RoboSense Technology Co., Ltd - Proxy Solicitation & Information Statement 2021

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Luoyang Glass Company Limited* , you should at once hand this circular to the purchaser(s) or the transferee(s), or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or the transfer was effected for transmission to the purchaser(s) or the transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

＊

(1) CONTINUING CONNECTED TRANSACTIONS; (2) MAJOR TRANSACTION AND CONTINUING CONNECTED TRANSACTION; (3) CHANGE OF OPERATION TERM OF BUSINESS LICENSE OF THE COMPANY;

(4) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION; AND

(5) PROPOSED AMENDMENTS TO THE RULES OF PROCEDURE FOR GENERAL MEETINGS

Financial adviser to Luoyang Glass Company Limited*

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Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

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Unless the context requires otherwise, capitalised terms used in this cover page shall have the same meanings as those set out in the section headed “Definitions” in this circular.

A letter from the Board is set out on pages 1 to 45 of this circular. A letter from the Independent Board Committee is set out on pages 46 to 47 of this circular. A letter from the Independent Financial Adviser is set out on pages 48 to 92 of this circular.

The EGM scheduled to be held at 9:00 a.m. on 18 January 2021 (Monday) was postponed to 9:00 a.m. on 9 February 2021 (Tuesday). The notice for convening the EGM to be held at the conference room of the Company on 3rd Floor, No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC, which was despatched to the Shareholders on 3 December 2020, is set out on pages 135 to 138 of this circular.

A form of proxy for use at the EGM was published on the website of the Stock Exchange (http://www.hkexnews.hk) on 3 December 2020 and was also despatched to the Shareholders on 3 December 2020. Whether or not you are able to attend the EGM in person, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the Company’s share registrar in Hong Kong, Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, or to the Company’s registered address at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC as soon as possible and in any event not less than 24 hours before the time appointed for holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

25 January 2021

For identification purposes only

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	46
Letter from the Independent Financial Adviser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	48
Appendix I – Financial Information of the Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	93
Appendix II – General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	100
Appendix III – Proposed Amendments to the Articles of Association. . . . . . . . . . . . . . . . . . . . . .	106
Appendix IV – Revised Rules of Procedure for General Meetings. . . . . . . . . . . . . . . . . . . . . . . . .	115
Notice of EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	135

– i –

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions shall have the following meanings:

“2018–2020 CCT Agreements”

the 2018–2020 Sale and Purchase of Glass Products Framework Agreement, the 2018–2020 Sale of Raw Materials Framework Agreement, the 2018–2020 Technical Services Framework Agreement, the 2018–2020 Engineering Equipment Procurement and Installation Framework Agreement, the 2018– 2020 Sale and Purchase of Spare Parts Framework Agreement, and the 2018–2020 Sale and Purchase of Products Framework Agreement

“2018–2020 Engineering Equipment Procurement and Installation Framework Agreement”

the engineering equipment procurement and installation framework agreement dated 24 January 2018 entered into between the Company and CNBMG, pursuant to which the CNBMG Group agreed to supply equipment materials, construction and installation services required for engineering projects to the Group

“2018–2020 Sale and Purchase of Glass Products Framework Agreement”
the sale and purchase of glass products framework agreement dated 24 January 2018 entered into between the Company and CNBMG, pursuant to which the Group agreed to supply certain glass products to the CNBMG Group
“2018 – 2020 Sale and Purchase of Products Framework Agreement”

the sale and purchase of products framework agreement dated 24 January 2018 entered into between Triumph and the Company, pursuant to which the Triumph Group agreed to supply float glass and wooden packaging boxes to the Group

“2018–2020 Sale and Purchase of Spare Parts Framework Agreement”

the sale and purchase of spare parts framework agreement dated 24 January 2018 entered into between CNBMG and the Company, pursuant to which the CNBMG Group agreed to supply certain equipment and spare parts to the Group

“2018–2020 Sale of Raw Materials Framework Agreement”
the sale of raw materials framework agreement dated 24 January 2018 entered into between CNBMG and the Company, pursuant to which the CNBMG Group agreed to supply certain raw materials to the Group

– ii –

DEFINITIONS

“2018–2020 Technical Services Framework Agreement”
“2021–2023 CCT Agreements”
“2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement”
“2021–2023 Financial Services Framework Agreement”
“2021–2023 Sale and Purchase of Glass Products Framework Agreement”
“2021–2023 Sale and Purchase of Products Framework Agreement”
“2021–2023 Sale and Purchase of Raw Materials Framework Agreement”

the technical services framework agreement entered into between the Company and CNBMG on 24 January 2018, pursuant to which the CNBMG Group agreed to provide certain technical services to the Group

the Non-exempt 2021–2023 CCT Agreements, the 2021–2023 Technical Services Framework Agreement, the 2021–2023 Sale and Purchase of Spare Parts Framework Agreement and the loan services and other financial services under the 2021–2023 Financial Services Framework Agreement

the engineering construction equipment procurement and installation framework agreement dated 2 December 2020 entered into between the Company and CNBMG, pursuant to which the CNBMG Group agreed to supply equipment materials, construction and installation services required for engineering projects to the Group

the financial services framework agreement dated 2 December 2020 entered into between the Company and CNBMG Finance, pursuant to which CNBMG Finance agreed to provide deposit services, loan services and other financial services approved by the CBIRC

the sale and purchase of glass products framework agreement dated 2 December 2020 entered into between the Company and CNBMG, pursuant to which the Group agreed to supply certain glass products to the CNBMG Group

the sale and purchase of products framework agreement dated 2 December 2020 entered into between Triumph and the Company, pursuant to which the Triumph Group agreed to supply glass products and packaging box products to the Group

the sale and purchase of raw materials framework agreement dated 2 December 2020 entered into between CNBMG and the Company, pursuant to which the CNBMG Group agreed to supply certain raw materials to the Group

– iii –

DEFINITIONS

“2021–2023 Sale and Purchase of Spare Parts Framework Agreement”
the sale and purchase of spare parts framework agreement dated 2 December 2020 entered into between CNBMG and the Company, pursuant to which the CNBMG Group agreed to supply certain equipment and spare parts to the Group
“2021–2023 Technical Services Framework Agreement”
the technical services framework agreement entered into between the Company and CNBMG on 2 December 2020, pursuant to which the CNBMG Group agreed to provide certain technical services to the Group
“A Share(s)” the domestic ordinary share(s) of RMB1.00 each in the share capital of the Company, which are listed on the Shanghai Stock Exchange and subscribed for and traded in RMB
“Articles of Association” the articles of association of the Company
“associate(s)”
has the same meaning as ascribed to it under the Listing Rules
“Bengbu Institute”
CNBM Bengbu Design & Research Institute for Glass Industry Co., Ltd* (中建材蚌埠玻璃工業設計研究院有限公司), a company incorporated in the PRC with limited liability, the substantial shareholder of the Company and a wholly-owned subsidiary of Triumph
“Board” the board of Directors
“CBIRC”
China Banking and Insurance Regulatory Commission* (中國銀行保險監督管理委員會)
“CLFG”
China Luoyang Float Glass (Group) Company Limited* (中國洛陽浮法玻璃集團有限責任公司), a company incorporated in the PRC with limited liability, and the substantial shareholder of the Company
“CNBM” China National Building Material Company Limited* (中國建材股份有限公司), a joint stock limited company incorporated under the laws of the PRC, the H shares of which are listed on the Stock Exchange and approximately 41.55% of the issued share capital of which are directly and indirectly held by CNBMG

– iv –

DEFINITIONS

“CNBMG”

China National Building Material Group Co., Ltd.* (中國建材集團有限公司), a wholly state-owned enterprise incorporated in the PRC and the ultimate controlling shareholder of the Company

“CNBMG Finance” China National Building Material Group Finance Co., Ltd.* (中國建材集團財務有限公司), a limited liability company incorporated under the laws of the PRC, and 70% equity interest in which is directly held by CNBMG and 30% equity interest in which is indirectly held by the CNBM

“CNBMG Group” CNBMG and its subsidiaries

“Company”

Luoyang Glass Company Limited* (洛陽玻璃股份有限公司), a joint stock limited company incorporated in the PRC with limited liability, the H Shares and A Shares of which are listed on the main board of the Stock Exchange (stock code: 1108) and the Shanghai Stock Exchange (stock code: 600876) respectively
“connected person(s)” has the same meaning as ascribed to it under the Listing Rules
“controlling shareholder(s)”

has the same meaning as ascribed to it under the Listing Rules

“Directors” the directors of the Company, including the independent nonexecutive directors of the Company

“EGM” the extraordinary general meeting of the Company to be convened and held at 9:00 a.m. on 9 February 2021 (or any adjourned meeting thereof) for the Independent Shareholders to consider and, if thought fit, approve, among other things, the 2021–2023 CCT Agreements and their respective Proposed Annual Caps and the Shareholders to consider and, if thought fit, approve, among other things, (i) change of operation term of business license of the Company; (ii) proposed amendments to the Articles of Association; and (iii) proposed amendments to the Rules of Procedures for General Meetings

“Group”

the Company and its subsidiaries

– v –

DEFINITIONS

“H Share(s)”
“Hong Kong”
“Huaguang Group”
“Independent Board Committee”
“Independent Financial Adviser”
“Independent Shareholders”
“International Engineering”
“Latest Practicable Date”
“Listing Rules”
“Non-exempt 2021–2023 CCT Agreements”
overseas listed foreign share(s) of RMB1.00 each in the share capital of the Company, listed on the main board of the Stock Exchange and traded in Hong Kong dollars

the Hong Kong Special Administrative Region of the PRC

Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd.* (安徽華光光電材料科技集團有限公司), a company incorporated in the PRC with limited liability

the independent board committee of the Company comprising all of the independent non-executive Directors
Veda Capital Limited, a corporation licensed to carry out Type 6 (advising on corporate finance) regulated activity under the SFO, being the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Non-exempt 2021-2023 CCT Agreements and their respective Proposed Annual Caps
Shareholders other than CNBMG and its associates
China Triumph International Engineering Co., Ltd.* (中國建材國際工程集團有限公司), a company incorporated in the PRC with limited liability
21 January 2021, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular
the Rules Governing the Listing of Securities on the Stock Exchange
the 2021–2023 Sale and Purchase of Glass Products Framework Agreement, the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement, the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement, the 2021–2023 Sale and Purchase of Products Framework Agreement, and the deposit services under the 2021–2023 Financial Services Framework Agreement

– vi –

DEFINITIONS

“PBOC”	the People’s Bank of China* (中國人民銀行)
“PRC” or “China”	The People’s Republic of China which, for the purpose of this
	circular and for geographical reference only, excludes Hong
	Kong and the Macau Special Administrative Region of the
	PRC and Taiwan
“Proposed Annual Caps”	the maximum aggregate annual transaction amounts for each of
	the continuing connected transactions contemplated under the
	2021–2023 CCT Agreements for each of the three years ending
	31 December 2023
“RMB”	Renminbi, the lawful currency of the PRC
“Rules of Procedure	the Rules of Procedure for General Meetings of the Company
for General Meetings”
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the Laws
	of Hong Kong)
“Shanghai Listing Rules”	Rules Governing the Listing of Stocks on Shanghai Stock
	Exchange
“Shareholder(s)”	the shareholder(s) of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“substantial shareholder(s)”	has the meaning as ascribed to it under the Listing Rules
“Triumph”	Triumph Technology Group Company Limited* (凱盛科技
	集團有限公司), a company incorporated in the PRC with
	limited liability and an indirect controlling shareholder of the
	Company
“Triumph Group”	Triumph and its subsidiaries
“VAT”	value-added tax in the PRC
“%”	per cent

For identification purposes only

– vii –

LETTER FROM THE BOARD

＊

Executive Directors:

Mr. Zhang Chong (Chairman) Mr. Xie Jun (Vice Chairman) Mr. Ma Yan (General Manager) Mr. Wang Guoqiang

Mr. Zhang Rong

Registered and principal office: No. 9 Tang Gong Zhong Lu Xigong District Luoyang Municipal Henan Province The PRC

Non-executive Directors:

Mr. Ren Hongcan

Mr. Chen Yong

Independent non-executive Directors:

Mr. Jin Zhanping

Mr. Ye Shuhua

Mr. He Baofeng

Ms. Zhang Yajuan

25 January 2021

To the Shareholders

Dear Sir or Madam,

(1) CONTINUING CONNECTED TRANSACTIONS;

(2) MAJOR TRANSACTION AND CONTINUING CONNECTED TRANSACTION; (3) CHANGE OF OPERATION TERM OF BUSINESS LICENSE OF THE COMPANY;

(4) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION; AND

(5) PROPOSED AMENDMENTS TO THE RULES OF PROCEDURE FOR GENERAL MEETINGS

– 1 –

LETTER FROM THE BOARD

INTRODUCTION

References are made to the announcement of the Company dated 2 December 2020 in relation to the 2021–2023 CCT Agreements and the Proposed Annual Caps for the continuing connected transactions contemplated under the respective agreements for each of the three years ending 31 December 2023 and the announcement of the Company dated 2 December 2020 in relation to the change of operation term of business license of the Company, the proposed amendments to the Articles of Association and the proposed amendments to the Rules of Procedure for General Meetings.

The purpose of this circular is to provide you with, among other things, (i) details of the 2021–2023 CCT Agreements and their respective Proposed Annual Caps: (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders in respect of the Non-exempt 2021–2023 CCT Agreements and their respective Proposed Annual Caps; (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Non-exempt 2021–2023 CCT Agreements and their respective Proposed Annual Caps; (iv) details about the change of operation term of business license of the Company, the proposed amendments to the Articles of Association and the proposed amendments to Rules of Procedure for General Meetings; and (v) a notice of the EGM.

I. CONTINUING CONNECTED TRANSACTIONS

A. RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

Set out below is the summary of the principal terms of (i) the 2021–2023 Sale and Purchase of Glass Products Framework Agreement; (ii) the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement; (iii) the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement; and (iv) the 2021–2023 Sale and Purchase of Products Framework Agreement, which are subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules:

1. 2021–2023 SALE AND PURCHASE OF GLASS PRODUCTS FRAMEWORK AGREEMENT

On 2 December 2020, the Company and CNBMG entered into the 2021–2023 Sale and Purchase of Glass Products Framework Agreement, details of which are set out as below:

– 2 –

LETTER FROM THE BOARD

Date

2 December 2020

Parties

(i) the Company (as supplier); and
(ii) CNBMG (as purchaser).

Effective period

The 2021–2023 Sale and Purchase of Glass Products Framework Agreement shall take effect upon signing with company seals by the authorised representatives of both parties and approval by the Independent Shareholders at the EGM of the Company, and shall be valid until 31 December 2023.

Nature of transaction

Pursuant to the 2021–2023 Sale and Purchase of Glass Products Framework Agreement, the Group agreed to supply the glass products produced by the Group, including but not limited to ultra-thin glass, photovoltaic glass, facility agricultural glass products and further processed glass products to the CNBMG Group.

The Group agreed to implement the production and supply glass products to the CNBMG Group according to the type of product, specifications, quantity and other orders as required by the CNBMG Group. The members of the Group and the CNBMG Group will enter into separate sale and purchase agreements within the scope of the 2021–2023 Sale and Purchase of Glass Products Framework Agreement. Such sale and purchase agreement and purchase orders will form part of the 2021–2023 Sale and Purchase of Glass Products Framework Agreement.

Pricing and payment terms

As a general principle, the price of glass products under the 2021–2023 Sale and Purchase of Glass Products Framework Agreement shall be determined in the ordinary course of business on normal commercial terms, negotiated on arm’s length basis by both parties under the principle of justice, fairness and openness, and based on the prevailing market prices of the transaction.

– 3 –

LETTER FROM THE BOARD

Such prices of glass products will also be determined in accordance with the following pricing principles, including:

(i) the prices offered by the Group to the CNBMG Group shall not be less than those comparable transactions offered by the Group to independent third parties for provision of the same or similar glass products; and
(ii) both parties agree that the Group has the right to freely choose its customer. If the Group does not agree with the actual transaction price and/or related terms proposed by the CNBMG Group, the Group shall not be responsible for the supply of products or services to the CNBMG Group.

In general, both parties will sign a specific sale and purchase agreement and shall agree on the payment period with the principle of fairness and reasonableness. Unless otherwise agreed by both parties, the buyer shall pay for the delivery or other arrangement already agreed.

Pricing standards

The price of glass products under the 2021–2023 Sale and Purchase of Glass Products Framework Agreement will be determined with reference to:

(i) comparable transactions (if any) conducted by the Group with independent third parties during the same period;
(ii) communication and exchange of price information by various means, including telephone conversations, emails and meetings with peers and business partners within the glass production industry;
(iii) sales staff will communicate and query with the customers, suppliers or trade partners through site visits to obtain the prices of comparable transactions in the same period and the prevailing market price at the time of a particular transaction; and/or
(iv) supply and demand information and price information in the PRC market obtained from China National Bureau of Statistics (www.stats.gov.cn) and the glass network/the official website of China glass industry (www.glass.org. cn) respectively. Relevant market price data will be used as the basis for the transactions with the CNBMG Group by the sales department.

– 4 –

LETTER FROM THE BOARD

The final price will be implemented after the approval of the general manager or the deputy general manager of the Company’s subsidiaries with reference to (i) to (iv) above. For products with unified prices set by the Company, the selling prices for relevant products shall not be lower than the floor prices issued by the Company.

Historical figures and proposed annual caps

Set out below are (i) the annual cap amounts for the three years ending 31 December 2020; and (ii) the historical transaction amounts for the two years ended 31 December 2019 and eleven months ended 30 November 2020 in respect of the 2018–2020 Sale and Purchase of Glass Products Framework Agreement:

	For the year	For the year	For the year
	ended	ended	ending
	31 December	31 December	31 December
	2018	2019	2020
	RMB’000	RMB’000	RMB’000
Historical annual caps
(inclusive of VAT)	363,620	452,570	490,690
	For the year	For the year	For the eleven
	ended	ended	months ended
	31 December	31 December	30 November
	2018	2019	2020
	RMB’000	RMB’000	RMB’000
Historical transaction
amounts (inclusive of
VAT)	120,890	161,240	170,662

The proposed annual caps under the 2021–2023 Sale and Purchase of Glass Products Framework Agreement for each of the three years ending 31 December 2023 are set out below:

	For the year	For the year	For the year
	ending	ending	ending
	31 December	31 December	31 December
	2021	2022	2023
	RMB’000	RMB’000	RMB’000
Proposed annual caps
(inclusive of VAT)	710,000	810,000	870,000

– 5 –

LETTER FROM THE BOARD

The proposed annual caps under the 2021–2023 Sale and Purchase of Glass Products Framework Agreement are determined based on the estimated amount of relevant glass products to be sold to the CNBMG Group by the Group after taking into account:

(i) the historical transaction amounts between the Group and the CNBMG Group in the past three years;
(ii) the anticipated increase in demand of the CNBMG Group on the glass products;
(iii) the production capacity of the Group in 2020 and the expected increase of production capacity of the Group in relation to the new production lines to be put into operations in certain cities in China, including Hefei, Yixing, Tongcheng, Luoyang and Puyang. For details, please refer to the section headed “3. 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement – Historical figures and proposed annual caps” below;
(iv) the anticipated increase in demand of the CNBMG Group on the glass products of the Group which is mainly attributable to the ongoing sales negotiation with the CNBMG Group and the expected improvement of the production capacity of the Group for the period of 2021 to 2023. The total expected purchase for the period of 2021 to 2023 from the CNBMG Group in relation to the major glass products of the Group was approximately 61.8 million square meters; and
(v) the respective estimated average unit prices of the glass products of the Group as above-mentioned which have taken into account the respective historical transactions between the Group and the CNBMG Group and the prevailing market prices and market trend of such products.

Internal control on pricing

The Company will adopt the below internal control measures in relation to the glass products provided to the CNBMG Group:

(i) the marketing department of the Company and the business departments of the Company’s subsidiaries will be responsible for collecting the market information including the supply and demand and the price fluctuation of each of the glass products on a monthly basis from China National Bureau of Statistics (www.stats.gov.cn) and the glass network/the official website of China glass industry (www.glass.org.cn) respectively;

– 6 –

LETTER FROM THE BOARD

(ii) the marketing department of the Company and the business departments of the Company’s subsidiaries will also communicate and query with the customers, suppliers or trade partners through telephone conversations, emails and site visits to obtain the prices of comparable transactions in the same period and the prevailing market price at the time of a particular transaction for verification of the prevailing market price implemented by the sales department;
(iii) the marketing department of the Company will set up the floor price to the subsidiaries for each of the glass products (products with unified prices set by the Company) for internal measure after approval by the management of the Company according to the market price provided by the marketing department and the selling price offered to the CNBMG Group will not be less than the floor price; and
(iv) the marketing department will review the sales of the glass products of the Company’s subsidiaries based on the floor price and report to the management of the Company on a monthly basis.

2. 2021–2023 SALE AND PURCHASE OF RAW MATERIALS FRAMEWORK AGREEMENT

On 2 December 2020, the Company and CNBMG entered into the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement, details of which are set out as below:

Date

2 December 2020

Parties

(i) CNBMG (as supplier); and
(ii) the Company (as purchaser).

Effective period

The 2021–2023 Sale and Purchase of Raw Materials Framework Agreement shall take effect upon signing with company seals by the authorised representatives of both parties and approval by the Independent Shareholders at the EGM of the Company, and shall be valid until 31 December 2023.

– 7 –

LETTER FROM THE BOARD

Nature of transaction

Pursuant to the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement, the CNBMG Group agreed to supply raw materials, such as silicon powder and sodium carbonate to the Group. The CNBMG Group will organise the production and procurement of silicon powder and sodium carbonate required for production according to the purchase plan of raw materials provided by the Group and supply such raw materials as required to the Group. The purchase plan will form part of the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement.

For the purpose of clarity, members of the Group and the CNBMG Group may enter into supplemental agreement or other confirmation documents for a certain product in accordance with the terms of the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement. Such supplemental agreement and confirmation documents will form part of the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement.

Pricing and payment terms

As a general principle, the price of raw materials under the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement shall be determined in the ordinary course of business on normal commercial terms, negotiated on arm’s length basis by both parties under the principle of justice, fairness and openness, and based on the prevailing market price of the transaction.

Such prices of raw materials will also be determined in accordance with the following pricing principles, including:

(i) the prices offered by the CNBMG Group to the Group shall not be higher than those comparable transactions (if any) offered by the CNBMG Group to independent third parties for provision of the same or similar raw materials;
(ii) the prices of products purchased by the Group from the CNBMG Group shall not be higher than those comparable transactions (if any) that purchased by the Group from independent third parties for provision of the same or similar raw materials; and
(iii) both parties agree that the Group has the right to freely choose its supplier. If the Group does not agree with the actual transaction price and/or related terms proposed by the CNBMG Group, the Group shall not be responsible for the purchase of products or services from the CNBMG Group.

– 8 –

LETTER FROM THE BOARD

In general, both parties will sign a specific sale and purchase agreement and shall agree on the payment period with the principle of fairness and reasonableness. Unless otherwise agreed by both parties, the payment for the current month shall be settled in the following month.

Pricing standards

Silicon powder

The price of silicon powder under the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement will be determined with reference to the prevailing market price at the time of particular transaction. The Company will obtain market price information through various channels, which include:

(i) reference made to comparable transactions (if any) conducted with independent third parties during the same period;
(ii) regular visit to silicon powder manufacturers (including independent third parties) to understand production, sales and price information on- site; and/or
(iii) the procurement price obtained by the way of open tender or invitation for bid. The major factors in relation to determination of market price are the supply and demand of silicon powder and other raw materials in the areas where the Group’s glass production lines are located, distance between the purchasers and vendors, and quality of silicon powder.

Sodium carbonate

The procurement of sodium carbonate by the Group is conducted via the centralised procurement platform adopted by the Triumph Group in order to give play to the benefit of large-scale procurement and reduction of general procurement costs. The centralised procurement of sodium carbonate shall be conducted by means of unified tender by the Triumph Group for unified procurement from and unified payment to sodium carbonate suppliers.

The price of sodium carbonate between the Group and the Triumph Group shall be

(i) the procurement price of the Triumph Group; plus
(ii) the capital occupation costs (surcharge of 1% for 1-month contracts).

– 9 –

LETTER FROM THE BOARD

The marketing department of the Company will also collect the market price information on a monthly basis. The deputy general manager who is in charge of the Company’s centralised procurement will approve the transaction price with the Triumph Group with reference to the quotations from different sodium carbonate manufacturers and the China’s bulk commodity service providers such as www. chem365.net.

Historical figures and proposed annual caps

	For the year	For the year	For the year
	ended	ended	ending
	31 December	31 December	31 December
	2018	2019	2020
	RMB’000	RMB’000	RMB’000
Historical annual caps
(inclusive of VAT)	347,370	571,370	580,230
	For the year	For the year	For the eleven
	ended	ended	months ended
	31 December	31 December	30 November
	2018	2019	2020
	RMB’000	RMB’000	RMB’000
Historical transaction
amounts (inclusive of
VAT)	151,190	242,180	173,953

– 10 –

LETTER FROM THE BOARD

The proposed annual caps under the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement for each of the three years ending 31 December 2023 are set out below:

	For the year	For the year	For the year
	ending	ending	ending
	31 December	31 December	31 December
	2021	2022	2023
	RMB’000	RMB’000	RMB’000
Proposed annual caps
(inclusive of VAT)	601,000	800,000	860,000

The proposed annual caps under the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement are determined mainly based on the estimated demand of silicon powder and sodium carbonate after taking into account:

(i) the historical purchase of silicon powder between the Group and the CNBMG Group of approximately 78,200 tonnes in 2020 which is assumed to be achieved the same for each of the three years ending 31 December 2023;
(ii) the anticipated increase in the consumption of silicon powder of approximately 195,400 tonnes, 346,800 tonnes and 346,800 tonnes for the three years ending 31 December 2023 are principally determined with reference to (1) the time schedule in 2021 in relation to the relevant new production lines of the Group to be constructed and commence operations in the major cities of China, including Hefei, Yixing, Tongcheng, Luoyang and Puyang; (2) the expected additional consumption of silicon powder to meet the maximum additional production capacity from the new production lines of the Group in such major production locations in 2022 and 2023; and (3) the consumption buffer from the overall production planning of the Group for the period of 2021 to 2023;
(iii) the historical purchase of sodium carbonate of approximately 118,769 tonnes in 2020 which is assumed to be achieved the same for each of the three years ending 31 December 2023;
(iv) the anticipated increase in the consumption of sodium carbonate of approximately 114,031 tonnes, 174,031 tonnes and 202,231 tonnes for the three years ending 31 December 2023 are principally determined with reference to (1) the time schedule in 2021 in relation to the relevant new production lines of the

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LETTER FROM THE BOARD

Group to be constructed and commence operations in the major cities of China, including Hefei, Yixing, Tongcheng, Luoyang and Puyang; and (2) the expected additional consumption of sodium carbonate to meet the additional production capacity from the new production lines of the Group in such major production locations in 2022 and 2023; and

(v) the expected unit price of silicon powder with reference to the historical transactions between the CNBMG Group and the Group and the prevailing market price of silicon powder and the expected unit price of sodium carbonate with reference to the historical transactions of sodium carbonate purchased from the centralised procurement platform adopted by the Triumph Group.

Internal control on pricing

The Group will adopt the below internal control procedures in relation to the procurement of the raw materials from the CNBMG Group:

(i) the procurement departments of the Company’s subsidiaries shall conduct open tender or invitation for bid involving at least three independent suppliers at least on a yearly basis, and determine the silicon powder supplier and silicon powder procurement price based on the tender results;
(ii) for the purpose of centralising the procurement of sodium carbonate, the deputy general manager in charge of marketing of the Company will be appointed to directly participate in the centralised tender, bid negotiation and pricing for sodium carbonate of the Triumph Group. A centralised tender for sodium carbonate shall be performed once a month or every two months depending on the market situation, and the tender is open for domestic major sodium carbonate manufacturers in the market;
(iii) the marketing department of the Company will be responsible for collection of information on supply and demand and price fluctuation of silicon powder and sodium carbonate on a monthly basis from different sodium carbonate manufacturers and China’s bulk commodity service providers such as www. chem365.net. Relevant personnel of the business department will communicate and query with the silicon powder and sodium carbonate manufacturers or trade partners through telephone conversations, emails and/or site visits to obtain the prices of comparable transactions by independent suppliers in the same period and the prevailing market price at the time of a particular transaction; and

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(iv) the deputy general manager in charge of marketing of the Company or the management of its subsidiaries will assess and determine the terms and pricing for procurement of raw materials with the CNBMG Group based on the market information collected with the abovementioned methods/channels in order to ensure that the prices offered by the CNBMG Group shall not be less favourable than those offered by other independent third parties for similar raw materials.

3. 2021–2023 ENGINEERING CONSTRUCTION EQUIPMENT PROCUREMENT AND INSTALLATION FRAMEWORK AGREEMENT

On 2 December 2020, the Company and CNBMG entered into the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement, details of which are set out as below:

Date

2 December 2020

Parties

(i) CNBMG (as provider); and
(ii) the Company (as receiver).

Effective period

The 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement shall take effect upon signing with company seals by the authorised representatives of both parties and approval by the Independent Shareholders at the EGM of the Company, and shall be valid until 31 December 2023.

Nature of transaction

Pursuant to the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement, the CNBMG Group agreed to provide the required equipment, materials and construction and installation services etc. to the Group according to the project planning and requirement for the engineering and construction projects of the Group.

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LETTER FROM THE BOARD

For the purpose of clarity, members of the Group and the CNBMG Group may enter into supplemental agreement or other confirmation documents for a certain project in accordance with the terms of the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement. Such supplemental agreement and confirmation documents will form part of the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement.

