increase of capital contribution to china shipping finance company ltd.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility forthe contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaimany liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contentsof this announcement.(A joint stock limited company incorporated in the People’s Republic of China with limited liability)(Stock code: 02866)CONNECTED TRANSACTION:INCREASE OF CAPITAL CONTRIBUTION TOCHINA SHIPPING FINANCE COMPANY LTD.The Board is pleased to announce that on 27 May 2011, the Company entered into the CapitalIncrease Agreement, pursuant to which, China Shipping, Guangzhou Maritime Transport, theCompany, CSDC and CS Haisheng have agreed to increase their respective capital contributionin the amount of RMB75 million, RMB60 million, RMB75 million, RMB75 million andRMB15 million, respectively, to CS Finance Company by way of cash in proportion to theirexisting shareholdings in CS Finance Company. Upon the completion of the foregoing increaseof capital contribution, the registered capital of CS Finance Company will increase fromRMB300 million to RMB600 million while the respective shareholding of China Shipping,Guangzhou Maritime Transport, the Company, CSDC and CS Haisheng in CS Finance Companywill remain as 25%, 20%, 25%, 25% and 5%.As at the date of this announcement, China Shipping holds approximately 47.03% of the issuedshare capital of the Company and Guangzhou Maritime Transport is a wholly owned subsidiaryof China Shipping, together they hold 45% in CS Finance Company. CS Finance Companyis thus an associate of a connected person of the Company. Accordingly, the Capital Increaseconstitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.Since the applicable percentage ratio set out in the Listing Rules for the Company’s capitalcontribution to CS Finance Company under the Capital Increase Agreement exceeds 0.1% butis less than 5%, the Capital Increase is subject to the reporting and announcement requirementsand is exempt from the independent shareholders’ approval requirements under Chapter 14A ofthe Listing Rules.1

CAPITAL INCREASE AGREEMENTThe main terms of the Capital Increase Agreement are summarized as follows:Date27 May 2011Parties(a)(b)(c)(d)(e)China Shipping;Guangzhou Maritime Transport;the Company;CSDC; andCS Haisheng.Capital IncreaseThe Board is pleased to announce that on 27 May 2011, the Company entered into the CapitalIncrease Agreement, pursuant to which, China Shipping, Guangzhou Maritime Transport, theCompany, CSDC and CS Haisheng have agreed to increase their respective capital contributionin the amount of RMB75 million, RMB60 million, RMB75 million, RMB75 million and RMB15million, respectively, to CS Finance Company by way of cash in proportion to their existingshareholdings in CS Finance Company.Upon the completion of the foregoing increase of capital contribution, the registered capital of CSFinance Company will increase from RMB300 million to RMB600 million while the respectiveshareholding of China Shipping, Guangzhou Maritime Transport, the Company, CSDC and CSHaisheng in CS Finance Company will remain as 25%, 20%, 25%, 25% and 5%.PaymentEach of the JV Partners shall fulfill their payment obligations by way of cash contribution inone lump-sum within 15 Business Days after execution of the Capital Increase Agreement andobtaining the approval of the CBRC on the Capital Increase.The Company intends to use its internal resources to satisfy its requisite capital contribution to CSFinance Company.2

INFORMATION ON CS FINANCE COMPANYCS Finance Company is a limited liability company established in the PRC which is principallyengaged in the provision of financial and financing advisory services, credit verification servicesand related consultancy and agency business to the JV Partners and their respective associates.Based on the audited financial statement of CS Finance Company which were prepared inaccordance with the PRC GAAP, CS Finance Company has recorded audited net profit before andafter taxation and extraordinary items attributable to the Company’s 25% equity interest in CSFinance Company in the amount of approximately RMB12,985,100.05 and RMB9,720,143.74,respectively, for the year ended 31 December 2010.INFORMATION ON THE PARTIES TO THE CAPITAL INCREASE AGREEMENT(a)China ShippingChina Shipping is a large shipping conglomerate that operates across different regions,sectors and countries.(b)Guangzhou Maritime TransportGuangzhou Maritime Transport is principally engaged in non-container vessel leases,hotel services, ancillary shipping services, health-hygiene, property management, projectsupervision and back-up support businesses.(c)The CompanyThe Company is principally engaged in the operation and management of international anddomestic container marine transportation.(d)CSDCCSDC is principally engaged in coastal, ocean and Yangtze River cargo transportation,international passenger transportation, vessel-chartering, cargo agency and cargotransportation agency businesses.(e)CS HaishengCS Haisheng is principally engaged in domestic coastal and near-sea route cargotransportation and cargo (containing liquid dangerous goods) transportation between ports inthe middle and lower reaches of the Yangtze River.3

