Guoquan Food (Shanghai) Co., Ltd. (2517) released a supplemental announcement providing additional details about the continuing connected transactions under the Procurement Framework Agreement. The information includes the basis for determining prices, the rationale behind annual caps, and internal control measures.

According to the announcement, prices for the purchase of alcoholic beverages will be set after arm’s length negotiation based on market factors such as the cost of raw materials, production cycles, product quality, and overall quality of distribution logistics. Terms offered to the Group must be no less favorable than those provided by at least two independent third-party suppliers offering comparable products and volumes.

The proposed annual caps were determined by considering the Group’s past procurement amounts, its business prospects, and projected demand for alcoholic beverages. The Group anticipates a rise in demand in 2026, largely due to its plan to bundle alcoholic beverages with hot pot and barbecue products in a broader sales effort. As of December 31, 2025, the Group had 11,566 stores and expects the expansion of its network to support significantly higher sales of alcoholic beverages.

Internal control procedures involve the business and procurement team regularly gathering supplier quotations and market price information, reviewing price fairness, and ensuring continued compliance with commercial practices and the relevant requirements set out by regulators and the Group.