Common use of Pricing Policy Clause in Contracts

Pricing Policy. Before placing a purchase order with the Buying Agents or the Vendors (as the case may be), the Group’s procurement department will compare the purchase price payable to the relevant Buying Agent or the Vendor for each purchase against prices for recovered paper or the Products (as the case may be) of comparable specifications quoted by at least two independent third party suppliers. The Group will also take into account prices of recovered paper and pulp published by RISI in order to determine the purchase cost of recovered paper or the Products (as the case may be). Based on this, the Group will prepare price tables on a daily basis setting out the maximum allowable purchase price of recovered paper or the Products (as the case may be) at a particular time. The above price information will be gathered by the Group’s procurement department and will be approved by the head of procurement of the Group. The procurement department will place an order with the Buying Agent or the Vendor (as the case maybe) only if the purchase price payable to the relevant Buying Agent or the Vendor (as the case may be) for a specified specification of recovered paper or the Products under the terms of the Buying Agent Agreement or the Pulp Purchase Agreement (as the case may be) is no less favourable than those which are available from independent third party suppliers for relevant delivery dates. If the purchase price payable to the relevant Buying Agent or the Vendor (as the case may be) falls below the relevant maximum allowable price as set out in the price tables, the Group will proceed with such purchase. INTERNAL CONTROL The relevant personnel of the business department of the Company will conduct regular checks on a monthly basis to review and assess whether the continuing connected transactions under the Buying Agent Agreement and the Pulp Purchase Agreement are conducted in accordance with the terms of the Buying Agent Agreement and the Pulp Purchase Agreement and will also regularly obtain updates on the market price of recovered paper and the Products for the purpose of considering if the price for a specific transaction is fair and reasonable and in accordance with the pricing policy. Such updates shall be obtained on a daily basis as part of its policy to prescribe the daily purchase price limit of the Group. For recovered paper, the updates would take into account prices for recovered paper of comparable specifications which are (i) published by independent third party suppliers, and (ii) quoted by at least two independent third party suppliers. For the Products, updates would take into account (i) the prices quoted by independent third party suppliers for the Products; and (ii) the production cost for the Products having considered the prevailing market price of the recovered paper and pulp (both onshore and offshore) published by RISI reports. Both the sales team and the marketing team of the Group will on a monthly basis gather market intelligence by way of research and/or investigation to ascertain the quality of the recovered paper as compared to similar products in the market and to ensure that the quality of the Products purchased from the Vendors is not lower than similar products available on the market. The Company will conduct semi-annual reviews of the transactions conducted under the Buying Agent Agreement and the Pulp Purchase Agreement (i) to consider effective implementation of the pricing policies and the payment methods; (ii) to identify management weaknesses, and (iii) to recommend improvement measures to ensure that the internal control measures in respect of the continuing connected transactions remain complete and effective. Where any weaknesses are identified, the Company will take measures to address them as soon as practicable. The Company will conduct semi-annual evaluation of the balances of the Buying Agent Annual Caps and the Pulp Purchase Annual Caps. The independent non-executive Directors will conduct an annual review of the transactions under the Buying Agent Agreement and the Pulp Purchase Agreement pursuant to Rule 14A.55 of the Listing Rules. The auditor of the Company will conduct an annual review of the transactions under the Buying Agent Agreement and the Pulp Purchase Agreement pursuant to Rule 14A.56 of the Listing Rules. Considering the pricing policies and internal control measures outlined above, the Directors believe that the price determination procedures outlined above are sufficient to ensure that the transactions contemplated under the Buying Agent Agreement and the Pulp Purchase Agreement will be conducted on normal commercial terms, are fair and reasonable and not prejudicial to the interests of the Company and its minority shareholders. REASONS FOR AND BENEFITS OF THE TRANSACTIONS UNDER THE BUYING AGENT AGREEMENT AND PULP PURCHASE AGREEMENT The Group is principally engaged in the business of large-scale paper manufacturing and specializes in the production of linerboard, corrugating medium and tissue paper. Recovered paper is one of the core raw materials of the Group in its manufacturing activities. In 2018, having balanced the risks associated with establishing its own recovered paper sourcing operations, the Group entered into the 2018 Buying Agent Agreement to engage the Buying Agents to source recovered paper from the United States, the United Kingdom and continental Europe. The Group considered that such arrangement would be most cost-effective to ensure the continued supply of recovered paper. Such recovered paper purchased was imported to the Group’s manufacturing facilities in the PRC and in Southeast Asia as raw materials. For the latest financial year ended 31 December 2020, the amount of recovered paper purchased (including agent fee) by the Group pursuant to the 2018 Buying Agent Agreement was approximately