 11 –

LETTER FROM THE BOARD

The Group did not deposit all of its cash balance to Finance Company historically and did not intend to deposit all of its cash balance to 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 Company will, prior to the placement of deposit with PDA and its associates or subsidiary(ies) (as the case maybe), (i) check the benchmark interest rates for deposits published by the PBOC, (ii) check the interest rates offered by at least two major commercial banks which have established business relationship with the Group and (iii) check the interest rates offered by PDA and its associates or subsidiary(ies) (as the case maybe) to any member of the PDA Group (other than any member of the Group) for comparable deposits;

• . 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; and

• . 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.

2.2 Terminal Facilities Design and Construction Services

Reference is made to the Announcement and the 2015 Announcement and Circular. Pursuant to the terminal facilities design and construction services agreement dated 26 October 2015, PDA and its associates or subsidiary(ies) (as the case maybe) have been providing Terminal Facilities Design and Construction Services to the Group.

– 12 –

LETTER FROM THE BOARD

To continue receiving Terminal Facilities Design and Construction Services from PDA and its associates or subsidiary(ies) (as the case maybe), on 9 November 2018, the Company entered into the Terminal Facilities Design and Construction Services Agreement with PDA for a term of three years commencing on 1 January 2019 and ending on 31 December 2021. The agreement provides that PDA and its associates or subsidiary(ies) (as the case maybe) 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 shall be priced in accordance with the following principles:

• . at 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 (the ‘‘State Price’’);

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

• . where the project is subject to public bidding, at the price determined through the bidding process.

• b) Historical figures for each of the two years of 2016, 2017 and the nine months ended 30 September 2018, annual cap for 2018 and estimated annual caps for each of the three years of 2019, 2020 and 2021

							Estimated
							amount
	For the		For the		For 9		for the
	year ended		year ended	months ended			year ending		Estimated	Estimated	Estimated
	31 December	31 December		30 September		31 December		Annual cap	annual cap	annual cap	annual cap
	2016		2017		2018		2018	for 2018	for 2019	for 2020	for 2021
	(RMB’000)		(RMB’000)		(RMB’000)		(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
Terminal Facilities	14,390(1)		31,040(1)		17,480(1)		77,630(1)	130,000(3)	276,000(5)	275,000(5)	290,000(5)
Design and	(13,030)(2)		(30,660)(2)		(8,800)(2)		(24,460)(2)	(126,240)(4)	(140,000)(6)	(160,000)(6)	(150,000)(6)
Construction
Services

– 13 –

LETTER FROM THE BOARD

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 2018 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 2018 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 2021, 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 2021.

In determining the estimated annual caps for 2019, 2020 and 2021, the Directors have considered historical amount of the services provided by PDA and its associates or subsidiary(ies) (as the case maybe), the Company’s investment plan and the expected construction works to be undertaken by PDA and its associates or subsidiary(ies) (as the case maybe) in the next three years, such as an integrated transportation hub terminal for passengers in Dalian, the PRC and berth engineering projects in Xing Port in Dalian, the PRC.

c) Internal control

Before entering into a specific terminal facilities design and construction services contract with PDA and its associates or subsidiary(ies) (as the case maybe), the Group will assess each service provider based on the following criteria:

• (i) such service provider shall have relevant qualifications for the services required by the Group;

• (ii) the project department (including relevant administrative departments) of the Company and/or its subsidiaries will have regular and close contact and dialogue with a wide range of suppliers and customers in order to keep abreast of market trends and pricing terms in the market throughout each year; and

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LETTER FROM THE BOARD

• (iii) in the event that it is mandatory to go through a tender and/or bidding process, the Group will seek its service provider through a tender and/or bidding process for bid involving at least two independent suppliers at least on a yearly basis, and determine the procurement price for terminal facilities design and construction services based on the tender and/or bidding results.

C. REASON FOR AND BENEFITS OF ENTERING INTO THE CONTINUING CONNECTED TRANSACTIONS

The Directors believe that the renewal of existing continuing connected transactions, including the provision of Deposit Services and Finance Leasing Services under the Financial Services Agreement and the transactions under the Terminal Facilities Design and Construction Services Agreement, can ensure that 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 such continuing connected transactions 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 renewal of the continuing connected transactions

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.

Given the nature of the continuing connected transactions (including the transactions contemplated under the Terminal Facilities Design and Construction Services Agreement, the Deposit Services and the Finance Leasing Services under the Financial Services Agreement), the Company does not expect there will be any significant adverse effect on the earnings and assets and liabilities of the Group.

D. LISTING RULES IMPLICATIONS

1. Renewal of existing Continuing Connected Transactions

As at the Latest Practicable Date, PDA is the controlling shareholder of the Company, holding more than 30% of the total issued share capital of the Company, and is a connected person of the Company under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios for the transactions under the provision of Finance Leasing Services and Deposit Services under the Financial Services Agreement is, on an annual basis, more than 5% and the proposed annual

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LETTER FROM THE BOARD

caps for such transactions are more than HK$10,000,000, such transactions are subject to the reporting, annual review, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios for the provision of Finance Leasing Services under the Financial Services Agreement is, on an annual basis, more than 5% but less than 25%, such transaction also constitutes a discloseable transaction of the Company, and is also subject to the notification and announcement requirements under Chapter 14 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 100%, such transaction also constitutes a major transaction of the Company, and is also subject to the notification, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

As one or more of the applicable percentage ratios for the transactions contemplated under the Terminal Facilities Design and Construction Services Agreement is, on an annual basis, more than 25% but less than 75%, such transactions constitute major transactions of the Company, and are subject to the notification, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules. As one or more of the applicable percentage ratios for such transactions is, on an annual basis, more than 0.1% but less than 5% and the proposed annual caps for such transactions are more than HK$3,000,000, such transactions are also subject to the reporting, annual review and announcement requirements under Chapter 14A of the Listing Rules.

The Directors, including the independent non-executive Directors, consider that the transactions contemplated under the Terminal Facilities Design and Construction 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 2019, 2020 and 2021 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 that the CCTs and the transactions contemplated thereunder 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. The Directors, excluding the independent non-executive Directors, also consider the proposed annual caps for each of the three years ending 31 December 2019, 2020 and 2021 for the relevant transactions are fair and reasonable.

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LETTER FROM THE BOARD

2. General

Each of Mr. Zhang Yiming, Mr. Wei Minghui, Mr. Xu Song 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 resolutions approving the continuing connected transactions and the transactions contemplated thereunder as well as the proposed annual caps for the aforementioned transactions. 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 continuing connected transactions and the transactions contemplated thereunder as well as the proposed annual caps for the aforementioned transactions.

The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the CCTs and the transactions contemplated thereunder as well as the proposed annual caps for the aforementioned transactions. The Independent Financial Adviser has also been appointed to advise the Independent Board Committee and the Independent Shareholders on the same. PDA and its associates will abstain from voting on the ordinary resolutions approving the continuing connected transactions and the transactions contemplated thereunder, as well as the proposed annual caps for the aforementioned transactions at the general meeting to be held by the Company.

Reference is made to the Announcement. Although the transactions contemplated under the Construction Management and Supervision Services Agreement, the Properties and Equipment Lease Agreement (including Leasing From and Leasing To), the Supply of Goods and Services Agreement and the Purchase of Goods and Services Agreement and the provision of Loan Services, Settlement Services and other financial services and Factoring Services under the Financial 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 contemplated 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 Construction Management and Supervision Services Agreement, the Properties and Equipment Lease Agreement (including Leasing From and Leasing To), the Supply of Goods and Services Agreement and the Purchase of Goods and Services Agreement and the provision of Loan Services, Settlement Services and other financial services and Factoring Services under the Financial Services Agreement are set out in Appendix II of this circular.

