Common use of Internal Control Clause in Contracts

Internal Control. The Company has implemented the following internal control measures for monitoring the pricing and other terms of the continuing connected transactions, including the transactions contemplated under the New Framework Purchase Agreements and the Lease (as supplemented by the Supplemental Leasing Agreement) and for ensuring that the transactions conducted under such agreements will be entered into based on normal commercial terms: (1) Before entering into the continuing connected transactions of the Company, the procurement department of the Group will review and verify whether the price is fair and reasonable. In addition, if the pricing terms in respect of the relevant agreement are applied for the first time or the pricing terms are different from those applied previously, the cost management department of the Group also reviews the above works conducted by the procurement department when settling the agreements. (2) The financial management department of the Company is mainly responsible for reviewing and monitoring the continuing connected transactions to ensure that the annual caps of the relevant continuing connected transactions would not be exceeded and are implemented pursuant to the pricing policy or mechanism under the respective framework agreements. The financial management department of the Company will consult the internal control units of the Group, external lawyers and compliance adviser regarding compliance issues of the continuing connected transactions. (3) The financial management department of the Company will prepare an annual report to the supervisor of the financial management department of the Company. The supervisor of the financial management department will report to the audit committee of the Company and submit a confirmation letter to the audit committee, confirming the continuing connected transactions of the Group (which are subject to the annual review and disclosure requirements under the Listing Rules) are all (a) entered into in the ordinary and usual course of business of the Group; (b) entered into on normal commercial terms or better; and (c) pursuant to the relevant agreements governing such transactions, entered into on the basis that the terms are fair and reasonable and are in the interests of the Shareholders as a whole; and the internal monitoring procedures of the Group regarding continuing connected transactions are adequate and effective in ensuring such transactions are conducted in such manner stated above. The audit committee will consider on such basis. The Board is of the view that the above internal control measures can ensure that the continuing connected transactions of the Group under the New Framework Purchase Agreements and the Lease (as supplemented by the Supplemental Leasing Agreement) are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Internal Control. The Company has implemented To ensure that the following internal control measures for monitoring continuing connected transaction under the pricing 2024 Distribution Framework Agreement will be conducted on normal commercial terms and other on terms which are similar or comparable to contracts of the Group with independent third parties, and are in accordance with the terms of the relevant agreement, the Company has a set of internal control policies to monitor its continuing connected transactions, including the transactions contemplated under the New Framework Purchase Agreements and the Lease (as supplemented by the Supplemental Leasing Agreement) and for ensuring that the transactions conducted under such agreements will be entered into based on normal commercial terms: (1) Before entering into the continuing connected transactions of the Company, the procurement . The relevant department of the Group responsible for international business will review and verify whether the price is fair and reasonable. In additioncompare at least two quotations from independent third parties (including comparable tender prices approved by local governments or hospitals), if available, and ensure that the pricing continuing connected transaction under the 2024 Distribution Framework Agreement will be conducted on normal commercial terms in respect of the relevant agreement and on terms which are applied for the first time similar or the pricing terms are different from those applied previously, the cost management department comparable to contracts of the Group also reviews the above works conducted by the procurement department when settling the agreements. (2) with independent third parties, if applicable. The financial relevant internal audit personnel and management department of the Company is mainly Group responsible for reviewing and monitoring the continuing connected transactions such internal control task will conduct checks every six months to ensure that the annual caps of the relevant continuing connected transactions would not be exceeded conducted under normal commercial terms and on terms which are implemented pursuant to similar or comparable with independent third parties. This would involve reviewing (i) the transactions are conducted in accordance with the terms of the 2024 Distribution Framework Agreement, (ii) the pricing terms are in accordance with the pricing policy or mechanism under of the respective framework agreements. The financial management department 2024 Distribution Framework Agreement and the policy of the Group and that the transactions would not be prejudicial to the interests of the Company and the Shareholders as a whole, and (iii) the annual caps have not been exceeded. The Company will consult re-comply with the internal control units requirements of the Group, external lawyers and compliance adviser regarding compliance issues Listing Rules if there is material change to the terms of the continuing connected transactions. (3) The financial management department of transactions or the Company will prepare an annual report to the supervisor of the financial management department of the Companycaps are exceeded. The supervisor of transactions contemplated under the financial management department will report to the audit committee of the Company and submit a confirmation letter to the audit committee, confirming the continuing connected transactions of the Group (which 2024 Distribution Framework Agreement are subject to the review by the independent non-executive Directors on an annual review and disclosure requirements under basis, who will confirm in the Listing Rules) are all (a) annual report whether the transactions have been entered into (i) in the ordinary and usual course of business of the Group; (bii) entered into on normal commercial terms or better; and (ciii) pursuant according to the relevant agreements governing such transactions, entered into agreement on the basis terms that the terms are fair and reasonable and are in the interests of the Shareholders as a whole. In addition, the transactions will also be subject to the review on an annual basis by the auditors of the Group, who will confirm to the Directors as to whether there is anything which has come to their attention that causes them to believe that such continuing connected transactions: (i) have not been approved by the Board; (ii) were not, in all material respects, in accordance with the pricing policies of the Group; (iii) were not entered into, in all material respects, in accordance with the relevant agreement governing the transactions; and (iv) have exceeded the internal monitoring procedures of the Group regarding continuing connected transactions are adequate and effective in ensuring such transactions are conducted in such manner stated above. The audit committee will consider on such basis. The Board is of the view that the above internal control measures can ensure that the continuing connected transactions of the Group under the New Framework Purchase Agreements and the Lease (as supplemented by the Supplemental Leasing Agreement) are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a wholeannual caps.