US$246 million (equivalent to approximately HK$1,922 million) representing approximately 17% of the Group’s total purchase of recovered paper in 2020, whilst the amount of recovered paper purchased directly from overseas independent suppliers amounted to approximately US$65 million (equivalent to approximately HK$506 million) representing approximately 5% of the Group’s total purchase of recovered paper in 2020. However, due to greater demand and awareness of environment and safety issues, the PRC government has implemented a number of new regulations on importing recovered paper. This has created difficulties for the Group on importing recovered paper from overseas in large volumes to support paper production in the PRC. In order to overcome such difficulties, the Group started using the Products as alternative raw materials in order to reduce the reliance on recovered paper and the Group has entered into the Master Agreement on 30 May 2019. Pursuant to the Master Agreement, each of Best Eternity, Ms. Xxx Xxxxxxx Man Xxx and Xx. Xxx Man Xxxxx agreed to maintain certain production capacities and/or supply of the Products to enable the Group to secure quality pulp board, pulp roll and related product sources in the market at reasonable price. For the latest financial year ended 31 December 2020, the amount of the Products purchased by the Group from the Previous Vendors’ Group was approximately US$34 million (equivalent to approximately HK$267 million) representing approximately 36% of the Group’s total purchase of the Products in 2020, whilst the amount of Products purchased directly from independent suppliers amounted to approximately US$60 million (equivalent to approximately HK$472 million) representing approximately 64% of the Group’s total purchase of the Products in 2020. In January 2021, the PRC government implemented full import ban on recovered paper. As a result, the domestic supply of recovered paper in the PRC significantly tightened, driving up the prices of raw materials. In addition, demand for paper products has been further increased by the “replacement of plastic with paper” trend and the recovery of consumer market demand and accelerating industrial protection in the PRC. In response to such changes in the market, the Group continued to consolidate upstream resources and develop a vertical business model covering pulp-making and recovered paper recycling in order to integrate the industrial chain and ensure the supply of raw materials. The Group has also introduced new production capacities in countries such as Malaysia and Indonesia to cater for its business expansion. Since the full import ban, recovered paper purchased under the 2018 Buying Agent Agreement has been supplied to the new production plants in Southeast Asia. In order to maintain a constant supply of raw material for paper production, the Group entered into the Buying Agent Agreement after the expiry of the 2018 Buying Agent Agreement, and Vantage Dragon and the Vendors entered into the Pulp Purchase Agreement after the expiry of the Master Agreement. The Directors (other than the independent non-executive Directors whose opinion will be given after receiving advice from the independent financial adviser, Xxxxxxxx) are of the view that the terms of the Buying Agent Agreement and the Pulp Purchase Agreement are fair and reasonable and are on normal commercial terms, and the entering into of the Buying Agent Agreement and the Pulp Purchase Agreement is in the ordinary and usual course of business of the Group and is in the best interests of the Company and Shareholders as a whole.

Pricing Policy. Before placing a purchase order The Group and the CGA Group will determine the prices of the Passenger Vehicles, passenger vehicles parts and accessories with reference to the Buying Agents or market prices of the Vendors (as relevant products at the case may be)relevant time. Where any material changes in the market result in the fluctuation of the costs of such products, the Group’s procurement department will compare the purchase price payable to the relevant Buying Agent or the Vendor for each purchase against prices for recovered paper or the Products (as the case may be) of comparable specifications quoted by at least two independent third party suppliers. The Group will also take into account prices of recovered paper and pulp published by RISI in order to determine the purchase cost of recovered paper or the Products (as the case may be). Based on this, the Group will prepare price tables on a daily basis setting out the maximum allowable purchase price of recovered paper or the Products (as the case may be) at a particular time. The above price information will be gathered by the Group’s procurement department and will be approved by the head of procurement of the Group. The procurement department will place an order with the Buying Agent or the Vendor (as the case maybe) only if the purchase price payable to the relevant Buying Agent or the Vendor (as the case may be) for a specified specification of recovered paper or the Products under the terms of the Buying Agent Agreement or the Pulp Purchase Agreement (as the case may be) is no less favourable than those which are available from independent third party suppliers for relevant delivery dates. If the purchase price payable to the relevant Buying Agent or the Vendor (as the case may be) falls below the relevant maximum allowable price as set out in the price tables, the Group will proceed with such purchase. INTERNAL CONTROL The relevant personnel of the business department of the Company will conduct regular checks on a monthly basis to review and assess whether the continuing connected transactions under the Buying Agent Agreement and the Pulp Purchase Agreement are conducted in accordance with the terms of the Buying Agent Agreement and the Pulp Purchase Agreement and will also regularly