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 broker or other licensed securities dealer, a bank manager, solicitor, professional accountant or other professional adviser.
If you have sold or transferred all your shares in CSSC Offshore & Marine Engineering (Group) Company Limited, you should at once hand this circular, together with the form of proxy and reply ship to the purchaser(s) or transferee(s) or to the bank, broker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).
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.
(a joint stock company with limited liability incorporated in the People’s Republic of China) (Stock Code: 00317)
NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS AND MAJOR TRANSACTION, PROPOSED CHANGES TO CORPORATE STRUCTURE, PROPOSED DISPOSAL AND POSSIBLE CONNECTED TRANSACTION, 2015 BUDGET OF GUARANTEES TO SUBSIDIARIES, ELECTION OF DIRECTORS AND NOTICE OF EXTRAORDINARY GENERAL MEETING
Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders
Shenwan Hongyuan Capital (H.K.) Limited
A letter from the Board is set out on pages 7 to 55 of this circular and a letter from the Independent Board Committee containing its recommendations to the Independent Shareholders is set out on pages 56 and 57 of this circular. A letter from Shenwan Hongyuan Capital (H.K.) Limited, the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 58 to 96 of this circular.
The EGM will be held at Conference Room, 2/F, Administration Building of the Company, 40 South Fangcun Main Road, Liwan District, Guangzhou, PRC at 2:30 p.m. on 5 November 2015. Shareholders who intend to attend the EGM are requested to send a written reply, whether in person, by post, by cable or by fax to the registered office of the Company at least 20 days before the EGM (i.e. before 16 October 2015). In order to ensure validity, holders of A Shares must deliver the completed proxy form and other authorization documents (if any) to the registered office of the Company not less than 24 hours before the time scheduled for the holding of the EGM (or any adjournment thereof). Holders of H Shares must deliver the completed proxy form and other authorization documents (if any) to the Company’s H shares registrar, Hong Kong Registrars Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, not less than 24 hours before the time scheduled for the holding of 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 should you so wish. A proxy form for use at the EGM has already been sent to Shareholders. Notice of EGM is set out on pages EGM-1 to EGM-4 to this circular.
21 October 2015 CONTENTS
PAGE
Definitions ...... 1
Letter from the Board ...... 7
Letter from the Independent Board Committee ...... 56
Letter from Independent Financial Adviser ...... 58
Appendix I – Financial Information of the Group ...... I-1
Appendix II – Corporate Structures ...... II-1
Appendix III – Valuation Report of GS Shipping Land ...... III-1
Appendix IV – Valuation Report of GS Shipping Building ...... IV-1
Appendix V – Valuation Report of GS Shipping Interest ...... V-1
Appendix VI – Details of Proposed Directors ...... VI-1
Appendix VII – General Information ...... VII-1
Notice of EGM ...... EGM-1
–i– DEFINITIONS
In this circular, unless the context otherwise requires, the following expressions shall have the following meanings:
“2010-2012 Framework the framework agreement for the continuing connected Agreement” transactions for the period from 1 January 2010 to 31 December 2012 entered into between the Company and CSSC on 27 October 2009 and approved by the Independent Shareholders on 29 December 2009, as amended by a supplemental agreement and approved by the Independent Shareholders on 8 June 2012;
“2013-2015 Framework the framework agreement for the continuing connected Agreement” transactions for the period from 1 January 2013 to 31 December 2015 entered into between the Company and CSSC on 30 October 2012 and approved by the Independent Shareholders on 19 December 2012;
“2014-2016 Framework framework agreement for the continuing connected Agreement” transactions for the period from 1 January 2014 to 31 December 2016 (both days inclusive) entered into between the Company and CSSC on 16 December 2013 and approved by the Independent Shareholders on 22 December 2014;
“A Share(s)” domestic shares of the Company with nominal value of RMB1.00 each and are listed on the Shanghai Stock Exchange;
“Acquisitions” the acquisitions of Huangpu Wenchong from the CSSC Group and certain assets from Yangzhou Kejin by the Company completed on 8 April 2015;
“associate(s)” has the meaning ascribed to it in the Listing Rules;
“Board” or “Board of Directors” the board of Directors of the Company;
“Business Day” a day on which banks are open for business in the PRC, other than Saturdays, Sundays or public holidays in the PRC;
“CBRC” China Banking Regulatory Commission;
“Company” CSSC Offshore & Marine Engineering (Group) Company Limited, a joint stock company established in the PRC with limited liability, the H Shares of which are listed on the Stock Exchange and the A Shares of which are listed on the Shanghai Stock Exchange;
–1– DEFINITIONS
“Comprehensive Services” the medical services, catering services, infant care and nursery, training programs for skilled labour and management of staff quarters provided to the Group, the staff of the Group and their family members by the CSSC Group;
“connected person(s)” has the meaning ascribed to it under the Listing Rules;
“Continuing Connected the continuing connected transactions contemplated Transactions” under the 2014-2016 Framework Agreement and the Supplemental Agreement, including: (i) the products and services provided by the Group to the CSSC Group; (ii) the products and services (including the Financial Services) provided by the CSSC Group to the Group; (iii) the Deposits maintained by the Group with CSSC Finance; and (iv) the guarantee(s) to be provided by the Group to the CSSC Group as further described in the section headed “Principal Terms of the Supplemental Agreement” in this circular;
“controlling shareholder(s)” has the meaning ascribed to it under the Listing Rules;
“CSSC” China State Shipbuilding Corporation（中國船舶工業集團 公司）, a state-owned enterprise and a state-authorized investment institution directly supervised and administered by the SASAC. As at the Latest Practicable Date, CSSC holds 847,685,990 Shares of the Company, representing 59.97% of the issued Shares of the Company, and is a controlling shareholder of the Company;
“CSSC Finance” CSSC Finance Company Limited （中船財務有限責任公 司）, a wholly-owned subsidiary of CSSC;
“CSSC Group” CSSC and its subsidiaries;
“Deposits” the deposits maintained by the Group from time to time with CSSC Finance under the Financial Services provided by the CSSC Group to the Group pursuant to the 2014-2016 Framework Agreement and the Supplemental Agreement;
“Director(s)” the director(s) of the Company;
–2– DEFINITIONS
“EGM” the extraordinary general meeting to be convened by the Company for the Independent Shareholders to consider and approve, if thought fit, the and the Supplemental Agreement, the transactions contemplated thereunder and the Revised Annual Caps;
“Financial Services” the financial services to be provided by CSSC Group or CSSC Finance to the Group, including the provision of Loans; financial and credit services; and guarantee services but excluding the FX Forward Contracts and assets custody and management services;
“Fonkwang Development” Fonkwang Development Company Limited（泛廣發展有 限公司）, a subsidiary of the Company owned as to 80% in its equity interest;
“FX Forward Contracts” a foreign exchange forward contract or a set of such contracts proposed to be entered into by the Group to hedge against the Group’s currency risk in relation to the possible appreciation of RMB against foreign currencies;
“Group” the Company and its subsidiaries, each a “Group Company”;
“GSI (Yangzhou)” Guangzhou Shipyard International (Yangzhou) Company Limited （廣船國際揚州有限公司）, a wholly owned subsidiary of the Company established to hold the assets acquired by the Company from Yangzhou Kejin;
“GS Shipping” Guangzhou Shipyard Shipping Co., Ltd.（廣州廣船船業 有限公司）, a wholly-owned subsidiary of the Company;
“GS Shipping Interest” 100% interest in the registered capital of GS Shipping;
“GS Shipping Properties” a land parcel located at 10 South Fangcun Main Road, Liwan District, Guangzhou, of approximately 393,793 sq.m. and the buildings erected thereon owned by GS Shipping;
“Guangzhou Shipyard” Guangzhou Shipyard International Company Limited （廣州廣船國際有限公司）, formerly known as “Guangzhou CSSC Longxue Shipbuilding Co., Ltd.（廣州中船龍穴造 船有限公司）, a wholly owned subsidiary of the Company;
–3– DEFINITIONS
“Guangzhou USS” Guangzhou United Steel Structures Limited（廣州永聯鋼 結構有限公司）, a wholly owned subsidiary of the Company;
“H Shares” overseas listed foreign shares of the Company listed on the Stock Exchange;
“Hong Kong” the Hong Kong Special Administrative Region of the PRC;
“Huangpu Wenchong” CSSC Huangpu Wenchong Shipbuilding Company Limited （中船黃埔文沖船舶有限公司）, a wholly owned subsidiary of the Company;
“Independent Board Committee” an independent committee of the Board comprising all the independent non-executive Directors, established for the purpose of advising the Independent Shareholders in connection with the Possible Connected Transactions;
“Independent Financial Adviser” Shenwan Hongyuan Capital (H.K.) Limited, a or “Shenwan Hongyuan” corporation licensed to carry on type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities under the SFO;
“Independent Shareholders” Shareholders other than CSSC and its associates, none of them will be required to abstain from voting at the EGM so convened for approval of the relevant transactions;
“Latest Practicable Date” 20 October 2015, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein;
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange;
“Loans” the loans advanced by CSSC Finance to the Group from time to time under the financial services provided by the CSSC Group to the Group pursuant to the 2014-2016 Framework Agreement and the Supplemental Agreement;
“Minimum Consideration” the amount of RMB3.529 billion representing the minimum consideration to be paid by a bidder in respect of the Proposed Disposal;
–4– DEFINITIONS
“PBOC” the People’s Bank of China;
“Possible Connected Transaction” assuming that CSSC became the successful bidder of the Proposed Disposal, the Proposed Disposal will constitute the connected transaction between the Company and its controlling shareholder;
“PRC” the People’s Republic of China and, for the sole purposes of this circular, excludes Taiwan, Hong Kong and Macau Special Administrative Region of the PRC;
“PRC Company Law” the Company Law of the PRC;
“Proposed Disposal” the proposed disposal of the GS Shipping Interest;
“Revised Annual Cap(s)” the revised annual cap(s) for the continuing connected transaction(s) contemplated under the Supplemental Agreement;
“RMB” Renminbi, the lawful currency of the PRC;
“SASAC” the State-owned Assets Supervision and Administration Commission of the State Council of the PRC;
“Shareholder(s)” holder(s) of Shares;
“Shares” shares of RMB1.00 each in the share capital of the Company;
“Stock Exchange” The Stock Exchange of Hong Kong Limited;
“SUAEE” Shanghai United Assets and Equity Exchange（上海聯合 產權交易所）, a comprehensive equity exchange service institution with enterprise legal person qualification approved by the Shanghai People’s Government as well as an institution designated by the State-owned Assets Supervision and Administration Commission of The State Council to engage in the transfer of state-owned equities of central enterprises;
“Supplemental Agreement” the supplemental agreement to the 2014-2016 Framework Agreement entered into by the Company and CSSC on 29 July 2015;
“US dollars” United States dollars, the lawful currency of the United States;
–5– DEFINITIONS
“Yangzhou Kejin” Yangzhou Kejin Shipbuilding Company Limited*（揚州 科進船業有限公司）;
“%” per cent;
“sq.m.” square meter.
* for identification only
–6– LETTER FROM THE BOARD
(a joint stock company with limited liability incorporated in the People’s Republic of China) (Stock Code: 00317)
Executive Directors: Registered office: Mr. Han Guangde (Chairman) 40 South Fangcun Main Road Mr. Chen Zhongqian (Vice-chairman) Liwan District Mr. Zhou Dusheng Guangzhou Mr. Xiang Huiming The PRC Postal Code: 510382 Non-executive Director: Mr. Yang Li Mr. Wang Jun Mr. Wong Guozhong
Independent non-executive Directors: Mr. Zhu Zhenyu Mr. Zhu Mingyou Mr. Song Dejin 21 October 2015
To the H Shareholders
Dear Sir or Madam,
NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS AND MAJOR TRANSACTION, PROPOSED DISPOSAL AND POSSIBLE CONNECTED TRANSACTION, PROPOSED CHANGES TO CORPORATE STRUCTURE, 2015 BUDGET OF GUARANTEES TO SUBSIDIARIES, ELECTION OF DIRECTORS AND NOTICE OF EXTRAORDINARY GENERAL MEETING
INTRODUCTION
Reference is made to the announcement of the Company dated 29 July 2015 in relation to the entering into the Supplemental Agreement between the Company and CSSC and the announcement of the Company dated 14 August 2015 in relation to the Proposed Disposal and Possible Connected Transaction.
Under the Listing Rules, the Continuing Connected Transactions (save for the provisions of the Financial Services) contemplated under the 2014-2016 Framework Agreement and the Supplemental Agreement constitute non-exempt continuing connected transactions of the Company and thus are subject to reporting, announcement and
–7– LETTER FROM THE BOARD independent shareholders’ approval requirements under Chapter 14A of the Listing Rules. Also, the Deposits constitutes a non-exempt continuing connected transaction and also a major transaction of the Company and is subject to reporting, announcement and Independent Shareholders’ approval at the EGM and the relevant major transaction requirements under Chapter 14 of the Listing Rules.
Further, as the applicable percentage ratios of the GS Shipping Interest exceed 5%, should CSSC or its associates finally become the successful bidder of the GS Shipping Interest, the Proposed Disposal will constitute connected transaction of the Company and is subject to the reporting, issue of circular and Independent Shareholders’ approval requirements under Chapter14A of the Listing Rules.
Shenwan Hongyuan Capital (H.K.) Limited has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders on the fairness and reasonableness of the terms of (i) the Continuing Connected Transactions and the Revised Annual Caps; and (ii) the Possible Connected Transaction and whether such transactions are in the interests of the Company and the Shareholders as a whole. The letter from the Independent Board Committee to the Independent Shareholders is also included in this circular.
The Company hereby dispatches a circular to the Shareholders, which contains, among other things, (i) further information about the Supplemental Agreement and the Continuing Connected Transactions; (ii) further information about the Proposed Disposal and the Possible Connected Transactions; (iii) Independent Board Committee’s advice to the Independent Shareholders on the Continuing Connected Transactions and the Possible Connected Transaction; (iv) Independent Financial Adviser’s advice to the Independent Board Committee and the Independent Shareholders on the Continuing Connected Transactions and the Possible Connected Transaction; and (v) notice of the EGM.
Independent Shareholders are further advised to read this circular carefully for details of all the Continuing Connected Transactions and the Possible Connected Transaction before making their decision as regards voting on the respective resolutions proposed at the EGM. Independent Shareholders should note that, if they vote in favor of the ordinary resolution proposed at the EGM regarding the Supplemental Agreement, they would approve all the Continuing Connected Transactions (including the provision of the Financial Services to the Group by the CSSC Group) contemplated under the Supplemental Agreement. In the event that the ordinary resolution proposed at the EGM as regards the Supplemental Agreement is not approved by the Independent Shareholders, the Company shall conduct the continuing connected transactions between the Group and CSSC Group in compliance with the 2014-2016 Framework Agreement as approved by the Independent Shareholders on 13 February 2014. Independent Shareholders should also note that, if they vote in favor of the ordinary resolution proposed at the EGM regarding the Proposed Disposal and the Possible Connected Transaction, they would approve in advance, the connected transaction between the Group and the CSSC Group in the event that CSSC or its associates became the successful bidder of the GS Shipping Interest.
–8– LETTER FROM THE BOARD
I. SUPPLEMENTAL AGREEMENT OF 2014-2016 FRAMEWORK AGREEMENT
A. BACKGROUND
References are made to the announcement of the Company dated 16 December 2013 and the circular of the Company dated 24 January 2014 in relation to the 2014-2016 Framework Agreement entered into between the Company and CSSC governing the continuing connected transactions between the Group and the CSSC Group.
References are also made to the announcements dated 31 October 2014 and 6 November 2014, respectively, and the circular of the Company dated 5 December, in relation to, among other things, the acquisitions of Huangpu Wenchong from the CSSC Group and certain assets from Yangzhou Kejin.
Upon the completion of the Acquisitions, Huangpu Wenchong became the wholly-owned subsidiaries of the Company. Accordingly, following completion of the Acquisitions, it is expected that certain existing continuing connected transactions between Huangpu Wenchong and the Company, are no longer classified as connected transactions of the Company while certain other existing transactions between CSSC and Huangpu Wenchong and GSI (Yangzhou), would constitute continuing connected transactions of the Company. As the results, the Company expects that there will be a substantial increase in the total value of the existing continuing connected transactions between the Group and the CSSC Group following the Acquisitions. The annual caps approved by the Independent Shareholders for continuing connected transactions between the Group and CSSC Group under the 2014-2016 Framework Agreement will need to be revised to reflect the expected increase in the transaction amounts. In order to comply with all applicable requirements of Chapter 14A of the Listing Rules, the Company entered into the Supplemental Agreement with CSSC on 29 July 2015 to modify the existing 2014-2016 Framework Agreement subject to the approval from Independent Shareholders.
Certain Directors hold positions in CSSC Group and/or its subsidiaries, in particular, Mr. Han Guangde is the chairman of Guangzhou Shipbuilding Factory Co., Ltd.*（廣州造船 廠有限公司董事長） and Mr. Wang Jun is the general manager of CSSC Investment and Development Co., Ltd.*（中船投資發展有限公司）, and are considered under PRC laws to be interested in the Continuing Connected Transactions and have not been counted in the voting on the Board resolutions for approving the Supplemental Agreement together with the Continuing Connected Transactions and the Revised Annual Caps contemplated thereunder.
For the avoidance of doubt, the entering into and the implementation of the Supplemental Agreement and the Continuing Connected Transactions (together with the Revised Annual Caps) contemplated thereunder is conditional upon the approval by Independent Shareholders at the EGM. In any event, prior to obtaining the approval from Independent Shareholders at the EGM, the Company shall continue to comply with the terms of, and the continuing connected transactions (together with the relevant annual caps) under the 2014-2016 Framework Agreement as approved by the Independent Shareholders on13 February 2014.
–9– LETTER FROM THE BOARD
B. SUPPLEMENTAL AGREEMENT
Principal terms of the Supplemental Agreement
Scope: Products and services to be provided by the Group to the CSSC Group:
(a) Electrical and mechanical engineering equipment, and metallic materials, primarily complete sets or accessories of electrical and mechanical engineering equipment, steel products, non-ferrous metal products etc., part of the accessories and equipment for use on ships and sales of electrical and mechanical engineering equipment and waste-recycling through CSSC Group;
(b) Utilities, primarily the supply of wind, water and electrical power; and
(c) Labour supply and technical services: labour supply primarily involves the provision of training, short-term labour supply, shipbuilding services etc.; according to the demands for technicians, the Group may provide to the CSSC Group the services for ship-painting, internal fit-out, human resources service and computer softwares and hardwares services in Guangzhou areas; short-term labour supply will be provided by the Group when the CSSC Group is in short of labour force for shipbuilding services in Guangzhou areas while the Group has excess labour force at the same time; the provision of technical services to the CSSC Group mainly involves the provision of shipbuilding products and other engineering design and relevant technical services.
Guarantees to be provided by the Group to the CSSC Group:
(d) Guarantees in respect of the CSSC Group’s borrowings or operating activities when required.
–10– LETTER FROM THE BOARD
Products and services to be provided by the CSSC Group to the Group:
(e) Electrical and mechanical engineering equipment, metallic materials, accessories and equipment for ship etc. and related logistics service; comprising primarily materials like steel products for shipbuilding, nonferrous metals, cables, paints, welding materials, complete sets or accessories of electrical and mechanical engineering products; and logistics and related services for marine outfitting (set and matching) and materials for use on ships, cable cutting services, etc; and
(f) Lease of production areas and equipment, Labour supply and technical services: lease of certain production sites and together with necessary production equipment within Guangzhou areas to the Group; labour supply includes subcontracting of shipbuilding works by section or steel structure works, the provision short-term labour supply, cabin cleaning services and other comprehensive services, etc.; subcontracting of shipbuilding works by section refers to the event that the Group’s shipbuilding production is constrained by limited resources such as workshop, equipment or labour force, and have to subcontract sections of the shipbuilding works or steel structure works to CSSC or its subsidiaries in order to keep up with the production plan; labour supply also involves the temporarily borrowing of labour force from CSSC Group to fulfill the needs of labour force in peak season; cabin cleaning services involves the subcontracting of cabin cleaning works to professional cleaning services provider in the CSSC Group; comprehensive services includes the provision of medical care service, catering service, infant day care service, technical training as well as the management service for staff quarter; the provision of technical services by the CSSC Group mainly involves the provision of shipbuilding products and other engineering design and relevant technical services.
–11– LETTER FROM THE BOARD
Financial services to be provided by the CSSC Group to the Group:
(g) (i) Maintaining Deposits with CSSC Finance; (ii) providing Loans by CSSC Finance; (iii) providing other financial or credit services which primarily includes the advance(s) provided to the Group from CSSC Finance directly, or payment(s) of compensation(s) and/or provision of indemnity(ies) in respect of any payment obligations which may arise out of the business activities carried on by the Group such as loans, trade finance, bill financing, finance leases, overdrafts, trade advances, promissory notes, letters of credit, guarantees, standby letters of credit, letters of credit confirmation, guarantees in bonds issuance, loan guarantees, asset sales with legal recourses, un-utilised irrevocable loan commitments, etc; (iv) entering into FX Forward Contracts by CSSC Finance with the Group; and (v) providing assets custody and management service to management the assets under custody through tailor-made value-adding asset management plan and strategy.
(h) Guarantees in respect of the Group’s borrowings or operating activities when required.
Agency Services to be provided by the CSSC Group to the Group:
(i) Agency services, primarily to take advantage of the CSSC Group’s reputation and bargaining power in selling the Group’s ships and purchasing imported materials for the Group.
(a) to (i) collectively referred to as the “Continuing Connected Transactions”, and each a “Continuing Connected Transaction”.
–12– LETTER FROM THE BOARD
Pricing: The Continuing Connected Transactions are to be conducted in the ordinary and usual course of business of the Group and on normal commercial terms (and if there are no sufficient comparable transactions to assess whether they are conducted on normal commercial terms, on terms no less favourable to the Group than terms available to or from (as appropriate) independent third parties) on the basis that they must be fair and reasonable so far as the Shareholders are concerned. Separate written agreement(s) setting out the detailed terms (including the basis of pricing) shall be, if required, entered into between relevant parties for each Continuing Connected Transaction.
In respect of (a) above, pricing will be based on market price.
In respect of (b) above, pricing will be based on the costs of utilities supplied to the CSSC Group plus a 20-25% management fee or on terms no less favourable to the Group than terms available from independent third parties.
In respect of (c) above, pricing will be based on terms not less favourable compared with independent third parties.
In respect of (d) above, no fee will be charged for providing guarantees to CSSC Group in the consideration that CSSC Group will provide equivalent amount of guarantee to the Huangpu Wenchong free of charge.
In respect of (e) above:
– pricing of electrical and mechanical engineering equipment and metallic materials will be based on market price and on terms no less favourable to the Group than available from independent third parties;
– pricing of steel components or accessories for ship, considering the will be determined on arm’s length negotiations between the parties annually based on actual costs taking into account the market price of raw materials;
–13– LETTER FROM THE BOARD
– pricing of equipment for ship shall be on terms no less favourable to the Group than terms available from independent third party suppliers taking into account circumstances such as the supply lead-in time, qualification of suppliers and quality of services etc. in the event that there are two or more suppliers from the CSSC Group; in the event that there is only one supplier from the CSSC Group due to technical specification or supply terms restrictions, pricing shall be determined by the parties at arm’s length based on the most recent purchase price of the equipment in question by the Group, taking into account of the fluctuation of the price of raw materials, and in any event shall not be less favourable than terms available from independent third party supplier to the Group; and
– pricing of logistics service shall be on terms no less favourable to the Group than terms available from independent third party service providers.
In respect of (f) above, rental of the lease shall be based on market price; pricing of Comprehensive Services shall be on terms no less favourable to the Group than terms available from independent third parties; pricing of labour supply services will be based on costs; pricing for providing cabin cleaning service and the shipbuilding products and other engineering design and relevant technical services shall be based on market price.
In respect of (g) above:
– interests of the Deposits shall be on such interest rate on deposits published by PBOC;
– interests of the Loans shall be at an interest rate not higher than interest rate on loans published by PBOC or at an interest rate which will not be less favourable than that provided by independent third parties providing similar services in the PRC;
– pricing of fees charged for financial and credit services shall be based on the charge standard as published by PBOC or on terms no less favourable to the Group than terms available from independent third parties providing similar services in the PRC;
–14– LETTER FROM THE BOARD
– for the handling of FX Forward Contracts, CSSC Finance does not charge any handling fee; and
– pricing of fees charged for providing custody and asset management services shall be determined by the parties by making reference to market price.
In respect of (h) above, fee will only be charged by the CSSC Group for the aggregate amount of guarantees provided by it to the Group in excess of the aggregate amount of guarantees provided by the Group to the CSSC Group. The pricing of the fee charged for such excessive part shall be at the rate not more than annual rate 0.6% of the maximum guaranteed amount, or at a rate which will not be less favourable than that provided by independent third parties.
In respect of (i) above, pricing of sales agency fees or commissions shall follow the worldwide industry practice and be 1% (which may vary if large vessel is involved) of the contract price and be paid in according to the shipbuilding progress of the vessel in question; and pricing of purchases agency fees will be based on agreed fee shall also follow the worldwide industry practice and be 1 to 2% of the contract price.
Payment Term: Payment of each Continuing Connected Transaction will be settled in cash in arrears, or in accordance with the payment terms agreed by the relevant parties in the contract(s) to be entered into in connect with such Continuing Connected Transaction pursuant to the Supplemental Agreement.
Term: Conditional upon approval by the Independent Shareholders at the EGM and completion of the Acquisitions, the term of the Supplemental Agreement shall be for the period from 1 January 2015to 31 December 2016 (both days inclusive).
–15– LETTER FROM THE BOARD
Historical Figures and Revised Annual Caps
Historical Figures
The table below sets out the amount of each category of the Continuing Connected Transactions for the three years ended 31 December 2014 and the comparison with the respective annual cap approved by the Independent Shareholders under the 2010-2012 Framework Agreement, the 2013-2015 Framework Agreement and the 2014-2016 Framework Agreement. The Directors will closely monitor that the transaction amounts of each category of the Continuing Connected Transactions for the year ending 31 December 2015to ensure the amounts will not exceed their respective annual caps for 2015 under the 2014-2016 Framework Agreement.
Unit RMB million Historical Annual Caps Historical Amounts For the eight months ended For the year ended 31 December For the year ended 31 December 30 August Transaction 2012 2013 2014 2015 2012 2013 2014 2015*
Products and services provided by the Group to CSSC Group: (a) Electrical and mechanical 359.70 306.10 421.58 526.98 10.44 84.12 315.48 182.89 engineering equipment, metallic (Note 1) (Note 1) materials and waste recycling (b) Utilities 6.60 5.00 105.75 132.19 1.49 0.86 82.77 30.31 (c) Labour supply, design and technical 313.18 432.37 315.75 394.69 169.47 303.86 203.76 8.62 services
Financial services provided by the Group to the CSSC Group: (d) Guarantee (Note 2) ––––––––
Products and services provided by the CSSC Group to the Group: (e) Electrical and mechanical 1,726.89 2,349.71 5,210.43 6,513.04 372.64 878.97 2,681.83 3,606.80 engineering equipment and metallic materials, shipbuilding accessories and equipment for use on ships (f) Leasing of production areas, 361.21 521.20 696.14 870.18 100.84 174.46 521.28 288.48 equipment and facilities; Labour (Note 3) (Notes 3 (Notes 3 (Notes 3 (Note 3) (Notes 4 (Notes 4 supply, design and technical and 4) and 4) and 4) and 5) and 5) services; and Comprehensive Services
Financial services provided by the CSSC Group to the Group: (g) (i) Aggregate interest on Deposits 30.00 30.00 130.00 130.00 13.94 16.69 17.14 66.84 for the year (Note 5) (ii) Aggregate interest on Loans for 42.00 42.00 400.00 400.00 13.92 30.42 184.36 93.33 the year (Note 5) (iii) Financial and credit services – – 7.20 7.20––00.96 (Note 6) (h) Guarantee fees (Note 7 and 8) 15.00 15.00 46.00 46.000000
Agency services provided by the CSSC Group to the Group (i) (i) Sales agency fees 83.82 73.50 70.00 73.00 35.56 17.13 27.67 21.99 (ii) Purchases agency fees 21.12 12.00 17.00 17.00 1.71 5.28 3.99 2.16
–16– LETTER FROM THE BOARD
Notes:
1. The 2010-2012 Framework Agreement did not provide for the waste-recycling. The Directors confirm that there was no transaction for each of the two years ended 31 December 2011 and 2012.
2. The 2010-2012 Framework Agreement, the 2013-2015 Framework Agreement and the 2014-2016 Framework Agreement did not provided for the provision of guarantee by the Group to the CSSC Group. The Directors confirm that there was no guarantee provided to CSSC Group for each of the two years ended 31 December 2013.
3. The 2010-2012 Framework Agreement did not provide for the leasing of production areas, equipment and facilities by the CSSC Group to the Group. The Directors confirm that there was no transaction for each of the two years ended 31 December 2011 and 2012.
4. The figure represents the total of annual cap for the category.
5. Maximum outstanding daily balances on each of the Deposits and Loans shall not exceed RMB600 million for the year ended 31 December 2012 and RMB600 million for the year ending 31 December2013, respectively.
6. The 2010-2012 Framework Agreement and the 2013-2015 Framework Agreement did not provide for the provision of financial and credit services by the CSSC Group to the Group. The Directors confirm that there was no transaction for each of the two years ended 31 December 2013.
7. Maximum guaranteed amount shall not exceed RMB2,500 million for each of the two years ended 31 December 2013 and shall not to exceed RMB7,500 million for the year ended 31 December 2014.
8. CSSC Group had not provided any guarantee to the Company for the two years ended 31 December 2013.
Revised Annual Caps
The table below sets out the revised annual caps for each category of the Continuing Connected Transactions for the two years ending 31 December 2015 and 2016 respectively
Unit RMB million
Revised Annual Caps For the year ended 31 December Transaction 2015 2016
Products and services provided by the Group to CSSC Group:
(a) Electrical and mechanical engineering equipment 1,253.83 2,268.77 and metallic materials and waste-recycling (i) Electrical and mechanical engineering 1,109.83 2,124.77 equipment (ii) Metalic material and waste-recycling 144 144 (b) Utilities 96.34 109.56 (c) Labour supply, design and technical services 292.80 373.42 (d) Guarantee amount 1,500.00 2,500.00
–17– LETTER FROM THE BOARD
Unit RMB million
Revised Annual Caps For the year ended 31 December Transaction 2015 2016
Products and services provided by the CSSC Group to the Group:
(e) Electrical and mechanical engineering equipment 12,267.23 14,462.27 and metallic materials, shipbuilding accessories and equipment for ship (f) Leasing of production areas and equipment; 1,218.13 1,378.93 Labour supply, design and technical services; Comprehensive Services: (i) lease of production areas and equipment 19.93 19.73 (excluding the lease of GS Shipping Properties) (ii) lease of GS Shipping Properties – 180 (iii) labour supply and Comprehensive Services 891.42 887.13 (iv) design and technical services 306.78 292.07 (g) (i) Aggregate interest on Deposits for the year 380.00 380.00 (Note 1) (ii) Aggregate interest on Loans for the year 589.00 659.00 (Note 2) (iii) Financial and credit services (Note 3) 17.20 17.20 (iv) FX Forward Contracts 7,000 8,500 (v) assets custody and management services 120.00 160.00 (Note 4) (h) Guarantee fees (Note 5) 67.00 73.00 (i) (i) Sales agency fees 109.00 113.20 (ii) Purchases agency fees 22.78 22.78
Notes:
1. Maximum outstanding daily balance on the Deposits shall not exceed RMB7,800 million for each of the two years ended 31 December 2016, respectively.
2. Maximum outstanding daily balance on the Loans shall not exceed RMB8,300 million and RMB9,300 million for the two years ended 31 December 2016, respectively.
3. Maximum amount for the financial and credit services in aggregate shall not exceed RMB6,500 million and RMB7,500 million for the two years ended 31 December 2016, respectively.
4. No management fee will be charged for the assets custody and management service if the annual investment return is less than 5% and the Company expects that the annual investment return will be around 4% for the two years ended 31 December 2016. The maximum value of the assets under custody and management shall not exceed RMB3,000 million and RMB4,000 million for the two years ended 31 December 2016, respectively.
5. Maximum guaranteed amount shall not exceed RMB11,000 million and RMB12,000 million for the two years ended 31 December 2016, respectively.
–18– LETTER FROM THE BOARD
The Revised Annual Caps are determined taking into account primarily the historical transaction amounts, production orders in hand, expected orders, material costs and anticipated total production value of the Group.
C. REASONS FOR ENTERING INTO OF THE SUPPLEMENTAL AGREEMENT AND FURTHER INFORMATION ON THE BASIS OF PRICING TERM
Following completion of the Acquisitions, certain existing continuing connected transactions between Huangpu Wenchong and the Company, are no longer classified as connected transactions of the Company while certain other existing transactions between CSSC and Huangpu Wenchong and GSI (Yangzhou), would constitute continuing connected transactions of the Company. Moreover, through the acquisition of Huangpu Wenchong from the CSSC Group, the Group has acquired the ability and also the qualification to build military ships, military auxiliary ships. The building of military and military auxiliary ships will involve materials, parts, components and equipment of military standards which are not commonly available in the market. Therefore, the Company expects there will be a substantial increase in the Group’s purchases from the CSSC Group for such materials and products for the year 2015 and 2016. As the results, the Company expects that there will be a substantial increase in the total value of the existing continuing connected transactions between the Group and the CSSC Group following the Acquisitions. The annual caps approved by the Independent Shareholders for continuing connected transactions between the Group and CSSC Group under the 2014-2016 Framework Agreement will need to be revised to reflect the expected increase in the transaction amounts and the additional continuing connected transactions.
The Continuing Connected Transactions allow the Group to leverage on the reputation and bargaining power of the CSSC Group in the international shipbuilding industry, provide a reliable and cost effective source of materials, labour, design, technology, financial and credit services and other services necessary for the Group to conduct its business, and allow flexibility for better allocation of resources between each other so as to meet the anticipated production schedules for shipbuilding in the next few years.
In addition, the Directors have taken into consideration the following regarding each of the Continuing Connected Transactions and their respective pricing term contemplated under the Supplemental Agreement:
(a) The CSSC Group has the need to purchase production equipment while the Group has the capability of designing and manufacturing electrical and mechanical engineering products and could provide complete sets or accessories of electrical and mechanical engineering equipment to the CSSC Group; or when the CSSC Group is facing a shortage in materials or equipment such as steel products, causing by insufficient procurements or delay in delivery of goods by suppliers or when it is urgently required to meet orders from its customers which temporarily exceeded its production capacity, the Group may provide various electrical and mechanical engineering equipment and metallic materials to the CSSC Group to meet its routine and urgent production needs, on terms to be determined based on market comparable prices.
–19– LETTER FROM THE BOARD
As the Group also sell relevant equipment and materials to other independent third parties, the Group will, when determining the pricing terms for the Continuing Connected Transaction, make reference to the then prevailing market prices made available to the Group by independent third party purchasers to the Group for similar products and ensure that the prices offered by the CSSC Group are in any event no less favourable. The sale of such products, equipment, materials and waste (except waste steels) would be conducted through tenders so that the CSSC Group have to compete with independent third party purchasers directly, while for the sale of waste steels, the price would be determined based on the price published by steel refinery companies.
All sales will be subject to the contract management rules under the Group’s internal control procedures (“Contract Management Rules”). The Contract Management Rules were designed to seek to ensure that the contracts from time to time entered into by the Group are in compliance with the Contract Law of the PRC（中華人民共和國合同法）, the Practice Note No.16 – Contract Management of the Enterprise Internal Control （企業內部控制應用指引第16號-合同管理） and other relevant PRC laws and regulations. The Contract Management Rules are applicable to all sale and purchase contracts of the Group so that all the suppliers or purchasers (as the case maybe) would be treated equally and would submit their respect tender and compete with each other through the same platform. The Company would take into account terms offered by the bidders including the price and payment terms and determine the successful bidder at the procurement meeting. The relevant Group Company would then enter into contract with the successful bidder on the Group’s standard format.
(b) When the former Guangzhou Shipyard (now renamed as “Guangzhou Shipyard Company Limited”), which is under control of CSSC Group, underwent restructuring and went public in 1993, its main production and operation vehicle, including utilities facilities of wind, water and electricity, was included in the Group, and Guangzhou Shipyard Company Limited also needs such utilities in the course of its operations. The fees for provision of utilities (primarily supply of wind, water and electrical power) by the Group to the CSSC Group is based on the utilities’ costs of the Group supplied to the CSSC Group plus a management fee ranging from 20% to 25% above the cost of the relevant type of utilities.
Given that the Group is not principally engaged in provision of utilities facilities, the 20% to 25% margin on the fees primarily represents the CSSC Group’s share of the expenses involved in overall generation of such utilities facilities. Such margin has been agreed after arm’s length negotiation between the Group and the CSSC Group, is considered as fair and reasonable to defray the relevant administrative costs and the miscellaneous expenses (including maintenance costs and depreciation charges) from time to time incurred by the Group for provision of such utilities facilities to CSSC Group.
(c) The Group will provide to the CSSC Group labour supply services, primarily providing training and supplying short-term labourers, shipbuilding services etc. According to the demands for technicians, the Company may provide to CSSC
–20– LETTER FROM THE BOARD
Group within Guangzhou areas services for ship painting, internal fit-out, human resources service and softwares and hardwares of computer services; supply short-term labourers, shipbuilding services in times of labour shortage of the CSSC Group while the Group has temporary excess labour supply. As the production cycles of both the Group and the CSSC Group are cyclical, such arrangements allow the Group the flexibility to supply excess labour to the CSSC Group. Besides, the Group will provide design and technology services relating to shipbuilding products and other projects, which the Group is Centralised in, to the CSSC Group from time to time. The Directors are of the view that the provision of such services to the CSSC Group enables the Group to capitalise on its excess production capacity and existing shipbuilding-related techniques to earn additional revenue for the Group.
Pricing of labour supply by the Group to the CSSC Group will be based on terms not less favourable compared with independent third parties. When determining the pricing term, the Company will consider factors like the skill required and the then supply and demand on the market, and make reference to the then prevailing average wage rate published by Statistical Bureau of Guangzhou Municipality（廣 州市統計局）. For labours without special skills, references will be made to the average wage of general workers while for labours with specialised skills required in shipbuilding, references will be made to the average wage of shipbuilding workers within Guangzhou area. The contract review committee of the Company will review and scrutinize quotations offered by the Group to the CSSC Group against those provided by the Group to independent third parties to seek to ensure that the Manual and the Contract Management Rules are complied with. Pricing for provision of design and technology services by the Group to the CSSC Group will primarily be based on certain fee formulae prescribed in the Manual. As the Directors understand, the fee formulae prescribed in the Manual are principally based on, among others, the skills required, complexity of the work involved and industry-specific job specification according to the prevailing market standard for ship-building. The Manual is intended to be applicable across CSSC Group (including the Group) for provision of reciprocal services and products, as well as to independent third parties.
(d) In consideration of the guarantee(s) provided by the CSSC Group to Huangpu Wenchong, Huangpu Wenchong used to provide guarantee(s) to member(s) of the CSSC Group. Such arrangement would enable Huangpu Wenchong to obtain bank loans or facilities with lower costs. The Directors are of the view that it is more cost-effective for Huangpu Wenchong to continue the guarantee arrangement with the CSSC Group. Considering that the amount of guarantees provided by the CSSC Group to the Group is much larger than those provided by the Group to the CSSC Group historically, the Company expects the amount of guarantees to be provided to the CSSC Group will not exceed the amount of guarantees to be received from the CSSC Group. The Company has adopted internal control policies and procedures to monitor all the ongoing continuing connected transaction of the Group. In particular, the operation management department of the Company prepares a monthly summary on all the ongoing continuing connected transactions to keep track of their respective accumulated transaction
–21– LETTER FROM THE BOARD
amounts such that they would not exceed their respective approved annual caps. There is also a written procedure to ensure the corresponding amount of guarantees provided by the CSSC Group to the Group will not be exceeded before any additional guarantees to be provided by the Group to the CSSC Group are proposed to the management team for approval. Moreover, article 57 of the articles of association of the Company provides that any external guarantee by the Company shall be voted on and approved by more than two-thirds of all Board members. In certain circumstances, the provision of external guarantees are to be approved by the Shareholders at a general meeting. As such, the Board is capable to monitor as well as to control the amounts of guarantees to be provided to the CSSC Group by the Group.
(e) The Group sources from the CSSC Group electrical and mechanical engineering equipment, metallic materials, shipbuilding accessories, materials and equipment for shipbuilding, mainly comprising materials such as steel products for ships, non-ferrous metals, cables, paint, welding materials, complete sets or accessories of electrical and mechanical engineering products. The Group also uses logistics and related services, cable cutting services, etc. provided by the CSSC Group. The Group sources these types of equipment and services from the CSSC Group and also from other independent suppliers so as to meet its routine and urgent needs. Considering that (i) the CSSC Group is Centralized in manufacturing some of such equipment and (ii) the CSSC Group is able to obtain competitive prices on certain materials by making bulk order through its Centralized purchase system, the Directors are of the view that the CSSC Group has the capacity to supply various shipbuilding materials or to provide necessary services when the Group has the production needs. Likewise, the Directors are of the view that it is more cost-effective to purchase of materials and equipment through bulk purchase by the CSSC Group.
The Group also sources the products and services described in (e) from other independent third party suppliers from time to time. Nevertheless, as the CSSC Group is either specialised in manufacturing some of such equipment and, or as the case may be, has a centralised purchase system for purchase of the required materials in bulk so as to obtain competitive prices, the Directors are of the view that it would be more cost-effective for the Group to purchase various ship-building materials and equipment from the CSSC Group.
The Group has to comply with the internal procurement policy as set out in the Contract Management Rules when selecting the supplier for materials or services. In particular, ship building related purchase transactions involving a transaction amount of over RMB5,000,000 (inclusive) or non-ship building purchase transactions involving a transaction amount of over RMB3,000,000 (inclusive) will need to be approved by the head of the relevant business departments, the risk management department and the relevant deputy general manager of the Group. Contracts of transaction amount below the above-mentioned thresholds can be approved by the head of the relevant procurement team. As a general procedure, regardless the contract amount, the Group have to obtain quotations from suppliers in a pre-approved list of suppliers for provision of materials and
–22– LETTER FROM THE BOARD
equipment and logistic-related services, including the CSSC Group, and/or invite other suppliers to submit their tenders. In certain circumstances, where quotations from independent suppliers are not available due to technical specifications or supply terms restrictions, specific reasons have to be provided for not going through the procedure for internal assessment. Favourable pricing and terms that are in the best interests of the Group is a key determining factor for winning a bid. However, the Group will also consider factors such as the background, creditworthiness and reliability of the counterparties, their ability to execute the transactions in accordance with the contractual terms; their understanding of the special needs and requirements of the Group, etc. in order to maximize the Group’s overall interest in a particular transaction and minimize the Group’s transaction costs.
(f) For lease of production area, as disclosed in “III. PROPOSED DISPOSAL AND POSSIBLE CONNECTED TRANSACTION” of this circular, the Company proposed to dispose the GS Shipping Interest through open tender. As it takes time for the Group to relocate its production from the current production site owned by GS Shipping to other site, the Group has conditionally entered into a lease agreement with GS Shipping prior to the Proposed Disposal to leaseback the GS Shipping Properties from the successful bidder such that the Group can continue its production at existing Liwan production base before the new production base is ready to use. Since CSSC has indicated its intention to participate in the bidding for such open tender, in the event that CSSC or its associates becomes the successful bidder of the GS Shipping interest, the Proposed Lease will constitute a continuing connected transaction of the Company. The rental of the proposed lease will be determined by making reference to the prevailing market rate of the adjacent lands and the Company has engaged an independent valuer to determine the fair rental. The principal terms of the Proposed Lease are summarised as the follows:
Date of Proposed 14 October 2015 Lease: Landlord: GS Shipping Tenant: Guangzhou Shipyard Property: The GS Shipping Properties Term: From the completion of the Proposed Disposal to 31 December 2017 Rent: To be determined by the parties at arm’s length negotiation with reference to the fair market rent assessed by an independent valuer, but in any event the annual rent will not more than RMB180 million. Management and The tenant shall be responsible for all management fees Utilities Fees: and utilities fees related to the GS Shipping Properties during the term of lease
–23– LETTER FROM THE BOARD
The Group has entered into three leases with members of the CSSC Group for the lease of land, pier and production facilities in various locations in Guangzhou. All the lease agreements are of similar terms as summarised herein below:
Subject Term Rent Payment term Use
1 A parcel of land Repeated lease Lease of land: The landlord Storage of 10,000 sq.m. of one year RMB6 per sq.m. per will issue located within term. month; Loading invoice at the the Xinlian service: RMB17.5 end of each Industrial Zone, per tonne; Storage calendar month Dagung Village, service: RMB40 per the tenant shall, Panyu, tonne upon the receipt Guangzhou; the of such invoice, loading service pay the rent to and storage the landlord in services the following calendar month.
2 Piers and Repeated lease Ranging from The landlord Berthing production of one year RMB33 to RMB66 will issue facilities term. per meter per day invoice at the located at plus utilities charge end of each Longxue Main and patrol and calendar month Road, Longxue cleaning service and the tenant Dao, Nansha charge shall, upon the District, receipt of such Guangzhou and invoice, pay the Qihang Road, rent to the Longxue Street, landlord with Nansha District, 30 days. Guangzhou
3 A parcel of land Repeated lease Annual rent: Payment shall Production of 638,083 of one year RMB19,112,935.62 made on or sq.m. located at term. before 5 no. 188 November in Changzhou each year. Street, Huangpu District, Guangzhou and 14 parcels of land of 638,776.58 sq.m. in aggregate located at 1 Wenchuan Road, Huangpu District, Guangzhou, respectively
–24– LETTER FROM THE BOARD
Labour services primarily include the borrowing of labour force from and subcontracting of shipbuilding works or steel structure works to the CSSC Group during the Group’s peak production season. Given that the need for labour varies in different stages of production, the Directors consider that procurement of labour services with special skills from the CSSC Group during the Group’s peak production season would be beneficial to the Group as it would not be required to maintain a large workforce of its own at all times. Also on cost-saving reason, the Group outsources the cabin cleaning services to CSSC Group. As the CSSC Group is specialised in the design of certain types of ship products or equipment, the Group also engages the CSSC Group to provide design and technical services to meet the requirements of different progresses of production. The Group has sourced the Comprehensive Services from the CSSC Group for years on terms no less favourable than terms available from independent third parties, the Directors believe that it would be more cost-efficient for the Group to retain the CSSC Group for the Comprehensive Services.
The Group sources labour services from the CSSC Group from time to time whenever there is a need for skilled labours during high production season. The Directors consider that procurement of labour services with special skills from CSSC Group would be beneficial to the Group as it would not be required to maintain a large workforce of its own at all times. For the similar reason, the Group also sources the cabin cleaning services, and design and technology services and the Comprehensive Services from the CSSC Group.
The pricing of labour services will be based on costs plus a management fee of not more than 10% on such costs. The management fee primarily represents the Group’s share of the overall administrative expenses for labour services but in any event the fees shall be no less favourable than those offered by the Group to independent third parties. The Company will consider factors like the skill required and the availability of similar supply on the market, and make reference to the then prevailing average wage rate published by Statistical Bureau of Guangzhou Municipality（廣州市統計局）.
As a reciprocal services arrangement applicable across the CSSC Group (including the Group) and to third party service providers, the pricing of ship design and related technology services will primarily be based on certain fee formulae prescribed in the Manual.
As regards the Comprehensive Services, the Directors understand that the provision of such services by the CSSC Group is not intended to be profit-making but for the benefit of the staff of the CSSC Group (including the Group) as a whole. As such, pricing of the Comprehensive Services shall be determined on terms no less favourable to the Group than terms available from independent third parties. The Company has compared the price and terms offered by third party service providers of similar qualifications taking into account factors such as remoteness of the Group’s production sites, quality of service and food safety, and concluded that the terms (including price) offered to the Group by the CSSC Group is not less favourable than third party suppliers.
–25– LETTER FROM THE BOARD
The pricing of the lease between the Group and the CSSC Group shall be based on the then prevailing market rent of similar properties at close proximity to the subject properties published on the websites of local real estate agents and if necessary, the Company would engage independent valuer to assess the fair rent of the lands and/or properties which are the subject of the lease.
The contract review committee will, in all cases, review and scrutinize quotations offered by the CSSC Group to the Group against those provided to the Group by third party service providers for providing similar services in order to seek to ensure that the Group can obtain the most favourable prices available at the relevant time and that, among others, the Contract Management Rules are complied with.
(g) (i) The Group maintains the Deposits with CSSC Finance from time to time. Such Deposits are on short-term basis and are maintained with CSSC Finance during the transition period for funds to the Group from the PRC Government authorities in support of the development of the shipbuilding industry for administration needs. Interests on the Deposits are based on rates on deposits published by the POBC from time to time. The Directors are of the view that there are practical needs for the Group to continue to maintain the Deposits with CSSC Finance to enable an effective transmission of Government funds provided from CSSC Group to the Group via CSSC Finance to the Group.
(ii) Apart from maintaining the Deposits with CSSC Finance, the Group also seeks the provision of Loans from CSSC Finance for standby purpose in support of the operational and production needs and to maintain the liquidity of the Group from time to time. The Loans will be charged at an interest rate not higher than interest rate on loans published by PBOC.
The Directors consider that the provision of the Loans from CSSC Finance is more efficient than the loans from other general domestic commercial banks that provide similar services for the Group. As such, the Directors are of the view that the provision of Loans by CSSC Finance will benefit the Group by increasing the operation efficiency in the use of fund.
(iii) Due to the business operation needs, the Group has to enter into various commercial arrangements involving payment obligations such as loans, trade finance, bill financing, finance leases, overdrafts, trade advances, promissory notes, letters of credit, guarantees standby letters of credit, letters of credit confirmation, guarantees in bonds issuance, loan guarantees, asset sales with legal recourses, unused irrevocable loan commitments, etc. In the past, the Group uses to source provision of the financial and credit services from independent third parties. The engagement of CSSC Finance for provision of the financial and credit services would enable the Group to obtain more competitive terms. Given the relationship between the Group and the CSSC
–26– LETTER FROM THE BOARD
Group, the Directors believe that the financial and credit services to be offered by CSSC Finance will be more efficient than the services offered by other general domestic commercial banks or institutions.
(iv) As disclosed, the Company’s ship export orders are denominated in US dollars and some domestic ship orders are also denominated in US dollars. As such the Company was subject to high exchange rate risk. The Group entered into FX Forward Contracts with independent third party banks to hedge against its currency risk in the past. As CSSC Finance obtained the licence to trade in FX Forward Contract in July 2014, the Company intends to enter into FX Forward Contracts with CSSC Finance. The FX Forward Contracts require no initial cash outlay or purchase cost. The principal terms of the FX Forward Contracts and the transaction process are as follows: The Group will first consult with CSSC Finance as to the exchange rate, transaction period and transaction amount regarding specific currency whenever it intends to enter into a FX Forward Contract. If the terms are more favourable than those offered by independent third parties to the Group, the Group will enter into FX Forward Contracts with CSSC Finance. For each FX Forward Contract with CSSC Finance, there will be one transaction between the Group and CSSC Finance. Such transaction will take place on a pre-agreed transaction date. Such transaction will consist of the following two payments at the same time: (i) a fixed amount payable by the Group to CSSC Finance in US dollars; and (ii) an amount payable by CSSC Finance to the Group, which will be a sum in RMB equals to X multiply by the exchange rate as specified in the contract.
The number of contracts to be entered with CSSC Finance depends on the hedging needs of the Group. In particular, it depends on the timings of inflow of cash denominated in US dollars from the Group’s operations and outflow of cash denominated in RMB for the Group’s operating cost. In order to mitigate the currency risk arising from the operation having regard to the timing of operating cash inflows denominated in US dollars and outflows denominated in RMB and to lock up our profit margin, contracts of different size and timing may be needed. The Group will decide the number of contracts to be entered with CSSC Finance according to the schedule of payments from customers or to suppliers and/or subcontractors throughout the year.
The Group will also continue to enter into FX Forward Contracts with independent third party banks if and when appropriate. The Group will compare the terms offered by independent third party banks with the terms offered by CSSC Finance before deciding on whether to enter into FX Forward Contracts with CSSC Finance. In view of this, the Directors consider that the entering into of the FX Forward Contracts with CSSC Finance provide an extra option for the Group to fulfill its operational needs to hedge against risks relating to exchange rates and therefore it is in the interest of the Group and the Shareholders as a whole.
–27– LETTER FROM THE BOARD
(v) Huangpu Wenchong has engaged CSSC Finance to provide assets custody and management services in order to generate incomes from certain unutilised funds. The principal terms of the custody and management service are as follows: The Group will entrust CSSC Finance with certain assets for an agreed period of time. CSSC Finance will invest the entrusted assets with designated types of low risk investment products available in the market in order to maximise the profitability of such entrusted assets. CSSC Finance will issue monthly statement to the Group to report the status of investments during the entrusted term. The Directors are of the view that it is in the interest of the Company and its Shareholders as a whole to continue to leverage on CSSC Finance’s expertise to provide assets custody and management services.
(h) The provision of guarantee services or mortgages in respect of the Group’s borrowings or operating activities by the CSSC Group constitutes financial assistance by a connected person for the benefit of the Group. Considering that (i) the provision of the guarantee is to be provided by the CSSC Group for the benefit of the Group and on normal commercial terms that are comparable to or more favourable than those offered by independent third parties for similar services in the PRC and (ii) no security over the assets of the Group is granted in respect of such service, the Directors consider that the guarantee to be provided by CSSC Finance will be more efficient than the services offered by other independent third parties. The finance department and the relevant project manager will be responsible for reviewing and scrutinizing the terms offered by the CSSC Group to the Group against those provided to the Group by independent third party for providing similar services in order to seek to ensure that the Group can obtain the most favourable terms available at the relevant time and that, among others, the Contract Management Rules are complied with.
In the past years and prior to the acquisition of Huangpu Wenchong by the Group, Huangpu Wenchong and other members of the CSSC Group had provided cross guarantees of roughly the same amounts to each other for their respective loans without any charge. It is expected that such practice will be continued in the future to minimize the parties’ costs on obtaining guarantees. Therefore, the CSSC Group will only charge guarantee fees on the part of guarantees provide by it to the Group in excess of the amount of guarantees provided by the Huangpu Wenchong to the CSSC Group. The fee is determined based on arm’s length negotiation between the parties, having reference to the then prevailing rate for providing similar financial services by independent third parties. The Group would also consider the terms offered by other independent third parties and choose to transact with the counterparty which offers more favourable terms that are in the Group’s interest. The finance department and the relevant project manager will be responsible for reviewing and scrutinizing the terms offered by the CSSC Group to the Group against those provided to the Group by independent third party for providing similar services in order to seek to ensure that the Group can obtain the most favourable terms available at the relevant time and that, among others, the Contract Management Rules are complied with.
–28– LETTER FROM THE BOARD
(i) The Group uses to leverage on the CSSC Group’s reputation in the international shipbuilding market, its long established relationships with ship owners and its bargaining power to sell the Group’s products. Therefore, the Directors are of the view that it is in the interest of the Company and its Shareholders as a whole to continue to use the agency services provided by the CSSC Group.
Pricing of sales agency fees or commission is determined and agreed based on arm’s length negotiation between the parties, having reference to the then prevailing rate of brokerage fees at the time of entering into specific transactions. The rate of brokerage fee will vary according to the size and type of vessels and usually a lower rate will be charged for sale of larger vessels or where the technical requirement is comparatively generic. The Group will also consider the terms offered by other independent service providers and choose to transact with the counterparty which offers more favourable terms that are in the Group’s interest.
Pricing of purchase agency fee is also determined and agreed based on arm’s length negotiation between the parties, having reference to the then prevailing market practices. However, counterparty which offers the lowest agency fee shall not be the sole determining factor. In deciding whether the Group will choose to transact with any particular counterparty, the Group will consider in totality the terms offered by counterparty for purchase of imported materials for the Group including the delivery schedule(s) of the imported materials, whether the counterparty will advance payment of the purchase price in foreign currency on the Group’s behalf and the payment terms available to the Group, etc.. The purchasing department and the relevant deputy general manager of the Group will be responsible for reviewing and scrutinizing the terms offered by the CSSC Group to the Group against those provided to the Group by third party service providers for providing similar services in order to seek to ensure that the Group can obtain the most favourable terms available at the relevant time and that, among others, the Contract Management Rules are complied with.
As it is expected that there will be also a substantial increase in the total value of the existing continuing connected transactions between the Group and the CSSC Group as a result of the Acquisitions. The annual caps approved by the Independent Shareholders for continuing connected transactions between the Group and CSSC Group under the 2014-2016 Framework Agreement need to be revised to reflect the expected increase in the transaction amounts. The increase in the amounts of Revised Annual Caps is mainly due to the inclusion of transactions between Huangpu Wenchong and GSI (Yanzhou) with the CSSC Group after the Acquisitions and the anticipated expansion of the Group’s ship-building and non-ship building businesses.
On basis summarized above and given that (i) the Continuing Connected Transactions are entered into under the usual and ordinary course of business of the Group and the CSSC Group; (ii) there are practical needs for the Group to continue its business relationship with the CSSC Group in accordance with the Group’s current business plan and production needs following completion of the Acquisition; and (iii) the Group will be benefited from better allocation of resources with the CSSC Group and hence enjoy competitive cost advantages,
–29– LETTER FROM THE BOARD the Directors (excluding the view of the independent non-executive Directors who will provide their view based on the advice to be provided by the independent financial advisor of the Company) are of the view that the terms of the Supplemental Agreement and the transactions contemplated thereunder (including the Revised Annual Caps) are fair and reasonable and in the interests of the Company and the Shareholders as a whole.
D. RISKS CONTROL RELATING TO THE DEPOSIT UNDER THE 2014-2016 FRAMEWORK AGREEMENT AND THE SUPPLEMENTAL AGREEMENT
In view of the significant amount of the Deposits placed or to be placed with CSSC Finance from time to time, CSSC Finance has provided an undertaking for, among other things, ensuring the safety of the Deposits. Pursuant to the undertaking provided by CSSC on 13 December 2013, CSSC Finance undertakes to the Company that it will:
(i) provide to the Company, at any time, financial services with terms which are no less favourable than for comparable financial services provided to CSSC or members of the CSSC Group; and those of the comparable financial services the Company may obtain from other financial institutions;
(ii) ensure that the Financial Operation Licence （金融許可證） and other business permits, approvals and filings, etc. have been lawfully obtained by CSSC Finance and will remain valid and effective;
(iii) ensure the safe operations of its fund settlement and clearance network, assure the safety of funds, control the risk exposure and safety of the Deposits and will satisfy the requirements for the payment of the Deposits;
(iv) ensure the strict compliance with the risk monitoring indicators for financial institutions promulgated by the CBRC and that the major regulatory indicators such as gearing ratio, interbank borrowing ratio and liquidity ratio will also comply with the requirements of the CBRC and other relevant laws and regulations;
(v) report its business and financial positions to the Company regularly, co-ordinate with the auditors of the Company in the course of their audit work to enable the Company to fulfil the requirements of the Listing Rules; and
(vi) on happening of new, or special event that may possibly affect the Company, CSSC Finance shall proactively inform the Company on a timely basis.
In order to safeguard the interests of the Shareholders, the Group will adopt certain guidelines and principles in monitoring, amongst other things, the Deposits arrangements. These include an assessment of the fund operation and control of risk exposure of CSSC Finance and evaluation of its services provided through its reports to be obtained regularly as mentioned above. Given SASAC’s requirement of centralization of funds held by state-owned enterprises, the undertakings provided by CSSC Finance on risk control on the financial services (including the Deposits) to be provided to the Group and that the Deposits will be subject to annual review conducted by the independent non-executive Directors, the
–30– LETTER FROM THE BOARD auditors of the Company and strict compliance of risk monitoring by the CBRC on CSSC Finance, the Directors (excluding the view of the independent non-executive Directors who will provide their view based on the advice to be provided by the independent financial advisor of the Company) are of the view that the arrangements for, amongst other things, the Deposits are in the interests of the Company and the Shareholders as a whole.
E. ADDITIONAL MEASURES TO SAFEGUARD INTERESTS OF THE COMPANY AND INDEPENDENT SHAREHOLDERS
The Group will, through the Group’s internal control procedures (including the Contract Management Rules) and a series of risk management arrangements in accordance with the regulatory requirements, endeavor to maintain its independency in decision-making as well as the fairness of the prices and terms of each Continuing Connected Transaction. Such arrangements shall include:
1. each Continuing Connected Transaction contemplated under the 2014-2016 Framework Agreement shall be conducted on a non-exclusive basis. The Group has the flexibility to enter into arrangement with third party for purchasing or selling equipment and materials and/or provision of services as it deems fit;
2. the pricing mechanism is transparent and the implementation of such pricing mechanism is subject to strict scrutiny by the Group’s contract review committee involving specific functional departments, administrative departments, finance department, risk management department and legal department, etc. of the Group in accordance with the Contract Management Rules; and
3. apart from the annual review by all independent non-executive Directors and external auditors of the Group to confirm that, among others, the Continuing Connected Transactions are conducted in according with the terms including the pricing principles set out in the relevant framework agreement, the Continuing Connected Transactions are also subject to review by the Supervisory Committee of the Company to ascertain whether such Continuing Connected Transactions are conducted under fair and reasonable terms and accordingly whether the interest of the Company will be affected.
F. IMPLICATIONS UNDER THE LISTING RULES
The provision of Financial Services provided by CSSC Group to the Group constitutes financial assistance received by the Group from a connected person. As (i) the provision of Financial Services is to be provided to the Group on normal commercial terms that are comparable to or more favourable than those offered by independent third parties for similar services in the PRC and (ii) no security over the assets of the Group is granted in respect of the Financial Services, the Financial Services are exempt from reporting, announcement and Independent Shareholders’ approval requirements under Rule 14A.90 of the Listing Rules.
As the applicable percentage ratios calculated pursuant to Rule 14.07 of the Listing Rules for the Revised Annual Caps of the Continuing Connected Transactions (save for the provision of the Financial Services) under the Supplemental Agreement are higher than 5%
–31– LETTER FROM THE BOARD on an annual basis, the Continuing Connected Transactions (save for the provision of the Financial Services) contemplated under the Supplemental Agreement constitute non-exempt continuing connected transactions of the Company that are subject to reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.
As the applicable percentage ratios in relation to the maximum outstanding daily balance on the Deposits exceeds 25% but less than 75% calculated pursuant to Rule 14.07 of the Listing Rules, the Deposits constitutes a non-exempt continuing connected transaction and also a major transaction of the Company and is subject to reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules and subject to the relevant major transaction requirements under Chapter 14 of the Listing Rules.
CSSC has stated that CSSC and its associates (together holding 847,685,990 Shares, representing 59.97% of the total issued share capital of the Company as at the Latest Practicable Date) will abstain from voting in respect of the resolution relating to the Supplemental Agreement, the Continuing Connected Transactions (save for the provision of the Financial Services) and the Revised Annual Caps at the forthcoming EGM.
The Company will comply with all relevant reporting and independent non-executive Directors’ review requirements under Chapter 14A of the Listing Rules in respect of the Continuing Connected Transactions (save for the provision of the Financial Services).
G. INFORMATION ABOUT THE COMPANY AND CSSC
Information about the Company
CSSC Offshore & Marine Engineering (Group) Company Limited, is a core subsidiary of China State Shipbuilding Corporation (a large-scale state-owned enterprise) in South China. Upon the completion of acquisition of CSSC Huangpu Wenchong Shipbuilding Company Limited (which owns core military assets) by the Company in March 2015, our position as the largest manufacturer of handy-size tankers and military auxiliary ships has been further enhanced by enabling us to build military ships and marine engineering equipment. This allows the overall optimization and comprehensive development of the Company’s business such as military ships, military auxiliary ships, civil ships and off-shore engineering, and thus improves the overall strength and competitiveness of the Company. Currently, the Company has three major wholly-owned subsidiaries, namely Guangzhou Shipyard International Company Limited, CSSC Huangpu Wenchong Shipbuilding Company Limited and Guangzhou Shipyard International (Yangzhou) Company Limited with principal businesses involving: asset management; investment management; design, develop, manufacture, repair, modify, lease and sale of ship and ship accessories, marine engineering and equipment, energy equipment, transportation equipment, environmental protection equipment, electrical and electronic equipment, and metal structures and components; import and export business.
–32– LETTER FROM THE BOARD
Information about CSSC
CSSC is a State-authorized investment institution directly supervised and administered by State-owned Assets Supervision and Administration Commission whose core business includes ship building, ship-repairing, processing, export/import of marine equipment, diversified businesses such as other steel structure manufacturing and international cooperation, joint venture operations, financing, technology trading and workforce exportation.
As at the Latest Practicable Date, CSSC, the controlling shareholder of the Company, held 847,685,990 Shares of the Company, representing 59.97% of the issued Shares of the Company.
II. PROPOSED CHANGES TO CORPORATE STRUCTURE
Background
In order to delineate the Group’s businesses and to rationalised the corporate structure, the Company proposes to change its existing corporate structure by transferring all the shareholding interests in its subsidiaries, controlled entities, associate companies and other invested companies directly held by the Company (save and except for the shareholding interests in Huangpu Wenchong, Guangzhou Shipyard and GSI (Yangzhou)) (the “Relevant Companies”) to Guangzhou Shipyard, the direct wholly owned subsidiary of the Company, at nil consideration.
Information of the Relevant Companies
The table below set out the basic information of the Relevant Companies:
Investment made by the Interests held Company Principal activities Company by the Group
1 Guangzhou GSI Designing, processing RMB188,610,000 100% Large-size Heavy and manufacturing of Mechanical auxiliary machines of Equipment Co., ships, large-scale Ltd. complete-set mechanical and electrical equipment
–33– LETTER FROM THE BOARD
Investment made by the Interests held Company Principal activities Company by the Group
2 Zhongshan GSI Designing, processing RMB100,000,000 100% Marine and manufacturing of Engineering Co., ships and auxiliaries Ltd. (fishing use excluded), metal structures and components, general machines, cast and forged components
3 GSI Marine Designing and RMB50,000,000 100% Engineering CO., manufacturing of Ltd. marine engineering products
4 Glory Group Trading HK$30,000,000 100% Developing Co., Ltd.
5 Guangzhou Manufacturing of RMB1,248,000,000 100% Shipyard Shipping ships and auxiliaries Co., Ltd.
6 Guangzhou Installation, welding, RMB2,000,000 100% Xingshun fitting, coating, Shipping Services repairing of hull Co., Ltd. structure
7 Guangzhou Installing and US$600,000 100% Wanda Marine repairing of outfitting Engineering Co., parts, pipelines, Ltd. ventilation system and furniture of ships and interior decoration of ships
8 Guangzhou Providing labor RMB5,000,000 100% Guangli services and Shipbuilding undertaking Human Resource engineering contracts Services Co., Ltd.
–34– LETTER FROM THE BOARD
Investment made by the Interests held Company Principal activities Company by the Group
9 Guangzhou USS Designing and US$8,850,000 100% manufacturing of large steel structure
10 Guangdong GSI Designing and RMB21,000,000 100% Elevator Co., Ltd. manufacturing of elevator
11 Guangzhou Developing of RMB5,000,000 51% Hongfan shipbuilding Technology Co., management computer Ltd. software, office automation software and the sales of such softwares
12 Guangzhou Tourism and catering RMB119,400,000 100% Hongfan Hotel Co., Ltd.
13 Zhanjiang Nanhai Maintaining and RMB2,000,000 40% Ship Hi-tech repairing of ships Services Co., Ltd.
14 Guangzhou Special coating of US$1,200,000 25% Economic and ships and marine Technological engineering products Development Zone in South China Special Coating Industrial Co., Ltd.
15 China Developing and RMB24,700,000 4.04% Shipbuilding manufacturing Industry Yuan automation products Zhou (Beijing) for ships; industrial Technology Co., investments Ltd.
–35– LETTER FROM THE BOARD
Reasons for the Proposed Changes to the Corporate Structure
Some of the Relevant Companies were established prior to 2006. The then PRC Company Law required a company shall have at least two shareholders. In order to comply with the then PRC Company Law, there are intersect holdings among some of the Company’s subsidiaries. As the current enforceable PRC Company Law allows a company to have sole shareholder, the Company intends to simplify the corporate structure by eliminate those unnecessary intersect holdings among its subsidiaries.
Further, following the acquisitions of Guangzhou CSSC Longxue Shipbuilding Co., Ltd. (currently known as Guangzhou Shipyard International Company Limited) in 2014 and Huangpu Wenchong and certain assets in 2015 by the Company from CSSC, the Company has expanded its business scope to include the manufacturing of military ships, military auxiliary ships, civil ships and off-shore engineering. Therefore, the Board considers it is in the best interests of the Company and its shareholders to consolidate the shipbuilding business of the Group into Guangzhou Shipyard for the delineation of the Group’s businesses.
Implementation Plan
In the event that the resolution relating to the proposed changes to the Group’s corporate structure is approved by the Shareholders in the forthcoming EGM, the Group will implement the following transfers:–
– transfer 100% interests in Guangzhou GSI Large-size heavy Mechanical Equipment Co., Ltd. held by the Company to Guangzhou Shipyard;
– transfer 83.33% and 16.67% interests in Zhongshan GSI Marine Engineering Co., Ltd. held by the Company and Guangzhou Guangli Shipbuilding Human Resource Services Co., Ltd., respectively, to Guangzhou Shipyard;
– transfer 100% interests in GSI Marine Engineering CO., Ltd. to Guangzhou Shipyard
– transfer 80% and 20% interests in Guangzhou Guangli Shipbuilding Human Resource Services Co., Ltd. held by the Company and Guangzhou Wanda Marine Engineering Co., Ltd., respectively, to Guangzhou Shipyard;
– transfer 100% interests in Glory Group Developing Co., Ltd. to Guangzhou Shipyard;
– transfer 100% interests in Guangzhou Xingshun Shipping Services Co., Ltd. to Guangzhou Shipyard;
– transfer 100% interests in Guangzhou Shipyard Shipping Co., Ltd. to Guangzhou Shipyard;
–36– LETTER FROM THE BOARD
– transfer 95% and 5% interests in Guangdong GSI Elevator Co., Ltd. held by the Company and Guangzhou Wanda Marine Engineering Co., Ltd., respectively, to Guangzhou Shipyard;
– transfer 91.62%, 6.7% and 1.68% interests in Guangzhou Hongfan Hotel Co., Ltd. held by the Company, Guangzhou Xingshun Shipping Services Co., Ltd. and Guangdong GSI Elevator Co., Ltd., respectively, to Guangzhou Shipyard;
– transfer 75%interests in Guangzhou Wanda Marine Engineering Co., Ltd. held by the Company to Guangzhou Shipyard;
– transfer 75%interests in Guangzhou USS held by the Company to Guangzhou Shipyard;
– transfer 51%interests in Guangzhou Hongfan Technology Co., Ltd. held by the Company to Guangzhou Shipyard;
– transfer 40%interests in Zhanjiang Nanhai Ship Hi-tech Services Co., Ltd. held by the Company to Guangzhou Shipyard;
– transfer 25% interests in Guangzhou Economic and Technological Development Zone in South China Special Coating Industrial Co., Ltd. held by the Company to Guangzhou Shipyard; and
– transfer 4.04% interests in China Shipbuilding Industry Yuan Zhou (Beijing) Technology Co., Ltd. held by the Company to Guangzhou Shipyard.
All the above-mentioned transfer will be conducted at zero consideration.
Condition Precedents
The above-mentioned transfers are subject to satisfaction of the following conditions:
1. the passing of an ordinary resolution by the shareholders of the Company approving proposed changes to corporate structure at the EGM;
2. the obtaining of necessary consents from the third party shareholders of those non-wholly owned companies of the Relevant Companies;
3. the Administration of Industry and Commerce and other relevant government authorities approving the relevant transfer of registered capital or shareholding interests.
The Company will carry out all necessary filing procedures in Hong Kong and in the PRC in due course.
–37– LETTER FROM THE BOARD
For avoidance of doubt, there will only be one ordinary resolution proposed at the EGM for the Shareholders to consider and to approve, if they think fit, the proposed changes to the Group’s corporate structure.
Please refer to Appendix II for the corporate chart immediately before and after the proposed restructuring.
III. PROPOSED DISPOSAL AND POSSIBLE CONNECTED TRANSACTION
A. BACKGROUND
By a written resolution dated 14 August 2015, the Board approved, among other things, the proposed disposal of entire interest in GS Shipping. As the GS Shipping Interest constitutes State-owned assets, the disposal of which is required to go through the process of open tender through an approved equity exchange in accordance with the relevant PRC laws and regulations governing the disposal of State -owned assets. The Proposed Disposal will be carried out through SUAEE.
As CSSC, the controlling shareholder of the Company, has indicated that it or its associates intends to participate in the open bid of the GS Shipping Interest. As the applicable percentage ratios of the GS Shipping Interest exceed 5% and should CSSC or its associates finally become the successful bidder of the GS Shipping Interest, the Proposed Disposal will constitute connected transaction of the Company and is subject to the reporting, issue of circular and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.
B. DESCRIPTION OF THE GS SHIPPING INTEREST
GS Shipping was established in the PRC on 18 November 2014 with a registered capital of RMB1,248,000,000. It is a wholly-owned subsidiary of the Company. GS Shipping is established solely for the purpose to disposal of certain interests in lands and properties. It has not engaged in any operation since its establishment.
The principal assets of GS Shipping include a land parcel (the “GS Shipping Land”) and the buildings erected thereon. The GS Shipping Land is a land parcel of 393,793 square meters located at 10 South Fangcun Main Road, Liwan District, Guangzhou, the PRC. It is registered as industry use land and is currently used by the Group as one of its production base. However, pursuant to the White Swan Pond Area Controlling and Detailed Plan of Guangzhou（白鵝潭地區控制性詳細規劃）issued by the Guangzhou Urban Planning Bureau of the Municipal Government of Guangzhou in 2011, the entire area in which the Company’s production base (including the GS Shipping Land) is presently located in White Swan Pond area, Liwan District, Guangzhou and its surrounding area have been planned to be transformed into a commercial and residential area. Although the local government authority has not laid down any defined timetable in altering the usage of the land parcels within the GS Shipping Land, the Company intends to plan ahead for the possible changes to minimise the impact. This involves to dispose the interest in GS Shipping and to gradually relocate its current operation in Liwan District to its other production base at Nansha District.
–38– LETTER FROM THE BOARD
The Company had obtained land use right certificated no. (93) Sui Guo Di Chu Zi No. 128 in connection with the GS Shipping Land. Such land use right certificate had been returned to the local government authority In accordance with the PRC’s policies to replace the land use certificate and the property ownership certificate with the real estate ownership certificate which endorses the legal titles of properties and lands within the same certificate. The Company had obtained the real estate ownership certificates for most of the buildings erected on the GS Shipping Land and it has been clearly indicated in each of such real estate ownership certificates that GS Shipping is the owner of the land use right of GS Shipping Land.
The Company has engaged Beijing Huayuan Longtai Real Estate and Land Assets Valuation Co., Ltd. （北京華源龍泰房地產土地資產評估有限公司） (the “Land Valuer”), a qualified real estate valuer in the PRC and a member of the China Institution of Real Estate Appraisers and Agents (“CIREA”) to issue the valuation report for the GS Shipping Land (the “GS Shipping Land Valuation Report”). The Land Valuer has appointed two employees, namely Mr. Yang Yadong and Ms. Qi Haiyan, who are both qualified real estate valuers registered with the Ministry of Construction of the PRC (“MOC”) and members of CIREA, to prepare the GS Shipping Land Valuation Report. Mr. Yang and Ms. Qi had been working with the Land Valuer for 11 years and 10 years respectively and both of them have more than 10 years experiences in real estate valuation in the PRC. The Land Valuer, together with Mr. Yang and Ms. Qi, as the members of CIREA, are required to comply with the professional discipline of CIREA when preparing the GS Shipping Land Valuation Report as well as the professional discipline and ethics regulations of the real estate appraisal industry in the PRC. The GS Shipping Land Valuation Report has been prepared in compliance with the Code for Real Estate Appraisal issued by MOC. The Company confirmed that the Land Valuer has complied with all the relevant rules and regulations to prepare the GS Shipping Land Valuation Report, including the professional discipline of CIREA, the professional discipline and ethics regulations of the real estate appraisal industry in the PRC. In view of the above, the Company considers the GS Shipping Land Valuation Report has been prepared in accordance with standards comparable with the HKIS property valuation standards.
In the PRC, both a land valuer and a real estate valuer are qualified to valuate lands used for residential/commercial purposes. However, as only CIREA has entered into reciprocity agreement with the Hong Kong Institution of Surveyors for the mutual recognition of the qualification of their respective members, in order to fulfill the requirement under Chapter 5 of the Listing Rules, the Company has engaged the Land Valuer, who possesses both land valuer qualification and real estate valuer qualification to prepare the GS Shipping Land Valuation Report.
Please refer to Appendix III for the GS Shipping Land Valuation Report.
–39– LETTER FROM THE BOARD
There were 77 buildings erected on such land parcel (the “GS Shipping Buildings”) with total gross floor area of 169,719.58 sq.m.. Out of the 77 buildings, property ownership certificates have been obtained for 50 buildings while property ownership certificates have not been applied for the remaining 27 buildings. Details of the GS Shipping Buildings are set out as follows:
Real Estate Ownership Name of Buildings Certificate No. Usage Area (sq.m)
Infrastructure Office Sui Fang Di Zheng Zi Office 1,487.72 No.163345
Pipe Processing Workshop Sui Fang Di Zheng Production 3,990.16 ZiNo.163349
Spare Parts Warehouse Nil Auxiliary 665.28
New Transformer Substation Sui Fang Di Zheng Zi Production 111.36 no. 8 No.163362
West Container Spare Parts Sui Fang Di Zheng Zi Production 835.35 Warehouse No.163374
Transformer Substation no. 1 Sui Fang Di Zheng Zi Production 198.53 No.163381
Transformer Substation no. 6 Sui Fang Di Zheng Zi Production 156.74 No.163387
Transformer Substation no. 10 Sui Fang Di Zheng Zi Production 77.60 No.163405
Compressor Room Sui Fang Di Zheng Zi Production 607.56 No.163406
Line 3 and line 4 of internal Sui Fang Di Zheng Zi Production 5,278.53 processing team No.163411 (Workshops)
50 tonnes South-North Cross Sui Fang Di Zheng Zi Production 5,983.78 Workshop No.163412
Auxiliary Field Sui Fang Di Zheng Zi Production 4,972.12 No.163413
West Centralised Assembly Sui Fang Di Zheng Zi Production 494.37 Line Auxiliary Building No.163415
–40– LETTER FROM THE BOARD
Real Estate Ownership Name of Buildings Certificate No. Usage Area (sq.m)
Installation Workshop Nil Auxiliary 2,570.00
New Steel Plate Processing Sui Fang Di Zheng Zi Production 577.95 Workshop No.163421
Electrical Equipment Sui Fang Di Zheng Zi Production 2,953.45 Warehouse No. 107 No.163426
Welding Testing Lab Sui Fang Di Zheng Zi Auxiliary 826.56 No.163434
Iron Casting Workshop Sui Fang Di Zheng Zi Production 2,939.53 No.163441
Main Office Building of Sui Fang Di Zheng Zi Office 2,769.79 Factory No.163444
Stabilizing Station Sui Fang Di Zheng Zi Auxiliary 530.14 No.163452
Technology Building Sui Fang Di Zheng Zi Office 1,805.74 No.163457
Computation Building Sui Fang Di Zheng Zi Office 3,856.12 No.163461
Guest Restaurant Sui Fang Di Zheng Zi Auxiliary 785.95 No.163467
Small Close-up Workshop Sui Fang Di Zheng Zi Production 5,913.25 No.163468
New Installation Workshop Nil Production 972.00
Office of Branch Installation Sui Fang Di Zheng Zi Office 701.84 Factory No.85248
Composite Office Of Branch Sui Fang Di Zheng Zi Office 1,118.31 Installation Factory No.85249
Old Steel Plate Processing Sui Fang Di Zheng Production 822.55 Workshop ZiNo.85251
Line 2 of Internal Processing Sui Fang Di Zheng Zi Production 3,975.97 Team (Workshop) No.85252
–41– LETTER FROM THE BOARD
Real Estate Ownership Name of Buildings Certificate No. Usage Area (sq.m)
Line 1 of Internal Processing Sui Fang Di Zheng Zi Production 3,408.68 Team (Workshop) No.85253
West Factory Container Sui Fang Di Zheng Zi Production 1,885.57 Processing Workshop No.85254
Warehouse for Non-Metal Sui Fang Di Zheng Zi Production 5,738.64 Components And Electric No.85255 Cables
Armor Installation Workshop Sui Fang Di Zheng Zi Production 2,081.65 No.85270
Quality Control Department Sui Fang Di Zheng Zi Auxiliary 415.38 Exposure Chamber No.85272
Ship Installation Phase Sui Fang Di Zheng Zi Production 1,319.20 Workshop No.85273
New Pressure Vessel Sui Fang Di Zheng Zi Production 2,691.30 Workshop No.85274
Large-size Components Sui Fang Di Zheng Zi Production 2,964.23 Processing Workshop No.0867709
West Restaurant and Office Sui Fang Di Zheng Zi Office 7,505.76 No.0867710
New Measurement Center Sui Fang Di Zheng Zi Office 2,933.00 No.0867711
New Office Building of Sui Fang Di Zheng Zi Office 3,113.68 Shipbuilding Department No.0867712
Phase Painting Workshop Sui Fang Di Zheng Zi Production 3,946.57 No.0867713
Carparks and Firefighting Sui Fang Di Zheng Zi Auxiliary 2,473.86 Building No.0867714
New Transformer Substation Sui Fang Di Zheng Zi Production 562.35 no. 1 No.0867715
60HZ Power Station Sui Fang Di Zheng Zi Production 542.14 No.0867716
–42– LETTER FROM THE BOARD
Real Estate Ownership Name of Buildings Certificate No. Usage Area (sq.m)
Dock Winch and Scheduling Sui Fang Di Zheng Zi Production 1,366.71 Room No.0867717
Fitting Units Installation Sui Fang Di Zheng Zi Production 1,837.67 Workshop No.0867718
Chemicals Warehouse Sui Fang Di Zheng Zi Production 674.82 No.0867719
Paints Warehouse Sui Fang Di Zheng Zi Production 1,263.36 No.0867720
Gas Station Sui Fang Di Zheng Zi Auxiliary 88.52 No.0867721
New Pipe Processing Sui Fang Di Zheng Zi Production 8,196.00 Workshop No.0867722
Electrical Equipment Sui Fang Di Zheng Zi Production 6,184.37 Warehouse No.0867724
Elevator Workshop Sui Fang Di Zheng Zi Production 3,876.77 No.C5786528
Design and Calibration Sui Fang Di Zheng Zi Office 10,130.61 Building No.C6468796
Welding Rod Warehouse Nil Production 471.81
New Transformer Substation Nil Production 86.50 no. 10
Security Room at North Gate Nil Auxiliary 25.20
Carpark of Design and Nil Auxiliary 4,800.00 Calibration Building
Toilets (4) Nil Auxiliary 48.38
Environmental COD Nil Auxiliary 10.11 Monitoring Room of Oil Tanks
Security Room of Oil Tanks Nil Auxiliary 17.95
–43– LETTER FROM THE BOARD
Real Estate Ownership Name of Buildings Certificate No. Usage Area (sq.m)
Simple Sand Shed of Pier 12 Nil Production 1,356.00
Simple Workshop for Heavy Nil Production 768.30 Engineering
Security Post at East Gate Nil Auxiliary 25.00
Old Phase Painting Workshop Nil Production 6,294.00
Restaurant Waste Water and Nil Production 80.00 Gas Treatment Station
Air Compressor and Electric Nil Production 1,282.50 Room of Painting Workshop
Electrical Equipment Nil Production 12,398.00 Distribution Center
Main Five-story Composite Nil Office 4,425.00 Office Building
New Transformer Substation Nil Production 256.00 no. 2
Infrastructure Design Nil Auxiliary 264.00 Building
Transformer Substation no. 4 Nil Production 98.40 High Voltage Room
Welding Rod Room at south Nil Production 48.50 of Main Dock
Large-size Equipment Nil Production 3,078.00 Processing Workshop
Hilltop Steel Plate Warehouse Nil Production 210.00 No. 2
Office of Steel Plate Factory Nil Office 119.58
–44– LETTER FROM THE BOARD
Real Estate Ownership Name of Buildings Certificate No. Usage Area (sq.m)
Rooms for Processing and Nil Auxiliary 74.40 Manufacturing Team
Security Room at Main Gate Nil Auxiliary 37.50
The Company has engaged Beijing CEA Real Estate Appraisal Co., Ltd.（北京中企華房 地產估價有限公司）(the “Building Valuer”), also a qualified real estate valuer in the PRC and a member of CIREA to issue the valuation report for the GS Shipping Buildings (the “GS Shipping Buildings Valuation Report”). The Building Valuer has appointed two employees, namely Mr. He Zhe and Mr. Shi Faliang, who are both qualified real estate valuers registered with MOC and members of CIREA, to prepare the GS Shipping Buildings Valuation Report. Mr. He and Mr. Shi had been working with the Building Valuer for 11 years and 10 years respectively and both of them have more than 10 years experiences in real estate valuation in the PRC. The Building Valuer, together with Mr. He and Mr. Shi, as the members of CIREA, are required to comply with the professional discipline of CIREA when preparing the GS Shipping Buildings Valuation Report as well as the professional discipline and ethics regulations of the real estate appraisal industry in the PRC. The GS Shipping Buildings Valuation Report has been prepared in compliance with the Code for Real Estate Appraisal issued by MOC. In view of the above, the Company considers the GS Shipping Buildings Valuation Report has been prepared in accordance with standards comparable with the HKIS property valuation standards.
