SITC International : RENEWAL OF EXISTING CONTINUING CONNECTED TRANSACTION

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SITC International Holdings Company Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1308)

RENEWAL OF

EXISTING CONTINUING CONNECTED TRANSACTION

RENEWAL OF EXISTING CONTINUING CONNECTED TRANSACTION

Reference is made to the announcements of the Company dated 2 August 2017 and 22 March 2019 in relation to the Existing Master Charter Agreement between the Company and Qingdao SITC, pursuant to which Qingdao SITC Group agreed to provide Vessel Chartering Services to the Company for a fixed term from 1 January 2017 to 31 December 2019 (both days inclusive).

As the term for the Existing Master Charter Agreement will expire on 31 December 2019, on 20 December 2019, the Company and Qingdao SITC entered into the 2020 Master Charter Agreement to renew the terms of the Existing Master Charter Agreement for a further period of three years commencing from 1 January 2020 and ending on 31 December 2022, pursuant to which the parties agreed that the Qingdao SITC Group will provide the Vessels Chartering Services to meet the Group's operational requirements from time to time during the term of the 2020 Master Charter Agreement.

LISTING RULES IMPLICATIONS

Qingdao SITC is owned as to 43.05% by Ms. Liu Rongli, the spouse of by Mr. Yang Shaopeng, an executive Director and the controlling shareholder of the Company. Accordingly, Qingdao SITC is a connected person of the Company and the entering into of the 2020 Master Charter Agreement and the transactions contemplated thereunder constitutes continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

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As each of the applicable percentage ratios under Chapter 14A of the Listing Rules in respect of the annual cap amount under the 2020 Master Charter Agreement are more than 0.1% but less than 5%, the transactions under the 2020 Master Charter Agreement are subject to the reporting and announcement requirements but are exempted from the circular and the independent shareholders' approval requirements under the Listing Rules.

RENEWAL OF EXISTING CONTINUING CONNECTED TRANSACTION

Reference is made to the announcements of the Company dated 2 August 2017 and 22 March 2019 in relation to the Existing Master Charter Agreement between the Company and Qingdao SITC, pursuant to which Qingdao SITC Group agreed to provide Vessel Chartering Services to the Company for a fixed term from 1 January 2017 to 31 December 2019 (both days inclusive).

As the term for the Existing Master Charter Agreement will expire on 31 December 2019, on 20 December 2019, the Company and Qingdao SITC entered into the 2020 Master Charter Agreement to renew the terms of the Existing Master Charter Agreement for a further period of three years commencing from 1 January 2020 and ending on 31 December 2022.

Details of the 2020 Master Charter Agreement are set forth below:

2020 Master Charter Agreement

Date:	20	December 2019
Parties:	(i)	the Company; and
	(ii)	Qingdao SITC.
Subject:	Pursuant to the 2020 Master Charter Agreement, the
	parties agreed that the Qingdao SITC Group will
	provide the Vessels Chartering Services to meet the
	Group's operational requirements from time to time
	during the term of the 2020 Master Charter
	Agreement.
Term:	The 2020 Master Charter Agreement has a fixed term
	of three years commencing from 1 January 2020 to
	31	December 2022 (both days inclusive).

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Pricing policy:	As a general principle, the price and terms of the
	individual services agreement in respect of the
	Vessel Chartering Services to be provided pursuant
	to the 2020 Master Charter Agreement will be
	determined in the ordinary course of business, on
	normal commercial terms, negotiated on arm's length
	basis and at prices and on terms no less favorable
	than those provided by independent third parties to
	the Group. Subject to the general principle disclosed
	above, the charter fee payable by the Company to
	Qingdao SITC for the Vessel Chartering Services
	shall be determined with reference to (i) the total
	number and type of container vessels required by the
	Group (the "Required Vessels") for which the
	operation of the Group's shipping business where
	chartered vessel is required; and (ii) the comparable
	market rate for the same or comparable type of
	container vessels provided by independent third
	parties (the "Comparable Market Price").
	Pricing policies and mechanism for the Comparable
	Market Price
	The Company obtains and ascertains the prevailing
	market price of the relevant container vessels
	through professional charter brokerage firms, which
	have extensive experience in vessel chartering within
	the region. Typically, the professional charter
	brokerage firm will gather relevant information
	through (i) market research; and (ii) third parties
	quotation. Once the information on the prevailing
	market price has been gathered by the professional
	charter brokerage firm, relevant information will
	then be passed on to the relevant personnel of the
	business department of the Company and information
	will then be used by the Company as the Comparable
	Market Price to determine whether individual
	quotations obtained by the Company for a
	particular vessel chartering service is fair and
	reasonable.