obtain updates on the market price of recovered paper and the Products for the purpose of considering if the price for a specific transaction is fair and reasonable and in accordance with parties shall adjust the pricing policythrough amicable negotiations. Such updates shall be obtained on a daily basis as part of its policy to prescribe In determining the daily purchase price limit of the Group. For recovered paper, the updates would take into account prices for recovered paper of comparable specifications which are (i) published by independent third party suppliers, and (ii) quoted by at least two independent third party suppliers. For the Products, updates would take into account (i) the prices quoted by independent third party suppliers for the Products; and (ii) the production cost for the Products having considered the prevailing market price of the recovered paper and pulp (both onshore and offshore) published by RISI reports. Both the sales team and the marketing team of the Group will on a monthly basis gather market intelligence by way of research and/or investigation to ascertain the quality of the recovered paper as compared to similar products in the market and to ensure that the quality of the Products purchased from the Vendors is not lower than similar products available on the market. The Company will conduct semi-annual reviews of the transactions conducted under the Buying Agent Agreement and the Pulp Purchase Agreement (i) to consider effective implementation of the pricing policies and the payment methods; (ii) to identify management weaknesses, and (iii) to recommend improvement measures to ensure that the internal control measures in respect of the continuing connected transactions remain complete and effective. Where any weaknesses are identified, the Company will take measures to address them as soon as practicable. The Company will conduct semi-annual evaluation of the balances of the Buying Agent Annual Caps and the Pulp Purchase Annual Caps. The independent non-executive Directors will conduct an annual review of the transactions under the Buying Agent Agreement and the Pulp Purchase Agreement pursuant to Rule 14A.55 of the Listing Rules. The auditor of the Company will conduct an annual review of the transactions under the Buying Agent Agreement and the Pulp Purchase Agreement pursuant to Rule 14A.56 of the Listing Rules. Considering the pricing policies and internal control measures outlined above, the Directors believe that the price determination procedures outlined above are sufficient to ensure that the transactions contemplated under the Buying Agent Agreement and the Pulp Purchase Agreement will be conducted on normal commercial terms, are fair and reasonable and not prejudicial to the interests of the Company and its minority shareholders. REASONS FOR AND BENEFITS OF THE TRANSACTIONS UNDER THE BUYING AGENT AGREEMENT AND PULP PURCHASE AGREEMENT The Group is principally engaged in the business of large-scale paper manufacturing and specializes in the production of linerboard, corrugating medium and tissue paper. Recovered paper is one of the core raw materials of the Group in its manufacturing activities. In 2018, having balanced the risks associated with establishing its own recovered paper sourcing operations, the Group entered into the 2018 Buying Agent Agreement to engage the Buying Agents to source recovered paper from the United States, the United Kingdom and continental Europe. The Group considered that such arrangement would be most cost-effective to ensure the continued supply of recovered paper. Such recovered paper purchased was imported to the Group’s manufacturing facilities in the PRC and in Southeast Asia as raw materials. For the latest financial year ended 31 December 2020, the amount of recovered paper purchased (including agent fee) by the Group pursuant to the 2018 Buying Agent Agreement was approximately US$246 million (equivalent to approximately HK$1,922 million) representing approximately 17% of the Group’s total purchase of recovered paper in 2020, whilst the amount of recovered paper purchased directly from overseas independent suppliers amounted to approximately US$65 million (equivalent to approximately HK$506 million) representing approximately 5% of the Group’s total purchase of recovered paper in 2020. However, due to greater demand and awareness of environment and safety issues, the PRC government has implemented a number of new regulations on importing recovered paper. This has created difficulties for the Group on importing recovered paper from overseas in large volumes to support paper production in the PRC. In order to overcome such difficulties, the Group started using the Products as alternative raw materials in order to reduce the reliance on recovered paper and the Group has entered into the Master Agreement on 30 May 2019. Pursuant to the Master Agreement, each of Best Eternity, Ms. Xxx Xxxxxxx Man Xxx and Xx. Xxx Man Xxxxx agreed to maintain certain production capacities and/or supply of the Products to enable the Group to secure quality pulp board, pulp roll and related product sources in the market at reasonable price. For the latest financial year ended 31 December 2020, the amount of the Products purchased products by the Group from the Previous Vendors’ CGA Group, the Group was approximately US$34 million (equivalent to approximately HK$267 million) representing approximately 36% will obtain the prevailing market prices of the products through various channels, including, among others, (a) comparable transactions namely, with similar types of products, quantity and specifications, with at least one independent third party in respect of the purchase of Passenger Vehicles and at least three independent third parties in respect of the purchase of vehicles parts and accessories during the same period; (b) maintaining contacts with at least one