Terms used in this cover page shall have the same meaning as those defined in the section headed Definitions in this circular.

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in Tianjin Binhai Teda Logistics (Group) Corporation Limited* (the Company ), you should at once hand this circular to the purchasers or the transferees or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchasers or the transferees. Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. Tianjin Binhai Teda Logistics (Group) Corporation Limited* (a joint stock limited company incorporated in the People s Republic of China with limited liability) (Stock code: 8348) (1) REVISION OF ANNUAL CAP FOR CONTINUING CONNECTED TRANSACTIONS AND (2) GRANT OF GENERAL MANDATE TO ISSUE SHARES AND (3) NOTICE OF ANNUAL GENERAL MEETING Terms used in this cover page shall have the same meaning as those defined in the section headed Definitions in this circular. A letter from the Board is set out on pages 4 to 9 of this circular. A letter from the Independent Board Committee containing its recommendation to the Shareholders is set out on page 10 of this circular. A letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Shareholders is set out on pages 11 to 15 of this circular. A notice convening an Annual General Meeting of Tianjin Binhai Teda Logistics (Group) Corporation Limited* to be held at the Conference Room at No.39 Bohai Road, Tianjin Economic and Technological Development Zone, Tianjin, the PRC on Wednesday, 9 June 2010 at 9:30 a.m. is set out on pages 20 to 23 of this circular. A form of proxy for use at the Annual General Meeting is enclosed with this circular and such form of proxy is also published on the websites of the Stock Exchange ( and the Company Whether or not you intend to attend the Annual General Meeting, you are requested to complete and return (i) the enclosed reply slip in accordance with the instructions printed thereon not later than Wednesday, 19 May 2010 and (ii) the enclosed form of proxy in accordance with the instructions printed thereon not less than 24 hours before the time fixed for holding the Annual General Meeting or any adjournment thereof (as the case may be). This circular will remain on the Latest Company Announcement page of the GEM website at and on the Company s website at for at least 7 days from the date of its publication. * For identification purpose only 20 April 2010

2 CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET ( GEM ) OF THE STOCK EXCHANGE OF HONG KONG LIMITED GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors. Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM. i

3 CONTENTS Page Definitions... 1 Letter from the Board 1. Introduction Revision of Annual Cap for the Continuing Connected Transactions Grant of the General Mandate to Issue Shares Annual General Meeting and Proxy Arrangement Procedures for Demanding a Poll by the Shareholders Recommendation Additional Information... 9 Letter from the Independent Board Committee Letter from the Independent Financial Adviser Appendix General Information Notice of the Annual General Meeting ii

4 DEFINITIONS In this circular, unless the context otherwise requires, the following expressions have the following meanings: Annual General Meeting or AGM Articles Board means an annual general meeting of the Company to be held at No.39 Bohai Road, Tianjin Economic and Technological Development Zone, Tianjin, the PRC on Wednesday, 9 June 2010 at 9:30 a.m., to consider and, if appropriate, to approve the resolutions contained in the notice of the annual general meeting which is set out on pages 20 to 23 of this circular, or any adjournment thereof means the articles of association of the Company currently in force means the board of Directors of the Company Company means Tianjin Binhai Teda Logistics (Group) Corporation Limited* ( ), a joint stock limited company incorporated in the PRC with limited liability Continuing Connected Transactions Director(s) Domestic Share(s) GEM GEM Listing Rules GEM website General Mandate means the transactions as contemplated between the Group and Toyota Tsusho and its associates under the Toyota Services Supply Agreement means the director(s) of the Company means ordinary share(s) of nominal value of RMB1.00 each in the share capital of the Company which are subscribed for or credited as paid up in Renminbi means the Growth Enterprise Market of the Stock Exchange means the Rules Governing the Listing of Securities on the GEM means being the internet website operated by the Stock Exchange for GEM means the proposed unconditional general mandate to allot, issue and otherwise deal with additional Domestic Shares and/or H Shares not exceeding 20% of the issued Shares of that class as at the date of the passing of the relevant resolution 1

5 DEFINITIONS Group Hong Kong means the Company together with its subsidiaries means the Hong Kong Special Administrative Region of the PRC H Shares means overseas-listed foreign shares of the Company with a nominal value of RMB1.00 each, which are listed on the GEM board of the Stock Exchange Independent Board Committee Independent Financial Adviser Latest Practicable Date PRC Prospectus Revised Annual Cap RMB means an independent committee of the Board comprising all the independent non-executive Directors, namely, Mr. Zhang Limin, Mr. Luo Yongtai and Mr. Liu Jingfu, to be established to advise the shareholders on the Continuing Connected Transactions and the Revised Annual Cap means KBC Bank N.V., acting through its Hong Kong branch, a licensed bank under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong) and a registered institution registered for Type 6 (advising on corporate finance) regulated activities under the SFO and the independent financial adviser to the Independent Board Committee and the independent Shareholders means 15 April 2010, being the latest practicable date prior to the printing of this circular for ascertaining certain information in this circular means the People s Republic of China, which for the purpose of this circular, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan means the prospectus of the Company dated 24 April 2008 means the revised annual cap for the Continuing Connected Transactions for the period from 1 January 2010 to 31 December 2010 in the sum of RMB109,000,000 means Renminbi, the lawful currency of the PRC 2

