THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR …sinotranship.sinotrans-csc.com/module/download/downfile.jsp?... · “Charter Agreement” the “Barecon 2001” Standard Bareboat

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you shouldconsult your licensed securities dealer, bank manager, solicitor, professional accountant or otherprofessional adviser.

If you have sold or transferred all your shares in the Company, you should at once hand thiscircular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank,licensed securities dealer or other agent through whom the sale or transfer was effected for onwardtransmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited takeno responsibility for the contents of this circular, make no representation as to its accuracy orcompleteness and expressly disclaim any liability whatsoever for any loss howsoever arising fromor in reliance upon the whole or any part of the contents of this circular.

(Incorporated in Hong Kong with limited liability)

(Stock Code: 368)

(1) DISCLOSEABLE AND CONNECTED TRANSACTIONIN RELATION TO DISPOSAL OF THE VESSEL

AND(2) NOTICE OF EXTRAORDINARY GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee andthe Independent Shareholders

A letter from the Board is set out on pages 4 to 11 of this circular.

A notice convening the Extraordinary General Meeting to be held at the Diamond Ballroom, theRitz-Carlton Hong Kong, International Commerce Centre, 1 Austin Road West, Kowloon, HongKong on Tuesday, 10 February 2015 at 11:00 a.m. is set out on pages EGM-1 to EGM-2 of thiscircular. Whether or not you are able to attend the Extraordinary General Meeting in person, youare requested to complete and return the enclosed form of proxy in accordance with theinstructions printed thereon to the registered office of the Company, as soon as possible and in anyevent not less than 48 hours before the time appointed for holding the Extraordinary GeneralMeeting or any adjournment thereof (as the case may be). Completion and return of the form ofproxy will not preclude you from attending and voting in person at the Extraordinary GeneralMeeting or any adjourned meeting thereof (as the case may be) should you so wish.

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

21 January 2015

Page

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Letter from Platinum Securities Company Limited . . . . . . . . . . . . . . . . . . . . . . . . 13

Appendix I — Valuation Report of the Vessel as at 30 October 2014 . . . . . . . I-1

Appendix II — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1

Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EGM-1

CONTENTS

In this circular, the following expressions shall have the meanings set out below unless the

context requires otherwise:

“Agreement” the memorandum of agreement dated 31 December 2014

entered into between the Vendor and the Purchaser in

relation to the Disposal

“Announcement” the announcement of the Company dated 31 December

2014 in relation to the Disposal

“associate(s)” has the meaning ascribed to it under the Listing Rules

“Board” the board of Directors

“Charter Agreement” the “Barecon 2001” Standard Bareboat Charter entered

into between the Company and the Charterer on 4 January

2011, details of which are included in the Company’s

circular dated 28 March 2011

“Charter Period” five years commenced from the date of delivery of the

Vessel under the Charter Agreement

“Charterer” Ji Sheng Marine Limited, a wholly-owned subsidiary of

Nanjing Tanker Corporation

“Company” Sinotrans Shipping Limited (中外運航運有限公司), a

company incorporated in Hong Kong with limited liability,

whose shares are listed on the Main Board of the Stock

Exchange

“Consideration” the consideration of US$61,805,000 (equivalent to

approximately HK$482,079,000) payable by the Purchaser

to the Vendor for the Disposal

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

“Disposal” the disposal of the Vessel by the Vendor to the Purchaser

pursuant to the Agreement

“EGM” or “Extraordinary General

Meeting”

an extraordinary general meeting of the Company to be

held to consider and, if thought fit, approve, among other

things, the Agreement and the transactions contemplated

thereunder

“Finance Lease Arrangement” the transactions contemplated under the Charter

Agreement

DEFINITIONS

– 1 –

“Group” the Company and its subsidiaries as at the Latest

Practicable Date

“HK$” Hong Kong dollars, the lawful currency of Hong Kong

“Hong Kong” the Hong Kong Special Administrative Region

“Independent Board Committee” an independent committee of the Board comprising all the

independent non-executive Directors established for the

purpose of advising the Independent Shareholders on the

Agreement and the transactions contemplated thereunder

“Independent Financial Adviser” or

“Platinum Securities”

Platinum Securities Company Limited, a corporation

licensed under the SFO to carry out Type 1 (dealing in

securities) and Type 6 (advising on corporate finance)

regulated activities under the SFO, and the independent

financial adviser to the Independent Board Committee and

the Independent Shareholders on the Agreement and the

transactions contemplated thereunder

“Independent Shareholders” in respect of the Shareholders other than the Parent

Company and its associates

“Independent Third Party(ies)” individual(s) or company(ies) not connected with any

directors, chief executive or substantial shareholders of the

Company or any of its subsidiaries or any of their

respective associates

“Latest Practicable Date” 16 January 2015, being the latest practicable date prior to

the printing of this circular for ascertaining certain

information for the purpose of inclusion in this circular

“Listing Rules” the Rules Governing the Listing of Securities on the Stock

Exchange

“Nanjing Tanker Corporation” Nanjing Tanker Corporation, a company established in the

PRC, an indirect subsidiary of the Parent Company

“Parent Company” 中國外運長航集團有限公司 (Sinotrans & CSC Holdings

Co., Ltd.), a PRC state-owned enterprise which indirectly

owns approximately 68.10% of the issued share capital of

the Company as at the Latest Practicable Date

“PRC” the People’s Republic of China, which for the purpose of

this circular, excludes Hong Kong, the Macau Special

Administrative Region and Taiwan

DEFINITIONS

– 2 –

“Purchaser” New Enterprise Shipping Company Limited, a joint

venture established in the PRC which is indirectly owned

as to 49% by the Parent Company and 51% by China

Merchants Energy Shipping Co., Ltd. (招商局能源運輸股份有限公司), an Independent Third Party

“SASAC” the State-owned Assets Supervision and Administration

Commission of the State Council of the PRC

“SFO” the Securities and Futures Ordinance (Chapter 571 of the

Laws of Hong Kong)

“Shareholders” holders of the issued Shares

“Shares” ordinary share(s) of the Company

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“US$” United States dollars, the lawful currency of the United

States of America

“Vendor” Grand Sea Shipping Limited, a wholly-owned subsidiary of

the Company as at the Latest Practicable Date

“Vessel” a 2008 built oil tanker, namely M/T “Yangtze Friendship”

(formerly known as M/T “GRAND SEA”)

For the purpose of this circular, the exchange rate of US$1.00 = HK$7.80 has been used for

currency translation, where applicable. Such exchange rates are for illustration purposes and do

not constitute representation that any amount in US$ or HK$ have been or may be converted in

such rates.

DEFINITIONS

– 3 –

(Incorporated in Hong Kong with limited liability)(Stock Code: 368)

Executive Directors:Mr. Li HuaMs. Feng Guoying

Non-executive Directors:Mr. Li Zhen (Chairman)Mr. Tian Zhongshan

Independent non-executive Directors:Mr. Tsang Hing LunMr. Lee, Peter Yip WahMr. Zhou Qifang

Registered office:21st Floor,Great Eagle Centre,23 Harbour Road,Wanchai,Hong Kong

21 January 2015

To the Shareholders

Dear Sir/Madam,

DISCLOSEABLE AND CONNECTED TRANSACTIONIN RELATION TO DISPOSAL OF THE VESSEL

INTRODUCTION

The Board is pleased to announce that on 31 December 2014, the Vendor entered into theAgreement with the Purchaser, pursuant to which, the Vendor has agreed to sell and the Purchaserhas agreed to purchase the Vessel. The principal terms of the Agreement are set out below:

The Agreement

Date

31 December 2014

Parties

(1) the Vendor, being a wholly-owned subsidiary of the Company; and

(2) the Purchaser

LETTER FROM THE BOARD

– 4 –

Asset to be disposed of

The Vendor has agreed to dispose the Vessel to the Purchaser.

The Vessel is a 2008 built oil tanker, namely M/T “Yangtze Friendship” (formerly

known as M/T “GRAND SEA”). The classification society/class is China Classification

Society by Mitsui Engineering & Shipbuilding Co., Ltd. (Chiba, Japan). The Vessel was

acquired by the Company in 2011 at the consideration of US$100,000,000 (approximately

HK$780,000,000). The Vessel, at the time of its delivery, will be free from all registered

mortgages, charters and liens (including maritime liens) created by the Vendor (but

excluding liens arising as a result of actions of the ship managers).

According to the management accounts of the Group for the ten months ended 31

October 2014, the unaudited net book value of the Vessel as at 31 October 2014 was

approximately US$61,805,000 (equivalent to approximately HK$482,079,000).

The net profits before and after taxation and extraordinary items attributable to the

Vessel for the financial years ended 31 December 2012 and 31 December 2013 were as

follows:

Financial yearended

31 December2013

Financial yearended

31 December2012

Net profits before taxation and

extraordinary items attributable to

the Vessel

US$5,366,028

(equivalent to

approximately

HK$41,855,000)

US$5,628,562

(equivalent to

approximately

HK$43,903,000)

Net profits after taxation and

extraordinary items attributable to

the Vessel

US$4,490,017

(equivalent to

approximately

HK$35,022,000)

US$4,697,764

(equivalent to

approximately

HK$36,643,000)

Consideration

Pursuant to the terms of the Agreement, the Consideration of US$61,805,000

(equivalent to approximately HK$482,079,000) shall be payable in cash by the Purchaser to

the Vendor on or before the delivery of the Vessel.

The Consideration has been arrived at based on normal commercial terms after arm’s

length negotiations between the Purchaser and the Vendor and was determined after taking

into account (i) the market intelligence that the Group has gathered from its own analysis of

recently concluded sale and purchase of vessels of comparable size and year of built in the

market; (ii) the net book value of the Vessel of approximately US$61,805,000 (equivalent to

HK$482,079,000) as at 31 October 2014; and (iii) the valuation of the Vessel as at 30


– 5 –

October 2014 of approximately US$61,805,000 (equivalent to HK$482,079,000) as

appraised by an independent valuer, the valuation report of which is contained in Appendix

I to this circular.

