Rizhao Port Jurong : CONTINUING CONNECTED TRANSACTION - OPERATION OUTSOURCING AGREEMENT 2021

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(a joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 6117)

CONTINUING CONNECTED TRANSACTION OPERATION OUTSOURCING AGREEMENT 2021

References are made to the announcements of the Company dated 18 November 2019 and 22 November 2019 in relation to the continuing connected transactions contemplated under the Operation Outsourcing Agreement 2019.

As the Operation Outsourcing Agreement 2019 expired on 31 December 2020, on 23 February 2021 (after trading hours), the Company entered into the Operation Outsourcing Agreement 2021 with Lanshan Branch of Rizhao Port to renew the Operation Outsourcing Agreement 2019 for a term commencing from 23 February 2021 to 31 December 2021.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Lanshan Branch of Rizhao Port is a branch of Rizhao Port, which is a controlling shareholder of the Company, holding approximately 50.6% of the total issued share capital of the Company, and hence is a connected person of the Company under the Listing Rules. Therefore, the entering into of the Operation Outsourcing Agreement 2021 and the transactions contemplated thereunder constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As the highest of all applicable percentage ratios in respect of the proposed annual cap under the Operation Outsourcing Agreement 2021 is higher than 0.1% but less than 5% on an annual basis, the Operation Outsourcing Agreement 2021 is subject to reporting, annual review and announcement requirements but exempt from the circular (including independent financial advice) and shareholders' approval requirements pursuant to Rule 14A.76(2) of the Listing Rules.

INTRODUCTION

References are made to the announcements of the Company dated 18 November 2019 and 22 November 2019 in relation to the continuing connected transactions contemplated under the Operation Outsourcing Agreement 2019, pursuant to which the Company may from time to time engage Lanshan Branch of Rizhao Port to provide stevedoring, storage and delivery services of grains cargo, in Lanshan port area.

As the Operation Outsourcing Agreement 2019 expired on 31 December 2020, on 23 February 2021 (after trading hours), the Company entered into the Operation Outsourcing Agreement 2021 with Lanshan Branch of Rizhao Port to renew the Operation Outsourcing Agreement 2019 for a term commencing from 23 February 2021 to 31 December 2021.

OPERATION OUTSOURCING AGREEMENT 2021

The principal terms of the Operation Outsourcing Agreement 2021 are set out as follows:

Date

23 February 2021 (after trading hours)

Parties

• (a) The Company; and

• (b) Lanshan Branch of Rizhao Port, a branch of Rizhao Port, the controlling shareholder of the Company, and hence a connected person of the Company.

Term

From 23 February 2021 to 31 December 2021

Nature of transaction

Pursuant to the Operation Outsourcing Agreement 2021, the Company may from time to time engage Lanshan Branch of Rizhao Port to provide stevedoring, storage and delivery services of grain cargoes, in Lanshan port area.

Pricing policy

The fee charged for the services provided by Lanshan Branch of Rizhao Port shall be determined through arm's length negotiations by the parties and based on normal commercial terms with reference to (a) qualification of service providers in stevedoring of grain cargoes in Lanshan port area; (b) the prevailing market price for the provision of similar types of services in the same or nearby service area by independent third parties; (c) the actual services to be provided, the volume of cargoes to be handled and the duration of storage of cargoes; and (d) the historical prices offered to independent third party service providers.

• (1) For the provision of stevedoring and delivery services of grain cargoes, the fee charged will be determined through the evaluation conducted by an independent third party with reference to the operation process of the same or similar types of services in the port, the complexity of storage of the cargoes, the cost of providing such services, the fees charged within the industry, as well as the historical prices offered to independent third party service providers. The Company will also take into account that Lanshan Branch of Rizhao Port is the only port operator with the qualification of stevedoring grain cargoes approved by the governmental authority in the Lanshan port area.

• (2) For the provision of storage services of grain cargoes, the fee charged will be determined with reference to the storage process, duration and quality requirements for such services, the storage prices charged by Lanshan Branch of Rizhao Port to other customers, the fee charged within the industry, as well as prices comparison of fees charged by the Company to other customers in respect of such services.

Before entering into any agreements pursuant to the Operation Outsourcing Agreement 2021, the Company will obtain quotations from two or more independent third party service providers through price inquiry. The finance department of the Company will perform the comparison of the fee quotations in accordance with the pricing policy to ensure that the terms of the continuing connected transactions contemplated under the Operation Outsourcing Agreement 2021 are fair and reasonable and no less favourable than the terms offered to the Company from independent third parties.