Internal Control. The Company has implemented As a general rule, the following internal control measures for monitoring the pricing price and other terms of the continuing connected transactions, including the transactions contemplated under the New Framework Purchase Agreements and the Lease (as supplemented by the Supplemental Leasing Agreement) and for ensuring that the transactions conducted under such individual service agreements will be entered into based on normal commercial terms: (1) Before entering into the continuing connected transactions of the Company, the procurement department of the Group will review and verify whether the price is fair and reasonable. In addition, if the pricing terms in respect of the relevant agreement are applied for the first time or the pricing terms are different from those applied previously, the cost management department of the Group also reviews the above works conducted by the procurement department when settling the agreements. (2) The financial management department of the Company is mainly responsible for reviewing and monitoring the continuing connected transactions to ensure that the annual caps of the relevant continuing connected transactions would not be exceeded and are implemented pursuant to the pricing policy or mechanism under the respective framework agreements. The financial management department of the Company will consult the internal control units of the Group, external lawyers and compliance adviser regarding compliance issues of the continuing connected transactions. (3) The financial management department of the Company will prepare an annual report to the supervisor of the financial management department of the Company. The supervisor of the financial management department will report to the audit committee of the Company and submit a confirmation letter to the audit committee, confirming the continuing connected transactions of the Group (will be conducted in the ordinary course of business of the Group, on normal commercial terms and on terms which are subject similar or comparable to contracts of the Group with independent third parties. The pricing policy of all the continuing connected transactions of the Group will be supervised and monitored by the relevant internal audit personnel and management of the Group to ensure that all the continuing connected transactions 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 the Shareholders as a whole. The relevant internal audit personnel and the management of the Group will conduct regular checks and assess whether individual transactions contemplated under the e-Platform Services are conducted in accordance with the terms of the Agreement and will also regularly review whether the prices charged under the e-Platform Services are fair and reasonable and in accordance with the aforesaid pricing policy. The independent non-executive Directors will review the transactions under the Agreement and the auditors of the Company will also conduct an annual review on the pricing terms and disclosure requirements annual caps thereof. Accordingly, the Directors consider that the internal control system of the Group is effective to ensure that the transactions contemplated under the Listing RulesAgreement have been and will be conducted on normal commercial terms and not prejudicial to the interests of the Company and the Shareholders as a whole. Shenzhen Colour Life Network is principally engaged in the provision of community leasing, sales and other services. The Agreement will enable the Group to provide more extended services to the users thereby enhancing the online marketing services of the Group. The Directors (including the independent non-executive Directors but excluding the interested Directors) considered that the terms of the Agreement are all (a) on normal commercial terms, and the Agreement was entered into in the ordinary and usual course of business of the Group; (b) entered into on normal commercial terms or better; and (c) pursuant to the relevant agreements governing such transactions, entered into on the basis that the terms of the Agreement and the annual caps are fair and reasonable reasonable, and are in the interests of the Shareholders as a whole; and the internal monitoring procedures of the Group regarding continuing connected transactions are adequate and effective in ensuring such transactions are conducted in such manner stated above. The audit committee will consider on such basis. The Board is of the view that the above internal control measures can ensure that the continuing connected transactions of the Group under the New Framework Purchase Agreements and the Lease (as supplemented by the Supplemental Leasing Agreement) are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Internal Control. The Company has implemented formulated a number of measures and policies, including connected transaction administrative measures and management measures, to ensure that all connected transactions of the following Company are effectively controlled and monitored. The Group will, through its internal control measures procedures and a series of risk management arrangements in accordance with the regulatory requirements, endeavour to maintain its independence in decision-making as well as the fairness of the prices and terms of each continuing connected transaction. Such arrangements include: (i) before the respective subsidiary of the Company enters into any transaction with DFEC Group according to the Dongfang Electric Framework Agreements, the relevant department will collect the information (including credit certificate) of counterparty (as the case may be) for monitoring selection, arrange the pricing legal department, finance department, technical department, production department, quality department and other terms relevant departments to review the contracts, subject to evaluation, review and approval by the management of the continuing connected transactions, including respective subsidiary to ensure the relevant terms and pricing are arrived at on a fair and reasonable basis; (ii) the transactions contemplated under the New Dongfang Electric Framework Purchase Agreements shall be conducted on a non-exclusive basis, and the Lease Group has the flexibility to enter into arrangements with Independent Third Parties; (as supplemented iii) the pricing mechanism is transparent and the implementation of such pricing mechanism on the Dongfang Electric Continuing Connected Transactions is subject to strict scrutiny by the Supplemental Leasing Agreement) finance department, technical department, internal audit department and for ensuring that the transactions conducted under such agreements will be entered into based on normal commercial terms: (1) Before entering into the continuing connected transactions legal department of the Company. This will ensure that the Dongfang Electric Continuing Connected Transactions are conducted in accordance with the relevant pricing policies and the quotations obtained meet the specification requirements; (iv) with regard to the Purchase Framework Agreement, the Group will keep and continue to update a centralised list of eligible suppliers whom are shortlisted based on their procurement