Condition Precedent

The Vendor’s obligations to sell and the Purchaser’s obligations to purchase the

Vessel under the Agreement are conditional upon the approval of the Agreement and the

transactions contemplated thereunder by the shareholders of the Company having been

obtained.

Delivery and Completion

The Vessel shall be delivered to the Purchaser on a condition that the Vessel with

everything belonging to it be at the Vendor’s risk and expense until it is delivered to the

Purchaser, but subject to the terms and conditions of the Agreement it shall be delivered and

taken over on an as is, where is basis. However, the Vessel shall be delivered with its

classification certificates and national certificates.

The Vessel is expected to be delivered on or around 10 February 2015 or such other

date as the Vendor and the Purchaser may agree. Completion of the Disposal shall take place

at the time of delivery of the Vessel. Upon completion of the Disposal, the Vendor will cease

to have any interest in the Vessel.

Termination

If the Vessel becomes an actual, constructive or compromised total loss before

delivery, the Agreement shall be null and void.

If the Consideration is not paid in accordance with the Agreement, the Vendor shall

have the right to cancel the Agreement. The Vendor shall not be entitled to claim further

compensation for their losses and for all expenses incurred thereunder.

If the Vendor fails to complete a legal transfer of the Vessel by 31 March 2015, the

Purchaser shall have the option to cancel the Agreement. If before the Purchaser has taken

delivery of the Vessel, the Vessel ceases to be physically ready for delivery and is not made

physically ready again by 31 March 2015, the Purchaser shall retain its option to cancel the

Agreement.

If the Vendor fails to complete a legal transfer as aforesaid, the Vendor shall

compensate the Purchaser for its loss and for all expenses together with interest if its failure

is due to proven negligence and whether or not the Purchaser would cancel the Agreement.


– 6 –

FINANCE LEASE ARRANGEMENT

Reference is made to the Company’s circular dated 28 March 2011 in relation to the FinanceLease Arrangement. On 4 January 2011, the Company entered into the Charter Agreement with theCharterer pursuant to which the Charterer has agreed to hire from the Company the Vessel for aterm of five years and to purchase the Vessel at the end of the Charter Period. The aggregateconsideration payable by the Charterer under the Charter Agreement is approximatelyUS$127,000,000 (equivalent to HK$990,600,000) of which (i) approximately US$47,000,000(equivalent to HK$366,600,000) is the total amount payable for the hire of the Vessel during theterm of the Charter Agreement at a daily rate of US$25,800 by monthly installments; and (ii)US$80,000,000 (equivalent to HK$624,000,000) is the total amount payable by the Charterer topurchase the Vessel at the end of the Charter Period.

The table below sets forth the finance lease income and the finance lease receivables of theGroup for the three years ended 31 December 2011, 2012 and 2013 under the Finance LeaseArrangement:

For the year ended 31 December2011 2012 2013

US$’000 US$’000 US$’000

Finance lease income of

the Group

3,657.71

(equivalent to

approximately

HK$28,530,000)

5,759.23

(equivalent to

approximately

HK$44,922,000)

5,531.90

(equivalent to

approximately

HK$43,149,000)

Finance lease receivables

of the Group

96,978.35

(equivalent to

approximately

HK$756,431,000)

93,294.78

(equivalent to

approximately

HK$727,699,000)

91,758.30

(equivalent to

approximately

HK$715,715,000)

The finance lease receivables of the Group under the Finance Lease Arrangement as at 30October 2014 amounted to approximately US$89,952,000 (equivalent to HK$701,626,000).

Reference is also made to the Company’s announcements dated 30 September 2014 and 30October 2014, respectively in relation to the termination of the Finance Lease Arrangement. Asdisclosed in the above announcements, the Company has exercised its rights to terminate theFinance Lease Arrangement and withdrew the Vessel from the service of the Charterer on 30October 2014 as the Charterer failed to pay the hire of the Vessel in accordance with the terms ofthe Charter Agreement due to its financial difficulties as a result of the current market condition inorder to prevent further loss incurred by the Company.

As at the Latest Practicable Date, the Company reached an agreement with the Charterer thatthe Company will enter into a settlement agreement with the Charterer on or before March 2015pursuant to which the Charterer would pay the Company an amount of approximatelyUS$36,000,000 (equivalent to HK$280,800,000, being the aggregate consideration payable by theCharterer under the Charter Agreement of approximately US$127,000,000 less the total amount ofcharter hire of the Vessel received under the Charter Agreement of approximately US$29,000,000


– 7 –

and the fair value of the Vessel of US$61,805,000) (the “Compensation”) on or before 31

December 2015. If the Charterer fails to settle the Compensation under the settlement agreement,

the Company will negotiate with the Charterer and/or seek legal advice on the potential legal

actions to be taken by the Company so as to recover the Compensation. The Directors (including

the independent non-executive Directors) have reviewed the terms of the settlement agreement and

are of the view that the Compensation and the terms of the settlement agreement are fair and

reasonable and in the interest of the Company and the Shareholders as a whole. The Company will

make further announcement in accordance with the Listing Rules in case if there is any material

change on the above terms.

RATIONALE OF, REASONS FOR, BENEFITS AND RISKS OF THE DISPOSAL

The Company has not identified any alternative independent purchasers for the Disposal as

at the Latest Practicable Date since the Company is of the view that transaction with a connected

person may have less uncertainties as opposed to transaction with Independent Third Parties. The

Vessel has been withdrawn from the service of the Charterer on 30 October 2014. The Company

has not considered to enter into a new finance lease arrangement in respect of the Vessel as the

Company will receive the total consideration upon disposal of the Vessel as contemplated under the

Disposal instead of by installments as in the case of finance lease arrangement. Since the Group is

not principally engaged in the business of oil tanker services and does not possess expertise in the

operation of oil tankers, the Company is of the view that it is in the interests of the Company and

its shareholders as a whole to enter into the Disposal. By entering into the Disposal, the Directors

considered that the sale proceeds from the Disposal will provide additional funding to the Group

by enhancing cashflow of the Group. The Group intends to use the sale proceeds from the Disposal

for general working capital purposes and for any future acquisition of new vessels when suitable

opportunities arise.

The consideration of the Disposal shall be settled in full by cash on or before the delivery of

the Vessel and the Vendor shall have the right to cancel the Agreement if the Purchaser fails to pay

the consideration of the Disposal. Save for the shareholdings of the Parent Company in both the

Purchaser and the Charterer, the Purchaser is not related to the Charterer. Accordingly, the

Company is of the view the financial difficulties experienced by the Charterer is not relevant to the

ability of the Purchaser to settle the Consideration. The Company believes that the Purchaser has

the ability to settle the Consideration and accordingly, the Directors (including the independent

non-executive Directors) believe that there will be no risk in relation to the Disposal.

FINANCIAL EFFECT OF THE DISPOSAL

The net proceeds of the Disposal is US$61,805,000 (equivalent to approximately

HK$482,079,000). Subject to audit, it is estimated that the Group will not record any gain or loss

from the Disposal in considering that the Consideration is equivalent to the book value of the

Vessel.


– 8 –

INFORMATION OF THE PURCHASER, THE PARENT COMPANY AND THE

CHARTERER

The Purchaser is, indirectly, owned as to 49% by the Parent Company and 51% by China

Merchants Energy Shipping Co., Ltd., an Independent Third Party. The Purchaser is principally

engaged in the business of oil tanker services.

The Charterer is a wholly-owned subsidiary of Nanjing Tanker Corporation, which is in turn

indirectly controlled and owned as to approximately 24.89% by the Parent Company and

approximately 75.11% by other Independent Third Parties. Save for the shareholdings of the Parent

Company in both the Purchaser and the Charterer, the Purchaser is not related to the Charterer.

The Parent Company was established in the PRC in 1950. Since its establishment, the Parent

Company has had control over one of the largest fleets of ocean-going vessels in the PRC. The

shipping business of the Parent Company has benefited from the overall development in the world

economy and the integration of international trade over the past years. The Parent Company is one

of the largest state-owned transportation and logistics services companies in the PRC and is

directly owned by the SASAC. The Parent Company is the largest integrated logistics services

supplier in the PRC and its principal business consists of the provision of logistics services and

shipping business and its subsidiary business consists of the construction of ships.

GENERAL INFORMATION OF THE VENDOR AND THE GROUP

The Vendor is a wholly-owned subsidiary of the Company which is principally engaged in

oil tanker bareboat chartering business under finance lease.

The Company was incorporated in Hong Kong and the Shares are listed on the Main Board

of the Stock Exchange. The Group is one of the largest shipping companies in the PRC in terms of

self-owned dry bulk fleet size. The Company owns, manages and operates a modern dry bulk fleet

and a container fleet on a worldwide scale. The primary focus and core business of the Group is dry

bulk vessel chartering, which involves the chartering of self-owned vessels for the transportation

of dry bulk cargo, such as iron ore, coal, grain and steel products, along with major global trade

routes.

LISTING RULES IMPLICATIONS

As one of the applicable percentage ratios (as defined under the Listing Rules) (other than

the profits ratio which is disregarded due to an anomalous result) in respect of the Disposal exceeds

5% but less than 25%, the Disposal constitutes a discloseable transaction of the Company under

Chapter 14 of the Listing Rules. As the Purchaser is owned as to 49% by the Parent Company

which is a substantial shareholder of the Company as at the Latest Practicable Date, the Purchaser

is therefore a connected person of the Company under the Listing Rules. Accordingly, the Disposal

constitutes a connected transaction under the Listing Rules and the Disposal will be subject to

reporting, announcement and Independent Shareholders’ approval requirements under Chapter

14A of the Listing Rules.