Please refer to Appendix IV for the GS Shipping Buildings Valuation Report.
As at 31 August 2015, there was no outstanding mortgage concerning the GS Shipping Properties.
On 17 August 2015, the Company submitted the information of the GS Shipping Properties to the Transfer and Registration Center of Liwan District Guangzhou（廣州市荔灣 區交登中心） to initiate the transfer of titles. As at the Latest Practicable Date, The registration regarding the transfer of one GS Shipping Building from the Company to GS Shipping has not been completed. Both the Company and GS Shipping have jointly undertaken that the ownership of the GS Shipping Properties belongs to GS Shipping and there have been no disputes over the title of ownership of the GS Shipping. As advised by SG & CO PRC Lawyers, the PRC legal adviser of the Company, on 15 October 2015, there is no legal implication as to the interest enjoyed by GS Shipping in respect of the GS Shipping Building of which the transfer has not completed.
The carrying cost of the GS Shipping Properties is approximately RMB372 million. As at the Latest Practicable Date, the GS Shipping Properties have been used by the Group.
The valuation of the GS Shipping Interest as at 30 November 2014 was RMB1,319,310,700, which was appraised by an independent valuer, Beijing China Enterprise Appraisals Co., Ltd.. Such valuation is valid for one year from the effective date. Please refer to Appendix V of this circular for the valuation report of GS Shipping. Please note that
–45– LETTER FROM THE BOARD the valuation report was prepared in Chinese and the English version is only the translation of such valuation report. Please also note that the valuation report contained in Appendix V is not prepared in accordance with Chapter 5 of the Listing Rules but only prepared to provide further information for the Shareholders.
The following is a summary of the financial information of GS Shipping based on the audited financial information from its incorporation on 18 November 2014 to 31 December 2014, prepared in accordance with the Accounting Standards from Business Enterprises of the PRC:
As at 31 December 2014 (audited) RMB’000
Net Assets 1,240,310 Net Profit/Loss -7,690
After completion of the Proposed Disposal, GS Shipping will no longer be a subsidiary of the Company.
C. MAJOR TERMS OF THE PROPOSED DISPOSAL
Minimum Consideration for the Proposed Disposal
The minimum considerations for the Proposed Disposal shall be RMB3.529 billion.
The basis of the Minimum Consideration is formed pursuant to the policy to alter the land usage from secondary industry to tertiary industry pursuant to《廣州市區產業「退二進三 」企業工業用地處置辦法》 (the Land Disposal Method of Guangzhou on Withdrawing Secondary Industry Enterprises from Downtown Areas and Encouraging the Development of Tertiary Industry Enterprises*) promulgated by the Municipal Government of Guangzhou in 2009 (the “Land Disposal Method”). Under the Land Disposal Method, the Company may return the GS Shipping Land to the local government and seek compensation from the local government. The amount of such compensation would be a designated portion, which shall be 60% pursuant to the《關於加快推進「三舊」改造工作的補充意見》(Supplementary Opinions on Accelerating the “Three Olds” Reformation*) issued by the Municipal Government of Guangzhou in June 2012, of the proceeds of an open tender to be conducted by the local government for the sale of GS Shipping Land after having converted such land parcel from industrial use into commercial/residential uses. By making reference to the results of the open tender of a parcel of residential land nearby GS Shipping Properties, of which the unit price for different parts of a parcel of the residential land is ranging from around RMB14,000 per square meter to around RMB18,000 per square meter, the Company estimated that the unit price of the GS Shipping Land shall be approximately RMB14,700 per square meter, and thus the market value of the GS Shipping Land of 393,793 square meters shall be approximately RMB5.789 billion if converted to commercial/residential use. In view of this and taking into account the estimated amount of compensation could have
–46– LETTER FROM THE BOARD received from the local government if the Company had elected to return the GS Shipping Land under Land Disposal Method, the Company estimates that the minimum consideration shall be approximately RMB3.529 billion.
The Minimum Consideration is consisted of: (i) the valuation result of GS Shipping Interest of approximately RMB1.319 billion as appraised by Beijing China Enterprise Appraisal Co., Ltd.; (ii) the costs that are expected to be incurred for the relocation of the current production base of approximately RMB1.134 billion; and (iii) a premium of RMB1.076 billion on the combined value of the appraised valuation and relocation costs, that the Company considers they should earn in addition to the appraised value and relocation costs as mentioned above. The relocation costs of RMB1.134 billion is arrived at after taking into account the estimated costs for demolition, transportation of equipment and machineries to the new production base, land restoration, costs of construction of new production plants and the loss of income in this transition period. The additional premium of RMB1.076 billion is determined by making reference to the result of the open tender of a parcel of land nearby GS Shipping Properties as well as the potential increase in value resulted from the change in land usage from industrial use to commercial/residential use.
Shareholders should note that the final consideration will depend on the final bid price offered by the successful bidder tor the GS Shipping Interest, but will in any event be no less than the relevant minimum consideration.
Directors (excluding independent non-executive Directors who express their opinions after they have received the opinion of independent financial adviser) consider that the Minimum Consideration is fair and reasonable.
Open tender process of the Proposed Disposal
It is proposed to submit the tender notice to the SUAEE in relation to the Proposed Disposal after obtaining Independent Shareholders’ approval at the EGM. The publication period of the tender notice will commence upon submission and open for 20 Business Days.
Upon expiry of the publication period, SUAEE will notify the Company the identity of the successful bidder (being the bidder who offers the highest bidding price) of the GS Shipping Interest. The Company will enter into a sale and purchase agreement in respect of the GS Shipping Interest with the successful bidder and to complete the transaction accordingly.
Having considered that there is no specific restriction preventing willing and eligible buyers to participate in the open tender process, we are of the view that the Proposed Disposal to be conducted through open tender process at SUAEE shall allow the Group to dispose of the GS Shipping Interest at the highest available price in the open market.
Conditions precedent to the entering into and completion of the Proposed Disposal
The entering into and completion of the Proposed Disposal shall be conditional upon the execution of an effective sale and purchase agreement in respect of the GS Shipping Interest between the Company and the successful bidder.
–47– LETTER FROM THE BOARD
Once there is a successful bidder for the GS Shipping Interest, the Company will have unconditional obligation to enter into sale and purchase agreement with such successful bidder and to complete the transactions contemplated thereunder. As CSSC has indicated that it or its associates intends to participate in the open bid of the GS Shipping Interest, the Board would like to seek approval from Independent Shareholders in advance in the EGM in respect of the Possible Connected Transaction in case that CSSC or its associates does succeed in the open bid.
D. REASONS FOR AND BENEFITS OF THE PROPOSED DISPOSAL
The GS Shipping Properties are located within the applicable zone of the Land Disposal Method. To comply with the town planning policy of Guangzhou City and to facilitate the future development needs of the Group, the Company has planned to retreat from the GS Shipping Properties.
The Proposed Disposal is conductive to optimizing the Group’s assets structure. The Minimum Consideration also represent a reasonable gain over the costs of the Group’s investment.
The Directors (excluding independent non-executive Directors who express their opinions after they have received the opinion of the independent financial adviser) are of the view that the Proposed Disposal will be carried out upon normal commercial terms which are fair and reasonable and in the interest of the Company and the Shareholders as a whole.
E. FINANCIAL IMPACT OF THE PROPOSED DISPOSAL
The Company expects that the net gain from the Proposed Disposal to amount to approximately RMB2.02 billion (after deducting tax and other expenses payable by the Company in connection with the Proposed Disposal). The Company intends to use the net proceeds from the Proposed Disposal as working capital.
F. INFORMATION ABOUT THE COMPANY AND CSSC
Please refer to the paragraph “Letter from the Board – I. Supplemental Agreement of 2014-2016 Framework Agreement-G. Information about The Company and CSSC” above.
G. IMPLICATION OF THE LISTING RULES
Possible Discloseable Transactions
As the applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules) in respect of Proposed Disposal exceed 5% but less than 25%, the Proposed Disposal, if proceeded, will constitute a discloseable transaction of the Company and is subject to the announcement requirement under Chapter 14A of the Listing Rules.
–48– LETTER FROM THE BOARD
Possible Connected Transaction
In addition, CSSC, the controlling shareholder of the Company, has indicated that it or its associates intends to participate in the open bid of the GS Shipping Interest. As the applicable percentage ratios of the GS Shipping Interest exceed 5% and should CSSC or its associates finally become the successful bidder of the GS Shipping Interest, the Proposed Disposal will constitute connected transaction of the Company and is subject to the reporting, issue of circular and Independent Shareholders’ approval requirements under Chapter14A of the Listing Rules. As such, CSSC has stated that CSSC and its associates (together holding 847,685,900 Shares, representing 59.97% of the total issued share capital of the Company as at the Latest Practicable Date) will abstain from voting in respect of the resolution relating to the Proposed Disposal and the Possible Connected Transaction at the forthcoming EGM.
Given the identity of the successful bidder of the GS Shipping Interest can only be confirmed after completion of the publication period. If CSSC or its associates become the successful bidder of the GS Shipping Interest, by that time, the Company will have unconditional obligation to enter into sale and purchase agreement with the bidder and to complete the transactions contemplated thereunder. As such, the Board is now seeking approval from Independent Shareholders in advance in the EGM in respect of the Possible Connected Transaction.
To the best knowledge, information and belief of the Directors, no Director is required to abstain from voting for approving the Board resolution in relation to the Proposed Disposal and the Possible Connected Transaction.
H. VALUATION REPORTS
The valuation report of GS Shipping Land and GS Shipping Building, which are set out in Appendices III and IV of the circular, are prepared in accordance with the Listing Decision HKEx-LD102-1 issued by the Stock Exchange in August 2010 and updated in March 2011.
The valuation report of GS Shipping Interest, which is set out in Appendix V of the circular, is prepared according to the relevant requirements of SASAC and the relevant PRC valuation standards. As such, the valuation report contained in Appendix V is not prepared in accordance with Chapter 5 of the Listing Rules but only prepared to provide further information for the Shareholders.
–49– LETTER FROM THE BOARD
I. OTHER MATTERS
In order to enable the smooth retreat from the current production base and to minimise the disturbance to the Group’s business, it is proposed that Guangzhou Shipyard International Company Limited, a wholly owned subsidiary of the Company, to enter into a lease with GS Shipping in respect of the GS Shipping Properties for office and factory uses expiring on 31 December 2017 (the “Proposed Lease”) prior to the Proposed Disposal. The Proposed Lease shall be attached to the Proposed Disposal as one of the conditions. The rental of the Proposed Lease shall be determined by making reference to the prevailing market rate of the adjacent lands and the Company has engaged an independent valuer to determine the fair rental of the GS Shipping Properties. The Company expects the annual rental shall be not more than RMB180 million.
In the event that CSSC or its associates becomes the successful bidder of the GS Shipping interest, the Proposed Lease will constitute a continuing connected transaction of the Company. The Proposed Lease shall fall into the scope of the 2014-2016 Framework Agreement and the Supplemental Agreement (if so approved by the Independent Shareholders at the EGM). The Company will closely monitor the Proposed Lease in order to comply with the 2014-2016 Framework Agreement and the Supplemental Agreement (if so approved by the Independent Shareholders at the EGM).
IV. 2015 BUDGET OF GUARANTEES TO SUBSIDIARIES
Based on the capital requirements for production and trading as well as the needs for business development of the Company and its subsidiaries, the Company proposes the budget for guarantees to be provided (i) by the Company to its subsidiaries and (ii) by any of its subsidiary to other subsidiaries shall be an aggregate amount of not exceeding RMB5.635 billion (the “Budget”) for the year 2015. If the Budget is approved as an ordinary resolution at the EGM by the Shareholders, it will be valid from 2015 and expired on the date on which the Budget is altered or revoked by the Shareholders at a general meeting.
Shareholders should note that the ordinary resolution in relation to the Proposed Disposal and the Possible Connected Transaction proposed at the EGM, if passed, will authorise the Chairman of the Company to deal with matters relating to the Proposed Disposal and the Possible Connected Transaction, including but not limited to entering into sale and purchase agreement with the successful bidder and to complete the transactions contemplated thereunder.
–50– LETTER FROM THE BOARD
Summary of Proposed Guarantees
The table below set forth a brief summary of proposed guarantees and the relevant limit of guaranteed amounts:–
Limit of Party for which guarantee to be guaranteed Guarantor provided amount (RMB)
1. The Company Guangzhou Shipyard 2,500 million
2. The Company Fonkwang Development 367 million
3. The Company Guangzhou USS 184 million
4. Huangpu Guangzhou Wenchong (as defined below) 2,000 million Wenchong
5. Guangzhou Huangpu Wenchong 500 million Wenchong
6. Guangzhou Baiyin Sanfeng (as defined below) 84 million Wenchong
Particulars of the Parties for which Guarantees to be Provided
1. Guangzhou Shipyard is a wholly owned subsidiary of the Company. It was established on 25 May 2006 in the PRC with a registered capital of RMB2,720 million. Its scope of business includes: manufacturing of railway, ship, aviation and other transportation vehicles. Its debt-to-assets was 99.75% as at 1 January 2015.
2. Fonkwang Development is a subsidiary of the Company owned as to 80% in its equity interest. It was established on 27 August 1996 in the PRC with a registered capital of HK$200,000. Its scope of business includes: trading of ship building components, manufacturing of structure steel and providing machining and engineering services. Its debt-to-assets was 96.13% as at 1 January 2015.
3. Guangzhou USS is a wholly owned subsidiary of the Company. It was established on 28 November 1994 in the PRC with a registered capital of US$8.85 million. Its scope of business includes: design, manufacturing, sale of structure steel products and providing aftersales installation services. Its debt-to-assets was 60.89% as at 1 January 2015.
–51– LETTER FROM THE BOARD
4. Huangpu Wenchong is a wholly owned subsidiary of the Company. It was established on 1 June 1981 in the PRC with a registered capital of RMB155.16 million. Its scope of business includes: manufacturing of railway, ship, aviation and other transportation vehicles. Its debt-to-assets was 83.75% as at 1 January 2015.
5. Guangzhou Wenchong Shipyard Company Limited （廣州文沖船廠有限責任公司） (“Guangzhou Wenchong”) is an indirect wholly owned subsidiary of the Company. It was established on 22 August 1981 in the PRC with a registered capital of RMB52.02 million. Its scope of business includes: manufacturing of railway, ship, aviation and other transportation vehicles. Its debt-to-assets was 76.97% as at 1 January 2015.
6. Baiyin Sanfeng Wenchuang Environmental Friendly Energy Company Limited（白 銀三峰環保發電有限公司）(“Baiyin Sanfeng”) is a joint-venture owned as to 50% in its equity interest by Guangzhou Wenchong. It was established on 19 April 2013 in the PRC with a registered capital of RMB60 million. Its other shareholders are independent third parties to the Company. Its scope of business includes: power generation by burning waste, waste leachate treatment, reuse of ashes, consulting service of waste treatment (save and except for scopes prohibited or require specific licences). Its debt-to-assets was 0.15% as at 1 January 2015.
Guarantee Agreements
Terms of each individual guarantee agreement will be subject to negotiation between the relevant guarantor, being the Company or its subsidiary and the bank. However, the Company undertakes that the guarantee agreements to be entered into shall fulfill the following requirements:–
1. guarantees will be provided to the financing or loans for working capital or construction funds of basic infrastructures, or as settlement guarantee, or guarantee from holding company or relating to banking facilities;
2. guarantee agreements will be entered into with licensed financial institutions;
3. for the non-wholly owned subsidiary and joint venture, guarantee will be provided in joint and several liabilities together with other shareholders/ joint-venture partners of such non-wholly owned subsidiary or joint venture; and
4. guarantees provided by the relevant guarantor will be valid the period from the date on which the relevant loan agreements/ banking facilities taking effect until the two-year anniversary of the expiry of such loan agreements/ banking facilities.
–52– LETTER FROM THE BOARD
Cumulative Amounts of Guarantees of the Company
For the year ended 31 December 2014, the Company has provided external guarantees amounted to an aggregate sum of approximately RMB3.327 billion, representing 59.10% of the net assets of the Group as at 31 December 2014. There was no overdue guarantee of the Company or any of its subsidiary.
Opinion of the Board
Given the production and operation situation of the Company and its subsidiaries, the proposed guarantees stated above are beneficial to the Company and its subsidiaries in obtaining the required working capital for the business development and their positive growth, and are in the interests of the Company and its subsidiaries as a whole. In terms of the guarantees provided by the Company to its non-wholly owned subsidiary and joint venture, the risks are under control and the guarantees are favorable to the non-wholly owned subsidiary and joint venture in obtaining liquidity required for its business, which in turns facilitate the business development of the non-wholly owned subsidiary and joint venture.
Given that the guarantors and parties for which guarantees to be provided are members of the Group, the Board is of the view that the risks relating to the provision of the guarantees are under control. The resolutions in relation to the proposed guarantees for the relevant subsidiaries were passed by a written resolutions of the Board dated 29 July 2015 unanimously.
Implication of Listing Rules
As the applicable percentage ratio of the proposed guarantee amount to be provided by the Group to Baiyin Sanfeng is less than 1%, the transaction contemplated thereunder, if being conducted, will not constitute a discloseable transaction of the Company and does not require shareholders’ approval. Baiyin Sanfeng is an indirect connected subsidiary of the Company, the provision of guarantees to Baiyin Sanfeng constitutes a continuing connected transaction of the Company. However, as the applicable percentage ratios of the proposed guarantee amount is less than 1% and it is a continuing connected transaction at the subsidiary level, guarantees to be provided to Baiyin Sanfeng by the Group will be an exempted continuing connected transaction of the Company under chapter 14A of the Listing Rules. The Company will comply with the requirements under Chapter 14A of the Listing Rules and publish relevant announcement when appropriate.
V. ELECTION OF DIRECTORS
Reference is made to the announcements of the Company dated 15 March 2015, 15 May 2015 and 19 May 2015 in relation to, among others, the resignation of Mr. Zhu Zhenyu and Mr. Liu Huaijing as the independent non-executive Directors. Mr. Zhu Zhenyu has agreed to remain in his directorship (including his duties in the Board committees) until a new independent non-executive director is elected and Mr. Liu Huaijing has agreed to
–53– LETTER FROM THE BOARD remain in his directorship until a new independent non-executive Director is elected in the general meeting of the Company, or within two months after 19 May 2015 (whichever is earlier).
The Board hereby proposes Mr. Wang Yichu and Mr. Min Weiguo to be appointed as the independent non-executive Directors. The above-mentioned appointments are subject to the approval by Shareholders at the EGM. Please refer to Appendix VI for the biographical details of each of the proposed Directors.
VI. EXTRAORDINARY GENERAL MEETING
The notice of EGM has been despatched to the Shareholders on 14 August 2015. The EGM was originally scheduled to be held at Conference Room, 2/F, Administration Building of the Company, 40 South Fangcun Main Road, Liwan District, Guangzhou, the PRC at 2:00 p.m. on 29 September 2015. However, as additional time is required to prepare and finalise certain information to be included in the circular, in order to allow the Shareholders have sufficient time to make informed decision in relation to the resolutions to be proposed at the EGM, the Board hereby announces that the EGM will be re-scheduled to 2:30 p.m. on Thursday, 5 November 2015 at the same venue. Shareholders who intend to attend the EGM are requested to send a written reply, whether in person, by post, by cable or by fax to the registered office of the Company at least 20 days before the EGM (i.e. before 16 October 2015).
Any Shareholder who is entitled to attend and vote at the EGM has the right to appoint one or more proxies to attend and vote on behalf of himself, and the proxy need not be a Shareholder. In order to ensure validity, holders of A Shares must deliver the completed proxy form and other authorization documents (if any) to the registered office of the Company not less than 24 hours before the time scheduled for the holding of the EGM (or any adjournment thereof). Holders of H Shares must deliver the completed proxy form and other authorization documents (if any) to the Company’s H shares registrar, Hong Kong Registrars Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 24 hours before the time scheduled for the holding of 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 should you so wish. A proxy form for use at the EGM has already been sent to Shareholders.
Resolutions to be proposed at the EGM will be voted on by way of poll. CSSC and its associates (holding, in aggregate, 501,745,100 A Shares and 345,940,890 H Shares as at the Latest Practicable Date) will abstain from voting on (i) the resolutions in relation to the Supplemental Agreement, the Continuing Connected Transactions (save for the provision of the Financial Services) and the Revised Annual Caps and (ii) the resolution in relation to the Proposed Disposal and Possible Connected Transaction.
–54– LETTER FROM THE BOARD
CLOSURE OF REGISTER OF MEMBERS
The share register for H Shares will be closed from 31 August 2015 to 29 September 2015 (both days inclusive) during which period no transfer of Shares will be effected. Due to change of date of the EGM, for the purpose of determining the identity of the Shareholders entitled to attend and vote at the EGM, the register of members of the Company will further be closed from 29 September 2015 to 5 November 2015 (both days inclusive). In order to determine the entitlement to attend and vote at the EGM, all transfer of shares accompanied by the relevant share certificates, must be lodged with the Company’s H-shares registrar, Hong Kong Registrars Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on 28 August 2015.
RECOMMENDATIONS
The Independent Board Committee, having taken into account the advice of the Independent Financial Adviser, consider that the ordinary resolution in relation to the Supplemental Agreement, the Continuing Connected Transactions (save for the provision of the Financial Services) and the Revised Annual Caps and the ordinary resolution in relation to the Disposal and Possible Connected Transaction to be proposed at the EGM are fair and reasonable in so far as the Independent Shareholders and concerned, and are in the interests of the Company and the Shareholders (including the Independent Shareholders) as a whole. Accordingly, it recommends the Independent Shareholders vote in favour of such resolution to be proposed at the EGM as set out in the notice of the EGM.
The Directors (including the independent non-executive Directors) consider that the proposed changes to the corporate structure, the proposed intra-group guarantees and their respective budgets, the re-appointment of Shinewing Certified Public Accounts (special general partnership) as the auditors and the proposed election of Directors, are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors (including the independent non-executive Directors) recommend the Shareholders to vote in favour of the relevant resolutions to be proposed at the EGM.
GENERAL INFORMATION
Your attention is drawn to the additional information set out in the Appendices to this circular.
Yours faithfully By Order of the Board CSSC Offshore & Marine Engineering (Group) Company Limited Shi Weidong Joint Company Secretary
–55– LETTER FROM THE INDEPENDENT BOARD COMMITTEE
(a joint stock company with limited liability incorporated in the People’s Republic of China) (Stock Code: 00317)
21 October 2015
To the Independent Shareholders
Dear Sir and Madam,
NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS AND MAJOR TRANSACTION AND PROPOSED DISPOSAL AND POSSIBLE CONNECTED TRANSACTION
We refer to the circular issued by the Company to the Shareholders of even date of which this letter forms part. Terms defined in the circular shall have the same meanings in this letter unless the context otherwise requires.
I. NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS AND MAJOR TRANSACTION
Under the Listing Rules, the conduct of the Continuing Connected Transactions and the Revised Annual Caps (save for the provisions of the Financial Services) contemplated under the Supplemental Agreement constitutes non-exempt continuing connected transactions of the Company and thus is subject to approval by Independent Shareholders at the EGM.
Under the Listing Rules, the Deposits constitutes a non-exempt continuing connected transaction and major transaction of the Company and is subject to reporting, announcement and Independent Shareholders’ approval at the EGM and subject to the relevant major transaction requirements under Chapter 14 of the Listing Rules.
We have been appointed by the Board to consider the terms and the Revised Annual Cap of each of the Continuing Connected Transactions (save for the provision of the Financial Services) contemplated under the Supplemental Agreement and to advise the Independent Shareholders as to whether, in our opinion, the terms and the Revised Annual Caps are fair and reasonable in so far as the Independent Shareholders are concerned. Shenwan Hongyuan Capital (H.K.) Limited has been appointed as the independent financial adviser (“Shenwan Hongyuan”orthe“IFA”) to advise us in this respect.
II. PROPOSED DISPOSAL AND POSSIBLE CONNECTED TRANSACTION
CSSC, the controlling shareholder of the Company, has indicated that it or its associates intends to participate in the open bids of the GS Shipping Interest set out in the paragraph “Letter from the Board – II. Proposed Disposal and Possible Connected Transaction”. As the applicable percentage ratios of the GS Shipping Interest exceed 5% and
–56– LETTER FROM THE INDEPENDENT BOARD COMMITTEE should CSSC or its associates finally become the successful bidder of the GS Shipping Interest, the Proposed Disposal to CSSC or its associates will constitute a connected transaction of the Company and the Company is subject to the reporting, issue of circular and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.
We have also been appointed to consider the Proposed Disposal and the minimum of the Possible Connected Transaction and to advise the Independent Shareholders as to whether, in our opinion, the Minimum Consideration are fair and reasonable in so far as the Independent Shareholders are concerned. Shenwan Hongyuan has also been appointed as the independent financial adviser to advise us on the Possible Connected Transaction.
Recommendation
We wish to draw your attention to the letter from the Board and the letter from the IFA as set out in the circular. Having considered the principal factors and reasons considered by, and the advice of, the IFA as set out in its letter of advice, we consider that (i) the terms and the Revised Annual Cap of each of the Continuing Connected Transactions (save for the provision of the Financial Services) contemplated under the Supplemental Agreement are fair and reasonable and on normal commercial terms, in the ordinary and usual course of business of the Group in so far as the Independent Shareholders are concerned, and are in the interests of the Company and its Shareholders as a whole; and (ii) the Proposed Disposal and the Minimum Consideration of the Possible Connected Transaction is fair and reasonable and on normal commercial terms, in so far as the Independent Shareholders are concerned, and are in the interests of the Company and its Shareholders (including Independent Shareholders) as a whole.
Accordingly, we recommend the Independent Shareholders vote in favour of the ordinary resolutions in relation to the Supplemental Agreement to be proposed at the EGM and thereby approve the Continuing Connected Transactions and the Revised Annual Caps (save for the provision of the Financial Services) contemplated under the Supplemental Agreement.
We would also recommend the Independent Shareholders to vote in favour of the ordinary resolution in relation to the Proposed Disposal and the Possible Connected Transaction to be proposed at the EGM and thereby approve the Proposed Disposal, the Minimum Consideration and the Possible Connected Transaction contemplated under the Proposed Disposal (i.e. CSSC or its associates eventually become the successful bidder of the GS Shipping Interest, which results in the Company to dispose the GS Shipping Interest to CSSC or its associates).
Yours faithfully, For and on behalf of Independent Board Committee Song Dejin Zhu Mingyou Zhu Zhenyu Independent Non-executive Directors
–57– LETTER FROM INDEPENDENT FINANCIAL ADVISER
Shenwan Hongyuan Capital (H.K.) Limited Level 19, 28 Hennessy Road Hong Kong
21 October 2015
To: The Independent Board Committee and the Independent Shareholders of CSSC Offshore & Marine Engineering (Group) Company Limited
Dear Sirs,
(1) NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS AND MAJOR TRANSACTION IN RELATION TO THE SUPPLEMENTAL AGREEMENT AND (2) PROPOSED DISPOSAL AND POSSIBLE CONNECTED TRANSACTION
I. INTRODUCTION
We refer to the circular of CSSC Offshore & Marine Engineering (Group) Company Limited dated 21 October 2015 (the “Circular”), of which this letter forms part, regarding the Continuing Connected Transactions contemplated under the Supplemental Agreement and the Possible Connected Transaction. Details of the Continuing Connected Transactions and the Possible Connected Transaction are set out in the letter from the Board (the “Letter from the Board”) in the Circular. Unless the context otherwise requires, terms used in this letter shall have the same meanings as defined in the Circular.
We, Shenwan Hongyuan Capital (H.K.) Limited, have been appointed by the Company as the independent financial adviser of the Company to advise the Independent Board Committee and the Independent Shareholders on the fairness and reasonableness of the terms of (i) the Continuing Connected Transactions (save for the provisions of the Exempt Financial Services as defined below); (ii) their respective Revised Annual Caps contemplated under the Supplemental Agreement; and (iii) the Possible Connected Transaction, and whether the Continuing Connected Transactions (save for the provisions of the Exempt Financial Services) and the Possible Connected Transaction are in the interests of the Company and its Shareholders as a whole.
As set out in the Letter from the Board, on 16 December 2013, the Company has entered into the 2014-2016 Framework Agreement with CSSC which governs the continuing connected transactions between the Group and the CSSC Group for the period from 1 January 2014 to 31 December 2016. As set out in the circular of the Company dated 5 December 2014 (the “2014 Circular”), the Company would acquire (1) the entire issued
–58– LETTER FROM INDEPENDENT FINANCIAL ADVISER share capital of Huangpu Wenchong from the CSSC Group; and (2) the fixed assets, intangible assets and construction in progress (the “Acquired Assets”) from Yangzhou Kejin (an independent third party) (the “Acquisitions”).
Following completion of the Acquisitions, the Group wholly owns Huangpu Wenchong and the Acquired Assets. Accordingly, Huangpu Wenchong is no longer a direct subsidiary of the CSSC Group, and the Acquired Assets will be utilised as an integral part of the Group’s operations, as a result of which:
(1) certain existing continuing connected transactions between the Group and Huangpu Wenchong no longer constitute continuing connected transactions of the Company (namely, categories (b) and (c) below);
(2) certain existing transactions between Huangpu Wenchong and the CSSC Group would continue and constitute continuing connected transactions of the Company (namely, categories (a) and (d) to (i) below); and
(3) the Group’s business has been extended into the manufacturing and sales of clean tank, chemical tanker, liquefied gas carrier, and offshore oil engineering vessels through the acquisition of the Acquired Assets, which shall incur new transactions between the Group and the CSSC Group (namely, categories (a), (e) and (f) below).
Therefore, the annual caps for existing continuing connected transactions under the 2014-2016 Framework Agreement between the Group and the CSSC Group will need to be revised in this regard.
The continuing connected transactions contemplated under the Supplemental Agreement (“Continuing Connected Transactions”) are categorised as follows:
Products and services to be provided by the Group to the CSSC Group:
(a) electrical and mechanical engineering equipment, metallic materials and waste recycling materials to the CSSC Group;
(b) utilities; and
(c) labour supply and technical services.
Guarantees to be provided by the Group to the CSSC Group:
(d) guarantees in respect of the CSSC Group’s borrowings or operating activities when required.
Products and services to be provided by the CSSC Group to the Group:
(e) electrical and mechanical engineering equipment, metallic materials, shipbuilding accessories and equipment, and related logistic services; and
–59– LETTER FROM INDEPENDENT FINANCIAL ADVISER
(f) lease of production areas and provision of labour supply, technical services and Comprehensive Services.
Financial services to be provided by the CSSC Group to the Group:
(g)(i) maintaining Deposits with CSSC Finance;
(g)(ii) providing Loans to the Group from CSSC Finance;
(g)(iii) providing other financial or credit services which primarily include the advance(s) provided to the Group from CSSC Finance directly, or payment(s) of compensation(s) and/or provision of indemnity(ies) in respect of any payment obligations which may arise out of the business activities carried on by the Group such as loans, trade finance, bill financing, finance leases, overdrafts, trade advance, promissory notes, letters of credit confirmation, guarantees in bonds issuance, loan guarantees, asset sales with legal recourses, un-utilised irrevocable loan commitments;
(g)(iv) sale and purchase of FX Forward Contracts against RMB with CSSC Finance to allow the Group to sale or purchase of foreign currencies at an agreed exchange rate for an agreement sum on an agreed completion date;
(g)(v) providing asset custody and management services on the Group’s assets under custody through tailor-made value-adding asset management plan and strategy.
Guarantees to be provided by the CSSC Group to the Group:
(h) guarantees by the CSSC Group in respect of the Group’s borrowings or operating activities when required; and
Agency services to be provided by the CSSC Group to the Group:
(i) agency services in relation to the Group’s ship sales and imported materials purchases.
As the applicable percentage ratios calculated pursuant to Rule 14.07 of the Hong Kong Listing Rules for the Revised Annual Caps under the categories (a) to (f), (g)(iv), (g)(v) and (i) above are higher than 5% on an annual basis, the relevant continuing connected transactions of the Company are subject to reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Hong Kong Listing Rules.
As the applicable percentage ratios in relation to the maximum outstanding daily balance on the Deposits, under the category (g)(i) above, exceeds 25% but less than 75% calculated pursuant to Rule 14.07 of the Hong Kong Listing Rules, the Deposits constitutes a non-exempt continuing connected transaction and also a major transaction of the Company
–60– LETTER FROM INDEPENDENT FINANCIAL ADVISER and is subject to reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Hong Kong Listing Rules and subject to the relevant major transaction requirements under Chapter 14 of the Hong Kong Listing Rules.
However, as the Financial Services under the categories (g)(ii), (g)(iii), and (h) above provided by the CSSC Group to the Group are (1) on normal commercial terms that are comparable to or more favourable than those offered by independent third parties for similar services in the PRC; and (2) no security over the assets of the Group is granted in respect of the Financial Services, such transactions (referred herein as “Exempt Financial Services”) constitute financial assistance received by the Group from a connected person which are exempt from reporting, announcement and Independent Shareholders’ approval requirements under Rule 14A.90 of the Hong Kong Listing Rules.
As further set out in the Letter from the Board, on 14 August 2015, the Board approved, among other things, the Proposed Disposal involving the disposal of the entire interest in the registered capital of GS Shipping, a wholly-owned subsidiary of the Company. As the GS Shipping Interest constitutes state-owned assets, the disposal of which is required to go through the process of open tender through an approved assets and equity exchange in accordance with the relevant PRC laws and regulations governing such disposal. The Proposed Disposal will be carried out through SUAEE.
CSSC has indicated to the Company that it or its associates intend to participate in the open tender of the Proposed Disposal. If CSSC or its associates finally become the successful bidder of the Proposed Disposal, the Company will have unconditional obligation to enter into sale and purchase agreement with CSSC or its associates and to complete the Proposed Disposal contemplated thereunder, and such disposal will constitute a connected transaction of the Company. As the applicable percentage ratios calculated pursuant to Rule 14.07 of the Hong Kong Listing Rules in respect of the Proposed Disposal exceed 5%, the Proposed Disposal would be subject to the reporting, issue of circular and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.
An EGM will be convened to approve, among other things, (i) the Continuing Connected Transactions contemplated under the Supplemental Agreement and the Revised Annual Caps, and (ii) the Possible Connected Transaction. CSSC and its associates will abstain from voting on the resolutions in relation to the Continuing Connected Transactions and the Revised Annual Caps, as well as the Possible Connected Transaction at the EGM. The Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Zhu Zhenyu, Mr. Song Dejin and Mr. Zhu Mingyou, has been established by the Company to advise the Independent Shareholders as to whether (i) the terms and the Revised Annual Caps of each of the Continuing Connected Transactions (save for the Exempt Financial Services) contemplated under the Supplemental Agreement and (ii) the Possible Connected Transaction are fair and reasonable and are in the interest of the Company and its Shareholders as a whole.
–61– LETTER FROM INDEPENDENT FINANCIAL ADVISER
II. INDEPENDENCE
As at the Latest Practicable Date, we did not have any relationships with or interests in the Company or any other parties that could reasonably be regarded as relevant to our independence. In the past two years, we had acted as an independent financial adviser to the then independent board committee and independent shareholders of the Company in relation to continuing connected transactions, connected transaction and granting of whitewash waiver (details of which were set out in the circulars of the Company dated 8 November 2013, 24 January 2014, 27 October 2014, and 5 December 2014). Apart from normal professional fees paid or payable to us in connection with such appointments, no other arrangements had existed or remain in existence whereby we had received or will receive any fees or benefits from the Company or any other party to the transactions. Therefore we consider that we are independent pursuant to Rule 13.84 of the Hong Kong Listing Rules.
III. BASIS OF OPINION
In formulating our opinion, we have relied upon the information, facts and representations contained in the Circular and those supplied or made available to us by the Directors and management of the Company for which they are solely responsible, and to their information and knowledge, were true, accurate and complete in all respects at the time they were given or made and continue to be true, accurate and valid as at the date of the Circular and can be relied upon. We have assumed that all statements and information supplied, and the opinions and representations made or provided by the Directors and management of the Company contained in the Circular have been reasonably made after due and careful enquiry.
We consider that we have reviewed all available information and documents which are made available to us to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our opinion. We have no reason to doubt the truth, accuracy and completeness of the statements, information, opinions and representations provided to us by the Company, the Directors and representatives of the Company or to believe that material information has been withheld or omitted from the information provided to us or referred to in the available documents. We have not, however, conducted any independent verification of the information provided, nor have we conducted any independent investigation into the business and affairs of the Company or any of its subsidiaries or associates or Huangpu Wenchong, the Acquired Assets or future prospects of the Group.
As stated in the Circular, the Directors having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in the Circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement in the Circular misleading.
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IV. PRINCIPAL FACTORS AND REASONS CONSIDERED
A. NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS AND MAJOR TRANSACTION IN RELATION TO THE SUPPLEMENTAL AGREEMENT
In arriving at our opinion on the fairness and reasonableness of the terms of the non-exempt Continuing Connected Transactions and the Revised Annual Caps thereof, and whether such non-exempt Continuing Connected Transactions are in the interests of the Company and its Shareholders as a whole, we have taken the following factors and reasons into consideration:
1. Information of the Group
The Company was founded in 1993 and is a core subsidiary of CSSC in South China. Upon the completion of acquisition of CSSC Huangpu Wenchong (which owns core assets in manufacturing military ships) by the Company in March 2015, the Company established itself as the largest manufacturer of handy-size tankers and military auxiliary ships in the PRC by its ability to build military ships and marine engineering equipment. Through its wholly-owned subsidiaries, the Group’s principal businesses also include (i) asset management; (ii) investment management; (iii) design, development, manufacturing, repair, modification, leasing and sale of ship and ship accessories, marine engineering and equipment, energy equipment, transportation equipment, environmental protection equipment electrical and electronic equipment, and metal structures and components; and (iv) import and export business.
2. Information of CSSC
CSSC is a state-authorised investment institution directly supervised and administered by the State-owned Assets Supervision and Administration Commission. Through its subsidiaries, the CSSC Group’s core businesses include shipbuilding, ship repairing and processing, export/import of marine equipment, diversified business such as other steel structure manufacturing and international cooperation, joint venture, financing, technology trading and exchange workforce exportation.
3. Information of Huangpu Wenchong
Huangpu Wenchong was established in 1981. Huangpu Wenchong is principally engaged in shipbuilding, ship modification and other manufacturing activities. Shipbuilding primarily refers to the construction of vessels for both civilian and military use covering public service vessels, patrol boats, handy-size bulk carrier, dredging engineering vessels, container feeder vessels and various types of military vessels and combat vessels, which include, without limitation,
–63– LETTER FROM INDEPENDENT FINANCIAL ADVISER missile frigate, missile cruiser, missile speedboat and other auxiliary vessels. According to the 2014 Circular, the key financial information of Huangpu Wenchong is as follows:
For the six months ended For the year ended 31 December 30 June 2011 2012 2013 2014 (RMB’million) (RMB’million) (RMB’million) (RMB’million)
Operating revenue 11,077 10,300 9,996 4,538 Operating profit 658 (70) 162 (64) Net profit 714 213 269 51
Furthermore, as advised by the Company, Huangpu Wenchong possesses various qualifications and permits, such as Permit for Research and Productions of Weaponry* （《武器裝備科研生產許可證》）, Registration Certificate for Equipment Production Unit* （《裝備承制單位註冊證書》）, Recognition Certificate for Quality Weaponry Production Body* （《武器裝備質量體系認證證書》）, Certificate for Unit with First Class Confidential Qualification*（《一級保密資格單位證書》）and Permit for Usage of Information Systems Involving National Secrets*（《涉及國家秘密的信 息系統使用許可證》）, which are required for the production of military vessels. Hence, through the Acquisitions, the Group shall acquire the production capacity, technical know-how and the required qualifications of Huangpu Wenchong for its expansion into the military and other civil vessel business. Amid the PRC government’s policies to support the shipbuilding industry and the expansion of its national defence spending as discussed in paragraph headed “5. Shipbuilding Industry in the PRC” below, the Directors expect that both the military and civil vessel businesses of Huangpu Wenchong will continue to flourish in the coming years.
4. Information of the assets of Yangzhou Kejin
Yangzhou Kejin was established in 2004. It is principally engaged in manufacturing and sales of clean tank, chemical tanker, liquefied gas carrier, and offshore oil engineering vessels (of 50,000 tonnes or below, for the purpose of shipping refined oil and chemicals). After the Acquisitions, the Group owns the Acquired Assets from Yangzhou Kejin (or its designated controlling subsidiaries), which include fixed assets, intangible assets and construction in progress for the purpose of broadening the Group’s product range to chemical and oil tankers.
5. Shipbuilding Industry in the PRC
The PRC is the largest shipbuilding country in the world in 2014 (based on new shipbuilding orders), according to the China Association of the National Shipbuilding Industry*（中國船舶工業行業協會）. In 2014, the PRC had the world’s largest market share in new shipbuilding orders, which increased from
–64– LETTER FROM INDEPENDENT FINANCIAL ADVISER approximately 47.9% in 2013 to approximately 50.5% in 2014. The PRC’s offshore engineering equipment manufacturing industry also had the world’s largest market share from approximately 29.5% in 2013 to approximately 35.2% in 2014. This shows a growing dominance of the PRC’s marine engineering industry in the world.
Furthermore, there have been a number of supportive policies promulgated by various departments of the PRC:
(a) In March 2015, during annual sessions of the National People’s Congress and the Chinese People’s Political Consultative Conference, the “Made in China 2025” initiative was introduced. The initiative focuses on promoting key sectors (including the shipbuilding industry) by creating larger companies to become leading international giants in their respective fields. As advised by the Company, the initiative is likely to result in consolidation (via merger and reorganisation) in the shipbuilding industry as part of the plan to reinvigorate the country’s state-owned enterprises.
(b) In February 2014, pursuant to (1) the Implementation Plan on Early Disposal and Retrofit of Aged Shipping Vessels and Single-hull Oil Tankers* （《老舊運輸船舶和單殼油輪提前報廢更新實施方案》） and (2) the Administrative Measures on Central Government Special Subsidy for Disposal and Retrofit of Aged Shipping Vessels and Single-hull Oil Tankers* （《老舊運輸船舶和單殼油輪報廢更新中央財政補助專項資金管理 辦法》）jointly issued by the Ministry of Finance, Ministry of Transport, National Development and Reform Commission and Ministry of Industry and Information Technology (the “MIIT”) of the PRC, the PRC government aims to modernise the vessels currently in operation in the PRC by replacing them with newer models. According to the Company, such implementation plan and administrative measures are expected to boost demand for shipping vessels as well as oil tankers (which is one of the Group’s shipbuilding products).
(c) The continuous mordernisation of the PRC’s naval force and the national strategy – “21st Century Maritime Silk Road Route Economic Belt” (21世紀海上絲綢之路）, which the Company believes will support further expansion in the marine engineering industry in the future.
In respect of the Group’s non-shipbuilding business, in additional to the national strategy mentioned above, we note that the MIIT published the Twelve Five Year Plan for the Development of Shipbuilding Industry*（《船舶工業「十二五」 發展規劃》） in March 2012, which contains policies supporting the offshore engineering equipment manufacturing industry in the PRC. The government would promote the advancement and innovation of relevant technologies and optimise relevant policies.
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Pursuant the above government policies and strategies, the management is of the view that the PRC shipbuilding industry will continue to consolidate in the course of its revival, and large shipbuilding enterprises such as the Group will be benefited from the resulting expansion of market share.
6. Benefits for entering into the Supplemental Agreement
As stated in the Letter from the Board, the Continuing Connected Transactions are mutually beneficial to the Group and the CSSC Group. Such transactions allow the Group to (i) leverage on the reputation and bargaining power of the CSSC Group in the international shipbuilding industry; (ii) provide a reliable and cost effective source of materials, labour, design, technology, financial and credit services and other services necessary for the Group to conduct its business; and (iii) allow flexibility for better allocation of resources between each other so as to meet the anticipated production schedules for shipbuilding going forward.
7. The Continuing Connected Transactions under the Supplemental Agreement and the respective Revised Annual Caps
Products and services to be provided by the Group to the CSSC Group:
(A) Sale of electrical and mechanical engineering equipment, metallic materials and sale of waste recycling materials
Pursuant to the Supplemental Agreement, the Group will continue to sell shipbuilding and non-shipbuilding components to the CSSC Group. These components include (1) electrical and mechanical engineering equipment and (2) metallic materials. Historically, Huangpu Wenchong has also been providing (1) electrical and mechanical engineering equipment and (2) metallic materials to the CSSC Group. After the Acquisitions, such transactions will constitute continuing connected transactions of the Company. We have been advised by the Company that the supply of components to the CSSC Group will not affect the daily operations of the Group (including Huangpu Wenchong).
In respect of waste recycling arrangement, we have been advised by the Company that the Group and Huangpu Wenchong have been selling waste materials (primarily scrap metals produced during its manufacturing process) to the CSSC Group. Given the efficiency and cost effectiveness brought by leveraging on the CSSC Group’s logistics capability in handling the scrap metals in bulk for all of its group companies, the Company believes that it is beneficial for the Group and Huangpu Wenchong to continue selling scrap metals to the CSSC Group going forward.
According to the Letter from the Board, pricing of the (1) electrical and mechanical engineering equipment, (2) metallic materials, and (3) waste materials will be determined with reference to the prevailing market prices
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made available to the Group by independent third party purchasers for similar products. Furthermore, all of these sales, including those with the CSSC Group, will be subject to the Group’s internal control procedures under its Contract Management Rule (details of which are set out in the paragraph headed “E. Additional measures to safeguard interests of the Company and independent Shareholders” in the Letter from the Board) to ensure the prices offered by the CSSC Group are no less favourable than those offered by independent third parties. After our review of records for historical sales to the CSSC Group against quotations provided by independent third parties, we noted that the pricing charged to the CSSC Group was in line with the market prices for similar transactions in 2015.
Based on the above, we are of the view that the transactions are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.
Revised Annual Caps
For the year ending 31 December 2015 2016 (RMB’million) (RMB’million)
Original approved annual caps 526.98 579.67 Increase in annual caps: – Huangpu Wenchong 437.05 618.10 – the Acquired Assets 289.80 1,071.00 Increase from the original approved annual caps 726.85 1,689.10
Revised Annual Caps 1,253.83 2,268.77
The Revised Annual Caps in respect of the sale of electrical and mechanical engineering equipment, metallic materials, and sale of waste recycling materials for the two years ending 31 December 2016 amount to RMB1,253.83 million and RMB2,268.77 million, respectively. The said Revised Annual Caps represent an increase of approximately RMB726.85 million and RMB1,689.1 million from the original approved annual caps for 2015 and 2016, respectively.
According to the Company, the increase in the Revised Annual Caps is mainly due to the anticipated transactions of Huangpu Wenchong and the Acquired Assets with the CSSC Group for their military and chemical tanker projects, respectively. The increase of the Revised Annual Caps is calculated based on the preliminary purchase orders as indicated by the CSSC Group in respect of the products of Huangpu Wenchong and the Acquired Assets for 2015 and 2016. We have reviewed the increase of the Revised Annual Cap
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against the aforementioned purchase orders attributable to Huangpu Wenchong and the Acquired Assets, respectively, and are of the view that the budget is in line with the increase in the Revised Annual Caps.
Based on the above, we consider the basis adopted to determine the Revised Annual Caps in respect of the sale of electrical and mechanical engineering equipment and metallic materials, and sale of waste recycling materials for the two years ending 31 December 2016 is fair and reasonable so far as the Independent Shareholders are concerned.
(B) Provision of utilities
We understand from the Company that the Group has been providing utilities to Huangpu Wenchong (primarily electricity) and CSSC’s subsidiary, Guangzhou Shipyard Company Limited*（廣州造船廠有限公司）(“Guangzhou Shipyard”) (including electricity and water supply) pursuant to the existing 2014-2016 Framework Agreement. Upon completion of the Acquisitions, such provision of utilities to Huangpu Wenchong will cease to constitute continuing connected transactions of the Company.
According to the Letter from the Board, pricing of the provision of the utilities represents cost of utilities plus a management fee of not more than 25%. We have reviewed monthly payment notes issued by the Group to the CSSC Group and noted that the (1) tariff rates used in calculating the costs of utilities are in line with those chargeable by the relevant state utility companies for the year ended 31 December 2014; and (2) 25% management fee covers the expenses for management staff costs, equipment maintenance costs and depreciation charges for the relevant transactions.
Based on the above, we are of the view that the transactions are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.
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Revised Annual Caps
For the year ending 31 December 2015 2016 (RMB’million) (RMB’million)
Original approved annual caps 132.19 145.40 Decrease in annual caps: – Huangpu Wenchong (35.85) (35.84) Decrease from the original approved annual caps (35.85) (35.84)
Revised Annual Caps 96.34 109.56
The Revised Annual Caps in respect of the provision of utilities for the two years ending 31 December 2016 amount to RMB96.34 million and RMB109.56 million, respectively. The Revised Annual Caps, represent a decrease of approximately RMB35.85 million and RMB35.84 million from the original approved annual caps for 2015 and 2016, respectively.
As the Group provided utilities to Huangpu Wenchong in the past, upon completion of the Acquisitions, such provision of utilities will cease to constitute continuing connected transactions of the Group which results in the decrease in the Revised Annual Caps. We have reviewed the estimation of utilities required by Huangpu Wenchong in 2015 and 2016 as provided by the Company and noted that the amount of decrease from the original approved annual caps is equivalent to the aggregated amount of utilities to be supplied to Huangpu Wenchong for the respective years under the existing 2014-2016 Framework Agreement.
Based on the above, we are of the view that the basis adopted to determine the Revised Annual Caps in respect of the provision of utilities for the two years ending 31 December 2016 is fair and reasonable so far as the Independent Shareholders are concerned.
(C) Provision of labour supply and technical services
The Group has been providing labour supply to Huangpu Wenchong and the CSSC Group within Guangzhou area in times of Huangpu Wenchong and the CSSC Group’s labour shortage while the Group has temporary excess labour supply. In addition, the Group has been providing technical services to the CSSC Group. Labour supply includes training, human resources, computer software and hardware support services, ship painting, installation and operation of equipment and technical services relates to shipbuilding projects in which the Group is specialised. Upon completion of the Acquisitions, provision of labour supply to Huangpu Wenchong will cease to constitute continuing connected transactions of the Group. The
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Directors are of the view that the provision of labour and technical services to the CSSC Group enables the Group to utilise its excess production capacity and existing shipbuilding-related techniques to earn additional revenue for the Group. Hence, pursuant to the Supplemental Agreement, the Group will continue to provide labour and technical services to the CSSC Group.
According to the Letter from the Board, pricing of labour supply by the Group to the CSSC Group will be based on terms no less favourable compared with independent third parties with reference to the prevailing average wage rate published by Statistical Bureau of Guangzhou Municipality （廣州市統計局）, whilst pricing for provision of design and technology services by the Group to the CSSC Group will primarily be based on certain fee formulae prescribed in the CSSC Group’s Ship-building Products Quotation Manual （造船產品報價手冊） (the “Manual”). We noted that the basis of pricing mentioned above is consistent with that set out in the 2014-2016 Framework Agreement, and the pricing of labour supply and the technical services provided to the CSSC Group is in line with the prevailing rates charged to independent third parties. We consider that the prices of the aforementioned transactions charged to the CSSC Group are fair and reasonable.
Based on the above, we are of the view that the transactions are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.
Revised Annual Caps
For the year ending 31 December 2015 2016 (RMB’million) (RMB’million)
Original approved annual caps 394.69 434.16 Decrease in annual caps: – Huangpu Wenchong (101.89) (60.74) Decrease from the original approved annual caps (101.89) (60.74)
Revised Annual Caps 292.80 373.42
The Revised Annual Caps in respect of the provision of labour supply and technical services to the CSSC Group for the two years ending 31 December 2016 amount to RMB292.8 million and RMB373.42 million, respectively. The said Revised Annual Caps represent a decrease of approximately RMB101.89 million and RMB60.74 million from the original approved annual caps for 2015 and 2016, respectively.
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As the Group provided labour supply to Huangpu Wenchong in the past, upon completion of the Acquisitions, such transactions will cease to constitute continuing connected transactions of the Group which results in the decrease in the Revised Annual Caps. We noted that the amount of decrease from the original approved annual caps is equivalent to the aggregate value of labour supply to be provided to Huangpu Wenchong for the respective years under the existing 2014-2016 Framework Agreement.
Based on the above, we are of the view that the basis adopted to determine the Revised Annual Caps in respect of the provision of labour supply and technical services to the CSSC Group for the two years ending 31 December 2016 is fair and reasonable so far as the Independent Shareholders are concerned.
Guarantees to be provided by the Group to the CSSC Group:
(D) Guarantees to be provided by the Group in respect of the CSSC Group’s borrowings or operating activities when required
According to the management, financial institutions are generally more willing to provide financing to the Group and Huangpu Wenchong at a lower cost if it is secured by a guarantee from a third party. In the case of Huangpu Wenchong, historically it would obtain guarantee from the CSSC Group in order to obtain loan at a lower cost. In consideration of providing such guarantee to Huangpu Wenchong, the CSSC Group would request Huangpu Wenchong to provide a reciprocal guarantee of equivalent amount to the CSSC Group in return. This means that Huangpu Wenchong would only provide financial guarantee to the CSSC Group when the CSSC Group has given its financial guarantee to Huangpu Wenchong to secure the relevant borrowings. We were further advised by the Company that no fee was chargeable by either party under such reciprocal guarantee arrangement. As such, the Directors are of the view that, the guarantee arrangement allows Huangpu Wenchong to obtain financing in a cost-effective manner and will continue such arrangement for 2015 and 2016 pursuant to the Supplemental Agreement. We have reviewed several guarantee agreements entered into by Huangpu Wenchong with the CSSC Group and noted that guarantees were provided on mutual and comparable basis and no guarantee fees were stipulated.
As advised by the Company, in order to ensure that the guarantee amount provided by the Group to the CSSC Group does not exceed the guarantee amount provided by the CSSC Group to the Group, the Company has internal control procedures in place to monitor the guarantee amounts. A monthly report which contains the guarantee amount provided by the CSSC Group to the Group, as well as the guarantee amount provided by the Group to the CSSC Group is prepared by the Finance Department. The monthly report is submitted to the Operations Management and Planning Department for their review and approval. In addition, there is written procedure that in
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the event of any proposed increase in the guarantee amount provided by the Group to the CSSC Group, the Finance Department has to ensure a corresponding increment in the guarantee amount provided by the CSSC Group to the Group is in place before submitting the guarantee application to the Operations Management and Planning Department for approval. We have reviewed the monthly reports containing the guarantee amount provided by the CSSC Group to the Group, as well as the guarantee amount provided by the Group to the CSSC Group and noted that the reports were duly reviewed and approved by the Operations Management and Planning Department. In this regard, we consider such controls are sufficient in monitoring the guarantee amounts.
Based on the above, we are of the view that the transactions are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.
Revised Annual Caps
For the year ending 31 December 2015 2016 (RMB’million) (RMB’million)
Original approved annual caps – – Increase in annual caps: – Huangpu Wenchong 1,500.00 2,500.00 Increase from the original approved annual caps 1,500.00 2,500.00
Revised Annual Caps 1,500.00 2,500.00
As set out in the Letter from the Board, the Revised Annual Caps in respect of the financial guarantees provided by Huangpu Wenchong to the CSSC Group for the two years ending 31 December 2016 amount to RMB1,500 million and RMB2,500 million, respectively.
Historically, a RMB1,000 million financial guarantee between Huangpu Wenchong and the CSSC Group was provided on a mutual and reciprocal basis. In light of the government’s increasing spending in national defense driven by the continuous modernisation of the naval force, the Revised Annual Caps are proposed in order to allow Huangpu Wenchong to obtain additional and cost-effective financing for its daily operations when required amid its expected business growth.
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Based on the above, we are of the view that the basis adopted to determine the Revised Annual Caps in respect of the provision of guarantee services for the two years ending 31 December 2016 is fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole.
Products and services to be provided by the CSSC Group to the Group:
(E) Purchase of electrical and mechanical engineering equipment, metallic materials, shipbuilding accessories and equipment, and related logistic services from the CSSC Group
Pursuant to the Supplemental Agreement, in order to ensure the Group and Huangpu Wenchong’s steady, orderly, efficient and cost-effective operation, they will source raw materials from domestic suppliers via the CSSC Group’s centralised purchasing scheme (the “Centralised Purchasing Scheme”). These raw materials include (1) electrical and mechanical engineering equipment, (2) metallic materials, and (3) shipbuilding accessories and equipment. We were advised by the management that in general (1) no handling fee is charged for purchases via the Centralised Purchasing Scheme; and (2) the CSSC Group is able to obtain competitive prices on certain materials and save various logistics costs by making bulk orders. Hence, the Directors consider that it is more cost-effective to purchase raw materials via the CSSC Group. In addition to the Centralised Purchasing System, the Group (including Huangpu Wenchong) may also source raw materials from other independent suppliers to meet its routine and urgent production needs.
According to the Letter from the Board, pricing of (1) electrical and mechanical engineering equipment and (2) metallic material will be determined based on market prices. Pricing of shipbuilding accessories and equipment will be determined on arm’s length negotiations between the parties based on actual costs plus a margin determined by the CSSC Group with reference to (i) the market price of raw materials, and (ii) most recent purchase price of the relevant equipment by the Group, and in any event shall be comparable to terms available from independent third party suppliers to the Group. In respect of purchasing equipment for ships, pricing shall be based on terms no less favourable to the Group than terms available from independent third party suppliers taking into account factors such as supply lead time, qualification of suppliers and quality of services. In the event the equipment can only be supplied by the CSSC Group due to technical specification or supply terms restrictions, pricing shall be determined by relevant parties at arm’s length based on the most recent purchase price of similar equipment by the Group, taking into account the fluctuation of raw materials prices, and in any event shall be no less favourable than terms available from independent third party supplier to the Group. In respect of logistics service, pricing shall be based on terms no less favourable to the Group than terms available from independent third party service providers.
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Furthermore, we note that as a general procedure to select suppliers for procurement of materials and equipment and logistic-related services under the Contract Management Rules, the Group has to obtain quotations from suppliers selected from a pre-approved supplier list (which also includes the CSSC Group), and/or invite other suppliers to submit their tenders. We have reviewed the pricing terms of several procurement contracts signed between the Group and the CSSC Group and noted that the pricing terms of the contracts are comparable to quotations given by independent suppliers.
Based on the above, we are of the view that the transactions are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.
Revised Annual Caps
For the year ending 31 December 2015 2016 (RMB’million) (RMB’million)
Original approved annual caps 6,513.04 7,164.34 Increase in annual caps: – Huangpu Wenchong 5,486.84 6,098.93 – the Acquired Assets 217.35 699.00 – the Company 50.00 500.00 Increase from the original approved annual caps 5,754.19 7,297.93
Revised Annual Caps 12,267.23 14,462.27
The Revised Annual Caps in respect of the purchase of electrical and mechanical engineering equipment and metallic materials from the CSSC Group for the two years ending 31 December 2016 amount to RMB12,267.23 million and RMB14,462.27 million, respectively. The said Revised Annual Caps represent an increase of approximately RMB5,754.19 million and RMB7,297.93 million from the original approved annual caps for 2015 and 2016, respectively.
The increase in the Revised Annual Caps is mainly due to the anticipated increase in the Group’s procurement and relevant logistic services needs from the CSSC Group amid its expanded operation scales after the Acquisitions; in particular, the expected additional orders attributable to Huangpu Wenchong for the procurement of specialised parts and equipment for the building of military and military auxiliary ships. As advised by the Company, pursuant to the Acquisitions, the Group has enhanced its production capacity for military and military auxiliary ships and has planned to further develop this business segment. Since the building of
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military and military auxiliary ships involves special materials, parts, components and equipment of military standards which are not commonly available in the market, the Company expects there will be a substantial increase in the Group’s purchase from the CSSC Group for such items in 2015 and 2016. The amount of anticipated procurement of Huangpu Wenchong from the CSSC Group is based on the Huangpu Wenchong’s procurement schedules, which were determined with reference to its orders on hand for the respective years. We have reviewed Huangpu Wenchong’s procurement schedules for 2015 and 2016 and found that such procurement schedules are supported by the relevant sales orders on hand for 2015 and 2016.
Based on the above, we are of the view that the basis adopted to determine the Revised Annual Caps in respect of the purchase of electrical and mechanical engineering equipment and metallic materials and related logistic services for the two years ending 31 December 2016 is fair and reasonable so far as the Independent Shareholders are concerned.
(F) Lease of production areas and provision of labour supply, technical services and Comprehensive Services by the CSSC Group
Pursuant to the Supplemental Agreement, the Group and Huangpu Wenchong will (1) lease shipbuilding production areas, (2) procure labour and technical services (e.g. ship design, research and development works), and (3) obtain Comprehensive Services (comprising staff benefits such as medical, catering and provision of staff quarters) from the CSSC Group. According to the Letter from the Board, during peak production season, the Group’s shipbuilding production is sometimes constrained by available resources such as workshop, equipment or labour force, and has to seek the CSSC Group’s idle production capacity for undertaking some of its shipbuilding works or steel structure works in order to keep up with customers’ demand. Furthermore, in order to prevent major disruption to the Group’s operations subsequent to the Proposed Disposal (details of which is discussed in the section headed “B. Proposed Disposal and Possible Connected Transaction” in this letter), the Company’s wholly-owned subsidiary, Guangzhou Shipyard International Company Limited, has conditionally entered into a lease agreement with GS Shipping before the Proposed Disposal, pursuant to which GS Shipping will leaseback the GS Shipping Properties for the Company’s use.
As stated in the Letter from the Board, pricing for the (1) lease of production areas shall be based on market price such as the prevailing market rent of similar properties in close proximity; (2) labour supply services will be based on costs (with reference to market information such as the prevailing average wage published by the Statistical Bureau of Guangzhou Municipality) plus a management fee of not more than 10% on such costs, which primarily represents the Group’s share of the overall administrative expenses for labour services; (3) technical services will be
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based on certain fee formulae prescribed in the Manual, which is also applicable reciprocally for technical services provided by the CSSC Group to the Group; and (4) Comprehensive Services shall be on terms no less favourable to the Group than terms available from independent third parties given the provision of such services is not intended to be profit-making but for the benefit of the staff of the CSSC Group (including the Group) as a whole. We understand that the above pricing bases are consistent with those set out in the existing 2014-2016 Framework Agreement. Furthermore, for lease of the production areas, we have reviewed the Group’s tenancy agreements and noted that the lease rates are comparable to those offered for similar sites nearby according to the websites of local real estate agents. For labour and technical services provided by the CSSC Group, we have reviewed samples of labour and technical service contracts and noted that the wage rates are in line with contracts signed with independent third parties. For Comprehensive Services, we noted that the pricing terms showed on the respective contracts are no less favourable than those offered by independent service providers.
Based on the above, we are of the view that the transactions are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.
Revised Annual Caps
For the year ending 31 December 2015 2016 (RMB’million) (RMB’million)
Original approved annual caps 870.18 957.20 Increase in annual caps: – Huangpu Wenchong 331.35 216.53 – the Acquired Assets 16.60 25.20 – lease of the GS Shipping Properties – 180.00 Increase from the original approved annual caps 347.95 421.73
Revised Annual Caps 1,218.13 1,378.93
As set out in the Letter from the Board, the Revised Annual Caps in respect of lease of production areas, procurement of labour supply, technical services and Comprehensive Services for the two years ending 31 December 2016 amount to RMB1,218.13 million and RMB1,378.93 million, respectively. The Revised Annual Caps represent an increase of approximately RMB347.95 million and RMB421.73 million from the original approved annual caps for 2015 and 2016, respectively.
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The increase in the Revised Annual Caps is mainly due to the anticipated increase in (i) transactions of the Group (including Huangpu Wenchong and the Acquired Assets) with the CSSC Group after the Acquisitions and (ii) the lease of the GS Shipping Properties which is expected to take place in 2016. The abovementioned increase in transactions of the Group with the CSSC Group after the Acquisitions is based on the Group’s and Huangpu Wenchong’s procurement schedules, which determine the amount of (1) production areas, (2) labour supply, (3) technical services, and (4) Comprehensive Services required to meet the production volume for 2015 and 2016. We have reviewed Huangpu Wenchong’s procurement schedules and noted that the increase in the Revised Annual Caps is supported by such procurement schedules prepared with reference to the expected production plan for 2015 and 2016.
In respect of the lease of the GS Shipping Properties, as stated in the Letter from the Board, pursuant to the lease agreement with GS Shipping mentioned above, the Company expects the annual rent for the GS Shipping Properties shall be no more than RMB180 million for the entire two-year term of the proposed lease expiring on 31 December 2017. We were advised by the Company that the expected rent is determined with reference to the rent appraisal performed by the independent property valuer, Guangdong Jinghua Assets & Real Estate Appraisal Co., Ltd. (“Guangdong Jinghua”). We noted that Guangdong Jinghua is a qualified valuer set out in the recognised list of valuation companies published by Guangzhou Municipal Land Resources and Housing Administrative Bureau（廣州市國土資源和房屋管 理局）. We have reviewed the letter from Guangdong Jinghua in respect of its appraisal of the fair lease rate of the GS Shipping Properties, and noted that the proposed rental is comparable to the fair rent as appraised by Guangdong Jinghua. According to the letter from Guangdong Jinghua, the appraised rent was arrived at under the income approach calculated on the basis that (i) the GS Shipping Land is assumed for industrial use; and (ii) the GS Shipping Properties will continue to be used for their shipbuilding purposes. As confirmed by the Company, the Group will utilise the relevant assets for its shipbuilding business under the proposed lease of the GS Shipping Properties. Therefore, we concur with Guangdong Jinghua’s view on the choice of the income approach and the assumptions adopted in arriving at the amount of the appraised rent.
Based on the above, we are of the view that the basis adopted to determine the Revised Annual Caps in respect of the lease of production areas and procurement of labour supply, provision of technical services and Comprehensive Services for the two years ending 31 December 2016 is fair and reasonable so far as the Independent Shareholders are concerned.
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(G) Non-exempt financial services provided by CSSC Finance to the Group
(1) Maintaining Deposits with CSSC Finance
Pursuant to the Supplemental Agreement, the Group (including Huangpu Wenchong) may deposit and withdraw its money from CSSC Finance at its discretion from time to time. According to the Directors, CSSC Finance acts as the settlement agent for the Group’s transactions with (1) the CSSC Group and (2) independent third parties. Some Deposits are therefore maintained at CSSC Finance for settlement purpose. In return, the Group shall receive interest on its money deposited in CSSC Finance at interest rates no less favorable than the interest rates set by the PBOC from time to time. We have reviewed Company’s records relating to deposit interest rates offered by CSSC Finance on RMB deposits and noted that the rates were comparable to those quoted by the PBOC at the relevant time.
The Revised Annual Cap of the Deposits placed by the Group with CSSC Finance for each of the two years ending 31 December 2016 of RMB7,800 million represents approximately 16.8% of the aggregate balance of deposits placed by various parties with CSSC Finance as at 31 December 2014. In order to ensure the safety of the Deposits, CSSC Finance has provided an undertaking to the Company, details of which are set out in the paragraph headed “D. Risks control relating to the Deposits under the 2014-2016 Framework Agreement and the Supplemental Agreement” in the Letter from the Board. Pursuant to the undertaking provided by CSSC Finance on 13 December 2013, CSSC Finance has undertaken to the Company that it will, among other things, provide to the Company, at any time, financial services (including deposit taking) with terms which are no less favourable than those provided by CSSC Finance to CSSC or members of the CSSC Group or those obtained by the Company from other financial institutions. Furthermore, the Group will continue to adopt those guidelines and principles in monitoring the Deposits arrangements in connection with the existing 2014-2016 Framework Agreement. The Deposits will also be subject to annual review conducted by the independent non-executive Directors and the auditors of the Company, and strict compliance of risk monitoring by the CBRC on CSSC Finance.
Based on the above, we are of the view that the terms for placing the Deposits with CSSC Finance are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.
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Revised Annual Caps
For the year ending 31 December 2015 2016 (RMB’million) (RMB’million)
Original approved annual caps 2,800.00 2,800.00 Increase in annual caps: – Huangpu Wenchong 5,000.00 5,000.00 Increase from the original approved annual caps 5,000.00 5,000.00
Revised Annual Caps 7,800.00 7,800.00
Note: The aggregate interest on Deposits is proposed to be increased from RMB130.00 million to RMB380.00 million for each of the years ending 31 December 2015 and 2016, based on the increase in the maximum outstanding daily balance and the prevailing interest rates for the Deposits.
The Revised Annual Caps in respect of the Deposits (being the maximum outstanding daily balance) for each of the two years ending 31 December 2016 amount to RMB7,800 million which represent an increase of RMB5,000 million from the original approved annual caps for 2015 and 2016.
The increase in the Revised Annual Caps is mainly due to the anticipated Deposits of Huangpu Wenchong with the CSSC Finance after the Acquisitions. According to the Company, as at 31 December 2014, the amount of Huangpu Wenchong’s deposits maintained with CSSC Finance amounted to approximately RMB4,642 million, which represents (1) approximately 92.8% of the Revised Annual Caps solely relating to Huangpu Wenchong for 2015 and 2016, and (2) approximately 54.0% of Huangpu Wenchong’s total cash and cash equivalents as at 31 December 2014.
Based on the above, we are of the view that the basis for determining the Revised Annual Caps for the Deposits is fair and reasonable so far as the Independent Shareholders are concerned.
(2) Sale and purchase of FX Forward Contracts
Pursuant to the Supplemental Agreement, the Group shall engage CSSC Finance in the sale and purchase of FX Forward Contracts, which allow the Group to sell or purchase a fixed sum of foreign currencies at an agreed exchange rate (against RMB) at a specified future time with CSSC Finance as the counterparty. We understand from the Company that the Group (including Huangpu Wenchong) has also dealt with other independent commercial banks for trading in FX
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Forward Contracts in the past in order to manage its foreign exchange risks associated with its operations, including export of products to overseas markets. Since July 2014, CSSC Finance has obtained the permission from the competent authorities to undertake business in forward foreign currency transactions. Given that the Group has established long business relationship with CSSC Finance in respect of various financial and credit services, the Group intends to consider CSSC Finance as one of the alternative providers for its sale and purchase of the FX Forward Contracts. As advised by the Company, in selecting the provider for its sale or purchase of FX Forward Contracts, the Group has internal control procedures in place to ensure the rates offered by the selected provider (including CSSC Finance) for the FX Forward Contracts are no less favourable than those offered by other independent third parties. We have reviewed and compared the historical FX Forward Contracts entered into between Huangpu Wenchong and CSSC Finance against the then forward rate quotations provided by independent third parties, and noted that the forward rates applicable to the FX Forward Contracts with CSSC Finance was in line with the then prevailing market rates for similar transactions with independent third parties in 2015. Furthermore, no handling fee will be charged by CSSC Finance to the Group for the sale and purchase of FX Forward Contracts. We have reviewed past FX Forward Contracts entered into with CSSC Finance and independent third parties and noted that no handling fee was charged by independent third party commercial banks.
Revised Annual Caps
As set out in the Letter from the Board, the proposed Revised Annual Caps, being the maximum aggregate principal amounts of the FX Forward Contracts to be entered into with CSSC Finance, are estimated to be RMB7,000 million and RMB8,500 million in 2015 and 2016, respectively. As advised by the Company, the above estimated principal amounts are mainly determined with reference to the purchase orders (from ship buyers who will settle the purchases in foreign currencies) of the Group for 2015 and 2016. As we understand from the Directors, the Group expects to receive from foreign buyers purchase orders (denominated in US dollars) amounting to approximately RMB10 billion each year, with an annual growth rate of 20% going forward. We have reviewed and discussed with the management the purchase order forecast prepared by the Group for the years from 2015 to 2016, and found such forecast to be reasonably compiled.
To minimise the foreign currency risk relating to those US dollar denominated purchase orders, the Group usually would hedge around 80% of such purchase order amount through entering into FX Forward
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Contracts. In this regard, we concur with the Company’s estimation that the Revised Annual Caps in FX Forward Contracts are RMB7,000 million and RMB8,500 million in 2015 and 2016, respectively.
Based on the above, we are of the view that the basis for determining the Revised Annual Caps for the sale and purchase of FX Forward Contracts with CSSC Finance are on normal commercial terms, the basis for determining the Annual Caps is fair and reasonable so far as the Independent Shareholders are concerned, and such transactions are in the interests of the Company and the Shareholders as a whole.
(3) Assets custody and management services
Pursuant to the Supplemental Agreement, the Group (including Huangpu Wenchong) would be offered assets custody and management services by CSSC Finance, which shall be responsible for the management of assets under custody through tailor-made and value-added asset management plans and strategies. As advised by the Company, as part of its treasury management measures and to take advantage of CSSC Finance’s experience in providing financial services to the CSSC Group, Huangpu Wenchong has historically engaged CSSC Finance to provide assets custody and management services with a view to generating stable income from certain unutilised funds which were not essential for its operations.
Based on our review of (i) quotations from independent third parties for similar asset management services; and (ii) Huangpu Wenchong’s records on the historical performance of such services provided by CSSC Finance, we note that the asset management products provided by CSSC Finance to the Group was primarily principal-protected products with duration of not more than two years, and the actual return produced by CSSC Finance was not less favourable than the return rates offered by those independent third parties for similar asset management services of comparable risk profile and duration. Huangpu Wenchong also confirmed that it did not have any loss on assets under custody and management by CSSC Finance in the past. Furthermore, as stated in the Letter from the Board, no management fee will be charged for the assets custody and management service by CSSC Finance if the annual return is less than 5%. We have reviewed the management fee mechanism offered by CSSC Finance to Huangpu Wenchong and note that it is no less favourable than the terms offered by independent third party providers to the Group for similar risk profile and duration.
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Having considered the above, we concur with the Directors’ view that the assets custody and management services provided by CSSC Finance are on normal commercial terms and it is in the interest of the Company and its Shareholders for Huangpu Wenchong to continue the utilisation of CSSC Finance’s assets custody and management services.
Revised Annual Caps
For the year ending 31 December 2015 2016 (RMB’million) (RMB’million)
Original approved annual caps − – Increase in annual caps: − Huangpu Wenchong 120.00 160.00 Increase from the original approved annual caps 120.00 160.00
Revised Annual Caps 120.00 160.00
The Revised Annual Caps in respect of assets custody and management services for the two years ending 31 December 2016 amount to RMB120.0 million and RMB160.0 million, respectively. As advised by the Company, the Revised Annual Caps represent the estimated aggregate annual returns receivable by Huangpu Wenchong from the assets portfolio managed by CSSC Finance, which is determined with reference to (i) the historical return on assets managed by CSSC Finance; (ii) the prevailing returns offered by independent third parties for asset management services of similar risk profile and duration; and (iii) the maximum asset portfolio size of RMB3,000 million and RMB4,000 million which may be managed by CSSC Finance in 2015 and 2016, respectively. We understand from the Directors that the maximum asset portfolio size for 2015 and 2016 is determined based primarily on the Company’s estimation of Huangpu Wenchong’s available unutilised funds having considered its operation needs and its projected total assets in the respective years. As mentioned above, no management fee will be charged for the assets custody and management service by CSSC Finance if the annual investment return is less than 5%. Given that (i) the Company expects the annual return will be around 4% for the two years ended 31 December 2016 having considered the historical performance of such services provided by CSSC Finance; and (ii) the Company considers an annual return of 4% is reasonable in view of the continuous expectation on interest rate reduction in the PRC, no management fee is expected to be payable to CSSC Finance in 2015 and 2016.
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Based on the above, we are of the view that the basis for determining the Revised Annual Caps for assets custody and management services is fair and reasonable so far as the Independent Shareholders are concerned.
(H) Provision of agency services in relation to ship sales and imported materials purchases by the CSSC Group
(1) Agency services for sale of ships through the CSSC Group
In addition to external agency services offered by independent third parties, the Group and Huangpu Wenchong have been utilising agency services offered by the CSSC Group in selling vessels from time to time. According to the Letter from the Board, pricing of sales agency fees shall follow the world wide industry practice at not more than 1% of the contract price and be paid in accordance to the shipbuilding schedule of the vessel in question. We noted that such price is within the range 0.6% to 1.5% as set out in the existing 2014-2016 Framework Agreement, and were advised by the Company that it is in line with the prevailing brokerage fee quotes from independent third parties and at terms no less favourable than the general market trend. Furthermore, as stated in the Letter from the Board, the fee rates may vary according to the size and type of vessels and usually a lower rate will be charged for sale of larger vessels or vessels with comparatively generic technical requirements/ specifications. We reviewed the Group’s vessel sales schedule and noted that sales agency fees previously charged by the CSSC Group did not exceed 1% of the contract price and such rate was comparable to the general market fee rate charged by independent ship-brokers.
Based on the above, we are of the view that the transactions are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.
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Revised Annual Caps
For the year ending 31 December 2015 2016 (RMB’million) (RMB’million)
Original approved annual caps 73.00 75.00 Increase in annual caps: – Huangpu Wenchong 36.00 38.20 Increase from the original approved annual caps 36.00 38.20
Revised Annual Caps 109.00 113.20
The Revised Annual Caps in respect of the agency services for sales of ships for the two years ending 31 December 2016 amount to RMB109 million and RMB113.2 million, respectively. The Revised Annual Caps, represent an increase of approximately RMB36 million and RMB38.2 million from the original approved annual caps for 2015 and 2016, respectively.
The increase in the Revised Annual Caps is mainly attributable to Huangpu Wenchong’s agency fees expected to be payable to the CSSC Group with reference to its orders on hand and expected sales plan. We further noted that the agency fees expected to be payable by Huangpu Wenchong to the CSSC Group for 2015 and 2016 are calculated at the applicable fee rate (not more than 1% of the contract price) for the respective years.
Based on the above, we are of the view that the basis for determining the Revised Annual Caps in respect of the agency fee for sales agency services for the two years ending 31 December 2016 are fair and reasonable so far as the Independent Shareholders are concerned.
(2) Agency services for purchase of imported materials through the CSSC Group
Pursuant to the Supplemental Agreement, the Group and Huangpu Wenchong may appoint the CSSC Group as its agent for purchasing raw materials sourced from overseas suppliers during the two years ending 31 December 2016. As advised by the Company, when customers place shipbuilding orders, they may occasionally request specific equipment, parts, materials and/or accessories to be imported from overseas to meet their ship specifications. In order to fulfill customers’ demand, the Group and Huangpu Wenchong would usually appoint agents, including the CSSC Group and independent third
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parties, to assist them in sourcing and purchasing of such imported items. The Directors are of the view that, in order to meet the requirements of clients, it is cost-effective and in the interest of the Company and the Shareholders as a whole to continue to use the agency services provided by the CSSC Group as one of its agents to source imported materials.
According to the Letter from the Board, the pricing for the agency fee for procurement of imported materials through the CSSC Group shall not exceed 2% of the contract price. Furthermore, we were advised by the Company that when selecting the agent for the procurement of imported materials, the Group will also consider terms other than the agency fee rate, including the delivery schedules of the imported materials, whether advance payment of the purchase price in foreign currency can be made on the Group’s behalf, and the payment terms available to the Group. In order to comply with the Contract Management Rules and to ensure the Group obtains the most favourable terms available, the selection of agent(s) and the terms of the agency services will be reviewed and scrutinised by the Group’s purchasing department and the relevant deputy general manager of the Group beforehand. We have noted that the purchase agency fee charged by the CSSC Group is in line with similar transactions charged by independent third parties at not more than 2%. Taking into account of the above, we concur with the Company that the terms contained in the agency agreements with the CSSC Group for the purchase of imported materials are no less favourable compared with those entered into with independent third parties.
Based on the above, we are of the view that the above purchase agency services from the CSSC Group are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.
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Revised Annual Caps
For the year ending 31 December 2015 2016 (RMB’million) (RMB’million)
Original approved annual caps 17.00 17.00 Increase in annual caps: – Huangpu Wenchong 5.78 5.78 Increase from the original approved annual caps 5.78 5.78
Revised Annual Caps 22.78 22.78
The Revised Annual Caps in respect of the procurement of agency services for procurement of raw materials for the two years ending 31 December 2016 amounts to RMB22.78 million and RMB22.78 million, respectively. The said Revised Annual Caps represent an increase of approximately RMB5.78 million and RMB5.78 million from the original approved annual caps for 2015 and 2016, respectively.
The increase in the Revised Annual Caps is mainly attributable to the anticipated purchase agency service obtained by Huangpu Wenchong from the CSSC Group after the Acquisitions. We noted that the agency fees payable by Huangpu Wenchong to the CSSC Group are determined with reference to its anticipated purchase requirement of imported materials. The Company has further advised that the amount of imported materials is expected to remain stable due to the decreasing number of shipbuilding orders requesting the use of imported materials. As a result, the Company does not expect any significant fluctuation in the annual purchases of imported materials and the corresponding agency fees payable to the CSSC Group for 2015 and 2016.
Based on the above, we are of the view that the basis for determining the Revised Annual Caps relating to the agency fee for purchase of imported materials is fair and reasonable so far as the Independent Shareholders are concerned.
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B. PROPOSED DISPOSAL AND POSSIBLE CONNECTED TRANSACTION
In arriving at our opinion on the fairness and reasonableness of the terms of the Possible Connected Transaction and whether such Possible Connected Transaction is in the interests of the Company and its Shareholders as a whole, we have taken the following factors and reasons into consideration:
1. Background information of GS Shipping
GS Shipping is a wholly-owned subsidiary of the Company established in the PRC on 18 November 2014. As specified in the Letter from the Board, GS Shipping is a special purpose entity established for holding interests in certain land and properties (that is, the GS Shipping Properties as further discussed below) for disposal. GS Shipping has not engaged in any operation since its establishment.
2. Reasons for the Proposed Disposal
As disclosed in the Letter from the Board, the principal assets of GS Shipping include one land parcel (the “GS Shipping Land”) and the buildings erected thereon (the “GS Shipping Buildings”) (collectively, the “GS Shipping Properties”). The GS Shipping Properties are located within the applicable zone under the administration of 《廣州市區產業「退二進三」企業工業用地處置辦法》 (the Land Disposal Methods of Guangzhou on Withdrawing Secondary Industry Enterprises from Downtown Areas and Encouraging the Development of Tertiary Industry Enterprises, promulgated by the Municipal Government of Guangzhou in 2009 (“Land Disposal Method”)). Details of the GS Shipping Land are as follows:
Land Use Right Certificate Location Number Usage Area
Land parcel at 40 South (93) Sui Guo Industrial and 393,793 Fangcun Main Road, Di Chu Zi No. auxiliary sq.m. Liwan District, Guangzhou 128 facility
We understand from the Company that the GS Shipping Land is currently designated for industrial and auxiliary facility usage and the GS Shipping Properties are mainly used as the Group’s office buildings, warehouses, docks and piers for shipbuilding activities. As at the Latest Practicable Date, there were 77 buildings erected on the GS Shipping Land with total gross floor area of 169,719.58 sq.m. As disclosed in the Letter from the Board, the Company had obtained the real estate ownership certificates for the GS Shipping Land and most of the buildings erected on the GS Shipping Land (i.e. the GS Shipping Buildings) which indicate that GS Shipping is the owner of the land use right of GS Shipping Land. Furthermore, the Company has obtained legal advise from its
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PRC legal adviser that there is no legal implication as to the interest enjoyed by GS Shipping regarding one of the GS Shipping Buildings of which the transfer has not completed as at the Latest Practicable Date. Therefore, the Company is of the view that there should not be any dispute over the title of ownership of the GS Shipping Land or other legal impediments adversely affecting the Proposed Disposal. For details, please refer to the paragraph headed “B. Description of the GS Shipping Interest” in the Letter from the Board.
As advised by the Company, in order to comply with the town planning policy of Guangzhou City as specified in the Land Disposal Method and to facilitate the future development needs of the Group upon completion of its acquisition of Guangzhou CSSC Longxue Shipbuilding Co., Ltd. (now known as Guangzhou Shipyard International Company Limited) in 2014 and the Acquisitions in 2015, the Company is in the process of relocating its existing production base in Liwan District, Guangzhou (including the relevant production facilities in the GS Shipping Properties, the “Liwan Production Base”) to the new production base in Longxue Island, Nansha District, Guangzhou City. Furthermore, in order to enable the Group to continue to use and occupy the GS Shipping Properties after the Proposed Disposal, the Company’s wholly-owned subsidiary, Guangzhou Shipyard Internation Company Limited, has conditionally entered into a lease agreement with GS Shipping before the Proposed Disposal for the period up to 31 December 2017, pursuant to which GS Shipping will leaseback the GS Shipping Properties for the Company’s use. As advised by the Company, the terms of the lease agreement shall be determined based on market prices such as the prevailing market rent of similar properties in close proximity. For further details, please refer to the paragraph headed “A. Non-exempt Continuing Connection Transactions and Major Transaction in Relation to the Supplemental Agreement – The Continuing Connected Transactions under the Supplemental Agreement and the respective Revised Annual Caps – (F) Lease of production areas and provision of labour supply, technical services and Comprehensive Services by the CSSC Group” in this letter.
As disclosed in the Letter from the Board, the Company considers that the Proposed Disposal is conducive to optimising the Group’s assets structure and the minimum consideration for the GS Shipping Interest also represents a reasonable premium over the cost of the Group’s investment in the GS Shipping Properties. The management estimated that the Group would be able to recognise gain on disposal of RMB2.02 billion and receive gross sale proceeds of RMB3.529 billion for deployment as the Group’s working capital, assuming that the Proposed Disposal would be transacted at the minimum consideration of RMB3.529 billion as further discussed below.
