THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Yangtze Optical Fibre and Cable Joint Stock Limited Company*, you should at once hand this supplemental circular together with the accompanying supplemental proxy form to the purchaser or the transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this supplemental 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 supplemental circular.

Yangtze Optical Fibre and Cable Joint Stock Limited Company*

長 飛 光 纖 光 纜 股 份 有 限 公 司

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 6869)

  1. PROPOSED NEW ANNUAL CAPS FOR THE OPTICAL FIBRE TECHNOLOGY COOPERATION AGREEMENT WITH DRAKA AND

RENEWAL OF THE CONTINUING CONNECTED TRANSACTIONS WITH

YOFC SHANGHAI

    1. PROPOSAL ON THE ESTIMATES OF THE 2020 TO 2022 ANNUAL TRANSACTION AMOUNTS FOR THE RELATED PARTY TRANSACTIONS TO BE CARRIED OUT IN THE ORDINARY AND USUAL COURSE OF BUSINESS
  2. PROPOSAL ON THE 2020 ANNUAL EXTERNAL GUARANTEE AMOUNT AND
  3. SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING

This supplemental circular should be read in conjunction with the circular of the Company dated December 2, 2019.

A letter from the Board is set out on pages 5 to 26 of this supplemental circular.

A supplemental notice of the EGM, which will be held as originally scheduled at Multi-Media Meeting Room, 201# Building, No. 9 Guanggu Avenue, East Lake High-tech Development Zone, Wuhan, Hubei Province, PRC on Friday, January 17, 2020 at 1:30 p.m. is set out on pages 43 to 45 of this supplemental circular.

A supplemental proxy form for the EGM is enclosed with this supplemental circular. If you intend to appoint a proxy to attend the EGM, you are required to complete and return the accompanying supplemental proxy form in accordance with the instructions printed thereon. The supplemental proxy form should be returned by holder of H Shares to the Company's H share registrar, Tricor Investor Services Limited, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong, by hand or by post not less than 24 hours before the time appointed for holding the EGM or any adjourned meeting thereof. Completion and return of the supplemental proxy form will not preclude you from attending and voting in person at the EGM or at any adjourned meeting should you so wish, but in such event the instrument appointing a proxy shall be deemed to be revoked.

References to time and dates in this supplemental circular are to Hong Kong time and dates.

  • For identification purpose only

December 31, 2019

CONTENTS

Page

DEFINITIONS . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

APPENDIX I

THE ESTIMATES OF THE 2020 TO 2022 ANNUAL

TRANSACTION AMOUNTS FOR THE RELATED

PARTY TRANSACTIONS TO BE CARRIED OUT

IN THE ORDINARY AND USUAL COURSE OF

BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27

APPENDIX II THE 2020 ANNUAL EXTERNAL GUARANTEE AMOUNT . .

37

SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING . . .

43

- i -

DEFINITIONS

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

"2017-2019 Framework

together, the 2017-2019 YOFC Shanghai Sales

Agreements"

Framework Agreement and the 2017-2019 YOFC

Shanghai Purchase Framework Agreement

"2017-2019 YOFC Shanghai

the purchase framework agreement entered into between

Purchase Framework

YOFC Shanghai and the Company on November 11, 2016

Agreement"

to regulate the purchase transactions of the Group with

YOFC Shanghai

"2017-2019 YOFC Shanghai

the sales framework agreement entered into between

Sales Framework Agreement"

YOFC Shanghai and the Company on November 11, 2016

to regulate the sales transactions of the Group with YOFC

Shanghai

"2020-2022 Framework

together, the 2020-2022 YOFC Shanghai Sales

Agreements"

Framework Agreement and the 2020-2022 YOFC

Shanghai Purchase Framework Agreement

"2020-2022 YOFC Shanghai

the purchase framework agreement entered into between

Purchase Framework

YOFC Shanghai and the Company on December 20, 2019

Agreement"

to regulate the purchase transactions of the Group with

YOFC Shanghai

"2020-2022 YOFC Shanghai

the sales framework agreement entered into between

Sales Framework Agreement"

YOFC Shanghai and the Company on December 20, 2019

to regulate the sales transactions of the Group with YOFC

Shanghai

"A Share(s)"

ordinary share(s) of the Company, with a nominal value

of RMB1.00 each, which are subscribed for in Renminbi

and listed on the Shanghai Stock Exchange (stock code:

601869)

"Articles of Association"

the articles of association of the Company, as amended

from time to time

"associate(s)"

has the meaning ascribed to it under the Listing Rules

"Board"

the board of Directors of the Company

- 1 -

DEFINITIONS

"Company"

Yangtze Optical Fibre and Cable Joint Stock Limited

Company* (長飛光纖光纜股份有限公司), a joint stock

limited company incorporated in the PRC with limited

liability, the A shares and H shares of which are listed on

Shanghai Stock Exchange and the Main Board of the

Stock Exchange, respectively

"connected person(s)"

has the meaning ascribed to it under the Listing Rules

"Director(s)"

the director(s) of the Company

"Draka"

Draka Comteq B.V., a company incorporated in the

Netherlands on May 14, 2004 and wholly-owned by

Draka Holding B.V.. It is a substantial shareholder and a

connected person of the Company

"Extraordinary General Meeting"

the extraordinary general meeting of the Company to be

or "EGM"

held at Multi-Media Meeting Room, 201# Building, No.

9 Guanggu Avenue, East Lake High-tech Development

Zone, Wuhan, Hubei Province, PRC on Friday, January

17, 2020 at 1:30 p.m., or any adjournment thereof

"Group"

the Company and its subsidiaries (excluding YOFC

Shanghai if and where the context requires)

"H Share(s)"

overseas listed foreign shares in the share capital of the

Company, with a nominal value of RMB1.00 each, which

are listed on the Main Board of the Stock Exchange and

traded in Hong Kong dollars (stock code: 6869)

"Hong Kong"

the Hong Kong Special Administrative Region of the

PRC

"Latest Practicable Date"

December 27, 2019, being the latest practicable date prior

to the printing of this supplemental circular for

ascertaining certain information in this supplemental

circular

"Listing Rules"

the Rules Governing the Listing of Securities on The

Stock Exchange of Hong Kong Limited

  • For identification purpose only

- 2 -

DEFINITIONS

"Optical Fibre Technology

the optical fibre technology cooperation agreement

Cooperation Agreement"

entered into on October 13, 2008 between Draka and the

Company, which was subsequently revised on August 27,

2013 and May 30, 2014

"OVD"

outside vapor deposition

"PCVD"

plasma activated chemical vapor deposition

"PRC"

the People's Republic of China, and for the purpose of

this supplemental circular, excluding Hong Kong, the

Macau Special Administrative Region of the PRC and

Taiwan

"Prysmian Group"

Prysmian S.p.A. and its associates (for the avoidance of

doubt, excluding YOFC Shanghai)

"RMB"

Renminbi, the lawful currency of the PRC

"Shanghai Listing Rules"

the Rules Governing the Listing of Stocks on the

Shanghai Stock Exchange (上海證券交易所股票上市規

則)

"Shanghai Stock Exchange"

Shanghai Stock Exchange

"Share(s)"

A Shares and/or H Shares

"Shareholder(s)"

holders of Shares

"Stock Exchange"

The Stock Exchange of Hong Kong Limited

"subsidiaries"

has the meaning ascribed to it in the Listing Rules

"substantial shareholder"

has the meaning ascribed to it under the Listing Rules

"USD"

United States dollar

"VAD"

vapor axial deposition

"YOFC Shanghai"

Yangtze Optical Fibre and Cable (Shanghai) Co,. Ltd. (長

飛光纖光纜(上海)有限公司), a company incorporated in

the PRC on October 30, 2002. It is owned as to 75% by

the Company and 25% by Draka, and is a connected

person of the Company

- 3 -

DEFINITIONS

"ZAR"

South African Rand, the lawful currency of South Africa

"%"

per cent.

- 4 -

LETTER FROM THE BOARD

Yangtze Optical Fibre and Cable Joint Stock Limited Company*

長 飛 光 纖 光 纜 股 份 有 限 公 司

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 6869)

Executive Directors:

Registered Office:

Mr. ZHUANG Dan

No. 9 Guanggu Avenue

Mr. Frank Franciscus DORJEE

East Lake High-tech Development Zone

Wuhan, Hubei Province

Non-executive Directors:

PRC

Mr. MA Jie (Chairman)

Mr. YAO Jingming

Principal Place of Business in Hong Kong:

Mr. Philippe Claude VANHILLE

Level 54

Mr. Pier Francesco FACCHINI

Hopewell Centre

Mr. XIONG Xiangfeng

183 Queen's Road East

Ms. ZHENG Huili

Hong Kong

Independent Non-executive Directors:

Dr. NGAI Wai Fung

Dr. IP Sik On Simon

Mr. LI Ping

Dr. LI Zhuo

December 31, 2019

To the Shareholders

Dear Sir or Madam,

  1. PROPOSED NEW ANNUAL CAPS FOR THE OPTICAL FIBRE TECHNOLOGY COOPERATION AGREEMENT WITH DRAKA AND

RENEWAL OF THE CONTINUING CONNECTED TRANSACTIONS WITH

YOFC SHANGHAI

      1. PROPOSAL ON THE ESTIMATES OF THE 2020 TO 2022 ANNUAL TRANSACTION AMOUNTS FOR THE RELATED PARTY TRANSACTIONS TO BE CARRIED OUT IN THE ORDINARY AND USUAL COURSE OF BUSINESS
    2. PROPOSAL ON THE 2020 ANNUAL EXTERNAL GUARANTEE AMOUNT AND
    3. SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING
  2. INTRODUCTION
    References are made to the circular of the Company ("Original Circular") and the notice

of EGM ("Original Notice"), both dated December 2, 2019, which set out the time and venue of the EGM and contain the resolutions to be tabled before the EGM for approval by Shareholders. This supplemental circular should be read together with the Original Circular.

  • For identification purpose only

- 5 -

LETTER FROM THE BOARD

References are also made to (i) the announcement of the Company dated December 23,

2019 in relation to, inter alia, the proposed new annual caps for the Optical Fibre Technology Cooperation Agreement with Draka, and the continuing connected transactions between the Group on the one hand and YOFC Shanghai on the other; (ii) the overseas regulatory announcement of the Company dated December 23, 2019 in relation to the proposal on the estimates of the 2020 to 2022 annual transaction amounts for the related party transactions to be carried out in the ordinary and usual course of business; and (iii) the overseas regulatory announcement of the Company dated December 23, 2019 in relation to the proposal on the 2020 annual external guarantee amount.

