REFRESHMENT OF GENERAL MANDATE TO ISSUE SHARES AND NOTICE OF EXTRAORDINARY GENERAL MEETING

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1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any 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 CIG Yangtze Ports PLC, you should at once hand this circular and the accompanying proxy form to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. (Incorporated in the Cayman Islands with limited liability) (Stock Code: 8233) REFRESHMENT OF GENERAL MANDATE TO ISSUE SHARES AND NOTICE OF EXTRAORDINARY GENERAL MEETING Independent financial adviser to the Independent Board Committee and the Independent Shareholders MasterLink Securities (Hong Kong) Corporation Limited Capitalised terms used in this cover page have the same meanings as defined in the section headed Definitions of this circular. A letter from the Board is set out on pages 4 to 7 of this circular. A letter from the Independent Board Committee (as defined herein) is set out on page 8 of this circular. A letter from the Independent Financial Adviser (as defined herein) containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 9 to 16 of this circular. A notice convening the EGM to be held at Room 3203, 32/F, Admiralty Centre I, 18 Harcourt Road, Hong Kong on 21 September 2007 at 11:00 a.m. is set out on pages 17 to 19 of this circular. A proxy form for use at the EGM is also enclosed. Whether or not you are able to attend and vote at the EGM or any adjourned meeting in person, you are requested to complete the proxy form in accordance with the instructions printed thereon and return the same to the Company s share registrar, Computershare Hong Kong Investor Services Limited at Rooms /F, Hopewell Centre, 183 Queen s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding of the EGM or any adjournment thereof. Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish. This circular will remain on the GEM website at on the Latest Company Announcements page for at least 7 days from the date of posting. * For identification purpose only 6 September 2007

2 CHARACTERISTICS OF GEM GEM has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. Furthermore, there may be risks arising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. 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 of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM. The principal means of information dissemination on GEM is publication on the internet website operated by the Stock Exchange. Listed companies are not generally required to issue paid announcements in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website in order to obtain up-to-date information on GEM-listed issuers. i

3 CONTENTS Page CHARACTERISTICS OF GEM... i DEFINITIONS LETTER FROM THE BOARD Introduction... 4 Refreshment of General Mandate to Issue Shares... 5 Reasons for the Refreshment of General Mandate... 5 EGM... 6 Poll Procedure Recommendation... 7 LETTER FROM THE INDEPENDENT BOARD COMMITTEE LETTER FROM THE INDEPENDENT FINANCIAL ADVISER NOTICE OF EXTRAORDINARY GENERAL MEETING ii

4 DEFINITIONS In this circular, unless the context requires otherwise, the following expressions have the following meanings: 2007 AGM the annual general meeting of the Company held on 7 May 2007 Articles of Association the articles of association of the Company as may be amended from time to time Board the Company s board of Directors Company CIG Yangtze Ports PLC, an exempted company incorporated in the Cayman Islands on 17 January 2003 with limited liability, the shares of which are listed on GEM (GEM Stock Code: 8233) Companies Law the Companies Law, Cap.22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands Controlling shareholder(s) has the same meaning as defined in the GEM Listing Rules Director(s) the director(s) of the Company EGM the extraordinary general meeting of the Company to be convened and held at Room 3203, 32/F, Admiralty Centre I, 18 Harcourt Road, Hong Kong on 21 September 2007 at 11:00 a.m., notice of which is set out on pages 17 to 19 of this circular, and any adjournment thereof GEM the Growth Enterprise Market operated by the Stock Exchange GEM Listing Rules the Rules Governing the Listing of Securities on GEM GEM Listing Committee the listing sub-committee of the board of the Stock Exchange with responsibility for GEM Group the Company and its subsidiaries Hong Kong the Hong Kong Special Administrative Region of the People s Republic of China 1

5 DEFINITIONS Independent Board Committee the independent board committee of the Company comprising the three independent non-executive Directors of the Company established by the Board for the purpose of advising the Independent Shareholders in relation to the granting of the New General Mandate Independent Financial Adviser or MasterLink Independent Shareholders Latest Practicable Date Memorandum New General Mandate SFO Share(s) MasterLink Securities (Hong Kong) Corporation Limited, a licensed corporation under the SFO to carry out types 1, 4 and 6 regulated activities and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the proposed New General Mandate Shareholders, other than the controlling shareholders of the Company and their associates 31 August 2007, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein the memorandum of association of the Company, as may be amended from time to time a general and unconditional mandate to the Directors to exercise the power of the Company to allot, issue or otherwise deal with shares of the Company of up to a maximum of 20% of the aggregate nominal amount of the share capital of the Company in issue as at the date of passing the relevant resolution at the EGM. Such mandate shall expire or cease to be effective upon the earliest of (i) the conclusion of the next annual general meeting of the Company: (ii) the expiration of the period within which the next annual general meeting of the Company is required to be held by any applicable laws of the Cayman Islands or the Articles of Association; and (iii) its revocation or variation by ordinary resolutions of the Shareholders in general meeting the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) ordinary share(s) of HK$0.10 each in the share capital of the Company 2