Having considered the above, we are of the view that the Proposed Disposal is in the interests of the Company and the Shareholders as a whole.
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3. Terms of the Possible Connected Transactions
(i) Open tender process
As stated in the Letter from the Board, the Proposed Disposal will be carried out through the process of open tender via SUAEE. Pursuant to《企業 國有產權轉讓管理暫行辦法》 (Interim Measures for the Administration of Transfer of State-owned Assets of Enterprises*, “Interim Measures of State-owned Assets Transfer”) promulgated jointly by State-owned Assets Supervision and Administration Commission of the State Council (“SASAC”) and The Ministry of Finance of the PRC (“MOF”) on 31 December 2003 and became effective on 1 February 2004 and《中華人民共和 國企業國有資產法》(Law of the PRC on State-owned Assets of Enterprises*) adopted at the Fifth Session of the Standing Committee of the Eleventh National People’s Congress on 28 October 2008, and promulgated and became effective on 1 May 2009, transfer of assets or property rights owned by a PRC state-owned enterprise should be subject to valuation and such transfer has to go through the process of an open tender at an approved asset and equity exchange. The valuation company conducting asset valuation must possess the relevant qualification for valuation of PRC state-owned enterprises as recognised by the PRC government. The appraised value under the aforesaid valuation will be the initial bidding price, i.e. the minimum amount payable by bidders participating in the open tender, whilst the actual consideration payable for the relevant transfer will be the final bid price of the open tender.
We note that SUAEE is one of the assets and equity exchanges approved by the SASAC to handle the transfer of state-owned assets for central state-owned enterprises in the PRC, and the Company had previously disposed of its entire equity interest in Guangzhou Shipyard Industrial Co., Ltd.（廣州廣船實業有限公司）, the then wholly-owned special purpose entity of the Company holding its land and properties for disposal purpose, through an open tender via SUAEE (details of which was set out in the circular of the Company dated 27 October 2014). As stated in the Letter from the Board, the Company intends to submit the tender notice to the SUAEE after the EGM and the publication period of the tender notice will commence upon the submission and the tender shall remain open for 20 Business Days.
As set out in the Letter from the Board, upon expiry of the publication period, SUAEE will notify the Company the identity of the successful bidder in relation to the GS Shipping Interest. The Company will enter into a sale and purchase agreement in relation to the Proposed Disposal with the successful bidder and to complete the transaction in accordance with the provisions of the sale and purchase agreement. Pursuant to the Notice on Matters Concerning Transfer of State-owned Assets, the final consideration for the GS Shipping Interest cannot be adjusted or discounted in any form
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subsequent to the open tender process, and in accordance with the Interim Measures of State-owned Assets Transfer, such consideration is required to be settled within one year from the end of the open tender process.
Having considered that there is no specific restriction preventing willing and eligible buyers to participate in the open tender process, we are of the view that the Proposed Disposal to be conducted through open tender process at SUAEE shall allow the Group to dispose of the GS Shipping Interest at the highest available price in the open market.
(ii) Minimum Consideration for the Proposed Disposal
We were advised by the Company that the minimum consideration for the Proposed Disposal was determined after taking into account (i) the minimum bidding price for the GS Shipping Interest as stipulated by the Law of the PRC on State-owned Assets of Enterprises, being the valuation result of GS Shipping of RMB1.319 billion as appraised by China Enterprise Appraisals Company, Inc. (“China Enterprise Appraisals”); (ii) the costs that are expected to be incurred for the relocation of the current production base of RMB1.134 billion; and (iii) a premium of RMB1.076 billion, which represents the amount that the Company considers they should earn in addition to the appraised value and relocation costs as mentioned above.
As stated in the Letter from the Board, the minimum consideration for the GS Shipping Interest shall be RMB3.529 billion, representing a premium of approximately RMB2.210 billion over the appraised value of approximately RMB1.319 billion as set out in the valuation report prepared by China Enterprise Appraisals (“GS Shipping Valuation Report”, the full text of which is set out in Appendix V to the Circular) and filed with SASAC. Such difference between the minimum consideration and the valuation was due to the fact that the appraised value of the GS Shipping Interest was determined by China Enterprise Appraisals on the basis that the GS Shipping Land is for industrial use. According to《白鵝潭地區控制性詳細 規劃》 (the White Swan Pond Area Controlling and Detailed Plan of Guangzhou*, “White Swan Pond Plan”) issued by the Guangzhou Urban Planning Bureau of the Municipal Government of Guangzhou in 2011, the GS Shipping Land and its surrounding area have been planned to be transformed into a commercial and residential area. On this basis, the Company considers that the minimum consideration should be set at an amount higher than the value as appraised by China Enterprise Appraisals in order to reflect the potential increase in value from the future change in land usage from industrial use to residential/commercial use. However, based on our discussion with China Enterprise Appraisals, they consider it is not appropriate to incorporate such factor into their valuation as the government authority has not yet laid down any defined timetable or issued any legally binding documents in relation to the alteration of the usage of the land
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parcels within the Liwan Production Base under the White Swan Pond Plan. Having considered the above, we consider such assumption adopted by China Enterprise Appraisals to be reasonable.
Valuation of the GS Shipping Interest
The Company has provided us with the audited financial statements of GS Shipping for the year ended 31 December 2014. As noted in the said accounts the assets of GS Shipping mainly comprise cash, fixed assets and land with no other material assets and liabilities, as GS Shipping is only a special purpose vehicle set up primarily to hold interests in land and properties for disposal. The Company has engaged three independent professional valuation companies to conduct the valuation on (i) the GS Shipping Land; (ii) the GS Shipping Buildings; and (iii) the GS Shipping Interest separately.
The Company engaged (i) Beijing Huayuan Longtai Real Estate and Land Assets Valuation Co., Limited* (“Beijing Huayuan”) for the appraisal of the value of the GS Shipping Land; (2) Beijing CEA Real Estate Appraisal Co., Limited (“Beijing CEA”) for the appraisal of the value of the GS Shipping Buildings; and (3) China Enterprise Appraisals for the appraisal of the value of the entire equity interest in GS Shipping which comprises cash, the GS Shipping Buildings and the GS Shipping Land. In valuing the GS Shipping Interest, China Enterprise Appraisals has taken into account the valuation results of the GS Shipping Land as well as the GS Shipping Buildings as appraised by Beijing Huayuan and Beijing CEA respectively.
As confirmed by the Company, Beijing Huayuan, Beijing CEA and China Enterprise Appraisals are all PRC valuers independent of the Company and the CSSC Group. We noted that both Beijing Huayuan and Beijing CEA are members of the China Institute of Real Estate Appraisers and Agents. We also noted that China Enterprise Appraisals is a qualified valuer as set out in the recognised list of valuation companies published by the MOF in August 2013. We have also interviewed Beijing Huayuan, Beijing CEA and China Enterprise Appraisals and reviewed terms of their engagements and consider their respective scope of work appropriate.
In respect of the valuation of GS Shipping Land, we have reviewed the valuation report issued by Beijing Huayuan (“Land Valuation Report”) and examined the methodologies adopted, and the basis and assumptions used in the valuation. As stated in the Land Valuation Report, Beijing Huayuan has considered three valuation approaches that are acceptable under the relevant PRC rules and regulations, namely repayment approach, cost approach and market approach.
–91– LETTER FROM INDEPENDENT FINANCIAL ADVISER
According to Beijing Huayuan, since the GS Shipping Land is mainly used as a production base but not for receiving rental income, it is considered that the repayment approach is not appropriate. Beijing Huayuan also considers the cost approach to be not appropriate because along with the continuing urbanisation in the PRC and the recent city development in the Liwan District, the cost of purchasing the GS Shipping Land with industrial usage would not be an applicable basis to reflect the fair value of such land. The market approach had thus been adopted for the appraisal of the GS Shipping Land. Having considered the above factors, we concur with Beijing Huayuan’s view on the choice of valuation approach.
For the valuation of the GS Shipping Buildings, Beijing CEA has adopted the replacement cost approach. The total replacement costs were estimated by taking into account the material cost, cost of construction and the cost of capital for reconstructing the relevant fixed assets, and the fair value is then derived after adjusting for the average residual life of such fixed assets currently erected on the GS Shipping Land. We concur with Beijing CEA’s view on the choice of valuation approach.
Regarding the valuation of the GS Shipping Interest, as stated in the GS Shipping Valuation Report, China Enterprise Appraisals has considered three valuation approaches that are acceptable under the relevant PRC rules and regulations, namely asset-based approach, income approach and market approach, in performing the valuation.
According to China Enterprise Appraisals, since GS Shipping is a special purpose vehicle set up primarily to hold interests in lands and properties for disposal, there are no comparable transactions in the market to enable China Enterprise Appraisals to use the market approach in valuing the GS Shipping Interest. Besides, as GS Shipping has no business activity since its establishment, China Enterprise Appraisals considered that the income approach is also inappropriate.
As mentioned above, the assets held by GS Shipping mainly comprise cash, fixed assets and land only with no other significant assets and liabilities. Therefore, considering that each asset type is valued by an appropriate valuation methodology as discussed above, China Enterprise Appraisals considers the asset-based approach to be an appropriate method in determining the value of GS Shipping Interest. On this basis, we concur with China Enterprise Appraisals’ view on the choice of valuation approach and are of the view the market approach and income approach are both inappropriate methodologies to cross-check the appraised value.
–92– LETTER FROM INDEPENDENT FINANCIAL ADVISER
Based on our review of the valuation reports of Beijing Huayuan, Beijing CEA and China Enterprise Appraisals, we have not identified any major factors which would lead us to cast doubt on the fairness and reasonableness of the methodologies adopted and the bases and assumptions applied by each of the above mentioned valuers in arriving at the appraised value of the GS Shipping Land, GS Shipping Buildings as well as the GS Shipping Interest.
Estimated Relocation Costs
As stated in the Letter from the Board, the Company expects that it will incur relocation costs of approximately RMB1.134 billion if it has to vacate the GS Shipping Land and reconstruct the same shipbuilding and auxiliary facilities on another production site as a result of the Proposed Disposal. According to the relocation budget provided to us by the Company, such amount is arrived at after taking into account the estimated costs for demolition, transportation of equipment and machineries to the new production base, land restoration, costs of construction of new production plants and the loss of income in this transition period. In this regard, we have reviewed the basis adopted in the relocation budget and discussed with the Company about each item in the calculation of the relocation costs. We are of the view that the basis of calculation and the relevant assumptions used in arriving at the estimated relocation costs are reasonable and that the management adopted such after due and careful consideration.
Additional Premium on Top of the Appraised Value and Estimated Relocation Costs
The Company considers the opportunity cost for vacating the GS Shipping Land as a result of the Proposed Disposal should be no less than the combined amount of the appraised valuation and the estimated relocation costs. The Company further considers that, in order to make the Proposed Disposal commercially justifiable, a mark-up should be incorporated in the minimum consideration on top of the estimated opportunity cost.
In determining the mark-up, the Company made reference to the estimated amount of compensations that will be receivable by the Company if the Company opts to return the GS Shipping Land to the government for inclusion in the land reserves under the provisions of the Land Disposal Method. Pursuant to the《關於加快推進「三舊」改造工 作的補充意見》 (Supplementary Opinions on Accelerating the “Three Olds” Reformation*, “Supplementary Opinions”) issued by the Municipal Government of Guangzhou in June 2012, the Company is entitled to receive monetary compensation equivalent to 60% of the land transfer price if it returns the land site to the government for inclusion in the land reserves as commercial/residential land for
–93– LETTER FROM INDEPENDENT FINANCIAL ADVISER
subsequent sale through open tender. On this basis, the Company worked out that it should receive approximately RMB3.529 billion as compensation under the provisions of the Land Disposal Method.
In this connection, we have checked the open bid results of the lands in Guangzhou published by the Guangzhou Municipal Land Resources And Housing Administrative Bureau for the most recent twelve months. Of all the open bid results, there was only one parcel of land located in the Liwan District (the “Guanggang Land”) which we consider suitable for comparison purposes. Specifically, the Guanggang Land was located at 166 South Fangcun Main Road which was nearby the GS Shipping Land. In addition, the Guanggang Land has been planned for residential use and is thus a good comparable land for the calculation of compensation receivable under the Land Disposal Method. Based on our review of the open bid result of the Guanggang Land, we consider the Company’s estimation on the compensation to be reasonable.
By comparing the potential compensation receivable amount resulting from surrendering the GS Shipping Land to the government under the Land Disposal Method and the estimated opportunity cost for vacating the same for the Proposed Disposal, the Company arrived at a mark-up of RMB1.076 billion. We concur with the Company’s view that adding in this mark-up would render the minimum consideration equivalent to what it would receive if it returned the land to the government under the Land Disposal Method as an alternative to dispose of the land site. In this regard, we also consider that the basis of determining the minimum consideration is reasonable.
Most importantly and as mentioned above, the Proposed Disposal will be conducted through an open tender process in accordance with the relevant rules and regulations in the PRC, with specified minimum consideration which is no less than the value appraised by the independent qualified valuers. Therefore, we are of the view that the Company’s interest in the Proposed Disposal is in no way compromised even if CSSC or its associates become the successful bidders.
Having considered that (i) the open tender process in relation to the Proposed Disposal is open for participation by all eligible bidders; and (ii) the minimum consideration for the Proposed Disposal shall be no less than what the Company would receive as compensation under the provisions of the Land Disposal Method, we consider the Proposed Disposal is on normal commercial terms and the basis of determining the minimum consideration thereof is fair and reasonable.
–94– LETTER FROM INDEPENDENT FINANCIAL ADVISER
4. Financial effects of the Possible Connected Transaction
As stated in the Letter from the Board, upon the completion of the Possible Connected Transaction, GS Shipping will cease to be a wholly-owned subsidiary of the Company and therefore the financial results of GS Shipping will cease to be consolidated into the financial statements of the Group.
(i) Effect on earnings
As stated in the Letter from the Board, the Company expects that the net gain to be recognised in the consolidated income statement of the Group from the Proposed Disposal would amount to approximately RMB2.02 billion assuming the Proposed Disposal was transacted at the minimum consideration of RMB3.529 billion, after deducting related tax, expenses directly attributable to the respective disposals, and the provision for relocation costs.
According to the financial information set out in the Letter from the Board, GS Shipping incurred a loss of approximately RMB7.69 million for the year ended 31 December 2014 as GS Shipping has no operation since its establishment and the loss for 2014 mainly represented operating expenses incurred during that year. As discussed above, the Company will cease to consolidate the financial results of GS Shipping upon completion of the Proposed Disposal. Therefore, the operating result of the Group is expected to be improved after the completion of the Proposed Disposal.
(ii) Effects on net asset value and working capital
According to the information set out in the Letter from the Board, as at 31 December 2014, the net assets of GS Shipping amounted to approximately RMB1.240 billion. We note that the above-mentioned net asset value was based on audited financial information of GS Shipping prepared in accordance with the Accounting Standards for Business Enterprises of the PRC and has reflected the valuation of the GS Shipping Properties contributed in-kind by the Company when GS Shipping was established. As set out in the Letter from the Board, the Company expects the Proposed Disposal will increase the consolidated net asset value of the Group by a minimum of approximately RMB2.02 billion, which is attributable to the net gain on the Proposed Disposal as mentioned above.
As advised by the Company, the net sale proceeds for the Proposed Disposal would be used as working capital, which should strengthen the working capital position of the Group upon completion of the Proposed Disposal.
–95– LETTER FROM INDEPENDENT FINANCIAL ADVISER
Having considered the effects on the Group’s earnings, net assets, and working capital resulting from the Proposed Disposal as discussed above, we are of the view that the Proposed Disposal is beneficial to the Company and the Shareholders as a whole.
V. RECOMMENDATION
Having considered the above principal factors and reasons, we concur with the Directors’ view that (i) the non-exempt Continuing Connected Transactions contemplated under the Supplemental Agreement are carried out in the ordinary and usual course of business of the Group; (ii) the terms of the non-exempt Continuing Connected Transactions contemplated under the Supplemental Agreement are on normal commercial terms, and are fair and reasonable so far as the Independent Shareholders are concerned; (iii) the non-exempt Continuing Connected Transactions and the Possible Connected Transaction are in the interests of the Company and the Shareholders as a whole; (iv) the basis of determining the Revised Annual Caps of the non-exempt Continuing Connected Transactions are fair and reasonable; (v) the Possible Connected Transaction is in the interests of the Company and the Shareholders as a whole; and (vi) the arrangement of the open tender process in relation to the Possible Connected Transaction is on normal commercial terms, and is fair and reasonable so far as the Independent Shareholders are concerned.
Accordingly, we would recommend the Independent Shareholders, and advise the Independent Board Committee to recommend to the Independent Shareholders, to vote in favour of the Continuing Connected Transactions contemplated under the Supplemental Agreement and the Revised Annual Caps thereof, as well as the Possible Connected Transaction at the EGM.
Yours faithfully, For and on behalf of Shenwan Hongyuan Capital (H.K.) Limited Ting Kay Loong Managing Director and Head of Corporate Finance
Mr. Ting Kay Loong is a licensed person and a responsible officer of Shenwan Hongyuan Capital (H.K.) Limited registered with the Securities and Futures Commission to carry out type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) since 2006. Mr. Ting has over 20 years of experience in corporate finance industry and has participated in the provision of independent financial advisory services for various transactions involving companies listed in Hong Kong.
* denotes English translation for illustrative purposes only
–96– APPENDIX I FINANCIAL INFORMATION OF THE GROUP
1. FINANCIAL INFORMATION OF THE GROUP FOR THE LAST THREE YEARS
The Company is required to set out in this circular the information for the last three financial years with respect to the Group’s profits and losses, financial record and position (set out as a comparative table), and the latest published audited balance sheet together with the notes to the annual accounts for the latest financial year.
The audited consolidated financial statements together with relevant notes thereto of the Company for the years ended 31 December 2012, 2013 and 2014 have been disclosed in the following documents published on the Stock Exchange’s website (http://www.hkexnews.hk) and the Company’s website (comec.cssc.net.cn):
– Annual report of the Company for the year ended 31 December 2014 published on 18 March 2015 (page 70 to page 262);
– Annual report of the company for the year ended 31 December 2013 published on 24April 2014 (page 59 to page 221); and
– Annual report of the company for the year ended 31 December 2012 published on 25April 2013 (page 61 to page 217).
2. INDEBTEDNESS
As at 31 August 2015 (being the latest practicable date for the purpose of this indebtedness statement), the Group did not have any debt securities (issued and outstanding, or authorised or otherwise created but unissued). As at 31 August 2015, the Group had borrowings of approximately RMB17,370,519,000, comprising short term bank borrowings of approximately RMB8,901,679,000 and long term bank borrowings of approximately RMB8,468,839,000.
3. WORKING CAPITAL
As at the Latest Practicable Date, having made appropriate inquiries and taking into account of the internal resources of the Group and currently available banking facilities, the Directors are of the opinion that the Group will have sufficient working capital for its present requirements for the 12 months from the date of this circular in absence of unforeseen circumstances.
4. FINANCIAL AND TRADING PROSPECTS
During the first half of2015, the shipping market continued to be at a low point, the shipbuilding market has recovered slowly. Facing unfavourable factors like impact of overall market condition and slow release of the Company’s effectiveness, the Company conducted fully various works in production and operation with the corporate spirits of “pulling together and pursuit of excellency”. In the first half of 2015, the Company completed the acquisition of 100% equity interest in Huangpu Wenchong, which successful injecting into of such high quality core military assets has further enhanced the building capacity of the Company in military ships and offshore engineering equipment, achieving overall
– I-1 – APPENDIX I FINANCIAL INFORMATION OF THE GROUP optimization and comprehensive development in military ships, military auxiliary ships, civil ships and offshore engineering business, thereby the comprehensive competitiveness of the Company is fully improved, and its total revenue is increased substantially.
For the second half of this year, the Company plans to complete an industrial production amounting to RMB14.017 billion; it is expected to complete the construction of 50 vessels, the sale of 241 sets of shearing press, the production of 524 elevators and 21,702 tons of steel structure.
5. ACQUISITION OF HUANGPU WENCHONG
On 8 April 2015, the Company completed the acquisitions of Huangpu Wenchong from the CSSC Group (the “Huangpu Wenchong Acquisition”).
Huangpu Wenchong was established by CSSC in June 1981 with the current registered capital of RMB1,551,629,753. Huangpu Wenchong is principally engaged in shipbuilding, ship modification and other manufacturing activities. Shipbuilding primarily refers to the construction of vessels for both civilian and military use, which include, without limitation, public service vessels, handy-size bulk carrier, dredging engineering vessels, container feeder vessels and various types of military vessels and combat vessels, which include, without limitation, missile frigate, missile cruiser and missile speedboat and other auxiliary vessels.
The consideration for the Huangpu Wenchong Acquisition is RMB4,536,055,400.00, which has been arrived at after arm’s length negotiations between the parties by reference to the valuation of Huangpu Wenchong of RMB4,536,055,400.00 derived based on the valuation report prepared thereunder which has been confirmed by State-owned Assets Supervision and Administration Commission of the State Council（國有資產監督管理委員會）. The consideration has been satisfied (i) partly by means of issue of 272,099,300 A Shares by the Company to CSSC at the issue price of RMB14.17 A Share; and (ii) partly by cash in the amount of RMB680,408,300.00 to CSSC.
No remuneration and benefits in kind of the directors of Huangpu Wenchong will be varied as a result of the Huangpu Wenchong Acquisition.
For further detail of the Huangpu Wenchong Acquisition, please refer to the circular of the Company dated 5 December 2014.
– I-2 – APPENDIX II CORPORATE STRUCTURES
Corporate structure of the Group as at Latest Practicable Date
GSI Yangzhou 100% Company Limited Guangzhou Shipyard International Marine Engineering Co., Ltd. Guangzhou Shipyard 100% International Company Limited Zhongshan GSI Ship and Marine Engineering Co., Ltd. CSSC Huangpu Wenchong 100% Guangzhou GSI Shipbuilding Large-Scale Machinery Company Limited and Equipment Company Co., Ltd. Zhanjiang Nanhai 40% Ship Hi-Tech
100%Guangzhou 100% Shipyard 100% 100% Services Ltd. Shipping Co., Ltd. China Shipbuilding
4.04% Industry Yuan Zhou (Beijing) Technology Co., Ltd.
75% Guangzhou United Steel Structures Limited South China Special Coating Industrial Co., Ltd. 25%
25% in Guangzhou Economic and Technological
51% Development Zone Guangzhou Hongfan Technology Co., Ltd.
100% Glory Group Development Co., Ltd. Company Limited Company Engineering (Group) CSSC Offshore & Marine CSSC Offshore 25%
75% Guangzhou Wanda Marine Engineering Co., Ltd. 20%
Guangzhou Guangli Shipbuilding Human Resource Service Co., Ltd.
16.67% Guangzhou XingShun Shipping Services Co., Ltd. 83.33% 80% 6.7%
Guangzhou Hongfan 91.62% Hotel Co., Ltd. 1.68% 5% Guangdong GSI Elevator Co., Ltd 95%
– II-1 – APPENDIX II CORPORATE STRUCTURES
Corporate structure of the Group immediately after completion of the proposed changes
Zhanjiang Nanhai Ship Hi-Tech Services Ltd. Guangzhou Shipyard
100% International Marine China Shipbuilding Engineering Co., Ltd. Industry Yuan Zhou 4.04%(Beijing) 40% Technology Co., Ltd.
Zhongshan GSI Ship and Marine South China Special Engineering Co., Ltd. Coating Industrial Co., Ltd.
25% in Guangzhou Economic and Technological Development Zone 100% Guangzhou Shipyard Shipping Co., Ltd. 100% Guangzhou GSI GSI Yangzhou GSI Yangzhou
100% Large-Scale Machinery Company Limited Company and Equipment Company Co., Ltd.
Guangzhou Hongfan Technology Co., Ltd.
Guangzhou United 75% 100% 100% Steel Structures Limited Guangzhou Shipyard Guangzhou Shipyard Company Limited Company Engineering (Group) CSSC Offshore & Marine CSSC Offshore 25% International Company Limited International Company
100%Glory Group 51% Development Co., Ltd. 25% 100%
75% Guangzhou Wanda Marine Engineering Co., Ltd. CSSC Huangpu Wenchong Wenchong CSSC Huangpu Shipbuilding Company Limited Shipbuilding Company Guangzhou Guangli Shipbuilding Human 100% Resource Service Co., Ltd.
Guangzhou
100% XingShun Shipping Services Co., Ltd.
100% Guangzhou Hongfan Hotel Co., Ltd.
Guangdong GSI 100% Elevator Co., Ltd
– II-2 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
REAL ESTATE VALUATION REPORT
Project name: Valuation of the land use rights of the land involved in the proposed transfer by CSSC Offshore & Marine Engineering (Group) Company Limited of 100% equity interest in Guangzhou Shipyard Shipping Co., Ltd. (Liwan District, Guangzhou City)
Client: CSSC Offshore & Marine Engineering (Group) Company Limited
Valuation institution: Beijing Huayuan Longtai Real Estate and Land Assets Valuation Co., Ltd.
Certified real estate valuer: Yang Yadong Qi Haiyan
Appraisal operation period: 15 September 2015 to 18 September 2015
No. of valuation report: Hua Yuan [2015] (Gu) Zi No. 234
– III-1 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
CONTENT
I. Letter to the Client ...... III-3 II. Valuers’ Representations ...... III-4 III. Assumptions for and Limiting Conditions to the Valuation ...... III-6 (I) Assumption and Conditions to Valuation ...... III-6 (II) Limiting Conditions to Valuation ...... III-6 (III) Other Matters Requiring Special Explanations: ...... III-7 IV. Report of Real Estate Appraisal Conclusion ...... III-10 (I) Client ...... III-10 (II) Valuation Institution ...... III-10
(III) Subject of Valuation ...... III-10 (IV) Purpose of Valuation ...... III-23 (V) Reference Day ...... III-23 (VI) Definition of Value ...... III-23 (VII)Basis of Valuation ...... III-24 (VIII) Principles of Valuation ...... III-25 (IX) Methodology of Valuation ...... III-26 (X) Appraisal Conclusion ...... III-28 (XI) Valuers ...... III-28 (XII)Appraisal Operation Period ...... III-28 (XIII) Validity Period of the Valuation Report ...... III-29 V. Technical Report for Real Estate Appraisal ...... III-30 (I) Individual Factor Analysis ...... III-30 (II) Location Factor Analysis ...... III-41 (III) Market Background Analysis ...... III-43 (IV) Analysis of Maximum and Best Utilization ...... III-52 (V) Selection of Valuation Methods ...... III-53 (VI) Appraisal Measurement Process ...... III-55 (VII)Determination of the Price of Real Estate of the Subject of Valuation .....III-77 VI. Appendices ...... III-79
– III-2 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
I. Letter to the Client
CSSC Offshore & Marine Engineering (Group) Company Limited:
In accordance with the Approval of Listing-for-sale of Companies Including GS Shipping by GSI issued by China State Shipbuilding Corporation (Chuan Gong Jing [2014] No. 758)（《關於廣船國際掛牌轉讓廣船實業等公司股權的批覆》文件（船工經[2014]758號））, CSSC Offshore & Marine Engineering (Group) Company Limited proposed to transfer 100% equity interest in Guangzhou Shipyard Shipping Co., Ltd.. We had been engaged to appraise the land use rights of the land located in Liwan District, Guangzhou City owned by Guangzhou Shipyard Shipping Co., Ltd. in order to provide a reference for the appointor to determine the price of the land use rights.
The subject of valuation is the land use right of a parcel of industrial land located in 40 South Fangcun Main Road, Liwan District, Guangzhou used by Guangzhou Shipyard Shipping Co., Ltd.. According to 50 certificates including Yue Fang Di Quan Zheng Sui Zi No. 0650169599（粵房地權證穗字第0650169599號）provided by the Client, basic information on the subject of valuation is as follows:
The type of land use right valued is land obtained through grant and the land is for industrial use with a land area of 393,793 sq.m..
According to the appraisal purpose, following the appraisal principles, using scientific and reasonable appraisal methods, on the basis of careful analysis of existing information, after measurement, combined with the appraisal experience and analysis of factors affecting value of the subject of valuation, the price of the subject of valuation as at the Reference Day, being 31 August 2015, is determined to be as follows (currency: Renminbi):
No. of parcels of land: 1 Area of the land valued: 393,793 sq.m. Unit price of the land valued: RMB2,165/sq.m. Total appraised land price: RMB852,561,800 In full: Renminbi eight hundred and fifty-two million, five hundred and sixty-one thousand, and eight hundred Currency: Renminbi
Beijing Huayuan Longtai Real Estate and Land Assets Valuation Co., Ltd.
Legal representative:
18 September 2015
– III-3 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
II. Valuers’ Representations
We solemnly represent that:
1. We confirm that the facts set out herein are truthful and accurate.
2. All analysis, opinions and conclusions set out herein are our own professional analysis, opinions and conclusions on the impartial basis, subject to the assumptions and restrictions stated in herein.
3. We have no interest in the subject of valuation hereunder, nor any interest in or prejudice to any relevant parties.
4. We prepared this valuation report based on our analysis, opinions and conclusions under the Code for Real Estate Appraisal (GB/T 50291-1999) and the Standard for Basic Terminology of Real Estate Appraisal (GB/T 50899-2013), being national standards of the People’s Republic of China.
5. Li Zhao, a land valuer with us, conducted site investigation on 18 September 2015 for the preparation of this report. During the investigation, accompanied by relevant staff from the enterprise, Li Zhao has investigated the condition of land, buildings and fixtures attached to the land along the road in the site. Checklist of land conditions were completed during the investigation.
6. This valuation report was prepared by us independently and no professional assistance of material importance was sought by us for this valuation report.
7. This valuation report is for reference only for the valuation of price of land use right involved in the proposed transfer by CSSC Offshore & Marine Engineering (Group) Company Limited of 100% equity interest in Guangzhou Shipyard Shipping Co., Ltd., and shall be invalid for any other purpose. The appraisal conclusion shall be used together with the valuation report during the validity period of this report.
8. Without a written consent from us, the Client shall not disclose all or any part of this report to the public or use the appraisal conclusion and the report for any other purpose that is unrelated to the purpose of this valuation. We disclaim any responsibility for any consequences arising out of the inappropriate use of this report by the Client.
Name of certified real estate valuer No. of registration Signature
Yang Yadong 1120070127
Qi Haiyan 1120120041
– III-4 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
III. Assumptions for and Limiting Conditions to the Valuation
(I) Assumption and conditions to valuation
1. In the valuation, it was assumed that as at 31 August 2015 the subject of valuation was in an open, fair and equitable market without monopoly and with information sharing and a balanced supply and demand.
2. This valuation is based on the information provided by CSSC Offshore & Marine Engineering (Group) Company Limited, including Guangzhou State-owned Land Use Rights Transfer Contract, real estate certificates, property survey forms, and enterprise legal person business license and on the assumption of the legality of these information.
3. The use of the subject of valuation is for industrial use. Combined with other elements for production and operation, the land can support normal production and operation of the appointor during the term of land use right of the land set and ensure its sustainable development.
4. The existing conditions and use of the subject of valuation will remain unchanged and meet the conditions imposed in the definition of land price.
5. All methods and procedures for the operation of the subject of valuation are in compliance with the administrative laws and regulations of the State, Guangdong Province and Guangzhou City.
6. The information provided by the appointor is true and effective.
7. As at the date of the report, the registration of transfer for some real estate certificates was not completed yet. In this valuation, it was assumed that the procedures for transfer will be completed in accordance with the laws as at the base date of valuation.
(II) Limiting conditions to valuation
1. This report was based on the information provided by the Client, who shall be responsible for the truthfulness of such information. The valuation institution should not assume the responsibility for errors of the result of valuation arising from incorrect information provided by the Client.
2. This valuation is made for reference only for the valuation of price of land use right involved in the proposed transfer by CSSC Offshore & Marine Engineering (Group) Company Limited of 100% equity interest in Guangzhou Shipyard Shipping Co., Ltd., and shall not be used for any other purpose, otherwise adjustments shall be made to the report or even a re-valuation should be made.
– III-5 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
3. The Reference Day for the report is 31 August 2015. As prices tend to change fast, the validity period (a stable period for forecasting price) shall be one year since the issuance of the valuation report. As time lapses, adjustments shall be made to the price of the real estate or even a re-valuation should be made.
4. In this valuation, material changes in national macroeconomic policies, nature disasters and other force majeure had not been taken into account in determining the appraisal conclusion. Furthermore, due to the feature of real estate of being difficult to realize, its disposal price may be far lower than its normal value in the event of a forced disposal within a short period. As such, all kinds of risks shall be considered by the relevant parties in using this report in decision-making.
5. The purpose of a certified real estate appraiser to conduct appraisal practice is to estimate the price of the subject of valuation and issue professional opinions. Confirmation of or issuing opinions on the legal ownership of the subject of valuation is beyond the scope of practice of a certified real estate appraiser who is not capable of doing so. As such, we hereby remind the Client and the relevant parties that we do not provide assurance for the legal ownership of the subject of valuation.
6. This valuation report is valid for one year from 18 September 2015 to 17 September 2016. Adjustments or re-valuation shall be made for use beyond the period.
(III) Other matters requiring special explanations
(1) In this valuation, joint-use of land has been registered in the real estate certificates provided by the Appointor. In 2014, the former Guangzhou Shipyard International Company Limited established Guangzhou Shipyard Shipping Co., Ltd. with the land and buildings erected thereon as capital contribution. As at time of valuation, only the registered owner of land use right for the pipe processing workshop (Sui Fang Di Zheng Zi No. 163349) has not yet changed. The fact that the registered owner of the said land use right has not yet changed does not affect the result of valuation.
(2) This valuation is made based on the existing conditions and use of the subject of valuation. In case of any changes in the nature of the land use right, land use, plot ratio and progress of land development, it shall be revaluated.
(3) The valuation principles, valuation methodology and technical parameters are determined by the valuers in accordance with the relevant laws, regulations, valuation rules and technical standards for land valuation in the State, Guangdong Province and Guangzhou City and in view of the situations of the subject of valuation.
(4) Note to capitalization rate: The capitalization rate of the land is estimated by adding risk-free rate to risk premium. Risk-free rate means the yield of a risk-free investment. Time deposit interest rate or treasury bond interest rate for various
– III-6 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
terms can be used as the risk-free rate. The benchmark one-year deposit interest rate set by the People’s Bank of China as at the base date of valuation, being 1.75%, was used as the risk-free rate during this valuation, and the risk premium was determined by taking into account the average return of properties in the area and investment risks. Currently the policies for the property market are tight and tend to change fast, and there are considerable investment risks. In light of the location and use of the land parcel valued, similar land investments and economic development in the area, and making reference to the reports on benchmark land price in Guangzhou, the risk premium for the land parcel valued was determined to be 4.25%, and the capitalization rate for the land parcel valued was determined to be 6%.
(5) Note to using benchmark land price: As at the date of this valuation, new benchmark land price announced in Guangzhou had not taken effect and cannot be used in the valuation. Upon investigation, the benchmark land price as at the original base date, being 1 July 2010, is still somewhat applicable for the following reasons: (i) The base date of this valuation has been over 3 years since the date on which the benchmark land price in Guangzhou and its revision system were approved by Guangzhou Municipal People’s Government for implementation. However, Guangzhou municipal people’s government has been applying the benchmark land price in the management of land price in the primary and secondary land markets, and the prices of tender, auction and listing-for-sale cases in the open market in Guangzhou are all subject to the benchmark land price and its revision system; (ii) Guangzhou has been included in the pilot dynamic monitoring of land prices by the Ministry of Land and Resources which reviews land prices of the areas monitored on a regular basis and announces land price indexes for various uses in the areas; and (iii) A relatively sound revision system has been established for the effects of the existing benchmark land price in Guangzhou on the land parcel and related corrections. Through a series of corrections such as those for base dates, location factors and individual factors, the price can be close to current market price. In view of the above reasons, the benchmark land price factor correction approach has been chosen as the second method in this valuation. It has not been used as the basis for valuation and its results are used only to verify the results from the market comparison approach, however, due to its low accuracy of valuation.
(6) SG & Co, Shanghai issued its Legal Opinion relating to the buildings and land on 15 October 2015. According to the Legal Opinion, the legal title of the valued buildings and land belongs to Guangzhou Shipyard Shipping Co., Ltd. and there is no dispute over such title. It is also mentioned in Legal Opinion that an undertaking letter has been entered into between Guangzhou Shipyard Shipping Co., Ltd. and CSSC Offshore & Marine Engineering (Group) Limited, which states that the legal title of the valued buildings and land belongs to Guangzhou Shipyard Shipping Co., Ltd. and therefore there is no ownership dispute. We have received from the management of CSSC Offshore & Marine Engineering (Group) Company Limited the Legal Opinion issued by SG & Co, Shanghai and the Legal Opinion has been fully taken into account when the valuation was being conducted.
– III-7 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
(7) As at the date of the report, the registration of transfer for a real estate certificate was not completed yet, and the owner of the land use right stated in the certificate had not been changed to Guangzhou Shipyard Shipping Co., Ltd.. Users of the report are reminded that, after the submission of this valuation report, the transfer of the owner of the land use right stated in the real estate certificate still has to be completed. The work in respect of the said transfer of has already been started, and is still on-going.
– III-8 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
IV. Report of Real Estate Appraisal Conclusion
(I) Client
Name of Client: CSSC Offshore & Marine Engineering (Group) Company Limited
Address: 40 South Fangcun Main Road, Liwan District, Guangzhou City
Person in charge: Han Guangde
Contact: Zhong Houling
Telephone: 13822220728
(II) Valuation institution (As the change of company name is in progress for the real estate qualification certificate, the following is the information recorded on the real estate qualification certificate before the change)
Name of entity: Beijing Huayuan International Real Estate and Land Assets Valuation Co., Ltd.
Address: 602, No. 1 Building, Qian He Jia Yuan, 108 North 4th Ring Road East, Chaoyang District, Beijing
Grade of qualification: Grade I
Registration No. of business 110000009044497 license:
Certification No.: Jian Fang Gu Zheng Zi [2013] No. 045
Validity period of qualification: 9 June 2013 to 8 June 2016
Legal representative: Li Jianrong
(III) Subject of Valuation
1. Scope of the subject of valuation
The subject of valuation is the land use right of a parcel of industrial land located in 40 South Fangcun Main Road, Liwan District, Guangzhou.
– III-9 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
2. Basic information on the subject of valuation
The subject of valuation is the land use right owned by Guangzhou Shipyard Shipping Co., Ltd. for a parcel of construction land obtained through grant in Fangcun Avenue, Liwan District, Guangzhou City, Guangdong Province. The registered land use is industrial use and the total land area is 393,793 sq.m..
Source of the subject of valuation:
The subject of valuation is the land use right legally obtained by Guangzhou Shipyard International Company Limited through grant in 1993. In 2014, Guangzhou Shipyard International Company Limited established Guangzhou Shipyard Shipping Co., Ltd. with the land to be valued as capital contribution, and the land was transferred to Guangzhou Shipyard Shipping Co., Ltd. accordingly.
① Registered land status
Details of the registered land status of the subject of valuation are as follows:
No. of land use right (93) Sui Guo Di Chu Zi No. 128 ((93)（穗國地出 transfer contract: 字第128號）
No. of real estate 50 certificates including Yue Fang Di Quan certificates: Zheng Sui Zi No. 0650169599（粵房地權證穗字 第0650169599號）
Land user as at the date Guangzhou Shipyard Shipping Co., Ltd. of valuation:
Location of land parcel: 40 South Fangcun Main Road, Liwan District, Guangzhou City（廣州市荔灣區芳村大道南40號）
No. of plot: –
No. of plan: –
Registered use: Industrial and ancillary facilities
Type of land use rights: obtained through grant
Area of land stated in the 393,793 sq.m. transfer contract:
– III-10 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Date of expiry of land 19 January 2044 (According to the real estate use rights: certificate, the term of state-owned land use right of the state-owned land for which the land premium has been paid is 50 years from 20 January 1994. Therefore, the date of expiry of land use rights is 19 January 2044)
Four boundaries: Pearl River to east, land of CSSC Offshore & Marine Engineering (Group) Company Limited to south, Fangcun Main Road to west, and Oil Tank No.4 of Guangdong Province Petroleum Company to north.
Note: None
Land grade: No record
② Status of land use
Based on the information provided by Guangzhou Shipyard Shipping Co., Ltd. and on-site survey conducted by the valuers, as at the base date of valuation, being 31 August 2015, details of the land use of the subject of valuation were as follows:
There were 77 buildings erected on the subject of valuation with a total gross floor area of 169,719.58 sq.m. and in steel, frame or mixed structures. The existing plot ratio was 0.43, and the plot ratio set for this valuation was 0.43. See the table below for details:
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
1 Yue Fang Di Guangzhou Office Planned 40 South Masonry 3.00 1,487.72 January Area with Quan Zheng Sui Shipyard building for factory, Fangcun Main concrete 1964 certificate – 848.54 Zi Shipping Co., the actual Road, Liwan square meters, No.0650169599 Ltd. infrastructural office District, extended area of construction Guangzhou City 639.18 square division meters without certificate
2 Sui Fang Di Guangzhou Pipe Factory 40 South Masonry 2.00 3,990.16 December Area with Zheng Zi Shipyard processing Fangcun Main concrete 1970 certificate – No.163349 International workshop Road, Liwan 3,270.16 m2, Co. Ltd District, extended area of Guangzhou City 720 square meters without certificate, with a closed basement
3 Nil Nil Spare parts Auxiliary 40 South Masonry 4.00 665.28 November warehouse Fangcun Main concrete 2012 (team room) Road, Liwan District, Guangzhou City
– III-11 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
4 Yue Fang Di Guangzhou New Factory 40 South Brick and 1.00 111.36 January Renewed and Quan Zheng Sui Shipyard Transformer Fangcun Main concrete 1989 altered, including Zi Shipping Co., Substation no. Road, Liwan facility foundation No.0650170476 Ltd. 8 District, Guangzhou City
5 Yue Fang Di Guangzhou West Factory 40 South Steel 1.00 835.35 December Quan Zheng Sui Shipyard Container Fangcun Main structure 1991 Zi Shipping Co., Spare Parts Road, Liwan No.0650170475 Ltd. Warehouse District, Guangzhou City
6 Yue Fang Di Guangzhou Transformer Industrial 40 South Brick and 1.00 198.53 January Quan Zheng Sui Shipyard Substation no. Fangcun Main concrete 1957 Zi Shipping Co., 1 Road, Liwan No.0650170473 Ltd. District, Guangzhou City
7 Yue Fang Di Guangzhou Transformer Factory 40 South Brick and 1.00 156.74 December Quan Zheng Sui Shipyard Substation no. Fangcun Main concrete 1963 Zi Shipping Co., 6 Road, Liwan No.0650169638 Ltd. District, Guangzhou City
8 Yue Fang Di Guangzhou Transformer Factory 40 South Brick and 1.00 77.60 January Quan Zheng Sui Shipyard Substation no. Fangcun Main concrete 1983 Zi Shipping Co., 10 Road, Liwan No.0650170472 Ltd. District, Guangzhou City
9 Yue Fang Di Guangzhou Old Factory 40 South Brick and 1.00 607.56 December Quan Zheng Sui Shipyard Compressor Fangcun Main concrete 1956 Zi Shipping Co., Room Road, Liwan No.0650170041 Ltd. District, Guangzhou City
10 Yue Fang Di Guangzhou Line 3 and Factory 40 South Masonry 1.00 5,278.53 January Quan Zheng Sui Shipyard line 4 of Fangcun Main concrete 1976 Zi Shipping Co., internal Road, Liwan No.0650170058 Ltd. processing District, team Guangzhou City (Workshops)
11 Yue Fang Di Guangzhou 50 tonnes Factory 40 South Masonry 1.00 5,983.78 January Quan Zheng Sui Shipyard South-North Fangcun Main concrete 1976 Zi Shipping Co., Cross Road, Liwan No.0650170500 Ltd. Workshop District, Guangzhou City
12 Yue Fang Di Guangzhou Auxiliary Factory 40 South Masonry 1.00 4,972.12 January Renewed and Quan Zheng Sui Shipyard Field Fangcun Main concrete 1965 altered due to Zi Shipping Co., Road, Liwan production needs No.0650170501 Ltd. District, Guangzhou City
13 Yue Fang Di Guangzhou West Factory 40 South Masonry 1.00 494.37 December Renewed and Quan Zheng Sui Shipyard Centralised Fangcun Main concrete 1988 altered, with indoor Zi Shipping Co., Assembly Line Road, Liwan steel platform No.0650170502 Ltd. Auxiliary District, Building Guangzhou City
– III-12 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
14 Nil Nil Installation Auxiliary 40 South Masonry 4.00 2,570.00 November Original building Workshop Fangcun Main concrete 2012 demolished and (team room) Road, Liwan rebuilt, carrying District, value includes the Guangzhou City cost of original building
15 Yue Fang Di Guangzhou New Steel Factory 40 South Masonry 1.00 577.95 January Plant with a Quan Zheng Sui Shipyard Plate Fangcun Main concrete 1983 production line, Zi Shipping Co., Processing Road, Liwan including No.0650170278 Ltd. Workshop District, production line Guangzhou City foundation outdoor
16 Yue Fang Di Guangzhou Electrical Factory 40 South Masonry 1.00 2,953.45 January Quan Zheng Sui Shipyard Equipment Fangcun Main concrete 1964 Zi Shipping Co., Warehouse Road, Liwan No.0650169938 Ltd. No. 107 District, Guangzhou City
17 Yue Fang Di Guangzhou Welding Factory 40 South Brick and 3.00 826.56 January Quan Zheng Sui Shipyard Testing Lab Fangcun Main concrete 1978 Zi Shipping Co., Road, Liwan No.0650169818 Ltd. District, Guangzhou City
18 Yue Fang Di Guangzhou Iron Casting Factory 40 South Masonry 1.00 2,939.53 January Quan Zheng Sui Shipyard Workshop Fangcun Main concrete 1970 Zi Shipping Co., Road, Liwan No.0650169838 Ltd. District, Guangzhou City
19 Yue Fang Di Guangzhou Main Office Planned 40 South Brick and 4.00 2,769.79 January Quan Zheng Sui Shipyard Building of factory, Fangcun Main concrete 1957 Zi Shipping Co., Factory actual Road, Liwan No.0650169859 Ltd. office District, Guangzhou City
20 Yue Fang Di Guangzhou Stabilizing Factory 40 South Masonry 2.00 530.14 January Now changed to Quan Zheng Sui Shipyard Station (team Fangcun Main concrete 1978 team room Zi Shipping Co., room) Road, Liwan No.0650170499 Ltd. District, Guangzhou City
21 Yue Fang Di Guangzhou Technology Planned 40 South Brick and 5.00 1,805.74 December Quan Zheng Sui Shipyard Building factory, Fangcun Main concrete 1974 Zi Shipping Co., actual Road, Liwan No.0650170478 Ltd. office District, Guangzhou City
22 Yue Fang Di Guangzhou Computation Planned 40 South Masonry 6.00 3,856.12 December Quan Zheng Sui Shipyard Building factory, Fangcun Main concrete 1984 Zi Shipping Co., actual Road, Liwan No.0650170479 Ltd. office District, Guangzhou City
23 Yue Fang Di Guangzhou Guest Factory 40 South Masonry 3.00 785.95 January Area shown on Quan Zheng Sui Shipyard Restaurant Fangcun Main concrete 1983 certificate is Zi Shipping Co., Road, Liwan 1,178.93 square No.0650169960 Ltd. District, meters, demolished Guangzhou City area is 392.98 square meters
– III-13 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
24 Yue Fang Di Guangzhou Small Factory 40 South Masonry 1.00 5,913.25 January Quan Zheng Sui Shipyard Close-up Fangcun Main concrete 1976 Zi Shipping Co., Workshop Road, Liwan No.0650170480 Ltd. District, Guangzhou City
25 Nil Nil New Production 40 South Steel 1.00 972.00 November Carrying value Installation Fangcun Main structure 2012 includes value of Workshop Road, Liwan demolished District, installation Guangzhou City workshop
26 Yue Fang Di Guangzhou Office of Planned 40 South Brick and 3.00 701.84 January Quan Zheng Sui Shipyard Branch factory, Fangcun Main concrete 1988 Zi Shipping Co., Installation actual Road, Liwan No.0650168158 Ltd. Factory office District, Guangzhou City
27 Yue Fang Di Guangzhou Composite Planned 40 South Brick and 3.00 1,118.31 January Quan Zheng Sui Shipyard Office Of factory, Fangcun Main concrete 1972 Zi Shipping Co., Branch actual Road, Liwan No.0650168698 Ltd. Installation office District, Factory Guangzhou City
28 Yue Fang Di Guangzhou Old Steel Factory 40 South Masonry 1.00 822.55 January Quan Zheng Sui Shipyard Plate Fangcun Main concrete 1979 Zi Shipping Co., Processing Road, Liwan No.0650168801 Ltd. Workshop District, Guangzhou City
29 Yue Fang Di Guangzhou Line 2 of Factory 40 South Masonry 1.00 3,975.97 January Quan Zheng Sui Shipyard Internal Fangcun Main concrete 1979 Zi Shipping Co., Processing Road, Liwan No.0650170241 Ltd. Team District, (Workshop) Guangzhou City
30 Yue Fang Di Guangzhou Line 1 of Factory 40 South Masonry 1.00 3,408.68 January Quan Zheng Sui Shipyard Internal Fangcun Main concrete 1976 Zi Shipping Co., Processing Road, Liwan No.0650170221 Ltd. Team District, (Workshop) Guangzhou City
31 Yue Fang Di Guangzhou West Factory Factory 40 South Masonry 1.00 1,885.57 January Its equipment base Quan Zheng Sui Shipyard Container Fangcun Main concrete 1977 was renewed and Zi Shipping Co., Processing Road, Liwan altered due to No.0650169744 Ltd. Workshop District, production needs Guangzhou City
32 Yue Fang Di Guangzhou Warehouse for Factory 40 South Masonry 1.00 5,738.64 January Quan Zheng Sui Shipyard Non-Metal Fangcun Main concrete 1969 Zi Shipping Co., Components Road, Liwan No.0650169759 Ltd. And Electric District, Cables Guangzhou City
33 Yue Fang Di Guangzhou Armor Factory 40 South Masonry 1.00 2,081.65 January Quan Zheng Sui Shipyard Installation Fangcun Main concrete 1972 Zi Shipping Co., Workshop Road, Liwan No.0650170470 Ltd. District, Guangzhou City
– III-14 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
34 Yue Fang Di Guangzhou Outside the Factory 40 South Brick and 2.00 415.38 January Internal wall with Quan Zheng Sui Shipyard Quality Fangcun Main concrete 1988 anti-radiation Zi Shipping Co., Control Road, Liwan treatment No.0650170474 Ltd. Department District, Exposure Guangzhou City Chamber (Renovated)
35 Yue Fang Di Guangzhou Ship Factory 40 South Masonry 1.00 1,319.20 December Quan Zheng Sui Shipyard Installation Fangcun Main concrete 1983 Zi Shipping Co., Phase Road, Liwan No.0650170477 Ltd. Workshop District, Guangzhou City
36 Yue Fang Di Guangzhou New Pressure Factory 40 South Masonry 1.00 2,691.30 December Quan Zheng Sui Shipyard Vessel Fangcun Main concrete 1988 Zi Shipping Co., Workshop Road, Liwan No.0650169762 Ltd. District, Guangzhou City
37 Yue Fang Di Guangzhou Large-size Factory 40 South Steel 1.00 2,964.23 December High requirement Quan Zheng Sui Shipyard Components Fangcun Main structure 1993 for fire prevention, Zi Shipping Co., Processing Road, Liwan with heat insulated No.0650169798 Ltd. Workshop District, rooftop and a Guangzhou City number of crane rails
38 Yue Fang Di Guangzhou West Planned 40 South Masonry 6 7,505.76 December Quan Zheng Sui Shipyard Restaurant and restaurant Fangcun Main concrete (partial)/3 1993 Zi Shipping Co., Office and Road, Liwan No.0650170469 Ltd. library, District, actual Guangzhou City office
39 Yue Fang Di Guangzhou New Planned 40 South Masonry 4.00 2,933.00 December Area shown on Quan Zheng Sui Shipyard Measurement factory, Fangcun Main concrete 1994 certificate is 997.86 Zi Shipping Co., Center actual Road, Liwan square meters, No.0650169700 Ltd. office District, extended area of Guangzhou City 1,935.14 square meters without certificate
40 Yue Fang Di Guangzhou New Office Planned 40 South Masonry 7.00 3,113.68 December Area shown on Quan Zheng Sui Shipyard Building of factory, Fangcun Main concrete 1993 certificate is Zi Shipping Co., Shipbuilding actual Road, Liwan 2,629.29 square No.0650169704 Ltd. Department office District, meters, extended Guangzhou City area of 484.39 square meters
41 Yue Fang Di Guangzhou Phase Painting Factory 40 South Steel 4 3,946.57 January Wall and ceiling Quan Zheng Sui Shipyard Workshop Fangcun Main structure (partial)/1 1996 with steel plate Zi Shipping Co., Road, Liwan sandwiched fire No.0650169741 Ltd. District, retardant padding. Guangzhou City As spraying would damage the wall and ceiling, requirements for fire resistance and steel plate are high
– III-15 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
42 Yue Fang Di Guangzhou Carparks and Carpark 40 South Masonry 2.00 2,473.86 September Quan Zheng Sui Shipyard Firefighting Fangcun Main concrete 1994 Zi Shipping Co., Building Road, Liwan No.0650169743 Ltd. District, Guangzhou City
43 Yue Fang Di Guangzhou New Transformer 40 South Masonry 2.00 562.35 January Including facility Quan Zheng Sui Shipyard Transformer room Fangcun Main concrete 1992 foundation Zi Shipping Co., Substation no. Road, Liwan No.0650169758 Ltd. 1 District, Guangzhou City
44 Yue Fang Di Guangzhou 6OHZ Power Power 40 South Masonry 2.00 542.14 January Including facility Quan Zheng Sui Shipyard Station station Fangcun Main concrete 1992 foundation Zi Shipping Co., Road, Liwan No.0650169760 Ltd. District, Guangzhou City
45 Yue Fang Di Guangzhou Dock Winch Factory 40 South Masonry 4.00 1,366.71 December Area shown on Quan Zheng Sui Shipyard and Fangcun Main concrete 1993 property certificate Zi Shipping Co., Scheduling Road, Liwan is 2,050.06 square No.0650170471 Ltd. Room District, meters, demolished Guangzhou City are is 683.35 square meters
46 Yue Fang Di Guangzhou Fitting Units Workshop 40 South Steel 1.00 1,837.67 December Alteration made Quan Zheng Sui Shipyard Installation Fangcun Main structure 1993 Zi Shipping Co., Workshop Road, Liwan No.0650169578 Ltd. District, Guangzhou City
47 Yue Fang Di Guangzhou Chemicals Materials 40 South Masonry 2.00 674.82 March Quan Zheng Sui Shipyard Warehouse warehouse Fangcun Main concrete 1994 Zi Shipping Co., Road, Liwan No.0650169980 Ltd. District, Guangzhou City
48 Yue Fang Di Guangzhou Paints Paints 40 South Masonry 1.00 1,263.36 January Quan Zheng Sui Shipyard Warehouse warehouse Fangcun Main concrete 1997 Zi Shipping Co., Road, Liwan No.0650170001 Ltd. District, Guangzhou City
49 Yue Fang Di Guangzhou Gas Station Gas station 40 South Masonry 1.00 88.52 March Two oil tanks Quan Zheng Sui Shipyard Fangcun Main concrete 1998 underground of Zi Shipping Co., Road, Liwan diameter 2.6 m and No.0650170004 Ltd. District, length 12 m Guangzhou City
50 Yue Fang Di Guangzhou New Pipe Factory 40 South Steel 1.00 8,461.37 December Quan Zheng Sui Shipyard Processing Fangcun Main structure 1992 Zi Shipping Co., Workshop Road, Liwan No.0650170498 Ltd. District, Guangzhou City
51 Yue Fang Di Guangzhou Electrical Warehouse 40 South Masonry 5.00 6,184.37 January Quan Zheng Sui Shipyard Equipment Fangcun Main concrete 1995 Zi Shipping Co., Warehouse Road, Liwan No.0650170021 Ltd. District, Guangzhou City
– III-16 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
52 Yue Fang Di Guangzhou Elevator Workshop 40 South Steel 1.00 3,876.77 October Quan Zheng Sui Shipyard Workshop Fangcun Main structure 2003 Zi Shipping Co., Road, Liwan No.0650169863 Ltd. District, Guangzhou City
53 Yue Fang Di Guangzhou Design and Office 40 South Masonry 4.00 10,130.60 July 2005 Carrying value Quan Zheng Sui Shipyard Calibration Fangcun Main concrete includes part of the Zi Shipping Co., Building Road, Liwan value of BA001608 No.0650170320 Ltd. District, Guangzhou City
54 Nil Nil Welding Rod Production 40 South Masonry 1.00 471.81 January Warehouse Fangcun Main concrete 1972 Road, Liwan District, Guangzhou City
55 Nil Nil New Production 40 South Masonry 1.00 86.50 October Now changed to Transformer Fangcun Main concrete 1994 team room Substation no. Road, Liwan 10 District, Guangzhou City
56 Nil Nil Security Room Auxiliary 40 South Masonry 1.00 25.20 June 1998 Carrying value at North Gate Fangcun Main concrete includes monitoring Road, Liwan system District, Guangzhou City
57 Nil Nil Carpark of Auxiliary 40 South Masonry 4.00 4,800.00 December Part of carrying Design and Fangcun Main concrete 2008 value included in Calibration Road, Liwan asset no Building District, Guangzhou City
58 Nil Nil Toilets (4) Auxiliary 40 South Brick and 1.00 48.38 June 1998 Fangcun Main concrete Road, Liwan District, Guangzhou City
59 Nil Nil Environmental Auxiliary 40 South Brick and 1.00 10.11 September COD Fangcun Main concrete 2003 Monitoring Road, Liwan Room of Oil District, Tanks Guangzhou City
60 Nil Nil Security Room Auxiliary 40 South Brick and 1.00 17.95 December of Oil Tanks Fangcun Main concrete 2006 Road, Liwan District, Guangzhou City
61 Nil Nil Simple Sand Production 40 South Steel 1.00 1,356.00 October Shed of Pier Fangcun Main structure 1998 12 Road, Liwan District, Guangzhou City
– III-17 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
62 Nil Nil Simple Production 40 South Steel 1.00 768.30 June 2004 Workshop for Fangcun Main structure Heavy Road, Liwan Engineering District, Guangzhou City
63 Nil Nil Security Post Auxiliary 40 South Brick and 1.00 25.00 May 2002 Including door at East Gate Fangcun Main concrete Road, Liwan District, Guangzhou City
64 Nil Nil Old Phase Production 40 South Masonry 1.00 6,294.00 November Wall and ceiling Painting Fangcun Main concrete 2009 with steel plate Workshop Road, Liwan sandwiched fire District, retardant padding. Guangzhou City As spraying would damage the wall and ceiling, requirements for fire resistance and steel plate are high, case
65 Nil Nil Restaurant Production 40 South Masonry 2.00 80.00 November With sewage Waste Water Fangcun Main concrete 2009 treatment pool and Gas Road, Liwan underground Treatment District, Station Guangzhou City
66 Nil Nil Air Production 40 South Masonry 3.00 1,282.50 November Auxiliary water Compressor Fangcun Main concrete 2009 pool included and Electric Road, Liwan Room of District, Painting Guangzhou City Workshop
67 Nil Nil Electrical Production 40 South Masonry 5.00 12,398.00 December Equipment Fangcun Main concrete 2009 Distribution Road, Liwan Center District, Guangzhou City
68 Nil Nil Main Office 40 South Masonry 5.00 4,425.00 December Five-story Fangcun Main concrete 2009 Composite Road, Liwan Office District, Building Guangzhou City
69 Nil Nil New Production 40 South Masonry 2.00 256.00 March Transformer Fangcun Main concrete 2010 Substation no. Road, Liwan 2 District, Guangzhou City
70 Nil Nil Infrastructure Auxiliary 40 South Brick and 3.00 264.00 November Some expenses not Design Fangcun Main concrete 2008 yet booked Building Road, Liwan District, Guangzhou City
– III-18 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
71 Nil Nil Transformer Production 40 South Masonry 2.00 98.40 June 2009 Carrying value Substation no. Fangcun Main concrete includes equipment 4 High Road, Liwan charges Voltage Room District, Guangzhou City
72 Nil Nil Welding Rod Production 40 South Brick and 1.00 48.50 December Room at south Fangcun Main concrete 2009 of Main Dock Road, Liwan District, Guangzhou City
73 Nil Nil Large-size Production 40 South Steel 1.00 3,078.00 December Wall and ceiling Equipment Fangcun Main structure 2012 with steel plate Processing Road, Liwan sandwiched fire Workshop District, retardant padding Guangzhou City
74 Nil Nil Hilltop Steel Production 40 South Steel 1.00 210.00 November With gas storage Plate Fangcun Main structure 2012 tank and auxiliary Warehouse Road, Liwan trenches No. 2 District, Guangzhou City
75 Nil Nil Office of Steel Office 40 South Masonry 2.00 119.58 January Plate Factory Fangcun Main concrete 1995 Road, Liwan District, Guangzhou City
76 Nil Nil Rooms for Auxiliary 40 South Simple 1.00 74.40 January High foundation Processing and Fangcun Main 2011 cost due toa3m Manufacturing Road, Liwan rubble foundation Team District, Guangzhou City
77 Nil Nil Security Room Auxiliary 40 South Brick and 1.00 37.50 April 1999 Including door and at Main Gate Fangcun Main concrete wall for image Road, Liwan District, Guangzhou City
Total 169,719.58
③ Status of infrastructure
Based on site investigation, the subject of valuation was in a mostly regular shape, with flat land and a strong geological carrying capacity within the land parcel. As at the Reference Day, the development progress of the land parcel was “five connections” (road, electricity, feed water, down water and communications) outside the red line of land parcel and “five connections” (road, electricity, feed water, down water and communications) and flat land within the red line of land parcel.
– III-19 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Details of the infrastructure outside the land parcel are as follows:
Road: The subject of valuation is along Fangcun Main Road;
Electricity: Electricity is supplied by local electricity companies and State Grid with high availability;
Communications: Connected to fixed telephone lines and can receive mobile communication signals;
Feed water: Supply of municipal water available within the land parcel;
Down water: Drainage of water within the land parcel;
Details of the infrastructure within the land parcel are as follows:
Road: Roads available within the land parcel of the subject of valuation;
Electricity: Electricity is supplied by local electricity companies and State Grid with high availability;
Communications: Connected to fixed telephone lines and can receive mobile communication signals;
Feed water: Supply of municipal water available within the land parcel;
Down water: Drainage of water within the land parcel;
Status of site levelling: Flat land.
④ Location
The subject of valuation is located in 40 South Fangcun Main Road, Liwan District, Guangzhou. Four boundaries of the land parcel: Pearl River to east, land of CSSC Offshore & Marine Engineering (Group) Company Limited to south, Fangcun Main Road to west, and Oil Tank No.4 of Guangdong Province Petroleum Company to north.
– III-20 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
3. Status of interests in the subject of valuation
(1) Land ownership of the The subject of valuation was owned by the State subject of valuation: as at the base date of valuation. Pursuant to the “Confirmation Letter in relation to the ownership of buildings and land of CSSC Offshore & Marine Engineering (Group) Company Limited and Guangzhou Shipyard Shipping Co., Ltd.” and “Legal opinion” issued by SG & Co, Shanghai, there is no dispute concerning the ownership of the appraised parcel belongs to Guangzhou Shipyard Shipping Co., Ltd..
(2) Land use right of the According to the real estate certificate, the land subject of valuation: user of the subject of valuation is Guangzhou Shipyard Shipping Co., Ltd. and the type of land use right is land use right of state-owned land obtained through grant.
(3) Encumbrances for the As at the base date of valuation, the subject of land: valuation was not subject to any encumbrances such as mortgage, guarantee and easement.
(IV) Purpose of Valuation
In accordance with the Approval of Listing-for-sale of Companies Including GS Shipping by GSI issued by China State Shipbuilding Corporation (Chuan Gong Jing [2014] No. 758) （《關於廣船國際挂牌轉讓廣船實業等公司股權的批復》文件（船工經[2014]758號））, CSSC Offshore & Marine Engineering (Group) Company Limited proposed to transfer 100% equity interest in Guangzhou Shipyard Shipping Co., Ltd.. As such, it is required to appraise the land use rights of the land located in Liwan District, Guangzhou City owned by Guangzhou Shipyard Shipping Co., Ltd. in order to provide a reference for the Client to determine the price of the land use rights.
(V) Reference Day
31 August 2015
(VI) Definition of Value
This valuation was made on the basis of market value, which represents the price that is most likely to develop or realize in an open market.
– III-21 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
The appraisal conclusion represent the price of land use right obtained through grant of the subject of valuation as at the Reference Day, being 31 August 2015, on the assumption of maintaining existing use and normal conditions. The market value of land in the result of valuation is based on the following premises:
1. According to the real estate certificate provided by the Client, the subject of valuation is a parcel of industrial land and the type of land use right is land obtained through grant. The use of land was set as industrial land and the type of land use right was set as land obtained through grant in this valuation.
2. According to site investigation, the actual plot ratio of the subject of valuation was 0.43. The plot ratio adopted in this valuation was set as 0.43 based on the actual plot ratio.
3. Based on site investigation, the development progress of the subject of valuation was “five connections” (road, electricity, feed water, down water and communications) outside and “five connections” (road, electricity, feed water, down water and communications) and flat land within the red line of land parcel. In accordance with the purposes of this valuation, the progress of development was set in this valuation as “five connections” (road, electricity, feed water, down water, and communications) outside the red line of the land parcel and flat land within the red line of the land parcel.
4. According to the real estate certificate of the land parcel valued, land premium for state-owned land has been paid for the land parcel for a term of 50 years since 20 January 1994. The land use right of the land parcel valued expires on 19 January 2044, and the remaining term of land use right is 28.39 years. As such, the remaining term of land use right was set as 28.39 years in this valuation.
(VII) Basis of Valuation
1. National and local laws and regulations
(1) Land Administration Law of the People’s Republic of China (29 August 1998)
(2) Law of the People’s Republic of China on the Administration of Urban Real Estate (5 July 1994)
(3) Regulations on the Implementation of the Land Administration Law of the People’s Republic of China ( passed at the 12th executive meeting of the State Council on 24 December 1998)
(4) Interim Regulations of the People’s Republic of China Concerning the Assignment and Transfer of the Right to the Use of the State-owned Land in the Urban Areas (Order No. 55 of the State Council, 19 May 1990)
– III-22 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
(5) Circular of the Ministry of Land and Resources on Issuing the “Several Opinions of the Ministry of Land and Resources on Intensifying Administration of Land Assets to Promote Reform and Development of State-owned Enterprises” (Guo Tu Zi Fa [1999] No. 433)
(6) Circular of the Ministry of Land and Resources on Reforming the Measures for Confirmation of Land Valuation Results and Review and Approval of Disposal of Land Assets (Guo Tu Zi Fa [2001] No. 44)
2. Relevant technical standards
(1) Code for Real Estate Appraisal, China National Standard (50291-1999)
(2) Standard for Basic Terminology of Real Estate Appraisal, China National Standard (GB/T 50899-2013)
(3) Land Use Status Classification, China National Standard (GB/T21010-2007, 10 August 2007)
3. Other information
(1) Information provided by the Client:
① Copies of Real Estate Certificates
② Copies of Contracts for Grant of State-Owned Land
(2) Information collected by the valuers through on-site survey and investigation
① Other information collected by the valuers through on-site survey and available to valuation institution;
② Data on the real estate market and similar property transactions in the location of the subject of valuation.
(VIII) Principles of Valuation
This valuation report was prepared based on an equitable, fair, open, objective and reasonable basis and the key principles followed are as follows:
1. Principle of legality
The valuation was made on the premise of lawful use, dealing and disposal of the subject of valuation.
– III-23 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
2. Principle of reference day
Valuation is in fact a process of calculating the price of the subject of valuation at a certain point in time. Therefore in the valuation it must be assumed that the market maintains its status on the Reference Day and the status of the subject of valuation shall be its status on the Reference Day. 31 August 2015 was adopted as the Reference Day in this valuation.
3. Principle of replacement
The law of replacement is followed for the prices of properties. Land parcels with the same or similar value in use in the same or similar area, being properties that are interchangeable, affect and compete against each other so that their prices tend to be the same due to competition.
4. Principle of objectivity, equity and independence
Careful investigation, research and on-site survey must be made from a practical perspective. The truthfulness and validity of information must be analysed realistically and appropriate methods, standards and procedures must be selected for objective valuation and in order to ensure the impartialness and reasonableness of the result of valuation.
5. Principle of maximum and best utilization
If the subject of valuation is already in use, one of the following valuation premises shall be determined and selected in accordance with the principle of maximum and best utilization and explanations shall be made in the valuation report accordingly:
(1) Premise of maintaining current use: If it is considered that maintaining current status represents the best utilization, valuation shall be made based on the premise of maintaining current use;
(2) Premise of change of use: If it is considered that change of use represents the best utilization, valuation shall be made based on the premise of change of use;
(3) Premise of decoration and renovation: If it is considered that decoration and renovation but without change of use represents the best utilization, valuation shall be made based on the premise of decoration and renovation but without change of use;
(4) Premise of reuse: If it is considered that demolition of existing buildings before reuse represents the best utilization, valuation shall be made based on the premise of demolition of existing buildings before reuse;
(5) A combination of the premises above.
– III-24 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
(IX) Methodology of valuation
The approach to appraise the land use right of the subject of valuation is selected through analysis of the land market where the subject of valuation is located and the information collected by land valuers in view of the features, conditions and realities of the subject of valuation and in accordance with the Regulations for Valuation on Urban Land.
1. Methods not applicable
(1) The subject of valuation is currently used as industrial land, mainly for shipbuilding. Given there are few similar lease cases, the income approach is not applicable in this valuation.
(2) The land parcel valued is industrial land on which construction is completed and production commenced, rather than land to be developed, and there is lack of market transaction cases of buildings and structures similar to the subject of valuation in the area of the land parcel valued, it is impracticable to determine reasonable total price of properties. The residual approach is not applicable.
(3) The cost approach is generally applicable to undeveloped land market where there are few land transaction cases and it is infeasible to conduct valuation using the market comparison approach. Furthermore, it is hard to take into consideration the usefulness of land and market demand using the cost approach, which has flaws and restrictions and is generally not applicable to the valuation of land in established urban areas. The subject of valuation is located in an established urban area, and the cost of land requisition in suburban areas cannot reflect the cost of land acquisition. Besides, demolition cases in established urban areas relate to the demolition of industrial facilities to build commercial or residential properties or the renovation of shanty areas into residential communities or commercial complexes and the demolition cost cannot reflect the cost of land acquisition either. As such, the cost approach is not applicable in this valuation.
2. Applicable methods
(1) In accordance with the Regulations for Valuation on Urban Land, benchmark land price factor correction approach, market comparison approach, cost approach, income approach and residual approach can be used in the valuation of industrial land. As neither of cost approach, income approach or residual approach is applicable, the valuers can use only the market comparison approach, in addition to the benchmark land price factor correction approach. Through market investigation, the valuers learned that there were rare cases of industrial land transactions in the area of the land parcel valued and only two industrial land transaction cases were identified in the same area. In order to meet the requirement of the market comparison approach on the number of valuation cases, the valuers extended the scope of selection to include a parcel of land that is similar to the land parcel
– III-25 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
valued as the third comparable case. The price of land use right of the subject of valuation can be determined through correction based on regional and individual factors. As such, the market comparison approach is applicable.
(2) As at the date of this valuation, new benchmark land price announced in Guangzhou had not taken effect and cannot be used in the valuation. Upon investigation, the benchmark land price as at the original base date, being 1 July 2010, is still somewhat applicable for the following reasons: (i) The base date of this valuation has been over 3 years since the date on which the benchmark land price in Guangzhou and its revision system was approved by Guangzhou municipal government for implementation. However, Guangzhou Municipal People’s Government has been applying the benchmark land price in the management of land price in the primary and secondary land markets, and the prices of tender, auction and listing-for-sale cases in the open market in Guangzhou are all subject to the benchmark land price and its revision system; (ii) Guangzhou has been included in the pilot dynamic monitoring of land prices by the Ministry of Land and Resources which reviews land prices of the areas monitored on a regular basis and announces land price indexes for various uses in the areas; and (iii) A relatively sound revision system has been established for the effects of the existing benchmark land price in Guangzhou on the land parcel and related corrections. Through a series of corrections such as those for base dates, location factors and individual factors, the price can be close to current market price. In view of the above reasons, the benchmark land price factor correction approach has been chosen as the second method in this valuation. It was not used as the basis for valuation and its results were used only to verify the results from the market comparison approach, however, due to its low accuracy of valuation.
In view of above, market comparison approach and benchmark land price factor correction approach were adopted in this valuation.
(X) Appraisal conclusion
According to the appraisal purpose, following the appraisal principles, using scientific and reasonable appraisal methods, on the basis of careful analysis of existing information, after measurement, combined with the appraisal experience and analysis of factors affecting value of the subject of valuation, the price of the subject of valuation in the land market as at the Reference Day, being 31 August 2015, is determined to be as follows: (currency: Renminbi):
No. of parcels of land: 1
Area of the land valued: 393,793 sq.m.
Unit price of the land valued: RMB2,165/sq.m.
Total land price assessed: RMB852,561,800
– III-26 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
In full: Renminbi eight hundred and fifty-two million, five hundred and sixty-one thousand, and eight hundred
Currency: Renminbi
(XI) Valuers
Name of certified real estate valuer No. of registration Signature
Yang Yadong 1120070127 Qi Haiyan 1120120041
(XII)Appraisal Operation Period
15 September 2015 to 18 September 2015
(XIII)Validity Period of the Valuation Report
The validity period of the valuation report shall be one year since the issuance of the valuation report.
Beijing Huayuan Longtai Real Estate and Land Assets Valuation Co., Ltd.
Legal representative:
18 September 2015
– III-27 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
V. Technical Report for Real Estate Appraisal
(I) Analysis of Individual Factors
1. Physical state description and analysis of the subject of valuation
(1) Physical state of the Land
① Registration of ownership of the Land
The subject of valuation is the land use right owned by Guangzhou Shipyard Shipping Co., Ltd. for a parcel of construction land obtained through grant in Fangcun Avenue, Liwan District, Guangzhou City, Guangdong Province. The registered land use is industrial use and the total land area is 393,793 sq.m..
Source of the subject of valuation:
The subject of valuation is the land use right legally obtained by Guangzhou Shipyard International Company Limited through grant in 1993. In 2014, Guangzhou Shipyard International Company Limited established Guangzhou Shipyard Shipping Co., Ltd. with the land to be valued as capital contribution, and the land was transferred to Guangzhou Shipyard Shipping Co., Ltd. accordingly.
Details of the registered land status of the subject of valuation are as follows:
No. of land use right (93) Sui Guo Di Chu Zi No. 128 ((93)（穗 transfer contract: 國地出字第128號）
No. of real estate 50 certificates including Yue Fang Di certificates: Quan Zheng Sui Zi No. 0650169599（粵房 地權證穗字第0650169599號）
Land user as at the date Guangzhou Shipyard Shipping Co., Ltd. of valuation:
Location of land parcel: 40 South Fangcun Main Road, Liwan District, Guangzhou City （廣州市荔灣區芳 村大道南40號）
No. of plot: –
No. of plan: –
Registered use: Industrial and ancillary facilities
– III-28 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Type of land use rights: obtained through grant
Area of land stated in the 393,793 sq.m. transfer contract:
Date of expiry of land 19 January 2044 (According to the real use rights: estate certificate, the term of state-owned land use right of the state-owned land for which the land premium has been paid is 50 years from 20 January 1994. Therefore, the date of expiry of land use rights is 19 January 2044)
Four boundaries: Pearl River to east, land of CSSC Offshore & Marine Engineering (Group) Company Limited to south, Fangcun Main Road to west, and Oil Tank No.4 of Guangdong Province Petroleum Company to north.
