During the Track Record Period and up to the Latest Practicable Date, we conducted all intra-group transactions in accordance with our transfer pricing policy based on the arm’s length principle.
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Based on the Tax Advisor’s assessment of the intra-group transactions and the transfer pricing benchmarking analysis performed through the identification and evaluation of comparable companies, the Tested Parties’ full cost mark-up was not less than the arm’s length range.
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During the Track Record Period and up to the Latest Practicable Date, we have not been subject to any penalties, investigations, queries or transfer pricing audits by the local tax authorities in respect of such intra-group transactions.
For fund financing transactions, several key arrangements were in place during the Track Record Period. These included a loan provided by Heihe Luoke Mining to Hainan Shengwei Trading Co., Ltd. (“Hainan Shengwei”) for working capital purposes; a loan with no fixed term from our Company to Hainan Shengwei for an overseas acquisition; a loan from Heihe Luoke Mining to YTSH for working capital; a RMB cash-pool arrangement between YTSH and Yintai Sheng Hong (Singapore) Pte. Ltd. (“Yintai Sheng Hong”); a loan with no fixed term provided by Yintai Sheng Hong to Osino Mining Investments Ltd. to support its local operations; a loan with no fixed term provided by Tenya HK to Osino Mining Investments Ltd. to support its local operations; a loan provided by Hainan Shengwei to Yintai Sheng Hong; and a loan provided by Yintai Sheng Hong to Tenya HK for working capital purpose.
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For fund financing related transactions, the applicable interest rates were agreed upon by both parties through negotiations, with reference to market interest rates and based on transaction terms including currency of the loan, principal amount, and loan tenure.
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Our Directors believe that these transactions were conducted in the ordinary and usual course of business and did not distort our results of operations or make our historical results unreflective of our future performance.