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9303560_435.pdf | en | Operating lease payments are recognised as an expense on a straight-line basis over the lease term. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis.
# Leasehold land and building
When a lease includes both land and building elements, the Group assesses the classification of each element as a finance or an operating lease separately based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the Group, unless it is clear that both elements are operating leases in which case the entire lease is classified as an operating lease. Specifically, the minimum lease payments (including any lump-sum upfront payments) are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of the lease.
When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease and accounted for as property, plant and equipment.
# Foreign currencies
In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (“foreign currencies”) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchange prevailing on the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are recognised in profit or loss in the period in which they arise.
For the purposes of presenting the Financial Information, the assets and liabilities of group entities are translated into the presentation currency of the Group (i.e. HK\$) using exchange rates prevailing at the end of each reporting period. Income and expenses items are translated at the average exchange rates for the year, unless exchange rates fluctuate significantly during the period, in which case, the exchange rates prevailing at the dates of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity under the heading of translation reserve.
# Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
# Retirement benefits costs
Payments to state-managed retirement benefits schemes and the Mandatory Provident Fund Scheme (“MPF Scheme”) are recognised as expenses when employees have rendered service entitling them to the contributions. |
9303560_436.pdf | en | # Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year/period. Taxable profit differs from profit as reported in the consolidated statements of comprehensive income because it excludes items of income or expense that are taxable or deductible in other periods, and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Financial Information and the corresponding tax base used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary difference to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of the reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rate (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax is recognised in profit or loss, except when it relates to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
# Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the first-in, first-out method. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.
# Financial instruments
Financial assets and financial liabilities are recognised in the consolidated statements of financial position when a group entity becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities are deducted from the fair value of the financial liabilities, as appropriate, on initial recognition.
# Financial assets
The Group’s financial assets are classified into loans and receivables. The accounting policies adopted in respect of loans and receivables are set out below. |
20783152_229.pdf | en | # OVERVIEW
Mr LU Yuanfeng, Mr. HUANG Guozhan and Mr. HUANG Deqiang are the Founders of our Group. On June 27, 2017, each of the Founders and Ms. LUO Simin (who is the spouse of Mr. LU), along with their respective wholly-owned companies holding the Shares, entered into a parties acting in concert deed to confirm that they have acted in concert in the management, operation and all major decisions of our Group. As of the Latest Practicable Date, LYF Digital Holdings Limited (a company wholly-owned by Mr. LU Yuanfeng), Angel Age Limited (a company wholly-owned by Ms. LUO Simin), LXT Digital Holdings Limited (a company wholly-owned by Mr. HUANG Guozhan) and HDQ Digital Holdings Limited (a company wholly-owned by Mr. HUANG Deqiang) are entitled to exercise voting rights of approximately 65.95% of the total issued share capital of our Company. Immediately following the completion of the Global Offering (assuming the Over-allotment Option or any options which may be granted under the Post-IPO Share Option Scheme are not exercised), Mr. LU Yuanfeng, Ms. LUO Simin, Mr. HUANG Guozhan and Mr. HUANG Deqiang through LYF Digital Holdings Limited, Angel Age Limited, LXT Digital Holdings Limited and HDQ Digital Holdings Limited, respectively, will beneficially own approximately 49.46% of the issued share capital of our Company. Accordingly, Mr. LU Yuanfeng, Ms. LUO Simin, Mr. HUANG Guozhan, Mr. HUANG Deqiang, LYF Digital Holdings Limited, Angel Age Limited, LXT Digital Holdings Limited and HDQ Digital Holdings Limited are considered as our Controlling Shareholders.
# DELINEATION OF OUR BUSINESS
Neither of our Controlling Shareholders, our Directors nor their respective close associates has any interest in any business, apart from the business operated by members of our Group, that competes or is likely to compete, directly and indirectly, with the business of our Group and would require disclosure pursuant to Rule 8.10 of the Listing Rules.
# DEED OF NON-COMPETITION
On November 24, 2017, each of the Controlling Shareholders entered into the Deed of Non-competition in favor of our Company, pursuant to which each of the Controlling Shareholders irrevocably undertake to our Company that during the Restricted Period (as defined below) he will not and will procure his close associates (except any member of our Group) not to, directly or indirectly (whether in the capacity of principal or agent, whether for its own benefit orj ointly with or on behalf of any person, firm or company, whether within or outside China), commence, engage in, participate in or acquire any business which competes or may compete directly or indirectly with our core business, namely development and publication of online games (“Restricted Business”) or own any rights or interests in such business. |
20783152_230.pdf | en | Each of the Controlling Shareholders has further irrevocably undertaken that during the Restricted Period (as defined below), he should and will procure his close associates (except any member of our Group) (each of the Controlling Shareholders and his close associates together, “Offeror”) to offer new business opportunities to us first in the following manner when any business, investment or other business opportunities (“New Business Opportunities”) related to the Restricted Business become available to the Offeror:
(i) the Offeror will make referral of the New Business Opportunities to us, and will as soon as possible inform us in writing (“Offer Notice”) about all necessary and reasonably required information in respect of any New Business Opportunities (including but not limited to details of the nature and investment or acquisition cost of the New Business Opportunities) for us to consider (a) whether the relevant New Business Opportunities will compete with our business, and (b) whether taking up the New Business Opportunities is in the interest of our Group.
(ii) upon receipt of the Offer Notice, the independent non-executive Directors will consider whether to pursue the New Business Opportunities taking into account whether the relevant New Business Opportunities would be able to achieve a sustainable profitability level, whether they are in line with the prevailing development strategies of our Group, and whether they are in the best interest of the Shareholders. Our Company must inform the Offeror in writing within 20 Business Days after receipt of the Offer Notice about its decision on whether the New Business Opportunities will be pursued.
(iii) only when (a) the Offeror has received our notice to reject the New Business Opportunities and our confirmation that the relevant New Business Opportunities are not considered to be able to compete with our core business, namely development and publication of online games; or (b) the Offeror has not received the relevant notice from our Company within the period as stated above in paragraph (ii) after the Offer Notice has been received by us, then the Offeror is entitled to take up the New Business Opportunities on terms and conditions not more favorable than those specified in the Offer Notice issued to us.
If material changes occur in the terms and conditions of the New Business Opportunities after the referral of which have been made or procured to be made to us by the Offeror, referral of the revised New Business Opportunities shall be made by the Offeror to us again in the manner as stated above.
The undertakings under the Deed of Non-competition are not applicable in the following circumstances:
(i) each of the Controlling Shareholders and/or his close associates engage in the Restricted Business directly or indirectly through the ownership of equity interest in any member of our Group; or |
7499820_27.pdf | en | # AUDIT COMMITTEE AND THE SCOPE OF WORK OF ZHONGHUI ANDA CPA LIMITED
The Company has established an audit committee in compliance with the Rules Governing the Listing of Securities (the “Listing Rules”) on the Stock Exchange of Hong Kong Limited (the “Exchange”). The audit committee comprises three independent non-executive Directors, namely, Messrs. Cai Jianmin (Chairman), Wong Kam Fai, William and Liu Xueling, who are responsible for reviewing the accounting principles and practices adopted by the Company as well as significant or unusual items, internal controls, financial reporting, risk management and control matters, which included a review on the audited annual results for the year ended 31 December 2019 and the interim report for 2020. According to the terms of reference of the audit committee adopted and implemented by the Company, the audit committee is responsible for reviewing the accounting principles and practices adopted by the Company as well as significant or unusual items, internal controls, financial reporting matters and duties of risk management and control.