6 DEFINITIONS Shareholder(s) Stock Exchange HK$ holder(s) of Share(s) The Stock Exchange of Hong Kong Limited Hong Kong dollars % per cent. 3

7 LETTER FROM THE BOARD (Incorporated in the Cayman Islands with limited liability) (Stock Code: 8233) Executive Director: Mr. Chow Kwong Fai, Edward Non-executive Directors: Mr. Wong Yuet Leung, Frankie Mr. Lee Jor Hung, Dannis Mr. Goh Pek Yang, Michael Registered Office: P.O. Box 309 GT Ugland House South Church Street George Town Grand Cayman Cayman Islands Independent Non-executive Directors: Mr. Lee Kang Bor, Thomas Mr. Wong Tin Yau, Kelvin Mr. Leung Kwong Ho, Edmund Head Office and Principal Place of Business in Hong Kong: 1604 Bank of America Tower 12 Harcourt Road Central Hong Kong 6 September 2007 To the Independent Shareholders Dear Sir or Madam, REFRESHMENT OF GENERAL MANDATE TO ISSUE SHARES INTRODUCTION The purpose of this circular is to provide you with information in relation to (i) the proposed New General Mandate; (ii) the recommendation from the Independent Board Committee to the Independent Shareholders on the proposed New General Mandate; (iii) the recommendation from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders on the proposed New General Mandate; and (iv) the notice of EGM at which relevant resolution will be proposed to the Independent Shareholders to consider, and if thought fit, to approve the proposed New General Mandate. * For identification purpose only 4

8 LETTER FROM THE BOARD REFRESHMENT OF GENERAL MANDATE TO ISSUE SHARES At the 2007 AGM, the general mandate (the General Mandate ) was granted to the Directors to exercise the powers of the Company to issue, allot and deal with up to 75,983,543 Shares, being 20% of the aggregate nominal amount of share capital of the Company in issue as at the date of the 2007 AGM. Pursuant to the subscription agreement entered into by the Company on 12 June 2007, 75,983,543 new Shares (the Subscription ) were allotted and issued under the General Mandate resulting in the General Mandate having been fully utilized. Net proceeds from the Subscription of approximately HK$44.8 million, part of which has been applied for working capital of the Group, and the outstanding net proceeds is to be applied for the financing of the Group s on-going capital expenditure in expanding its container port and logistics facilities as well as for working capital of the Group as intended. As the General Mandate is fully utilized, the Directors propose to seek approval from the Independent Shareholders at the EGM, to refresh the General Mandate and grant to the Directors the proposed New General Mandate to authorize the Directors to further issue, allot and deal with new Shares not exceeding 20% of the aggregate nominal amount of share capital of the Company in issue as at the date of the EGM. Based on the 455,901,260 Shares in issue as at the Latest Practicable Date and, if the proposed New General Mandate is approved at the EGM and on the basis that no further Shares will be issued and/or repurchased by the Company between the Latest Practicable Date and the date of the EGM, the total number of new Shares that may be issued under the proposed New General Mandate is 91,180,252 Shares, representing 20% of the 455,901,260 Shares in issue as at the EGM date. REASONS FOR THE REFRESHMENT OF GENERAL MANDATE The Group s principal activities are investment in and the development, operation and management of container ports which are conducted through the WIT Port, Wuhan, China, which is 85% owned by the Group. As at the Latest Practicable Date, the Directors were allowed to and had allotted and issued a total of 75,983,543 Shares to institutional investors under the General Mandate resulting in the General Mandate being fully utilized. The Directors consider that the proposed New General Mandate would provide the Company with the flexibility to raise further capital to finance future investments or further development of existing projects when opportunities are identified. Accordingly, the Directors propose that the New General Mandate be sought from the Shareholders at the EGM. 5