qualification, capability to procure products with specific technical requirements, and the Group’s past experience in dealing with each of such suppliers. Prior to the entering into of the transactions by the Purchaser and the Seller under the Purchase Framework Agreement, the business department of the Purchaser shall summit an application and the procurement department of the Purchaser shall organize and select suppliers from the list, which shall also be subject to consideration and approval by the management of the purchaser(s) so as to ensure the fairness and reasonableness of relevant terms and pricing; (v) with regard to the Sales Framework Agreement, the Group will strictly follows the internal sales policy to perform relevant pricing and approval procedures. For each type of sales contract, the relevant procedures set forth the functional departments that are required to participate the contract review and verify whether the price is fair and reasonabledue diligence, as well as detailed review standards. In additionthe contract signing phase, if a tiered structure of execution authority is implemented, depending on the pricing terms in respect consideration of the relevant agreement are applied for contracts; (vi) with regard to the first time or the pricing terms are different from those applied previouslyFinance Lease Framework Agreement, the cost management department business departments of the members of the Group are responsible for collecting information and initiating a transaction under the Finance Lease Agreement and will also reviews the above works conducted by the procurement conduct due diligence. The risk control department when settling the agreements. (2) The and financial management department of the Company members of the Group will review the details of the transaction and compare the major terms of finance leasing services in relation to similar assets provided to members of the Group with similar qualification and terms obtained by the lessee from other financial institutions if applicable at the relevant time. The transaction shall be submitted for approval at the meeting of the general manager office of the relevant Group member. When assessing a specific transaction, the risk control department and financial management department of the members of the Group will take into account factors including regulatory compliance, ownership and operation of the leased properties, litigations involved by the lessee, procurement conditions of the leased equipment, financial condition, cash flow, solvency and control on trade receivables of the lessee, capital resource of the Group for such transaction, financial costs and return to the Group; (vii) with regard to the transactions in relation to the Deposit Services under the Financial Services Framework Agreement, the personnel in the finance department of the Group is mainly responsible for reviewing comparing the interest rates offered by Dongfang Electric Finance against the deposit interest rates announced by the PBOC, and monitoring further against the continuing connected deposit interest rates offered by at least two major commercial banks in the PRC, so as to confirm that the interest rates offered by Dongfang Electric Finance are not less favourable than such interest rates in respect of the Group, while all of this information together with the daily deposit amount (with the corresponding accrued interests) will be included in the report to be submitted to the Chief Financial Officer of the Group for review, verification and approval; (viii) with regard to the transactions in relation to the Lending Services under the Financial Services Framework Agreement, the personnel in the finance department of the Group is responsible for comparing the lending rates offered by Xxxxxxxx Xxxxxxxx Electric Finance against the benchmark lending rates announced by the PBOC, and further against the lending rates offered by at least two major commercial banks in the PRC, so as to confirm that the lending rates offered by Dongfang Electric Finance are not higher than the rates applicable to the same type of loan services provided by major commercial banks in the PRC to the Group, and loan agreements shall be determined on normal commercial terms. Each of the loans of the Group at Dongfang Electric Finance will be submitted to the management of the Group for review and approval in accordance with the relevant policies; (ix) in order to ensure that Dongfang Electric Continuing Connected Transaction will be or have been conducted in accordance with the relevant pricing policies or mechanisms and do not exceed the annual caps of the relevant continuing connected transactions would not be exceeded and are implemented pursuant to transactions, the pricing policy or mechanism under the respective framework agreements. The financial management department relevant departments of the Company will consult monitor Dongfang Electric Continuing Connected Transactions, including (a) the internal control units legal and securities department, in conjunction with the finance department, will regularly monitor the transaction amounts of the Group, external lawyers and compliance adviser regarding compliance issues of the continuing connected transactions. (3) Dongfang Electric Continuing Connected Transactions on a monthly basis. The financial management department of the Company will prepare an annual business departments shall report to the supervisor legal and securities department and the finance department before the 10th of each month the statistical statement of the cumulative connected transaction amount and the transaction contract ledger as of the end of the previous month. The transaction amount statistical statement must be signed and confirmed by each of the business department leaders, financial management department leaders and general managers of the Company. The supervisor legal and securities department will provide advice to the business departments based on the statistical statement, especially when the cumulative transaction amount reaches 80% of the financial management annual limit, it will warn the business department will report to the audit committee of the Company and submit a confirmation letter to the audit committee, confirming the continuing conduct connected transactions of the Group (which are subject to prudently and not exceed the annual review and disclosure requirements under the Listing Rules) are all (a) entered into in the ordinary and usual course of business of the Group; (b) entered into on normal commercial terms or better; and (c) pursuant to the relevant agreements governing such transactions, entered into on the basis that the terms are fair and reasonable and are in the interests of the Shareholders as a whole; and the internal monitoring procedures of the Group regarding continuing connected transactions are adequate and effective in ensuring such transactions are conducted in such manner stated above. The audit committee will consider on such basis. The Board is of the view that the above internal control measures can ensure that the continuing connected transactions of the Group under the New Framework Purchase Agreements and the Lease (as supplemented by the Supplemental Leasing Agreement) are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.limit;

