Common use of REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS Clause in Contracts

REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS. The Group is principally engaged in the research and development, manufacturing and trading of automobiles, automobile parts and related automobile components, and investment holding. The Geely Holding Group is principally engaged in the sales of automobiles and related parts and components wholesale and retail business. The Existing CBU Agreement has continued to strengthen the business relationship between the Group and the Geely Holding Group. For many years, the Geely Holding Group has recognized the Group as a reliable supplier of products to meet the needs of its business, while the Group has managed to expand its sales coverage through the better distribution network of the Geely Holding Group in Taizhou, Zhejiang Province, the PRC. The Directors believe that the continuation of the Existing CBU Agreement is essential in maintaining and further developing the mutually beneficial relationship between the Group and the Geely Holding Group. Given that (i) Geely Holding has better distribution channels in Taizhou, Zhejiang Province, the PRC; and (ii) the price for the sales of CBUs to the Geely Holding Group under the New CBU Agreement will not be less than the price offered to independent third party distributors (please refer to the sub- section headed “Pricing policy” above for details on the Group’s internal control mechanism to ensure this pricing principle), the Directors consider that it is in the interest of the Company to continue to sell the CBUs to the Geely Holding Group as it would ensure a stable demand for the Company’s products. The Directors (including the independent non-executive Directors) are of the view that the terms of the New CBU Agreement, including the Annual Caps are fair and reasonable and the Continuing Connected Transactions contemplated under the New CBU Agreement are in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole. Geely Holding is a connected person of the Company for the purpose of the Listing Rules by virtue of the fact that Geely Holding is beneficially wholly-owned by Xx. Xx and his associates. As such, Geely Holding is an associate of Xx. Xx, an executive Director and a substantial Shareholder holding approximately 42.72% of the total issued share capital of the Company as at the date of this announcement. Accordingly, the New CBU Agreement constitutes continuing connected transactions for the Company pursuant to Chapter 14A of the Listing Rules. As the applicable percentage ratios (as defined in the Listing Rules) in respect of the Continuing Connected Transactions contemplated under the New CBU Agreement are more than 0.1% but less than 5% on an annual basis, the Continuing Connected Transactions are subject to the reporting, announcement and the annual review requirements, and exempt from the Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules. Xx. Xx is considered to have a material interest in the Continuing Connected Transactions by virtue of his interests in Geely Holding. As a result, Xx. Xx has abstained from voting on the Board resolution for approving the New CBU Agreement.

REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS. COSCO Finance is a non-bank financial institution approved and regulated by the PBOC and the CBRC and is engaged in providing financial services to members of the COSCO Group. The deposit interest rates and the lending rates offered by COSCO Finance to the Group will be equal to or more favourable to the Group than those offered by commercial banks in the PRC to the Group for comparable deposits or, as the case may be, loans. The Financial Services Master Agreement is therefore expected not only to provide the Group with a new means of financing but also to improve the efficiency of the use of its funds through higher interest income and lower costs of financing. The Group also expects to be in a better position to manage the security of its funds since COSCO Finance is principally engaged in not considered to be exposed to any significant capital risk. For the research and developmentavoidance of doubt, manufacturing and trading the Financial Services Master Agreement does not preclude the Group from using the services of automobiles, automobile parts and related automobile components, and investment holdingother financial institutions. The Geely Holding Group still has the freedom to select any major and independent PRC commercial banks as its financial services providers as it thinks fit and appropriate for the benefit of the Group. Xx. XX Xxxxxxx, the Chairman of the Board and a Non-executive Director, is principally engaged in the sales of automobiles and related parts and components wholesale and retail business. The Existing CBU Agreement has continued to strengthen the business relationship between the Group a director and the Geely Holding Grouppresident of COSCO, a holding company of COSCO Finance. For many yearsXx. XXXX Xxxxxxxx, the Geely Holding Group an Executive Director, is a director of COSCO Finance. Each of Xx. XX Xxxxxxx and