9 LETTER FROM THE BOARD EGM The Company will convene the EGM at Room 3203, 32/F, Admiralty Centre I, 18 Harcourt Road, Hong Kong on 21 September 2007 at 11:00 a.m. to consider the granting of the New General Mandate. A notice of the EGM is set out on pages 17 to 19 of this circular. Pursuant to Rule 17.42A(1)(a) of the GEM Listing Rules, any controlling shareholders and their associates, or where there are no controlling shareholders, directors (excluding independent non-executive directors) and the chief executive of the Company and their respective associates shall abstain from voting in favour of the resolution to be proposed at the EGM. As at the Latest Practicable Date, Unbeatable Holdings Limited ( Unbeatable ) was interested in 101,787,450 Shares, Chow Holdings Limited ( Chow Holdings ) was interested in 32,463,816 Shares and CIG China Holdings Limited ( CIG China ) was interested in 13,520,000 Shares which respectively represented 22.33%, 7.12% and 2.96%, or in aggregate represented 32.41% of the issued share capital of the Company. As Unbeatable, Chow Holdings and CIG China are each being a company in respect of which Mr. Chow Kwong Fai, Edward is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of that company, they are collectively deemed to be controlling shareholders and are required to abstain from voting in favour of the New General Mandate at the EGM. Unbeatable, Chow Holdings and CIG China have indicated to the Company that they will not vote against the New General Mandate at the EGM. A form of proxy for use by the Independent Shareholders at the EGM is also enclosed. Whether or not you intend to attend and vote at the EGM or any adjourned meeting in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to Computershare Hong Kong Investor Services Limited at Rooms , 18/F, Hopewell Centre, 183 Queen s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof if you so wish. POLL PROCEDURE Pursuant to the Articles of Association, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hand unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is duly demanded. A poll may be demanded by: (a) (b) (c) the Chairman of the meeting; or at least five members present in person or by proxy and entitled to vote or who represent in the aggregate not less than one-tenth of the total voting rights of all members having the right to attend and vote at the meeting; or any member or members present in person or by proxy and holding shares conferring a right to attend and vote at the meeting on which there have been paid up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all shares conferring that right. 6

10 LETTER FROM THE BOARD Pursuant to Rule the GEM Listing Rules, the votes of the Independent Shareholders cast at the EGM to approve the New General Mandate will be taken by poll, the results of which will be announced on the next business day after the EGM. RECOMMENDATION The Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Lee Kang Bor, Thomas, Mr. Wong Tin Yau, Kelvin, and Leung Kwong Ho, Edmund, has been established to advise the Independent Shareholders as to whether the granting of the New General Mandate is fair and reasonable and is in the interests of the Company and the Shareholders in general. Your attention is drawn to the advice of the Independent Board Committee contained in its letter set out on page 8 of this circular. Your attention is also drawn to the letter of advice from MasterLink to the Independent Board Committee and the Independent Shareholders in relation to the granting of the New General Mandate as set out on pages 9 to 16 of this circular. The Independent Board Committee, having taken into account the advice of MasterLink, considers that the granting of the New General Mandate is fair and reasonable as far as the Independent Shareholders are concerned and is in the best interest of the Company and the Independent Shareholders in general. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolution to approve the granting of the New General Mandate at the EGM. Yours faithfully, For and on behalf of the Board Edward Kwong Fai Chow Chairman 7

11 LETTER FROM THE INDEPENDENT BOARD COMMITTEE (Incorporated in the Cayman Islands with limited liability) (Stock Code: 8233) 6 September 2007 To the Independent Shareholders Dear Sir or Madam, REFRESHMENT OF GENERAL MANDATE TO ISSUE SHARES We refer to the circular issued by the Company to its Shareholders dated 6 September 2007 (the Circular ) of which this letter forms part. Terms defined in this Circular have the same meanings when used in this letter unless the context otherwise requires. Under the GEM Listing Rules, the granting of the New General Mandate is subject to the approval of the Independent Shareholders at the EGM. We have been appointed by the Board to consider the granting of the New General Mandate and to advise the Independent Shareholders as to whether, in our opinion, the granting of the New General Mandate is fair and reasonable and in the interests of the Company and the Independent Shareholders in general. MasterLink has been appointed as the Independent Financial Adviser to advise us in this respect. We wish to draw your attention to the letter from the Board and the letter from MasterLink as set out in the Circular. Having taken into account of the advice of MasterLink as set out in its letter of advice, we consider that the granting of the New General Mandate is fair and reasonable as far as the Independent Shareholders are concerned and is in the best interest of the Company and the Independent Shareholders in general. We therefore recommend the Independent Shareholders to vote in favour of the ordinary resolution to approve the granting of the New General Mandate at the EGM. Yours faithfully, For and on behalf of the Board Independent Board Committee Lee Kang Bor, Thomas Wong Tin Yau, Kelvin Leung Kwong Ho, Edmund Independent non-executive Directors * For identification purpose only 8