Internal Control. The Company Group has implemented adopted the following internal control measures for monitoring the pricing and other terms of the continuing connected transactions, including the transactions contemplated under the New Framework Purchase Agreements and the Lease (as supplemented by the Supplemental Leasing Agreement) and for ensuring that the transactions conducted under such agreements will be entered into based on normal commercial terms: (1) Before entering into procedures over the continuing connected transactions of the Company: • Before entering into a continuing connected transaction, the procurement finance department of the Group will review and verify whether ensure that the price pricing is fair and reasonablereasonable with reference to price quotes obtained from independent third parties for similar products or services. In addition, if addition to reviewing the pricing before entering into a transaction under the continuing connected transactions of the Company where the pricing terms in respect of under the relevant agreement are applied for the first time or the pricing terms are different from those applied used previously, the cost management department of Board will engage an independent financial adviser to review the Group also reviews the above works conducted by the procurement department when settling the agreements. (2) relevant terms. • The financial management finance department of the Company is mainly primarily responsible for reviewing and monitoring the continuing connected transactions to ensure that the annual caps of the relevant continuing connected transactions would are not be exceeded and are implemented pursuant to the continuing connected transactions have been conducted in accordance with the pricing policy policies or mechanism mechanisms under the respective framework agreements. relevant agreement; • The financial management finance department of the Company will consult the internal control units of with the Group, external lawyers and compliance adviser regarding compliance issues ’s chief financial officer in respect of the continuing connected transactions. (3) The financial management department of the Company will prepare an annual report to the supervisor of the financial management department of the Company. The supervisor of the financial management department transaction compliance issues, who will report to the audit committee of the Company and submit also provide a confirmation letter to the audit committee, confirming committee that the continuing connected transactions of the Group (Company which are subject to the annual review and disclosure requirements under the GEM Listing Rules) are all Rules have been entered into (a) entered into in the ordinary and usual course of business of the Group; (b) entered into on normal commercial terms or better; and (c) pursuant to in accordance with the relevant agreements governing such transactions, entered into them on the basis terms that the terms are fair and reasonable and are in the interests of the Shareholders as a whole; and that the Group’s internal monitoring control procedures of the Group regarding applicable to continuing connected transactions are adequate and effective in ensuring to ensure that such transactions are conducted in such manner stated abovewere so conducted. The audit committee will consider on such basisthis accordingly. • The Board is of Company’s external auditors will review the view that continuing connected transactions (which are subject to the above internal control measures can ensure that annual review and disclosure requirements under the GEM Listing Rules) annually to check and confirm (among others) whether the pricing terms have been adhered to and whether the relevant caps have been exceeded. • The independent non-executive Directors will review the continuing connected transactions of the Group Company (which are subject to the annual review and disclosure requirements under the New Framework Purchase Agreements GEM Listing Rules) annually to check and confirm whether such continuing connected transactions are conducted in the Lease (as supplemented by ordinary and usual course of business of the Supplemental Leasing Agreement) are Group, on normal commercial termsterms or better, in accordance with the relevant agreements governing them on terms that are fair and reasonable and in the interests of the Company and the Shareholders as a whole., and whether the internal control procedures put in place by the Company are adequate and effective to ensure that such continuing connected transactions were conducted in accordance with the pricing policies set out in such relevant agreements. Loto Shenzhen is a wholly-owned subsidiary of the Group. The Group is engaged in the provision of lottery-related technologies, systems and solutions to two state-run lottery operators in the PRC, namely the China Welfare Lottery Issuance Centre and CSLA. It is a distributor of high quality, versatile lottery terminals and parts for CSLA. E-Sun Sky is a company established in the PRC and is principally engaged in internet lottery tickets sales activities. It is a wholly-owned subsidiary of 000.xxx Limited, the controlling shareholder of the Group. 000.xxx Limited is a company incorporated in the Cayman Islands, the shares of which are listed on the New York Stock Exchange (NYSE: WBAI). It is a leading online sports lottery service provider in the PRC. It offers a comprehensive and integrated suite of online lottery services, information, user tolls and virtual community venues to its users. 000.xxx Limited was among the first companies to provide online lottery services in the PRC. Reference is made to the Previous Announcement. 000.xxx Limited entered into a framework agreement with CSLA on the cooperation in development of physical channels to sell sports lottery tickets. Pursuant to the said framework agreement, 000.xxx Limited will seek to enter into cooperation agreements with provincial sports lotteries centers to assist in installing sports lottery terminals and provide relevant maintenance and operational services, in order to enhance the convenience of sports lottery ticket purchases, enlarge customer base and optimize user experience for lottery purchasers. As one of the first companies to provide online lottery services in the PRC and one of the only two entities that had been approved by the Ministry of Finance to provide online lottery sales services on behalf of CSLA, 000.xxx Limited has extensive experience and full capacity in online lottery industry. Nonetheless, given the geographical coverage and financial commitment of the project contemplated under the CSLA Framework Agreement, it may not be commercially practicable for 000.xxx to implement the entire project on its own without further cooperation with relevant physical channels, offline outlets and lottery terminal suppliers. The Group, as a distributor of high quality, versatile lottery terminals and parts for CSLA with nearly ten years of industry experience, is capable of supplying lottery terminals and providing related solutions and services. With years of