– 9 –

The Independent Board Committee comprising all the independent non-executive Directors

has been formed to advise the Independent Shareholders in relation to the Agreement and the

transactions contemplated thereunder. Your attention is drawn to the letter of recommendation

from the Independent Board Committee set out on page 12 of this circular.

The Company has appointed Platinum Securities Company Limited as the independent

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

respect of the Agreement and the transactions contemplated thereunder. Your attention is drawn to

the letter of advice set out on pages 13 to 23 to this circular.

EXTRAORDINARY GENERAL MEETING

A notice convening the EGM to be held at the Diamond Ballroom, the Ritz-Carlton Hong

Kong, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong on Tuesday, 10

February 2015 at 11:00 a.m. is set out on pages EGM-1 to EGM-2 of this circular for the purpose

of considering and, if thought fit, passing the ordinary resolution as set out therein. Voting at the

EGM will be by poll.

A form of proxy for use by the Shareholders at the EGM is enclosed herewith. Whether or

not you are able to attend the EGM in person, you are requested to complete and return the

enclosed form of proxy in accordance with the instructions printed thereon and deposit at the

registered office of the Company at 21st Floor, Great Eagle Centre, 23 Harbour Road, Wanchai,

Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for

the holding of the EGM or any adjourned meeting thereof (as the case may be). Completion and

return of the form of proxy will not preclude you from attending and voting in person at the EGM

or any adjourned meeting thereof (as the case may be) should you so wish.

Pursuant to the articles of association of the Company, where there is any matter which

involves transaction(s) between the Company and (i) the Parent Company and/or its subsidiaries

and/or their respective associates; or (ii) any connected persons of the Company, it is to be

considered and voted solely by independent non-executive Directors. Accordingly, the executive

Directors including Mr. Li Hua and Ms. Feng Guoying and the non-executive Directors including

Mr. Li Zhen and Mr. Tian Zhongshan are required to abstain and have abstained from voting on the

relevant Board resolutions to approve the Agreement and the transactions contemplated

thereunder.

The Parent Company and its associates, who are beneficially interested in 2,718,520,000

Shares, approximately 68.10% of Shares issued as at the Latest Practicable Date. The Parent

Company and its associates are required to abstain from voting for the resolution approving the

Agreement and the transactions contemplated thereunder. Save as disclosed above, to the best of

the knowledge of the Directors, information and belief having made all reasonable enquiries, no

other Shareholders has a material interest in the Disposal. Accordingly, save for the Parent

Company and its associates, no other Shareholder is required to abstain from voting for the

resolution to approve the Agreement and the transactions contemplated thereunder.


– 10 –

CLOSURE OF REGISTER OF MEMBERS OF THE COMPANY

Shareholders whose names appear on the register of members of the Company on Tuesday,

10 February 2015 will be entitled to attend and vote at the EGM. The register of members of the

Company will be closed from Monday, 9 February 2015 to Tuesday, 10 February 2015 (both days

inclusive), during which period no transfer of Shares will be registered.

In order to be entitled to attend and vote at the EGM, all share certificates with completed

transfer forms must be lodged with the Company’s Share Registrar, Computershare Hong Kong

Investor Services Limited at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road

East, Wanchai, Hong Kong not later than 4:30 p.m. on Friday, 6 February 2015.

RECOMMENDATION

Your attention is drawn to the letter from the Independent Board Committee set out on page

12 of this circular which contains its recommendations to the Independent Shareholders on the

Agreement and the transactions contemplated thereunder and the letter of advice from the

Independent Financial Adviser which contains, amongst other matters, its advice to the

Independent Board Committee and the Independent Shareholders in relation to the Agreement and

the transactions contemplated thereunder as set out from pages 13 to 23 of this circular. Your

attention is also drawn to the valuation report of the Vessel as at 30 October 2014 which is set out

in Appendix I to the circular.

The Directors consider that the Agreement and the transactions contemplated thereunder are

entered into in the ordinary and usual course of business of the Company, on normal commercial

terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Accordingly, the Directors recommend the Independent Shareholders to vote in favour of the

relevant ordinary resolution to be proposed at the EGM.

Your attention is also drawn to the additional information set out in the appendices of this

circular.

By Order of the BoardSinotrans Shipping Limited

LI HUAExecutive Director


– 11 –


(Stock Code: 368)

21 January 2015

To the Independent Shareholders

Dear Sir or Madam,


We refer to the circular of the Company to the Shareholders dated 21 January 2015 (the“Circular”), in which this letter forms a part. Unless the context requires otherwise, capitalisedterms used in this letter will have the same meanings given to them in the Circular.

We have been authorised by the Board to form the Independent Board Committee to advisethe Independent Shareholders on whether the Agreement and the transactions contemplatedthereunder, are entered into on normal commercial terms, are fair and reasonable so far as theCompany and the Independent Shareholders are concerned, and in the interests of the Shareholdersas a whole.

We wish to draw your attention to the letter of advice from Platinum Securities CompanyLimited (the “Independent Financial Adviser”). The Independent Financial Adviser has beenappointed to advise the Independent Board Committee and the Independent Shareholders inrelation to the Agreement and the transactions contemplated thereunder, as set out on pages 13 to23 of the Circular and the letter from the Board set out on pages 4 to 11 of the Circular.

Having considered, among other matters, the terms of the Agreement, the factors andreasons considered by, and the opinion of the Independent Financial Adviser as stated in its letterof advice, we consider that the Agreement and the transactions contemplated thereunder, which areentered into in the ordinary and usual course of business of the Company, on normal commercialterms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinaryresolution in relation to the Agreement and the transactions contemplated thereunder, to beproposed at the EGM.

Yours faithfullyThe Independent Board Committee of

Sinotrans Shipping LimitedMr. Tsang Hing Lun

Mr. Lee Yip Wah, PeterMr. Zhou Qifang

Independent Non-executive Directors

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

– 12 –

The following is the text of the letter of advice from the Independent Financial Adviser to the

Independent Board Committee and the Independent Shareholders for the purpose of incorporation

into this circular.

21 January 2015

To the Independent Board Committee and the Independent Shareholders

Dear Sir or Madam,


INTRODUCTION

We refer to our engagement as the Independent Financial Adviser to advise the Independent

Board Committee and the Independent Shareholders in respect of the discloseable and connected

transaction (the “Transaction”) contemplated under the Agreement. Details of the Transaction are

contained in the letter from the Board as set out in the circular of the Company dated 21 January

2015 (the “Circular”). Terms used in this letter shall have the same meanings as defined in the

Circular unless the context requires otherwise.

In our capacity as the Independent Financial Adviser, our role is to advise the Independent

Board Committee and the Independent Shareholders as to whether the Transaction was in the

ordinary and usual course of business of the Company, the terms of the Transaction were agreed on

normal commercial terms and are fair and reasonable, and in the interests of the Company and the

Shareholders as a whole; and to give independent advice to the Independent Board Committee.

In formulating our opinion, we have relied on the information and facts supplied to us by the

Directors and/or management of the Company. We have reviewed, among other things: (i) the

announcement of the Company dated 31 December 2014 (the “Announcement”); (ii) the Valuation

Report prepared by the Beijing Golden Standard & Headmen Appraisal and Advisory Co., Ltd. (the

“PRC Valuer”) dated 29 December 2014; (iii) the Agreement; (iv) the audited 2013 annual report

of the Group (the “2013 Annual Report”); and (v) the unaudited 2014 interim report of the Group

(the “2014 Interim Report”).

LETTER FROM PLATINUM SECURITIES COMPANY LIMITED

– 13 –

We have assumed that all information, facts, opinions and representations contained in the

Circular are true, complete and accurate in all material respects and we have relied on the same.

The Directors have confirmed that they take full responsibility for the contents of the Circular and

have made all reasonable inquiries that no material facts have been omitted from the information

supplied to us.

We have no reason to suspect that any material facts or information have been withheld or to

doubt the truth, accuracy or completeness of the information of all facts as set out in the Circular

and of the information and representations provided to us by the Directors and/or management of

the Company. Furthermore, we have no reason to suspect the reasonableness of the opinions and

representations expressed by the Directors and/or management of the Company, which have been

provided to us. In line with normal practice, we have not, however, conducted a verification

process of the information supplied to us, nor have we conducted any independent in-depth

investigation into the business and affairs of the Company. We consider that we have reviewed

sufficient information to enable us to reach an informed view and to provide a reasonable basis for

our opinion regarding the Transaction.

During the past two years, Mr. Lenny Li, for and on behalf of Platinum Securities Company

Limited, signed the opinion letter from the independent financial adviser contained in the

Company’s circular dated 22 April 2014 in respect of (1) very substantial acquisition; (2)

connected transactions; and (3) continuing connected transactions. The past engagement was

limited to providing independent advisory services to the independent board committee and the

independent shareholders of the Company pursuant to the Listing Rules. Under the past

engagement, Platinum Securities Company Limited received normal professional fee from the

Company. Notwithstanding the past engagement, as at the Latest Practicable Date, we are

independent from, and are not associated with the Company or any other party to the Transaction,

or their respective substantial shareholder(s) or connected person(s), as defined under the Listing

Rules and accordingly, are considered eligible to give independent advice on the Transaction. We

will receive a fee from the Company for our role as the Independent Financial Adviser to the

Independent Board Committee and the Independent Shareholders in relation to the Transaction.

Apart from the normal professional fee payable to us in connection with this appointment, no

arrangements exist whereby we will receive any fees or benefits from the Company or any other

party to the Transaction or their respective substantial shareholder(s) or connected person(s), as

defined under the Listing Rules.