established supplier of Passenger Vehicles which is independent third party and at least three established suppliers of vehicles parts and accessories which are independent third parties through enquiries and obtaining price quotations from them regularly; and (c) conducting market price research on a monthly basis through various independent market data providers. Based on such market price information, the Group will compare and negotiate terms of quotations with these suppliers after taking into account factors including the lowest price quotations, quality of products, ability and capacity to meet specifications and delivery schedules, qualifications and relevant experience. The contract will be awarded to the suppliers who offer the best commercial terms to the Group after comprehensive assessment. On the other hand, in determining the prices of the sale of the products by the Group to the CGA Group’s total , the Group will make reference to the pricing system adopted by the Group which aligns with the expected market demand and competition strategy of the Group by reference to the designated mark-ups for different customers. The Group will consider the business reputation, financial capacity of the purchase of the Products in 2020products by the customers, whilst the amount of Products purchased directly from independent suppliers amounted to approximately US$60 million (equivalent to approximately HK$472 million) representing approximately 64% of the Group’s total credit terms for payment, goods delivery arrangements and purchase of the Products in 2020volume. In January 2021any event, the PRC government implemented full import ban on recovered paper. As a result, the domestic supply of recovered paper in the PRC significantly tightened, driving up the prices of raw materials. In addition, demand for paper the purchase of products has been further increased by the “replacement Group from the CGA Group or the prices of plastic with paper” trend the sale of products by the Group to the CGA Group shall be no less favourable to the Group than those available to it or from independent third parties under prevailing market conditions. Payment terms Payment will be settled on a monthly basis based on the number of Passenger Vehicles and passenger vehicles parts and accessories sold in that month pursuant to the definitive agreements. The Passenger Vehicles and the recovery of consumer market demand passenger vehicles parts and accelerating industrial protection in accessories will be delivered according to the PRC. In response individual definitive agreements to such changes in the market, the Group continued to consolidate upstream resources and develop a vertical business model covering pulp-making and recovered paper recycling in order to integrate the industrial chain and ensure the supply of raw materialsbe entered into. The Group has also introduced new production capacities in countries such as Malaysia and Indonesia to cater for its business expansion. Since the full import ban, recovered paper purchased payment terms under the 2018 Buying Agent Agreement has been supplied each separate individual definitive agreements shall be determined with reference to the new production plants in Southeast Asia. In order to maintain a constant supply of raw material for paper production, the Group entered into the Buying Agent Agreement after the expiry of the 2018 Buying Agent Agreement, and Vantage Dragon and the Vendors entered into the Pulp Purchase Agreement after the expiry of the Master Agreement. The Directors (other than the independent non-executive Directors whose opinion will be given after receiving advice from the independent financial adviser, Xxxxxxxx) are of the view that the payment terms of the Buying Agent Agreement sale and purchase with independent third parties under similar conditions to ensure that the Pulp Purchase Agreement payment terms are fair in line with the market practice. Detailed terms (including types and reasonable quantities of Passenger Vehicles and are on normal commercial terms, passenger vehicles parts and the entering accessories required) will be governed by separate individual definitive agreements entered into of the Buying Agent Agreement and the Pulp Purchase Agreement is in the ordinary and usual course of business between members of the Group and the CGA Group which shall follow the terms and principles under the Renewed Procurement Framework Agreement. Historical Transaction Amounts Set out below is the aggregate historical amounts paid/payable by the Group in respect of its purchase from CGA Group and the best interests aggregate historical amounts received/receivable by the Group in respect of its sales to the CGA Group for the period from 28 May 2021 to 30 November 2023 as well as the previous annual caps under the Existing Procurement Framework Agreement for the period from 28 May 2021 to 31 December 2023: Period from 28 May 2021 to 31 December 2021 Year ended 31 December 2022 Eleven months ended 30 November 2023 Year ending 31 December 2023 Actual amounts Historical Cap Actual amounts Historical Cap Actual amounts Historical Cap (RMB’ million) (RMB’ million) (RMB’ million) (Audited) (Audited) (Unaudited) 7.6 50.0 51.6 60.0 60.0 70.0 9.9 20.0 9.6 20.0 15.5 20.0 Amounts paid/payable by the Group to the CGA Group Amounts received/receivable by the Group from the CGA Group In 2021 and 2022, as affected by the recurring pandemic and due to the gradual adjustment of the Company management structure of the Group, the Group has concurrently implemented the management by automobile brands to coordinate with the existing management by regions based on different automobile brands distributed. Therefore, the Group’s demand for vehicles and Shareholders as a wholeprocurement strategies with CGA Group will be diversified in different regions, by different brands, and in different timeframe.