experience established in the PRC gaming and lottery terminal market, the Group has accumulated extensive networks and resources in the PRC. The Group is desirous to capitalise on these networks and resources, broaden its source of revenue and expand its business operations with an aim to maximizing profit and return for the Company. Accordingly, in view of the business potential, Xxxx Xxxxxxxx, E-Sun Sky and 深圳市穗彩科技開發有限公司 (Shenzhen General Lottery Technology Co., Ltd.) (“Shenzhen GenLot”) (an independent third party) agreed to collaborate their existing channels and resources to expand their business in the end-market of sports lottery terminals in the PRC. As disclosed in the Previous Announcement, the Group intends to provide consultancy services and/or financing to 000.xxx Limited. The existing business of the Group comprises (i) the trading of lottery terminals and parts; and (ii) the provision of services and solutions for the distribution of lottery products. As to the trading of lottery terminals and parts, the Group obtains orders from Beijing Intradak System Technology Co., Ltd, one of the six authorised providers of CSLA, and places orders with Xx Xxxxx Computer Technology (Shanghai) Co., Ltd. As to the provision of services and solutions for the distribution of lottery products, the Group provides system maintenance services and game upgrading technology for the rapid-draw game “Xxx Xxx Xxx” in the Chongqing Municipality. This existing business model can be traced back to 2008. The management of the Company are fully aware of the uncertainty and seasonality of the procurement cycle of lottery terminals by CSLA, the low profit margin of its traditional terminals trading business and the risks of heavy reliance on a major customer and a major supplier. As such, the management of the Company has been actively exploring new opportunities to expand its existing business. However, the lottery industry in the PRC is heavily regulated by the Chinese government, so the Company has to operate with other market participants to fully utilise any opportunities under the current regulatory regime. In order to further expand its lottery business, the Company intends to cooperate with 000.xxx Limited in developing the business of new retail of lottery tickets brought by the CSLA Framework Agreement. In respect of Provision of Terminals, the Group will be supplying terminals of an upgrade version procured from Shenzhen GenLot. In respect of Online Channel Referral and Offline Channel Referral, the Group will be responsible for referring online channels and offline channels to E-Sun Sky and procuring their cooperation. The main difference between the transactions contemplated under the Cooperation Agreement and the Group’s existing lottery terminal trading business is that the transactions contemplated under the Cooperation Agreement involves an online element whereas the Group’s existing lottery terminal trading business only relates to offline trading and sales. The Company’s technical expertise and business network meet 000.xxx Limited’s requirements for a service provider under the new retail of lottery tickets. As such, the Company does not foresee any particular new set of management skill set required in carrying out the transactions contemplated under the Cooperation Agreement. The Cooperation Agreement was therefore entered into by Xxxx Xxxxxxxx and E-Sun Sky to put their cooperation into practice and bring mutual benefits to each party. The Directors (except the independent non-executive Directors whose view(s) will be contained in the circular to be despatched to the Shareholders) considered that:

Internal Control. The 7.1 Each of the Reporting Accountants is independent as required by the Main Board Listing Rules and the GEM Listing Rules and the Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (a) transactions are executed in accordance with management’s general or specific authorisations; (b) access to assets is permitted only in accordance with management’s general or specific authorisation; (c) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate actions taken with respect to any differences; and (d) the Company has implemented made and kept books, records and accounts, in reasonable detail, which accurately and fairly reflect the following transactions and dispositions of assets of such entity and provide a sufficient basis for the preparation of financial statements in conformity with HKFRS. Neither the Company nor any of the other members of the Group has experienced any material difficulties with regard to the foregoing matters within the 12 months prior to the date of this Agreement. The Directors have established and followed procedures which provide a reasonable basis for them to make proper judgments as to the financial position, results of operations and prospects of the Group taken as a whole and are not aware of any material weakness in its internal control measures for monitoring controls over financial reporting. Each member of the pricing Group has established and maintains and evaluates disclosure and corporate governance controls and procedures to ensure that (a) material information relating to such member of the Group is made known in a timely manner to the Board and the Company’s management by others within those entities and (b) the Company and the Directors comply in a timely manner with the requirements of the Main Board Listing Rules, the GEM Listing Rules , the Hong Kong Codes on Takeovers and Mergers and Share Repurchases, the SFO, the Companies Ordinance and any other Applicable Laws in all material respects, including, without limitation, the requirements of the SFO, the Main Board Listing Rules and the GEM Listing Rules on disclosure of inside information and notifiable, connected and other terms of transactions required to be disclosed, and such disclosure and corporate governance controls and procedures are effective to perform the continuing connected transactions, including the transactions contemplated under the New Framework Purchase Agreements functions for which they were established and documented properly and the Lease (as supplemented implementation of such disclosure and corporate governance controls and procedures policies are monitored by the Supplemental Leasing Agreement) responsible persons. For the purposes of this paragraph, the term disclosure and corporate governance controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by the Company, including, without limitation, information in reports that it files or submits under any Applicable Laws, price-sensitive information and information on notifiable, connected and other transactions required to be disclosed, is recorded, processed, summarised and reported, in a timely manner and in any event within the time period required by Applicable Laws. 7.2 Any issues identified and as disclosed in the Internal Control Report have been rectified or improved to a sufficient standard or level for ensuring the operation and maintenance of efficient systems of internal accounting and financial reporting controls and disclosure and corporate governance controls and procedures that are effective to perform the transactions conducted under such agreements will be