DISCLOSEABLE TRANSACTION FORMATION OF A JOINT VENTURE

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1 The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement Dalian Port (PDA) Company Limited* 大 連 港 股 份 有 限 公 司 (a sino-foreign joint stock limited company incorporated in the People s Republic of China) (Stock Code: 2880) DISCLOSEABLE TRANSACTION FORMATION OF A JOINT VENTURE The Directors are pleased to announce that on 19 July 2007, DPC, a 90.99% owned subsidiary of the Company, entered into the JV Contract with CSTD, CSTD HK and NYK relating to the formation of the JV Enterprise for the purposes of investing in, constructing, managing and operating the Phase-3 container terminal in Dayao Bay, Dalian, the PRC. The JV Enterprise will be owned as to 40% by DPC, 30% by CSTD, 10% by CSTD HK and the remaining 20% by NYK. As the percentage ratios of the total capital commitment in respect of the JV Enterprise exceed 5% but are less than 25% for the Company, the formation of the JV Enterprise constitutes a discloseable transaction for the Company under the Listing Rules. A circular containing details of the JV Contract will be dispatched to the Shareholders as soon as practicable. A. THE JV CONTRACT The principal terms of the JV Contract are set forth below: Date: 19 July 2007 Parties: Purpose: DPC, CSTD, CSTD HK and NYK. To invest in, construct, manage and operate the Phase-3 container terminal in Dayao Bay, Dalian, the PRC. Name of the JV Enterprise: 大 连 国 际 集 装 箱 码 头 有 限 公 司 (Dalian International Container Terminal Co., Ltd.) The name of the JV Enterprise is subject to the registration with the State Administration for Industry and Commerce. Place of incorporation: Equity interest: The PRC. The equity interests in the JV Enterprise to be held by the JV Parties are: DPC 40% CSTD 30% CSTD HK 10% NYK 20% Total 100% 1

2 Total investment: RMB4.0 billion, 35% of which shall be the registered capital of the JV Enterprise and the remaining 65% shall be funded by means of loan financing or other means to be determined by the board of the JV Enterprise. The registered capital of the JV Enterprise shall amount to RMB1.4 billion representing 35% of the total investment, and 40% out of which, i.e. RMB560 million, shall be contributed by DPC. Such amount of registered capital shall be paid by way of two equal installments. The first installment shall be paid within 30 days from the date of the JV Enterprise's first board meeting which will be held within 15 days of issuance of the business license of the JV Enterprise while the remaining installment shall be paid within two years of issuance of the business license of the JV Enterprise. Pursuant to the terms of the JV Contract, the difference between the total investment amount and the registered capital of the JV Enterprise shall be funded by means of loan financing or other means to be determined by the board of the JV Enterprise. In the event that the JV Parties are required to provide financial support to the JV Enterprise, the JV Parties shall provide guarantees in proportion to their respective interests in the JV Enterprise. In this respect, the highest possible amount to be provided by DPC shall be RMB1.04 billion. The investment amount to be contributed by DPC will be funded by cash from internal resources. Scope of business: Board of directors: Construction, operation and management of container terminal; container and other cargos loading, discharge, transport, stacking, storage, transshipment and multi-modal transport; container repair and cleaning; stuffing and unstuffing of the containers; container management; electronic data interchange (EDI) service and operation of container freight station (CFS); free trade storage of import and export cargos, supervision of export goods; investment in constructing and operating auxiliary facilities relating to terminal business such as container yard and warehouse and other business allowed by the relevant laws of the PRC. It shall consist of five directors, two of whom shall be nominated by DPC, two by CSTD and CSTD HK, and one by NYK. The chairman of the board shall be appointed by CSTD. Management organization: The JV Enterprise shall establish a management organization which will be responsible for the daily management and operation of the JV Enterprise. The management organization of the JV Enterprise includes: one general manager nominated by DPC, one executive deputy general manager nominated by CSTD and one deputy general manager (in charge of finance) nominated by NYK. Term: 50 years. The JV Contract is subject to the approval of the relevant PRC government authorities. The financial results of the JV Enterprise will be accounted for, on an equity basis, in the Company s financials. B. REASONS FOR AND BENEFIT OF ENTERING INTO THE JV CONTRACT Development of infrastructure is in line with the PRC s long-term policy for social and economic development. It is believed that there will be potential growth for container transportation in the PRC, 2