The purpose of this supplemental circular is to provide you with, among other things, (i) details of the proposed annual caps for the continuing connected transactions between the Company and Draka under the Optical Fibre Technology Cooperation Agreement for the three years ending December 31, 2020, 2021 and 2022, the information of the sale and purchase transactions with YOFC Shanghai as respectively contemplated under the 2020-2022 YOFC Shanghai Sales Framework Agreement and the 2020-2022 YOFC Shanghai Purchase Framework Agreement and the respective proposed annual caps; (ii) details of the proposal on the estimates of the 2020 to 2022 annual transaction amounts for the related party transactions to be carried out in the ordinary and usual course of business; (iii) details of the proposal on the 2020 annual external guarantee amount; and (iv) the supplemental notice of EGM. Save as set out in this supplemental circular, no changes have been made to matters in relation to the EGM as set out in the Original Circular and the Original Notice.

  1. PROPOSED NEW ANNUAL CAPS FOR THE OPTICAL FIBRE TECHNOLOGY COOPERATION AGREEMENT WITH DRAKA AND RENEWAL OF THE CONTINUING CONNECTED TRANSACTIONS WITH YOFC SHANGHAI
  1. Background

1 The Optical Fibre Technology Cooperation Agreement

The existing annual caps for the transactions contemplated under the Optical Fibre Technology Cooperation Agreement will expire on December 31, 2019. As the Optical Fibre Technology Cooperation Agreement will not expire until July 22, 2024 and the Company will continue carrying out the transactions contemplated thereunder in the ordinary and usual course of business of the Group, the Board proposes to renew the annual caps for the three years ending December 31, 2020, 2021 and 2022.

- 6 -

LETTER FROM THE BOARD

2 Sale and Purchase Transactions with YOFC Shanghai

On November 11, 2016, the Company entered into the 2017-2019 YOFC Shanghai Sales Framework Agreement with YOFC Shanghai to regulate the sales transactions with YOFC Shanghai. On the same day, the Company also entered into the 2017-2019 YOFC Shanghai Purchase Framework Agreement with YOFC Shanghai to regulate the purchase transactions with YOFC Shanghai.

The 2017-2019 YOFC Shanghai Sales Framework Agreement and the 2017-2019 YOFC Shanghai Purchase Framework Agreement with YOFC Shanghai will expire on December 31, 2019. As the Group intends to continue carrying out the transactions contemplated under the 2017-2019 Framework Agreements in the ordinary and usual course of business of the Group, the Board announces that on December 20, 2019:

  1. the Company and YOFC Shanghai entered into the 2020-2022 YOFC Shanghai Sales Framework Agreement on the same terms as the 2017-2019 YOFC Shanghai Sales Framework Agreement for a term of three years commencing from January 1, 2020; and
  2. the Company and YOFC Shanghai entered into the 2020-2022 YOFC Shanghai Purchase Framework Agreement on the same terms as the 2017-2019 YOFC Shanghai Purchase Framework Agreement for a term of three years commencing from January 1, 2020,

to renew the 2017-2019 Framework Agreements upon the effective date of the 2020-2022 YOFC Shanghai Sales Framework Agreement and the 2020-2022 YOFC Shanghai Purchase Framework Agreement. The 2020-2022 Framework Agreements shall take retrospective effect from January 1, 2020 upon the passing of the relevant resolutions for approval of the 2020- 2022 Framework Agreements at the Extraordinary General Meeting. The sale and purchase transactions with YOFC Shanghai will be subject to the respective proposed annual caps for the three years ending December 31, 2020, 2021 and 2022.

  1. The Optical Fibre Technology Cooperation Agreement

1 Summary of the terms of the Optical Fibre Technology Cooperation Agreement

The Company entered into the Optical Fibre Technology Cooperation Agreement with Draka in relation to the joint development of optical fibre technology, the grant of a license over Draka's patents and the provision of technical services. The principal terms of the Optical Fibre Technology Cooperation Agreement are summarized below:

Date

October 13, 2008, and further revised on August 27,

2013 and May 30, 2014

- 7 -

LETTER FROM THE BOARD

Parties

The Company and Draka

Duration

The Optical Fibre Technology Cooperation

Agreement came into effect on June 1, 2008 and

shall expire on July 22, 2024 unless terminated

earlier by one party by written notice in the case of

breach of contract by the other party, provided that

in the case of any breach capable of being made

good, the agreement shall not be terminated unless

and until such breaching party has failed to ratify

the breach within sixty days after it has been served

with a written notice specifying the breach and

requiring it to ratify the breach.

Nature of Transactions

Joint development of optical fibre technology, the

grant of a license over Draka's patents and the provision of technical services.

Joint development of optical fibre technology

The Company and Draka agree to seek and conduct joint development project in the area of optical fibre technology. A joint development project shall become effective after a separate written agreement on a project plan shall be entered into between the parties to set out, among other things, the scope, goal, schedule and budget of the project and the nomination of project leaders for the purpose of such joint development project. Either party shall have the right of first refusal to acquire jointly developed inventions in the event of liquidation or termination of the other party.

License Grant

Draka has granted a non-exclusive and non- transferable license to the Company to use certain patent or patent applications owned by Draka to manufacture at the Company's production facility in Wuhan, the PRC and sell optical fibres and semi- finished products that are used for the manufacture of optical fibres in and outside China.

- 8 -

LETTER FROM THE BOARD

Provision of Technical Services

The Company and Draka have agreed to provide to each other the training, support, assistance to operate the optical fibre production equipment and assessment of possibilities for procurement of raw materials and components.

Pricing Basis

Joint development of optical fibre technology

Each party shall bear its own internal costs to

conduct the joint development project and shall

exclusively own the intellectual property rights of

the inventions made solely by its own inventors.

Both the Company and Draka have the right to use

the inventions solely developed by the other party

free of charge on a non-exclusive basis for the

production and sales of optical fibres and semi-

finished products that are used for the manufacture

of optical fibres. In case the inventions are not

independently developed by either party, the rights

shall be jointly owned by the Company and Draka

on a 50:50 basis.

License Grant

The Company has agreed to pay royalty fee to

Draka equivalent to 1.3% of the net selling price of

each optical fibre product manufactured under the

licensed patents that the Company sells or disposes

of. The Company is not required to pay any royalty

fees if products are sold to Draka or its affiliates. If

either party wishes to use any improvements,

upgrades, modifications made in the working

methods,

manufacturing

processes

and

manufacturing equipment that the other party

applies or uses in its mass production of optical

fibre products, then it may file a request with the

other party and, if the other party accepts such

request, additional royalties shall be payable as

agreed upon the parties.

Provision of Technical Services

The remuneration to be paid by each party for technical services shall be determined under a separate agreement.

- 9 -

LETTER FROM THE BOARD

2 The existing annual caps and historical amounts

The table below sets out the existing annual caps for the transactions contemplated under the Optical Fibre Technology Cooperation Agreement during the periods indicated below:

For the year

For the year ended

ending

December 31,

December 31,

2017

2018

2019

(RMB'000)

Existing annual caps

41,000

45,000

49,000

The table below sets out the total amount of royalty fees paid by the Company to Draka under the Optical Fibre Technology Cooperation Agreement during the periods indicated below:

Ten months

For the year ended

ended

December 31,

October 31,

2017

2018

2019

(RMB'000)

(audited)(unaudited)

Royalty fees

40,618

37,194

13,546

Notes:

  1. During the years ended December 31, 2017 and 2018 and the ten months ended October 31, 2019, no joint development project has been carried out and no fees have been incurred by the Company.
  2. During the years ended December 31, 2017 and 2018 and the ten months ended October 31, 2019, no technical services has been procured from Draka and no technical service fees have been paid by the Company.

3 Proposed new annual caps

The Company currently does not have any plan to conduct any joint development project with Draka or to source any technical services from Draka. The Board proposes that the below annual caps be set for the total amount of royalty fees payable to Draka under the Optical Fibre Technology Cooperation Agreement in respect of the years ending December 31, 2020, 2021 and 2022:

- 10 -

LETTER FROM THE BOARD

Proposed Annual Cap

(RMB'000)

For the year ending December 31,

2020 2021 2022

Royalty fees

25,000

25,000

25,000

In arriving at the above proposed new annual caps, the Company has taken into account the following:

  1. the historical amounts paid to Draka;
  2. the expected sales volume of optical fibre preforms and optical fibres manufactured with the licensed patents and patent applications from Draka based on the Group's existing production capacity; and
  3. the price of the optical fibre preforms and optical fibres in the next three years which is expected to be of a similar level as 2019.
  1. Sales Transactions with YOFC Shanghai
    1 Background

The Company sells raw materials, equipment and components to YOFC Shanghai, a subsidiary of the Company, on an ad hoc basis for meeting its temporary operational needs.

2 Summary of the terms of the 2020-2022 YOFC Shanghai Sales Framework Agreement

On November 11, 2016, the Company entered into the 2017-2019 YOFC Shanghai Sales Framework Agreement with YOFC Shanghai to regulate the sales transactions with YOFC Shanghai. The principal terms of the 2020-2022 YOFC Shanghai Sales Framework Agreement, which shall replace the 2017-2019 YOFC Shanghai Sales Framework Agreement with retrospective effect from January 1, 2020 upon the passing of the relevant resolution for approval of the 2020-2022 YOFC Shanghai Sales Framework Agreement at the Extraordinary General Meeting, are summarized below:

Date

December 20, 2019

Parties

The Company and YOFC Shanghai

- 11 -

LETTER FROM THE BOARD

Duration

The 2020-2022 YOFC Shanghai Sales Framework

Agreement shall take retrospective effect from

January 1, 2020 upon the passing of the relevant

resolution for approval of the 2020-2022 YOFC

Shanghai Sales Framework Agreement at the

Extraordinary General Meeting and is valid until

either (i) the expiry of a period of three years or (ii)

the date on which Draka ceases to be a connected

person of the Company, whichever comes earlier.

The parties to the agreement may negotiate to

extend the agreement for a further term of three

years within two months before the expiry of the

three-year term of the agreement unless the

agreement is terminated earlier due to Draka

ceasing to be a connected person of the Company.

Nature of Transactions

Sale of optical fibres and optical fibre cables, raw

materials, equipment and components in respect of

the 2020-2022 YOFC Shanghai Sales Framework

Agreement.

To implement the sales transactions contemplated under the 2020-2022 YOFC Shanghai Sales Framework Agreement, YOFC Shanghai will place specific purchase orders with the Group each time it sources from the Group optical fibres, optical fibre cables, raw materials, equipment and components. A purchase order typically contains terms on product specifications, quantity, payment date and method, delivery arrangements, liabilities and warranties. The marketing team of the Company will keep abreast of the pricing information made available to the public by the General Administration of Customs of the PRC from time to time. Such pricing information is usually updated on a monthly basis.