The Independent Board Committee, comprising Mr. Tsang Hing Lun, Mr. Lee Peter Yip Wah

and Mr. Zhou Qifang, has been established to advise the Independent Shareholders as to whether

the Transaction was entered into in the ordinary and usual course of business of the Company, the

terms of the Transaction were agreed on normal commercial terms and are fair and reasonable so

far as the Independent Shareholders are concerned and that the entering into the Transaction is in

the interests of the Company and the Shareholders as a whole.


– 14 –

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating and giving our independent financial advice to the Independent Board

Committee and the Independent Shareholders, we have taken into account the principal factors as

follows:

1. Background of the Transaction

The Board announced that on 31 December 2014, the Vendor entered into the

Agreement with the Purchaser, pursuant to which, the Vendor has agreed to sell and the

Purchaser has agreed to purchase the Vessel.

1.1 Background of the Group

The Group is one of the largest shipping companies in the PRC in terms of

self-owned dry bulk fleet size. The Company owns, manages and operates a modern

dry bulk fleet and a container fleet on a worldwide scale. The primary focus and core

business of the Group is dry bulk vessel chartering, which involves the chartering of

self-owned vessels for the transportation of dry bulk cargo, such as iron ore, coal,

grain and steel products, along major global trade routes.

1.2 Background of the Parent Company

The Parent Company was established in the PRC in 1950. Since its

establishment, the Parent Company has had control over one of the largest fleets of

ocean-going vessels in the PRC. The shipping business of the Parent Company has

benefited from the overall development in the world economy and the integration of

international trade over the past years. The Parent Company is one of the largest

state-owned transportation and logistics services companies in the PRC and is

directly owned by the SASAC. The Parent Company is the largest integrated logistics

services supplier in the PRC and its principal business consists of the provision of

logistics services and shipping business and its subsidiary business consists of the

construction of ships.

1.3 Background of the Purchaser

The Purchaser is, indirectly, owned as to 49% by the Parent Company and 51%

by China Merchants Energy Shipping Co., Ltd., an Independent Third Party. The

Purchaser is principally engaged in business of oil tanker services.


– 15 –

1.4 The Vessel

The Vessel is a 2008 built oil tanker, namely M/T “Yangtze Friendship”

(formerly known as M/T “GRAND SEA”). The size of the Vessel was about 310,444

DWT, which was classified as a very large crude oil carrier (“VLCC”). The

classification society/class is China Classification Society by Mitsui Engineering &

Shipbuilding Co., Ltd. (Chiba, Japan). The Vessel was acquired by the Company in

2011 at the consideration of US$100,000,000 (approximately HK$780,000,000). The

Vessel, at the time of its delivery, will be free from all registered mortgages, charters

and liens (including maritime liens) created by the Vendor (but excluding liens arising

as a result of actions of the ship managers).

According to the management accounts of the Group for the ten months ended

31 October 2014, the unaudited net book value of the Vessel as at 31 October 2014

was approximately US$61,805,000 (equivalent to approximately HK$482,079,000).

The net profits before and after taxation and extraordinary items attributable to

the Vessel for the financial years ended 31 December 2012 and 31 December 2013

were as follows:

Financialyear ended

31 December2013

Financialyear ended

31 December2012

Net profits before taxation and

extraordinary items

attributable to the Vessel

US$5,366,028

(equivalent to

approximately

HK$41,855,000)

US$5,628,562

(equivalent to

approximately

HK$43,903,000)

Net profits after taxation

and extraordinary items

attributable to the Vessel

US$4,490,017

(equivalent to

approximately

HK$35,022,000)

US$4,697,764

(equivalent to

approximately

HK$36,643,000)

However, as described in section below headed “Termination of the finance

lease of the Vessel”, due to the fact that the finance lease of the Vessel was terminated

on 30 October 2014, the Vessel will not generate sound return until the Company

enters into a new long-term charterer agreement for the Vessel.

2. Reasons for and benefits of the Transaction

2.1 The Group does not focus on the business of oil tanker services and instead, the

Group intends to focus more on dry bulk shipping business

The Group is one of China’s largest shipping companies in terms of self-owned

dry bulk fleet size, whose primary focus and core business is dry bulk shipping.


– 16 –

Table 1 below shows fleet size of respective business segments of dry bulk shipping,

container shipping and oil tanker shipping.

Table 1: fleet size of the business segments

Number of self-owned vesselsas the Latest Practicable Date

Dry bulk shipping 50Container shipping 11Oil tanker shipping 1

Source: Information provided by the management of the Company

As illustrated from the Table 1, the oil tanker shipping segment has only one

self-owned vessel, i.e. the Vessel, as compared to the dry bulk shipping segment

which has 50 self-owned vessels. In addition, income generated from the oil tanker

shipping business for the six months ended 30 June 2014 was only US$2.7 million in

comparison with revenue generated from the dry bulk shipping business for the six

months ended 30 June 2014 of more than US$106 million. We understand from the

management of the Company that since the Group is not principally engaged in the

business of oil tanker services and does not possess expertise in the operation of oil

tanker, therefore we concur with the management of the Company that the oil tanker

shipping business represents a significantly less important segment as compared to

the dry bulk shipping. As such, we are of the view that it is in the interests of the

Company and its shareholders as a whole to enter into the Agreement and focus more

on its dry bulk business.

Reference is made to the circular of the Company dated 22 April 2014 in

relation to the very substantial acquisition. The acquisition was subsequently

completed on 31 July 2014 and the Company’s self-owned fleet size of dry bulk

shipping was further enlarged by 4 vessels. On the other hand, self-owned fleet size of

oil tanker business has not been increased through this transaction. We consider it

further demonstrates the Company’s greater and continued focus on its core business

of dry bulk shipping.


– 17 –

By entering into the Agreement, the sale proceeds from the Disposal willprovide additional funding to the Group by enhancing cashflow of the Group, whichcould be used for general working capital purposes and for any future acquisition ofnew vessels when suitable opportunities arise.

2.2 Uncertain outlook of the oil tanker industry

The oil tanker industry may continue to face pressure owing to the subdueddemand. According to the research report issued by Clarkson (one of the world’sleading providers of integrated shipping services) in the fourth quarter of 2014, totalcrude trade volumes are expected to decline slightly in 2014, due to imports to manyOECD countries declining. Therefore, we consider that there remain uncertainties forthe oil tanker market.

We have reviewed the VLCC spot earnings rates of the past two years fromJanuary 2013 to December 2014, which is the one of the key benchmarks for the oiltanker industry. We noted that VLCC spot rates fluctuated between the lower end ofapproximately US$3,000 per day in February 2013 and upper end of approximatelyUS$46,000 per day in December 2013. In December 2014, the VLCC spot ratesfurther dropped to approximately US$40,000 per day, representing a 13% decreaseyear-on-year. During the review period of the past two years, there was a hugedifference between the lower end and the upper end of VLCC spot earnings rateswhich implies an uncertain oil tanker market.

Given the uncertain outlook of oil tanker industry and the fluctuation of theVLCC spot rates, we concur with the management of the Company that it is in theinterest of the Company to focus less on oil tanker business through disposal of theVessel.

2.3 Termination of the finance lease of the Vessel

Reference is made to the Company’s (i) circular dated 28 March 2011 inrelation to the Finance Lease Arrangement entered into between the Company and JiSheng Marine Limited, a wholly-owned subsidiary of Nanjing Tanker Corporation;(ii) announcement dated 30 September 2014 in relation to an update of the FinanceLease Arrangement; (iii) announcement dated 30 October 2014 in relation to thetermination of the Finance Lease Arrangement. With the Charterer having sufferedserious loss and failed to meet its obligation under the terms of the Finance LeaseAgreement as a result of the prolonged downturn of the oil tanker market condition,pursuant to the terms of the Finance Lease Agreement, the Company has exercised itsrights to terminate the Finance Lease Arrangement and withdraw the Vessel from theservice of the Charterer on 30 October 2014. We also understand from themanagement of the Company that on 16 January 2015, the Company reached anagreement with the Charterer that the Company will enter into a settlement agreementwith the Charterer on or before March 2015 pursuant to which the Charterer wouldpay the Company an amount of approximately US$36,000,000 on or before 31December 2015. If the Charterer fails to settle the compensation under the settlementagreement, the Company will negotiate with the Charterer and/or seek legal advice onthe potential legal actions to be taken by the Company so as to recover thecompensation.


– 18 –

The Company has not considered to enter into a new finance lease arrangement

in respect of the Vessel as the Company will receive the total consideration upon

disposal of the Vessel as contemplated under the Disposal instead of by installments

as in the case of finance lease arrangement. Furthermore, due to the uncertain oil

tanker market condition, the management of the Company considers it will be

difficult for the Company to find a new charterer, who possesses sound

creditworthiness, at similar level of charter hire rate for similar charter period.

Therefore, in order to avoid future losses, the management of the Company

considered disposal of the Vessel is reasonable to realise the investment immediately.

3. Principal terms of the Transaction

3.1 The Agreement

Detailed terms of the Agreement have been contained in the letter from the

Board as set out in the Circular.

3.2 Basis in determining the Consideration

As stated in the letter from the Board in the Circular, the Consideration is

based on normal commercial terms after arm’s length negotiations between the

Purchaser and the Vendor and was determined after taking into account (i) the market

intelligence that the Group has gathered from its own analysis of recently concluded

sale and purchase of vessels of comparable size and year of built in the market; (ii) the

net book value of the Vessel of approximately US$61,805,000 (equivalent to

HK$482,079,000) as at 31 October 2014; and (iii) the valuation of the Vessel as at 30

October 2014 of approximately US$61,805,000 (equivalent to HK$482,079,000) as

appraised by the PRC Valuer.

To assess the basis in determining the Consideration, we have reviewed the

Valuation Report, discussed with the PRC Valuer and enquired the management of the

Company. We noted and discussed with the PRC Valuer that they had considered three

general accepted valuation approaches, i.e. cost approach, income approach and

market approach.