Pricing and payment terms

As a general principle, the price of equipment materials, construction fee and installation fee under the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement shall be determined in the ordinary course of business on normal commercial terms, negotiated on arm’s length basis by both parties under the principle of justice, fairness and openness, and based on the prevailing market price of the transaction.

Such prices of equipment materials, construction fees and installation fees will also be determined in accordance with the following pricing principles, including:

(i) the prices or fees charged by the CNBMG Group on the Group shall not be higher than those comparable transactions (if any) charged by the CNBMG Group on independent third parties for the same or similar type of equipment materials, construction and installation services;
(ii) the prices of equipment or fees paid by the Group to the CNBMG Group shall not be higher than those comparable transactions (if any) charged to the Group by independent third parties for the same or similar type of equipment materials, construction and installation services; and
(iii) both parties agree that the Group has the right to freely choose its supplier. If the Group does not agree with the actual transaction price and/or related terms proposed by the CNBMG Group, the Group shall not be responsible for the purchase of products or services from the CNBMG Group.

In general, both parties will sign a specific sale and purchase agreement and shall agree on the payment period with the principle of fairness and reasonableness and taking into account of the requirements of engineering projects of the Group.

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Pricing standards

The pricing or consideration under the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement will be determined with reference to:

(i) prices offered to other independent third party(ies) on the same or similar size of the engineering projects by CNBMG;
(ii) the comparable transactions (if any) with independent third parties by the Group during the same period on the same or similar size of the engineering projects; and
(iii) communication and exchange of price information by various means, including telephone conversations, emails and meetings with peers and business partners within the glass production industry.

If there is no available prevailing market prices or where it is impracticable to obtain such market prices, the Group and the CNBMG Group will determine the price through arm’s length negotiation with reference to:

(i) the previous similar transactions concluded by the Group and independent third parties;
(ii) similar transactions concluded by the CNBMG Group and independent third parties; and/or
(iii) the costs of equipment and materials provided by the CNBMG Group for engineering projects, technical requirements on installation, manpower involved, complexity of technical plan, technology advancement and duration of the installation. The price offered by the CNBMG Group to the Group shall not be less favourable than those offered by the CNBMG Group to other independent third parties for provision of the same or similar size of the services.

Upon collection of market information as stated above, relevant terms (including pricing and payment terms) will be used as the basis for the transaction with the CNBMG Group. The written contract in relation to the engineering equipment procurement shall be executed with the approval of the secretary to the Board, chief financial controller and general manager of the Company after joint review by the company legal consultant, internal control management department, finance department and secretariat of the Board of the Company.

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LETTER FROM THE BOARD

Historical figures and proposed annual caps

Set out below are (i) the annual cap amounts for the three years ending 31 December 2020; and (ii) the historical transaction amounts for the two years ended 31 December 2019 and eleven months ended 30 November 2020 in respect of the 2018–2020 Engineering Equipment Procurement and Installation Framework Agreement:

	For the year	For the year	For the year
	ended	ended	ending
	31 December	31 December	31 December
	2018	2019	2020
	RMB’000	RMB’000	RMB’000
Historical annual caps
(inclusive of VAT)	1,137,000	1,105,000	685,000
	For the year	For the year	For the eleven
	ended	ended	months ended
	31 December	31 December	30 November
	2018	2019	2020
	RMB’000	RMB’000	RMB’000
Historical transaction
amounts (inclusive of
VAT)	34,910	207,290	193,159

The proposed annual caps under the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement for each of the three years ending 31 December 2023 are set out below:

	For the year	For the year	For the year
	ending	ending	ending
	31 December	31 December	31 December
	2021	2022	2023
	RMB’000	RMB’000	RMB’000
Proposed annual caps
(inclusive of VAT)	2,300,000	1,500,000	2,000,000

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LETTER FROM THE BOARD

The proposed annual caps under the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement are determined based on the estimated amounts of the equipment material, construction services and installation services to be required for future engineering projects after taking into account:

(i) the projected schedule of the new construction projects and technological upgrading projects proposed to be implemented by the Group and the estimated demand of equipment material, construction services and installation services based on the complexity of the new construction work and installation work for future projects for the period of 2021 to 2023; in particular:
(1) the new construction projects of the Group planned for 2021 in relation to one production line, with the annual production capacity of approximately 41.2 million square meters and five processing lines for photovoltaic cell packaging products, with the annual processing and/ or production capacity of approximately 40 million square meters and the new construction projects of the Group planned for 2022 in relation to six processing lines, with the annual processing and/or production capacity of approximately 60 million square meters of photovoltaic glass in Hefei;
(2) the new construction projects of the Group planned for 2021 in relation to one production line, with the annual production capacity of approximately 41.2 million square meters and four processing lines for photovoltaic cell packaging products with the annual processing and/or production capacity of approximately 40 million square meters and the new construction projects of the Group planned for 2022 and 2023 in relation to four processing lines and three processing lines, respectively, with the annual processing and/or production capacity of approximately 40 million square meters and 30 million square meters of photovoltaic glass, respectively, and a cold repair project planned to commence in two phases in 2022 and 2023 in Yixing;
(3) the new construction projects of the Group planned for 2021 in relation to one production line and four processing lines, with the annual processing and/or production capacity of approximately 40 million square meters of photovoltaic glass and the new construction projects of the Group planned for 2023 in relation to eight processing lines, with the annual processing and/or production capacity of approximately 80 million square meters of photovoltaic glass for the Group’s production projects in Tongcheng; and

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LETTER FROM THE BOARD

(4) other new construction projects of the Group to be constructed in Luoyang, including an intelligent warehouse project in 2021, a secondphase production line project between 2022 and 2023 and other new construction projects of the Group to be constructed in Puyang, including a research and development center project and a photovoltaic backplane project in 2021, a solar thermal glass deep processing project, a flue gas treatment project and a photovoltaic backplane project in 2022 and a coated glass production line project in 2023.

and;

(ii) the estimated price and fees for the equipment material, construction services and installation services are mainly based on (1) the historical transactions between the Group and the CNBMG Group in relation to the production projects with similar scale and nature; and (2) the feasibility studies of the new production projects of the Group to be constructed and commence operations for the three years ending 31 December 2023.

Internal control on pricing

The Group will adopt the below internal control procedures in relation to the procurement of the equipment materials, construction services and installation services provided by the CNBMG Group:

(i) the management of the Company will assign a project leader who will select professional technicians from production management department, finance department and project implementation unit of the Group to constitute a project team for new, reconstruction and extension, relocation and construction, technical transformation projects;
(ii) the project team will review the offer price from the CNBMG Group and propose terms, pricing basis and plan on relevant equipment materials, construction fee and installation fees principally based on the design plan, amount of investment, quantity of buildings and advancement of technologies adopted by the CNBMG Group. The project team will then submit the information as abovementioned to the general manager of the Group for discussion; and

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LETTER FROM THE BOARD

(iii) the written contract in relation to the transaction shall be executed with the approval of the secretary to the Board, chief financial controller and general manager of the Company after joint review by the company legal consultant, internal control management department, finance department and secretariat of the Board of the Company.

4. 2021–2023 SALE AND PURCHASE OF PRODUCTS FRAMEWORK AGREEMENT

On 2 December 2020, the Company and Triumph entered into the 2021–2023 Sale and Purchase of Products Framework Agreement, details of which are set out as below:

Date

2 December 2020

Parties

(i) Triumph (as supplier); and
(ii) the Company (as purchaser).

Effective period

The 2021–2023 Sale and Purchase of Products Framework Agreement shall take effect upon signing with company seals by the authorised representatives of both parties and approval by the Independent Shareholders at the EGM of the Company, and shall be valid until 31 December 2023.

Nature of transaction

Pursuant to the 2021–2023 Sale and Purchase of Products Framework Agreement, the Triumph Group agreed to supply the glass products and packaging box products produced by the Triumph Group to the Group, including but not limited to float glass, plywood packaging boxes, wooden packaging boxes, etc.

For glass products, the Triumph Group agreed to manufacture the glass products according to the type of product, specification, quantity and other orders as requested by the Group and provide the required products to the Group. For packaging boxes, the Triumph Group agreed to manufacture the packaging boxes according to the category of the packaging boxes, the size and drawings requested by the Group and provide the required products to the Group.

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LETTER FROM THE BOARD

The Group and the Triumph Group will enter into separate sale and purchase agreements within the scope of the 2021–2023 Sale and Purchase of Products Framework Agreement and contain details of the sale and purchase of the products. Such sale and purchase agreement, orders and drawings, etc. will form part of the 2021–2023 Sale and Purchase of Products Framework Agreement.

Pricing and payment terms

As a general principle, the price of the products under the 2021–2023 Sale and Purchase of Products Framework Agreement shall be determined in the ordinary course of business on normal commercial terms, negotiated on arm’s length basis by both parties under the principle of justice, fairness and openness, and based on the prevailing market price of the transaction.

Such prices of glass products and packaging box products will also be determined in accordance with the following pricing principles, including:

(i) the price offered by the Triumph Group to the Group shall not be higher than those comparable transactions (if any) offered by the Triumph Group to independent third parties for provision of the same or similar glass products and packaging box products;
(ii) the price of glass products and packaging box products purchased by the Group from the Triumph Group shall not be higher than those comparable transactions (if any) charged to the Group by independent third parties for provision of the same or similar glass products and packaging box products; and
(iii) both parties agree that the Group has the right to freely choose its supplier. If the Group does not agree with the actual transaction price and/or related terms proposed by the Triumph Group, the Group shall not be responsible for the purchase of products or services from the Triumph Group.

In general, both parties will sign a specific sale and purchase agreement and shall agree on the payment period with the principle of fairness and reasonableness. Unless otherwise agreed by both parties, the payment for the current month shall be settled in the following month.

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LETTER FROM THE BOARD

Pricing standards

Glass products

Specifically, the business department of the Company will (i) collect the price information by various means, including telephone conversations, emails and meetings with peers and business partners within the glass production industry; (ii) collect the supply and demand information and price information in the PRC market from China National Bureau of Statistics (www.stats.gov.cn) and from the glass network/ the official website of China glass industry (www.glass.org.cn). Relevant market price data will be used as the basis for the transactions by the business department of the Group; and/or (iii) refer to the comparable transactions (if any) conducted by the Group with independent third parties during the same period on the same products or the products with same specification and grade.

The final price will be implemented after the approval of the general manager or the deputy general manager of the Company’s subsidiaries with reference to the information of (i) to (iii) above.

Packaging box products

The Company will determine the market price thereof by inquiring no less than three suppliers or through invitation for bid. The Company will also require the Triumph Group to provide the sale and purchase contracts for packaging box products between the Triumph Group and the independent third parties for provision of the same or similar products to ensure the price fairness and reasonableness.

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Historical figures and proposed annual caps

	For the year	For the year	For the year
	ended	ended	ending
	31 December	31 December	31 December
	2018	2019	2020
	RMB’000	RMB’000	RMB’000
Historical annual caps
(inclusive of VAT)	28,820	36,420	36,420
	For the year	For the year	For the eleven
	ended	ended	months ended
	31 December	31 December	30 November
	2018	2019	2020
	RMB’000	RMB’000	RMB’000
Historical transaction
amounts (inclusive of
VAT)	8,180	4,840	16,418

The proposed annual caps under the 2021–2023 Sale and Purchase of Products Framework Agreement for each of the three years ending 31 December 2023 are set out below:

	For the year	For the year	For the year
	ending	ending	ending
	31 December	31 December	31 December
	2021	2022	2023
	RMB’000	RMB’000	RMB’000
Proposed annual caps
(inclusive of VAT)	561,000	740,000	920,000

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LETTER FROM THE BOARD

The proposed annual caps under the 2021–2023 Sale and Purchase of Products Framework Agreement are determined based on the expected consumption on the glass products and packaging box products after taking into account:

(i) the estimated purchase of float glass from the Triumph Group of approximately 24 million square meters, 36 million square meters and 49 million square meters for the three years ending 31 December 2023. The anticipated significant increase in demand on the float glass has taken into consideration of (1) the amount of the float glass that the Group purchased from Triumph Group and used in the production projects of the Group in the cities of Hefei, Yixing and Tongcheng in 2020 of approximately 6.5 million square meters to be achieved the same for each of the three years ending 31 December 2023; and (2) the new processing/production lines of the Group to be put into operations to cater the future growth of the photovoltaic glass industry in the PRC for the period of 2021–2023 as mentioned in the section headed “3. 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement – Historical figures and proposed annual caps” above;
(ii) the estimated purchase of ultra-white glass from the Triumph Group of approximately 12 million square meters for each of the three years ending 31 December 2023. The anticipated significant increase in demand on the ultra-white glass has taken into consideration of (1) the amount of the ultrawhite glass that the Group purchased from the Triumph Group and used in the production projects of the Group in the cities of Hefei, Yixing and Tongcheng in 2020 of approximately 2 million square meters to be achieved the same for each of the three years ending 31 December 2023; and (2) the new processing/production lines of the Group to be put into operations to cater the future growth of the photovoltaic glass industry in the PRC for the period of 2021–2023 as mentioned in the section headed “3. 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement – Historical figures and proposed annual caps” above;
(iii) the historical transactions of the packaging products between the Group and the Triumph Group; and
(iv) the estimated price of the glass products and packaging box products based on the historical transactions between the Group and the Triumph Group and the prevailing market price of the same or similar types of such products.

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LETTER FROM THE BOARD

Internal control on pricing

The Company will adopt the below internal control procedures in relation to the purchase of the glass products and packaging box products from the Triumph Group:

(i) the business departments of the Company’s subsidiaries will be responsible for collection of information on market information and price changes of relevant products, and report the same to the deputy general manager of subsidiaries;
(ii) the deputy general manager in charge of business is responsible for verification of the pricing and payment terms for procurement of products and the final contract terms and pricing shall be subject to approval by the general managers of subsidiaries; and
(iii) the internal audit department will regularly supervise and evaluate the product orders or contract approval procedures in respect of their compliance with internal control requirements.

CONTINUING CONNECTED TRANSACTIONS SUBJECT TO THE REPORTING AND ANNOUNCEMENT REQUIREMENTS ONLY

Set out below is the summary of the principal terms of (i) the 2021–2023 Technical Services Framework Agreement; and (ii) the 2021–2023 Sale and Purchase of Spare Parts Framework Agreement which are subject to the reporting and announcement requirements only under the Listing Rules:

1. 2021–2023 TECHNICAL SERVICES FRAMEWORK AGREEMENT

On 2 December 2020, the Company and CNBMG entered into the 2021–2023 Technical Services Framework Agreement, details of which are set out as below:

Date

2 December 2020

Parties

(i) CNBMG (as provider); and
(ii) the Company (as receiver).

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Effective period

The 2021–2023 Technical Services Framework Agreement shall take effect upon signing with company seals by the authorised representatives of both parties and approval by the Independent Shareholders at the EGM of the Company (if necessary), and shall be valid until 31 December 2023.

Nature of transaction

Pursuant to the 2021–2023 Technical Services Framework Agreement, the CNBMG Group agreed to provide technical services to the Group including but not limited to: (1) preparation of engineering project feasibility plans and feasibility study reports; (2) project design and project consultation; (3) implementation of the projects; (4) design, organisation and implementation of plans for environmental protection facilities; (5) maintenance, organisation and implementation of the kiln and main equipment; (6) cloud services and development, application and services of the project software; (7) technical consultation and technical training; (8) testing and certification services; (9) plan design, report preparation and budget estimation for environmental impact assessment; (10) use of proprietary technology; and (11) assistance to the organisation in resumption of production in response to material and unexpected industrial accident.

The CNBMG Group and the Group may enter into specific design contract, construction contract, technical service agreement, supplemental agreement or other confirmation document for a specific technical service in accordance with the terms of the 2021–2023 Technical Services Framework Agreement. Such contract, agreement and confirmation documents shall form part of the 2021–2023 Technical Services Agreement.

Pricing and payment terms

As a general principle, the technical service fees in relation to the 2021–2023 Technical Services Framework Agreement shall be determined in the ordinary course of business on normal commercial terms and negotiated on arm’s length basis by both parties under the principle of justice, fairness and openness.

Such technical service fees will also be determined in accordance with the following pricing principles, including:

(i) the technical service fees charged by the CNBMG Group to the Group shall not be higher than those comparable transactions (if any) that the CNBMG Group charge to independent third parties for similar or same technical services;

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(ii) the technical service fees charged to the Group by the CNBMG Group shall not be higher than those comparable transactions (if any) that the Group accept from independent third parties for similar or same technical services; and
(iii) both parties agree that the Group has the right to freely choose its service provider. If the Group does not agree with the actual transaction price and/ or related terms proposed by the CNBMG Group, the Group shall not be responsible for the purchase of products or services from the CNBMG Group.

In general, both parties will sign a specific service contract and shall agree on the payment period with the principle of fairness and reasonableness and with reference to the service scope.

Pricing standards

The technical service fees under the 2021–2023 Technical Services Framework Agreement will also be determined with reference to:

(i) the applicable state price which refers to the engineering survey and design fee regulations (工程勘察設計收費管理規定) issued by the National Development and Reform Commission of the PRC (中華人民共和國國家發展和改革委員會);
(ii) if there is no applicable state price for such services, the technical service fees should be determined with reference to the comparable prices of the same or same type of technical services provided by independent third parties in the location of the Company or the nearby area, and the prevailing market price of the transaction. The Group will obtain relevant market price information through various channels, which include (1) considering the comparable transactions (if any) conducted with independent third parties during the same period on such services; and (2) communication and exchange of price information with independent suppliers by various means, including telephone conversations, emails and meetings, with peers and business partners within the glass production industry. The Company will then conclude the relevant market price by taking reference with the comparable transactions with independent third parties; and the price offered by the independent suppliers to set a fair price; or

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(iii) where there are no available prevailing market prices or where it is impracticable to obtain the relevant market price information, the Group and the CNBMG Group will determine the price after arm’s length negotiations with reference to (1) the previous same or same type of the transactions concluded by the Group with independent third parties; (2) previous same or same type of the transactions concluded by the CNBMG Group with independent third parties; and/or (3) the costs of equipment and materials required by the CNBMG Group for provision of the relevant technical services, manpower involved, complexity of the technical plans, level of technology advancement and duration of the construction.

Historical figures and proposed annual caps

	For the year	For the year	For the year
	ended	ended	ending
	31 December	31 December	31 December
	2018	2019	2020
	RMB’000	RMB’000	RMB’000
Historical annual caps
(inclusive of VAT)	24,000	24,000	20,000
	For the year	For the year	For the eleven
	ended	ended	months ended
	31 December	31 December	30 November
	2018	2019	2020
	RMB’000	RMB’000	RMB’000
Historical transaction
amounts (inclusive of
VAT)	9,810	2,250	3,920

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The proposed annual caps under the 2021–2023 Technical Services Framework Agreement for each of the three years ending 31 December 2023 are set out below:

	For the year	For the year	For the year
	ending	ending	ending
	31 December	31 December	31 December
	2021	2022	2023
	RMB’000	RMB’000	RMB’000
Proposed annual caps
(inclusive of VAT)	46,000	18,000	17,000

The proposed annual caps under the 2021–2023 Technical Services Framework Agreement are determined based on the estimated need for the technical services of the Company after taking into account:

(i) the historical transaction amounts between the Group and the CNBMG Group;
(ii) the expected fees to be incurred in the preparation of feasibility studies reports, environmental impact assessment (EIA) reports, project design and survey, and project supervision for the implementation of new projects of the Group in 2021, including (1) approximately RMB12.0 million, RMB3.6 million and RMB0.6 million for the three years ending 31 December 2023 in relation to the new production projects to be constructed in Hefei; (2) approximately RMB7.0 million, RMB3.4 million and RMB4.9 million for the three years ending 31 December 2023 in relation to the new production projects to be constructed in Yixing; (3) approximately RMB17.5 million for 2021 and RMB4.0 million for 2023 in relation to the new production projects to be constructed in Tongcheng; and (4) approximately RMB4.0 million, RMB5.0 million and RMB1.0 million of other new production projects of the Group to be constructed in Luoyang and Puyang for the three years ending 31 December 2023;
(iii) the estimated fees of technical maintenance, cloud services and development, application and services of the project software of approximately RMB4.6 million, RMB5.4 million and RMB6 million for the three years ending 31 December 2023 in relation to the new production projects to be constructed in the Yixing; and
(iv) the expected fees of the technical projects with reference to the historical transaction between the Group and the CNBMG Group and the prevailing market price for the provision of same or similar services.

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Internal control on pricing

The Company will adopt the below internal control procedures in relation to the technical services provided by the CNBMG Group:

(i) the relevant unit of the Group should report to their respective management of the Group for the application of the technical services and such technical services and the respective fees will be accepted only upon approval of the management of such unit. Significant and important technical services shall be implemented upon approval by the general manager of the Group; and
(ii) the written contract in relation to technical services shall be executed upon approval by the secretariat of the Board, chief financial controller and general manager of the Company after joint review by the legal consultant, internal control management department, finance department and secretariat of the Board of the Company.

2. 2021–2023 SALE AND PURCHASE OF SPARE PARTS FRAMEWORK AGREEMENT

On 2 December 2020, the Company and CNBMG entered into the 2021–2023 Sale and Purchase of Spare Parts Framework Agreement, details of which are set out as below:

Date

2 December 2020

Parties

(i) CNBMG (as supplier); and
(ii) the Company (as purchaser).

Effective period

The 2021–2023 Sale and Purchase of Spare Parts Framework Agreement shall take effect upon signing with company seals by the authorised representatives of both parties and approval by the Independent Shareholders at the EGM of the Company (if necessary), and shall be valid until 31 December 2023.

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LETTER FROM THE BOARD

Nature of transaction

Pursuant to the 2021–2023 Sale and Purchase of Spare Parts Framework Agreement, the CNBMG Group agreed to supply the equipment and spare parts to the Group, including but not limited to calenders, cold-end equipment, punching machines, coating machines, robot arms, iron trays, glass shelves and various spare parts etc.

Pricing and payment terms

As a general principle, the price of the equipment and spare parts under the 2021–2023 Sale and Purchase of Spare Parts Framework Agreement shall be determined in the ordinary course of business on normal commercial terms, negotiated on arm’s length basis by both parties under the principle of justice, fairness and openness, and based on the prevailing market price of the transaction.

Such prices of equipment and spare parts will also be determined in accordance with the following pricing principles, including:

(i) the price of equipment and spare parts offered by the CNBMG Group to the Group shall not be higher than those comparable transactions (if any) offered by the CNBMG Group to independent third parties for provision of the same or similar equipment and spare parts;
(ii) the price of equipment and spare parts purchased by the Group from the CNBMG Group shall not be higher than those comparable transactions (if any) charged to the Group by independent third parties for provision of the same or similar equipment and spare parts; and
(iii) both parties agree that the Group has the right to freely choose its supplier. If the Group does not agree with the actual transaction price and/or related terms proposed by the CNBMG Group, the Group shall not be responsible for the purchase of products or services from the CNBMG Group.

In general, both parties will sign a specific sale and purchase agreement and shall agree on the payment period with the principle of fairness and reasonableness. Unless otherwise agreed by both parties, the payment for the current month shall be settled in the following month.

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LETTER FROM THE BOARD

Pricing standards

The price of the equipment and spare parts under the 2021–2023 Sale and Purchase of Spare Parts Framework Agreement will be determined with reference to the prevailing market price at the time of particular transaction and not be less favourable than those offered by other independent third party(ies) on the same or similar products. The procurement department of the Company’s subsidiary will make reference price by inquiring at least three independent suppliers with the same or better quality of products and services, price, capabilities and experience as the CNBMG Group or inviting independent suppliers for tender to determine the price offered by the CNBMG Group.

Historical figures and proposed annual caps

	For the year	For the year	For the year
	ended	ended	ending
	31 December	31 December	31 December
	2018	2019	2020
	RMB’000	RMB’000	RMB’000
Historical annual caps
(inclusive of VAT)	22,000	25,290	22,730
	For the year	For the year	For the eleven
	ended	ended	months ended
	31 December	31 December	30 November
	2018	2019	2020
	RMB’000	RMB’000	RMB’000
Historical transaction
amounts (inclusive of
VAT)	5,450	6,550	18,859

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LETTER FROM THE BOARD

The proposed annual caps under the 2021–2023 Sale and Purchase of Spare Parts Framework Agreement for each of the three years ending 31 December 2023 are set out below:

	For the year	For the year	For the year
	ending	ending	ending
	31 December	31 December	31 December
	2021	2022	2023
	RMB’000	RMB’000	RMB’000
Proposed annual caps
(inclusive of VAT)	38,000	42,000	48,000

The proposed annual caps under the 2021–2023 Sale and Purchase of Spare Parts Framework Agreement are determined based on the expected consumption of the production equipment and spare parts after taking into account:

(i) the historical consumption amounts of the production equipment and spare parts;
(ii) the expected demand on the spare parts for repair and replacement based on the existing production capacity and the expected increase of consumption on the production equipment and spare parts for the proposed projects of the Group for the period of 2021 to 2023, including (1) the estimated repair and replacement fees of approximately RMB13.0 million for each of the three years ending 31 December 2023 in relation to the existing and new production projects in Hefei; (2) the estimated repair and replacement fees of approximately RMB22.6 million, RMB26.9 million and RMB32.5 million for the three years ending 31 December 2023 in relation to the existing and new production projects in Yixing; and (3) the estimated repair and replacement fees of approximately RMB1.6 million for each of the three years ending 31 December 2023 in relation to other production projects of the Group in Luoyang and Puyang; and
(iii) the estimated average price of the spare parts based on the historical transactions between the Group and the CNBMG Group and the prevailing market price of the same or similar types of spare parts.

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LETTER FROM THE BOARD

Internal control on pricing

The Company will adopt the below internal control procedures in relation to the purchase of the equipment and spare parts from the CNBMG Group:

(i) the procurement department of the Company’s subsidiaries will make reference price by inquiring at least three suppliers to determine the price offered by the CNBMG Group and the business departments of the Company’s subsidiaries will be responsible for collection of information on market information and price changes of relevant products, and report the same to the deputy general manager of subsidiaries;
(ii) the deputy general manager in charge of business is responsible for verification of the pricing and payment terms for procurement of products. The final contract terms and pricing shall be subject to approval by the general managers of subsidiaries; and
(iii) the internal audit department will perform regular check of the product orders or contract approval procedures to ensure the compliance with internal control requirements.

B. NEW CONTINUING CONNECTED TRANSACTIONS

2021–2023 FINANCIAL SERVICES FRAMEWORK AGREEMENT

On 2 December 2020, the Company and CNBMG Finance entered into the 2021–2023 Financial Services Framework Agreement, details of which are set out as below:

Date

2 December 2020

Parties

(i) the Company; and
(ii) CNBMG Finance.

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LETTER FROM THE BOARD

Effective period

The 2021–2023 Financial Services Framework Agreement shall take effect upon (i) the signing with company seals by the legal or authorised representatives of both parties; and (ii) the completion of internal approval procedures by both parties (including but not limited to the approval by the Independent Shareholders at the EGM of the Company) and shall be valid until 31 December 2023.

Nature of transactions

Pursuant to the 2021–2023 Financial Services Framework Agreement, CNBMG Finance has agreed to provide (i) deposit services; (ii) loan services; and (iii) other financial services approved by the CBIRC (including but not limited to bills acceptance, discounting services, assistance in achieving the collection and payment of the transactional proceeds, clearing and settlement services, financial leasing services, financial advisory services, credit authentication and related consulting and agency services).

Pricing and payment terms

The deposit services, loan services and other financial services under the 2021–2023 Financial Services Framework Agreement provided by CNBMG Finance to the Group are in accordance with the following pricing principles:

Deposit services:

The interest rate for deposits offered to the Group by CNBMG Finance should comply with the PBOC’s regulations on the interest rates for the same type of deposit from time to time, and will not be lower than (i) the interest rate specified by the PBOC for the deposit of the same category during the same period; (ii) the interest rate paid by CNBMG Finance for deposits of the same type placed by the members of CNBMG (other than the Group) with CNBMG Finance during the same period under the same conditions; and (iii) the interest rate for deposits of the same type offered by the PRC general commercial banks to the Group during the same period under the same conditions.

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LETTER FROM THE BOARD

Loan services:

The interest rate for loans granted to the Group by CNBMG Finance should comply with the PBOC’s regulations on interest rates for loans of the same type from time to time, and will not be higher than (i) the loan prime rate announced by the National Interbank Funding Center* (全國銀行間同業拆借中心) during the same period; (ii) the interest rate for similar loans charged by CNBMG Finance to the members of CNBMG (other than the Group) during the same period under the same conditions; and (iii) the interest rate charged by the PRC general commercial banks to the Group for similar loans during the same period under the same conditions.

CNBMG Finance will provide the loan services on normal commercial terms or better and such loans will not be secured by the assets of the Group.

Other financial services:

The terms and conditions for provision of other financial services by CNBMG Finance to the Group will not be less favourable than (i) the terms and conditions provided by CNBMG Finance to the members of CNBMG (other than the Group); and (ii) the terms and conditions for provision of services of the same type by PRC general commercial banks to the Group.

The service fees charged by CNBMG Finance for provision of other financial services to the Group will be in accordance with the standard of fees set by the PBOC or the CBIRC (if applicable). According to the above principle, such service fees will not be higher than (i) the fees charged by CNBMG Finance to members of CNBMG (other than the Group) for providing services of the same type during the same period under the same conditions; and (ii) the fees charged to the Group by the PRC general commercial banks for services of the same type during the same period under the same conditions.

Both parties shall further sign a separate contract which is in compliance with the 2021–2023 Financial Services Framework Agreement and agree on the specific transaction terms for the transaction to be entered by CNBMG Finance and the Group.