During the year, the audit committee of the Company held meetings on 31 March, 7 May, 5 June and 18 August 2020 to review the annual report, change of auditor and interim financial reports of the Group respectively. All members of the committee namely, Messrs. Cai Jianmin, Wong Kam Fai, William and Liu Xueling, attended the meetings.
The final results of the Company for the year ended 31 December 2020 have been reviewed by the audit committee of the Company. The financial figures in this announcement of the Group’s results for the year ended 31 December 2020 have been agreed by the Group’s auditor, ZHONGHUI ANDA CPA Limited, to the amounts set out in the Group’s audited consolidated financial statements for the year.
# REMUNERATION COMMITTEE
The Company has established a remuneration committee in compliance with the Listing Rules. During the year under review, the remuneration committee comprises three Directors including Messrs. Liu Xueling (Chairman) and Cai Jianmin, being independent non-executive Directors, and Mr. Zhang Yuping, Chairman and executive Director of the Group. The primary duties of the remuneration committee are to review and determine the terms of remuneration packages, bonuses and other compensation payable to the Directors and senior management of the Group.
The remuneration committee held one meeting during the year to review matters related to the remuneration structure of the Directors and senior management of the Company. All members, namely Messrs. Liu Xueling, Cai Jianmin and Zhang Yuping, attended the meeting.
According to the terms of reference of the remuneration committee adopted by the Company, the remuneration committee acts as a consultant regarding the remuneration matters of the Directors and senior management of the Company, while the Board retains the ultimate power to approve the remuneration of the Directors and senior management. |
7499820_28.pdf | en | # NOMINATION COMMITTEE
The Company has established a nomination committee in compliance with the Listing Rules. During the year under review, the nomination committee comprises three Directors, including Mr. Zhang Yuping (Chairman), executive Director and Chairman of the Group, and Messrs. Cai Jianmin and Liu Xueling, who are independent non-executive Directors. The Company has adopted and implemented the terms of reference of the nomination committee. The nomination committee is mainly responsible for making recommendations to the Board on the appointment of Directors and succession of the Board.
Two meetings were held by the nomination committee during the year to review matters related to the nomination and selection policies for the Board members as well as matters related to retirement by rotation and re-election of Directors. All members of the nomination committee (namely Messrs. Zhang Yuping, Cai Jianmin, and Liu Xueling) attended the meeting.
# CORPORATE GOVERNANCE
Since its establishment, the Company has been committed to maintaining a high standard of corporate governance practice to ensure transparency of the Group’s management, so that the long term development of our shareholders, customers, employees as well as the Group can be safeguarded. The Company has established the Board, an audit committee, a remuneration committee and a nomination committee that are up to the requirements as being diligent, accountable and professional. ZHONGHUI ANDA CPA Limited has been appointed as the Group’s external auditors.
# Compliance with the Corporate Governance Code
The Company has adopted the Code on Corporate Governance Practices set out in Appendix 14 to the Listing Rules. The Directors are of the opinion that the Company had complied with the Corporate Governance Code except for a deviation from provision A.2.1 during the year under review. Given its existing corporate structure, the roles of Chairman and Chief Executive Officer of the Company have not been separated, but are both performed by Mr. Zhang Yuping. Although the roles and duties of Chairman and Chief Executive Officer have been performed by the same individual, all major decisions have been made after consultation with the Board or, where applicable, directly by the Board. There are three independent non-executive Directors in the Board, all of which possess adequate independence and therefore the Board believes that the Company has achieved adequate balance of power and been able to guarantee scientific decision-making.
# Composition of the Board
To maintain high-level independence and objectivity in decision making, and supervise the management of the Group in a comprehensive and equitable manner, the Board of the Group comprises three executive Directors (Messrs. Zhang Yuping (Chairman of the Group), Huang Yonghua and Lee Shu Chung, Stan), one non-executive Director (Mr. Shi Zhongyang) and three independent non-executive Directors (Messrs. Cai Jianmin, Wong Kam Fai, William and Liu Xueling). |
20752441_92.pdf | en | among other things, the ability of the Company’s subsidiaries to incur indebtedness; the ability of the Company and its subsidiaries to grant certain liens, make restricted payments, materially change the nature of its or their business, make investments, guarantees, loans or advances in non-subsidiaries or enter into certain hedging agreements; the ability of the Company’s material subsidiaries to enter into certain restrictive agreements; the ability of the Company and its material subsidiaries to enter into certain affiliate transactions; the ability of the Company and its subsidiaries to redeem any senior notes; and the Company’s ability to merge or consolidate with any person or sell all or substantially all of its assets to any person. The Company and its subsidiaries are also prohibited from using the proceeds under the Credit Facility in violation of Sanctions (as defined in the Credit Facility). In addition, the representations, warranties and covenants contained in the Credit Facility are subject to certain exceptions and/or standards of materiality applicable to the contracting parties.
Events of Default. The Credit Facility includes customary events of default, including events of default relating to:
• non-payment of principal, interest or fees;
• inaccuracy of representations and warranties in any material respect when made or when deemed made;
• violation of covenants;
• cross payment-defaults;
• cross acceleration;
• bankruptcy and insolvency events;
• certain unsatisfied judgments;
• a change of control; and
• during any secured period, the failure of the collateral documents to be in effect or a lien to be valid and perfected.
If an event of default with respect to a borrower occurs under the Credit Facility, the lenders will be able to terminate the commitments and accelerate the maturity of the loans of the defaulting borrower under the Credit Facility and exercise other rights and remedies.
# Senior Notes
The following table summarizes the face values, maturity dates, semi-annual interest payment dates, and optional redemption periods related to the Company’s outstanding unsecured senior note obligations at December 31, 2017.
<table><tr><td>Senior Note</td><td>Face Value
(Millions)</td><td>Maturity Date</td><td>Interest Payment
Dates</td><td>Optional
Redemption
Period(a)</td></tr><tr><td>7.500% Senior Notes due 2020 (the “2020 Notes”)</td><td>$ 350</td><td>August 1, 2020</td><td>February 1, August
1</td><td>July 1, 2020</td></tr><tr><td>6.000% Senior Notes due 2022 (the “2022 Notes”)</td><td>$ 1,100</td><td>January 15, 2022</td><td>January 15, July
15</td><td>October 15, 2021</td></tr><tr><td>8.250% Senior Notes due 2023 (the “2023 Notes”)</td><td>$ 500</td><td>August 1, 2023</td><td>February 1, August
1</td><td>June 1, 2023</td></tr><tr><td>5.250% Senior Notes due 2024 (the “2024 Notes”)</td><td>$ 650</td><td>September 15, 2024</td><td>March 15,
September 15</td><td>June 15, 2024</td></tr></table>
(a) At any time prior to these dates, we have the option to redeem some or all of the notes at a specified “make whole” premium as described in the indenture(s) governing the notes to be redeemed. On or after these dates, we have the option to redeem the notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest thereon to the redemption date as more fully described in the indenture.