For the valuation of the Vessel, the PRC Valuer have adopted the market

approach as there are relatively large number of transactions to be used as market

comparables similar to the Vessel and the PRC Valuer therefore consider that the

market approach produces a more reliable estimation of the market value rather than

the cost approach and the income approach which are less direct in estimating value

in a transaction. Therefore, the PRC Valuer relied solely on the market approach in

the valuation of the Vessel. The PRC Valuer has used the market approach to

determine the market value of the Vessel by referencing comparable sales evidence of

similar vessels, in terms of function, size, condition and age, with adjustments for the

size, condition and age of the Vessel.


– 19 –

We have obtained and reviewed the information of the aforesaid comparabletransactions and noted that the comparable transactions that chosen by the PRCValuer are similar to that of the Vessel (in terms of size and age of vessel) and the dateof such comparable transactions are the most recent (i.e. within the six months fromthe valuation date) among all the other comparable transactions.

The market value of the Vessel is defined as the estimated amount for which anasset or liability should exchange on the valuation date between a willing buyer and awilling seller in an arm’s-length transaction after proper marketing and where theparties had each acted knowledgeably, prudently and without compulsion. Inconducting the valuation of the Vessel, the PRC Valuer has also adopted the followingassumptions:

– The general economic environment will not change substantially;

– There will be no significant change in the taxation policies; and

– The PRC Valuer did not take into account the inflation factor.

In order to assess the fairness and reasonableness of the above assumptions, wehave also discussed with the PRC Valuer regarding the major assumptions made in thevaluation process and noted that these are normal assumptions in relation to thevaluation of vessels.

Besides, we have discussed with the PRC Valuer in relation to their experiencesand understood that the PRC Valuer is an independent valuers approved by theMinistry of Finance the PRC and China Securities Regulatory Commission. The PRCValuer has extensive experience in valuing various tangible and intangible properties.It is currently equipped with approximately 80 Chinese Certified Public Valuers and 5members of Royal Institution of Chartered Surveyors (“RICS”). We also understoodthat Mr. Yu Yuexin, the president of the PRC Valuer, has the qualification of CertifiedPublic Valuer and the member of RICS and over 20 years of experience in the field ofappraisal, and Mr. Luo Junjun, the vice president of the PRC Valuer, has thequalification of Certified Public Valuer and over 10 years of experience in the field ofappraisal. According to the “RICS Valuation – Professional Standards” published byRICS, practical experience is one of the way to test whether an individual isappropriately qualified to accept the responsibility for a valuation. Given that Mr. YuYuexin and Mr. Luo Junjun have plenty of practical experience in the valuation asstated above, we are of the view that they are qualified to provide a reliable valuationfor the Vessel. As discussed with the PRC Valuer, they have no current or priorrelationships with other parties and connected persons to the Transaction over thepast two years.

Given (i) the market approach is a commonly adopted and well recognisedmethodology for valuing vessels; (ii) the major assumptions made in connection withthe valuation approach are reasonable; and (iii) the PRC Valuer is qualified andappropriate to provide a reliable valuation for the Vessel, we are of the view that thebasis in determining the Consideration is fair and reasonable so far as the Companyand the Shareholders as a whole are concerned.


– 20 –

4. Financial Impacts of the Transaction

4.1 Effect on net asset value

As disclosed in the 2014 Interim Report, the unaudited net asset value (the

“NAV”) attributable to the Shareholders as at 30 June 2014 was US$2,185.0 million.

According to the management of the Company, the net proceeds of the Disposal is

US$61,805,000 (equivalent to approximately HK$482,079,000). Subject to audit, it

is estimated that the Group will not record any gain or loss from the Disposal. As

such, the Transaction will not have a direct impact on the NAV attributable to the

Shareholders.

The management of the Company expects that the Group would possibly

generate better return by focusing its investment on dry bulk shipping business, which

the overall market condition is improving.

As such, we consider that the Transaction will have a potential positive effect

on the NAV of the Group.

4.2 Effect on earnings

As disclosed in the 2014 Interim Report, the unaudited profit attributable to the

Shareholders was US$10.0 million for the six months ended 30 June 2014. With

reference to the announcement dated 30 September 2014 in relation to an update of

the Finance Lease Arrangement and the announcement dated 30 October 2014 in

relation to the termination of the Finance Lease Arrangement, the Company has

exercised its rights to terminate the Finance Lease Arrangement and withdraw the

Vessel from the service of the Charterer on 30 October 2014. Without the Disposal,

the Company may suffer loss attributable to the Vessel as there will be no sound return

generated by the Vessel but depreciation expense and other maintenance costs, if

there is no new charterer being identified for the Vessel. Therefore, we consider that

the Disposal may avoid incurring future loss.

According to the management of the Company, the Group will not record any

gain or loss from the Disposal, but sale proceeds from the Disposal will provide

additional funding to the Group for working capital purpose by enhancing cashflow

of the Group and for any future acquisition of new vessels when suitable

opportunities arise.

Therefore, we consider that the Transaction will have no immediate direct

effect on the earnings of the Group but may limit any future losses arising from

owning the Vessel.


– 21 –

4.3 Effect on cash/working capital

As disclosed in the 2014 Interim Report, the Group had current assets of

approximately US$936.8 million (including cash and bank balances of US$863.4

million) and current liability of US$28.4 million as at 30 June 2014. As the Directors

confirmed that the net proceeds from the Transaction would increase the Group’s

bank balance and cash before the Group utilises them for general working capital

purposes and exploring other investment opportunities, we consider that the cash

position and the working capital of the Group will be strengthened upon completion

of the Transaction.

Therefore, we consider that the Transaction will have a positive effect on the

cash position and the working capital of the Group.

In light of:

(i) the potential positive effect on the NAV of the Group;

(ii) no immediate direct effect on the earnings of the Group but may limit

any future losses arising from owning the Vessel; and

(iii) the positive effect on the cash position and the working capital of the

Group,

we are of the view that the Transaction will have an overall positive financial effect on

the Group and is in the interests of the Company and the Shareholders as a whole.

RECOMMENDATION

In relation to the Transaction, we have considered the above principal factors and reasons, in

particular, having taken into account the following in arriving at our opinion:

(i) the Transaction is in the ordinary and usual course of business of the Company and it

is in line with the Group’s overall business strategy;

(ii) the reasons for and benefits of the Transaction are in the interests of the Company and

the Shareholders as a whole;

(iii) the basis in determining the Consideration is fair and reasonable so far as the

Company and the Shareholders as a whole are concerned;

(iv) the Consideration is fair and reasonable so far as the Independent Shareholders are

concerned; and

(v) the Transaction will have an overall positive financial effect on the Group and is in the

interests of the Company and the Shareholders as a whole.


– 22 –

Having considered the above, we are of the view that the Transaction is in ordinary and usual

course of business of the Company and it is in line with the Group’s overall business strategy, and

the terms of the Transaction were agreed on normal commercial terms and are fair and reasonable

and in the interests of the Company and the Shareholders as a whole.

Accordingly, we advise the Independent Board Committee to recommend, and we ourselves

recommend the Independent Shareholders to vote in favour of the ordinary resolution in relation to

the Transaction to be proposed at the EGM.

Yours faithfully,

For and on behalf of

Platinum Securities Company Limited

Lenny Li

Director and Co-head of Corporate Finance

Mr. Lenny Li is a licensed person registered with the Securities and Futures Commission and

as a responsible officer of Platinum Securities Company Limited to carry out Type 1 (dealing in

securities) and Type 6 (advising on corporate finance) regulated activities under the SFO and has

over eight years of experience in corporate finance industry.


– 23 –

The following is the text of the valuation report, prepared for the purpose of inclusion in this

circular received from Beijing Golden Standard & Headman Appraisal and Advisory Co., Ltd.

Asset Valuation Report

In respect of the Proposed Transfer of the“Yangtze Friendship” Oil Tanker byGRAND SEA SHIPPING LIMITED

Da Zheng Hai Di Ren Ping Bao Zi (2014) No. 441A

(Volume 1, Book 1)

Beijing Golden Standard & Headman Appraisal and Advisory Co., Ltd.

29 December 2014

APPENDIX I VALUATION REPORT OF THE VESSEL AS AT 30 OCTOBER 2014

– I-1 –

CONTENTS

Disclaimer of the Asset Valuation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

Summary of the Asset Valuation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4

Full Text of the Asset Valuation Report

I. The Principal, the Title Holder and the Valuation Report Users . . . . . . . . . . . I-6

II. Valuation Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7

III. Subject and Scope of Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7

IV. Type and Definition of Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7

V. Valuation Base Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7

VI. Basis of Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8

VII. Valuation Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9

VIII. Implementation Process and Conditions for the Valuation Procedures . . . . . . I-10

IX. Valuation Hypothesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11

X. Valuation Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12

XI. Special Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12

XII. Restrictions on the Usage of the Valuation Report . . . . . . . . . . . . . . . . . . . . I-13

XIII. Valuation Reporting Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-14


– I-2 –

Disclaimer of the Asset Valuation Report

This asset valuation report is prepared by our valuers on the basis of due and thorough check

and verification as well as upon performance of necessary valuation procedures such as valuations

and estimation in respect of all of the assets involved within the scope of the valuation. With regard

to this valuation report, we hereby in particular make the following statements:

I. The certified asset valuer carries out assets valuation based on the relevant laws and

regulations and the asset valuation standards on the principle of independence,

objectiveness and fairness. Based on the information collected in the course of our

practice, the statements in the valuation report are objective, and we assume

corresponding legal responsibilities for the reasonableness on the conclusion of the

valuation.

II. Lists of appraised assets have been provided and declared by the principal and the

asset ownership party with their signatures and seals. The principal and the related

parties shall be responsible for the authenticity, legality, and completeness of the data

provided as well as the appropriate usage of the valuation report.