Xx. XXXX Xxxxxxxx has recognized the Group as a reliable supplier of products to meet the needs of its business, while the Group has managed to expand its sales coverage through the better distribution network of the Geely Holding Group in Taizhou, Zhejiang Province, the PRC. The Directors believe that the continuation of the Existing CBU Agreement is essential in maintaining and further developing the mutually beneficial relationship between the Group and the Geely Holding Group. Given that (i) Geely Holding has better distribution channels in Taizhou, Zhejiang Province, the PRC; and (ii) the price for the sales of CBUs to the Geely Holding Group under the New CBU Agreement will not be less than the price offered to independent third party distributors (please refer to the sub- section headed “Pricing policy” above for details abstained from voting on the Group’s internal control mechanism to ensure this pricing principle), the Directors consider that it is in the interest relevant board resolutions of the Company to continue to sell approving the CBUs to Financial Services Master Agreement. None of the Geely Holding Group as it would ensure other Directors has a stable demand material interest in the Financial Services Master Agreement, but Dr. FAN XXX Xxx Xxx, Xxxx, an Independent Non-executive Director, has voluntarily abstained from voting on the relevant board resolutions of the Company approving the Financial Services Master Agreement for the Company’s productsreason that she is also an independent non-executive director of China COSCO, a subsidiary of COSCO. The Directors (including the independent nonIndependent Non-executive Directors) are of (other than the view three Directors who have abstained from voting on the relevant board resolutions approving the Financial Services Master Agreement as referred to above) consider that the terms of the New CBU Agreement, including the Annual Caps are fair and reasonable and the Continuing Connected Transactions contemplated under the New CBU Financial Services Master Agreement are is entered into in the ordinary and usual course of business of the Group on normal commercial terms and that the terms of the Financial Services Master Agreement are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Geely Holding is a connected person of the Company for the purpose of the Listing Rules by virtue of the fact that Geely Holding is beneficially wholly-owned by Xx. Xx and his associates. As such, Geely Holding is an associate of Xx. Xx, an executive Director and a substantial Shareholder holding approximately 42.72% of the total issued share capital of the Company as at the date of this announcement. Accordingly, the New CBU Agreement constitutes continuing connected transactions for the Company pursuant to Chapter 14A of the Listing Rules. As the applicable percentage ratios (as defined in the Listing Rules) in respect of the Continuing Connected Transactions contemplated under the New CBU Agreement are more than 0.1% but less than 5% on an annual basis, the Continuing Connected Transactions are subject to the reporting, announcement and the annual review requirements, and exempt from the Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules. Xx. Xx is considered to have a material interest in the Continuing Connected Transactions by virtue of his interests in Geely Holding. As a result, Xx. Xx has abstained from voting on the Board resolution for approving the New CBU Agreement.

REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS. The Feihe Dairy Group is principally engaged in was one of the research and development, manufacturing and trading Group’s top five customers for each of automobiles, automobile parts and related automobile components, and investment holdingthree years ended 31 December 2018. The Geely Holding Group is principally engaged in Board believes the sales of automobiles raw milk to the Feihe Dairy Group is important to the business of the Group. It is expected that the long term, continuing supply of raw milk products to the Feihe Dairy Group will further enhance the stability of the Group’s customer base and related parts and components wholesale and retail businessensure future demand for the Group’s raw milk product. The Existing CBU proposed grant of priority in favour of the Feihe Dairy Group in the supply of raw milk (the “Priority Rights”) and the extension of the existing term of the 2017 Feihe Master Agreement has continued to strengthen beyond 31 December 2019 were initially proposed and requested by the Feihe Dairy Group. Having considered (i) the background of Feihe Dairy Group; (ii) long-term business relationship between the Group and the Geely Holding Feihe Dairy Group. For many years, the Geely Holding Group has recognized ; (iii) that the Group as a reliable supplier will give priority to Feihe Dairy Group for purchase of products raw milk on terms and conditions being no less favourable to meet the needs of its business, while the Group has managed to expand its sales coverage through than that offered by the better distribution network of the Geely Holding Group in Taizhou, Zhejiang Province, the PRC. The