E. GENERAL INFORMATION

The principal activities of the Group are: (i) the provision of terminal and related logistics services and trading 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) general cargo terminal and related logistics and trading services; (v) bulk grain terminal and related logistics and trading services; (vi) passenger and roll-on, roll-off terminal and related logistics services; and (vii) port valueadded 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 2018, the total assets of Finance Company amounted to RMB7,738.2 million. The profit before tax and after tax of Finance Company for the year ended 31 December 2017 amounted to RMB215.8 million and RMB161.8 million, respectively. The profit before tax and after tax of Finance Company for the year ended 31 December 2016 amounted to RMB228.8 million and RMB171.6 million, respectively. 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 more than 30% of the total issued share capital of the Company as at the date of this circular.

F. 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 Friday, 28 December 2018 to approve, among other things, the resolutions in relation to the continuing connected transactions 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 continuing connected transactions 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, collectively holding 6,032,421,162 Shares (comprising 5,310,255,162 A Shares and 722,166,000 H Shares) of the Company amounting to approximately 46.78% of the total issued share capital of the Company as of the Latest Practicable Date, are required to abstain from voting at the EGM in respect of resolutions to approve the continuing connected transactions 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 2018, and will be dispatched together with the reply slip and proxy form. If you intend to attend the EGM, please complete and return the enclosed reply slip in accordance with the instructions printed thereon as soon as possible and in any event by Friday, 7 December 2018. Whether or not you are able to attend the EGM, please complete and return the proxy form in accordance with the instructions printed thereon as soon as practicable and in any event no less than 24 hours before the time designated for holding the EGM or any adjournment thereof. Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

In order to determine the holders of H Shares who are entitled to attend the EGM, the H Share register of members of the Company will be closed from Wednesday, 28 November 2018 to Friday, 28 December 2018 (both days inclusive), during which no transfer of

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LETTER FROM THE BOARD

H Shares will be effected. Holders of H Shares whose names appear on the H Shares register of members on Friday, 28 December 2018 are entitled to attend and vote at the EGM. In order to qualify for attending and voting at the EGM, instruments of transfer accompanied by share certificates and other appropriate documents in respect of transfer of H Shares must be lodged with the Company’s H Share registrar, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 4: 30 p.m. on Tuesday, 27 November 2018.

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

G. RECOMMENDATIONS

The Independent Board Committee has been appointed to advise the Independent Shareholders in connection with the transactions under the CCTs and the transactions contemplated thereunder. The Independent Board Committee, having considered the terms of the CCTs and the transactions contemplated thereunder, and the factors and reasons considered by the Independent Financial Adviser and its opinion as stated in its letter of advice, considers that CCTs and the transactions contemplated thereunder are on normal commercial terms or better and fair and reasonable so far as the Independent Shareholders are concerned, and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favor of the relevant resolutions to be proposed at the EGM in respect of the CCTs and the transactions contemplated thereunder.

Given that the Directors (including the independent non-executive Directors whose opinion is stated in the ‘‘Letter from the Independent Board Committee’’ of this circular) are of the view that the provision of Deposit Services and Finance Leasing Services under the Financial Services Agreement and the transactions under the Terminal Facilities Design and Construction Services Agreement 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 resolutions in respect of the provision of Deposit Services and Finance Leasing Services under the Financial Services Agreement and the transactions under the Terminal Facilities Design and Construction Services Agreement.

Yours faithfully, By Order of the Board ZHANG Yiming Chairman

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

– 19 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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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)

13 November 2018

To the Independent Shareholders

Dear Sir or Madam,

RENEWAL OF EXISTING CONTINUING CONNECTED TRANSACTIONS

We refer to the circular dated 13 November 2018 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 provision of Deposit Services and Finance Leasing Services under the Financial Services Agreement, 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 CCTs and the transactions contemplated thereunder, to be proposed at the EGM. TC Capital International 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 contains, among other things, details of the CCTs and the transactions contemplated thereunder, and the ‘‘Letter from the Independent Financial Adviser’’ contained in this Circular, which contains its advice in respect of the CCTs and the transactions contemplated thereunder and the proposed annual caps for each of the transactions for each of the three years ending 31 December 2019, 2020 and 2021.

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

– 20 –

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 CCTs and the transactions contemplated thereunder, the basis upon which the terms of the CCTs and the transactions contemplated thereunder 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 provision of the CCTs and the transactions contemplated thereunder, (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 CCTs and the transactions contemplated thereunder, and the advice and opinion of TC Capital in relation thereto, we are of the opinion that 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 CCTs and the transactions contemplated thereunder and all the matters contemplated thereunder.

Yours faithfully,

For and on behalf of the Independent Board Committee

LAW Man Tat WANG Zhifeng SUN Xiyun Independent non-executive Independent non-executive Independent non-executive Director Director Director

– 21 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

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13 November 2018

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

Dear Sirs,

RENEWAL OF EXISTING CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Deposit Services and the Finance Leasing Services (the ‘‘Non-exempt Continuing Connected Transactions’’) and the proposed annual caps of the Non-exempt Continuing Connected Transactions for the three years ending 31 December 2021 (the ‘‘Proposed Annual Caps’’), details of which are set out in the Letter from the Board (the ‘‘Letter from the Board’’) in the circular of Dalian Port (PDA) Company Limited* (the ‘‘Company’’) to the Shareholders dated 13 November 2018 (the ‘‘Circular’’). Capitalized terms used in this letter have the same meanings as those defined in the Circular unless the context otherwise requires.

Listing Rules Implication

As stated in the Letter from the Board, as at the Latest Practicable Date, as PDA was the controlling shareholder of the Company holding more than 30% of the total issued share capital of the Company and was a connected person of the Company under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios for the Non-exempt Continuing Connected Transactions is, on an annual basis, more than 5% and the Proposed Annual Caps are more than HK$10,000,000, the Non-exempt Continuing Connected Transactions are subject to the reporting, annual review, announcement and Independent Shareholders’ approval requirements under Chapter 14A the Listing Rules.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We have been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders as to (i) whether the Non-exempt Continuing Connected Transactions are entered in the ordinary and usual course of business of the Company and the terms of the Non-exempt Continuing Connected Transactions are on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned; (ii) whether the Non-exempt Continuing Connected Transactions are in the interests of the Company and the Shareholders as a whole and the Annual Caps are fair and reasonable; and (iii) how the Independent Shareholders should vote in favour of the relevant resolutions to approve the Non-exempt Continuing Connected Agreements and the Annual Caps.

OUR INDEPENDENCE

As at the Latest Practicable Date, we did not have any relationships or interests with the Company or any other parties that could reasonably be regarded as relevant to the independence of us.

BASIS OF OUR OPINION

In putting forth our recommendation, we have relied on the information, opinions, facts and representations supplied to us by the Directors and/or the representatives of the Company. We have reviewed, among other things, (i) the Financial Services Agreement; (ii) the third quarterly report of the Company for the nine months ended 30 September 2018 (the ‘‘2018 3rd Quarterly Report’’); (iii) the annual report of the Company for the year ended 31 December 2017 (the ‘‘2017 Annual Report’’); and (iv) other information as set out in the Circular.

We have assumed that all such information, opinions, facts and representations, which have been provided to us by the Directors and/or the representatives of the Company, for which they are fully responsible, are true, accurate and complete in all respects. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Company and/or the representations of the Company. The Company has also confirmed to us that no material facts have been omitted from the information supplied and we have no reason to suspect that any material information has been withheld by the Company or is misleading.