Note: None
Land grade: No record
② Status of land use
Based on the information provided by Guangzhou Shipyard Shipping Co., Ltd. and on-site survey conducted by the valuers, as at the base date of valuation, being 31 August 2015, details of the land use of the subject of valuation were as follows:
There were 77 buildings erected on the subject of valuation with a total gross floor area of 169,719.58 sq.m. and in steel, frame or mixed structures. The existing plot ratio was 0.43, and the plot ratio set for this valuation was 0.43. See the table below for details:
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
1 Yue Fang Di Guangzhou Office Planned 40 South Masonry 3.00 1,487.72 January Area with Quan Zheng Sui Shipyard building for factory, Fangcun Main concrete 1964 certificate – 848.54 Zi Shipping Co., the actual Road, Liwan square meters, No.0650169599 Ltd. infrastructural office District, extended area of construction Guangzhou City 639.18 square division meters without certificate
– III-29 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
2 Sui Fang Di Guangzhou Pipe Factory 40 South Masonry 2.00 3,990.16 December Area with Zheng Zi Shipyard processing Fangcun Main concrete 1970 certificate – No.163349 International workshop Road, Liwan 3,270.16 m2, Co. Ltd District, extended area of Guangzhou City 720 square meters without certificate, with a closed basement
3 Nil Nil Spare parts Auxiliary 40 South Masonry 4.00 665.28 November warehouse Fangcun Main concrete 2012 (team room) Road, Liwan District, Guangzhou City
4 Yue Fang Di Guangzhou New Factory 40 South Brick and 1.00 111.36 January Renewed and Quan Zheng Sui Shipyard Transformer Fangcun Main concrete 1989 altered, including Zi Shipping Co., Substation no. Road, Liwan facility foundation No.0650170476 Ltd. 8 District, Guangzhou City
5 Yue Fang Di Guangzhou West Factory 40 South Steel 1.00 835.35 December Quan Zheng Sui Shipyard Container Fangcun Main structure 1991 Zi Shipping Co., Spare Parts Road, Liwan No.0650170475 Ltd. Warehouse District, Guangzhou City
6 Yue Fang Di Guangzhou Transformer Industrial 40 South Brick and 1.00 198.53 January Quan Zheng Sui Shipyard Substation no. Fangcun Main concrete 1957 Zi Shipping Co., 1 Road, Liwan No.0650170473 Ltd. District, Guangzhou City
7 Yue Fang Di Guangzhou Transformer Factory 40 South Brick and 1.00 156.74 December Quan Zheng Sui Shipyard Substation no. Fangcun Main concrete 1963 Zi Shipping Co., 6 Road, Liwan No.0650169638 Ltd. District, Guangzhou City
8 Yue Fang Di Guangzhou Transformer Factory 40 South Brick and 1.00 77.60 January Quan Zheng Sui Shipyard Substation no. Fangcun Main concrete 1983 Zi Shipping Co., 10 Road, Liwan No.0650170472 Ltd. District, Guangzhou City
9 Yue Fang Di Guangzhou Old Factory 40 South Brick and 1.00 607.56 December Quan Zheng Sui Shipyard Compressor Fangcun Main concrete 1956 Zi Shipping Co., Room Road, Liwan No.0650170041 Ltd. District, Guangzhou City
10 Yue Fang Di Guangzhou Line 3 and Factory 40 South Masonry 1.00 5,278.53 January Quan Zheng Sui Shipyard line 4 of Fangcun Main concrete 1976 Zi Shipping Co., internal Road, Liwan No.0650170058 Ltd. processing District, team Guangzhou City (Workshops)
11 Yue Fang Di Guangzhou 50 tonnes Factory 40 South Masonry 1.00 5,983.78 January Quan Zheng Sui Shipyard South-North Fangcun Main concrete 1976 Zi Shipping Co., Cross Road, Liwan No.0650170500 Ltd. Workshop District, Guangzhou City
– III-30 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
12 Yue Fang Di Guangzhou Auxiliary Factory 40 South Masonry 1.00 4,972.12 January Renewed and Quan Zheng Sui Shipyard Field Fangcun Main concrete 1965 altered due to Zi Shipping Co., Road, Liwan production needs No.0650170501 Ltd. District, Guangzhou City
13 Yue Fang Di Guangzhou West Factory 40 South Masonry 1.00 494.37 December Renewed and Quan Zheng Sui Shipyard Centralised Fangcun Main concrete 1988 altered, with indoor Zi Shipping Co., Assembly Line Road, Liwan steel platform No.0650170502 Ltd. Auxiliary District, Building Guangzhou City
14 Nil Nil Installation Auxiliary 40 South Masonry 4.00 2,570.00 November Original building Workshop Fangcun Main concrete 2012 demolished and (team room) Road, Liwan rebuilt, carrying District, value includes the Guangzhou City cost of original building
15 Yue Fang Di Guangzhou New Steel Factory 40 South Masonry 1.00 577.95 January Plant with a Quan Zheng Sui Shipyard Plate Fangcun Main concrete 1983 production line, Zi Shipping Co., Processing Road, Liwan including No.0650170278 Ltd. Workshop District, production line Guangzhou City foundation outdoor
16 Yue Fang Di Guangzhou Electrical Factory 40 South Masonry 1.00 2,953.45 January Quan Zheng Sui Shipyard Equipment Fangcun Main concrete 1964 Zi Shipping Co., Warehouse Road, Liwan No.0650169938 Ltd. No. 107 District, Guangzhou City
17 Yue Fang Di Guangzhou Welding Factory 40 South Brick and 3.00 826.56 January Quan Zheng Sui Shipyard Testing Lab Fangcun Main concrete 1978 Zi Shipping Co., Road, Liwan No.0650169818 Ltd. District, Guangzhou City
18 Yue Fang Di Guangzhou Iron Casting Factory 40 South Masonry 1.00 2,939.53 January Quan Zheng Sui Shipyard Workshop Fangcun Main concrete 1970 Zi Shipping Co., Road, Liwan No.0650169838 Ltd. District, Guangzhou City
19 Yue Fang Di Guangzhou Main Office Planned 40 South Brick and 4.00 2,769.79 January Quan Zheng Sui Shipyard Building of factory, Fangcun Main concrete 1957 Zi Shipping Co., Factory actual Road, Liwan No.0650169859 Ltd. office District, Guangzhou City
20 Yue Fang Di Guangzhou Stabilizing Factory 40 South Masonry 2.00 530.14 January Now changed to Quan Zheng Sui Shipyard Station (team Fangcun Main concrete 1978 team room Zi Shipping Co., room) Road, Liwan No.0650170499 Ltd. District, Guangzhou City
21 Yue Fang Di Guangzhou Technology Planned 40 South Brick and 5.00 1,805.74 December Quan Zheng Sui Shipyard Building factory, Fangcun Main concrete 1974 Zi Shipping Co., actual Road, Liwan No.0650170478 Ltd. office District, Guangzhou City
– III-31 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
22 Yue Fang Di Guangzhou Computation Planned 40 South Masonry 6.00 3,856.12 December Quan Zheng Sui Shipyard Building factory, Fangcun Main concrete 1984 Zi Shipping Co., actual Road, Liwan No.0650170479 Ltd. office District, Guangzhou City
23 Yue Fang Di Guangzhou Guest Factory 40 South Masonry 3.00 785.95 January Area shown on Quan Zheng Sui Shipyard Restaurant Fangcun Main concrete 1983 certificate is Zi Shipping Co., Road, Liwan 1,178.93 square No.0650169960 Ltd. District, meters, demolished Guangzhou City area is 392.98 square meters
24 Yue Fang Di Guangzhou Small Factory 40 South Masonry 1.00 5,913.25 January Quan Zheng Sui Shipyard Close-up Fangcun Main concrete 1976 Zi Shipping Co., Workshop Road, Liwan No.0650170480 Ltd. District, Guangzhou City
25 Nil Nil New Production 40 South Steel 1.00 972.00 November Carrying value Installation Fangcun Main structure 2012 includes value of Workshop Road, Liwan demolished District, installation Guangzhou City workshop
26 Yue Fang Di Guangzhou Office of Planned 40 South Brick and 3.00 701.84 January Facility foundation Quan Zheng Sui Shipyard Branch factory, Fangcun Main concrete 1988 renewed due to Zi Shipping Co., Installation actual Road, Liwan production needs No.0650168158 Ltd. Factory office District, Guangzhou City
27 Yue Fang Di Guangzhou Composite Planned 40 South Brick and 3.00 1,118.31 January Quan Zheng Sui Shipyard Office Of factory, Fangcun Main concrete 1972 Zi Shipping Co., Branch actual Road, Liwan No.0650168698 Ltd. Installation office District, Factory Guangzhou City
28 Yue Fang Di Guangzhou Old Steel Factory 40 South Masonry 1.00 822.55 January Quan Zheng Sui Shipyard Plate Fangcun Main concrete 1979 Zi Shipping Co., Processing Road, Liwan No.0650168801 Ltd. Workshop District, Guangzhou City
29 Yue Fang Di Guangzhou Line 2 of Factory 40 South Masonry 1.00 3,975.97 January Quan Zheng Sui Shipyard Internal Fangcun Main concrete 1979 Zi Shipping Co., Processing Road, Liwan No.0650170241 Ltd. Team District, (Workshop) Guangzhou City
30 Yue Fang Di Guangzhou Line 1 of Factory 40 South Masonry 1.00 3,408.68 January Quan Zheng Sui Shipyard Internal Fangcun Main concrete 1976 Zi Shipping Co., Processing Road, Liwan No.0650170221 Ltd. Team District, (Workshop) Guangzhou City
31 Yue Fang Di Guangzhou West Factory Factory 40 South Masonry 1.00 1,885.57 January Its equipment base Quan Zheng Sui Shipyard Container Fangcun Main concrete 1977 was renewed and Zi Shipping Co., Processing Road, Liwan altered due to No.0650169744 Ltd. Workshop District, production needs Guangzhou City
– III-32 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
32 Yue Fang Di Guangzhou Warehouse for Factory 40 South Masonry 1.00 5,738.64 January Quan Zheng Sui Shipyard Non-Metal Fangcun Main concrete 1969 Zi Shipping Co., Components Road, Liwan No.0650169759 Ltd. And Electric District, Cables Guangzhou City
33 Yue Fang Di Guangzhou Armor Factory 40 South Masonry 1.00 2,081.65 January Quan Zheng Sui Shipyard Installation Fangcun Main concrete 1972 Zi Shipping Co., Workshop Road, Liwan No.0650170470 Ltd. District, Guangzhou City
34 Yue Fang Di Guangzhou Quality Factory 40 South Brick and 2.00 415.38 January Internal wall with Quan Zheng Sui Shipyard Control Fangcun Main concrete 1988 anti-radiation Zi Shipping Co., Department Road, Liwan treatment No.0650170474 Ltd. Exposure District, Chamber Guangzhou City
35 Yue Fang Di Guangzhou Ship Factory 40 South Masonry 1.00 1,319.20 December Quan Zheng Sui Shipyard Installation Fangcun Main concrete 1983 Zi Shipping Co., Phase Road, Liwan No.0650170477 Ltd. Workshop District, Guangzhou City
36 Yue Fang Di Guangzhou New Pressure Factory 40 South Masonry 1.00 2,691.30 December Quan Zheng Sui Shipyard Vessel Fangcun Main concrete 1988 Zi Shipping Co., Workshop Road, Liwan No.0650169762 Ltd. District, Guangzhou City
37 Yue Fang Di Guangzhou Large-size Factory 40 South Steel 1.00 2,964.23 December High requirement Quan Zheng Sui Shipyard Components Fangcun Main structure 1993 for fire prevention, Zi Shipping Co., Processing Road, Liwan with heat insulated No.0650169798 Ltd. Workshop District, rooftop and a Guangzhou City number of crane rails
38 Yue Fang Di Guangzhou West Planned 40 South Masonry 6 7,505.76 December Quan Zheng Sui Shipyard Restaurant and restaurant Fangcun Main concrete (partial)/3 1993 Zi Shipping Co., Office and Road, Liwan No.0650170469 Ltd. library, District, actual Guangzhou City office
39 Yue Fang Di Guangzhou New Planned 40 South Masonry 4.00 2,933.00 December Area shown on Quan Zheng Sui Shipyard Measurement factory, Fangcun Main concrete 1994 certificate is 997.86 Zi Shipping Co., Center actual Road, Liwan square meters, No.0650169700 Ltd. office District, extended area of Guangzhou City 1,935.14 square meters without certificate
40 Yue Fang Di Guangzhou New Office Planned 40 South Masonry 7.00 3,113.68 December Area shown on Quan Zheng Sui Shipyard Building of factory, Fangcun Main concrete 1993 certificate is Zi Shipping Co., Shipbuilding actual Road, Liwan 2,629.29 square No.0650169704 Ltd. Department office District, meters, extended Guangzhou City area of 484.39 square meters
– III-33 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
41 Yue Fang Di Guangzhou Phase Painting Factory 40 South Steel 4 3,946.57 January Wall and ceiling Quan Zheng Sui Shipyard Workshop Fangcun Main structure (partial)/1 1996 with steel plate Zi Shipping Co., Road, Liwan sandwiched fire No.0650169741 Ltd. District, retardant padding. Guangzhou City As spraying would damage the wall and ceiling, requirements for fire resistance and steel plate are high
42 Yue Fang Di Guangzhou Carparks and Carpark 40 South Masonry 2.00 2,473.86 September Quan Zheng Sui Shipyard Firefighting Fangcun Main concrete 1994 Zi Shipping Co., Building Road, Liwan No.0650169743 Ltd. District, Guangzhou City
43 Yue Fang Di Guangzhou New Transformer 40 South Masonry 2.00 562.35 January Including facility Quan Zheng Sui Shipyard Transformer room Fangcun Main concrete 1992 foundation Zi Shipping Co., Substation no. Road, Liwan No.0650169758 Ltd. 1 District, Guangzhou City
44 Yue Fang Di Guangzhou 6OHZ Power Power 40 South Masonry 2.00 542.14 January Including facility Quan Zheng Sui Shipyard Station station Fangcun Main concrete 1992 foundation Zi Shipping Co., Road, Liwan No.0650169760 Ltd. District, Guangzhou City
45 Yue Fang Di Guangzhou Dock Winch Factory 40 South Masonry 4.00 1,366.71 December Area shown on Quan Zheng Sui Shipyard and Fangcun Main concrete 1993 property certificate Zi Shipping Co., Scheduling Road, Liwan is 2,050.06 square No.0650170471 Ltd. Room District, meters, demolished Guangzhou City are is 683.35 square meters
46 Yue Fang Di Guangzhou Fitting Units Workshop 40 South Steel 1.00 1,837.67 December Alteration made Quan Zheng Sui Shipyard Installation Fangcun Main structure 1993 Zi Shipping Co., Workshop Road, Liwan No.0650169578 Ltd. District, Guangzhou City
47 Yue Fang Di Guangzhou Chemicals Materials 40 South Masonry 2.00 674.82 March Quan Zheng Sui Shipyard Warehouse warehouse Fangcun Main concrete 1994 Zi Shipping Co., Road, Liwan No.0650169980 Ltd. District, Guangzhou City
48 Yue Fang Di Guangzhou Paints Paints 40 South Masonry 1.00 1,263.36 January Quan Zheng Sui Shipyard Warehouse warehouse Fangcun Main concrete 1997 Zi Shipping Co., Road, Liwan No.0650170001 Ltd. District, Guangzhou City
49 Yue Fang Di Guangzhou Gas Station Gas station 40 South Masonry 1.00 88.52 March Two oil tanks Quan Zheng Sui Shipyard Fangcun Main concrete 1998 underground of Zi Shipping Co., Road, Liwan diameter 2.6 m and No.0650170004 Ltd. District, length 12 m Guangzhou City
– III-34 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
50 Yue Fang Di Guangzhou New Pipe Factory 40 South Steel 1.00 8,461.37 December Quan Zheng Sui Shipyard Processing Fangcun Main structure 1992 Zi Shipping Co., Workshop Road, Liwan No.0650170498 Ltd. District, Guangzhou City
51 Yue Fang Di Guangzhou Electrical Warehouse 40 South Masonry 5.00 6,184.37 January Quan Zheng Sui Shipyard Equipment Fangcun Main concrete 1995 Zi Shipping Co., Warehouse Road, Liwan No.0650170021 Ltd. District, Guangzhou City
52 Yue Fang Di Guangzhou Elevator Workshop 40 South Steel 1.00 3,876.77 October Quan Zheng Sui Shipyard Workshop Fangcun Main structure 2003 Zi Shipping Co., Road, Liwan No.0650169863 Ltd. District, Guangzhou City
53 Yue Fang Di Guangzhou Design and Office 40 South Masonry 4.00 10,130.60 July 2005 Carrying value Quan Zheng Sui Shipyard Calibration Fangcun Main concrete includes part of the Zi Shipping Co., Building Road, Liwan value of BA001608 No.0650170320 Ltd. District, Guangzhou City
54 Nil Nil Welding Rod Production 40 South Masonry 1.00 471.81 January Warehouse Fangcun Main concrete 1972 Road, Liwan District, Guangzhou City
55 Nil Nil New Production 40 South Masonry 1.00 86.50 October Now changed to Transformer Fangcun Main concrete 1994 team room Substation no. Road, Liwan 10 District, Guangzhou City
56 Nil Nil Security Room Auxiliary 40 South Masonry 1.00 25.20 June 1998 Carrying value at North Gate Fangcun Main concrete includes monitoring Road, Liwan system District, Guangzhou City
57 Nil Nil Carpark of Auxiliary 40 South Masonry 4.00 4,800.00 December Part of carrying Design and Fangcun Main concrete 2008 value included in Calibration Road, Liwan asset no Building District, Guangzhou City
58 Nil Nil Toilets (4) Auxiliary 40 South Brick and 1.00 48.38 June 1998 Fangcun Main concrete Road, Liwan District, Guangzhou City
59 Nil Nil Environmental Auxiliary 40 South Brick and 1.00 10.11 September COD Fangcun Main concrete 2003 Monitoring Road, Liwan Room of Oil District, Tanks Guangzhou City
– III-35 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
60 Nil Nil Security Room Auxiliary 40 South Brick and 1.00 17.95 December of Oil Tanks Fangcun Main concrete 2006 Road, Liwan District, Guangzhou City
61 Nil Nil Simple Sand Production 40 South Steel 1.00 1,356.00 October Shed of Pier Fangcun Main structure 1998 12 Road, Liwan District, Guangzhou City
62 Nil Nil Simple Production 40 South Steel 1.00 768.30 June 2004 Workshop for Fangcun Main structure Heavy Road, Liwan Engineering District, Guangzhou City
63 Nil Nil Security Post Auxiliary 40 South Brick and 1.00 25.00 May 2002 Including door at East Gate Fangcun Main concrete Road, Liwan District, Guangzhou City
64 Nil Nil Old Phase Production 40 South Masonry 1.00 6,294.00 November Wall and ceiling Painting Fangcun Main concrete 2009 with steel plate Workshop Road, Liwan sandwiched fire District, retardant padding. Guangzhou City As spraying would damage the wall and ceiling, requirements for fire resistance and steel plate are high, case
65 Nil Nil Restaurant Production 40 South Masonry 2.00 80.00 November With sewage Waste Water Fangcun Main concrete 2009 treatment pool and Gas Road, Liwan underground Treatment District, Station Guangzhou City
66 Nil Nil Air Production 40 South Masonry 3.00 1,282.50 November Auxiliary water Compressor Fangcun Main concrete 2009 pool included and Electric Road, Liwan Room of District, Painting Guangzhou City Workshop
67 Nil Nil Electrical Production 40 South Masonry 5.00 12,398.00 December Equipment Fangcun Main concrete 2009 Distribution Road, Liwan Center District, Guangzhou City
68 Nil Nil Main Office 40 South Masonry 5.00 4,425.00 December Five-story Fangcun Main concrete 2009 Composite Road, Liwan Office District, Building Guangzhou City
– III-36 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
69 Nil Nil New Production 40 South Masonry 2.00 256.00 March Transformer Fangcun Main concrete 2010 Substation no. Road, Liwan 2 District, Guangzhou City
70 Nil Nil Infrastructure Auxiliary 40 South Brick and 3.00 264.00 November Some expenses not Design Fangcun Main concrete 2008 yet booked Building Road, Liwan District, Guangzhou City
71 Nil Nil Transformer Production 40 South Masonry 2.00 98.40 June 2009 Carrying value Substation no. Fangcun Main concrete includes equipment 4 High Road, Liwan charges Voltage Room District, Guangzhou City
72 Nil Nil Welding Rod Production 40 South Brick and 1.00 48.50 December Room at south Fangcun Main concrete 2009 of Main Dock Road, Liwan District, Guangzhou City
73 Nil Nil Large-size Production 40 South Steel 1.00 3,078.00 December Wall and ceiling Equipment Fangcun Main structure 2012 with steel plate Processing Road, Liwan sandwiched fire Workshop District, retardant padding Guangzhou City
74 Nil Nil Hilltop Steel Production 40 South Steel 1.00 210.00 November With gas storage Plate Fangcun Main structure 2012 tank and auxiliary Warehouse Road, Liwan trenches No. 2 District, Guangzhou City
75 Nil Nil Office of Steel Office 40 South Masonry 2.00 119.58 January Plate Factory Fangcun Main concrete 1995 Road, Liwan District, Guangzhou City
76 Nil Nil Rooms for Auxiliary 40 South Simple 1.00 74.40 January High foundation Processing and Fangcun Main 2011 cost due toa3m Manufacturing Road, Liwan rubble foundation Team District, Guangzhou City
77 Nil Nil Security Room Auxiliary 40 South Brick and 1.00 37.50 April 1999 Including door and at Main Gate Fangcun Main concrete wall for image Road, Liwan District, Guangzhou City
Total 169,719.58
③ Status of infrastructure
Based on site investigation, the subject of valuation was in a mostly regular shape, with flat land and a strong geological carrying capacity within the land parcel. As at the Reference Day, the development progress of the land parcel was “five connections” (road, electricity, feed water, down water
– III-37 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
and communications) outside the red line of land parcel and “five connections” (road, electricity, feed water, down water and communications) and flat land within the red line of land parcel.
Details of the infrastructure outside the land parcel are as follows:
Road: The subject of valuation is along Fangcun Main Road;
Electricity: Electricity is supplied by local electricity companies and State Grid with high availability;
Communications: Connected to fixed telephone lines and can receive mobile communication signals;
Feed water: Supply of municipal water available within the land parcel;
Down water: Drainage of water within the land parcel;
Details of the infrastructure within the land parcel are as follows:
Road: Roads available within the land parcel of the subject of valuation;
Electricity: Electricity is supplied by local electricity companies and State Grid with high availability;
Communications: Connected to fixed telephone lines and can receive mobile communication signals;
Feed water: Supply of municipal water available within the land parcel;
Down water: Drainage of water within the land parcel;
Status of site levelling: Flat land.
④ Location
The subject of valuation is located in 40 South Fangcun Main Road, Liwan District, Guangzhou. Four boundaries of the land parcel: Pearl River to east, land of CSSC Offshore & Marine Engineering (Group) Company Limited to south, Fangcun Main Road to west, and Oil Tank No.4 of Guangdong Province Petroleum Company to north.
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2. Status of interests in the subject of valuation
(1) Land ownership of the subject of valuation: The subject of valuation was owned by the State as at the base date of valuation. Pursuant to the “Confirmation Letter in relation to the ownership of buildings and land of CSSC Offshore & Marine Engineering (Group) Company Limited and Guangzhou Shipyard Shipping Co., Ltd.” and “Legal opinion” issued by SG & Co, Shanghai, there is no dispute concerning the ownership of the appraised parcel belongs to Guangzhou Shipyard Shipping Co., Ltd..
(2) Land use right of the subject of valuation: According to the real estate certificate, the land user of the subject of valuation is Guangzhou Shipyard Shipping Co., Ltd. and the type of land use right is land use right of state-owned land obtained through grant.
(3) Encumbrances for the land: As at the base date of valuation, the subject of valuation was not subject to any encumbrances such as mortgage, guarantee and easement.
(II) Location factor analysis
1. Location overview
Liwan District is a district of Guangzhou located in the west of Guangzhou, Guangdong Province, with Yuexiu District in the east, connecting to Baiyun District in both water and land in the north and northwest, and bordering Nanhai District of Foshan City in the west.
Liwan, commonly known as “Xiguan”, was named because of a litchi bay in the area which is “a green bay with red litchi on both sides”. It is well-known for Xiguan, Litchi Bay and beautiful rivers and fragrant flowers, enjoys a reputation that “One must go to Guangzhou to experience the culture of south China, and cannot say he has been to Guangzhou unless he has visited Liwan”, and is one of the three old districts in Guangzhou. Early in the Ming Dynasty, it was already an important port where China did business and exchanged culture with foreign countries. In the Qing Dynasty, it had been the only port for foreign trade for over a hundred years and was home to The Thirteen Factories, a renowned commercial port.
Liwan District is a central area of Guangzhou and the core area of Guangzhou-Foshan metropolis area, and has three important business areas including “one street, two roads”, as well as three commercial zones being Shangjiu and Xiajiu commercial pedestrian malls, Kangwang Road, Zhongshan 7th Road and Zhongshan 8th Road.
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2. Accessibility
Liwan is located in the west of Guangzhou, China’s 3rd largest city, and is one of the prosperous downtown areas and eight old districts in Guangzhou. Situated on the east and north banks of the Pearl River, it enjoys great accessibility, bordering the railway station and Baiyun Airport in the north, Renmin Bridge and the Pearl River Tunnel in the south connecting both banks of the Pearl River, the Pearl River Bridge connecting to Nanhai and Foshan in the west, Guangzhou Goods Transport South Station of Beijing-Guangzhou Railway and Xinfeng Operation Wharf of Guangzhou Port in the southwest. National Highway No. 107 and Guangzhou-Foshan Expressway connect it to Guangzhou-Shenzhen Expressway and Hong Kong. Guangzhou Metro Line 1 and Inner Ring Elevated Road pass through the whole district, forming a three-dimensional water, land and aerial transport network and enabling Liwan District to enjoy a great, unique location and a vital business area. Liwan District enjoys a good accessibility in general.
3. Status of infrastructure
Liwan District receives mainly municipal water supply and is planning to establish a multiple water source protection system and a sound emergency backup water supply system to ensure water supply. It has implemented reform for separation of rain and polluted water to safeguard drainage. Liwan Electricity Supply Bureau meets the demand of enterprises for supply of high-quality electricity and services and plays an important role in protecting the development of local economy. Communications are connected to municipal communications network in the area. Weak current overhead lines for communications, television and video monitoring have been laid underground along a number of arterial roads and the communication lines are good in general.
4. Environment
(1) Natural environment
Situated in the west of Guangzhou and to the south of the tropic of Cancer, Liwan District belongs to the south subtropics and has a typical subtropical maritime monsoon climate. Facing both mountains and ocean, it has a typical maritime climate, featured by warmness, being rainy, sufficient sunshine, long summer and short frost period. It has an average temperature of 21.4 to 21.8 degree Celsius, with temperatures above zero degree Celsius throughout the year. It has a 290-day frost-free period in the north and a 346-day frost-free period in the south and enjoys a good natural environment.
(2) Cultural environment
Liwan District enjoys a good cultural environment. As for the culture, Liwan has the “First place in the west” for Zen Damour, “Renwei Ancestral Temple”, a Taoism temple with a history of over 1,000 years, “Huaiyuan Post”, a foreign
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trade administration in the Ming Dynasty, and “Chen Family Shrine”, an important national historical monument under special preservation and a treasury of architectural art in South China.
As for distinguished figures, among them are Deng Huaxi, a junior guardian of princess in the Qing Dynasty, Kang Youwei, the leader of the Constitutional Reform and Modernization, He Xiangning, a notable revolutionary activist, Zhou Wenyong, one of the leaders of the Guangzhou Uprising.
5. Concentration of industries
In early years there were many industrial enterprises in Liwan District including Fangcun Industrial Park, Hedong Industrial Park and Dongsha Industrial Park. With the acceleration of renovation of old towns, plants and villages in Guangzhou and the development of Guangzhou, many large industrial enterprises successively relocated out of the district. The existing industrial enterprises in the district are mainly shipbuilding enterprises along the banks of the Pearl River. Traditional industry in the history of Liwan District is not industry but commercial trade. With the development of the city, commercial trade recorded a growth much faster than industry did. As such, the industry concentration is relatively low in Liwan District.
6. Restrictions on planning
The land parcel valued is located in an area where industries are restricted. The existing industrial enterprises have begun to relocate and the planning uses of land in the area are mainly commercial and residential uses. The area enjoys a promising prospect in planning.
In view of the above analysis, Liwan District enjoys a unique geographic advantage. While industrial enterprises relocate out of the area, commerce, residential properties, service industries and trade industry grew fast and infrastructure continued to improve. The location factor has a positive effect on the land price in general and is conducive to the maintenance and appreciation of land value.
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(III) Market Background Analysis
(1) Property regulations
Date Policy name Content
2013.2.20 Executive meeting of the 1. Improve the responsibility system State Council: Five policies for the stabilization of the and measures were housing prices. introduced to enhance 2. Resolutely curb speculative regulation of the property investment buyers. market, being “Five 3. Increase ordinary commodity National Measures” housing and land supply. 4. Accelerate the planning and construction of the affordable housing projects. 5. Strengthen market supervision.
2013.3.1 General office of the State Accelerating the implementation of an Council: Circular on Keep enduring and effective mechanism to up the Regulatory Work of guide the healthy development of the the Real Estate Market（關於 real estate market. Various departments 繼續做好房地產市場調控工作 shall strengthen basic work, accelerate 的通知）, being “Detailed the establishment of a sound housing Rules of Five National supply system, thinking and policy Measures”. framework for the operation of the property market and supervision mechanism, promote the real estate taxation system reform, improve the housing finance system and housing land supply mechanism, advance housing industrialization, and support the sustainable and healthy development of the property market.
2013.3.28 General office of the State It specifically states that the Council: Plan for the Regulation on Real Estate Registration Institutional Restructuring of shall be introduced by the end of June the State Council and 2014 and a real estate registration Transformation of Functions system shall be implemented. The （國務院機構改革和職能轉變方 relevant departments including the 案） Ministry of Land and Resources, the Ministry of Housing Urban-Rural Development, the Legislative Affairs Office and the State Administration of Taxation shall be jointly responsible for the work.
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Date Policy name Content
2013.4.9 Ministry of Housing It requires to accelerate the Urban-Rural Development: achievement of annual construction Circular on the Urban objectives. The goal is that in 2013, Affordable Housing Project 4.7 million government-subsidized Work in 2013（關於做好2013 urban affordable housing units should 年城鎮保障性安居工程工作的 be basically completed and 通知） construction of another 6.3 million units should begin.
2013.6.26 The Standing Committee Xu Shaoshi, director of the National listened to the State Development and Reform Commission, Council’s Report on the said that the government shall establish Urbanization Construction a housing system combining Work market-driven quota and government subsidies. The government shall fully remove the restrictions on obtaining residence in small towns and cities, orderly relax the restrictions on obtaining residence in medium-sized cities, gradually loosen the restrictions on obtaining residence in large cities, set reasonable restrictions on obtaining residence in metropolises, and gradually transform rural transfer population meeting conditions into urban residents.
2013.7.9 The State Administration for The circular requires that greater Industry and Commerce and efforts shall be made in cracking down the Ministry of Housing on real estate agencies and brokers Urban-Rural Development whose behaviours are in violation of jointly issued a circular, laws and regulations. They shall be requiring vigorous efforts to forced to make corrections within the be made in fighting ten prescribed period and their behaviours behaviours of real estate will be kept in their credit record. agencies which violate laws Those who refuse to make corrections and regulations. or whose behaviours have grave consequences shall be subject to revocation of qualification of real estate agencies for online agreement signing and fines, and the taxation and price departments will be notified of such situation. Relevant brokers will be fined legally.
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Date Policy name Content
2013.7.12 Ministry of Housing Policies on tax relief and exemption Urban-Rural Development: shall be implemented and the scope of Explanations for the application of tax benefit policies for Opinions of the State resettlement housing in shanty areas Council on Accelerating the shall be extended. Redevelopment of Shanty Areas（國務院關於加快棚戶區 改造工作的意見）
2013.11.22 The General Office of the i. They shall have a correct Ministry of Land and knowledge of the serious harms Resources and the Ministry of the issues on properties with of Housing Urban-Rural “Small Property Rights”. Development jointly promulgated the Urgent ii. They shall resolutely punish the Notice on Resolutely construction and sale of Curbing Illegal Construction properties with “Small Property and Sale of Housing with Rights”. “Small Property Rights”（關 於堅决遏制違法建設、銷售” iii. They shall effectively fulfil 小產權房”的緊急通知）, supervision and administration requesting local duties. governments to resolutely crack down on the construction and sale of properties with “Small Property Rights”.
(2) Property market
Throughout 2013, trading of residential properties showed a relative balance of demand and supply in all regions in the city, as trading in the market was affected by government regulation. From the prospective of the area of presold commodity residential properties in the ten districts and two cities in Guangzhou, the overall supply was mainly concentrated in the fourth quarter and in Zengcheng, Huadu, Panyu and Nansha districts, which together accounted for 68% of the total supply.
From the prospective of market absorption, save for Luogang and Nansha districts which had relatively low absorption rates, other areas all showed a situation of supply lower than or close to demand. Mainly as a result of oversupply of properties, Luogang and Nansha districts had relatively low absorption rates of 68% and 83%, respectively, facing great selling pressure in the future. Yuexiu and Zengcheng districts showed a relatively balanced supply and demand.
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As for trading in various areas in Guangzhou, four suburban districts and two cities together accounted for 81% of total trading volume in Guangzhou, and six central districts accounted for only 29%. Trading volume in Zengcheng, Huadu and Panyu were the highest, amounting to 2,640,000 sq.m., 1,830,000 sq.m. and 1,650,000 sq.m., respectively. In central area, Baiyun District recorded the highest trading volume of 640,000 sq.m..
In terms of trading value, the areas with highest trading volume also recorded highest trading value. Panyu, Zengcheng and Huadu accounted for 18%, 15% and 12%, respectively, of total trading value in Guangzhou. Luogang District recorded the highest year-on-year growth of trading value of 64%, as a result of the favourable overall planning for Luogang District and the considerable increase in trading in adjacent Tianhe District.
In terms of average trading price, all areas in Guangzhou recorded month-on-month price increase. The high trading volume and lower trading price in Zengcheng and Huadu resulted in lower average trading price in Guangzhou.
In 2013, the overall property market in Guangzhou went through four stages including rushing for sale stage, gaming stage, golden stage and turning stage, and the overall downward market trend had taken shape. On the other side, according to Yang Guang Jia Yuan under Netease, all the ten districts and two cities in Guangzhou recorded increases in prices of residential properties to various extents, ranging from 4% to 26% varying from area to area. Amid the widespread “double contracts”, Guangzhou Municipal Government “accomplished” its annual regulation objectives with difficulty. In addition, the overall average trading price was lowered a result of high trading volume and low trading price in non-central areas. Excluding such effect, the objective of controlling the increase in prices of residential properties was not met in fact. Furthermore, the stock in Guangzhou’s property market was relatively normal and developers would not face huge pressure in destocking. There is a high probability that the prices of residential properties in Guangzhou would remain stable.
In the primary residential property market in Guangzhou, trading volume from January to February 2014 was 838,000 sq.m., representing a year-on-year decrease of 43.7%, while trading price continued to increase by 12.5% year-on-year.
In February 2014, the administrative ranking of Zengcheng and Conghua were changed from cities to districts, resulting in changes in the trading structure.
From January to February 2014, total trading volume in six central districts of Guangzhou amounted to 224,000 sq.m., with monthly trading volume decreasing year-on-year by 48.0%, and the average trading price was RMB25,847/sq.m., representing a decrease of 4.4% from the last quarter. During the same period, total trading volume in four suburban districts of Guangzhou amounted to 613,700 sq.m., with monthly trading volume decreasing year-on-year by 41.9%, and the average trading price was RMB13,577/sq.m., representing an increase of 17.5%.
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(3) Land system
In 2012, China’s goal of land supply policies was to adhere to its property regulation policies with their direction unchanged, attitude unswayed and strength unrelaxed, to strive for the steady operation of the land market, and to avoid significant fluctuations in the total volume, structure and price of land supply while promoting reasonable decrease in property prices.
In 2012, the land policies will focus on continuing to strictly implement the central government’s various regulation policies and measures, making greater efforts in supervision and regulation, consolidating existing regulation results, and promoting reasonable decrease in property prices. The government will continue to ensure land supply by focusing on supply of government-subsidized affordable housing project land, strive to maintain the steady operation of land market and avoid significant fluctuations in the total volume, structure and price of land supply, and guide market expectations in a reasonable manner. It will continue to enhance supervision of land supplied for residential properties by concentrating on effective supply of residential properties, strengthen dynamic monitoring and supervision of land supplied for residential properties, strictly urging the commencement and completion of construction as agreed, timely identifying and handling idle land, and resolutely cracking down on illegal transfer of land use rights.
In 2013, Guangzhou government issued the Opinions on Economical and Intensive Use of Land in Guangzhou, which cover all links in the whole process from land use application, land supply, land development, cultivated land requisition-compensation balance, to punish illegal land uses and play an important role in the regulated, transparent and efficient use of land. The government revised the industrial land use guide by imposing quantified appraisal and admission of industrial land, social cause land and infrastructure land, establishing land use standards that match industrial transformation and focus on both encouragement and restraints, and organised quantified appraisal of economical and intensive use of land in all districts (and county-level counties) for the first time. It drafted beautiful countryside construction land protection polices and rural land comprehensive treatment policies, and prepared village land use planning in accordance with the principle of “reducing total volume and optimising structure”.
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Summary of national land policies in 2013
Date Policy name Content
2013.1.28 The Ministry of Land and According to the outline of planning, Resources announced the by 2020, China’s land development Outline of China’s Land will form a “two-horizontal, Planning (2013-2030)（全國 three-vertical” strategic urban network 國土規劃綱要（2013-2030年）） mainly consisting of as approved by the State Lianyungang-Lanzhou Railway, Council. Riverside and Coastal Railways, Beijing-Harbin Railway, Beijing-Guangzhou Railway and Baotou-Kunming Railway.
2013.2.1 The Central Committee of It provides that the government shall the Chinese Communist improve the measures for land Party and the State Council: requisition compensation, determine Several Opinions on reasonable compensation standards, Accelerating the restrain land requisition, and the Development of Modern applications for land requisition for Agriculture and Further which the compensation has not been Strengthening the Vigorous made shall not be approved. Development of Rural Areas （關於加快發展現代農業進一步 增强農村發展活力的若干意見）.
2013.6. 5 General office of the State It provides that the relevant Council: Program for the departments shall strengthen the Division of Work for Key further division of work relating to the Departments Engaged in establishment of a modern distribution Deepening Distribution system and comprehensive System Reforms and improvement in information Accelerating the distribution and accelerate the adoption Development of the of detailed implementation measures. It Distribution Industry（深化流 specifically requires that greater 通體制改革加快流通產業發展 support shall be provided to land for 重點工作部門分工方案） use in the distribution industry but prohibits occupying land in the name of construction of logistics centres or commodities distribution centres to avoid idle land.
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Date Policy name Content
2013.7.22 The Ministry of Land and The work for the establishment of Resources held a meeting ownership, registration and issuance of for the update on the certificates for collectively-owned land progress of establishment of in rural areas of China had been ownership, registration and substantially completed. In the future, issuance of certificates for the government will start to make collectively-owned land in preparations for the uniformed rural areas of China registration of real estate.
(4) Land market
In 2014, Guangzhou’s land market experienced a course of ups and downs, like riding on a rollercoaster.
From January to February 2014, land trading was hectic in Guangzhou. By the middle of the year, however, the property market was at its lowest, and many land auctions failed. By September 2014, the government’s revenue from land during the year amounted to only 55% of its annual target. As a result of successful transfer of several huge land parcels in the central area at the end of the year, Guangzhou exceeded the target. In 2014, Guangzhou’s land trading value was approximately RMB84.4 billion, representing a significant increase of 35.91% from RMB62.1 billion of last year.
According to the website of Guangzhou Municipal Land Resources and Housing Administrative Bureau, in 2014, a total of 152 parcels of land were proposed for transfer through tender, auction and listing-for-sale in Guangzhou and 122 parcels of land were successfully transferred with a total land area of 7,090,000 sq.m. and a total trading value of RMB84.38 billion. It exceeded the transfer target by RMB4.4 billion and represented a significant increase of 35.91% from RMB62.1 billion of last year.
Successful trading were concentrated in six central districts. In particular, Guanggang New Town in Liwan District and Huamei Milk Plant in the Olympic Sports Guangdan in Tianhe District were the biggest land transactions in the land market in the year. Revenue from land premium in the two districts in 2014 amounted to RMB20.9 billion and RMB17.3 billion, respectively, ranking the 1st and 2nd, respectively, in Guangzhou.
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Land transfers in Guangzhou in 2014 Number of Trading land parcels value (in proposed to No. of Renminbi be No. of failed terminated ten Nature transferred transactions transactions thousand)
Residential 43 9 7 7061534 Commercial 22 3 4 1146959 Industrial 52 2 5 167775 Others 5 0 0 32397.5 Total 122 14 16 8438666
Source: Guangzhou Municipal Land Resources and Housing Administrative Bureau
Major developers have always wanted to enter the 1st tier cities. In 2014, Guangzhou’s land auctions attracted many external property developers such as “Financial Street”, “Beihu”, “Beida Resources” and “Shen Zhenye” which intended to establish their presence in Guangzhou.
It is reported that external developers obtained 17 parcels of resident land, representing approximately 50% of total trading in 2014. The average land price for external developers was RMB14,333/sq.m., 38% higher than that for local developers of RMB10,309/sq.m.
It is worth noting that Financial Street, which is new to Guangzhou’s market, obtained the highest number of land parcels, including three parcels of land in Guanggang New Town and a parcel of land at Chang Ling Ju, Luogang District at a total of RMB5.995 billion. These projects are expected to be introduced in the market in the second half of the year.
Beida Resources also entered Guangzhou this year and obtained a parcel of land in Guanggang New Town at RMB1.37 billion. So was Shen Zhenye, which spent RMB2.03 billion in obtaining a parcel of land in Guanggang New Town. Longfor Properties was also new and obtained parcels of land in Guanggang New Town at RMB3.78 billion.
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Property developers in Guangzhou in 2014
Top 10 by number of land Top 10 by value of land parcels obtained acquired Number of Value (in land parcels Renminbi ten Rank Developer obtained Rank Developer thousand)
1 Poly 4.5 1 China Overseas 1154047 2 China Overseas 4 2 Poly 754983 3 Financial 3.5 3 Yuexiu 645071 Street 4 Country 3 4 Financial 599528 Garden Street Huafa 3 5 Huafa 463062 5 China 2 6 Guangdian 445675 Resources Group Longfor 2 7 Longfor 378000 Ping’an 2 8 City 307500 Construction Investment Wanda 2 9 Pearl River 307500 Industry Zhongtai 2 10 China 30200 Resources
(5) Industrial land market
In 2013, 51 parcels of industrial land were transferred in Guangzhou, mainly concentrated in non-central areas including Huangpu, Panyu and Nansha. The industrial land transferred had a total area of 1,992,986 sq.m. and a total transfer value of RMB1,687,200,000. There will be steady supply of industrial land.
Guangzhou government issued the Opinions on Improving the Efficiency of Use of Industrial Land in Guangzhou to seek feedback, which propose the flexible transfer of industrial land, whereby a flexible term of land transfer may be determined in view of the type of industries and their life cycles, and upon the expiry of the initial term of transfer the operation of projects and the performance of transfer contracts will be reviewed before renewal for a fee or revocation of the land use rights, as applicable.
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(IV) Analysis of Maximum and Best Utilization
Maximum and best utilization was the most possible utilization of the appraisal object, which was legally permitted, technically possible, financially feasible and was determined adequate and reasonable following discussion and study. Such utilization maximized the value of the appraisal object. The maximum and best utilization principle aimed to illustrate that the appraisal of real estate was made under the premise of maximum and best utilization.
The analysis of maximum and best utilization reflected truly the objectivity of the appraisal. The standard of measurement and judgement of whether the appraised real estate was under maximum and best utilization was mainly as follows:
(I) Legal permission (permitted by planning and related policies and regulations), that was, not limited by the status of existing use, and the real estate shall be appraised based on its possible optimal use in accordance with laws and regulations and the direction of planning and development.
(II) Technical possibility, that was, the appraisal shall not regard utilization which cannot be achieved technically as the maximum and best utilization. The real estate shall be appraised according to technical requirements of building construction.
(III) Economical feasibility, that was, among various possible utilization manners, the valuation price shall be determined in a utilization manner of maximizing income by limited economic contribution.
(IV) Balance between land and buildings, that was, the optimal utilization was determined by whether the balance of the internal components of the real estate portfolio could be achieved, meaning factors such as whether the buildings matched the location of land and the investment intensity were considered during the appraisal.
(V) Coordination of real estate with its surrounding environment, that was, whether the real estate was balanced or coordinated with its external environment. The appraisal was not based on the original purpose of usage, but on the new purpose of usage which was determined by the best utilization of the most external economic benefits that could be obtained through the real estate’s coordination with its surrounding environment.
(VI) Sustainable development, that was, to appraise not only by researching on the past and present price situation but also by researching on the present situation and the development trend of the real estate market, as well as the impact of political and economic situation and policy changes on the real estate, in order to predict future price and the trend of income changes.
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If the appraised object was already in certain uses, the appraisal shall be made according to the maximum and best utilization principle and by making one of the following judgments and choices on valuation premises, which shall be explained in the valuation report:
(1) The premise of maintaining the status quo: when the continual usage (maintaining the status quo) of the appraised object was deemed to be the most beneficial, it shall be appraised with the premise of maintaining the status quo;
(2) The premise of usage conversion: when the conversion of usage of the appraised object was deemed to be the most beneficial, it shall be appraised with the premise of usage conversion;
(3) The premise of revamping: when revamping of the appraised object while maintaining its usage was deemed to be the most beneficial, it shall be appraised with the premise of revamping without conversion of usage;
(4) The premise of reuse: when reusing after demolishing the existing buildings was deemed to be the most beneficial, it shall be appraised with the premise of reusing after demolishing the existing buildings;
(5) Combination of the aforesaid.
Based on the purpose of the appraisal and the information provided by the entrusting party, the valuer believed that although the intensity of land use of the land parcel valued was not high, it met that of the shipbuilding enterprises’ in general, as well as the maximum and best utilization of shipbuilding enterprises. Therefore, under the current approved uses, the premise of maintaining the status quo shall be used for the appraisal and shall be in line with the maximum and best utilization conditions of real estate.
(V) Methodology of valuation
The approach to appraise the land use right of the subject of valuation is selected through analysis of the land market where the subject of valuation is located and the information collected by land valuers in view of the features, conditions and realities of the subject of valuation and in accordance with the Regulations for Valuation on Urban Land.
1. Methods not applicable
(1) The subject of valuation is currently used as industrial land, mainly for shipbuilding. Given there are few similar lease cases, the income approach is not applicable in this valuation.
(2) The land parcel valued is industrial land on which construction is completed and production commenced, rather than land to be developed, and there is lack of market transaction cases of buildings and structures similar to the
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subject of valuation in the area of the land parcel valued, it is impracticable to determine reasonable total price of properties. The residual approach is not applicable.
(3) The cost approach is generally applicable to undeveloped land market where there are few land transaction cases and it is infeasible to conduct valuation using the market comparison approach. Furthermore, it is hard to take into consideration the usefulness of land and market demand using the cost approach, which has flaws and restrictions and is generally not applicable to the valuation of land in established urban areas. The subject of valuation is located in an established urban area, and the cost of land requisition in suburban areas cannot reflect the cost of land acquisition. Besides, demolition cases in established urban areas relate to the demolition of industrial facilities to build commercial or residential properties or the renovation of shanty areas into residential communities or commercial complexes and the demolition cost cannot reflect the cost of land acquisition either. As such, the cost approach is not applicable in this valuation.
2. Applicable methods
(1) In accordance with the Regulations for Valuation on Urban Land, benchmark land price factor correction approach, market comparison approach, cost approach, income approach and residual approach can be used in the valuation of industrial land. As neither of cost approach, income approach or residual approach is applicable, the valuers can use only the market comparison approach, in addition to the benchmark land price factor correction approach. Through market investigation, the valuers learned that there were rare cases of industrial land transactions in the area of the land parcel valued and only two industrial land transaction cases were identified in the same area. In order to meet the requirement of the market comparison approach on the number of valuation cases, the valuers extended the scope of selection to include a parcel of land that is similar to the land parcel valued as the third comparable case. The price of land use right of the subject of valuation can be determined through correction based on regional and individual factors. As such, the market comparison approach is applicable.
(2) As at the date of this valuation, new benchmark land price announced in Guangzhou had not taken effect and cannot be used in the valuation. Upon investigation, the benchmark land price as at the original base date, being 1 July 2010, is still somewhat applicable for the following reasons: (i) The base date of this valuation has been over 3 years since the date on which the benchmark land price in Guangzhou and its revision system was approved by Guangzhou municipal government for implementation. However, Guangzhou Municipal People’s Government has been applying the benchmark land price in the management of land price in the primary and secondary land markets, and the prices of tender, auction and listing-for-sale cases in the open market in Guangzhou are all subject to the benchmark land price and its revision
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system; (ii) Guangzhou has been included in the pilot dynamic monitoring of land prices by the Ministry of Land and Resources which reviews land prices of the areas monitored on a regular basis and announces land price indexes for various uses in the areas; and (iii) A relatively sound revision system has been established for the effects of the existing benchmark land price in Guangzhou on the land parcel and related corrections. Through a series of corrections such as those for base dates, location factors and individual factors, the price can be close to current market price. In view of the above reasons, the benchmark land price factor correction approach has been chosen as the second method in this valuation. It was not used as the basis for valuation and its results were used only to verify the results from the market comparison approach, however, due to its low accuracy of valuation.
In view of above, market comparison approach and benchmark land price factor correction approach were adopted in this valuation.
(VI) Appraisal Measurement Process
A. Benchmark land price factor correction approach
The benchmark land price factor correction approach is an approach to determine the price of the subject of valuation as at the base date of valuation by using the appraisal conclusion such as urban benchmark land price and benchmark land price correction factor table to compare the location and individual factors of the subject of valuation against the average level in the area in accordance with the principle of replacement and selecting appropriate correction factors from the correction factor table to make corrections to benchmark land price.
In simple terms, the government divides the land into a number of sections according to the actual situation of the land in an area, and sets an average price for each section according to the average conditions of the land in the area. In calculating the price of a particular land parcel, the valuation method used is to take the average price of the area where the land parcel is located as the base and make correction for factors affecting land price such as date, region and particular factors, plot ratio and remaining terms of land use rights with reference to the difference between the conditions of the particular land parcel and the average conditions of the area, so as to arrive at the price of the valued land parcel.
1. Introduction to benchmark land price and implications
In accordance with the Notice on Announcing Benchmark Land Price of Land Use Rights in Guangzhou City (Sui Guo Fang Zi [2011] No. 1318), benchmark land prices in Guangzhou are classified into those for commercial, general (office), residential and industrial land and are all in the form of network grid land price.
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The base date of the benchmark land price is 1 July 2010, which represents the price of cultivated land under normal market conditions and with progress of development of “five connections and one flat” (i.e. road, electricity supply, water supply, drainage and communications available outside the red line, and flat land within the red line) and a reasonable plot ratio, inclusive of land acquisitions fees (cost of land requisition and relocation and related taxation and expenses), land development fees and land use fees. The terms of the land use rights are 40 years for commercial land, 70 years for residential land, and 50 years for industrial and general (office) land. The benchmark land price of commercial land represents the price per square metre of first floor area; the benchmark land price of general (office) land represents the price per square metre of floor area in the area of the land parcel with a reasonable average plot ratio; and the benchmark land price of industrial land represents the price per square metre of land area in the area of the land parcel with a reasonable average plot ratio. The nit is RMB/sq.m. and the currency is Renminbi. The implications of benchmark land price in various areas are as follows:
Implications of benchmark land price
Liwan District, Yuexiu District, Tianhe District, Haizhu District, Baiyun District, Huangpu District and Panyu Nansha Huadu Region Luogang District District District District
Commercial Progress of land Five connections and one flat land development Average plot ratio Reasonable Price type Price per square metre of first floor area Residential, Progress of land Five connections and one flat general development (office) land Average plot ratio 2.7 1.8 1.8 1.8 Price type Price per square metre of floor area Industrial land Progress of land Five connections and one flat development Average plot ratio 1.0 Price type Price per square metre of land area
Notes:
1. Five connections and one flat: Water supply, drainage, electricity supply, communications and roads available and flat land;
2. The benchmark land price of general (office) is calculated based on 100% of the benchmark land price of residential land.
3. In accordance with the Notice on Announcing Benchmark Land Price of Land Use Rights in Guangzhou City (Sui Guo Fang Zi [2011] No. 1318), it is stipulated by the government that the average plot ratios for residential, general (office) land are set according to districts, with Panyu District 1.8, Nansha District 1.8, Huadu District 1.8 and the rest districts such as Liwan District 2.7 respectively. Such data is formulated by the government and announced to the society through the above documents.
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In accordance with the Benchmark Land Prices of State-owned Land Use Rights in Guangzhou, the formula of calculation of the appraised land price of the land parcel using the benchmark land price factor correction approach is as follows:
Land price per square metre of industrial land = (Benchmark land price at point of network grid + Benchmark land price at point of network grid × Area within the line of land parcel alongside river × Correction for location alongside
river ÷ Total land area) × K1 ×K2 ×K3 ×K4 ×K5 ×K6 ± Correction for development progress
Where: V – Price of the subject of valuation
K1 – Correction factor for base date
K2 – Correction factor for plot ratio
K3 – Correction factor for location factor affecting land price
K4 – Correction factor for individual factor affecting land price
K5 – Correction factor for term of land use rights
K6 – Correction factor for other factors
2. Benchmark land price correction system table for industrial land
(1) Correction for location alongside river
For land alongside the front and rear waterways on the Pearl River (Bai E Tan to Zhu Jiang Kou, Bai E Tan to Sha Bei Hai, Bai E Tan to Bai Sha He, Bai E Tan to Ya Ji Sha, Ya Ji Sha to Guanzhou Island, and Luoxi Island to Lijiao Waterway), Baisha River, Xi Hua Hai, Sha Bei Hai, Baini River, Bajiang River, Yagang River, Liuxi River, Sanzhixiang Waterway, Shiqiao Waterway, Lijiao Waterway and Shawan Waterway, the benchmark land price of land less than 50 metres from the line of land parcel shall be 30% higher except the land for commercial uses.
The formula is: Weighted land price of land parcel = land price at points of network grid of land parcel ×30% × Area of coastal land ÷ Total size of land parcel, where the area of coastal land = Length of coastline and river line x 50
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(2) Correction for other individual factors
Table of explanations on correction for individual factors for industrial land
Level of indicator Excellent Good Ordinary Bad Terrible
Explanations Regular shape, Relatively Almost regular Irregular shape, Extremely on indicators large size, regular shape, shape, medium small size, bad irregular shape, excellent relatively large size, modest topography and very small topography and size, good topography and geological size, terrible geological topography and geological conditions, bad topography and conditions, geological conditions, accessibility geological great conditions, accessibility conditions, accessibility good that can meet terrible accessibility needs accessibility
Correction 1.10-1.05 1.05-1.0 1.0 1.0-0.95 0.95-0.90 factors
(3) Correction for term
The benchmark land price of industrial land represents the price at a maximum term of land use right of 50 years. If the remaining term of land use right of the subject of valuation is lower, corrections shall be made using the remaining term. The formula of correction is:
m n K5 = [1-1/(1+r) ]/[1-1/(1+r) ]
Where:
K5 – Correction factor for term of land use rights of the subject of valuation
r – land capitalization rate
m – Remaining term of land use right set for the subject of valuation (year)
n – Term of land use rights set for benchmark land price
(4) Correction for progress of land development
In determining the benchmark land price, the progress of land development was set at “five connections and one flat”. If the infrastructure of the land parcel valued does not meet or exceed “five connections and one flat”, corrections shall be made according to the actual progress of development.
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Table of correction scope for infrastructure Unit:
RMB/sq.m.
Water Flat Progress of development Road supply Drainage Electricity Communications Gas land
Development expenses 50-90 10-30 5-20 30-90 6-20 20-40 15-20
3. Determination of benchmark land price of the network grid where the subject of valuation is located
In view of the location of the subject of valuation and the network grid land price chart, the benchmark land price at the point of network grid where the subject of valuation is located is determined to be RMB645/sq.m..
Network grid land price of the land parcel valued, upon correction for location alongside river:
According to on-site investigation, the subject of valuation is along the Pearl River and its branch waterways, and the correction factor for location alongside river is determined to be 30%. The benchmark land price of land less than 50 metres from the river are higher. According to the diagrams attached to the land use right transfer contract provided by the appointor, the width of the riverside part of the subject of valuation is approximately 1,300 metres.
Benchmark land price of network = (Benchmark land price at point of grid following correction for network grid + Benchmark land location alongside river price at point of network grid × Area within the line of land parcel alongside river × Correction for location alongside river ÷ Total land area) = 645 + 645 × 50 × 1300 × 30% ÷ 393793 = RMB677/sq.m. (rounded)
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4. Determination of correction factor for base date (K1)
The base date of valuation of the land parcel valued is 31 August 2015, and the base date of the benchmark land price is 1 July 2010. Correction is required to be made due to the difference. There were rare cases of industrial land transactions in the urban area of the land parcel valued in recent years, and the base date correction factor cannot be calculated in accordance with the changes in prices of industrial land transaction cases. In addition, as Guangzhou develops, a large number of industrial enterprises relocated out of urban areas, and there are a large number of industrial land transaction cases in non-central areas of Guangzhou. In order to avoid the difference in prices as a result of location and individual factors, we calculated the average price of industrial land for the year from the industrial land transaction cases in non-central areas of Guangzhou in recent years, and then derived the average land price index for the year. Correction factor for base date is then calculated on this basis. The industrial land price index is prepared as follows, assuming the land price index is 100 in 2010:
Total value Average Area of of land trading land Land price Year land traded traded price index Note (sq.m.) (in RMB ten (RMB/sq.m.) thousand)
2010 961620 34439 358 100 Using data for 2010 as basis 2011 1578596 98749.34 626 175 2012 1806487 117676.35 651 182 2013 1925940 149439 776 217 2014 1992986 168720 847 237
The formula of calculation of industrial land price index is:
Average land price index for the year = Average land price for the year ÷ Average land price for 2010 ×100
As such: Average land price index for 2011 = 626 ÷ 358 = 175 Land price index for 2012 = 651 ÷ 358 × 100 = 182 Land price index for 2013 = 776 ÷ 358 × 100 = 217 Land price index for 2014 = 847 ÷ 358 × 100 = 237
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The land price index for the period from the end of 2014 to the base date of valuation is calculated from the growth rate of land price issued by China Urban Land Price Dynamic Monitor.
Growth rate of land price of industrial land in Guangzhou in the first half of 2015
First Second quarter of quarter of Item 2015 2015
Growth rate of land price (%) 1.06 2.88
As the data for the third quarter of 2015 is not available yet, assuming the growth rate is the same as that in the second quarter of 2015, then the land price index as at the base date of the valuation is 237 × (1 + 1.06%) × (1 + 2.88%) × (1 + 2.88% × 2/3) = 251, and the correction factor for base date is 2.51
5. Determination of correction factor for plot rate (K2)
The plot rate of industrial land normally has no impact on the land price in Guangzhou, and in recent years in order to promote enterprises’ intensive and effective use of land, the land premium for industrial land have not taken into account the plot ratio and have been calculated based on price per square metre of land area. Based on the investigation of the land premium of industrial land at different plot ratios in recent years in Liwan District, the plot ratio has had almost no impact on land price. According to the Notice of the State Council on Promoting the Land Saving and Intensive Use (Guo Fa [2008] No. 3), should the raising of the land use rate and plot ratio of the existing industrial land conform to the plans and does not change the use of land, the land price shall not be raised. The industrial land control target of the newly added industrial land shall be further elevated. Should the gross floor area of plant exceed the plot ratio control target, the land price shall not be raised. As such, the correction factor for plot ratio of industrial land is 1.0.
6. Determination of correction factor for location factor (K3)
In view of the location of the subject of valuation and the network grid land price chart, the subject of valuation is within the coverage of benchmark land price network grid in Guangzhou. Value has been attributed to the land located in the center of each network grid, and location factor has been considered. Therefore, no correction for location factor is required and the correction factor is 1.
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7. Determination of correction factor for individual factor (K4)
According to the benchmark land price correction system, benchmark land price in Guangzhou is the network grid land price, and no correction for location factor is required. Correction factor for individual factor is determined to make correction for individual factor of the subject of valuation.
Guangdong Province-Guangzhou City-Guangzhou Shipyard Shipping Co., Ltd.-Transfer – 1 Description of factors affecting the land price of the subject of valuation and correction factor table
Description Correction Factor of factor factor
Individual factor Size of land parcel Large size 0.02 Shape of land parcel Mostly regular 0.00 Topography and Good topography 0.02 geological conditions and geological conditions Accessibility Good accessibility 0.01 Total (1+ΑK) 1.05
In view of above, the correction factor for individual factor is 1.05.
8. Determination of correction factor for term of land use right (K5)
In this valuation, the remaining term of land use right for Guangdong Province-Guangzhou City-Guangzhou Shipyard Shipping Co., Ltd.-Transfer–1is 28.39 years. Based on the benchmark land price formulation of correction for term of land use right of industrial land, correction factor for term of land use rights of industrial land in this valuation is 0.8552.
The capitalization rate of the land is estimated by adding risk-free rate to risk premium. Risk-free rate means the yield of a risk-free investment. Time deposit interest rate or treasury bond interest rate for various terms can be used as the risk-free rate. The benchmark one-year deposit interest rate set by the People’s Bank of China, being 1.75% as at the base date of valuation, was used as the risk-free rate during this valuation, and the risk premium was determined by taking into account the average return of properties in the area and investment risks. Currently the policies for the property market are tight and tend to change fast, involving considerable investment risks. In light of the location and use of the land parcel valued, similar land investments and economic development in the area, and making reference to the reports on benchmark land prices in Guangzhou, the risk premium for the land parcel valued was determined to be 4.25%, and the capitalization rate of the land parcel valued was determined to be 6%.
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9. Determination of correction factor for other factors (K6)
There are wharves erected on the land parcel Guangdong Province-Guangzhou City-Guangzhou Shipyard Shipping Co., Ltd.-Transfer – 1, being the subject of valuation, which have a positive effect on the land price of industrial land by bringing additional channels for product distribution and helping lower the logistics cost. In addition to the wharves, the utilities, planning and environment of the land parcel is better than average in the area. Through comprehensive analysis, the correction factor for other factors in this valuation is 1.1.
10. Determination of correction factor for progress of land development
The progress of development of the subject of valuation is “five connections” (road, electricity, feed water, down water, and communications) outside the red line and flat land within the red line of the land parcel, consistent with the progress of land development for the benchmark land price of “five connections and one flat” (i.e. road, electricity supply, water supply, drainage and communications available outside the red line, and flat land within the red line). Accordingly, no correction is required for the progress of development.
11. Calculation of unit land price of the subject of valuation
In accordance with the calculation formula of unit land price, the calculation is as follows:
Guangdong Province – Guangzhou City – Guangzhou Shipyard Shipping Co., Ltd. – Transfer – 1:
Unit land price of the subject of valuation = 677 × 2.51 × 1.0×1×1.05 × 1.1 × 0.8552 = RMB1,678/sq.m. (rounded)
B. Market comparison approach
The market comparison approach is an approach adopted to derive the land price of the subject of valuation as at the base date of valuation by comparing the subject of valuation with similar parcels of land traded in a recent short period and making corrections for their differences in transaction facts, base date, location and individual factors based on the price of similar parcels of land traded.
The calculation formula is:
Price of the subject of valuation = Price of comparable land parcel × Fact index of the subject of valuation/Fact index of comparable land parcel × Land price index of the subject of valuation as at the date of valuation/Land price index of comparable land parcel as at the date of valuation × Location factor index of the subject of valuation/ Location factor index of comparable land parcel × Individual factor index of the subject of valuation/Individual factor index of comparable land parcel.
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1. Selection of comparable cases
The land parcel valued is located in urban areas. Due to urban development and the government’s restrictions on industrial land in the year, there were rare cases of industrial land transactions in urban areas. Through investigation, only two industrial land transaction cases similar to the land parcel valued were identified in the same area. In order to meet the requirement on the number of valuation cases under the market comparison approach, the valuers extended the scope of selection to include a parcel of land that is similar to the subject of valuation as the third comparable case, with details as follows:
Case A: Land used by Guangzhou Liby Enterprise Group Co., Ltd.
The case relates to a parcel of land located in Nandun, Liwan District named Plot AF060505. The user of the land is Guangzhou Liby Enterprise Group Co., Ltd. and it is for industrial use. The construction land area is 77,488 sq.m., and the planned plot ratio is 1. The term of the land use rights granted is 50 years. The land parcel has good accessibility, regular shape and good topography and geological conditions. The status of infrastructure development is “five connections” outside the red line (road, electricity, water supply, drainage and communications) and “flat land” within the red line of the land parcel, and the trading price of state-owned construction land use rights is RMB2,189/sq.m (price per metre of land area in listing-for-sale), date of the transaction: 27 August 2012.
Case B: Land used by Guangzhou Changxing Concrete Co., Ltd.
The case relates to a parcel of land located in Liwan District, bordering Dongsha Avenue in the east, Huancui Road South in the south, Dongsha Overpass in the west and Huancheng Expressway in the north. The user of the land is Guangzhou Changxing Concrete Co., Ltd. and it is for industrial use. The construction land area is 8,623 sq.m., and the planned plot ratio is 1.2. The term of the land use rights granted is 50 years. The land parcel has good accessibility, regular shape and good topography and geological conditions. The status of infrastructure development is “five connections” outside the red line (road, electricity, water supply, drainage and communications) and “flat land” within the red line of the land parcel, and the trading price of state-owned construction land use rights is RMB2,189/sq.m (price per metre of land area in listing-for-sale), date of the transaction: 19 December 2013.
Case C: Land used by Guangzhou Panyu Juda Car Audio Equipment Co., Ltd.
The case relates to a parcel of land located in Baisha Lake, Yuexi Village, Shilou Town, Panyu District. The user of the land is Guangzhou Panyu Juda Car Audio Equipment Co., Ltd.. and it is for industrial use. The construction land area is 39,235 sq.m., and the planned plot ratio is 2. The term of the land use rights granted is 50 years. The land parcel has good accessibility, regular shape and good topography and geological conditions. The status of infrastructure
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development is “five connections” outside the red line (road, electricity, water supply, drainage and communications) and “flat land” within the red line of the land parcel, and the trading price of state-owned construction land use rights is RMB1,030/sq.m (price per metre of land area in listing-for-sale), date of the transaction: 21 March 2014.
2. Selection of comparison factors
Based on conditions of the land parcel valued, factors affecting the price of the land parcel valued are mainly as follows:
(1) Land use: Corrections shall be made for the factor of difference in land uses;
(2) Transaction: Whether the transaction is normal, open, equitable and voluntary;
(3) Method of transaction: Corrections shall be made for the factor of difference in methods of transactions;
(4) Date of transaction: Determination of land price index:
(5) Remaining term of land use rights: Corrections shall be made for the factor of difference in remaining terms of land use rights;
(6) Location factor: Mainly accessibility, infrastructure, environment, industry concentration and planning;
(7) Individual factor: Mainly geological conditions, topography, size and shape of land parcel, plot ratio and other factors.
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3. Explanations on comparison factors
Details of the comparison factors of the land parcel valued and the comparable cases are set out in the table below.
Table of explanations on comparison factors
Guangdong Province- Guangzhou City-GS Shipping- Comparable Comparable Comparable Item Transfer – 1 case A case B case C
Location Hedong Nandun, Liwan Bordering Baisha Lake, Overpass, Liwan District Dongsha Avenue Yuexi Village, District, in the east, Shilou Town, Guangzhou City Huancui Road Panyu District South in the south, Dongsha Overpass in the west and Huancheng Expressway in the north Construction land area (sq.m.) 393793 77488 8623 39235 Trading price (RMB/sq.m.) To be assessed 2189 2189 1030 Land use Industrial and Industrial land Industrial land Industrial land ancillary facilities Transaction Normal Normal Normal Normal Method of transaction Equity transfer Listing-for-sale Listing-for-sale Listing-for-sale Type of land use rights Transfer Transfer Transfer Transfer Date of transaction 31 August 2015 27 August 2012 19 December 21 March 2014 2013 Remaining term of land use rights 29.14 50 50 50 (year) Location factor Accessibility Alongside Alongside Alongside Bad accessibility Fangcun Main Huancheng Huancheng Road, with good Expressway and Expressway and accessibility Dongxin Dongxin Expressway, with Expressway, with good good accessibility accessibility Status of “five “five “five “five infrastructure connections” connections” connections” connections” outside the red outside the red outside the red outside the red line of land line of land line of land line of land parcel parcel parcel parcel Environment Light pollution Light pollution Light pollution Heavy pollution quality Industry Low industry Low industry Low industry High industry concentration concentration concentration concentration concentration Planning Strong planning Good planning Good planning Bad planning Status of utilities Sound Sound Sound Unsound
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Guangdong Province- Guangzhou City-GS Shipping- Comparable Comparable Comparable Item Transfer – 1 case A case B case C
Status of living Sound Sound Sound Unsound facilities Planned use Commercial and Commercial Commercial Industrial residential Individual factor Geological Good geological Good geological Good geological Good geological conditions conditions conditions conditions conditions Strong geological Strong geological Strong geological Strong geological carrying capacity carrying capacity carrying capacity carrying capacity Topography Relatively flat Flat Flat Flat Size of land Convenient for Convenient for Relatively small Modest size of parcel use with large use with large size of land land parcel, size of land size of land parcel, affecting relatively good parcel parcel the use for use Shape of land Mostly regular Regular Regular Irregular parcel Progress of “flat land” within “flat land” within “flat land” within “flat land” within development the red line the red line the red line the red line Plot ratio 0.43 1 1.2 2 Sides facing road One side along Four sides facing Four sides facing Three sides street streets streets facing streets Other factors Riverside, having No special No special No special wharves affecting factors affecting factors affecting factors
4. Preparation of table of comparison factors
The table of comparison factors is prepared in light of the actual situations of the land parcel valued and comparable cases. Comparison factor index is determined as follows:
(1) Transaction
The land parcel valued and comparable cases all reflect normal transactions, and the land prices represent normal market land price. As such, no corrections are required for the transactions.
(2) Method of transaction
The transaction for the land parcel valued is in the form of equity transfer, and all the three comparable cases are in the form of listing-for-sale. As the equity transfer and listing-for-sale are all conducted in the open market and have the same implications of price, no correction is required for the method of transaction factor.
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(3) Correction for type of land use rights
The land use rights of the land parcel valued and the comparable cases are all granted through transfer, and no correction is required.
(4) Correction for land use
The land parcel valued is industrial land, and comparable cases A, B and C are all industrial land. No correction is required as the uses are the same.
(5) Correction for base date
There were rare cases of industrial land transactions in the urban area of the land parcel valued in recent years, and the base date correction factor cannot be calculated in accordance with the changes in prices of industrial land transaction cases. In addition, as Guangzhou develops, a large number of industrial enterprises relocated out of urban areas, and there are a large number of industrial land transaction cases in non-central areas of Guangzhou. In order to avoid the difference in prices as a result of location and individual factors, we calculated the average price of industrial land for the year from the industrial land transaction cases in non-central areas of Guangzhou in recent years, and then derived the average land price index for the year and then the correction factor for base date. The industrial land price index is prepared as follows, assuming the land price index is 100 in 2010:
Total value Average Area of of land trading land Land price Year land traded traded price index Note (sq.m.) (in RMB ten (RMB/sq.m.) thousand)
2010 961620 34439 358 100 Using data for 2010 as basis 2011 1578596 98749.34 626 175 2012 1806487 117676.35 651 182 2013 1925940 149439 776 217 2014 1992986 168720 847 237
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The formula of calculation of industrial land price index is:
Average land price index for the year = Average land price for the year ÷ Average land price for 2010 ×100
As such: Average land price index for 2011 = 626 ÷ 358 = 175 Land price index for 2012 = 651 ÷ 358 × 100 = 182 Land price index for 2013 = 776 ÷ 358 × 100 = 217 Land price index for 2014 = 847 ÷ 358 × 100 = 237
The land price index for the period from the end of 2014 to the base date of valuation is calculated from the growth rate of land price issued by China Urban Land Price Dynamic Monitor.
Growth rate of land price of industrial land in Guangzhou in the first half of 2015
First Second quarter quarter Item of 2015 of 2015
Growth rate of land price (%) 1.06 2.88
As the data for the third quarter of 2015 is not available yet, assuming the growth rate is the same as that in the second quarter of 2015, then the land price index as at the base date of the valuation is 237 × (1 + 1.06%) × (1 + 2.88%) × (1 + 2.88% × 2/3) = 251, and the correction factor for base date is 2.51
(6) Correction factor for term of land use rights (K)
The formulation of correction factor for term of land use right is:
K = [1-1/(1+r)m]/[ 1-1/(1+r)n]
Where: K – correction factor for term of land use right
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r – capitalization rate of the land (estimated by adding risk-free rate to risk premium. Risk-free rate means the yield of a risk-free investment. Time deposit interest rate or treasury bond interest rate for various terms can be used as the risk-free rate. The benchmark one-year deposit interest rate set by the People’s Bank of China, being 1.75% as at the base date of valuation, was used as the risk-free rate during this valuation, and the risk premium was determined by taking into account the average return of properties in the area and investment risks. Currently the policies for the property market are tight and tend to change fast, there are considerable investment risks. In light of the location and use of the land parcel valued, similar land investments and economic development in the area, and making reference to the reports on benchmark land price in Guangzhou, the risk premium for the land parcel valued was determined to be 4.25%, and the capitalization rate for the land parcel valued was determined to be 6%.)
m – Remaining term of land use rights of the land parcel valued
m – Term of land use rights of comparable cases
The correction factor for the term of land use right of the land parcel valued is 0.8552, as calculated in accordance with the formula.
(7) Correction factor for location and individual factors
I. Location factor:
A. Accessibility: Based on the effect of accessibility on land value, they are classified into five levels namely terrible, bad, just meeting needs, good and excellent. The value of the subject of valuation was set at 100, and a correction of 5% is made for each level of differences in light of the realities.
B. Status of infrastructure: They are classified into five levels namely seven connections outside the red line of land parcel, six connections outside the red line of land parcel, five connections outside the red line of land parcel, four connections outside the red line of land parcel and three connections outside the red line of land parcel. The value of the land parcel valued was set at 100, and a correction of 4% for land price is made for each level of differences.
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C. Environment quality: They are classified into five levels namely light pollution, relatively light pollution, modest pollution, heavy pollution, and serious pollution. The value of the land parcel valued was set at 100, and a correction of 2% for land price is made for each level of differences.
D. Industry concentration: Based on the effect of the industry concentration on land value, they are classified into five levels namely low, relatively low, ordinary, relatively high and high industry concentration. The value of the subject of valuation was set at 100, and a correction of 5% is made for each level of differences in light of the differences in industry concentration and their impact on the development and use of land.
E. Planning: Based on the effect of planning on land value, they are classified into five levels namely terrible, bad, ordinary, good and excellent. The value of the subject of valuation was set at 100, and a correction of 5% is made for each level of differences in light of the realities.
F. Status of utilities: They are classified into five levels namely sound, relatively sound, ordinary, relatively unsound and unsound. The value of the subject of valuation was set at 100, and a correction of 4% is made for each level of differences.
G. Status of living facilities: They are classified into five levels namely sound, relatively sound, ordinary, relatively unsound and unsound. The value of the subject of valuation was set at 100, and a correction of 4% is made for each level of differences.
H. Planned use: They are classified into four levels namely commercial, commercial and residential, residential and industrial. A correction of 5% is made for each level of differences.
II. Individual factor:
A. Geological conditions: Based on the effect of geological conditions on land value, they are classified into five levels namely terrible, bad, modest, good and excellent. The value of the subject of valuation was set at 100, and a correction of 2% is made for each level of differences in light of the realities.
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B. Topography: Based on the effect of topography on land value, they are classified into three levels namely uneven, relatively flat and flat. The value of the subject of valuation was set at 100, and a correction of 3% is made for each level of differences in light of the realities.
C. Size of land parcel: they are classified into five levels namely convenient for use with large size of land parcel, convenient for use with relatively large size of land parcel, relatively small size of land parcel, affecting the use, and small size of land parcel, affecting the use. The value of the subject of valuation was set at 100, and a correction of 2% is made for each level of differences.
D. Shape of land parcel: Based on the effect of the shape of land parcel on land value, they are classified into four levels namely irregular, mostly regular, relatively regular and regular. The value of the subject of valuation was set at 100, and a correction of 1% is made for each level of differences in light of the differences in the shapes of land parcels and their impact on the development and use of land.
E. Progress of development: Based on the effect of progress of development on land value, they are classified into two levels namely flat land within the red line of land parcel, uneven land within the red line of land parcel or meeting condition to development and construction within the red line of land parcel. The value of the subject of valuation was set at 100, and a correction of 3% is made for each level of differences in light of the realities of the cases and local land development expenses.
F. Plot ratio: The plot rate of industrial land normally has no impact on the land price in Guangzhou, and in recent years in order to promote enterprises’ intensive and effective use of land, the land premium for industrial land have not taken into account the plot ratio and have been calculated based on price per square metre of land area. Based on the investigation of the land premium of industrial land at different plot ratios in recent years in Liwan District, the plot ratio has had almost no impact on land price. According to the Notice of the State Council on Promoting the Land Saving and Intensive Use (Guo Fa [2008] No. 3), should the raising of the land use rate and plot ratio of the existing industrial land conform to the plans and does not change the use of land, the land price shall not be raised. The industrial land control target of the newly added industrial land shall be further elevated. Should the gross floor area of plant
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exceed the plot ratio control target, the land price shall not be raised. As such, no correction is required for plot ratio of industrial land.
G. Side facing road: They are classified into one side facing street, two sides facing streets, three sides facing streets and four sides facing streets. A correction of 3% is made for each level of differences.
H. Other factors: Corrections are made for other individual factors which have considerable impact on the land price, such as whether there are wharfs for own use (or whether there are stock yards or coastlines in the nature of wharf), self-use railways, riverside or not. The value of the subject of valuation was set at 100, and a correction of 5% is made for each level of differences in light of the actual impacts.
The comparison factor indexes table below is prepared based on the explanations to the aforementioned comparison factors.
Comparison factor indexes table for Guangdong Province-Guangzhou City-GS Shipping-Transfer – 1
Guangdong Province – Guangzhou City – GS Shipping – Comparable case Comparable Item Transfer – 1 A Comparable case B case C
Location Hedong Overpass, Nandun, Liwan Bordering Dongsha Baisha Lake, Liwan District, District Avenue in the east, Yuexi Village, Guangzhou City Huancui Road South Shilou Town, in the south, Dongsha Panyu District Overpass in the west and Huancheng Expressway in the north Trading price (RMB/sq.m.) To be assessed 2189 2189 1030 Land use 100 100 100 100 Transaction 100 100 100 100 Method of transaction 100 100 100 100 Type of land use rights 100 100 100 100 Date of transaction 251 182 217 241 Remaining term of land use rights (year) 0.8552 0.9457 0.9457 0.9457 Location factor Accessibility 100 105 105 85 Status of infrastructure 100 100 100 100 Environment quality 100 100 100 94 Industry concentration 100 100 100 110 Planning 100 105 105 85 Status of utilities 100 100 100 84 Status of living facilities 100 100 100 84 Planned use 100 105 105 90
– III-72 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Guangdong Province – Guangzhou City – GS Shipping – Comparable case Comparable Item Transfer – 1 A Comparable case B case C
Individual factor Geological conditions 100 100 100 100 100 100 100 100 Topography 100 103 103 103 Size of land parcel 100 100 94 96 Shape of land parcel 100 102 102 99 Progress of development 100 100 100 100 Plot ratio 100 100 100 100 Sides facing road 100 109 109 106 Other factors 100 90 90 90
5. Correction for factors and calculation of unit price
The comparison factor correction factor table below has been prepared, with details as follows:
Comparison factor correction factor table for Guangdong Province-Guangzhou City- GS Shipping-Transfer – 1
Comparable Comparable Item case A Comparable case B case C
Location Nandun, Liwan Bordering Dongsha Baisha Lake, District Avenue in the east, Yuexi Village, Huancui Road South in Shilou Town, the south, Dongsha Panyu District Overpass in the west and Huancheng Expressway in the north Trading price (RMB/sq.m.) 2189 2189 1030 Land use 100/100 100/100 100/100 Transaction 100/100 100/100 100/100 Method of transaction 100/100 100/100 100/100 Type of land use rights 100/100 100/100 100/100 Date of transaction 251/182 251/217 251/241 Remaining term of land use rights (year) 0.8552/0.9457 0.8552/0.9457 0.8552/0.9457 Location factor Accessibility 100/105 100/105 100/85 Status of 100/100 100/100 100/100 infrastructure Environment quality 100/100 100/100 100/94 Industry concentration 100/100 100/100 100/110 Planning 100/105 100/105 100/85 Status of utilities 100/100 100/100 100/84 Status of living 100/100 100/100 100/84 facilities Planned use 100/105 100/105 100/90
– III-73 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
Comparable Comparable Item case A Comparable case B case C
Individual factor Geological conditions 100/100 100/100 100/100 100/100 100/100 100/100 Topography 100/103 100/103 100/103 Size of land parcel 100/100 100/94 100/96 Shape of land parcel 100/102 100/102 100/99 Progress of 100/100 100/100 100/100 development Plot ratio 100/100 100/100 100/100 Sides facing road 100/109 100/109 100/106 Other factors 100/90 100/90 100/90 Prospective price (RMB/sq.m.) 2288.17 2041.61 2226.51 Market comparison approach result (RMB/ 2165 sq.m.)
6. Calculation of land price for cases following corrections
By comparison and analysis, the prospective prices for case A and case B are close As comparable case C is selected by the valuers from an extended scope just to meet the requirement of number of cases under the market comparison approach which is not in the area of the subject of valuation and has considerable differences from the subject of valuation, the prospective price of case C is for reference only and is not used as a basis to calculate value of the subject of valuation. As such, the simple arithmetic mean of the prospective prices of case A and case B is adopted as the result of valuation under the market comparison approach. The appraisal conclusion of the land parcel valued under the market comparison approach is RMB2,165/sq.m..
(VII) Determination of the Price of Real Estate of the Subject of Valuation
1. Method of determination of price
The benchmark land price factor correction approach is an approach to determine the price of the subject of valuation as at the base date of valuation by using the appraisal conclusion such as urban benchmark land price and benchmark land price correction factor table to compare the location and individual factors of the subject of valuation against the average level in the area in accordance with the principle of replacement and making corrections to benchmark land price. The accuracy and reliability of the appraisal conclusion are subject to factors such as accurate reference made to benchmark land price and reasonable extents of corrections.
The three comparable cases under the market comparison approach are all in the form of open listing-for-sale. Case A and case B are in the same area as the subject of valuation, occurred in the past two years, and have land uses and land conditions almost the same as or similar to those of the subject of valuation. Quantitative and
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qualitative analysis and comparison and corrections have been made for their differences with the subject of valuation. As such, there is high confidence in the prospective prices.
In accordance with the basic principles of land valuation and the procedures for valuation, two methods, being the market comparison approach and the benchmark land price factor correction approach, were adopted for this valuation, and they generated different results. As new benchmark land prices in Guangzhou have yet to take effect and no other method was available, old benchmark land prices had to be adopted in this valuation, and the accuracy of its results is lower than that under the market comparison approach. As such, the result under the market comparison approach, being RMB2,165/sq.m, has been adopted as the result of this valuation, and the total land price is RMB899,423,200.
Market comparison Benchmark land Unit Land parcel approach price approach land Total land valued Size Result Weight Result Weight price price (sq.m.) (RMB/ (RMB/ (RMB/ (in RMB ten sq.m.) sq.m.) sq.m.) thousand)
Guangdong 393793 2165 1 1678 0 2165 85256.18 Province – Guangzhou City – GS Shipping – Transfer – 1
2. Appraisal conclusion
The price of land use rights of the subject of valuation as at the base date of valuation under normal market condition and the type of land use rights, term of land use right, progress of development and use set by the valuers, as assessed by the valuers following on-site survey and local market analysis and in accordance with the basic principles and valuation procedures for land price valuation following choosing appropriate valuation method, is as follows:
No. of parcels of land: 1
Area of the land valued: 393,793 sq.m.
Unit price of the land RMB2,165/sq.m. valued:
Total land price assessed: RMB852,561,800
In full: Renminbi eight hundred and fifty-two million, five hundred and sixty-one thousand, and eight hundred
Currency: Renminbi
– III-75 – APPENDIX III VALUATION REPORT OF GS SHIPPING LAND
VI. Appendices
Appendix 1 Location map of the subject of valuation
Appendix 2 Pictures of the uses of the subject of valuation
Appendix 3 Copies of the Real Estate Certificates and the State-owned Land Use Rights Transfer Contracts of the subject of valuation
Appendix 4 Copies of title documents of the subject of valuation
Appendix 5 Copies of business license and qualification certificates of the valuation institution
Appendix 6 Copies of qualification certificates of the land valuers
Notes:
Mr. Yang Yadong and Ms. Qi Haiyan, both of 602, No.1 Building, Qian He Jia Yuan, 108 North 4th Ring Road East, Chaoyang District, Beijing, PRC, are both qualified real estate valuers registered with the Ministry of Construction of the PRC and members of the China Institution of Real Estate Appraisers and Agents. Mr. Yang and Ms. Qi had been working with the Beijing Huayuan Longtai Real Estate and Land Assets Valuation Co., Ltd. （北京華源龍泰房地產土地資產評估有限公司） for 11 years and 10 years respectively and both of them have more than 10 years experiences in real estate valuation in the PRC.
– III-76 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
REAL ESTATE APPRAISAL REPORT
Appraisal Project Name: Appraisal on Market Value of Buildings and Structures Involved In Respect of Equity Interests in Guangzhou Shipyard Shipping Co., Ltd. Proposed to Be Transferred by CSSC Offshore & Marine Engineering (Group) Company Limited
Client: CSSC Offshore & Marine Engineering (Group) Company Limited
Appraisal Institution: Beijing CEA Real Estate Appraisal Co., Ltd.
Valuer: He Zhe Shi Fa Liang
Appraisal Operation Period: From 14 September 2015 to 29 September 2015
Appraisal Report No.: Jing Zhong Qi Hua (2015) (Fang Gu) Zi No. 0080
–IV-1– APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
CONTENT
Letter to the Client ...... IV-3
Valuers’ Representations ...... IV-5
Assumptions and Limitation Conditions of Appraisal...... IV-7 I. Assumption Preconditions of This Appraisal...... IV-7 II. Attentions to Users of the Report...... IV-8 III. Limitation Conditions for Use of This Report...... IV-9 IV. Useful Term of the Appraisal Report ...... IV-9
Report of Real Estate Appraisal Conclusion ...... IV-10 I. Client and Owner...... IV-10 II. Appraisal Institution...... IV-10 III. Appraisal Objects...... IV-11 IV. Appraisal Purpose ...... IV-24 V. Reference Day ...... IV-24 VI. Value Definition...... IV-24 VII. Appraisal Basis ...... IV-24 VIII. Appraisal Principals ...... IV-27 IX. Appraisal Methods ...... IV-28 X. Appraisal Conclusion ...... IV-28 XI. Valuers ...... IV-29 XII. Appraisal Operation Period ...... IV-29 XIII. Useful Term of Appraisal Report ...... IV-29
Technical Report for Real Estate Appraisal ...... IV-30 I. Description and Analysis of Appraisal Objects ...... IV-30 II. Analysis of Market Background ...... IV-36 III. Analysis of Maximum and Best Utilization ...... IV-38 IV. Selection of Appraisal Methods ...... IV-39 V. Appraisal Measurement Process ...... IV-40 VI. Appraisal Conclusion ...... IV-58
Annexes ...... IV-59
1. Detail List of Buildings Appraisal, Detail List of Structures and Other Auxiliary Facilities and Detail List for Pipes and Trenches Appraisal, 2. Appraisal Entrustment Letter, 3. Business License of the Client and the Owner, 4. Undertaking Letter of the Client and the Owner, 5. Copy of legal opinion, 6. Copies of Real Estate Ownership Certificates, 7. Photo of Current Status of the Appraisal Objects, 8. Location Map for the Appraisal Objects, 9. Copies of Business License and Qualification Certificate of the Real Estate Appraisal Institution, 10. Copies of Qualification Certificates of the Valuers
–IV-2– APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
Letter to the Client
CSSC Offshore & Marine Engineering (Group) Company Limited:
We are entrusted by the Company to appraise the market value of the appraisal objects on basis of independent, fair, objective, legal and cautious principals according to scientific methods in accordance with relevant requirements of real estate value appraisal of China.
1. Appraisal objects: Total of 77 buildings with a gross floor area of 169,719.58 square meters; total of 61 structures; and total of 383 pipes and trenches attributable to Guangzhou Shipyard Shipping Co., Ltd., which are located at 40 South Fangcun Main Road, Liwan District, Guangzhou.
2. Appraisal purpose: To appraise the market value of the appraisal objects to provide a value reference basis with CSSC Offshore & Marine Engineering (Group) Company Limited as the Client for buildings and structures involved in respect of equity interests in Guangzhou Shipyard Shipping Co., Ltd. proposed to be transferred by it.
3. Reference Day: 31 August 2015
4. Value Definition:
(1) Value Type: this appraisal conclusion was a market value using an open market value standard.
(2) Value Connotation
This appraisal conclusion comprised value of the buildings, structures, pipes and trenches within the appraisal objects, excluding value of land use rights, which was the market value of the appraisal objects as at the Reference Day being 31 August 2015.
5. Appraisal conclusion:
According to the appraisal purpose, following the appraisal principals, in accordance with the appraisal procedures, using scientific appraisal methods, on the basis of careful analysis of existing information, after the careful and accurate measurement, combined with the appraisal experience and analysis of factors affecting value of the appraisal objects, the valuers determined the appraisal conclusion on the market value of the appraisal objects as at the Reference Day as follows:
Total market value of the appraisal objects: RMB473.1327 million
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Amount in words: RMB FOUR HUNDRED SEVENTY-THREE MILLION ONE HUNDRED THIRTY-TWO THOUSAND SEVEN HUNDRED ONLY
Of which:
Value of buildings: RMB272.8920 million (of which the buildings with real estate ownership certificates were 129,237.17 square meters valuing at RMB161.8760 million; the buildings without real estate ownership certificates were 40,482.41 square meters valuing at RMB111.0160 million)
Value of structures: RMB170.0210 million
Value of pipes and trenches: RMB30.2197 million
See the annexes to the report for the detailed results – Detail List of Buildings Appraisal, Detail List of Structures and Other Auxiliary Facilities and Detail List for Pipes and Trenches Appraisal.
6. Useful Term of the Appraisal Report: from 29 September 2015 to 28 September 2016
Beijing CEA Real Estate Appraisal Co., Ltd.
Legal Representative (Signature):
29 September 2015
–IV-4– APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
Valuers’ Representations
We solemnly represent that:
1. We confirm that the facts set out herein are truthful and accurate.
2. All analysis, opinions and conclusions set out herein are our own professional analysis, opinions and conclusions on the impartial basis, subject to the assumptions and restrictions stated in herein.
3. We have no interest in the subject properties hereunder, nor any interest in or prejudice to any relevant parties.
4. We prepared this appraisal report based on our analysis, opinions and conclusions under the Code for Real Estate Appraisal (GB/T 50291-1999), a national standard of the People’s Republic of China.
5. He Zhe as the valuer had conducted on-site survey on the appraisal objects hereunder on 14 September 2015. The survey made by the valuer on the appraisal objects was only restricted to the appearance and service condition of such appraisal objects. The valuer do not bear the responsibility to investigate the quality of architectural structure of the appraisal objects, or to survey the other parts which are covered, unexposed or inaccessible.
6. No professional assistance of material importance was sought by us for this appraisal report.
7. The appraisal conclusion herein was only used by the client for the purpose of this appraisal, and shall not be used other purposes. Without a written consent from this appraisal institution, all or any part of this report shall not be provided to units and individuals other than the client, users of the report and review authorities of the report, or published openly in any form.
8. The explanation of this appraisal report was attributable to Beijing CEA Real Estate Appraisal Co., Ltd..
9. The personnel involved in this appraisal
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Signature of the certified real estate valuer involved in this appraisal
Name of valuers Qualification certificate no. Signature
He Zhe 1120050150 Shi Fa Liang 1120060098
He Zhe and Shi Faliang, both of Room 916, Fanli Plaza, 22 Chaoyangmenwai Street, Beijing City, PRC are both registered real estate appraisers in China. They both carried out real estate valuation in China for the past 10 years. He Zhe and Shi Faliang joined Beijing CEA Real Estate Appraisal Co., Ltd. and served as registered real estate appraisers for 10 years and 5 years respectively. Chu Yongqiang also participated in the assessment as a valuer.
–IV-6– APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
Assumptions and Limitation Conditions of Appraisal
I. Assumption Preconditions of This Appraisal
1. This appraisal was made based on the assumption precondition that the appraisal objects had clear ownership without ownership dispute and were legally tradable real estates.
2. The real estate market was a fair, equal and voluntary trading market as at the Reference Day.
3. The trading buyer had grasped complete market information with necessary professional knowledge on the transaction subject.
4. This appraisal was made based on the assumption that the transaction of the appraisal objects had a reasonable period of time for negotiation and no additional bid price offered by the buyer was considered.
5. The appraisal objects included total 77 buildings with a gross floor area of 169,719.58 square meters, of which the real estate ownership certificates were obtained for 50 buildings with a total gross floor area of 129,237.17 square meters (according to the original real estate ownership certificate, the registration area was of 126,534.79 square meters, the expansion area was of 3,778.71 square meters, the demolition area was of 1,076.33 square meters, the current actual area was of 129,237.17 square meters). The title owner set out in 49 of the certificates was Guangzhou Shipyard Shipping Co. Ltd. and the remaining one title (pipe processing workshop, Sui Fang Di Zheng Zi No. 163349) was not transferred to Guangzhou Shipyard Shipping Co. Ltd. The title owner set out in the certificate was Guangzhou Shipyard International Company Limited (the former name of COMEC). 4 buildings with certificates (the office building for the infrastructural construction division, the workshop for the finished products, the new measurement central building and the new office building for the shipbuilding department) was partially expanded. The expanded gross floor area was 3,778.71 square meters with no real estate ownership certificates obtained; no real estate ownership certificates were obtained for the remaining 27 buildings with a total gross floor area of 40,482.41 square meters. CSSC Offshore & Marine Engineering (Group) Company Limited jointly undertook that, all buildings within the appraisal scope were invested as capital contribution into Guangzhou Shipyard Shipping Co., Ltd. The titles of the buildings belong to Guangzhou Shipyard Shipping Co., Ltd. with no disputes concerning ownership. In case of any dispute arising from or in connection with the ownership of titles, CSSC Offshore & Marine Engineering (Group) Company Limited and Guangzhou Shipyard Shipping Co., Ltd. should take full legal responsibilities. According to the Legal Opinion on Ownership of Buildings and Land of Guangzhou Shipyard issued by SG & Co, Shanghai, there is no dispute concerning the ownership of the appraised objects. The ownership certificate documents on which the appraisal of buildings with the certificates was based included the real estate ownership certificates etc. Such information was provided by the owner, which necessary inspection was made by valuers. This appraisal was made based on the assumption preconditions that the abovementioned documents were truthful, legal and valid.