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LETTER FROM THE BOARD

Pricing standards

Pursuant to the 2021–2023 Financial Services Framework Agreement, the Group will obtain quotes of interest rate, fees and terms from at least two general commercial banks in the PRC located in the same or adjacent regions during the same period and will compare the quotes as obtained with the corresponding terms proposed by CNBMG Finance for the transactions to be entered into between the Group and CNBMG Finance. If the interest rates, fees and terms proposed by CNBMG Finance are more favourable than those proposed by the PRC general commercial banks, the Group will engage CNBMG Finance.

The Group will only give priority to using the services of CNBMG Finance if such terms and conditions offered by CNBMG Finance are equivalent to the PRC general commercial banks’ offers. The Group has discretion to engage other PRC general commercial banks as its financial service providers as it thinks fit and beneficial to the Group.

Proposed annual caps

The proposed annual caps for the deposit services, loan services and other financial services under the 2021–2023 Financial Services Framework Agreement for each of the three years ending 31 December 2023 are set out below:

		For the year	For the year	For the year
		ending	ending	ending
		31 December	31 December	31 December
		2021	2022	2023
		RMB’000	RMB’000	RMB’000
Proposed annual caps
–	Maximum daily deposit
	balance (including
	corresponding interest)	500,000	600,000	700,000
–	Maximum daily loan balance
	(excluding corresponding
	interest)	550,000	650,000	750,000
–	Other financial services	10,000	15,000	20,000

The proposed annual caps for the 2021–2023 Financial Services Framework Agreement are determined based on (i) the estimated collected funds from operations and expected cash and cash equivalent of the Group as at 31 December 2020; (ii) the expectation on the capital needs and financing requirement in relation to the business development of the Group

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LETTER FROM THE BOARD

between 2021 and 2023; (iii) the consideration of financial ability of CNBMG Finance in relation to its recent financial position and financial performance in 2020, including the scale of deposits accepted and loans granted; and (iv) the expected interest rate of deposit and loan to be offered by CNBMG Finance.

Internal control on pricing

The Company will adopt the below internal control procedures in relation to the deposit services, loan services and other financial services under the 2021–2023 Financial Services Framework Agreement provided by CNBMG Finance to the Group:

(i) the Group employs and maintains separate business, operation and accounting personnel of its own from CNBMG Finance for a clear segregation of approval authority and duty between the parties;
(ii) the Company’s finance department will monitor the actual transaction amount at the Group level to ensure the pricing and the annual caps are in compliance with the 2021–2023 Financial Services Framework Agreement;
(iii) the finance department will review the interest rates for deposits and interest rates for loans regularly published by other PRC general commercial banks and compare with the interest rates for deposits and interest rates for loans offered by CNBMG Finance to ensure the fairness and reasonableness;
(iv) the finance department will review the interest rates for deposits, the interest rates for loans and the fees charged by CNBMG Finance arising from its acceptance of offers and compare the offers with those in similar nature and period that CNBMG Finance offered to independent third parties in order to ensure the fairness and reasonableness;
(v) the finance department will review and monitor the balance of deposits from the relevant members of the Group through the online platform of CNBMG Finance;
(vi) the finance department will perform risk diversification measure by separating the money deposits among the financial service providers, including CNBMG Finance, to avoid excessive concentration of deposits in a particular financial service provider;
(vii) the finance department will review the financial statements of CNBMG Finance on a monthly basis and will also review the regulatory reports submitted by CNBMG Finance to the CBIRC in order to keep abreast of the operations and financial situation of CNBMG Finance and to take timely action when any unfavourable situation is found;

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LETTER FROM THE BOARD

(viii) according to the articles of association of CNBMG Finance, the board of directors of CNBMG committed that CNBMG will base on the actual emergency of payment difficulties facing by CNBMG Finance to provide the corresponding funding to CNBMG Finance to solve its payment difficulties. Therefore, the safety of deposits of the Group will be ensured by means of the financial support from CNBMG to CNBMG Finance; and
(ix) the Company’s external auditor will conduct an annual review of the transactions entered into under the 2021–2023 Financial Services Framework Agreement to confirm the transaction amount are within the annual caps and the transactions are entered into in accordance with the terms set out in the 2021–2023 Financial Services Framework Agreement in all material respects.

INTERNAL CONTROL ON CONTINUING CONNECTED TRANSACTIONS

The Group has implemented the following measures to ensure that the annual transaction amounts under each of the 2021–2023 CCT Agreements will not exceed the respective Proposed Annual Caps of the respective year:

(i) the subsidiaries of the Group will record and report the connected transactions amounts to the finance department monthly. The finance department will then prepare the statistics on the amount of continuing connected transactions on a monthly basis and together with the secretariat of the Board, jointly supervise and control the amounts of related party transactions of subsidiaries;
(ii) the internal control management department of the Group (with the Company’s audit department as the implementation department) will inspect, supervise and evaluate the purchase/sales orders and/or the contract approval procedures of the Company and its subsidiaries in respect of their compliance with the internal control requirements of connected transactions on a quarterly basis and will report the issue discovered (if any) to the audit (examination) committee under the Board in a timely manner; and
(iii) in accordance with the Listing Rules, the independent non-executive Directors and the auditors of the Company will also perform an annual review of the terms of continuing connected transactions under the 2021–2023 CCT Agreements to confirm that the transactions entered into are in accordance with the terms set out in the respective framework agreements and the pricing policy and the annual caps remain fair and reasonable and that appropriate internal control procedures are in place, and will confirm so each year in the annual report published by the Company.

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LETTER FROM THE BOARD

INFORMATION ON AND RELATIONSHIP OF THE PARTIES TO THE 2021–2023 CCT AGREEMENTS

The Company is principally engaged in the (i) information display glass segment which mainly produces and sells ultra-thin electronic glass substrate; and (ii) new energy glass segment which mainly produces and sells photovoltaic original glass and its further processed products.

CNBMG, a wholly state-owned enterprise incorporated in the PRC and the ultimate controlling shareholder of the Company, is a comprehensive building materials industry group. It was deemed to be interested in 191,520,357 A Shares, representing approximately 34.91% of the total issued share capital of the Company as at the Latest Practicable Date.

CNBMG Finance is a limited liability company incorporated under the laws of the PRC. It is licensed and regulated by the CBIRC and is engaged in the provision of financial services which principally include acceptance of deposits, loans, bills acceptance and discounting services and clearing and settlement services. CNBMG Finance has a registered capital of RMB1 billion and its 70% equity interest is directly held by CNBMG, and 30% equity interest is indirectly held by CNBM.

Triumph, a company incorporated in the PRC with limited liability, is directly and indirectly interested in approximately 34.84% equity interests in the Company and is a direct whollyowned subsidiary of CNBMG. Triumph is principally engaged in glass sector, new materials sector, new energy sector, new equipment sector and project management sector.

BACKGROUND OF AND REASONS FOR ENTERING INTO THE 2021–2023 CCT AGREEMENTS

As the 2018–2020 CCT Agreements will expire on 31 December 2020, the renewal of the 2018–2020 CCT Agreements on 2 December 2020 is for the purposes of (i) assurance of continuous provision of goods and services to and by the Group; (ii) coping with the operation needs and business development of the Group; and (iii) fulfilling the needs in relation to the expansion of the Company’s production scale and business development in the next three years, maintaining the stability of the supply chain and production chain to ensure continuous access to raw materials, products and technical services, and to meet the construction requirements of new and rebuilt projects.

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LETTER FROM THE BOARD

In order to ensure a better planning of capital and cash flow management in different stages of various projects and business development of the Group, on 2 December 2020, the Company and CNBMG Finance entered into the 2021–2023 Financial Services Framework Agreement, pursuant to which CNBMG Finance has agreed to provide the Group, on a nonexclusive basis, with deposit services, loan services and other financial services approved by the CBIRC subject to the terms and conditions therein. The Group expects that the engagement with CNBMG Finance will (i) provide an alternative of a stable source of financial services provider which CNBMG Finance can offer more favourable, diversified and flexible financial service than other third party commercial banks; and (ii) encourage the cooperating financial services providers of the Group to offer more competitive terms to the Group.

Accordingly, the Directors are of the view that the 2021–2023 CCT Agreements have been entered into on normal commercial terms and in the ordinary and usual course of business of the Group, the terms of the 2021–2023 CCT Agreements and their respective Proposed Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Shareholders and the Company as a whole.

IMPLICATIONS UNDER LISTING RULES

CNBMG was deemed to be interested in 191,520,357 A Shares, representing approximately 34.91% of the total issued share capital of the Company as at the Latest Practicable Date, and CNBMG Finance and Triumph are the non wholly-owned subsidiary and wholly-owned subsidiary of CNBMG, respectively. Therefore, each of CNBMG, CNBMG Finance and Triumph is regarded as a connected person of the Company and the transactions contemplated under each of the 2021–2023 CCT Agreements constitute continuing connected transactions of the Company.

As the respective highest applicable percentage ratios as defined in Rule 14.07 of the Listing Rules for each of the Non-exempt 2021–2023 CCT Agreements exceed 5%, the transactions contemplated thereunder will be subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

As the respective highest applicable percentage ratios as defined in Rule 14.07 of the Listing Rules for each of the 2021–2023 Technical Services Framework Agreement and the 2021– 2023 Sale and Purchase of Spare Parts Framework Agreement exceed 0.1% but less than 5%, the transactions contemplated thereunder will be subject to the reporting and announcement requirements only but exempt from the independent shareholders’ approval requirement under Chapter 14A of the Listing Rules.

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LETTER FROM THE BOARD

As the highest applicable percentage ratio as defined in Rule 14.07 of the Listing Rules in respect of the maximum daily amount of the deposit services under the 2021–2023 Financial Services Framework Agreement exceed 5%, the deposit services under the 2021–2023 Financial Services Framework Agreement will be subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules. As the highest applicable percentage ratio (as defined in Rule 14.07 of the Listing Rules) in relation to the provision of deposit services under the 2021–2023 Financial Services Framework Agreement is more than 25%, such transaction constitutes a major transaction of the Company and is subject to the requirements of reporting, announcement and shareholders’ approval under Chapter 14 of the Listing Rules.

The loan services under the 2021–2023 Financial Services Framework Agreement are on normal or better commercial terms and are in the interest of the Group and no security over the assets of the Group will be granted to CNBMG Finance in respect of such loans. Such services will therefore be fully exempted from all reporting, announcement and independent shareholders’ approval requirements pursuant to Rule 14A.90 of the Listing Rules.

As the highest applicable percentage ratio as defined in Rule 14.07 of the Listing Rules for the other financial services under the 2021–2023 Financial Services Framework Agreement exceed 0.1% but less than 5%, such other financial services will be subject to the reporting and announcement requirements only but exempted from the independent shareholders’ approval requirement under Chapter 14A of the Listing Rules.

Mr. Zhang Chong and Mr. Xie Jun, the executive Directors, and Mr. Ren Hongcan and Mr. Chen Yong, the non-executive Directors, have abstained from voting in respect of the 2021– 2023 CCT Agreements in the Board meeting due to the fact that they are connected with CNBMG and are not regarded as independent to make any recommendation to the Board.

INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising all independent non-executive Directors has been formed by the Company in accordance with the Listing Rules to advise the Independent Shareholders on the Non-exempt 2021–2023 CCT Agreements. The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders as to whether the terms and conditions of the Non-exempt 2021–2023 CCT Agreements, the transactions contemplated thereunder and their respective Proposed Annual Caps are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

SHANGHAI LISTING RULES IMPLICATIONS

As the A Shares of the Company are listed on the Shanghai Stock Exchange, the Company is also required to comply with the relevant requirements of the Shanghai Listing Rules. Pursuant to the Shanghai Listing Rules, the Proposed Annual Caps of all the 2021–2023 CCT Agreements should be aggregated and are subject to the Independent Shareholders’ approval at the EGM.

II. CHANGE OF OPERATION TERM OF BUSINESS LICENSE OF THE COMPANY

In accordance with the requirements of the industrial and commercial administrative authorities, the Company proposed to change the operation term of its business license from “7 August 1996 to 6 August 2036” to “7 August 1996 to perpetual existence” in order to make the operation term specified in the business license of the Company to be in line with that set forth in Article 5 of Chapter 1 of the Articles of Association, i.e. “The Company is a joint stock limited company with perpetual existence”.

The resolution on the change of operation term of business license of the Company has been approved at the Board meeting held on 2 December 2020, but it is subject to the approval by the Shareholders at the EGM by way of ordinary resolution.

III. PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

In accordance with the business scope which is approved for registration by the industrial and commercial administrative authorities, the Company amends Article 12 of the Articles of Association. According to relevant provisions of the Company Law of the PRC (《中華人民共和國公司法》), the Guidelines for the Articles of Association of Listed Companies (《上市公司章程指引》) issued by China Securities Regulatory Commission, the Company amends the relevant articles of the Articles of Association in relation to the circumstances and procedures of acquisition by the Company of its own shares. And according to the Adjustment of Rules on Notice Period of the General Meetings Convened by Overseas Listed Companies (《國務院關於調整適用在境外上市公司召開股東大會通知期限等事項的規定》) issued by the State Council, the requirements on the notice period of the general meetings, shareholders’ proposal right and convening procedures for joint stock companies incorporated in the PRC and listed overseas shall be governed by the relevant provisions under the Company Law of the PRC, instead of the provisions under the Articles 20 to 22 of the Special Regulations on the Overseas Offering and Listing of Shares by Joint Stock Limited Companies (《國務院關於股份有限公司境外募集股份及上市的特別規定》).

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LETTER FROM THE BOARD

Therefore, the Company proposes to amend the Articles of Association, and the resolution on the proposed amendments to the Articles of Association has been approved at the Board meeting held on 2 December 2020, but it is subject to the approval by the Shareholders at the EGM by way of special resolution.

The proposed amendment to the Articles of Association are set out in the Appendix III to this circular.

The numbering of the original Article 256 and subsequent articles of the Articles of Association shall be adjusted accordingly upon the proposed amendments to the articles of the Articles of Association. The existing chapters, articles and cross-referenced articles will be renumbered and adjusted accordingly. The English versions of the proposed amendments to the Articles of Association and the Shareholders Meeting Rules are unofficial translation of their respective Chinese versions. In the event of any inconsistency, the Chinese version shall prevail.

IV. AMENDMENTS TO THE RULES OF PROCEDURE FOR GENERAL MEETINGS

In accordance with the relevant content of the newly revised Articles of Association upon the proposed amendments to the articles of the Articles of Association, the relevant requirements of the existing laws, regulations and regulatory documents, and the actual conditions of the Company, the Rules of Procedure for the General Meetings have been amended accordingly.

The resolution on the amendments to the Rules of Procedure for General Meetings has been approved at the Board meeting held on 2 December 2020, but it is subject to the approval by the Shareholders at the EGM by way of ordinary resolution.

The full text of the revised Rules of Procedure for General Meetings of the Company are set out in Appendix IV to this circular.

The English version of the revised Rules of Procedure for General Meetings of the Company is an unofficial translation of its Chinese version. In the event of any inconsistency, the Chinese version shall prevail.

EGM

The Company will convene the EGM for the purposes of, among other things, seeking the Independent Shareholders’ approval for each of the 2021–2023 CCT Agreements and the respective Proposed Annual Caps and the Shareholders’ approval for, among other things, the change of operation term of business license of the Company, the proposed amendments to the Articles of Association and the proposed amendments to the Rules of Procedure for General Meetings. At the EGM, voting on the proposed resolutions will be conducted by way of poll.

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LETTER FROM THE BOARD

The EGM scheduled to be held at 9:00 a.m. on 18 January 2021 (Monday) was postponed to 9:00 a.m. on 9 February 2021 (Tuesday). The notice for convening the EGM scheduled to be held at the conference room of the Company on 3rd Floor, No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC, which was despatched to the Shareholders on 3 December 2020, is set out on pages 135 to 138 of this circular. A form of proxy for use at the EGM was published on the website of the Stock Exchange (http://www.hkexnews.hk) on 3 December 2020 and was also despatched to the Shareholders on 3 December 2020. Whether or not you are able to attend the EGM in person, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the Company’s share registrar in Hong Kong, Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, or to the Company’s registered address at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC as soon as possible and in any event not less than 24 hours before the time appointed for holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

An announcement will be made by the Company following conclusion of the EGM to inform the Shareholders of the results of the EGM. Pursuant to Rule 14A.36 of the Listing Rules, any shareholder who has a material interest in the transaction must abstain from voting on the resolution. Therefore, CNBMG and its associates, which have interests in the transactions contemplated under the 2021–2023 CCT Agreements, will abstain from voting on the resolutions in respect of each of the 2021-2023 CCT Agreements and their respective Proposed Annual Caps at the EGM.

RECOMMENDATIONS

The Directors (including the independent non-executive Directors) consider that the continuing connected transactions under the 2021–2023 CCT Agreements are carried out in the ordinary and usual course of business of the Group and on normal commercial terms. The Directors (including the independent nonexecutive Directors) are of the view that the terms of the 2021–2023 CCT Agreements, the transactions contemplated thereunder and the Proposed Annual Caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Independent Shareholders to vote in favour of the ordinary resolutions with respect to the 2021–2023 CCT Agreements and the Proposed Annual Caps to be proposed at the EGM.

The Independent Board Committee, having taken into account, among other things, the advice of the Independent Financial Adviser, is of the view that the terms of the Non-exempt 2021–2023 CCT Agreements are on normal commercial terms, and the entering into of the Non-exempt 2021–2023 CCT Agreements, the transactions contemplated thereunder and the respective Proposed Annual Caps are fair and reasonable, in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolutions with respect to the Non-exempt 2021–2023 CCT Agreements and the respective Proposed Annual Caps to be proposed at the EGM.

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LETTER FROM THE BOARD

Furthermore, the Directors believe that the proposed (i) amendments to the Articles of Association; (ii) change of operation term of business licence of the Company; and (iii) amendments to the Rules of Procedure for General Meetings are in the best interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of (i) the special resolution with respect to the proposed amendments to the Articles of Association; (ii) the ordinary resolution with respect to the change of operation term of business licence of the Company; and (iii) the ordinary resolution with respect to the proposed amendments to the Rules of Procedure for General Meetings to be proposed at the EGM.

ADDITIONAL INFORMATION

Your attention is drawn to the letter from the Independent Board Committee to the Independent Shareholders and the letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders which are respectively set out on pages 46 to 47 and pages 48 to 92 of this circular. Additional information is also set out in the appendices to this circular and the notice of the EGM.

Yours faithfully,

By order of the Board

**Luoyang Glass Company Limited* Zhang Chong**

Chairman

Luoyang, the PRC

For identification purposes only

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

＊

25 January 2021

To the Independent Shareholders

Dear Sir or Madam,

(1) CONTINUING CONNECTED TRANSACTIONS; AND (2) MAJOR TRANSACTION AND CONTINUING CONNECTED TRANSACTION

We refer to the circular dated 25 January 2021 of the Company (the “ Circular ”) of which this letter forms part. Terms defined in the Circular have the same meanings herein unless the context otherwise requires.

We have been appointed as the members of the Independent Board Committee to consider the terms of the Non-exempt 2021–2023 CCT Agreements and the respective Proposed Annual Caps, and to advise the Independent Shareholders whether, in our opinion, the terms of the Non-exempt 2021–2023 CCT Agreements, the transactions contemplated thereof and the respective Proposed Annual Caps are fair and reasonable, in the ordinary and usual course of business of the Group, on normal commercial terms, and are in the interests of the Company and the Shareholders as a whole. Veda Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

Your attention is drawn to (i) the “Letter from the Board”; (ii) the “Letter from the Independent Financial Adviser” to the Independent Board Committee and the Independent Shareholders which contains its advice in respect of the terms of the Non-exempt 2021–2023 CCT Agreements, the transactions contemplated thereof and the respective Proposed Annual Caps; and (iii) the additional information as set out in the appendices to the Circular.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having considered the terms and conditions of the Non-exempt 2021–2023 CCT Agreements, the transactions contemplated thereof and the respective Proposed Annual Caps, and having taken into account the opinion of the Independent Financial Adviser and, in particular, the factors, reasons and recommendations as set out in the “Letter from the Independent Financial Adviser” on pages 48 to 92 of the Circular, we are of the opinion that the Non-exempt 2021–2023 CCT Agreements were entered into in the ordinary and usual course of business of the Group, on normal commercial terms and that the terms of the Non-exempt 2021–2023 CCT Agreements, the transactions contemplated thereof and the respective Proposed Annual Caps are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions concerning the same to be proposed at the EGM.

Yours faithfully,

For and on behalf of the Independent Board Committee

Mr. Jin Zhanping

Mr. Ye Shuhua Mr. He Baofeng Ms. Zhang Yajuan

Independent non-executive Directors

For identification purposes only

– 47 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of a letter of advice from Veda Capital Limited to the Independent Board Committee and the Independent Shareholders in relation to the Non-exempt 2021–2023 CCT Agreements and their respective Proposed Annual Caps, which has been prepared for the purpose of inclusion in this circular.

==> picture [133 x 37] intentionally omitted <==

Suites 1001–1002, 10/F., 299 QRC 299 Queen’s Road Central, Hong Kong

25 January 2021

To the Independent Board Committee and the Independent Shareholders of

Luoyang Glass Company Limited

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Non-exempt 2021–2023 CCT Agreements and their respective Proposed Annual Caps, details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular dated 25 January 2021 issued by the Company to the Shareholders (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

On 2 December 2020, the Company has entered into, including but not limited to, the Non-exempt 2021– 2023 CCT Agreements with (i) CNBMG, which is deemed to be interested in 191,520,357 A Shares, representing approximately 34.91% of the total issued share capital of the Company as at the date of this circular; (ii) Triumph, a wholly-owned subsidiary of CNBMG; and (iii) CNBMG Finance, a non-wholly owned subsidiary of CNBMG, respectively. Each of CNBMG, Triumph and CNBMG Finance is regarded as a connected person of the Company and the transactions contemplated under each of the Non-exempt 2021–2023 CCT Agreements therefore constitute continuing connected transactions of the Company.

As the respective highest applicable percentage ratios as defined in Rule 14.07 of the Listing Rules for each of the Non-exempt 2021–2023 CCT Agreements exceeds 5%, the transactions contemplated thereunder will be subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules. The Non-exempt 2021–2023 CCT Agreements are,

2021–2023 Sale and Purchase of Glass Products Framework Agreement;

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2021–2023 Sale and Purchase of Raw Materials Framework Agreement;
2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement;
2021–2023 Sale and Purchase of Products Framework Agreement; and
The deposit services under the 2021–2023 Financial Services Framework Agreement.

As the highest of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in relation to the provision of deposit services under the 2021–2023 Financial Services Framework Agreement is more than 25%, such transaction constitutes a major transaction of the Company and is also subject to the requirements of reporting, announcement and shareholders’ approval under Chapter 14 of the Listing Rules.

Mr. Zhang Chong and Mr. Xie Jun, the executive Directors, and Mr. Ren Hongcan and Mr. Chen Yong, the non-executive Directors, have abstained from voting in respect of the 2021–2023 CCT Agreements (including the Non-exempt 2021–2023 CCT Agreements) in the Board meeting due to the fact that they are connected with CNBMG and are not regarded as independent to make any recommendation to the Board. Save as mentioned, none of the Directors has material interests in the 2021–2023 CCT Agreements and is required to abstain from voting on the relevant resolutions at the EGM.

The Independent Board Committee comprising all the independent non-executive Directors has been formed by the Company in accordance with the Listing Rules to advise the Independent Shareholders on the Non-exempt 2021–2023 CCT Agreements.

We have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the terms and conditions of the Non-exempt 2021–2023 CCT Agreements, the transactions contemplated thereunder and their respective Proposed Annual Caps are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole.

OUR INDEPENDENCE

As at the Latest Practicable Date, we did not have any relationships or interests with the Company or any other parties that could reasonably be regarded as relevant to our independence. Save for this appointment as the Independent Financial Adviser in relation to the Non-exempt 2021–2023 CCT Agreements, there were no other engagements between us and the Group in the past two years. Apart from normal

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professional fees paid or payable to us in connection with this transaction, no other arrangement exists whereby we had received or would receive any fees or benefits from the Company or any parties that could reasonably be regarded as relevant to our independence. Accordingly, we consider ourselves independent in accordance with Rule 13.84 of the Listing Rules.

BASIS OF OUR OPINION

In formulating our opinion and advice, we have relied upon the accuracy of the information and representations contained in the Circular and information provided to us by the Company and the management of the Company (the “ Management ”). We have assumed that all statements, information and representations made or referred to in the Circular and all information and representations which have been provided by the Company and the Management, for which they are solely and wholly responsible, were true at the time they were made and continue to be true as at the Latest Practicable Date.

We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration and there are no other facts not contained in the Circular, the omission of which make any such statement contained in the Circular misleading. The Shareholders will be notified of material changes as soon as possible, if any, to the information and representations provided and made to us after the Latest Practicable Date and up to and including the date of the EGM.

The Directors have collectively and individually accepted full responsibility for the accuracy of the information contained in the Circular and have confirmed, having made all reasonable enquiries that, to the best of their knowledge and belief, there are no omission of other facts that would make any statements in the Circular misleading. We, as the Independent Financial Adviser, take no responsibility for the contents of any part of the Circular, save and except for this letter. We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have no reason to believe that any information and representations relied on by us in forming our opinion is untrue, inaccurate or misleading, nor are we aware of any omission of any material facts that would render the information provided and the representations made to us untrue, inaccurate or misleading. We have not, however, conducted any independent in-depth investigation into the business affairs, financial position or future prospects of the Group, nor have we carried out any independent verification of the information provided by the Directors and/or the Management.

This letter is issued to the Independent Board Committee and the Independent Shareholders, solely in connection for their consideration of the Non-exempt 2021–2023 CCT Agreements, the transactions contemplated thereunder and their respective Proposed Annual Caps, and except for its inclusion in the Circular, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purpose without our prior written consent.

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PRINCIPAL FACTORS AND REASONS CONSIDERED

In assessing the Non-exempt 2021–2023 CCT Agreements, the transactions contemplated thereunder and their respective Proposed Annual Caps and in giving our recommendations to the Independent Board Committee and the Independent Shareholders, we have taken into consideration of the following principal factors and reasons.

1. Information on the Company

The Company is principally engaged in the (i) information display glass segment which mainly produces and sells ultra-thin electronic glass substrate (the “ Ultra-thin Glass ”); and (ii) new energy glass segment which mainly produces and sells photovoltaic original glass and its further processed products (the “ Photovoltaic Glass ”).

With references to the annual financial report of the Company for the year ended 31 December 2019,

(i) in respect of the Ultra-thin Glass segment, the Company ranks among the leading manufacturers of ultra-thin electronic glass in the PRC in terms of production capacity as well as product varieties and specifications. It is the first domestic enterprise that carried out research and development and commercial production of ultra-thin float glass products. Moreover, it has accumulated extensive knowledge and processing experience through the production and operation of ultra-thin glass substrates for over 10 years and is capable of producing 0.12mm-2.0mm series of electronic glass in large scale;
(ii) as for the Photovoltaic Glass segment, the Company has a diversified photovoltaic glass product portfolio including but not limited to double-glass components and high transparent photovoltaic original glass. It also keeps up with technological development trend of downstream photovoltaic components, and took the lead in developing and producing a new product in 1.6mm ultra-thin photovoltaic glass catering to the development trend favoring thin and lightweight photovoltaic glass; and
(iii) the Company’s development strategy is to, centering on new glass, new material and new energy market, expand application fields and optimizes product mix. It aims to achieve production volume of 109 million square meters and operating revenue of RMB2,413 million for the year ended 31 December 2020 (the “ Company’s Targets ”), representing an increase of approximately 30.08% as compared to the revenue of approximately RMB1,855 million for the year ended 31 December 2019.

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2. Relationships of CNBMG, Triumph and CNBMG Finance with the Group

CNBMG, a wholly state-owned enterprise incorporated in the PRC, is a comprehensive building materials industry group and the ultimate controlling Shareholder. It is deemed to be interested in 191,520,357 A Shares, representing approximately 34.91% of the total issued share capital of the Company as at the Latest Practicable Date. CNBMG entered into the (i) 2021–2023 Sale and Purchase of Glass Products Framework Agreement as the purchaser; (ii) 2021–2023 Sale and Purchase of Raw Materials Framework Agreement as the supplier; and (iii) 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement as the service provider, respectively.

Triumph, a company incorporated in the PRC with limited liability, is principally engaged in glass sector, new materials sector, new energy sector, new equipment sector and project management sector. It is directly and indirectly interested in approximately 34.84% equity interests in the Company and is a direct wholly-owned subsidiary of CNBMG. Triumph entered into the 2021–2023 Sale and Purchase of Products Framework Agreement as the supplier.

CNBMG Finance, a company incorporated in the PRC with limited liability, is licensed and regulated by the CBIRC to engage in the provision of financial services which principally include acceptance of deposits, loans, bills acceptance and discounting services and clearing and settlement services. CNBMG Finance has a registered capital of RMB1 billion and its 70% equity interest is directly held by CNBMG, and 30% equity interest is indirectly held by CNBM. CNBMG Finance entered into the 2021–2023 Financial Services Framework Agreement as the service provider.

3. Background of and reasons for entering into the 2021–2023 CCT Agreements (including the Non-exempt 2021–2023 CCT Agreements)

As stated in the Board Letter, the 2018–2020 CCT Agreements (including the 2018–2020 Sale and Purchase of Glass Products Framework Agreement, 2018–2020 Sale of Raw Materials Framework Agreement, 2018–2020 Engineering Equipment Procurement and Installation Framework Agreement and the 2018–2020 Sale and Purchase of Products Framework Agreement) will expire on 31 December 2020.

The renewal of the 2018–2020 CCT Agreements (including the above-said agreements) is for the purposes of (i) assurance of continuous provision of goods and services to and by the Group; (ii) coping with the operation needs and business development of the Group; and (iii) fulfilling the needs in relation to the expansion of the Company’s production scale and business development in the next three years, maintaining the stability of the supply chain and production chain to ensure continuous access to raw materials, products and technical services and meeting the construction requirements of new and rebuilt projects.

