Sinotrans Shipping : CONTINUING CONNECTED TRANSACTIONS AND DISCLOSEABLE TRANSACTIONS IN RESPECT OF THE DEPOSIT SERVICES UNDER THE NEW SINOTRANS FINANCIAL SERVICES FRAMEWORK AGREEMENT AND THE CMB FINANCIAL SERVICES AGREEME

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(Incorporated in Hong Kong with limited liability)

(Stock Code: 368) CONTINUING CONNECTED TRANSACTIONS AND DISCLOSEABLE TRANSACTIONS IN RESPECT OF THE DEPOSIT SERVICES UNDER THE NEW SINOTRANS FINANCIAL SERVICES FRAMEWORK AGREEMENT AND THE CMB FINANCIAL SERVICES AGREEMENT Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders BACKGROUND

References are made to the 2014 Announcement and the 2014 Circular in relation to the CCT Master Agreements.

On 13 June 2016, the Board is pleased to announce that the New CCT Master Agreements have been entered into by the Company.

IMPLICATIONS UNDER THE LISTING RULES

The Parent Company is the controlling shareholder interested in approximately 68.15% of all the issued shares of the Company as at the Latest Practicable Date and is therefore a connected person of the Company for the purpose of the Listing Rules.

Given the Parent Company will then be administratively allocated (for no consideration) into and become a wholly-owned subsidiary of CMG after completion of the Reorganisation, CMG will directly hold the Parent Company and become an indirect controlling shareholder of the Company and a connected person of the Company under the Listing Rules. Each of HK Hoi Tung, CMG Industry and CMG Logistic which is a wholly-owned subsidiary of CMG, will be an associate of the Parent Company under the Listing Rules, and therefore a connected person of the Company under the Listing Rules. Accordingly, the transactions contemplated under the CMG Subsidiaries Master Services Agreements will constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

Sinochart and Sinotrans Container Lines are non wholly-owned subsidiaries of the Company given that each of Marine Peace and Marine Harvest has appointment and removal right for a majority of the board of directors of each of Sinochart and Sinotrans Container Lines, respectively. The Parent Company is a joint venture party to and holds 51% equity interest of each of Sinochart and Sinotrans Container Lines. Accordingly, Sinochart and Sinotrans Container Lines are deemed to be connected persons of the Company for the purpose of Rule 14A.16(1) of the Listing Rules and the transactions with Sinochart and Sinotrans Container Lines constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

China Merchants Bank is indirectly owned as to approximately 29.97% by CMG and directly and indirectly owned as to approximately 0.09% by the Parent Company. As a result of the Reorganisation, CMG and its subsidiaries and associates will become connected persons of the Company, China Merchants Bank and its subsidiaries will become associates of the Company. Therefore, financial services provided by China Merchants Bank Group to the Group will become continuing connected transactions of the Group upon completion of the Reorganisation. Accordingly, the transactions contemplated under the CMB Financial Services Agreement will constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

In relation to the New Supplemental Renewed Master Tenancy and Property Management Agreement, given that some of the applicable percentage ratios for the transactions contemplated thereunder on an annual basis are expected to be more than 0.1% but all of the applicable percentage ratios are less than 5%, such transactions will be exempted from the Independent Shareholders' approval requirement and will be subject to the reporting, announcement and annual review requirements under Chapter 14A of the Listing Rules.

In relation to the New Supplemental Parent Master Services Agreement, the CMG Subsidiaries Master Services Agreements and the New CCT JV Master Services Agreements, given that some of the applicable percentage ratios for the transactions contemplated thereunder on an annual basis, when aggregated under Rule 14A.81 of the Listing Rules are expected to be more than 5%, such transactions will be subject to the reporting, announcement, annual review and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

In relation to the New Supplemental Parent Master Chartering Agreement, the CMG Energy Master Chartering Agreement and the New CCT JV Master Chartering Agreements, given that some of the applicable percentage ratios for the transactions contemplated thereunder on an annual basis are expected to be more than 5%, such transactions will be subject to the reporting, announcement, annual review and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