We consider that we have sufficient information currently available to reach an informed view and to provide a reasonable basis for our recommendation. We have not, however, carried out any independent verification of the information provided by the Directors and the representatives of the Company, nor have we conducted any independent investigation into the business, affairs, operations, financial position or future prospects of each of the Group, the counterparties to the Non-exempt Continuing Connected Transactions and any of their respective subsidiaries and associates.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion in respect of the Non-exempt Continuing Connected Transactions and the Annual Caps, we have taken into account the following principal factors and reasons:

1. Background information of the Non-exempt Continuing Connected Transactions

a) The Group

As stated in the Letter from the Board, the principal activities of the Group are: (i) the provision of terminal and related logistics services and trading 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) general cargo terminal and related logistics and trading services; (v) bulk grain terminal and related logistics and trading services; (vi) passenger and roll-on, roll-off terminal and related logistics services; and (vii) port value-added services and ancillary port operations.

The table set below is the financial information of the Group for the two years ended 31 December 2017 and the nine months ended 30 September 2018 and as at 31 December 2016 and 2017 and 30 September 2018 as extracted from the 2017 Annual Report and the 2018 3rd Quarterly Report:

	For the year ended	For the year ended	For the nine	months ended
	31 December		30 September
	2016	2017	2017	2018
	RMB’000	RMB’000	RMB’000	RMB’000
	(Audited)	(Audited)	(Unaudited)	(Unaudited)
Revenue	12,814,484	9,031,643	6,188,285	5,363,962
Cost of sales	11,427,062	7,568,203	5,189,981	4,157,165
Gross profit	1,387,422	1,463,441	998,304	1,206,797
Operating profit	610,752	711,284	499,810	724,136
Net profit	612,683	574,292	442,139	559,694
				As at
		As at 31	December	30 September
		2016	2017	2018
		RMB’000	RMB’000	RMB’000
		(Audited)	(Audited)	(Unaudited)
Cash and bank balances		6,741,279	7,507,917	6,747,905
Total assets		31,902,065	36,585,276	35,063,181
Total liabilities		12,795,750	15,965,478	14,133,125
Net assets		19,106,315	20,619,798	20,930,056

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Group’s unaudited revenue amounted to approximately RMB5,363,962,199 for the nine months end 30 September 2018, representing a decrease of approximately 13.3% as compared with the revenue for the nine months end 30 September 2017. As advised by the representatives of the Company, the decrease in revenue is mainly due to the structural adjustments actively undertaken by the Company in relation to controlling risks and boosting trading business quality and profitability, which is partially offset by the increase in revenue generated from consolidation of container terminals, the growth of our general cargo business and the increase of container freight service. The Group’s audited revenue amounted to approximately RMB9,031,643,350 for the year ended 31 December 2017, representing a decrease of approximately 29.5% respectively as compared with the revenue for the year ended 31 December 2016. As disclosed in the 2017 Annual Report, such decrease was mainly due to the year-on-year decrease of 54.0% in income from trading business, and the decrease in income from the trading business was mainly due to the structural adjustments actively undertaken by the Company from the perspectives of controlling risks and boosting trading business quality and revenue.

The unaudited net profit of the Company for the nine months ended 30 September 2017 and 30 September 2018 accounted approximately RMB442,139,326 and RMB559,693,677 respectively, representing an increase of approximately 26.59%. As advised by the representatives of the Company, the increase in net profit is mainly due to the consolidation of container terminals and improvement of general cargo business which have driven the increase of gross profit and the increase of currency exchange gains of the Group as a result of the exchange fluctuation in the capital market. The audited net profit of the Company for the year ended 31 December 2016 and 31 December 2017 accounted approximately RMB612,682,943 and RMB574,291,910 respectively, representing a decrease of approximately 6.27%. As disclosed in the 2017 Annual Report, the decrease in audited net profit of the Company for the year ended 31 December 2017 was mainly due to the decrease in gross profit of oil storage business, increase in exchange losses and provision for decline in the value of assets due to legal proceedings and disputes.

The cash and bank balances of the Group as at 31 December 2017 was approximately RMB7,507,917,167, representing an increase of approximately 11.4% as compared to that as at 31 December 2016 which was mainly due to operating cash inflow generated during the year ended 31 December 2017, but decrease to approximately RMB6,747,904,809 as at 30 September 2018, representing a decrease of approximately 10.1% as compared to that as at 31 December 2017 which was mainly due to cash repayments of borrowings is larger than cash received from borrowing. The net assets of the Group as at 31 December 2017 were approximately RMB20,619,798,074, representing an increase of approximately 7.9% as compared to that as at 31 December 2016 which was mainly due to the increase in non-current asset of the Group as at 31 December 2017 and partially offset by the increase in current liabilities. Such remained constant compared to approximately RMB20,930,056,222 as at 30 September 2018.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

b) The Deposit Services

The representatives of the Company advised that the Deposit Services has been provided by the Finance Company. As stated in the Letter from the Board, the 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.

c) The Finance Leasing Services

The representatives of the Company advised that the Finance Leasing Services has been provided by Dalian Equipment Finance Lease Company Limited (‘‘DLEFL’’) and Ocean Harvest Container Co. Limited (‘‘Ocean Harvest’’) to the Group. The Finance Company can provide the Finance Leasing Services to the Group.

DLEFL is a licensed institution to carry out finance lease business in China and is an associate of PDA, the controlling shareholder of the Company.

Ocean Harvest is a licensed institution to carry out finance lease business in China and is a subsidiary of PDA.

As stated in the Letter from the Board, PDA and its associates or subsidiary(ies) (as the case maybe) shall provide the Finance Leasing Services to the Group as per their respective requirements in respect of leasing tangible assets, such as machines, equipment and containers on terms no less favourable to them than terms available to independent third parties. As advised by the representative of the Company, PDA and its associates or subsidiary(ies) (as the case maybe) generally provide the Finance Lease Services to the Group by the following ways: (i) the Group sells its tangible assets to PDA and/or its associates then lease back those tangible assets from PDA and its associates or subsidiary(ies) (as the case maybe) for the Group’s own use and then the Group repurchases those tangible assets at the end of the lease period; and/or (ii) PDA and its associates or subsidiary(ies) (as the case maybe) purchase the tangible assets from the suppliers which are chosen by the Group, then lease those tangible assets from PDA and its associates or subsidiary(ies) (as the case maybe) to the Group for the Group’s own use and then PDA and its associates or subsidiary(ies) (as the case maybe) sell those tangible assets to the Group at the end of the lease period. While those tangible assets are used as collateral for the loans.

As stated in the Letter from the Board, before entering into a specific finance leasing services contract with PDA and its associates or subsidiary(ies) (as the case maybe), the Group will obtain at least two quotations from independent third parties and will assess each counter party based on the following criteria:

• (i) the Group will review whether lessors shall have relevant qualifications and other approval documents for the financial leasing services; and

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

• (ii) the Group will ensure that the Group will decide the title, specification, model, quantity, performance of assets to be leased, free of influence from lessors.

2. Reasons for and benefits of entering into the Non-exempt Continuing Connected Transactions

The management of the Company advised that the Non-exempt Continuing Connected Transactions has been provided by PDA and its associates or subsidiary(ies) (as the case maybe) to the Group since 2012. With the benefit of this long-standing relationship, PDA and its associates or subsidiary(ies) (as the case maybe) understand well the financial conditions of the Group and will be able to cater the financial needs of the Group more efficiently.