III. The certified asset valuer does not have existing or prospective interests in the subject

matter of this valuation report; and the certified asset valuer has no existing or

prospective interests with the principal and any related parties or any bias towards the

principal and any related parties.

IV. The certified asset valuer and other valuers have carried out on-site investigation on

the subject matter of the valuation and the related assets thereof that are mentioned in

the valuation report. We have paid due attention to the legal ownership of the subject

matter of the valuation and the assets thereof. We have verified the legal ownership of

the subject matter of the valuation and the assets thereof and faithfully disclosed any

findings. We have also requested the principal and the related parties to fulfill their

property ownership formalities so as to meet the requirements for issuing the report,

but do not give any form of guarantee as to the legal title of the subject matter of the

valuation.

V. The analysis, judgment, and conclusions in the valuation report are restricted by the

assumptions and limiting conditions set out in the valuation report. Users of this

report shall give due consideration to the assumptions, limiting conditions, and

explanations for specific issues stated in the valuation report as well as their impacts

on the valuation conclusions.

VI. The issued valuation report and the disclosure of the valuation conclusion therein are

limited to the valuation purpose as stated in the valuation report. They are effective

for use during the effective period of the valuation conclusion. The certified asset

valuer signing this report and the valuation institution are not responsible for any

consequences from any misuse thereof.


– I-3 –

Summary of the Asset Valuation Report



IMPORTANT NOTE

This summary is extracted from the text of the valuation report. Fordetails of this valuation project and reasonable understanding of thevaluation conclusions, please read the full text of the valuation reportcarefully.

Beijing Golden Standard & Headmen Appraisal and Advisory Co., Ltd. accepted the

entrustment from GRAND SEA SHIPPING LIMITED, in accordance with relevant laws,

regulations and asset valuation standards of the State, observing the independent, objective and

fair principles, to conduct a valuation on the “Yangtze Friendship” Oil Tanker owned by GRAND

SEA SHIPPING LIMITED and involved in the proposed transfer of assets by GRAND SEA

SHIPPING LIMITED.

The subject and scope of this valuation are the “Yangtze Friendship” Oil Tanker owned by

GRAND SEA SHIPPING LIMITED. The value type for the valuation is market value. The

valuation base date is 30 October 2014.

The valuer followed through the necessary valuation procedures, taking the continuous use

of assets and open market as a basis, the market approach was adopted to make valuation and

estimations.

As on the valuation base date, being 30 October 2014, the valuation result of the “Yangtze

Friendship” Oil Tanker owned by GRAND SEA SHIPPING LIMITED was US$61,805,000.


– I-4 –

Summary Table of Asset Valuation Result

Unit: USD10,000

ItemBookvalue

Appraisedvalue

Appreciation/Depreciation

Appreciationrate %

A B C = B-A D = C/A×100%

1 The “Yangtze Friendship”

Oil Tanker

– 6,180.50 6,180.50 –

2 Total assets – 6,180.50 6,180.50 –


Unit: RMB10,000

ItemBookvalue

Appraisedvalue


Appreciationrate %

A B C = B-A D = C/A×100%


Oil Tanker

– 37,983.50 37,983.50 –

2 Total assets – 37,983.50 37,983.50 –

The valuer has made explanations of special issues on the Valuation Report in relation to the

restricted matters of the valuation procedures found during the valuation process, to which users of

the Report should pay attention.

The valuation conclusions of this Report will be valid for one year from the valuation base

date, that is, from the date of asset valuation, 30 October 2014 to 29 October 2015.

The valuation reporting date is 29 December 2014.

The above content is extracted from the text of the valuation report. For details of this

valuation and reasonable understanding of the valuation conclusions, please read the full text of

the valuation report carefully.


– I-5 –

Full Text of the Asset Valuation Report



GRAND SEA SHIPPING LIMITED:

Beijing Golden Standard & Headmen Appraisal and Advisory Co., Ltd. accepted the

entrustment from your Company, in accordance with relevant laws, regulations and asset valuation

standards, asset valuation principles of the State, observing the independent, objective and fair

principles, to conduct an appraisal on the market value of the “Yangtze Friendship” Oil Tanker

owned by GRAND SEA SHIPPING LIMITED and involved in the proposed transfer of assets by

GRAND SEA SHIPPING LIMITED as of 30 October 2014 by using the market approach. The

valuer has performed necessary valuation procedures. The valuation report is hereby summarised

as follows:

I. THE PRINCIPAL, THE TITLE HOLDER AND THE VALUATION REPORTUSERS

The Principal and the Title Holder were GRAND SEA SHIPPING LIMITED. The

Valuation Report Users were the Principal and other valuation report users stipulated by the

State laws and regulations.

(I) Information of the Principal

1. Overview:

Name of company: GRAND SEA SHIPPING LIMITED

Legal representative: Li Hua (李樺)

Corporate domicile: 21/F, Great Eagle Centre, No. 23 HarbourRoad, Wan Chai, Hong Kong

Business scope: Shipping and related businesses.

Ownership structure: Marine Peace Shipowning Ltd holding100% equity interest of GRAND SEASHIPPING LIMITED. Sinotrans & CSCHoldings Co. Ltd. indirectly holds MarinePeace Shipowning Ltd.


– I-6 –

(II) Relationship between the Principal and the Title Holder

The Principal and the Title Holder were GRAND SEA SHIPPING LIMITED.

II. VALUATION PURPOSE

The purpose of this valuation was to provide the market value of the “Yangtze

Friendship” Oil Tanker owned by GRAND SEA SHIPPING LIMITED as of the valuation

base date by undergoing an appraisal so as to offer a reference value in the proposed transfer

of the “Yangtze Friendship” Oil Tanker.

Document on Economic Behaviors involved in this valuation is:

Resolutions of the Board of GRAND SEA SHIPPING LIMITED on 30 October 2014.

III. SUBJECT AND SCOPE OF VALUATION

The subject and scope of this valuation are the “Yangtze Friendship” Oil Tanker

owned by GRAND SEA SHIPPING LIMITED.

The “Yangtze Friendship” VLCC was built by the Japanese MTISUI ENGINEERING

& SHIPBUILDING CO., LTD. in March 2008. With a total vessel’s main dimensions length

of 323 m, width 60 m, depth 28.8 m, DWT of about 312,000 tons, the hull was entirely

welded with steel; the main engine is of one MAN B & W 7S80MC-C type diesel engine; a

total of three sets of generators, prime mover consists of two 8N21AL-EV type diesel engine

and one Shinko RG64-M type diesel engine. The vessel operates normally and is managed

with practices and its daily maintenance is good.

The subject and scope of this valuation are consistent with those confirmed in the

entrustment.

IV. TYPE AND DEFINITION OF VALUE

Pursuant to relevant conditions such as economic behavior and valuation purpose, the

value type of this valuation is market value. Market value refers to the estimated amount of

the valuation target on the valuation base date in a normal arm’s length transaction that the

free-will buyer and free-will seller conduct a transaction rationally not subject to duress.

V. VALUATION BASE DATE

The valuation base date of this project is 30 October 2014.

The valuation base date was determined by the principal. Factors such as the end of

accounting period and favorability of realizing such economic behavior were taken into

consideration of the determination of the valuation base date.


– I-7 –

The evaluated price standards during the valuation were the effective price standards

as at the valuation base date.

VI. BASIS OF VALUATION

(I) Basis of Economic Behavior

Resolutions of the Board of GRAND SEA SHIPPING LIMITED on 30 October

2014.

(II) Basis of Laws and Regulations

1. “Administrative Measures on Appraisal of State-owned Assets” (1991,

Order No. 91 of the Stat Council of the People’s Republic of China);

2. “Detailed Rules for the Implementation of the Administrative Measures

for State-owned Asset Assessments” (Guo Zi Ban Fa [1992] No. 36);

3. “Administration Measures on Appraisal of the State-owned Assets of

Enterprises” (2005, Order No. 12 of the SASAC of the State Council);

4. “Notice of Certain Issues on Strengthening Administration on

State-owned Assets Appraisal” (Guo Zi Wei Chan Quan [2006] No.

274);

5. Other relevant laws, regulations, rules and systems related to appraisal

work.

(III) Basis of Valuation Standards

1. “Asset Valuation Standards – Basic Standards” (MOF Cai Qi (2004) No.

20);

2. “Ethical Norms for Assets Valuation – Basic Norms” (MOF Cai Qi

(2004) No. 20);

3. “Asset Valuation Standards – Valuation Report” (Zhong Ping Xie [2007]

No. 189);

4. “Asset Valuation Standards –Valuation Process” (Zhong Ping Xie [2007]

No. 189);

5. “Asset Valuation Standards – Machinery & Equipment” (Zhong Ping Xie

[2008] No. 217);

6. “Guidelines on Valuation Report of State-Owned Assets of Enterprises”

(Zhong Ping Xie [2008] No. 218);


– I-8 –

7. “Guidelines on Valuation Report of Institutional Business Quality

Control” (《評估機構業務質量控制指南》) (Zhong Ping Xie [2010] No.

214);

8. “Guidelines for Certified Assets Valuers Concerning Legal Ownership

of Evaluation Object Ref No: [2003] No. 18) (《註冊資產評估師關注評估對象法律權屬指導意見》) (中注協會協[2003]No. 18));

9. “Guidelines on Type of Value on Asset Valuation” (《資產評估價值類型指導意見》) (Zhong Ping Xie [2007] No. 189).