entered into based on normal commercial terms: (1) Before entering into the continuing connected transactions of functions for which they were established and to allow compliance by the Company, the procurement department Directors and other members of the Group will review with all Applicable Laws, and verify whether the price is fair no such issues have materially and reasonableadversely affected, or could reasonably be expected to materially and adversely affect, such controls and procedures or such ability to comply with all Applicable Laws in all material respects. In additionThe statutory books, if the pricing terms in respect books of the relevant agreement are applied for the first time or the pricing terms are different from those applied previously, the cost management department account and other records of whatsoever kind of each member of the Group also reviews the above works conducted by the procurement department when settling the agreements. (2) The financial management department of the Company is mainly responsible for reviewing and monitoring the continuing connected transactions to ensure that the annual caps of the relevant continuing connected transactions would not be exceeded and are implemented pursuant to the pricing policy or mechanism under the respective framework agreements. The financial management department of the Company will consult the internal control units of the Group, external lawyers and compliance adviser regarding compliance issues of the continuing connected transactions. (3) The financial management department of the Company will prepare an annual report to the supervisor of the financial management department of the Company. The supervisor of the financial management department will report to the audit committee of the Company and submit a confirmation letter to the audit committee, confirming the continuing connected transactions of the Group (which are subject to the annual review and disclosure requirements under the Listing Rules) are all (a) entered into in the ordinary and usual course of business of the Group; (b) entered into on normal commercial terms or better; and (c) pursuant to the relevant agreements governing such transactions, entered into on the basis that the terms are fair and reasonable and are in the interests of the Shareholders proper possession, up-to-date and contain complete and accurate records as a whole; and the internal monitoring procedures of the Group regarding continuing connected transactions are adequate and effective in ensuring such transactions are conducted required by Applicable Laws in such manner stated above. The audit committee will consider books in all material respects and no notice or allegation on such basis. The Board is the accuracy and rectification has been received; all accounts, documents and returns required by Applicable Laws to be delivered or made to the Registrar of Companies in Hong Kong, the view that the above internal control measures can ensure that the continuing connected transactions of the Group under the New Framework Purchase Agreements SFC or any other Governmental Authority in any jurisdiction have been duly and the Lease (as supplemented by the Supplemental Leasing Agreement) are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a wholecorrectly delivered or made.

Internal Control. The Company has implemented the following internal control measures for monitoring the pricing and other terms of the continuing connected transactions, transactions (including the transactions contemplated under the New Framework Purchase Agreements and the Lease (as supplemented by the Supplemental New Asset Leasing Agreement) and for ensuring that the transactions conducted under such agreements will be entered into based on normal commercial terms: (1) Before entering into the continuing connected transactions of the Company, the procurement department of the Group will review and verify whether the price is fair and reasonable. In addition, if the pricing terms in respect of the relevant agreement are applied for the first time or the pricing terms are different from those applied previously, the cost management department of the Group also reviews the above works conducted by the procurement department when settling the agreements. (2) The financial management department of the Company is mainly responsible for reviewing and monitoring the continuing connected transactions to ensure that the annual caps of the relevant continuing connected transactions would not be exceeded and are implemented pursuant to the pricing policy or mechanism under the respective framework agreements. The financial management department of the Company will consult the internal control units of the Group, external lawyers and compliance adviser regarding compliance issues of the continuing connected transactions. (3) The financial management department of the Company will prepare an annual report to the supervisor of the financial management department of the Company. The supervisor of the financial management department will report to the audit committee of the Company and submit a confirmation letter to the audit committee, confirming the continuing connected transactions of the Group (which are subject to the annual review and disclosure requirements under the Listing Rules) are all (a) entered into in the ordinary and usual course of business of the Group; (b) entered into on normal commercial terms or better; and (c) pursuant to the relevant agreements governing such transactions, entered into on the basis that the terms are fair and reasonable and are in the interests of the Shareholders as a whole; and the internal monitoring procedures of the Group regarding continuing connected transactions are adequate and effective in ensuring such transactions are conducted in such manner stated above. The audit committee will consider on such basis. The Board is of the view that the above internal control measures can ensure that the continuing connected transactions of the Group under the New Framework Purchase Agreements and the Lease (as supplemented by the Supplemental New Asset Leasing Agreement) Agreement are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Internal Control. The Company has formulated and strictly implemented various systems such as the following internal control measures for monitoring Administrative Measures of Connected Transactions of China Telecom Corporation Limited, the pricing and other terms Working Guidance of the continuing connected transactions, including the transactions contemplated under the New Framework Purchase Agreements Connected Transactions of China Telecom Corporation Limited and the Lease (as supplemented by the Supplemental Leasing Agreement) and for ensuring that the transactions conducted under such agreements will be entered into based on normal commercial terms: (1) Before entering into the continuing connected transactions Internal Control Manual of the Company, the procurement department of the Group will review and verify whether the price is fair and reasonable. In addition, if the pricing terms in respect of the relevant agreement are applied for the first time or the pricing terms are different from those applied previously, the