Directors believe that the continuation of the Existing CBU Agreement is essential in maintaining and further developing the mutually beneficial relationship between the Group and the Geely Holding Group. Given that (i) Geely Holding has better distribution channels in Taizhou, Zhejiang Province, the PRCother purchasers; and (iiiv) the price for the sales of CBUs to the Geely Holding Group under the New CBU Agreement will not be less than the price offered to independent third party distributors (please refer to the sub- section headed “Pricing policy” above for details on the Group’s internal control mechanism to ensure this pricing principle)annual capacity of raw milk, the Directors consider that it is in the interest of the Company to continue to sell the CBUs to the Geely Holding Group as it would ensure a stable demand for the Company’s products. The Directors (including Directors, other than the independent non-executive Directors) are of the view Directors who will express their opinion in a separate letter to be included in a circular, consider that the terms and conditions of the New CBU Agreement, 2020 Feihe Master Agreement (including the Annual Caps Priority Rights) are on normal commercial terms and are fair and reasonable reasonable, and the Continuing Connected Transactions transactions contemplated under the New CBU 2020 Feihe Master Agreement are will be conducted in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders its shareholders as a whole. Geely Holding The Directors, other than the independent non-executive Directors who will express their opinion in a separate letter to be included in a circular, are also of the view that the proposed annual caps for the transactions contemplated under the 2020 Feihe Master Agreement for each of the three years ending 31 December 2022 are fair and reasonable. Feihe Dairy Group (comprising China Feihe and its subsidiaries) is not a connected person of the Company for the purpose of Rule 14A.06(7) of the Listing Rules Rules. However, due to our past relationship and transactions with Feihe Dairy Group as disclosed in the section headed “History, Development and Reorganization – our Relationship with Feihe Dairy Group” in the Prospectus, Feihe Dairy Group is deemed by virtue the Stock Exchange as a connected person pursuant to Rule 14A.19 (or the then Rule 14A.06) of the fact that Geely Holding is beneficially wholly-owned by Xx. Xx and his associatesListing Rules. As such, Geely Holding is an associate of Xx. Xx, an executive Director and a substantial Shareholder holding approximately 42.72% of the total issued share capital of the Company as at the date of this announcement. Accordingly, the New CBU Agreement constitutes continuing connected transactions for the Company pursuant has agreed to undertake to comply with Chapter 14A of the Listing Rules. As the applicable percentage ratios (as defined in the Listing Rules) ’ requirements in respect of the Continuing Connected Transactions transactions with Feihe Dairy Group from the Listing Date. Based on the proposed annual caps for each of the three years ending 31 December 2022, given that the relevant applicable percentage ratio in respect of the transactions contemplated under the New CBU 2020 Feihe Master Agreement are is expected to be more than 0.1% but less than 5% on an and the annual basisconsideration is not less than HK$10 million, the Continuing Connected Transactions such transactions are subject to the reporting, announcement and the annual review requirements, and exempt from the Independent Shareholdersindependent shareholders’ approval requirements requirement under Chapter 14A of the Listing Rules. XxAn Independent Board Committee has been established to advise the Independent Shareholders in relation to the 2020 Feihe Master Agreement, the transactions contemplated thereunder and the proposed annual caps. Xx is considered Gram Capital has been appointed as the Independent Financial Adviser to have advise the Independent Board Committee and the Independent Shareholders in this regard. The Company will convene a SGM to seek approval from the Independent Shareholders in respect of, among other matters, the 2020 Feihe Master Agreement and the transactions contemplated thereunder (including the proposed annual caps relating thereto). A circular containing, among others, (i) the letter from the Board containing further information on the 2020 Feihe Master Agreement, the transactions contemplated thereunder and the proposed annual caps relating thereto, (ii) the letter of recommendation from the Independent Board Committee to the Independent Shareholders, (iii) the letter of advice from Gram Capital, and (iv) the notice convening the SGM and the proxy form, will be dispatched to the shareholders on or before 16 October 2019. Each of the members of the Independent Board Committee has confirmed that he has no material interest in the Continuing Connected Transactions by virtue of his interests in Geely Holding. As a result, Xx. Xx has abstained from voting on transactions contemplated under the Board resolution for approving the New CBU 2020 Feihe Master Agreement.

REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS. The Group is principally engaged in entering into of the research and development, manufacturing and trading of automobiles, automobile parts and related automobile components, and investment holding. The Geely Holding Group is principally engaged in the sales of automobiles and related parts and components wholesale and retail business. The Existing CBU Fujian Yongfeng Master Maintenance Services Agreement has continued to strengthen the business relationship between will allow the Group to procure maintenance services needed for its ordinary and the Geely Holding Group. For many yearsusual course of business at prevailing market price and terms with assured stable quality, the Geely Holding Group has recognized the Group as a reliable supplier of products to meet the needs of its business, while the Group has managed to expand its sales coverage through the better distribution network of the Geely Holding Group in Taizhou, Zhejiang Province, the PRC. The Directors believe that the continuation of the Existing CBU Agreement is essential in maintaining and further developing the mutually beneficial relationship between the Group and the Geely Holding Group. Given that (i) Geely Holding has better distribution channels in Taizhou, Zhejiang Province, the PRC; and (ii) the price for the sales of CBUs to the Geely Holding Group under the New CBU Agreement will not be less than the price offered to independent third party distributors (please refer to the sub- section headed “Pricing policy” above for details on contributing towards the Group’s internal control mechanism to ensure this pricing principle), the Directors consider that it is efforts in the interest of the Company to continue to sell the CBUs to the Geely Holding Group as it would ensure a stable demand for the Company’s productsefficiency improvement. The Directors (including the independent non-executive Directors) are of the view that the terms of the New CBU Agreement, including the Annual Caps are fair and reasonable and the Continuing Connected Transactions transactions contemplated under the New CBU Fujian Yongfeng Master Maintenance Services Agreement are and will be entered into in the ordinary and usual course of business of the Group and are and will be on normal commercial terms and the terms thereof and the annual caps in relation thereto are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Geely Holding To the best of knowledge, information and belief of the Directors after having made all reasonable enquiries, none of the Directors has a material interest in the transactions contemplated under the Fujian Yongfeng Master Maintenance Services Agreement or is required to abstain from voting on the relevant Board resolutions approving the Fujian Yongfeng Master Maintenance Services Agreement and the transactions contemplated thereunder. However, to demonstrate good corporate governance practice, Xx. Xxxx Xxxxxx, a non-executive Director, voluntarily abstained from voting on the relevant Board resolutions since he has been an investment manager of Century Golden Resources Investment Group Co., Ltd. (世紀金源投資集團有限公司), an asset management company based in Beijing, the PRC which is owned by Xx. Xxxxx Xxx and Xx. Xxxxx Xxxxxxx (黃世熒) as to 60% and 40%, respectively, as at the date of this announcement, since August 2020. IMPLICATIONS UNDER THE LISTING RULES Fujian Yongfeng is ultimately owned as to 64.74% by Xx. Xxxxx Xxx, a substantial Shareholder, indirectly holding approximately 12.53% of the entire issued share capital of the Company. Hence, Xxxxxx Xxxxxxxx, being an associate of Xx. Xxxxx Xxx, is a connected person of the Company for and the purpose of transactions contemplated under the Listing Rules by virtue of the fact that Geely Holding is beneficially wholly-owned by Xx. Xx and his associates. As such, Geely Holding is an associate of Xx. Xx, an executive Director and a substantial Shareholder holding approximately 42.72% of the total issued share capital of the Company as at the date of this announcement. Accordingly, the New CBU Fujian Yongfeng Master Maintenance Services Agreement constitutes constitute continuing connected transactions for the Company pursuant to Chapter 14A of the Listing RulesCompany. As the applicable percentage ratios (other than profits ratio) as defined in under Rule 14.07 of the Listing Rules) Rules in respect of the Continuing Connected Transactions highest annual cap contemplated under the New CBU Fujian Yongfeng Master Maintenance Services Agreement are more than exceed 0.1% but are all less than 5% on an annual basis%, the Continuing Connected Transactions such transactions are only subject to the reporting, announcement and the annual review requirements, and exempt from the Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules but are exempted from the circular (including advice from the independent financial advisor) and Independent Shareholders’ approval requirements pursuant to Rule 14A.76(2)(a) of the Listing Rules. Xx. Xx is considered to have a material interest in the Continuing Connected Transactions by virtue of his interests in Geely Holding. As a result, Xx. Xx has abstained from voting on the Board resolution for approving the New CBU Agreement.