Also, the Financial Services Agreement does not restrict the Group to the Deposit Services and the Finance Leasing Services provided by third party and therefore offers an additional financing option to the Group and increases the financial flexibility of the Group. Therefore, the Group may, but is not obliged to, continue to use the services of PDA and its associates or subsidiary(ies) (as the case maybe) if the price is competitive.

As the Finance Company was 40% owned by the Company as at the Latest Practicable Date, the Company can ultimately benefit from the business development of the Finance Company.

Having considered that (i) PDA and its associates or subsidiary(ies) (as the case maybe) familiarise the business operation and financial position of the Group due to the long-established relationship; (ii) the terms of the Non-exempt Continuing Connected Transactions are fair and reasonable as mentioned in the paragraph headed ‘‘Principal terms of the Non-exempt Continuing Connected Transactions’’ below; and (iii) the Nonexempt Continuing Connected Transactions do not restrict the Group to obtain the same services only from PDA and its associates or subsidiary(ies) (as the case maybe); and (iv) as a shareholder of the Finance Company, the Company can benefit from the business development of the Finance Company, we concur with the Directors’ view that entering into the Non-exempt Continuing Connected Transactions are in the ordinary and usual course of the business of the Company and in the interests of the Company and the Independent Shareholders as a whole.

3. Principal terms of the Non-exempt Continuing Connected Transactions

On 9 November 2018, the Company entered into the Financial Services Agreement with PDA pursuant to which PDA and its associates or subsidiary(ies) (as the case maybe) shall provide, among others, (i) the Deposit Service; and (ii) the Finance Leasing Services to the Group on normal commercial terms or better for a term of three years commencing on 1 January 2019 and ending on 31 December 2021. Details of the terms of the Non-exempt Continuing Connected Transactions are stated in the Letter from the Board. Set out below is the pricing of the Non-exempt Continuing Connected Transactions.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Deposit Services

According to Letter from the Board, the interest rate payable by PDA and its associates or subsidiary(ies) (as the case maybe) to the Group for any deposits should not be lower than the interest rate prescribed by People’s Bank of China for comparable deposits. It should also not be lower than any of the following interest rates: (i) the interest rate paid by other major commercial banks in the PRC for comparable deposits; and (ii) the interest rate paid by PDA and its associates or subsidiary(ies) (as the case maybe) to any member of the PDA Group (other than any member of the Group) for comparable deposits.

We have obtained and reviewed four and three deposit slips for deposits of the Group placed in the Finance Company for the year ended 31 December 2017 and the period from 1 January 2018 to 30 September 2018 respectively, which amounted for the whole transaction amount for the year ended 31 December 2017 and the period from 1 January 2018 to 30 September 2018. We compared the interest rates of deposit offered by the Finance Company against (i) the benchmark interest rates promulgated by the PBOC for comparable deposits of comparable terms; (ii) the interest rate offered by major commercial banks in the PRC for comparable deposits; and (iii) the interest rate offered by the Finance Company to any member of the PDA Group (other than any member of the Group) for comparable deposits. We noted that the interests received from the Finance Company for the deposit were no less favorable than that of (i), (ii) and (iii) as mentioned above. Therefore we are of the view that the pricing policy of the Deposit Services are fair and reasonable so far as the Independent Shareholders are concerned.

The Finance Leasing Services

As stated in the Letter from the Board, rental payable by the relevant members of the Group shall be determined by reference to market price, and the amount and way of payment shall be provided in each individual agreement by the parties thereto.

We have obtained and reviewed seven financial services agreements between the Group and DLEFL and Ocean Harvest for the year ended 31 December 2017 and the period from 1 January 2018 to 30 June 2018 which amounted for the whole transaction amount for the year ended 31 December 2017 and the period from 1 January 2018 to 30 June 2018. We checked the interest charged by DLEFL and Ocean Harvest against the interest rate charged from the quotation from the independent third parties. We noted that the interest rates charged by DLEFL and Ocean Harvest were no less favourable than that of those independent third parties for similar finance lease. Therefore we are of the view that the pricing policy of the Finance Leasing Services are fair and reasonable so far as the Independent Shareholders are concerned.

– 28 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

4. The Proposed Annual Caps and basis of determination

The following table sets out the historical transaction amounts for the two years ended 31 December 2017 and the nine months ended 30 September 2018, and the Proposed Annual Caps:

		Historical Transaction	Amounts		Annual Caps
			For the nine
		For the year ended	months ended	For	the year ending
		31 December	30 September		31 December
		2016 2017	2018	2019	2020	2021
		RMB’000 RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
Deposit		2,943,170 3,164,850	3,706,720	4,000,000	4,000,000	4,000,000
Finance	leasing	1,061,760 1,051,070	3,700	1,140,000	1,120,000	1,120,000

The Deposit Services

The Annual Caps for the Deposit Services were determined based on the below factors:

As shown in the above table, the historical maximum daily balance of the Deposit Services for the two years ended 31 December 2017 and for the nine months ended 30 September 2018 was approximately RMB3,706,720,000. Given that the Annual Caps of the Deposit Services is set to accommodate the maximum daily balance of deposit and interest income for the three years ending 31 December 2021, we consider it is justifiable to use the historical maximum daily balance of the Deposit Taking Services of RMB3,706,720,000 in setting the Annual Caps of the Deposit Taking Services.

The representatives of the Company advised that it is expected that cash and cash equivalents balance of the Group in the next three years will be increased based on the historical increase in 2017. We have reviewed the 2017 Annual Report and noted that the net increase in cash and cash equivalents of the Company for the year ended 31 December 2017 was approximately RMB550,000,000.

Therefore, having considered (i) the historical maximum daily balance of the Deposit Services for the two years ended 31 December 2017 and for the nine months ended 30 September 2018 was approximately RMB3,706,720,000; and (ii) the expected increase in cash and cash equivalents in the next three years, we are of the view that the Annual Caps of the Deposit Services are determined based on reasonable estimation and after due and careful consideration and are fair and reasonable so far as the Company and the Independent Shareholders are concerned.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Finance Leasing Services

The Annual Caps for the Finance Leasing Services were determined based on the below factors:

As shown in the above table, the largest historical transaction amounts of the Finance Leasing Services for the two years ended 31 December 2017 and for the nine months ended 2018 was approximately RMB1,061,760,000. Given that the Annual Caps of the Finance Leasing Services is set to accommodate the maximum balance of finance lease and repayment for the three years ending 31 December 2021, we consider it is justifiable to use the largest historical transaction amounts of the Finance Leasing Services of approximately RMB1,061,758,000 in setting the Annual Caps of the Finance Leasing Services.

Furthermore, the representatives of the Company advised that the Company plans to finance lease of certain containers and equipment in the next three years. We have reviewed a memorandum of understanding for renewal of finance lease of containers, a strategy agreement of finance lease of containers and a report of construction of vessels and its estimated price. Moreover, the Company plans to finance the repayment of its short-term loans by the Finance Leasing Services. As stated in the 2018 3rd Quarterly Report, there were short-term borrowings of approximately RMB3,381,000,000 and non-current liabilities due within one year of approximately RMB658,155,209 as at 30 September 2018. As finance lease required fixed asset as collateral, we have checked and obtained the list of relevant assets of the Company which is available for purpose of Finance Leasing Services and noted that relevant assets is adequate for the Finance Leasing Services.

Therefore, having considered (i) the historical transaction amount for the Finance Leasing Services for the two years ended 31 December 2017 and for the nine months ended 30 September 2018 was approximately RMB1,061,760,000; (ii) the expected containers and equipment to be arranged with the Finance Leasing Services; and (iii) it is necessary for the Company to source the financing to repay short-term debts of the Company in which the proposed Finance Leasing Services will provide an option of financing, we are of the view that the Annual Caps the Finance Leasing Services are determined based on reasonable estimation and after due and careful consideration and they are fair and reasonable so far as the Company and the Independent Shareholders are concerned.