HISTORICAL AMOUNTS

The historical transaction amounts with Lanshan Branch of Rizhao Port in relation to such stevedoring, storage and delivery services for each of the financial years ended 31 December 2019 and 2020 were RMB7,093,000 (audited) and RMB13,346,061.31 (unaudited), respectively.

PROPOSED ANNUAL CAP

The proposed annual cap for the transactions contemplated under the Operation Outsourcing Agreement 2021 for the financial year ending 31 December 2021 is set out as follows:

For the year ending 31 December 2021

RMBProvision of stevedoring, storage and delivery services by Lanshan

Branch of Rizhao Port

25,000,000

The proposed annual cap for the amount payable by the Company to Lanshan Branch of Rizhao Port was determined with reference to (a) the historical amount of fees paid by the Company to Lanshan Branch of Rizhao Port for the provision of stevedoring, storage and delivery services; and (b) the existing demand for such services, taking into account the scale and operations of the grain import business of the Company.

INFORMATION OF THE PARTIES

The Company, a joint stock company incorporated in the PRC with limited liability, is principally engaged in comprehensive port-related services, including stevedoring, berth leasing, port management, storage, and logistics agency services.

Lanshan Branch of Rizhao Port, a branch of Rizhao Port, is principally engaged in cargo transshipping, stevedoring, handling and storage services and operation. Rizhao Port is a company established in the PRC with limited liability whose shares are listed and traded on the Shanghai Stock Exchange (stock code: 600017) and its controlling shareholder, Rizhao Port Group Co., Ltd. ( ˚๫ಥණྠϞࠢʮ̡ ), is a direct wholly-owned subsidiary of Shandong Port Group Co., Ltd. ( ʆ؇޲ಥɹණྠϞࠢ ʮ̡ ), which is a state-owned enterprise ultimately controlled by Shandong Provincial State-owned Assets Supervision and Administration Commission.

REASONS FOR AND BENEFITS OF THE TRANSACTION

The transactions contemplated under the Operation Outsourcing Agreement 2021 are part of or related to the principal business activities of the Company and are expected to either increase the revenue of the Company, and/or provide the Company with overall business and operational convenience and synergy, which is beneficial to the Company for improving its business volume in the market, stabilizing its customers, enhancing its development of comprehensive business strategy and promoting its regional market competitive advantage.

The terms of the Operation Outsourcing Agreement 2021 have been arrived at after arm's length negotiations between the parties. The Directors (including the independent non-executive Directors) have confirmed that the transactions contemplated under the Operation Outsourcing Agreement 2021 are fair and reasonable, on normal commercial terms or better and in the ordinary and usual course of business of the Company, and are in the interests of the Company and the Shareholders as a whole.

None of the Directors has any material interest in the Operating Outsourcing Agreement 2021 and the transactions contemplated thereunder or were otherwise required to abstain from voting in respect of the relevant board resolutions.

INTERNAL CONTROL MEASURES

The Company has established the following internal control measures to ensure that the pricing mechanism and the terms of the continuing connected transactions contemplated under the Operation Outsourcing Agreement 2021 are fair and reasonable and no less favourable to the Company than the terms offered to the Company from independent third parties:

• (a) The finance office of the Company will perform half-yearly check on the transactions entered into under the Operation Outsourcing Agreement 2021 to ensure compliance with pricing policies and that the proposed annual cap will not be exceeded;

• (b) The relevant office of the Company carrying out the specific connected transactions under the Operation Outsourcing Agreement 2021 with Lanshan Branch of Rizhao Port will closely monitor the actual transaction amount on a monthly basis. If the actual transaction amount reaches approximately 85% of the proposed annual cap for the transactions contemplated under the Operation Outsourcing Agreement 2021 at any time of the year, the relevant department will report to the senior management of the Company, which will seek advice from the audit committee of the Company and the Board will consider taking appropriate measures to revise the annual cap and comply with the relevant announcement and/or shareholders' approval requirements in accordance with the Listing Rules;

• (c) The finance office of the Company will perform quarterly check on the transactions entered into under the Operation Outsourcing Agreement 2021 and report to the audit committee of the Company and the Board to ensure that the proposed annual cap for the transactions contemplated under the Operation Outsourcing Agreement 2021 is not exceeded;