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6. This appraisal was envisaged that the real estate market was stable with no significant change in policy and not taking into account of effect of force majeure during the term of the report.
II. Attentions to Users of the Report
1. The appraisal conclusion in this report was only in relating to the market condition and current condition of the appraisal objects as at the Reference Day. Over time, the real estate market condition, real estate policies and own condition of the appraisal objects will be changed, the market value of the appraisal objects also will be changed accordingly.
2. The valuers did not certify ownership certificate materials of the appraisal objects contents set out therein at relevant competent departments; in the appraisal objects, the gross floor area of buildings with the certificates was based on those as set out in the real estate ownership certificates, the gross floor area of buildings without the certificates was based on the data provided by the owner, which was roughly equivalent by visual measurement, and no professional survey was made.
3. The survey made by the valuers on the appraisal objects was only restricted to the appearance and service condition of such appraisal objects. The valuers do not bear the responsibility to investigate the quality of architectural structure of the appraisal objects, or to survey the other parts which are covered, unexposed or inaccessible.
4. Such information on which this appraisal report was based was provided by the client and the owner, which truth was responsible for by them. The appraisal institution should not assume the responsibility for errors of the appraisal conclusion arisen from incorrect information provided.
5. In the appraisal objects, 2 buildings with the certificates (guest restaurant and dock winch scheduling room) was demolished partly, the demolition area was of 1,076.33 square meters, portions of buildings demolished was appraised to be zero.
6. As at the Reference Day, the actual user of the land and buildings thereon was CSSC Offshore & Marine Engineering (Group) Company Limited. As at the date of issue of the appraisal report, no lease agreement was entered into for the land and buildings thereon leased by Guangzhou Shipyard Shipping Co., Ltd. to CSSC Offshore & Marine Engineering (Group) Company Limited and such agreement was being drawn up.
7. The Reference Day was not the date of completion of on-site survey, which was determined based on the Appraisal Entrustment Letter of the Client.
8. The usage of buildings without the certificates was determined by their existing usage.
9. The appraisal conclusion of this report was not taken into account of effect of taxes and expenses to be paid upon registration of ownership title for the buildings without the certificates.
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10. In the event that expressions of words or figures in contents as set out in this report was not clear or had errors arisen from proofreading, printing or other reasons, kindly please users of the report inform properly us to clarify or correct, which shall not be used maliciously, otherwise the error parts and the affected parts were invalid.
III. Limitation Conditions for Use of This Report
1. The Client should use reasonably the appraisal value in this appraisal report. The application scope of this appraisal report was only to provide a value reference basis with CSSC Offshore & Marine Engineering (Group) Company Limited as the Client for buildings and structures involved in respect of equity interests in Guangzhou Shipyard Shipping Co., Ltd. proposed to be transferred by it, in the event of changing the appraisal purpose and use conditions, it was required to make necessary modifications or reappraisal after consulting with this appraisal institution.
2. According to relevant requirements, this appraisal report was effective within one year from the date of its issue. For use of this appraisal report after the expiry of its application term, the related liability shall be assumed by users. For use of this appraisal report within its application term, the related liability shall be assumed by the appraisal institution issuing this appraisal report except for improper use by users.
3. The use of this real estate appraisal report was subject to affixation of official seal by the appraisal institution and signature by the valuers.
4. Without a written consent from the appraisal party and the Client, all or parts of this report and any reference information shall not be permitted to be cited in any openly published document, notice or statement, nor shall be published openly in any other form.
5. The effectiveness of this report was subject to a complete use (in particular price), the entrusted institution shall not reliable for the losses which may be arisen from use of parts of contents in this report.
6. The entrusting party for this appraisal was CSSC Offshore & Marine Engineering (Group) Company Limited, the owner of the appraisal objects was Guangzhou Shipyard Shipping Co., Ltd., the owner had issued a written statement that CSSC Offshore & Marine Engineering (Group) Company Limited and Guangzhou Shipyard Shipping Co., Ltd. had known this economic behavior, and they were willing to bear the corresponding legal responsibility.
7. This appraisal report was in quintuplicate, of which four was held by the Client, and one was held by this institution. A copy of this report was invalid.
IV. Useful Term of the Appraisal Report
The use of this appraisal report shall not exceed one year from the date of issue of the appraisal report.
–IV-9– APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
Report of Real Estate Appraisal Conclusion
I. Client and Owner
Client: CSSC Offshore & Marine Engineering (Group) Company Limited
Legal Representative: Han Guangde
Address: 40 South Fangcun Main Road, Liwan District, Guangzhou
Contact Tel: 13760774723
Owner: Guangzhou Shipyard Shipping Co., Ltd.
Legal Representative: Ouyang Beijing
Address: Calibration Building, 40 South Fangcun Main Road, Liwan District, Guangzhou
Relationship between the client and the owner: Guangzhou Shipyard Shipping Co., Ltd. as the owner was a wholly owned subsidiary of CSSC Offshore & Marine Engineering (Group) Company Limited as the client
II. Appraisal Institution
Name: Beijing CEA Real Estate Appraisal Co., Ltd.
Real Estate Appraisal Qualification Grade: Grade One
Qualification Validity Period: from 22 May 2015 to 21 May 2018
Real Estate Qualification Certificate No.: Jian Fang Gu Zheng Zi Di No. [2015]018
Business License Registration No.:110000006801702
Legal Representative: Wei Xin Contact: Chu Yongqiang
Contact Tel: (010) 65883588 Fax: (010) 65887033
Address: Room 916, Fanli Plaza, 22 Chaoyangmenwai Street, Beijing City
– IV-10 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
III. Appraisal Objects
(1) Appraisal objects and scope
This appraisal scope included the buildings, structures, pipes and trenches which were attributable to Guangzhou Shipyard Shipping Co., Ltd.. There were total of 77 buildings with a gross floor area of 169,719.58 square meters, of which the real estate ownership certificates were obtained for 50 buildings with a total gross floor area of 129,237.17 square meters (according to the original real estate ownership certificate, the registration area was of 126,534.79 square meters, the expansion area was of 3,778.71 square meters, the demolition area was of 1,076.33 square meters, the current actual area was of 129,237.17 square meters). The title owner set out in 49 of the certificates was Guangzhou Shipyard Shipping Co. Ltd. and the remaining one title (pipe processing workshop, Sui Fang Di Zheng Zi No. 163349) was not transferred to Guangzhou Shipyard Shipping Co. Ltd. The title owner set out in the certificate was Guangzhou Shipyard International Company Limited (the former name of COMEC); no real estate ownership certificates were obtained for the remaining 27 buildings with a total gross floor area of 40,482.41 square meters. There were total of 61 structures; there were total of 383 pipes and trenches.
(2) Location and four boundaries
The appraisal objects were located at 40 South Fangcun Main Road, Liwan District, Guangzhou City, four boundaries of the land parcel were: Pearl River to east, land of CSSC Offshore & Marine Engineering (Group) Company Limited to south, Fangcun Main Road to west, and Oil Tank No.4 of Guangdong Province Petroleum Company to north.
(3) Status of Interests
① Status of land interests
According to 50 documents provided by the owner, including the Land Grant Contract (No. (93) Sui Guo Di Chu Zi No. 128) and the Real Estate Ownership Certificate (Yue Fang Di Quan Zheng Sui Zi Di 0650168158), the owner of land use right for the land parcel at which the appraisal objects were located was CSSC Offshore & Marine Engineering (Group) Company Limited, total area of the land parcel was 393,793 square meters, the land was obtained by grant, the land was for industrial and auxiliary purposes, the expiry date of the land use right was 19 January 2044 (as stated in the Real Estate Ownership Certificate, the grant premium of the state-owned land use right was levied, the term of land use right was 50 years from 20 January 1994.Based on such date, the expiry date of the land use right was 19 January 2044), the remaining term of the land use right was 28.39 years as at the Reference Day.
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② Status of building interests
According to 50 documents provided by the owner, including the Real Estate Ownership Certificate (Yue Fang Di Quan Zheng Sui Zi Di 0650168158), as at the Reference Day, in the appraisal objects, the real estate ownership certificates were obtained for 50 buildings with a total gross floor area of 129,237.17 square meters (according to the original real estate ownership certificate, the registration area was of 126,534.79 square meters, the expansion area was of 3,778.71 square meters, the demolition area was of 1,076.33 square meters, the current actual area was of 129,237.17 square meters). The title owner set out in 49 of the certificates was Guangzhou Shipyard Shipping Co. Ltd. and the remaining one title (pipe processing workshop, Sui Fang Di Zheng Zi No. 163349) was not transferred to Guangzhou Shipyard Shipping Co. Ltd. The title owner set out in the certificate was Guangzhou Shipyard International Company Limited (the former name of COMEC); no real estate ownership certificates were obtained for the remaining 27 buildings with a total gross floor area of 40,482.41 square meters. The specific status was as follows:
Detail List of Buildings in Appraisal Objects
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
1 Yue Fang Di Guangzhou Office Planned 40 South Masonry 3.00 1,487.72 January Area with Quan Zheng Sui Shipyard building for factory, Fangcun Main concrete 1964 certificate – 848.54 Zi Shipping Co., the actual Road, Liwan square meters, No.0650169599 Ltd. infrastructural office District, extended area of construction Guangzhou City 639.18 square division meters without certificate
2 Sui Fang Di Guangzhou Pipe Factory 40 South Masonry 2.00 3,990.16 December Area with Zheng Zi Shipyard processing Fangcun Main concrete 1970 certificate – No.163349 International workshop Road, Liwan 3,270.16 m2, Co. Ltd District, extended area of Guangzhou City 720 square meters without certificate, with a closed basement
3 Nil Nil Spare parts Auxiliary 40 South Masonry 4.00 665.28 November warehouse Fangcun Main concrete 2012 (team room) Road, Liwan District, Guangzhou City
4 Yue Fang Di Guangzhou New Factory 40 South Brick and 1.00 111.36 January Renewed and Quan Zheng Sui Shipyard Transformer Fangcun Main concrete 1989 altered, including Zi Shipping Co., Substation no. Road, Liwan facility foundation No.0650170476 Ltd. 8 District, Guangzhou City
5 Yue Fang Di Guangzhou West Factory 40 South Steel 1.00 835.35 December Quan Zheng Sui Shipyard Container Fangcun Main structure 1991 Zi Shipping Co., Spare Parts Road, Liwan No.0650170475 Ltd. Warehouse District, Guangzhou City
– IV-12 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
6 Yue Fang Di Guangzhou Transformer Industrial 40 South Brick and 1.00 198.53 January Quan Zheng Sui Shipyard Substation no. Fangcun Main concrete 1957 Zi Shipping Co., 1 Road, Liwan No.0650170473 Ltd. District, Guangzhou City
7 Yue Fang Di Guangzhou Transformer Factory 40 South Brick and 1.00 156.74 December Quan Zheng Sui Shipyard Substation no. Fangcun Main concrete 1963 Zi Shipping Co., 6 Road, Liwan No.0650169638 Ltd. District, Guangzhou City
8 Yue Fang Di Guangzhou Transformer Factory 40 South Brick and 1.00 77.60 January Quan Zheng Sui Shipyard Substation no. Fangcun Main concrete 1983 Zi Shipping Co., 10 Road, Liwan No.0650170472 Ltd. District, Guangzhou City
9 Yue Fang Di Guangzhou Old Factory 40 South Brick and 1.00 607.56 December Quan Zheng Sui Shipyard Compressor Fangcun Main concrete 1956 Zi Shipping Co., Room Road, Liwan No.0650170041 Ltd. District, Guangzhou City
10 Yue Fang Di Guangzhou Line 3 and Factory 40 South Masonry 1.00 5,278.53 January Quan Zheng Sui Shipyard line 4 of Fangcun Main concrete 1976 Zi Shipping Co., internal Road, Liwan No.0650170058 Ltd. processing District, team Guangzhou City (Workshops)
11 Yue Fang Di Guangzhou 50 tonnes Factory 40 South Masonry 1.00 5,983.78 January Quan Zheng Sui Shipyard South-North Fangcun Main concrete 1976 Zi Shipping Co., Cross Road, Liwan No.0650170500 Ltd. Workshop District, Guangzhou City
12 Yue Fang Di Guangzhou Auxiliary Factory 40 South Masonry 1.00 4,972.12 January Renewed and Quan Zheng Sui Shipyard Field Fangcun Main concrete 1965 altered due to Zi Shipping Co., Road, Liwan production needs No.0650170501 Ltd. District, Guangzhou City
13 Yue Fang Di Guangzhou West Factory 40 South Masonry 1.00 494.37 December Renewed and Quan Zheng Sui Shipyard Centralised Fangcun Main concrete 1988 altered, with indoor Zi Shipping Co., Assembly Line Road, Liwan steel platform No.0650170502 Ltd. Auxiliary District, Building Guangzhou City
14 Nil Nil Installation Auxiliary 40 South Masonry 4.00 2,570.00 November Original building Workshop Fangcun Main concrete 2012 demolished and (team room) Road, Liwan rebuilt, carrying District, value includes the Guangzhou City cost of original building
15 Yue Fang Di Guangzhou New Steel Factory 40 South Masonry 1.00 577.95 January Plant with a Quan Zheng Sui Shipyard Plate Fangcun Main concrete 1983 production line, Zi Shipping Co., Processing Road, Liwan including No.0650170278 Ltd. Workshop District, production line Guangzhou City foundation outdoor
– IV-13 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
16 Yue Fang Di Guangzhou Electrical Factory 40 South Masonry 1.00 2,953.45 January Quan Zheng Sui Shipyard Equipment Fangcun Main concrete 1964 Zi Shipping Co., Warehouse Road, Liwan No.0650169938 Ltd. No. 107 District, Guangzhou City
17 Yue Fang Di Guangzhou Welding Factory 40 South Brick and 3.00 826.56 January Quan Zheng Sui Shipyard Testing Lab Fangcun Main concrete 1978 Zi Shipping Co., Road, Liwan No.0650169818 Ltd. District, Guangzhou City
18 Yue Fang Di Guangzhou Iron Casting Factory 40 South Masonry 1.00 2,939.53 January Quan Zheng Sui Shipyard Workshop Fangcun Main concrete 1970 Zi Shipping Co., Road, Liwan No.0650169838 Ltd. District, Guangzhou City
19 Yue Fang Di Guangzhou Main Office Planned 40 South Brick and 4.00 2,769.79 January Quan Zheng Sui Shipyard Building of factory, Fangcun Main concrete 1957 Zi Shipping Co., Factory actual Road, Liwan No.0650169859 Ltd. office District, Guangzhou City
20 Yue Fang Di Guangzhou Stabilizing Factory 40 South Masonry 2.00 530.14 January Now changed to Quan Zheng Sui Shipyard Station (team Fangcun Main concrete 1978 team room Zi Shipping Co., room) Road, Liwan No.0650170499 Ltd. District, Guangzhou City
21 Yue Fang Di Guangzhou Technology Planned 40 South Brick and 5.00 1,805.74 December Quan Zheng Sui Shipyard Building factory, Fangcun Main concrete 1974 Zi Shipping Co., actual Road, Liwan No.0650170478 Ltd. office District, Guangzhou City
22 Yue Fang Di Guangzhou Computation Planned 40 South Masonry 6.00 3,856.12 December Quan Zheng Sui Shipyard Building factory, Fangcun Main concrete 1984 Zi Shipping Co., actual Road, Liwan No.0650170479 Ltd. office District, Guangzhou City
23 Yue Fang Di Guangzhou Guest Factory 40 South Masonry 3.00 785.95 January Area shown on Quan Zheng Sui Shipyard Restaurant Fangcun Main concrete 1983 certificate is Zi Shipping Co., Road, Liwan 1,178.93 square No.0650169960 Ltd. District, meters, demolished Guangzhou City area is 392.98 square meters
24 Yue Fang Di Guangzhou Small Factory 40 South Masonry 1.00 5,913.25 January Quan Zheng Sui Shipyard Close-up Fangcun Main concrete 1976 Zi Shipping Co., Workshop Road, Liwan No.0650170480 Ltd. District, Guangzhou City
25 Nil Nil New Production 40 South Steel 1.00 972.00 November Carrying value Installation Fangcun Main structure 2012 includes value of Workshop Road, Liwan demolished District, installation Guangzhou City workshop
– IV-14 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
26 Yue Fang Di Guangzhou Office of Planned 40 South Brick and 3.00 701.84 January Facility foundation Quan Zheng Sui Shipyard Branch factory, Fangcun Main concrete 1988 renewed due to Zi Shipping Co., Installation actual Road, Liwan production needs No.0650168158 Ltd. Factory office District, Guangzhou City
27 Yue Fang Di Guangzhou Composite Planned 40 South Brick and 3.00 1,118.31 January Quan Zheng Sui Shipyard Office Of factory, Fangcun Main concrete 1972 Zi Shipping Co., Branch actual Road, Liwan No.0650168698 Ltd. Installation office District, Factory Guangzhou City
28 Yue Fang Di Guangzhou Old Steel Factory 40 South Masonry 1.00 822.55 January Quan Zheng Sui Shipyard Plate Fangcun Main concrete 1979 Zi Shipping Co., Processing Road, Liwan No.0650168801 Ltd. Workshop District, Guangzhou City
29 Yue Fang Di Guangzhou Line 2 of Factory 40 South Masonry 1.00 3,975.97 January Quan Zheng Sui Shipyard Internal Fangcun Main concrete 1979 Zi Shipping Co., Processing Road, Liwan No.0650170241 Ltd. Team District, (Workshop) Guangzhou City
30 Yue Fang Di Guangzhou Line 1 of Factory 40 South Masonry 1.00 3,408.68 January Quan Zheng Sui Shipyard Internal Fangcun Main concrete 1976 Zi Shipping Co., Processing Road, Liwan No.0650170221 Ltd. Team District, (Workshop) Guangzhou City
31 Yue Fang Di Guangzhou West Factory Factory 40 South Masonry 1.00 1,885.57 January Its equipment base Quan Zheng Sui Shipyard Container Fangcun Main concrete 1977 was renewed and Zi Shipping Co., Processing Road, Liwan altered due to No.0650169744 Ltd. Workshop District, production needs Guangzhou City
32 Yue Fang Di Guangzhou Warehouse for Factory 40 South Masonry 1.00 5,738.64 January Quan Zheng Sui Shipyard Non-Metal Fangcun Main concrete 1969 Zi Shipping Co., Components Road, Liwan No.0650169759 Ltd. And Electric District, Cables Guangzhou City
33 Yue Fang Di Guangzhou Armor Factory 40 South Masonry 1.00 2,081.65 January Quan Zheng Sui Shipyard Installation Fangcun Main concrete 1972 Zi Shipping Co., Workshop Road, Liwan No.0650170470 Ltd. District, Guangzhou City
34 Yue Fang Di Guangzhou Quality Factory 40 South Brick and 2.00 415.38 January Internal wall with Quan Zheng Sui Shipyard Control Fangcun Main concrete 1988 anti-radiation Zi Shipping Co., Department Road, Liwan treatment No.0650170474 Ltd. Exposure District, Chamber Guangzhou City
35 Yue Fang Di Guangzhou Ship Factory 40 South Masonry 1.00 1,319.20 December Quan Zheng Sui Shipyard Installation Fangcun Main concrete 1983 Zi Shipping Co., Phase Road, Liwan No.0650170477 Ltd. Workshop District, Guangzhou City
– IV-15 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
36 Yue Fang Di Guangzhou New Pressure Factory 40 South Masonry 1.00 2,691.30 December Quan Zheng Sui Shipyard Vessel Fangcun Main concrete 1988 Zi Shipping Co., Workshop Road, Liwan No.0650169762 Ltd. District, Guangzhou City
37 Yue Fang Di Guangzhou Large-size Factory 40 South Steel 1.00 2,964.23 December High requirement Quan Zheng Sui Shipyard Components Fangcun Main structure 1993 for fire prevention, Zi Shipping Co., Processing Road, Liwan with heat insulated No.0650169798 Ltd. Workshop District, rooftop and a Guangzhou City number of crane rails
38 Yue Fang Di Guangzhou West Planned 40 South Masonry 6 7,505.76 December Quan Zheng Sui Shipyard Restaurant and restaurant Fangcun Main concrete (partial)/3 1993 Zi Shipping Co., Office and Road, Liwan No.0650170469 Ltd. library, District, actual Guangzhou City office
39 Yue Fang Di Guangzhou New Planned 40 South Masonry 4.00 2,933.00 December Area shown on Quan Zheng Sui Shipyard Measurement factory, Fangcun Main concrete 1994 certificate is 997.86 Zi Shipping Co., Center actual Road, Liwan square meters, No.0650169700 Ltd. office District, extended area of Guangzhou City 1,935.14 square meters without certificate
40 Yue Fang Di Guangzhou New Office Planned 40 South Masonry 7.00 3,113.68 December Area shown on Quan Zheng Sui Shipyard Building of factory, Fangcun Main concrete 1993 certificate is Zi Shipping Co., Shipbuilding actual Road, Liwan 2,629.29 square No.0650169704 Ltd. Department office District, meters, extended Guangzhou City area of 484.39 square meters
41 Yue Fang Di Guangzhou Phase Painting Factory 40 South Steel 4 3,946.57 January Wall and ceiling Quan Zheng Sui Shipyard Workshop Fangcun Main structure (partial)/1 1996 with steel plate Zi Shipping Co., Road, Liwan sandwiched fire No.0650169741 Ltd. District, retardant padding. Guangzhou City As spraying would damage the wall and ceiling, requirements for fire resistance and steel plate are high
42 Yue Fang Di Guangzhou Carparks and Carpark 40 South Masonry 2.00 2,473.86 September Quan Zheng Sui Shipyard Firefighting Fangcun Main concrete 1994 Zi Shipping Co., Building Road, Liwan No.0650169743 Ltd. District, Guangzhou City
43 Yue Fang Di Guangzhou New Transformer 40 South Masonry 2.00 562.35 January Including facility Quan Zheng Sui Shipyard Transformer room Fangcun Main concrete 1992 foundation Zi Shipping Co., Substation no. Road, Liwan No.0650169758 Ltd. 1 District, Guangzhou City
44 Yue Fang Di Guangzhou 6OHZ Power Power 40 South Masonry 2.00 542.14 January Including facility Quan Zheng Sui Shipyard Station station Fangcun Main concrete 1992 foundation Zi Shipping Co., Road, Liwan No.0650169760 Ltd. District, Guangzhou City
– IV-16 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
45 Yue Fang Di Guangzhou Dock Winch Factory 40 South Masonry 4.00 1,366.71 December Area shown on Quan Zheng Sui Shipyard and Fangcun Main concrete 1993 property certificate Zi Shipping Co., Scheduling Road, Liwan is 2,050.06 square No.0650170471 Ltd. Room District, meters, demolished Guangzhou City are is 683.35 square meters
46 Yue Fang Di Guangzhou Fitting Units Workshop 40 South Steel 1.00 1,837.67 December Alteration made Quan Zheng Sui Shipyard Installation Fangcun Main structure 1993 Zi Shipping Co., Workshop Road, Liwan No.0650169578 Ltd. District, Guangzhou City
47 Yue Fang Di Guangzhou Chemicals Materials 40 South Masonry 2.00 674.82 March Quan Zheng Sui Shipyard Warehouse warehouse Fangcun Main concrete 1994 Zi Shipping Co., Road, Liwan No.0650169980 Ltd. District, Guangzhou City
48 Yue Fang Di Guangzhou Paints Paints 40 South Masonry 1.00 1,263.36 January Quan Zheng Sui Shipyard Warehouse warehouse Fangcun Main concrete 1997 Zi Shipping Co., Road, Liwan No.0650170001 Ltd. District, Guangzhou City
49 Yue Fang Di Guangzhou Gas Station Gas station 40 South Masonry 1.00 88.52 March Two oil tanks Quan Zheng Sui Shipyard Fangcun Main concrete 1998 underground of Zi Shipping Co., Road, Liwan diameter 2.6 m and No.0650170004 Ltd. District, length 12 m Guangzhou City
50 Yue Fang Di Guangzhou New Pipe Factory 40 South Steel 1.00 8,461.37 December Quan Zheng Sui Shipyard Processing Fangcun Main structure 1992 Zi Shipping Co., Workshop Road, Liwan No.0650170498 Ltd. District, Guangzhou City
51 Yue Fang Di Guangzhou Electrical Warehouse 40 South Masonry 5.00 6,184.37 January Quan Zheng Sui Shipyard Equipment Fangcun Main concrete 1995 Zi Shipping Co., Warehouse Road, Liwan No.0650170021 Ltd. District, Guangzhou City
52 Yue Fang Di Guangzhou Elevator Workshop 40 South Steel 1.00 3,876.77 October Quan Zheng Sui Shipyard Workshop Fangcun Main structure 2003 Zi Shipping Co., Road, Liwan No.0650169863 Ltd. District, Guangzhou City
53 Yue Fang Di Guangzhou Design and Office 40 South Masonry 4.00 10,130.60 July 2005 Carrying value Quan Zheng Sui Shipyard Calibration Fangcun Main concrete includes part of the Zi Shipping Co., Building Road, Liwan value of BA001608 No.0650170320 Ltd. District, Guangzhou City
54 Nil Nil Welding Rod Production 40 South Masonry 1.00 471.81 January Warehouse Fangcun Main concrete 1972 Road, Liwan District, Guangzhou City
– IV-17 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
55 Nil Nil New Production 40 South Masonry 1.00 86.50 October Now changed to Transformer Fangcun Main concrete 1994 team room Substation no. Road, Liwan 10 District, Guangzhou City
56 Nil Nil Security Room Auxiliary 40 South Masonry 1.00 25.20 June 1998 Carrying value at North Gate Fangcun Main concrete includes monitoring Road, Liwan system District, Guangzhou City
57 Nil Nil Carpark of Auxiliary 40 South Masonry 4.00 4,800.00 December Part of carrying Design and Fangcun Main concrete 2008 value included in Calibration Road, Liwan asset no Building District, Guangzhou City
58 Nil Nil Toilets (4) Auxiliary 40 South Brick and 1.00 48.38 June 1998 Fangcun Main concrete Road, Liwan District, Guangzhou City
59 Nil Nil Environmental Auxiliary 40 South Brick and 1.00 10.11 September COD Fangcun Main concrete 2003 Monitoring Road, Liwan Room of Oil District, Tanks Guangzhou City
60 Nil Nil Security Room Auxiliary 40 South Brick and 1.00 17.95 December of Oil Tanks Fangcun Main concrete 2006 Road, Liwan District, Guangzhou City
61 Nil Nil Simple Sand Production 40 South Steel 1.00 1,356.00 October Shed of Pier Fangcun Main structure 1998 12 Road, Liwan District, Guangzhou City
62 Nil Nil Simple Production 40 South Steel 1.00 768.30 June 2004 Workshop for Fangcun Main structure Heavy Road, Liwan Engineering District, Guangzhou City
63 Nil Nil Security Post Auxiliary 40 South Brick and 1.00 25.00 May 2002 Including door at East Gate Fangcun Main concrete Road, Liwan District, Guangzhou City
– IV-18 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
64 Nil Nil Old Phase Production 40 South Masonry 1.00 6,294.00 November Wall and ceiling Painting Fangcun Main concrete 2009 with steel plate Workshop Road, Liwan sandwiched fire District, retardant padding. Guangzhou City As spraying would damage the wall and ceiling, requirements for fire resistance and steel plate are high, case
65 Nil Nil Restaurant Production 40 South Masonry 2.00 80.00 November With sewage Waste Water Fangcun Main concrete 2009 treatment pool and Gas Road, Liwan underground Treatment District, Station Guangzhou City
66 Nil Nil Air Production 40 South Masonry 3.00 1,282.50 November Auxiliary water Compressor Fangcun Main concrete 2009 pool included and Electric Road, Liwan Room of District, Painting Guangzhou City Workshop
67 Nil Nil Electrical Production 40 South Masonry 5.00 12,398.00 December Equipment Fangcun Main concrete 2009 Distribution Road, Liwan Center District, Guangzhou City
68 Nil Nil Main Office 40 South Masonry 5.00 4,425.00 December Five-story Fangcun Main concrete 2009 Composite Road, Liwan Office District, Building Guangzhou City
69 Nil Nil New Production 40 South Masonry 2.00 256.00 March Transformer Fangcun Main concrete 2010 Substation no. Road, Liwan 2 District, Guangzhou City
70 Nil Nil Infrastructure Auxiliary 40 South Brick and 3.00 264.00 November Some expenses not Design Fangcun Main concrete 2008 yet booked Building Road, Liwan District, Guangzhou City
71 Nil Nil Transformer Production 40 South Masonry 2.00 98.40 June 2009 Carrying value Substation no. Fangcun Main concrete includes equipment 4 High Road, Liwan charges Voltage Room District, Guangzhou City
72 Nil Nil Welding Rod Production 40 South Brick and 1.00 48.50 December Room at south Fangcun Main concrete 2009 of Main Dock Road, Liwan District, Guangzhou City
– IV-19 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
Gross Real Estate Floor Year and Serial Ownership Building Area Month of No. Certificate No. Owner Name Usage Address Structure Storeys (m2) Completion Remark
73 Nil Nil Large-size Production 40 South Steel 1.00 3,078.00 December Wall and ceiling Equipment Fangcun Main structure 2012 with steel plate Processing Road, Liwan sandwiched fire Workshop District, retardant padding Guangzhou City
74 Nil Nil Hilltop Steel Production 40 South Steel 1.00 210.00 November With gas storage Plate Fangcun Main structure 2012 tank and auxiliary Warehouse Road, Liwan trenches No. 2 District, Guangzhou City
75 Nil Nil Office of Steel Office 40 South Masonry 2.00 119.58 January Plate Factory Fangcun Main concrete 1995 Road, Liwan District, Guangzhou City
76 Nil Nil Rooms for Auxiliary 40 South Simple 1.00 74.40 January High foundation Processing and Fangcun Main 2011 cost due toa3m Manufacturing Road, Liwan rubble foundation Team District, Guangzhou City
77 Nil Nil Security Room Auxiliary 40 South Brick and 1.00 37.50 April 1999 Including door and at Main Gate Fangcun Main concrete wall for image Road, Liwan District, Guangzhou City
Total 169,719.58
③ Status of encumbrance
As at the Reference Day, the actual user of the land and buildings thereon was CSSC Offshore & Marine Engineering (Group) Company Limited. As at the date of issue of the appraisal report, no lease agreement was entered into for the land and buildings thereon leased by Guangzhou Shipyard Shipping Co., Ltd. to CSSC Offshore & Marine Engineering (Group) Company Limited and such agreement was being drawn up. As at the Reference Day, the appraisal objects had no charge, guarantee or other encumbrance.
(4) Physical condition
The appraisal objects were located at 40 South Fangcun Main Road, Liwan District, Guangzhou City, four boundaries of the land parcel were: Pearl River to east, land of CSSC Offshore & Marine Engineering (Group) Company Limited to south, Fangcun Main Road to west, and Oil Tank No.4 of Guangdong Province Petroleum Company to north. The land parcel was in relatively regular shape and in flat terrain, the development extent of the land was in “five links” (roadway, electricity, telecommunication, water supply and drainage) inside and outside the land parcel and the land parcel was in flat field.
– IV-20 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
The buildings and structures in the appraisal objects were mostly buildings and structures used in the factory area, mainly included workshop, office and warehouse etc., the structures mainly included advance outfitting yard, dump yard, roadway, fence and etc., hydraulic structures mainly included dock, berth, terminal and etc.. The buildings were completed between 1965 and 2012; the structures were completed between 1958 and 2013; the pipes, trenches and cables were completed between 1956 and 2012.
The buildings and structures were summarized as follows:
Description of the buildings: New Installation Workshop, Large-size Components Processing Workshop and Phase Painting Workshop etc. were in steel structure. The base composition was mainly reinforced concrete piles and caps, steel column, steel beam and exterior wall were enveloped by color steel plate, the ground was in concrete, the windows were generally aluminum alloy windows, the doors were fire resistance steel doors. Indoor water, electricity and other auxiliary services were fully equipped. Offices and staff dormitory etc. were in masonry concrete structure; the interior walls were decorated by spray paint after general cement mortar, the exterior walls were decorated by paint after cement mortar; the ground was mainly made of ground tiles, ceramic tiles and granite tiles; indoor water and electricity services were fully equipped. For scope of buildings, please refer to the annex to the report – Detail List of Buildings Appraisal.
Description of structures: mainly advance outfitting yard, dump yard, roadway, fence, dock, berth, terminal etc. the advance outfitting yard, dump yard and roadway were in concrete or reinforced concrete structure; the fences were in tile structure; the dock and berth were in concrete gravity structure, the terminal was high beam slab or gravity structure. For scope of structures, please refer to the annex to the report – Detail List of Structures and Other Auxiliary Facilities.
Description of pipes and trenches: the pipes and trenches mainly included industrial water, fire hose, water pipe, living water, compressed air pipe. For scope of pipes and trenches, pleas refer to the annex to the report – Detail List of Pipes and Trenches Appraisal.
Summary of main buildings and structures:
① the Company’s 5-storey general office building was in reinforced concrete and masonry concrete structure, totaling 5 storeys, with a gross floor area of 4,425.00 m2, the base of such building was pre-stressed concrete pipe pile; the supporting structures were reinforced concrete beams, columns and shear walls; exterior wall, separating wall and interior wall used aerated concrete blocks; the exterior wall pasted mosaic, interior wall brushed pain; the ground of floor laid by ceramic tiles, parts of which were laid by cement mortar; the stairs laid terrazzo with stainless steel handrails and railings; stainless steel-made door, aluminum alloy window, stainless steel shield was
– IV-21 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
installed for 1st to 2nd floor; the plafonds were 106 paint with mixed mortar, parts of which were sprung roof; water, electricity and related auxiliary facilities were fully equipped.
② Old phase and pipe painting workshops were in masonry concrete structure, single-storey industrial factory with a gross floor area of 6,294.00 m2 and eaves height of 19.00 meters. The supporting structures were reinforced concrete columns, steel beams; the retaining structure was brick ball with thickness of 240 mm, the exterior wall was painted dry wall, the interior wall was double layer steel plate with sandwiched fireproof cotton wall, casting in place reinforced concrete roof with steel plate ceiling; the floor was reinforced concrete floor with 16 mm thickness of steel plate laid on surface; main gates of the workshops were flexible list fireproof door with fire resistance limit of not less than 3h, aluminum alloy window; the level of waterproof for roof was in grade two with double waterproofs; water, electricity and related facilities were fully equipped in the workshops.
③ Size of main structure of dock: Length of 260M, width of 36M, height of 9.35M. Such dock was invested and constructed to meet ship supply and ship repair. The head of the dock was set with steel-made dock door. Each of both sides of the dock was set with two units of 80t gantry cranes. Its western side and backside were set with general assembly and outfitting field. The engineering structure type: the dock was in reinforced concrete gravity structure, the entrance of the dock used steel-made caisson structure with steel-made plug plate door. The dock wall was in casting-in-place reinforced concrete lining, retaining pile and waterproof curtain pile. Buttress wall bottom formed the waterproof curtain by pressure cementing. The upper structure of the dock wall set with public pipe lines corridor. The base plate of dock chamber was in casting-in-place reinforced concrete structure, the decompression drainage system was set under the plate bottom. The main body of pump room used casting-in-place reinforced concrete structure. The dock area was designed with a couple of 400 tons crane track foundation, two couples of 80 tons gantry crane track foundation. In addition to use of dock wall, dump room and dock gate block as bases, such tracks adopted multi span continuous beam structure of pile foundation, and the pile foundation used bored grouting pile. General assembly, outfitting field and phase advance assembly field: the field used 300 mm thickness of casting-in-place reinforced concrete plate. The whole structure of the dock, entrance of dock, bulkhead wall was stable, which was in compliance with requirements of design standard. The main body of the dock, dock wall, dock entrance, bottom plate etc. were in good condition, the auxiliary facilities remained intact. The sea side of the dock gate and railing at the end of the dock had slight corrosion partly.
The overall quality of the buildings in appraisal objects was good, which mainly presented in the following aspects: the foundation of buildings was stable, and uneven sedimentation was not found; the main structure of buildings above the ground was
– IV-22 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
intact with adequate bearing capacity, no obvious deformation was found; internal facilities of major buildings were perfect and in normal use; the functional technical indicators were able to meet requirements of the established use.
IV. Appraisal Purpose
To appraise the market value of the appraisal objects to provide a value reference basis with CSSC Offshore & Marine Engineering (Group) Company Limited as the Client for buildings and structures involved in respect of equity interests in Guangzhou Shipyard Shipping Co., Ltd. proposed to be transferred by it.
V. Reference Day
31 August 2015, which was determined based on the Appraisal Entrustment Letter of the Client.
VI. Value Definition
(1) Value Type: this appraisal conclusion was a market value using an open market value standard.
(2) Value Connotation
This appraisal conclusion comprised value of the buildings, structures, pipes and trenches within the appraisal objects, excluding value of land use rights, which was the market value of the appraisal objects as at the Reference Day being 31 August 2015.
VII. Appraisal Basis
(I) State’s laws and regulations
1. Land Administration Law of the People’s Republic of China (Chairman Order No. 28, 28 August 2004);
2. Law of the People’s Republic of China on the Administration of Urban Real Estate (Chairman Order No. 72, 30 August 2007);
3. Real Right Law of the People’s Republic of China (Chairman Order No. 62, 16 March 2007);
4. Urban and Rural Planning Law of the People’s Republic of China (Chairman Order No.74, passed at the 3rd session of the Standing Committee of the Tenth National People’s Congress of the People’s Republic of China on 28 October 2007);
5. Provisional Regulations of the People’s Republic of China on the Grant and Transfer of State-owned Land Use Rights (State Council Order No.55);
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6. Other laws and requirements, policy documents etc.
(II) Local laws and regulations
1. Guangdong’s Implementation Measurement on the Land Administration Law of the People’s Republic of China by the Standing Committee of the People’s Congress of Guangdong Province (Notice No. 15, effective from 1 January 1995)
(III) Technical Standards Adopted For This Appraisal
1. Code for Real Estate Standard (National Standard GB/T 50291-1999);
2. Standard for Basic Terminology of Real Estate Appraisal(GB/T 50899-2013).
(IV) Relevant Information Provided by the Client and the Owner
1. Copies of business licenses of the client and the owner;
2. Appraisal entrustment letter;
3. Owner’s undertaking letter;
4. Copy of legal opinion;
5. Copies of real estate ownership certificates;
6. Information and drawings concerning budget and final accounts provided by the enterprises;
7. Contracting and Sub-contracting contracts signed between the enterprise and relevant entities.
(V) Information Collected by the Valuers upon Investigation
1. Circular of the State Development Planning Commission on Issuing the Tentative Provisions on Charges for Consultancy of Preliminary Work of Construction Projects (Ji Jia Ge [1999] No. 1283);
2. Circular of the State Development Planning Commission and the Ministry of Construction on Issuing the Administrative Provisions on Charges of Engineering Survey and Design (Ji Jia Ge [2002] No. 10);
3. Notice of the National Planning Commission and State Environmental Protection Administration on Regulating Environmental Impact Consultation Fees (Ji Jia Ge [2002] No. 125);
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4. Circular of the State Development Planning Commission on Issuing the Interim Administrative Measures for Service Fees of Tendering Agencies (Ji Jia Ge [2002] No. 1980);
5. Circular of the Ministry of Finance on Issuing the Provisions on Financial Management of Basic Construction (Cai Jian [2002] No. 394);
6. Circular of the National Development and Reform Commission and the Ministry of Construction on Issuing the Administrative Provisions on Charges of Supervision of Construction Projects and Relevant Service (Fa Gai Jia Ge [2007] No. 670);
7. Rating Standard for Condition of Houses (For Trial Implementation) (Cheng Zhui Zi [1984] No. 678);
8. Comprehensive Estimate Norm of Guangdong Province for Construction and Decoration Project (2010);
9. Comprehensive Estimate Norm of Guangdong Province for Installation Projects (2010);
10. General Rules of Guangdong Province for Price Determination Estimate Norm of Construction Projects (2010);
11. Guangzhou Construction Cost Information for August 2015;
12. Circular of the Ministry of Communications Jiao Ji Fa [2004] No. 247 “Estimate Norm for Hydraulic Architecture Projects of Coastal Ports”;
13. Circular of the Ministry of Communications Jiao Shui Fa [2004] No. 247 “Rules on Preparation of Budgetary Estimates for Construction Projects of Coastal Ports”;
14. Circular of the Ministry of Communications Jiao Ji Zi [2004] No. 247 “Estimate Norm for On-shift Fees for Marine Machines for Hydraulic Architecture Projects and Handling Mechanical Equipment of Coastal Ports”;
15. Circular of the Ministry of Communications Jiao Ji Fa [2004] No. 247 “Estimate Norm for Quantity of Concrete and Mortar Materials for Marine Transport Engineering”;
16. YHSGGYS System Software for Budgeting for Coastal Port Projects (2005, Estimate Norm for the Ministry of Communications);
17. Circular of the Ministry of Communications Jiao Ji Zi [1997] No. 246 “Estimate Norm for On-shift Fees for Vessels for Dredging Engineering”;
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18. On-site investigation records and other information in relation to the valuation collected by the valuers.
VIII. Appraisal Principals
This appraisal report was prepared in accordance with the following principals:
1. Independent, objective and fair principle: Under independent, objective and fair principals, it was required to appraise fairly and decently a value or price which was fair and reasonable for each interested party of this appraisal based on the principal of neutrality and facts.
2. Legal principal: Under legal principal, it was required that the appraisal conclusion was a value or price under the condition of the appraisal objects determined legally.
3. Principal of Reference Day: Under the principal of Reference Day, it was required that the appraisal conclusion was a value or price at a particular time determined under the appraisal purpose.
4. Alternative principal: Under the alternative principal, it was required that the appraisal conclusion was a value of real estate which was similar as the appraisal objects under the equivalent conditions or the price deviation was within a reasonable range.
5. Maximum and best utilization principal: Under the maximum and best utilization principal, it was required that the appraisal conclusion was a value or price of the appraisal objects under the condition of their maximum and best utilization.
IX. Appraisal Methods
(I) Appraisal technique route
This appraisal objects were buildings, structures and ancillary facilities for industrial production and auxiliary purposes, excluding land use rights, appraising the appraisal objects by using the cost method.
(II) Selection of appraisal methods
After careful analysis of available information with on-site survey and investigation, and based on characteristics of the appraisal objects, in accordance with relevant laws and regulations of the State and technical standards of appraisal, the valuers had decided to use the cost method as the basic method for this appraisal after repeated research. As information on construction costs for the appraisal objects was readily available, the cost method was selected as the appraisal method; the trading market for industrial buildings was undeveloped, and this appraisal was only involved
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in buildings, structures and auxiliary facilities, excluding land use rights, so it was not applicable to select the comparison method, income method and hypothesis development method to appraise them.
(III) Definition of appraisal methods
The cost method was a method of calculating value or price of an appraisal object by its replacement costs or reconstruction costs minus depreciation after measuring the replacement costs or reconstruction costs and depreciation of the appraisal object as at the Reference Day.
Formula: Appraisal value = Replacement costs or Reconstruction costs – Depreciation
Or, Appraisal value = Replacement costs or Reconstruction costs × Comprehensive newness rate
X. Appraisal Conclusion
According to the appraisal purpose, following the appraisal principals, in accordance with the appraisal procedures, using scientific appraisal methods, on the basis of careful analysis of existing information, after the careful and accurate measurement, combined with the appraisal experience and analysis of factors affecting value of the appraisal objects, the valuers determined the appraisal conclusion on the market value of the appraisal objects as at the Reference Day as follows:
Total market value of the appraisal objects: RMB473.1327 million
Amount in words: RMB FOUR HUNDRED SEVENTY-THREE MILLION ONE HUNDRED THIRTY-TWO THOUSAND SEVEN HUNDRED ONLY
Of which:
Value of buildings: RMB272.8920 million (of which the buildings with real estate ownership certificates were 129,237.17 square meters valuing at RMB161.8760 million; the buildings without real estate ownership certificates were 40,482.41 square meters valuing at RMB111.0160 million)
Value of structures: RMB170.0210 million
Value of pipes and trenches: RMB30.2197 million
See the annexes to the report for the detailed results – Detail List of Buildings Appraisal, Detail List for Structures and Other Auxiliary Facilities Appraisal and Detail List for Pipes and Trenches Appraisal.
– IV-27 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
XI. Valuers
Name of Valuers Qualification Certificate No. Signature
He Zhe 1120050150
Shi Fa Liang 1120060098
He Zhe and Shi Faliang are both registered real estate appraisers in China. They both carried out real estate valuation in China for the past 10 years. He Zhe and Shi Faliang joined Beijing CEA Real Estate Appraisal Co., Ltd. and served as registered real estate appraisers for 10 years and 5 years respectively. Chu Yongqiang also participated in the assessment as a valuer.
XII. Appraisal Operation Period
From 14 September 2015 to 29 September 2015
XIII. Useful Term of Appraisal Report
The use of this appraisal report shall not exceed one year from the date of issue of the appraisal report.
– IV-28 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
Technical Report for Real Estate Appraisal
I. Description and Analysis of Appraisal Objects
(I) Basic Status of Real Estate
1. Name: The appraisal objects were buildings and structures used by Guangzhou Shipyard Shipping Co., Ltd. in the factory area.
2. Location: The appraisal objects were located at 40 South Fangcun Main Road, Liwan District, Guangzhou City.
3. Four boundaries: The boundaries of the appraisal objects were Pearl River to east, land of CSSC Offshore & Marine Engineering (Group) Company Limited to south, Fangcun Main Road to west, and Oil Tank No.4 of Guangdong Province Petroleum Company to north.
4. Size: The scope of this appraisal was buildings, structures, pipes and trenches attributable to Guangzhou Shipyard Shipping Co., Ltd.. There were total of 77 buildings with a total gross floor area of 169,719.58 square meters; total of 61 structures; total of 383 pipes and trenches.
5. Usage: The appraisal objects were buildings, structures and ancillary facilities etc. for industrial production and auxiliary purposes.
6. Ownership: In the appraisal objects, the real estate ownership certificates were obtained for 50 buildings, of which the title owner in 49 certificates was Guangzhou Shipyard Shipping Co. Ltd. and the remaining one title (pipe processing workshop, Sui Fang Di Zheng Zi No. 163349) was not transferred to Guangzhou Shipyard Shipping Co. Ltd. The title owner set out in the certificate was Guangzhou Shipyard International Company Limited (the former name of COMEC); no real estate ownership certificates were obtained for the remaining 27 buildings.
(II) Description and Analysis of Location of Real Estate
1. Location
(1) Location: The appraisal objects were located at 40 South Fangcun Main Road, Liwan District, Guangzhou City, location of which was shown as the map below, was the position at which the appraisal objects were located.
– IV-29 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
(2) Azimuth: The appraisal objects were located between Pearl River and Fungcun Main Road, Liwan District, Guangzhou City.
(3) Distance: The appraisal objects were 8.5 kilometers away from Guangzhou Railway Station and 18.5 kilometers away from Foshan Airport.
(4) Orientation: The main gate of the factory area of the appraisal objects was towards the west.
2. Transportation
(1) Available vehicle: There are lines 52, 64, 121, 312, 769 (rapid line), 995, Guang 277, Night 42, and Night 79 buses arriving at here, the land parcel was closely adjacent to bus stations; 2 kilometers away from Xilang Station of Metro Line 1; 900 meters away from Biahedong Terminal.
(2) Status of roadway: The appraisal objects was close to Fungcun Main Road as a trunk road, nearly there are Hedong Road as the trunk road and other branch roads, the road was smooth with convenient road accessibility and smooth traffic.
(3) Status of traffic control: No traffic control.
(4) Convenience of parking: There were parking lot and parking garage in the factory area.
– IV-30 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
3. Surrounding environment and landscape
(1) Natural environment: The appraisal object was a shipbuilding enterprise, which had a certain degree of pollution.
(2) Humanistic environment: The area at which the appraisal objects were located was mostly industrial land, the humanistic environment was ordinary.
(3) Landscape: close to Pearl River, but the landscape was ordinary.
4. Exterior auxiliary facilities
(1) External infrastructure: Road, water supply, drainage (rain, sewage), power supply, communication, cable television and other facilities were relatively perfect.
(2) External public service facilities: There were Xindong Primary School, Hedong Primary School, Peiying Middle School, Guangchuan Technical School, Dongsha Hospital, Guanggang Hospital, Liwan District No. 3 Hospital, Agricultural Bank, Agricultural and Commercial Bank of Guangdong, Lemanduo Shopping Mall, Zhengjia Shopping Mall around a certain range of the area.
5. Merit analysis of regional condition
Liwan District had a unique geographical advantage, although the industrial enterprises in the region had been moved out in succession, commercial, residential, service and trade sectors achieved rapid development, the infrastructure had improved continuously, the regional factor as a whole generated a favorable effect on the land premium. Furthermore, as a shipbuilding enterprise, there was obvious geographical advantage as it was close to Pearl River.
(III) Description and analysis of physical status of real estate
1. Physical status of land
(1) Land area: 393,793 square meters.
(2) Land shape: relatively regular polygon.
(3) Terrain: The terrain was flat.
(4) Topography: The topography was consistent with the adjacent land, and natural drainage was in good condition.
– IV-31 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
(5) Soil: as a shipbuilding enterprise, it generated certain pollution to the soil.
(6) Foundation (geology): The foundation had a relatively stronger bearing capacity and the stability was good with no bad geological phenomenon.
(7) The development extent of land: There were “five links” (roadway, electricity, telecommunication, water supply and drainage) inside and outside the land parcel and the land parcel was in flat field.
2. Physical status of buildings
(1) Size of buildings: The scope of this appraisal was buildings, structures, pipes and trenches attributable to Guangzhou Shipyard Shipping Co., Ltd.. There were total of 77 buildings with a total gross floor area of 169,719.58 square meters; total of 61 structures; total of 383 pipes and trenches.
(2) Storeys and height: The buildings of the appraisal objects were mostly low-rise buildings, minority was multi-storey buildings, most of which were in a single storey, and multi-storey buildings were 2 to 7 storeys; the height was 3 to 32 meters.
(3) Appearance: The appearance of buildings in the appraisal objects included color steel envelope, brushing paint, pasting mosaic etc..
(4) Structure of building: The structure of buildings in the appraisal objects included masonry concrete structure, brick and concrete structure, steel structure and simple structure etc.; the structure of structures included concrete or reinforced concrete structure, brick structure, high piled beam slab or gravity type structure and etc..
(5) Facilities and equipment: There were mainly water, electricity and related auxiliary facilities interior.
(6) Decoration and fitting: The external wall like new installation workshop, large-size components processing workshop and phase painting workshop etc. were color steel plate envelope, the ground was in concrete floor, the windows were generally aluminum alloy windows, the doors were steel-made fireproof doors. The interior walls of offices and staff dormitory were decorated by spray paint after general cement mortar, the exterior walls were decorated by paint after cement mortar; the ground was mainly made of ground tiles, ceramic tiles and granite tiles.
(7) It was relatively good in waterproof, heat preservation, heat insulation, sound insulation, ventilation, lighting, sunshine and etc. for buildings in the appraisal objects.
– IV-32 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
(8) Age and designed useful term of building: The buildings were completed between 1965 and 2012; the structures were completed between 1958 and 2013; the pipes, trenches and cables were completed between 1956 and 2012. The designed useful term was varied depending on difference of structure and different extent of use, general useful term was 8 to 50 years with the remaining value ratio of 3%-10%.
(9) Repair and maintenance conditions and extent of damage: The foundation of buildings in the appraisal objects was stable, and uneven sedimentation was not found; the main structure of buildings above the ground was intact with adequate bearing capacity, no obvious deformation was found; internal facilities of major buildings were perfect and in normal use; the functional technical indicators were able to meet requirements of the established use.
5. Merit analysis of physical status of real estate
The appraisal objects were buildings, structures and ancillary facilities for industrial production and auxiliary purposes. According to description of such status, the effect extent of their physical status on their value was ordinary.
(IV) Description and analysis of interest status of real estate
1. Status of land interests
According to 50 documents provided by the owner, including the Land Grant Contract (No. (93) Sui Guo Di Chu Zi No. 128) and the Real Estate Ownership Certificate (Yue Fang Di Quan Zheng Sui Zi Di 0650168158), the owner of land use right for the land parcel at which the appraisal objects were located was CSSC Offshore & Marine Engineering (Group) Company Limited, total area of the land parcel was 393,793 square meters, the land was obtained by grant, the land was for industrial and auxiliary purposes, the expiry date of the land use right was 19 January 2044 (as stated in the Real Estate Ownership Certificate, the grant premium of the state-owned land use right was levied, the term of land use right was 50 years from 20 January 1994.Based on such date, the expiry date of the land use right was 19 January 2044), the remaining term of the land use right was 28.39 years as at the Reference Day.
2. Status of buildings interests
According to 50 documents provided by the owner, including the Real Estate Ownership Certificate (Yue Fang Di Quan Zheng Sui Zi Di 0650168158), as at the Reference Day, in the appraisal objects, the real estate ownership certificates were obtained for 50 buildings with a total gross floor area of 129,237.17 square meters (according to the original real estate ownership certificate, the registration area was of 126,534.79 square meters, the expansion area was of 3,778.71 square meters, the demolition area was of 1,076.33 square meters, the current actual area was of 129,237.17 square meters). The title owner set out in 49 of the certificates
– IV-33 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
was Guangzhou Shipyard Shipping Co. Ltd. and the remaining one title (pipe processing workshop, Sui Fang Di Zheng Zi No. 163349) was not transferred to Guangzhou Shipyard Shipping Co. Ltd. The title owner set out in the certificate was Guangzhou Shipyard International Company Limited (the former name of COMEC); no real estate ownership certificates were obtained for the remaining 27 buildings with a total gross floor area of 40,482.41 square meters. For the specific status, please refer to the Detail List of Buildings in Appraisal Objects.
3. Status of encumbrance
As at the Reference Day, the actual user of the land and buildings thereon was CSSC Offshore & Marine Engineering (Group) Company Limited. As at the date of issue of the appraisal report, no lease agreement was entered into for the land and buildings thereon leased by Guangzhou Shipyard Shipping Co., Ltd. to CSSC Offshore & Marine Engineering (Group) Company Limited and such agreement was being drawn up. As at the Reference Day, the appraisal objects had no charge, guarantee or other encumbrance.
4. Merit analysis of status of real estate interests
In the appraisal objects, 1 building (pipe processing workshop, Sui Fang Di Zheng Zi No. 163349) was not transferred to Guangzhou Shipyard Shipping Co. Ltd.. 4 buildings with certificates (the office building for the infrastructural construction division, the workshop for the finished products, the new measurement central building and the new office building for the shipbuilding department) was partially expanded. The expanded gross floor area was 3,778.71 square meters with no real estate ownership certificates obtained; no real estate ownership certificates were obtained for 27 buildings. no lease agreement was entered into for the land and buildings thereon leased by Guangzhou Shipyard Shipping Co., Ltd. to CSSC Offshore & Marine Engineering (Group) Company Limited. CSSC Offshore & Marine Engineering (Group) Company Limited jointly undertook that, all buildings within the appraisal scope were invested as capital contribution into Guangzhou Shipyard Shipping Co., Ltd. The titles of the buildings belong to Guangzhou Shipyard Shipping Co., Ltd. with no disputes concerning ownership. In case of any dispute arising from or in connection with the ownership of titles, CSSC Offshore & Marine Engineering (Group) Company Limited and Guangzhou Shipyard Shipping Co., Ltd. should take full legal responsibilities. According to the Legal Opinion on Ownership of Buildings and Land of Guangzhou Shipyard dated 15 October 2015 issued by SG & Co, Shanghai, there is no dispute concerning the ownership of the appraised objects. Such matters may affect the existence of value of the appraisal objects, but this appraisal had not been taken into account of them. It is also mentioned in Legal Opinion that an undertaking letter has been entered into between Guangzhou Shipyard Shipping Co., Ltd. and CSSC Offshore & Marine Engineering (Group) Limited, which states that the legal title of the valued buildings and land belongs to Guangzhou Shipyard Shipping Co., Ltd. and therefore there is no ownership dispute. We have received from the management of the Company the Legal Opinion issued by SG & Co, Shanghai and the Legal Opinion has been fully taken into account when the valuation was being conducted.
– IV-34 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
II. Analysis of Market Background
(I) Macroeconomic situation
1. Overall economic condition of China for the first half of 2015
The gross domestic products of China amounted to RMB29,686.8 billion for the first half of 2015, in term of comparable price, representing an year-on-year increase of 7.0%. By quarters, the first quarter achieved a year-on-year increase of 7.0%, the second quarter achieved a year-on-year increase of 7.0%. By industries, the added value of the primary industry amounted to RMB2,025.5 billion, representing a year-on-year increase of 3.5%; the added value of the secondary industry amounted to RMB12,964.8 billion, representing an increase of 6.1%; the added value of the tertiary industry amounted to RMB14,696.5 billion, representing an increase of 8.4%. by quarter-on quarter comparison, the gross domestic products for the second quarter increased 1.7%.
2. Overall economic condition of Guangzhou City for the first half of 2015
For the first half of 2015, Guangzhou City achieved the gross domestic products (GDP) of RMB828.527 billion, representing a year-on-year increase of 8.1%, the growth rate increased 0.6 percentage points over the first quarter. Of which, the added value of primary industry, secondary industry and tertiary industry amounted to RMB9.862 billion, RMB270.328 billion and RMB548.337 billion, representing an increase of 2.0%, 6.9% and 8.9% respectively, the structure of three industries was 1.19: 32.63: 66.18.
(II) Summary of related policies for real estate
In the first half of 2015, as stimulated by various favourable policies and the market demand released continuously, in the domestic real estate market, trading of property in the first-tier cities was picked up gradually. In particular, after the “30 March new policy”, recovery momentum of property market was very obvious. From figures, the property market in the first half of 2015 was very “nice”, and the major real estate enterprises also took opportunity to strive to digest their inventory. Most of property projects sold during small holidays like Labor Day and Dragon Boat Festival had achieved considerable good results. With the market recovery, sales results of the brand real estate enterprises also achieved rapid rebound in the second quarter, their capital position was improved. As analyzed by China Index Institute, it considered that the momentum in the first half of this year would be continued. It was expected that decline of market supply in the second half year would be narrowed with the demand picked up continuously. Sales area of commercial housing in the whole year would remain an increase of about 2%-5%. At the same time, the inventory would be digested gradually; the pressure of supply exceeding demand would be improved continuously. It was expected that the housing price would be stabilized and rebounded slightly, and thus would promote the overall recovery of the market.
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From the policy trend in the first half year, the attitude of adjustment and control on the property market had changed, launching of a series of policies stimulating the property market, including changing term of levying business tax from 5 years to 2 years, loosening mortgage on the second home and reducing reserve rate and interest rate, became the booster of the property market recovery in the first half year. In the first six months, the property market in Guangzhou presented a trend of “decline first and then rise”. According to monitoring by Fangjiadp.com on figures of online contracts of g4c.laho.gov.cn, from January to June, the number of first-hand homes contracted on line in Guangzhou was 42,300 sets, representing a year-on-year increase of 28.6% as compared with 32,900 sets for January to June 2014. Of which, the number of first-hand homes contracted online in the whole city exceeded continuously 9,000 sets in May and June, which was a rare high level since launching of “Sui Six Regulations”.
(III) Overall condition of real estate market in Guangzhou City
Land: In the first half of 2015, the supply area, transaction area and amounts in Guangzhou by bid, auction and listing declined 16%, 22% and 10% on a year-on-year basis; the proportion of transaction by base price exceeded 90%. As compared with the planned supply area announced by the government at the beginning of the year, the area granted in Guangzhou still had the difference of 87% as compared with the whole planned supply area. On the other hand, results of a considerable number of real estate enterprises were not satisfactory, relevant statistics revealed that in 20 typical real estate enterprises, only 4 enterprises achieved one half or above of their sale targets, less than half for 11 enterprises, and sales results of 5 enterprises only achieved 40% or below of their annual sales targets. The real estate enterprises became more cautious in acquisition of land as a result of the pressure of collecting capital, so they would require a higher return on land.
Residential: In January to May, the transaction area for first-hand commercial housing in Guangzhou increased 15% on a year-on-year basis, the increase in transaction volume mitigated the high pressure in inventory, as at the end of May, the saleable inventory of first-hand commercial housing slightly reduced to 9.55 million square meters, the cycle of digesting the inventory was estimated to be 12.9 months. As at the end of June, the saleable inventory further reduced to 8.87 million square meters, the estimated cycle of digesting the inventory was further declined to 10.9 months. The relationship between supply and demand tended to be healthy, the price trend was steadily rising: although the property-purchasing limitation still was not loose, the policy of down payment for the second home mortgage also was most stringent in the first-tier cities, price of properties in Guangzhou still picked up. Entering into June, as driven by the price increase in five central districts, the average of transaction price in the whole city increased 7% over May on a month-on-month basis.
Office buildings: In January to May, the supply volume of newly completed bulk-type office buildings (including business apartment) in original 10 districts in Guangzhou decreased by 22.4% on a year-on-year basis, with the transaction volume decreased by 23.7% on a year-on-year basis; the supply-to-sales ratio was 1.57 the
– IV-36 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
sales pressure of digesting inventory for office buildings increased. In districts, the supply-to-sales ratio in Baiyun and Liwan was relatively higher with more pressure; and Nansha became a “black horse” in supply and sales of office buildings (including business apartment) in the first half year. On the other hand, in January to May, the sales area of the second-hand office buildings in original 10 districts increased by 29% on a year-on-year basis; Tianhe and Yuexiu as the core business districts was leading regions in transaction of the second-hand office buildings. The lease area of office buildings in the whole city decreased on a year-on-year basis, however, as the lease data for office buildings only recorded the lease situation on the existing buildings which had been put into use, and such data could not reflect expected strong lease performance of office buildings to be delivered. As the core business districts where Grade A office buildings were most concentrated, Tianhe and Yuaxiu had regained the leading position in the lease market after experienced “decentralization” for a short time; the proportion of two districts over the original 10 districts in the lease transaction increased to 51% in the first half year from 37% in 2014.
Shops: Despite facing impact of the e-commerce, slowdown in growth of economy and consumption and increasing competition pressure, the performance of shop lease in Guangzhou was active in the first half year. Except for new Huangpu (including Luogang), the lease transaction area of various types of shops in other districts had increased obviously. In the first half year, fast fashion and catering industry became most active demand source for commercial lease of entity. The catering industry brought more pedestrian flow with increasing lease capacity, which continued to be favored by major business entities. Each of the transaction area of shops lease in Huadu, Nansha, Panyu and Baiyun increased by over 50% on a year-on-year basis. As the emerging business districts was rising continuously, the proportion of shops lease area in Panyu and Baiyun over the whole city increased to 33% in 2014 from 24% in 2013; and further increased to 39% in January to May this year, the aggregation of proportion in both districts even exceeded the aggregation of proportion in Tianhe and Yuexiu as traditional business districts.
III. Analysis of maximum and best utilization
The appraisal of real estate was made under the premise of maximum and best utilization. The maximum and best utilization was a reasonable and possible utilization of maximizing value of real estate, which was legally allowed, possible technically and feasible financially, including best usage, size and grade etc.. The analysis of maximum and best utilization reflected truly the objectivity of appraisal. The standard of measurement and judgement was as follows:
(I) Legal permission (permitted by planning and related policies and regulations), that was, not limited by the status of existing use, and in accordance with laws and requirements urban planning development.
(II) Technical possibility, that was, it shall not regard utilization which can’t achieve technically as the maximum and best utilization, which should be determined according to achievable requirements of construction materials, construction technologies and other aspects.
– IV-37 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
(III) Financial feasibility, that was, in various possible utilization manners, select a manner of present value of income higher than present value of expense, seek a utilization manner of maximizing financial income by contribution of limited capital.
(IV) Maximum of value. In utilization manners with financial feasibility, one manner which can maximize value of the appraisal objects.
(V) Balance between land and buildings, that was, determine by whether balance of the internal components portfolio of real estate or not.
(VI) Coordination with external environment. According to coordination of real estate with its surrounding environment, appraise the utilization which can obtain best external economic benefit.
(VII)Sustainable development. Determine the utilization manner according to view of sustainable development, that was, a utilization manner of maximizing future benefit by research on development change trend of the real estate market.
The registered land use rights of the appraisal objects were industrial and auxiliary facilities, building planning and existing usage was for industrial factory, workshop and other ancillary facilities etc., the existing construction size and standard was similar with the planned construction size and design standard. According to the above criteria, it was determined that the manner of achieving the maximum and best utilization of the appraisal objects was to maintain the existing status to continue to be for industrial purpose.
IV. Selection of Appraisal Methods
After careful analysis of available information with on-site survey and investigation, and based on characteristics of the appraisal objects, in accordance with relevant laws and regulations of the State and technical standards of appraisal, the valuers had decided to use the cost method as the basic method for this appraisal after repeated research. Applicability of the methods was illustrated as follows:
(I) Comparison method
As the appraisal objects were not real estate available for trading, and it was difficult to find the transaction examples for similar real estate. Furthermore, the appraisal objects excluded the land use right, it was not applicable to appraise them by using the comparison method.
(II) Income method
As the appraisal objects were not real estate generating gain or potential gain, it was not applicable to appraise them by using income method.
– IV-38 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
(III) Hypothetical development method
As the appraisal objects were not a land to be developed or construction in progress, nor were real estate with investment and development or redevelopment potential, it was not applicable to appraise them by using hypothetical development method.
(IV) Cost method
As the appraisal objects were industrial real estate with no gain and rare transaction, which can be assumed to redevelop and construct, it was applicable to appraise them by using the cost method. Firstly, it should estimate the reconstruction costs, and then estimate the depreciation, lastly calculate the price.
V. Appraisal Measurement Process
The cost method was a method of calculating value or price of an appraisal object by its replacement costs or reconstruction costs minus depreciation after measuring the replacement costs or reconstruction costs and depreciation of the appraisal object as at the Reference Day.
Formula: Appraisal value = Replacement costs or Reconstruction costs – Depreciation
Or, Appraisal value = Replacement costs or Reconstruction costs × Comprehensive newness rate
1. Determination of full replacement price
The full replacement price of buildings and structures generally includes construction and installation costs, upfront fees and other expenses and capital cost. The calculation formula for the full replacement price of buildings and structures is as follows:
Full replacement price = overall construction and installation costs + upfront fees and other expenses + capital costs
(1) Overall Construction and installation costs
It included civil engineering costs incurred for construction of buildings and auxiliary projects, installation engineering costs and decoration and fitting engineering costs etc. According to settlement information for completion of buildings provided by the owner, and at the same time, with reference to the estimation indicators for investment in construction work of Guangzhou City, the prices of building materials manpower and construction machinery market and other factors as at the Reference Day, it was finally determined the comprehensive price of construction installation for the appraisal objects.
– IV-39 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
(2) Upfront fees and other expenses
The upfront fees and other expenses of construction projects are charged based on the investment amount of the Equity Holder’s construction projects in accordance with the charging standards of the industry, the State or local governments. The preliminary and other costs included construction unit management fee, survey and design fee, construction supervision fee, project bidding agency service charge, feasibility study fee and environmental impact assessment fee etc. Names, charging base, charging standard and charging basis were as set out in the following table:
Serial Charging no. Name of charge Rate base Charging basis Remarks
I Construction unit 0.48% engineering Cai Jian No. management fee cost [2002]394 II Survey and design 3.42% engineering Ji Jia Ge No. fee cost [2002]10 III Construction 1.75% engineering Fa Gai Jia Ge supervision fee cost No. [2007]670 IV Project bidding 0.05% engineering Ji Jia Ge No. agency service cost [2002]1980 charge V Feasibility study 0.16% engineering Ji Jia Ge No. fee cost [1999]1283 VI Environmental 0.03% engineering Ji Jia Ge No. impact assessment cost [2002]125 fee VII Special fund for 10 gross floor Yue Cai Zong RMB10/square new wall materials area No. [2009]53 meter, no need to pay if use new wall materials VIII Termites control 7 or 3 gross floor Yue Jia No. Charging RMB7/ fee area [2002]370 square meter for 3 storeys or below, charging RMB3/ square meter for 10 storeys or below of general buildings. IX Special fund for 1.5 gross floor Yue Cai Zong RMB1.5/square bulk cement area No. [2002]63 meter
– IV-40 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
(3) Capital costs
The capital cost is evenly charged with the sum of the overall construction and installation cost, and the upfront fees and other expenses as the basis within the reasonable construction period of the appraised unit and with reference to the base rate of RMB loans of financial institutions issued by the People’s Bank of China for the same period on the Reference Day. The reasonable construction period of the appraised unit was 2 years. The calculation formula of capital cost is as follows:
Capital costs = (overall Construction and installation costs + upfront fees and other expenses) × reasonable construction period × base rate of loans × 1/2
2. Determination of newness rate
(1) For large, high value and important buildings (structures), judgment is made based on the economic useful life, life used and the actual condition of all components such as the structures, decoration and auxiliary facilities through on-site investigation to comprehensively determine the remaining useful life and the comprehensive newness rate is determined as follows:
Comprehensive newness rate = Remaining useful life / (Remaining useful life + life used) × 100%
(2) For small, low value buildings (structures) with simple structure, the economic useful life is used to determine the newness rate, to be adjusted through the onsite investigation. The formula is as follows:
Life-based newness rate = (Economic life − Life used)/Economic life×100% Comprehensive newness rate = Life-based newness rate ×adjustment coefficient
(3) For hydraulic structure, the scoring method based on technical state grade and durability method are adopted for the comprehensive newness rate through the formula as follows:
Comprehensive newness rate = newness rate from the scoring method based on technical state grade × 60% + theoretical newness rate × 40%
– IV-41 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
For the scoring method based on technical state grade, the grade is scored to all parts of the hydraulic structure subject to the Procedures for Maintenance Technology for Port Facilities issued by the Ministry of Communications on 1 May 1998. The specific standards were shown as follows:
Standard Item Type Comment score
Overall I Stable 30−40 II Sedimentation and 20−30 displacement not exceeding limit III Sedimentation and 10−20 displacement slightly exceeded the allowable value IV Obvious sedimentation and 0−10 displacement Main structures and I Intact 30−40 components II Intact basically 20−30 III Damaged 10−20 IV Damaged seriously 0−10 Ancillary facilities I Full and intact 15−20 II Full and intact basically 10−15 III Damaged commonly 0−10 IV Damaged completely 0 Total 0−100
Theoretical newness rate = (durability period – years of service)/durability x 100%
3. Determination of appraisal value
Appraisal value = full replacement price × comprehensive newness rate
The process of calculating the appraisal objects:
– IV-42 – The process of buildings in the appraisal objects is as set out in the following table: BUILDING SHIPPING GS OF REPORT VALUATION IV APPENDIX
b (Upfront fee) c (Capital cost) Amounts = Amounts = a (Unit a*Rate + (a+b)* Serial Assets Month and Gross floorComprehensive price for Based on Based on Loan rate * Replacement Full no. no. Name of building Usage2 Structureyear of Durability Storeys area (m newness construction gross floor gross floor Construction Annual loan Construction unit price = replacement Appraisal ) completion period Life used rate fee) Rate area area period rate period * 1/2 a+b+c price value
1 A002165 office building for the Planned Masonry concrete 3.00 1,487.72 1964-01 60.00 51.70 30.00 2,550.00 5.89% 14.50 164.70 2.00 5.00% 135.73 2,850.43 4,240,600.00 1,272,180 infrastructural factory, actual construction division office 2 A001092 Pipe processing Factory Masonry concrete 2.00 3,990.16 1970-12 50.00 44.78 30.00 2,550.00 5.89% 18.50 168.70 2.00 5.00% 135.93 2,854.63 11,390,400.00 3,417,120 workshop 3 A001031 Spare parts warehouse Auxiliary Masonry concrete 4.00 665.28 2012-11 60.00 2.83 95.00 1,700.00 5.89% 3.00 103.13 2.00 5.00% 90.16 1,893.29 1,259,600.00 1,196,620.00 (team room) 4 A002028 New Transformer Factory Brick and 1.00 111.36 1989-01 40.00 26.68 33.00 1,950.00 5.89% 18.50 133.36 2.00 5.00% 104.17 2,187.52 243,600.00 80,388 Substation no. 8 concrete 5 A005429 West Container Spare Factory Steel structure 1.00 835.35 1991-12 50.00 23.76 52.00 1,150.00 5.89% 67.74 2.00 5.00% 60.89 1,278.62 1,068,100.00 555,412 Parts Warehouse 6 A002035 Transformer Substation Industrial Brick and 1.00 198.53 1957-01 40.00 58.70 30.00 1,250.00 5.89% 18.50 92.13 2.00 5.00% 67.11 1,409.23 279,800.00 83,940 no. 1 concrete 7 A002029 Transformer Substation Factory Brick and 1.00 156.74 1963-12 40.00 51.78 30.00 1,500.00 5.89% 18.50 106.85 2.00 5.00% 80.34 1,687.19 264,500.00 79,350 no. 6 concrete 8 A002030 Transformer Substation Factory Brick and 1.00 77.60 1983-01 40.00 32.68 30.00 1,250.00 5.89% 18.50 92.13 2.00 5.00% 67.11 1,409.23 109,400.00 32,820 no. 10 concrete 9 A002034 Old Compressor – IV-43 Room– Factory Brick and 1.00 607.56 1956-12 40.00 58.79 30.00 1,850.00 5.89% 18.50 127.47 2.00 5.00% 98.87 2,076.34 1,261,500.00 378,450 concrete 10 A001128 Line 3 and line 4 of Factory Masonry concrete 1.00 5,278.53 1976-01 50.00 39.69 30.00 2,100.00 5.89% 18.50 142.19 2.00 5.00% 112.11 2,354.30 12,427,200.00 3,728,160 internal processing team (Workshops) 11 A001129 50 tonnes South-North Factory Masonry concrete 1.00 5,983.78 1976-01 50.00 39.69 30.00 2,100.00 5.89% 18.50 142.19 2.00 5.00% 112.11 2,354.30 14,087,600.00 4,226,280 Cross Workshop 12 A002134 Auxiliary Field Factory Masonry concrete 1.00 4,972.12 1965-01 50.00 50.70 30.00 2,100.00 5.89% 18.50 142.19 2.00 5.00% 112.11 2,354.30 11,705,900.00 3,511,770 13 A001123 West Centralised Factory Masonry concrete 1.00 494.37 1988-12 50.00 26.76 46.00 2,050.00 5.89% 18.50 139.25 2.00 5.00% 109.46 2,298.71 1,136,400.00 522,744 Assembly Line Auxiliary Building PEDXI AUTO EOTO SSIPN BUILDING SHIPPING GS OF REPORT VALUATION IV APPENDIX
b (Upfront fee) c (Capital cost) Amounts = Amounts = a (Unit a*Rate + (a+b)* Serial Assets Month and Gross floorComprehensive price for Based on Based on Loan rate * Replacement Full no. no. Name of building Usage2 Structureyear of Durability Storeys area (m newness construction gross floor gross floor Construction Annual loan Construction unit price = replacement Appraisal ) completion period Life used rate fee) Rate area area period rate period * 1/2 a+b+c price value
14 A001117 Installation Workshop Auxiliary Masonry concrete 4.00 2,570.00 2012-11 60.00 2.83 95.00 2,100.00 5.89% 3.00 126.69 2.00 5.00% 111.33 2,338.02 6,008,700.00 5,708,265.00 (team room) 15 A001132 New Steel Plate Factory Masonry concrete 1.00 577.95 1983-01 50.00 32.68 34.00 8,900.00 5.89% 18.50 542.71 2.00 5.00% 472.14 9,914.85 5,730,300.00 1,948,302 Processing Workshop 16 A001079 Electrical Equipment Factory Masonry concrete 1.00 2,953.45 1964-01 50.00 51.70 30.00 1,750.00 5.89% 18.50 121.58 2.00 5.00% 93.58 1,965.15 5,804,000.00 1,741,200 Warehouse No. 107 17 A002170 Welding Testing Lab Factory Brick and 3.00 826.56 1978-01 50.00 37.69 30.00 1,400.00 5.89% 14.50 96.96 2.00 5.00% 74.85 1,571.81 1,299,200.00 389,760 concrete 18 A001055 Iron Casting Workshop Factory Masonry concrete 1.00 2,939.53 1970-01 50.00 45.69 30.00 1,750.00 5.89% 18.50 121.58 2.00 5.00% 93.58 1,965.15 5,776,600.00 1,732,980 19 A001173 Main Office Building Planned Brick and 4.00 2,769.79 1957-01 50.00 58.70 30.00 2,400.00 5.89% 14.50 155.86 2.00 5.00% 127.79 2,683.65 7,433,100.00 2,229,930 of Factory factory, actual concrete office 20 A002016 Stabilizing Station Factory Masonry concrete 2.00 530.14 1978-01 60.00 37.69 37.00 2,300.00 5.89% 14.50 149.97 2.00 5.00% 122.50 2,572.47 1,363,800.00 504,606 (team room) 21 A002175 Technology Building Planned Brick and 5.00 1,805.74 1974-12 50.00 40.78 30.00 1,550.00 5.89% 14.50 105.80 2.00 5.00% 82.79 1,738.58 3,139,400.00 941,820 factory, actual concrete office 22 A001174 Computation Building Planned Masonry concrete 6.00 3,856.12 1984-12 60.00 30.77 49.00 2,300.00 5.89% 14.50 149.97 2.00 5.00% 122.50 2,572.47 9,919,800.00 4,860,702 factory, actual office 23 A001176 Guest Restaurant Factory Masonry concrete 3.00 785.95 1983-01 60.00 32.68 45.00 2,400.00 5.89% 14.50 155.86 2.00 5.00% 127.79 2,683.65 2,109,200.00 949,140 24 A001130 Small Close-up Factory Masonry concrete 1.00 5,913.25 1976-01 50.00 39.69 30.00 1,850.00 5.89% 18.50 127.47 2.00 5.00% 98.87 2,076.34 12,277,900.00 3,683,370 V4 – IV-44 – Workshop 25 A001118 New Installation Production Steel structure 1.00 972.00 2012-11 50.00 2.83 94.00 2,750.00 5.89% 161.98 2.00 5.00% 145.60 3,057.57 2,972,000.00 2,793,680.00 Workshop 26 A002139 Office of Branch Planned Brick and 3.00 701.84 1988-01 50.00 27.68 44.00 1,600.00 5.89% 14.50 108.74 2.00 5.00% 85.44 1,794.18 1,259,200.00 554,048 Installation Factory factory, actual concrete office PEDXI AUTO EOTO SSIPN BUILDING SHIPPING GS OF REPORT VALUATION IV APPENDIX
b (Upfront fee) c (Capital cost) Amounts = Amounts = a (Unit a*Rate + (a+b)* Serial Assets Month and Gross floorComprehensive price for Based on Based on Loan rate * Replacement Full no. no. Name of building Usage2 Structureyear of Durability Storeys area (m newness construction gross floor gross floor Construction Annual loan Construction unit price = replacement Appraisal ) completion period Life used rate fee) Rate area area period rate period * 1/2 a+b+c price value
27 A002143 Composite Office Of Planned Brick and 3.00 1,118.31 1972-01 50.00 43.69 30.00 1,400.00 5.89% 14.50 96.96 2.00 5.00% 74.85 1,571.81 1,757,800.00 527,340 Branch Installation factory, actual concrete Factory office 28 A001133 Old Steel Plate Factory Masonry concrete 1.00 822.55 1979-01 50.00 36.69 30.00 1,700.00 5.89% 18.50 118.63 2.00 5.00% 90.93 1,909.56 1,570,700.00 471,210 Processing Workshop 29 A001127 Line 2 of Internal Factory Masonry concrete 1.00 3,975.97 1979-01 50.00 36.69 30.00 2,300.00 5.89% 18.50 153.97 2.00 5.00% 122.70 2,576.67 10,244,800.00 3,073,440 Processing Team (Workshop) 30 A001126 Line 1 of Internal Factory Masonry concrete 1.00 3,408.68 1976-01 50.00 39.69 30.00 2,150.00 5.89% 18.50 145.14 2.00 5.00% 114.76 2,409.89 8,214,500.00 2,464,350 Processing Team (Workshop) 31 A001125 West Factory Container Factory Masonry concrete 1.00 1,885.57 1977-01 50.00 38.69 30.00 2,250.00 5.89% 18.50 151.03 2.00 5.00% 120.05 2,521.08 4,753,700.00 1,426,110 Processing Workshop 32 A001099 Warehouse for Factory Masonry concrete 1.00 5,738.64 1969-01 50.00 46.69 30.00 1,550.00 5.89% 18.50 109.80 2.00 5.00% 82.99 1,742.78 10,001,200.00 3,000,360 Non-Metal Components And Electric Cables 33 A001114 Armor Installation Factory Masonry concrete 1.00 2,081.65 1972-01 50.00 43.69 30.00 1,550.00 5.89% 18.50 109.80 2.00 5.00% 82.99 1,742.78 3,627,900.00 1,088,370 Workshop 34 A002498 Quality Control Factory Brick and 2.00 415.38 1988-01 50.00 27.68 44.00 1,850.00 5.89% 14.50 123.47 2.00 5.00% 98.67 2,072.14 860,700.00 378,708 Department Exposure concrete Chamber 35 A001113 Ship Installation Phase Factory Masonry concrete 1.00 1,319.20 1983-12 50.00 31.77 36.00 2,050.00 5.89% 18.50 139.25 2.00 5.00% 109.46 2,298.71 3,032,500.00 1,091,700
Workshop – IV-45 – 36 A001131 New Pressure Vessel Factory Masonry concrete 1.00 2,691.30 1988-12 50.00 26.76 46.00 2,600.00 5.89% 18.50 171.64 2.00 5.00% 138.58 2,910.22 7,832,300.00 3,602,858 Workshop 37 A005451 Large-size Components Factory Steel structure 1.00 2,964.23 1993-12 50.00 21.76 56.00 3,950.00 5.89% 232.66 2.00 5.00% 209.13 4,391.79 13,018,300.00 7,290,248 Processing Workshop PEDXI AUTO EOTO SSIPN BUILDING SHIPPING GS OF REPORT VALUATION IV APPENDIX
b (Upfront fee) c (Capital cost) Amounts = Amounts = a (Unit a*Rate + (a+b)* Serial Assets Month and Gross floorComprehensive price for Based on Based on Loan rate * Replacement Full no. no. Name of building Usage2 Structureyear of Durability Storeys area (m newness construction gross floor gross floor Construction Annual loan Construction unit price = replacement Appraisal ) completion period Life used rate fee) Rate area area period rate period * 1/2 a+b+c price value
38 A001490 West Restaurant and Planned Masonry concrete Partial 6 7,505.76 1993-12 60.00 21.76 64.00 3,200.00 5.89% 14.50 202.98 2.00 5.00% 170.15 3,573.13 26,819,100.00 17,164,224 Office restaurant and /3 library, actual office 39 A001436 New Measurement Planned Masonry concrete 4.00 2,933.00 1994-12 60.00 20.76 65.00 1,600.00 5.89% 14.50 108.74 2.00 5.00% 85.44 1,794.18 5,262,300.00 3,420,495 Center factory, actual office 40 A001442 New Office Building of Planned Masonry concrete 7.00 3,113.68 1993-12 60.00 21.76 64.00 2,350.00 5.89% 14.50 152.92 2.00 5.00% 125.15 2,628.06 8,182,900.00 5,237,056 Shipbuilding factory, actual Department office 41 A005457 Phase Painting Factory Steel structure Partial 3,946.57 1996-01 50.00 19.68 60.00 3,250.00 5.89% 191.43 2.00 5.00% 172.07 3,613.50 14,260,900.00 8,556,540 Workshop 4/1 42 A002478 Carparks and Carpark Masonry concrete 2.00 2,473.86 1994-09 60.00 21.01 65.00 1,650.00 5.89% 14.50 111.69 2.00 5.00% 88.08 1,849.77 4,576,100.00 2,974,465 Firefighting Building 43 A001398 New Transformer Transformer Masonry concrete 2.00 562.35 1992-01 50.00 23.68 52.00 1,850.00 5.89% 18.50 127.47 2.00 5.00% 98.87 2,076.34 1,167,600.00 607,152 Substation no. 1 room 44 A001421 6OHZ Power Station Power station Masonry concrete 2.00 542.14 1992-01 50.00 23.68 52.00 2,050.00 5.89% 18.50 139.25 2.00 5.00% 109.46 2,298.71 1,246,200.00 648,024 45 A001450 Dock Winch and Factory Masonry concrete 4.00 1,366.71 1993-12 50.00 21.76 56.00 2,050.00 5.89% 14.50 135.25 2.00 5.00% 109.26 2,294.51 3,135,900.00 1,756,104 Scheduling Room 46 A005438 Fitting Units Workshop Steel structure 1.00 1,837.67 1993-12 50.00 21.76 56.00 2,050.00 5.89% 120.75 2.00 5.00% 108.54 2,279.28 4,188,600.00 2,345,616 Installation Workshop 47 A001466 Chemicals Warehouse Materials Masonry concrete 2.00 674.82 1994-03 50.00 21.52 57.00 2,050.00 5.89% 18.50 139.25 2.00 5.00% 109.46 2,298.71 1,551,200.00 884,184 V4 – IV-46 – warehouse 48 A001459 Paints Warehouse Paints Masonry concrete 1.00 1,263.36 1997-01 50.00 18.67 62.00 1,700.00 5.89% 18.50 118.63 2.00 5.00% 90.93 1,909.56 2,412,500.00 1,495,750 warehouse 49 A001467 Gas Station Gas station Masonry concrete 1.00 88.52 1998-03 60.00 17.51 71.00 14,300.00 5.89% 14.50 856.77 2.00 5.00% 757.84 15,914.61 1,408,800.00 1,000,248 PEDXI AUTO EOTO SSIPN BUILDING SHIPPING GS OF REPORT VALUATION IV APPENDIX
b (Upfront fee) c (Capital cost) Amounts = Amounts = a (Unit a*Rate + (a+b)* Serial Assets Month and Gross floorComprehensive price for Based on Based on Loan rate * Replacement Full no. no. Name of building Usage2 Structureyear of Durability Storeys area (m newness construction gross floor gross floor Construction Annual loan Construction unit price = replacement Appraisal ) completion period Life used rate fee) Rate area area period rate period * 1/2 a+b+c price value
50 A005427 New Pipe Processing Factory Steel structure 1.00 8,461.37 1992-12 50.00 22.76 54.00 1,850.00 5.89% 108.97 2.00 5.00% 97.95 2,056.91 17,404,300.00 9,398,322 Workshop 51 A001441 Electrical Equipment Warehouse Masonry concrete 5.00 6,184.37 1995-01 50.00 20.68 58.00 2,350.00 5.89% 14.50 152.92 2.00 5.00% 125.15 2,628.06 16,252,900.00 9,426,682 Warehouse 52 A005472 Elevator Workshop Workshop Steel structure 1.00 3,876.77 2003-10 50.00 11.92 76.00 1,550.00 5.89% 91.30 2.00 5.00% 82.06 1,723.36 6,681,100.00 5,077,636 53 A005488 Design and Calibration Office Masonry concrete 4.00 10,130.60 2005-07 60.00 10.17 83.00 3,200.00 5.89% 14.50 202.98 2.00 5.00% 170.15 3,573.13 36,198,000.00 30,044,340 Building 54 BA001080 Welding Rod Production Masonry concrete 1.00 471.81 1972-01 50.00 43.69 30.00 1,000.00 5.89% 18.50 77.40 2.00 5.00% 53.87 1,131.27 533,700.00 160,110.00 Warehouse 55 BA001426 New Transformer Production Masonry concrete 1.00 86.50 1994-10 50.00 20.86 58.00 2,150.00 5.89% 14.50 141.14 2.00 5.00% 114.56 2,405.69 208,100.00 120,698.00 Substation no. 10 56 BA001477 Security Room at Auxiliary Masonry concrete 1.00 25.20 1998-06 60.00 17.26 71.00 10,000.00 5.89% 14.50 603.50 2.00 5.00% 530.18 11,133.68 280,600.00 199,226.00 North Gate 57 BA001608 Carpark of Design and Auxiliary Masonry concrete 4.00 4,800.00 2008-12 60.00 6.67 89.00 2,000.00 5.89% 14.50 132.30 2.00 5.00% 106.62 2,238.92 10,746,800.00 9,564,652.00 Calibration Building 58 BA002476 Toilets (4) Auxiliary Brick and 1.00 48.38 1998-06 50.00 17.21 66.00 450.00 5.89% 14.50 41.01 2.00 5.00% 24.55 515.56 24,900.00 16,434.00 concrete 59 BA002493 Environmental COD Auxiliary Brick and 1.00 10.11 2003-09 50.00 11.94 76.00 1,850.00 5.89% 14.50 123.47 2.00 5.00% 98.67 2,072.14 20,900.00 15,884.00 Monitoring Room of concrete Oil Tanks 60 BA002500 Security Room of Oil Auxiliary Brick and 1.00 17.95 2006-12 50.00 8.67 83.00 1,650.00 5.89% 14.50 111.69 2.00 5.00% 88.08 1,849.77 33,200.00 27,556.00 Tanks concrete V4 – IV-47 – 61 BA005465 Simple Sand Shed of Production Steel structure 1.00 1,356.00 1998-10 50.00 16.86 66.00 1,650.00 5.89% 97.19 2.00 5.00% 87.36 1,834.54 2,487,600.00 1,641,816.00 Pier 12 62 BA005477 Simple Workshop for Production Steel structure 1.00 768.30 2004-06 50.00 11.19 78.00 1,350.00 5.89% 79.52 2.00 5.00% 71.48 1,500.99 1,153,200.00 899,496.00 Heavy Engineering 63 B018114 Security Post at East Auxiliary Brick and 1.00 25.00 2002-05 50.00 13.34 73.00 1,900.00 5.89% 14.50 126.41 2.00 5.00% 101.32 2,127.73 53,200.00 38,836.00 Gate concrete PEDXI AUTO EOTO SSIPN BUILDING SHIPPING GS OF REPORT VALUATION IV APPENDIX
b (Upfront fee) c (Capital cost) Amounts = Amounts = a (Unit a*Rate + (a+b)* Serial Assets Month and Gross floorComprehensive price for Based on Based on Loan rate * Replacement Full no. no. Name of building Usage2 Structureyear of Durability Storeys area (m newness construction gross floor gross floor Construction Annual loan Construction unit price = replacement Appraisal ) completion period Life used rate fee) Rate area area period rate period * 1/2 a+b+c price value
64 A001678 Old Phase Painting Production Masonry concrete 1.00 6,294.00 2009-11 50.00 5.75 88.00 3,750.00 5.89% 18.50 239.38 2.00 5.00% 199.47 4,188.84 26,364,600.00 23,200,848.00 Workshop 65 A001680 Restaurant Waste Water Production Masonry concrete 2.00 80.00 2009-11 50.00 5.75 88.00 11,400.00 5.89% 14.50 685.96 2.00 5.00% 604.30 12,690.26 1,015,200.00 893,376.00 and Gas Treatment Station 66 A001681 Air Compressor and Production Masonry concrete 3.00 1,282.50 2009-11 50.00 5.75 88.00 5,550.00 5.89% 14.50 341.40 2.00 5.00% 294.57 6,185.96 7,933,500.00 6,981,480.00 Electric Room of Painting Workshop 67 A001682 Electrical Equipment Production Masonry concrete 5.00 12,398.00 2009-12 50.00 5.67 89.00 2,500.00 5.89% 14.50 161.75 2.00 5.00% 133.09 2,794.84 34,650,400.00 30,838,856.00 Distribution Center 68 A001683 Main Five-story Office Masonry concrete 5.00 4,425.00 2009-12 60.00 5.67 91.00 1,950.00 5.89% 14.50 129.36 2.00 5.00% 103.97 2,183.32 9,661,200.00 8,791,692.00 Composite Office Building 69 A001684 New Transformer Production Masonry concrete 2.00 256.00 2010-03 50.00 5.42 89.00 1,500.00 5.89% 3.00 91.35 2.00 5.00% 79.57 1,670.92 427,800.00 380,742.00 Substation no. 2 70 A002506 Infrastructure Design Auxiliary Brick and 3.00 264.00 2008-11 50.00 6.75 86.00 1,450.00 5.89% 14.50 99.91 2.00 5.00% 77.50 1,627.40 429,600.00 369,456.00 Building concrete 71 A002507 Transformer Substation Production Masonry concrete 2.00 98.40 2009-06 50.00 6.17 88.00 14,700.00 5.89% 14.50 880.33 2.00 5.00% 779.02 16,359.35 1,609,800.00 1,416,624.00 no. 4 High Voltage Room 72 A002509 Welding Rod Room at Production Brick and 1.00 48.50 2009-12 40.00 5.67 86.00 1,650.00 5.89% 18.50 115.69 2.00 5.00% 88.28 1,853.97 89,900.00 77,314.00 south of Main Dock concrete 73 A005498 Large-size Equipment – IV-48 – Production Steel structure 1.00 3,078.00 2012-12 50.00 2.67 95.00 4,050.00 5.89% 238.55 2.00 5.00% 214.43 4,502.97 13,860,100.00 13,167,095.00 Processing Workshop 74 A005503 Hilltop Steel Plate Production Steel structure 1.00 210.00 2012-11 50.00 2.75 94.00 8,050.00 5.89% 474.15 2.00 5.00% 426.21 8,950.35 1,879,600.00 1,766,824.00 Warehouse No. 2 75 BA001443 Office of Steel Plate Office Masonry concrete 2.00 119.58 1995-01 60.00 20.68 65.00 1,600.00 5.89% 14.50 108.74 2.00 5.00% 85.44 1,794.18 214,500.00 139,425.00 Factory 76 BA004481 Rooms for Processing Auxiliary Simple 1.00 74.40 2011-01 10.00 4.67 53.00 2,500.00 5.89% 147.25 2.00 5.00% 132.36 2,779.61 206,800.00 109,604.00 and Manufacturing Team 77 BA002479 Security Room at Main Auxiliary Brick and 1.00 37.50 1999-04 50.00 16.37 68.00 17,600.00 5.89% 14.50 1,051.14 2.00 5.00% 932.56 19,583.70 734,400.00 499,392.00 Gate concrete Total 169,719.58 272,892,005 APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
Case for calculation of structure: Dock (Table 4-6-2, Serial no. 44)
Time of completion: November 2006 Size of main structure: Length of 260M, width of 36M, height of 9.35M Original carrying value: RMB88,124,345.00 Net carrying value: RMB85,210,233.11
1. Overview of dock
(1) Summary of project
The project is located in the factory area of Guangzhou Shipyard International, designed by No. 9 Design Institution of CSSC, undertaken by the Third Navigational Fairs Engineering Bureau of PRC Ports as the general contractor, and supervised by Guangzhou Hairong Construction Supervision Co., Ltd..