Shareholders should note that as the Annual Caps are relating to future events and was estimated based on assumptions which may or may not remain valid for the entire period up to 31 December 2021, and they do not represent forecasts of the Non-exempt Continuing Connected Transactions. Consequently, we express no opinion as to how closely the actual amount of the Non-exempt Continuing Connected Transactions will correspond with the respective Proposed Annual Caps.

– 30 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

5. Internal control measures

As stated in the Letter from the Board, the Company will, prior to the placement of deposit with PDA and its associates or subsidiary(ies) (as the case maybe), (i) check the benchmark interest rates for deposits published by the PBOC, (ii) check the interest rates offered by at least two major commercial banks which have established business relationship with the Group and (iii) check the interest rates offered by PDA and its associates or subsidiary(ies) (as the case maybe) to any member of the PDA Group (other than any member of the Group) for comparable deposits.

The Group has also adopted internal control policies, including, among others, 大 連港股份有限公司關聯交易管理辦法 (Dalian Port (PDA) Company Limited Connected Transaction Management Measure) (the ‘‘Measure’’) to monitor the continuing connected transaction. We have obtained and reviewed the Measure and noted that the Measure include that the departments or units should report amount of the connected transactions incurred to the finance department of the Company via 股 份公司關聯交易統計系統 (the connected transactions accounting system of the Company) at the next date of each month end of the monthly financial statements. Those departments and units are accountable for truthfulness, accuracy and completeness of those information. Furthermore, the finance department of the Company is responsible to account for the transaction amounts of the continuing connected transactions and periodically report to the independent directors and the audit committee to discover whether the amount of continuing connected transactions exceed the annual caps.

Also, prior to the placement of deposit with PDA and its associates or subsidiary(ies) (as the case maybe), the representatives of the Company advised that the finance department of the Company will compare the interest rates offered by the Finance Company with (i) the interest rates prescribed by People’s Bank of China for comparable deposits, (ii) the interest rate offered by at least two major commercial banks in the PRC which have established business relationship with the Group for comparable deposits, and (iii) the interest rates offered by PDA and its associates or subsidiary(ies) (as the case maybe) to any member of the PDA Group (other than any member of the Group) for comparable deposits. When the Company received deposit slips, the finance department of the Company will compare the interest rates in the deposit slips with the interests prescribed by People’s Bank of China for comparable deposits and the interest rate offered by at least two major commercial banks in the PRC which have established business relationship with the Group for comparable deposits to check whether the interest rates provided by the Finance Company should not be lower than the interests prescribed by People’s Bank of China for comparable deposits and the interest rate offered by at least two major commercial banks in the PRC which have established business relationship with the Group for comparable deposits. For the Finance Lease Services, as stated in the Letter from the Board, before entering into a specific financial leasing services contract with PDA and its associates or subsidiary(ies) (as the case maybe), at least two quotations from independent third parties will be obtained by the Group and the Group will assess each counter party based on the following criteria: (i) the Group will review whether lessors shall have

– 31 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

relevant qualifications and other approval documents for the financial leasing services; and (ii) the Group will ensure that the Group will decide the title, specification, model, quantity, performance of assets to be leased, free of influence from lessors.

Moreover, as stated in the 2017 Annual Report, the independent non-executive Directors of the Company had reviewed the continuing connected transactions disclosed in the 2017 Annual Report and confirmed that the transactions have been entered into: (i) in the ordinary and usual course of business of the Company; (ii) either on normal commercial terms or, if there are no sufficient comparable transactions to judge whether they are on normal commercial terms, on terms better than terms available to independent third parties; and (iii) in accordance with the agreements governing the relevant transactions on terms that are fair and reasonable and in the best interests of the Company as a whole. According to Rule 14A.56 of the Listing Rules, the Company’s auditor was engaged to report on the Group’s continuing connected transactions in accordance with Hong Kong Standard on Assurance Engagements 3000 ‘‘Assurance Engagements other than Audits or Reviews of Historical Financial Information’’ and with reference to Practice Note 740 ‘‘Auditor’s Letter on Continuing Connected Transactions under the Hong Kong Listing Rules’’. The auditor has accordingly issued an assurance report on the Company’s continuing connected transactions for the year ended 31 December 2017, and has confirmed the following regarding the Company’s continuing connected transactions in 2017: (i) nothing has come to their attention that causes them to believe that the disclosed continuing connected transactions have not been approved by the Company’s board of directors; (ii) for transactions involving the provision of goods or services by the Group, nothing has come to their attention that causes them to believe that the transactions were not, in all material respects, in accordance with the pricing policies of the Group; (iii) nothing has come to their attention that causes them to believe that the transactions were not entered into, in all material respects, in accordance with the relevant agreements governing such transactions; and (iv) with respect to the aggregate amount of each of the continuing connected transactions set out in the report, nothing has come to their attention that causes them to believe that the disclosed continuing connected transactions have exceeded the annual caps as set by the Company.

Taking into account the internal control measures as stated above, we concur with the Directors’ view that the Company has established internal control procedures to ensure the Non-exempt Continuing Connected Transactions will be conducted on normal commercial terms, fair and reasonable and in the interest of the Company and the Shareholders as a whole.

– 32 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

Having considered the principal factors and reasons as discussed above, we are of the view that the Non-exempt Continuing Connected Transactions are entered in the ordinary and usual course of business of the Company, the terms of the Non-exempt Continuing Connected Transactions are on 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 and the Annual Caps are fair and reasonable. Accordingly, we would recommend (i) the Independent Board Committee to advise the Independent Shareholders; and (ii) the Independent Shareholders, to vote in favour of the ordinary resolutions in this regard.

Yours faithfully, For and on behalf of TC Capital International Limited Edward Wu Chairman

• Note: Mr. Edward Wu has been a responsible officer of Type 6 (advising on corporate finance) regulated activities under the SFO since 2005. He has participated in and completed various advisory transactions in respect of connected transactions of listed companies in Hong Kong.

• for identification purpose only

– 33 –

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 2015, 2016 and 2017 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 2017 published on 24 April 2018 (page 100 to page 302);

• (ii) annual report of the Company for the year ended 31 December 2016 published on 27 April 2017 (page 95 to page 286); and

• (iii) annual report of the Company for the year ended 31 December 2015 published on 29 April 2016 (page 77 to page 229).

3. STATEMENT OF INDEBTEDNESS

As at the close of business of 30 September 2018, the Group had outstanding borrowings of approximately RMB12,126.7 million comprising pledged bank loans of approximately RMB547.2 million, unsecured bank loans of approximately RMB5,650.1 million, outstanding finance leases of approximately RMB58.8 million and bonds of approximately RMB5,870.4 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, finance 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 2018.

4. WORKING CAPITAL

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

– I-1 –

APPENDIX I

GENERAL INFORMATION

5. FINANCIAL AND TRADING PROSPECTS

As disclosed in announcement of the Company dated 28 March 2018 in relation to the annual results of the Group for the year ended 31 December 2017, the Group’s operations achieved sound growth in 2017. During the first half of 2018, the Group’s major business segments performed well. As disclosed in the Company’s announcement of 27 August 2018 of its interim results for the six months ended 30 June 2018, the Group recorded revenue and net profit attributable to owners of the Company of RMB3,651.2 million and RMB176.2 million, respectively.

In view of the recovery in domestic economy, 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. north-eastern 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 2018.