(IV) Basis of Asset Ownership

1. Vessel Ownership Registration Certificate (船舶所有權登記證書);

2. Nationality Certificate (船舶國籍證書);

3. Other property rights documents.

(V) Basis of Valuation Pricing

1. Introduction to vessels (《船舶概論》);

2. List of materials and equipment of vessel and technical specification

table etc. provided by the appraised party;

3. List of assets and other information provided by the appraised party;

4. “Table of Interest Rate on Loan of the People’s Bank of China”

(implemented from 6 July 2012);

5. “Common Data and Parameters for Asset Valuation” (《資產評估常用數據與參數手冊》);

6. Market information, economic data of the industry and macroeconomy

information collected by the valuers;

7. Other reference materials.

VII. VALUATION METHODS

Asset valuation approaches mainly comprise the cost approach, income approach and

market approach. In analyzing the available information in accordance with the purposes of

this valuation and based on the valuation of the characteristics of the valuation object, the

trading market of vessels is considered to be relatively active. There are readily identifiable

market comparable transactions in this valuation and the conditions for adopting the market

approach are satisfied. Thus, the market approach is adopted in this valuation.


– I-9 –

Market approach refers to the valuation method which determines the value of thevaluation object by comparing it with comparable transaction cases.

The market price of the valuation object is estimated by comparisons and revisionsanalysis on factors that affect the market price of vessels in accordance with the condition ofthe valuation object and the comparable cases, which were more relevant and substitutionalto the valuation object in the recent second-hand vessel trading market.

VIII. IMPLEMENTATION PROCESS AND CONDITIONS FOR THE VALUATIONPROCEDURES

Beijing Golden Standard & Headman Appraisal and Advisory Co., Ltd. accepted theentrustment from GRAND SEA SHIPPING LIMITED to evaluate the “Yangtze Friendship”Oil Tanker held by GRAND SEA SHIPPING LIMITED and the valuation base date wasagreed to set on 30 October 2014. Beijing Golden Standard & Headman Appraisal andAdvisory Co., Ltd. prepared the valuation plans and decided the valuation processes. Thevaluation procedures are mainly as follows:

(I) Preparation stage before the valuation

1. Negotiated and agreed with the Principal and the Title Holder on basicissues including the valuation purpose, the scope of valuation, thevaluation base date of this valuation and signed the “BusinessEngagement Letter” with the Principal, and a work plan was formulated;

2. Coordinated with the Title Holder to complete tasks such as conductingasset inventory inspection and filling in the “Asset Valuation DetailsForm”. Valuation team staff paid on-site visit to have an initialunderstanding on the entrusted assets and assisted the enterprise toconduct the asset report work for conducting asset valuation, and tocollect documents and information as required by the asset valuation.

(II) On-site Verification and Valuation Stage

1. To listen to the relevant staff from the Principal and the appraised partyto give an introduction to the general enterprise status and the historyand current of the appraised assets, to understand the financial system,fixed asset technology and other information of the enterprise;

2. To verify the “Asset Valuation Details Form” and relevant financialrecords and data as provided by the appraised party, and to coordinatewith the appraised party to make adjustments when problems are found;

3. To conduct verification on fixed assets listed on the “Asset ValuationDetails Form” based on the requirements of the asset valuation;

4. To review and collect property certification documents of the appraisedassets;


– I-10 –

5. To confirm the actual valuation methods according to the actual

situation and characteristics of the appraised assets;

6. To review and collect technical information and collection information

of the relevant assets; to conduct market research, survey and collect

relevant information and price information;

7. To make an initial valuation and calculation of the assets within the

scope of valuation.

(III) Valuation Summary Stage

To compile an initial analysis and summary of various types of assets, to make

necessary adjustments, amendments and improves on the valuation results.

(IV) Preparation and Submission Stage of the Valuation Report

To compile asset valuation report, and to exchange opinions on the valuation

draft with the principal. After make comprehensive consideration of relevant

opinions, amendments and corrections were made to the valuation report according to

the internal three-tier audit system and procedures of the valuation authority, and to

provide the official asset valuation report.

IX. VALUATION HYPOTHESIS

(1) Hypothesis on transaction;

(2) Hypothesis on open market;

(3) Hypothesis on continuous use of assets;

(4) The existing macroeconomy would have no substantial changes;

(5) The social economy environment where the parties are in, and policies such as

tax and tax rate would have no substantial changes;

(6) The parties are unanimous in scope and approach of business and outlook on

the basis of existing administrative strategies and standards;

(7) This valuation does not consider the effect of inflation.

The valuer determined that these hypotheses were tenable on valuation base date

pursuant to the requirement of asset appraisal. Should there be any material changes in the

future economic environment or any changes in the preceding conditions, the valuer would

not be liable for the difference in appraisal results arising from any changed preceding

conditions.


– I-11 –

X. VALUATION CONCLUSIONS

Based on the implementation of the above valuation procedures and methods and on

the premise of continuing utilization, as of the Valuation Base Date (30 October 2014), the

valuation result of the “Yangtze Friendship” Oil Tanker held by GRAND SEA SHIPPING

LIMITED was US$61,805,000. The result of asset valuation is as follows:


Unit: US$10,000

ItemsBookvalue

Appraisedvalue


Appreciationrate %

A B C=B-A D=C/A×100%


Oil Tanker

– 6,180.50 6,180.50 –

2 Total assets – 6,180.50 6,180.50 –


Unit：RMB10,000

ItemsBookvalue

Appraisedvalue


Appreciationrate %

A B C=B-A D=C/A×100%


Oil Tanker

– 37,983.50 37,983.50 –

2 Total assets – 37,983.50 37,983.50 –

XI. SPECIAL MATTERS

(i) For the conclusion of this valuation report, the complete market value of the

“Yangtze Friendship” Oil Tanker at the valuation base date was valued. This

valuation does not consider the “Yangtze Friendship” Oil Tanker’s possible

relevant outstanding payables and taxes as at the valuation base date.

(ii) The conclusion of this valuation report does not consider the “Yangtze

Friendship” Oil Tanker’s possible relevant taxes arising from the transfer

transaction.

(iii) Circumstances where valuation procedures may be subject to restrictions

The title holder did not provide the book value of the “Yangtze Friendship” Oil

Tanker in this valuation, so the valuer of this valuation was unable to verify the book

value of the “Yangtze Friendship” Oil Tanker.


– I-12 –

(iv) Major matters after valuation base date

With due diligence, the valuer did not find any major matter that may have

significant influence on the valuation conclusions from the valuation base date to the

valuation reporting date. After the valuation base date and during the validity of the

valuation conclusions, in case of any change in the quantity and valuation standard of

the assets, the following principles will apply:

1. In case the quantity of assets changes, the amount of assets shall be

adjusted accordingly based on the original valuation approach;

2. In case the price standard of assets changes and has an obvious impact

on the appraised value of assets, the principal shall engage a qualified

appraisal agency to re-determine the appraised value in a timely manner;

3. For any change in the quantity and price standard of assets after the

valuation base date, the principal shall take due considerations and make

adjustment accordingly during actual valuation.

(v) The appraisal agency and valuer disclaim any liability for the defects of the

business which may affect the appraised value of the asset, but no special notes

were made at the time of entrustment and the valuer cannot know them even

after performing the valuation procedures.

For the said special matters, the valuer would like to draw the attention of the

report users.

XII. RESTRICTIONS ON THE USAGE OF THE VALUATION REPORT

(i) This valuation report can only be used for the valuation purpose as indicated

herein other than other purposes. The undersigned valuer and his appraisal

agency disclaim any liability for the results caused by improper use;

(ii) This valuation report can be used only by the valuation report users agreed in

the asset valuation agreement between Beijing Golden Standard & Headmen

Appraisal and Advisory Co., Ltd. and the principal as well as those under the

State laws and regulations;

(iii) The valuation conclusions shall not be used before the valuation report is

approved or filed;

(iv) All or part of the valuation report shall not be extracted, cited or disclosed to

the public media without the consent of the appraisal agency;


– I-13 –

(v) In case there are no significant changes in the market conditions or asset

condition since the valuation base date, the valuation conclusions of the report

will be valid for one year from the valuation base date, that is from the date of

asset valuation 30 October 2014 to 29 October 2015;

(vi) In case any policy adjustment has major impact on the valuation conclusions,

the valuation base date shall be re-determined for valuation.

XIII. VALUATION REPORTING DATE

The valuation reporting date is 29 December 2014.

Beijing Golden Standard & Headmen Appraisal and Advisory Co., Ltd.

Legal Representative: Ms. Chen Dongmei

Certified Asset Valuers: Mr. Yu Yuexin and Mr. Luo Junjun

29 December 2014

Note:

Beijing Golden Standard & Headmen Appraisal and Advisory Co., Ltd. (hereinafter referred to as “GSHAA”) was founded

in 1997. It owns the securities assets appraisal qualification granted by the MOF China and CSRC, the exploration and

mining right appraisal qualification granted by the Ministry of Land and Resources, the land planning qualification granted

by BLSS, and price appraisal qualification granted by NDRC etc. Beijing Golden Standard & Headmen Appraisal and

Advisory Co., Ltd. is currently equipped with approximately 80 Chinese CPVs and 5 members of the Royal Institution of

Chartered Surveyors, and has branches and agencies in Shandong, Shenzhen, Shanxi, Shaanxi and Shanghai etc. The

comprehensive strength ranks top 15 in the Chinese appraisal industry.

Mr. Yu Yuexin, born in October 1963. He graduated from Wuhan University of Technology in 1985. Mr. Yu has the

qualification of Certified Public Valuer and the member of Royal Institution of Chartered Surveyors, etc. He has over 20

years of experience in the field of appraisal. From July 1985 to May 1994, he took office as senior engineer in Design &

Research Institute of Ministry of machine building industry. He joined Chesterton Petty. Ltd as the general manager of

China region in June 1994. He joined Sallmanns (Far East) Limited as President of China region in June 2007. Mr. Yu held

the posts of President in Golden Standard & Headmen Appraisal and Advisor Co., Ltd since November 2009.

