The Board hereby announces that on 27 December 2023 (after trading hours), the China Development Bank Financial Leasing Co., Ltd. (as the Lessor) entered into the Finance Lease Agreement with the Lessee, pursuant to which (i) the Lessor purchased the Leased Assets from the Lessee at a consideration of RMB 1,000,000,000, and (ii) the Lessor agreed to lease the Leased Assets to the Lessee with a lease period of 60 months. The Leased Assets are relevant facilities and ancillary equipment in relation to catalytic cracking of heavy oil located in Heilongjiang Province, the PRC. The appraised value of the Leased Assets is approximately RMB1,033,100,876.23 in aggregate. The Lessee does not separately calculate the profits before and after tax of the Leased Assets. Pursuant to the Finance Lease Agreement, the Lessor agreed to lease the Leased Assets to the Lessee. The rent, including value-added taxes, is calculated and paid in RMB and comprised of lease principal and lease interest, of which, the lease principal is of the same amount as the transfer consideration, totaling RMB1,000,000,000; the total amount of lease interest for the lease period is approximately RMB155,000,000. The lease principal and lease interest shall be paid by the Lessee
to the Lessor on a semi-annual basis in installments during the lease period. The terms of the Finance Lease Agreement, including the Leased Assets' transfer consideration, lease principal, lease interest and other expenses under the Finance Lease Agreement, were determined upon arm's length negotiation between the Lessee and the Lessor with reference to
the appraised value of the Leased Assets and the prevailing market prices of the same category of finance lease products in the PRC. The Lessee has agreed to transfer and/or change the registration of the Leased Assets to the Lessor during the lease period at a total transfer consideration of RMB1,000,000,000. The consideration will be paid by the Lessor's self-owned funds and/or commercial loans. At the same time, the Lessor has agreed to lease the Leased Assets to the Lessee. The Lessee is entitled to the possession, usage and benefits of such assets. Upon expiration of the lease period, the Lessee may purchase back the Leased Assets from the Lessor at a consideration of RMB100 in nominal value. The Finance Lease Agreement is entered into by the Company during its ordinary and usual course of business. Entering into of the Finance Lease Agreement benefits the Company by increasing revenue from its finance lease business and is consistent with the Company's business development strategy. The Directors are of the view that the terms under the Finance Lease Agreement are fair and reasonable and are in the interests of the Company and the shareholders of the Company as a whole.