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Furthermore, we were given to understand by the Group that it is devoted to increase its productions of glass products through, among other ways, the construction of new producing/ processing facilities and machineries in the Group’s existing major production projects located in the cities of Hefei (the “ HF Production ”), Yixing (the “ YX Production ”) and Tongcheng (the “ TC Production ”) (collectively, the “ Production Projects ”), which are principally engaged in producing glass products that will be processed into photovoltaic glass products of the Group.

In view of expanding the production scales for each of the Production Projects, the Group has engaged Bengbu Institute to prepare feasibility reports for each of the Production Projects, namely the HF Report, the YX Report and the TC Report.

Bengbu Institute was found in 1953 and has over 50 years of experience in the research, development and construction design of plate glass and other glass and their production system. It is one of the PRC’s core new technology enterprises and is specified in, among others, innovating new glass products and production equipment. Due to its leading technologies in respect of the production of float glass and other glass products, Bengbu Institute is well recognised among the glass industry in the PRC and the PRC government and it has many years of business partnership with the Group in the past.

Accordingly, we have obtained a copy of the HF Report, the YX Report and the TC Report from the Company and we noted that these reports provided Bengbu Institute’s assessment on, among other information, the construction costs, raw materials, capacity and production output of the constructing of relevant necessary production factory, plant and equipment for the production and processing of qualitied efficient photovoltaic glass products for each of the Production Projects.

As advised by the Company, the Company is generally satisfied with the quality of the products and services rendered by the CNBMG Group and the Triumph Group under the Non-exempt 2018–2020 CCT Agreements.

In light of the Company’s Target, the retaining of the sale of glass products by the Company to the CNBMG Group under the 2021–2023 Sale and Purchase of Glass Products Framework Agreement will serve to provide stable source of revenue to the Group and enhance existing business partnerships to increase market shares in the PRC.

Concurrently, the entering of each of the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement, 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement and 2021–2023 Sale and Purchase of Products Framework Agreement, hinging over the course of business partnerships and familiarization of the Company’s demands, projects and business operations by the CNBMG Group and the Triumph Group, respectively, as the suppliers, would enable the Company to enjoy stable and consistent supply of products and services it currently enjoys.

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It is also stated in the Board Letter that with the entering of the 2021–2023 Financial Services Framework Agreement, CNBMG Finance will provide the Group, on a non-exclusive basis, with deposit services and other financial services approved by the CBIRC (the “ Financial Services ”) subject to the terms and conditions therein.

The Financial Services is expected to (i) ensure better planning of capital and cash flow management in different stages of various projects and business development of the Group; (ii) provide the Group an alternative of a stable source of financial services provider in CNBMG Finance; and (iii) encourage the cooperating financial services providers of the Group to offer more competitive terms to the Group.

Having considered that (i) the existing business partnerships of the Company with the members of the CNBMG Group; (ii) the entering into of the Non-exempt 2021–2023 CCT Agreements (except 2021–2023 Financial Services Framework Agreement) are in substance the renewal of the existing agreements of the Company; (iii) the entering into of the Non-exempt 2021–2023 CCT Agreements support the Company’s Targets and cater the business growth and development of the Group; and (iv) the entering into of the 2021–2023 Financial Services Framework Agreement will provide the Group an additional option that may possibly offer more favorable terms to consider with in selecting the relevant demanded Financial Services, we are of the view that the entering of the Non-exempt 2021–2023 CCT Agreements are in the ordinary and usual course of business of the Group, on normal commercial terms and in the interests of the company and the Shareholders as a whole.

4. Principal terms of each of the Non-exempt 2021–2023 CCT Agreements

A. 2021–2023 Sale and Purchase of Glass Products Framework Agreement

Date 2 December 2020

Parties

(i) the Company (as supplier); and (ii) CNBMG (as purchaser)

Effective period upon signing with company seals by the authorised representatives of both parties and approval by the Independent Shareholders at the EGM, and shall be valid until 31 December 2023.

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Nature of transaction

Pursuant to the 2021–2023 Sale and Purchase of Glass Products Framework Agreement, the Group agreed to supply the glass products of the Group, including but not limited to ultra-thin glass, photovoltaic glass, facility agricultural glass products and further processed glass products to the CNBMG Group.

The Group agreed to implement the production and supply glass products to the CNBMG Group according to the type of product, specifications, quantity and other orders as required by the CNBMG Group. The members of the Group and the CNBMG Group will enter into separate sale and purchase agreements within the scope of the 2021–2023 Sale and Purchase of Glass Products Framework Agreement and such sale and purchase agreement and purchase orders will form part of the 2021–2023 Sale and Purchase of Glass Products Framework Agreement.

Pricing and payment terms

As set out in the Board Letter, the price of glass products under the 2021–2023 Sale and Purchase of Glass Products Framework Agreement shall be determined in the ordinary course of business on normal commercial terms, negotiated on arm’s length basis by both parties under the principle of justice, fairness and openness, and based on the prevailing market prices of the transaction. Please also refer to the subsection headed “Pricing and payment terms” under the section headed “1. 2021–2023 Sale and Purchase of Glass Products Framework Agreement” in the Board Letter for more information.

Pricing standards

The price of glass products under the 2021–2023 Sale and Purchase of Glass Products Framework Agreement will be determined with reference to:

(i) comparable transactions (if any) conducted by the Group with independent third parties during the same period;
(ii) communication and exchange of price information by various means, including telephone conversations, emails and meetings with peers and business partners within the glass production industry;
(iii) sales staff will communicate and query with the customers, suppliers or trade partners through site visits to obtain the prices of comparable transactions in the same period and the prevailing market price at the time of a particular transaction; and/or

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(iv) supply and demand information and price information in the PRC market obtained from China National Bureau of Statistics (www.stats.gov.cn) and the glass network/ the official website of China glass industry (www.glass.org.cn) respectively. Relevant market price data will be used as the basis for the transactions with the CNBMG Group by the sales department.

The Company further advised that the final price will be implemented after the approval of the general manager or the deputy general manager of the Company’s subsidiaries with reference to (i) to (iv) above. For products with unified prices set by the Company, the selling prices for relevant products shall not be lower than the floor prices issued by the Company.

In order to assess the reasonableness and fairness of the pricing standard of the 2021–2023 Sale and Purchase of Glass Products Framework Agreement, we have obtained the summary of all the agreement entered into by the Group with CNBMG Group and other parties who are independent third parties of the Company for the past two years (the “ GP Summary ”). Having considered, including but not limited to, the price fluctuation of glass products, the Company summarized and provided the average prices of the glass products in the GP Summary for each of the year ended 31 December 2019 and the nine months ended 30 September 2020. According to the GP Summary, we noted that the average prices for the purchase of glass products from CNBMG Group were not higher than those purchased from other independent third parties for each of the year ended 31 December 2019 and the nine months ended 30 September 2020.

Furthermore, we have also requested the Company to provide 6 sets of the contracts (the “ GP Contracts ”) in the GP Summary, including those entered into by the Group with CNBMG Group and other parties who are independent third parties of the Company in each set. Each set of the GP Contracts was selected such that the transactions (i) involve products which are the same or highly comparable in feature, characteristic and quality; (ii) were conducted within 30 days to avoid uncertainties due to market price fluctuation. Accordingly, we are of the view that the selection basis of the GP Contracts is fair and representative. We noted that (i) the GP Contracts are approved and signed by the general manager of the sales department of members of the Group which shows that the internal control procedures have been effective; and (ii) the payment terms and arrangement offered by CNBMG Group are not less favorable to the Group than those offered by other independent third parties.

Having considered that (i) the historical average prices for the purchase of glass products from CNBMG Group were not higher than those purchased from other independent third parties; and (ii) the payment terms and arrangement offered by CNBMG Group are not less

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favorable to the Group than those offered by other independent third parties, we consider that the terms of the 2021–2023 Sale and Purchase of Glass Products Framework Agreement are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Historical figures

The annual cap amount for the three years ended 31 December 2018, 2019 and 2020 (inclusive of VAT) are approximately RMB363.62 million, approximately RMB452.57 million and approximately RMB490.69 million respectively.

The historical transaction amounts for the two years ended 31 December 2018 and 2019 and eleven months ended 30 November 2020 in respect of the 2018–2020 Sale and Purchase of Glass Products Framework Agreement (inclusive of VAT) are approximately RMB120.89 million, approximately RMB161.24 million and approximately RMB170.66 million respectively.

Proposed annual caps

The amount of the proposed annual caps under the 2021–2023 Sale and Purchase of Glass Products Framework Agreement for each of the three years ending 31 December 2021, 2022 and 2023 (inclusive of VAT) (the “ GP Caps ”) are as follows,

For the year ending 31 December 2021 – RMB710.00 million.

For the year ending 31 December 2022 – RMB810.00 million.

For the year ending 31 December 2023 – RMB870.00 million.

The GP Caps are determined based on the estimated amount of relevant glass products to be sold to the CNBMG Group after taking into account, among other matters (i) the historical transaction amounts between the Group and the CNBMG Group in the past three years; (ii) the anticipated increase in demand of the CNBMG Group on the glass products; (iii) the production capacity in 2020 and estimated increase in the production capacity of the Group for the period of 2021–2023 in respect of the new production line to be put into operation; and (iv) the respective estimated average unit prices of glass products with reference to the historical transactions between the Group and the CNBMG Group and the prevailing market price of such products.

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(i) HF Production

Based on historical records provided by the Company, approximately 3.07 million square meters of glass products were supplied to the CNBMG Group under the HF Production in 2020, including approximately 1.63 million square meters of crystalline silicon battery glass products and approximately 1.44 million square meters of thin-film battery glass products.

As advised by the Company, as the CNBMG Group were satisfied with the quality of crystalline silicon battery glass products supplied by the Group, the CNBMG Group has indicated that it intends to increase its purchase of the Group’s crystalline silicon battery glass products to approximately 5.00 million square meters per year in 2021, 2022 and 2023. The additional sales of crystalline silicon battery glass products will be supported by the production lines to be invested into the HF Production pursuant to the HF Report. With reference to the historical average transactions’ prices over the past three months over the period from September to November 2020 of crystalline silicon battery glass products of the HF Production at approximately RMB28.07 per square meter and due to expected strong demand of the Group’s crystalline silicon battery glass products by the CNBMG Group, the Company estimated that the average unit price for crystalline silicon battery glass products to be supplied to the CNBMG Group will increase to approximately RMB30.00 per square meter in 2021, 2022 and 2023 in calculating the transactions amount under the HF Production in respect of the GP Caps.

We understand from the Company that, based on the anticipated growth of the Photovoltaic Glass industry in the PRC, the CNBMG has indicated that it intends to increase its purchase of the Group’s thin-film battery glass products to approximately 2.1 million square meters in 2021, approximately 3.5 million square meters in 2022 and approximately 4.2 million square meters in 2023. The additional sales of thin-film battery glass products will be supported by the production lines to be invested into the HF Production pursuant to the HF Report. With reference to the historical average transactions’ prices over the past three months over the period from September to November 2020 of thin-film battery glass products of the HF Production ranged from approximately RMB45 per square meter to RMB47 per square meter, the Company estimated that the average unit price for thin-film battery glass products to be supplied to the CNBMG Group will increase to approximately RMB45.57 per square meter in 2021, 2022 and 2023 in calculating the transactions amount under the HF Production in respect of the GP Caps.

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(ii) YX Production

Based on historical records provided by the Company, there were no glass products supplied to the CNBMG Group under the YX Production in 2020. As advised by the Company, based on ongoing negotiation between the Group and the CNBMG Group, the CNBMG indicated that it intends to purchase the Group’s photovoltaic glass products under the YX Production of approximately 10 million square meters per year in 2021, 2022 and 2023 due to the expansion plans of the subsidiaries of CNBMG, the improved processing quality of the photovoltaic products of YX Production and the fact that further funding will be invested into the additional production lines in YX Production pursuant to the YX Report. The Company estimated that the average unit price for photovoltaic glass products to be supplied to the CNBMG Group under the YX Production will be approximately RMB24 per square meter in 2021, 2022 and 2023 in calculating the transactions amount in respect of the GP Caps, which is made reference to the recent market price of related photovoltaic glass products.

(iii) TC Production

Based on historical records provided by the Company, approximately 0.98 million square meters of glass products were supplied to the CNBMG Group under the TC Production in 2020, including approximately 0.88 million square meters of photovoltaic glass products and approximately 0.1 million square meters of agricultural glass products.

As advised by the Company, based on ongoing negotiations between the Group and the CNBMG Group and additional demand on the Group’s photovoltaic glass products due to the CNBMG Group’s intention to expand its production capacity in the next three years, the CNBMG Group has indicated that it intends to increase its purchase of the Group’s photovoltaic glass products under the TC Production to approximately 5.00 million square meters in 2021, approximately 5.30 million square meters in 2022 and approximately 5.50 million square meters in 2023. With reference to the historical average transactions’ prices over the past three months over the period from September to November 2020 of photovoltaic glass products of the TC Production, the Company estimated that the average unit price for photovoltaic glass products to be supplied to the CNBMG Group under the TC Production will be approximately RMB23 per square meter in 2021, 2022 and 2023 in calculating the transactions amount in respect of the GP Caps.

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As advised by the Company, based on ongoing negotiations between the Group and the CNBMG Group and additional demand on the Group’s agricultural glass products due to the CNBMG Group’s intention to increase its production capacity and promote its agricultural projects in the PRC for the next three years, the CNBMG Group has indicated that it intends to increase its purchase of the Group’s agricultural glass products under the TC Production to approximately 0.45 million square meters in 2021, approximately 0.7 million square meters in 2022 and approximately 1.0 million square meters in 2023. With reference to the historical average transactions’ prices over the past three months over the period from September to November 2020 of agricultural glass products of the TC Production, the Company estimated that the average unit price for photovoltaic glass products to be supplied to the CNBMG Group under the TC Production will be approximately RMB50 per square meter in 2021, 2022 and 2023 in calculating the transactions amount in respect of the GP Caps.

(iv) Other production projects of the Group

Based on historical records provided by the Company, aside from the above mentioned, approximately 4,146,000 square meters of glass products were sold to members of the CNBMG Group under other production projects of the Group in 2020, including approximately 3,861,000 square meters of electronic glass products and approximately 285,000 square meters of ultra-thin glass products which will be used for producing a variety of electronic device for CNBMG Group.

As advised by the Company, based on ongoing negotiations between the Group and the CNBMG Group and additional demand on the Group’s electronic glass products due to the CNBMG Group’s intention to expand its production capacity in the next three years, the CNBMG Group has indicated that it intends to increase its purchase of the Group’s electronic glass products under other production projects of the Group to approximately 5,326,000 square meters in 2021, approximately 5,650,000 square meters in 2022 and approximately 6,144,000 square meters in 2023. With reference to the historical average transactions’ prices over the past three months over the period from September to November 2020 of electronic glass products of other production projects of the Group, the Company estimated that the average unit price for electronic glass products to be supplied to the CNBMG Group under the other production projects of the Group will be approximately RMB14.80 per square meter in 2021, approximately RMB15.50 per square meter in 2022 and approximately RMB16.00 per square meter in 2023 in calculating the transactions amount in respect of the GP Caps. A slight increase in price was reflected based on the anticipated growth of the electronic device industry in the PRC.

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As advised by the Company, based on ongoing negotiations between the Group and the CNBMG Group and additional demand on the Group’s ultra-thin glass products due to the CNBMG Group’s intention to expand its production capacity in the next three years, the CNBMG Group has indicated that it intends to increase its purchase of the Group’s ultra-thin glass products under other production projects of the Group to approximately 430,000 square meters in 2021, approximately 640,000 square meters in 2022 and approximately 800,000 square meters in 2023. With reference to the historical average transactions’ prices over the past three months over the period from September to November 2020 of electronic glass products of other production projects of the Group, the Company estimated that the average unit price for electronic glass products to be supplied to the CNBMG Group under the other production projects of the Group will be approximately RMB13.50 per square meter in 2021, 2022 and 2023 in calculating the transactions amount in respect of the GP Caps.

Recap

To recap, the GP Caps can be broken down as follows:

HF Production YX Production TC Production Others Total Utilization of GP Caps	2021 RMB’000 245,700 240,000 137,500 84,283 707,483 99.65%	2022 RMB’000 309,500 240,000 156,900 96,211 802,611 99.09%	2023 RMB’000 341,400 240,000 176,500 109,109
			867,009

			99.66%

As illustrated in the table above, the GP Caps are designed to cater for the purposes of the CNBMG Group’s demands for Group’s glass products as a result of its intention to expand its production capacity for the three financial years ending 31 December 2023 and are supported by the expected engineering construction/installation in relation to, among other matters, production and processing lines for the production of photovoltaic glass products and display glass products of the Group under each of the notably productions/projects of the Group for the three financial years ending 31 December 2023.

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B. 2021–2023 Sale and Purchase of Raw Materials Framework Agreement

Date 2 December 2020

Parties (i) CNBMG (as supplier); and

(ii) the Company (as purchaser)

Nature of transaction

Pursuant to the 2021–2023 Sale and of Raw Materials Framework Agreement, the CNBMG Group agreed to supply raw materials, such as silicon powder and sodium carbonate to the Group. The CNBMG Group will organize the production and procurement of silicon powder and sodium carbonate required for production according to the purchase plan of raw materials provided by the Group and supply such raw materials as required to the Group. The purchase plan will form part of the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement.

For the purpose of clarity, members of the Group and the CNBMG Group may enter into supplemental agreement or other confirmation documents for a certain product in accordance with the terms of the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement, such supplemental agreement and confirmation documents will form part of the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement.

Pricing and payment terms

As set out in the Board Letter, the price of raw materials under the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement shall be determined in the ordinary course of business on normal commercial terms, negotiated on arm’s length basis by both parties under the principle of justice, fairness and openness, and based on the prevailing market prices of the transaction. Please also refer to the subsection headed “Pricing and payment terms” under the section headed “2. 2021–2023 Sale and Purchase of Raw Materials Framework Agreement” in the Board Letter for more information.

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Pricing standards

Specifically, the price of silicon powder under the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement will be determined with reference to:

(i) reference made to comparable transactions (if any) conducted with independent third parties during the same period;
(ii) regular visit to silicon powder manufacturers (including independent third parties) to understand production, sales and price information on-site; and/or
(iii) the procurement price obtained by the way of open tender or invitation for bid. The major factors in relation to determination of market price are the supply and demand of silicon powder and other raw materials in the areas where the Group’s glass production lines are located, distance between the purchasers and vendors, and quality of silicon powder.

Whereas, the procurement of sodium carbonate by the Group is conducted via the centralized procurement platform adopted by the Triumph Group in order to give play to the benefit of large-scale procurement and reduction of general procurement costs. The centralized procurement of sodium carbonate shall be conducted by means of unified tender by the Triumph Group for unified procurement from and unified payment to sodium carbonate suppliers. The price of sodium carbonate between the Group and the Triumph Group shall be (i) the procurement price of the Triumph Group; plus (ii) the capital occupation costs (surcharge of 1% for 1-month contract)

The Company advised that the marketing department of the Company will collect market price information on a monthly basis. The deputy general manager who is in charge of the Company’s centralized procurement will be responsible for the approval of the transaction price with the Triumph Group with the reference to the quotations from different sodium carbonate manufacturers and the PRC’s bulk commodity service providers such as www.chem365.net.

Silicon powders

We understand from the Company that the silicon powders of the Group are all sourced through the method of bidding and each of the relevant subsidiaries of the Company are responsible for their own sourcing of silicon powders. As advised by the Company, each relevant subsidiaries of the Company usually arrange for their own bidding once per year or two years and would invite at least 3 silicon powders providers to participate each bidding,

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including CMBMG and other independent third parties. The participants would offer their respective selling prices for the Company. The subsidiaries of the Company would then compare the prices offered by all the Silicon powders providers and perform two rounds of screening in order to lower the ultimate selling price, the results of which would further be signed by 2 judges who are the general manager and the vice general manager of the procurement department of the subsidiaries of the Company. Upon approval by the general manager and the vice general manager, the subsidiaries of the Company shall confirm with the successful bidders on the purchasing amount and prices and the entering into of the raw material framework agreement.

As such, the Company has provided us 6 historical bidding records of its subsidiaries and we noted that the Group has followed the above bidding procedures and pricing standards. Furthermore, we have also requested the Company to provide 9 agreements (the “ Silicon Contracts ”) entered into as a result of the above bidding process in the past two years, including those entered into by the Group with CNBMG Group and other parties who are independent third parties of the Company. The Silicon Contracts was selected such that the transactions (i) involve various sets of products which are the same or highly comparable in feature, characteristic and quality; (ii) of each set were conducted within 30 days to avoid uncertainties such as market price fluctuation. Accordingly, we are of the view that the selection basis of the Silicon Contracts is fair and representative. We noted that (i) the Silicon Contracts were approved and signed by general manager of the procedure departments of the members of the Group which shows that the aforesaid internal control procedures have been effective; and (ii) the payment terms and arrangement offered by CNBMG Group are not less favorable to the Group than those offered by other independent third parties.

Sodium carbonate

We understand from the Company that due to the benefits of large-scale procurement, the procurement of sodium carbonate by the Group is conducted via the centralized procurement platform adopted by the Triumph Group (the “ Sodium Carbonate Platform ”) and the Group have not sourced its sodium carbonate via any other methods. The price of the sodium carbonate to be sourced from the Sodium Carbonate Platform will then be compared with those as quoted on www.chem365.net. The decision of purchase will finally be made by the vice general manager of the sales department of the Company upon such comparison. We have obtained historical documents and record in relation to the procurement of sodium carbonate which shows that the above-mentioned internal control procedures exist and the purchase of sodium carbonate have been approved by the vice general manager of the procurement department of the Company.

Having considered (i) that the screening of price of silicon powders in the bidding events held by the Group would ensure that the price of silicon powders purchased from CNBMG Group are not higher than those purchased from other independent third parties; (ii) that the payment terms and arrangement for silicon powders offered by CNBMG Group are not

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less favorable to the Group than those offered by other independent third parties; and (iii) the price discount from the Sodium Carbonate Platform as compared to market price, we consider that the terms of the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Historical figures

The annual cap amount for the three years ended 31 December 2018, 2019 and 2020 (inclusive of VAT) are approximately RMB347.37 million, approximately RMB571.37 million and approximately RMB580.23 million respectively.

The historical transaction amounts for the two years ended 31 December 2018 and 2019 and eleven months ended 30 November 2020 in respect of the 2018–2020 Sale of Raw Materials Framework Agreement (inclusive of VAT) are approximately RMB151.19 million, approximately RMB242.18 million and approximately RMB173.95 million respectively.

Proposed annual caps

The amount of the proposed annual caps under the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement for each of the three years ending 31 December 2021, 2022 and 2023 (inclusive of VAT) (the “ RM Caps ”) are as follows,

For the year ending 31 December 2021 – RMB601.00 million.

For the year ending 31 December 2022 – RMB800.00 million.

For the year ending 31 December 2023 – RMB860.00 million.

The RM Caps are determined based on the estimated demand of silicon powder and sodium carbonate after taking into account, among other matters (i) the historical transaction amounts in 2018 and 2019 and the expected transaction amounts for the year ending 31 December 2020 between the Group and the CNBMG Group; (ii) the increase in consumption of silicon powder and sodium carbonate mainly due to the expected increase in the production capacity of the glass products for the Group in 2022 and 2023; and (iii) the expected unit price of such raw materials with reference to the average price of the same or similar raw materials.

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Silicon powders

Silicon powders is expected to be purchased by the members of the Company to be used in producing various glass products throughout the period from 2021 to 2023 in the HF Production, YX Production and other production projects of the Group. As advised by the Group, most of the silicon powders that were used by the Group were sourced from the members of the CNBMG Group so as to secure the quality and consistent supply of silicon powders for the Group.

(i) HF Production

Based on historical records provided by the Company, approximately 28 million square meters of photovoltaic glasses were produced under the HF Production in 2020 and that, among other materials, approximately 70,000 tonnes of silicon powder were consumed and sourced from members of the CNBMG Group. Pursuant to the HF Report, given that there will be further funding to be invested into expanding the production lines of glass products, an addition of 150,000 tonnes of silicon powder will be required in order to meet with the maximum additional production capacity per year under the HF Production. As the relevant new production lines are expected to commence operations around November 2021, the Company (i) has thus estimated that around 11,600 tonnes of silicon powder (prudent estimation for 1 month usage) will be used for the year ending 2021; (ii) expected that 140,000 tonnes of silicon powder (prudent estimation for 1 year usage) will be used for in 2022 and 2023 respectively; and (iii) is expected to purchase additional 50,000 tonnes of silicon powders as buffer for each year, for production purposes. Accordingly, having taken into account of the existing amount of the silicon powders currently purchased, the Company expected that 131,600 tonnes, 260,000 tonnes and 260,000 tonnes of silicon powder will be consumed under the HF Production and can be purchased from the members of the CNBMG Group in 2021, 2022, and 2023 respectively.

With references to the historical average transactions’ prices over the past three months over the period from August to October 2020 of silicon powder of the Group used for the HF Production at RMB480/tonne, the Company estimated that the unit price for a ton of silicon powder to be RMB480/tonne in 2020, RMB500/tonne in 2022 and RMB500/tonne in 2023 in calculating the transactions amount under the HF Production in respect of the RM Caps. A slight increase in price was reflected based on the anticipated growth of the Photovoltaic Glass industry in the PRC.

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(ii) YX Production

Based on historical records provided by the Company, approximately 41 million square meters of photovoltaic glasses were produced under the YX Production in 2020 and that, among other materials, approximately 8,200 tonnes of silicon powder were consumed and sourced from members of the CNBMG Group. Pursuant to the YX Report, given that there will be further funding to be invested into expanding the production lines of glass products, an addition of 150,000 tonnes of silicon powder will be required in order to meet with the maximum additional production capacity per year under the YX Production. We were given to understand that there are more silicon powder suppliers nearby the location of the YX Production, the required amount of silicon powders sourced from the members of the CNBMG Group will be comparatively less than other projects (as mentioned in this letter) for the YX Production. Based on the Management’s experience, the Company estimated that as when the relevant new production lines commence operations by late-2021, it will purchase not less than 13,800 tonnes of silicon powder in 2021 and, on a full year basis, not less than 36,800 tonnes of silicon powder in 2022 and 2023 respectively. Accordingly, having taken into account of the existing amount of the silicon powders currently purchased, the Company expected that 22,000 tonnes, 45,000 tonnes and 45,000 tonnes of silicon powder will be consumed under the HF Production and can be purchased from the members of the CNBMG Group in 2021, 2022, and 2023 respectively.

With references to the historical average transactions’ prices over the past three months over the period from August to October 2020 of silicon powder of the Group used for the YX Production at RMB500/tonne, the Company estimated that the unit price for a ton of silicon powder to be RMB500/tonne in 2020, RMB505/tonne in 2022 and RMB510/tonne in 2023 in calculating the transactions amount under the XY Production in respect of the RM Caps. The slight increases in prices were reflected based on the anticipated growth of the Photovoltaic Glass industry in the PRC that will be further discussed in this letter in another section.

(iii) Other production projects of the Group

Based on historical records provided by the Company, the Group did not consume or source any silicon powder from members of the CNBMG Group under other production projects of the Group in 2020 as some of the production/processing

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lines were either in maintenance or were newly commenced operation. As advised by the Company, the aforesaid maintenance has been completed in 2020. Given the maximum production capacity of approximately 120,000 tonnes of silicon powder per year and no other changes expected to be made in these production projects for the three upcoming years, the Company estimates to purchase a total of 120,000 tonnes of silicon powder (the “ UW Silicon Powder ”), which will be consumed by the Group to produce ultra-white photovoltaic glass in other production projects of the Group, from members of the CNBMG Group for these other production projects in 2021, 2022 and 2023 respectively.

As advised by the Company, photovoltaic glass products made with the UW Silicon Powder can be more transparent and energy efficient and thus more expensive as compared to those made with the silicon powders used in the HF Production and YX Production. With references to the historical average transactions’ prices over the past three months over the period from August to October 2020 of UW Silicon Powder of the Group at RMB800/tonne, the Company estimated that the unit price for a ton of UW Silicon Powder to be RMB800/tonne in 2021, RMB850/tonne in 2022 and RMB900/tonne in 2023 in calculating the transactions amounts in respect of the RM Caps. Taken into the fact that it is generally more costly for the mining of the UW Silicon Powder and less supply in the market than normal silicon powder, higher increment in prices over the years (i.e. 6.25% and approximately 5.88% respectively) were reflected to cope with the anticipated growth of the Photovoltaic Glass industry in the PRC.

(iv) Summary for silicon powder expected to be purchased from members of the CNBMG Group

HF Production YX Production Others Total	2021 RMB’000 63,168 11,000 96,000 170,168	2022 RMB’000 130,000 22,725 102,000 254,725	2023 RMB’000 130,000 22,950 108,000
			260,950

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Sodium Carbonate

(i) HF Production

Based on historical records provided by the Company, approximately 28 million square meters of photovoltaic glasses were produced under the HF Production in 2020 and that, among other materials, approximately 48,000 tonnes of sodium carbonate were consumed and sourced from members of the CNBMG Group. Pursuant to the HF Report, given that there will be further funding to be invested into expanding the production lines of glass products, an addition of 48,000 tonnes of sodium carbonate will be required in order to meet with the maximum additional production capacity per year under the HF Production. As the relevant new production lines are expected to commence operations in mid-2021, the Company (i) has thus estimated that around 24,000 tonnes of sodium carbonate (estimation for 6 months usage) will be used for the year ending 2021; and (ii) expected that 48,000 tonnes of sodium carbonate will be used in 2022 and 2023 respectively, for production purposes. Accordingly, having taken into account of the existing amount of the sodium carbonate currently purchased, the Company expected that 72,000 tonnes, 96,000 tonnes and 96,000 tonnes of sodium carbonate will be consumed under the HF Production and can be purchased from the members of the CNBMG Group in 2021, 2022, and 2023 respectively.