• (d) The Company will conduct internal control review and financial audit on an annual basis, financial monitoring and decision analysis on a half-yearly basis, so as to ensure that the terms of the Operation Outsourcing Agreement 2021 and the pricing policies are complied with;

• (e) The auditors of the Company and the independent non-executive Directors will conduct annual review on the transactions entered into under the Operation Outsourcing Agreement 2021 in accordance with the Listing Rules; and

• (f) The Company's internal audit office will focus on the above internal control measures as part of their ongoing work plan and will report to the audit committee of the Company and the Board on a quarterly basis.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Lanshan Branch of Rizhao Port is a branch of Rizhao Port, which is a controlling shareholder of the Company, holding approximately 50.6% of the total issued share capital of the Company, and hence is a connected person of the Company under the Listing Rules. Therefore, the entering into of the Operation Outsourcing Agreement 2021 and the transactions contemplated thereunder constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As the highest of all applicable percentage ratios in respect of the proposed annual caps under the Operation Outsourcing Agreement 2021 is higher than 0.1% but less than 5% on an annual basis, the Operation Outsourcing Agreement 2021 is subject to reporting, annual review and announcement requirements but exempt from the circular (including independent financial advice) and shareholders' approval requirements pursuant to Rule 14A.76(2) of the Listing Rules.

DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context requires otherwise:

"Board"	the board of Directors
"Company"	Rizhao Port Jurong Co., Ltd. ( ˚๫ಥ༃఼ٰ΅Ϟࠢʮ
̡ ), a joint stock company incorporated in the PRC with
limited liability, the H Shares of which are listed on the
Main Board of the Stock Exchange (stock code: 6117)
"connected person"	has the meaning ascribed to it under the Listing Rules
"controlling shareholder"	has the meaning ascribed to it under the Listing Rules
"Directors"	the directors of the Company
"Domestic Share(s)"	ordinary shares in the share capital of the Company, with
a nominal value of RMB1.00 each, which are subscribed
for and paid up in RMB by PRC natural persons or entities
established under PRC laws
"H Share(s)"	overseas listed shares in the share capital of the Company
with a nominal value of RMB1.00 each in the share capital
of the Company, listed on the Main Board of the Stock
Exchange and traded in Hong Kong dollars
"Hong Kong"	the Hong Kong Special Administrative Region of the PRC
"Lanshan Branch of	Lanshan stevedoring branch of Rizhao Port* ( ˚๫ಥٰ
Rizhao Port"	΅Ϟࠢʮ̡ళʆༀ՝ʱʮ̡)
"Listing Rules"	The Rules Governing the Listing of Securities on the Stock
Exchange, as amended from time to time
"Operation Outsourcing	the operation outsourcing agreement dated 18 November
Agreement 2019"	2019 entered into between the Company and Lanshan
Branch of Rizhao Port
"Operation Outsourcing	the operation outsourcing agreement dated 23 February
Agreement 2021"	2021 entered into between the Company and Lanshan
Branch of Rizhao Port

"PRC"

the People's Republic of China (excluding, for the purposes of this announcement, Hong Kong, the Macau Special Administrative Region and Taiwan)

"Rizhao Port"

Rizhao Port Co., Ltd. ( ˚๫ಥٰ΅Ϟࠢʮ̡ ), a company established in the PRC with limited liability whose shares are listed and traded on the Shanghai Stock Exchange (stock code: 600017), the controlling shareholder of the Company

"RMB"

Renminbi, the lawful currency of the PRC

"Share(s)"

share(s) of the Company, comprising the Domestic Shares and the H Shares

"Shareholder(s)"

the holder(s) of the Share(s)

"Stock Exchange"

The Stock Exchange of Hong Kong Limited

By Order of the Board Rizhao Port Jurong Co., Ltd.

Wang Yufu ChairmanRizhao, PRC, 23 February 2021

As at the date of this announcement, the Board comprises Mr. Wang Yufu as Chairman and non-executive Director; Mr. He Zhaodi as executive Director; Mr. Pay Cher Wee, Mr. Ooi Boon Hoe and Mr. Jiang Zidan as non-executive Directors; and Mr. Zhang Zixue, Mr. Lee Man Tai and Mr. Wu Xibin as independent non-executive Directors.

* Translated English names of Chinese entities for which no official English translation exists are unofficial translations for identification purpose only and should not be regarded as the official English translation of the Chinese names.