During third-quarter 2017, we issued an additional \$150 million of our 5.25% senior notes due 2024. The proceeds were used to fund the tender offer of\$150 million of our 7.50% senior notes due 2020. As a result, we recorded a loss on extinguishment of debt of \$17 million .
The terms of the indentures governing our 2020 Notes, 2022 Notes, 2023 Notes and 2024 Notes are substantially identical.
Change of Control. If we experience a change of control (as defined in the indentures governing the notes) accompanied by a specified rating decline, we must offer to repurchase the notes of such series at 101% of their principal amount, plus accrued and unpaid interest. |
20752441_93.pdf | en | Covenants. The terms of the indentures governing our notes restrict our ability and the ability of our subsidiaries to incur additional indebtedness secured by liens and to effect a consolidation, merger or sale of substantially all our assets. The indentures also require us to file with the trustee and the SEC certain documents and reports within certain time limits set forth in the indentures. However, these limitations and requirements are subject to a number of important qualifications and exceptions. The indentures do not require the maintenance of any financial ratios or specified levels of net worth or liquidity.
Events of Default. Each of the following is an “Event of Default” under the indentures with respect to the notes of any series:
(1) a default in the payment of interest on the notes when due that continues for 30 days ;
(2) a default in the payment of the principal of or any premium, if any, on the notes when due at their stated maturity, upon redemption, or otherwise;
(3) failure by us to duly observe or perform any other of the covenants or agreements (other than those described in clause (1) or (2) above) in the indenture, which failure continues for a period of 60 days , or, in the case of the reporting covenant under the indenture, which failure continues for a period of 90 days , after the date on which written notice of such failure has been given to us by the trustee; provided, however, that if such failure is not capable of cure within such 60-day or 90-day period, as the case may be, such 60-day or 90-day period, as the case may be, will be automatically extended by an additional 60 days so long as (i) such failure is subject to cure and (ii) we are using commercially reasonable efforts to cure such failure; and
(4) certain events of bankruptcy, insolvency or reorganization described in the indenture.
# Note 10 . Provision (Benefit) for Income Taxes
The following table includes the provision (benefit) for income taxes from continuing operations.
<table><tr><td rowspan="3"></td><td colspan="3">Years Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td colspan="3">(Millions)</td></tr><tr><td>Provision (benefit):</td><td></td><td></td><td></td></tr><tr><td>Current:</td><td></td><td></td><td></td></tr><tr><td>Federal</td><td>$ (18)</td><td>$ (26)</td><td>$ (4)</td></tr><tr><td>State</td><td>1</td><td>(7)</td><td>7</td></tr><tr><td></td><td>(17)</td><td>(33)</td><td>3</td></tr><tr><td>Deferred:</td><td></td><td></td><td></td></tr><tr><td>Federal</td><td>(118)</td><td>(301)</td><td>12</td></tr><tr><td>State</td><td>(13)</td><td>9</td><td>9</td></tr><tr><td></td><td>(131)</td><td>(292)</td><td>21</td></tr><tr><td>Total provision (benefit)</td><td>$ (148)</td><td>$ (325)</td><td>$ 24</td></tr></table>
The following table provides reconciliations from the provision (benefit) for income taxes from continuing operations at the federal statutory rate to the realized provision (benefit) for income taxes.
<table><tr><td rowspan="3"></td><td colspan="3">Years Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td colspan="3">(Millions)</td></tr><tr><td>Provision (benefit) at statutory rate</td><td>$ (56)</td><td>$ (328)</td><td>$ 7</td></tr><tr><td>Increases (decreases) in taxes resulting from:</td><td></td><td></td><td></td></tr><tr><td>State income taxes (net of federal benefit)</td><td>(12)</td><td>(40)</td><td>3</td></tr><tr><td>Valuation allowance on current year state income taxes (net of federal benefit)</td><td>17</td><td>18</td><td>1</td></tr><tr><td>Valuation allowance on state income taxes resulting from sale (net of federal benefit)</td><td>—</td><td>8</td><td>—</td></tr><tr><td>Effective state income tax rate change (net of federal benefit)</td><td>(12)</td><td>15</td><td>7</td></tr><tr><td>Provisional impact of Tax Cuts and Jobs Act</td><td>(92)</td><td>—</td><td>—</td></tr><tr><td>Other</td><td>7</td><td>2</td><td>6</td></tr><tr><td>Provision (benefit) for income taxes</td><td>$ (148)</td><td>$ (325)</td><td>$ 24</td></tr></table> |
2902944_24.pdf | en | # 7. TRANSACTIONS WITH THE TRUSTEE, MANAGER AND CONNECTED PERSONS (Continued)
# (b) Trustee fee and Registrar’s fee
The Trustee is entitled to receive a trustee fee of up to 1% per annum of the net asset value of the Sub-Fund, which accrued daily and calculated as at each dealing day and payable monthly in arrears. For the year ended December 2016 and 2015, the trustee fee is calculated as a percentage per annum of the net asset value of the Sub-Fund at the rate as follows, subject to a monthly minimum of RMB40,000:
<table><tr><td></td><td>Trustee fee percentage
per annum</td></tr><tr><td>For first RMB200 million</td><td>0.16%</td></tr><tr><td>For next RMB1,000 million</td><td>0.14%</td></tr><tr><td>For next RMB1,000 million</td><td>0.12%</td></tr><tr><td>For next RMB1,000 million</td><td>0.10%</td></tr><tr><td>Thereafter</td><td>0.08%</td></tr></table>
The Trustee’s fee is inclusive of fees payable to The Hongkong and Shanghai Banking Corporation Limited (the “Custodian”) and HSBC Bank (China) Company Limited (the “PRC Custodian”).
The Trustee, acting as the Registrar, is also entitled to a fee of RMB120 (2015: RMB120) per participating dealer per transaction.
# (c) Financial assets
The investments and bank balances of the Sub-Fund held with related parties of the Trustee are:
<table><tr><td rowspan="2"></td><td>2016</td><td>2015</td></tr><tr><td>RMB</td><td>RMB</td></tr><tr><td>Investments</td><td></td><td></td></tr><tr><td>HSBC Bank (China) Company Limited</td><td>17,177,372,883</td><td>18,232,458,944</td></tr><tr><td>Bank balances</td><td></td><td></td></tr><tr><td>The HonkShgondkig an anhigai BannCg oridporaton Limte</td><td>27,455,761</td><td>110,734,726</td></tr><tr><td>HSBC Bank (China) Company Limited</td><td>12,822,162</td><td>100,388,864</td></tr><tr><td></td><td>40,277,923</td><td>211,123,590</td></tr></table>
Interest income amounted to RMB439,200 (2015: RMB1,266,203) was earned on these bank balances for the year ended 31 December 2016 and 2015.