The unit price for a tonne of sodium carbonate in calculating the transactions amount under the HF Production in respect of the RM Caps was estimated to be at RMB1,850 per ton of sodium carbonate having to give play to the benefit of large-scale procurement and reduction of general procurement costs by the Triumph Group.

(ii) YX Production

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existing amount of the sodium carbonate currently purchased, the Company expected that 57,600 tonnes, 57,600 tonnes and 81,600 tonnes of sodium carbonate will be consumed under the YX Production and can be purchased from the members of the CNBMG Group in 2021, 2022, and 2023 respectively.

The unit price for a ton of sodium carbonate in calculating the transactions amount under the YX Production in respect of the RM Caps was estimated to be at RMB1,850 per ton of sodium carbonate having to give play to the benefit of large-scale procurement and reduction of general procurement costs by the Triumph Group.

(iii) TC Production

Based on historical records provided by the Company, approximately 41 million square meters of photovoltaic glasses were produced under the TC Production in 2020 and that, among other materials, approximately 18,000 tonnes of sodium carbonate were consumed and sourced from members of the CNBMG Group. Pursuant to the TC Report, given that there will be further funding to be invested into expanding the production lines of glass products, an addition of 72,000 tonnes of silicon powder will be required in order to meet with the maximum additional production capacity per year under the TC Production. As the relevant new production lines are expected to commence operations in mid-2021, the Company (i) has thus estimated that around 36,000 tonnes of sodium carbonate (estimation for 6 months usage) will be used for the year ending 2021; and (ii) expected that 72,000 tonnes of sodium carbonate will be used in 2022 and 2023 respectively, for production purposes. Accordingly, having taken into account of the existing amount of the sodium carbonate currently purchased, the Company expected that 54,000 tonnes, 90,000 tonnes and 90,000 tonnes of sodium carbonate will be consumed under the TC Production and can be purchased from the members of the CNBMG Group in 2021, 2022, and 2023 respectively.

The unit price for a ton of sodium carbonate in calculating the transactions amount under the TC Production in respect of the RM Caps was estimated to be at RMB1,850 per ton of sodium carbonate having to give play to the benefit of large-scale procurement and reduction of general procurement costs by the Triumph Group.

(iv) Other production projects of the Group

Based on historical records provided by the Company, aside from the above mentioned, approximately 19,169 tonnes of sodium carbonate were consumed and sourced from members of the CNBMG Group to produce photovoltaic glasses in other production projects of the Group in 2020. As advised by the Company, the production/

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processing lines of other production projects of the Group were not operated in their full capacity as some of the production/processing lines were either in maintenance or newly commenced operation under other production projects of the Group. Taking into account (i) the aforesaid maintenance of production/processing lines having completed in 2020; (ii) aforesaid new production/processing lines having commenced operation in 2020; and (iii) no other changes expected to be made in these production projects for the two upcoming years, the Company estimates to maintain its purchase of a total of 49,200 tonnes of sodium carbonate from members of the CNBMG Group for these other production projects in 2021 and 2022. As, it is expected that additional production line will be installed by the Group in 2023 which may consume additional 4,200 tonnes of sodium carbonate for production, the Company expects to purchase a total of 53,400 tonnes of sodium carbonate from members of the CNBMG Group in 2023.

The unit price for a ton of sodium carbonate in calculating the transactions amount under other production projects of the Group in respect of the RM Caps was estimated to be at RMB1,850 per ton of sodium carbonate having to give play to the benefit of large-scale procurement and reduction of general procurement costs by the Triumph Group.

(v) Summary for sodium carbonate expected to be purchased from members of the CNBMG Group

HF Production YX Production TC Production Others Total	2021 RMB’000 133,200 106,560 99,900 91,020 430,680	2022 RMB’000 177,600 106,560 166,500 91,020 541,680	2023 RMB’000 177,600 150,960 166,500 98,790
			593,850

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Recap

In light of the above, the RM Caps can be broken down as follows:

Silicon Powder Sodium Carbonate Total Utilization of RM Caps	2021 RMB’000 170,168 430,680 600,848 99.97%	2022 RMB’000 254,725 541,680 796,405 99.55%	2023 RMB’000 260,950 593,850
			854,800

			99.40%

As illustrated in the table above, the RM Caps are designed to cater for the purposes of the demands of the raw materials for the productions of glass products under each of the notably productions/projects of the Group for the three financial years ending 31 December 2023.

C. 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement

Date 2 December 2020 Parties (i) CNBMG (as provider); and (ii) the Company (as receiver)

Nature of transaction

Pursuant to the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement, the CNBMG Group agreed to provide the required equipment, materials and construction and installation services etc. to the Group, according to the project planning and requirement for the engineering and construction projects of the Group.

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For the purpose of clarity, members of the Group and the CNBMG Group may enter into supplemental agreement or other confirmation documents for a certain project in accordance with the terms of the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement, such supplemental agreement and confirmation documents will form part of the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement.

Pricing and payment terms

As set out in the Board Letter, the price of equipment materials, construction fee and installation fee under the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement shall be determined in the ordinary course of business on normal commercial terms, negotiated on arm’s length basis by both parties under the principle of justice, fairness and openness, and based on the prevailing market prices of the transaction. Please also refer to the subsection headed “Pricing and payment terms” under the section headed “3. 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement” in the Board Letter for more information.

Pricing standards

The price or consideration under the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement will be determined with reference to:

(i) prices offered to other independent third party(ies) on the same or similar size of the engineering projects by CNBMG;
(ii) the comparable transactions (if any) with independent third parties by the Group during the same period on the same or similar size of the engineering projects; and
(iii) communication and exchange of price information by various means, including telephone conversations, emails and meetings with peers and business partners within the glass production industry.

In the event that there are no available prevailing market prices or where it is impracticable to obtain such market prices, the Group and the CNBMG Group will determine the price through arm’s length negotiation with references to:

(i) the previous similar transactions concluded by the Group and independent third parties;

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(ii) similar transactions concluded by the CNBMG Group and independent third parties; and/or
(iii) the costs of equipment and materials provided by the CNBMG Group for engineering projects, technical requirements on installation, manpower involved, complexity of technical plan, technology advancement and duration of the installation. The price offered by the CNBMG Group to the Group shall not be less favorable than those offered by the CNBMG Group to other independent third parties for provision of the same or similar size of the services.

As advised by the Company, due to years of cooperation between the Group and the CNBMG Group, members of the CNBMG Group have the required technology and equipment that is more catered to the Company’s need for producing high-quality glass products than those of other independent third parties. The valuation and consideration of each construction or installation is made reference to the feasibility reports (e.g., the HF Report, the YX report and the TC Report) provided by qualified institutions appointed by the Company, including but not limited to, the Bengbu Institute. These feasibility reports will be reviewed by the general manager and project team of the Company and compared to other similar construction and installation projects of the Group in the past.

Having considered that (i) the pricing of the construction and installation projects is made reference to the abovementioned feasibility reports; (ii) the technology and equipment provided by the CNBMG Group is catered to the Company’s need for producing high-quality glass products, we consider that the terms of the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Historical figures

The annual cap amounts for the three years ended 31 December 2018, 2019 and 2020 (inclusive of VAT) are approximately RMB1,137.00 million, approximately RMB1,105.00 million and approximately RMB685.00 million respectively.

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The historical transaction amounts for the two years ended 31 December 2018 and 2019 and eleven months ended 30 November 2020 in respect of the 2018–2020 Engineering Equipment Procurement and Installation Framework Agreement (inclusive of VAT) are approximately RMB34.91 million, approximately RMB207.29 million and approximately RMB193.16 million respectively.

Proposed annual caps

The amount of the proposed annual caps under the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement for each of the three years ending 31 December 2021, 2022 and 2023 (inclusive of VAT) (the “ EC Caps ”) are as follows,

For the year ending 31 December 2021 – RMB2,300.00 million.

For the year ending 31 December 2022 – RMB1,500.00 million.

For the year ending 31 December 2023 – RMB2,000.00 million.

The EC Caps are determined based on the estimated amounts of the equipment material, construction services and installation services to be required for future engineering projects after taking into account, among other matters (i) the projected schedule of construction projects for the new projects and technological upgrading projects proposed to be implemented by the Group for the period of 2021–2023; (ii) the estimated demand of equipment material, construction services and installation services based on the complexity of the construction work and installation work for future projects; and (iii) the estimated price and fees for the equipment material, construction services and installation services based on the historical transactions between the Group and the CNBMG Group.

As advised by the Company, the details for each of the engineering projects involved in the calculations of the EC Caps are listed as follows:

(i) HF Production

As advised by the Company, in relation to the HF Production in 2021, the Company intends to construct/install the relevant necessary production factory, plant and equipment that will comprise of (i) one production-line that comprise of an annual processing capacity of, among other materials, 150,000 tonnes of silicon powder

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and 48,000 tonnes of sodium carbonate that will then be used for the making of certain glass products and subsequently processed to be photovoltaic glasses; and (ii) five processing-lines that in aggregate comprise of an annual processing and/or production capacity of 40 million square meters of photovoltaic glass (the “ 2021 HF Construction ”).

According to the HF Report, the total construction costs for the development of the 2021 HF Construction as mentioned will be approximately RMB690.76 million of which, according to the Company, approximately RMB615.75 million service costs would require specific know-how to perform the necessary constructions/services (the “ Exclusive Services ”) and approximately RMB75.01million service costs could be performed by general engineers with respective qualified licenses.

As advised by the Company, the Exclusive Services are expected, or required, to be performed by the members of the CNBMG Group as the skills involved in constructing/installing the relevant equipment to process, and produce, the products of the Group (i.e. 1.6mm ultra-thin photovoltaic glass) are considered as confidential information of the Group and its connected persons (the “ CNBMG Advantages ”).

Additionally, in 2022, the Group is expecting to construct/install the relevant necessary production factory, plant and equipment that will comprise of six processing-lines that in aggregate comprise of an annual processing and/or production capacity of 60 million square meters of photovoltaic glass to further supplement the HF Production (the “ 2022 HF Construction ”). With references to TC Report, which principally studied and examined the construction and installation costs of a processing-line, the service costs for a processing line with annual processing and/or production capacity of 10 million square meters of photovoltaic glass is estimated to be approximately RMB60 million (the “ PL Reference Cost ”). Therefore, the total costs for 2020 HF Construction are estimated to be around RMB360 million.

In short, in relation to the HF Production, the 2021 HF Construction and the 2022 HF Construction of approximately RMB615.75 million in 2021 and RMB360 million in 2022 will be forming parts of the calculations of the EC Caps.

(ii) YX Production

As advised by the Company, in relation to the YX Production in 2021, the Company intends to construct/install the relevant necessary production factory, plant and equipment that will comprise of (i) one production-line that comprise of an annual

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processing capacity of, among other materials, 150,000 tonnes of silicon powder and 48,000 tonnes of sodium carbonate that will then be used for the making of certain glass products and subsequently processed to be photovoltaic glasses; and (ii) four processing-lines that in aggregate comprise of an annual processing and/or production capacity of 40 million square meters of photovoltaic glass (the “ 2021 YX Construction ”).

According to the YX Report, the total construction costs for the development of the 2021 YX Construction as mentioned will be approximately RMB753.62 million of which, approximately RMB614.10 million service costs would be considered as Exclusive Services that are expected, or required, to be performed by the members of the CNBMG Group to fully capture the CNBMG Advantages.

Additionally, in 2022, the Group targets to construct/install (i) two processing lines in aggregate comprise of annual processing/production capacity of 20 million square meters of photovoltaic glass with service costs estimated to be around RMB120 million; and (ii) two processing lines with annual processing/producing capacity of approximately 20 million square meters of photovoltaic glass with service cost estimated to be around RMB120 million (the “ 2022 YX Construction ”). In 2023, three Processing Lines in aggregate comprise of annual processing and/or producing capacity of 30 million square meters of photovoltaic glass with service costs estimated to be around RMB180 million (the “ 2023 YX Construction ”). The service costs of both the 2022 YX Construction and 2023 YX Construction are taken reference with the PL Reference Cost as above-mentioned.

Further, we were advised by the Company that the estimated service costs for upgrade, maintenance and modification of the machineries in relation to the YX Production are approximately RMB6.06 million in 2021, approximately RMB176.06 million in 2022 and approximately RMB126.06 million in 2023 with reference to the historical cost of other similar upgrade of other facilities of the Group (the “ YX Production Service Costs ”).

In short, in relation to the YX Production, the 2021 YX Construction, the 2022 YX Construction, the 2023 YX Construction and the YX Production Service Costs for the period between 2021 and 2023 are amounted to approximately RMB620.16 million in 2021, approximately RMB416.06 million in 2022 and approximately RMB306.06 million in 2023 will be forming parts of the calculations of the EC Caps.

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(iii) TC Production

As advised by the Company, in relation to the TC Production in 2021, the Company intends to construct/install similar, relevant necessary production factory, plant and equipment that will comprise of a production line and four processing-lines for the production of photovoltaic glasses that in aggregate comprise of an annual processing and/or production capacity of 40 million square meters of photovoltaic glass (the “ 2021 TC Construction ”).

According to the TC Report, the total construction costs for the development of the 2021 TC Construction as mentioned will be approximately RMB936.64 million of which, approximately RMB877.22 million service costs would be considered as Exclusive Services that are expected, or required, to be performed by the members of the CNBMG Group to fully capture the CNBMG Advantages.

In 2023, the Group targets to supplement the TC Production and construct/install additional eight processing-lines in aggregate comprise of annual processing and/or producing capacity of 80 million square meters of photovoltaic glass (the “ 2023 TC Construction ”). With reference to the PL Reference Cost, the total service costs for the 2023 TC Construction are estimated to be around RMB480 million.

In short, in relation to the TC Production, the 2021 TC Construction and the 2023 TC Construction of approximately RMB877.22 million in 2021 and approximately RMB480 million in 2023 will be forming parts of the calculations of the EC Caps.

(iv) Other productions of the Group

Save for the above mentioned developments, in 2021, the Group expects to have the following developments that may also require Exclusive Services,

(a) approximately RMB100 million will be served for constructing/installing two processing lines with aggregated annual processing/production capacity of 16 million square meters of photovoltaic glasses;
(b) approximately RMB46 million will be used for the development of a research and development center that will be used for development of other glass products for the Group to cater market demand and capture additional market share in the market; and
(c) approximately RMB15 million will be used for warehouse upgrading purposes.

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For the year 2022,

(a) approximately RMB131 million will be served for constructing/installing two processing lines with aggregate annual processing/production capacity of 23 million square meters of photovoltaic glasses;
(b) approximately RMB50 million will be used for constructing a waste management facility to manage and process the wastes created from the procurement of processing and producing of the Group’s glass products;
(c) approximately RMB500 million will be used for the constructing/installing an addition production line to the existing production line to produce glass products to be used for the Group’s Ultra-thin Glass segment.

For the year 2023,

(a) approximately RMB750 million will be used for constructing a production/ project the scale and nature of which are similar to the 2021 HF Construction, 2021 YX Construction and the 2021 TC Construction; and
(b) approximately RMB450 million will be used for constructing/installing an additional production line to produce glass products to be used for the Group’s Ultra-thin Glass segment with annual production output of approximately 15.5 million square meters, with reference to previous construction/installation of production line with similar characteristics, including but not limited to, production capacity, production output and the type of equipment and facilities to be installed.

In light of the above, approximately RMB161 million in 2021, approximately RMB681 million in 2022 and approximately RMB1,200 million in 2023 will be forming parts of the EC Caps.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Recap

To recap, the EC Caps can be broken down as follows:

HF Production YX Production TC Production Others Total Utilization of RM Caps	2021 RMB’000 615,750 620,160 877,220 161,000 2,274,130 98.88%	2022 RMB’000 360,000 416,060 – 681,000 1,457,060 97.14%	2023 RMB’000 – 306,060 480,000 1,200,000
			1,986,060

			99.30%

As illustrated in the table above, the EC Caps are designed to cater for the purposes of the expected engineering construction/installation in relation to, among other matters, production and processing lines for the production of photovoltaic glass products and display glass products of the Group under each of the notably productions/projects of the Group for the three financial years ending 31 December 2023.

D. 2021–2023 Sale and Purchase of Products Framework Agreement

Date 2 December 2020 Parties (i) Triumph (as supplier); and (ii) the Company (as purchaser)

Effective period

upon signing with company seals by the authorised representatives of both parties and approval by the Independent Shareholders at the EGM, and shall be valid until 31 December 2023

Nature of transaction

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For packaging boxes, the Triumph Group agreed to manufacture the packaging boxes according to the category of the packaging boxes, the size and drawings requested by the Group and provide the required products to the Group.

The Group and the Triumph Group will enter into separate sale and purchase agreements within the scope of the 2021–2023 Sale and Purchase of Products Framework Agreement and contain details of the sale and purchase of the products, such sale and purchase agreement, orders and drawings, etc. will form part of the 2021–2023 Sale and Purchase of Products Framework Agreement.

Pricing and payment terms

As set out in the Board Letter, the price of the products under the 2021–2023 Sale and Purchase of Products Framework Agreement shall be determined in the ordinary course of business on normal commercial terms, negotiated on arm’s length basis by both parties under the principle of justice, fairness and openness, and based on the prevailing market prices of the transaction. Please also refer to the subsection headed “Pricing and payment terms” under the section headed “4. 2021–2023 Sale and Purchase of Products Framework Agreement” in the Board Letter for more information.

Pricing standards

The prices of glass products under the 2021–2023 Sale and Purchase of Products Framework Agreement will be determined with reference to:

(i) price information collected by the business department of the Company by various means, including telephone conversations, emails and meetings with peers and business partners within the glass production industry;
(ii) supply and demand information and price information in the PRC market from China National Bureau of Statistics (www.stats.gov.cn) and from the glass network/the official website of China glass industry (www.glass.org.cn) collected by the business department of the Company to be used as the basis for the transactions by the sales department of the Group; and/or

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(iii) comparable transactions (if any) conducted by the Group with independent third parties during the same period on the same products or the products with same specification and grade.

The prices of packaging box products under the 2021–2023 Sale and Purchase of Products Framework Agreement will be determined by the Company after inquiring no less than three suppliers or through invitation for bid. The Company will also require the Triumph Group to provide the sale and purchase contracts for packaging boxes products between the Triumph Group and the independent third parties for provision of the same or similar products to ensure the price fairness and reasonableness.

As advised by the Company, the Company intends that the glass products to be sourced from the 2021–2023 Sale and Purchase of Products Framework Agreement will be processed into photovoltaic glass products of the Group.

In the past, as a result of the Notice of Photovoltaic Power Generation Related Matters in 2018 (關於2018年光伏發電有關事項的通知) jointly announced by the PRC National Development and Reform Commission (中華人民共和國國家發展和改革委員會), the Ministry of Finance of the PRC (中國人民共和國財政部) and National Energy Administration of the PRC (國家能源局) in 2018, the photovoltaic industry were in recession and the downstream demand was in shrink. Therefore, the purchasing scale of the glass products from other parties was relatively small.

According to the summary of all the agreement entered into by the Group with Triumph Group and other parties who are independent third parties of the Company for the past two years (the “ Products Summary ”) provided by the Company, the Group has in the past two years entered 22 contracts with Triumph and the average unit purchasing price as stipulated in these contracts is not higher than those purchased from other independent third parties in the past two years.

Furthermore, due to the limited amount of comparable glass products purchased from Triumph Group and independent third parties in the past two years, we have also requested the Company to provide 7 comparable contracts (the “ Products Contracts ”) in the Products Summary, including those entered into by the Group with Triumph and other parties who are independent third parties of the Company. The Products Contracts was selected such that the transactions (i) involve various sets of products which are the same or highly comparable in feature, characteristic and quality; (ii) of each set were conducted within 30 days to avoid

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uncertainties such as market price fluctuation. Accordingly, we are of the view that the selection basis of the Products Contracts is fair and representative. We noted that (i) the contracts are approved and signed by the general manager of procurement department of members of the Group which shows that the aforesaid internal control procedures have been effective; and (ii) the payment terms and arrangement offered by Triumph Group are not less favorable to the Group than those offered by other independent third parties.

Having considered that (i) the historical average unit price of glass products purchased from Triumph Group is not higher than those purchased from other independent third parties in the past two years; and (ii) the payment terms and arrangement offered by Triumph Group are not less favorable to the Group than those offered by other independent third parties, we consider that the terms of the Sale and Purchase of Products Framework Agreement are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Historical figures

The annual cap amount for the three years ended 31 December 2018, 2019 and 2020 (inclusive of VAT) are approximately RMB28.82 million, approximately RMB36.42 million and approximately RMB36.42 million respectively.

The historical transaction amounts for the two years ended 31 December 2018 and 2019 and eleven months ended 30 November 2020 in respect of the 2018–2020 Sale and Purchase of Products Framework Agreement (inclusive of VAT) are approximately RMB8.18 million, approximately RMB4.84 million and approximately RMB16.42 million respectively.

Proposed annual caps

The amount of the proposed annual caps under the 2021–2023 Sale and Purchase of Products Framework Agreement for each of the three years ending 31 December 2021, 2022 and 2023 (inclusive of VAT) (the “ Products Caps ”) are as follows,

For the year ending 31 December 2021 – RMB561.00 million.

For the year ending 31 December 2022 – RMB740.00 million.

For the year ending 31 December 2023 – RMB920.00 million.

The Products Caps are determined based on the expected consumption on the glass products and packaging box products after taking into account, among other matters (i) the anticipated significant increase in demand of the Group of the float glass products in respect of the new

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deep processing production to be put into operation for the period of 2021–2023; (ii) the historical transactions amounts of the packaging products between the Group and Triumph; and (iii) the estimated price of the glass products and packaging box products based on the historical transactions between the Group and the Triumph Group and the prevailing market price of the same or similar types of glass products and packaging box products.

(i) HF Production

Based on historical records provided by the Company, approximately 4.5 million square meters of glass products were consumed and sourced from Triumph Group under the HF Production in 2020, including approximately 3.5 million square meters of float glass and approximately 1.0 million square meters of ultra-white glass, which were used by HF Production to further process into photovoltaic glass products.

Having considered the new processing lines to be installed and to commence operations under HF Production in the next three years, the Company thus estimated to purchase from Triumph Group of (i) additional 6.5 million square meters of float glass in 2021; (ii) additional 10.5 million square meters of float glass in 2022; (iii) additional 14.5 million square meters of float glass in 2023; and (iv) additional 3.0 million square meters of ultra-white glass in 2021, 2022 and 2023. Accordingly, having taken into account of the existing amount of the float glass and ultra-white glass currently purchased, the Company expected that approximately 10 million square meters, 14 million square meters and 18 million square meters of float glass can be purchased from the members of Triumph Group in 2021, 2022 and 2023 respectively and approximately 4 million square meters of ultra-white glass can be purchased from the members of Triumph Group in each of 2021, 2022 and 2023.

With reference to the historical average transactions’ prices over the past three months over the period from September to November 2020 of float glass and ultra-white glass, the Company estimated that the average unit price for float glass and ultra-white glass to be purchased from Triumph Group will be approximately RMB14 per square meter and RMB16 per square meter respectively in 2021, 2022 and 2023 in calculating the transactions amount under the HF Production in respect of the Products Caps.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(ii) YX Production

Based on historical records provided by the Company, approximately 4.0 million square meters of glass products were consumed and sourced from Triumph Group under the YX Production in 2020, including approximately 3.0 million square meters of float glass and approximately 1.0 million square meters of ultra-white glass, which were used by YX Production to further process into photovoltaic glass products.

Due to the anticipated growth of the photovoltaic glass industry in the PRC in future years, the Group would like to increase its revenue and capture additional market share in the photovoltaic glass industry in the PRC by way of sourcing additional float glass and ultra-white glass from Triumph Group. Having considered the new processing lines to be installed and to commence operations under YX Production in the next three years, the Company thus estimated to purchase from Triumph Group of (i) additional 9.0 million square meters of float glass in 2021; (ii) additional 13.0 million square meters of float glass in 2022; (iii) additional 18.0 million square meters of float glass in 2023; and (iv) additional 7.0 million square meters of ultra-white glass in 2021, 2022 and 2023. Accordingly, having taken into account of the existing amount of the float glass and ultra-white glass currently purchased, the Company expected that approximately 12.0 million square meters, 16.0 million square meters and 21.0 million square meters of float glass can be purchased from the members of Triumph Group in 2021, 2022 and 2023 respectively and approximately 8.0 million square meters of ultra-white glass can be purchased from the members of Triumph Group in each of 2021, 2022 and 2023.

(iii) TC Production

Based on historical records provided by the Company, approximately 38,454 square meters of float glass were consumed and sourced from Triumph Group under the TC Production in 2020 which were used by TC Production to further process into photovoltaic glass products.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

With reference to the historical average transactions’ prices over the past three months over the period from September to November 2020 of float glass and ultra-white glass, the Company estimated that the average unit price for float glass to be purchased from Triumph Group will be approximately RMB14 per square meter in 2021, 2022 and 2023 in calculating the transactions amount under the TC Production in respect of the Products Caps.

Recap

To recap, the Products Caps can be broken down as follows:

HF Production YX Production TC Production Total Utilization of Products Caps	2021 RMB’000 204,000 296,000 28,000 528,000 94.12%	2022 RMB’000 260,000 352,000 84,000 696,000 94.01%	2023 RMB’000 316,000 422,000 140,000
			878,000 95.43%

As illustrated in the table above, the Products Caps are designed to cater for the purposes of the demands of the float glass and ultra-white glass for the processing of the Group’s photovoltaic glass products under each of the notably productions/projects of the Group for the three financial years ending 31 December 2023. Aside from the utilized Products Caps as explained above, the remaining RM Caps of approximately RMB33 million, approximately RMB44 million and approximately RMB42 million for 2021, 2022 and 2023 respectively are considered as buffer for the Group to purchase the necessary packaging box products from Triumph Group for the packaging of the Group’s glass products in general.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Outlook of the Group’s Glass Industry in the PRC

The Ministry of Industry and Information Technology of the PRC (工業和信息化部) and National Energy Administration of the PRC (國家能源局) in 2016 published the “Industrial Technology Innovation Development Plan” (產業技術創新能力發展規劃) and “Development of Solar Power for Thirteenth Five-Year Plan” (太陽能發展十三五規劃) respectively to support PRC enterprise to enhance the efficiency and quality of photovoltaic cell products and photovoltaic systems while reducing the cost of producing photovoltaic products and generating electricity. The usage of photovoltaic power generation has also been largely promoted to form photovoltaic towns and villages. Based on our research on the solar industry in the PRC, according to the National Bureau of Statistics of the PRC (the “ National Bureau ”) (http://www.stats.gov.cn/), the monthly electricity generated by solar power in the PRC tripled from approximately 3.05 billion kWh in October 2016 to approximately 11.61 billion kWh in October 2020.

The Central Committee of Communist Party of China (中國共產黨中央委員會) proposed “Proposals of the Central Committee of the Communist Party of China on Formulating the Fourteenth Five-Year Plan for National Economic and Social Development and the Long-term Goals for 2035” (中共中央關於制定國民經濟和社會發展第十四個五年規劃和二〇三五年遠景目標的建議) in October 2020, which states that the PRC government will continue to focus on the development of new energy industry, including but not limited to, the solar energy and photovoltaic glass industry. Furthermore, with reference to the “2050 Roadmap of China Solar Power Development” (中國太陽能發展路線圖2050) published by, among others, the PRC National Development and Reform Commission Research Centre (國家發展改革委能源研究所) (http://www.cvig.org.cn/), the PRC government have long and sustainable plans to leverage on the trend of renewable and environmentally friendly energy, including the solar power which is expected to generate approximately 40% of all the electricity demand of the PRC by 2050.

The “Proposals of the Central Committee of the Communist Party of China on Formulating the Fourteenth Five-Year Plan for National Economic and Social Development and the Long-term Goals for 2035” (中共中央關於制定國民經濟和社會發展第十四個五年規劃和二〇三五年遠景目標的建議) also emphasized the innovation of high quality and more efficient information display glass used in various mobile and other devices that could gain access the Internet for users. With the implementation of 5G technology, the usage of mobile devices is expected to become more universal. According to the “PRC Industry Development Report” (中國行業發展報告) published by China Economic Information Website* (中國經濟信息網) (http://reportnew.cei.cn), the production unit of mobile phones in the PRC is expected to grow by approximately 14.12% in 2021 and approximately 9.79% in 2022. The higher production for mobile devices is expected to increase the demand of the Group’s information display glass and thin glass products.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Having considered that (i) the usage of solar power and photovoltaic glass in generating electricity has been largely increased in the past years and is expected to further increase in the coming years; (ii) the PRC government has implemented various favourable policies to promote the usage of photovoltaic glass products and photovoltaic technology and will continue to develop the solar power industry in the future; (iii) the universalization of mobile device is expected to enhance the future demand of the Group’s information display glass and thin glass; and (iv) the PRC government will continue to encourage the innovation of new glass products used in electronic devices during the Fourteenth Five-Year Plan period, we are of the view that the increases in the Proposed Annual Caps are justifiable and will ultimately generate more revenue for the Group, and hence, are in the interest of the Company and Shareholders as a whole.