cost management department of the Group also reviews the above works conducted by the procurement department when settling the agreements. (2) The financial management department of the Company is mainly responsible for reviewing and monitoring the continuing connected transactions China Telecom Corporation Limited to ensure that the annual caps of the relevant continuing connected transactions would not be exceeded and are implemented pursuant to the pricing policy or mechanism under the respective framework agreements. The financial management department of the Company will consult the internal control units of the Group, external lawyers and compliance adviser regarding compliance issues of the continuing connected transactions. (3) The financial management department of the Company will prepare an annual report to the supervisor of the financial management department of the Company. The supervisor of the financial management department will report to the audit committee of the Company and submit a confirmation letter to the audit committee, confirming the continuing connected transactions of the Group (which are subject to the annual review and disclosure requirements under the Listing Rules) are all (a) entered into in the ordinary accordance with pricing mechanisms and usual course of business of the Group; (b) entered into on normal commercial terms or better; and (c) pursuant to the relevant agreements governing such transactions, entered into on the basis transaction models that the terms are fair and reasonable and are in the interests of the Shareholders Company and its shareholders as a whole. The relevant business departments and connected persons negotiate the pricing terms of the continuing connected transactions. These pricing terms shall be determined in accordance with the pricing policies principles as set out in the agreements of continuing connected transactions, which shall be fair and reasonable and subject to the review of the finance department. The legal department regularly analyses and oversees the execution of connected transactions to ensure that they are implemented in accordance with the relevant terms under the connected transactions agreements. The finance department initiates the daily management of connected transactions, including cooperating with the relevant business departments for account reconciliation with connected parties, regularly analysing the implementation of connected transactions together with business departments and performing supervisory examination. The finance department regularly reports the status of the implementation of connected transactions to the Audit Committee. The audit department incorporates such connected transactions into the scope of annual internal control assessment and reports the results to the management. The auditors of the Company review the respective continuing connected transactions of the Company and confirm to the Board that the transactions have received the approval by the Board on an annual basis; the transactions have been entered into in accordance with the pricing policies as set out in the relevant agreements governing such transactions; and the internal monitoring procedures transactions have been performed in accordance with the terms of the Group regarding relevant agreements governing such transactions. Meanwhile, the auditors of the Company would confirm that the annual caps applicable to the respective continuing connected transactions are adequate entered into between the Company and effective in ensuring its connected persons have not been exceeded. The independent non-executive Directors of the Company conduct annual review on the continuing connected transactions and confirm that the transactions have been entered into, and the agreements governing such transactions were entered into, by the Group in the ordinary and usual course of business; the transactions are conducted on normal commercial terms or better and have been entered into in accordance with the relevant agreements governing such manner stated above. The audit committee will consider on such basistransactions, whose terms are fair and reasonable, and are in the interests of the shareholders of the Company as a whole. The Board is oversees the Company’s risk management and internal control systems, including internal control systems of connected transactions on an ongoing basis and the Board, through the Audit Committee, conducts an annual review of the view risk management and internal control systems for each financial year of the Company. After receiving the reports from the Internal Audit Department and the confirmation from the management to the Board on the effectiveness of these systems, the Board would confirm that the above Company’s risk management and internal control measures can ensure systems are solid, well-established, effective and sufficient. Upon completion of the disposal of E-surfing Pay, the Company believes that entering into the Payment and Digital Finance Related Services Framework Agreement enables the Group to continue to effectively facilitate the Group’s strategic planning and construction of the digital finance ecosystem, and realise synergies between E-surfing Pay and the Group’s telecommunications business through the provisions of payment and digital finance related services provided by E-surfing Pay and its subsidiaries to the Group. As a former subsidiary of the Company, E-surfing Pay has a long-standing and cooperative relationship with the Group in the past, which has enabled it to gain a more comprehensive and deeper understanding of the Group’s network features and business needs. Compared to third parties, E-surfing Pay is more capable of providing high quality services at a comparatively lower cost. The Group will receive high quality services and concurrently lower its operational expenses in an effective way. As of the date of this announcement, China Telecommunications Corporation is the Company’s controlling shareholder, holding approximately 70.89% of the issued share capital of the Company and approximately 64.53% of the issued share capital of E-surfing Pay. Pursuant to Chapter 14A of the Listing Rules, E-surfing Pay is a connected person of the Company and the transactions contemplated under the Payment and Digital Finance Related Services Framework Agreement constitute continuing connected transactions of the Company for the purpose of Chapter 14A of the Listing Rules. As each of the applicable percentage ratios (except for the profit ratio) of the Annual Cap for the year ending 31 December 2021 for the transactions contemplated under the Payment and Digital Finance Related Services Framework Agreement is expected to exceed 0.1% but is less than 5%, the continuing connected transactions of the Group payment and digital finance related services are only subject to the reporting, announcement and annual review requirements but are exempt from the independent shareholders’ approval requirement under the New Framework Purchase Agreements and the Lease (as supplemented by the Supplemental Leasing Agreement) are on normal commercial terms, fair and reasonable and in the interests Chapter 14A of the Company and the Shareholders as a wholeListing Rules.