6 DEFINITIONS SFO Shareholders Shares Stock Exchange Toyota Fengtian Logistics Toyota Services Supply Agreement Toyota Tsusho means the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time means holder(s) of the Shares means the Domestic Shares and the H shares means The Stock Exchange of Hong Kong Limited means Tianjin Fengtian Logistics Co., Ltd. ( ), a sino-foreign equity joint venture incorporated in the PRC on 19 July 1996, which is owned as to 52% by the Company, 36.2% by Toyota Tsusho, 7.3% by Kamigumi Company Limited ( ) and 4.5% by Toyota Transportation Corporation ( ). Tianjin Fengtian Logistics is a subsidiary of the Company under the GEM Listing Rules means a master services agreement entered into between the Company and Toyota Tsusho on 18 April 2008 in relation to the provision of logistics services and supply chain solutions by the Group for automobiles and car components to Toyota Tsusho and its associates means Toyota Tsusho Corporation ( ), a company incorporated in Japan with limited liability whose common stock is listed on the first section of Tokyo Stock Exchange and Nagoya Stock Exchange, a shareholder of Tianjin Fengtian Logistics holding 36.2% of its entire registered capital. Toyota Tsusho is owned as to approximately 21.57% by Toyota Motor Corporation and is an associated company of Toyota Motor Corporation. Toyota Tsusho is therefore a member of the Toyota Group. Its principal business includes trading of metals, machinery and electronics products, automotive, energy and chemical products, produce and foodstuffs, consumer products, services and materials % means percent 3

7 LETTER FROM THE BOARD Tianjin Binhai Teda Logistics (Group) Corporation Limited* (a joint stock limited company incorporated in the People s Republic of China with limited liability) (Stock code: 8348) Executive Directors: Mr. Zhang Jian Mr. Wang Wei Non-executive Directors: Mr. Zhang Jun Mr. Ding Yi Mr. Hu Jun Mr. Zhang Jinming Independent non-executive Directors: Mr. Zhang Limin Mr. Luo Yongtai Mr. Liu Jingfu Registered office and Principal place of Business in the PRC: No.39, Bohai Road Tianjin Economic and Technological Development Zone Tianjin The PRC Principal place of business in Hong Kong: Suite 2208, 22/F, Jardine House 1 Connaught Place Central Hong Kong 20 April 2010 To the Shareholders Dear Sir or Madam, (1) REVISION OF ANNUAL CAP FOR CONTINUING CONNECTED TRANSACTIONS AND (2) GRANT OF GENERAL MANDATE TO ISSUE SHARES AND (3) NOTICE OF ANNUAL GENERAL MEETING 1. INTRODUCTION The purpose of this circular is to provide you with information regarding, among other things, (i) details of the Continuing Connected Transactions and the Revised Annual Cap, (ii) recommendations from the Independent Board Committee in relation to the Continuing Connected Transactions and the Revised Annual Cap, (iii) letter from the Independent Financial Adviser to the Independent Board Committee containing its advice on the Continuing Connected Transactions and the Revised Annual Cap, (iv) grant of the general mandate to issue shares, and (v) notice of the AGM. * For identification purpose only 4

8 LETTER FROM THE BOARD 2. REVISION OF ANNUAL CAP FOR CONTINUING CONNECTED TRANSACTIONS Reference is made to the announcements of the Company dated 12 March 2010 and 29 March 2010 respectively, whereby the Company announced that the aggregate transaction value received by the Group for the financial year ended 31 December 2009 has slightly exceeded the annual monetary cap of RMB60,000,000 by approximately RMB5,318,000 and is approximately RMB65,318,000. Further, it is anticipated that the aggregate transaction value received by the Group for the financial year ended 31 December 2010 will exceed the previous monetary cap of RMB66,000,000 by RMB43,000,000 and will be no more than RMB109,000,000. Thus, the Company would like to approve and rectify the aggregate transaction value for the period from 1 January 2009 to 31 December 2009 and increase the annual monetary cap for the period from 1 January 2010 to 31 December 2010 so as to reflect the continuing growth in its logistics business. Background of the Continuing Connected Transactions As disclosed in the Prospectus, certain transactions between the Group and Toyota Tsusho are regarded as non-exempt continuing connected transactions pursuant to the GEM Listing Rules, and a waiver from strict compliance with the requirements under Chapter 20 of the GEM Listing Rules in respect of the Continuing Connected Transactions has been granted by the Stock Exchange. The Group has from time to time offered logistics services and supply chain solutions for automobiles and car components to Toyota Tsusho and its associates. The Company entered into the Toyota Services Supply Agreement with Toyota Tsusho on 18 April 2008 for the period up to 31 December 2010 as required the GEM Listing Rules. Pursuant to the Toyota Services Supply Agreement, the service fees payable by Toyota Tsusho and its associates to the Group shall be determined by reference to the services specified by Toyota Tsusho and its relevant associates, including the nature and quantities of goods to be delivered and handled, the time and human resources required, the distance of freight forwarding and the complexity of the logistics and supply chain solutions (such as processing and packaging cost and fees for customs clearance, where applicable) and on terms no more favourable to Toyota Tsusho and its relevant associates than those available to independent third parties. Please refer to the Prospectus for further details in relation to the Continuing Connected Transactions. Exceeded amount for 2009 Due to the unexpected increase in the actual business volume of Toyota Tsusho which leads to the corresponding increase in the demand of the logistics services from the Group, the aggregate transaction value received by the Group for the financial year ended 31 December 2009 has slightly exceeded the annual 5