12 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER The following is the full text of a letter of advice from MasterLink, the independent financial adviser to the Independent Board Committee and the Independent Shareholders in connection with the refreshment of the General Mandate, which has been prepared for the purpose of incorporation into this circular. MasterLink Securities (Hong Kong) Corporation Limited Unit 2603, 26th Floor, The Center 99 Queen s Road Central Central Hong Kong 6 September 2007 To the Independent Board Committee and the Independent Shareholders of CIG Yangtze Ports PLC Dear Sirs, REFRESHMENT OF GENERAL MANDATE TO ISSUE SHARES INTRODUCTION We refer to our appointment as independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the refreshment of the General Mandate to issue shares, details of which are set out in the letter from the Board (the Letter from the Board ) contained in the circular to the Shareholders dated 6 September 2007 (the Circular ), of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular unless the context requires otherwise. At the 2007 AGM, the General Mandate was granted to the Directors to exercise the powers of the Company to issue, allot and deal with up to 75,983,543 Shares, being 20% of the aggregate nominal amount of share capital of the Company in issue as at the date of the 2007 AGM. Pursuant to the subscription agreement entered into by the Company on 12 June 2007, 75,983,543 new Shares were allotted and issued under the General Mandate resulting in the General Mandate having been fully utilized. Net proceeds from the Subscription which amounted to approximately HK$44.8 million are to be applied for the financing of the Group s on-going capital expenditure in expanding its container port and logistics facilities as well as for working capital of the Group. 9

13 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER As the General Mandate is fully utilized, the Directors propose to seek approval from the Independent Shareholders at the EGM, to refresh the General Mandate and grant to the Directors the proposed New General Mandate to authorize the Directors to further issue, allot and deal with new Shares not exceeding 20% of the aggregate nominal amount of share capital of the Company in issue as at the date of the EGM. Based on the 455,901,260 Shares in issue as at the Latest Practicable Date and, if the proposed New General Mandate is approved at the EGM and on the basis that no further Shares will be issued and/or repurchased by the Company between the Latest Practicable Date and the date of the EGM, the total number of new Shares that may be issued under the proposed New General Mandate is 91,180,252 Shares, representing 20% of the 455,901,260 Shares in issue as at the EGM date. The EGM will be convened and held for the purpose of considering and, if thought fit, approve the granting of the New General Mandate. The Independent Board Committee, comprising Messrs. Lee Kang Bor, Thomas, Wong Tin Yau, Kelvin and Leung Kwong Ho, Edmund, all being independent non-executive Directors, has been formed to advise the Independent Shareholders as to whether the New General Mandate is fair and reasonable so far as the Independent Shareholders generally are concerned and whether the New General Mandate is in the interests of the Company and the Independent Shareholders in general. BASIS OF OUR OPINION In formulating our opinion, we have relied on the accuracy of the information and facts supplied, and the opinions and representations expressed, to us by the Directors, the Company and its management. We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular were reasonably made after due and careful enquiry and are based on honestly-held opinions. We have no reasons to doubt the truth, accuracy and completeness of the information and representations referred to in the Circular and provided to us by the Company and the Directors, and have been advised by the Directors that no material facts have been omitted from the information provided to us and referred to in the Circular. We have also assumed that all statements of intention of the Company or its Directors as set out in the Circular will be implemented. We consider that we have reviewed sufficient information to reach an informed view and to justify reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our advice. We have assumed that all information and representations made or referred to in the Circular and provided to us by the Company and the Directors, for which they were solely and wholly responsible, were true, complete and accurate at the time they were made and continue to be true, complete and accurate at the date of the EGM. We have not, however, carried out any independent verification of the information and representations provided to us nor have we conducted any form of independent in-depth investigation into the businesses and affairs, financial position or the future prospects of the Group. 10