- 12 -

LETTER FROM THE BOARD

Pricing Basis

The pricing terms of each sales transaction shall be

consistent the following guidelines:

(i)

the prevailing tender price announced by the

local telecommunications operators at the

place where the relevant purchaser is located

(the "Local Tender Price"); or

(ii)

the latest average export (from China) price

made available to the public by the General

Administration of Customs of the PRC, at the

time of the relevant transaction (the

"Export Price"),

where neither Local Tender Price nor the Export Price is available, the pricing terms shall be consistent with the prevailing tender price announced by the state-owned telecommunications operators in the PRC (the "PRC Tender Price") and where none of the Local Tender Price, the Export Price or the PRC Tender Price is available or applicable, the price shall be determined on a fair and reasonable basis which is equivalent or comparable to those offered to or quoted by third parties independent of the Company for similar products.

3 Internal control measures

The Local Tender Price and the PRC Tender Price will be fixed when the overseas telecommunications operators or the state-owned telecommunications operators in the PRC, as the case may be, have completed their bidding process and announced the bidding results. The bidding results including the tender price will be made available to all the bidders participating in the bidding process including the Company. The bidding process will only be carried out by the overseas telecommunications operators when they have the business needs and therefore the Local Tender Price will not be announced on a frequent basis. Each of the state-owned telecommunications operators in the PRC will usually carry out their respective central bidding processes once in a year to determine the volume of optical fibres and optical fibre cables to be purchased from each domestic manufacturer in the PRC. The PRC Tender Price will be announced to industry participants after completion of the central bidding process conducted by the state-owned telecommunications operators in the PRC.

A predetermined price range will be set by the chief sales officer of the Company in the first quarter every year by reference to the Local Tender Price and the PRC Tender Price. The price range will also be updated from time to time to incorporate the latest Export Price.

- 13 -

LETTER FROM THE BOARD

For export sales, the actual contract price will be determined with reference to the higher of the Local Tender Price or the Export Price if both the Local Tender Price and the Export Price are available for the specific type of optical fibres or optical fibre cables being sold. Before accepting an export purchase order, the salesman responsible for such order shall make sure that the actual contract price falls within the predetermined price range set by the chief sales officer. Where the price of any order is below the minimum value of the predetermined price range, it shall be approved by the chief sales officer and the president of the Company before such order is accepted.

For domestic sales, since the Local Tender Price and the Export Price are not relevant, the price will be determined with reference to the PRC Tender Price. The PRC Tender Price announced by the state-owned telecommunications operators is usually considered as a benchmark for the prices of optical fibres and optical fibre cables to be sold by domestic manufacturers. Before accepting a domestic purchase order, the salesman responsible for such order shall make sure that the actual contract price is at least equal to or higher than the PRC Tender Price.

4 The existing annual caps and historical amounts

The table below sets out the existing annual caps for the sales transactions contemplated under the 2017-2019 YOFC Shanghai Sales Framework Agreement during the periods indicated below:

For the year

For the year ended

ending

December 31,

December 31,

2017

2018

2019

(RMB' 000)

Existing annual caps for the sales

transactions with YOFC Shanghai

408,000

448,000

494,000

The table below sets out the historical transaction amounts received by the Group from the sales transactions with YOFC Shanghai under the 2017-2019 YOFC Shanghai Sales Framework Agreement during the periods indicated below:

Ten months

For the year ended

ended

December 31,

October 31,

Seller

Purchaser

Goods

2017

2018

2019

(RMB' 000)

(audited)

(unaudited)

The Group

YOFC

Optical fibres,

Shanghai

optical fibre

cables, raw

materials,

equipment and

components

380,600

378,875

192,590

- 14 -

LETTER FROM THE BOARD

Note:

  1. The historical transaction amounts for the sales transactions between the Company and YOFC Shanghai did not exceed the existing annual caps for the years ended December 31, 2017 and 2018. Further details of the historical transactions amounts for the sales transactions with YOFC Shanghai are set out in the previous annual reports of the Company. As at October 31, 2019, the historical transaction amounts for the sales transactions between the Company and YOFC Shanghai have not exceeded the existing annual cap for the year ending December 31, 2019.

5 Proposed new annual caps

The Board proposes that the below proposed annual caps be set for the sales transactions with YOFC Shanghai in respect of the years ending December 31, 2020, 2021 and 2022:

Proposed Annual Cap

For the year ending December 31,

Seller

Purchaser

Goods

2020

2021

2022

(RMB' 000)

The Group

YOFC

Optical fibres,

Shanghai

optical fibre

cables, raw

materials,

equipment and

components

350,000

350,000

350,000

In arriving at the above proposed new annual caps, the Company has taken into account the following:

  1. the historical transaction amounts with YOFC Shanghai; and
  2. despite the slowing down of sales of optical fibre and optical fibre cables to YOFC Shanghai during 2019, optical fibre and cable are key infrastructures in telecom network, and the mass construction of 5G network is expected to bring another cycle for the optical fibre and cable industry. On June 6, 2019, the Ministry of Industry and Information Technology issued 5G licenses to four telecom operators. According to the information from GSA (Global Mobile Suppliers Association), in May 2019, 235 telecom operators in 93 countries invested in 5G, and the construction is expected to expand from trial network to scaled network. It is anticipated that the mass scale construction of 5G network may facilitate growth in demand in optical fibre and optical fibre cables.

Shareholders should note that the above monetary annual caps should not be construed as an assurance or forecast by the Company of the future revenues of the Group under the terms of the 2020-2022 YOFC Shanghai Sales Framework Agreement.

- 15 -

LETTER FROM THE BOARD

  1. Purchase Transactions with YOFC Shanghai
    1 Background

The Company purchases optical fibre, optical fibre cables and spare parts from YOFC Shanghai, a subsidiary of the Company, to meet any temporary operational needs.

2 Summary of the terms of the 2020-2022 YOFC Shanghai Purchase Framework Agreement

On November 11, 2016, the Company entered into the 2017-2019 YOFC Shanghai Purchase Framework Agreement with YOFC Shanghai to regulate the purchase transactions with YOFC Shanghai. The principal terms of the 2020-2022 YOFC Shanghai Purchase Framework Agreement, which shall replace the 2017-2019 YOFC Shanghai Purchase Framework Agreement with retrospective effect from January 1, 2020 upon the passing of the relevant resolution for approval of the 2020-2022 YOFC Shanghai Purchase Framework Agreement at the Extraordinary General Meeting, are summarized below:

Date

December 20, 2019

Parties

The Company and YOFC Shanghai

Duration

The 2020-2022 YOFC Shanghai Purchase Framework

Agreement shall take retrospective effect from January 1,

2020 upon the passing of the relevant resolution for

approval of the 2020-2022 YOFC Shanghai Purchase

Framework Agreement at the Extraordinary General

Meeting and is valid until either (i) the expiry of a period

of three years or (ii) the date on which Draka ceases to be

a connected person of the Company, whichever comes

earlier.

The parties to the agreement may negotiate to extend the

agreement for a further term of three years within two

months before the expiry of the three-year term of the

agreement unless the agreement is terminated earlier due

to Draka ceasing to be a connected person of the

Company.

- 16 -

LETTER FROM THE BOARD

Nature of Transactions

Purchases of optical fibres, optical fibre cables and spare

parts in respect of the 2020-2022 YOFC Shanghai

Purchase Framework Agreement.

To implement the purchase transactions contemplated

under the 2020-2022 YOFC Shanghai Purchase

Framework Agreement, the Group will place specific

purchase orders with YOFC Shanghai each time the

Group purchases optical fibres, optical fibre cables and

spare parts from YOFC Shanghai. A purchase order

typically contains terms on product specifications,

quantity, payment date and method, delivery

arrangements, liabilities and warranties. The marketing

team of the Company will keep abreast of the pricing

information made available to the public by the General

Administration of Customs of the PRC from time to time.

Such pricing information is usually updated on a monthly

basis.

Pricing Basis

The pricing terms of each purchase transaction shall be

consistent with the following guidelines:

(i) the latest average import (into China) price made

available to the public by the General

Administration of Customs of the PRC (中華人民共

和國海關總署) at the time of the relevant

transaction (the "Import Price"); or

(ii) the prevailing tender price announced by the state-

owned telecommunications operators in the PRC

(the "Purchase PRC Tender Price"),

where none of the above is available or applicable, the

price shall be determined on a fair and reasonable basis

which is equivalent or comparable to those offered to or

quoted by third parties independent of the Company for

similar products. The Group shall solicit at least two

other contemporaneous transactions with unrelated third

parties for products in similar quantities and quality to

determine if the price and terms offered by YOFC

Shanghai are fair and reasonable and comparable to those

offered by unrelated third parties.

- 17 -

LETTER FROM THE BOARD

3 Internal control measures

The Purchase PRC Tender Price will be fixed when the state-owned telecommunications operators in the PRC have completed their central bidding process and announced the bidding results. As the central bidding process will usually be carried out once a year, the Purchase PRC Tender Price will be announced to industry participants after completion of the central bidding process.

For import purchases, the price will be determined with reference to the Import Price. A predetermined price range will be set by the head of supply chain department of the Company at the beginning of each financial year with reference to the latest available Import Price and such range will be updated from time to time based on the latest information available from the General Administration of Customs of the PRC. Before placing a purchase order, the procurement staff responsible for such order shall make sure that the actual contract price shall fall within such predetermined price range. Where the price of any order is above the maximum value of the predetermined price range, it shall be approved by the head of supply chain department and the president of the Company before such order is placed.

For domestic purchases, the price will be determined with reference to the Purchase PRC Tender Price. The Purchase PRC Tender Price announced by the state-owned telecommunications operators is usually considered as a benchmark for the prices of optical fibres and optical fibre cables to be purchased from other domestic manufacturers. Before placing a domestic purchase order, the procurement staff responsible for such order shall make sure that actual contract price would not be higher than the Purchase PRC Tender Price.

4 The existing annual caps and historical amounts

The table below sets out the existing annual caps for the purchase transactions contemplated under the 2017-2019 YOFC Shanghai Purchase Framework Agreement during the periods indicated below:

For the year

For the year ended

ending

December 31,

December 31,

2017

2018

2019

(RMB' 000)

Existing annual caps for the purchase

transactions with YOFC Shanghai

830,000

910,000

1,000,000

- 18 -

LETTER FROM THE BOARD

The table below sets out the historical transaction amounts paid by the Company to YOFC

Shanghai during the periods indicated below:

Ten months

For the year ended

ended

December 31,

October 31,

Purchaser

Seller

Goods

2017

2018

2019

(RMB' 000)

(audited)

(unaudited)

The 2017-2019 YOFC Shanghai Purchase Framework Agreement

The Company

YOFC

Optical fibres,

Shanghai

optical fibre

cables and

spare parts

356,820

497,306

306,738

Note:

  1. The historical transaction amounts for the purchase transactions between the Company and YOFC Shanghai did not exceed the existing annual caps for the years ended December 31, 2017 and 2018. Further details of the historical transactions amounts for the purchase transactions with YOFC Shanghai are set out in the previous annual reports of the Company. As at October 31, 2019, the historical transaction amounts for the purchase transactions between the Company and YOFC Shanghai have not exceeded the existing annual cap for the year ending December 31, 2019.