# (d) License fee
According to the Trust Deed dated 25 July 2012, as amended, the license fees and expenses payable to the owner of an index for the use of such index shall be payable out of the Sub-Fund. Prior to 1 January 2015, the FTSE index license fees were paid by the Manager of the Sub-Fund. Pursuant to the letter dated 16 November 2015 between the Trustee and the Manager of the Sub-Fund, the Manager has decided that the license fee shall be paid out of the Sub-Fund commencing from 1 January 2015 and the Manager was reimbursed by the Sub-Fund for the license fee of RMB19,918,378 which was paid out by the Manager from 1 January 2015 to 16 November 2015. For the year ended 31 December 2016 and 2015, the amount of RMB19,481,156 represents the license fee (2015: the amount of RMB22,984,953 represents the license fee of the Sub-Fund of which RMB19,918,378 was the reimbursement to the Manager for their payment of the license fee for the Sub-Fund for 1 January 2015 to 16 November 2015). |
2902944_25.pdf | en | # 8. FINANCIAL RISK MANAGEMENT
The objective of the Sub-Fund is to provide investment results that, before deduction of fees and expenses, closely correspond to the performance of the FTSE China A50 Index. The Sub-Fund’s activities may expose it to a variety of risks including but not limited to: market risk (including market price risk, interest rate risk and currency risk), credit and counterparty risk and liquidity risk which are associated with the markets in which the Sub-Fund invests.
The following is a summary of the main risks and risk management policies.
# (a) Market risk
# (i) Market price risk
Market price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual instrument or factors affecting all instruments in the market.
The Sub-Fund is designated to track the performance of the FTSE China A50 Index, therefore the exposures to market risk in the Sub-Fund will be substantially the same as the tracked index. The Manager manages the Sub-Fund’s exposures to market risk by ensuring that the key characteristics of the portfolio, such as security weight and industry weight, are closely aligned with the characteristics of the tracked index.
As at 31 December, the Sub-Fund’s investments were concentrated in the following industries:
<table><tr><td rowspan="3"></td><td colspan="2">2016</td><td colspan="2">2015</td></tr><tr><td>Fair value</td><td>% of net
asset value</td><td>Fair value</td><td>% of net
asset value</td></tr><tr><td>RMB</td><td></td><td>RMB</td><td></td></tr><tr><td>Listed equities in PRC – by
industry</td><td></td><td></td><td></td><td></td></tr><tr><td>Basic materials</td><td>153,662,997</td><td>0.89</td><td>293,798,572</td><td>1.60</td></tr><tr><td>Consumer goods</td><td>2,045,331,472</td><td>11.90</td><td>1,353,533,151</td><td>7.38</td></tr><tr><td>Consumer Services</td><td>-</td><td>-</td><td>252,164,110</td><td>1.38</td></tr><tr><td>Financials</td><td>11,903,756,589</td><td>69.24</td><td>12,585,400,577</td><td>68.64</td></tr><tr><td>Health Care</td><td>88,029,586</td><td>0.51</td><td>86,329,057</td><td>0.47</td></tr><tr><td>Industrials</td><td>2,175,816,158</td><td>12.65</td><td>2,630,961,791</td><td>14.36</td></tr><tr><td>Oil & gas</td><td>402,492,070</td><td>2.34</td><td>404,247,010</td><td>2.21</td></tr><tr><td>Technology</td><td>35,907,130</td><td>0.21</td><td>-</td><td>-</td></tr><tr><td>Telecommunications</td><td>-</td><td>-</td><td>260,833,401</td><td>1.42</td></tr><tr><td>Utilities</td><td>372,376,881</td><td>2.17</td><td>365,191,275</td><td>2.00</td></tr><tr><td></td><td>17,177,372,883</td><td>99.91</td><td>18,232,458,944</td><td>99.46</td></tr></table>
The Sub-Fund held 50 out of 50 (2015: 50 out of 50) constituent securities comprising the FTSE China A50 Index. The Sub-Fund is therefore exposed to substantially the same market price risk as the FTSE China A50 Index. |
11789999_17.pdf | en | \[ s _ { m _ { n } n } = \frac { \sum _ { j \ge n + 1 } t _ { m _ { n } j } } { \sum _ { j \ge 1 } j t _ { m _ { n } j } } = \frac { p + 1 } { p n + 1 } \left( \frac { p - 1 } { p } \right) ^ { p } \alpha _ { n } \, , \]
where \( \alpha _ { n } \rightarrow 1 ^ { + } \). The conclusion follows from Theorem 4.1.
For the special choice \( w _ { n } = n ^ { r } \),\( n \geq \) 1, with \( r \ge \) 0 fixed, Corollary 4.6 yields the implication
\[ ( 4 . 5 ) \qquad \qquad \operatorname * { s u p } _ { n \geq 1 } n ^ { - r } \| M _ { n } ^ { ( p ) } ( \lambda T ) \| < \infty \Longrightarrow \| T ^ { n } \| = o ( n ^ { r + 1 } ) , \quad n \to \infty \, , \]
whenever \( p \geq \) 1 and \( \sigma ( T ) \cap \mathbb { T } \) has arclength measure zero. It turns out that such ”regular” growth restrictions for the Ces\`aro means can be reformulated in terms of resolvent estimates. This has been first proved by Strikwerda and Wade [SW] in the case when \( p \) = 2 and \( r \) = 0. The Ces\`aro means of order one are related to the partial sums of the Taylor expansion at infinity of the resolvent function of T. The uniform boundedness of these partial sums in the exterior of the unit disc is called the uniform Kreiss boundedness condition (see [MSZ] and[GH] for the boundedness only on the real line) and is equivalent to the uniform boundedness of \( \{ M _ { n } ( \lambda T ) \} \) on the unit circle. These last two conditions are more restrictive. The result below provides an extension of the theorems wej ust mentioned.