Given the nature of the continuing connected transactions (including the transactions contemplated under the Terminal Facilities Design and Construction Services Agreement and the Finance Leasing Services under the Financial Services Agreement), the Company does not expect there will be any significant adverse effect on the earnings and assets and liabilities of the Group.

6. DISCLOSURE OF INTERESTS

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

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

– I-2 –

APPENDIX I

GENERAL INFORMATION

• (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 Group	A Shares	5,310,255,162(L)	Beneficial owner	68.65%	41.18%
Corporation Limited(4)
China Merchants Securities	H Shares	2,721,417,600(L)	Interest of controlled	52.75%	21.11%
(HK) Co Ltd			corporation
China Securities	H Shares	1,249,593,000(L)	Beneficial owner	24.22%	9.69%
Depository and Clearing
Corporation Limited
Dalian Port Group	H Shares	722,166,000(L)	Beneficial owner	14.00%	5.60%
Corporation Limited(4)

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 — 7,735,820,000; H Shares — 5,158,715,999.

• (3) Total number of Shares in the share capital of the Company as at the Latest Practicable Date: 12,894,535,999.

• (4) Each of Mr. Zhang Yiming, Mr. Wei Minghui, Mr. Xu Song and Mr. Yin Shihui, being a Director, also holds a management position or directorship with PDA, which is wholly owned by 遼寧東北亞港航發展有限公司 (Liaoning North East Asia Gang Hang Development Co., Ltd.*). For further details, please refer to the announcement of the Company dated 4 November 2018.

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.

– I-3 –

APPENDIX I

GENERAL INFORMATION

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 2017 (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 of the Company 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.

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 International A licensed corporation under the SFO to engage in Limited 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

– I-4 –

APPENDIX I

GENERAL INFORMATION

the Group, since 31 December 2017, 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 2017 (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.

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 equity transfer agreement entered into between Dalian Port Container Development Co., Ltd. (大連港集裝箱發展有限公司) (a wholly-owned subsidiary of the Company, ‘‘Dalian Port Container’’) and APM Terminals Dalian Company Limited (‘‘APM Terminals Dalian’’) on 3 August 2017, pursuant to which APM Terminals Dalian conditionally agreed to sell, and Dalian Port Container conditionally agreed to purchase the sale shares, representing 20% of the total equity interest in Dalian Port Container Terminal Co., Ltd. (大連港灣集裝箱碼 頭有限公司, ‘‘DPCM’’), at a consideration of US$18 million in cash;

• (ii) the merger agreement entered into, among others, Dalian Container Terminal Co., Ltd. (大連集裝箱碼頭有限公司) (a non-wholly-owned subsidiary of the Company, ‘‘DCT’’), Dalian International Container Terminal Co., Ltd. (大連國 際集裝箱碼頭有限公司, ‘‘DICT’’), DPCM, Dalian Port Container, COSCO Ports (Dalian) Limited (中遠碼頭（大連）有限公司), China Shipping Terminal Development Co., Ltd.* (中海碼頭發展有限公司), China Shipping Ports Development Co., Ltd. (中海港口發展有限公司), Singapore Dalian Port Investment Pte Ltd. (新加坡大連港口投資私人有限公司), PSA China Pte Ltd. and Nippon Yusen Kabushiki Kaisha (日本郵船株式會社), on 4 August 2017, pursuant to which DICT and DPCM shall be merged with and into DCT, and DCT shall continue as the surviving company and shall succeed to and assume all the assets, business, credits and debts of DICT and DPCM; and

– I-5 –

APPENDIX I

GENERAL INFORMATION

• (iii) the equity transfer agreement entered into between the Company and PDA on 28 June 2018, pursuant to which the Company conditionally agreed to dispose and PDA conditionally agreed to acquire the Company’s 60% equity interest in Dalian Jingang United Automobile International Trade Co., Ltd. (大連金港聯合 汽車國際貿易有限公司).

14. GENERAL

• (a) The joint company secretaries of the Company are Mr. Wang Jilu 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 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

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

15. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at 21–22/F, Bank of China Tower, 1 Garden 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 2015, 2016 and 2017 respectively;

• (c) the interim report for the six months ended 30 June 2018;

• (d) the letter from the Independent Board Committee, the text of which is set out on pages 20 to 21 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 22 to 33 of this circular;

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

• (g) the Financial Services Agreement;

– I-6 –

APPENDIX I

GENERAL INFORMATION

• (h) the Terminal Facilities Design and Construction 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 the transactions contemplated under the Construction Management and Supervision Services Agreement, the Properties and Equipment Lease Agreement (including Leasing From and Leasing To), the Supply of Goods and Services Agreement and the Purchase of Goods and Services Agreement and the provision of Loan Services, Settlement Services and other financial services and Factoring Services under the Financial Services Agreement are as follows:

I. SUMMARY OF THE TRANSACTIONS

1. Financial Services

Pursuant to the financial services agreement dated 26 October 2015 and the finance lease agreement dated 14 March 2014, PDA and its associates or subsidiary(ies) (as the case maybe) have been providing financial services, including Deposit Services, Loan Services, Factoring Services, Settlement Services and other financial services and Finance Leasing Services to the Group.

To continue receiving Loan Services, Settlement Services and other financial services and Factoring Services from PDA and its associates or subsidiary(ies) (as the case maybe), on 9 November 2018, the Company entered into a Financial Services Agreement with PDA for a term of three years commencing on 1 January 2019 and ending on 31 December 2021.

1.1 Loan Services

Pursuant to the Financial Services Agreement, PDA and its associates or subsidiary(ies) (as the case maybe) 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 2019 and ending on 31 December 2021. 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 its associates or subsidiary(ies) (as the case maybe) 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 its associates or subsidiary(ies) (as the case maybe) for comparable loans. In addition, the daily closing balance of the Group’s loan with PDA and its associates or subsidiary(ies) (as the case maybe) 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 2016 and 2017 and the nine months ended 30 September 2018, annual cap for 2018 and estimated annual caps for each of the three years of 2019, 2020 and 2021

Financial Services — Loan Services (maximum daily closing balance)

For the	For the	For 9
year ended	year ended	months ended		Estimated	Estimated	Estimated
31 December	31 December	30 September	Annual cap	annual cap	annual cap	annual cap
2016	2017	2018	for 2018	for 2019	for 2020	for 2021
(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
367,560(1)	981,840(1)	949,120(1)	5,000,000(3)	5,000,000(5)	5,000,000(5)	5,000,000(5)
(367,560)(2)	(981,840)(2) (949,120)(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 2018 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 2018 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 2021, 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 2021.

In determining the estimated annual caps for 2019, 2020 and 2021, 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) a demand to replace a foreign-currency based loan due to the fluctuation of exchange rates and (iv) financial ability of PDA and its associates or subsidiary(ies) (as the case maybe) 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 its associates or subsidiary(ies) (as the case maybe) 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 2019 and ending on 31 December 2021.

a) Pricing

Pursuant to the Financial Services Agreement, the Company expects that the total annual fees payable by the Group to PDA and its associates or subsidiary(ies) (as the case maybe) for Settlement Services and other financial services will not exceed RMB30.0 million per year for each of the three years ending 31 December 2019, 2020 and 2021. Settlement Services are provided by PDA and its associates or subsidiary(ies) (as the case maybe) free of any service charge.

