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

(Stock Code: 3983)

CONNECTED TRANSACTION

ACQUISITION OF AN 8% EQUITY INTEREST

IN HAINAN CNOOC TRANSPORTATION CO., LTD.

On 8 November 2013, Basuo Port, a subsidiary of the Company, entered into the Equity Transfer Agreement with Shanghai Shenxin, pursuant to which Basuo Port has agreed to purchase, and Shanghai Shenxin has agreed to sell, an 8% equity interest in Hainan CNOOC Transportation with a total consideration of RMB3,106,600 (equivalent to approximately HK$3,918,862.66).
Before signing the Equity Transfer Agreement, the equity interest of Hainan CNOOC Transportation was owned as to 92.0% by Basuo Port and as to 8% by Shanghai Shenxin. Following the completion of the Acquisition, Hainan CNOOC Transportation will become a wholly-owned subsidiary of Basuo Port.
Shanghai Shenxin is a wholly-owned subsidiary of ZhongHai Investment, 95% of equity interest in which is owned by the Company's controlling shareholder, CNOOC. As such, Shanghai Shenxin is a connected person of the Company. The Acquisition will constitute a connected transaction for the Company.
As the highest applicable percentage ratio exceeds 0.1% but is less than 5%, the Acquisition is only subject to the reporting and announcement requirements, under Chapter 14A of the Listing Rules.
1. INTRODUCTION
The Board is pleased to announce that on 8 November 2013, Basuo Port, a subsidiary of the Company, entered into the Equity Transfer Agreement with Shanghai Shenxin, pursuant to which Basuo Port has agreed to purchase, and Shanghai Shenxin has agreed to sell, an 8% equity interest in Hainan CNOOC Transportation.
Before signing the Equity Transfer Agreement, the equity interest of Hainan CNOOC Transportation was owned as to 92% by Basuo Port and as to 8% by Shanghai Shenxin. Following the completion of the Acquisition, Hainan CNOOC Transportation will become a wholly-owned subsidiary of Basuo Port.
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2. THE ACQUISITION
(a) Key Terms of the Acquisition
Target Equity
Basuo Port has agreed to purchase, and Shanghai Shenxin has agreed to sell, an 8% equity interest in Hainan CNOOC Transportation in accordance with the terms and conditions in the Equity Transfer Agreement.
Consideration
The total consideration for the Acquisition is RMB3,106,600 (equivalent to approximately HK$3,918,862.66). The Consideration was determined on the basis of normal commercial terms and arm's length negotiations between Basuo Port and Shanghai Shenxin, with reference to the appraised value of Hainan CNOOC Transportation of RMB38,832,200 (equivalent to approximately HK$48,985,404.87) as at 31 December 2012 (being the reference date) and multiplying by 8%. Such appraisal was prepared by an independent PRC valuer based on an asset-based approach. As at 31 December 2012, the audited book value of the net asset of Hainan CNOOC Transportation was RMB37,027,124.77 (equivalent to approximately HK$46,708,368.26). Shanghai Shenxin's original investment amount was RMB500,000 (equivalent to approximately HK$630,731.78) in 2003.
The Consideration for the Acquisition will be paid in full in cash on the Completion
Date.
The Consideration will be financed by the Group's internal resources.
Following the completion of the Acquisition, Hainan CNOOC Transportation will become a wholly-owned subsidiary of Basuo Port.
(b) Reasons For and Benefits of the Acquisition
Hainan CNOOC Transportation has strong profitability with steady business development in the future. The Acquisition will increase the Company's economic return.
The Directors (including independent non-executive Directors) believe that the Acquisition is conducted on normal commercial terms in the ordinary and usual course of the Company's business, and the terms of the Equity Transfer Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.
(c) Information on Hainan CNOOC Transportation
Hainan CNOOC Transportation was incorporated under the laws of the PRC and is principally engaged in the transportation service.
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The total profits attributable to the equity to be acquired, which is an 8% equity interest in Hainan CNOOC Transportation, for the two years ended 31 December
2011 and 31 December 2012 are as follows:
For the year ended
31 December
2011
For the year ended
31 December
2012
(RMB'000) (RMB'000)
Net profits before taxation 1,312 1,199
Net profits after taxation 946 891
3. LISTING RULES IMPLICATIONS
Shanghai Shenxin is a wholly-owned subsidiary of ZhongHai Investment, 95% of equity interests in which are owned by the Company's controlling shareholder, CNOOC. As such, Shanghai Shenxin is a connected person of the Company. The Acquisition will constitute a connected transaction for the Company within the meaning of the Listing Rules.
As the highest applicable percentage ratio exceeds 0.1% but is less than 5%, the Acquisition is only subject to the reporting and announcement requirements, under Chapter 14A of the Listing Rules.
4. INFORMATION ON THE COMPANY AND BASUO PORT
The Company and its subsidiaries are principally engaged in the production and sale of fertilizers (mainly urea and phosphate fertilizers) and chemical products (primarily methanol and POM).
Basuo Port is a subsidiary of the Company and mainly engaged in the port operation.
5. INFORMATION ON SHANGHAI SHENXIN
Shanghai Shenxin is a company incorporated under the laws of the PRC and mainly engaged in development of real estate projects.
DEFINITIONS
In this announcement, save as the context otherwise requires, the defined terms have the following meanings:
''Acquisition'' the acquisition by Basuo Port of an 8% equity interest in Hainan CNOOC Transportation from Shanghai Shenxin pursuant to the Equity Transfer Agreement
''Basuo Port''