5 Proposed new annual caps

The Board proposes that the below proposed annual caps be set for the purchase transactions with YOFC Shanghai in respect of the years ending December 31, 2020, 2021 and 2022.

Proposed Annual Cap

(RMB' 000)

For the year ending December 31,

Purchaser

Seller

Goods

2020

2021

2022

The Company

YOFC

Optical fibres,

Shanghai

optical fibre

cables and

spare parts

450,000

450,000

450,000

In arriving at the above proposed new annual caps, the Company has taken into account the following:

(i) the historical transaction amounts with YOFC Shanghai; and

- 19 -

LETTER FROM THE BOARD

    1. the projected increase in the purchase of optical fibre cables from YOFC Shanghai in line with the growth in demand for optical fibre cables resulting from the anticipated mass construction of 5G network.
  2. Reasons for and Benefits of the Continuing Connected Transactions
    The Optical Fibre Technology Cooperation Agreement

Optical fibres are made by first constructing a cylindrical high purity glass rod with a carefully controlled refractive index profile, known as an optical fibre preform. The optical fibre preform production process requires careful control over complex chemical processes with expensive equipment and many producers employing proprietary technologies in their production processes. Within the industry, OVD, VAD and PCVD are the three commonly used processes for the production of optical fibre preforms. The PCVD process is able to produce a wide variety of optical fibre performs for a wide variety of optical fibres, including technologically advanced optical fibres for wider and specialty applications. Draka owns core patents of the PCVD production process and since Draka Holding N.V. became the then holder of the equity interest of the Company in 1994, the Company has been furnished with the key technologies in connection with the PCVD production process. While the Company has been continuously developing its proprietary technologies, Draka continues to be one of the Company's sources of technology. The cooperation between the parties is imperative for the Company to continue to use Draka's patents and technology to manufacture its products, and is fair and reasonable and in the interest of the Company and the Shareholders as a whole.

Sale and purchase transactions with YOFC Shanghai

The Group is principally engaged in the manufacture and sales of optical fibre preforms, optical fibres and optical fibre cables. YOFC Shanghai is principally engaged in the production and sales of optical fibre cables. The Company has benefited from working with YOFC Shanghai, providing optical fibres, optical fibre cables, raw materials, equipment and components to YOFC Shanghai, and purchasing optical fibres, optical fibre cables and spare parts from YOFC Shanghai. The Group has established long-term relationship with YOFC Shanghai. Such relationship is fair and reasonable, beneficial for the stable operation and business expansion of the Company and in the interest of the Company and the Shareholders as a whole.

With regard to the continuing connected transactions contemplated under the Optical Fibre Technology Cooperation Agreement, the Directors (including the independent non-executive Directors but excluding Mr. Philippe Claude Vanhille and Mr. Pier Francesco Facchini who have abstained from voting) are of the view that the proposed annual caps for the continuing connected transactions contemplated under the Optical Fibre Technology Cooperation Agreement for the three years ending December 31, 2020, 2021 and 2022 are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

- 20 -

LETTER FROM THE BOARD

With regard to the continuing connected transactions contemplated under the

2020-2022 Framework Agreements, the Directors (including the independent non- executive Directors but excluding Mr. Zhuang Dan, Mr. Philippe Claude Vanhille and Mr. Pier Francesco Facchini who have abstained from voting) are of the view that the 2020-2022 Framework Agreements, which have been and will be entered into in the ordinary and usual course of business of the Group, are on normal commercial terms, and the terms of the 2020-2022 Framework Agreements as well as the proposed annual caps for the continuing connected transactions contemplated thereunder for the three years ending December 31, 2020, 2021 and 2022 are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The Board has passed resolutions to approve, among others, the proposed annual caps for the continuing connected transactions between the Company and Draka under the Optical Fibre Technology Cooperation Agreement for the three years ending December 31, 2020, 2021 and 2022, and the continuing connected transactions with YOFC Shanghai under the 2020-2022 Framework Agreements and the respective proposed annual caps on December 20, 2019. None of the Directors has any material interest in the aforementioned continuing connected transactions or the respective proposed annual caps or is required to abstain from voting on the Board resolution in relation to the aforementioned continuing connected transactions and the respective proposed annual caps, except for Mr. Zhuang Dan (in case of the continuing connected transactions contemplated under the 2020-2022 Framework Agreements and the respective proposed annual caps only), Mr. Philippe Claude Vanhille and Mr. Pier Francesco Facchini. Mr. Zhuang Dan is the chairman and a director of YOFC Shanghai. Mr. Philippe Claude Vanhille has been serving as the executive vice-president of telecom business of the Prysmian Group and is primarily responsible for its global telecom business; he is also an executive director of Draka and holds several positions in certain subsidiaries of Prysmian S.p.A. and a joint venture owned as to 50% by the Prysmian Group. Mr. Pier Francesco Facchini is currently an executive director and the chief financial officer of Prysmian S.p.A. and is also responsible for its IT activities; he also holds a number of positions in the subsidiaries of Prysmian S.p.A.. Accordingly, Mr. Philippe Claude Vanhille and Mr. Pier Francesco Facchini have abstained from voting on the resolutions in respect of the proposed annual caps for the continuing connected transactions between the Company and Draka under the Optical Fibre Technology Cooperation Agreement for the three years ending December 31, 2020, 2021 and 2022, and continuing connected transactions with YOFC Shanghai under the 2020-2022 Framework Agreements and the respective proposed annual caps. Mr. Zhuang Dan has abstained from voting on the resolutions in respect of the continuing connected transactions contemplated under the 2020-2022 Framework Agreements and the respective proposed annual caps.

- 21 -

LETTER FROM THE BOARD

  1. Information on the Company, Draka and YOFC Shanghai

The Company is principally engaged in the manufacture and sales of optical fibre preforms, optical fibres and optical fibre cables with various standard specifications that are widely used in the telecommunications industry and the provision of other related products and services.

Draka is an indirect wholly-owned subsidiary of Prysmian S.p.A., which, together with its group companies, is a world leader in the energy and telecom cables and systems industry. As at the Latest Practicable Date, Draka holds approximately 23.73% of the total issued share capital of the Company.

YOFC Shanghai is principally engaged in the production and sales of optical fibre cables. As at the Latest Practicable Date, YOFC Shanghai is owned as to 75% by the Company and 25% by Draka.

  1. Listing Rules Implications

The Optical Fibre Technology Cooperation Agreement

As at the Latest Practicable Date, Draka holds approximately 23.73% of the total issued share capital of the Company and is therefore a substantial shareholder of the Company. Accordingly, the transactions with Draka under the Optical Fibre Technology Cooperation Agreement constitute continuing connected transactions of the Company under the Listing Rules.

Since the highest relevant percentage ratio under the Listing Rules in respect of the transactions with Draka under the Optical Fibre Technology Cooperation Agreement is expected to be more than 0.1% but less than 5.0% on an annual basis, the transactions will be exempt from the circular (including independent financial advice) and independent shareholders' approval requirements but will be subject to the annual reporting and announcement requirements under Chapter 14A of the Listing Rules.

Sale and purchase transactions with YOFC Shanghai

As at the Latest Practicable Date, Draka holds approximately 23.73% of the total issued share capital of the Company and is therefore a substantial shareholder of the Company. YOFC Shanghai is a non-wholly owned subsidiary of the Company, which is owned as to 75% by the Company and 25% by Draka, and is therefore a connected person of the Company pursuant to Rule 14A.16(1) of the Listing Rules. Accordingly, the transactions between the Group on the one hand and YOFC Shanghai on the other constitute continuing connected transactions of the Company under the Listing Rules.

- 22 -

LETTER FROM THE BOARD

Since the highest relevant percentage ratio under the Listing Rules in respect of (1) the sales transactions with YOFC Shanghai as contemplated under the 2020-2022 YOFC Shanghai Sales Framework Agreement and (2) the purchase transactions with YOFC Shanghai as contemplated under the 2020-2022 YOFC Shanghai Purchase Framework Agreement in each case is expected to be more than 0.1% but less than 5.0% on an annual basis, the sales transactions as contemplated under the 2020-2022 YOFC Shanghai Sales Framework Agreement and the purchase transactions as contemplated under the 2020- 2022 YOFC Shanghai Purchase Framework Agreement are respectively exempt from the circular (including independent financial advice) and independent shareholders' approval requirements but will be subject to the annual reporting and announcement requirements under Chapter 14A of the Listing Rules.

As the A Shares of the Company are listed on the Shanghai Stock Exchange, the Company will continue to be subject to and regulated by the Shanghai Listing Rules and other applicable laws and regulations in the PRC insofar as its A Shares remain listed. The requirements of the Listing Rules in relation to connected transactions are different from those of the Shanghai Listing Rules.

Although the proposed annual caps for the continuing connected transactions between the Company and Draka under the Optical Fibre Technology Cooperation Agreement for the three years ending December 31, 2020, 2021 and 2022, and the sale and purchase transactions with YOFC Shanghai as respectively contemplated under the 2020-2022 YOFC Shanghai Sales Framework Agreement and the 2020-2022 YOFC Shanghai Purchase Framework Agreement and the proposed annual caps are exempt from the independent shareholders' approval requirement under the Listing Rules, such transactions shall be subject to the approval by the Shareholders at the general meeting pursuant to the Shanghai Listing Rules. The Company will seek approval for the proposed annual caps for the continuing connected transactions between the Company and Draka under the Optical Fibre Technology Cooperation Agreement for the three years ending December 31, 2020, 2021 and 2022, and the sale and purchase transactions with YOFC Shanghai as respectively contemplated under the 2020-2022 YOFC Shanghai Sales Framework Agreement and the 2020-2022 YOFC Shanghai Purchase Framework Agreement and the proposed annual caps applicable thereto from the Shareholders at the Extraordinary General Meeting.