14 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER PRINCIPAL FACTORS AND REASONS CONSIDERED In arriving at our opinion to the Independent Board Committee in respect of the New General Mandate, we have taken into consideration the following principal factors and reasons: Background of and Reasons for the Refreshment of General Mandate The Group s principal activities are investment in and the development, operation and management of container ports which are conducted through its port (the WIT Port ) in Wuhan, China which is 85% owned by the Group. The General Mandate granted to the Directors to allot, issue and deal in up to a maximum of 75,983,543 Shares, representing 20% of the issued share capital of the Company at the date of the 2007 AGM when the General Mandate was granted, was fully utilized following the placement of 75,983,543 new Shares by the Company on 25 June The General Mandate has not been refreshed since it was fully utilized. As at the Latest Practicable Date, there were 455,901,260 Shares in issue. Assuming that no other Shares would be issued and/or repurchased between the Latest Practicable Date and the date of the EGM, the New General Mandate, if granted, would empower the Directors to allot, issue or otherwise deal in up to a maximum of 91,180,252 Shares, representing 20% of the Shares in issue at the Latest Practicable Date. As referred to in the latest published interim report of the Company for the six months ended 30 June 2007 (the Interim Report 2007 ) that, in pursuant to its strategic plans for future development of its operations, the Group has plans to pursue the development of phase II ( Phase II ) of the WIT Port and the development of a heavy item port (the Heavy Item Port ). Phase II development is an extension of the existing operations of the WIT Port while the Heavy Item Port development would involve the development of port and related facilities capable of handling large and heavy cargo shipments (up to 600 tonnes in weight) to cater for the transportation needs of some major European power generation, transmission and distribution equipment manufacturers which have chosen to establish manufacturing plants in the Yanglou District of Wuhan (where the WIT Port is situated). Non-legally binding heads of agreements had been entered into for both Phase II and the Heavy Item Port development and the Group is currently pursuing for government approvals ( ) on both these projects. In view of the above, taking into account of the fact that the General Mandate has been fully utilized, the New General Mandate could give the Company the flexibility and the ability to capture any capital raising or investment or business opportunities as and when it arises. The Directors consider that if there is no refreshment of the General Mandate before the next annual general meeting of the Company which is expected to be held in or around May 2008, the Company may not be able to capture any opportunities which may arise during the period from the Latest Practicable Date to the next annual general meeting of the Company in a timely and expedient manner. The Directors 11

15 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER therefore propose to seek the approval of the Independent Shareholders to approve the granting of the New General Mandate at the EGM. The Directors consider that the granting of the New General Mandate is in the best interests and for the benefits of both the Company and the Independent Shareholders in general. Fund Raising Activities of the Company According to the information provided by the Directors, the only fund raising exercise undertaken by the Company in the twelve months prior to the Latest Practicable Date was the placement of 75,983,543 new shares (the Subscription Shares ) of the Company pursuant to the subscription agreement (the Subscription Agreement ) entered into by the Company with Value Partners Limited ( Value Partners ) on 12 June 2007 whereby Value Partners had undertaken to procure the subscription of the Subscription Shares. Subsequent to the signing of the Subscription Agreement, the Subscription Shares were fully subscribed, issued and allotted on 25 June 2007 raising net proceeds of HK$44.8 million to the Group to finance the Group s on-going expenditure in expanding its container port and logistics facilities as well as for working capital of the Group. We consider that it is reasonable for the Directors to propose the granting of the New General Mandate in the EGM in order to give the Company greater flexibility in the issuance of Shares in future as and when the Company considers desirable for the benefit of the development of the Company. Status of Utilization of Existing General Mandate According to the Letter from the Board, save and except for the subscription for new shares announced by the Company on 12 June 2007 whereby a total of 75,983,543 Shares were allotted and issued under the General Mandate. The General Mandate is fully utilized. The Company had in issue an aggregate of 455,901,260 Shares as at the Latest Practicable Date. Subject to the passing of the proposed resolution for the approval of the New General Mandate and the basis that no Shares would be issued and/or repurchased by the Company from the Latest Practicable Date up to the date of the EGM, the New General Mandate would allow the Directors to allot and issue up to a maximum of 91,180,252 Shares, representing 20% of the aggregate nominal amount of the issued Shares at the EGM. The New General Mandate to issue Shares will, if granted, remain effective until the earliest of: (i) the conclusion of the next annual general meeting of the Company; (ii) the expiration of the period within which the next annual general meeting of the Company is required to be held by any applicable laws of the Cayman Islands or the Company s articles or association; and (iii) its revocation or variation by ordinary resolutions of the Shareholders in general meeting. 12