(2) Size and structure type of project
Size of project: Such dock was invested and constructed to meet ship supply and ship repair. The head of the dock was set with steel-made dock door. Each of both sides of the dock was set with two units of 80t gantry cranes. Its western side and backside were set with general assembly and outfitting field.
The original size of the dock was length of 145 meters, width of 18.3 meters and depth of 7.7 meters, after two reconstructions in 2005 and 2009, length of 260 meters, width of 36 meters and depth of 9.35 meters.
Engineering structure type: the dock was in reinforced concrete gravity structure, the entrance of the dock used steel-made caisson structure with steel-made plug plate door.
The dock wall was in casting-in-place reinforced concrete lining, retaining pile and waterproof curtain pile. Buttress wall bottom formed the waterproof curtain by pressure cementing. The upper structure of the dock wall set with public pipe lines corridor.
The base plate of dock chamber was in casting-in-place reinforced concrete structure, the decompression drainage system was set under the plate bottom.
The main body of pump room used casting-in-place reinforced concrete structure.
The dock area was designed with a couple of 400 tons crane track foundation, two couples of 80 tons gantry crane track foundation. In addition to use of dock wall, dump room and dock gate block as bases, such tracks adopted multi span continuous beam structure of pile foundation, and the pile foundation used bored grouting pile.
General assembly, outfitting field and phase advance assembly field: the field used 300mm thickness of casting-in-place reinforced concrete plate.
– IV-49 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
(3) Status of on-site survey: The whole structure of the dock, entrance of dock and bulkhead wall was stable, which was in compliance with requirements of design standard. The main body of the dock, dock wall, dock entrance, bottom plate etc. were in good condition, the auxiliary facilities remained intact. The sea side of the dock gate and railing at the end of the dock had slight corrosion partly.
2. Determination of full replacement price
Full replacement price = Engineering costs for construction and installation + upfront fees and other expenses + capital costs
(1) Engineering costs for construction and installation
According to engineering quantities as shown in the dock’s list of projects, contract documents and construction drawings and other information, by using YHSGGYS system software for estimate norm of existing installation project for coastal buildings, the following summary table of engineering costs for construction and installation was determined based on the comprehensive price of materials in information for engineering cost of Guangzhou City as at the Reference Day:
Engineering costs for construction and installation of the dock
Serial Description of no. Name of fee charging Rate (%) Amounts of fee
(I) Estimated direct fee for base price 19,655,536.11 (II) Estimated direct fee Direct fee + main 66,286,727.82 materials fee (III) Other direct fee × Rate 969,214.49 1 Construction site facilities 1.392 273,605.06 2 Increased fee for construction in 0.744 146,237.19 winter, rainy season and night 3 Fee for second handing of materials 0.353 69,384.04 4 Construction auxiliary fee 1.116 219,355.78 5 Fee for entrance and exit of 1.326 260,632.41 construction team (IV) Direct engineering fee (II) + (III) 67,255,942.30 (V) Enterprise management fee [(I) + (III)] × Rate 9.712 2,003,075.78 (VI) Finance costs [(I) + (III)] × Rate 0.754 155,510.62 (VII) Profit [(I) + (III) + (V) + 7 1,594,833.59 (VI)] × Profit rate (VIII) Tax [(IV) + (V) + (VI) + 3.477 2,468,995.53 (VII)] × Tax rate (IX) Special fee 18,388,755.00 (X) Appraised costs for unit engineering (IV) + ... + (IX) 91,867,112.81
– IV-50 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
B. Upfront fees and other expenses
As calculated, the rate for upfront fees and other expenses was 5.89%, details of which were as follows:
Items for upfront and other expenses and rates
Serial Rate Calculation no. Names of tax and fee standard base Basis
I construction unit 0.48% engineering cost Cai Jian No. management fee [2002]394 II survey and design fee 3.42% engineering cost Ji Jia Ge No. [2002]10 III construction 1.75% engineering cost Fa Gai Jia GE No. supervision fee [2007]670 IV project bidding agency 0.05% engineering cost Ji Jia Ge No. service charge [2002]1980 V Upfront fee for engineering 1. Feasibility study 0.16% engineering cost Ji Jia Ge No. fee [1999]1283 2. Environmental 0.03% engineering cost Ji Jia Ge No. impact assessment [2002]125 fee Total Engineering costs × 5.89%
Upfront fee for engineering = Engineering costs for construction and installation × Rate for upfront fees and other expenses = 91,867,112.81×5.89% = RMB5,410,972.94
C. Capital costs
The capital costs had taken into consideration of reasonable work period of 2 years and bank’s loan rate during the same period assuming even contribution of capital. The calculation of capital costs is as follows:
Capital cost = (Engineering costs for construction and installation + Upfront fees and other expense) × 5.00%×2÷2 = (91,867,112.81 + 5,410,972.94) × 5.00%×2÷2 = RMB4,863,904.29
Full replacement price = Engineering costs for construction and installation + Upfront fees for engineering + Capital costs = 91,867,112.81 + 5,410,972.94 + 4,863,904.29 = RMB102,142,000.00 (rounding)
– IV-51 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
(3) Determination of comprehensive newness rate
The comprehensive newness rate is calculated by combination of using on-site survey technical state grade scoring method and theoretical newness rate, the newness rate from the technical state grade scoring method accounted for 60%; the theoretical newness rate accounted for 40%. The durability period for terminal and dock of hydraulic structures is 50 years, the calculation of which is as follows:
Comprehensive newness rate = newness rate from the scoring method based on technical state grade × 60% + theoretical newness rate × 40%
A. Technical state grade scoring method
The grade is scored to all parts of the hydraulic structure subject to the Procedures for Maintenance Technology for Port Facilities issued by the Ministry of Communications on 15 July 2013. The specific scoring was shown as follows:
Appraisal Standard scoring Item Type Appraisal basis scoring %
Overall I Stable 30-40 33 II Sedimentation and 20-30 displacement not exceeding limit III Sedimentation and 10-20 displacement slightly exceeded the allowable value IV Obvious 0-10 sedimentation and displacement Main structures I Intact 30-40 35 and components II Intact basically 20-30 III Damaged 10-20 IV Damaged seriously 0-10 Ancillary facilities I Full and intact 15-20 16 II Full and intact 10-15 basically III Damaged commonly 0-10 III 0 Total 0-100 84
After on-site survey by the valuers, overall structure of the terminal was stable, main structure and components was intact, the ancillary facilities were fully equipped. The newness rate from technical state grade scoring method was 84%.
– IV-52 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
B. Theoretical newness rate
The shipbuilding dock was completed in November 2006, which had been used for 8.84 years as at the Reference Day of 31 August 2015.
Theoretical newness rate = (durability period - years of service) ÷ durability×100% = (50-8.84) ÷ 50 × 100% = 82.32%
Comprehensive newness rate = 84% × 60% + 82.32% × 40% = 83.33%, comprehensive newness rate used 83%
(4) Determination of appraisal value
Appraisal value = Full replacement price × Comprehensive newness rate = 102,142,000.00 × 83% = RMB84,777,860.00
Case for calculation of pipes and trenches: Power cable engineering (Table 4-6-3, Serial no. 293)
Time of completion: February 2003
Original carrying value: RMB694,100.00
Net carrying value: RMB525,780.74
1. Overview of assets
The power cable was completed and put into use in February 2003, with length of 6,683.00 meters, the cable type was YJV22-1KV, the cable was laid in trenches with the depth of 1m.
– IV-53 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
2. Determination of full replacement price
(1) Determination of engineering costs for construction and installation
According to on-site survey and relevant information provided by the appraised unit, in accordance with drawings and budget and settlement information of similar pipes and trenches, applying the Comprehensive Estimate Norm of Guangdong Province for Installation Projects (2010) and Guangzhou Construction Cost Information for August 2015, it is adjusted to price level as at the Reference Day based on materials price, manpower unit price and machine-shift cost in the existing market, related charge was calculated under relevant requirements, and then determined the engineering costs for construction and installation. The details of the calculation process are shown in the following calculation table:
Charging Table for Construction and Installation
Unit: RMB
Serial Rate Amounts no. Name Charging base (%) (in RMB)
1 Sub-engineering fee 1.1+1.2+1.3 1,138,846.23 1.1 Estimated sub-engineering fee Α(Engineering 1,076,925.06 quantities × Sub-item base price) 1.1.1 Labor cost 107,934.14 1.1.2 Materials cost 890,189.53 1.1.3 Machinery cost 57,455.01 1.1.4 Management fee 21,346.38 1.2 Price variance 1.2.1+1.2.2+1.2.3 42,685.38 1.2.1 Labor price variance 39,812.63 1.2.2 Materials price variance 1.2.3 Machinery price variance 2,872.75 1.3 Profit 1.1.1 18% 19,235.79 2 Measure project fee 188,061.88 2.1 Safety and Civilization Calculated according to 74,677.60 construction fee relevant requirements (including price variance and profit) 2.2 Other measure project fee Calculate according to 113,384.28 relevant requirements (including price variance and profit) 3 Other project fee 1.1.1 2,457.91 4 Stipulated fee 4.1+4.2+4.3+4.4 9,812.39 4.1 Engineering sewage fee Calculate according to 2,692.93 the actual situation upon occurrence
– IV-54 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
Serial Rate Amounts no. Name Charging base (%) (in RMB)
4.2 Construction noise treatment Calculate according to 2,692.93 fee the actual situation upon occurrence 4.3 Flood control maintenance cost (1+~3) × Rate 0.13% 1,728.18 4.4 Insurance premium for 1.1.1 2.50% 2,698.35 accidental injury from dangerous operation 5 Engineering costs excluding tax (1+~4) 1,339,178.41 6 Tax (5) × Tax rate 3.48% 46,563.23 7 Engineering costs including tax (5+6) 1,385,740.00
Overall construction and installation costs = RMB1,385,740.00
(2) Determination of upfront fees and other expenses
Upfront fees and other expenses are determined according to relevant national and local administrative and institutional charge standard. The calculation standard is shown in the following table:
Calculation Table for Upfront fees and Other Expenses
Serial Rate Calculation no. Name of tax and fee standard base Basis
1 construction unit management 0.48% engineering cost Cai Jian No. fee [2002]394 2 survey and design fee 3.42% engineering cost Ji Jia Ge No. [2002]10 3 construction supervision fee 1.75% engineering cost Fa Gai Jia Ge No. [2007]670 4 project bidding agency service 0.05% engineering cost Ji Jia Ge No. charge [2002]1980 5 feasibility study fee 0.16% engineering cost Ji Jia Ge No. [1999]1283 6 environmental impact 0.03% engineering cost Ji Jia Ge No. assessment fee [2002]125 Total Engineering costs × 5.89%
Upfront fees and other expenses = Engineering costs × Rate for Upfront fees and other expenses = 1,385,740.00×5.89% = RMB81,620.09
– IV-55 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
(3) Determination of capital costs
The reasonable construction period for the whole project was determined as about 2 years according to estimate norm for the construction period, the capital during the construction period is contributed evenly, the one year to three (inclusive) years loan rate issued by the People’s Republic of China is 5.00% as at the Reference Day, then:
Capital costs = (overall Construction and installation costs + upfront fees and other expenses) × loan rate × reasonable construction period/2 = (1,385,740.00 + 81,620.09) × 5.00% × 2/2 = RMB73,368.00
(4) Full replacement price
Full replacement price = Overall construction and installation costs + Upfront fees and other expenses + Capital costs = 1,385,740.00 + 81,620.09 + 73,368.00 = RMB1,540,700.00 (rounding)
3. Determination of comprehensive newness rate
The power cable was completed in February 2003, which had been used for 12.52 years. After verification, use and maintenance of the power cable is in good condition, according to on-site verification together with its durability period, the remaining useful term is determined as 7.5 years, comprehensive newness rate of which is as follows:
Comprehensive newness rate = Remaining useful life / (Life used + Remaining useful life) × 100% = 7.5 / (12.52 + 7.5) × 100% = 37% (rounding)
4. Determination of appraisal value
Appraisal value = Full replacement price × Comprehensive newness rate = 1,540,700.00 × 37% = RMB570,059.00
– IV-56 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
The appraisal value for other structures, pipes and trenches can be made based on the above calculation process. The appraisal conclusion on the appraisal objects is shown in the following table:
Summary Table of Appraisal Conclusion
Unit: RMB
Carrying value Appraisal value Original Original Name of item value Net value value Net value
Buildings 276,480,346.00 265,919,847.94 454,850,200.00 272,892,005.00 Structures 177,291,529.00 167,817,036.18 290,286,200.00 170,020,961.00 Pipes and trenches 32,617,099.00 28,152,759.60 64,245,500.00 30,219,704.00 Total 486,388,974.00 461,889,643.72 809,381,900.00 473,132,670.00
VI. Appraisal Conclusion
According to the appraisal purpose, following the appraisal principals, in accordance with the appraisal procedures, using scientific appraisal methods, on the basis of careful analysis of existing information, after the careful and accurate measurement, combined with the appraisal experience and analysis of factors affecting value of the appraisal objects, the valuers determined the appraisal conclusion on the market value of the appraisal objects as at the Reference Day as follows:
Total market value of the appraisal objects: RMB473.1327 million
Amount in words: RMB FOUR HUNDRED SEVENTY-THREE MILLION ONE HUNDRED THIRTY-TWO THOUSAND SEVEN HUNDRED ONLY
Of which:
Value of buildings: RMB272.8920 million (of which the buildings with real estate ownership certificates were 129,237.17 square meters valuing at RMB161.8760 million; the buildings without real estate ownership certificates were 40,482.41 square meters valuing at RMB111.0160 million)
Value of structures: RMB170.0210 million
Value of pipes and trenches: RMB30.2197 million
See the annexes to the report for the detailed results – Detail List of Buildings Appraisal, Detail List of Structures and Other Auxiliary Facilities and Detail List for Pipes and Trenches Appraisal.
– IV-57 – APPENDIX IV VALUATION REPORT OF GS SHIPPING BUILDING
Annexes
1. Detail List of Buildings Appraisal, Detail List of Structures and Other Auxiliary Facilities and Detail List for Pipes and Trenches Appraisal
2. Appraisal Entrustment Letter
3. Business License of the Client and the Owner
4. Undertaking Letter of the Client and the Owner
5. Copy of legal opinion
6. Copies of Real Estate Ownership Certificates
7. Photo of Current Status of the Appraisal Objects
8. Location Map for the Appraisal Objects
9. Copies of Business License and Qualification Certificate of the Real Estate Appraisal Institution
10. Copies of Qualification Certificates of the Valuers
– IV-58 – APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
Report of Appraisal In Respect of Equity Interests in Guangzhou Shipyard Shipping Co., Ltd. Proposed to Be Transferred by CSSC Offshore & Marine Engineering (Group) Company Limited
Zhong Qi Hua Ping Bao Zi (2015) No. 1277 (Volume 1 of 1)
China Enterprise Appraisals Company Inc. 23 September 2015
–V-1– APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
Content
STATEMENT OF CERTIFIED PUBLIC VALUERS...... V-3
SUMMARY ...... V-4
APPRAISAL REPORT...... V-6 I. CLIENT, EQUITY HOLDER, ENTITY APPRAISED AND OTHER USERS OF REPORT AS AGREED IN THE ENGAGEMENT LETTER ...... V-6 II. PURPOSE ...... V-11 III. APPRAISAL OBJECT AND SCOPE ...... V-11 IV. VALUE TYPE AND DEFINITION...... V-12
V. REFERENCE DAY ...... V-12 VI. APPRAISAL BASIS ...... V-13 VII. APPRAISAL METHODS ...... V-17 VIII. IMPLEMENTATION OF APPRAISAL PROCEDURES ...... V-21 IX. APPRAISAL ASSUMPTIONS ...... V-23 X. CONCLUSION ...... V-23 XI. SPECIAL INSTRUCTIONS ...... V-25 XII. RESTRICTIONS ON USE OF THE REPORT ...... V-26 XIII. DATE OF THE APPRAISAL REPORT ...... V-27
ANNEXES ...... V-28
–V-2– APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
Statement of Certified Public Valuers
1. We have, when carrying out the asset appraisal activities, complied with relevant laws, regulations and standards of asset appraisal, abided by the independent, objective and equitable principles. Based on the information collected in the process of appraisal, we have made objective statements in the Report and will assume corresponding legal liabilities for the rationality of the appraisal conclusion.
2. The list assets of the appraisal object involved have been declared by the entity valued and confirmed with its signatures and seals; the information provided is authentic, lawful and complete. It is the responsibility of the Client and relevant parties to use the Report properly.
3. We have no existing or expected interests in the appraisal object in the Report or with the relevant parties. And we have no prejudice against the relevant parties.
4. We have conducted on-site investigation against the appraisal object and assets involved in the Report; paid necessary attention to the ownership in law of the object and the assets involved; verified the information concerning the object and the assets involved; disclosed any issues found according to facts and requested the equity holders and relevant parties to improve the property rights to comply with the requirements for issuance of the appraisal report.
5. The analysis, judgment and conclusion in the Report are subject to the assumptions and restrictive conditions of the Report. Users of the Report shall give a full consideration to the assumptions, restrictive conditions and special instruction set out in the Report and the impacts thereof on the appraisal conclusion.
–V-3– APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
Summary
Important Notice
The contents of the summary are excerpts from the text of the Report. For the details of the appraisal and a reasonably understanding of the conclusion, please read the text of the Report carefully.
China Enterprise Appraisals Company Inc. has accepted the commission of CSSC Offshore & Marine Engineering (Group) Company Limited to, according to relevant laws, regulations and asset appraisal standards and based on the principles of independence, objectivity and justice, appraise the market value of all shareholders’ equity of Guangzhou Shipyard Shipping Co., Ltd. through necessary appraisal procedures. The Report is hereby summarized as follows:
Purpose: CSSC Offshore & Marine Engineering (Group) Company Limited proposes to transfer the equity of Guangzhou Shipyard Shipping Co., Ltd. held by it. For such purpose, it is required to appraise the value of all shareholders equity of Guangzhou Shipyard Shipping Co., Ltd. involved in such transfer.
Object: The value of all shareholders’ equity of Guangzhou Shipyard Shipping Co., Ltd.
Scope: All assets and liabilities of Guangzhou Shipyard Shipping Co., including the current assets, fixed assets, intangible assets and current liabilities.
Reference day: 31 August 2015
Value type: Market value
Appraisal method: Asset-based approach
Conclusion: The Report takes the appraisal results from the asset-based approach as the conclusion, the details of which are as follows:
On the reference day of 31 August 2015, the carrying value of total assets of Guangzhou Shipyard Shipping Co., Ltd. was RMB1,200,966,000, the appraised value was RMB1,325,565,900 and the added value of appraisal was RMB124,599,900 with a value increase of 10.37%; the total liabilities was RMB6,255,200, the appraised value was RMB6,255,200, with no change (increase/decrease); the carrying value of net assets was RMB1,194,710,800, the appraised value was RMB1,319,310,700 and the added value of appraisal was RMB124,599,900 with a value increase of 10.43%.
–V-4– APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
Details of the appraisal results are listed in the table below:
Summary of Appraisal Results
Reference day: 31 August 2015 Unit: RMB0’000
Increase/ Carrying Appraised decrease in Appreciation Item Value Value value rate % D=C/ A B C=B-A A×100%
Current assets 1 51.30 51.30 0.00 0.00 Non-current assets 2 120,045.30 132,505.29 12,459.99 10.38 Including: Long-term equity investment 3 Investment property 4 Fixed assets 5 46,188.96 47,249.11 1,060.14 2.30 Construction in progress 6 Intangible assets 7 73,856.33 85,256.18 11,399.85 15.44 Including: land use rights 8 73,856.33 85,256.18 11,399.85 15.44 Other non-current assets 9
Total assets 10 120,096.60 132,556.59 12,459.99 10.37
Current liabilities 11 625.52 625.52 0.00 0.00 Non-current liabilities 12
Total liabilities 13 625.52 625.52 0.00 0.00
Net assets 14 119,471.08 131,931.07 12,459.99 10.43
The appraised value of all shareholders’ equity of Guangzhou Shipyard Shipping Co., Ltd. was RMB1,319,310,700.
The Report is only a reference basis for the economic activities described in the Report in terms of value, and the conclusion shall be valid for one year since 31 August 2015, the reference day.
Users of the Report shall give a full consideration to the assumptions, restrictive conditions, special instructions set out in the Report and their effects on the conclusion.
–V-5– APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
Report of Appraisal
In Respect of
Equity Interests in Guangzhou Shipyard Shipping Co., Ltd. Proposed to Be Transferred by CSSC Offshore & Marine Engineering (Group) Company Limited
Appraisal Report
CSSC Offshore & Marine Engineering (Group) Company Limited,
China Enterprise Appraisals Company Inc. has accepted the commission of CSSC Offshore & Marine Engineering (Group) Company Limited to, according to relevant laws, regulations and asset appraisal standards and based on the principles of independence, objectivity and justice, appraise the market value of all shareholders’ equity of Guangzhou Shipyard Shipping Co., Ltd. as at 31 August 2015 through necessary appraisal procedures. The Report is hereby to presented as follows:
I. Client, Equity Holder, Entity Appraised and Other Users of Report As Agreed in the Engagement Letter
The Client and Equity Holder for the appraisal is CSSC Offshore & Marine Engineering (Group) Company Limited while the Entity Appraised is Guangzhou Shipyard Shipping Co., Ltd. Other users of the Report as agreed in the Report are the State-asset regulatory authorities, the government authority and the regulatory authorities in the industry of appraisal.
(I) Overview of the Client and Equity Holder
1. Introduction
Name: CSSC Offshore & Marine Engineering (Group) Company Limited (“COMEC”)
Legal domicile: No.40, South Fangcun Avenue, Liwan District, Guangzhou
Place of business: No.40, South Fangcun Avenue, Liwan District, Guangzhou
Legal representative: Han Guangde
Registered capital: RMB1,413,506,378
–V-6– APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
Business nature: Joint stock company with limited liability (domestic joint venture with enterprise from Hong Kong, Macau or Taiwan, listed)
Business scope: Railway, vessels, aerospace and other transportation equipment manufacturing.
2. Equity structure and changes
CSSC Offshore & Marine Engineering (Group) Company Limited was reorganized in 1993 from Guangzhou Shipyard, and incorporated in the People’s Republic of China as a joint stock company with limited liability. The company was registered in Guangzhou, which was approved by Guojiatigaisheng (1993) Circular 83. The company became as a public limited liability company, which was approved by Guojiatigaisheng (1993) Circular 110 on 5 July 1993. It was registered on 7 June 1993, addressed No.40, South Fangcun Avenue, Liwan District, Guangzhou.
COMEC’s public offering of 337,279,600 A-shares listed on 22 September 1993 was approved under China Securities Regulatory Commission (1993) No.31, China Securities Regulatory Administrator Zheng Jian Fa Shen (1993) No.26 and Shanghai Stock Exchange listing application (1993) No.2076. The shares began trading on 28 October 1993. The company’s public offering of 157,398,000 H-shares was made on 21 July 1993 for listing on Hong Kong Stock Exchange and the shares began trading on 6 August 1993 and thereinafter, the total amount of company share capital is 494,677,600 shares.
Pursuant to the 2010 shareholders’ meeting and revised Articles of Association of COMEC, COMEC’s paid-up capital (share capital) transferred from capital reserves increased by RMB148,403,274, and relevant procedures of H shares and A shares were completed on 15 July 2011 and 19 July 2011, respectively. The registered capital was therefore increased to RMB643,080,900.
Based on the resolutions of the first extraordinary shareholders’ meeting in 2013, the first domestic shareholders’ class (A shares) meeting in 2013, the first foreign share shareholders’ class (H shares) meeting in 2013, and the approval of CSSC Offshore & Marine Engineering (Group) Company Limited to list overseas for issuing foreign stocks capital (CSRC permitted [2014] No.117) issued by CSRC, COMEC completed the issuance of 345,940,890, 31,134,680 and 10,378,227 H Shares of RMB1 each to CSSC (Hong Kong) Shipping Company Limited (“CSSC HK”), Baosteel Resources International Co., Ltd. (“Baosteel International”) and China Shipping (H.K.) Holdings Co., Ltd. (“China Shipping HK”), respectively on 11 February 2014. All issued shares were ordinary shares and the registered capital has been therefore increased to RMB1,030,534,651.00.
On 3 March 2015, CSRC issued the approval of Guangzhou Shipyard International Co. Ltd to issuance of shares by Guangzhou Shipyard International Company Limited to China State Shipbuilding Corporation and others for asset
–V-7– APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
acquisition and supporting funds raising (CSRC permitted [2015] No.330), which approved COMEC to issue 272,099,300 and 68,313,338 shares to China State Shipbuilding Corporation and Yangzhou Kejin Shipbuilding Company Limited respectively for relevant asset acquisition. All issued shares are ordinary shares with nominal value of RMB1 per share.
On 31 March 2015, COMEC issued 42,559,089 ordinary shares to 7 specific investors by a non-public issue manner. The registered capital after change was RMB1,413,506,378.
On 11 May 2015, the company completed change of business registration. The name of the company was officially changed to CSSC Offshore & Marine Engineering (Group) Company Limited.
As of the reference day, the equity structure of COMEC is shown in the following table:
Proportion Capital of Capital No. Name of Shareholder Contribution Contribution (RMB)
1 China State Shipbuilding 501,745,100.00 35.50% Corporation 2 CSSC (Hong Kong) Shipping 345,940,890.00 24.47% Company Limited 3 Other public shares 565,820,388.00 40.03%
Total 1,413,506,378.00 100.00%
(II) Overview of the Entity Appraised
1. Overview
Name: Guangzhou Shipyard Shipping Co., Ltd.
Legal domicile: Liandiao Building, No.40, South Fangcun Avenue, Liwan District, Guangzhou
Place of business: No.40, South Fangcun Avenue, Liwan District, Guangzhou
Legal representative: Ouyang Beijing
Registered capital: 1,248,000,000
–V-8– APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
Business nature: Limited liability company (foreign-funded enterprise with sole proprietorship of legal person)
Business scope: Railway, ship and aerospace and other transportation equipment manufacturing.
2. Equity structure and changes
Guangzhou Shipyard Shipping Co., Ltd. was established on 18 November 2014. The shareholder is CSSC Offshore & Marine Engineering (Group) Company Limited, contributing 100% capital.
3. Management
Guangzhou Shipyard Shipping Co., Ltd. has no board of directors, and has 1 executive director, 1 supervisor and 1 manager (the office of which is concurrently held by the executive director).
4. Financial and operating conditions
The financial condition of the Entity Appraised on the reference day is seen in the following table:
Unit: RMB
As at As at 31 December 31 August Item 2014 2015
Current assets 572,968.84 512,999.46 Long-term equity investment Fixed assets 483,695,949.98 461,889,643.72 Construction in progress Intangible assets 756,044,102.88 738,563,314.40 Total assets 1,240,313,021.70 1,200,965,957.58 Current liabilities – 6,255,180.68 Non-current liabilities Total liabilities – 6,255,180.68 Owners’ equity 1,240,313,021.70 1,194,710,776.90
–V-9– APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
The operating condition of the Entity Appraised on the reference day is seen in the following table:
Unit: RMB
January – Item 2014 August 2015
1. Revenue from operations Less: cost of operations Business tax and surcharges Selling expense Administrative expenses 7,687,221.14 45,602,683.42 Financial expenses -242.84 -438.62 Loss on impairment of assets Add: income from investment 2. Operating profit -7,686,978.30 -45,602,244.80 Add: non-operating income Less: non-operating expenses 3. Total profit -7,686,978.30 -45,602,244.80 Less: income tax expenses 4. Net profit -7,686,978.30 -45,602,244.80
The financial statements of the Entity Appraised on the reference day have been audited by Shine Wing Certified Public Accountants (Special General Partnership), who has issued unqualified auditor’s opinions.
5. Relation between the Client and the Entity Appraised
Guangzhou Shipyard Shipping Co., Ltd. (the Entity Appraised) is a wholly-owned subsidiary of CSSC Offshore & Marine Engineering (Group) Company Limited (the Client).
(III) Other users of the Report as agreed in the engagement letter
The Report can only be used by the Client, equityholder, the State-asset regulatory authorities, the government authority and the regulatory authorities in the industry of appraisal, and shall not be used by or relied on any third parties.
– V-10 – APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
II. Purpose
CSSC Offshore & Marine Engineering (Group) Company Limited proposed to transfer equity interests in Guangzhou Shipyard Shipping Co., Ltd. held. For such purpose, it is required to appraise the value of the entire shareholders’ interests in Guangzhou Shipyard Shipping Co., Ltd. in respect of the equity transfer.
For such matter, China State Shipbuilding Corporation issued the Approval on COMEC’s Transfer of Equity Interests in Guangzhou Shipyard Industrial by Way of Tendering (Chuan Gong Jing [2014] No. 758).
III. Appraisal Object and Scope
(I) Appraisal object
According to the purpose of the appraisal, the appraisal object is the value of all equity interests in Guangzhou Shipyard Shipping Co., Ltd.
(II) Scope
The scope of appraisal covers all assets and liabilities of Guangzhou Shipyard Shipping Co., Ltd. including the current assets, fixed assets, intangible assets and current liabilities. The carrying value of total assets was RMB1,200,966,000; the total liabilities was RMB6,255,200; the carrying value of the net assets was RMB1,194,710,800.
The appraisal object and scope commissioned are consistent with the object and scope involved in the economic activities.
As at 31 August 2015 (the reference day), there were 77 properties with a total gross floor area of 169,719.58 square meters in the appraisal scope with an original carrying value of RMB265,919,847.94 and the net carrying value of RMB276,480,346.00; real estate ownership certificates were obtained for 50 properties with a total gross floor area of 129,237.17 square meters (according to the original real estate ownership certificate, the registration area was of 126,534.79 square meters, the expansion area was of 3,778.71 square meters, the demolition area was of 1,076.33 square meters, the actual area was of 129,237.17 square meters), original carrying value of RMB163,772,877.00 and net carrying value of RMB156,942,406.34. The title owner set out in 49 of the certificates was Guangzhou Shipyard Shipping Co. Ltd. and the remaining one title (pipe processing workshop, Sui Fang Di Zheng Zi No. 163349) was not transferred to Guangzhou Shipyard Shipping Co. Ltd. The title owner set out in the certificates was Guangzhou Shipyard International Company Limited (original title: COMEC). No real estate ownership certificates were obtained for the remaining 27 properties with a total gross floor area of 40,482.41 square meters, an original carrying value of RMB108,977,441.60 and a net carrying value of RMB112,707,469.00. CSSC Offshore & Marine Engineering (Group) Company Limited undertook to invest the untransferred properties above, as capital contribution, into Guangzhou Shipyard Shipping Co., Ltd., and CSSC Offshore & Marine Engineering (Group) Company
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Limited and Guangzhou Shipyard Shipping Co., Ltd. jointly undertook that the titles of the properties mentioned above belong to Guangzhou Shipyard Shipping Co., Ltd. with no disputes concerning ownership. In case of any dispute arising from or in connection with the ownership of titles, CSSC Offshore & Marine Engineering (Group) Company Limited and Guangzhou Shipyard Shipping Co., Ltd. should take full legal responsibilities.
A land grant contract was signed for one parcel of land in the scope of the appraisal with land grant premium paid. The account was consistent with the actual situation. The registration of the land use right is seen in the following table:
Term for Name of Land Land Grant Land Use Parcel Contract No. Location Usage Right Area (year) (m2)
Fangcun Avenue (93) Sui Guo No.40, South Industrial and 50 393,793.00 No. 1 Di Chu Zi Fangcun auxiliary No. 128 Avenue, facilities Liwan District, Guangzhou
Four boundaries of the land were Pear River on the east, the land used by CSSC Offshore & Marine Engineering (Group) Company Limited on the south, Fangcun Avenue on the east and No. 4 Oil Depot of Guangdong Oil Company on the north.
On the reference day, the houses, building and land within the scope of the appraisal were all used by CSSC Offshore & Marine Engineering (Group) Company Limited. The houses and buildings were generally in good conditions and could meet the requirements for use.
IV. Value Type and Definition
According to the purpose of the appraisal, it is determined that the value type of the appraisal object is market value.
The market value is the estimated value of normal and equitable transaction of the appraisal object as at the reference day in the circumstance that the voluntary buyers and sellers act reasonably and are not forced.
V. Reference Day
The reference day is 31 August 2015.
The reference day is determined by the Client.
– V-12 – APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
VI. Appraisal Basis
(I) Basis of economic activities
1. The Approval of China State Shipbuilding Corporation on COMEC’s Transfer of Equity Interests in Guangzhou Shipyard Industrial by Way of Tendering (Chuan Gong Jing [2014] No. 758);
2. The document of CSSC Offshore & Marine Engineering (Group) Company Limited: Requests for Instructions on Disposal of Equity Interests in Subsidiaries by COMEC through Transfer (COMEC [2014] No. 388).
(II) Legal basis
1. Company Law of the People’s Republic of China (Amended for the third time at the 6th session of the Standing Committee of the Twelfth National People’s Congress of the People’s Republic of China on 28 December 2013 and effective from 1 March 2014);
2. Securities Law of the People’s Republic of China (Amended for the second time at the 3rd session of the Standing Committee of the Twelfth National People’s Congress of the People’s Republic of China on 29 June 2013);
3. Law of the People’s Republic of China on the Administration of Urban Real Estate (passed at the 29th session of the Standing Committee of the Tenth National People’s Congress of the People’s Republic of China on 30 August 2007);
4. Land Administration Law of the People’s Republic of China ( Passed at the 11th session of the Standing Committee of the Tenth National People’s Congress of the People’s Republic of China on 28 August 2004);
5. Enterprise State-owned Assets Law of the People’s Republic of China (Passed at the 5th session of the Standing Committee of the Eleventh National People’s Congress of the People’s Republic of China on 28 October 2008);
6. The Tentative Measures for the Supervision and Administration of State-Owned Assets of Enterprises (Order of the State Council 378);
7. The Interim Administrative Measures on the Appraisal of the State-owned Assets of Enterprises (Order of the State-owned Assets Supervision and Administration Commission of the State Council No. 12);
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8. Circular on Strengthening the Administration of the Appraisal of State-owned Assets of Enterprises (Guo Zi Wei Chan Quan [2006] No. 274);
9. Circular on Matters concerning Audit of Appraisal Report of State-owned Assets of Enterprises (Guo Zi Chan Quan [2009] No. 941);
10. Circular on Printing and Distributing the Guidelines for Record-Filing of State-Owned Asset Assessment Projects of Central Enterprises (Guo Zi Fa Chan Quan [2013] No. 64);
11. Interim Regulations of the People’s Republic of China on Urban Land Use Tax (Passed at the 163rd Standing Meeting of the State Council on 30 December 2006);
12. Procedures for Appraisal of Urban Lands (GB/T18508-2001);
13. Procedures for Rating of Urban Lands (GB/T18507-2001).
(III) Basis of appraisal principles
1. Asset Appraisal Standards – Basic Standards (Cai Qi [2004] No. 20);
2. Standards of Professional Ethics for Asset Appraisal – Basic Standards (Cai Qi [2004] No. 20);
3. Standards for Professional Ethics of Asset Appraisal– Independence (Zhong Ping Xie [2012] No. 248);
4. Guiding Opinions on Attention of Certified Public Valuers on Legal Ownership of Appraisal Target (Hui Xie [2013] No. 18);
5. Asset Appraisal Standards – Appraisal Procedures (Zhong Ping Xie [2007] No. 189);
6. Asset Appraisal Standards – Working Papers (Zhong Ping Xie [2007] No. 189);
7. Asset Appraisal Standards – Real Estate (Zhong Ping Xie [2007] No. 189);
8. Guiding Opinions on Types of Value in Asset Appraisal (Zhong Ping Xie [2007] No. 189);
9. Guidelines for Quality Control of Business of Appraisal Institutions (Zhong Ping Xie [2010] No. 214);
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10. Asset Appraisal Standards – Enterprise Value (Zhong Ping Xie [2011] No. 227);
11. Asset Appraisal Standards – Appraisal Report (Zhong Ping Xie [2011] No. 230);
12. Asset Appraisal Standards – Engagement Letter (Zhong Ping Xie [2011] No. 230);
13. Asset Appraisal Standards -Using the Work of an Expert (Zhong Ping Xie [2012] No. 244);
14. The Guidelines for the State-owned Asset Appraisal Reports of Enterprises (Zhong Ping Xie [2011] No. 230);
(IV) Basis of ownership
1. Contract for grant of State-owned Land;
2. Real Estate Ownership Certificates;
3. Other ownership documents.
(V) Basis for price selection
1. Circular of the State Development Planning Commission on Issuing the Tentative Provisions on Charges for Consultancy of Preliminary Work of Construction Projects (Ji Jia Ge [1999] No. 1283);
2. Circular of the State Development Planning Commission and the Ministry of Construction on Issuing the Administrative Provisions on Charges of Engineering Survey and Design (Ji Jia Ge [2002] No. 10);
3. Notice of the National Planning Commission and State Environmental Protection Administration on Regulating Environmental Impact Consultation Fees (Ji Jia Ge [2002] No. 125);
4. Circular of the State Development Planning Commission on Issuing the Interim Administrative Measures for Service Fees of Tendering Agencies (Ji Jia Ge [2002] No. 1980);
5. Circular of the Ministry of Finance on Issuing the Provisions on Financial Management of Basic Construction (Cai Jian [2002] No. 394);
6. Circular of the National Development and Reform Commission and the Ministry of Construction on Issuing the Administrative Provisions on Charges of Supervision of Construction Projects and Relevant Service (Fa Gai Jia Ge [2007] No. 670);
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7. Rating Standard for Condition of Houses (For Trial Implementation) (Cheng Zhui Zi [1984] No. 678);
8. Comprehensive Estimate Norm of Guangdong Province for Construction and Decoration Project (2010);
9. Comprehensive Estimate Norm of Guangdong Province for Installation Projects (2010);
10. General Rules of Guangdong Province for Price Determination Estimate Norm of Construction Projects (2010);
11. Guangzhou Construction Cost Information for August 2015;
12. Circular of the Ministry of Communications Jiao Ji Fa [2004] No. 247 “Estimate Norm for Hydraulic Architecture Projects of Coastal Ports”;
13. Circular of the Ministry of Communications Jiao Shui Fa [2004] No. 247 “Rules on Preparation of Budgetary Estimates for Construction Projects of Coastal Ports”;
14. Circular of the Ministry of Communications Jiao Ji Zi [2004] No. 247 “Estimate Norm for On-shift Fees for Marine Machines for Hydraulic Architecture Projects and Handling Mechanical Equipment of Coastal Ports”;
15. Circular of the Ministry of Communications Jiao Ji Fa [2004] No. 247 “Estimate Norm for Quantity of Concrete and Mortar Materials for Marine Transport Engineering”;
16. YHSGGYS System Software for Budgeting for Coastal Port Projects (2005, Estimate Norm for the Ministry of Communications);
17. Circular of the Ministry of Communications Jiao Ji Zi [1997] No. 246 “Estimate Norm for On-shift Fees for Vessels for Dredging Engineering”;
18. Information and drawings concerning budget and final accounts provided by the enterprises;
19. Contracting and Sub-contracting contracts signed between the enterprise and relevant entities;
20. On-site investigation records and other information in relation to the valuation collected by the valuers;
21. Other information in relation to the asset appraisal.
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(VI) Other reference information
1. List of assets and appraisal declaration form provided by Guangzhou Shipyard Shipping Co., Ltd.;
2. Information base of China Enterprise Appraisals Company Inc.
VII. Appraisal Methods
Basic methods for appraisal of the value of enterprises are mainly the market approach, the income approach and the asset-based approach.
The income approach is an appraisal method, in which the expected income will be capitalized or discounted to determine the value of the appraisal object.
The market approach is an appraisal method, in which the value of the appraisal object is determined by making comparisons between the appraisal object and the comparable listed companies or transaction cases.
The asset-based approach is an appraisal method to determine the value of appraisal object based on the balance sheet of the entity appraised on the reference day and by reasonable appraisal of the value of all on-and-off balance sheet assets and liabilities.
According to Asset Appraisal Standards – Enterprise Value, certified public valuers that carry out the appraisal of enterprise value shall, based on relevant conditions such as the purpose, object, value type and information collected, analyze applicability of the asset-based approach, the market approach and the income approach and properly choose one or more approaches.
Based on the purpose, object, value type and information collected, and the applicability of three approaches, the asset-based approach is adopted for the appraisal with the following reasons:
The financial audit of the Entity Appraised is standard that the valuers can perform relevant appraisal procedures to compare the value of on-and-off balance sheet assets and liabilities based on the balance sheet of the entity on the reference day. Therefore, the asset-based approach can be used for the appraisal.
Guangzhou Shipyard Shipping Co., Ltd. was established on 18 November 2014 and has not yet conducted any operations; in addition, according to the arrangement of its parent company, COMEC, after the establishment of Guangzhou Shipyard Shipping Co., Ltd., the land and assets on the land were to be leased to CSSC Offshore & Marine Engineering (Group) Company Limited for use and administration, and Guangzhou Shipyard Shipping Co., Ltd did not conduct any other production or operating activities. Therefore, it is inappropriate to use income approach for appraisal. And there are no comparable cases for such company. It is inappropriate to adopt market approach.
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The methods for appraisal of all the assets of Guangzhou Shipyard Shipping Co., Ltd. are introduced as follows:
1. Current assets
Current assets within the scope of the appraisal are all cash and cash equivalents. The valuers verified the assets through the bank statements and bank confirmation and determined the verified value as the appraised value.
2. Buildings and constructions
The cost method is adopted for the houses, buildings and structures.
According to the features of the buildings, the value type and information collected, the cost method is adopted for buildings and constructions.
Appraisal value = full replacement price × comprehensive newness rate
(1) Determination of full replacement price
The full replacement price of buildings and construction generally includes construction and installation costs, upfront fees and other expenses and capital cost. The calculation formula is as follows:
Full replacement price = overall construction and installation costs + upfront fees and other expenses + capital costs
① Overall Construction and installation costs
For large, high value and important buildings (structures), the budget coordination method is adopted to determine the construction and installation costs, i.e. the construction costs and the installation costs are respectively calculated based on the engineering quantity in the final accounting of the buildings (structures) to be estimated and according to the Estimate Norm standards and documents on charges locally implemented to obtain the overall construction and installation costs.
For hydraulic architecture, the measures are calculated according to the engineering quantities listed in the settlement statement of the construction project of the hydraulic architecture, the existing budget Estimate Norm of installation project for coastal buildings and through YHSGGYS system software. The price of the engineering price is from the price set out in the Guangzhou Construction Cost Information for the 2nd Quarter of 2015 and some of the prices of special material for the port project come from the market price.
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For small, low value buildings (structures) with simple structure, the cost method is adopted to determine the overall installation and construction costs.
② Upfront fees and other expenses
The upfront fees and other expenses of construction projects are charged based on the investment amount of the Equity Holder’s construction projects in accordance with the charging standards of the industry, the State or local governments.
③ Capital costs
The capital cost is evenly charged with the sum of the overall construction and installation cost, and the upfront fees and other expenses as the basis within the reasonable construction period of the Equity Holder and with reference to the base rate of RMB loans of financial institutions issued by the People’s Bank of China for the same period on the reference day. The calculation formula is as follows:
Capital costs = (overall Construction and installation costs + upfront fees and other expenses) × reasonable construction period × base rate of loans × 1/2
(2) Determination of newness rate
① For large, high value and important buildings (structures), judgment is made based on the economic useful life, life used and the actual condition of all components such as the structures, decoration and auxiliary facilities through on-site investigation to comprehensively determine the remaining useful life and the comprehensive newness rate is determined as follows:
Comprehensive newness rate = remaining useful life /(remaining useful life + life used) × 100%
② For small, low value buildings (structures) with simple structure, the economic useful life is used to determine the newness rate, to be adjusted through the onsite investigation. The formula is as follows:
Comprehensive newness rate = remaining useful life/(life used + remaining useful life) × 100%
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③ For hydraulic structure, the scoring method based on technical state grade and durability method are adopted for the comprehensive newness rate through the formula as follows:
Comprehensive newness rate = newness rate from the scoring method based on technical state grade × 60% + theoretical newness rate × 40%
For the scoring method based on technical state grade, the grade is scored to all parts of the hydraulic structure subject to the Procedures for Maintenance Technology for Port Facilities issued by the Ministry of Communications on 15 July 2013.
Theoretical newness rate = (durability period – years of service) durability x 100%
3. Land use right
The one parcel of land included in the scope of appraisal is located at No. 40, South Fangcun Avenue Guangzhou, which was appraised by Huayuan International Real Estate and Land Asset Appraisal Co., Ltd with the following two methods: market comparison method and benchmark land price-based coefficient adjusting method. The weighted value of the values calculated through two methods is used to determine the appraisal value. The weight of the market comparison method is 1 while the weight of the other method is 0. The land appraisal institution issued the Land Appraisal Report Hua Yuan [2014] (Gu) Zi No. 143-Transfer of Guangzhou Shipyard Shipping Co., Ltd. – Guangzhou – Guangdong. Based on the result of the above Land Appraisal Report, the valuers determined the appraised value of the land with direct reference to the relevant data. The result of appraisal of the land use right is referenced in the following table:
Unit: RMB0’000
Parcel Carrying Appraisal Price No. Item Nature Area Value Value Referenced (m2)
1 Land use Grant 393,793.00 73,856.33 85,256.18 85,256.18 right
4. Liabilities
Liabilities are mainly taxes payable and other current liabilities. The valuers determine the appraised value based on the actual liabilities which should be borne by the entity after verifying the carrying value according to the breakdown of each project and related financial information provided by the entity.
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VIII. Implementation of Appraisal Procedures
The valuers implemented the appraisal to the assets and liabilities involved in the appraisal object from 1 December 2014 to 26 January 2015, 14 September 2015 to 23 September 2015 (30 November 2014 and 31 August 2015 as respective reference day) with details of the appraisal procedures as follows:
The appraisal institution accepted the commission and conducted the following acts:
(I) Acceptance
1. To preliminarily understand the economic activities and information concerning the assets commissioned to be appraised to determine the purpose, scope and object of appraisal;
2. To arrange the information list according to the requirements of the asset appraisal standards;
3. To draft the appraisal plan according to the features of the assets to be appraised and the general requirements in terms of time and in combination with the features of the enterprise’s assets and to set up an appraisal team for the needs of the appraisal.
(II) Onsite investigations
On the condition that the enterprise reported its assets and conducted comprehensive self-check according to the facts, the valuers conducted overall verifications to the assets included in the scope of the appraisal. The current assets were all bank deposits. The valuers verified the accounts for the bank deposits and, together with the auditor, consulted the bank; the physical assets were all fixed assets; the details of verification were the number, use state, property rights of the assets and other material factors affecting the appraisal; liabilities are mainly taxes payable and other current liabilities. The valuers determine the appraised value based on the actual liabilities which should be borne by the entity after verifying the carrying value according to the breakdown of each project and related financial information provided by the entity.
The members of the project team conducted onsite verification to the assets included in the scope of appraisal from 14 September 2015 to 18 September 2015. Upon the completion of the verification, the valuers submitted their working papers for verification. The procedures for the asset verification are as follows:
1. To instruct relevant finance and asset management personnel of the enterprise to fill in and register the “Detail List of Asset Appraisal”, the “Asset Survey Form” and “Data List” provided by the appraisal institution according to the requirements based on the asset verification and meanwhile
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to collect the certificates on the property ownership of the asset appraised, the project contract, final accounting and documents and data reflecting the performance, status and economic and technical indicators.
2. Preliminary review of the Detail List of Asset Appraisal provided by the property holder
The valuers understood the details of the specific objects within the scope of the appraisal through reviewing relevant data and drawings. Then, they reviews all kinds of Detail Lists of Asset Appraisal to check if there were missed fillings or ambiguity in assets, and check any omissions in the Detail List of Asset Appraisal according to their experience and relevant data.
3. Onsite survey
The valuers checked and conducted onsite survey to the fixed assets declared according to the Detail List of Asset Appraisal, and used different methods according to their features and characteristics.
(1) In terms of survey to the buildings and constructions, the valuers reviews the budgets (final) report for the main buildings and constructions, construction drawings and ownership certificates, and filled in the onsite survey form according to the technical conditions and examination records of the buildings and constructions.
(2) In terms of the verification of land use rights: the valuers mainly verified the property rights of the land use rights and the composition of carrying value.
4. Supplements, modifications and improvements to the Detail List of Asset Appraisal
According to the onsite survey results, the valuers further improved the detail declaration form and historical data to keep the “form” consistent with the “actual situation”.
5. Verification of ownership certificate
The valuers investigated and verified the houses and constructions in the scope of the appraisal, and land use rights to clarify the ownership of assets.
(III) Appraisal and estimates
According to the details of all kinds of assets, the valuers analyzed, calculated and made judgment with the method selected, corresponding formula and parameters and formed preliminary conclusions on appraisal. The person in charge of the project summarized all the preliminary conclusions on all assets, and prepared and formed a draft appraisal report.
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(IV) Internal review
According to our administrative measures on the appraisal procedures, the person in charge of the project shall, after review of the draft report, form the first draft and submit it to the company for internal review. Upon the completion of the internal review, the person in charge of the project shall prepare the draft appraisal report for comments and submit it to the Client for opinions, and according to the feedback, the person in charge shall make reasonable modifications, prepare the formal report and hand it to the Client.
IX. Appraisal Assumptions
The analysis and estimates in the Report are made based on the following assumptions that:
1. The Entity Appraised operated on a going concern after the reference day;
2. The Entity Appraised maintained the same business scope, and operation methods based on current management mode and level;
3. No force majeure occurred to have any material adverse effects after the reference day.
The conclusions made in the Report shall only be valid on the reference day based on the assumptions above. Where there is any large change in the assumptions above, the certified public valuers signing the Report and our company shall undertake no responsibilities for different conclusions arising from the changes in such assumptions.
X. Conclusion
The conclusion from the appraisal work above is as follows:
On 31 August 2015, the reference day, the carrying value of total assets of Guangzhou Shipyard Shipping Co., Ltd. was RMB1,200,966,000, the appraised value was RMB1,325,565,900 and the added value of appraisal was RMB124,599,900 with a value increase of 10.37%; the total liabilities was RMB6,255,200, the appraised value was RMB6,255,200, with no change (increase/decrease); the carrying value of net assets was RMB1,194,710,800, the appraised value was RMB1,319,310,700 and the added value of appraisal was RMB124,599,900 with a value increase of 10.43%.
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Details of the appraisal results are listed in the table below:
Summary of Appraisal Results Reference day: 31 August 2015
Unit: RMB0’000
Increase/ Carrying Appraised decrease in Appreciation Item Value Value value rate % D=C/A× A B C=B-A 100%
Current assets 1 51.30 51.30 0.00 0.00 Non-current assets 2 120,045.30 132,505.29 12,459.99 10.38 Including: Long-term equity investment 3 Investment property 4 Fixed assets 5 46,188.96 47,249.11 1,060.14 2.30 Construction in progress 6 Intangible assets 7 73,856.33 85,256.18 11,399.85 15.44 Including: land use right 8 73,856.33 85,256.18 11,399.85 15.44 Other non-current assets 9
Total assets 10 120,096.60 132,556.59 12,459.99 10.37
Current liabilities 11 625.52 625.52 0.00 0.00 Non-current liabilities 12
Total liabilities 13 625.52 625.52 0.00 0.00
Net assets 14 119,471.08 131,931.07 12,459.99 10.43
The appraised value of all the shareholders’ equity of Guangzhou Shipyard Shipping Co., Ltd was RMB1,319,310,700.
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XI. Special Instructions
The followings are matters that have been found in the course of appraisal to possibly affect the conclusion of the appraisal but are not related to the practicing standard and capability of the valuers:
1. The land use right was commissioned by CSSC Offshore & Marine Engineering (Group) Company Limited to be appraised by Beijing Huayuan Longtai International Real Estate and Asset Appraisal Co., Ltd. The appraisal value of the land use right in the Report used the Land Appraisal Report Hua Yuan Longtai [2014] (Gu) Zi No. 143 – Transfer of Guangzhou Shipyard Shipping Co., Ltd. – Guangzhou – Guangdong as a reference. When referencing the conclusion of the Land Appraisal Report, we have understood the process to obtain the conclusion of the report and assume relevant liabilities concerning reference of the conclusion in such report.
2. Guangzhou Shipyard Shipping Co., Ltd. is a company established on 18 November 2014 by CSSC Offshore & Marine Engineering (Group) Company Limited with the land of 393,793.00 square meters and the buildings on the land for consideration as the capital contribution. Up to the reporting date, among the real estate ownership certificates that CSSC Offshore & Marine Engineering (Group) Limited has invested into Guangzhou Shipyard Shipping Co., Ltd., one property (pipe processing workshop, Sui Fang Di Zheng Zi No. 163349) has not completed title transferal. CSSC Offshore & Marine Engineering (Group) Limited and Guangzhou Shipyard Shipping Co., Ltd. jointly undertook that the titles of the land and buildings belong to Guangzhou Shipyard Shipping Co., Ltd. with no disputes concerning ownership. In case of any dispute arising from or in connection with the ownership of titles, CSSC Offshore & Marine Engineering (Group) Company Limited and Guangzhou Shipyard Shipping Co., Ltd. should take full legal responsibilities.
3. There were 77 properties, with a total gross floor area of 169,719.58 square meters in the appraisal scope. Real estate ownership certificates were obtained for 50 properties with a total gross floor area of 129,237.17 square meters. The title owner set out in 49 of the certificates was Guangzhou Shipyard Shipping Co. Ltd. and the remaining one title (pipe processing workshop, Sui Fang Di Zheng Zi No. 163349) was not transferred to Guangzhou Shipyard Shipping Co. Ltd. The title owner set out in the certificates was Guangzhou Shipyard International Company Limited, and the title was not transferred to Guangzhou Shipyard Shipping Co., Ltd. 4 properties with certificates (the office building for the infrastructural construction division, the workshop for the finished products, the new measurement central building and the new office buildings for the shipbuilding department) was partially expanded. The expanded gross floor area was 3,778.71 square meters with no real estate ownership certificates obtained; no real estate ownership certificates were obtained for 27 properties with a total gross floor area of 40,482.41 square meters. Guangzhou Shipyard International Company Limited and Guangzhou Shipyard Shipping Co., Ltd. jointly undertook that, all properties within the scope of the appraisal were invested as capital contribution into
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Guangzhou Shipyard Shipping Co., Ltd. The titles of the properties belong to Guangzhou Shipyard Shipping Co., Ltd. with no disputes concerning ownership. In case of any dispute arising from or in connection with the ownership of titles, CSSC Offshore & Marine Engineering (Group) Company Limited and Guangzhou Shipyard Shipping Co., Ltd. should take full legal responsibilities.
4. 2 properties with certificates in the scope of appraisal (the restaurant and the control room for the winches) were partially demolished. The area demolished was 1,076.33 square meters. The appraisal value of the properties demolished was 0.
5. Up to 31 August 2015, the reference day, 37 properties within the scope of appraisal were encumbered with mortgage loans. However, all the loans were repaid and the mortgage contracts were terminated and had completed de-registration.
6. Up to the date of the Report, Guangzhou Shipyard Shipping Co., Ltd. has not signed any lease agreement for lease of its land and buildings on the land to CSSC Offshore & Marine Engineering (Group) Company Limited.
Users should pay special attentions to the any effects of the matters above on the appraisal conclusion.
XII. Restrictions on Use of the Report
(I) The Report can only be used for the purposes and use set out herein;
(II) The Report can only be used by users set out herein;
(III) Unless otherwise specified by laws and regulations or agreed by relevant parties, the relevant content must be reviewed by the appraisal institution if the Report is to be partially or wholly extracted, referenced or disclosed to public media;
(IV) The Report shall only be officially used after it is signed by certified public valuers and affixed with the seal of the appraisal institution;
(V) The Report shall be used officially after it is filed with the enterprise of capital contribution for records;
(VI) The conclusions disclosed herein are only effective for the economic activities herein and shall remain effective for one year since the reference day.
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XIII. Date of the Appraisal Report
The date of the Report is 23 September 2015.
Legal Representative: Quan Zhongguang
Certified Public Valuer: Yu Ning Certified Public Valuer: Zhang Ning
China Enterprise Appraisals Company Inc. 23 September 2015
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Annexes
Annex I Documents of Economic Activities;
Annex II Financial Statements of the Entity Appraised;
Annex III Copies of Corporate Business Licenses of the Client and the Entity Appraised;
Annex IV Main Ownership Certificates and Documents Involved by Appraisal Object;
Annex V Letter of Undertakings of the Client and Relevant Parties;
Annex VI Letter of Undertakings of Certified Public Valuers Signing the Report;
Annex VII Copies of Asset Appraisal Qualification Certificate of China Enterprise Appraisals Company Inc.;
Annex VIII Copies of Securities Qualification Certificates of China Enterprise Appraisals Company Inc.;
Annex IX Copies of Business Licenses of China Enterprise Appraisals Company Inc.;
Annex X Copies of Qualification Certificates of Valuers of China Enterprise Appraisals Company Inc.
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Letter of Undertakings of Certified Public Valuers
CSSC Offshore & Marine Engineering (Group) Company Limited,
Upon the acceptance of your commissioning, we have valued all the shareholders’ equity in Guangzhou Shipyard Shipping Co., Ltd. involved in your proposed transfer of equity interests in Guangzhou Shipyard Shipping Co., Ltd. with 31 August 2015 as the reference day and prepared the appraisal report. On the conditions that all the assumptions disclosed in the appraisal report are satisfied, we hereby undertake that:
1. We possess relevant practicing qualifications;
2. The appraisal object and scope are consistent with those agreed in the letter of engagement;
3. We have made necessary verifications to the appraisal object and the assets involved;
4. We have selected the appraisal methods according to the asset appraisal standards and relevant appraisal criteria;
5. We have fully considered the factors affecting the appraisal value;
6. The appraisal conclusion is reasonable;
7. The appraisal has been conducted independently without any interference.
Certified Public Valuer: Yu Ning
Certified Public Valuer: Zhang Ning
23 September 2015
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Asset Appraisal of Guangzhou Shipyard Shipping Co., Ltd.
Detail declaration Form Reference Day: 31 August 2015
Appraisal Object: Guangzhou Shipyard Shipping Co., Ltd.
Principal: Ouyang Beijing Financial Officer: Hou Zengquan
Major preparer: Ma Chao Telephone of preparer: 020-81891712 ext 2002
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SUMMARY OF ASSET APPRAISAL RESULTS Reference Day: 31 August 2015
Appraisal Object: Guangzhou Shipyard Shipping Co., Ltd.
Unit: RMB0’000
Increase/ Carrying Appraised decrease in Appreciation Item Value Value value rate % D=C/A× A B C=B-A 100%
Current assets 1 51.30 51.30 0.00 0.00 Non-current assets 2 120,045.30 132,505.29 12,459.99 10.38 Including: Long-term equity investment 3 Investment property 4 Fixed assets 5 46,188.96 47,249.11 1,060.14 2.30 Construction in progress 6 Intangible assets 7 73,856.33 85,256.18 11,399.85 15.44 Including: land use right 8 73,856.33 85,256.18 11,399.85 15.44 Other non-current assets 9
Total assets 10 120,096.60 132,556.59 12,459.99 10.37
Current liabilities 11 625.52 625.52 0.00 0.00 Non-current liabilities 12
Total liabilities 13 625.52 625.52 0.00 0.00
Net assets 14 119,471.08 131,931.07 12,459.99 10.43
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SUMMARY OF ASSET APPRAISAL CATEGORISED RESULTS Reference Day: 31 August 2015
Appraisal Object: Guangzhou Shipyard Shipping Co., Ltd.
Unit: RMB
Increase/ Carrying Appraised decrease in Appreciation No. Subject value Value value rate %
1 I. Total Current assets 512,999.46 512,999.46 0.00 0.00 2 Cash and cash equivalents 512,999.46 512,999.46 0.00 0.00 3 Financial asset for trading 4 Notes receivable 5 Total accounts receivable 6 Less: Provision for bad debts 7 Net accounts receivable 8 Prepayments 9 Interests receivable 10 Dividends receivable 11 Total other receivables 12 Less: Provision for bad debts 13 Net other receivables 14 Total inventories 15 Less: Provision for inventory impairment 16 Net inventories 17 Non-current assets due within one year 18 Other current assets 19 II. Total non-current assets 1,200,452,958.12 1,325,052,861.50 124,599,903.38 10.38 20 Available-for-sale financial assets 21 Total held-to-maturity investments 22 Less: Provision for impairment of held-to-maturity investments 23 Net held-to-maturity investments 24 Long-term receivables 25 Total long-term receivables 26 Less: Provision for impairment of Long-term equity investments 27 Net long-term equity investments 28 Total investment properties 29 Less: Provision for impairment of investment properties 30 Net investment properties 31 Fixed assets at cost 486,388,974.00 798,542,600.00 312,153,626.00 64.18 32 Of which: Buildings 486,388,974.00 798,542,600.00 312,153,626.00 64.18 33 Facilities 34 Land 35 Less: Accumulated depreciation -100.00 36 Fixed assets, net value 461,889,643.72 472,491,061.50 10,601,417.78 2.30 37 Of which: Buildings 461,889,643.72 472,491,061.50 10,601,417.78 2.30 38 Facilities 39 Land 40 Less: Provision for fixed asset impairment 41 Net fixed assets 461,889,643.72 472,491,061.50 10,601,417.78 2.30 42 Construction in progress 43 Construction materials 44 Disposal of fixed assets
– V-32 – APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
Increase/ Carrying Appraised decrease in Appreciation No. Subject value Value value rate %
45 Productive biological assets 46 Total oil and gas assets 47 Less: Provision for impairment of oil and gas assets 48 Net oil and gas assets 49 Total intangible assets 738,563,314.40 852,561,800.00 113,998,485.60 15.44 50 Of which: land use rights 738,563,314.40 852,561,800.00 113,998,485.60 15.44 51 Less: Provision for intangible assets impairment 52 Net intangible assets 738,563,314.40 852,561,800.00 113,998,485.60 15.44 53 Research and development expenses 54 Goodwill 55 Long-term deferred expenses 56 Deferred tax assets 57 Other non-current assets 58 III. Total assets 1,200,965,957.58 1,325,565,860.96 124,599,903.38 10.37 59 IV. Total current liabilities 60 Short-term loans 61 Financial liabilities for trading 62 Notes payable 63 Accounts payable 64 Advance from customers 65 Employee benefits 66 Taxes payable 6,255,180.68 6,255,180.68 0.00 0.00 67 Interests payable 68 Dividends payable 69 Other payables 70 Non-current liabilities due within one year 71 Other current liabilities 72 V. Total non-current liabilities: 73 Long-term loans 74 Bonds payable 75 Long-term payables 76 Special payables 77 Estimated Liabilities 78 Deferred income tax liabilities 79 Other non-current liabilities 80 VI. Total liabilities 81 VII. Net assets (owner’s equity) 1,194,710,776.90 1,319,310,680.28 124,599,903.38 10.43
– V-33 – APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
SUMMARY OF CURRENT ASSETS APPRAISAL Reference Day: 31 August 2015
Appraisal Object: Guangzhou Shipyard Shipping Co., Ltd.
Unit: RMB
Increase/ Carrying Appraised decrease in Appreciation No. Subject value Value value rate %
3-1 Cash and cash equivalents 512,999.46 512,999.46 0.00 0.00 3-2 Financial asset for trading 3-3 Notes receivable 3-4 Total accounts receivable Less: Provision for bad debts Net accounts receivable 3-5 Prepayments 3-6 Interests receivable 3-7 Dividends receivable 3-8 Total other receivables Less: Provision for bad debts Net other receivables 3-9 Total inventories Less: Provision for inventory impairment Net inventories 3-10 Non-current assets due within one year 3-11 Other current assets
Total current assets 512,999.46 512,999.46 0.00 0.00
Preparer of appraised object: Ma Chao Valuer: Zhang Ning Prepared on: 15 September 2015
– V-34 – APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
SUMMARY OF CASH AND CASH EQUIVALENTS APPRAISAL Reference Day: 31 August 2015
Appraisal Object: Guangzhou Shipyard Shipping Co., Ltd.
Unit: RMB
Increase/ Carrying Appraised decrease in Appreciation No. Subject value Value value rate % Remarks
3-1-1 Cash 3-1-2 Bank deposits 512,999.46 512,999.46 0.00 0.00 3-1-3 Other cash and cash equivalents
Total 512,999.46 512,999.46 0.00 0.00
Preparer of appraised object: Ma Chao Valuer: Zhang Ning Prepared on: 15 September 2015
– V-35 – APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
CASH AND CASH EQUIVALENTS – DETAIL LIST OF BANK DEPOSITS APPRAISAL Reference Day: 31 August 2015
Appraisal Object: Guangzhou Shipyard Shipping Co., Ltd.
Unit: RMB
Carrying Exchange value in rate on Account foreign reference Carrying Appraised Appreciation No. Bank no. Currency currency day value value rate % Remarks
1 ICBC Guangzhou 3602 0014 RMB 512,999.46 512,999.46 0.00 Hedong Sub-branch 0920 0080 137
Total 512,999.46 512,999.46 0.00
Preparer of appraised object: Ma Chao Valuer: Zhang Ning Prepared on: 15 September 2015
– V-36 – APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
SUMMARY OF NON-CURRENT ASSETS APPRAISAL Reference Day: 31 August 2015
Appraisal Object: Guangzhou Shipyard Shipping Co., Ltd.
Unit: RMB
Increase/ Appraised decrease in Appreciation No. Subject Carrying value Value value rate %
4-1 Available-for-sale financial assets 4-2 Total held-to-maturity investments Less: Provision for impairment of held-to-maturity investments Net held-to-maturity investments 4-3 Long-term receivables 4-4 Total long-term receivables Less: Provision for impairment of Long-term equity investments Net long-term equity investments 4-5 Total investment properties Less: Provision for impairment of investment properties Net investment properties 4-6 Fixed assets at cost 486,388,974.00 798,542,600.00 312,153,626.00 64.18 Of which: Buildings 486,388,974.00 798,542,600.00 312,153,626.00 64.18 Facilities Land Less: Accumulated depreciation 0.00 Fixed assets, net value 461,889,643.72 472,491,061.50 10,601,417.78 2.30 Of which: Buildings 461,889,643.72 472,491,061.50 10,601,417.78 2.30 Facilities Land Less: Provision for fixed asset impairment Net fixed assets 461,889,643.72 472,491,061.50 10,601,417.78 2.30 4-7 Construction in progress 4-8 Construction materials 4-9 Disposal of fixed assets 4-10 Productive biological assets 4-11 Total oil and gas assets Less: Provision for impairment of oil and gas assets Net oil and gas assets 4-12 Total intangible assets 738,563,314.40 852,561,800.00 113,998,485.60 15.44 Of which: land use rights 738,563,314.40 852,561,800.00 113,998,485.60 15.44 Less: Provision for intangible assets impairment
– V-37 – APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
Increase/ Appraised decrease in Appreciation No. Subject Carrying value Value value rate %
Net intangible assets 738,563,314.40 852,561,800.00 113,998,485.60 15.44 4-13 Research and development expenses 4-14 Goodwill 4-15 Long-term deferred expenses 4-16 Deferred tax assets 4-17 Other non-current assets
Total 1,200,452,958.12 1,325,052,861.50 124,599,903.38 10.38
Preparer of appraised object: Ma Chao Valuer: Zhang Ning Prepared on: 15 September 2015
– V-38 – APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
SUMMARY OF FIXED ASSETS APPRAISAL Reference Day: 31 August 2015
Appraisal Object: Guangzhou Shipyard Shipping Co., Ltd.
Unit: RMB
Carrying value Impairment Value appraised Increase/decrease in value No. Subject At cost Net valueprovision At cost Net value At cost Net value
Total buildings 486,388,974.00 461,889,643.72 0.00 798,542,600.00 472,491,061.50 64.18 2.30 4-6-1 Fixed assets – buildings 276,480,346.00 265,919,847.94 0.00 444,010,900.00 270,087,063.50 60.59 1.57 4-6-2 Fixed assets – buildings and auxiliary facility 177,291,529.00 167,817,036.18 0.00 290,286,200.00 172,184,294.00 63.73 2.60 4-6-3 Fixed assets – Pipelines and trenches 32,617,099.00 28,152,759.60 0.00 64,245,500.00 30,219,704.00 96.97 7.34 Total facilities 4-6-4 Fixed assets – machinery and facility 4-6-5 Fixed assets – vehicles 4-6-6 Fixed assets – electronic equipment 4-6-7 Fixed assets – Land
Total fixed assets 486,388,974.00 461,889,643.72 0.00 798,542,600.00 472,491,061.50 64.18 2.30
Less: Provision for fixed assets impairment 0.00
Net fixed assets 486,388,974.00 461,889,643.72 798,542,600.00 472,491,061.50 64.18 2.30
Preparer of appraised object: Ma Chao Valuer: Zhang Ning Prepared on: 15 September 2015
– V-39 – FIXED ASSETS – DETAIL LIST OF BUILDINGS APPRAISAL INTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Reference Day: 31 August 2015
Appraisal Object: Guangzhou Shipyard Shipping Co., Ltd.