Conclusion

Having considered the following reasons,

(i) the GP Caps are expected to be highly utilised and will cover all the expected sales of the glass products of the Group to the members of the CNBMG Group over the period of 2021–2023 Sale and Purchase of Glass Products Framework Agreement;
(ii) the RM Caps are expected to be highly utilised and will cover all the expected demands for the raw materials to be purchased from the members of the CNBMG Group over the period of 2021–2023 Sale and Purchase of Raw Materials Framework Agreement;
(iii) the EC Caps are expected to be highly utilised and will cover all the expected engineering costs (i.e., Exclusive Services) to be performed by the members of the CNBMG Group over the period of 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement;
(iv) the Products Caps are expected to be highly utilised and will cover all the expected purchase of the glass products of the Group from the members of the CNBMG Group over the period of 2021–2023 sale and Purchase of Products Framework Agreement;
(v) demands and productions of the Group’s Photovoltaic Glass products are expected to continue to growth significantly with the supporting policies of the PRC government on, inter alia, fastening the employment of new innovative technologies and making use of different efficient green energy, including but not limited to, solar energy; and

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(vi) demands and productions of the Group’s Ultra-thin Glass products is expected to continue to surge along with the increase in numbers of smart phones, tablets and/or any vehicles with access to the internet due to the support from the PRC government to focus and encourage the development of 5G internet and the telecommunication industry,

we are of the view that each of the GP Caps, RM Caps, EC Caps and Products Caps is fair and reasonable.

E. The deposit services under the 2021–2023 Financial Services Framework Agreement

Date 2 December 2020

Parties (i) the Company; and

(ii) CNBMG Finance

Effective period

upon (i) signing with company seals by the legal or authorised representatives of both parties; and (ii) the completion of internal approval procedures by both parties (including but not limited to the approval by the Independent Shareholders at the EGM) and shall be valid until 31 December 2023

Nature of transaction

Pursuant to the 2021–2023 Financial Services Framework Agreement, CNBMG Finance has agreed to provide certain Financial Services, i.e. the deposit services, for the Group.

Pricing and payment terms

The deposit services under the 2021–2023 Financial Services Framework Agreement provided by CNBMG Finance to the Group are in accordance with the following pricing principle.

The interest rate for deposits offered to the Group by CNBMG Finance should comply with the PBOC’s regulations on the interest rates for the same type of deposit from time to time, and will not be lower than (i) the interest rate specified by the PBOC for the deposit of the same category during the same period; (ii) the interest rate paid by CNBMG Finance for deposits of the same type placed by the members of the CNBMG (other than the Group) with CNBMG Finance during the same period under the same conditions; and (iii) the interest rate for deposits of the same type offered by the PRC general commercial banks to the Group during the same period under the same conditions.

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The parties shall further sign a separate contract which is in compliance with the 2021–2023 Financial Services Framework Agreement and agree on the specific transaction terms for the transaction to be entered by CNBMG Finance and the Group.

Pricing standards

The Company further advised that the Group will only give priority to using the services of CNBMG Finance if such terms and conditions offered by CNBMG Finance are equivalent to the PRC general commercial banks’ offers. The Group has discretion to engage other PRC general commercial banks as its financial service providers as it thinks fit and beneficial to the Group.

We were given to understand that the Company will adopt certain internal control procedures in relation to the Financial Services (the “ FS Internal Control ”) details of which are disclosed in the sub-section headed “Internal control on pricing” under the section headed “2021–2023 Financial Services Framework Agreement” in the Board Letter.

We have obtained the comparison table (the “ Deposit Comparison ”) provided by the Company which summarised the proposed interest rates and other principal terms to be offered to the Group by 9 parties as at 30 October 2020, including (i) CNBMG Finance; (ii) the PBOC; and (iii) other independent third-party banks. The Deposit Comparison shows different categories or types of deposit services such as demand deposit and fixed deposit with a variety of deposit periods ranged from one day to five years. As advised by the Company, the interest rates and other principal terms to be offered by the PBOC were obtained through its website (http://www.pbc.gov.cn/) while those to be offered by CNBMG Finance and other independent third-party banks were obtained through arm’s length negotiation between the management of the Group and the representatives of their respective independent third-party banks. We noted from the Deposit Comparison that for each category or type of deposit service, the interest rates and terms to be offered by CNBMG Finance are not less favourable to the Group than those to be offered by other independent third-party banks including the PBOC.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Having considered that the interest rates and terms to be offered by CNBMG Finance are not less favourable to the Group than those to be offered by other independent third-party banks including the PBOC based on the Deposit Comparison, we consider that the terms of the deposit services under the 2021–2023 Sale and Purchase of Glass Products Framework Agreement are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Proposed annual caps

The proposed annual caps for the maximum daily deposit balance (including corresponding interest) under the 2021–2023 Financial Services Framework Agreement for each of the three years ending 31 December 2021, 2022 and 2023 (the “ Deposit Caps ”) are as follows,

For the year ending 31 December 2021 – RMB500.00 million.

For the year ending 31 December 2022 – RMB600.00 million.

For the year ending 31 December 2023 – RMB700.00 million.

The Deposit Caps are determined based on, including but not limited, (i) the estimated collected funds from operations and expected cash and cash equivalent of the Group as at 31 December 2020; and (ii) the expectation on the capital needs and financing requirement in relation to the business development of the Group between 2021 and 2023; (iii) the consideration of financial ability of CNBMG Finance in relation to its recent financial position and financial performance in 2020, including the scale of deposits accepted and loans granted; and (iv) the expected interest rate of deposit to be offered by CNBMG Finance.

Based on the previous annual reports and interim report of the Company, the Group’s cash and cash equivalent increased steadily from approximately RMB204.2 million as at 31 December 2017 to approximately RMB276.1 million as at 31 December 2018, approximately RMB432.9 million as at 31 December 2019 (representing an average annual increment of approximately RMB114.4 million from 2017 to 2019) and approximately RMB563.4 million as at 30 June 2020. In addition, we are also given to understand that the estimated collected funds from operations are reference to the accounts receivable of the Group within one year which were approximately RMB675.0 million as at 30 June 2020.

We have reviewed the latest audited financial statements for the year ended 31 December 2019 and latest unaudited financial statements for the nine months ended 30 September 2020 of CNBMG Finance which were provided by the Company for our assessment of the

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financial ability of CNBMG Finance. We noted the business scale of CNBMG Finance, including but not limited to, its asset scale, amount of deposits accepted, amount of loan granted and its deposit reserve ratio which fulfills the regulatory requirement of the China Banking Regulatory Commission and are of the view that the financial ability of CNBMG Finance is sufficient for CNBMG Finance to provide deposit services to the Group.

Having considered (i) the historical pattern of the scale of cash and cash equivalent of the Group; (ii) the estimated collected funds from the current amount of accounts receivable which is estimated to be realized as cash of the Group within one year; (iii) the expected fund from the future operation of the Group; and (iv) the financial ability of CNBMG Finance, we concur with the view of the Directors that the Deposit Caps are justifiable, fair and reasonable and are in the interest of the Company and the Shareholders as a whole.

RECOMMENDATIONS

Having considered the above principal factors and reasons, we are of the view that (i) the Non-exempt 2021–2023 CCT Agreements were entered into in the ordinary and usual course of the business of the Group, on normal commercial terms and that the terms of the Non-exempt 2021–2023 CCT Agreements, the transactions contemplated thereunder and their respective Proposed Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the entering into each of the Non-exempt 2021–2023 CCT Agreements is in the interests of the Company and the Shareholders as a whole.

Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders, and we also recommend Independent Shareholders to vote in favor of the relevant resolution for approving the Non-exempt 2021–2023 CCT Agreements, the transactions contemplated thereunder and their respective Proposed Annual Caps at the EGM.

Yours faithfully, For and on behalf of Veda Capital Limited Julisa Fong Managing Director

Ms. Julisa Fong is a licensed person registered with the SFC and a responsible officer of Veda Capital Limited which is licensed under the SFO to carry out type 6 (advising on corporate finance) regulated activity and has over 24 years of experience in corporate finance industry.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

Details of the financial information of the Group for each of the three years ended 31 December 2017, 2018, 2019 and the nine months ended 30 September 2020 are disclosed in the following documents which have been published on the websites of the Stock Exchange (www.hkexnews.hk) and of the Company (www.zhglb.com):

(i) the third quarterly report of the Company for the nine months ended 30 September 2020 published on 29 October 2020, please refer to pages 2 to 27 in particular;
(ii) the interim report of the Company for the six months ended 30 June 2020 published on 22 September 2020, please refer to pages 52 to 200 in particular;
(iii) the annual report of the Company for the year ended 31 December 2019 published on 15 May 2020, please refer to pages 93 to 243 in particular;
(iv) the annual report of the Company for the year ended 31 December 2018 published on 26 April 2019, please refer to pages 97 to 237 in particular; and
(v) the annual report of the Company for the year ended 31 December 2017 published on 25 April 2018, please refer to pages 83 to 199 in particular.

2. INDEBTEDNESS

1. Borrowings

As at the close of business on 30 November 2020, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had outstanding bank loans and other borrowings of approximately RMB1,898,015,516.25. As at 30 November 2020, bank loans and other borrowings of approximately RMB1,644,777,602.03 were guaranteed by the de facto controller and its subsidiaries; bank loans and other borrowings of approximately RMB153,188,117.60 were secured by the interests of the Group in investment properties and land use rights and guaranteed by the de facto controller and its subsidiaries; bank loans and other borrowings of RMB100,000,000.00 were secured by the interests of the Group in investment properties and land use rights; and bank loans of approximately RMB49,796.62 were pledged by certificate of deposit.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The breakdown of the outstanding borrowings as at 30 November 2020 is shown as follows:

Counterparty of the loan	Date of borrowing	Due date	Interest Rate	Balance of the loan
				(RMB)
Bank of China Xigong
Sub-branch	2020.02.20	2021.02.20	4.35%	29,980,000.00
Bank of China Xigong
Sub-branch	2020.02.28	2021.02.28	4.35%	70,130,821.25
China Construction Bank Luoyang
Branch	2020.03.20	2021.03.19	4.35%	49,059,208.33
China Everbright Bank Luoyang
Branch	2020.03.27	2021.03.26	4.35%	35,600,541.67
China Everbright Bank Luoyang
Branch	2020.05.12	2021.05.11	4.35%	35,000,000.00
China Guangfa Bank
Shangdu Sub-branch	2020.08.07	2021.08.06	4.00%	50,055,555.56
Industrial Bank Zhengzhou Branch	2020.02.26	2021.02.26	4.35%	60,810,731.25
Industrial Bank Zhengzhou Branch	2020.03.12	2021.03.12	4.35%	34,500,000.00
China CITIC Bank Luoyang Branch	2020.08.18	2021.08.11	4.35%	30,036,250.00
Huishang Bank Bengbu Branch	2020.02.26	2021.02.26	5.13%	15,000,000.00
Industrial Bank Hefei Branch	2020.02.27	2021.02.26	5.00%	2,000,000.00
Industrial Bank Anqing Branch	2020.06.30	2021.06.29	4.35%	50,368,541.67
SPD BANK Anqing Branch	2020.02.18	2021.02.18	4.35%	25,220,520.83
SPD BANK Anqing Branch	2020.02.19	2021.02.19	4.35%	25,220,520.83
Hefei Science & Technology Rural
Commercial Bank Lujiang Sub-
branch	2020.05.07	2021.05.05	4.35%	5,244,611.66
Bank of Jiangsu Yixing
Sub-branch	2020.08.21	2021.08.20	4.35%	35,000,000.00
Bank of Jiangsu Yixing
Sub-branch	2020.08.26	2021.08.25	4.35%	40,000,000.00
Bank of Jiangsu Yixing
Sub-branch	2020.09.11	2021.09.10	4.35%	20,000,000.00

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Counterparty of the loan	Date of borrowing	Due date	Interest Rate	Balance of the loan
				(RMB)
Yixing Rural Commercial Bank
Fandao Sub-branch	2019.12.03	2020.12.03	5.00%	10,000,000.00
Yixing Rural Commercial Bank
Fandao Sub-branch	2020.04.24	2021.04.23	4.80%	5,000,000.00
Yixing Rural Commercial Bank
Fandao Sub-branch	2020.07.31	2021.07.30	4.35%	35,000,000.00
Yixing Rural Commercial Bank
Fandao Sub-branch	2020.08.20	2021.08.19	4.35%	14,000,000.00
Yixing Rural Commercial Bank
Fandao Sub-branch	2020.08.20	2021.08.19	4.35%	16,000,000.00
Yixing Rural Commercial Bank
Fandao Sub-branch	2020.08.25	2021.08.24	4.35%	20,000,000.00
Yixing Rural Commercial Bank
Fandao Sub-branch	2020.01.07	2021.01.07	5.22%	20,000,000.00
Yixing Rural Commercial Bank
Fandao Sub-branch	2020.09.10	2021.09.09	4.35%	20,000,000.00
Yixing Rural Commercial Bank
Fandao Sub-branch	2020.03.23	2021.03.22	5.20%	25,000,000.00
Yixing Rural Commercial Bank
Fandao Sub-branch	2020.03.24	2021.03.23	5.20%	25,000,000.00
SPD BANK Yixing
Sub-branch	2020.07.09	2021.06.30	4.35%	25,000,000.00
SPD BANK Yixing
Sub-branch	2020.07.16	2021.06.30	4.35%	25,000,000.00
China Everbright Bank Yixing Sub-
branch	2020.06.30	2021.06.29	4.25%	80,000,000.00
China Merchants Bank Dingshu Sub-
branch	2019.12.20	2020.12.20	4.35%	20,000,000.00
China Merchants Bank Dingshu Sub-
branch	2019.12.23	2020.12.15	4.35%	30,000,000.00
Bank of Ningbo Yixing
Sub-branch	2020.06.17	2021.06.16	4.35%	50,000,000.00
Industrial Bank Qingyang Road Sub-
branch	2020.01.17	2021.01.16	5.00%	15,147,990.63
Industrial Bank Qingyang Road Sub-
branch	2020.07.24	2021.07.23	4.35%	20,171,583.34

– 95 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Counterparty of the loan	Date of borrowing	Due date	Interest Rate	Balance of the loan
				(RMB)
Hefei Science & Technology Rural
Commercial Bank Qilitang Sub-
branch	2019.12.20	2020.12.20	5.15%	40,406,277.78
Hefei Science & Technology Rural
Commercial Bank Qilitang Sub-
branch	2020.05.14	2021.05.14	4.35%	30,257,375.00
SPD BANK High-tech Zone Sub-
branch	2020.03.19	2021.03.19	5.00%	20,197,320.84
SPD BANK High-tech Zone Sub-
branch	2020.04.14	2021.04.14	5.00%	20,197,320.84
SPD BANK High-tech Zone Sub-
branch	2020.04.28	2021.04.28	4.35%	20,171,583.34
SPD BANK High-tech Zone Sub-
branch	2020.06.22	2021.06.22	4.35%	20,171,583.34
SPD BANK High-tech Zone Sub-
branch	2020.09.21	2021.09.21	4.00%	10,078,888.88
China Construction Bank Zhonglou
Sub-branch	2019.12.30	2020.12.29	4.35%	30,036,250.00
French Government	1989.03.07	2021.12.31	2.50%	49,796.62
The Export-Import Bank of China
Henan Branch	2018.12.07	2026.04.30	4.80%	202,082,666.66
The Export-Import Bank of China
Henan Branch	2019.03.05	2026.04.30	4.80%	20,000,000.00
The Export-Import Bank of China
Henan Branch	2019.7.15	2026.11.25	4.80%	150,000,000.00
The Export-Import Bank of China
Henan Branch	2020.2.13	2026.11.25	4.80%	100,000,000.00
The Export-Import Bank of China
Henan Branch	2020.7.24	2026.11.25	4.80%	50,000,000.00
Suyin Financial Leasing Co., Ltd.	2017.11.10	2022.11.10	5.80%	16,033,099.92
Suyin Financial Leasing Co., Ltd.	2017.4.27	2022.4.27	5.60%	21,593,027.14
Yixing Rural Commercial Bank
Fandao Sub-branch	2017.09.04	2020.12.20	5.15%	10,000,000.00

– 96 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Counterparty of the loan	Date of borrowing	Due date	Interest Rate	Balance of the loan
				(RMB)
Yixing Rural Commercial Bank
Fandao Sub-branch	2017.09.13	2021.06.20	5.15%	10,000,000.00
Yixing Rural Commercial Bank
Fandao Sub-branch	2017.09.20	2021.06.20	5.15%	10,000,000.00
Industrial Bank Qingyang Road Sub-
branch	2015.03.26	2021.03.25	4.35%	9,082,710.42
Industrial Bank Qingyang Road Sub-
branch	2015.05.28	2021.05.27	4.35%	381,298.45
Industrial Bank Qingyang Road Sub-
branch	2015.09.09	2021.09.08	4.35%	16,036,408.75
Industrial Bank Qingyang Road Sub-
branch	2015.12.15	2021.12.14	4.35%	22,693,031.25
Total				1,898,015,516.25

As at 30 November 2020, pledged bank deposits, secured fixed assets–buildings, fixed assets–machinery and equipment and secured intangible assets–land use rights amounted to RMB1,463,000.00, RMB222,489,038.37, RMB214,798,837.53 and RMB121,205,163.09, respectively.

2. Capital commitments

As at 30 November 2020, the Group had capital commitments of RMB410,349,089.73 with respect to properties, plants and others, which had been contracted for without provisions in the financial statements.

3. Pledge of assets

As at 30 November 2020, the net book value of certain secured assets of the Group amounted to RMB559,956,038.99.

4. Contingent liabilities

As at 30 November 2020, the Group had no contingent liabilities.

– 97 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Disclaimer

Save for the aforesaid and apart from intra-group liabilities and normal trade payables in the ordinary course of business, as at the close of business on 30 November 2020, none of the members of the Group had any outstanding bonds, acceptance liabilities (other than normal trade bills), acceptance credits, finance lease, mortgages, pledge, loan capital or overdraft or other similar indebtedness.

The Directors have confirmed that there has not been any material change in the indebtedness and contingent liabilities of the Group since 30 November 2020.

For the purpose of the above indebtedness statement, foreign currency amounts have been translated into Renminbi at the exchange rates prevailing at the close of business on 30 November 2020.

3. WORKING CAPITAL SUFFICIENCY

Taking into account the financial resources available to the Group, including its existing cash and cash equivalents and cash flow from operations, the Directors believe that the Group has available sufficient working capital for at least the next 12 months from the date of this circular.

4. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

According to the statistics from China Electricity Council (中國電力企業聯合會), from January to May 2020, the new photovoltaic grid connection installation capacity in China was approximately 6.15 gigawatt, representing a period-on-period decrease of approximately 23%, mainly due to the outbreak of the novel coronavirus (COVID-19) epidemic. However, with the overall control of the domestic epidemic and the successive implementation of relevant policies, the influence of COVID-19 was reduced and the photovoltaic industry in China is gradually recovered in the second half of 2020. On 31 July 2020, the National Development and Reform Commission and the National Energy Administration (國家能源局) jointly issued the “Notice on 2020 Grid Parity Wind and Photovoltaic Parity Generation Projects (《2020年風電，光伏平價上網通知》)”. The installed capacity of photovoltaic power grid parity projects was approximately 33.05 million kilowatts, and the scale of photovoltaic projects increased by approximately 124% period-on-period. The scale of grid parity installed capacity exceeded the market expectations which is expected that the photovoltaic-related industry chain is gaining momentum. From 26 to 29 October 2020, the communique of fifth plenary session of the 19th Central Committee of the Communist Party of China (中國共產黨第十九屆中央委員會第五次全體會議) was held in Beijing to formulate the fourteenth five-year plan for the national economic and social development. It is clear that one of the core areas of the fourteenth five-year plan is to promote marketisation, lower cost, and priority development of renewable energy for the coming future.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

In 2020, the Group has promoted the project construction and cemented the foundation of principal businesses, such as (i) the completion of the main works of the production line of Puyang ultrawhite solar thermal material project, which has been put into operation; and (ii) carrying on an intelligentization upgrade and transformation of the production line of a subsidiary for improving the product profitability and efficiency of production line. To further increase the market share of photovoltaic glass products of the Company, each of the three new energy companies of the Group will build a deep-processing production line for photovoltaic glass. The production capacity of the large-sized ultra-thin photovoltaic panel glass and back plate glass used for double-glass modules of the Company is expected to achieve a substantial improvement upon the project being put into operation.

Going forward, on the basis of the results achieved in 2020, the Company will seize the potential opportunities under goal-oriented principle and will continue to effectively carry out quality and efficiency improvement program, follow the orientation of technology and product innovation, build core competitive strength and focus on advancing high-quality development to become a pioneer and leader in the new glass industry.

5. FINANCIAL EFFECTS OF THE DEPOSIT SERVICES UNDER THE 2021–2023 FINANCIAL SERVICES FRAMEWORK AGREEMENT ON THE ASSETS, LIABILITIES AND EARNINGS OF THE GROUP

The Company entered into the 2021–2023 Financial Services Framework Agreement with CNBMG Finance to strengthen the management and control of funds and account management by raising funds at lower interest rates and enjoying higher deposit interest rates, which are conducive to further improving the efficiency in the use of funds while enhancing the Group’s external financing bargaining power. Nevertheless, the Group does not expect to develop reliance on CNBMG Finance from the enjoying of such services, and the entering into of the 2021–2023 Financial Services Framework Agreement will not interfere the Group from considering to enter into similar agreements with other financial institutions when it deems necessary.

Given that the deposit interest rate offered to the Group by CNBMG Finance will not be lower than (i) the interest rate specified by the PBOC for the deposit of the same category during the same period; (ii) the interest rate paid by CNBMG Finance for deposits of the same type placed by the members of CNBMG (other than the Group) with CNBMG Finance during the same period under the same conditions; and (iii) the interest rate for deposits of the same type offered by the PRC general commercial banks to the Group during the same period under the same conditions, the Group expects that the deposit services under the 2021–2023 Financial Services Framework Agreement will not have any material impact on the assets, liabilities and earnings of the Group.

– 99 –

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Interests of the Directors, supervisors and chief executives of the Company

As at the Latest Practicable Date, none of the Directors, supervisors or chief executives of the Company had an interest or short position in any Shares, underlying shares or debentures of the Company or any associated corporations (within the meaning of Part XV of the SFO) which were required to be (i) notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which the Directors, supervisors or chief executives of the Company was taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, entered in the register kept by the Company; or (iii) notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers.

As at the Latest Practicable Date, none of the Directors was a director or employee of a company which had an interest or short position in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

As at the Latest Practicable Date, so far as the Directors were aware, none of the Directors or their respective close associates were considered to have interest in any business which competes or may compete with the business of the Group which would be required to be disclosed under Rule 8.10 of the Listing Rules as if each of them was a controlling shareholder.

As at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any assets which had been acquired or disposed of by, or leased to any member of the Group, or were proposed to be acquired or disposed of by, or leased to any member of the Group since 31 December 2019, being the date to which the latest published audited consolidated financial statements of the Group were made up.

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GENERAL INFORMATION

APPENDIX II

None of the Directors is materially interested in any contract or arrangement subsisting at the Latest Practicable Date and which was significant in relation to the business of the Group taken as a whole.

(b) Substantial Shareholders’ and other Shareholders’ interests

As at the Latest Practicable Date, save as disclosed below, so far as is known to the Directors or chief executives of the Company, no other person had an interest or short position in the Shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or were required to be notified to the Company and the Stock Exchange pursuant to section 324 of the SFO, or, who is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any members of the Group.

						Number of			Percentage
						underlying	Total	Percentage	of the total
						Shares held	number	of the relevant	issued
					Number of	under equity	of Shares	issued class of	share capital of	Type of
Name				Capacity	Shares Held 1	derivatives 1	interested 1	share capital	the Company	Share
								(%)	(%)
CNBMG		2		Interest in controlled	191,520,357 (L)	/	191,520,357 (L)	64.15	34.91	A Share
				corporation
Triumph	2			Beneficial owner/	191,133,987 (L)	/	191,133,987 (L)	64.02	34.84	A Share
				interest in controlled
				corporation
Bengbu Institute				Beneficial owner	70,290,049 (L)	/	70,290,049 (L)	23.54	12.81	A Share
CLFG				Beneficial owner	111,195,912 (L)	/	111,195,912(L)	37.25	20.27	A Share
Note 1:			(L) – Long position
Note 2:			CNBMG is the controlling shareholder of CNBM, which					is also the controlling shareholder
			of International Engineering.			Triumph, a	wholly-owned subsidiary of CNBMG,			is the
			controlling shareholder of Bengbu Institute,				CLFG and Huaguang Group.

Therefore, CNBMG is deemed to have the same interests in the Company as those owned by International Engineering, Bengbu Institute, CLFG, Triumph and Huaguang Group by virtue of the SFO; and Triumph is deemed to have the same interest in the Company as those owned by Bengbu Institute, CLFG and Huaguang Group by virtue of the SFO.

– 101 –

GENERAL INFORMATION

APPENDIX II

3. MATERIAL CONTRACTS

The members of the Group have not entered into contracts which are or may be material (being contracts not entered into in the ordinary course of business) within the two years up to and including the Latest Practicable Date.

4. LITIGATION

References are made to the announcements of the Company dated 10 June 2019, 30 September 2019 and 23 December 2019. In June 2019, Hefei Gas Group Company Limited (合肥燃氣集團有限公司) (“ Hefei Gas Group ”, as the plaintiff) filed a civil action to the People’s Court of Hefei Hitech Industrial Development Zone of Anhui Province (安徽省合肥高新技術產業開發區人民法院) (the “ People’s Court of Hefei Hi-tech Zone ”) in respect of the dispute on price in the gas supply contract with CNBM (Hefei) New Energy Co., Ltd. (中建材（合肥）新能源有限公司) (“ Hefei New Energy ”, as the defendant), a wholly-owned subsidiary of the Company. The amount involved in the lawsuit was RMB18,640,395.8, including the overdue natural gas fees of RMB18,364,922 and the late payment penalty of RMB275,473.8 (equivalent to 1% of the outstanding gas fees on a daily basis). In September 2019, the People’s Court of Hefei Hi-tech Zone ruled in the first instance and issued the Civil Judgment ((2019) Wan 0191 Min Chu No. 3097) which adjudicated that Hefei New Energy shall pay Hefei Gas Group the natural gas fees of RMB8,851,360 plus the late payment penalty (which was calculated based on RMB7,924,966 at twice of the benchmark interest rate for similar loans in the same period announced by the People’s Bank of China from 1 April 2019 to 8 May 2019). Subsequently, Hefei New Energy filed an appeal against the judgment of the first instance given by the People’s Court of Hefei Hi-tech Zone to the Hefei Intermediate People’s Court of Anhui Province (安徽省合肥市中級人民法院) (the “ Hefei Intermediate People’s Court ”). In December 2019, the Hefei Intermediate People’s Court has made a final judgment and issued the Civil Judgment ((2019) Wan 01 Min Zhong No. 10314) which adjudicated that the appeal was dismissed and the original judgment was upheld.

As at the Latest Practicable Date, save as disclosed above, no member of the Group was engaged in any litigation, arbitration or claim of material importance and no litigation, arbitration or claim of material importance was known to the Directors to be pending or threatened against any member of the Group.

5. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors or supervisors of the Company had any existing or proposed service contract with any member of the Group which does not expire or is not determinable by the Company within one year without payment of compensation (other than statutory compensation).

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GENERAL INFORMATION

APPENDIX II

6. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors confirmed that there has been no material adverse change in the financial or trading position of the Group since 31 December 2019, being the date to which the latest published audited consolidated financial statements of the Group were made up.

7. QUALIFICATION OF EXPERT

The following is the qualification of the expert whose letter is contained in this circular:

Name	Qualification
Veda Capital Limited	a corporation licensed to carry out type 6
	(advising on corporate finance) regulated activity
	under the SFO

8. CONSENT OF EXPERT

The Independent Financial Adviser has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and reference to its name in the form and context in which they appear.

9. INTERESTS OF EXPERT

As at the Latest Practicable Date, the Independent Financial Adviser had no shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group and had no direct or indirect interest in any assets which had been acquired or disposed of by, or leased to any member of the Group, or were proposed to be acquired or disposed of by, or leased to any member of the Group since 31 December 2019, being the date to which the latest published audited consolidated financial statements of the Group were made up.

10. OTHER INFORMATION

(a) The company secretary of the Company is Mr. Ip Pui Sum. Mr. Ip is a certified public accountant in Hong Kong, a fellow member of the Association of Chartered Certified Accountants, and a member of the Hong Kong Institute of Certified Public Accountants, Chartered Institute of Management Accountants, Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Chartered Secretaries.

– 103 –

GENERAL INFORMATION

APPENDIX II

(b) The registered and principal office of the Company is situated at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC.
(c) The branch share registrar and the transfer office of the Company for H Shares in Hong Kong is Hong Kong Registrars Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the office of Messrs. Li & Partners, at 22/F, World Wide House, Central, Hong Kong during normal business hours on any weekday (except public holidays) for a period of 14 days from the date of this circular:

(a) the Articles of Association;
(b) the published annual reports of the Company for the financial years ended 31 December 2018 and 2019;
(c) the 2018–2020 Sale and Purchase of Glass Products Framework Agreement;
(d) the 2018–2020 Sale of Raw Materials Framework Agreement;
(e) the 2018-2020 Engineering Equipment Procurement and Installation Framework Agreement;
(f) the 2018–2020 Sale and Purchase of Products Framework Agreement;
(g) the 2018-2020 Technical Services Framework Agreement;
(h) the 2018-2020 Sale and Purchase of Spare Parts Framework Agreement;
(i) the 2021–2023 Sale and Purchase of Glass Products Framework Agreement;
(j) the 2021–2023 Sale and Purchase of Raw Materials Framework Agreement;
(k) the 2021–2023 Engineering Construction Equipment Procurement and Installation Framework Agreement;
(l) the 2021–2023 Sale and Purchase of Products Framework Agreement;
(m) the 2021–2023 Technical Services Framework Agreement;

– 104 –

GENERAL INFORMATION

APPENDIX II

(n) the 2021–2023 Sale and Purchase of Spare Parts Framework Agreement;
(o) the 2021–2023 Financial Services Framework Agreement;
(p) the letter from the Independent Board Committee, the text of which is set out on pages 46 to 47 of this circular;
(q) the letter from the Independent Financial Adviser, the text of which is set out on pages 48 to 92 of this circular;
(r) the written consent of the Independent Financial Adviser mentioned in the section headed “8. CONSENT OF EXPERT” in this appendix;
(s) the circular of the Company dated 29 May 2020 in relation to the connected transactions – share buy-backs; and
(t) this circular.