In relation to the New Sinotrans Financial Services Framework Agreement, as the Parent Company holds 55% equity interest of the Finance Company as at the date of this announcement, the Finance Company is a connected person of the Company for the purpose of the Listing Rules. Therefore, the transactions contemplated under the New Sinotrans Financial Services Framework Agreement constitute continuing connected transactions of the Company. As all of the applicable percentage ratios calculated in accordance with the Listing Rules in respect of the provision of the deposit services under the New Sinotrans Financial Services Framework Agreement, when aggregated with the proposed annual caps of the deposit services under the CMB Financial Services Framework Agreement, are more than 5%, such deposit services and the related annual caps contemplated thereunder are therefore subject to the reporting, annual review, announcement requirements and the Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules. In addition, the deposits placed in the Finance Company and China Merchants Bank are provision of financial assistance by the Company under Rule 14.04(1)(e) of the Listing Rules. As some of the percentage ratios in respect of the placing of deposits in the Finance Company and China Merchants Bank (when aggregated) are more than 5% but less than 25% on an annual basis, such placing of deposits also constitute discloseable transactions of the Company which are subject to the reporting and announcement requirements but exempted from the Shareholders' approval requirement. The provision of credit facility services provided by the Finance Company to the subsidiaries and joint ventures of the Company, which is on normal commercial terms (similar or even more favorable than those offered from independent third parties for comparable services), and no security over the assets of the Group will be required for the credit facility services, will amount to financial assistance by a connected person for the benefit of the Group and therefore the transactions contemplated thereunder will be exempted under the Listing Rule 14A.90 from reporting, annual review, announcement and Independent Shareholders' approval requirements. The Company will comply with the applicable requirements of reporting, annual review, announcement and approval from Independent Shareholders under the Listing Rules if the transaction amount of any financial services under the New Sinotrans Financial Services Framework Agreement would exceed the relevant threshold.

In relation to the CMB Financial Services Agreement, as one or more of the applicable percentages calculated in accordance with the Listing Rules in respect of the maximum daily outstanding balance of the Deposit Services contemplated under the CMB Financial Services Agreement, when aggregated with annual cap of the deposit services under the New Sinotrans Financial Services Framework Agreement, will be higher than 5% and the annual caps exceed HK$10,000,000, the maximum daily outstanding balance of the Deposit Services under the CMB Financial Services Agreement is therefore subject to the reporting, annual review, announcement and the approval from Independent Shareholders requirements under Chapter 14A of the Listing Rules. The loan services provided by China Merchants Bank Group to the Group on normal commercial terms on an unsecured basis under the CMB Financial Services Agreement constitute financial assistance by a connected person for the benefit of the Group which is exempt under the Listing Rule 14A.90 from reporting, annual review, announcement and Independent Shareholders' approval requirements. The annual transaction amount of other financial services to be provided by the China Merchants Bank Group to the Group under the CMB Financial Services Agreement, when aggregated with financial services provided by the Finance Company under the New Sinotrans Financial Services Framework Agreement, will fall within the de minims threshold for exemption set forth in the Listing Rules 14A.76(1). Thus, the provision of the other financial services by the China Merchants Bank Group to the Group is exempt from reporting, annual review, announcement and approval from Independent Shareholders requirements under the Listing Rules.

GENERAL

The independent non-executive Directors will express their views after receiving advice from Gram Capital as to whether the terms of the New Supplemental Parent Master Services Agreement, the CMG Subsidiaries Master Services Agreements, the New CCT JV Master Services Agreements, the New Supplemental Parent Master Chartering Agreement, the CMG Energy Master Chartering Agreement, the New CCT JV Master Chartering Agreements, the New Sinotrans Financial Services Framework Agreement, the CMB Financial Services Framework Agreement and the transactions contemplated thereunder are entered into on normal commercial terms, are fair and reasonable and in the interests of the Company and the Shareholders as a whole. In addition, the proposed annual caps contemplated under the New CCT Master Agreements are determined by the Directors (including the independent non-executive Directors) after due and careful consideration and on a fair and reasonable basis. The independent non-executive Directors will express their view after receiving advice from Gram Capital as to whether the pricing principles and procedures used in determining the services fees under the New Supplemental Parent Master Services Agreement, the CMG Subsidiaries Master Services Agreements and the New CCT JV Master Services Agreements and the chartering fees under New Supplemental Parent Master Chartering Agreement, the CMG Energy Master Chartering Agreement, the New CCT JV Master Chartering Agreements, the New Sinotrans Financial Services Framework Agreement and the CMB Financial Services Framework Agreement will be conducted on normal commercial terms and not prejudicial to the interests of the Company and its minority Shareholders.