16 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER Current Financial Resources According to the Interim Report 2007, the Group had bank balances and cash of approximately HK$59.4 million. The Group has sufficient financial resources to meet its present requirements. The Directors confirm that the Group does not have any fund raising plans as at the Latest Practicable Date. However, there is no certainty that current financial resources would be adequate for the Group to pursue any investment opportunities identified by the Group in the future. Financial Flexibility Given that equity financing is interest free and security free by nature, Directors consider that equity financing serves as a cost effective means of raising additional capital for the Group as general working capital and to fund any additional investment requirements of existing or other new project development opportunities that may be identified in the future. In addition, the Directors are of the view that equity financing has merits over bank/debt financing to fund the Group s capital needs as the former could broaden the shareholder base of the Company without creating any additional interest burden to the Company. When comparing various equity financing methods, the Directors perceive that placing of new shares would enable the Company to raise funds in a more commercially expedient time frame and would preserve shareholders value due to the relatively small dilution effect on shareholdings of exiting shareholders. Other Alternatives of Financing We are represented that it is the Directors belief that the New General Mandate will provide the Company with an additional alternative of equity funding when there is funding requirement or when any business opportunities arise in the future. It is reasonable to suggest that the New General Mandate could enhance the financing flexibility of the Company to raise equity funds, if and when required, by way of the issuance of new Shares and/or convertible instruments for further development of the Group. In addition, the Directors consider that if investment or acquisition opportunities arise, it would be possible that decisions may have to be made within a limited period of time. The granting of the New General Mandate would provide the Group with higher degree of flexibility as allowed under the Listing Rules to issue new Shares and/or convertible instruments to raise capital and strengthen the capital base of the Company as consideration or otherwise for such potential investments and/or acquisitions in the future as and when such opportunities arise. However, from our enquiry to the Directors and save as referred to elsewhere in this circular and the announcements and publications released to the Shareholders by the Company prior to the Latest Practicable Date, the Directors represented that there is no concrete proposal for any new investment or acquisition for the Group at present. On the above basis, we hold the view that there are reasonable grounds for the Directors to propose the refreshment of the General Mandate at the EGM. 13

17 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER Potential Dilution of Shareholding of the Independent Shareholders Based on information available from public source and from the Directors, we set out below a table setting out the shareholding structure of the Company as at the Latest Practicable Date and upon full utilization of the New General Mandate: Shareholder As at the Latest Practicable Date No. of shares held % Assuming full utilization of the New General Mandate No. of shares held % Non-public shareholders Unbeatable Holdings Limited (Note 1) 101,787, % 101,787, % Chow Holdings Limited (Note 1) 32,463, % 32,463, % CIG China Holdings Limited (Note 1) 13,520, % 13,520, % Sub-total: 147,771, % 147,771, % Value Partners China Hedge Fund Master Fund Limited (Note 2) 28,368, % 28,368, % Value Partners Asia Fund, LLC (Note 2) 29,889, % 29,889, % Value Partners China Greenchip Fund Limited (Note 2) 17,726, % 17,726, % Sub-total: 75,983, % 75,983, % Harbour Master Limited (Note 3) 72,141, % 72,141, % MOL (Asia) Limited (Note 4) 37,620, % 37,620, % Ramwealth Company Limited (Note 5) 4,568, % 4,568, % Public shareholders Other shareholders 117,816, % 117,816, % Share to be issued under the New General Mandate 91,180, % Total 455,901, % 547,081, % 14