• b) Historical figures for each of the two years of 2016 and 2017 and the nine months ended 30 September 2018, annual cap for 2018 and estimated annual caps for each of the three years of 2019, 2020 and 2021

	For the	For the		For 9
	year ended	year ended	months ended			Estimated	Estimated	Estimated
	31 December	31 December	30 September		Annual cap	annual cap	annual cap	annual cap
	2016	2017		2018	for 2018	for 2019	for 2020	for 2021
	(RMB’000)	(RMB’000)		(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
Financial Services	260(1)	180(1)		100(1)	30,000(3)	30,000(5)	30,000(5)	30,000(5)
— Settlement Services	(260)(2)	(180)(2)		(100)(2)	(30,000)(4)	(30,000)(6)	(30,000)(6)	(30,000)(6)
and other financial
services

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 2018 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 2018 relates to the annual cap approved by the Shareholders under the Listing Rules.

– II-3 –

APPENDIX II

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

• (5) In determining the estimated annual caps for each of the three years ending 31 December 2021, 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 2021.

As the Settlement Services shall be provided free of any service charge, the estimated annual caps for 2019, 2020 and 2021 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 introduction of new financial services such as provision of secured financing, and bank acceptance bill, and (iii) the operational and financial needs of the Group in the coming three years.

1.3 Factoring Services

Pursuant to the Financial Services Agreement, PDA and its associates or subsidiary(ies) (as the case maybe) shall provide Factoring Services to the Group on normal commercial terms or better to the Group for a term of three years commencing on 1 January 2019 and ending on 31 December 2021. Factoring Services is a service provided by PDA and/or its associates (as defined in the Listing Rules and its associates or subsidiary(ies) (as the case maybe) to the Group in which the Group will assign to PDA and its associates or subsidiary(ies) (as the case maybe) 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) Pricing

Pursuant to the Financial Services Agreement, the interest rate payable by the Group to PDA and its associates or subsidiary(ies) (as the case maybe) for any 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. In addition, the daily closing balance of the Factoring Services provided to the Group by PDA and its associates or subsidiary(ies) (as the case maybe) should not exceed RMB120 million.

– II-4 –

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 2016 and 2017 and the nine months ended 30 September 2018, annual cap for 2018 and estimated annual caps for each of the three years of 2019, 2020 and 2021

	For the	For the		For 9
	year ended	year ended	months ended			Estimated	Estimated	Estimated
	31 December	31 December	30 September		Annual cap	annual cap	annual cap	annual cap
	2016	2017		2018	for 2018	for 2019	for 2020	for 2021
	(RMB’000)	(RMB’000)		(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
Financial Services	Nil(1)	Nil(1)		8,035(1)	1,500,000(3)	120,000(5)	120,000(5)	120,000(5)
— Factoring Services	(Nil)(2)	(Nil)(2)		(8,035)(2)	(1,500,000)(4)	(120,000)(6)	(120,000)(6)	(120,000)(6)
(maximum daily
closing balance)

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 2018 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 2018 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 2021, 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 2021.

In determining the estimated annual caps for 2019, 2020 and 2021, the Directors have considered a number of factors, including: (i) the amount of accounts receivables of members of the Group, and (ii) the amount of cash flow of members of the Group.

– II-5 –

APPENDIX II

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

2. Construction Management and Supervision Services

Pursuant to the construction management and supervision services agreement dated 26 October 2015, Superintendence Company, a subsidiary of the Company, has been providing Construction Management and Supervision Services to PDA and its associates or subsidiary(ies) (as the case maybe).

To continue the provision of Construction Management and Supervision Services, on 9 November 2018, Superintendence Company entered into a Construction Management and Supervision Services Agreement with PDA for a term of three years commencing on 1 January 2019 and ending on 31 December 2021. The agreement provides that Superintendence Company shall provide Construction Management and Supervision Services to PDA and its associates or subsidiary(ies) (as the case maybe) on normal commercial terms or better to the Group.

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 following principles:

• . at the State Price; and

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

• b) Historical figures for each of the two years of 2016 and 2017 and the nine months ended 30 September 2018, annual cap for 2018 and estimated annual caps for each of the three years of 2019, 2020 and 2021

	For the	For the		For 9
	year ended	year ended	months ended			Estimated	Estimated	Estimated
	31 December	31 December	30 September		Annual cap	annual cap	annual cap	annual cap
	2016	2017		2018	for 2018	for 2019	for 2020	for 2021
	(RMB’000)	(RMB’000)		(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
Construction	43,140(1)	35,850(1)		8,760(1)	60,000(3)	120,000(5)	110,000(5)	100,000(5)
Management Services	(36,200)(2)	(27,960)(2)		(6,130)(2)	(60,000)(4)	(118,900)(6)	(110,000)(6)	(100,000)(6)
and Supervision
Services

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-6 –

APPENDIX II

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

• (3) The annual cap for 2018 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 2018 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 2021, 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 2021.

In determining the estimated annual caps for 2019, 2020 and 2021, 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 its associates or subsidiary(ies) (as the case maybe) 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 resumed in 2019 and the amount of work to be completed will gradually reduce from 2019 to 2021.

3. Properties and Equipment Lease

3.1 Leasing From

Pursuant to the properties and equipment lease agreement dated 26 October 2015, the Company and its associates or subsidiary(ies) (as the case maybe) has been leasing properties and equipment from PDA and its associates or subsidiary(ies) (as the case maybe).

To continue with the properties and equipment leasing arrangement between the Company and its associates or subsidiary(ies) (as the case maybe) and PDA and its associates or subsidiary(ies) (as the case maybe), on 9 November 2018, the Company entered into the Properties and Equipment Lease Agreement with PDA for a term of three years commencing on 1 January 2019 and ending on 31 December 2021. The agreement provides that the Company and its associates or subsidiary(ies) (as the case maybe) shall lease properties and equipment from PDA and its associates or subsidiary(ies) (as the case maybe) on normal commercial terms or better to the Company and its associates or subsidiary(ies) (as the case maybe).

– II-7 –

APPENDIX II

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

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.

• b) Historical figures for each of the two years of 2016 and 2017 and the nine months ended 30 September 2018, annual cap for 2018 and estimated annual caps for each of the three years of 2019, 2020 and 2021

Rental paid/payable

For the	For the	For 9
year ended	year ended	months ended		Estimated	Estimated	Estimated
31 December	31 December	30 September	Annual cap	annual cap	annual cap	annual cap
2016	2017	2018	for 2018	for 2019	for 2020	for 2021
(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
59,160(1)	166,690(1)	129,560(1)	300,000(3)	250,000(5)	250,000(5)	250,000(5)
(53,670)(2)	(57,580)(2) (51,030)(2)		(73,500)(4)	(130,000)(6)	(130,000)(6)	(130,000)(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 2018 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 2018 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 2021, 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 2021.

The estimated aggregate rentals to be paid by the Company and its associates or subsidiary(ies) (as the case maybe) for each of 2019, 2020 and 2021 were determined with the anticipated increase in market rate for renting properties, the land required for the Group’s business growth and expansion.

– II-8 –

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 Company and its associates or subsidiary(ies) (as the case maybe) shall lease properties and equipment to PDA and its associates or subsidiary(ies) (as the case maybe) on normal commercial terms or better to the Company and its associates or subsidiary(ies) (as the case maybe) for a term of three years commencing on 1 January 2019 and ending on 31 December 2021.