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	Basis of determination for the final charter fee
	The quotations on charter fee obtained by the Group
	will be assessed by the Group with reference to the
	number, type (as specified by the business operation
	and marketing department of the Company from time
	to time) and lease term of container vessels required
	by the Group as well as the number, type and lease
	term of container vessels that the relevant charterer
	has available. For example, it may be acceptable for
	the Group to accept a fee proposal from a particular
	charterer who will be able to offer the exact type of
	container vessel required by the Group, the proposed
	fee of which may be higher than another charterer
	who can only offer a similar type of container vessel
	required by the Group. On the other hand, if both
	charterers can offer the exact same type of container
	vessel, the Group will choose to enter into chartering
	arrangement with the charterer who offers the lower
	charter fee as compared to the other. As the current
	market rate of vessel charter is at a low level,
	therefore, under the condition that the type of vessels
	and charter fee are the same, the Company will opt
	for a charterer who can offer a longer lease term. The
	final charter fee payable by the Company, which will
	be within the limit as approved by the Board and will
	not be at a level higher than the Comparable Market
	Price, will also be submitted by the general manager
	of the business department of the Company for
	verification by the finance department of the
	Company with cost and profit considerations and
	final approval by the Group's CEO and all
	independent non-executive Directors.
Payment:	Payment for the Vessel Chartering Services is
	payable to the designated accounts of Qingdao
	SITC 15 days in advance of the relevant invoice day.

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It is proposed that the cap amounts of the Vessel Chartering Services for each of the three financial years ending 31 December 2020, 2021 and 2022 will not exceed the followings:

For the year ending 31 December

	2020	2021	2022
	(US$)	(US$)	(US$)
Provision of Vessel Chartering
Services	14,000,000	14,000,000	14,000,000

The above annual caps for the Vessel Chartering Services were determined with reference to (i) the Required Vessels for which the Group's operation of shipping business where chartered vessels is required; (ii) the Comparable Market Price; and

1. the actual charter fee paid by the Group to Qingdao SITC for the Vessel Chartering Services for the two years ended 31 December 2018 and the 11 months ended 30 November 2019. In addition, the proposed annual caps for the years ending 31 December 2020, 2021 and 2022 is expected to be higher than the actual charter fee paid by the Group for the two years ended 31 December 2018 and 11 months ended 30 November 2019 as it is expected that (i) the charter fee will fluctuate and may increase in the upcoming years, in particular taking into consideration that the charter fee was towards the lower range in the two years ended 31 December 2018 and 11 months ended 30 November 2019; and (ii) the number of Required Vessels will increase based on the Group's latest business development plan.

The Group has been chartering vessels from Qingdao SITC Group in the past and the historical transaction amounts for chartering vessels from Qingdao SITC Group for the two years ended 31 December 2018 and the 11 months ended 30 November 2019 were as follows:

	For the	For the	For the eleven
	year ended	year ended	months ended
	31 December	31 December	30 November
	2017	2018	2019
	(US$)	(US$)	(US$)
Provision of Vessel
Chartering Services	4,215,384	4,077,004	6,615,175

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As at the date of this announcement, the annual cap under the Existing Master Charter Agreement for the financial year ending 31 December 2019 has not exceeded.

Reasons for the 2020 Master Charter Agreement

In addition to operating its self-owned fleet of vessels, the Company also chartered vessels to meet its operational requirements. The entering of the 2020 Master Charter Agreement is expected to enhance the Group's continuous expansion of its shipping routes. Further, the Group has entered into agreements with the Qingdao SITC Group for the chartering of vessels owned by Qingdao SITC Group since 2017, and therefore Qingdao SITC Group is familiar with the vessel specifications required by the Group, accordingly by entering into the 2020 Master Charter Agreement, the Group will also be able to better control the costs and better organize such chartering matters, as well as to secure a stable source of chartered vessels for its business.

The Directors (including the independent non-executive Directors) consider that the transactions under the 2020 Master Charter Agreement are entered into in the usual and ordinary course of business of the Group are conducted on an arm's length basis and on normal commercial terms between the Group and Qingdao SITC, the 2020 Master Charter Agreement is fair and reasonable and in the interests of the Company and its Shareholders as a whole.

Listing Rules Implications

Qingdao SITC is owned as to 43.05% by Ms. Liu Rongli, the spouse of by Mr. Yang Shaopeng, an executive Director and the controlling shareholder of the Company. Accordingly, Qingdao SITC is a connected person of the Company and the entering into of the 2020 Master Charter Agreement and the transactions contemplated thereunder constitutes continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

As each of the applicable percentage ratios under Chapter 14A of the Listing Rules in respect of the annual cap amount under the 2020 Master Charter Agreement are more than 0.1% but less than 5%, the transactions under the 2020 Master Charter Agreement are subject to the reporting and announcement requirements but are exempted from the circular and the independent shareholders' approval requirements under the Listing Rules.

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The Company will comply with the relevant provisions under Chapter 14A of the Listing Rules governing connected transactions in the event that the total amount of the transactions under the 2020 Master Charter Agreement on an annual basis exceeds 5% for each of the percentage ratios (other than the profit ratio), or that there is any material amendment to their terms.