12. MISCELLANEOUS

(a) All references to times and dates in this circular refer to Hong Kong times and dates.
(b) The English text of this circular shall prevail over its Chinese text.

– 105 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX III

The proposed amendments to the Articles of Association are set out below:

Original Article 12:

The business scope of the Company is subject to the items approved by the Company registration authority.

The business scope of the Company includes photoelectric and solar thermal materials (e.g. information display glass and new energy glass) and their further-processed products and modules; special glass (e.g. functional glass) and its further-processed products and modules; development, production, manufacturing and installation of relevant materials, mechanical whole-set equipment and its electrical appliance and accessories; technical consultation and services in respect of information display glass, new energy glass and functional glass; sales and after-sale services of self-made products; trading of goods and raw materials and fuel relating to glass products; proprietary operation or factoring of import and export business of materials relating to glass.

Amended Article 12:

The business scope of the Company is subject to the items approved by the Company registration authority.

The business scope of the Company includes development, production, manufacture and installation of information display glass, new energy glass, photoelectric material for functional glass category and its furtherprocessed products and components, relevant materials, mechanical whole-set equipment and its electrical appliances and accessories, relevant technical consultancy and technical services, and sales and after-sales services of self-made products.

Original Article 28:

The Company may, upon the passing of the procedures under the Articles of Association, and subject to the approval of the relevant governing authority of the State, repurchase its issued shares under the following circumstances:

(1) to cancel shares for the purpose of capital reduction;
(2) to merge with another company that holds shares of the Company;
(3) to reward the staff of the Company with shares;
(4) to acquire shares held by Shareholders (upon their request) who vote against any resolution on the merger or division of the Company proposed in general meeting;

– 106 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX III

(5) other circumstances as permitted by laws and administrative regulations.

The Company shall repurchase its issued shares in accordance with the provisions of Articles 29 to 32.

Amended Article 28:

Under the following circumstances, the Company may repurchase its own shares in accordance with laws, administrative regulations, departmental rules and the Articles of Association :

(1) to reduce the registered capital of the Company;
(2) to merge with another company that holds shares of the Company;
(3) to utilize its shares for employee stock ownership plans or share option incentives;
(4) to acquire shares held by Shareholders (upon their request) who vote against any resolution on the merger or division of the Company proposed in general meeting;
(5) to utilize its shares for conversion into convertible corporate bonds issued by the Company;
(6) to protect the Company’s value and shareholders’ interest as the Company deems necessary;
(7) other circumstances as permitted by laws and administrative regulations.

Apart from the above circumstances, the Company shall not repurchase its own shares.

– 107 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX III

Original Article 29:

The Company may, with the approval of the relevant governing authority of the State for repurchasing its shares, conduct the repurchase in one of the following manners:

(1) to make a pro rata general offer of repurchase to all of its Shareholders;
(2) to repurchase shares through public trading on a stock exchange;
(3) to repurchase through an off-market agreement;
(4) other methods which are permitted by China Securities Regulatory Commission.

Amended Article 29:

The Company may repurchase its own shares through public centralized trading or other methods as permitted by the laws, administrative regulations and the CSRC.

When the Company repurchases its own shares in the circumstances set out in the Items (3), (5) and (6) of paragraph 1 of Article 28 hereof, such repurchase shall be conducted through public centralized trading.

Original Article 31:

After legally repurchasing the shares, the Company shall, within the time limit stipulated by the laws and administrative laws, cancel the shares and apply to the original company registration authority for changing registered capital. The total par value of the cancelled shares shall be deducted from the Company’s registered capital.

Where the Company needs to purchase its own shares for any of the reasons as mentioned in Items (1) to (3) of Article 28 hereof, it shall be subject to a resolution of the general meeting. Under the circumstance as mentioned in Item (1), after the Company repurchases its own shares pursuant to the provisions of the Article 28 hereof, such shares shall be cancelled within 10 days after the day of repurchase; Under circumstance as mentioned in Item (2) or (4), the repurchased shares shall be transferred or cancelled within 6 months.

The shares repurchased by the Company in accordance with Item (3) of Article 28 hereof shall not exceed 5% of the total issued shares of the Company. The fund used for the share repurchase shall be paid by the profits after tax of the Company. The shares repurchased by the Company shall be transferred to the employees within one (1) year.

– 108 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX III

Amended Article 31:

Where the Company needs to repurchase its own shares pursuant to the circumstances as specified in Items (1) and (2) of Article 28 hereof , it shall be subject to a resolution of the general meeting; where the Company needs to repurchase its own shares pursuant to the circumstances as specified in Items (3), (5) and (6) of Article 28 hereof, it shall be subject to a resolution at the Board meeting with more than two-thirds of the Directors present, in accordance with the provisions of the Articles of Association or under the authorization of the general meeting. Under the circumstance as mentioned in Item (1), after the Company repurchases its own shares pursuant to the provisions of the Article 28 hereof, such shares shall be cancelled within 10 days after the day of repurchase; Under circumstance as mentioned in Item (2) or (4), the repurchased shares shall be transferred or cancelled within 6 months; Under the circumstances as mentioned in Item (3), (5) or (6), the total number of shares held by the Company shall not exceed 10% of the total issued shares of the Company, and shall be transferred or cancelled within 3 years.
Original Article 47: Transfers may not be entered in the register of members within thirty (30) days prior to the date of a general meeting or within five (5) days before the record date set by the Company for the purpose of distribution of dividends.
Amended Article 47: Where the laws, administrative regulations, departmental rules, regulatory documents and the relevant stock exchanges or regulatory authorities of the place(s) where the shares of the Company are listed stipulate on the period of closure of the register prior to the holding of a general meeting or prior to the record date for the determination of dividend distribution by the Company, such provisions shall prevail.
Original Article 71: A notice, by announcement or in other forms as required by this Articles of Association, where necessary, shall be given to notify all the Shareholders whose names appear in the register of members of the matters proposed to be considered and the date and place of the meeting within the period of fortyfive (45) to fifty (50) days prior to the date of convening the general meeting. Shareholders who intend to attend the meeting shall serve their written replies to the Company twenty (20) days prior to the date of the meeting.

– 109 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX III

The general meeting shall have a venue and be held on-site. The Company shall also provide the internet or other conveniences to facilitate the participation of Shareholders in the general meeting. A Shareholder who participated in a general meeting in the aforesaid manners shall be deemed to have been present at the meeting. The same voting right can only be exercised by electing to vote at the scene or via internet. In the event that the same voting right has been exercised twice, the result of the first voting shall prevail.

Amended Article 71:

When the Company convenes an annual general meeting, a notice shall be given twenty (20) business days prior to the date of the meeting, and when the Company convenes an extraordinary general meeting, a notice shall be given ten (10) business days or fifteen (15) days (whichever is longer) prior to the date of the meeting.

Original Article 83:

Amended Article 83:

The Company shall calculate the number of voting shares represented by shareholders who intend to attend the general meeting based upon the written reply received 20 days before the date of the meeting. If the number of voting shares represented by shareholders who intend to attend the meeting amounts to more than half of the total number of voting shares of the Company, the Company may convene a general meeting. Otherwise, the Company shall within 5 days give the shareholders further notice of the matters to be considered at the meeting as well as the date and venue of the meeting by way of a public announcement. The Company may convene a general meeting when such announcement is made. Extraordinary general meeting shall not pass any resolution that has not been specified in the notice.

Proposals which are not listed in the notice of the general meeting or are inconsistent with the requirements of Article 74 hereof shall not be voted on and passed as resolutions by the general meeting.

– 110 –

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

APPENDIX III

Original Article 85:

A notice of the general meeting shall be dispatched to Shareholders (regardless of their voting rights at the general meeting) by way of announcement and/or personal delivery or by pre-paid mail. The addresses of the recipients shall be such addresses as shown in the register of members.

The announcement referred to in the preceding paragraph shall be published within a period of forty-five (45) to fifty (50) days prior to the date of the general meeting at the websites of the Company and/or stock exchanges of the listing places, and in one or more newspapers and journals designated by competent securities authorities of the State Council or by other means as permitted by the competent securities authorities of the State Council from time to time. Once announced, published or issued, all the Shareholders shall be deemed to have received the relevant notice of the general meeting.

Amended Article 85:

The announcement referred to in the preceding paragraph shall be published in accordance with the notice period as stipulated in this Articles of Association at the websites of the Company and/or stock exchanges of the listing places, and in one or more newspapers and journals designated by competent securities authorities of the State Council or by other means as permitted by the competent securities authorities of the State Council from time to time. Once announced, published or issued, all the Shareholders shall be deemed to have received the relevant notice of the general meeting.

Original Article 126:

Written notice of a class meeting convened by the Company shall be dispatched forty-five (45) days prior to the date of the class meeting to all Shareholders of such class whose names appear on the register of members, specifying the matters to be considered and the date and place of the meeting. Shareholders who intend to attend the meeting shall serve on the Company written replies of their intention to attend twenty (20) days prior to the date of the meeting.

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If the number of voting shares at such meeting held by Shareholders who intend to attend such meeting reaches more than one-half of the total number of voting shares at such meeting, the Company may convene such class meeting; if this cannot be attained, the Company shall further notify the Shareholders by way of announcement within five (5) days thereof specifying the matters to be considered and the date and place of the meeting. After such announcement has been given, the Company may then hold the class meeting.

Amended Article 126:

Notice of a class meeting convened by the Company shall be dispatched, by reference to Article 71 of this Articles of Association in respect of the requirements of the notice period for convening a general meeting, to all Shareholders of such class whose names appear on the register of members, specifying the matters to be considered and the date and place of the meeting.

A new article is added
after the original Article 255

Amended Article 256: Notices of the Company or other written materials may be delivered:

(1) by hand;
(2) by post;
(3) by fax or e-mail;
(4) subject to the compliance with the laws, administrative regulations and the relevant requirements of the securities regulatory authority in the place where the Company’s shares are listed and this Article of Association, by way of posting on the website of the Company and/ or the website designated by the stock exchange in the place where the Company’s shares are listed;
(5) by way of public announcement;
(6) by such ways as agreed in advance between the Company and the party to be notified or any other way which is recognized by the party to be notified after having received such notice;

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(7) other ways which are stipulated by the regulatory authority in the place where the Company’s shares are listed or in this Articles of Association.

The Company’s notices delivered by way of public announcement are deemed to be received by all relevant parties as soon as the public announcement is published, provided that such announcement shall be published in the designated newspapers and/or websites.

Original Article 256:

(1) Unless otherwise stipulated herein, the notices, materials or written statement sent by the Company to the Shareholders shall be delivered to, based on the registered address of each Shareholders, the Shareholders holding registered shares by personal delivery or prepaid registered mail.
(2) Where the notice is sent by post, so long as the address is accurate and notice is delivered by prepaid registered mail, such notice is deemed as delivered and received after five working days as of the date of delivery.
(3) Notices, orders, documents, materials or written statements sent by the Shareholders and Directors to the Company shall be put or sent to the legal address of the Company by prepaid registered mail, or put or sent to the registered agent of the Company by prepaid registered mail.
(4) Notices, orders, documents, materials or written statements sent by the Shareholders and Directors to the Company shall be deemed as delivered within the specified time under normal conditions with the date of post of such notices orders, documents, materials or written statements as the proof, or that may be proved by the clearly stated address and prepaid postage certificate.
(5) The magazines publishing the announcement hereof shall be the magazines designated or required by the relevant laws, administrative regulations or rules.

Where it is necessary to publish the announcement to H share Shareholders, the relevant announcement shall be published in the magazine designated by the listing rules of the Hong Kong Stock Exchange subject to the “newspaper articles” as defined in the listing rules of Hong Kong Stock Exchange.

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Where the meeting notice has not been sent to the receiver whoever has right to receive due to accidental omission or such person has not received the meeting notice, such meeting and the resolution adopted in the meeting shall remain valid.

Amended Article 257:

(1) the notice, data or written statement sent by the Company to the shareholders of foreign investment shares listed outside the People’s Republic of China, can be sent out by way of the method specified in Article 256.
(2) Where the notice is sent by person, the recipient shall sign (or seal) the receipt acknowledgement and the date of the signature of such recipient shall be the date of service; where the notice is sent by way of announcement, the date of the first announcement shall be the date of service; where the notice is sent by fax, e-mail or website, the effective date of the written letter shall be date of service; where the notice is sent by post, so long as the address is accurate and notice is delivered by prepaid registered mail, such notice is deemed as delivered and received after five working days as of the date of delivery.
(3) Notices, orders, documents, materials or written statements sent by the Shareholders and Directors to the Company shall be put or sent to the legal address of the Company by prepaid registered mail, or put or sent to the registered agent of the Company by prepaid registered mail.
(4) Notices, orders, documents, materials or written statements sent by the Shareholders and Directors to the Company shall be deemed as delivered within the specified time under normal conditions with the date of post of such notices orders, documents, materials or written statements as the proof, or that may be proved by the clearly stated address and prepaid postage certificate.
(5) The magazines publishing the announcement hereof shall be the magazines designated or required by the relevant laws, administrative regulations or Listing Rules.

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The full text of the revised Rules of Procedure for General Meetings are set out below:

LUOYANG GLASS COMPANY LIMITED RULES OF PROCEDURE FOR GENERAL MEETINGS

(Revised version)

CHAPTER 1 GENERAL PROVISIONS

Article 1 These rules of procedure are formulated in order to enhance efficiency of the general meeting of Luoyang Glass Company Limited* (洛陽玻璃股份有限公司) (the “Company”) and ensure the functions and powers of the general meeting to be legally exercised in accordance with the requirements of the Company Law of the People’s Republic of China (hereinafter referred to as the “Company Law”) and other laws, regulations and regulatory documents and the Articles of Association of Luoyang Glass Company Limited (hereinafter referred to as the “Articles of Association”).

Article 2 The Company shall convene the general meeting in strict compliance with the relevant requirements of the laws, administrative regulations, these rules and the Articles of Association so as to ensure that the shareholders can exercise their rights in accordance with the laws.

The board of directors of the Company shall earnestly perform its duties and organize the general meeting in a serious and timely manner. All the directors of the Company shall exercise their diligence to ensure that the general meeting is duly held and its functions and powers are exercised in accordance with the laws.

Article 3 The general meeting shall exercise its functions and powers within the scope specified in the Company Law and the Articles of Association.

Article 4 General meetings shall be classified as annual general meetings and extraordinary general meetings. The annual general meetings shall be convened once a year and shall be held within six (6) months after the end of the preceding accounting year. The extraordinary general meetings which are convened irregularly shall be convened within the prescribed time upon the occurrence of the circumstances where an extraordinary general meeting shall be held within two (2) months as specified in the Company Law and the Articles of Association.

In the event that the Company is unable to convene a general meeting within the aforesaid period, it shall report to the delegated agencies of the China Securities Regulatory Commission (hereinafter referred to as the “CSRC”) at the place where the Company is located and the stock exchanges (hereinafter referred to as the “Stock Exchanges”) on which the shares of the Company are listed and traded, to explain the reasons and make an announcement in respect thereof.

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Article 5 If the Company holds a general meeting, it shall engage a lawyer to issue legal advice on the following matters and make an announcement in respect thereof:

(1) whether the convening of the general meeting and its procedures are in compliance with the requirement of the laws, administrative regulations, these rules and the Articles of Association;
(2) whether the qualifications of the attendants and the convener are legal and valid;
(3) whether the procedures and results of voting of the meeting are legal and valid;
(4) legal advices on other relevant matters at the request of the Company.

CHAPTER 2 POWERS OF THE GENERAL MEETING

Article 6 The general meeting is the organ of authority of the Company and shall exercise its functions and powers in accordance with the law.

Article 7 The general meeting may exercise the following functions and powers:

(1) to decide on the operating policies and investment plans of the Company;
(2) to elect and remove directors and to decide on matter relating to the remuneration of the relevant directors;
(3) to elect and remove supervisors (being shareholders’ representatives), and to decide on matter relating to the remuneration of the relevant supervisors;
(4) to consider and approve the reports of the board of directors;
(5) to consider and approve the reports of the supervisory committee;
(6) to consider and approve the proposed annual financial budgets and final accounts of the Company;
(7) to consider and approve the profit distribution plans and loss recovery plans of the Company;
(8) to adopt resolutions on any increase or reduction of registered capital of the Company;
(9) to adopt resolutions on matters such as merger, demerger, dissolution, and liquidation of the Company;

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(10) to adopt resolutions on the issue of debentures of the Company;
(11) to adopt resolutions on the appointments or dismissals of accounting firms;
(12) to amend the Articles of Association;
(13) to consider the provisional proposals submitted by shareholders who individually or collectively hold more than 3% (including 3%) of the Company’s shares;
(14) to consider and approve the guarantees provided in Article 8 herein;
(15) to consider the acquisition or disposal of any major assets, the amount of which exceeds 30% of the latest audited total assets of the Company;
(16) to consider the change of use of proceeds from capitals raised;
(17) to consider the adoption of share option incentive scheme;
(18) to consider such other things required by laws, administrative regulations and the Articles of Association to be resolved by general meeting of shareholders;
(19) to authorize or delegate to the board of directors to deal with the authorized or entrusted matters.

Article 8 Any of the following guarantee activities of the Company shall be approved by the general meeting:

(1) any of the external guarantee provided after the total guaranteed amount of the Company and its controlling subsidiaries to the any other party reaching to or exceeding 50% of the latest audited net assets;
(2) any of the external guarantee provided after the total guaranteed amount of the Company reaching to or exceeding 30% of the latest audited net assets;
(3) providing the guarantee for the guaranteed object, whose ratio of liabilities to assets exceeds 70%;
(4) the amount of single guarantee exceeding 10% of the latest audited net assets;
(5) providing the guarantee for the shareholders, actual controllers and its connected parties.

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Article 9 Unless prior approval is obtained at a general meeting, the Company shall not enter into any contract with any person other than the directors, supervisors, managers and other senior management members whereby the management of the whole or any substantial part of the Company’s business is to be handed over to such person.

CHAPTER 3 CONVENING OF THE GENERAL MEETING

Article 10 The board of directors shall convene the general meeting within the period specified by Article 4 herein on a timely basis.

Article 11 The independent directors have the right to propose to the board of directors to convene an extraordinary general meeting. Whenever the independent director requires the convening of an extraordinary general meeting, the board of directors shall, in accordance with the provisions of laws, administrative regulations and the Articles of Association, furnish a written reply stating its agreement or disagreement to the convening of the extraordinary general meeting within ten (10) days after receiving such proposal.

Where the board of directors agrees to convene the extraordinary general meeting, the board of directors shall send out the notice of the general meeting within five (5) days after making the resolutions; where the board of directors disagrees to convene the extraordinary general meeting, reasons for such disagreement shall be given by way of announcement.

Article 12 The supervisory committee have the right to propose to the board of directors to convene an extraordinary general meeting and shall propose in writing. The board of directors shall, in accordance with the provisions of laws, administrative regulations and the Articles of Association, furnish a written reply stating its agreement or disagreement to the convening of the extraordinary general meeting within ten (10) days after receiving such proposal.

Where the board of directors agrees to convene an extraordinary general meeting, the board of directors shall send out the notice of the general meeting within five (5) days after the passing of the relevant resolutions and any changes to the original proposal made in the notice shall be approved by the supervisory committee.

Where the board of directors does not agree to convene an extraordinary general meeting, or does not furnish any reply within ten (10) days after receiving the proposal, the board of directors shall be deemed as incapable of performing or failing to perform the duty of convening a general meeting and the supervisory committee is entitled to convene and preside over a general meeting independently.

Article 13 The shareholders individually or jointly holding more than 10% shares of the Company, have the right to request the board of directors to convene an extraordinary general meeting and shall make the proposal to the board of directors in writing. The board of directors shall, in accordance with the provisions of laws, administrative regulations and the Articles of Association, furnish a written reply stating its agreement or disagreement to the convening of the extraordinary general meeting within ten (10) days after receiving such proposal.

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Where the board of directors does not agree to convene an extraordinary general meeting, or does not furnish any reply within ten (10) days after receiving the proposal, shareholders individually or jointly holding more than 10% shares of the Company have the right to propose to the supervisory committee to convene the extraordinary general meeting and such proposal shall be made in writing.

Where the supervisory committee agrees to convene the extraordinary general meeting, the supervisory committee shall send out the notice of the general meeting within five (5) days after receiving the proposal and any changes to the original proposal made in the notice shall be approved by the shareholders concerned.

Failure of the supervisory committee to send out such notice within the prescribed term shall be deemed as failure to convene and preside over the general meeting, the shareholders individually or jointly holding more than 10% shares of the Company for more than ninety (90) consecutive days are entitled to independently convene and preside over a general meeting.

Article 14 Whenever deciding to convene the general meeting, the supervisory committee or shareholders shall notify the board of directors in writing and apply to the delegated agencies of the CSRC in the place where the Company is located and the stock exchanges for filing.

Prior to making the announcement of resolutions of general meeting, the shareholders who convene the meeting shall hold no less than 10% shares of the Company.

While sending out the notice of general meeting and making the announcement of resolutions of general meeting, the supervisory committee and the convening shareholders shall submit relevant evidence to the delegated agencies of the CSRC in the place where the Company is located and the stock exchanges.

Article 15 The board of directors and secretary to the board of directors shall provide full cooperation for the general meeting convened by the supervisory committee or shareholders and the board of directors shall provide the register of members as of the equity registration date. Where the board of directors fails to provide the register of members, the convener may apply to the securities registration and clearing institution for obtaining the register of members with the relevant announcement on the convening of the general meeting. The register of members obtained by the convener shall not be used for other purpose other than convening of the general meeting.

Article 16 Where the supervisory committee or the shareholders convenes the general meeting, all expenses arising from the meeting shall be borne by the Company.

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CHAPTER 4 PROPOSALS AND NOTICE OF GENERAL MEETING

Article 17 Contents of the proposal in the general meeting shall fall within the scope of authority of the general meeting, and set out specific subject and matters to be resolved, and comply with relevant requirements of the laws, administrative regulations and the Articles of Association.

Article 18 Shareholders individually or collectively holding 3% or more of the shares of the Company may put forward provisional proposals and submit in writing to the board of directors ten (10) days prior to the date of the general meeting. The board of directors shall issue a supplementary notice of the general meeting within two (2) days upon the receipt of the proposal and submit such temporary proposal to the general meeting for consideration. Contents of the provisional proposal shall fall within the scope of authority of the general meeting, and set out specific subject and matters to be resolved.

Save as the requirement in the preceding paragraph, after the convener has issued the notice for the general meeting, no changes shall be made to the stated proposals in the notice of the general meeting and no new proposals shall be added.

The general meeting shall not vote on or resolve proposals not stated in the notice of the general meeting or proposals which do not meet the requirements in Article 17 herein.

Article 19 The Company shall issue a notice twenty (20) business days before an annual general meeting is convened, and issue a notice ten (10) business days or fifteen (15) days (whichever is longer) before an extraordinary general meeting is convened. The shareholders whose names appear in the register of members shall be informed of the matters proposed to be considered at the meeting and the date and place of the meeting.

Article 20 Specific content of all the proposals, and all information and explanations necessary for the shareholders to make reasonable judgement on the matters to be discussed shall be fully and completely disclosed in the notice of general meeting and the supplementary notice. If independent non-executive directors are required to provide advices on the matters to be discussed, their advices and reasons shall be disclosed when the notice of the general meeting or the supplementary notice is issued.

Article 21 For matters involving election of directors and/or supervisors to be discussed at the general meeting, the particulars of candidates for directors and/or supervisors to be disclosed in the notice of the general meeting shall at least include:

(1) personal particulars including educational background, working experience and any part-time job;
(2) whether they are connected with the Company or the controlling shareholder(s) or beneficial owner(s) of the Company;

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(3) disclosure of their shareholdings in the Company;
(4) whether or not they have been subject to any punishment by the CSRC or other related authorities or chastisement from the Stock Exchanges;
(5) other information required to be disclosed pursuant to the Company Law and/or the relevant laws and regulations of the jurisdictions where the Company’s shares are listed and the relevant requirements of the Stock Exchanges and regulatory authorities.

In addition to the adoption of the cumulative voting system to elect directors and supervisors, each of the candidates for directors or supervisors shall be proposed in a separate proposal.

Article 22 A notice of general meeting shall be issued in writing and contain the following contents:

(1) the place, date and time of the meeting;
(2) stating the matters to be discussed at the meeting;
(3) providing shareholders with such information and explanation as are necessary for them to make an informed decision in respect to the matters to be discussed. This principle shall include (but not limited to) where the Company proposes to merge, repurchase its shares, restructure share capital or undergo other reorganization, the specific conditions and contracts (if any) of the proposed transactions must be provided and the reasons and effects of the same must be properly explained;
(4) if any director, supervisor, manager and other senior management members have material interests in the matters subject to discussion, the nature and extent of such material interests shall be disclosed, and if the effect of the proposed matters on such director, supervisor, manager and other senior management members in their capacity as shareholders is different from that of other shareholders of the same class, the differences shall also be specified;
(5) containing full text of any special resolution proposed to be passed at the meeting;
(6) containing a clear statement that a shareholder who has the right to attend and vote at the meeting shall have the right to appoint one or more proxies to attend and vote at the meeting on his/her behalf and that a proxy need not be a shareholder;
(7) stating the equity registration date for determining the entitlement to attend the general meetings;
(8) stating the date and place for the service of the proxy forms for the meeting;

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(9) stating the name and contact number of the standing contact person for the affairs of the meeting;
(10) if the general meeting is held via internet or other methods, the voting time and procedures via internet or other methods shall be clearly set out in the notice of the general meeting.

The interval between the equity registration date and the date of the meeting shall not be more than seven (7) working days. Once the equity registration date is determined, it shall not be changed.

Article 23 After issuing the notice of general meeting, without any proper reason, the general meeting shall not be postponed or cancelled, and the proposals set out in the notice of general meeting shall not be cancelled. In the event that the general meeting is postponed or cancelled, the convener shall make an announcement at least two (2) working days prior to the date on which the general meeting is originally scheduled and give the reasons therefor.

Article 24 A notice of the general meeting shall be dispatched to shareholders (regardless of their voting rights at the general meeting) by way of announcement and/or personal delivery or by pre-paid mail. The addresses of the recipients shall be such addresses as shown in the register of members by personal delivery or by pre-paid mail.

The announcement referred to in the preceding paragraph shall be published within the period required for a notice of general meeting as set out in Article 19 herein at the websites of the Company and/ or stock exchanges of the listing places, and in one or more newspapers and journals designated by securities regulatory authorities of the State Council or by other means as permitted by the securities regulatory authorities of the State Council from time to time. Once announced, published or issued, all the shareholders shall be deemed to have received the relevant notice of the general meeting.

Article 25 The accidental omission to give notice of a meeting to, or the non-receipt of notice of a meeting by, any person entitled to receive such notice shall not invalidate the meeting and the resolutions passed thereat.

CHAPTER 5 HOLDING OF THE GENERAL MEETING

Article 26 The Company shall hold the general meeting at the domicile of the Company or the place as specified in the Articles of Association.

The general meeting shall have a venue and be held on-site. The Company shall provide convenience for the shareholders to attend the general meeting via the internet or other manners which are safe, economical and convenient. A shareholder who attend a general meeting in the aforesaid manners shall be deemed to have been present at the meeting.

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Shareholders may attend the general meeting in person and exercise their voting rights, or appoint a proxy to attend and exercise their voting rights within the scope of authorization.

Article 27 In the event that the general meeting of the Company is held via internet or other methods, the voting time and procedures via internet or other methods shall be clearly set out in the notice of the general meeting.

The beginning time for voting via internet or other methods for the general meeting shall not be earlier than 3:00 p.m. on the day prior to the on-site general meeting, and shall not be later than 9:30 a.m. on the day when the on-site general meeting is convened and its closing time shall not be earlier than 3:00 p.m. on the day when the on-site general meeting is concluded.

Article 28 The board of directors and other convener shall take such necessary measures to ensure the normal order of the general meeting. For any disturbance to the normal order of the meeting, picking quarrels and provoking troubles and acts infringing on the lawful interests of the shareholders, certain measures shall be taken to prevent them, and the relevant authorities will be reported to pursue the matter timely.

Article 29 All shareholders or their proxies whose names appeared in the register of members the Company at the equity registration date are entitled to attend the general meeting, and the Company and convener shall not refuse on any ground.

Article 30 Shareholders shall attend the general meeting with the share certificates, identity cards, or any valid documents or certificates which can prove their identities. Proxies shall submit the power of attorney and valid proof of personal identity.

Article 31 Any shareholder entitled to attend and vote at the general meeting shall have the right to appoint one or several persons (who need not be shareholders) to act as his proxy to attend and vote at the meeting on his behalf. The proxy/proxies so appointed by the shareholder may exercise the following rights:

(1) the same right as the shareholder to speak at the meeting;
(2) to demand, either individually or jointly, for a poll;
(3) to vote by a show of hands or on a poll. Where more than one proxy is appointed, the proxies may only exercise the voting right on a poll.

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Article 32 The shareholders shall appoint a proxy in writing and the proxy form shall be signed by the principal or by the representative authorized in writing. Where the principal is the legal person, the proxy form shall be affixed with the common seal or its director or the duly authorized representative. Such proxy form shall state clearly the number of shares he represents for the principal.