9 LETTER FROM THE BOARD monetary cap of RMB60,000,000 by approximately RMB5,318,000 and the aggregate transaction value for period from 1 January 2009 to 31 December 2009 is approximately RMB65,318,000. The aforesaid exceeded amount has come to the attention of the Company in the course of its annual audit and has been further disclosed in the 2009 annual report of the Company. Reasons and benefits of the Continuing Connected Transactions The Company considers that the aforesaid exceeded amount is mainly due to the unexpected increase in the actual business volume of Toyota Tsusho which leads to the corresponding increase in the demand of the logistics services from the Group. The Continuing Connected Transactions are important to the long-term business relationship between the Group and Toyota Tsusho and its associates and are one major source of income of the Group. Toyota Tsusho and its associates have been paying the Group in accordance with the terms of invoice issued by the Group to Toyota Tsusho and its associates. As such transactions have been conducted in accordance with the principles as disclosed in the Prospectus, the Board (including the independent non-executive Directors) considers that the aforesaid exceeded amount, is on normal commercial terms, in the ordinary and usual course of business of the Group, fair and reasonable and in the interests of the Company and the Shareholders as a whole. Approval of the Continuing Connected Transactions and revision of the annual cap In light of the aforesaid, the Company would like to approve and rectify the aggregate transaction value of RMB65,318,000 for the period from 1 January 2009 to 31 December 2009 and increase the annual monetary cap for the period from 1 January 2010 to 31 December 2010 from RMB66,000,000 to RMB109,000,000 so as to reflect the continuing growth in the logistics business. The historical transaction amounts in respect of the Continuing Connected Transactions are as follows: Year ending 31 December RMB 000 RMB 000 RMB 000 Actual transaction amount for the Continuing Connected Transactions 45,248 54,224 65,318 6

10 LETTER FROM THE BOARD To reflect the continuing growth in the logistics business of the Group, it is proposed that the annual cap for the period from 1 January 2010 to 31 December 2010: Annual cap for the period from 1 January 2010 to 31 December 2010 RMB 000 RMB 000 Current Revised Aggregate transaction value for the Continuing Connected Transactions 66, ,000 The Revised Annual Cap is based on the following: The Revised Annual Cap is determined primarily based on Toyota Tsusho s annual projection of its logistic and supply chain solution services demanded from the Group and the volume and types of the automobile and car components to be transported which, in turn, is based on the yearly production plan of Toyota Tsusho and its associates, and a buffer for the unexpected additional logistics and supply chain solution services to be demanded by Toyota Tsusho and its associates. Having considered the above, together with the facts that the actual monetary transaction amount of the Continuing Connected Transactions for the year ended 31 December 2009 has exceeded the corresponding initial annual cap by approximately 8.9%; and the positive PRC government policies on the automobile industry, the Board considers that it is reasonable for the Group to adopt the above-mentioned bases and assumptions in determining the Revised Annual Cap and the Revised Annual Cap is on normal commercial terms, in the ordinary and usual course of business of the Group, fair and reasonable and in the interests of the Company and the Shareholders as a whole. All the terms of the Toyota Services Supply Agreement as disclosed in the Prospectus will remain unchanged. GEM Listing Rules implications Toyota Tsusho, which holds approximately 36.2% equity interest in Tianjin Fengtian Logistics, a non-wholly owned subsidiary of the Company, is a substantial shareholder of Tianjin Fengtian Logistics and thus, a connected person of the Company as defined under the GEM Listing Rules. As the previously announced annual cap for the year ended 31 December 2009 was exceeded, the Company will re-comply with the reporting, announcement and independent shareholders approval requirements under the GEM Listing Rules. Also, since the Revised Annual Cap exceeds 2.5% of the applicable percentage ratio, it is subject to the reporting, announcement and independent shareholders approval requirements under the GEM Listing Rules. 7