18 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER Note: 1. Mr. Chow Kwong Fai, Edward, an executive Director, is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of Unbeatable Holdings Limited, Chow Holdings Limited and CIG China Holdings Limited. 2. Value Partners China Hedge Fund Master Fund Limited, Value Partners Asia Fund, LLC and Value Partners China Greenchip Fund Limited are investment funds which are managed by Value Partners Limited. 3. Harbour Master Limited is controlled by Yangtze Ventures II Limited. Yangtze Ventures II Limited is controlled by Goldcrest Development Limited. Goldcrest Development Limited is controlled by Shui On Construction and Materials Limited. Shui On Construction and Materials Limited is controlled by Shui On Company Limited. Shui On Company Limited is controlled by Bosrich Holdings Inc. Bosrich Holdings Inc. is controlled by HSBC International Trust Limited and Mr. Lo Hong Sui, Vincent is interested in the shares of Bosrich Holdings Inc. held by HSBC International Trust Limited. 4. MOL (Asia) Limited is not considered as a public shareholder as it has appointed a non-executive Director to represent it on the Board. 5. Mr. Lee Jor Hung, Dannis, a non-executive Director, is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of Ramwealth Company Limited. Assuming that (i) the proposed New General Mandate will be approved at the EGM; (ii) no Shares will be repurchased and no new Shares will be issued from the Latest Practicable Date up to the date of the EGM (both dates inclusive); and (iii) upon full utilization of the New General Mandate, up to 91,180,252 Shares may be issued under the New General Mandate, representing 20% and approximately 16.67% of the existing issued share capital as at the Latest Practicable Date and the enlarged issued share capital of the Company respectively. The aggregate shareholding of the existing public Shareholders will be decreased from approximately 25.85% to approximately 21.54% upon full utilization of the New General Mandate. Shareholders should note that the New General Mandate which will be and continue to be in force until the earliest of (i) the conclusion of the Company s next annual general meeting; (ii) the expiration of the period within which the next annual general meeting of the Company is required by the articles of association of the Company or any applicable law to be held; and (iii) the revocation or variation of the authority given under the relevant resolution to be proposed at the EGM by ordinary resolution of the Shareholders in general meeting. Such duration is in compliance with the GEM Listing Rules. Terms of the New General Mandate According to Rule 17.42A of the GEM Listing Rules, it is stipulated that an ordinary resolution shall be proposed at the EGM to obtain approval from the Shareholders to refresh the General Mandate before the next annual general meeting of the Company to authorize the Directors to allot and issue new Shares of not exceeding 20% of the total number of issued shares of the Company as at the date of the EGM. Pursuant to Rule 17.42A(1) of the GEM Listing Rules, any controlling shareholders and their associates, or where there are no controlling shareholders, directors (excluding independent 15

19 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER non-executive directors) and the chief executive of the Company and their respective associates shall abstain from voting in favour of the resolution to be proposed at the EGM. As at the Latest Practicable Date, Unbeatable Holdings Limited ( Unbeatable ) was interested in 101,787,450 Shares, Chow Holdings Limited ( Chow Holdings ) was interested in 32,463,816 Shares and CIG China Holdings Limited ( CIG China ) was interested in 13,520,000 Shares which respectively represented 22.33%, 7.12% and 2.96%, or in aggregate represented 32.41% of the issued share capital of the Company. As Unbeatable, Chow Holdings and CIG China are each being a company in respect of which Mr. Chow Kwong Fai, Edward is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of that company, they are collectively deemed to be controlling shareholders and are required to abstain from voting in favour of the New General Mandate at the EGM. As mentioned before, it is further stipulated that upon approval of the New General Mandate at the EGM, the New General Mandate will be and continue to be effective until the earliest of (i) the conclusion of the next annual general meeting of the Company; (ii) the expiration of the period within which the next annual general meeting of the Company is required to be held by any applicable laws of Cayman Islands or the Company s articles of association; and (iii) the revocation or variation of the authority given under the relevant resolution to be proposed by ordinary resolution of the Shareholders in general meeting. Such duration is in compliance with Rule of the GEM Listing Rules. In view of the said stringent provisions and requirements of the GEM Listing Rules, we believe that there are sufficient control and measures to guide the refreshment of the General Mandate and the continuity of the New General Mandate. In this respect, we consider that the terms of the granting of the New General Mandate are fair and reasonable so far as the Independent Shareholders are concerned. RECOMMENDATION Having considered the above principal factors and reasons and Directors representations, we are of the opinion that the granting of the New General Mandate is fair and reasonable so far as the Independent Shareholders are concerned and the New General Mandate is in the interest of the Company and the Shareholders in general. Accordingly, we advise the Independent Shareholders, and also recommend the Independent Board Committee to advise the Independent Shareholders, to vote in favour of the resolution approving the granting of the New General Mandate at the EGM. Yours faithfully, For and on behalf of MasterLink Securities (Hong Kong) Corporation Limited Bernard Wu Director 16