Unit: RMB
Gross Carrying value Appraised value Property certificate Corresponding land Owner shown on Name of Eave floor Time of Estimated Newness Value Appraised No. Asset no. no. certificate no. property certificate buildings Use Detail address Structure height Floors area completion Unit cost useful life At cost Net value At cost rate Net value increase unit price Remark 2 2 (m)2 (m )) (RMB/m (year)) % % (RMB/m
1 A002165 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Infrastructure Office 40 South Fangcun Main Framework 9.24 3.00 1,487.72 1964-01 2,794.50 30.00 1,266,060.00 1,184,790.09 4,157,900.00 30 1,247,370 5.28 2,794.81 Area with certificate – Zi No. 163345 No.128 International Company Office Road, Liwan District, 848.54m Limited Guangzhou 2 , extended area of 639.18m2 without certificate
2 A001092 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Pipe Processing Production 40 South Fangcun Main Framework 15.80 2.00 3,990.16 1970-12 962.53 40.00 3,373,830.00 3,281,499.18 11,124,200.00 30 3,281,639 0.00 2,787.91 Area with certificate – Zi No.163349 No.128 International Company Workshop Road, Liwan District, 3270.16m Limited Guangzhou 2 , extended area of 720m2 -0– V-40 – without certificate, with a closed basement
3 A001031 Nil (93) Sui Guo Di Chu Zi Nil Spare Parts Auxiliary 40 South Fangcun Main Framework 13.70 4.00 665.28 2012-11 1,707.98 50.00 1,191,645.00 1,161,665.01 1,215,200.00 95 1,148,364.00 -1.14 1,826.60 No.128 Warehouse (team Road, Liwan District, room) Guangzhou
4 A002028 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard New Production 40 South Fangcun Main Brick and 3.50 1.00 111.36 1989-01 2,776.58 40.00 84,000.00 82,377.57 237,400.00 33 78,342 -4.90 2,131.82 Renewed and altered, Zi No.163362 No.128 International Company Transformer Road, Liwan District, concrete including facility Limited Substation no. 8 Guangzhou foundation
5 A005429 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard West Container Production 40 South Fangcun Main Steel structure 5.00 1.00 835.35 1991-12 404.80 10.00 557,712.00 422,466.84 1,021,700.00 52 531,284 25.76 1,223.08 Zi No.163374 No.128 International Company Spare Parts Road, Liwan District, Limited Warehouse Guangzhou
6 A002035 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Transformer Production 40 South Fangcun Main Brick and 3.50 1.00 198.53 1957-01 138.92 30.00 81,510.00 61,743.84 268,700.00 30 80,610 30.56 1,353.45 Zi No.163381 No.128 International Company Substation no. 1 Road, Liwan District, concrete Limited Guangzhou
7 A002029 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Transformer Production 40 South Fangcun Main Brick and 5.00 1.00 156.74 1963-12 197.40 40.00 77,550.00 74,401.08 255,700.00 30 76,710 3.10 1,631.36 Zi No.163387 No.128 International Company Substation no. 6 Road, Liwan District, concrete Limited Guangzhou
8 A002030 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Transformer Production 40 South Fangcun Main Brick and 3.50 1.00 77.60 1983-01 685.58 40.00 31,860.00 29,331.45 105,000.00 30 31,500 7.39 1,353.09 Zi No.163405 No.128 International Company Substation no. Road, Liwan District, concrete Limited 10 Guangzhou PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX
Gross Carrying value Appraised value Property certificate Corresponding land Owner shown on Name of Eave floor Time of Estimated Newness Value Appraised No. Asset no. no. certificate no. property certificate buildings Use Detail address Structure height Floors area completion Unit cost useful life At cost Net value At cost rate Net value increase unit price Remark 2 2 (m)2 (m )) (RMB/m (year)) % % (RMB/m
9 A002034 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Old Compressor Production 40 South Fangcun Main Brick and 11.00 1.00 607.56 1956-12 153.80 30.00 374,400.00 300,115.62 1,234,500.00 30 370,350 23.40 2,031.90 Zi No.163406 No.128 International Company Room Road, Liwan District, concrete Limited Guangzhou
10 A001128 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Line 3 and line Production 40 South Fangcun Main Framework 19.25 1.00 5,278.53 1976-01 430.56 40.00 3,626,610.00 3,482,042.37 11,957,700.00 30 3,527,522 1.31 2,265.35 Zi No.163411 No.128 International Company 4 of internal Road, Liwan District, Limited processing team Guangzhou (Workshops)
11 A001129 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard 50 tonnes Production 40 South Fangcun Main Framework 19.25 1.00 5,983.78 1976-01 700.58 40.00 4,111,140.00 4,016,192.25 13,555,400.00 30 4,066,620 1.26 2,265.36 Zi No.163412 No.128 International Company South-North Road, Liwan District, Limited Cross Guangzhou
12 A002134 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Auxiliary Field Production 40 South Fangcun Main Framework 19.25 1.00 4,972.12 1965-01 1,208.64 40.00 3,416,100.00 3,304,821.84 11,263,600.00 30 3,379,080 2.25 2,265.35 renewed and altered due Zi No.163413 No.128 International Company Road, Liwan District, to production needs Limited Guangzhou
13 A001123 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard West Container Production 40 South Fangcun Main Framework 6.00 1.00 494.37 1988-12 2,035.44 40.00 538,128.00 527,734.53 1,108,900.00 46 510,094 -3.34 2,243.06 renewed and altered, with Zi No.163415 No.128 International Company Processing Road, Liwan District, indoor steel platform Limited Auxiliary Plant Guangzhou
14 A001117 Nil (93) Sui Guo Di Chu Zi Nil Installation Auxiliary 40 South Fangcun Main Framework 12.60 4.00 2,570.00 2012-11 2,021.53 40.00 5,752,197.00 5,054,743.08 5,865,800.00 96 5,631,168.00 11.40 2,282.41 Original building No.128 Workshop (team Road, Liwan District, demolished and rebuilt, room) Guangzhou carrying value includes the cost of original building
15 A001132 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard New Steel Plate Production 40 South Fangcun Main Framework 13.34 1.00 577.95 1983-01 6,013.27 40.00 2,080,836.00 1,965,863.25 5,704,600.00 34 1,939,564 -1.34 9,870.40 plant with a production Zi No.163421 No.128 International Company Processing Road, Liwan District, line, including production Limited Workshop Guangzhou line foundation outdoor
16 A001079 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Electrical Production 40 South Fangcun Main Framework 13.26 1.00 2,953.45 1964-01 278.42 40.00 1,730,400.00 1,664,433.24 5,705,500.00 30 1,711,650 2.84 1,931.81 Zi No.163426 No.128 International Company Equipment Road, Liwan District, Limited Warehouse No. Guangzhou 107 -1– V-41 – 17 A002170 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Welding Testing Auxiliary 40 South Fangcun Main Brick and Zi No.163434 No.128 International Company Lab Road, Liwan District, concrete Limited Guangzhou
11.50 3.00 826.56 1978-01 338.40 40.00 377,310.00 290,628.01 1,244,100.00 30 373,230 28.42 1,505.15
18 A001055 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Iron Casting Production 40 South Fangcun Main Framework 13.34 1.00 2,939.53 1970-01 573.09 40.00 1,722,240.00 1,668,350.52 5,678,600.00 30 1,703,580 2.11 1,931.81 Zi No.163441 No.128 International Company Workshop Road, Liwan District, Limited Guangzhou
19 A001173 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Main Office Office 40 South Fangcun Main Brick and 12.25 4.00 2,769.79 1957-01 1,080.76 40.00 2,198,340.00 2,088,674.28 7,248,400.00 30 2,174,520 4.11 2,616.95 Zi No.163444 No.128 International Company Building of Road, Liwan District, concrete Limited Factory Guangzhou PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX
Gross Carrying value Appraised value Property certificate Corresponding land Owner shown on Name of Eave floor Time of Estimated Newness Value Appraised No. Asset no. no. certificate no. property certificate buildings Use Detail address Structure height Floors area completion Unit cost useful life At cost Net value At cost rate Net value increase unit price Remark 2 2 (m)2 (m )) (RMB/m (year)) % % (RMB/m
20 A002016 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Stabilizing Auxiliary 40 South Fangcun Main Framework 11.00 2.00 530.14 1978-01 1,794.24 40.00 521,430.00 499,224.75 1,322,500.00 37 489,325 -1.98 2,494.62 now changed to team Zi No.163452 No.128 International Company Station (team Road, Liwan District, room Limited room) Guangzhou
21 A002175 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Technology Office 40 South Fangcun Main Brick and 16.50 5.00 1,805.74 1974-12 737.42 40.00 909,510.00 688,953.84 2,998,900.00 30 899,670 30.58 1,660.76 Zi No.163457 No.128 International Company Building Road, Liwan District, concrete Limited Guangzhou
22 A001174 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Computation Office 40 South Fangcun Main Framework 19.80 6.00 3,856.12 1984-12 1,383.01 40.00 4,927,500.00 4,574,901.06 9,748,200.00 49 4,776,618 4.41 2,527.98 Zi No.163461 No.128 International Company Building Road, Liwan District, Limited Guangzhou
23 A001176 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Guest Restaurant Auxiliary 40 South Fangcun Main Framework 12.50 3.00 785.95 1983-01 1,709.23 40.00 981,454.00 894,024.49 2,065,500.00 45 929,475 3.97 2,628.02 Area shown on certificate Zi No.163467 No.128 International Company Road, Liwan District, is1178.93m Limited Guangzhou
2 , demolished area392.98m2
24 A001130 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Small joining Production 40 South Fangcun Main Framework 15.01 1.00 5,913.25 1976-01 965.43 40.00 3,624,030.00 3,518,921.07 11,949,200.00 30 3,584,760 1.87 2,020.75 Zi No.163468 No.128 International Company workshop Road, Liwan District, Limited Guangzhou
25 A001118 Nil (93) Sui Guo Di Chu Zi Nil New Installation Production 40 South Fangcun Main Steel structure 10.20 1.00 972.00 2012-11 3,770.51 40.00 2,850,830.00 2,742,149.87 2,896,300.00 94 2,722,522.00 –0.72 2,979.73 Carrying value includes No.128 Workshop Road, Liwan District, value of demolished -2– V-42 – Guangzhou installation workshop
26 A002139 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Office of Branch Office 40 South Fangcun Main Brick and 9.65 3.00 701.84 1988-01 466.98 40.00 571,090.00 536,941.93 1,228,000.00 44 540,320 0.63 1,749.69 Zi No.85248 No.128 International Company Installation Road, Liwan District, concrete Limited Factory Guangzhou
27 A002143 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Composite Office 40 South Fangcun Main Brick and 10.30 3.00 1,118.31 1972-01 282.00 40.00 514,260.00 503,119.80 1,695,600.00 30 508,680 1.11 1,516.22 Zi No.85249 No.128 International Company Office Of Road, Liwan District, concrete Limited Branch Guangzhou Installation Factory
28 A001133 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Old Steel Plate Production 40 South Fangcun Main Framework 11.58 1.00 822.55 1979-01 475.77 40.00 465,270.00 423,823.02 1,534,100.00 30 460,230 8.59 1,865.05 Zi No.85251 No.128 International Company Processing Road, Liwan District, Limited Workshop Guangzhou
29 A001127 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Line 2 of Production 40 South Fangcun Main Framework 19.25 1.00 3,975.97 1979-01 454.67 40.00 3,013,230.00 2,744,806.53 9,935,300.00 30 2,980,590 8.59 2,498.84 Zi No.85252 No.128 International Company Internal Road, Liwan District, Limited Processing Team Guangzhou (Workshop)
30 A001126 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Line 1 of Production 40 South Fangcun Main Framework 19.25 1.00 3,408.68 1976-01 354.55 40.00 2,445,360.00 2,388,883.83 8,063,000.00 30 2,418,900 1.26 2,365.43 Zi No.85253 No.128 International Company Internal Road, Liwan District, Limited Processing Team Guangzhou (Workshop) PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX
Gross Carrying value Appraised value Property certificate Corresponding land Owner shown on Name of Eave floor Time of Estimated Newness Value Appraised No. Asset no. no. certificate no. property certificate buildings Use Detail address Structure height Floors area completion Unit cost useful life At cost Net value At cost rate Net value increase unit price Remark 2 2 (m)2 (m )) (RMB/m (year)) % % (RMB/m
31 A001125 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard West Factory Production 40 South Fangcun Main Framework 19.25 1.00 1,885.57 1977-01 2,347.83 40.00 1,416,300.00 1,272,529.05 4,669,800.00 30 1,400,940 10.09 2,476.60 facility foundation Zi No.85254 No.128 International Company Containeer Road, Liwan District, renewed due to Limited Processing Guangzhou production needs Workshop
32 A001099 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Warehouse for Production 40 South Fangcun Main Framework 10.20 1.00 5,738.64 1969-01 521.49 40.00 2,936,460.00 2,817,226.09 9,682,200.00 30 2,904,660 3.10 1,687.19 Zi No.85255 No.128 International Company Non-Metal Road, Liwan District, Limited Components And Guangzhou Electric Cables
33 A001114 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Deck Installation Production 40 South Fangcun Main Framework 10.00 1.00 2,081.65 1972-01 413.33 40.00 1,044,120.00 1,021,501.74 3,442,700.00 30 1,032,810 1.11 1,653.83 Zi No.85270 No.128 International Company Workshop Road, Liwan District, Limited Guangzhou
34 A002498 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Quality Control Auxiliary 40 South Fangcun Main Brick and 10.44 2.00 415.38 1988-01 1,146.85 30.00 385,250.00 371,956.55 828,400.00 44 364,496 -2.01 1,994.32 Internal wall with Zi No.85272 No.128 International Company Department Road, Liwan District, concrete anti-radiation treatment Limited Exposure Guangzhou Chamber
35 A001113 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Ship Installation Production 40 South Fangcun Main Framework 14.00 1.00 1,319.20 1983-12 527.00 40.00 1,125,522.00 1,036,196.46 2,929,800.00 36 1,054,728 1.79 2,220.89 Zi No.85273 No.128 International Company Phase Workshop Road, Liwan District, Limited Guangzhou
36 A001131 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard New Pressure Production 40 South Fangcun Main Framework 19.25 1.00 2,691.30 1988-12 1,356.40 40.00 3,757,104.00 3,564,165.69 7,712,600.00 46 3,547,796 -0.46 2,865.75 Zi No.85274 No.128 International Company Vessel Workshop Road, Liwan District, Limited Guangzhou
37 A005451 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Large-size Production 40 South Fangcun Main Steel structure 14.00 1.00 2,964.23 1993-12 4,112.87 30.00 7,536,694.00 7,275,601.39 12,820,500.00 58 7,435,890 2.20 4,325.07 High requirement for fire Zi No.0867709 No.128 International Company Components Road, Liwan District, prevention, with heat Limited Processing Guangzhou insulated rooftop and a Workshop number of crane rails
38 A001490 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard West Restaurant Office 40 South Fangcun Main Framework 21.20 Part of 7,505.76 1993-12 3,102.61 40.00 17,403,945.00 16,776,108.51 26,401,800.00 66 17,425,188 3.87 3,517.54 Zi No.0867710 No.128 International Company and Office Road, Liwan District, 6/F /3 Limited Guangzhou -3– V-43 – 39 A001436 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Zi No.0867711 No.128
Guangzhou Shipyard New Office 40 South Fangcun Main Framework 17.90 4.00 2,933.00 1994-12 877.13 40.00 3,431,874.00 3,313,453.98 5,066,700.00 65 3,293,355 –0.61 1,727.48 Area shown on certificate International Company Measurement Road, Liwan District, 2 is 997.86m Limited Center Guangzhou , extended area of1935.14m2 without certificate
40 A001442 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard New Office Office 40 South Fangcun Main Framework 20.40 7.00 3,113.68 1993-12 1,808.97 40.00 5,263,440.00 5,081,820.09 8,009,800.00 64 5,126,272 0.87 2,572.45 Area shown on certificate Zi No.0867712 No.128 International Company Building of Road, Liwan District, is 2629.29m Limited Shipbuilding Guangzhou Department 2 , extended area of 484.39m2 PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX
Gross Carrying value Appraised value Property certificate Corresponding land Owner shown on Name of Eave floor Time of Estimated Newness Value Appraised No. Asset no. no. certificate no. property certificate buildings Use Detail address Structure height Floors area completion Unit cost useful life At cost Net value At cost rate Net value increase unit price Remark 2 2 (m)2 (m )) (RMB/m (year)) % % (RMB/m
41 A005457 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Phase Painting Production 40 South Fangcun Main Steel structure 14.00 Part of 3,946.57 1996-01 2,704.24 30.00 8,943,039.00 8,404,606.35 13,997,700.00 61 8,538,597 1.59 3,546.80 Wall and ceiling with Zi No.0867713 No.128 International Company Workshop Road, Liwan District, 4/F /1 steel plate sandwiched Limited Guangzhou fire retardant padding. As spraying would damage the wall and ceiling, requirements for fire resistance and steel plate are high
42 A002478 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Carparks and Auxiliary 40 South Fangcun Main Framework 7.05 2.00 2,473.86 1994-09 1,511.68 30.00 2,950,479.00 2,797,159.50 4,356,000.00 65 2,831,400 1.22 1,760.81 Zi No.0867714 No.128 International Company Firefighting Road, Liwan District, Limited Building Guangzhou
43 A001398 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard New Production 40 South Fangcun Main Framework 6.60 2.00 562.35 1992-01 901.48 40.00 628,375.00 601,745.35 1,130,100.00 52 587,652 -2.34 2,009.60 Including facility Zi No.0867715 No.128 International Company Transformer Road, Liwan District, foundation Limited Substation no. 1 Guangzhou
44 A001421 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard 60HZ Power Production 40 South Fangcun Main Framework 6.50 2.00 542.14 1992-01 2,326.60 40.00 669,460.00 644,800.18 1,204,000.00 52 626,080 -2.90 2,220.83 Including facility Zi No.0867716 No.128 International Company Station Road, Liwan District, foundation Limited Guangzhou
45 A001450 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Dock Winch and Production 40 South Fangcun Main Framework 13.00 4.00 1,366.71 1993-12 2,801.45 40.00 1,776,366.00 1,717,624.80 3,029,600.00 56 1,696,576 -1.23 2,216.72 Area shown on property Zi No.0867717 No.128 International Company Scheduling Road, Liwan District, certificate is 2050.06m Limited Room Guangzhou -4– V-44 –
2 , demolished area 683.35m 2
46 A005438 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Fitting Units Production 40 South Fangcun Main Steel structure 14.00 1.00 1,837.67 1993-12 3,687.14 30.00 2,396,096.00 2,238,818.39 4,086,400.00 56 2,288,384 2.21 2,223.69 Alteration made Zi No.0867718 No.128 International Company Installation Road, Liwan District, Limited Workshop Guangzhou
47 A001466 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Chemicals Production 40 South Fangcun Main Framework 5.72 2.00 674.82 1994-03 1,279.92 40.00 904,500.00 876,399.30 1,491,200.00 57 849,984 -3.01 2,209.77 Zi No.0867719 No.128 International Company Warehouse Road, Liwan District, Limited Guangzhou
48 A001459 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Paints Production 40 South Fangcun Main Framework 11.49 1.00 1,263.36 1997-01 1,553.00 40.00 1,539,135.00 1,486,648.08 2,342,200.00 62 1,452,164 -2.32 1,853.95 Zi No.0867720 No.128 International Company Warehouse Road, Liwan District, Limited Guangzhou
49 A001467 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Gas Station Auxiliary 40 South Fangcun Main Framework 4.34 1.00 88.52 1998-03 12,647.71 40.00 1,039,666.00 1,007,366.08 1,405,800.00 71 998,118 -0.92 15,881.16 Two oil tanks Zi No.0867721 No.128 International Company Road, Liwan District, underground of diameter Limited Guangzhou 2.6 m and length 12 m
50 A005427 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard New Pipe Production 40 South Fangcun Main Steel structure 12.40 1.00 8,461.37 1992-12 1,712.08 40.00 9,182,992.00 8,840,395.75 16,745,700.00 56 9,377,592 6.08 1,979.08 Zi No.0867722 No.128 International Company Processing Road, Liwan District, Limited Workshop Guangzhou
51 A001441 Sui Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Electrical Production 40 South Fangcun Main Framework 25.00 5.00 6,184.37 1995-01 1,834.58 40.00 9,810,813.00 9,472,281.78 15,909,100.00 60 9,545,460 0.77 2,572.47 Zi No.0867724 No.128 International Company Equipment Road, Liwan District, Limited Warehouse Guangzhou PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX
Gross Carrying value Appraised value Property certificate Corresponding land Owner shown on Name of Eave floor Time of Estimated Newness Value Appraised No. Asset no. no. certificate no. property certificate buildings Use Detail address Structure height Floors area completion Unit cost useful life At cost Net value At cost rate Net value increase unit price Remark 2 2 (m)2 (m )) (RMB/m (year)) % % (RMB/m
52 A005472 Yue Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Elevator Production 40 South Fangcun Main Steel structure 9.25 1.00 3,876.77 2003-10 570.48 30.00 5,098,392.00 4,916,722.77 6,465,600.00 76 4,913,856 -0.06 1,667.78 Zi No.C5786528 No.128 International Company Workshop Road, Liwan District, Limited Guangzhou
53 A005488 Yue Fang Di Zheng (93) Sui Guo Di Chu Zi Guangzhou Shipyard Design and Office 40 South Fangcun Main Framework 16.85 4.00 10,130.60 2005-07 3,150.33 40.00 30,911,695.00 30,188,212.18 35,860,000.00 85 30,481,000 0.97 3,539.77 Carrying value includes Zi No.C6468796 No.128 International Company Calibration Road, Liwan District, part of the value of Limited Building Guangzhou BA001608
54 BA001080 Nil (93) Sui Guo Di Chu Zi Nil Welding Rod Production 40 South Fangcun Main Framework 4.00 1.00 471.81 1972-01 406.29 40.00 150,750.00 114,193.12 497,000.00 30 149,100.00 30.57 1,053.39 No.128 Warehouse Road, Liwan District, Guangzhou
55 BA001426 Nil (93) Sui Guo Di Chu Zi Nil New no Production 40 South Fangcun Main Framework 3.50 1.00 86.50 1994-10 4,133.61 40.00 123,300.00 118,796.22 203,300.00 58 117,914.00 -0.74 2,350.29 Now changed to team No No.128 Transformer Road Liwan District room Substation no.10 Guangzhou Road, District,
56 BA001477 Nil (93) Sui Guo Di Chu Zi Nil Security Room Auxiliary 40 South Fangcun Main Framework 3.08 1.00 25.20 1998-06 9,395.86 40.00 206,663.00 200,287.85 279,400.00 71 198,374.00 -0.96 11,087.30 Carrying value includes No.128 at North Gate Road, Liwan District, monitoring system Guangzhou
57 BA001608 Nil (93) Sui Guo Di Chu Zi Nil Carpark of Auxiliary 40 South Fangcun Main Framework 14.85 4.00 4,800.00 2008-12 1,754.51 45.00 9,542,988.00 9,365,354.10 10,373,200.00 90 9,335,880.00 -0.31 2,161.08 Part of carrying value No.128 Design and Road, Liwan District, included in asset no. Calibration Guangzhou Building
58 BA002476 Nil (93) Sui Guo Di Chu Zi Nil Toilets (4) Auxiliary 40 South Fangcun Main Brick and 3.50 1.00 48.38 1998-06 206.70 30.00 15,300.00 14,480.55 22,300.00 66 14,718.00 1.64 460.93 No.128 Road, Liwan District, concrete Guangzhou
59 BA002493 Nil (93) Sui Guo Di Chu Zi Nil Environmental Auxiliary 40 South Fangcun Main Brick and 2.91 1.00 10.11 2003-09 1,781.39 30.00 16,068.00 15,447.36 20,400.00 76 15,504.00 0.37 2,017.80 No.128 COD Monitoring Road, Liwan District, concrete Room of Oil Guangzhou Tanks
60 BA002500 Nil (93) Sui Guo Di Chu Zi Nil Security Room Auxiliary 40 South Fangcun Main Brick and 2.95 1.00 17.95 2006-12 1,625.92 30.00 27,710.00 26,797.13 32,200.00 83 26,726.00 -0.27 1,793.87
No.128 of Oil Tanks Road, – V-45 Liwan– District, concrete Guangzhou
61 BA005465 Nil (93) Sui Guo Di Chu Zi Nil Simple Sand Production 40 South Fangcun Main Steel structure 11.00 1.00 1,356.00 1998-10 1,292.03 40.00 1,658,316.00 1,607,873.16 2,412,300.00 66 1,592,118.00 -0.98 1,778.98 No.128 Shed of Pier 12 Road, Liwan District, Guangzhou
62 BA005477 Nil (93) Sui Guo Di Chu Zi Nil Simple Production 40 South Fangcun Main Steel structure 11.00 1.00 768.30 2004-06 796.27 20.00 898,160.00 829,977.98 1,110,500.00 78 866,190.00 4.36 1,445.40 No.128 Workshop for Road, Liwan District, Heavy Guangzhou
63 B018114 Nil (93) Sui Guo Di Chu Zi Nil Security Post at Auxiliary 40 South Fangcun Main No.128 East Gate
Brick and 3.00 1.00 25.00 2002-05 1,706.17 25.00 39,140.00 29,648.53 51,000.00 73 37,230.00 25.57 2,040.00 Including door Road, Liwan District, concrete Guangzhou PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX
Gross Carrying value Appraised value Property certificate Corresponding land Owner shown on Name of Eave floor Time of Estimated Newness Value Appraised No. Asset no. no. certificate no. property certificate buildings Use Detail address Structure height Floors area completion Unit cost useful life At cost Net value At cost rate Net value increase unit price Remark 2 2 (m)2 (m )) (RMB/m (year)) % % (RMB/m
64 A001678 Nil (93) Sui Guo Di Chu Zi Nil Old Phase Production 40 South Fangcun Main Framework 19.00 1.00 6,294.00 2009-11 4,112.00 35.00 23,803,871.00 23,226,627.11 25,801,900.00 88 22,705,672.00 -2.24 4,099.44 Wall and ceiling with No.128 Painting Road, Liwan District, steel plate sandwiched Workshop Guangzhou fire retardant padding. As spraying would damage the wall and ceiling, requirements for fire resistance and steel plate are high, case
65 A001680 Nil (93) Sui Guo Di Chu Zi Nil Restaurant Waste Production 40 South Fangcun Main Framework 8.83 2.00 80.00 2009-11 11,069.52 35.00 932,295.00 909,686.82 1,011,700.00 88 890,296.00 -2.13 12,646.25 With sewage treatment No.128 Water and Gas Road, Liwan District, pool underground Treatment Guangzhou Station
66 A001681 Nil (93) Sui Guo Di Chu Zi Nil Air Compressor Production 40 South Fangcun Main Framework 12.60 3.00 1,282.50 2009-11 5,441.86 35.00 7,219,849.00 7,044,767.68 7,833,700.00 89 6,971,993.00 -1.03 6,108.15 Auxiliary water pool No.128 and Electric Road, Liwan District, included Room of Guangzhou Painting Workshop
67 A001682 Nil (93) Sui Guo Di Chu Zi Nil Electrical Production 40 South Fangcun Main Framework 32.30 5.00 12,398.00 2009-12 2,379.31 35.00 31,243,212.00 30,487,662.90 33,961,200.00 91 30,904,692.00 1.37 2,739.25 No.128 Equipment Road, Liwan District, Distribution Guangzhou Center
68 A001683 Nil (93) Sui Guo Di Chu Zi Nil Main Five-story Office 40 South Fangcun Main Framework 16.80 5.00 4,425.00 2009-12 1,821.62 35.00 8,754,927.00 8,543,208.12 9,316,800.00 92 8,571,456.00 0.33 2,105.49 No.128 Composite Road, Liwan District, Office Building Guangzhou
69 A001684 Nil (93) Sui Guo Di Chu Zi Nil New Production 40 South Fangcun Main Framework 8.00 2.00 256.00 2010-03 1,343.59 30.00 384,652.00 373,605.94 413,500.00 89 368,015.00 -1.50 1,615.23 No.128 Transformer Road, Liwan District, Substation no. 2 Guangzhou
70 A002506 Nil (93) Sui Guo Di Chu Zi Nil Infrastructure Auxiliary 40 South Fangcun Main Brick and 8.76 3.00 264.00 2008-11 143.48 30.00 368,104.00 356,945.89 409,100.00 86 351,826.00 -1.43 1,549.62 Some expenses not yet No.128 Design Building Road, Liwan District, concrete booked
Guangzhou – V-46 – PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX
Gross Carrying value Appraised value Property certificate Corresponding land Owner shown on Name of Eave floor Time of Estimated Newness Value Appraised No. Asset no. no. certificate no. property certificate buildings Use Detail address Structure height Floors area completion Unit cost useful life At cost Net value At cost rate Net value increase unit price Remark 2 2 (m)2 (m )) (RMB/m (year)) % % (RMB/m
71 A002507 Nil (93) Sui Guo Di Chu Zi Nil Transformer Production 40 South Fangcun Main Framework 7.50 2.00 98.40 2009-06 13,858.01 30.00 1,464,660.00 1,421,316.00 1,606,500.00 88 1,413,720.00 -0.53 16,326.22 Carrying value includes No.128 Substation no. 4 Road, Liwan District, equipment charges High Voltage Guangzhou Room
72 A002509 Nil (93) Sui Guo Di Chu Zi Nil Welding Rod Production 40 South Fangcun Main Brick and 4.50 1.00 48.50 2009-12 1,527.87 30.00 77,519.00 75,270.71 86,100.00 86 74,046.00 -1.63 1,775.26 No.128 Room at south Road, Liwan District, concrete of Main Dock Guangzhou
73 A005498 Nil (93) Sui Guo Di Chu Zi Nil Large-size Production 40 South Fangcun Main Steel structure 14.00 1.00 3,078.00 2012-12 4,251.81 30.00 13,356,706.00 12,748,584.86 13,586,400.00 96 13,042,944.00 2.31 4,414.04 Wall and ceiling with No.128 Equipment Road, Liwan District, steel plate sandwiched Processing Guangzhou fire retardant padding. Workshop
74 A005503 Nil (93) Sui Guo Di Chu Zi Nil Hill-top Steel Production 40 South Fangcun Main Steel structure 3.00 1.00 210.00 2012-11 8,193.16 20.00 1,831,748.00 1,757,714.81 1,863,200.00 94 1,751,408.00 -0.36 8,872.38 With gas storage tank and No.128 Plate Yard Road, Liwan District, auxiliary trenches Station no.2 Guangzhou
75 BA001443 Nil (93) Sui Guo Di Chu Zi Nil Office of Steel Office 40 South Fangcun Main Framework 6.00 2.00 119.58 1995-01 1,003.51 40.00 139,896.00 135,068.76 206,600.00 65 134,290.00 -0.58 1,727.71 No.128 Plate Factory Road, Liwan District, Guangzhou
76 BA004481 Nil (93) Sui Guo Di Chu Zi Nil Rooms for Auxiliary 40 South Fangcun Main Simple 3.50 1.00 74.40 2011-01 2,502.88 10.00 137,283.00 122,112.33 202,700.00 53 107,431.00 -12.02 2,724.46 High foundation cost due No.128 Processing and Road, Liwan District, toa3mrubble Manufacturing Guangzhou foundation Team
77 BA002479 Nil (93) Sui Guo Di Chu Zi Nil Security Room Auxiliary 40 South Fangcun Main Brick and 3.00 1.00 37.50 1999-04 15,531.94 30.00 519,680.00 493,455.71 732,700.00 68 498,236.00 0.97 19,538.67 Including door and wall No.128 at Main Gate Road, Liwan District, concrete for image Guangzhou
Total buildings 169,719.58 -7– V-47 –
276,480,346.00 265,919,847.94270,087,063.50 444,010,900.00 1.57
Less: Impairment provision for buildings
Net buildings
276,480,346.00 265,919,847.94270,087,063.50 444,010,900.00 1.57
Preparer of appraised object: Ma Chao Valuer: Li Yerong Prepared on: 15 September 2015 FIXED ASSETS – STRUCTURES AND OTHER AUXILIARY FACILITIES INTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Reference Day: 31 August 2015
Appraisal Object: Guangzhou Shipyard Shipping Co., Ltd.
Unit: RMB0’000
Carrying value Appraised value Time of Newness Value Appraised No. Asset no. Name Detail address Material Specification Unit Quantity completion At cost Net value At cost rate Net value increase unit price Remark 2 % % (RMB/m ) 1 B002043 Refuse dumping 40 South Fangcun Main Concrete 21*12*0.2 m 2 site Road, Liwan District, 253.00 1992-01 20,490.00 19,313.16 67,500.00 30 20,250.00 4.85 Guangzhou
2 B018048 Road of west 40 South Fangcun Main Concrete 546.3*10*0.15 m factory (Youth Road, Liwan District, 2 Road) Guangzhou 5463.00 1992-01 386,850.00 293,038.86 1,275,600.00 30 382,680.00 30.59 -8– V-48 –
3 B018067 Steel plate yard 40 South Fangcun Main Concrete 124*25*0.25 m Road, Liwan District, 2 Guangzhou 3100.00 1995-01 319,872.00 281,618.85 930,600.00 30 279,180.00 -0.87
4 B018071 Bridge no.1 to road 40 South Fangcun Main Concrete 145*6.6*0.15 m south of no. 3 Road, Liwan District, 2 shipbuilding berth Guangzhou 963.60 1996-01 84,138.00 75,496.56 225,000.00 34 76,500.00 1.33
5 B018087 Concrete floor at 40 South Fangcun Main Concrete 30*18.7*0.15 m southeast corner of Road, Liwan District, 2 major restaurant Guangzhou 561.00 1997-07 56,932.00 51,470.26 131,000.00 40 52,400.00 1.81
6 B018088 Road in front of 40 South Fangcun Main Concrete 131.6*12*0.20 m 1580.00 1998-03 196,052.00 179,106.08 421,600.00 41 172,856.00 -3.49 gas station Road, Liwan District, Guangzhou 7 B018091 Road next to 40 South Fangcun Main Concrete 178.85*14*0.20 m 2503.99 1997-11 297,220.00 269,907.07 668,200.00 40 267,280.00 -0.97 painting workshop Road, Liwan District, Guangzhou PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX
Carrying value Appraised value Time of Newness Value Appraised No. Asset no. Name Detail address Material Specification Unit Quantity completion At cost Net value At cost rate Net value increase unit price Remark 2 % % (RMB/m ) 8 B018092 Road south of 40 South Fangcun Main Concrete 161.36*8*0.15 m 1291.00 1997-12 127,688.00 116,196.08 287,100.00 40 114,840.00 -1.17 mechanical Road, Liwan District, processing Guangzhou workshop 9 B018093 Enclosing wall at 40 South Fangcun Main Brick and 287*6*0.4 m 287.00 1997-12 167,508.00 152,432.28 376,500.00 40 150,600.00 -1.20 2 m height rubble south of steel plate Road, Liwan District, concrete retaining wall under the yard Guangzhou wall 10 B018101 Steel yard and 40 South Fangcun Main Concrete 56*46*0.25 m warehouse Road, Liwan District, Guangzhou
2 2576.00 1998-12 367,446.00 339,552.03 773,300.00 44 340,252.00 0.21
11 B018109 Phase I of heavy 40 South Fangcun Main Reinforced 86*12.26 m engineering site Road, Liwan District, concrete 2 Guangzhou 1055.00 2001-03 378,504.00 354,731.76 668,600.00 51 340,986.00 -3.87 -9– V-49 –
12 B018110 Enclosing wall of 40 South Fangcun Main Brick and 90.57*5.45*0.4 m 90.57 2001-05 49,056.00 46,040.10 86,600.00 53 45,898.00 -0.31 oil depot Road, Liwan District, concrete Guangzhou 13 B018112 Phase II of heavy 40 South Fangcun Main Reinforced 219*50 m engineering Road, Liwan District, concrete installation and Guangzhou welding site 2 10950.00 2001-10 4,840,782.00 4,553,298.81 8,400,500.00 53 4,452,265.00 -2.22
14 B018115 85 tonnes fixed 40 South Fangcun Main Reinforced 11.2*12.9*1.6 m3 230.40 2003-03 636,300.00 582,368.94 996,500.00 58 577,970.00 -0.76 crane foundation Road, Liwan District, concrete Guangzhou 15 B018116 Anchoring 40 South Fangcun Main Reinforced 10*10*3 m (foundation) of 30 Road, Liwan District, concrete tonnes long boom Guangzhou crane
2 300.00 2003-04 223,083.00 205,848.36 350,200.00 59 206,618.00 0.37
16 B018118 Terrace north of 40 South Fangcun Main Reinforced 175*20 m main dock Road, Liwan District, concrete Guangzhou 2 3980.00 2003-05 2,508,345.00 1,900,071.36 3,938,400.00 59 2,323,656.00 22.29 PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX
Carrying value Appraised value Time of Newness Value Appraised No. Asset no. Name Detail address Material Specification Unit Quantity completion At cost Net value At cost rate Net value increase unit price Remark 2 % % (RMB/m ) 17 B018123 C1 band satellite 40 South Fangcun Main Reinforced 1*1 antenna support Road, Liwan District, concrete 個 1.00 2005-04 33,327.00 25,245.18 47,700.00 66 31,482.00 24.70 Guangzhou
18 B018127 Road north of main 40 South Fangcun Main Concrete 132*5.5*0.15 m 726.00 2007-04 130,264.00 124,822.87 169,500.00 72 122,040.00 -2.23 dock advance Road, Liwan District, outfitting yard Guangzhou 19 B018130 Original pipe and 40 South Fangcun Main Reinforced 142.6*26.52 m hardware yard Road, Liwan District, concrete Guangzhou
2 3781.80 2007-02 1,841,480.00 1,730,610.17 2,396,700.00 71 1,701,657.00 -1.67
20 B018131 Original hardware 40 South Fangcun Main Reinforced 67.4*20.2 m warehouse terrace Road, Liwan District, concrete 2 project Guangzhou 1361.48 2007-02 1,093,260.00 1,028,333.73 1,422,900.00 71 1,010,259.00 -1.76 Anti-compression steel plate buried beneath the road
21 B018138 Heavy engineering – V-50 – 40 South Fangcun Main Concrete 40*37.5*0.2 m premise Road, Liwan District, 2 Guangzhou 1500.00 2007-12 328,770.00 311,161.68 416,900.00 74 308,506.00 -0.85
22 B018142 Road of unloading 40 South Fangcun Main Concrete 64*18*0.25 m 1152.00 2008-09 279,680.00 227,730.92 345,800.00 77 266,266.00 16.92 terminal in old Road, Liwan District, district section Guangzhou 23 B018151 Ground in front of 40 South Fangcun Main Reinforced 116*42 m coating workshop Road, Liwan District, concrete in old district Guangzhou
2 4872.00 2010-05 2,072,170.00 1,798,078.42 2,383,400.00 82 1,954,388.00 8.69
24 B018152 Alternated new 40 South Fangcun Main Concrete 40*73.8*0.15 m mechanical and Road, Liwan District, 2 electrical materials Guangzhou 2952.00 2010-06 599,248.00 521,166.88 689,300.00 83 572,119.00 9.78 distribution warehouse
25 B018155 Main engine shed 40 South Fangcun Main Concrete 59.5*25.15 m and plant project Road, Liwan District, Guangzhou 2 1500.00 2010-12 400,576.00 386,753.71 450,300.00 84 378,252.00 -2.20 PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX
Carrying value Appraised value Time of Newness Value Appraised No. Asset no. Name Detail address Material Specification Unit Quantity completion At cost Net value At cost rate Net value increase unit price Remark 2 % % (RMB/m ) 26 B018157 Pressure testing and 40 South Fangcun Main Steel 44*8.4 m 2 steel cap Road, Liwan District, structure 367.00 2011-12 252,945.00 226,966.05 342,800.00 62 212,536.00 -6.36 Steel shed installation of pipe Guangzhou processing department
27 B018159 Original terrace of 40 South Fangcun Main Reinforced 67*23*0.3 m sample room and Road, Liwan District, concrete gas station of Guangzhou second division 2 1541.00 2012-11 716,374.00 651,228.76 753,900.00 91 686,049.00 5.35
28 B018160 Ground and 40 South Fangcun Main Reinforced 21*19 m surrounding Road, Liwan District, concrete renovation at gate Guangzhou 2 of Donglang 393.40 2012-11 299,296.00 272,078.74 314,900.00 91 286,559.00 5.32 Carrying value includes costs of removing obstructing buildings and rebuilding
29 B018161 Online Monitoring – V-51 – 40 South Fangcun Main Reinforced 12*2.5*4 m3 13.60 2013-09 474,524.00 435,442.94 483,000.00 93 449,190.00 3.16 Construction designated room of company’s Road, Liwan District, concrete by government sewage outfall Guangzhou 30 B019095 Stainless steel 40 South Fangcun Main Steel 3*2.5 billboard (3+2=5 Road, Liwan District, structure pieces) Guangzhou
個 5.00 1998-03 64,630.00 48,957.22 138,700.00 41 56,867.00 16.16
31 BA005489 Shelter of 60 40 South Fangcun Main Steel Height 7.03 m tonnes weighbridge Road, Liwan District, structure 2 Guangzhou 133.89 2007-04 14,460.00 10,953.42 47,600.00 30 14,280.00 30.37
32 B018129 Advance outfitting 40 South Fangcun Main Reinforced 133.2*32 m yard of main dock Road, Liwan District, concrete 2 Guangzhou 7872.12 2007-02 4,371,064.00 4,111,476.28 5,689,100.00 71 4,039,261.00 -1.76
33 B013002 No. 2 shipbuilding 40 South Fangcun Main Reinforced 213*30 m berth Road, Liwan District, concrete/ 2 Guangzhou Gravity 4590.00 1958-01 10,185,180.00 9,495,903.84 33,582,800.00 32 10,746,496.00 13.17 Valuation includes structure B018005 PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX
Carrying value Appraised value Time of Newness Value Appraised No. Asset no. Name Detail address Material Specification Unit Quantity completion At cost Net value At cost rate Net value increase unit price Remark 2 % % (RMB/m ) 35 B013003 No. 3 shipbuilding 40 South Fangcun Main Reinforced 200*36 m 2 berth Road, Liwan District, concrete/ 3080.00 1982-01 11,862,390.00 11,083,753.40 39,113,000.00 32 12,516,160.00 12.92 Guangzhou Gravity structure
38 B013041 No. 1 shipbuilding 40 South Fangcun Main Reinforced 213*36 m berth Road, Liwan District, concrete/ Guangzhou Gravity 2 structure 6120.19 1991-01 6,016,200.00 5,759,997.90 19,836,700.00 31 6,149,377.00 6.76
39 B013062 No. 4 tire rack 40 South Fangcun Main Reinforced 46.9*42.3 m district Road, Liwan District, concrete Guangzhou 2 2207.00 1994-01 384,524.00 329,492.96 1,226,900.00 30 368,070.00 11.71
40 B018026 North ship repair 40 South Fangcun Main Gravity 400*13 m dock Road, Liwan District, 2 Guangzhou 4000.00 2001-12 28,258,350.00 26,545,187.49 37,269,600.00 73 27,206,808.00 2.49 -2– V-52 –
43 B018102 Installation and 40 South Fangcun Main Reinforced 140*28 m welding field of Road, Liwan District, concrete 2 ship repair dock Guangzhou 3920.00 1998-06 1,346,080.00 1,242,998.59 2,833,000.00 43 1,218,190.00 -2.00
44 B018126 Main dock 40 South Fangcun Main Reinforced 260*36*9.35 m3 8658.00 2006-11 88,124,345.00 85,210,233.11 102,142,000.00 83 84,777,860.00 -0.51 Case Road, Liwan District, concrete/ Guangzhou Gravity structure 45 B012001 Installation and 40 South Fangcun Main Reinforced 17.6*13 m welding platform Road, Liwan District, concrete Guangzhou
2 1919.00 1984-01 168,240.00 143,761.08 554,700.00 30 166,410.00 15.75
46 B017090 3# revetment and 40 South Fangcun Main Gravity 230*10 m 230.00 1997-12 6,154,236.00 5,600,354.76 13,835,400.00 41 5,672,514.00 1.29 new crane rail Road, Liwan District, structure Guangzhou 47 B018010 No. 12 terminal 40 South Fangcun Main Reinforced 176*4.4 m Road, Liwan District, concrete Guangzhou
2 409.20 1965-01 1,159,650.00 1,073,855.52 3,823,700.00 30 1,147,110.00 6.82 PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX
Carrying value Appraised value Time of Newness Value Appraised No. Asset no. Name Detail address Material Specification Unit Quantity completion At cost Net value At cost rate Net value increase unit price Remark 2 % % (RMB/m ) 48 Phase I sand well 40 South Fangcun Main Concrete ⌽500 Unit 9.00 2007-09 11,200.00 73 8,176.00 Carrying value included Road, Liwan District, in No.381 of Table 4-6-3 Guangzhou 49 Phase I water inlet 40 South Fangcun Main Brick and 600*380*1000 Unit 9.00 2007-09 2,500.00 73 1,825.00 Carrying value included well Road, Liwan District, concrete in No.381 of Table 4-6-3 Guangzhou 50 Phase I sewage 40 South Fangcun Main Brick and ⌽1000 Unit 67.00 2007-09 70,700.00 73 51,611.00 Carrying value included well 1000 Road, Liwan District, concrete in No.381 of Table 4-6-3 Guangzhou 51 Phase II manhole1 40 South Fangcun Main Reinforced ⌽1000 Unit 9.00 2010-12 53,100.00 84 44,604.00 Carrying value included Road, Liwan District, concrete in No.382 of Table 4-6-3 Guangzhou 52 Phase II manhole 2 40 South Fangcun Main Brick and ⌽1000 Unit 9.00 2010-12 10,000.00 84 8,400.00 Carrying value included Road, Liwan District, concrete in No.382 of Table 4-6-3 Guangzhou 53 Phase II manhole 3 40 South Fangcun Main Brick and ⌽1250 Unit 1.00 2010-12 1,500.00 84 1,260.00 Carrying value included Road, Liwan District, concrete in No.382 of Table 4-6-3 Guangzhou 54 Phase II manhole 4 40 South Fangcun Main Brick and ⌽500 Unit 20.00 2010-12 14,800.00 84 12,432.00 Carrying value included
Road, Liwan District, concrete – V-53 – in No.382 of Table 4-6-3 Guangzhou 55 Phase II water inlet 40 South Fangcun Main Brick and ⌽300 Unit 7.00 2010-12 2,200.00 84 1,848.00 Carrying value included well Road, Liwan District, concrete in No.382 of Table 4-6-3 Guangzhou 56 Manhole of water 40 South Fangcun Main Concrete 1000*1000*1500 Unit 4.00 2010-12 8,300.00 84 6,972.00 Carrying value included inlet project Road, Liwan District, in No.382 of Table 4-6-3 Guangzhou 57 Phase III manhole 40 South Fangcun Main Concrete ⌽1000 Unit 51.00 2012-11 147,000.00 91 133,770.00 Carrying value included Road, Liwan District, in No.383 of Table 4-6-3 Guangzhou PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX
Carrying value Appraised value Time of Newness Value Appraised No. Asset no. Name Detail address Material Specification Unit Quantity completion At cost Net value At cost rate Net value increase unit price Remark 2 % % (RMB/m ) 58 Phase III 40 South Fangcun Main Concrete 400*600*1000 Unit 5.00 2012-11 5,300.00 91 4,823.00 Carrying value included stormwater well Road, Liwan District, in No.383 of Table 4-6-3 Guangzhou 59 Small square well 40 South Fangcun Main Concrete 400*800*1000 Unit 10.00 2012-11 13,200.00 91 12,012.00 Carrying value included Road, Liwan District, in No.383 of Table 4-6-3 Guangzhou 60 Manhole 40 South Fangcun Main Concrete 500*500 Unit 3.00 2012-11 3,400.00 91 3,094.00 Carrying value included Road, Liwan District, in No.383 of Table 4-6-3 Guangzhou 61 Septic tank 40 South Fangcun Main Concrete 400*400*1000 Unit 15.00 2012-11 35,500.00 86 30,530.00 Carrying value included Road, Liwan District, in No.383 of Table 4-6-3 Guangzhou Total structures -4– V-54 –
177,291,529.00 167,817,036.18 290,286,200.00 172,184,294.00
Less: Impairment 0.00 provision for structures and other auxiliary facilities Net structures
177,291,529.00 167,817,036.18 290,286,200.00 172,184,294.00
Preparer of appraised object: Ma Chao Valuer: Li Yerong Prepared on: 15 September 2015 FIXED ASSETS – DETAIL LIST OF PIPELINES AND TRENCHES APPRAISAL INTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX
Reference Day: 30 November 2014
Appraisal Object: Guangzhou Shipyard Shipping Co., Ltd.
Unit: RMB
Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
1 4901006 Galvanised water From northwest corner of assembly 180.00 0.80 200*5 Galvanized steel nil 1992-10 20.00 7,290.00 5,522.17 24,000.00 30 7,200.00 30.38 pipe for industrial use platform to 1# north of pipes shipbuilding platform 2 4901007 Galvanised water 1# north of shipbuilding platform 300.00 0.80 200*5 Galvanized steel nil 1975-01 20.00 16,500.00 15,820.50 54,400.00 30 16,320.00 3.16 pipe for industrial use to south of major dining hall pipes 3 4901011 Galvanised water From sandblasting room to 18 m 290.00 0.80 300*6 Galvanized steel nil 1986-01 20.00 36,270.00 34,776.45 119,300.00 30 35,790.00 2.91 pipe for industrial use to north of 18 m span pipes 4 4901012 Galvanised water north of 18 m span to north east of 36.00 0.80 200*5 Galvanized steel nil 1992-10 20.00 4,140.00 3,136.05 13,600.00 30 4,080.00 30.10 -5– V-55 – pipe for industrial use 5# pipes 5 4901013 Galvanised water From northwest corner of assembly 260.00 0.80 200*5 Galvanized steel nil 1990-04 20.00 11,670.00 8,840.04 38,400.00 30 11,520.00 30.32 pipe for industrial use platform to guest building pipes 6 4901014 Galvanised water Southeast to west of warehouse 90.00 0.80 100*4 Galvanized steel nil 1992-11 20.00 5,040.00 3,817.80 16,600.00 30 4,980.00 30.44 pipe for industrial use 107 pipes 7 4901015 Galvanised water Large hardwares to education 130.00 0.80 100*4 Galvanized steel nil 1992-10 20.00 3,150.00 2,386.12 10,400.00 30 3,120.00 30.76 pipe for industrial use center pipes 8 4901016 Galvanised water From south of major dining hall to 60.00 0.80 150*4.5 Galvanized steel nil 1992-10 20.00 4,020.00 3,045.12 13,200.00 30 3,960.00 30.04 pipe for industrial use 7# workshop fitting sector pipes 9 4901017 Galvanised water 7# workshop fitting sector to south 400.00 0.80 150*4.5 Galvanized steel pipe for industrial use of 11# workshop
nil 1992-10 20.00 15,120.00 11,453.40 49,800.00 30 14,940.00 30.44 pipes 10 4901018 Galvanised water South of 11 workshop to east of 100.00 0.80 150*4.5 Galvanized steel nil 1992-10 20.00 5,790.00 4,385.91 19,100.00 30 5,730.00 30.65 pipe for industrial use dangerous goods warehouse pipes 11 4901019 Galvanised water North west corner of guest 80.00 0.80 150*4.5 Galvanized steel nil 1992-10 20.00 3,480.00 2,636.07 11,500.00 30 3,450.00 30.88 pipe for industrial use building to west of dining hall 2 pipes 12 4901020 Galvanised water Northwest corner to east of 1# 120.00 0.80 150*4.5 Galvanized steel nil 1992-10 20.00 7,650.00 5,794.87 25,200.00 30 7,560.00 30.46 pipe for industrial use workshop pipes 13 4901021 Galvanised water Northwest corner of guest building 145.00 0.80 200*5 Galvanized steel nil 1992-10 20.00 6,450.00 4,885.89 21,300.00 30 6,390.00 30.78 pipe for industrial use to northeast of major dining hall pipes 14 4901022 Galvanised water Southeast of 1# workshop to north 370.00 0.80 150*4.5 Galvanized steel nil 1992-10 20.00 12,990.00 9,839.91 42,800.00 30 12,840.00 30.49 pipe for industrial use of steel plate platform pipes 15 4901023 Galvanised water East of coal yard to terminal 135.00 0.80 150*4.5 Galvanized steel nil 1992-10 20.00 6,840.00 5,181.30 22,500.00 30 6,750.00 30.28 pipe for industrial use pipes 16 4901024 Galvanised water South to north of west container 480.00 0.80 100*4 Galvanized steel nil 1992-10 20.00 26,880.00 20,361.57 88,600.00 30 26,580.00 30.54 pipe for industrial use terminal pipes 17 4901025 Galvanised water Small dock district to small dock 110.00 100*4 Galvanized steel nil 1992-10 20.00 3,930.00 2,976.99 13,000.00 30 3,900.00 31.00 Exposed pipe for industrial use district pipes conduit 18 4901027 Galvanised water North of main dock to north of 140.00 0.80 150*4.5 Galvanized steel nil 1992-10 20.00 11,340.00 8,590.05 37,400.00 30 11,220.00 30.62 pipe for industrial use main dock pipes 19 4901028 Galvanised water South of main dock to south of 140.00 100*4 Galvanized steel nil 1992-11 20.00 3,030.00 2,295.24 10,000.00 30 3,000.00 30.71 Exposed pipe for industrial use main dock pipes conduit PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
20 4901029 Galvanised water New installation and welding 240.00 0.80 100*4 Galvanized steel nil 1992-10 20.00 9,300.00 7,044.78 30,700.00 30 9,210.00 30.74 pipe for industrial use platform district to new installation pipes and welding platform district 21 4901031 Galvanised water 1# shipbuilding platform district to 200.00 0.80 100*4 Galvanized steel nil 1992-10 20.00 14,850.00 11,248.87 48,900.00 30 14,670.00 30.41 pipe for industrial use 1# shipbuilding platform district pipes 22 4901032 Galvanised water 2# shipbuilding platform district to 230.00 0.80 100*4 Galvanized steel nil 1992-10 20.00 8,850.00 6,703.86 29,200.00 30 8,760.00 30.67 pipe for industrial use 2# shipbuilding platform district pipes 23 4901033 Galvanised water 2# shipbuilding platform district to 140.00 0.80 150*4.5 Galvanized steel nil 1992-10 20.00 5,160.00 3,908.73 17,000.00 30 5,100.00 30.48 pipe for industrial use 2# shipbuilding platform district pipes 24 4901034 Galvanised water 3# shipbuilding platform district to 280.00 0.80 100*4 Galvanized steel nil 1992-10 20.00 9,720.00 7,362.90 32,100.00 30 9,630.00 30.79 Exposed pipe for industrial use 3# shipbuilding platform district pipes conduit 25 4901036 Galvanised water Smelter to 11# workshop 80.00 0.80 150*4.5 Galvanized steel nil 1992-11 20.00 2,940.00 2,227.02 9,700.00 30 2,910.00 30.67 pipe for industrial use pipes 26 4901046 Galvanised water Front of Large harewares 120.00 0.80 213*2.5 Galvanized steel nil 1990-01 20.00 20,760.00 19,905.09 68,300.00 30 20,490.00 2.94 pipe for industrial use warehouse to propeller team of pipes ship repairing 27 4901047 Galvanised water Propeller team of ship repairing to 540.00 0.80 213*2.5 Galvanized steel nil 1990-01 20.00 76,290.00 73,148.46 251,000.00 30 75,300.00 2.94 pipe for industrial use doorway of woodworking and end pipes of Youth Road 28 4901048 Fire galvanised pipe Inside of new pressure vessel 240.00 0.80 213*2.5 Galvanized steel nil 1990-01 20.00 14,730.00 14,123.40 48,600.00 30 14,580.00 3.23 workshop to new pressure vessel pipes workshop 29 4901049 Galvanised water -6– V-56 – Trunk intersection at Youth Road 175.00 0.80 50*4 Galvanized steel nil 1990-08 20.00 8,850.00 8,445.49 29,200.00 30 8,760.00 3.72 pipe for industrial use to electromechanic workshop (ship pipes repairing) 30 4901050 Galvanised water Advance fitting at south of 3# 150.00 0.80 150*4.5 Galvanized steel nil 1991-04 20.00 13,140.00 12,598.92 43,200.00 30 12,960.00 2.87 pipe for industrial use shipbuilding platform to pipes pre-outfitting at south of 3# shipbuilding platform 31 4901053 Galvanised water Rain shelter to 1# shipbuilding 350.00 0.80 150*4.5 Galvanized steel nil 1990-10 20.00 16,530.00 15,849.33 54,500.00 30 16,350.00 3.16 pipe for industrial use platform entrance pipes 32 4901054 Galvanised water 1# shipbuilding platform entrance 80.00 0.80 100*4 Galvanized steel nil 1990-10 20.00 2,880.00 2,725.74 9,500.00 30 2,850.00 4.56 pipe for industrial use to 1# shipbuilding platform district pipes 33 4901055 Water pipe for power Inside of 24 m span assembly, 198.00 80*4 Galvanized steel nil 1993-12 20.00 20,430.00 15,475.72 67,100.00 30 20,130.00 30.07 Overhead system from southwest to north side via pipes east side then to west side 34 4901056 Water pipe for power Inside of 24 m span assembly, 87.00 80*4 Galvanized steel nil 1993-12 20.00 4,740.00 3,590.52 15,700.00 30 4,710.00 31.18 Overhead system southern, from west to east, for pipes high precision machineries 35 4901057 Galvanised water 32 m span to 35,000 tonnes ship 190.00 0.80 80*4 Galvanized steel nil 1994-02 20.00 22,143.00 16,773.33 66,100.00 30 19,830.00 18.22 pipe for industrial use block yard pipes 36 4901058 Galvanised water Southeast corner of 35,000 tonnes 127.00 0.80 80*4 Galvanized steel nil 1994-02 20.00 10,131.00 7,674.25 30,400.00 30 9,120.00 18.84 pipe for industrial use ship block yard to northwest pipes corner 37 4901059 Galvanised water North of rains shelter to south of 210.00 0.80 150*4.5 Galvanized steel nil 1994-02 20.00 11,220.00 8,499.12 33,600.00 30 10,080.00 18.60 pipe for industrial use 3# tire rack district pipes 38 4901060 Galvanised water Front of 2#3# tire rack district to 200.00 0.80 50*4 Galvanized steel nil 1994-02 20.00 8,151.00 6,174.40 24,500.00 30 7,350.00 19.04 pipe for industrial use right and left of the district pipes 39 4901061 Galvanised water 4# tire rack district northwest 68.00 0.80 80*4 Galvanized steel nil 1994-12 20.00 10,574.00 8,009.81 30,700.00 30 9,210.00 14.98 pipe for industrial use corner to north east of 4# tire rack pipes district 40 4901062 Galvanised water Main trench of main dock to pipe for industrial use
50.00 0.80 200*6 Galvanized steel nil 1995-12 20.00 12,691.00 9,613.45 33,900.00 34 11,526.00 19.89 original old pipe of main dock pipes PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
41 4901064 Galvanised water 1# bridge end to south of 3# 170.00 0.80 200*6 Galvanized steel nil 1996-12 20.00 31,406.00 23,790.02 75,600.00 37 27,972.00 17.58 pipe for industrial use shipbuilding platform pipes 42 4901065 Galvanised water Pressure vessel workshop to gate 155.00 0.80 200*6 Galvanized steel nil 1996-12 20.00 28,659.00 21,709.20 68,900.00 37 25,493.00 17.43 pipe for industrial use at Dongliang pipes 43 4901066 Galvanised water 24 m span to 18 m span 110.00 0.80 200*6 Galvanized steel nil 1996-12 20.00 20,336.00 15,404.54 48,900.00 37 18,093.00 17.45 pipe for industrial use pipes 44 4902001 Galvanised pipe for Main water meter to southeast of 145.00 0.80 300*6 Galvanized steel nil 1992-10 20.00 18,150.00 13,748.64 59,700.00 30 17,910.00 30.27 potable water dangerous goods warehouse pipes 45 4902002 Galvanised pipe for East side of southern dangerous 40.00 0.80 100*4 Galvanized steel nil 1992-10 20.00 2,340.00 1,772.55 7,700.00 30 2,310.00 30.32 potable water goods warehouse to north of pipes dangerous goods warehouse 46 4902003 Galvanised pipe for South of dangerous goods 90.00 0.80 150*4.5 Galvanized steel nil 1991-08 20.00 3,240.00 2,454.30 10,700.00 30 3,210.00 30.79 potable water warehouse to north of pipes electroplating workshop 47 4902004 Galvanised pipe for North of electroplating workshop 150.00 0.80 150*4.5 Galvanized steel nil 1964-10 20.00 5,370.00 5,148.87 17,700.00 30 5,310.00 3.13 potable water to south of major dining hall pipes 48 4902006 Galvanised pipe for North east corner of pipe 90.00 0.80 200*5 Galvanized steel nil 1964-10 20.00 3,090.00 2,962.74 10,200.00 30 3,060.00 3.28 potable water workshop to west of pipe pipes workshop 49 4902007 Galvanised pipe for South of dangerous goods 460.00 0.80 200*5 Galvanized steel nil 1991-02 20.00 15,810.00 11,976.09 52,200.00 30 15,660.00 30.76 potable water warehouse to tuck shop pipes
-7– V-57 – 50 4902013 Galvanised pipe for West of guest building to major 80.00 0.80 100*4 Galvanized steel nil 1992-10 20.00 3,600.00 2,727.00 11,800.00 30 3,540.00 29.81 potable water dining hall pipes 51 4902014 Galvanised pipe for South of tuck shop to north east 160.00 0.80 75*4 Galvanized steel nil 1962-01 20.00 5,940.00 5,675.40 19,600.00 30 5,880.00 3.61 potable water corner of 5# workshop pipes 52 4902016 Galvanised pipe for West of 5# workshop to dining 310.00 0.80 50*4 Galvanized steel nil 1992-10 20.00 11,280.00 8,544.63 37,200.00 30 11,160.00 30.61 potable water hall 4 pipes 53 4902017 Galvanised pipe for East of tuck shop to west of new 200.00 0.80 150*4.5 Galvanized steel nil 1991-07 20.00 7,410.00 5,613.06 24,500.00 30 7,350.00 30.94 potable water installation and welding platform pipes 54 4902018 Galvanised pipe for West of new installation and 270.00 0.80 125*4.5 Galvanized steel nil 1991-07 20.00 9,090.00 6,885.67 30,000.00 30 9,000.00 30.71 potable water welding platform to north of pipes sandblasting shed 55 4902019 Galvanised pipe for North of sandblasting shed to 450.00 0.80 80*4 Galvanized steel nil 1992-10 20.00 17,610.00 13,339.59 58,000.00 30 17,400.00 30.44 potable water south of new district terminal pipes 56 4902021 Galvanised pipe for South of sandblasting shed to 150.00 0.80 50*4 Galvanized steel nil 1992-10 20.00 12,150.00 9,203.62 40,000.00 30 12,000.00 30.38 potable water oxygen station pipes 57 4902022 Galvanised pipe for Water tank to terminal pump room 250.00 0.80 50*4 Galvanized steel nil 1992-10 20.00 6,750.00 5,113.12 22,200.00 30 6,660.00 30.25 potable water of main dock pipes 58 4902023 Galvanised pipe for East of testing room to east of 6# 150.00 0.80 75*4 Galvanized steel nil 1992-11 20.00 6,690.00 5,067.66 22,000.00 30 6,600.00 30.24 potable water workshop pipes 59 4902024 Galvanised pipe for East of coal yard to terminal 130.00 0.80 75*4 Galvanized steel nil 1992-10 20.00 6,000.00 4,544.97 19,800.00 30 5,940.00 30.69 potable water pipes 60 4902025 Galvanised pipe for North of old terminal to south of 485.00 0.80 100*4 Galvanized steel nil 1992-10 20.00 35,970.00 27,247.29 118,600.00 30 35,580.00 30.58 potable water old terminal pipes 61 4902031 Galvanised pipe for West side of blanks warehouse to potable water doorway of woodworking
130.00 0.80 50*4 Galvanized steel nil 1990-01 20.00 21,480.00 20,595.48 70,700.00 30 21,210.00 2.98 pipes 62 4902032 Galvanised pipe for doorway of woodworking to front 665.00 0.80 50*4 Galvanized steel nil 1990-01 20.00 112,110.00 107,493.36 368,900.00 30 110,670.00 2.96 potable water of large harewares warehouse pipes 63 4902035 Galvanised pipe for Original casting workshop to 190.00 0.80 50*4 Galvanized steel nil 1990-01 20.00 8,130.00 7,795.20 26,800.00 30 8,040.00 3.14 potable water power piping system pipes 64 4902036 Galvanised pipe for North to south of terminal 485.00 0.80 100*4 Galvanized steel nil 1990-01 20.25 11,790.00 11,169.99 38,800.00 30 11,640.00 4.21 potable water pipes 65 4902037 Galvanised pipe for Side of old air compression room 70.00 0.80 80*4 Galvanized steel nil 1992-03 20.00 3,480.00 3,293.61 11,500.00 30 3,450.00 4.75 potable water to side of 1# shipbuilding platform pipes PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
66 4902047 Galvanised pipe for 32 m span to 35,000 tonnes ship 190.00 0.80 80*4 Galvanized steel nil 1994-02 15.00 22,143.00 16,773.33 66,100.00 30 19,830.00 18.22 potable water block yard pipes 67 4902048 Galvanised pipe for Pipe pressure testing field to south 200.00 0.80 100*4 Galvanized steel nil 1994-03 15.00 14,850.00 11,248.87 44,500.00 30 13,350.00 18.68 potable water end of pipe processing line pipes 68 4902049 Galvanised pipe for Southeast corner to northwest 127.00 0.80 150*4.5 Galvanized steel nil 1994-02 15.00 12,144.00 9,199.11 36,300.00 30 10,890.00 18.38 potable water corner of 35,000 tonnes ship block pipes yard 69 4902051 Galvanised pipe for Main trench of main dock to 50.00 0.80 50*4 Galvanized steel nil 1995-12 15.00 5,550.00 4,204.14 14,800.00 34 5,032.00 19.69 potable water original old pipe of main dock pipes 70 4902052 Galvanised pipe for Pressure vessel workshop to new 700.00 0.80 150*4.5 Galvanized steel nil 1996-12 15.00 93,562.00 70,873.18 224,900.00 37 83,213.00 17.41 potable water district container pipes 71 4902053 Galvanised pipe for Shipbuilding 1 span east workshop 130.00 0.80 80*4 Galvanized steel nil 1996-07 15.00 18,080.00 13,695.58 44,500.00 37 16,465.00 20.22 potable water entrance road to north bathing pipes room of Guangli air compressing station 72 4903005 Seamless steel pipe GSI Company to company’s steel 100.00 0.80 133*6 Seamless steel nil 1995-03 15.00 172,476.00 130,650.57 472,900.00 33 156,057.00 19.45 GSI to factory for steam plate yard pipes area, overhead with 6 m reinforced concrete pole 73 4903006 Seamless steel pipe West end of steel plate yard to 1,200.00 0.80 100*6 Seamless steel nil 1995-03 15.00 600,660.00 454,999.95 1,647,800.00 33 543,774.00 19.51 for steam dining hall pipes 74 4903009 Seamless steel pipe North enclosing wall to north 20.00 0.80 for steam bathing room of Guangli air compressing station -8– V-58 – 200*9 Seamless steel nil 1996-07 15.00 17,480.00 13,241.09 43,200.00 37 15,984.00 20.72 Guangli to pipes factory area, overhead with 6 m reinforced concrete pole 75 4904012 Seamless steel pipe West to east of installation and 200.00 0.80 100*6 Seamless steel nil 1992-10 20.00 6,870.00 5,204.01 22,700.00 30 6,810.00 30.86 for compressed air welding platform pipes 76 4904015 Seamless steel pipe Platform district to platform 260.00 0.80 50*4 Seamless steel nil 1992-10 20.00 6,930.00 5,249.47 22,800.00 30 6,840.00 30.30 for compressed air district pipes 77 4904017 Seamless steel pipe Old compressor room to west of 230.00 0.80 200*9 Seamless steel nil 1981-01 20.00 8,700.00 8,316.42 28,600.00 30 8,580.00 3.17 for compressed air 7# workshop pipes 78 4904020 Seamless steel pipe North to south of terminal 500.00 0.80 159*6 Seamless steel nil 1985-01 20.00 12,810.00 12,282.51 42,300.00 30 12,690.00 3.32 for compressed air pipes 79 4904032 Seamless steel pipe Exit of machinery repairing section 60.00 0.80 200*9 Seamless steel nil 1990-01 20.00 8,760.00 8,399.28 28,800.00 30 8,640.00 2.87 for compressed air to propeller team of ship repairing pipes 80 4904033 Seamless steel pipe Exit of machinery repairing section 185.00 0.80 200*9 Seamless steel nil 1990-01 20.00 27,000.00 25,888.14 88,900.00 30 26,670.00 3.02 for compressed air to fitting section of ship repairing pipes 81 4904034 Seamless steel pipe Fitting section of ship repairing to 265.00 0.80 200*9 Seamless steel nil 1990-01 20.00 33,780.00 32,388.96 111,100.00 30 33,330.00 2.91 for compressed air ship repairing pier (7#) pipes 82 4904035 Seamless steel pipe Propeller team of ship repairing to 85.00 0.80 200*9 Seamless steel nil 1990-01 20.00 10,830.00 10,384.05 35,600.00 30 10,680.00 2.85 for compressed air front of large harewares warehouse pipes 83 4904036 Seamless steel pipe Propeller team of ship repairing to 513.00 0.80 200*9 Seamless steel nil 1990-01 20.00 65,400.00 62,706.84 215,000.00 30 64,500.00 2.86 for compressed air doorway of woodworking and end pipes of Youth Road 84 4904037 Seamless steel pipe Inside of new pressure vessel 250.00 200*9 Seamless steel nil 1990-01 20.00 15,600.00 14,957.58 51,400.00 30 15,420.00 3.09 Overhead for compressed air workshop to inside of new pipes pressure vessel workshop 85 4904039 Seamless steel pipe Surrounding of workshop of ship 275.00 50*4 Seamless steel nil 1990-08 20.00 6,780.00 6,500.82 22,300.00 30 6,690.00 2.91 Overhead for compressed air repairing branch factory to pipes surrounding of workshop of ship repairing branch factory PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
86 4904040 Seamless steel pipe 3# shipbuilding platform 195.00 0.80 159*6 Seamless steel nil 1991-04 20.00 40,110.00 38,458.32 132,000.00 30 39,600.00 2.97 for compressed air pre-outfitting field to 3# pipes shipbuilding platform pre-outfitting field 87 4904041 Seamless steel pipe Side of old compressor room to 190.00 0.80 159*6 Seamless steel nil 1991-04 20.00 8,280.00 7,939.05 27,300.00 30 8,190.00 3.16 for compressed air side of rain shelter pipes 88 4904042 Seamless steel pipe Side of rain shelter of 1# 420.00 0.80 108*6 Seamless steel nil 1991-04 19.00 12,330.00 11,617.11 40,600.00 30 12,180.00 4.85 for compressed air shipbuilding platform to side of pipes rain shelter of 1# shipbuilding platform 89 4904045 Seamless steel pipe Inside of 24 m span assembly, 198.00 108*6 Seamless steel nil 1993-12 15.00 10,020.00 7,590.18 33,000.00 30 9,900.00 30.43 Overhead for compressed air from southwest to north side via pipes east side then to west side 90 4904046 Seamless steel pipe Inside of 24 m span assembly, 87.00 108*6 Seamless steel nil 1993-12 15.00 3,390.00 2,567.94 11,200.00 30 3,360.00 30.84 Overhead for compressed air southern, from west to east, for pipes high precision machineries 91 4904048 Seamless steel pipe 32 m span to 35,000 tonnes ship 190.00 0.80 159*6 Seamless steel nil 1994-02 15.00 31,284.00 23,697.63 93,600.00 30 28,080.00 18.49 for compressed air block yard pipes 92 4904049 Seamless steel pipe Pipe pressure testing field to south 60.00 0.80 108*6 Seamless steel nil 1994-03 15.00 12,474.00 9,449.05 37,300.00 30 11,190.00 18.42 for compressed air of pipe processing line pipes 93 4904050 Seamless steel pipe 35,000 tonnes ship block yard to 127.00 0.80 108*6 Seamless steel nil 1994-02 20.00 14,289.00 10,823.91 42,600.00 30 12,780.00 18.07 for compressed air 35,000 tonnes ship block yard pipes district 94 4904051 Seamless steel pipe Front of 2#3# tire rack district to 200.00 0.80 60*5 Seamless steel for compressed air tire rack district right and left side -9– V-59 –
nil 1994-02 20.00 10,296.00 7,799.22 30,900.00 30 9,270.00 18.86 pipes 95 4904052 Seamless steel pipe South of 3# tire rack district to 210.00 0.80 108*6 Seamless steel nil 1994-02 20.00 10,824.00 8,199.15 32,500.00 30 9,750.00 18.91 for compressed air north of rain shelter pipes 96 4904053 Seamless steel pipe Northwest corner to northeast side 54.00 0.80 89*5 Seamless steel nil 1994-12 15.00 14,926.00 11,306.47 43,400.00 30 13,020.00 15.16 for compressed air of 4# tire rack district pipes 97 4904056 Seamless steel pipe Top trench of main dock to 30.00 0.80 159*6 Seamless steel nil 1995-12 15.00 8,066.00 6,110.02 21,500.00 34 7,310.00 19.64 for compressed air original old pipe of main dock pipes 98 4904057 Seamless steel pipe End of bridge to south of 3# 170.00 0.80 159*6 Seamless steel nil 1996-12 15.00 33,292.00 25,218.70 80,100.00 37 29,637.00 17.52 for compressed air shipbuilding platform pipes 99 4904058 Seamless steel pipe 24 m span to 18 m span 110.00 0.80 219*9 Seamless steel nil 1996-12 15.00 29,397.00 22,268.20 70,800.00 37 26,196.00 17.64 for compressed air pipes 100 4904069 Seamless steel pipe 300 m from engine room to 580.00 219*9 Seamless steel nil 2003-02 15.00 119,133.00 92,465.55 186,400.00 58 108,112.00 16.92 Overhead for compressed air terminal south to 280 m from pipes engine room to terminal north 101 4905006 Seamless steel 1#,2#,3# shipbuilding platform 830.00 0.80 38*4 Seamless steel nil 1982-01 16.00 17,640.00 16,689.42 58,100.00 30 17,430.00 4.44 pipeline for oxygen branch administration to 1#,2#,3# pipes shipbuilding platform branch administration district 102 4905016 Seamless steel 27 m span plant extension to 27 m 250.00 32*4 Seamless steel nil 1984-01 16.00 6,990.00 6,613.35 23,100.00 30 6,930.00 4.79 Overhead pipeline for oxygen span plant extension pipes 103 4905020 Seamless steel Inside new pressure vessel 215.00 50*4 Seamless steel nil 1990-01 16.00 29,580.00 28,005.42 97,300.00 30 29,190.00 4.23 Overhead pipeline for oxygen workshop to inside of new pipes pressure vessel workshop 104 4905021 Seamless steel Pre-outfitting field south of 3# 205.00 0.80 50*4 Seamless steel nil 1990-01 16.00 16,950.00 16,047.75 55,800.00 30 16,740.00 4.31 pipeline for oxygen shipbuilding platform to pipes pre-outfitting field south of 3# shipbuilding platform 105 4905023 Seamless steel Central control room at side of 195.00 63*4 Seamless steel nil 1990-04 16.00 10,650.00 10,083.09 35,100.00 30 10,530.00 4.43 Overhead pipeline for oxygen pressure vessel workshop to 3# pipes shipbuilding platform PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
106 4905024 Seamless steel Central control room at side of 250.00 63*4 Seamless steel nil 1990-04 16.00 13,650.00 12,923.42 45,000.00 30 13,500.00 4.46 Overhead pipeline for oxygen pressure vessel workshop to pipes special connection managed by cutting machines 107 4905025 Seamless steel Central control room at side of 230.00 63*4 Seamless steel nil 1990-04 16.00 12,570.00 11,900.85 41,400.00 30 12,420.00 4.36 Overhead pipeline for oxygen pressure vessel workshop to 3# pipes workshop doorway 108 4905026 Seamless steel Central control room at side of 160.00 63*4 Seamless steel nil 1990-04 16.00 8,730.00 8,265.32 28,800.00 30 8,640.00 4.53 Overhead pipeline for oxygen pressure vessel workshop to pipes junction of pre-outfitting field 109 4905027 Seamless steel Central control room at side of 65.00 63*4 Seamless steel nil 1990-04 16.00 3,540.00 3,351.54 11,700.00 30 3,510.00 4.73 Overhead pipeline for oxygen pressure vessel workshop to pipes entrance of 2# workshop (supply of pressure vessel) 110 4905028 Seamless steel Central control room at side of 95.00 63*4 Seamless steel nil 1991-04 16.00 5,190.00 4,913.70 17,100.00 30 5,130.00 4.40 Overhead pipeline for oxygen pressure vessel workshop to tire pipes rack district and 2# shipbuilding platform 111 4905029 Seamless steel Central control room at side of 20.00 146*6 Seamless steel nil 1991-04 16.00 8,370.00 7,924.41 27,500.00 30 8,250.00 4.11 Overhead pipeline for oxygen pressure vessel workshop to pipes pressure vessel workshop 112 4905030 Seamless steel Side of rain shelter of pressure 430.00 0.80 45*4 Seamless steel nil 1991-04 16.00 5,520.00 5,222.55 18,200.00 30 5,460.00 4.55 pipeline for oxygen vessel workshop to side of 1# pipes shipbuilding platform 113 4905032 power system Inside of 24 m span assembly, 198.00 45*4 Seamless steel nil 1993-12 15.00 9,540.00 7,226.55 31,500.00 30 9,450.00 30.77 Overhead seamless steel pipe from southwest to north side via pipes
-0– V-60 – east side then to west side 114 4905033 power system Inside of 24 m span assembly, 87.00 45*4 Seamless steel seamless steel pipe southern, from west to east, for high precision machineries
nil 1993-12 15.00 4,050.00 3,067.87 13,300.00 30 3,990.00 30.06 Overhead pipes
115 4905034 Seamless steel 32 m span to 35,000 tonnes ship 190.00 0.80 60*5 Seamless steel nil 1994-02 16.00 31,284.00 23,697.63 93,600.00 30 28,080.00 18.49 pipeline for oxygen block yard pipes 116 4905035 Seamless steel 35,000 tonnes ship block yard to 127.00 0.80 48*4 Seamless steel nil 1994-02 20.00 14,289.00 10,823.91 42,600.00 30 12,780.00 18.07 pipeline for oxygen 35,000 tonnes ship block yard pipes district 117 4905036 Seamless steel North of 3# tire rack district to 410.00 0.80 60*5 Seamless steel nil 1994-02 16.00 21,153.00 16,023.37 63,400.00 30 19,020.00 18.70 pipeline for oxygen 2#3# tire rack to right and left side pipes and north rain shelter 118 4905037 Seamless steel Southwest corner of 3# tire rack 145.00 0.80 60*5 Seamless steel nil 1994-12 15.00 15,572.00 11,795.78 45,100.00 30 13,530.00 14.70 pipeline for oxygen district to southwest corner of 3# pipes shipbuilding platform 119 4905038 Seamless steel main dock top trench to top of 14.00 0.80 27*3.5 Seamless steel nil 1995-12 15.00 1,443.00 1,093.08 3,900.00 34 1,326.00 21.31 pipeline for oxygen main dock pipes 120 4905044 Seamless steel GSI Guangzhou-HKgas factory to 2,636.00 0.80 133*6 Seamless steel nil 1999-04 15.00 1,091,850.00 827,076.39 2,157,100.00 45 970,695.00 17.36 pipeline for oxygen South Fangcun Main Road (GSI pipes section) 121 4905045 Seamless steel East of GSI, crossing Fangcun 91.00 0.80 133*6 Seamless steel nil 1999-04 15.00 31,050.00 23,520.37 61,300.00 45 27,585.00 17.28 pipeline for oxygen Main Road to gate at entrance of pipes steel plate yard 122 4905046 Seamless steel Gate at entrance of steel plate yard 489.00 0.80 140*6 Seamless steel nil 1999-04 15.00 144,000.00 109,080.00 284,300.00 45 127,935.00 17.29 pipeline for oxygen to front of storage tanks of oxygen pipes station PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
123 4905053 Seamless steel Gas station at south of machinery 85.00 1.20 60*5 Seamless steel nil 2008-09 15.00 14,256.00 13,081.86 17,400.00 77 13,398.00 2.42 pipeline for oxygen processing workshop to pipes shipbuilding terminal of old district 124 4909005 Seamless steel Gas distribution room to northwest 175.00 0.80 60*5 Seamless steel nil 1982-09 16.00 4,500.00 4,257.54 14,800.00 30 4,440.00 4.29 pipeline for acetylene corner of 1# tire rack pipes 125 4909006 Seamless steel Gas distribution room to southeast 425.00 0.80 60*5 Seamless steel nil 1982-09 16.00 20,220.00 19,130.37 66,600.00 30 19,980.00 4.44 pipeline for acetylene of small dock pipes 126 4909007 Seamless steel Gas distribution room to south east 310.00 0.80 60*5 Seamless steel nil 1982-09 16.00 6,600.00 6,244.32 21,700.00 30 6,510.00 4.25 pipeline for acetylene side of 2# workshop18 m span pipes 127 4909008 Seamless steel Gas distribution room to southeast 270.00 0.80 60*5 Seamless steel nil 1982-09 16.00 3,540.00 3,349.20 11,700.00 30 3,510.00 4.80 pipeline for acetylene of ship bodyworkshop pipes 128 4909009 Seamless steel Gas distribution room to new 190.00 0.80 60*5 Seamless steel nil 1982-09 16.00 11,460.00 10,842.42 37,800.00 30 11,340.00 4.59 pipeline for acetylene shipbuilding platform pipes 129 4909019 Seamless steel main dock to main dock 360.00 0.80 25.4*3.5 Seamless steel nil 1982-09 16.00 7,650.00 7,237.71 25,200.00 30 7,560.00 4.45 pipeline for acetylene pipes 130 4909020 Seamless steel main dock to terminal 340.00 0.80 60*5 Seamless steel nil 1982-09 16.00 7,230.00 6,840.39 23,800.00 30 7,140.00 4.38 pipeline for acetylene pipes 131 4909022 Seamless steel West side of 1# tire rack district to 400.00 0.80 60*5 Seamless steel nil 1970-01 16.00 3,900.00 3,689.85 12,900.00 30 3,870.00 4.88 pipeline for acetylene east side of 1# shipbuilding pipes platform 132 4909023 Seamless steel pipeline for acetylene
-1– V-61 – West side of 2# tire rack district to 350.00 0.80 60*5 Seamless steel nil 1970-01 16.00 2,610.00 2,471.04 8,600.00 30 2,580.00 4.41 east side of 2# shipbuilding pipes platform 133 4909024 Seamless steel West side of 3# tire rack district to 200.00 0.80 60*5 Seamless steel nil 1970-01 16.00 2,490.00 2,355.81 8,200.00 30 2,460.00 4.42 pipeline for acetylene east side of 3# shipbuilding pipes platform 134 4909026 Seamless steel Inside new pressure vessel 220.00 60*5 Seamless steel nil 1990-01 16.00 17,070.00 16,161.36 56,300.00 30 16,890.00 4.51 Overhead pipeline for acetylene workshop to inside new pressure pipes vessel workshop district 135 4909027 Seamless steel 3# shipbuilding platform south 190.00 0.80 50*5 Seamless steel nil 1991-04 16.00 14,340.00 13,576.62 47,300.00 30 14,190.00 4.52 pipeline for acetylene pre-outfitting field to 3# pipes shipbuilding platform south pre-outfitting field district 136 4909028 Seamless steel End of 2# tire rack district to 1# 120.00 0.80 60*5 Seamless steel nil 1991-04 16.00 7,890.00 7,464.84 26,000.00 30 7,800.00 4.49 pipeline for acetylene shipbuilding platform and rain pipes shelter 137 4909029 Seamless steel 1# shipbuilding platform rain 430.00 0.80 60*5 Seamless steel nil 1991-04 16.00 4,770.00 4,516.11 15,800.00 30 4,740.00 4.96 pipeline for acetylene shelter to 1# shipbuilding platform pipes rain shelter area 138 4909031 power system Inside of 24 m span assembly, 198.00 60*5 Seamless steel nil 1993-12 15.00 9,540.00 7,226.55 31,500.00 30 9,450.00 30.77 Overhead seamless steel pipe from southwest to north side via pipes east side then to west side 139 4909032 power system Inside of 24 m span assembly, 87.00 60*5 Seamless steel nil 1993-12 16.00 3,750.00 2,840.64 12,400.00 30 3,720.00 30.96 Overhead seamless steel pipe southern, from west to east, for pipes high precision machineries 140 4909034 Seamless steel Pipe pressure testing field to south 440.00 0.80 60*5 Seamless steel nil 1994-03 15.00 3,927.00 2,974.71 11,700.00 30 3,510.00 17.99 pipeline for acetylene end of pipe processing line pipes 141 4909035 Seamless steel 35,000 tonnes ship block yard to 127.00 0.80 48*4 Seamless steel nil 1994-02 16.00 14,289.00 10,823.91 42,600.00 30 12,780.00 18.07 pipeline for acetylene 35,000 tonnes ship block yard pipes district 142 4909036 Seamless steel Acetylene station to gas 150.00 89*5 Seamless steel nil 1994-02 16.00 14,520.00 10,998.93 43,400.00 30 13,020.00 18.38 Overhead pipeline for acetylene distribution room pipes PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
143 4909037 Seamless steel gas distribution room to south of 210.00 60*6*3 Seamless steel nil 1994-02 16.00 20,262.00 15,348.45 60,500.00 30 18,150.00 18.25 Overhead pipeline for acetylene 3# ship tire rack district pipes 144 4909038 Seamless steel gas distribution room to north of 780.00 60*5 Seamless steel nil 1994-02 16.00 75,240.00 56,994.30 224,600.00 30 67,380.00 18.22 Overhead pipeline for acetylene 27 m span pipes 145 4909039 Seamless steel 27 m span to north of 35,000 260.00 0.80 60*5 Seamless steel nil 1994-02 16.00 393,294.00 297,920.19 1,176,600.00 30 352,980.00 18.48 Including pipeline for acetylene tonnes yard pipes trench construction 146 4909040 Seamless steel North of 35,000 tonnes yard to 580.00 0.80 60*5 Seamless steel nil 1994-02 16.00 55,935.00 42,370.74 167,000.00 30 50,100.00 18.24 pipeline for acetylene north of Youth Road pipes 147 4909041 Seamless steel South of 3# tire rack district to 410.00 0.80 60*5 Seamless steel nil 1994-02 16.00 21,153.00 16,023.37 63,400.00 30 19,020.00 18.70 pipeline for acetylene 2#3# tire rack to right and left of pipes district and north of rain shelter 148 4909042 Seamless steel Southwest corner of 3# tire rack 145.00 0.80 60*5 Seamless steel nil 1994-12 15.00 15,572.00 11,795.78 45,100.00 30 13,530.00 14.70 pipeline for acetylene district to southwest corner of 3# pipes shipbuilding platform district 149 4909043 Seamless steel main trench of main dock to 165.00 0.80 27*3.5 Seamless steel nil 1995-12 15.00 7,215.00 5,465.38 19,300.00 34 6,562.00 20.06 pipeline for acetylene original old pipe of main dock pipes 150 5901001 High voltage cable 19th Institute to 10th Institute 1# 496.00 1.00 3*50 ZLQ2-10KV nil 1981-01 9.58 6,690.00 5,067.66 22,100.00 30 6,630.00 30.83 transformer 151 5901002 High voltage cable 19th Institute to 5th Institute 722.00 1.00 3*35*2 ZLQ2-10KV nil 1981-01 30.25 24,360.00 23,616.42 80,300.00 30 24,090.00 2.01 Including cable trench 152 5901003 High voltage cable 19th Institute to south side of 2# 400.00 1.00 3*35*2 ZLQ2-10KV nil 1981-01 29.25 5,400.00 5,227.92 17,800.00 30 5,340.00 2.14 workshop 153 5901006 High voltage cable 19th Institute to F3# incoming line 192.00 1.00 3*240*2 ZLQ2-10KV nil 1983-10 29.25 5,370.00 4,067.79 17,700.00 30 5,310.00 30.54 154 5901007 High voltage cable 1st Institute to 19th Institute 1,100.00 1.00 3*120*2 ZLQ2-10KV nil 1981-01 29.25 20,400.00 19,750.02 67,300.00 30 20,190.00 2.23 155 5901008 High voltage cable 1st Institute to 2nd Institute liaison 600.00 1.00 3*120*2 ZLQ-10KV nil 1996-11 29.25 11,130.00 10,410.27 36,700.00 30 11,010.00 5.76 -2– V-62 –