INTERNAL CONTROL

The pricing policy for all the continuing connected transactions of the Group will be supervised and monitored by the finance department, the sales department and management of the Group in charge to ensure that the 2020 Master Charter Agreement are conducted on normal commercial terms and in accordance with the pricing policy of the Group and will not be prejudicial to the interests of the Company and its Shareholders as a whole. The relevant personnel and management of the Group will conduct regular checks to review and assess whether the transactions contemplated under the 2020 Master Charter Agreement are conducted in accordance with the terms of the 2020 Master Charter Agreement and in accordance with the aforesaid pricing policy. Further, the management of the Group will continue to closely monitor the local restrictions applicable for the provision of shipping agency services in the PRC, and shall eliminate the need to seek for shipping agency services from other parties as and when local rules and regulations in the PRC permit the Group to engage in such services itself. The independent non- executive Directors will review the transactions contemplated under all continuing connected transactions of the Company and the auditors of the Group will also conduct an annual review on the pricing terms and annual caps thereof. Accordingly, the Directors consider that the internal control mechanism is effective to ensure that the transactions contemplated under all continuing connected transactions have been and will be conducted on normal commercial terms and in accordance with the pricing policy of the Group and not prejudicial to the interests of the Company and the Shareholders as a whole.

GENERAL

The Group is an Asia-based shipping logistics company that provides integrated transportation and logistics solutions.

Qingdao SITC is a company incorporated in the PRC, mainly engaged in investment holding, owning of ships and shipping agency.

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As at the date of this announcement, Ms. Liu Rongli, the spouse of Mr. Yang Shaopeng, an executive Director, indirectly holds 43.05% interests in Qingdao SITC. Further, Ms. Lin Limei (the spouse of Mr. Yang Xianxiang, an executive Director), Ms. Li Xuerao (the spouse of Mr. Liu Kecheng, an executive Director), Ms. Xue Yuge (the daughter of Mr. Xue Peng, an executive Director), Ms. Zhang Qiongye (the spouse of Mr. Lai Zhiyong, an executive Director) and Ms. Sheng Jiejun (the spouse of Mr. Xue Mingyuan, an executive Director), each an executive Director, also holds 18.04%, 5.13%, 2.52%, 2.12% and 3.06% interests in Qingdao SITC, respectively. Accordingly, each of Mr. Yang Shaopeng, Mr. Yang Xianxiang, Mr. Liu Kecheng, Mr. Xue Peng, Mr. Lai Zhiyong and Mr. Xue Mingyuan is considered to be interested in the transaction and each of them has therefore abstained from voting for the Board resolution to approve the 2020 Master Charter Agreement.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions shall have the following meaning:

"2020 Master Charter	a master charter agreement dated 20 December 2019,
Agreement"	on terms and conditions similar to the Existing
	Master Charter Agreement, entered into by and
	between the Company and Qingdao SITC, details of
	which are set out herein this announcement;
"Board"	the board of Directors;
"Company"	SITC International Holdings Company Limited, a
	company incorporated in the Cayman Islands with
	limited liability, the shares of which are listed on the
	main board of the Stock Exchange;
"connected person(s)"	has the meaning ascribed to it under the Listing
	Rules;
"controlling shareholders"	has the meaning ascribed to it under the Listing
	Rules;
"Director(s)"	the director(s) of the Company;

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"Existing Master Charter	a master charter agreement dated 2 August 2017, and
Agreement"	as supplemented by the supplemental master charter
	agreement dated 22 March 2019, entered into
	between the Company and Qingdao SITC in
	relation to the provision of Vessel Chartering
	Services by the Qingdao SITC Group to the Group;
"Group"	the Company and its subsidiaries;
"Listing Rules"	the Rules Governing the Listing of Securities on the
	Stock Exchange;
"PRC"	the People's Republic of China;
"Qingdao SITC"	SITC Maritime Group Company Limited (青島海豐
	國際航運集團有限公司), a connected person of the
	Company in which 43.05% interest is owned by Ms.
	Liu Rongli, the spouse of Mr. Yang Shaopeng, an
	executive Director and the controlling shareholder of
	the Company;
"Qingdao SITC"	Qingdao SITC and its subsidiaries;
"Shareholders"	holder(s) of the Shares;
"Stock Exchange"	The Stock Exchange of Hong Kong Limited;
"Vessel Chartering	the provision of chartered vessels by the Qingdao
Services"	SITC Group to the Group as contemplated under the
	2020 Master Charter Agreement; and
"%"	per cent.
	By order of the Board
	SITC International Holdings Company Limited
	Yang Shaopeng
	Chairman

Hong Kong, 20 December 2019

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As at the date of this announcement, the executive directors of the Company are Mr. Yang Shaopeng, Mr. Yang Xianxiang, Mr. Liu Kecheng, Mr. Xue Peng, Mr. Xue Mingyuan and Mr. Lai Zhiyong; and the independent non-executive directors of the Company are Mr. Tsui Yung Kwok, Mr. Yeung Kwok On, Dr. Lo Wing Yan, William and Dr. Ngai Wai Fung.

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