  1. PROPOSAL ON THE ESTIMATES OF THE 2020 TO 2022 ANNUAL TRANSACTION AMOUNTS FOR THE RELATED PARTY TRANSACTIONS TO BE CARRIED OUT IN THE ORDINARY AND USUAL COURSE OF BUSINESS

Pursuant to the Company Law of the People's Republic of China, the Accounting Standards for Business Enterprises and other applicable PRC laws and regulations, the Company has prepared an estimate on the 2020 to 2022 annual transaction amounts for the related party transactions to be carried out in the ordinary and usual course of business. The transactions listed in the estimates did not and will not constitute notifiable transactions or connected transactions of the Company under Chapter 14 and Chapter 14A of the Listing Rules.

- 23 -

LETTER FROM THE BOARD

Details of the estimates of the 2020 to 2022 annual transaction amounts for the related party transactions to be carried out in the ordinary and usual course of business are set out in Appendix I to this supplemental circular.

It is proposed that the Board or such persons as authorized by the Board, be authorized by the general meeting to enter into specific business agreements with the related parties from time to time during the years 2020 to 2022 within the estimated limits on the transaction amounts, for each transaction contemplated under this proposal in the ordinary and usual course of business.

In accordance with the applicable PRC laws and regulations and the Articles of Association, Mr. Zhuang Dan, as a Director, has abstained from voting on the relevant Board resolutions by virtue of his positions held in the counterparties to the transactions. This proposal has been approved by the Board, and shall be submitted to the EGM for consideration and approval by way of an ordinary resolution pursuant to Article 64(6) of the Articles of Association.

IV. PROPOSAL ON THE 2020 ANNUAL EXTERNAL GUARANTEE AMOUNT

To satisfy the daily operational needs of each subsidiary of the Group, the Company proposed that during year 2020, the Company would provide its subsidiaries and those subsidiaries would provide among each other guarantees not exceeding the amount of USD145 million, RMB108.5 million, ZAR15 million and MXN5 million (Mexican Peso), equivalent to approximately RMB1.13 billion. In addition, it is proposed that the Board or such person as authorized by the Board, be authorized to handle the specific matters in relation to the external guarantee, including adjusting specific guarantee amount and signing relevant legal documents in accordance with actual business needs within the limit of the 2020 annual external guarantee amount contemplated under this proposal.

Details of the 2020 annual external guarantee amount are set out in Appendix II to this supplemental circular.

This proposal has been approved by the Board, and shall be submitted to the EGM for consideration and approval by way of an ordinary resolution pursuant to Article 65 the Articles of Association.

  1. EGM

A supplemental notice of the EGM to be held as originally scheduled and convened at Multi-Media Meeting Room, 201# Building, No. 9 Guanggu Avenue, East Lake High-tech Development Zone, Wuhan, Hubei Province, PRC on Friday, January 17, 2020 at 1:30 p.m. is set out on pages 43 to 45 of this supplemental circular.

A supplemental proxy form (the "Supplemental Proxy Form") in respect of the ordinary resolutions to consider and approve (i) the proposed annual caps for the continuing connected transactions between the Company and Draka under the Optical Fibre Technology Cooperation

- 24 -

LETTER FROM THE BOARD

Agreement for the three years ending December 31, 2020, 2021 and 2022, and the continuing connected transactions with YOFC Shanghai under the 2020-2022 Framework Agreements and the respective proposed annual caps; (ii) the proposal on the estimates of the 2020 to 2022 annual transaction amounts for the related party transactions to be carried out in the ordinary and usual course of business; and (iii) the proposal on the 2020 annual external guarantee amount, is enclosed with this supplemental circular. If you intend to appoint a proxy to attend the EGM, you are required to complete and return the accompanying supplemental proxy form in accordance with the instructions printed thereon. To be valid, the supplemental proxy form together with the power of attorney or other authorization document (if any) should be returned by holder of H Shares to the Company's H share registrar, Tricor Investor Services Limited, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong, by hand or by post not less than 24 hours before the time appointed for holding the EGM or any adjourned meeting thereof. Completion and return of the supplemental proxy form will not preclude you from attending and voting in person at the EGM or at any adjourned meeting should you so wish, but in such event the instrument appointing a proxy shall be deemed to be revoked.

The proxy form issued by the Company along with the circular of the Company dated December 2, 2019 (the "Original Proxy Form") will remain valid and effective to the fullest extent applicable if correctly completed and lodged with the H Share registrar of the Company. Shareholders entitled to attend and vote at the EGM may appoint one or more proxies to attend and vote in their stead. For the avoidance of doubt, should the proxies being appointed to attend the EGM under each of the Original Proxy Form and the Supplemental Proxy Form are different and more than one of the proxies attended the EGM, only the proxy validly appointed under the Original Proxy Form shall be designated to vote at the EGM.

Please refer to the Original Notice for details in respect of other resolutions to be passed at the EGM, eligibility for attending the EGM, proxy, registration procedures, closure of register of members and other relevant matters.

VI. VOTING BY WAY OF POLL

Pursuant to Rule 13.39(4) of the Listing Rules, all votes at the EGM will be taken by poll and the Company will announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules.

In accordance with the Listing Rules, Draka and its associates will abstain from voting at the EGM on the ordinary resolutions to approve the sale and purchase transactions with YOFC Shanghai as respectively contemplated under the 2020-2022 YOFC Shanghai Sales Framework Agreement and the 2020-2022 YOFC Shanghai Purchase Framework Agreement and the respective proposed annual caps, and the proposed annual caps for the continuing connected transactions between the Company and Draka under the Optical Fibre Technology Cooperation Agreement for the three years ending December 31, 2020, 2021 and 2022.

- 25 -

LETTER FROM THE BOARD

VII. FURTHER INFORMATION

Further information in respect of the proposal on the estimates of the 2020 to 2022 annual transaction amounts for the related party transactions to be carried out in the ordinary and usual course of business and the proposal on the 2020 annual external guarantee amount is also set out on pages 27 to 42 of this supplemental circular for your attention.

Yours faithfully

For and on behalf of the Board

Yangtze Optical Fibre and Cable Joint Stock Limited Company*

長飛光纖光纜股份有限公司

Ma Jie

Chairman

  • For identification purpose only

- 26 -

APPENDIX I

THE ESTIMATES OF THE 2020 TO 2022 ANNUAL TRANSACTION

AMOUNTS FOR THE RELATED PARTY TRANSACTIONS TO BE

CARRIED OUT IN THE ORDINARY AND USUAL COURSE OF BUSINESS

Shareholders should be aware that the English text of this Appendix is only a translation of the Chinese version and for reference purpose only. The Chinese version shall prevail in the case of discrepancies and/or inconsistencies between the two versions.

Pursuant to the Company Law of the People's Republic of China, the Accounting Standards for Business Enterprises and other applicable PRC laws and regulations, the Company has prepared an estimate on the 2020 to 2022 annual transaction amounts for the related party transactions during the ordinary and usual course of business, with details set out as follows:

  1. TRANSACTION TYPE AND AMOUNTS FOR THE ESTIMATES

Related party

Yangtze Zhongli Optical

Fibre and Cable (Jiangsu)

Co., Ltd.

(江蘇長飛中利光纖光纜 有限公司)

Sichuan Lefei

Optoelectric Technology

Company Limited

(四川樂飛光電科技有限 公司)

Shantou Hi-Tech Zone

Ao Xing Optical

Communication

Equipment Co., Ltd.

(汕頭高新區奧星光通信 設備有限公司)

Yangtze (Wuhan) Optical System Corp.

(長飛(武漢)光系統股份有 限公司)

Estimated

Estimated

Estimated

Transaction

Transaction

Transaction

Amount

Amount

Amount

Type of Transaction

Currency

for 2020

for 2021

for 2022

Purchase of goods

RMB

370,000,000

370,000,000

370,000,000

Sale of products/

RMB

300,000,000

300,000,000

300,000,000

Rendering of

services

Purchase of goods

RMB

800,000,000

800,000,000

800,000,000

Sale of products/

RMB

470,000,000

470,000,000

470,000,000

Rendering of

services

Purchase of goods

RMB

350,000,000

350,000,000

350,000,000

Sale of products/

RMB

300,000,000

300,000,000

300,000,000

Rendering of

services

Purchase of goods

RMB

10,000,000

10,000,000

10,000,000

Sale of products/

RMB

70,000,000

70,000,000

70,000,000

Rendering of

services

- 27 -

APPENDIX I

THE ESTIMATES OF THE 2020 TO 2022 ANNUAL TRANSACTION

AMOUNTS FOR THE RELATED PARTY TRANSACTIONS TO BE

CARRIED OUT IN THE ORDINARY AND USUAL COURSE OF BUSINESS

Estimated

Estimated

Estimated

Transaction

Transaction

Transaction

Amount

Amount

Amount

Related party

Type of Transaction

Currency

for 2020

for 2021

for 2022

Shin-Etsu YOFC (Hubei)

Purchase of goods

RMB

700,000,000

700,000,000

700,000,000

Optical Preform Co., Ltd.

(長飛信越(湖北)光棒有限

Sale of

RMB

150,000,000

150,000,000

150,000,000

公司)

products/Rendering

of services

Shenzhen SDGI Optical

Purchase of goods

RMB

80,000,000

80,000,000

80,000,000

Fibre Co., Ltd.

(深圳特發信息光纖有限

Sale of

RMB

300,000,000

300,000,000

300,000,000

公司)

products/Rendering

of services

Wuhan Guangyuan

Purchase of goods

RMB

30,000,000

30,000,000

30,000,000

Electronic Technology

Co., Ltd.

(武漢光源電子科技有限

公司)

Wuhan Yunjingfei Optical

Purchase of goods

RMB

50,000,000

50,000,000

50,000,000

Fibre Materials Co., Ltd.

(武漢雲晶飛光纖材料有

限公司)

AVIC Baosheng Ocean

Purchase of goods

RMB

50,000,000

50,000,000

50,000,000

Engineering Cable

Company

(中航寶勝海洋工程電纜 有限公司)

- 28 -

APPENDIX I

THE ESTIMATES OF THE 2020 TO 2022 ANNUAL TRANSACTION

AMOUNTS FOR THE RELATED PARTY TRANSACTIONS TO BE

CARRIED OUT IN THE ORDINARY AND USUAL COURSE OF BUSINESS

  1. BASIC INFORMATION ON THE COUNTERPARTY TO THE TRANSACTIONS

1. Yangtze Zhongli Optical Fibre and Cable (Jiangsu) Co., Ltd. (江蘇長飛中利光纖光纜 有限公司)

Nature of Corporation

limited liability company

Date of Establishment

March 6, 2002

Registered Capital

RMB92,880,000

Address

Changkun Industrial Park, Changshu, Jiangsu Province

Legal Representative

Wang Baixing (王柏興)

Scope of Business

Manufacture and sale of optical fibres and optical fibre

cables and its associated series of products, active

optical devices and passive optical devices,

telecommunications

terminal

devices

and

telecommunications equipment. Sale of optical fibre

cable protective materials and other optical fibre cable

raw materials. Export business for its self-produced

products and technologies, and import business of

mechanical equipment, accessories, raw materials and

technologies required by the Company, except for goods

and technologies restricted by or prohibited to be

imported or exported by the PRC State; engineering

works for the connection and installation of

telecommunications energy cables and optical fibre

cables. (For projects subject to approval pursuant to

PRC laws, approval must be obtained from relevant

regulators prior to the commencement of any business

activities.)