Pricing Policy. Before placing a purchase order with Given Genius AFC is not the Buying Agents exclusive provider of financing services to the XXXX & CO Dealers or the Vendors (as the case may be)XXXX & CO Retail Customers, the Group’s procurement department will compare the purchase price payable to the relevant Buying Agent or the Vendor for each purchase against prices for recovered paper or the Products (as the case may be) of comparable specifications quoted by at least two independent third party suppliers. The Group will also take into account prices of recovered paper and pulp published by RISI in order to determine the purchase cost of recovered paper or the Products (as the case may be). Based on this, the Group will prepare price tables on a daily basis setting out the maximum allowable purchase price of recovered paper or the Products (as the case may be) at a particular time. The above price information will be gathered by the Group’s procurement department and will be approved by the head of procurement of the Group. The procurement department will place an order with the Buying Agent or the Vendor (as the case maybe) only if the purchase price payable to the relevant Buying Agent or the Vendor (as the case may be) for a specified specification of recovered paper or the Products under the terms of the Buying Agent Agreement or the Pulp Purchase Agreement (as the case may be) is no less favourable than those which are available from independent third party suppliers for relevant delivery dates. If the purchase price payable to the relevant Buying Agent or the Vendor (as the case may be) falls below the relevant maximum allowable price as set out in the price tables, the Group will proceed with such purchase. INTERNAL CONTROL The relevant personnel of the business department of the Company will conduct regular checks on a monthly basis to review and assess whether the continuing connected transactions under the Buying Agent Agreement and the Pulp Purchase Agreement are conducted in accordance with the terms of the Buying Agent Agreement and the Pulp Purchase Agreement and will also regularly obtain updates on the market price of recovered paper and the Products for the purpose of considering if the price for a specific transaction is fair and reasonable and in accordance with the pricing policy. Such updates shall be obtained on a daily basis as part of its policy to prescribe the daily purchase price limit of the Group. For recovered paper, the updates would take into account prices for recovered paper of comparable specifications which are (i) published by independent third party suppliers, and (ii) quoted by at least two independent third party suppliers. For the Products, updates would take into account (i) the prices quoted by independent third party suppliers for the Products; and (ii) the production cost for the Products having considered the prevailing market price of the recovered paper and pulp (both onshore and offshore) published by RISI reports. Both the sales team and the marketing team of the Group will on a monthly basis gather market intelligence by way of research and/or investigation to ascertain the quality of the recovered paper as compared to similar products in the market and to ensure that the quality of the Products purchased from the Vendors is not lower than similar products available on the market. The Company will conduct semi-annual reviews of the transactions conducted under the Buying Agent Agreement and the Pulp Purchase Agreement (i) to consider effective implementation of the pricing policies and the payment methods; (ii) to identify management weaknesses, and (iii) to recommend improvement measures to ensure that the internal control measures in respect of the continuing connected transactions remain complete and effective. Where any weaknesses are identified, the Company will take measures to address them as soon as practicable. The Company will conduct semi-annual evaluation of the balances of the Buying Agent Annual Caps and the Pulp Purchase Annual Caps. The independent non-executive Directors will conduct an annual review of the transactions under the Buying Agent Agreement and the Pulp Purchase Agreement pursuant to Rule 14A.55 of the Listing Rules. The auditor of the Company will conduct an annual review of the transactions under the Buying Agent Agreement and the Pulp Purchase Agreement pursuant to Rule 14A.56 of the Listing Rules. Considering the pricing policies and internal control measures outlined above, the Directors believe that the price determination procedures outlined above are sufficient to ensure that the transactions contemplated under the Buying Agent Agreement and the Pulp Purchase Agreement will be conducted on normal commercial terms, are fair and reasonable and not prejudicial to the interests of the Company and its minority shareholders. REASONS FOR AND BENEFITS OF THE TRANSACTIONS UNDER THE BUYING AGENT AGREEMENT AND PULP PURCHASE AGREEMENT The Group is principally engaged in the business of large-scale paper manufacturing and specializes in the production of linerboard, corrugating medium and tissue paper. Recovered paper is one of the core raw materials of the Group in its manufacturing activities. In 2018, having balanced the risks associated with establishing its own recovered paper sourcing operations, the Group entered into the 2018 Buying Agent Agreement to engage the Buying Agents to source recovered paper from the United States, the United Kingdom and continental Europe. The Group considered that such arrangement would be most cost-effective to ensure the continued