REASONS FOR AND BENEFITS OF THE CAPITAL INCREASEThe reasons for the further capital contribution by the JV Partners to CS Finance Company are thatthe Capital Increase will enhance CS Finance Company’s ability to further expand its business andincrease its overall profitability that in turn will create higher returns for the shareholders of theCompany.The Board (including the independent non-executive Directors) considers the terms of the CapitalIncrease Agreement are fair and reasonable and in the interest of the shareholders of the Companyas a whole.IMPLICATIONS UNDER THE LISTING RULESAs at the date of this announcement, China Shipping holds approximately 47.03% of the issuedshare capital of the Company and Guangzhou Maritime Transport is a wholly owned subsidiary ofChina Shipping, together they hold 45% in CS Finance Company. CS Finance Company is thus anassociate of a connected person of the Company. Accordingly, the Capital Increase constitutes aconnected transaction of the Company under Chapter 14A of the Listing Rules.Since the applicable percentage ratio set out in the Listing Rules for the Company’s capitalcontribution to CS Finance Company under the Capital Increase Agreement exceeds 0.1% but isless than 5%, the Capital Increase is subject to the reporting and announcement requirements andis exempt from the independent shareholders’ approval requirements under Chapter 14A of theListing Rules.Those Directors who have a material interest in the transaction (by virtue of being the principalmanagement staff or directors of China Shipping or its subsidiaries) have abstained from voting atthe Board meeting for approval of the relevant transaction.DEFINITIONSIn this announcement, unless the context otherwise requires, the following expressions have thefollowing meanings:“associate(s)”“Board”“Business Day(s)”“Capital Increase”“Capital Increase Agreement”has the meaning ascribed thereto under the Listing Rulesthe board of Directorsa day, (excluding Saturdays, Sundays, public holidays and dayson which a tropical cyclone warning no. 8 or above or a “black”rainstorm warning signal is hoisted in Hong Kong at any timebetween the hours of 9.00 a.m. and 5.00 p.m. on weekdays and9.00 a.m. and 12.00 noon on Saturdays) on which licensed banksin the PRC are open for general businessthe proposed contribution of additional capital in the total amountof RMB300,000,000 by the JV Partners to CS Finance Companythe capital increase agreement entered into between the JVPartners on 27 May 20114

“CBRC”“China Shipping”“Company”“connected person”“CSDC”“CS Finance Company”“CS Haisheng”“Directors”“Group”“Guangzhou MaritimeTransport”“JV Partners”“Listing Rules”“percentage ratios”China Banking Regulatory Commission ()China Shipping (Group) Company (),a wholly PRC state-owned enterprise, which is the controllingshareholder of the Company, having an approximately 47.03%shareholding interestChina Shipping Container Lines Company Limited (), a joint stock limited company established inthe PRC, of which 3,751,000,000 H shares are listed on the StockExchange and 7,932,125,000 A shares are listed on the ShanghaiStock Exchangehas the meaning ascribed thereto under the Listing RulesChina Shipping Development Company Limited (), a joint stock limited company established in the PRC,whose H shares and A shares are listed on the Stock Exchange andthe Shanghai Stock Exchange respectively, and in which ChinaShipping has an approximately 46.36% shareholding interestChina Shipping Finance Company Ltd. (), a limited liability company established by the JV Partnersin the PRCChina Shipping (Hainan) Haisheng Shipping and Enterprise Co.,Ltd. (), a joint stock limitedcompany established in the PRC, whose A shares are listed on theShanghai Stock Exchange, and in which China Shipping has anapproximately 27.49% shareholding interestdirectors of the Companythe Company and its subsidiariesGuangzhou Maritime Transport (Group) Co. Ltd. (), a limited liability company incorporated in thePRC, which is a wholly-owned subsidiary of China ShippingChina Shipping, Guangzhou Maritime Transport, the Company,CSDC and CS HaishengThe Rules Governing the Listing of Securities on the StockExchangehas the meaning ascribed thereto under the Listing Rules5

“PRC”“PRC GAAP”“RMB”“Stock Exchange”“subsidiary”People’s Republic of Chinathe Generally Accepted Accounting Principles of the PRCRenminbi, the lawful currency of the PRCThe Stock Exchange of Hong Kong Limitedhas the meaning ascribed thereto under the Listing RulesBy Order of the BoardChina Shipping Container Lines Company LimitedYe YumangCompany SecretaryShanghai, the PRC27 May 2011The Board as at the date of this announcement comprises of Mr. Li Shaode, Mr. Zhang Guofa, Mr.Huang Xiaowen and Mr. Zhao Hongzhou, being executive Directors, Mr. Ma Zehua, Mr. ZhangJianhua, Mr. Lin Jianqing, Mr. Wang Daxiong, Mr. Yan Zhichong and Mr. Xu Hui, being nonexecutiveDirectors, and Mr. Shen Kangchen, Mr. Jim Poon (also known as Pan Zhanyuan), Mr.Shen Zhongying, Mr. Wu Daqi and Ms. Zhang Nan, being independent non-executive Directors.* The Company is registered as a non-Hong Kong company under Part XI of the Companies Ordinance (Chapter 32of the Laws of Hong Kong) under its Chinese name and under the English name “China Shipping Container LinesCompany Limited”.6