11 LETTER FROM THE BOARD Information on the Group The Group is principally engaged in the provision of supply chain logistic services regarding transportation of finished automobiles and automobile components, electronic components, materials procurement and related logistic services and bonded warehouse services. Information on Toyota Tsusho Toyota Tsusho and its associates are members of Toyota group. Toyota group is one of the leading manufacturers in the automobiles and car components industry. It has established numerous trade operations, joint ventures and affiliates which engage in the manufacture and trading automobiles and car components in the PRC. Toyota Tsusho has well established transportation network in Shanghai and Guangzhou. 3. GRANT OF GENERAL MANDATE TO ISSUE SHARES To increase the flexibility and efficiency in operation, and to give discretion to the Board in the event that it becomes desirable to issue new Shares, the Company proposes to obtain Shareholders approval for the General Mandate to allot, issue and otherwise deal with additional Domestic Shares and/or H Shares not exceeding 20% of the issued Shares of that class as at the date of the passing of the relevant resolution. Any exercise of the power by the Directors under the General Mandate shall be subject to the relevant requirements of the GEM Listing Rules, the Articles and the applicable laws and regulations of the PRC. The Board has no present plan to issue new Shares pursuant to the General Mandate. The General Mandate shall be effective from the date of passing of the relevant resolution until whichever is the earliest of: (i) (ii) (iii) the conclusion of the next annual general meeting of the Company; the expiration of the period within which the next annual general meeting of the Company is required by the Articles or other applicable laws to be held; or the revocation or variation of the authority given under the relevant resolution by a special resolution of the Company in general meeting. As at the Latest Practicable Date, the Company had in issue 354,312,000 Shares, which comprises 256,068,800 Domestic Shares and 98,243,200 H Shares. Subject to the passing of the proposed resolution for the approval of the General Mandate and in accordance with the terms therein, the Company will be allowed to allot, issue and deal with up to a maximum of 51,213,760 Domestic Shares and/or 19,648,640 H Shares on the basis that no further Shares will be issued by the Company prior to the AGM. 4. ANNUAL GENERAL MEETING AND PROXY ARRANGEMENT The notice of the AGM is set out on pages 20 to 23 of this circular. At the AGM, resolutions will be proposed to approve, among others, the Continuing Connected Transactions, the Revised Annual Cap and the grant of the General Mandate. 8

12 LETTER FROM THE BOARD A form of proxy for use at the AGM is enclosed with this circular and such form of proxy is also published on the websites of the Stock Exchange ( and the Company ( Whether or not you intend to attend the AGM, you are requested to complete and return (i) the enclosed reply slip in accordance with the instructions printed thereon not later than Wednesday, 19 May 2010 and (ii) the enclosed form of proxy in accordance with the instructions printed thereon not less than 24 hours before the time fixed for holding the AGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending the AGM and voting in person if you so wish. To the best of the Director s knowledge, information and belief and having made all reasonable requires, no Director or Shareholder has a material interest in the resolutions proposed at the AGM, and no shareholder is required to abstain from voting on any of the resolution at the AGM. 5. PROCEDURES FOR DEMANDING A POLL BY SHAREHOLDERS According to GEM Listing Rule 17.47(4), any vote of the Shareholders at a general meeting must be taken by poll. 6. RECOMMENDATION Your attention is drawn to the recommendations of the Independent Board Committee as set out in its letter on page 10 of this circular. Your attention is also drawn to the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Shareholders in respect of the Continuing Connected Transactions and the Revised Annual Cap on pages 11 to 15 of this circular. The Directors consider that all resolutions proposed for consideration and approval by the Shareholders at the AGM are in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend all the Shareholders to vote in favour of all the resolutions to be proposed at the AGM as set out in the notice of the AGM. 7. ADDITIONAL INFORMATION Your attention is drawn to the additional information set out in the appendix to this circular. * For identification purpose only Yours faithfully, By order of the Board Tianjin Binhai Teda Logistics (Group) Corporation Limited* Zhang Jian Chairman 9

13 LETTER FROM THE INDEPENDENT BOARD COMMITTEE Tianjin Binhai Teda Logistics (Group) Corporation Limited* (a joint stock limited company incorporated in the People s Republic of China with limited liability) (Stock code: 8348) To the Shareholders 20 April 2010 Dear Sir or Madam, REVISION OF ANNUAL CAP FOR CONTINUING CONNECTED TRANSACTIONS We refer to the circular issued by the Company to the Shareholders dated 20 April 2010 (the Circular ) of which this letter forms part. Unless otherwise specified, capitalised terms used herein shall have the same meanings as those defined in the Circular. We have been appointed by the Board to advise you on the terms of the Continuing Connected Transactions and the Revised Annual Cap. KBC Bank N.V. Hong Kong Branch has been appointed as the independent financial adviser to advise you and us in this regard. Details of its advice, together with the principal factors and reasons it has taken into consideration in giving such advice, are set out from pages 11 to 15 of the Circular and the additional information set out in the appendix thereto. Having considered the terms of the Continuing Connected Transactions and the Revised Annual Cap, and taking into account the independent advice of KBC Bank N.V. Hong Kong Branch set out in its letter from pages 11 to 15 of the Circular, we consider that the terms of the Continuing Connected Transactions and the Revised Annual Cap are fair and reasonable as far as the Shareholders are concerned and the entering into of the Continuing Connected Transactions by the Company and the approval of the Revised Annual Cap are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend you to vote in favour of the ordinary resolution to be proposed at the AGM to approve the Continuing Connected Transactions and the Revised Annual Cap. Yours faithfully, For and on behalf of The Independent Board Committee Mr. Zhang Limin Mr. Luo Yongtai Mr. Liu Jingfu * For identification purpose only 10