Related Party Relationship

Director and senior managers of the Company serve as

its directors. According to the relevant provisions of

Rule 10.1.3 (3) of the Shanghai Listing Rules, Yangtze

Zhongli Optical Fibre and Cable

(Jiangsu) Co.,

Ltd.

(江蘇長飛中利光纖光纜有限公司) is a related party of

the Company

Key Financial Information

As of December 31, 2018, Yangtze Zhongli Optical

for 2018

Fibre and Cable (Jiangsu) Co., Ltd. had total assets of

approximately RMB817,355,800, net assets of

approximately RMB319,479,800, operating income for

2018 of approximately

RMB1,057,135,100, and

net

profit of approximately RMB46,754,100. (The above information has been audited)

- 29 -

APPENDIX I

THE ESTIMATES OF THE 2020 TO 2022 ANNUAL TRANSACTION

AMOUNTS FOR THE RELATED PARTY TRANSACTIONS TO BE

CARRIED OUT IN THE ORDINARY AND USUAL COURSE OF BUSINESS

2. Sichuan Lefei Optoelectric Technology Company Limited (四川樂飛光電科技有限公 司)

Nature of Corporation

limited liability company

Date of Establishment

May 17, 1993

Registered Capital

RMB108,000,000

Address

Jiulizhen, Emeishan, Sichuan

Legal Representative

Yan Changku (閆長鵾)

Scope of Business

Manufacture and sale of various types of optical fibres

(including optical fibre preforms), optical fibre cables

and other telecommunications cables, optical

equipments, telecommunications testing equipment, and

the import and export of the aforementioned products

(excluding prohibited projects by the PRC State).

Development and provision of services for internet

connection devices and software; design, construction

and provision of ancillary manufacturing services for

CATV optical fibre networks. (For projects subject to

approval pursuant to PRC laws, approval must be

obtained from relevant regulators prior to the

commencement of any business activities.)

Related Party Relationship

Senior managers of the Company serve as its directors.

According to the relevant provisions of Rule 10.1.3 (3)

of the Shanghai Listing Rules, Sichuan Lefei

Optoelectric Technology Company Limited (四川樂飛

光電科技有限公司) is a related party of the Company

Key Financial Information

As of December 31, 2018, Sichuan Lefei Optoelectric

for 2018

Technology Company Limited had total assets of

approximately RMB356,951,500, net assets of

approximately RMB157,841,200, operating income for

2018 of approximately RMB1,000,674,500, and net

profit of approximately RMB25,535,800. (The above

information has been audited)

- 30 -

APPENDIX I

THE ESTIMATES OF THE 2020 TO 2022 ANNUAL TRANSACTION

AMOUNTS FOR THE RELATED PARTY TRANSACTIONS TO BE

CARRIED OUT IN THE ORDINARY AND USUAL COURSE OF BUSINESS

3. Shantou Hi-TechZone Ao Xing Optical Communication Equipment Co., Ltd. (汕頭 高新區奧星光通信設備有限公司)

Nature of Corporation

limited liability company

Date of Establishment

November 6, 1992

Registered Capital

RMB170,558,817

Address

No. 15 Keji East Road, High-tech Zone, Shantou

Legal Representative

Gao Jingtao (高靜濤)

Scope of Business

Research, development, manufacture and sales of

optical fibre preforms, optical fibres, optical fibre

cables, telecommunication cables, specialty cables and

devices, accessories, components and materials;

manufacture

of

specialized

equipment

and

telecommunication products; provision of engineering

and technical services of such products. (For projects

subject to approval pursuant to PRC laws, approval

must be obtained from relevant regulators prior to the

commencement of any business activities.)

Related Party Relationship

Director of the Company serves as its director.

According to the relevant provisions of Rule 10.1.3 (3)

of the Shanghai Listing Rules, Shantou Hi-Tech Zone

Ao Xing Optical Communication Equipment Co., Ltd.

(汕頭高新區奧星光通信設備有限公司) is a related party

of the Company

Key Financial Information

As of December 31, 2018, Shantou Hi-Tech Zone Ao

for 2018

Xing Optical Communication Equipment Co., Ltd. had

total assets of approximately RMB487,106,700, net

assets of approximately RMB262,933,400, operating

income for 2018 of approximately RMB695,918,800,

and net profit of approximately RMB25,754,400. (The

above information has been audited)

4. Yangtze (Wuhan) Optical System Corp. (長飛(武漢)光系統股份有限公司)

Nature of Corporation

limited liability company

Date of Establishment

July 29, 2004

Registered Capital

RMB47,500,000

- 31 -

APPENDIX I

THE ESTIMATES OF THE 2020 TO 2022 ANNUAL TRANSACTION

AMOUNTS FOR THE RELATED PARTY TRANSACTIONS TO BE

CARRIED OUT IN THE ORDINARY AND USUAL COURSE OF BUSINESS

Address

No. 4 Guanshan 2nd Road, Hongshan District, Wuhan

Legal Representative

Zhou Lijing (周理晶)

Scope of Business

Research and development, manufacture, processing,

sales and provision of technology services for specialty

optical fibres, optical devices, optical sensing and a

series of other optical system products; research and

development, provision of technology service and

technology consultation of system integration, computer

software and hardware products; telecommunications

engineering design, installment and maintenance; as

proprietor or as agent in the business of importing and

exporting of various goods and technologies (except for

goods and technologies restricted by or prohibited to be

imported or exported by the PRC State). (For the

purposes of the abovementioned scope of business,

projects subject to specific requirements by the PRC

State can be carried out when approved or pursuant to a

permit, during the assessed period)

Related Party Relationship

Senior manager of the Company serves as its director.

According to the relevant provisions of Rule 10.1.3 (3)

of the Shanghai Listing Rules, Yangtze (Wuhan) Optical

System Corp. (長飛(武漢)光系統股份有限公司) is a

related party of the Company

Key Financial Information

As of December 31, 2018, Yangtze (Wuhan) Optical

for 2018

System Corp. had total assets of

approximately

RMB94,084,700, net assets of

approximately

RMB67,203,200, operating income for 2018 of approximately RMB44,561,300, and net profit of approximately RMB4,164,300. (The above information has been audited)

5. Shin-Etsu YOFC (Hubei) Optical Preform Co., Ltd. (長飛信越(湖北)光棒有限公司)

Nature of Corporation

limited liability company

Date of Establishment

August 18, 2015

Registered Capital

JPY8,000,000,000

Address

Te No. 1 Changfei Avenue, Jianghan Yanhua Industrial

Park, Qianjiang

Legal Representative

Zhuang Dan (莊丹)

- 32 -

APPENDIX I

THE ESTIMATES OF THE 2020 TO 2022 ANNUAL TRANSACTION

AMOUNTS FOR THE RELATED PARTY TRANSACTIONS TO BE

CARRIED OUT IN THE ORDINARY AND USUAL COURSE OF BUSINESS

Scope of Business

Manufacture and sale of optical fibre preforms for

optical fibres, production and sale of hydrochloric acid

and silicon tetrachloride; production and sale of

industrial products (excluding hazardous chemicals).

(Involves licensed project, prior permission from the

relevant departments must be obtained before operating)

Related Party Relationship

Director and supervisor of the Company serve as its

directors. According to the relevant provisions of Rule

10.1.3 (3) of the Shanghai Listing Rules, Shin-Etsu

YOFC (Hubei) Optical Preform Co., Ltd. (長飛信越(湖

北)光棒有限公司) is a related party of the Company

Key Financial Information

As of December 31, 2018, Shin-Etsu YOFC (Hubei)

for 2018

Optical Preform Co., Ltd. had total assets of

approximately RMB890,537,200, net assets of

approximately RMB624,080,600, operating income for

2018 of approximately RMB436,659,300, and net profit

of approximately RMB87,441,500. (The above

information has been audited)

6. Shenzhen SDGI Optical Fibre Co., Ltd. (深圳特發信息光纖有限公司)

Nature of Corporation

limited liability company

Date of Establishment

August 30, 2000

Registered Capital

RMB386,518,320

Address

No. 20 Technology North 1st Road, Nanshan Xili

Residential District, Shenzhen

Legal Representative

Peng Zuhua (彭祖華)

Scope of Business

Technology development, technology consultation and

sales of optical fibres, telecommunication products and

mechanical equipment; domestic sales, export and

import business. Manufacture of optical fibres and

mechanical equipment

Related Party Relationship

Supervisor and senior managers of the Company serve

as its directors. According to the relevant provisions of

Rule 10.1.3 (3) of the Shanghai Listing Rules, Shenzhen

SDGI Optical Fibre Co., Ltd. (深圳特發信息光纖有限公

司) is a related party of the Company

- 33 -

APPENDIX I

THE ESTIMATES OF THE 2020 TO 2022 ANNUAL TRANSACTION

AMOUNTS FOR THE RELATED PARTY TRANSACTIONS TO BE

CARRIED OUT IN THE ORDINARY AND USUAL COURSE OF BUSINESS

Key Financial Information

As of

December

31,

2018,

Shenzhen

SDGI

Optical

for 2018

Fibre

Co., Ltd.

had

total

assets of

approximately

RMB710,537,000, net assets of approximately

RMB490,230,800, operating income for 2018 of

approximately RMB462,835,100, and net profit of

approximately

RMB36,589,200.

(The

above

information has been audited)

7. Wuhan Guangyuan Electronic Technology Co., Ltd. (武漢光源電子科技有限公司)

Nature of Corporation

limited liability company

Date of Establishment

November 4, 2002

Registered Capital

RMB5,000,000

Address

Wuzhigou West, Gexin Avenue South, Dongxihu

District (No. 15 Wunan Road, Wujiashan)

Legal Representative

Li Xizhe (李希哲)

Scope of Business

Research and development, development and sales of

plastic products, precision moulds, electronic products,

telecommunications equipment, photoelectric devices,

optical fibres and optical fibre cables technology; as

proprietor or as agent in the business of importing and

exporting of various goods and technologies (except for

goods and technologies restricted by or prohibited to be

imported or exported by the PRC State). (For projects

subject to approval pursuant to PRC laws, approval

must be obtained from relevant regulators prior to the

commencement of any business activities.)

Related Party Relationship

Senior manager of the Company serves as its director.