Theorem 4.7. Given \( T \in { \mathcal { B } } ( { \mathcal { X } } ) \) we have:
(i) If \( p \geq \) 2 and \( r \ge \) 0 then
\[ \operatorname* { s u p } _ { \stackrel { n \geq 1 } { \lambda \in \mathbb { T } } } n ^ { - r } \| M _ { n } ^ { ( p ) } ( \lambda T ) \| < \infty \iff \operatorname* { s u p } _ { | \lambda | > 1 } \frac { ( | \lambda | - 1 ) ^ { r + 1 } } { | \lambda | ^ { r } } \| ( T - \lambda I ) ^ { - 1 } \| < \infty \, . \]
(ii) If \( p \) = 1 and \( r \ge \) 0 then
\[ \operatorname* { s u p } _ { \frac { n \geq 1 } { \lambda \in \mathbb { T } } } n ^ { - r } \| M _ { n } ( \lambda T ) \| < \infty \iff \operatorname* { s u p } _ { \frac { n \in \mathbb { N } } { | \lambda | > 1 } } \frac { ( | \lambda | - 1 ) ^ { r + 1 } } { | \lambda | ^ { r } } \left\| \sum _ { k = 0 } ^ { n } \lambda ^ { - k - 1 } T ^ { k } \right\| < \infty . \]
Proof. (=\( \Rightarrow \)) The argument uses the ideas in [SW]. We start with the identity proved in [SW],formula (6.3), for 0 \( < \rho < \) 1 and \( \lambda \in \mathbb { T } \), namely
\[ ( I - \rho \lambda T ) ^ { - 1 } = ( 1 - \rho ) ^ { p } \sum _ { n = 0 } ^ { \infty } \binom { n + p } { p } M _ { n } ^ { ( p ) } ( \lambda T ) \rho ^ { n } \, . \]
For \( p \geq \) 2 the resolvent estimate follows directly from
\[ \sum _ { n = 0 } ^ { \infty } \binom { n + p } { p } n ^ { r } \rho ^ { n } \leq C ( 1 - \rho ) ^ { - p - r - 1 } \, . \]
By a straightforward argument we see that the above equality holds for all \( \rho \in \mathbb { D } \) and by comparing the coefficients of \( \rho ^ { k } \) we obtain for \( p \) = 1,
\[ \sum _ { k = 0 } ^ { n } \rho ^ { k } \lambda ^ { k } T ^ { k } = ( 1 - \rho ) \sum _ { k = 0 } ^ { n - 1 } ( k + 1 ) M _ { k } ( \lambda T ) \rho ^ { k } + ( n + 1 ) M _ { n } ( \lambda T ) \rho ^ { n } \, . \] |
11789999_18.pdf | en | In this case the desired estimate follows from the inequalities
\[ \sum _ { n = 0 } ^ { n - 1 } ( k + 1 ) ^ { r + 1 } \rho ^ { k } \leq C ( 1 - \rho ) ^ { - r - 2 } \, , \quad ( 1 - \rho ) ^ { r + 1 } \rho ^ { n } \leq C ^ { \prime } ( n + 1 ) ^ { - r - 1 } \, , \]
for 0 \( < \rho < \) 1.
(\( \Leftarrow \)=) We begin with (i) and assume first that \( p \) = 2. Use (2.6) to write for 0 \( < \rho < \) 1,\( \lambda \in \mathbb { T } \),
\[ \frac { ( n + 1 ) ( n + 2 ) } { 2 } M _ { n } ^ { ( 2 ) } ( \lambda T ) = \int _ { 0 } ^ { 2 \pi } ( I - \rho \lambda e ^ { i t } T ) ^ { - 1 } \sum _ { j = 0 } ^ { n } ( n - j + 1 ) e ^ { - i j t } \rho ^ { - j } \frac { \mathrm { d } t } { 2 \pi } \, . \]
so that
\[ \begin{array} { r l } & { \left\| \frac { ( n + 1 ) ( n + 2 ) } { 2 } M _ { n } ^ { ( 2 ) } ( \lambda T ) \right\| \le \frac { C } { ( 1 - \rho ) ^ { r + 1 } } \rho ^ { - n } \int _ { 0 } ^ { 2 \pi } \frac { 1 } { | 1 - \rho e ^ { - i t } | ^ { 2 } } \frac { \mathrm { d } t } { 2 \pi } } \\ & { \qquad \qquad \qquad \qquad = \frac { C } { ( 1 - \rho ) ^ { r + 1 } ( 1 - \rho ^ { 2 } ) } \rho ^ { - n } } \\ & { \qquad \qquad \qquad \qquad \le \frac { C } { ( 1 - \rho ) ^ { r + 2 } } \rho ^ { - n } \, . } \end{array} \]
If we now choose \( \textstyle \rho = 1 - { \frac { 1 } { n } } \) we obtain the estimate for \( M _ { n } ^ { ( 2 ) } ( T ) \) in (i) for all \( r \ge \) 0. For \( p > \) 2, this follows immediately from the first equality in (2.6).
Let us turn to the case when \( p \) = 1. For \( n \geq \) 1, \( \mu \in \mathbb { T } \) and \( \lambda \in \mathbb { C } \) with \|λ\| > 1 we have by the Abel summation formula
\[ \begin{array} { c } { { \displaystyle M _ { n } ( \mu T ) = \frac { 1 } { n + 1 } \sum _ { k = 0 } ^ { n } ( \mu T ) ^ { k } = \frac { 1 } { n + 1 } \sum _ { k = 0 } ^ { n } \lambda ^ { k + 1 } \lambda ^ { - k - 1 } ( \mu T ) ^ { k } } } \\ { { = \frac { 1 } { n + 1 } \left( \lambda ^ { n + 1 } \sum _ { k = 0 } ^ { n } \lambda ^ { - k - 1 } ( \mu T ) ^ { k } + ( 1 - \lambda ) \sum _ { k = 0 } ^ { n - 1 } \lambda ^ { k + 1 } \sum _ { j = 0 } ^ { k } \lambda ^ { - j - 1 } ( \mu T ) ^ { j } \right) } } \\ { { = \frac { 1 } { n + 1 } \left( \lambda ^ { n + 1 } \overline { { { \mu } } } \sum _ { k = 0 } ^ { n } ( \lambda \overline { { { \mu } } } ) ^ { - k - 1 } T ^ { k } + ( 1 - \lambda ) \sum _ { k = 0 } ^ { n - 1 } \lambda ^ { k + 1 } \overline { { { \mu } } } \sum _ { j = 0 } ^ { k } ( \lambda \overline { { { \mu } } } ) ^ { - j - 1 } T ^ { j } \right) . } } \end{array} \]
From the assumption
\[ \operatorname* { s u p } _ { \stackrel { n \in \mathbb { N } } { | \lambda | > 1 } } \frac { ( | \lambda | - 1 ) ^ { r + 1 } } { | \lambda | ^ { r } } \left\| \sum _ { k = 0 } ^ { n } \lambda ^ { - k - 1 } T ^ { k } \right\| < \infty \, , \]
we obtain
\[ \| M _ { n } ( \mu T ) \| \leq C \frac { | \lambda | ^ { r + 1 } } { ( | \lambda | - 1 ) ^ { r + 1 } ( n + 1 ) } \left( | \lambda | ^ { n } + \frac { | 1 - \lambda | ( | \lambda | ^ { n } - 1 ) } { | \lambda | - 1 } \right) \, , \]
and if \( \textstyle \lambda = 1 + { \frac { 1 } { n } } \),
\[ \| M _ { n } ( \mu T ) \| \le 2 ^ { r } ( 2 e - 1 ) C n ^ { r } \]
for \( n \geq \) 1 and \( \mu \in \mathbb { T } \), which concludes the proof.
|
9259174_155.pdf | en | Following the Listing, the following transactions between our Group and the relevant connected person(s) (as defined in the GEM Listing Rules) will continue, and will constitute continuing connected transactions under the GEM Listing Rules.
# FULLY EXEMPT CONTINUING CONNECTED TRANSACTIONS
Pursuant to Chapter 20 of the GEM Listing Rules, the continuing connected transactions of our Group as set out below are exempt from compliance with the requirements of reporting, annual review, announcement and approval by the independent Shareholders under Chapter 20 of the GEM Listing Rules.
