Dalian Port PDA : NEW DISCLOSEABLE AND CONTINUING CONNECTED TRANSACTIONS

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大連港股份有限公司

Dalian Port (PDA) Company Limited*

(a sino-foreign joint stock limited company incorporated in the People's Republic of China)

(Stock Code: 2880)

NEW DISCLOSEABLE AND CONTINUING CONNECTED TRANSACTIONS

NEW DISCLOSEABLE AND CONTINUING CONNECTED TRANSACTIONS

On 20 December 2019, the Company entered into the New Financial Services Agreement with CMG Finance in relation to the provision of Deposit services, Loan services and Settlement Services and other financial services (the "CMG Finance Transactions"). The CMG Finance Transactions will gradually replace the corresponding transactions under the Financial Services Agreement.

As at the date of this announcement, the Company is a fellow subsidiary of CMG Finance. As such, CMG Finance is a connected person of the Company and the transactions contemplated under the New Financial Services Agreement will constitute connected transactions of the Company under Chapter 14A of the Listing Rules.

Under the Listing Rules, the Loan Services under the New Financial Services Agreement to be provided by CMG Finance to the Group would amount to financial assistance by a connected person for the benefit of the Group, which are on normal commercial terms or better than those offered from independent third parties for comparable services in the PRC and which is exempt under Rule 14A.90 of the Listing Rules from all reporting, annual review, announcement and independent shareholders' approval requirements since no security over the assets of the Group will be granted in respect of the loan(s).

As one or more of the applicable percentage ratios for the provision of Deposit Services under the New Financial Services Agreement is, on an annual basis, more than 5% and the proposed annual caps for such transactions are more than HK$10,000,000, such transactions are subject to the reporting, annual review, announcement and the independent shareholders' approval requirements under Chapter 14A of the Listing Rules. As one or more of the applicable percentage ratios for such transactions is, on an annual basis, more than 5% but less than 25%, such transactions also constitute a discloseable transaction of the Company, and are also subject to the notification and announcement requirements under Chapter 14 of the Listing Rules.

As one or more of the applicable percentage ratios for the provision of Settlement Services and other financial services under the New Financial Services Agreement is, on an annual basis, more than 0.1% but less than 5%, such transactions are subject to the reporting, annual review and announcement requirements, but exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

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For the purpose of obtaining the independent shareholders' approval on the provision of Deposit Services under the New Financial Services Agreement as well as the proposed annual caps for the aforementioned transactions for each of the two years ending 31 December 2020 and 2021, the Company will convene an EGM pursuant to the Listing Rules.

GENERAL

The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the provision of Deposit Services under the New Financial Services Agreement as well as the proposed annual caps for the aforementioned transactions. An independent financial adviser will be appointed to advise the Independent Board Committee to the Independent Shareholders on the same. CMG and its associates will abstain from voting on the ordinary resolution approving the transactions contemplated under the New Financial Services Agreement as well as the proposed annual caps for the aforementioned transactions at the EGM.

A circular containing, among other things, a letter of advice from the independent financial adviser to both the Independent Board Committee and the Independent Shareholders and a letter of recommendation from the Independent Board Committee to the Independent Shareholders and the details of the general meeting to be held to approve the provision of Deposit Services under the New Financial Services Agreement as well as the proposed annual caps for the aforementioned transactions, will be dispatched to the Shareholders on or before 13 January 2020 in accordance with the Listing Rules.

Although the provision of Loan Services and Settlement Services and other financial services under the New Financial Services Agreement are exempt from independent shareholders' approval requirements under Chapter 14A of the Listing Rules, the Company will seek independent shareholders' approval for the aforementioned transactions thereunder pursuant to the requirements under the Shanghai Listing Rules.

1. NEW DISCLOSEABLE AND CONTINUING CONNECTED TRANSACTIONS
   1. Introduction
   Reference is made to the 2018 Announcement and Circular in relation to the renewal of certain continuing connected transactions and new continuing connected transactions between the Company and/or its subsidiaries and PDA and/or its relevant associates.
   Reference is also made to (i) the announcement jointly issued by Broadford and the Company dated 4 June 2019, in relation to the Equity Transfer Agreement and the possible H Share Offer; (ii) the composite offer and response document in connection with the H Share Offer dated 5 October 2019 (the "Composite Document"); and (iii) the announcement jointly issued by Broadford and the Company dated 28 October 2019 in relation to the results of the H Share Offer.