Article 33 Any proxy form issued to a shareholder by the board of directors for use by him for appointing a proxy shall allow the shareholder to freely instruct the proxy to cast vote in favour of or against, and make separate instruction as to matters to be voted on in relation to, each resolution proposed at the meeting. Such proxy form shall contain a statement that in the absence of instructions by the shareholder, his proxy may vote at his own discretion.

Article 34 Where the principal has become deceased, has become incapacitated to act, has withdrawn the appointment or the power of attorney, or where the relevant shares have been transferred prior to the voting, a vote given in accordance with the proxy form shall remain valid provided that no written notice of such event has been received by the Company prior to the commencement of the relevant meeting.

Article 35 Proxy forms shall be deposited at the domicile of the Company or other places specified in the notice of meeting twenty-four (24) hours before the relevant meeting for voting according to the proxy form, or twenty-four (24) hours before the designated time of voting. If the proxy form is signed by a person under a power of attorney on behalf of the principal, the power of attorney or other authorization documents authorized to be signed shall be notarized. A notarized power of attorney or other authorization documents, together with the proxy form, shall be deposited at the domicile of the Company or other places specified in the notice of meeting.

Where the principal is a legal person, its legal representative or other persons authorized by the resolutions of the board of directors or other decision-making organ to act as its representatives may attend the general meeting of the Company as a representative of the principal.

Article 36 The convener and lawyer shall together verify the validity of qualification of shareholders in accordance with the register of members provided by the securities registration and clearing institution, and register the name of shareholders or the number of shares with voting rights held by them. Before the chairman of the meeting declares the number of shareholders and proxies present at the meeting as well as the total number of shares with voting rights held by them, registration for the meeting shall be ended.

Article 37 When the Company convenes the general meeting, all directors, supervisors and secretary of the board of directors shall attend the meeting, and the general manager and other senior management members shall be present at the meetings.

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Article 38 The general meeting shall be presided over by the chairman of the board of directors. In the event that the chairman of the board of directors is unable or fails to perform his/her duties, a vice-chairman shall preside over the meeting. Where the vice-chairman is unable or fails to perform his/ her duties, the meeting shall be presided over by a director elected by more than half members of the board of directors.

Where the supervisory committee convenes the general meeting, such general meeting shall be presided over by the chairman of the supervisory committee. Where the chairman of the supervisory committee is unable to or fails to perform his/her duties to convene a general meeting, the general meeting shall be convened and presided over by the vice-chairman of the supervisory committee. Where the vice-chairman of the supervisory committee is unable to or fails to perform his/her duties to convene a general meeting, a supervisor elected by more than half of the supervisors shall preside over the meeting.

Where the general meeting is convened by the shareholders, the convener shall nominate a representative to preside over the meeting.

Where the chairman of the meeting violates these rules of procedure which makes it difficult for the general meeting to continue, a person may be elected at the general meeting to act as the chairman of the meeting, subject to the approval of more than half of the shareholders with voting rights who are eligible to vote and present at the meeting.

Article 39 At the annual general meeting, the board of directors, the supervisory committee and the management of the Company shall report to the general meeting for their work over the previous year, and each of the independent directors shall also submit his/her work report.

Article 40 Directors, supervisors and senior management members shall respond and explain to the inquiries made by shareholders at the general meeting.

They may refuse to answer the inquiries in connection with the following circumstances but specify the reason:

(1) inquires not relating to issues;
(2) inquiries subject to further investigation;
(3) response to the inquiry will reveal the Company’s business secrets or significantly damage the common interests of the shareholders;
(4) other important reasons.

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Article 41 The chairman of the meeting shall declare the number of shareholders and proxies present at the on-site meeting and the total number of shares carrying voting rights held by them before voting, but the figures recorded in the attendance records of the meeting shall prevail.

Article 42 Minutes of a general meeting shall be kept by the secretary to board of directors and include the followings:

(1) time, place, agenda of meeting and the name of the convener;
(2) names of the chairman of the meeting, directors, supervisors, secretary to the board of directors, managers and other senior management members attending or being present at the meeting;
(3) number of shareholders and proxies attending the meeting, total number of the shares with voting rights held by them, and the percentage of shares with voting rights held by them to the total number of shares of the Company;
(4) process of consideration for each proposal, the gist of speeches and voting results;
(5) shareholders’ inquires or recommendations and the corresponding replies or explanations;
(6) names of the lawyer, the counter and the scrutineer;
(7) other matters which shall be recorded in the meeting minutes pursuant to the Articles of Association.

Directors, the secretary to the board of directors, the convener or his representative and the chairman of the meeting shall sign on the minutes of the meeting and ensure that the contents of minutes of the meeting are true, accurate and complete. The minutes of the meeting should be maintained with the register for attendance of shareholders physically present at the meeting and the proxy forms of their proxies and valid information on voting via internet and other manners, and the maintaining period shall not be less than 10 years.

CHAPTER 6 VOTING AND RESOLUTIONS OF THE GENERAL MEETING

Article 43 Voting at a general meeting shall be executed by a show of hands unless a poll is demanded (whether before or after any vote by show of hands) by the following persons:

(1) the chairman of the meeting;
(2) at least two (2) shareholders entitled to vote in person or proxies with voting rights;

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(3) one or more shareholders (including proxies) individually or jointly holding more than 10% (including 10%) of all shares carrying right to vote at the meeting.

Unless a poll is demanded, a declaration by the chairman that a resolution has been passed by a show of hands and the record of such in the minutes of meeting shall be conclusive evidence of the fact that such resolution has been passed. There is no need to provide evidence of the number or proportion of votes in favour of or against such resolution.

If voting is conducted by poll, the chairman of the general meeting should make sure that the procedures of voting by poll have been explained and all questions from shareholders regarding voting by poll have been answered at the commencement of the meeting. The demand for a poll may be withdrawn by the person who makes such demand.

A poll demanded on such matters as the election of chairman or the adjournment of the meeting shall be taken forthwith. A poll demanded on any other matters shall be taken at such time as the chairman may decide, and the meeting may proceed to discuss other matters, while the results of the poll shall still be deemed to be a resolution of that meeting.

Article 44 The same voting right can only be exercised by electing to vote on-site, via internet or other voting methods. In the event that the same voting right has been exercised twice, the result of the first voting shall prevail.

Article 45 Resolutions of general meetings may either be ordinary resolutions or special resolutions.

Ordinary resolutions of the general meeting shall be passed by more than half of the voting rights held by the shareholders (including proxies) attending the meeting.

Special resolutions of the general meeting shall be passed by more than two-thirds of the voting rights held by the shareholders (including proxies) attending the meeting.

The shareholders (including proxies) attending the meeting shall clearly indicate to support or oppose to each item to be voted. Abstention and abstaining from voting shall not be treated as the votes while the Company calculating the voting result on such item.

Article 46 The following matters shall be resolved either by an ordinary resolution at a general meeting:

(1) work reports of the board of directors and the supervisory committee;
(2) plans formulated by the board of directors for distribution of profits and for making up losses;

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REVISED RULES OF PROCEDURE FOR GENERAL MEETINGS

APPENDIX IV

(3) the appointment and removal of members of the board of directors and the supervisory committee, their remuneration and payment methods;
(4) the Company’s annual financial budgets and final accounts, balance sheets, income statements and other financial statements and annual report;
(5) matters other than those required by the laws and administrative regulations or by the Articles of Association to be adopted by special resolutions.

Article 47 The following matters shall be resolved by a special resolution at the general meeting:

(1) increase or reduction of the share capital and issue of shares of any class, stock warrants or other similar securities;
(2) issuance of corporate debentures;
(3) the demerger, merger, dissolution and liquidation of the Company;
(4) amendments to the Articles of Association;
(5) the major assets acquired or sold within one (1) year or the guaranteed amount exceeding 30% of the Company’s latest audited total assets;
(6) share incentive scheme;
(7) such other matters as may be required by laws, administrative regulations or the Articles of Association or matters which, if resolved by way of ordinary resolutions at general meetings, are considered to have material effects on the Company and require approval by special resolutions.

Article 48 A shareholder (including proxy) may exercise voting rights in accordance with the number of shares carrying the right to vote held by him and each share shall have one vote.

When material issues affecting the interests of minority investors are considered at the general meeting, the votes of minority investors shall be counted separately. The result of separate vote counting shall be disclosed publicly in a timely manner.

The Company shall have no voting rights for the shares that it holds, which are not counted in the total number of shares with voting rights attending the general meeting.

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APPENDIX IV

The board of directors, independent non-executive directors and shareholders who meet the relevant required conditions may collect voting rights from shareholders publicly. Information such as specific voting intention shall be disclosed adequately to the shareholders from whom such voting rights are collected in the process of collection. It is prohibited to collect voting rights from shareholders by paying consideration or de facto consideration. The Company shall not impose minimum shareholding requirement for the collection of voting rights.

Article 49 When connected transactions are being considered at a general meeting, the connected shareholders shall abstain from voting, and the number of shares with voting right held by them shall not be counted toward the total number of valid votes. An announcement of the resolutions of the general meeting shall fully disclose the results of voting by non-connected shareholders on the transactions.

Article 50 For voting at a general meeting in relation to the election of directors and supervisors, the cumulative voting system may be adopted in accordance with the provisions of the Articles of Association.

The cumulative voting system referred to in the preceding paragraph shall mean a system used in the election of directors or supervisors at a general meeting where the holder of each share shall have such number of votes as is equivalent to the number of directors or supervisors to be elected, which votes may be casted for a single candidate.

Article 51 Save where the cumulative voting system is adopted, all proposals shall be voted upon at a general meeting item by item. Where there are different proposals for the same matter, such proposals shall be voted upon according to the order in which they are proposed. Unless a general meeting is adjourned or no resolution can be adopted thereat due to force majeure or other special reasons, no proposed resolution shall be set aside or rejected for voting at the general meeting.

Article 52 While considering the proposal at the general meeting, no change shall be made to the proposal; otherwise, the relevant amendment shall be treated as a new proposal and shall not be voted at the said general meeting.

Article 53 Before voting on the proposal, two shareholder representatives shall be nominated to participate in counting and scrutinizing the ballots at the general meeting. Where the shareholders have interests in the proposals to be resolved, the relevant shareholders and their proxies shall not participate in counting and scrutinizing the ballots.

While taking a vote on the proposal in the general meeting, the lawyers, shareholder representatives and supervisor representatives shall be jointly responsible for counting and scrutinizing the ballots.

The shareholders of the Company or its proxies voting via the internet or other manners shall have right to check its voting result through relevant voting system.

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REVISED RULES OF PROCEDURE FOR GENERAL MEETINGS

APPENDIX IV

Article 54 At the end of the on-site general meeting, the chairman of the meeting shall announce on the meeting venue the voting information and result of each proposal.

Before the voting result is formally announced, relevant parties involved in the voting on-site or via the internet or other methods, such as the Company, the counter, the scrutineer, the major shareholders and the internet services providers, shall assume confidentiality obligations toward the information on voting.

Article 55 The shareholders (including proxies) attending the meeting shall clearly indicate to support, oppose to or abstain from voting for each item to be voted.

If a poll is taken at a meeting, a shareholder (including proxy) entitled to two or more votes need not cast all his votes in the same way.

Ballot papers that are left blank, unduly completed or illegible or that have not been used, are deemed as void votes which means that the voter has waived his rights, and the voting results corresponding to the shares in their possession shall be treated as “Abstain from voting”.

If any shareholder is, under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, required to abstain from voting on any particular resolution or restricted to voting only for or only against any particular resolution, any votes cast by or on behalf of such shareholders in contravention of such requirement or restriction shall not be counted.

Article 56 In case of an equality of votes (whether on a show of hands or on a poll), the chairman shall have a second vote.

Article 57 The chairman of the meeting is responsible to decide whether the resolutions in the general meeting are passed. The chairman’s decision is the ultimate decision and should be announced during the meeting and put on record in the minutes.

Article 58 In case of votes to be counted at the general meeting, the result shall be recorded in the meeting minutes.

The meeting minutes, together with the register of attendance signed by shareholders present at the meeting and the proxy forms for proxies attending the meeting, shall be kept at the domicile of the Company.

Article 59 Copies of the meeting minutes shall be available for shareholders’ inspection during business hours of the Company without charge. If a shareholder demands from the Company a copy of such minutes, the Company shall send the copy to him within seven (7) days after receipt of reasonable charges.

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REVISED RULES OF PROCEDURE FOR GENERAL MEETINGS

APPENDIX IV

Article 60 In the event that the chairman of the meeting has any doubt as to the result of a resolution put forward to the vote, he may have the votes counted. In the event that the chairman of the meeting fails to have the votes counted, any shareholder present in person or by proxy objects to the result announced by the chairman of the meeting may demand that the votes be counted immediately after the declaration of the voting result, and the chairman of the meeting shall have the votes counted immediately.

Article 61 The resolutions of a general meeting shall be announced promptly, and shall indicate the number of shareholders and proxies attended the meeting, the total number of shares with voting right held by them, the percentage of such shares with voting right to the total number of voting shares in the Company, the voting method, and the voting results in respect of each proposal (including the individual counting of minority investors (if applicable)) and the details of each resolution passed.

Article 62 If a proposal is not passed or a resolution passed at the previous general meeting is amended at such general meeting, it shall be set out as a special reminder in the announcement on resolutions of the general meeting.

Article 63 The convener shall ensure the general meeting is held without adjournment until the final resolution is reached. Where special reasons such as force majeure have led to the suspension of the meeting or no resolution can be adopted, necessary measures should be taken to resume the meeting, or to end the meeting directly with a timely announcement. Meanwhile, the convener shall report to the delegated agencies office of the CSRC and the Stock Exchanges.

Article 64 When the resolution to elect directors and/or supervisors is passed at general meeting, those newly elected shall assume office according to the provisions of the Articles of Association.

Article 65 Where a proposal on cash dividends, bonus shares or conversion of capital reserve into share capital is passed at a general meeting, the Company shall implement the specific scheme within two (2) months after conclusion of the general meeting.

Article 66 The resolutions passed at the general meeting are null and void if they are in breach of the laws and administrative regulations.

In case the convening and voting procedures of the general meetings are in breach of laws, administrative regulations or the Articles of Association, or the contents of the resolutions are in breach of the Articles of Association, the shareholders may apply to the court for the revocation of such resolutions within sixty (60) days as of the date of resolutions made.

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REVISED RULES OF PROCEDURE FOR GENERAL MEETINGS

APPENDIX IV

CHAPTER 7 SPECIAL PROCEDURES FOR VOTING BY CLASS SHAREHOLDERS

Article 67 Shareholders holding different classes of shares are referred to as class shareholders.

Class shareholders shall be entitled to the rights and assume obligations pursuant to the provisions of laws, administrative regulations and the Articles of Association.

Article 68 Any variation or abrogation of the rights of any class of shareholders proposed by the Company may only come into effect upon the adoption of a special resolution at a general meeting and approval by the affected shareholders of that class at a separate general meeting held in accordance with Articles 70 to 74 herein.

Article 69 The following circumstances shall be deemed to be a variation or abrogation of the rights of shareholders of a certain class:

(1) to increase or decrease the number of shares of a particular class, or increase or decrease the number of shares of other classes having rights on voting, distribution or other privileges equal or superior to those of the shares of such class;
(2) to convert all or part of the shares of such class into shares of other class, or to convert or grant a right to convert all or part of the shares of other classes into shares of such class;
(3) to remove or reduce rights to accrued dividends or cumulative dividends attached to shares of such class;
(4) to reduce or remove the rights to a dividend preference or a liquidation preference to distribution of property attached to shares of such class;
(5) to add, remove or reduce the rights to conversion, options, voting, transfer, pre-emptive rights to placement and acquire securities of the Company attached to shares of such class;
(6) to remove or reduce rights to receive amounts payable by the Company in particular tendency attached to shares of such class;
(7) to create a new class of shares having rights on voting, distribution or other privileges equal or superior to those of the shares of such class;
(8) to impose restrictions or additional restrictions the transfer or ownership of the shares of such class;

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REVISED RULES OF PROCEDURE FOR GENERAL MEETINGS

APPENDIX IV

(9) to issue subscription rights or share conversion rights for shares of such class or other classes;
(10) to increase the rights and privileges of shares of other classes;
(11) to restructure the Company which will result in shareholders of different classes bearing a disproportionate burden of obligations of such proposed restructuring;
(12) to vary or abrogate the terms provided in this chapter.

Article 70 Shareholders of the affected class, whether or not having the right to vote at the general meeting, shall nevertheless have the right to vote at class meetings on matters referred to in items (2) to (8), (11) and (12) of the preceding article, but interested shareholders shall not be entitled to vote at the class meetings.

The interested shareholders mentioned in the preceding paragraph shall have the following meanings:

(1) In the case of a repurchase of its own shares by the Company by making offers to all shareholders on a same pro rata basis or through public dealing on a stock exchange in accordance with the Articles of Association, “interested shareholder” shall refer to the controlling shareholders as defined in the Articles of Association;
(2) In the case of a repurchase of its own shares by the Company through an off-market agreement in accordance with the provisions of the Articles of Association, “interested shareholders” shall refer to the shareholders to which the proposed agreement relates;
(3) In the case of a restructuring of the Company, “interested shareholder” shall refer to a shareholder within a class who bears liabilities less than the proportional burden imposed on other shareholders of that class or who has interests different from those held by shareholders of the same class.

Article 71 A resolution of the class meeting shall be passed by shareholders with voting rights present in the meeting representing more than two-thirds of voting rights.

Article 72 Written notice of a class meeting convened by the Company shall be dispatched to all shareholders of such class whose names appear on the register of members, specifying the matters to be considered and the date and place of the meeting with reference to Article 19 herein regarding the matters set out in the notice for convening the extraordinary general meeting.

Article 73 Notices of the class meeting only need to be served on shareholders entitled to vote thereat. The procedures for holding the class meeting shall be similar to those for holding the general meeting as far as possible, and the provisions in the Articles of Association relating to the procedures for a general meeting shall apply to the class meeting.

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APPENDIX IV

Article 74 Save for shareholders of shares of other classes, the holders of domestic shares and holders of overseas-listed foreign-invested shares are deemed to be different classes of shareholders.

Special voting procedures for class shareholders shall not apply in the following circumstances:

Where the Company issues, either separately or concurrently, domestic shares and overseas-listed foreigninvested shares in numbers not exceeding 20% of the number of domestic shares and overseas-listed foreign-invested shares then in issue respectively in any twelve month period as approved by a special resolution of a shareholders’ general meeting; or where the Company’s plan for issuing domestic shares and overseas-listed foreign-invested shares upon its establishment is implemented within fifteen months from the date of approval by the authorized departments.

CHAPTER 8 SUPPLEMENTARY PROVISIONS

Article 75 These rules will be revised from time to time in line with amendments to relevant laws, regulations, regulatory documents and the Articles of Association. In case of any conflict between the provisions of these rules and the requirements of relevant laws, regulations, regulatory documents and the Articles of Association, the relevant requirements of relevant laws, regulations, regulatory documents and the Articles of Association shall prevail.

Article 76 These rules of procedure shall be subject to the interpretation of the board of directors.

Article 77 These rules shall be effective from the date of consideration and approval by the general meeting.

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NOTICE OF EGM

IMPORTANT NOTICE:

As stated in the announcements of the Company dated 30 December 2020, 13 January 2021 and 22 January 2021, the EGM originally scheduled to be held at 9:00 a.m. on 18 January 2021 (Monday) was postponed to 9:00 a.m. on 29 January 2021 (Friday), and was further postponed to 9:00 a.m. on 8 February 2021 (Monday), and was subsequently further postponed to 9:00 a.m. on 9 February 2021 (Tuesday) and the venue, the attendance eligibility, the resolutions to be considered at and other relevant matters of the EGM will remain unchanged. For details, please refer to the notice of the EGM of the Company dated 3 December 2020 set out below.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this notice, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this notice.

＊

NOTICE OF THE FIRST EXTRAORDINARY GENERAL MEETING 2021

NOTICE IS HEREBY given that the First Extraordinary General Meeting 2021 (the “ EGM ”) of Luoyang Glass Company Limited (the “ Company ”) will be held at the conference room of the Company on 3rd Floor, No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the People’s Republic of China (the “ PRC* ”) at 9:00 a.m. on 18 January 2021 (Monday) for the purpose of considering and, if thought fit, passing the following resolutions:

Unless otherwise indicated, capitalised terms used herein shall have the same meanings as those defined in the announcement of the Company dated 2 December 2020 in relation to the continuing connected transactions and the announcement of the Company dated 2 December 2020 in relation to the change of operation term of business license of the Company, amendments to the Articles of Association and Rules of Procedures of General Meetings (the “ Announcements ”).

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NOTICE OF EGM

Special Resolution

To consider and approve the proposed amendments to the Articles of Association of the Company.

Ordinary Resolutions

To consider and approve the 2021-2023 Sale and Purchase of Glass Products Framework Agreement (a copy of which has been proposed to the EGM marked “ 1 ” and signed by the chairman of the EGM for the purpose of identification), the terms and conditions thereof, its proposed annual caps, the transactions contemplated thereunder and the implementation thereof;
To consider and approve the 2021-2023 Sale and Purchase of Raw Materials Framework Agreement (a copy of which has been proposed to the EGM marked “ 2 ” and signed by the chairman of the EGM for the purpose of identification), the terms and conditions thereof, its proposed annual caps, the transactions contemplated thereunder and the implementation thereof;
To consider and approve the 2021-2023 Technical Services Framework Agreement (a copy of which has been proposed to the EGM marked “ 3 ” and signed by the chairman of the EGM for the purpose of identification), the terms and conditions thereof, its proposed annual caps, the transactions contemplated thereunder and the implementation thereof;
To consider and approve the 2021-2023 Engineering Construction Equipment Procurement and Installation Framework Agreement (a copy of which has been proposed to the EGM marked “ 4 ” and signed by the chairman of the EGM for the purpose of identification), the terms and conditions thereof, its proposed annual caps, the transactions contemplated thereunder and the implementation thereof;
To consider and approve the 2021-2023 Sale and Purchase of Spare Parts Framework Agreement (a copy of which has been proposed to the EGM marked “ 5 ” and signed by the chairman of the EGM for the purpose of identification), the terms and conditions thereof, its proposed annual caps, the transactions contemplated thereunder and the implementation thereof;
To consider and approve the 2021-2023 Sale and Purchase of Products Framework Agreement (a copy of which has been proposed to the EGM marked “ 6 ” and signed by the chairman of the EGM for the purpose of identification), the terms and conditions thereof, its proposed annual caps, the transactions contemplated thereunder and the implementation thereof;
To consider and approve the 2021-2023 Financial Services Framework Agreement (a copy of which has been proposed to the EGM marked “ 7 ” and signed by the chairman of the EGM for the purpose of identification), the terms and conditions thereof, its proposed annual caps, the transactions contemplated thereunder and the implementation thereof;

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NOTICE OF EGM

To approve, ratify and confirm any one of the Directors for and on behalf of the Company, among other matters, to sign, execute, complete, deliver or to authorize signing, executing, completing and delivering all such documents and deeds, to do or authorize doing all such acts, matters and things as they may in their discretion consider necessary, expedient or desirable giving effect to and implementing the 2021-2023 CCT Agreements;
To consider and approve the change of operation term of business license of the Company; and

In accordance with the requirements of the industrial and commercial administrative authorities, the Company proposed to change the operation term of its business license from “7 August 1996 to 6 August 2036” to “7 August 1996 to perpetual existence” in order to make the operation term specified in the business license of the Company to be identical to that set forth in Article 5 of Chapter 1 of the Articles of Association of the Company, i.e. “The Company is a joint stock limited liability company with perpetual existence”.

To consider and approve the amendments to the Rules of Procedures of General Meetings.
(For details of the above resolutions, please refer to the Announcements.)

By order of the Board Luoyang Glass Company Limited* Zhang Chong Chairman

Luoyang, the PRC 3 December 2020

As at the date of this notice, the Board of the Company comprises five executive Directors: Mr. Zhang Chong, Mr. Xie Jun, Mr. Ma Yan, Mr. Wang Guoqiang and Mr. Zhang Rong; two non-executive Directors: Mr. Ren Hongcan and Mr. Chen Yong; and four independent non-executive Directors: Mr. Jin Zhanping, Mr. Ye Shuhua, Mr. He Baofeng and Ms. Zhang Yajuan.

For identification purposes only

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NOTICE OF EGM

Notes:

Holders of the Company’s H Shares, whose names appear on the register of members maintained by Hong Kong Registrars Limited at the close of trading at 4:30 p.m. on 17 December 2020, are entitled to attend and vote at the EGM. The register of members of the Company’s H Shares will be closed from 18 December 2020 to 18 January 2021 (both days inclusive), during which period no transfer of H Shares will be effected in order to determine the list of holders of H Shares eligible to attend the EGM. Holders of H Shares of the Company who wish to attend the EGM must lodge all share transfer forms accompanied by the relevant H share certificates with the registrar of the Company’s H Shares, namely Hong Kong Registrars Limited at Shops 1712–1716, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong by 4:30 p.m. on 17 December 2020.
Any Shareholder entitled to attend and vote at the EGM may appoint a proxy or proxies (who need not be a Shareholder of the Company) to attend and vote at the EGM on his/her behalf. A proxy of a Shareholder who has appointed more than one proxy may only vote on a poll.
The principal Shareholder may appoint a proxy in written form (i.e. through the enclosed proxy form). The proxy form shall be signed by the principal or his attorney as authorised. In case that the proxy form is signed by the attorney of the principal, the power of attorney or other authorisation documents must be notarised by the notary public. The proxy form together with such power of attorney or other authorisation documents as notarised by the notary public must be lodged at the Company’s share registrar in Hong Kong, Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong or to the Company at No. 9 Tang Gong Zhong Lu, Xigong District, Luoyang Municipal, Henan Province, the PRC not less than 24 hours before the time appointed for the holding of the EGM or any adjournment thereof.
Shareholders who intend to attend the EGM in person or by proxy should complete and return the signed reply slip for attending the EGM to the registered address of the Company on or before 28 December 2020 by courier, mail or facsimile.
Shareholders or their proxies shall produce their proofs of identity when attending the EGM. A proxy of Shareholder who is appointed to attend the EGM shall produce the proxy form at the same time.
The EGM is expected to last for no more than one day. Shareholders and their proxies attending the EGM should be responsible for their own traveling and accommodation expenses.
The Company’s registered address is as follows:

No. 9 Tang Gong Zhong Lu, Xigong District Luoyang Municipal, Henan Province the People’s Republic of China Postal Code: 471009 Tel: 86–379–6390 8588 Fax: 86–379–6325 1984

Completion and return of the proxy form will not preclude Shareholders of the Company from subsequently attending and voting in person at the EGM or any adjourned meetings should you so wish.

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AI assistant

RoboSense Technology Co., Ltd — Proxy Solicitation & Information Statement 2021

50628_rns_2021-01-24_0d1fbc5d-b587-408c-93ac-774be9d5ed6e.pdf

(1) CONTINUING CONNECTED TRANSACTIONS; (2) MAJOR TRANSACTION AND CONTINUING CONNECTED TRANSACTION; (3) CHANGE OF OPERATION TERM OF BUSINESS LICENSE OF THE COMPANY;

(4) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION; AND

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

“CNBMG”

Executive Directors:

(1) CONTINUING CONNECTED TRANSACTIONS;

(2) MAJOR TRANSACTION AND CONTINUING CONNECTED TRANSACTION; (3) CHANGE OF OPERATION TERM OF BUSINESS LICENSE OF THE COMPANY;

(4) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION; AND

(5) PROPOSED AMENDMENTS TO THE RULES OF PROCEDURE FOR GENERAL MEETINGS

INTRODUCTION

I. CONTINUING CONNECTED TRANSACTIONS

A. RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

1. 2021–2023 SALE AND PURCHASE OF GLASS PRODUCTS FRAMEWORK AGREEMENT

Date

Parties

Effective period

Nature of transaction

Pricing and payment terms

Pricing standards

Historical figures and proposed annual caps

Internal control on pricing

LETTER FROM THE BOARD

2. 2021–2023 SALE AND PURCHASE OF RAW MATERIALS FRAMEWORK AGREEMENT

Parties

Nature of transaction

Pricing and payment terms

LETTER FROM THE BOARD

Pricing standards

Silicon powder

Sodium carbonate

LETTER FROM THE BOARD

Historical figures and proposed annual caps

LETTER FROM THE BOARD

Internal control on pricing

3. 2021–2023 ENGINEERING CONSTRUCTION EQUIPMENT PROCUREMENT AND INSTALLATION FRAMEWORK AGREEMENT

Date

Parties

Effective period

Nature of transaction

LETTER FROM THE BOARD

Pricing and payment terms

Pricing standards

LETTER FROM THE BOARD

Historical figures and proposed annual caps

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Internal control on pricing

4. 2021–2023 SALE AND PURCHASE OF PRODUCTS FRAMEWORK AGREEMENT

Date

Parties

Effective period

Nature of transaction

LETTER FROM THE BOARD

Pricing and payment terms

Pricing standards

Glass products

Packaging box products

LETTER FROM THE BOARD

Historical figures and proposed annual caps

Internal control on pricing

CONTINUING CONNECTED TRANSACTIONS SUBJECT TO THE REPORTING AND ANNOUNCEMENT REQUIREMENTS ONLY

1. 2021–2023 TECHNICAL SERVICES FRAMEWORK AGREEMENT

Effective period

Nature of transaction

Pricing and payment terms

LETTER FROM THE BOARD

Pricing standards

LETTER FROM THE BOARD

Historical figures and proposed annual caps

LETTER FROM THE BOARD

Internal control on pricing

2. 2021–2023 SALE AND PURCHASE OF SPARE PARTS FRAMEWORK AGREEMENT

RoboSense Technology Co., Ltd Proxy Solicitation & Information Statement 2021

**Luoyang Glass Company Limited* Zhang Chong**