# Warehouse Tenancy Agreement
Winning Tower (as tenant) entered into a tenancy agreement (the ‘‘Warehouse Tenancy Agreement’’) dated 30 September 2015 with Iao Ip Property Investment Company Limited (‘‘Iao Ip Property’’) (as landlord), pursuant to which Iao Ip Property agreed to lease Unit 1002, 10/F, Riley House, 88 Lei Muk Road, Kwai Chung, New Territories, Hong Kong to Winning Tower for a term of three years commencing from 1 October 2015 and ending on 30 September 2018 (both days inclusive) at the monthly rent of HK\$50,000 (inclusive of property tax but exclusive of management fee, government rent, rates and water, gas and electricity charges), which was agreed after arm’s length negotiations between the parties with regard to the market rent of similar properties in similar locations as the property leased under the Warehouse Tenancy Agreement, and the terms of the Warehouse Tenancy Agreement were no less favourable to Winning Tower than terms available from Independent Third Parties.
The rent (together with the management fee, government rent and rates) paid by us under the Warehouse Tenancy Agreement for each of the two years ended 31 December 2016 amounted to approximately HK\$0.2 million and HK\$0.6 million, respectively. It is expected that the annual rent (together with the management fee, government rent and rates) payable by us under the Warehouse Tenancy Agreement for each of the two years ending 31 December 2018 amounts to approximately HK\$0.7 million and HK\$0.7 million respectively.
By using the above expected annual rent (together with the management fee, government rent and rates) as the numerators for the calculation of percentage ratios, all the relevant percentage ratios calculated for the relevant transactions under the Warehouse Tenancy Agreement pursuant to Chapter 20 of the GEM Listing Rules will be less than 5% and the annual consideration will be less than HK\$3,000,000.
Iao Ip Property is a company incorporated in Hong Kong which is owned as to 20% by Mr. Yu, our non-executive Director and Controlling Shareholder, and as to 80% in aggregate by three associates of Mr. Yu. As such, Iao Ip Property is an associate of Mr. Yu and hence a connected person of our Company for the purposes of the GEM Listing Rules and the transactions under the Warehouse Tenancy Agreement will constitute exempt continuing connected transactions for our Group after the Listing. |
9259174_156.pdf | en | # Food Factory Tenancy Agreement
Winning Star (as tenant) entered into a tenancy agreement (the ‘‘Food Factory Tenancy Agreement’’) dated 1 January 2017 with Winning Tower Group (as landlord), pursuant to which Winning Tower Group agreed to lease Unit 1105, 11/F, Riley House, 88 Lei Muk Road, Kwai Chung, New Territories, Hong Kong to Winning Star for a term of three years commencing from 1 January 2017 and ending on 31 December 2019 (both days inclusive) at the monthly rent of HK\$61,000 (inclusive of property tax, management fee, government rent and rates but exclusive of water, gas and electricity charges), which was agreed after arm’s length negotiations between the parties with regard to the market rent of similar properties in similar locations as the property leased under the Food Factory Tenancy Agreement, and the terms of the Food Factory Tenancy Agreement were no less favourable to Winning Tower Group than terms available from Independent Third Parties.
The rent paid by Winning Star for the relevant premises for each of the two years ended 31 December 2016 amounted to approximately HK\$0.3 million and HK\$0.7 million, respectively. It is expected that the annual rent payable by Winning Star under the Food Factory Tenancy Agreement for each of the three years ending 31 December 2019 amounts to approximately HK\$0.7 million, HK\$0.7 million and HK\$0.7 million respectively.
By using the above expected annual rent as the numerators for the calculation of percentage ratios, all the relevant percentage ratios calculated for the relevant transactions under the Food Factory Tenancy Agreement pursuant to Chapter 20 of the GEM Listing Rules will be less than 5% and the annual consideration will be less than HK\$3,000,000.
Winning Star is a limited company incorporated in Hong Kong and is owned and controlled as to 60% by our Company and as to 40% by Grand Gold, which is a fellow subsidiary of Top Ocean, our Controlling Shareholder. As such, Winning Star is a connected subsidiary and hence a connected person of our Company for the purposes of the GEM Listing Rules and the transactions under the Food Factory Tenancy Agreement will constitute exempt continuing connected transaction for the Group after the Listing.
# Master Purchase Agreement of Yau Heng
Winning Tower Group (for itself and as trustee for the benefit of its subsidiaries from time to time) (as purchaser) entered into a master purchase agreement (the ‘‘Master Purchase Agreement of Yau Heng’’) dated 23 May 2017 with Yau Heng (as supplier) for a term of three years commencing from 1 January 2017 and ending on 31 December 2019 (both days inclusive), pursuant to which Yau Heng agreed to supply certain frozen raw and unprocessed meat products to Winning Tower Group and its subsidiaries on the basis of individual purchase order placed by any of them at the price to be determined after arm’s length negotiations between the parties from time to time with reference to the then prevailing market price of similar products in the market (which is ascertained by, among others, obtaining quotations from two other suppliers who are Independent Third Parties).
For each of the two years ended 31 December 2016, our total purchases attributable to the purchase of the aforesaid products from Yau Heng was approximately HK\$2.6 million and HK\$2.5 million, respectively. Our Directors confirm that Yau Heng had transactions with parties other than our Group and our total purchases attributable to the purchase of the aforesaid products from Yau Heng accounted for less than 2% of Yau Heng’s sales for each of the Track Record Period. Based on our |
7496124_23.pdf | en | # 9. LOSS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT
The calculation of the basic loss per share amounts is based on the loss for the year attributable to ordinary equity holders of the parent, and the weighted average number of ordinary shares of 4,439,460,000 (2019: 4,163,227,000) in issue during the year.
The computation of diluted loss per share does not assume the exercise of the Company’s share options because the exercise prices of those options were higher than the average market price of the Company’s shares for the year ended 31 December 2020.
No adjustment has been made to the basic loss per share amounts presented for the years ended 31 December 2020 and 2019 in respect of a dilution as the impact of the share options outstanding had an anti-dilutive effect on the basic loss per share amounts presented.
The calculations of basic and diluted loss per share are based on:
<table><tr><td rowspan="2"></td><td>2020</td><td>2019</td></tr><tr><td>HK$’000</td><td>HK$’000</td></tr><tr><td>Loss</td><td></td><td></td></tr><tr><td>Loss attributable to ordinary equity holders of the parent</td><td>(242,399)</td><td>(441,039)</td></tr></table>
<table><tr><td rowspan="3"></td><td colspan="2">Number of shares</td></tr><tr><td>2020</td><td>2019</td></tr><tr><td>’000</td><td>’000</td></tr><tr><td>Shares</td><td></td><td></td></tr><tr><td>Weihgted averadige number of ornary shares in issue during
the year used in the basic and diluted loss per share calculation</td><td>4,439,460</td><td>4,163,227</td></tr></table> |
7496124_24.pdf | en | # 10. TRADE AND BILLS RECEIVABLES
<table><tr><td rowspan="2"></td><td>2020</td><td>2019</td></tr><tr><td>HK$’000</td><td>HK$’000</td></tr><tr><td>Trade receivables</td><td>321,087</td><td>210,947</td></tr><tr><td>Impairment</td><td>(123,465)</td><td>(100,740)</td></tr><tr><td>Trade receivables, net</td><td>197,622</td><td>110,207</td></tr><tr><td>Bills receivable</td><td>223</td><td>223</td></tr><tr><td></td><td>197,845</td><td>110,430</td></tr><tr><td>Less: Non-current portion</td><td>(139,102)</td><td>(57,029)</td></tr><tr><td>Current portion</td><td>58,743</td><td>53,401</td></tr></table>
The Group enters into an arrangement to sublease a leased asset to a third party while the original lease contract is in effect, the Group is an intermediate lessor, this sublease is classified as a finance lease. The Group derecognised the right-of-use asset on the head lease and recognised trade receivables at the sublease commencement date, continued to account for the original lease liability in accordance with the lessee accounting model. At 31 December 2020, the current portion and non-current portion of the trade receives amounted to RMB8,022,000 (equivalent to approximately HK\$9,532,000) and RMB71,272,000 (equivalent to approximately HK\$84,656,000), respectively.