3 in particular in the Northeastern Region of the PRC where the Phase-3 container terminal is to be constructed, to meet the anticipated foreign and domestic trade growth and freight movements. Both CSTD and CSTD HK are subsidiaries of China Shipping (Group) Company ( China Shipping, together with its subsidiaries the China Shipping Group ). China Shipping is a shipping conglomerate that operates across different regions, sectors and countries. NYK is one of the world s largest integrated global logistics enterprises offering ocean, land, and air transportation services. The Board considers that it is in the interests of the Company to join forces with CSTD, CSTD HK and NYK to develop Phase-3 container terminal in Dayao Bay, Dalian, the PRC. Phase-1 container terminal commenced operations in It operates 7 berths with the total handling capacity of 2.3 million TEUs. Phase-2 container terminal commenced operations in Currently it operates 4 berths with the total capacity of 1.35 million TEUs. Phase-3 container terminal is expected to commence operations in The terms of the JV Contract were negotiated on an arm s length basis and were determined on normal commercial terms. The Directors, including the independent non-executive Directors, believes that the terms of the JV Contract are fair and reasonable and in the best interests of the Company and the Shareholders as a whole. C. GENERAL The principal activities of the Group are: (i) the provision of terminal and logistics services for oil products and liquefied chemicals; (ii) the provision of terminal and logistics services for containers; and (iii) the provision of port value-added services including tugging, tallying and IT services. DPC is a 90.99% owned subsidiary of the Company and principally engaged in container terminal operations, logistics services and port investment in the PRC. Both CSTD and CSTD HK are subsidiaries of China Shipping. The principal business of CSTD is port investment, warehouse, port facilities and equipments related financial leasing. The principal business of CSTD HK includes construction, investment, operation, management of container terminals and cargo terminals, vessel chartering and property investment. NYK is one of the world s largest integrated global logistics enterprises offering ocean, land, and air transportation services and its shares are listed on various stock exchanges in Japan including Tokyo, Osaka, and Nagoya. D. DISCLOSEABLE TRANSACTIONS To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, each of CSTD, CSTD HK and NYK is not a connected person to the Company as defined under the Listing rules. Given that the percentage ratios involved are more than 5% but less than 25% for the Company, the JV Contract and the transactions contemplated thereunder constitute a discloseable transaction for the Company and is subject to notification and publication requirements as set out in Rules to of the Listing Rules. A circular containing details of the JV Contract will be dispatched to the Shareholders as soon as practicable. E. DEFINITIONS In this announcement, the following expressions have the meanings set out below unless the context requires otherwise. Board the Company's board of Directors; 3

4 Company CSTD CSTD HK DPC Directors Group Hong Kong JV Contract JV Enterprise JV Parties Listing Rules NYK PRC RMB Shareholders Stock Exchange 大 連 港 股 份 有 限 公 司 (Dalian Port (PDA) Company Limited), a sinoforeign joint stock limited company incorporated in the PRC with H shares listed and traded on the main board of the Stock Exchange; 中 海 码 头 发 展 有 限 公 司 (China Shipping Terminal Development Company Limited), a company incorporated in the PRC with limited liability; China Shipping Terminal Development (Hong Kong) Company Limited, a company incorporated in Hong Kong with limited liability; 大 連 港 集 裝 箱 股 份 有 限 公 司 (Dalian Port Container Co., Ltd.), a joint stock limited company incorporated in the PRC and a 90.99% owned subsidiary of the Company; the directors of the Company; the Company and its subsidiaries; Hong Kong Special Administrative Region of the PRC; the joint venture contract dated 19 July 2007 between the JV Parties in respect of the establishment of the JV Enterprise; a sino-foreign equity joint venture enterprise which will be established in the PRC pursuant to the terms of the JV Contract. DPC, CSTD, CSTD HK and NYK; the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited; Nippon Yusen Kabushiki Kaisha, a corporation registered under the laws of Japan; the People s Republic of China (for the purpose of this announcement, excluding Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan); renminbi, the lawful currency of the PRC; The shareholders of the Company; and The Stock Exchange of Hong Kong Limited. By Order of the Board of Directors MA Jinru LEE Kin Yu, Arthur Joint Company Secretaries Dalian City, Liaoning Province, the PRC 19 July 2007 As at the date of this announcement, the Directors are: Executive Directors: SUN Hong, ZHANG Fengge, JIANG Luning and SU Chunhua 4

5 Non-executive Directors: LU Jianmin Independent non-executive Directors: YANG Zan, ZHANG Xianzhi and NG Ming Wah, Charles * The Company is registered as an oversea company under Part XI of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) under the English name Dalian Port (PDA) Company Limited. 5