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On 9 November 2018, the Company entered into the financial services agreement with PDA for a term of three years commencing on 1 January 2019 and ending on 31 December 2021, pursuant to which the Company shall continue to receive the deposit services, loan services, factoring services, settlement services and other financial services and finance leasing services from PDA and its associates or subsidiary(ies) (as the case may be) (including Dalian Port Finance, which is a subsidiary of PDA) (the "Financial Services Agreement"). As at the date of this announcement, PDA remains a controlling shareholder of the Company and thus a connected person of the Company. Details of such transactions are set out in the 2018 Announcement and Circular.

Following the Completion (as defined in the Composite Document) on 30 September 2019, China Merchants Liaoning became the registered owner of an aggregate of 51% equity interest in Liaoning Port Group (a controlling shareholder of the Company). As at the date of this announcement, Broadford and parties acting in concert with it were indirectly interested in approximately 75% of the total issued share capital of the Company. The Company has therefore become a fellow subsidiary of CMG Finance, which is beneficially wholly-owned by CMG.

There is a business consolidation in progress between CMG Finance and Dalian Port Finance. To ensure a smooth business transition, on 20 December 2019, the Company entered into the New Financial Services Agreement with CMG Finance in relation to the provision of Deposit services, Loan services and Settlement Services and other financial services (the "CMG Finance Transactions"). The CMG Finance Transactions will gradually replace the corresponding transactions under the Financial Services Agreement.

2. Continuing connected transaction fully exempt from the reporting, annual review and announcement and independent shareholders' approval requirements

2.1 Financial Services - Loan Services

Pursuant to the New Financial Services Agreement, CMG Finance shall provide Loan Services to the Group on normal commercial terms or better to the Group for a term commencing on the date of the EGM and ending on 31 December 2021.

1. Pricing

Pursuant to the New Financial Services Agreement, the interest rate for any loan provided by CMG Finance to the Group should not be higher than the rate charged by other financial institutions in the PRC for comparable loans. In addition, the daily closing balance of the Group's loan (plus accrued interests and service fees) with CMG Finance including the loan with PDA and its associates or subsidiary(ies) (as the case may be) under the Financial Services Agreement should not exceed RMB5.0 billion.

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1. Estimated annual caps for each of the two years ending 31 December 2020 and 2021

	Estimated		Estimated
	annual cap for		annual cap for
	the year ending		the year ending
	31 December		31 December
	2020	2021
	(RMB'000)		(RMB'000)
Financial Services - Loan Services
(maximum daily closing balance)	5,000,000	5,000,000

In determining the estimated annual caps for 2020 and 2021, the Directors have considered (i) the historical figures of the maximum daily outstanding balance of loans (including accrued interest and service fee) for the Loan Services, and (ii) Group's capital needs and financial ability of CMG Finance for providing loan or credit to, and guarantee for the Group.

3. Continuing connected transactions subject to the reporting, annual review and announcement requirements but exempt from independent shareholders' approval requirement

3.1 Financial Services - Settlement Services and other financial services

Pursuant to the New Financial Services Agreement, CMG Finance shall provide Settlement Services and other financial services to the Group on normal commercial terms or better to the Group for a term commencing on the date of the EGM and ending on 31 December 2021.

1. Pricing

Pursuant to the New Financial Services Agreement, the Company expects that the total annual fees payable by the Group to CMG Finance for Settlement Services and other financial services including total annual fees payable by the Group to PDA and its associates or subsidiary(ies) (as the case may be) under the Financial Services Agreement will not exceed RMB30.0 million per year for each of the two years ending 31 December 2020 and 2021. On-shore Settlement Services are provided by CMG Finance free of charge and the settlement rate for cross-border and off-shore Settlement Services shall not be higher than the service fee for comparable financial institutions in the PRC and abroad. In addition, the fees payable by the Group to CMG Finance shall not be higher than the fees charged by major financial institutions in the PRC.

1. Historical figures for each of the two years ended 31 December 2017 and 2018 and the nine months ended 30 September 2019, annual caps for 2019 and estimated annual caps for each of the two years ending 31 December 2020 and 2021

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Estimated

Estimated

For

For

For

annual cap

annual cap

the year

the year

9 months

for the year

for the year

ended 31

ended 31

ended 30

Annual

ending 31

ending 31

December

December

September

cap for

December

December

2017

2018

2019

2019

2020

2021

(RMB'000) (RMB'000) (RMB'000) (RMB'000) (RMB'000) (RMB'000)

Financial Services - Settlement

Services and other financial services

180

103

55

30,000

30,000

30,000

The Directors have considered a number of factors in determining the estimated annual caps, including: (i) the historical amounts of service fees as shown in the table above, (ii) the expected introduction of new financial services such as provision of secured financing, and bank acceptance bill, and (iii) the operational and financial needs of the Group in the coming two years.