The Group’s trading terms with its customers are mainly on credit. The credit period is generally three months. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management. In view of the aforementioned and the fact that the Group’s trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk. The Group does not hold any collateral or other credit enhancements over its trade receivable balances. Trade receivables are non-interest-bearing.
An ageing analysis of the trade and bills receivables as at the end of the reporting period, based on the invoice date and net of loss allowance, is as follows:
<table><tr><td rowspan="2"></td><td>2020</td><td>2019</td></tr><tr><td>HK$’000</td><td>HK$’000</td></tr><tr><td>Within 90 days</td><td>106,295</td><td>27,834</td></tr><tr><td>91 to 180 days</td><td>3,995</td><td>6,304</td></tr><tr><td>181 to 365 days</td><td>9,625</td><td>5,398</td></tr><tr><td>Over 365 days</td><td>77,930</td><td>70,894</td></tr><tr><td></td><td>197,845</td><td>110,430</td></tr></table> |
8405636_291.pdf | en | So far as our Directors are aware, the following persons will, immediately prior to and following the completion of the Capitalisation Issue, the Distribution and the Global Offering (without taking into account any Shares which may be issued pursuant to the exercise of the Over-allotment Option and assuming there will be no change in the shareholding structure of Sunac China from the Latest Practicable Date up to the Listing), have interests or short positions in our Shares or underlying Shares which would be required to be disclosed to us and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is, directly or indirectly, interested in 10% or more of the issued voting shares of any other member of our Group:
# INTERESTS IN SHARES OF OUR COMPANY
<table><tr><td>Name of Shareholder</td><td> Nature of Interest</td><td colspan="2">Shares held immediately
f
prior to the comlpetion othe Caiptalisation Issue the,
Distribution and the Global
(1)Offering</td><td colspan="2">Shares held immediately
following the Caiptalisation
Issue the Ditributio and
,sn(1)the Global Offering</td></tr><tr><td></td><td></td><td>Number</td><td>Approximate
Percentage</td><td> Number</td><td>Approximate
Percentage</td></tr><tr><td>Sunac Services
(2)Investment </td><td>Beneficial owner</td><td> 7,600,000(L)</td><td>80%</td><td> 1,698,000,000(L)</td><td>56.60%</td></tr><tr><td>(2)Sunac Shine</td><td>Trustee</td><td> 1,900,000(L)</td><td>20%</td><td> 462,000,000(L)</td><td>15.40%</td></tr><tr><td>(2)Sunac China </td><td>Interest in
controlled
corporation</td><td>9,500,000(L)</td><td>100%</td><td> 2,160,000,000(L)</td><td>72.00%</td></tr><tr><td rowspan="2">(2)(3)Sunac International </td><td>Interest in
controlled
corporation</td><td>9,500,000(L)</td><td>100%</td><td> 2,160,000,000(L)</td><td>72.00%</td></tr><tr><td>Beneficial owner</td><td>–</td><td>–</td><td> 65,731,909(L)</td><td>2.19%</td></tr><tr><td rowspan="2">(M \( \angle \gamma ( - ) \gamma ( + \))r. S un</td><td>Interest in
controlled
corporation</td><td>9,500,000(L)</td><td>100%</td><td> 2,227,299,274(L)</td><td>74.24%</td></tr><tr><td>Beneficial owner</td><td>–</td><td>–</td><td> 366,531(L)</td><td>0.01%</td></tr></table>
Notes:
(1) The letter “L” denotes a long position in our Shares. |
8405636_292.pdf | en | (2) Sunac Services Investment is wholly owned by Sunac China. Sunac Shine, is wholly-owned by Sunac China and acts as the trustee of the Sunac Services Share Award Scheme Trust which is set up for the purpose of a share award scheme to be adopted at least six months after Listing. As at the Latest Practicable Date, the detailed terms of the share award scheme and the relevant grantees had not yet been determined. By virtue of the SFO, Sunac China is deemed to be interested in the Shares held by Sunac Services Investment and Sunac Shine.
(3) As at the Latest Practicable Date, Sunac China was owned as to (i) approximately 43.82% by Sunac International, (ii) approximately 1.05% by Tianjin Biaodi, which was indirectly wholly owned by Mr. Sun, and (iii) approximately 0.24% by Mr. Sun. By virtue of the SFO, Sunac International and Mr. Sun are deemed to be interested in the Shares held by Sunac Services Investment and Sunac Shine, both of which are wholly owned by Sunac China.
(4) Tianjin Biaodi is expected to hold 1,567,365 Shares, representing approximately 0.05% of our Shares in issue immediately following the completion of the Capitalisation Issue, the Distribution and the Global Offering. Tianjin Biaodi is indirectly wholly owned by Mr. Sun. By virtue of the SFO, Mr. Sun is deemed to be interested in the Shares held by Tianjin Biaodi.
# INTEREST IN EQUITY INTEREST OF MEMBERS OF OUR GROUP
<table><tr><td>Name of Shareholder</td><td>Company
concerned</td><td>Nature of
Interest</td><td>Equity interest held
immediately prior to
the comlifpeton o the
Caiiptalsation Issue,
the Distribution and
the Global Offering</td><td>Equity interest held
immediately following
the comlifpeton o the
Caiiptalsation Issue,
the Distribution and
the Global Offering</td></tr><tr><td></td><td></td><td></td><td>Approximate
Percentage</td><td>Approximate
Percentage</td></tr><tr><td>QindLgao onhPgai roperty
Services Co., Ltd. (青島隆海物
業服務有限公司) </td><td>QindSgao unac</td><td> Beneficial
owner</td><td>30%</td><td>30%</td></tr><tr><td>Deng Hong (鄧鴻) </td><td>Chendgu
Huanrong</td><td>Beneficial
owner</td><td>29%</td><td>29%</td></tr><tr><td>Hebei Shuangchuang Pingan
Investment Co., Ltd. (河北雙創
平安投資有限公司) </td><td>Shijiazhuang
Ronhgong</td><td>Beneficial
owner</td><td>46%</td><td>46%</td></tr><tr><td rowspan="2">Shoujin Minzhi (Tianjin) Property
Development Co., Ltd. (首金敏
志(天津)置業發展有限公司)</td><td>Hubei Rongshou</td><td> Beneficial
owner</td><td>50%</td><td>50%</td></tr><tr><td>Henan Rongshou</td><td> Beneficial
owner</td><td>40%</td><td>40%</td></tr></table> |
2122103_80.pdf | en | # 4 Critical accounting estimates and judgments
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Save as disclosed in Note 2.1, the estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
# (a) Income taxes
The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current income tax and deferred tax provision in the period in which such determination is made.