According to the relevant provisions of Rule 10.1.3 (3)

of the Shanghai Listing Rules, Wuhan Guangyuan

Electronic Technology Co., Ltd. (武漢光源電子科技有

限公司) is a related party of the Company

Key Financial Information

As of December 31, 2018, Wuhan Guangyuan

for 2018

Electronic Technology Co., Ltd. had total assets of

approximately RMB19,929,200, net assets of

approximately RMB9,502,300, operating income for

2018 of approximately RMB30,716,800, and net loss of

approximately RMB295,100. (The above information

has not been audited)

- 34 -

APPENDIX I

THE ESTIMATES OF THE 2020 TO 2022 ANNUAL TRANSACTION

AMOUNTS FOR THE RELATED PARTY TRANSACTIONS TO BE

CARRIED OUT IN THE ORDINARY AND USUAL COURSE OF BUSINESS

8. Wuhan Yunjingfei Optical Fibre Materials Co., Ltd. (武漢雲晶飛光纖材料有限公司)

Nature of Corporation

limited liability company

Date of Establishment

April 26, 2011

Registered Capital

RMB45,000,000

Address

No. 9 Guanggu Avenue, Donghu Development Zone,

Wuhan

Legal Representative

Bao Wendong (包文東)

Scope of Business

Development, manufacture and sale of high-purity

germanium

tetrachloride,

high-purity

silicon

tetrachloride and associated series of products used for

optical fibres; import and export of goods, import and

export of technology, as agent in importing and

exporting (except for goods and technologies prohibited

to be imported or exported by the PRC State). (For the

purposes of the abovementioned scope of business,

projects subject to specific requirements by the PRC

State can be carried out when approved or pursuant to a

permit, during the assessed period.)

Related Party Relationship

Senior manager of the Company serves as its director.

According to the relevant provisions of Rule 10.1.3 (3)

of the Shanghai Listing Rules, Wuhan Yunjingfei

Optical Fibre Materials Co., Ltd. (武漢雲晶飛光纖材料

有限公司) is a related party of the Company

Key Financial Information

As of December 31, 2018, Wuhan Yunjingfei Optical

for 2018

Fibre Materials Co., Ltd. had total assets of

approximately RMB86,133,400, net assets of

approximately RMB62,221,700, operating income for

2018 of approximately RMB71,716,600, and net profit

of approximately RMB3,198,300. (The

above

information has been audited)

9. AVIC Baosheng Ocean Engineering Cable Company (中航寶勝海洋工程電纜有限公 司)

Nature of Corporation

limited liability company

Date of Establishment

August 26, 2015

Registered Capital

RMB1,000,000,000

- 35 -

APPENDIX I

THE ESTIMATES OF THE 2020 TO 2022 ANNUAL TRANSACTION

AMOUNTS FOR THE RELATED PARTY TRANSACTIONS TO BE

CARRIED OUT IN THE ORDINARY AND USUAL COURSE OF BUSINESS

Address

No. 1 Shiqiao south road, Yangzhou

Legal Representative

Chen Dayong (陳大勇)

Scope of Business

Design, research and development, manufacture and

sales of submarine cables, submarine optical cables,

optoelectronic composite cables, submarine special

cables, DC cables, high-voltage cables, ultra-high-

voltage cables, umbilical cables, towing cables, OPGW

and other electrical cables and accessories, soft

connectors and other marine projects products;

providing terminal facilities management services for

ships; providing general cargo handling, storage, and

transportation services in ports; supply chain

management services; overall logistics solution

planning and consulting; freight forwarding services;

water and land transportation services; logistics

information consulting; import and export of self-

management and distribution of products and

technologies (except for management of products and

technologies that are restricted to the state's enterprises

or import or export of products and technologies that are

restricted).

Related Party Relationship

Senior managers of the Company serve as its directors.

According to the relevant provisions of Rule 10.1.3 (3)

of the Shanghai Listing Rules, AVIC Baosheng Ocean

Engineering Cable Company (中航寶勝海洋工程電纜有

限公司) is a related party of the Company

Key Financial Information

As of December 31, 2018, AVIC Baosheng Ocean

for 2018

Engineering Cable Company had total assets of

approximately RMB1,178,739,400, net assets of

approximately RMB1,000,067,400, operating income

for 2018 of nil, and net profit of approximately RMB700. (The above information has been audited)

- 36 -

APPENDIX II THE 2020 ANNUAL EXTERNAL GUARANTEE AMOUNT

To satisfy the daily operational needs of each subsidiary of the Group, the Company proposed that during year 2020, the Company would provide its subsidiaries and those subsidiaries would provide among each other guarantees not exceeding the amount of USD145 million, RMB108.5 million, ZAR15 million and MXN5 million (Mexican Peso), equivalent to approximately RMB1.13 billion. Details of the 2020 annual external guarantee amount are set out below:

Estimated amount of

No.

Subsidiary

guarantee in 2020

1

Yangtze Optical Fibre and Cable Company

USD110,000,000

(Hong Kong) Limited

2

PT Yangtze Optics Indonesia

USD5,000,000

3

Yangtze Optics Africa Holdings Proprietary Limited

ZAR15,000,000

4

PT Yangtze Optical Fibre Indonesia

USD5,000,000

5

YOFC International (Singapore) Pte. Ltd.

USD5,000,000

6

YOFC Peru S.A.C.

USD20,000,000

7

YOFC International (Thailand) Co., Ltd.

RMB8,500,000

8

YOFC International (Philippines) Corporation

RMB100,000,000

9

YOFC INTERNATIONAL MEXICO S.A. DE C.V.

MXN5,000,000

The actual financing amount of each of the Company's subsidiary shall not exceed the amount guaranteed, and the actual financing amount shall be reasonably determined according to the actual needs of such company. As of December 20, 2019, the Company's cumulative external guarantee extended to its subsidiaries between its subsidiaries amounted to approximately RMB1.356 billion, accounting for approximately 16.56% of the latest audited net assets of the Company.

- 37 -

APPENDIX II THE 2020 ANNUAL EXTERNAL GUARANTEE AMOUNT

BASIC INFORMATION ON THE GUARANTEED PARTIES

1. Yangtze Optical Fibre and Cable Company (Hong Kong) Limited

Registered Address: FLAT/RM01, BLK02, 26/F, Lippo Centre, No.89 Queensway, Hong Kong

Registered Capital: HKD80,000

Scope of Business: Engaging in the import and export trade of optical fibres, optical fibre cables and relevant raw materials

Shareholding Structure: 100% owned by the Company

Key Financial Position: As of September 30, 2019, Yangtze Optical Fibre and Cable Company (Hong Kong) Limited had total assets of approximately RMB302,061,200, total liabilities of approximately RMB161,882,000, net assets of approximately RMB140,179,200, current liabilities of approximately RMB161,882,000, non-current liabilities of nil; operating income of approximately RMB289,093,600 and net profit of approximately RMB10,208,900 for the nine month period ended September 30, 2019. (The above information has not been audited and was converted into RMB)

2. PT Yangtze Optics Indonesia

Registered Address: Surya Cipta City of Industry Jl. Surya Madya X Kav.1-65 E4, Karawang, WestJava, Indonesia

Registered Capital: USD14,000,000

Scope of Business: Engaging in the business activities of the optical fibre and optical fibre cable industry

Shareholding Structure: 90% owned by the Company, 10% owned by PT Fiber Optik Teknologi Indonesia

Key Financial Position: As of September 30, 2019, PT Yangtze Optics Indonesia had total assets of approximately RMB204,465,300, total liabilities of approximately RMB116,069,200, net assets of approximately RMB88,396,000, current liabilities of approximately RMB116,069,200, non-current liabilities of nil; operating income of approximately RMB70,211,000 and net profit of approximately RMB4,837,300 for the nine month period ended September 30, 2019. (The above information has not been audited and was converted into RMB)

- 38 -

APPENDIX II THE 2020 ANNUAL EXTERNAL GUARANTEE AMOUNT

3. Yangtze Optics Africa Holdings Proprietary Limited

Registered Address: 322 15th Road, Randjespark, Midrand, Gaueng, 1685

Registered Capital: USD10,000,000

Scope of Business: Investment and trading

Shareholding Structure: 51% owned by the Company, 23.9% owned by Yangtze Optical Fibre and Cable Company (Hong Kong) Limited, 25.1% owned by Mustek Limited

Key Financial Position: As of September 30, 2019, Yangtze Optics Africa Holdings Proprietary Limited had total assets of approximately RMB95,734,600, total liabilities of approximately RMB43,544,900, net assets of approximately RMB52,189,600, current liabilities of approximately RMB39,600,400, non-current liabilities of approximately RMB3,944,500; operating income of approximately RMB49,445,800 and net profit of approximately -RMB3,004,500 for the nine month period ended September 30, 2019. (The above information has not been audited and was converted into RMB)

4. PT Yangtze Optical Fibre Indonesia

Registered Address: Jl. Surya Madya X Kav 1-65 E3, Surya Cipta City of Industry, Desa Mulyasari Kecamatan Ciampel, Kabupaten Karawang

Registered Capital: IDR126.79 billion

Scope of Business: Engaging in the manufacturing and sales of optical fibre and optical fibre cable

Shareholding Structure: 70% owned by the Company, 30% owned by Yangtze Optical Fibre and Cable Company (Hong Kong) Limited

Key Financial Position: As of September 30, 2019, PT Yangtze Optical Fibre Indonesia had total assets of approximately RMB264,544,000, total liabilities of approximately RMB117,109,800, net assets of approximately RMB147,434,200, current liabilities of approximately RMB117,109,800, non-current liabilities of nil; operating income of approximately RMB68,566,400 and net profit of approximately -RMB13,186,900 for the nine month period ended September 30, 2019. (The above information has not been audited and was converted into RMB)

- 39 -

APPENDIX II THE 2020 ANNUAL EXTERNAL GUARANTEE AMOUNT

5. YOFC International (Singapore) Pte. Ltd.

Registered Address: 12 Marina Boulevard#17-01fzl Marina Bay Financial Centre Singapore

Registered Capital: USD8,000,000

Scope of Business: General import and export wholesale trade (import and export of telecommunication equipment for trade purpose) and other uncategorised telecommunication related business activities

Shareholding Structure: 100% owned by Yangtze Optical Fibre and Cable Company (Hong Kong) Limited

Key Financial Position: As of September 30, 2019, YOFC International (Singapore) Pte. Ltd. had total assets of approximately RMB29,989,000, total liabilities of approximately RMB21,291,100, net assets of approximately RMB8,697,900, current liabilities of approximately RMB21,291,100, non-current liabilities of nil; operating income of approximately RMB25,962,800 and net profit of approximately RMB511,500 for the nine month period ended September 30, 2019. (The above information has not been audited and was converted into RMB)

6. YOFC Peru S.A.C.

Registered Address: Av. Enrique Canaval Moreyra N0 480, Oficina 1501, Lima 27

Registered Capital: PEN108,693,728

Scope of Business: Provision of public telecommunication services, especially internet access and intranet services to public institutions, private entities and individuals; planning, design, construction, financing, operation, maintenance and/or repair of telecommunication networks and/or telecommunication systems and provision of other goods required for general telecommunication services, especially the goods required for provision of internet access and intranet services to public institutions, private entities and individuals; all actions related to the above that help achieve goals of the company and comply with the law are included

Shareholding Structure: 75% owned by Yangtze Optical Fibre and Cable Company (Hong Kong) Limited, 25% owned by Yachay Telecomunicaciones S.A.C.