20 NOTICE OF EXTRAORDINARY GENERAL MEETING (Incorporated in the Cayman Islands with limited liability) (Stock Code: 8233) NOTICE IS HEREBY GIVEN THAT the extraordinary general meeting (the EGM ) of the shareholders of CIG Yangtze Ports PLC (the Company ) will be held at Room 3203, 32/F, Admiralty Centre I, 18 Harcourt Road, Hong Kong on 21 September 2007 at 11:00 a.m. for the purpose of considering and, if thought fit, passing the following resolution as an ordinary resolution; 1. THAT: (a) (b) (c) subject to paragraph (c) of this resolution, and pursuant to the Rules Governing the Listing of Securities on The Growth Enterprise Market ( GEM ) of The Stock Exchange of Hong Kong Limited ( Stock Exchange ), the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional shares in the share capital of the Company and to make or grant offers, agreements and options which might require the exercise of such powers be and is hereby generally and unconditionally approved; the approval of paragraph (a) of this resolution be in addition to any other authorizations given to the Directors and shall authorize the Directors during the Relevant Period to make or grant offers, agreements and options which might require the exercise of such powers after the end of the Relevant Period; the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to options or otherwise) by the Directors pursuant to the approval in paragraph (a) of this resolution, otherwise than pursuant to (i) a Rights Issue (as hereinafter defined); or (ii) the grant or exercise of any option under the share option scheme of the Company or any other option scheme or similar arrangement for the time being adopted for the grant or issue of shares or rights to acquire shares of the Company; or (iii) any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the articles of association of the Company in force from time to time; or (iv) any issue of shares in the Company upon the exercise of rights of subscription or conversion under the terms of any existing warrants of the Company or any existing securities of the Company which carry rights to subscribe for or are convertible into shares of the Company, shall not exceed 20% of the aggregate nominal amount of the share capital of the Company in issue at the date of the passing of this resolution and the authority pursuant to paragraph (a) of this resolution shall be limited accordingly; and * For identification purpose only 17

21 NOTICE OF EXTRAORDINARY GENERAL MEETING (d) for the purpose of this resolution, Relevant Period means the period from the date of the passing of this resolution until whichever is the earliest of: (i) the conclusion of the next annual general meeting of the Company; (ii) the expiration of the period within which the next annual general meeting of the Company is required by the articles of association of the Company, or any applicable law of the Cayman Islands to be held; and (iii) the passing of an ordinary resolution by the shareholders of the Company in general meeting revoking or varying the authority given to the Directors by this resolution. Rights Issue means an offer of shares in the Company, or offer or issue of warrants, options or other securities giving rights to subscribe for shares open for a period fixed by the Directors to holders of shares in the Company on the register on a fixed record date in proportion to their holdings of shares (subject to such exclusion or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements, or having regard to any restrictions or obligations under the laws of, or the requirements of, or the expense or delay which may be involved in determining the existence or extent of any restrictions or obligations under the laws of, or the requirements of, or the expense or delay which may be involved in determining the existence or extent of any restrictions or obligations under the laws of, or the requirements of, any jurisdiction applicable to the Company, or any recognized regulatory body or any stock exchange applicable to the Company). By order of the Board CIG Yangtze Ports PLC Frederick Wai Keung Wong Company Secretary Hong Kong, 6 September 2007 As at the date hereof, the Board comprises an executive director namely Mr. Chow Kwong Fai, Edward, three non-executive directors namely Mr. Wong Yuet Leung, Frankie, Mr. Lee Jor Hung, Dannis and Mr. Goh Pek Yang, Michael and three independent non-executive directors namely Mr. Lee Kang Bor, Thomas, Mr. Wong Tin Yau, Kelvin and Mr. Leung Kwong Ho, Edmund. 18

22 NOTICE OF EXTRAORDINARY GENERAL MEETING Notes: 1. Any member of the Company entitled to attend and vote at the EGM is entitled to appoint one or more proxies to attend and vote on his/her/its behalf. A proxy needs not be a member of the Company. 2. Where there are joint registered holders of any share, any one of such persons may vote at the meeting, either personally or by proxy, in respect of such share as if he /she/it were solely entitled thereto; but if more than one of such holders be present at the meeting, personally or by proxy, that one of the said persons so present whose name stands first on the register in respect of such share shall alone be entitled to vote in respect thereto. 3. A form of proxy for the EGM is enclosed herewith. 4. In order to be valid, a form of proxy must be deposited by hand or by post at Computershare Hong Kong Investor Services Limited at Rooms , 18th Floor, Hopewell Centre, 183 Queen s Road East, Wanchai, Hong Kong, together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power or attorney, not less than 48 hours before the time appointed for holding the EGM. 5. Shareholders or their proxies shall produce their identity documents when attending the EGM. 6. Shareholders or proxies attending the EGM should state clearly, in respect of each resolution requiring a vote, whether they are voting for or against the resolution. Abstention votes will not be regarded by the Company as having voting rights for the purpose of vote counts. 19