14 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER The following is the text of a letter received from KBC Bank N.V. Hong Kong Branch setting out its advice to the Independent Board Committee and the independent Shareholders for inclusion in this Circular. 39/F Central Plaza 18 Harbour Road Hong Kong 20 April 2010 To the Independent Board Committee and the independent Shareholders Dear Sir/Madam, INTRODUCTION REVISION OF ANNUAL CAP FOR CONTINUING CONNECTED TRANSACTIONS We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the independent Shareholders in connection with the Continuing Connected Transactions and the Revised Annual Cap, details of which, among other things, are set out in the section headed Letter from the Board as contained in the circular dated 20 April 2010 (the Circular ), of which this letter forms a part. Unless otherwise defined herein, terms used in this letter shall have the same meanings as those defined in the Circular. As described in the Prospectus, the Group has from time to time offered logistics services and supply chain solutions for automobiles and car components to Toyota Tsusho and its associates. On 18 April 2008, Toyota Fengtian Logistics, a non-wholly owned subsidiary of the Company, entered into the Toyota Services Supply Agreement for the Group s provision of the said logistics services and supply chain solutions to Toyota Tsusho and its associates for the period from 18 April 2008 to 31 December By virtue of Toyota Tsusho being a substantial shareholder interested in 36.2% equity interest in Tianjin Fengtian Logistics, a non-wholly owned subsidiary of the Company, Toyota Tsusho and its associates are connected persons of the Company under the GEM Listing Rules. Accordingly, the transactions contemplated under the Toyota Services Supply Agreement constitute continuing connected transactions of the Company. During the year ended 31 December 2009, the Group experienced an unexpected increase in the business volume with Toyota Tsusho and its associates and the actual transaction amount exceeded the proposed annual cap of RMB60 million (the Toyota Services Annual Cap ) for the Continuing Connected Transactions for the same year by approximately 8.9%. In order to cope with the growth in the Group s business with Toyota Tsusho and its associates, the Company has proposed to increase the Toyota Services Annual Cap for the year ending 31 December 2010 from RMB66 million to the Revised Annual Cap of RMB109 million. As the applicable ratio(s) (as defined under the GEM Listing Rules) in respect of the Revised Annual Cap are more than 2.5% and the Revised Annual Cap is greater than HK$10 million, the Revised Annual Cap is subject to the reporting, announcement and independent shareholders approval requirements under the GEM Listing Rules. 11

15 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER The Independent Board Committee, comprising all the independent non-executive Directors, namely Mr. Zhang Limin, Mr. Luo Yongtai and Mr. Liu Jinfu, has been established to advise the independent Shareholders on the Revised Annual Cap. We, KBC Bank N.V. Hong Kong Branch, have been appointed as the independent financial adviser to advise the Independent Board Committee and the independent Shareholders as to whether (i) the Continuing Connected Transactions are conducted on normal commercial terms and in the ordinary and usual course of business of the Group; (ii) the Revised Annual Cap is fair and reasonable in so far as the independent Shareholders are concerned; and (iii) the granting of the Revised Annual Cap is in the interest of the Company and the Shareholders as a whole. In formulating our recommendation, we have relied on the information and facts supplied to us by the Company. We have reviewed, among other things, (i) the Toyota Services Supply Agreement; (ii) the Prospectus; and (iii) the Company s annual reports covering the three years ended 31 December 2009 (the Financial Reports ). We have assumed that all information and facts supplied to us by the Company are true, complete and accurate in all material aspects and we have relied on the same. Also, we have relied on the representations made by the management of the Company that having made all due enquiries and careful decisions, and to the best of their information, knowledge and belief, there is no other fact or representation or the omission of which would make any statement contained in the Circular, including this letter, misleading. We have also assumed that all information, statements and representations made or referred to in the Circular, which have been provided to us by the Company, and for which it is wholly responsible, are true, complete and accurate in all material respects at the time they were made and continue to be so at the date of despatch of the Circular. We consider that we have reviewed sufficient information to enable us to reach an informed view to provide us with a reasonable basis for our recommendation. We have no reason to suspect that any material facts have been omitted or withheld, nor are we aware of any facts or circumstances, which would render the information and the representations made to us untrue, inaccurate or misleading. We have not, however, carried out any independent verification of the information provided by the Company; nor have we conducted any independent in-depth investigation into the business and affairs of the Company and its respective associates. PRINCIPAL FACTORS AND REASONS CONSIDERED In formulating our opinion and recommendation and giving our independent financial advice to the Independent Board Committee and the independent Shareholders, we have taken into account the following principal factors: 1. Background of the Group and Tianjin Fengtian Logistics The Group is principally engaged in the provision of comprehensive logistics and supply chain solutions regarding automobiles and car components, electronic components, materials procurement and related logistics services and bonded warehouse services in the PRC. The Group designs and implements custom-made logistics and supply chain solutions for its customers with an aim to ensuring accurate inventory flow, precise warehousing, pre-production preparation management and timely freight forwarding services for its customers. The Group s supply chain solutions are designed to manage the inventory level of its customers and shorten the lead time for delivery of production materials and components from the suppliers to its customers manufacturing plants, thereby enhancing the efficiency of the manufacturing operations of its customers. 12