156 5901009 High voltage cable 2nd Institute to 3t electric furnace 140.00 1.00 3*240 ZLQ2-10KV nil 1981-01 29.25 17,010.00 16,468.02 56,000.00 30 16,800.00 2.02 Including cable trench 157 5901010 High voltage cable 2nd Institute to 0.5t electric 140.00 1.00 3*240 ZLQ2-10KV nil 1981-01 29.25 7,560.00 7,319.16 24,900.00 30 7,470.00 2.06 furnace 158 5901011 High voltage cable 2nd Institute to 16th Institute 1# 340.00 1.00 3*50 ZLQ2-10KV nil 1983-01 28.25 27,510.00 26,593.35 90,700.00 30 27,210.00 2.32 Including transformer cable trench 159 5901013 High voltage cable 2nd Institute to old air compressor 300.00 1.00 3*35 ZLQ2-10KV nil 1996-11 29.25 13,650.00 12,767.28 45,000.00 30 13,500.00 5.74 room 160 5901014 High voltage cable 2nd Institute to 7th Institute 1# 110.00 1.00 3*95 ZLQ2-10KV nil 1981-01 29.25 9,600.00 9,294.09 31,600.00 30 9,480.00 2.00 transformer 161 5901015 High voltage cable 2nd Institute to 3rd Institute 170.00 1.00 3*35 ZQ2-6KV nil 1996-11 29.25 7,740.00 7,239.51 25,500.00 30 7,650.00 5.67 162 5901016 High voltage cable 2nd Institute to 3rd Institute 170.00 1.00 3*95 ZLQ2-10KV nil 1981-01 29.25 14,850.00 14,376.87 48,800.00 30 14,640.00 1.83 163 5901017 High voltage cable 2nd Institute to new 13# workshop 240.00 1.00 3*95 ZLQ2-10KV nil 1981-01 30.25 20,970.00 20,329.92 68,800.00 30 20,640.00 1.53 164 5901020 High voltage cable 19th Institute to 6th Institute 360.00 1.00 3*120*2 ZLQ2-10KV nil 1994-07 35.00 22,470.00 21,355.44 74,000.00 30 22,200.00 3.95 Including cable trench 165 5901022 High voltage cable 19th Institute to 10th Institute 2# 430.00 1.00 3*35 ZLQ2-10KV nil 2004-07 12.00 26,600.00 20,149.52 52,600.00 45 23,670.00 17.47 transformer 166 5901023 High voltage cable 19th Institute to 15th Institute 550.00 1.00 3*35 LGJ-10KV nil 1981-01 30.25 48,030.00 46,563.90 157,800.00 30 47,340.00 1.67 167 5901024 High voltage cable 19th Institute to 2# workshop 230.00 1.00 3*95 ZLQ-10KV nil 1980-01 7.83 20,160.00 15,271.20 66,500.00 30 19,950.00 30.64 Including multi-head welder cable trench 168 5901025 High voltage cable 19th Institute to 1# shipbuilding 500.00 1.00 3*95 ZLQ-10KV nil 2004-07 12.00 30,900.00 23,406.78 61,200.00 45 27,540.00 17.66 platform multi-head welder PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
169 5901026 High voltage cable F9# incoming line room to 19th 62.00 1.00 3*240 ZLQ-10KV nil 1976-11 12.00 389,910.00 295,356.81 1,285,600.00 30 385,680.00 30.58 Being Institute bricklaying reinforced concrete pipe trench, its carrying value includes the cable trench project, renovation was carried out 170 5901027 High voltage cable F3# incoming line room to 19th 100.00 1.00 3*120*2 ZLQ-10KV nil 1994-07 35.00 6,240.00 5,930.49 20,600.00 30 6,180.00 4.21 Including Institute cable trench 171 5901036 High voltage cable 1st Institute to 5th Institute, power 720.00 1.00 3*50 YJV22-15KV nil 1993-05 16.92 60,690.00 45,972.66 200,100.00 30 60,030.00 30.58 station 172 5901037 High voltage cable 1st Institute to substation of 1,002.00 1.00 3*50 YJV22-15KV nil 1994-03 16.08 84,480.00 63,993.57 278,500.00 30 83,550.00 30.56 northwest region 173 5901038 High voltage cable 1st Institute to 60HZ power station 1,220.00 1.00 3*50 YJV22-15JV nil 1994-08 15.67 267,390.00 202,547.92 881,700.00 30 264,510.00 30.59 Including cable trench 174 5901039 High voltage cable 1st Institute to new 10th Institute 800.00 1.00 3*50 YJV22-15JV nil 1994-10 15.50 67,440.00 51,085.83 222,400.00 30 66,720.00 30.60 175 5901044 High voltage cable F3 special line, from Fusha 2,200.00 3*120+1*70 YJV22-1KV nil 1999-12 12.00 326,430.00 247,270.72 1,073,800.00 30 322,140.00 30.28 Overhead substation to company’s 1# substation 176 5901045 High voltage cable F14 special line, from Fusha 2,200.00 3*120+1*70 YJV22-1KV nil 1999-12 12.00 326,430.00 247,270.72 1,073,800.00 30 322,140.00 30.28 Overhead substation to company’s 1#
-3– V-63 – substation 177 5901046 High voltage cable No.3 substation to no.15 substation 3,656.00 1.00 3*70 YJV22 nil 2003-02 12.00 198,880.00 150,651.61 447,100.00 39 174,369.00 15.74 178 5901051 High voltage power 1st Institute 317 switch to site 180.00 0.50 3*70 YJV22-15KV nil 2008-07 12.00 498,540.00 434,536.23 704,300.00 65 457,795.00 5.35 Including cable switch of 400T crane cable trench construction, renewed and altered 179 5901052 High voltage power 16th Institute incoming line (old 2,000.00 1.00 3*50 YJV22-15KV nil 2008-07 12.00 196,700.00 171,447.17 278,000.00 65 180,700.00 5.40 cable institute) to new 16th Institute 2# transformer 180 5901053 High voltage power Substation 16 to high voltage 120.00 1.00 3*120 YJV8.7-15KV nil 2009-02 12.00 23,976.00 21,185.19 32,000.00 67 21,440.00 1.20 cable power cabin of air compressor 181 5901054 High voltage power Substation 16 high voltage 120.00 1.00 3*70 YJV8.7-15KV nil 2009-02 12.00 15,466.00 13,665.73 20,700.00 67 13,869.00 1.49 cable incoming line cabin to three transformer high voltage power supplies 182 5901055 High voltage cable 1st Institute to substation 16 1,800.00 1.00 3*50 YJV22-15KV nil 2009-07 12.00 379,350.00 337,953.42 500,300.00 70 350,210.00 3.63 183 5901057 High voltage cable 1st Institute to new 2nd Institute 431.00 1.00 3*70 YJV22-15KV nil 2009-06 12.00 69,000.00 61,375.05 91,000.00 69 62,790.00 2.31 Including 2# transformer cable trench 184 5901058 High voltage cable 1st Institute to new 2nd Institute 431.00 1.00 3*70 YJV22-15KV nil 2009-06 12.00 69,000.00 61,375.05 91,000.00 69 62,790.00 2.31 Including 1# transformer cable trench 185 5901059 High voltage cable 1st Institute to 13th Institute 2# 571.00 1.00 3*70 YJV22-15KV nil 2009-06 12.00 72,225.00 64,243.71 95,200.00 69 65,688.00 2.25 transformer 186 5901060 High voltage cable 1st Institute(3169 switch) to 13th 563.00 1.00 3*70 YJV22-15KV nil 2009-06 12.00 71,175.00 63,309.72 93,900.00 69 64,791.00 2.34 Institute 1# transformer PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
187 5901064 High voltage cable New high voltage room 1# 50.00 1.00 3*70 YJV8.7*15KV nil 2009-11 12.00 10,395.00 9,314.64 13,300.00 71 9,443.00 1.38 incoming line cabin to original overhead room knife switch cabinet 188 5905001 Low voltage cable 1st Institute to main dock power 65.00 1.00 3*120+1*70 ZQ-1KV nil 1956-01 16.00 3,180.00 3,010.71 10,500.00 30 3,150.00 4.63 Including supply 1# welder room cable trench 189 5905005 Low voltage cable 1st Institute to pump room of main 200.00 1.00 2*3*70+2*35 CPA-500 nil 1956-01 16.00 5,190.00 4,910.28 17,100.00 30 5,130.00 4.47 dock 190 5905008 Low voltage cable 2nd Institute to cement lamp pole 100.00 1.00 3*70+2*35 ZQ-1KV nil 1956-01 16.00 3,090.00 2,925.48 10,200.00 30 3,060.00 4.60 north of factory entrance 191 5905012 Low voltage cable 2nd Institute to 1st Institute 114 260.00 1.00 3*70+2*35 ZQ2-0.6KV nil 1956-01 16.00 32,430.00 30,682.38 107,000.00 30 32,100.00 4.62 Including liaison cable trench 192 5905019 Low voltage cable 2nd Institute to electroplating room 300.00 1.00 3*185+1*95 ZLQ-1KV nil 1956-01 16.00 42,480.00 40,190.76 140,100.00 30 42,030.00 4.58 Including and 3rd Institute 304, 316 cable trench 193 5905029 Low voltage cable 3rd Institute to sand box yard of 80.00 1.00 3*150+1*70 ZQ nil 1958-01 16.00 4,440.00 4,203.66 14,700.00 30 4,410.00 4.91 Including 13# workshop cable trench 194 5905046 Low voltage cable 5th Institute to new north 1 160.00 1.00 3*95+1*50 VLV29 nil 1985-01 16.00 1,770.00 1,674.60 5,900.00 30 1,770.00 5.70 installation and welding field 195 5905083 Low voltage cable 6th Institute to north 3 and north 5 185.00 1.00 3*95+1*50 VLV29 nil 1967-01 16.00 3,000.00 2,838.36 9,900.00 30 2,970.00 4.64 Including welding rooms of 2# shipbuilding cable trench platform 196 5905097 Low voltage cable 6th Institute to north of 2# 185.00 1.00 3*95+1*50 VLV29 nil 1967-01 16.00 2,070.00 1,958.49 6,800.00 30 2,040.00 4.16 shipbuilding platform 7# welder room 197 5905106 Low voltage cable 7th Institute to 16th Institute 500.00 1.00 2*3*185+1*95 VLV29 nil 1985-01 16.00 7,770.00 7,351.32 25,600.00 30 7,680.00 4.47 liaison
-4– V-64 – 198 5905107 Low voltage cable 7th Institute to pier 1# welder 180.00 1.00 2*3*185+1*95 VLV29 nil 1985-01 16.00 2,790.00 2,641.50 9,200.00 30 2,760.00 4.49 room 199 5905108 Low voltage cable 7th Institute to pier 1# shore 180.00 1.00 3*120+1*70 VLV29 nil 1985-01 16.00 1,890.00 1,789.38 6,200.00 30 1,860.00 3.95 power 200 5905109 Low voltage cable 7th Institute to 2# welder room 120.00 1.00 2*3*185+1*95 VLV29 nil 1985-01 16.00 1,860.00 1,761.00 6,100.00 30 1,830.00 3.92 201 5905123 Low voltage cable 10th Institute to assembly line 300.00 1.00 2*3*120+1*70 VLV29 nil 1983-01 28.25 26,490.00 25,607.37 87,400.00 30 26,220.00 2.39 Including planing machine cable trench 202 5905125 Low voltage cable 10th Institute to 5# workshop 310.00 1.00 2*3*120+1*70 VLV29 nil 1983-01 28.25 27,390.00 26,477.31 90,300.00 30 27,090.00 2.31 Including cable trench 203 5905146 Low voltage cable 16th Institute to crane 200.00 1.00 3*185+1*95 VLV29 nil 1985-01 16.00 3,180.00 3,010.71 10,500.00 30 3,150.00 4.63 204 5905147 Low voltage cable 16th Institute to 4#~7# pier shore 540.00 1.00 2*3*185+1*95 VLV29 nil 1985-01 16.00 8,370.00 7,924.41 27,600.00 30 8,280.00 4.49 power 205 5905148 Low voltage cable 16th Institute to 5#~8# pier shore 400.00 1.00 2*3*120+1*70 VLV29 nil 1985-01 16.00 4,320.00 4,090.05 14,200.00 30 4,260.00 4.16 power 206 5905149 Low voltage cable 16th Institute to 4# welder room 280.00 1.00 3*185+1*95 VLV29 nil 1985-01 16.00 4,440.00 4,203.66 14,600.00 30 4,380.00 4.19 207 5905150 Low voltage cable 16th Institute to 5# welder room 240.00 1.00 3*185+1*95 VLV29 nil 1985-01 16.00 3,810.00 3,607.22 12,500.00 30 3,750.00 3.96 208 5905151 Low voltage cable 16th Institute to 5#~9# pier shore 200.00 1.00 2*3*185+1*95 VLV29 nil 1985-01 16.00 3,090.00 2,925.48 10,200.00 30 3,060.00 4.60 power 209 5905152 Low voltage cable 16th Institute to 6-10.11.12 pier 500.00 1.00 2*3*185+1*95 VLV29 nil 1985-01 16.00 7,770.00 7,356.36 25,600.00 30 7,680.00 4.40 shore power 210 5905153 Low voltage cable 16th Institute to pier lighting 680.00 1.00 3*95+1*50 VLV29 nil 1985-01 16.00 7,560.00 7,152.57 24,900.00 30 7,470.00 4.44 211 5905154 Low voltage cable 16th Institute to 6# welder room 200.00 1.00 3*185+1*95 VLV29 nil 1985-01 16.00 3,180.00 3,010.71 10,500.00 30 3,150.00 4.63 212 5905155 Low voltage cable 16th Institute to 7th Institute 250.00 1.00 3*185+1*95 VLV29 nil 1985-01 16.00 7,320.00 6,925.53 24,200.00 30 7,260.00 4.83 Including liaison cable trench 213 5905157 Low voltage cable 6th Institute to 2# shipbuilding platform
120.00 1.00 3*120+1*70 VV29 nil 1990-12 16.00 9,420.00 8,918.52 31,100.00 30 9,330.00 4.61 Including cable trench 214 5905158 Low voltage cable 6th Institute to 2# shipbuilding 120.00 1.00 3*120+1*70 VV29 nil 1990-12 16.00 9,420.00 8,918.52 31,100.00 30 9,330.00 4.61 Including platform cable trench PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
215 5905159 Low voltage cable 6th Institute to 2# shipbuilding 120.00 1.00 3*120+1*70 VV29 nil 1990-12 16.00 9,420.00 8,918.52 31,100.00 30 9,330.00 4.61 Including platform cable trench 216 5905160 Low voltage cable 6th Institute to 2# shipbuilding 120.00 1.00 3*120+1*70 VV29 nil 1990-12 16.00 9,420.00 8,918.52 31,100.00 30 9,330.00 4.61 Including platform cable trench 217 5905161 Low voltage cable 6th Institute to 2# shipbuilding 120.00 1.00 3*120+1*70 VV29 nil 1990-12 16.00 9,420.00 8,918.52 31,100.00 30 9,330.00 4.61 Including platform cable trench 218 5905162 Low voltage cable 6th Institute to 2# shipbuilding 120.00 1.00 3*120+1*70 VV29 nil 1990-12 16.00 9,420.00 8,918.52 31,100.00 30 9,330.00 4.61 Including platform cable trench 219 5905163 Low voltage cable 6th Institute to 2# shipbuilding 120.00 0.50 3*120+1*70 VV29 nil 1979-06 12.00 10,650.00 9,848.46 35,100.00 30 10,530.00 6.92 Including platform cable trench 220 5905164 Low voltage cable 6th Institute to 2# shipbuilding 120.00 0.50 3*120+1*70 VV29 nil 1990-12 16.00 9,420.00 8,918.52 31,100.00 30 9,330.00 4.61 Including platform cable trench 221 5905165 Low voltage cable 6th Institute to 2# shipbuilding 120.00 0.50 3*120+1*70 VV29 nil 1990-12 16.00 9,420.00 8,918.52 31,100.00 30 9,330.00 4.61 Including platform cable trench 222 5905166 Low voltage cable 6th Institute to 2# shipbuilding 120.00 0.50 3*120+1*70 VV29 nil 1990-12 16.00 9,420.00 8,918.52 31,100.00 30 9,330.00 4.61 Including platform cable trench 223 5905167 Low voltage cable 6th Institute to 2# shipbuilding 120.00 0.50 3*120+1*70 VV29 nil 1990-12 16.00 9,420.00 8,918.52 31,100.00 30 9,330.00 4.61 Including platform cable trench 224 5905168 Low voltage cable 6th Institute to 2# shipbuilding 120.00 0.50 3*120+1*70 VV29 nil 1990-12 16.00 9,420.00 8,918.52 31,100.00 30 9,330.00 4.61 Including platform cable trench 225 5905169 Low voltage cable 6th Institute to 2# shipbuilding 120.00 0.50 3*120+1*70 VV29 nil 1990-12 16.00 9,420.00 8,918.52 31,100.00 30 9,330.00 4.61 Including platform cable trench 226 5905170 Low voltage cable 6th Institute to 2# shipbuilding 120.00 0.50 3*120+1*70 VV29 nil 1990-12 16.00 9,420.00 8,918.52 31,100.00 30 9,330.00 4.61 Including platform cable trench 227 5905171 Low voltage cable 6th Institute to 2# shipbuilding 120.00 0.50 3*120+1*70 VV29 nil 1990-12 16.00 9,420.00 8,918.52 31,100.00 30 9,330.00 4.61 Including platform cable trench
-5– V-65 – 228 5905172 Low voltage cable 6th Institute to 2# shipbuilding 120.00 0.50 3*120+1*70 VV29 nil 1990-12 16.00 9,420.00 8,918.52 31,100.00 30 9,330.00 4.61 Including platform cable trench 229 5905173 Low voltage cable 6th Institute to 2# shipbuilding 120.00 0.50 3*120+1*70 VV29 nil 1990-12 16.00 9,420.00 8,918.52 31,100.00 30 9,330.00 4.61 Including platform cable trench 230 5905175 Low voltage cable No.6 transformer room to south of 145.00 0.50 3*150+1*70 VV29 nil 1991-10 16.00 5,370.00 5,084.16 17,700.00 30 5,310.00 4.44 3# shipbuilding platform, container yard 231 5905176 Low voltage cable No.6 transformer room to south of 158.00 0.50 3*150+1*70 VV29 nil 1991-10 16.00 5,850.00 5,538.60 19,300.00 30 5,790.00 4.54 3# shipbuilding platform, container yard 232 5905177 Low voltage cable No.6 transformer room to south of 85.00 0.50 3*120+1*70 VV29 nil 1991-10 16.00 22,740.00 21,529.50 74,900.00 30 22,470.00 4.37 Including 3# shipbuilding platform, container cable trench yard 233 5905178 Low voltage cable No.6 transformer room to south of 120.00 0.50 3*120+1*70 VV29 nil 1991-10 16.00 28,050.00 26,556.81 92,500.00 30 27,750.00 4.49 Including 3# shipbuilding platform, container cable trench yard 234 5905179 Low voltage cable Street lamp of western factory 3,250.00 1.00 3*120+1*70 VV29 nil 1993-01 19.33 156,720.00 118,715.43 516,700.00 30 155,010.00 30.57 Including district to cable trench 235 5905180 Low voltage cable 5th Institute to southern
172.00 0.50 3*185+1*95 VV29 nil 1991-10 16.00 14,610.00 11,067.06 48,000.00 30 14,400.00 30.12 shipbuilding platform power box 236 5905181 Low voltage cable 5th Institute to southern 172.00 0.50 3*185+1*95 VV29 nil 1991-10 16.00 14,610.00 13,832.31 48,000.00 30 14,400.00 4.10 shipbuilding platform power box 237 5905182 Low voltage cable 5th Institute to southern 172.00 0.50 3*185+1*95 VV29 nil 1991-10 16.00 14,610.00 11,067.06 48,000.00 30 14,400.00 30.12 shipbuilding platform power box 238 5905183 Low voltage cable 5th Institute to southern 172.00 0.50 3*185+1*95 VV29 nil 1991-10 16.00 14,610.00 13,832.31 48,000.00 30 14,400.00 4.10 shipbuilding platform power box 239 5905184 Low voltage cable 5th Institute to southern 172.00 0.50 3*185+1*95 VV29 nil 1991-10 16.00 14,610.00 13,832.31 48,000.00 30 14,400.00 4.10 shipbuilding platform power box PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
240 5905185 Low voltage cable 5th Institute to southern 172.00 0.50 3*185+1*95 VV29 nil 1991-10 16.00 14,610.00 13,832.31 48,000.00 30 14,400.00 4.10 shipbuilding platform power box 241 5905186 Low voltage cable 5th Institute to southern 172.00 0.50 3*185+1*95 VV29 nil 1991-10 16.00 14,610.00 13,832.31 48,000.00 30 14,400.00 4.10 shipbuilding platform power box 242 5905187 Low voltage cable 5th Institute to southern 172.00 0.50 3*185+1*95 VV29 nil 1991-10 16.00 14,610.00 13,832.31 48,000.00 30 14,400.00 4.10 shipbuilding platform power box 243 5905188 Low voltage cable 5th Institute to southern 172.00 0.50 3*185+1*95 VV29 nil 1991-10 16.17 14,610.00 13,730.34 48,000.00 30 14,400.00 4.88 shipbuilding platform power box 244 5905189 Low voltage cable 5th Institute to southern 172.00 0.50 3*185+1*95 VV29 nil 1991-10 16.00 14,610.00 13,832.31 48,000.00 30 14,400.00 4.10 shipbuilding platform power box 245 5905190 Low voltage cable 5th Institute to southern 172.00 0.50 3*185+1*95 VV29 nil 1991-10 16.00 14,610.00 13,832.31 48,000.00 30 14,400.00 4.10 shipbuilding platform power box 246 5905191 Low voltage cable 5th Institute to southern 172.00 0.50 3*185+1*95 VV29 nil 1991-10 16.17 14,610.00 13,730.34 48,000.00 30 14,400.00 4.88 shipbuilding platform power box 247 5905192 Low voltage cable 19th Institute to new 5th Institute 150.00 1.00 3*150+1*70 VV29 nil 1991-10 16.00 5,550.00 5,254.53 18,300.00 30 5,490.00 4.48 248 5905193 Low voltage cable 5th Institute to 1# north of 245.00 0.50 3*120+1*70 VV29 nil 1991-10 16.00 30,000.00 28,403.04 98,900.00 30 29,670.00 4.46 Including shipbuilding platform cable trench 249 5905194 Low voltage cable 5th Institute to 1# north of 313.00 0.50 3*120+1*70 VV29 nil 1991-10 16.00 29,880.00 28,289.43 98,500.00 30 29,550.00 4.46 Including shipbuilding platform cable trench 250 5905195 Low voltage cable 5th Institute to 1# north of 285.00 0.50 3*120+1*70 VV29 nil 1991-10 16.00 30,090.00 28,488.27 99,200.00 30 29,760.00 4.46 Including shipbuilding platform cable trench 251 5905196 Low voltage cable 5th Institute to 1# north of 410.00 0.50 3*120+1*70 VV29 nil 1991-10 16.00 29,460.00 27,891.77 97,100.00 30 29,130.00 4.44 Including shipbuilding platform cable trench 252 5905197 Low voltage cable 5th Institute to 1# north of 375.00 0.50 3*120+1*70 VV29 nil 1991-10 16.17 29,460.00 27,686.28 97,100.00 30 29,130.00 5.21 Including shipbuilding platform cable trench 253 5905198 Low voltage cable 5th Institute to 1# north of 342.00 0.50 3*120+1*70 VV29 nil 1991-10 16.00 30,330.00 28,715.49 100,000.00 30 30,000.00 4.47 Including
-6– V-66 – shipbuilding platform cable trench 254 5905199 Low voltage cable 5th Institute to south of 1# 313.00 0.50 3*120+1*70 VV29 nil 1991-10 16.00 29,880.00 28,289.43 98,500.00 30 29,550.00 4.46 Including shipbuilding platform cable trench 255 5905200 Low voltage cable 5th Institute to south of 1# 285.00 0.50 3*120+1*70 VV29 nil 1991-10 16.00 30,090.00 28,488.27 99,200.00 30 29,760.00 4.46 Including shipbuilding platform cable trench 256 5905201 Low voltage cable 5th Institute to south of 1# 245.00 0.50 3*120+1*70 VV29 nil 1991-10 16.00 30,000.00 28,403.04 98,900.00 30 29,670.00 4.46 Including shipbuilding platform cable trench 257 5905202 Low voltage cable 5th Institute to south of 1# 342.00 0.50 3*120+1*70 VV29 nil 1991-10 16.00 30,330.00 28,715.49 100,000.00 30 30,000.00 4.47 Including shipbuilding platform cable trench 258 5905203 Low voltage cable 5th Institute to south of 1# 375.00 0.50 3*120+1*70 VV29 nil 1996-12 15.67 20,610.00 15,612.07 68,000.00 30 20,400.00 30.67 Including shipbuilding platform cable trench 259 5905204 Low voltage cable 5th Institute to south of 1# 410.00 0.50 3*120+1*70 VV29 nil 1991-10 16.00 32,220.00 30,483.72 106,200.00 30 31,860.00 4.51 Including shipbuilding platform cable trench 260 5905208 Low voltage cable 1st Institute to enclosing wall of 520.00 1.00 3*150+1*70 W-1KV nil 1993-05 16.92 15,090.00 11,430.69 49,700.00 30 14,910.00 30.44 welding warehouse 261 5905209 Low voltage cable Old compressor room to control 160.00 1.00 30*1*1.5 KVV29 nil 1993-05 16.92 1,620.00 1,227.15 5,300.00 30 1,590.00 29.57 cabinet 262 5905210 Low voltage cable Old compressor room to AC cabinet
40.00 1.00 3*16+1*6 YC nil 1993-05 16.92 1,620.00 1,227.15 5,300.00 30 1,590.00 29.57
263 5905211 Low voltage cable 1st Institute to rain shelter 2,870.00 1.00 3*120+1*70 VV29 nil 1993-05 16.92 196,470.00 148,826.02 647,800.00 30 194,340.00 30.58 Including cable trench 264 5905212 Low voltage cable 1st Institute to rain shelter 450.00 1.00 3*150+1*70 VV29 nil 1993-05 16.92 34,890.00 26,429.19 115,100.00 30 34,530.00 30.65 Including cable trench 265 5905217 Low voltage cable Northwest district substation (13th 608.00 1.00 3*120+1*70 VV29 nil 1994-03 16.08 45,720.00 34,632.90 150,700.00 30 45,210.00 30.54 Including Institute) to pipe processing cable trench production line 266 5905218 Low voltage cable 13th Institute to pipe processing 1,000.00 1.00 3*120+1*70 VV29 nil 1994-03 16.08 210,090.00 159,143.16 692,700.00 30 207,810.00 30.58 Including production line cable trench PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
267 5905219 Low voltage cable 13th Institute to pipe processing 500.00 1.00 3*185+1*95 VV29 nil 1994-03 16.08 59,340.00 44,950.08 195,100.00 30 58,530.00 30.21 Including production line cable trench 268 5905220 Low voltage cable 1st Institute to yard 1,700.00 1.00 3*120+1*70 VV29 nil 1994-02 16.17 156,510.00 118,556.32 516,000.00 30 154,800.00 30.57 Including cable trench 269 5905221 Low voltage cable 60HZ power station to ship 551.00 1.00 3*185+1*95 VV29 nil 1994-08 15.67 46,830.00 35,473.71 153,800.00 30 46,140.00 30.07 repairing pier and welder room 270 5905222 Low voltage cable 60HZ power station to places of 7,584.00 1.00 3*150+1*70 VV29 nil 1994-08 15.67 741,660.00 561,807.42 2,445,400.00 30 733,620.00 30.58 Including use at ship repairing pier cable trench 271 5905223 Low voltage cable Old 10th Institute to new 10th 100.00 1.00 8*3*120+1*70 VV29 nil 1994-10 15.50 16,860.00 12,771.48 55,500.00 30 16,650.00 30.37 Including Institute cable trench 272 5905224 Low voltage cable New 10th Institute to warehouse 200.00 1.00 2*3*120+1*70 VV29 nil 1994-10 15.50 33,720.00 25,542.87 111,200.00 30 33,360.00 30.60 Including cable trench 273 5905225 Low voltage cable New 10th Institute to 18 m span 200.00 4*3*120+1*70 VV29 nil 1994-10 15.50 33,720.00 25,542.87 111,000.00 30 33,300.00 30.37 Including supporting poles 274 5905226 Low voltage cable New 10th Institute to 27 m span 1,000.00 6*3*120+1*70 VV29 nil 1994-10 15.50 168,600.00 127,714.53 554,800.00 30 166,440.00 30.32 Including supporting poles 275 5905227 Low voltage cable New 10th Institute to plasma and 1,600.00 7*3*120+1*70 VV29 nil 1994-10 15.50 264,360.00 200,252.73 869,900.00 30 260,970.00 30.32 Including three-roller supporting poles 276 5905228 Power cable 5th Institute 2# tire north, to 6th 970.00 1.00 3*150+1*70 VV29 nil 1994-12 15.33 163,530.00 123,873.97 539,200.00 30 161,760.00 30.58 Including Institute to south of 3# tire rack cable trench district 277 5905229 Power cable 6th Institute to northwest side of 680.00 1.00 3*120+1*70 VV22 nil 1994-12 15.33 63,510.00 48,108.84 208,700.00 30 62,610.00 30.14 4# tire rack district
-7– V-67 – 278 5905230 Power cable 2nd Institute to 6# workshop, 510.00 1.00 3*120+1*70 VV29 nil 1994-12 15.33 70,500.00 53,403.78 231,900.00 30 69,570.00 30.27 Including factory office, dining hall 2 cable trench 279 5905232 Power cable 1# substation to new telephone 270.00 1.00 3*150+1*70 VV29 nil 1995-06 14.83 18,210.00 13,794.06 60,000.00 30 18,000.00 30.49 exchange room 280 5905235 Power cable 19# substation via 1# bridge to 4# 720.00 1.00 3*185+1*95 YJV-15KV nil 1996-09 12.00 135,960.00 102,989.67 447,500.00 30 134,250.00 30.35 substation 281 5905242 Outdoorway power 1st Institute low voltage room 365.00 1.00 3*150+1*70 VV29 nil 1997-10 12.00 35,190.00 26,656.42 115,700.00 30 34,710.00 30.21 cable cabinet to outdoor distribution box of block outfitting site 282 5905244 Power cable 10th Institute 8th Institute to south 1,512.00 1.00 3*240+1*150 VV-4 nil 1999-04 12.00 193,740.00 146,758.02 638,800.00 30 191,640.00 30.58 Including of 18 m span north of 24 m span cable trench 283 5905245 Copper busbar south of 18 m span to south of 27 270.00 1.00 3*120+1*100*8 VV29 nil 1999-04 12.00 327,750.00 248,270.64 1,080,400.00 30 324,120.00 30.55 Including m span cable trench 284 5905246 Closed busbar 9th Institute to shipbuilding 24 m 106.00 1.00 CFW-2000A VV29 nil 1999-04 12.00 193,020.00 146,212.62 636,200.00 30 190,860.00 30.54 Including span workshop, central busbar cable trench 285 5905253 Power cable 3# substation to 7#, 11#, pier 730.00 1.00 3*240+1*120 YJV22-1KV nil 1999-09 12.00 123,090.00 93,240.69 405,800.00 30 121,740.00 30.57 Including cable trench 286 5905254 Power cable 3# substation to 7#, 11#, pier 360.00 1.00 3*150+1*70 YJV22-1KV nil 1999-09 12.00 25,500.00 19,316.28 84,100.00 30 25,230.00 30.62 287 5905255 Low voltage power Substation 6 to transformer room 140.00 0.50 3*185+1*95 YJV22-1KV nil 2001-04 12.00 16,520.00 12,513.92 46,500.00 30 13,950.00 11.48 cable under 2# shipbuilding platform 288 5905256 Low voltage power cable
Substation 6 to 2# shipbuilding 360.00 0.50 3*150+1*70 YJV22-1KV nil 2001-04 12.00 29,750.00 22,535.60 84,100.00 30 25,230.00 11.96 platform 2, 3 tire rack district cable 289 5905257 Low voltage power Substation 6 to electric box on 1,540.00 0.50 3*120+1*70 YJV22-1KV nil 2001-04 12.00 145,390.00 110,132.95 410,900.00 30 123,270.00 11.93 cable both sides of 2# shipbuilding platform PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
290 5905258 Closed busbar North of 27 m span workshop to 136.00 CFW-2000A CFW-2000A nil 2001-04 12.00 333,872.00 252,908.02 589,400.00 53 312,382.00 23.52 Including 80,000T control room busbar supporting poles 291 5905259 Power cable 16th Institute to pier N5 box 2,060.00 1.00 3*240+1*120 YJV22-1KV nil 2002-11 12.00 94,915.00 71,898.13 229,000.00 37 84,730.00 17.85 292 5905260 Power cable 16th Institute to pier N5 box 2,060.00 1.00 3*240+1*120 YJV22-1KV nil 2002-11 12.00 94,915.00 71,898.13 229,000.00 37 84,730.00 17.85 293 5905262 Power cable No.3 substation to pier 6,683.00 1.00 3*150+1*70 YJV22-1KV nil 2003-02 12.00 694,100.00 525,780.74 1,540,700.00 37 570,059.00 8.42 Case 294 5905263 Power cable No.3 substation to pier M71 pier 162.00 1.00 3*185+1*95 YJV22-1KV nil 2003-02 12.00 18,436.00 13,965.25 41,400.00 38 15,732.00 12.65 distribution box 295 5905264 Power cable No.3 substation to 40 cu m air 1,360.00 1.00 3*240+1*120 YJV22-1KV nil 2003-02 12.00 201,784.00 152,851.36 453,600.00 38 172,368.00 12.77 Including compressor room power supporting distribution poles 296 5905272 Low voltage power 3rd Institute to main dock 355.00 1.00 3*150+1*70 YJV22-1KV nil 2006-12 12.00 103,912.00 85,398.73 165,800.00 56 92,848.00 8.72 Including cable cable trench 297 5905280 Low voltage power 1st Institute 126 switch to main 2,630.00 1.00 3*185+1*95 YJV22-1KV nil 2008-07 12.00 620,830.00 541,126.36 874,300.00 65 568,295.00 5.02 cable dock 128 switch 298 5905281 Low voltage power 3rd Institute366-1 switch to main 330.00 1.00 3*185+1*95 YJV22-1KV nil 2008-06 12.00 189,560.00 164,860.58 267,500.00 64 171,200.00 3.85 Including cable dock cable trench construction 299 5905282 Low voltage power 1st Institute 136-1 switch to main 850.00 1.00 3*150+1*70 YJV22-1KV nil 2008-06 12.00 160,510.00 139,595.80 226,800.00 64 145,152.00 3.98 Including cable dock, pump room cable trench 300 5905293 Tinned copper bar 1st Institute transformer to 258.00 1.00 100*10 nil 2008-06 12.00 116,000.00 100,885.40 143,100.00 76 108,756.00 7.80 incoming line cabinet to incoming line cabinet to capacitor cabinet 301 5905294 Tinned copper bar transformer to incoming line 42.00 1.00 80*6 80*6 nil 2008-06 12.00 117,040.00 101,789.86 144,700.00 76 109,972.00 8.04 Including cabinet to incoming line cabinet to cable trench capacitor cabinet
-8– V-68 – 302 5905297 Low voltage power New 16th Institute to no. 8 pier 1,100.00 1.00 3*120+1*70 YJV22-1KV nil 2008-07 12.00 251,020.00 218,793.43 354,700.00 65 230,555.00 5.38 Including cable shore power box cable trench 303 5905298 Low voltage power New 16th Institute to pre-outfitting 1,900.00 1.00 3*185+1*95 YJV22-1KV nil 2008-07 12.00 642,810.00 560,284.50 906,300.00 65 589,095.00 5.14 Including cable field 2, south side N1, 3, 5 cable trench 304 5905299 Low voltage power New 16th Institute to no. 5pier 1,000.00 1.00 3*150+1*70 YJV22-1KV nil 2008-07 12.00 188,860.00 164,613.73 266,800.00 65 173,420.00 5.35 Including cable shore power box cable trench 305 5905300 Low voltage power Calibration building electric room 240.00 3*95+1*50 YJV22-1KV nil 2008-07 12.00 24,570.00 21,415.68 34,700.00 65 22,555.00 5.32 cable to distribution to consumer unit 306 5905301 Low voltage power Calibration building electric room 120.00 1.00 3*35+1*16 YJV22-1KV nil 2008-07 12.00 24,570.00 21,415.68 34,600.00 65 22,490.00 5.02 cable to distribution to distribution box 307 5905302 Low voltage power company complex 1st floor cable consumer unitAP1 to takeaway
60.00 1.00 3*25+2*16 YJV22-1KV nil 2008-10 12.00 36,423.00 31,944.51 50,600.00 66 33,396.00 4.54 Including cable trench preparation hall construction 308 5905303 Low voltage power company complex 1st floor 200.00 1.00 3*35+2*16 YJV22-1KV nil 2008-10 12.00 36,707.00 32,193.59 51,100.00 66 33,726.00 4.76 Including cable consumer unitAP1 to freezer area cable trench 309 5905304 Low voltage power company complex 1st floor 165.00 1.00 3*50+2*25 YJV22-1KV nil 2008-10 12.00 36,849.00 32,318.13 51,200.00 66 33,792.00 4.56 cable consumer unitAP1 to elevator 310 5905305 Low voltage power company complex 1st floor 90.00 1.00 3*70+2*35 YJV22-1KV nil 2008-10 12.00 37,346.00 32,754.02 51,900.00 66 34,254.00 4.58 Including cable consumer unitAP1 to snack room cable trench and fire pump construction 311 5905306 Low voltage power company complex 1st floor 50.00 1.00 3*95+2*50 YJV22-1KV nil 2008-10 12.00 37,133.00 32,567.21 51,700.00 66 34,122.00 4.77 Including cable consumer unitAP1 to central AC cable trench construction 312 5905307 Low voltage power company complex 1st floor 530.00 1.00 3*120+2*70 YJV22-1KV nil 2008-10 12.00 50,765.00 44,523.05 70,700.00 66 46,662.00 4.80 cable consumer unitAP1 to processing room 313 5905308 Low voltage power New 16th Institute to control 160.00 1.00 3*120+2*70 YJV22-1KV nil 2009-02 12.00 33,300.00 29,423.88 44,500.00 67 29,815.00 1.33 Including cable cabinet of water pump room cable trench PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
314 5905309 Low voltage cable 13th Institute to cable warehouse 40.00 1.00 3*150+2*70 YJV22-1KV nil 2009-07 12.00 5,025.00 4,476.63 6,700.00 70 4,690.00 4.77 315 5905310 Low voltage cable 13th Institute to cable warehouse 40.00 1.00 3*150+2*70 YJV22-1KV nil 2009-07 12.00 8,775.00 7,817.40 11,600.00 70 8,120.00 3.87 Including cable trench 316 5905311 Low voltage power New16th Institute to coating 800.00 1.00 3*185+1*95 YJV22-1KV nil 2009-02 12.00 199,652.00 176,412.47 266,000.00 67 178,220.00 1.02 cable workshop 1#, 2# distribution room cabinet 317 5905312 Low voltage power No. 4 air compressor station 140.00 1.00 3*35+2*16 YJV22-1KV nil 2009-02 12.00 9,324.00 8,238.69 12,500.00 67 8,375.00 1.65 cable consumer unit to No. 1, 2, 3, 4 air compressor 318 5905313 Low voltage power New 16th Institute, consumer unit 240.00 1.00 3*120+1*70 YJV22-1KV nil 2009-02 12.00 47,878.00 42,305.02 64,000.00 67 42,880.00 1.36 cable controlling air compressor station to consumer unit of no. 4 air compressor station 319 5905314 Low voltage power New 16th Institute to consumer 285.00 1.00 3*185+1*95 YJV22-1KV nil 2009-07 12.00 72,075.00 64,209.81 94,700.00 70 66,290.00 3.24 cable unit of electromechnical distribution warehouse 320 5905315 Low voltage power New 2nd Institute to office 150.00 1.00 3*185+1*95 YJV22-1KV nil 2009-06 12.00 126,450.00 112,476.51 166,600.00 69 114,954.00 2.20 Including cable building cable trench construction 321 5905316 Low voltage power 13th Institute to office building 317.00 1.00 3*185+1*95 YJV22-1KV nil 2009-06 12.00 128,250.00 114,077.55 168,800.00 69 116,472.00 2.10 Including cable cable trench 322 5905317 Low voltage power 12th Institute to calibration 1,108.00 1.00 3*185+1*95 YJV22-1KV nil 2009-06 12.00 280,200.00 249,236.13 368,300.00 69 254,127.00 1.96 cable building 323 5905318 Low voltage power New 2nd Institute to pipe pressure 210.00 1.00 3*120+1*70 YJV22-1KV nil 2009-06 12.00 42,525.00 37,825.74 56,000.00 69 38,640.00 2.15 cable testing workshop 324 5905319 Low voltage power New 2nd Institute to computing 210.00 1.00 3*120+1*70 YJV22-1KV nil 2009-06 12.00 42,525.00 37,825.74 56,000.00 69 38,640.00 2.15
-9– V-69 – cable building 325 5905320 Low voltage power New 2nd Institute to quality 210.00 1.00 3*120+1*70 YJV22-1KV nil 2009-06 12.00 42,525.00 37,825.74 56,000.00 69 38,640.00 2.15 cable inspection building, lab on 1st floor 326 5905321 Low voltage power Side of main dock, pre-outfitting 140.00 1.00 3*120+1*70 YJV22-1KV nil 2009-06 12.00 42,525.00 37,825.74 56,000.00 69 38,640.00 2.15 Including cable field 1# box to side of main dock, cable trench pre-outfitting field 2# box 327 5905322 Low voltage power New 2nd Institute to complex 236.00 1.00 3*120+1*70 YJV22-1KV nil 2009-06 12.00 47,775.00 42,495.60 63,000.00 69 43,470.00 2.29 cable dining hall, central AC 328 5905323 Low voltage power New 2nd Institute to complex 92.00 1.00 3*120+1*70 YJV22-1KV nil 2009-06 12.00 41,850.00 37,225.35 55,200.00 69 38,088.00 2.32 Including cable dining hall cable trench 329 5905324 Low voltage power New 2nd Institute to GSI factory 247.00 1.00 3*120+1*70 YJV22-1KV nil 2009-06 12.00 49,950.00 44,430.21 65,900.00 69 45,471.00 2.34 cable office building 330 5905325 Low voltage power
New 2nd Institute to pre-outfitting 232.00 1.00 3*120+1*70 YJV22-1KV nil 2009-06 12.00 46,950.00 41,761.75 61,900.00 69 42,711.00 2.27 cable field no. 1 electric cabinet (side of main dock) 331 5905326 Plug-in busbar New 2nd Institute transformer to 38.00 1.00 1000*250 CMX6-3200A nil 2009-06 12.00 293,850.00 261,377.73 386,800.00 69 266,892.00 2.11 two transformer cabinets CMX6-3200A 332 5905327 Low voltage power New 2nd Institute to office 380.00 1.00 3*120+1*70 YJV22-1KV nil 2009-07 12.00 86,475.00 77,038.41 114,100.00 70 79,870.00 3.68 Including cable complex (measurement center) cable trench 333 5905328 Low voltage power New 2nd Institute to old district 358.00 1.00 3*185+1*95 YJV22-1KV nil 2009-07 12.00 126,750.00 112,918.44 166,800.00 70 116,760.00 3.40 Including cable no.3 pre-outfitting field AP13 cable trench distribution box 334 5905329 Low voltage power New 2nd Institute to old district 468.00 1.00 3*185+1*95 YJV22-1KV nil 2009-07 12.00 118,350.00 105,435.09 155,600.00 70 108,920.00 3.31 cable no.3 pre-outfitting field AP15 distribution box PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
335 5905330 Low voltage power New 2nd Institute to old district 578.00 1.00 3*185+1*95 YJV22-1KV nil 2009-07 12.00 146,175.00 130,223.67 192,200.00 70 134,540.00 3.31 cable no.3 pre-outfitting field AP17 distribution box 336 5905331 Low voltage power New 2nd Institute to old district 488.00 1.00 3*150+1*70 YJV22-1KV nil 2009-07 12.00 119,325.00 106,303.62 157,400.00 70 110,180.00 3.65 Including cable no.3 pre-outfitting field AP11 cable trench distribution box 337 5905332 Low voltage power Old district no.3 pre-outfitting 340.00 1.00 3*120+1*70 YJV22-1KV Nil 2009-07 12.00 74,550.00 66,414.72 98,300.00 70 68,810.00 3.61 Including cable field AP11 distribution box to cable trench AP12, AP21, AP14, AP16, AP23, AP18 338 5905333 Low voltage power Old district no.3 pre-outfitting 80.00 1.00 3*25+1*16 YJV22-1KV Nil 2009-07 12.00 4,050.00 3,608.01 5,300.00 70 3,710.00 2.83 cable field AP12 distribution box to old district no.3 pre-outfitting field, CO2 station 339 5905334 Low voltage power Substation 6 (No. 3 shipbuilding 390.00 1.00 3*150+1*70 YJV22-1KV Nil 2009-08 12.00 79,952.00 71,334.95 104,100.00 70 72,870.00 2.15 Including cable platform front) to no. 3, 4 rail, D cable trench distribution box 340 5905335 Low voltage power Substation 6(no.3 shipbuilding 450.00 1.00 3*150+1*70 YJV22-1KV Nil 2009-08 12.00 92,264.00 82,319.99 120,100.00 70 84,070.00 2.13 Including cable platform front) to no. 3, 4 rail, E cable trench distribution box 341 5905336 Low voltage power Substation 6 (no.3 shipbuilding 470.00 1.00 3*150+1*70 YJV22-1KV Nil 2009-08 12.00 96,368.00 85,981.64 125,400.00 70 87,780.00 2.09 Including cable platform front) to no. 3, 4 rail, K cable trench distribution box 342 5905337 Low voltage power New 16th Institute to power supply 240.00 1.00 3*185+1*95 YJV22-1KV Nil 2009-11 12.00 81,004.00 72,585.40 103,800.00 71 73,698.00 1.53 Including cable of electromechnical distribution cable trench warehouse of material department
-0– V-70 – 343 5905338 Low voltage power Substation 1 to connection between 120.00 1.00 3*150+1*70 YJV22-1KV Nil 2009-11 12.00 24,948.00 22,355.19 32,000.00 71 22,720.00 1.63 Including cable electrical boxes cable trench 344 5905339 Low voltage power Substation 2 to Substation 1 180.00 1.00 3*185+1*95 YJV22-1KV Nil 2009-11 12.00 60,753.00 54,439.05 77,900.00 71 55,309.00 1.60 Including cable cable trench 345 5905340 Busbar trough New 2nd Institute transformer to 10.00 1.00 1000*250 CCX6-3200A/4 Nil 2009-11 12.00 55,590.00 49,812.63 64,600.00 81 52,326.00 5.05 incoming line cabinet CCX6-3200A/4 346 5905341 Low voltage power New 2nd Institute transformer to 215.00 1.00 CCX6-3200A/4 CCX6-3200A/4 Nil 2009-11 12.00 44,660.00 40,018.52 57,400.00 71 40,754.00 1.84 cable incoming line cabinet 347 5905342 Low voltage power 1st Institute to Wanda home 850.00 1.00 3*150+1*70 YJV22-1KV Nil 2009-11 12.00 176,561.00 158,211.26 226,800.00 71 161,028.00 1.78 Including cable decoration section cable trench 348 5905343 Low voltage power 1st Institute to consumer unit north 480.00 1.00 3*120+1*70 YJV22-1KV Nil 2009-12 12.00 101,010.00 90,635.70 128,100.00 71 90,951.00 0.35 cable of warehouse 107 349 5905344 Low voltage power cable
2nd Institute to main dock 700.00 1.00 3*150+1*70 YJV22-1KV Nil 2009-12 12.00 159,588.00 143,197.38 202,400.00 71 143,704.00 0.35 Including installation and welding platform cable trench 214-1 350 5905345 Low voltage power Main dock installation and welding 200.00 1.00 3*120+1*70 YJV22-1KV Nil 2009-12 12.00 42,120.00 37,794.06 53,400.00 71 37,914.00 0.32 cable platform 214-1 to main dock installation and welding platform 214-2 351 5905346 Low voltage power Main dock installation and welding 120.00 1.00 3*50 YJV22-1KV Nil 2009-12 12.00 11,544.00 10,358.34 14,700.00 71 10,437.00 0.76 Including cable platform transformer box to each cable trench 36V box of the platform 352 5905347 Low voltage power New 16th Institute to spraying 530.00 1.00 3*185+1*95 YJV22-1KV Nil 2010-03 12.00 174,116.00 156,842.93 217,400.00 73 158,702.00 1.19 Including cable workshop no.2, coating gate, cable trench consumer unit AP1, AP2 353 5905348 Busbar trough New 16th Institute to air 50.00 1.00 1000*250 LCMX2-1600A/5 Nil 2010-03 12.00 320,006.00 288,259.94 367,300.00 82 301,186.00 4.48 compressor station LCMX2-1600A/5 PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
354 5905349 Low voltage power 2nd Institute to main dock AP no. 1,000.00 1.00 3*185+1*95 YJV22-1KV Nil 2010-04 12.00 310,786.00 280,301.02 388,000.00 74 287,120.00 2.43 Including cable 3, 4, 5, 6 electrical box cable trench 355 5905350 Low voltage power main dock AP3-1 cable 到AP3-2; AP4-1到 680.00 1.00 3*150+1*70 YJV22-1KV Nil 2010-04 12.00 150,969.00 136,160.49 189,000.00 74 139,860.00 2.72 Including AP4-2 to main dock AP5-1到 cable trench AP5-2; AP6-1到AP-2 356 5905351 Low voltage power main dock original 36V 220.00 1.00 3*50 YJV22-1KV Nil 2010-04 12.00 15,642.00 14,107.68 19,600.00 74 14,504.00 2.81 cable box-AP-D1; AP-D1-D2 to main dock original 36V box-AP-D3; AP-D3-D4 357 5905354 Low voltage power 1st Institute to main dock no.80 390.00 1.00 3*120+1*70 YJV22-1KV Nil 2010-07 12.00 84,160.00 76,173.94 104,100.00 75 78,075.00 2.50 cable crane, power supply cabinet to 2nd Institute to main dock no. 25 cranepower supply cabinet 358 5905355 Busbar trough 5th Institute transformer to 15.00 1.00 1000*250 CCX6-3200A/4 Nil 2010-07 12.00 162,960.00 147,496.49 201,100.00 75 150,825.00 2.26 incoming line cabinet CCX6-3200A/4 359 5905362 Low voltage power 3rd Institute to old district pier 1,500.00 3*120+1*70 YJV22-1KV Nil 2011-02 12.00 424,872.00 387,405.99 500,300.00 77 385,231.00 -0.56 Including cable distribution box supporting poles 360 5905363 Low voltage power 3rd Institute to old district pier 1,500.00 1.00 3*120+1*70 YJV22-1KV Nil 2011-02 12.00 339,948.00 309,970.80 400,300.00 77 308,231.00 -0.56 cable distribution box 361 5905364 Low voltage power 3rd Institute to old district pier 1,500.00 3*120+1*70 YJV22-1KV Nil 2011-02 12.00 339,948.00 309,970.80 400,300.00 77 308,231.00 -0.56 Overhead cable distribution box 362 5905368 Low voltage cable Electromechanical warehouse to 200.00 1.00 3*120+1*70 YJV22-1KV Nil 2011-04 12.00 57,372.00 52,413.00 67,600.00 79 53,404.00 1.89 Including new large machine workshop cable trench opposite to main dock -1– V-71 – 363 5906002 Cable with aluminum Factory office building to factory 220.00 1.00 2*100P/0.5 HQ Nil 1982-01 29.25 24,480.00 23,700.06 80,700.00 30 24,210.00 2.15 Including sheath gate first lead pole cable trench 364 5906003 Cable with aluminum Factory office building to staff 180.00 1.00 2*200P/0.5 HQ Nil 1982-01 28.25 7,170.00 6,931.05 23,600.00 30 7,080.00 2.15 sheath hospital 365 5906004 Cable with aluminum Factory gate first upper pole to 1,000.00 2*100P/0.5 HQ Nil 1982-01 29.25 50,580.00 48,968.46 166,800.00 30 50,040.00 2.19 Overhead sheath central 8 gate pole 366 5906005 Cable with aluminum Factory gate first upper pole to 1,000.00 2*50P/0.5 HQ Nil 1982-01 28.25 5,400.00 5,220.09 17,800.00 30 5,340.00 2.30 Overhead sheath central 8 gate pole 367 5906013 Cable with aluminum electrical installation section to 200.00 1.00 2*100P/0.5 HQ Nil 1982-01 28.25 20,910.00 20,213.29 68,900.00 30 20,670.00 2.26 Including sheath transformer of 19th Institute cable trench 368 5906014 Plastic cable Transformer of 19th Institute to 800.00 2*30P/0.5 HPYV Nil 1982-01 29.25 53,400.00 51,698.64 176,100.00 30 52,830.00 2.19 Overhead transformer of 15th Institute 369 5906025 Formed cable Telephone exchange room to cable 245.00 2*100P/0.5 HPVQ Nil 1987-01 7.83 19,260.00 14,589.45 63,500.00 30 19,050.00 30.57 Overhead room 370 5906042 Telephone cable Telephone exchange room to 2,007.00 1.00 HYA HYA Nil 1995-06 14.83 108,270.00 82,014.52 357,000.00 30 107,100.00 30.59 calibration building 371 5906043 Telephone cable Telephone exchange room to 2,947.00 1.00 100-0.5 HYA Nil 1995-06 14.83 268,320.00 203,252.43 881,400.00 30 264,420.00 30.09 material department complex 372 5906044 Telephone cable Telephone exchange room to pipe 1,355.00 1.00 300-0.5 HYA Nil 1995-06 14.83 246,720.00 186,890.43 812,000.00 30 243,600.00 30.34 processing department 373 5906045 Telephone cable Telephone exchange room to office 450.00 1.00 300-0.5 HYA Nil 1995-06 14.83 88,020.00 66,675.15 289,700.00 30 86,910.00 30.35 Including building cable trench 374 5906046 Telephone cable Distribution boxes to security and 360.00 1.00 30-0.5 HYA Nil 1995-06 14.83 13,350.00 10,112.61 44,000.00 30 13,200.00 30.53 environmental section, technology building etc. 375 5906047 Telephone cable Distribution boxes to ship 320.00 1.00 20-0.5 HYA Nil 1995-06 14.83 7,560.00 5,726.70 24,900.00 30 7,470.00 30.44 transport, expert building etc. 376 5906050 Telephone cable Distribution boxes to computing 330.00 1.00 200-0.5 HYA Nil 2000-11 12.00 50,468.00 38,229.53 160,700.00 30 48,210.00 26.11 building PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
377 5906051 Telephone cable Distribution boxes to HR building 390.00 1.00 50-0.5 HYYC Nil 2000-11 12.00 8,556.00 6,481.14 27,300.00 30 8,190.00 26.37 378 5906052 Optical cable 1st floor military machinery room 1,370.00 9/125(48 to 5th floor design department 芯) Single-mode fiber Nil 2012-12 12.00 458,304.00 425,237.91 485,900.00 86 417,874.00 -1.73 Overhead 379 B018037 Pipeline trench in Land of 2 Fangcun Main Road 100.00 1.00 800*250 300*3 Cast iron pipe 1972-01 25.00 86,070.00 83,307.54 283,200.00 30 84,960.00 1.98 Including front of original no.2 (i.e.40 South Fangcun Main Road) trench workshop construction 380 B018082 Power piping of plant Land of 2 Fangcun Main Road 210.00 1.60 500*250 150*4 Seamless steel 1997-01 25.00 577,772.00 520,454.42 1,391,100.00 37 514,707.00 -1.10 Including (i.e.40 South Fangcun Main Road) pipes trench construction 381 B018134 Company’s Land of 2 Fangcun Main Road 1,495,648.00 1,416,032.11 -5.50 environmental (i.e.40 South Fangcun Main Road) pollution treatment system 381-1 Company entrance to intersection 99.00 1.40 de700 HDPE double wall 2007-09 25.00 327,900.00 73 239,367.00 Uneven of Chuang Ye Road corrugated pipe carrying value 381-2 Chuang Ye Road intersection to 54.00 1.40 de600 HDPE double wall 2007-09 25.00 133,900.00 73 97,747.00 Chuang Ye North Road corrugated pipe 381-3 Chuang Ye North Road to 90.00 1.40 de500 HDPE double wall 2007-09 25.00 171,000.00 73 124,830.00 intersection of Youth Road corrugated pipe 381-4 Intersection of Youth Road to pipe 100.00 1.40 de500 HDPE double wall 2007-09 25.00 190,000.00 73 138,700.00 stainless steel workshop corrugated pipe 381-5 Pipe stainless steel workshop to 102.00 1.40 de400 HDPE double wall 2007-09 25.00 153,300.00 73 111,909.00 elevator workshop corrugated pipe 381-6 Intersection of Chuang Ye North 115.00 1.40 de300 HDPE double wall 2007-09 25.00 127,200.00 73 92,856.00 Road to cleaning house corrugated pipe
381-7 – V-72 – Connection of Chuang Ye North to 176.00 1.40 de500 HDPE double wall 2007-09 25.00 334,400.00 73 244,112.00 entrance of elevator company corrugated pipe 381-8 Entrance of elevator company to 160.00 1.40 de400 HDPE double wall 2007-09 25.00 240,500.00 73 175,565.00 oil depot corrugated pipe 381-9 Material department, 140.00 1.40 de300 HDPE double wall 2007-09 25.00 154,900.00 73 113,077.00 electromechanical equipment corrugated pipe warehouse to north main gate 382 B018154 Company’s Land of 2 Fangcun Main Road 3,604,304.00 3,441,269.90 -3.51 Uneven environmental (i.e.40 South Fangcun Main Road) carrying value pollution treatment Phase II 382-1 Intersection of Ying Bin Road to 147.20 1.40 de260 HDPE double wall 2010-12 25.00 163,700.00 84 137,508.00 warehouse 107 corrugated pipe 382-2 Intersection of Ying Bin Road to 41.30 1.40 de300 HDPE double wall 2010-12 25.00 45,700.00 84 38,388.00 warehouse 107 corrugated pipe 382-3 Intersection of Ying Bin Road to 150.00 1.40 de600 HDPE double wall 2010-12 25.00 371,900.00 84 312,396.00 warehouse 107 corrugated pipe 382-4 Warehouse 107 to 1# substation 104.00 1.40 de260 HDPE double wall 2010-12 25.00 115,600.00 84 97,104.00 corrugated pipe 382-5 Warehouse 107 to 1# substation 187.00 1.40 de300 HDPE double wall 2010-12 25.00 206,900.00 84 173,796.00 corrugated pipe 382-6 Warehouse 107 to 1# substation 108.90 1.40 de600 HDPE double wall 2010-12 25.00 270,000.00 84 226,800.00 corrugated pipe 382-7 Steel plate yard to company 118.90 1.40 de300 HDPE double wall 2010-12 25.00 131,500.00 84 110,460.00 enclosing wall to pressure vessel corrugated pipe workshop 382-8 Steel plate yard to company enclosing wall to pressure vessel
324.10 1.40 de600 HDPE double wall 2010-12 25.00 803,600.00 84 675,024.00 corrugated pipe workshop PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
382-9 Processing department (front of 194.10 1.40 de600 HDPE double wall 2010-12 25.00 481,300.00 84 404,292.00 internal operation section corrugated pipe workshop) block, 1# shipbuilding platform block 382-10 Processing department (front of 278.10 1.40 de300 HDPE double wall 2010-12 25.00 307,700.00 84 258,468.00 internal operation section corrugated pipe workshop) block, 1# shipbuilding platform block 382-11 Processing department (front of 147.90 1.40 de400 HDPE double wall 2010-12 25.00 222,300.00 84 186,732.00 internal operation section corrugated pipe workshop) block, 1# shipbuilding platform block 382-12 Pressure vessel workshop to new 381.00 1.40 de300 HDPE double wall 2010-12 25.00 421,500.00 84 354,060.00 district bridge corrugated pipe 382-13 Pressure vessel workshop to new 44.30 1.40 de400 HDPE double wall 2010-12 25.00 66,600.00 84 55,944.00 district bridge corrugated pipe 382-14 Pressure vessel workshop to new 149.90 1.40 de500 HDPE double wall 2010-12 25.00 284,800.00 84 239,232.00 district bridge corrugated pipe 382-15 Company second road water 20.00 1.40 de300 HDPE double wall 2010-12 25.00 22,100.00 84 18,564.00 project 1 corrugated pipe 382-16 Company second road water 25.00 1.40 de400 HDPE double wall 2010-12 25.00 37,600.00 84 31,584.00 project 2 corrugated pipe 383 B018158 Environmental Land of 2 Fangcun Main Road 2,801,422.00 2,688,197.86 -7.31 Uneven pollution treatment (i.e.40 South Fangcun Main Road) carrying value Phase III 383-1 New district 1# team warehouse to 165.00 1.40 de300 HDPE double wall 2012-11 25.00 182,500.00 91 166,075.00
-3– V-73 – front of 2# team warehouse corrugated pipe 383-2 2# front of team warehouse to 2# 157.00 1.40 de500 HDPE double wall 2012-11 25.00 298,300.00 91 271,453.00 back of team room corrugated pipe 383-3 2# back of team room to 144.00 1.40 de200 HDPE double wall 2012-11 25.00 124,200.00 91 113,022.00 surrounding of ship body auxiliary corrugated pipe building 383-4 Surrounding of ship body auxiliary 133.00 1.40 de500 HDPE double wall 2012-11 25.00 252,700.00 91 229,957.00 building to enclosing wall of corrugated pipe 43,000 m2 leased area 383-5 Enclosing wall of 43,000 m2 535.00 1.40 de500 HDPE double wall 2012-11 25.00 1,016,600.00 91 925,106.00 leased area to 43,000 m2 side of corrugated pipe testing well at south gate 383-6 Original new district dining hall to 300.00 1.40 de300 HDPE double wall 2012-11 25.00 331,900.00 91 302,029.00 toilet of United Steel workshop corrugated pipe 383-7 Construction cost of connection to 71.49 1.40 de500 HDPE double wall municipal pipping of Phase III drainage
2012-11 25.00 135,800.00 91 123,578.00 corrugated pipe
383-8 Construction connecting hospital 106.40 1.40 de400 HDPE double wall 2012-11 25.00 159,900.00 91 145,509.00 sewage to sewage piping of the corrugated pipe factory area 1 383-9 Construction connecting hospital 92.90 1.40 de300 HDPE double wall 2012-11 25.00 102,800.00 91 93,548.00 sewage to sewage piping of the corrugated pipe factory area 2 383-10 Construction connecting hospital 15.00 1.40 de225 HDPE double wall 2012-11 25.00 16,400.00 91 14,924.00 sewage to sewage piping of the corrugated pipe factory area 3 PEDXVVLAINRPR FG HPIGINTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Trench W*D (mm*mm) depth of Pipe Estimated Carrying value Appraised value Length trench dia*thickness Time of useful life Newness rate Appreciation No. Asset no. Name Site of beginning and end (m) (m) (mm*mm) Material Insulation completion (year) At cost Net value At cost % Net value rate % Remark
383-11 Environment pollution treatment 126.60 1.40 de200 HDPE double wall 2012-11 25.00 109,200.00 91 99,372.00 and septic tank connection with corrugated pipe sewage pipe 1 383-12 Environment pollution treatment 7.10 1.40 de300 HDPE double wall 2012-11 25.00 7,900.00 91 7,189.00 and septic tank connection with corrugated pipe sewage pipe 2 Total pipelines and trenches 32,617,099.00 28,152,759.60 64,245,500.00 30,219,704.00 Less: Impairment provision for pipelines and trenches – Net pipelines and trenches 32,617,099.00 28,152,759.60 64,245,500.00 30,219,704.00 -4– V-74 –
Preparer of appraised object: Ma Chao Valuer: Li Yerong Prepared on: 15 September 2015 APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
Summary of intangible assets appraisal Reference Day: 31 August 2015
Appraisal Object: Guangzhou Shipyard Shipping Co., Ltd.
Unit: RMB
Increase/ Carrying Appraised decrease in Appreciation No. Subject value Value value rate %
4-12-1 Intangible assets – land use rights 738,563,314.40 852,561,800.00 113,998,485.60 15.44 4-12-2 Intangible assets – mining rights 0.00 0.00 0.00 4-12-3 Intangible assets – other intangible assets 0.00 0.00 0.00 Total intangible assets 738,563,314.40 852,561,800.00 113,998,485.60 15.44 Of which: land use rights 738,563,314.40 852,561,800.00 Less: Impairment provision on Intangible assets 0.00 Net intangible assets 738,563,314.40 852,561,800.00 113,998,485.60 15.44
Preparer of appraised object: Ma Chao Valuer: Li Yerong Prepared on: 15 September 2015
– V-75 – Intangible assets – Detail List of Land Use Rights Appraisal INTEREST SHIPPING GS OF REPORT VALUATION V APPENDIX Reference Day: 31 August 2015
Appraisal Object: Guangzhou Shipyard Shipping Co., Ltd.
No. of grant Date of Nature of Other Extent of Original Appraisal Appreciation No. contract Name of land Location of land Vacant acquisition land use rights Land use Term development Area recorded value Carrying value value rate Remark 2 (m )%
1 (93) Sui Guo Di 1 Fangcun 40 South Fangcun No 1994-01 Grant Nil Industrial and 50 Site formation 393,793.00 760,414,300.00 738,563,314.40 852,561,800.00 15.44 Chu Zi No.128 Main Road Main Road, Liwan auxiliary with red line District, Guangzhou facilities
Total 393,793.00 760,414,300.00 738,563,314.40 852,561,800.00 15.00 -6– V-76 –
Preparer of appraised object: Ma Chao Valuer: Beijing Huayuan International Real Estate and Asset Appraisal Co., Ltd. Prepared on: 15 September 2015 APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
Summary of Current Liabilities Valuation Reference Day: 31 August 2015
Appraisal Object: Guangzhou Shipyard Shipping Co., Ltd.
Unit: RMB’000
Carrying Appraised Increase in Appreciation No. Item Value Value value rate %
5-1 Short-term loans 0.00 0.00 0.00 5-2 Trading financial liabilities 0.00 0.00 0.00 5-3 Notes payable 0.00 0.00 0.00 5-4 Accounts payable 0.00 0.00 0.00 5-5 Receipts in advance 0.00 0.00 0.00 5-6 Staff salary payable 0.00 0.00 0.00 5-7 Taxes payable 6,255,180.68 6,255,180.68 0.00 0.00 5-8 Interest payable 0.00 0.00 0.00 5-9 Dividend payable (profit payable) 0.00 0.00 0.00 5-10 Other payables 0.00 0.00 0.00 5-11 Non-current liabilities due within one year 0.00 0.00 0.00 5-12 Other current liabilities 0.00 0.00 0.00
Total current liabilities 6,255,180.68 6,255,180.68 0.00 0.00
Completed by: Ma Chao Appraised by: Zhang Ning Completed on: 15 September 2015
– V-77 – APPENDIX V VALUATION REPORT OF GS SHIPPING INTEREST
Detail List of Tax Payable Valuation Reference Day: 31 August 2015
Appraisal Object: Guangzhou Shipyard Shipping Co., Ltd.
Unit: RMB’000
Carrying Appraised No. Tax authority Date Type of tax Value Value Remarks
1 Liwan District Office. 2015-08 Properties tax 4,157,157.75 4,157,157.75 Administration of Local Taxation of Guangzhou 2 Liwan District Office. 2015-08 Land use tax 2,098,022.93 2,098,022.93 Administration of Local Taxation of Guangzhou
Total 6,255,180.68 6,255,180.68
Completed by: Ma Chao Appraised by: Zhang Ning Completed on: 15 September 2015
– V-78 – APPENDIX VI DETAILS OF PROPOSED DIRECTORS
As required by the Listing Rules, the following are the particulars of the proposed Directors to be elected at the EGM:
INDEPENDENT NON-EXECUTIVE DIRECTORS
WANG YICHU（王翼初）
Mr. Wang Yichu, male, aged 55, is a senior certified accountant in China, a certified tax agent in China and a senior accountant. Mr. Wang graduated from Jinan University with a bachelor degree in accounting in July 1984. Mr. Wang has also obtained a master degree in political economy in July 2000 from Guangdong Academy of Social Science. Mr. Wang has more than 20 years’ experience in accounting, auditing, initial public offer, asset restructuring, corporate restructuring, mergers and acquisitions, tax consultation, investment decision making, assets and capital verification upon dissolution, and financial accounting consultation. Mr. Wang worked as an accountant in Guangzhou South China Sewing Machine Second Factory（廣州華南縫紉機二廠）from August 1980 to May 1985 and also as an accountant in Guangzhou Jintong Industrial Company Limited（廣州金通實業有限公司）for the period from May to December 1985. For the period from December 1985 to December 2012, Mr. Wang was the auditor, department manager, deputy chief accountant of Lixin Yangcheng Certified Public Accountants Company Limited（立信羊城會計師事務所有限公司）. Mr. Wang is currently the partner of the Guangdong branch office of BDO China Shu Lun Pan Certified Public Accountants LLPsince December 2012.
Save as disclosed above, Mr. Wang does not hold any other position with the Company or other members of the Group and did not hold any position in other listed companies in the last three years. Save as disclosed, Mr. Wang does not have any relationships with any Directors, supervisors, senior management, substantial shareholders or controlling shareholders of the Company. Mr. Wang does not have any interest in Shares within the meaning of Part XV of the SFO.
Subject to the approval by the Shareholders at the EGM, the Company will enter into a letter of appointment with Mr. Wang. The initial length of service of Mr. Wang with the Company will be from the date of his election to the date of the annual general meeting of the Company for the year of 2016.
In line with other independent non-executive Directors, the remuneration of Mr. Wang will be RMB200,000 per annum.
Save as disclosed above, there was no other matters that need to be brought to the attention of Shareholders in respect of the appointment of Mr. Wang and there is no other information relating to Mr. Wang which is required to be disclosed pursuant to any of the requirement of Rule 13.51(2) of the Listing Rules.
MIN WEIGUO（閔衛國）
Mr. Min Weiguo, male, aged 50, is a senior lawyer. Mr. Min graduated from Wuhan University with a bachelor degree in law in June 1987. In May 2005, Mr. Min also graduated from Massey University in the New Zealand with a MBA degree. Mr. Min also
– VI-1 – APPENDIX VI DETAILS OF PROPOSED DIRECTORS obtained a doctorate degree in civil and commercial law from Wuhan University in June 2013. Mr. Min also obtained a master degree in international law from the University of Lincoln in the United Kingdom in December 2014. Mr. Min worked in Zhuhai Xiangzhou Justice Bureau（珠海香洲區司法局）from July 1987 to January 1990. Mr. Min worked as the supervisor of Zhuhai Xiangzhou Trade and Economic Law Office（珠海香洲區局經貿律師事務 所） from January 1990 to March 1994. Mr. Min was the partner and the supervisor of Guangdong D&S Law Firm. Mr. Min worked as the supervisor in the Toronto branch of D&S Law Firm （德賽律師事務所多倫多分所）. Mr. Min worked as the senior partner in Guangdong Nanguo D&S Law Firm （廣東南國德賽律師事務所） from January 2001 to September 2014. Mr. Min has been the principal partner of Guangdong Nanguo D&S Law Firm（廣東南國德賽律師事務所）since September 2014. Mr. Min has obtained Qualification for Lawyers Practising in Corporate Joint-Stock Reform Law（律師從事企業股份制改組法律業 務資格）, Qualification for Lawyers Practising in Securities Law（律師從事證券業務資格）, and is an Arbitrator under Guangzhou Arbitration Commission （廣州仲裁委員會仲裁員） and a member of the Chartered Institute of Arbitrators. He was also a Guangzhou deputy of the 14th National People’s Congress and a member of the Guangzhou Budget Committee of the National People’s Congress（廣州市人大預算委員會）.
Save as disclosed above, Mr. Min does not hold any other position with the Company or other members of the Group and did not hold any position in other listed companies in the last three years. Save as disclosed, Mr. Min does not have any relationships with any Directors, supervisors, senior management, substantial shareholders or controlling shareholders of the Company. Mr. Min does not have any interest in Shares within the meaning of Part XV of the SFO.
Subject to the approval by the Shareholders at the EGM, the Company will enter into a letter of appointment with Mr. Min. The initial length of service of Mr. Min with the Company will be from the date of his election to the date of the annual general meeting of the Company for the year of 2016.
In line with other independent non-executive Directors, the remuneration of Mr. Min will be RMB200,000 per annum.
Save as disclosed above, there was no other matters that need to be brought to the attention of Shareholders in respect of the appointment of Mr. Min and there is no other information relating to Mr. Min which is required to be disclosed pursuant to any of the requirement of Rule 13.51(2) of the Listing Rules.
– VI-2 – APPENDIX VII GENERAL INFORMATION
1. RESPONSIBILITY STATEMENT
This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the 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 the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.
2. INTERESTS OF SUBSTANTIAL SHAREHOLDERS
As at the Latest Practicable Date, so far as is known to the Directors, the following persons (other than the Directors) had or are deemed or taken to have an interest or short position in the shares and underlying shares which fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV 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 a general meeting of any member of the Group and were recorded in the register to be kept under section 336 of the SFO:
Percentage Percentage of of total Class of relevant issued Number of Shares class of share Name Capacity shares held held Shares capital
CSSC Beneficial 501,745,100 (L) A Shares 61.08% 35.50% owner 345,940,890 (L) H Shares 58.43% 24.47%
JP Morgan Beneficial 16,679,400 (L) H Shares 2.82% 1.27% Chase & owner 16,676,600 (P) H Shares 2.82% 1.27% Co. Custodian
Norges Bank Beneficial 16,571,000 (L) H Shares 2.80% 1.17% owner
Note: L = Long position S = Short position P = Lending pool
Save as disclosed above, so far as is known to the Directors, as at the Latest Practicable Date, no other person (other than a Director of the Company) had, or was deemed or taken to have, an interest or short position in the shares or underlying shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, 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 other member of the Group or held any option in respect of such capital.
– VII-1 – APPENDIX VII GENERAL INFORMATION
3. DIRECTORS’ AND SUPERVISORS’ INTERESTS
As at the Latest Practicable Date, the interests and short positions of the Directors, supervisors and chief executive of the Company in the Shares, underlying Shares and/or debentures (as the case may be) of the Company or any of its associated corporations (within the meaning of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which any such Director or chief executive is taken or deemed to have under such provisions of the SFO) or which were required to be entered into 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 the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers in the Listing Rules, were as follows:
Percentage Percentage of total Class of of relevant issued Number of Shares class of share Name Capacity shares held held Shares capital
Mr. Chen Beneficial 3,302 A Shares 0.0004% 0.0002% Jingqi owner
Save as disclosed none of the Directors, supervisors and chief executive of the Company had any interest or short position in the shares, underlying shares or debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or which had otherwise been notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies.
As at the Latest Practicable date, save as disclosed above none of the Directors, the supervisors or their respective associates of the Company had any interest, direct or indirect, in any assets which have been since 31 December 2014, being the date to which the latest published audited financial statements of the Group were made up, acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group.
Saved as disclosed in this circular, as at the Latest Practicable Date,
(a) none of the Directors had entered into any existing or proposed service contract with the Company, excluding those contracts expiring or determinable by the Group within one year without payment of compensation, other than statutory compensation.
– VII-2 – APPENDIX VII GENERAL INFORMATION
(b) none of the Directors or their associates had any direct or indirect interest in any assets which had been, since 31 December 2014 (the date to which the latest published audited financial statements of the Group were made up), acquired, or disposed of by, or leased to any member of the Group, or proposed to be acquired, or disposed of by, or leased to any member of the Group.
(c) none of the Directors or their associates was materially interested in any contract or arrangement subsisting at the date of this circular which is significant in relation to the business of the Group.
4. COMPETING INTERESTS AND OTHER INTERESTS
So far as the Directors were aware, none of the Directors or their respective associates had any interests which competes or is likely to compete, either directly or indirectly with the business of the Group.
Save disclosed herein, none of the Directors or their associates was materially interested in any contract or arrangement subsisting at the date of this circular which is significant in relation to the business of the Group.
5. EXPERT
The following are the qualifications of the professional advisers who have given opinions or advice which are contained in this circular:
Names Qualifications
Shenwan Hongyuan Capital a corporation licensed to carry on type 1(dealing (H.K.) Limited in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities under the SFO
Beijing China Enterprise Engaging in securities business assets appraisal, Appraisals Co., Ltd. the qualification for valuation of exploration and mining rights, and the national certified qualification for land valuation, etc.
As at the Latest Practicable Date, Shenwan Hongyuan Capital (H.K.) Limited and Beijing China Enterprise Appraisals Co., Ltd.:
(a) did not have any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group;
(b) has given and has not withdrawn its written consent to the issue of this circular with its letter of advice and/or opinion and the references to its name and logo in the form and context in which they are included; and
– VII-3 – APPENDIX VII GENERAL INFORMATION
(c) did not have any direct or indirect interest in any assets which had been, since 31 December 2014 (the date to which the latest published audited financial statements of the Group were made up), acquired, or disposed of by, or leased to any member of the Group, or proposed to be acquired, or disposed of by, or leased to any member of the Group.
The letter and recommendation from Shenwan Hongyuan Capital (H.K.) Limited are given as of the date of this circular for incorporation herein.
The valuation report prepared by Beijing China Enterprise Appraisals Co., Ltd. was prepared in compliance with relevant requirements of SASAC for the Proposed Disposal.
6. LITIGATION
As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration proceedings 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.
7. MATERIAL ADVERSE CHANGE
As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2014, the date to which the latest published audited financial statements of the Company were made up.
8. GENERAL
(a) The registered office of the Company is located at 40 South Fangcun Main Road, Liwan District, Guangzhou, The People’s Republic of China, Postal Code: 510382.
(b) The H share registrar and H share transfer office of the Company is Computer share Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Center, 183 Queen’s Road East, Hong Kong.
(c) The joint company secretaries of the Company are Mr. Shi Weidong and Mr. Li Zhidong. Shi Weidong, male, born in June 1967, Han nationality, started career in August 1989. He graduated from Fudan University, Shanghai, majoring in Global Economics and later obtained a master’s degree in business administration from China Europe International Business School. Mr. Shi worked in joint-stock restructuring office of Jiangnan Shipyard from August 1989 to November 1996. From June 1997 to February 2005, he was the secretary to the board of directors of China State Shipbuilding Steel Structure Engineering Company Limited; and from February 2005 to July 2007, he was the deputy general manager and secretary to the board of directors of China State Shipbuilding Steel Structure Engineering Company Limited. Since July 2007, he has been the secretary to the board of directors of China CSSC Holdings Limited. Mr. Li Zhidong, aged 48, senior engineer, currently the joint company secretary and assistant to general
– VII-4 – APPENDIX VII GENERAL INFORMATION
manager of the Company. He graduated from Shanghai Jiaotong University in August 1987, joined Guangzhou Shipyard in the same year, and obtained a master’s degree in business administration in 1997. He has served as engineer of Accommodation section of ship design office, deputy manager of engineering department in shipbuilding division, assistant to the manager of Financial Department of the Company, deputy director of Administrative Office of the Company, and qualified as Fellow member of the Britain Institute of Chartered Secretaries and Administrators and the Hong Kong Institute of Chartered Secretaries in the year 2008.
(d) The following Directors are directors or employees of CSSC Group: Mr. Han Guangde is the chairman of Guangzhou Shipbuilding Factory Co., Ltd.*（廣州造船 廠有限公司董事長）and Mr. Wang Jun is the general manager of CSSC Investment and Development Co., Ltd.*（中船投資發展有限公司）. Other than disclosed above, so far as known to the Directors, as at the Latest Practicable Date, none of the Directors is a director or employee of a company which has an interest or short position in the shares and underlying shares of the Company which would require to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO.
(e) In the event of inconsistency, the English text of this circular shall prevail over the Chinese text.
9. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents will be available for inspection at the offices of Tung & Co., the legal advisers to the Company on Hong Kong laws, on Office 1601, 16th Floor, LHT Tower, 31 Queen’s Road Central, Hong Kong during 9:00 a.m. to 5:00 p.m. on any day on which licensed banks in Hong Kong are open for ordinary business (excluding public holidays and Saturdays) from the date of this circular up to and including the date which is 14 days from the date of this circular:
(a) the Supplemental Agreement;
(b) the 2014-2016 Framework Agreement;
(c) the 2013-2015 Framework Agreement;
(d) the 2010-2012 Framework Agreement;
(e) the supplemental agreement of the 2010-2012 Framework Agreement;
(f) the Undertaking dated 13 December 2013 provided by CSSC regarding the risk control over Deposits;
(g) the letter of recommendation from the Independent Board Committee dated 21 October 2015, the text of which is set out on pages 56 to 57 of this circular;
– VII-5 – APPENDIX VII GENERAL INFORMATION
(h) the letter of advice issued by the Shenwan Hongyuan to the Independent Board Committee and the Independent Shareholders dated 21 October 2015, the text of which is set out on pages 58 to 96 of this circular;
(i) the written consent given by Shenwan Hongyuan as referred to in the paragraph headed “Expert” in this appendix;
(j) the valuation report in Chinese of GS Shipping Land prepared by independent valuer Beijing Huayuan Longtai Real Estate and Land Assets Appraisal Co., Ltd.
(k) the valuation report in Chinese of GS Shipping Building prepared by independent valuer Beijing China Enterprise Real Estate Appraisals Co., Ltd.
(l) the valuation report in Chinese of GS Shipping Interest prepared by independent valuer Beijing China Enterprise Appraisals Co., Ltd. dated 23 September 2015, together with its English translation, the text of which is set out in Appendix V of this circular; and
(m) this circular.
– VII-6 – NOTICE OF EGM
(a joint stock company with limited liability incorporated in the People’s Republic of China) (H Share Stock Code: 00317)
NOTICE OF THE SECOND EXTRAORDINARY GENERAL MEETING OF 2015 CLOSURE OF REGISTERS OF MEMBERS
NOTICE IS HEREBY GIVEN that the Second Extraordinary General Meeting of 2015 (“EGM”) of CSSC Offshore & Marine Engineering (Group) Company Limited (the “Company”) will be held at the Conference Room of the Company at 40 South Fangcun Main Road, Liwan District, Guangzhou, the People’s Republic of China (the “PRC”) at 2:30 p.m. on Tuesday, 29 September 2015 at which the following matters will be proposed for consideration:
ORDINARY RESOLUTIONS
1. To consider and approve the resolution in relation to the Supplemental Agreement to the 2014-2016 Frame Agreement to be entered into between the Company and China State Shipbuilding Corporation in respect of the Continuing Connected Transactions contemplated thereunder between the Group and CSSC Group and the Revised Annual Caps.
2. To consider and approve the resolution in relation to proposed changes to the Group’s corporate structure as the follows:
(1) transfer 100% interests in Guangzhou GSI Large-size Heavy Mechanical Equipment Co., Ltd. to Guangzhou Shipyard;
(2) transfer 100% interests in Zhongshan GSI Marine Engineering Co., Ltd. to Guangzhou Shipyard;
(3) transfer 100% interests in GSI Marine Engineering CO., Ltd. to Guangzhou Shipyard
(4) transfer 100% interests in Guangzhou Guangli Shipbuilding Human Resource Services Co., Ltd. Guangzhou Shipyard;
(5) transfer 100% interests in Glory Group Developing Co., Ltd. to Guangzhou Shipyard;
(6) transfer 100% interests in Guangzhou Xingshun Shipping Services Co., Ltd. to Guangzhou Shipyard;
– EGM-1 – NOTICE OF EGM
(7) transfer 100% interests in Guangzhou Shipyard Shipping Co., Ltd. to Guangzhou Shipyard;
(8) transfer 100% interests in Guangdong GSI Elevator Co., Ltd. to Guangzhou Shipyard;
(9) transfer 100% interests in Guangzhou Hongfan Hotel Co., Ltd. to Guangzhou Shipyard;
(10) transfer 75% interests in Guangzhou Wanda Marine Engineering Co., Ltd. to Guangzhou Shipyard;
(11) transfer 75% interests in Guangzhou United Steel Structures Limited to Guangzhou Shipyard;
(12) transfer 51% interests in Guangzhou Hongfan Technology Co., Ltd. to Guangzhou Shipyard;
(13) transfer 40% interests in Zhanjiang Nanhai Ship Hi-tech Services Co., Ltd. to Guangzhou Shipyard;
(14) transfer 25% interests in Guangzhou Economic and Technological Development Zone in South China Special Coating Industrial Co., Ltd. to Guangzhou Shipyard; and
(15) transfer 4.04% interests in China Shipbuilding Industry Yuan Zhou (Beijing) Technology Co., Ltd. to Guangzhou Shipyard.
3. Subject to the passing of the proposed resolution no. 2 above, to consider and approve the resolution in relation to the proposed disposal of the entire equity interests in Guangzhou Shipyard Shipping Co., Ltd. by Guangzhou Shipyard through open listing process on Shanghai United Assets and Equity Exchange at the Minimum Consideration and the Possible Connected Transaction contemplated thereunder; and to approve the entering of relevant sale and purchase agreement, and to implement and take all such steps and to do all such acts and things as may be necessary or desirable to give effect and to complete the transactions contemplated under the relevant sale and purchase agreement by Guangzhou Shipyard.
4. To consider and approve the resolution in relation to the intra-group guarantees to be provided by the Company and the member(s) of the Group to other member(s) of the Group and/or the Company’s affiliates and associated companies and their respective budgets in 2015.
5. To consider and approve the resolution in relation to re-appointment of Shinewing Certified Public Accounts (special general partnership) as the auditors for the year 2015 and to authorize the Board to fix their remuneration.
– EGM-2 – NOTICE OF EGM
6. The resolution in relation to the election of independent executive directors of the Company.
6.1 To consider the resolution in relation to the election of Mr. Wang Yichu as an independent executive director of the Company.
6.2 To consider the resolution in relation to the election of Mr. Min Weiguo as an independent executive director of the Company.
Pursuant to the Articles of Association of the Company, no registration of transfers will be made within 30 days prior to the holding of the EGM. The register of members of the Company will be closed from 31 August 2015 to 29 September 2015 (both dates inclusive). Holders of overseas listed foreign shares (H Shares) who have lodged the duly completed transfer documents accompanied by the relevant share certificates with the Company’s H share registrar, Hong Kong Registrars Limited, at Rooms 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong by 4:30 p.m. on 28 August 2015, the transferee but not the transferor shall be regarded as holder of the relevant H-Shares will be entitled to attend and vote at the EGM.
By order of the Board CSSC Offshore & Marine Engineering (Group) Company Limited Shi Weidong Joint Company Secretary Guangzhou, August 14, 2015
As at the date of this announcement, the Board comprises ten Directors, namely executive Directors Mr. Han Guangde, Mr. Chen Zhongqian, Mr. Xiang Huiming and Mr. Zhou Dusheng, non-executive Directors Mr. Yang Li, Mr. Wang Guozhong and Mr. Wang Jun and independent non-executive Directors Mr. Zhu Zhenyu, Mr. Song Dejin and Mr. Zhu Mingyou.
Notes:
1. Shareholders who intend to attend the EGM are requested to send a written reply, whether in person, by post, by cable or by fax to the registered office of the Company at least 20 days before the EGM (i.e. before 8 September 2015). Completion and return of such written reply will not preclude the shareholders from attending the EGM in person.
2. Any shareholder who is entitled to attend and vote at the EGM has the right to appoint one or more proxies to do so on behalf of himself, and the proxy needs not be a shareholder of the Company. In order to ensure validity, holders of A shares must deliver the completed proxy form and other authorization documents (if any) to the registered office of the Company not less than 24 hours before the time scheduled for the holding of the EGM. Holders of H shares must deliver the completed proxy forms and other authorization documents (if any) to the Company’s H share registrar, Hong Kong Registrars Limited at Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 24 hours before the time scheduled for the holding of the EGM. A shareholder who has completed and delivered a proxy form can still attend the EGM and vote in person.
3. Resolutions to be proposed at the EGM will be voted by way of poll. In accordance with article 97 of the Articles of Association of the Company, the voting in respect of the election of directors at the EGM will be conducted by way of cumulative voting.
– EGM-3 – NOTICE OF EGM
4. Shareholders and proxies must show their identification documents when attending the EGM.
5. The EGM is expected to last for half a day. Shareholders and proxies attending the EGM shall be responsible for their own travel and accommodation expenses.
6. The registered office of the Company is at the Board’s Office of CSSC Offshore & Marine Engineering (Group) Company Limited at 40 South Fangcun Main Road, Liwan District, Guangzhou, the PRC (Postal code: 510382).
Contact officers: Shi Weidong/Yu Wenbo Postal code: 510382 Tel: (8620) 8189 3807 Fax: (8620) 8189 6411
– EGM-4 –