supply of recovered paper. Such recovered paper purchased was imported to the Group’s manufacturing facilities fierce competition in the PRC auto finance market and in Southeast Asia as raw materials. For that the latest financial year ended 31 December 2020Independent XXXX & CO Dealers and the XXXX & CO Retail Customers are independent third parties to Genius AFC, Genius AFC’s sales and marketing department will communicate with the amount of recovered paper purchased XXXX & CO Dealers on an ongoing basis (including agent feeobtaining feedbacks from XXXX & CO Dealers on the range of lending rates and other major terms offered by other vehicle financing companies) by the Group pursuant to the 2018 Buying Agent Agreement was approximately US$246 million (equivalent to approximately HK$1,922 million) representing approximately 17% of the Group’s total purchase of recovered paper in 2020, whilst the amount of recovered paper purchased directly from overseas independent suppliers amounted to approximately US$65 million (equivalent to approximately HK$506 million) representing approximately 5% of the Group’s total purchase of recovered paper in 2020. However, due to greater demand and awareness of environment and safety issues, the PRC government has implemented a number of new regulations on importing recovered paper. This has created difficulties for the Group on importing recovered paper from overseas in large volumes to support paper production in the PRC. In order to overcome such difficulties, the Group started using the Products as alternative raw materials in order to reduce the reliance on recovered paper and the Group has entered into the Master Agreement on 30 May 2019. Pursuant to the Master Agreement, each of Best Eternity, Ms. Xxx Xxxxxxx Man Xxx and Xx. Xxx Man Xxxxx agreed to maintain certain production capacities and/or supply of the Products to enable the Group to secure quality pulp board, pulp roll and related product sources in the market at reasonable price. For the latest financial year ended 31 December 2020, the amount of the Products purchased by the Group from the Previous Vendors’ Group was approximately US$34 million (equivalent to approximately HK$267 million) representing approximately 36% of the Group’s total purchase of the Products in 2020, whilst the amount of Products purchased directly from independent suppliers amounted to approximately US$60 million (equivalent to approximately HK$472 million) representing approximately 64% of the Group’s total purchase of the Products in 2020. In January 2021, the PRC government implemented full import ban on recovered paper. As a result, the domestic supply of recovered paper in the PRC significantly tightened, driving up the prices of raw materials. In addition, demand for paper products has been further increased by the “replacement of plastic with paper” trend and the recovery of consumer market demand and accelerating industrial protection in the PRC. In response to such changes in the market, the Group continued to consolidate upstream resources and develop a vertical business model covering pulp-making and recovered paper recycling in order to integrate the industrial chain and ensure the supply of raw materials. The Group has also introduced new production capacities in countries such as Malaysia and Indonesia to cater for its business expansion. Since the full import ban, recovered paper purchased under the 2018 Buying Agent Agreement has been supplied to the new production plants in Southeast Asia. In order to maintain a constant supply of raw material for paper production, the Group entered into the Buying Agent Agreement after the expiry of the 2018 Buying Agent Agreement, and Vantage Dragon and the Vendors entered into the Pulp Purchase Agreement after the expiry of the Master Agreement. The Directors (other than the independent non-executive Directors whose opinion will be given after receiving advice from the independent financial adviser, Xxxxxxxx) are of the view that the terms of the Buying Agent XXXX & CO Wholesale Facility Agreement and the Pulp Purchase XXXX & CO Retail Loan Agreement are fair and reasonable and are on normal commercial termscompetitive at all times during the term of the XXXX & CO Finance Cooperation Agreement, and such terms shall be in line with general auto finance market practice. All loan and product pricing proposals are also prepared in accordance with the entering into internal control procedures as disclosed in the paragraph headed “Internal Control Measures in relation to the Automobile Financing Arrangements – Internal Control within Genius AFC”. Genius AFC shall have the sole discretion in determining the final pricing of the Buying Agent Agreement services to be applied to the XXXX & CO Dealers and the Pulp Purchase Agreement is in the ordinary and usual course of business XXXX & CO Retail Customers. The final pricing of the Group services will be determined by Genius AFC after taking into consideration various factors, including its cost of funds, the borrower’s risk profile, which will be assessed by Genius AFC in accordance with the section headed “(iii) Lending Risk” below, as well as the lending rates offered by the competitors. The interest rates, at the time of each setting, for the loans to be provided by Genius AFC to the XXXX & CO Dealers and is in the best interests XXXX & CO Retail Customers shall be higher than the base lending rates published by the PBOC for similar types of the Company loans under similar terms and Shareholders as a wholeconditions, provided that all relevant laws and regulations are complied with.