Internal Control. The Company has implemented Group will, through the following Group’s internal control measures procedures and a series of risk management arrangements in accordance with the regulatory requirements, endeavour to maintain its independence 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 Revised Purchase Framework Agreement and the Strategic Cooperation Framework Agreement shall be conducted on a non-exclusive basis. The Group has the flexibility to enter into arrangement with Independent Third Parties for monitoring purchasing or selling equipment, products and/or services as it deems fit; 2. the pricing mechanism is transparent and other the implementation of such pricing mechanism is subject to strict scrutiny by the finance department, technical department, internal audit department and the legal department of the Company. This will ensure that the transactions are conducted in accordance with the relevant pricing policies and the quotations obtained meet the specification requirements; 3. the internal audit department of the Company will also conduct audit on the continuing connected transactions 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. The auditors and audit committee of the Company will also conduct annual review of the continuing connected transactions, including the transactions contemplated under the New Framework Purchase Agreements and the Lease (as supplemented by the Supplemental Leasing Agreement) and for ensuring that the transactions conducted under such agreements will be entered into based on normal commercial terms: (1) Before entering into to confirm whether the continuing connected transactions have been conducted in compliance with the pricing policies or system and whether the relevant annual caps have been exceeded; 4. with regard to the Revised Purchase Framework Agreement, the Group will keep and continue to update a centralised list of eligible suppliers whom are shortlisted based on their procurement qualification, capability to procure products with specific technical requirements, and the Group’s past experience in dealing with each of such suppliers. Prior to entering into the transactions by the Purchasers and the Sellers under the Revised Purchase Framework Agreement, the business department of the Company, Purchasers shall submit an application and the procurement department of the Purchasers shall organise and select suppliers from the list, which shall also be subject to consideration and approval by the chairman’s office of the Purchasers so as to ensure the fairness and reasonableness of relevant terms and pricing; and 5. with regard to the Strategic Cooperation Framework Agreement, the Group will review implemented detailed management procedures on sales since the year of 2017, which govern the three phases of sales, namely, pre-sales internal application and verify whether the price is fair approval, contract signing and reasonableafter-sales monitoring. In additionparticular, if in the pricing terms in respect pre-sales phase, once the prices of the relevant agreement parts or equipment are applied for the first time or the pricing terms are different from those applied previously, the cost management department of the Group also reviews the above works conducted by the procurement department when settling the agreements. (2) The financial management department of the Company is mainly responsible for reviewing and monitoring the continuing connected transactions to ensure that the annual caps of the relevant continuing connected transactions would not be exceeded and are implemented determined pursuant to the streamlined product pricing policy or mechanism under procedures, the respective framework agreementsapprovals by competent senior management members are required. The financial management department For each type of sales contract, the relevant procedures set forth the functional departments that are required to participate the contract review and due diligence, as well as detailed review standards. In the contract signing phase, a tiered structure of execution authority is implemented, depending on the consideration of the Company will consult the internal control units of the Group, external lawyers and compliance adviser regarding compliance issues of the continuing connected transactionscontracts. (3) The financial management department of the Company will prepare an annual report to the supervisor of the financial management department of the Company. The supervisor of the financial management department will report to the audit committee of the Company and submit a confirmation letter to the audit committee, confirming the continuing connected transactions of the Group (which are subject to the annual review and disclosure requirements under the Listing Rules) are all (a) entered into in the ordinary and usual course of business of the Group; (b) entered into on normal commercial terms or better; and (c) pursuant to the relevant agreements governing such transactions, entered into on the basis that the terms are fair and reasonable and are in the interests of the Shareholders as a whole; and the internal monitoring procedures of the Group regarding continuing connected transactions are adequate and effective in ensuring such transactions are conducted in such manner stated above. The audit committee will consider on such basis. The Board is of the view that the above internal control measures can ensure that the continuing connected transactions of the Group under the New Framework Purchase Agreements and the Lease (as supplemented by the Supplemental Leasing Agreement) are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.