4. Discloseable and continuing connected transactions subject to the reporting, annual review and announcement and independent shareholders' approval requirements

4.1 Financial Services - Deposit Services

Pursuant to the New Financial Services Agreement, CMG Finance shall provide Deposit Services to the Group on normal commercial terms or better to the Group for a term commencing on the date of the EGM and ending on 31 December 2021.

1. Pricing

Pursuant to the New Financial Services Agreement, the interest rate payable

by CMG Finance to the Group for any deposits should not be lower than the interest rate prescribed by People's Bank of China (中國人民銀行)

for comparable deposits. It should also not be lower than interest rate paid by other major commercial banks in the PRC for comparable deposits. In addition, the daily closing balance of the Group's deposit with CMG Finance including the Group's deposit with PDA and its associates or subsidiary(ies) (as the case may be) under the Financial Services Agreement should not exceed RMB4.0 billion.

1. Historical figures for each of the two years ended 31 December 2017 and 2018, the nine months ended 30 September 2019, annual cap for 2019 and estimated annual caps for each of the two years ending 31 December 2020 and 2021

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Estimated

Estimated

For

For

For

annual cap

annual cap

the year

the year

9 months

for the year

for the year

ended 31

ended 31

ended 30

Annual

ending 31

ending 31

December

December

September

cap for

December

December

2017

2018

2019

2019

2020

2021

(RMB'000) (RMB'000) (RMB'000) (RMB'000) (RMB'000) (RMB'000)

Financial Services - Deposit Services

(maximum daily closing balance)

3,164,850

3,665,619

3,576,264

4,000,000

4,000,000

4,000,000

In determining the estimated annual caps for 2020 and 2021, the Directors have considered a number of factors, including: (i) the historical figures of the maximum daily closing balance of deposit as shown in the table above, and (ii) approximately 6.3% annual growth of the maximum actual daily closing balance in the past three years.

1. REASON FOR AND BENEFITS OF ENTERING INTO THE NEW FINANCIAL SERVICES AGREEMENT
   The Directors believe that the entering into of the New Financial Services Agreement ensures the operational and business development needs of the Group are effectively met, with terms and conditions of the transactions being not less favourable to the Group than that those available from independent third parties. The terms and conditions of the New Financial Services Agreement are on normal commercial terms or better, fair and reasonable and in the interests of the Company and its Shareholders as a whole.
2. LISTING RULES IMPLICATIONS
   1. New Discloseable and Continuing Connected Transactions
   As at the date of this announcement, the Company is a fellow subsidiary of CMG Finance. As such, CMG Finance is a connected person of the Company and the transactions contemplated under the New Financial Services Agreement will constitute connected transactions of the Company under Chapter 14A of the Listing Rules.
   Under the Listing Rules, the Loan Services under the New Financial Services Agreement to be provided by CMG Finance to the Group would amount to financial assistance by a connected person for the benefit of the Group, which are on normal commercial terms or better than those offered from independent third parties for comparable services in the PRC and which is exempt under Rule 14A.90 of the Listing Rules from all reporting, annual review, announcement and independent shareholders' approval requirements since no security over the assets of the Group will be granted in respect of the loan(s).

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As one or more of the applicable percentage ratios for the provision of Deposit Services under the New Financial Services Agreement is, on an annual basis, more than 5% and the proposed annual caps for such transactions are more than HK$10,000,000, such transactions are subject to the reporting, annual review, announcement and the independent shareholders' approval requirements under Chapter 14A of the Listing Rules. As one or more of the applicable percentage ratios for such transactions is, on an annual basis, more than 5% but less than 25%, such transactions also constitute a discloseable transaction of the Company, and are also subject to the notification and announcement requirements under Chapter 14 of the Listing Rules.

The Directors (excluding the independent non-executive Directors who will give their opinion in the circular based on the recommendation of the independent financial adviser) consider that the provision of Deposit Services under the New Financial Services Agreement as well as the proposed annual caps for the aforementioned transactions for each of the two years ending 31 December 2020 and 2021 are in the Group's ordinary and usual course of business, on normal commercial terms or better to the Group, are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

As one or more of the applicable percentage ratios for the provision of Settlement Services and other financial services under the New Financial Services Agreement is, on an annual basis, more than 0.1% but less than 5%, such transactions are subject to the reporting, annual review and announcement requirements, but exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

The Directors, including the independent non-executive Directors, consider that the provision of Loan Services and Settlement Services and other financial services under the New Financial Services Agreement are in the Group's ordinary and usual course of business, on normal commercial terms or better to the Group, which are fair and reasonable and in the interests of the Company and its Shareholders as a whole. The Directors, including the independent non-executive Directors, also consider the proposed annual caps for each of the two years ending 31 December 2020 and 2021 for the relevant transactions are fair and reasonable.

