China Merchants Port : PROPOSED DISCLOSEABLE TRANSACTION - ACQUISITION OF 51% EQUITY INTEREST IN ZHONGSHAN PORT GROUP

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(Incorporated in Hong Kong with limited liability under the Companies Ordinance)

The Board wishes to announce that on 11 September 2017, the board of directors of Chiwan Wharf, a subsidiary of the Company, has approved the terms of the Share Purchase Agreement, pursuant to which Chiwan Wharf will acquire from the Vendor the Sale Shares, representing 51% equity interest in the Target for a total consideration of RMB484,500,000 (equivalent to approximately HK$579,962,000). The execution of the Share Purchase Agreement will take place on 13 September 2017.

Upon completion of the acquisition, Chiwan Wharf, the Vendor and ZDCCI will each hold 51%, 11.51% and 37.49% of the equity interest in the Target. On the same day, Chiwan Wharf will also enter into the New Articles and the Equity Pledge Agreement in connection with the acquisition of the Target.

The Target currently operates port zones in Zhongshan Port, Xiaolan Port and Shenwan Port in the Pearl Delta River region with a total of 23 berths in operation.

As the applicable ratios of the consideration to be paid by Chiwan Wharf under the Share Purchase Agreement are more than 5% but less than 25%, the Share Purchase Agreementt, when entered into, and the transactions contemplated thereunder will constitute a discloseable transaction of the Company, and are subject to the notification and announcement requirements under Chapter 14 of the Hong Kong Listing Rules.

The Board wishes to announce that on 11 September 2017, the board of directors of Chiwan Wharf, a subsidiary of the Company has approved the terms of the Share Purchase Agreement with the Vendor in relation to the acquisition of 51% of the equity interest in the Target. The execution of the Share Purchase Agreement will take place on 13 September 2017. Upon completion of the acquisition, Chiwan Wharf, the Vendor and ZDCCI will each hold 51%, 11.51% and 37.49% of the equity interest in the Target, respectively. On the same day, Chiwan Wharf will also enter into the New Articles and the Equity Pledge Agreement in connection with the acquisition of the Target.

Major terms of the Share Purchase Agreement are set out below:

1. Chiwan Wharf (as purchaser)

2. Zhongshan Zhonghang Investment Development Limited (中山市中航投資發展 有限公司) (as vendor)

   Assets to be acquired

   Chiwan Wharf will acquire from the Vendor the Sale Shares, representing 51% of the equity interest of the Target.

   Consideration

   The total consideration for the acquisition of the Sale Shares shall be RMB484,500,000 (equivalent to approximately HK$579,962,000). The consideration was determined based on, inter alia, the appraised value of the Target as at 30 June 2017 (deducting the net profit to be distributed to the existing shareholders for the six months ended 30 June 2017) and also with reference to the historical financial performance and potential future development of the Target.

   The consideration will be settled by cash in two instalments. Payment of the first instalment of RMB454,500,000 is conditional upon, and shall be made within five business days after, satisfaction of, inter alia, the following:

3. execution of the New Articles by the relevant parties;

4. all necessary written notification and/or consent required from the third party lenders of the Target having been made/obtained;

5. all necessary consents and approvals (including those from the relevant PRC authorities) in relation to the transactions contemplated under the Share Purchase Agreement having been obtained; and

6. completion of relevant registration or filing with company registration authority in relation to the equity interest of Chiwan Wharf in the Target.

The second instalment of RMB30,000,000 shall be made within five business days upon the execution and completion of registration of the Equity Pledge Agreement with the relevant authorities.

The total consideration will be funded by the internal resources of the Group and bank loan facilities.

Corporate governance of the Target

Following completion of the acquisition under the Share Purchase Agreement, the board of directors of the Target will comprise nine directors of which Chiwan Wharf shall be entitled to appoint five directors (including the chairman who shall also act as the legal representative of the Target). ZDCCI and the Vendor shall be entitled to appoint three directors and one director, respectively. Resolutions of the board of directors of the Target shall be passed by a majority of directors present at the meeting.

Chiwan Wharf shall be entitled to appoint one out of three supervisors in the supervisory committee and such supervisor shall be the chairman of the supervisory committee. Chiwan Wharf shall also have the right to nominate the chief executive officer and chief financial officer of the Target.

EQUITY PLEDGE AGREEMENT

Pursuant to the Share Purchase Agreement, the Vendor shall create in favour of Chiwan Wharf an equity pledge of 6,000,000 shares of the Target held by it, representing 6% of the total equity interest in the Target, to guarantee certain of its obligations under the Share Purchase Agreement for a period of two years from the date of registration of the Equity Pledge Agreement.

INFORMATION OF THE TARGET, THE VENDOR AND ZDCCI The Target

The Target is a company incorporated in the PRC with limited liability and currently owned by the Vendor and ZDCCI as to 62.51% and 37.49%, respectively. The Target and its subsidiaries are principally engaged in port investment and operation, water

cargo transportation, logistics operation, agency of shipping and cargo, storage, import and export of goods and technology, and leasing of properties in Zhongshan, Guangdong Province, the PRC. The Target currently operates port zones in Zhongshan Port, Xiaolan Port and Shenwan Port in the Pearl Delta River region with a total of 23 berths in operation.

Based on the audited financial statements of the Target prepared in accordance with the China Accounting Standards for Business Enterprises, the audited consolidated total assets and net assets of the Target as at 30 June 2017 amounted to approximately RMB1,050,597,400 (equivalent to approximately HK$1,257,598,000) and RMB476,682,100 (equivalent to approximately HK$570,603,400) respectively. The net profits (before and after tax) of the Target for the years ended 31 December 2015 and 31 December 2016 are as follows:

For the year ended 31 December 2015 For the year ended 31 December 2016

(RMB'000)

(HK$'000)

Net profit before tax

RMB72,783 (equivalent to approximately HK$87,124)

RMB100,960 (equivalent

to approximately HK$120,852)

Net profit after tax

RMB52,400 (equivalent to approximately HK$62,724)

RMB75,795 (equivalent to approximately HK$90,729)

The Vendor

The Vendor is a company incorporated in the PRC with limited liability. Its principal business activity includes port investment, shipping, land transportation and related business, sale of construction materials and electronic appliances, leasing of properties and management of car parking in local districts.