16 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER Set out below is a summary of the Group s financial performance for the three years ended 31 December 2009: For the year ended 31 December * 2009 RMB million %RMB million %RMB million % Turnover Logistics services and supply chain solutions % % % Materials Procurement and related logistics services % % 1, % Others % % Total % 1, % 2, % Segment Results Logistics services and supply chain solutions % % % Materials Procurement and related logistics services % % Others Total % % % Source: the Financial Reports * balances as restated in the Company s annual report for the year ended 31 December 2009 Although the revenue derived from the Group s provision of the logistics services and supply chain solutions business had been adversely impacted by the global financial crisis and the downturn of the domestic economy, this business segment has remained as a major profit contributor of the Group for each of the past three years, accounting for more than 70% of the Group s total segment results for each of the corresponding years, respectively. 2. Background of Toyota Tsusho and its relationship between the Group Toyota Tsusho, a company incorporated in Japan with its shares listed on the first section of the Tokyo Stock Exchange and the Nagoya Stock Exchange and an associate of the Toyota Motor Corporation ( Toyota, and together with its subsidiaries, the Toyota Group ), is principally engaged in the trading of metals, machinery and electronics products, automotive, energy and chemical products. Toyota Tsusho has formed a number of joint ventures engaging in the business of logistics in the PRC, Japan, the Republic of India, the Republic of Indonesia and the Republic of Colombia and established Tianjin Fengtian Logistics as a sino-foreign joint venture in 1996, which became a 52%-subsidiary of the Company in 2006, for the provision of logistics business to the automobile and car components sector. The Toyota Group, a renowned Japanese group of companies engaged in the manufacturing and sales of automobiles, is one of the principal customers of the Group for many years, particularly after the commencement of commercial production of Toyota Group s automobile manufacturing plant in Tianjin, the PRC 13

17 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER in As disclosed in the Circular, the Continuing Connected Transactions are important to the long-term business relationship between the Group and Toyota Tsusho and its associates, and accounted for approximately 7.2% and 8.8% of Tianjin Fengtian Logistics turnover for each of the two years ended 31 December 2009, respectively. Given that all of the terms of the Toyota Services Supply Agreement will remain unchanged and the fees payable by Toyota Tsusho and its associates for the Continuing Connected Transactions are determined with reference to the services specified by Toyota Tsusho and its associates, including the nature and the quantities of goods to be delivered and handled, the time and the human resources required, the distance of freight forwarding and the complexity of the logistics and supply chain solutions (such as processing and packaging costs and fees for customs clearance, where applicable) and on terms no more favourable to Toyota Tsusho and its relevant associates than those available to independent third parties as disclosed in the Prospectus, we are of the view that the Continuing Connected Transactions are conducted in the ordinary and usual course of business of the Group and on normal commercial terms. 3. Overview of the logistics and automobile industries in the PRC During late 2008 and early 2009, the State Council of the PRC announced a series of policies to stimulate domestic consumption to mitigate the adverse impact on the PRC s economy from the global financial turmoil, including (i) the RMB4 Trillion Stimulus Package announced in November 2008 for purposes of increasing the national investment in infrastructure (such as power network, water resources, railways, expressways and airports), environmental protection (garbage management and sewage water processing) and the income of rural households (through provision and increment in the various government subsidies), and (ii) the Swap of Used Cars and Home Appliances for New Ones program announced in March 2009, under which PRC consumers who trade-in their used vehicles for purchasing new ones will receive rebates from the government. In March 2009, the State Council of the PRC issued the (the National Plan for Adjustment and Stimulation of the Logistics Industry ) which aimed to further expand the logistics industry in the PRC and had specifically designated Tianjin to be one of the nine major logistics centres of the PRC. Given the implementation of these macroeconomic measures, the PRC s gross domestic product in 2009 was able to record a growth rate of approximately 8.7% from 2008 according to the National Bureau of Statistics of the PRC, and the national logistics expenses and value of the logistics industry rose by 7.2% and 7.4% from 2008 to approximately RMB6.08 trillion and RMB96.7 trillion in 2009, respectively, according to the China Federation of Logistics and Purchasing. Whilst at the same time, the PRC s automobile industry overtook the leading position of the United States of America s and became the world s largest producer and consumer of automobiles in 2009 (representing an increase of approximately 48.30% and 46.15% from 2008, respectively). In March 2010, the PRC government has further announced that the growth rate of the national gross domestic products is targeted to be maintained at 8% in Given the above, together with the actual transaction amount of the Continuing Connected Transaction for the year ended 31 December 2009, we concur with the management of the Company that the demand for the logistics services and supply chain solutions from Toyota Tsusho and its associates (including the Toyota Group) will continue to increase and the actual transaction amount of the Continuing Connected Transactions for the year ending 31 December 2010 is likely to exceed the Toyota Services Annual Cap. 14