Key Financial Position: As of September 30, 2019, YOFC Peru S.A.C. had total assets of approximately RMB637,793,000, total liabilities of approximately RMB584,491,900, net assets of approximately RMB53,301,100, current liabilities of approximately RMB584,134,600, non-current liabilities of approximately RMB357,300; operating income of nil and net profit of approximately -RMB5,181,500 for the nine month period ended September 30, 2019. (The above information has not been audited and was converted into RMB)

- 40 -

APPENDIX II THE 2020 ANNUAL EXTERNAL GUARANTEE AMOUNT

7. YOFC International (Thailand) Co., Ltd.

Registered Address: Olympia Thai Tower, 13th Floor, 444 Ratchadapisek Road, Samsennok, Huay Kwang, Bangkok, The Kingdom of Thailand

Registered Capital: 1,000,000 issued shares of THB10 each

Scope of Business: Import and export of optical fibres, optical fibre cables and telecommunication products, engineering design, telecommunication facility construction, import and export of insulation materials, aluminium strips and steel strips required for optical fibre and optical fibre cable and other protective products for circuits and cables.

Shareholding Structure: 100% controlled by Yangtze Optical Fibre and Cable Company (Hong Kong) Limited

Key Financial Position: As of September 30, 2019, YOFC International (Thailand) Co., Ltd. had total assets of approximately RMB21,743,600, total liabilities of approximately RMB24,011,500, net assets of approximately -RMB2,267,800, current liabilities of approximately RMB24,011,500, non-current liabilities of nil; operating income of approximately RMB22,776,300 and net profit of approximately -RMB4,526,800 for the nine month period ended September 30, 2019. (The above information has not been audited and was converted into RMB)

8. YOFC International (Philippines) Corporation

Registered Address: 3rd Flr. 170 Salcedo St., Legaspi Village, Makati City, Republic of the Philippines.

Registered Capital: 10,200,000 issued shares of PHP1.00 each

Scope of Business: Sales of optical fibres and optical fibre cables and related packaged engineering services

Shareholding Structure: 100% controlled by Yangtze Optical Fibre and Cable Company (Hong Kong) Limited

Key Financial Position: As of September 30, 2019, YOFC International (Philippines) Corporation had total assets of approximately RMB50,875,300, total liabilities of approximately RMB46,645,000, net assets of approximately RMB4,230,300, current liabilities of approximately RMB46,645,000, non-current liabilities of nil; operating income of approximately RMB45,408,200 and net profit of approximately RMB2,748,200 for the nine month period ended September 30, 2019. (The above information has not been audited and was converted into RMB)

- 41 -

APPENDIX II THE 2020 ANNUAL EXTERNAL GUARANTEE AMOUNT

9. YOFC INTERNATIONAL MEXICO S.A. DE C.V.

Registered Address: Ave Insurgentes Sur 730, Piso 1, Del Valle Centro, Mexico, Ciudad De MEXICO

Registered Capital: MXN50,000

Scope of Business: Import, export, distribution, maintenance, storage, sales and manufacturing of optical fibres and optical fibre cables, and businesses relating to the system integration of optical fibres, optical fibre cables and other optical communication products

Shareholding Structure: 99% owned by Yangtze Optical Fibre and Cable Company (Hong Kong) Limited, 1% owned by YOFC International (Singapore) Pte. Ltd.

Key Financial Position: As of September 30, 2019, YOFC INTERNATIONAL MEXICO S.A. DE C.V. had total assets of approximately RMB38,140,400, total liabilities of approximately RMB35,582,700, net assets of approximately RMB2,557,700, current liabilities of approximately RMB35,582,700, non-current liabilities of nil; operating income of approximately RMB11,824,900 and net profit of approximately RMB1,837,100 for the nine month period ended September 30, 2019. (The above information has not been audited and was converted into RMB)

- 42 -

SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING

Yangtze Optical Fibre and Cable Joint Stock Limited Company*

長 飛 光 纖 光 纜 股 份 有 限 公 司

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 6869)

SUPPLEMENTAL NOTICE OF THE EXTRAORDINARY GENERAL MEETING

References are made to the circular of Yangtze Optical Fibre and Cable Joint Stock Limited Company* (the "Company") and the notice of the extraordinary general meeting of the Company (the "EGM") dated December 2, 2019 (the "Original Notice"), which set out the time and venue of the EGM and contain the resolutions to be tabled before the EGM for shareholders' approval.

SUPPLEMENTAL NOTICE IS HEREBY GIVEN that the EGM will be held as originally scheduled on Friday, January 17, 2020 at 1:30 p.m. at Multi-Media Meeting Room, 201# Building, No. 9 Guanggu Avenue, East Lake High-tech Development Zone, Wuhan, Hubei Province, PRC, for the purposes of considering and if thought fit, passing the following resolutions, in addition to the resolutions set out in the Original Notice:

ORDINARY RESOLUTIONS

7. To consider and approve the following proposed annual caps and continuing connected transactions/2020 to 2022 annual transaction amounts for the related party transactions to be carried out in the ordinary and usual course of business:

7.01 the proposed annual caps for the continuing connected transactions contemplated under the Optical Fibre Technology Cooperation Agreement for the three years ending December 31, 2020, 2021 and 2022 be and are hereby approved and confirmed, and the directors of the Company acting together or by committee, or any director of the Company acting individually, be and is hereby authorised to do all such further acts and things and execute such further documents and take all such steps which in his/her/their opinion may be necessary, desirable or expedient to implement and/or give effect to such proposed annual caps;

  • 7.02 (i) the continuing connected transactions contemplated under the purchase framework agreement entered into between Yangtze Optical Fibre and Cable (Shanghai) Co., Ltd. (長飛光纖光纜(上海)有限公司) and the Company on December 20, 2019, a copy of which has been initialled by the chairman of this meeting and for the purpose of identification marked "A", and the proposed

  • For identification purpose only

- 43 -

SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING

annual caps be and are hereby generally and unconditionally approved and the directors of the Company acting together or by committee, or any director of the Company acting individually, be and is hereby authorised to do all such further acts and things and execute such further documents and take all such steps which in his/her/their opinion may be necessary, desirable or expedient to implement and/or give effect to the terms of such continuing connected transactions; and (ii) the continuing connected transactions contemplated under the sales framework agreement entered into between Yangtze Optical Fibre and Cable (Shanghai) Co., Ltd. (長飛光纖光纜(上海)有限公司) and the Company on December 20, 2019, a copy of which has been initialled by the chairman of this meeting and for the purpose of identification marked "B", and the proposed annual caps be and are hereby generally and unconditionally approved and the directors of the Company acting together or by committee, or any director of the Company acting individually, be and is hereby authorised to do all such further acts and things and execute such further documents and take all such steps which in his/her/their opinion may be necessary, desirable or expedient to implement and/or give effect to the terms of such continuing connected transactions;

7.03 the estimates of the 2020 to 2022 annual transaction amounts for the related party transactions to be carried out in the ordinary and usual course of business as set out in Appendix I to the supplemental circular of the Company dated December 31, 2019 be and are hereby approved, and that the board of directors of the Company (the "Board") or such persons as authorized by the Board, be authorized to enter into specific business agreements with the related parties from time to time during the years 2020 to 2022 within the limits of the estimates on the transaction amounts, for each transaction contemplated under this proposal during the ordinary and usual course of business; and

8. To consider and approve the 2020 annual external guarantee amount as set out in Appendix II to the supplemental circular of the Company dated December 31, 2019, and that the Board or such person as authorized by the Board, be authorized to handle the specific matters in relation to the external guarantee, including adjusting specific guarantee amount and signing relevant legal documents in accordance with actual business needs within the limit of the 2020 annual external guarantee amount contemplated under this proposal.

By Order of the Board

Yangtze Optical Fibre and Cable Joint Stock Limited Company*

長飛光纖光纜股份有限公司

Ma Jie

Chairman

Wuhan, PRC, December 31, 2019

- 44 -

SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING

Notes:

  1. Details of the above proposals and resolutions to be considered at the EGM are set out in the supplemental circular of the Company dated December 31, 2019 (the "Supplemental Circular"). Unless otherwise defined in this supplemental notice, capitalized terms used in this supplemental notice shall have the same meanings as those defined in the Supplemental Circular.
  2. A supplemental proxy form (the "Supplemental Proxy Form") containing the resolutions numbered 7 to 8 mentioned above is enclosed with this Supplemental Circular. The proxy form issued by the Company along with the circular of the Company dated December 2, 2019 (the "Original Proxy Form") will remain valid and effective to the fullest extent applicable if correctly completed and lodged with the H Share registrar of the Company.
  3. If you intend to appoint a proxy to attend the EGM, you are required to complete and return the accompanying Supplemental Proxy Form in accordance with the instructions printed thereon. To be valid, the Supplemental Proxy Form together with the power of attorney or other authorization document (if any) should be returned by holder of H Shares to the Company's H share registrar, Tricor Investor Services Limited, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong, by hand or by post not less than 24 hours before the time appointed for holding the EGM or any adjourned meeting thereof. Completion and return of the Supplemental Proxy Form will not preclude you from attending and voting in person at the EGM or at any adjourned meeting should you so wish, but in such event the instrument appointing a proxy shall be deemed to be revoked.
  4. Shareholders entitled to attend and vote at the EGM may appoint one or more proxies to attend, speak and vote in their stead. For the avoidance of doubt, should the proxies being appointed to attend the EGM under each of the Original Proxy Form and the Supplemental Proxy Form are different and more than one of the proxies attended the EGM, only the proxy validly appointed under the Original Proxy Form shall be designated to vote at the EGM.
  5. Please refer to the Original Notice for details in respect of other resolutions to be passed at the EGM, eligibility for attending the EGM, proxy, registration procedures, closure of register of members and other relevant matters.

- 45 -

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Yangtze Optical Fibre and Cable Joint Stock Ltd. Company published this content on 30 December 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 December 2019 08:35:12 UTC