Mr. Luo Junjun, born in August 1972. He was appointed as Vice President of Golden Standard & Headmen Appraisal and

Advisor Co., Ltd in June 2012. Mr. Luo graduated from Wuhan Institute of Technology in 1995. He got a Degree of

Bachelor of Engineering and the qualification of Certified Public Valuer. He has over 10 years of experience in the field of

appraisal. From May 2004 to May 2009, Mr. Luo served as assistant appraiser, project manager and department manager of

appraisement in Beijing Northen Yashi Assets Appraisal Co., Ltd. He joined Golden Standard & Headmen Appraisal and

Advisor Co., Ltd since June 2009. He successively held the posts of senior project manager, department manager of

appraisement, assistant to the general manager, from June 2012 he promoted to Vice President.


– I-14 –

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept fullresponsibility, includes particulars given in compliance with the Listing Rules for the purpose ofgiving information with regard to the Company. The Directors, having made all reasonableenquiries, confirm that to the best of their knowledge and belief the information contained in thiscircular is accurate and complete in all material respects and not misleading or deceptive, there areno other matters the omission of which would make any statement herein or this circularmisleading.

2. DISCLOSURE OF INTERESTS

(a) Directors’ Interests and Short Positions

As at the Latest Practicable Date, none of the Directors or the chief executive of theCompany had any interests and short positions in the Shares, underlying Shares anddebentures of the Company and its associated corporations (within the meaning of Part XVof the SFO) which were required to be notified to the Company and the Stock Exchangepursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positionswhich the Directors or the chief executive of the Company were taken or deemed to haveunder provisions of the SFO), or which were required, pursuant to section 352 of the SFO, tobe entered in the register referred to therein, or which were required, pursuant to the ModelCode for Securities Transactions by Directors of Listed Companies contained in the ListingRules, to be notified to the Company and the Stock Exchange.

(b) Substantial Shareholders’ Interest

As at the Latest Practicable Date, so far as is known to any Director or the chiefexecutive of the Company, the following persons (other than the Directors or chief executiveof the Company) had interests or short positions in the Shares or underlying Shares of theCompany as recorded in the register kept by the Company pursuant to section 336 of theSFO which would fall to be disclosed to the Company under the provisions of Divisions 2and 3 of Part XV of the SFO.

Long positions in the Shares and underlying Shares of the Company

Name of substantialshareholders

Capacity andnature ofinterests

Number ofShares held

Approximatepercentage ofshareholding

The Parent Company (Note 1) Interest ofcontrolledcorporation

2,718,520,000 68.10%

Sinotrans Shipping (Holdings)Limited (Note 1)

Beneficialowner

2,600,000,000 65.13%

Note 1: The Parent Company is the beneficial owner of all the issued shares in Sinotrans Shipping(Holdings) Limited. Accordingly, the Parent Company is deemed to be interested in the sharesowned by Sinotrans Shipping (Holdings) Limited for the purposes of the SFO.

APPENDIX II GENERAL INFORMATION

– II-1 –

Save as disclosed above, as at the Latest Practicable Date, no other person (other than the

Directors or chief executives of the Company) had an interest or short position in the Shares or

underlying Shares of the Company which were recorded in the register kept by the Company

pursuant to section 336 of the SFO which would fall to be disclosed to the Company under the

provisions of Divisions 2 and 3 of Part XV of the SFO.

3. DIRECTORS’ COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors nor his associates is and was

interested in any business which competes or may compete, either directly or indirectly, with the

business of the Group.

4. DIRECTORS’ INTERESTS IN ASSETS

As at the Latest Practicable Date, so far as the Directors are aware, none of the Directors had

any interest, either directly or indirectly, in any assets which has since 31 December 2013 (being

the date to which the latest published audited consolidated financial statements of the Group were

made up) up to the Latest Practicable Date, been acquired or disposed of by or leased to, any

member of the Group or are proposed to be acquired or disposed of by, or leased to, any member of

the Group.

5. 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).

6. DIRECTORS INTERESTS IN CONTRACT OR ARRANGEMENT OF

SIGNIFICANCE

As at the Latest Practicable Date, none of the Directors was materially interested, directly or

indirectly, in any contract or arrangement entered into by any member of the Group subsisting at

the Latest Practicable Date and which is significant in relation to the business of the Group.

7. MATERIAL ADVERSE CHANGE

The Company is not aware of any material adverse change in the financial or trading

position of the Group since 31 December 2013, being the date to which the latest published audited

financial statements of the Company were made and up to the Latest Practicable Date.


– II-2 –

8. EXPERT’S QUALIFICATIONS AND CONSENT

Below set out the qualifications of the expert whose name/advice and/or report is contained

in this circular:

Name Qualification

Platinum Securities Company

Limited

A licensed corporation under the SFO to carry out

Type 1 (dealing in securities) and Type 6 (advising

on corporate finance) regulated activities under the

SFO

Beijing Golden Standard &

Headman Appraisal and

Advisory Co., Ltd.

Independent professional valuer

As at the Latest Practicable Date, each of Platinum Securities and Beijing Golden Standard

& Headman Appraisal and Advisory Co., Ltd. (i) had no shareholding in 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; (ii) had no direct or indirect

interest in any assets which had been, since 31 December 2013 (the date to which the latest

published audited consolidated financial statements of the Group were made up), acquired,

disposed of by, or leased to any member of the Group, or were proposed to be acquired, disposed of

by, or leased to any member of the Group; and (iii) has given and has not withdrawn its written

consent to the issue of this circular with the inclusion of its letter and the reference to its name

included herein in the form and context in which it appears.

9. MISCELLANEOUS

The English text of this circular shall prevail over its respective Chinese text for the purpose

of interpretation.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the Company’s

principal place of business in Hong Kong at 21st Floor, Great Eagle Centre, 23 Harbour Road,

Wanchai, Hong Kong during normal business hours on any weekdays, except public holidays, from

the date of this circular up to and including the date of the EGM:

(a) the valuation report on the Vessel as at 30 October 2014 as set out in Appendix I to

this circular;

(b) the letter from the Independent Board Committee to the Independent Shareholders,

the text of which is set out on page 12 of this circular;


– II-3 –

(c) the letter from the Independent Financial Adviser to the Independent Board

Committee and the Independent Shareholders, the text of which is set out on pages 13

to 23 of this circular;

(d) the written consents referred to in the paragraph headed “Expert’s Qualifications and

Consent” in this Appendix;

(e) the Charter Agreement;

(f) the Agreement; and

(g) this circular.


– II-4 –


(Stock Code: 368)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the extraordinary general meeting (the “EGM”) of

Sinotrans Shipping Limited (the “Company”) will be held at the Diamond Ballroom, the

Ritz-Carlton Hong Kong, International Commerce Centre, 1 Austin Road West, Kowloon, Hong

Kong on Tuesday, 10 February 2015 at 11:00 a.m. for the purpose of considering and, if thought fit,

passing the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

1. “THAT

(a) the memorandum of agreement dated 31 December 2014 (the “Agreement”)

(copy of which is marked “A” and now produced to the meeting and initialled

by the chairman of the meeting for the purpose of identification) entered into

between Grand Sea Shipping Limited as vendor and New Enterprise Shipping

Company Limited as purchaser in respect of the disposal of the 2008 built oil

tanker, namely M/T “Yangtze Friendship” (formerly known as M/T “GRAND

SEA”) and the transactions contemplated thereunder be and are hereby

approved, confirmed and ratified; and

(b) any one director of the Company, or any two directors of the Company if the

affixation of the common seal is necessary, be and is/are hereby authorised to

sign and execute all documents, instruments and agreements and to do all such

acts or things deemed by him/her to be incidental to, ancillary to or in

connection with the matters contemplated in the Agreement.”

By Order of the BoardSinotrans Shipping Limited

Huen Po WahCompany Secretary

Hong Kong, 21 January 2015


– EGM-1 –

Registered office:

21st Floor, Great Eagle Centre, 23 Harbour Road,

Wanchai, Hong Kong

Notes:

1. The register of members of the Company will be closed from Monday, 9 February 2015 to Tuesday, 10 February

2015 (both days inclusive) during which period no transfer of Share(s) will be effected. In order to determine the

entitlement to attend and vote at the EGM, all transfer of Share(s), accompanied by the relevant share certificate(s)

with the properly completed transfer form(s) either overleaf or separately, must be lodged with the Company’s

share registrar, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17th Floor, Hopewell

Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Friday, 6 February

2015.

2. Any member of the Company entitled to attend and vote at the EGM is entitled to appoint one or, if he/she is the

holder of two or more shares, more than one proxy to attend and, on a poll, vote instead of him/her. A proxy needs

not be a member of the Company.

3. A form of proxy for use at the EGM is enclosed herewith.

4. To be valid, the proxy form, together with the power of attorney or other authority (if any) under which it is signed

or a notarially certified copy thereof, must be deposited at the registered office of the Company at 21st Floor, Great

Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding

the EGM or any adjournment thereof (as the case may be) and in default thereof the proxy form and such power or

authority shall not be treated as valid.

5. Delivery of an instrument appointing a proxy shall not preclude a shareholder from attending and voting in person

at the EGM or any adjournment thereof (as the case may be) and in such event, the instrument appointing a proxy

shall be deemed to be revoked.

6. As at the date of this notice, the Directors of the Company are Mr. Li Hua and Ms. Feng Guoying as the executive

Directors; Mr. Li Zhen (Chairman) and Mr. Tian Zhongshan as the non-executive Directors; and Mr. Tsang Hing

Lun, Mr. Lee Peter Yip Wah and Mr. Zhou Qifang as the independent non-executive Directors.


– EGM-2 –

Documents

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR …sinotranship.sinotrans-csc.com/module/download/downfile.jsp?... · “Charter Agreement” the “Barecon 2001” Standard Bareboat