Pricing Policy. Before placing As a purchase order with general principle, the Buying Agents or price and terms of the Vendors (individual orders in respect of the Xxxxxxx Xxxxx Transactions will be on normal commercial terms, negotiated on an arm’s length basis, on similar basis as the case may be)Group transacts business with other independent third party customers and shall be on terms which are no less favourable to the Group than those provided to independent third party customers. In the circumstances that no direct comparable price from the market is available, subject to the general principle disclosed above, the Group’s procurement department will compare the purchase price payable to the relevant Buying Agent or the Vendor personnel responsible for each purchase against prices for recovered paper or the Products (as the case may be) sales of comparable specifications quoted by at least two independent third party suppliers. The Group production wastes will also take into account the following factors when determining the prices of recovered paper and pulp published by RISI in order to determine the purchase cost of recovered paper or the Products (as the case may be). Based on this, the Group will prepare price tables on a daily basis setting out the maximum allowable purchase price of recovered paper or the Products (as the case may be) at a particular time. The above price information will be gathered by the Group’s procurement department and will be approved by the head of procurement of the Group. The procurement department will place an order with the Buying Agent or the Vendor (as the case maybe) only if the purchase price payable to the relevant Buying Agent or the Vendor (as the case may be) for a specified specification of recovered paper or the Products under the terms of the Buying Agent Agreement or the Pulp Purchase Agreement (as the case may be) is no less favourable than those which are available from independent third party suppliers for relevant delivery dates. If the purchase price payable to the relevant Buying Agent or the Vendor (as the case may be) falls below the relevant maximum allowable price as set out in the price tables, the Group will proceed with such purchase. INTERNAL CONTROL The relevant personnel of the business department of the Company will conduct regular checks on a monthly basis to review and assess whether the continuing connected transactions under the Buying Agent Agreement and the Pulp Purchase Agreement are conducted in accordance with the terms of the Buying Agent Agreement and the Pulp Purchase Agreement and will also regularly obtain updates on the market price of recovered paper and the Products for the purpose of considering if the price for a specific transaction is fair and reasonable and in accordance with the pricing policy. Such updates shall be obtained on a daily basis as part of its policy to prescribe the daily purchase price limit of the Group. For recovered paper, the updates would take into account prices for recovered paper of comparable specifications which are (i) published by independent third party suppliers, and (ii) quoted by at least two independent third party suppliers. For the Products, updates would take into account Xxxxxxx Xxxxx Transactions: (i) the comparable market prices quoted by independent third party suppliers of the materials required for the ProductsXxxxxxx Xxxxx Transactions with reference to the type and weight of wastes involved, in the case of cowhide, whether the cowhide are processed or not; and (ii) the production cost for the Products having considered the prevailing market price of the recovered paper and pulp (both onshore and offshore) published expected costs to be incurred by RISI reports. Both the sales team and the marketing team of the Group will on a monthly basis gather market intelligence by way of research and/or investigation to ascertain the quality of the recovered paper as compared to similar products in the market and to ensure that the quality of the Products purchased from the Vendors is not lower than similar products available on the market. The Company will conduct semi-annual reviews of the transactions conducted under the Buying Agent Agreement and the Pulp Purchase Agreement (i) to consider effective implementation of the pricing policies and the payment methods; (ii) to identify management weaknesses, and (iii) to recommend improvement measures to ensure that the internal control measures in respect of the continuing connected transactions remain complete and effective. Where any weaknesses are identified, the Company will take measures to address them as soon as practicable. The Company will conduct semi-annual evaluation of the balances of the Buying Agent Annual Caps and the Pulp Purchase Annual Caps. The independent non-executive Directors will conduct an annual review of the transactions under the Buying Agent Agreement and the Pulp Purchase Agreement pursuant to Rule 14A.55 of the Listing Rules. The auditor of the Company will conduct an annual review of the transactions under the Buying Agent Agreement and the Pulp Purchase Agreement pursuant to Rule 14A.56 of the Listing Rules. Considering the pricing policies and internal control measures outlined above, the Directors believe that the price determination procedures outlined above are sufficient to ensure that the transactions contemplated under the Buying Agent Agreement and the Pulp Purchase Agreement will be conducted on normal commercial terms, are fair and reasonable and not prejudicial to the interests of the Company and its minority shareholders. REASONS FOR AND BENEFITS OF THE TRANSACTIONS UNDER THE BUYING AGENT AGREEMENT AND PULP PURCHASE AGREEMENT The Group is principally engaged in the business of large-scale paper manufacturing and specializes in the production of linerboard, corrugating