For the purpose of obtaining the independent shareholders' approval on the provision of Deposit Services under the New Financial Services Agreement as well as the proposed annual caps for the aforementioned transactions for each of the two years ending 31 December 2020 and 2021, the Company will convene an EGM pursuant to the Listing Rules.

2. General

Each of Mr. XU Song, Mr. YIM Kong, Mr. CAO Dong, Dr. LI Jianhui, Mr. YUAN Yi and Mr. WEI Minghui, being a Director also holding a management position or directorship with CMG or its associates (other than the Group), has abstained from voting on the board resolution approving the New Financial Services Agreement and the transactions contemplated thereunder. Save as disclosed above, none of the Directors attending the board meeting has a material interest in or is required to abstain from voting on the New Financial Services Agreement and the transactions contemplated thereunder.

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The Independent Board Committee has been formed to advise the Independent Shareholders in respect of the provision of Deposit Services under the New Financial Services Agreement as well as the proposed annual caps for the aforementioned transactions. An independent financial adviser will be appointed to advise the Independent Board Committee to the Independent Shareholders on the same. CMG and its associates will abstain from voting on the ordinary resolution approving the transactions contemplated under the New Financial Services Agreement as well as the proposed annual caps for the aforementioned transactions at the general meeting to be held by the Company.

A circular containing, among other things, a letter of advice from the independent financial adviser to both the Independent Board Committee and the Independent Shareholders and a letter of recommendation from the Independent Board Committee to the Independent Shareholders and the details of the general meeting to be held to approve the provision of Deposit Services under the New Financial Services Agreement as well as the proposed annual caps for the aforementioned transactions, will be dispatched to the Shareholders on or before 13 January 2020 in accordance with the Listing Rules.

Although the provision of Loan Services and Settlement Services and other financial services under the New Financial Services Agreement are exempt from independent shareholders' approval requirements under Chapter 14A of the Listing Rules, the Company will seek independent shareholders' approval for the aforementioned transactions pursuant to the requirements under the Shanghai Listing Rules.

1. GENERAL INFORMATION
   The principal activities of the Group are: oil/liquefied chemical terminal and the related logistics services (Oil Segment); container terminal and related logistics services (Container Segment); automobile terminal and related logistics services (Automobile Terminal Segment); bulk and general cargo terminal and related logistics services (Bulk and General Cargo Segment); bulk grain terminal and related logistics services (Bulk Grain Segment); passenger and roll-on,roll-off terminal and related logistics services (Passenger and Ro-Ro Segment) and value-added and ancillary port operations (Value-added Services Segment).
   CMG Finance is beneficially wholly-owned by CMG and incorporated in the PRC. Its principal business activities include (i) provision of financial advice, credit authentication and relevant consulting and agency services for members of the CMG Group (the "CMG Group Members"); (ii) assistance in collection and payment of transaction money for CMG Group Members; (iii) provision of guarantees for CMG Group Members; (iv) trust loan services between CMG Group Members; (v) bills acceptances and discount services for CMG Group Members; (vi) internal money transfer and settlement and relevant settlement and clearance arrangement between CMG Group Members; (vii) internal money deposit services; (viii) loan and lease financing services for CMG Group Members; (ix) inter-bank lending business; (x) underwriting corporate bond of CMG Group Members; (xi) marketable securities investment (fixed income).
   CMG is an enterprise wholly-owned by the PRC Government (the State Council of the PRC) and supervised by the SASAC. It mainly provides services in three sectors, including transportation and related infrastructure, financial investment and asset management, and industry park and property development and management.