• 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 Company and its associates or subsidiary(ies) (as the case maybe) to independent third parties, or (ii) by independent third parties to PDA and its associates or subsidiary(ies) (as the case maybe), 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 2016 and 2017 and the nine months ended 30 September 2018, annual cap for 2018 and estimated annual caps for each of the three years of 2019, 2020 and 2021

Rental received/ receivable

For the	For the		For 9
year ended	year ended	months ended			Estimated	Estimated	Estimated
31 December	31 December	30 September		Annual cap	annual cap	annual cap	annual cap
2016	2017		2018	for 2018	for 2019	for 2020	for 2021
(RMB’000)	(RMB’000)		(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
109,270(1)	126,460(1)		13,500(1)	200,000(3)	100,000(5)	100,000(5)	100,000(5)
(Nil)(2)	(Nil)(2)		(Nil)(2)	(Nil)(4)	(10,000)(6)	(10,000)(6)	(10,000)(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 2018 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 2018 relates to the annual cap approved by the Shareholders under the Listing Rules.

– II-9 –

APPENDIX II

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

• (5) In determining the estimated annual caps for each of the three years ending 31 December 2021, 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 2021.

The estimated aggregate rentals to be received by the Group for each of 2019, 2020 and 2021 were determined with the anticipated increase in market rate for renting terminal related properties and equipment.

4. Supply of Goods and Services

Pursuant to the supply of goods and services agreement dated 26 October 2015, 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 its associates or subsidiary(ies) (as the case maybe).

To continue the Supply of Goods and Services to PDA and its associates or subsidiary(ies) (as the case maybe), on 9 November 2018, the Company entered into a Supply of Goods and Services Agreement with PDA for a term of three years commencing on 1 January 2019 and ending on 31 December 2021. The agreement provides that the Group shall supply goods and services to PDA and its associates or subsidiary(ies) (as the case maybe) 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:

• . at the State Price; and

• . where there is no State Price, at 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.

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,

– II-10 –

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

APPENDIX II

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 supplies	Market price
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

• b) Historical figures for each of the two years of 2016, 2017 and the nine months ended 30 September 2018, annual cap for 2018 and estimated annual caps for each of the three years of 2019, 2020 and 2021

	For the	For the		For 9
	year ended	year ended	months ended			Estimated	Estimated	Estimated
	31 December	31 December	30 September		Annual cap	annual cap	annual cap	annual cap
	2016	2017		2018	for 2018	for 2019	for 2020	for 2021
	(RMB’000)	(RMB’000)		(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
Supply of Goods and	342,790(1)	268,860(1)		168,350(1)	410,000(3)	547,000(5)	580,000(5)	602,000(5)
Services	(62,430)(2)	(59,250)(2)		(70,290)(2)	(90,000)(4)	(190,000)(6)	(206,000)(6)	(223,000)(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.

– II-11 –

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

APPENDIX II

• (3) The annual cap for 2018 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 2018 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 2021, 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 2021.

In determining the estimated annual caps for 2019, 2020 and 2021, the Directors have referenced to the historical transaction amount, and considered the anticipated increase in demand for the terminal and related logistics services for coal, rocks and steel businesses, power engineering and maintenance services due to the development of the projects at Dayao Bay, Taiping Bay and International Cruise City in Dalian, the PRC as well as the commencement of an underwater tunnel project. and Taiping Bay in Dalian, the PRC. The Dayao Bay Port project, the Taiping Bay Port project and the International Cruise City project are projects of modern logistics parks instituted by PDA, and the Group will continue to provide power engineering and maintenance services for the support of development of the projects starting from the year of 2019.

5. Purchase of Goods and Services

Pursuant to the purchase of goods and services agreement dated 26 October 2015, 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 its associates or subsidiary(ies) (as the case maybe).

To continue the Purchase of Goods and Services from PDA and its associates or subsidiary(ies) (as the case maybe), on 9 November 2018, the Company entered into the Purchase of Goods and Services Agreement with PDA for a term of three years commencing on 1 January 2019 and ending on 31 December 2021. The agreement provides that the Group shall purchase goods and services from PDA and its associates or subsidiary(ies) (as the case maybe) on normal commercial terms or better to the Group subject to compliance with applicable Listing Rule requirements.

– II-12 –

APPENDIX II

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

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:

• . at the State Price; and

• . where there is no State Price, at 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 maintenance services	State price
Landscaping services	Market price
Catering services	Market price
Medical check services	Market price
Printing services	Market price
Conference services	Market price

– II-13 –

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 2016, 2017 and the nine months ended 30 September 2018, annual cap for 2018 and estimated annual caps for each of the three years of 2019, 2020 and 2021

	For the	For the	For 9
	year ended	year ended	months ended		Estimated	Estimated	Estimated
	31 December	31 December	30 September	Annual cap	annual cap	annual cap	annual cap
	2016	2017	2018	for 2018	for 2019	for 2020	for 2021
	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
Purchase of Goods and	219,040(1)	176,720(1)	131,890(1)	470,000(1)	925,000(3)	936,000(5)	944,000(5)
Services	(99,320)(2)	(115,240)(2) (94,330)(2)		(172,000)(2)	(276,000)(4)	(281,000)(6)	(286,000)(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 2018 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 2018 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 2021, 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 2021.

In determining the estimated annual caps for 2019, 2020 and 2021, the Directors have referenced to the historical amount and taken into account, among others, (i) the expected increase in demand for diesel oil attributed to business growth of the Group in Zhangxing Island in Dalian, the PRC, (ii) anticipated demand for maintenance services for public facility in the terminal, (iii) rise in the price of diesel oil and petrol in the future and (iv) the expected increase in demand for time charter services.

– II-14 –

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 can ensure that 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 the Shareholders as a whole.

III. OPINION OF THE BOARD

On 29 October 2018, the Board has approved, amongst others, the transactions contemplated under the Construction Management and Supervision Services Agreement, the Properties and Equipment Lease Agreement (including Leasing From and Leasing To), the Supply of Goods and Services Agreement and the Purchase of Goods and Services Agreement and the provision of Loan Services, Settlement Services and other financial services and Factoring Services under the Financial Services Agreement, as well as the proposed annual caps for such transactions.

– II-15 –

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 (the ‘‘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 Friday, 28 December 2018 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 9 November 2018.

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 13 November 2018 in accordance with the Listing Rules.

ORDINARY RESOLUTIONS

1. The Terminal Facilities Design and Construction 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 2021 for transactions that will only constitute connected transactions under Chapter 14A of the Listing Rules (the ‘‘Listing Rules 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 Deposit Services under the Financial Services Agreement and the related proposed annual caps (including the relevant Listing Rules 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 provision of Finance Leasing Services under the Financial Services Agreement and the related proposed annual caps (including the relevant Listing Rules 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 Supply of Goods and 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;

3. The Purchase of Goods and 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;

4. 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;

5. 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;

6. 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;

7. 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;

– EGM-2 –

NOTICE OF EGM

1. 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

2. 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 Dalian Port (PDA) Company Limited* WANG Jilu LEE Kin Yu, Arthur Joint Company Secretaries

Dalian City, Liaoning Province, the PRC 13 November 2018

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.

3. 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 Wednesday, 28 November 2018 to Friday, 28 December 2018 (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 Friday, 28 December 2018 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 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 4: 30 p.m. on Tuesday, 27 November 2018.

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

– EGM-3 –

NOTICE OF EGM

1. The proxy form together with the power of attorney or other authorization document (if any) must be deposited at the office of Board, at the address as stated in Note 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 Friday, 7 December 2018 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 9900/8759 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.

2. The meeting is expected to be concluded within a day. Shareholders (in person or by proxy) attending the meeting are responsible for their own transportation and accommodation expenses. Shareholders or their proxies attending the meeting shall produce the identity documents.

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

Executive directors: ZHANG Yiming and WEI Minghui

Non-executive directors: BAI Jingtao, XU Song, ZHENG Shaoping and YIN Shihui Independent non-executive directors: LAW Man Tat, WANG Zhifeng and SUN Xiyun

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

– EGM-4 –