medium and tissue paper. Recovered paper is one of the core raw materials of the Group in its manufacturing activities. In 2018, having balanced the risks associated with establishing its own recovered paper sourcing operations, the Group entered into the 2018 Buying Agent Agreement to engage the Buying Agents to source recovered paper from the United States, the United Kingdom and continental Europeproviding such products. The Group considered that such arrangement would be most cost-effective will evaluate and assess the scope of the relevant order and prepare a detailed cost calculation with reference to ensure the continued supply cost of recovered papermaterials, products and labors. Such recovered paper purchased was imported to The evaluation and assessment of orders received and the preparation of costs calculations are mainly prepared by the Group’s manufacturing facilities in relevant team of personnel responsible for sales of production wastes and subject to final approval by the PRC and in Southeast Asia as raw materialshead of the sales department. For Upon the latest financial year ended 31 December 2020finalization of the costs calculations, the amount of recovered paper purchased (including agent fee) by price for the Group pursuant Xxxxxxx Xxxxx Transactions specified under individual purchase order will be determined with reference to the 2018 Buying Agent Agreement was approximately US$246 million (equivalent to approximately HK$1,922 million) representing approximately 17% type and quantity of the Group’s total purchase of recovered paper in 2020materials required by Xxxxxxx Xxxxx. Further, whilst the amount of recovered paper purchased directly from overseas independent suppliers amounted to approximately US$65 million (equivalent to approximately HK$506 million) representing approximately 5% of the Group’s total purchase of recovered paper in 2020. However, due to greater demand and awareness of environment and safety issues, the PRC government has implemented a number of new regulations on importing recovered paper. This has created difficulties for the Group on importing recovered paper from overseas in large volumes to support paper production in the PRC. In order to overcome such difficulties, the Group started using the Products as alternative raw materials in order to reduce the reliance on recovered paper and given that the Group has entered into the Master Agreement on 30 May 2019Xxxxxxx Xxxxx Transactions with Xxxxxxx Xxxxx for many years, price movement will also be regularly monitored by the Group. Pursuant The above factors will be considered by the Group’s relevant team of personnel responsible for sales of production wastes in determining the selling prices for all products under the Xxxxxxx Xxxxx Transactions and will be subject to the Master Agreement, each of Best Eternity, Ms. Xxx Xxxxxxx Man Xxx and Xx. Xxx Man Xxxxx agreed to maintain certain production capacities and/or supply final approval of the Products to enable the Group to secure quality pulp board, pulp roll and related product sources in the market at reasonable price. For the latest financial year ended 31 December 2020, the amount head of the Products purchased by sales department of the Group from the Previous Vendors’ Group was approximately US$34 million (equivalent to approximately HK$267 million) representing approximately 36% Group. The senior manager of the Group’s total purchase internal audit department will also supervise and monitor to ensure that the Xxxxxxx Xxxxx Transactions are conducted in accordance with such pricing policy. Payment Payment for the Xxxxxxx Xxxxx Transactions will be settled by way of the Products in 2020, whilst the amount of Products purchased directly from independent suppliers amounted bank transfer at credit terms to approximately US$60 million (equivalent to approximately HK$472 million) representing approximately 64% of the Group’s total purchase of the Products in 2020. In January 2021, the PRC government implemented full import ban on recovered paper. As a result, the domestic supply of recovered paper in the PRC significantly tightened, driving up the prices of raw materials. In addition, demand for paper products has been further increased be agreed by the “replacement of plastic parties in accordance with paper” trend and the recovery of consumer market demand and accelerating industrial protection in the PRC. In response to such changes in the market, the Group continued to consolidate upstream resources and develop a vertical business model covering pulp-making and recovered paper recycling in order to integrate the industrial chain and ensure the supply of raw materials. The Group has also introduced new production capacities in countries such as Malaysia and Indonesia to cater for its business expansion. Since the full import ban, recovered paper purchased under the 2018 Buying Agent Agreement has been supplied to the new production plants in Southeast Asia. In order to maintain a constant supply of raw material for paper production, the Group entered into the Buying Agent Agreement after the expiry of the 2018 Buying Agent Agreement, and Vantage Dragon and the Vendors entered into the Pulp Purchase Agreement after the expiry of the Master Agreement. The Directors (other than the independent non-executive Directors whose opinion will be given after receiving advice from the independent financial adviser, Xxxxxxxx) are of the view that the their respective normal terms of the Buying Agent Agreement and the Pulp Purchase Agreement are fair and reasonable and are on normal commercial terms, and the entering into of the Buying Agent Agreement and the Pulp Purchase Agreement is in the ordinary and usual course of business of the Group and is in the best interests of the Company and Shareholders as a wholesupplies to third parties.