18 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER 4. The Revised Annual Cap Set out below are the summaries of the annual caps and the actual amount of the Continuing Connected Transactions for each of the three years ended 31 December 2009: For the year ended 31 December (RMB million) (RMB million) (RMB million) Annual caps Actual transaction amount N/A As disclosed in the Circular, the Revised Annual Cap of RMB109 million is determined primarily based on Toyota Tsusho s annual projection of its logistic and supply chain solution services demanded from the Group and the volume and types of the automobile and car components to be transported which, in turn, is based on the yearly production plan of Toyota Tsusho and its associates (including Toyota Group), and a buffer for the unexpected additional logistics and supply chain solution services to be demanded by Toyota Tsusho and its associates. As advised by the management of the Company, there has been no material change in the pricing of the various logistics services rendered by the Group and the Revised Annual Cap is mainly based on the expected increase in the business volume between the Group and Toyota Tsusho and its associates for the year ending 31 December Having considered the above, together with the facts that the actual monetary transaction amount of the Continuing Connected Transactions for the year ended 31 December 2009 exceeded the Toyota Services Annual Cap by approximately 8.9% (representing an increase of approximately 20.5% as compared with the actual monetary value of the Continuing Connected Transactions for the year ended 31 December 2008); and (ii) the PRC government s favourable policies on the logistics and automobile industry, we consider it reasonable for the Group to adopt the above-mentioned bases and assumptions in determining the Revised Annual Cap and the Revised Annual Cap is fair and reasonable in so far as the independent Shareholders are concerned. RECOMMENDATION Having considered the above principal factors and reasons, we are of the opinion that (i) the Continuing Connected Transactions are conducted on normal commercial terms and in the ordinary and usual course of business of the Group; (ii) the Revised Annual Cap is fair and reasonable in so far as the independent Shareholders are concerned; and (iii) the granting of the Revised Annual Cap is in the interest of the Company and the Shareholders as a whole. Accordingly, we would recommend the Independent Board Committee to advise the independent Shareholders to vote in favour of the resolution(s) in respect of the Revised Annual Cap at the Annual General Meeting. Yours faithfully, For and on behalf of KBC Bank N.V. Hong Kong Branch Kenneth Chan Head of Corporate Finance, Greater China Gaston Lam Corporate Finance 15

19 APPENDIX GENERAL INFORMATION RESPONSIBILITY STATEMENT This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: (1) The information contained in this circular is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this circular misleading; and (3) all opinions expressed in this circular have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable. DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE S INTERESTS AND SHORT POSITIONS IN SHARE CAPITAL OF THE COMPANY AND ITS ASSOCIATES As at the Latest Practicable Date, none of the Directors, supervisors and chief executive of the Company or their respective associates (with the meaning of the GEM Listing Rules) held interests or short positions in the shares, underlying shares or debentures of the Company or its associated corporations (with the meaning of Part XV of SFO), which were required to be notified to the Company and the Stock Exchange under the provisions of Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they have taken or deemed to have under such provisions of the SFO), or which were recorded in the register required to be kept by the Company under Section 352 of the SFO, or which were otherwise required to be notified to the Company and Stock Exchange pursuant to Rules 5.46 to SUBSTANTIAL SHAREHOLDER S INTERESTS So far as is known to the Directors, supervisors and chief executive of the Company, as at the Latest Practicable Date, the following person (other than a Director or a Supervisor or chief executive of the Company) held or deemed to hold interests or short positions in the shares and underlying shares of the Company, which were required to be disclosed to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO, or were directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group. 16