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1. DEFINITIONS

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

"2018 Announcement and	the Company's announcement dated 9 November 2018 and the
Circular"	circular dated 13 November 2018;
"acting in concert"	has the meaning ascribed to it under the Codes on Takeovers
	and Mergers and Share Buy-backs;
"associate"	has the meaning ascribed to it under the Listing Rules;
"Board"	the board of Directors;
"Broadford"	Broadford Global Limited, a company incorporated in Hong
	Kong on 27 November 2017 with limited liability and is
	directly wholly owned by China Merchants Holdings (Hong
	Kong) Company Limited and ultimately wholly-owned by
	CMG;
"China Merchants Liaoning"	China Merchants (Liaoning) Port Development Company
	L i m i t e d * ( 招商局（遼寧）港口發展有限公司) , a l i m i t e d
	liability company established in the PRC on 16 May 2018
	and is indirectly wholly-owned by Broadford and ultimately
	wholly-owned by CMG;
"CMG"	China Merchants Group Limited (招商局集團有限公司), a
	state wholly-owned enterprise established under the laws of
	the PRC on 14 October 1986 under the direct control of the
	SASAC;
"CMG Finance"	China Merchants Group Finance Co., Ltd.* (招商局集團財
	務有限公司) formerly known as 中外運長航財務有限公司
	(Sinotrans & CSC Finance Co., Ltd.), a company which is
	beneficially wholly-owned by CMG and incorporated in the
	PRC on 17 May 2011;
"New Financial Services	the framework agreement entered into by the Company and
Agreement"	CMG Finance on 20 December 2019 in regard to provision of
	Deposit Services, Loan Services and Settlement Services and
	other financial services by CMG Finance to the Group;

"CMG Group"

"Company"

"connected person"

CMG and its subsidiaries;

Dalian Port (PDA) Company Limited* (大連港股份有限公司), a joint stock limited company incorporated in the PRC;

has the meaning ascribed to it under the Listing Rules;

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"controlling shareholder"

"Dalian Port Finance"

has the meaning ascribed to it under the Listing Rules;

Dalian Port Group Finance Company Limited* (大連港集團財 務有限公司), a non-bank finance company jointly established by PDA and the Company under the PRC laws on 8 November 2011;

"Deposit Services"

"Director(s)"

"EGM"

"Group"

"Hong Kong"

"Independent Board Committee"

"Independent Shareholders"

"Liaoning Port Group"

depository services to be provided by CMG Finance to the Group pursuant to the New Financial Services Agreement;

the director(s) of the Company;

the extraordinary general meeting of the Company;

the Company and its subsidiaries;

the Hong Kong Special Administrative Region of the PRC;

the independent committee of the Board, comprising the independent non-executive Directors, namely WANG Zhifeng, SUN Xiyun and LAW Man Tat;

Shareholders other than CMG and its associates;

Liaoning Port Group Limited (遼寧港口集團有限公司),

formerly known as Liaoning North East Asia Gang Hang Development Co., Ltd. (遼寧東北亞港航發展有限公司),

a limited liability company established in the PRC on 27 November 2017;

"Listing Rules"

"Loan Services"

the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited;

credit, loan and guarantee services to be provided by CMG Finance to the Group pursuant to the New Financial Services Agreement;

"normal commercial terms	has the meaning ascribed to it under the Listing Rules;
or better"

"PDA"Dalian Port Group Corporation Limited* (大連港集團有限公

司), the controlling shareholder of the Company and a limited liability company established in the PRC on 1 January 1951 and directly wholly-owned by Liaoning Port Group;

"PRC"the People's Republic of China which, for the purpose of this announcement, excludes Hong Kong, Macao Special Administrative Region of the PRC and Taiwan;

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"RMB"

"SASAC"

"Settlement Services"

Renminbi, the lawful currency of the PRC;

the State-owned Assets Supervision and Administration Commission of the State Council of the PRC;

settlement and clearance services to be provided by CMG Finance to the Group pursuant to the New Financial Services Agreement;

"Shanghai Listing Rules"

"Shanghai Stock Exchange"

"Shareholders"

"subsidiary"

"%"

the Stock Listing Rules of the Shanghai Stock Exchange (上海 證券交易所股票上市規則);

the Shanghai Stock Exchange;

the shareholders of the Company;

has the meaning ascribed to it under the Listing Rules;

per cent.

By Order of the Board

WANG Huiying LEE Kin Yu, Arthur

Joint Company Secretaries

Dalian City, Liaoning Province, the PRC

20 December 2019

As at the date of this announcement, the Directors are:

Executive Director: WEI Minghui

Non-executive Directors: CAO Dong, LI Jianhui and YUAN Yi

Independent non-executive Directors: WANG Zhifeng, SUN Xiyun and LAW Man Tat

• The Company is registered as Non-Hong Kong company under Part XI of the previous Hong Kong Companies Ordinance (equivalent to Part 16 of the Hong Kong Companies Ordinance with effect from 3 March 2014) under the English name "Dalian Port (PDA) Company Limited".
• for identification purposes only.

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