20 APPENDIX GENERAL INFORMATION Long position in Shares Name Capacity Number and class of shares (Note 1) Approximate percentage of shareholding in the same class of shares Approximate percentage of shareholding to the Company s total issued share capital Tianjin Teda Investment Holding Company Limited Beneficial owner 178,765,011 (L) Domestic shares 69.81% 50.45% Tianjin Economic and Technological Development Area State Asset Operation Company Beneficial owner 77,303,789 (L) Domestic shares 30.19% 21.82% Tianjin Port Development Holdings Limited Beneficial owner 20,000,000 (L) Hshares 20.36% 5.64% Edmond de Rothchild Asset Management (Note 2) Investment manager 13,682,000 (L) Hshares 13.93% 3.81% Hongkong Topway Trading Co., Limited Beneficial owner 10,000,000 (L) Hshares 10.18% 2.82% The National Council for Social Security Fund of the People s Republic of China Beneficial owner 8,931,200 (L) Hshares 9.09% 2.52% Note: 1. The letter L denotes the shareholders long position in the share capital of the Company. 2. Edmond de Rothchild Asset Management was deemed to be interested in the 13,682,000 H shares directly owned by Edmond de Rothchild Asset Management Hong Kong Limited by virtue of its 100% shareholding in Edmond de Rothchild Asset Management Hong Kong Limited. Save as disclosed above, the Directors are not aware of any persons (other than a Director or a Supervisor or chief executive of the Company) who held, or deemed to hold interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or, which were recorded in the register required to be kept by the Company under Section 336 of the SFO or who were directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group as at 31 December

21 APPENDIX GENERAL INFORMATION DIRECTORS AND SUPERVISORS INTERESTS IN ASSETS AND CONTRACTS As at the Latest Practicable Date, none of the Directors and the supervisors of the Company had any direct or indirect interest in any assets which have been acquired or disposed of by or leased to the Company or are proposed to be acquired or disposed of by or leased to the Company since 31 December 2009, being the date to which the latest published audited accounts of the Company were made up. None of the Directors and the supervisors of the Company was materially interested in any contract or arrangement entered into by the Company subsisting at the Latest Practicable Date and which is significant in relation to the business of the Company. COMPETING BUSINESS As at the Latest Practicable Date, none of the Directors nor his associates was interested in any business apart from the business of the Group, which competes or is likely to compete, either directly or indirectly, with that of the Group. MATERIAL ADVERSE CHANGE As at the Latest Practicable Date, the Directors are not aware of any material adverse change to the financial or trading position of the Group since 31 December 2009 (being the date of the latest published audited financial statements of the Group). DIRECTORS SERVICE CONTRACTS None of the Directors has a service contract with the Company which is not determinable by the Company within one year without payment of compensation other than statutory compensation. LITIGATION As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration of material importance and there is no litigation or claim of material importance known to the Directors to be pending or threatened by or against any member of the Group. CONSENT AND QUALIFICATION OF EXPERT Name KBC Bank N.V. Hong Kong Branch Qualification KBC Bank N.V., acting through its Hong Kong branch, a licensed bank under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong) and a registered institution registered for Type 6 (advising on corporate finance) regulated activities under the SFO (a) KBC Bank N.V. Hong Kong Branch has given and not withdrawn its written consent to the issue of this circular with the inclusion of its letter and the reference to its name in the form and context in which it appears. 18

22 APPENDIX GENERAL INFORMATION (b) (c) As at the Latest Practicable Date, KBC Bank N.V. Hong Kong Branch was not beneficially interested in the share capital of any member of the Group nor had it have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group; and As at the Latest Practicable Date, KBC Bank N.V. Hong Kong Branch has no direct or indirect interest in any assets which had, since 31 December 2009, being the date of the latest published audited financial statements of the Group, been acquired or disposed of by, or leased to, or are proposed to be acquired or disposed of by, or leased to, any member of the Group. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents are available for inspection during normal business hours from 9:30 a.m. to 1:00 p.m. and from 2:00 p.m. to 6:00 p.m. (other than Saturdays, Sundays and public holidays) from Wednesday, 19 May 2010 up to and including the date of the AGM: (i) (ii) (iii) (iv) the Toyota Services Supply Agreement; the letter from the Independent Board Committee as set out in this circular; the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Shareholders as set out in this circular; and the written consent from the Independent Financial Adviser referred to in the paragraph headed Consent and Qualification of Expert in this appendix. MISCELLANEOUS (i) (ii) (iii) (iv) (v) (vi) The registered office and the principal place of business in the PRC of the Company is at No.39, Bohai Road, Tianjin Economic and Technological Development Zone, Tianjin, the PRC. The principal place of business of the Company in Hong Kong is Suite 2208, 22/F, Jardine House, 1 Connaught Place, Central, Hong Kong. The Company s H Share Registrars and transfer office in Hong Kong is Computershare Hong Kong Investor Services Limited, Shops , 17/F, Hopewell Centre, 183 Queen s Road East, Wanchai, Hong Kong. The company secretary of the Company is Mr. Wang Xiao Jun, who is a practicing solicitor of the High Court of Hong Kong. The compliance officer of the Company is Mr. Zhang Jian. In the event of inconsistency, the English language text of this circular shall prevail over the Chinese language text. 19