# (b) Provision for impairment of receivables
Management determines the provision for impairment of trade receivables. This amount of impairment is based on the credit history of its customers and the current market condition. Management reassesses the provision at each reporting date.
Significant judgment is exercised on the assessment of the collectability of trade receivables from each customer. In making the judgment, management considers a wide range of factors such as results of follow-up procedures performed by sales personnel, customer payment trends including subsequent payments and customers’ financial positions. If the financial conditions of the customers of the Group were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.
The carrying amount and impairment of trade receivables are disclosed in Note 19.
# (c) Identification of functional currencies
The functional currency for each entity in the Group is the currency of the primary economic environment in which it operates. Determination of functional currency involves significant judgment. The Group reconsiders the functional currency of its entities if there is a change in the underlying transactions, events and conditions which determine their primary economic environment. |
2122103_81.pdf | en | # 4 Critical accounting estimates and judgments (Continued)
# (d) Estimated useful lives and impairment of property, plant and equipment
Management estimates useful lives of the property, plant and equipment by reference to the Group’s business model, its assets management policy, the industry practice, expected usage of the assets, expected repair and maintenance, the technical or commercial obsolescence arising from changes or improvements in the market. Residual values of the property, plant and equipment are determined based on prevailing market values for equivalent aged assets taking into account the condition of the relevant assets and other economic considerations. Depreciation would be significantly affected by the useful lives and residual values of the property, plant and equipment as estimated by management.
The Group’s major operating assets represent property, plant and equipment. Management performs review for impairment of the property, plant and equipment whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be recoverable.
Management considered there was no impairment indicator of remaining property, plant and equipment and construction in progress as at December 31, 2017 as these assets were used for profitable projects, and there is a strong demand of these property, plant and equipment in the second hand market (December 31, 2016: Same).
# 5 Revenue and Segment information
The chief operating decision-maker has been identified as the Board. The Board reviews the Group’s internal reporting in order to assess performance and allocate resources. The Board has determined the operating segments based on these reports.
The Board considers the business from both product and geographical perspectives. The Board regularly reviews the consolidated financial statements from both product and geographical perspectives to assess performance and make resources allocation decisions. The operating segments are determined to be based on products. Management assesses the performance of the operating segments based on a measure of gross profit.
The Group derives its revenue from three product segments, namely the electronics parts, branded OPLV products, and construction and industrial products which are operating in five geographical areas, namely The PRC (excluding Hong Kong), Australia, North America, Hong Kong and others.
The description of each reportable product segment is as follows:
<table><tr><td>Reportable product segment</td><td>Type of products</td></tr><tr><td>Electronics parts</td><td>Aluminium parts for consumer electronics products, examples include
heat sinks and chassis for computers</td></tr><tr><td>Construction and industrial products</td><td>Products sold for construction and industrial use, examples include
window and door frames, curtain walls, guardrails, body parts for
transportation, mechanical and electrical equipment and consumer
durable goods</td></tr><tr><td>Branded OPLV products</td><td>Door and window frames systems marketed under “OPLV” brand
and sold through distributors</td></tr></table> |
2589458_22.pdf | en | # Remuneration Committee
The Company has established the Remuneration Committee on 6 June 2014 with written terms of reference in compliance with Rule 3.25 of the Listing Rules and paragraph B.1 of the Code on Corporate Governance Practices as set out in Appendix 14 to the Listing Rules. As at the date of this annual report, the Remuneration Committee consists of two independent non-executive Directors, namely Mr. Gong Jinjun (as Chairman) and Mr. Wang Ping, and one executive Director, namely Mr. Liu Daoqi (who replaced Mr. Feng Bin with effect from 17 March 2017). The primary duties of the Remuneration Committee are, inter alia, (1) to determine the remuneration policy of all Directors, to assess the performance of the Directors, to approve the terms of service contracts of the Directors, to review and approve the management’s remuneration proposals with reference to the Board’s corporate goals and objectives, to make recommendations to the Board on the remuneration packages of individual executive Directors and senior management, to make recommendations to the Board on the remuneration of the non-executive Director(s), (2) consider salaries paid by comparable companies, time commitment and responsibilities and employment conditions elsewhere in the group to review and approve compensation arrangements relating to dismissal or removal of Directors for misconduct to ensure they are consistent with relevant contractual terms and are otherwise reasonable and appropriate, (3) to review and approve compensation payable to executive Director and senior management for any loss or termination of office or appointment to ensure that it is consistent with contracted terms and is otherwise fair and not excessive, and (4) to ensure that no Director or any of his associates is involved in deciding his own remuneration.
During the year ended 31 December 2017, one meeting was held by the Remuneration Committee. The attendance record of each member of the Remuneration Committee is set out below:
<table><tr><td>Name of Director</td><td>Attendance
/Number of Remuneration Committee meeting(s)</td></tr><tr><td>Mr. Gong Jinjun</td><td>1/1</td></tr><tr><td>Mr. Wang Ping</td><td>1/1</td></tr><tr><td>Mr. Liu Daoiq (aidfhpponte as a member o te Remuneration
Committee on 17 March 2017)</td><td>1/1</td></tr><tr><td>Mr. Feng Bin (resigned on 17 March 2017)</td><td>0/0</td></tr></table>
During the year ended 31 December 2017, the Remuneration Committee mainly performed works including reviewing and making recommendation to the Board regarding of the Directors’ remuneration for the year ending 31 December 2017 and the terms of service contracts for newly appointed directors.
There had been no disagreement between the Board and the Remuneration Committee during the year ended 31 December 2017. |
2589458_23.pdf | en | # Nomination Committee
The Company has established the Nomination Committee on 6 June 2014 with written terms of reference in compliance with paragraph A.5 of the Code on Corporate Governance Practices as set out in Appendix 14 to the Listing Rules. As at the date of this annual report, the Nomination Committee consists of two independent non-executive Directors, namely Mr. Zeng Shiquan and Mr. Gong Jinjun, and one executive Director, Mr. Li Tie (as Chairman) (who replace Mr. Yang Yoong An with effect from 17 March 2017). The primary functions of the nomination committee are, inter alia, to review the structure, size and composition (including the skills, knowledge and experience) of the Board at least annually and make recommendations on any proposed changes to the Board to complement the Company’s corporate strategy, to identify individuals suitably qualified to become Board members and select or make recommendations to the Board on the selection of individuals nominated for directorships, to assess the independence of independent non-executive Directors, and to make recommendations to the Board on the appointment or re-appointment of Directors in particular the chairman and the chief executive officer and succession planning for Directors.
During the year ended 31 December 2017, one meeting was held by the Nomination Committee. The attendance record of each member of the Nomination Committee is set out below:
<table><tr><td>Name of Director</td><td>Attendance/
Number of Nomination Committee meeting(s)</td></tr><tr><td>Mr. Li Tie (appointed as chairman of the
Nomination Committee on 17 March 2017)</td><td>1/1</td></tr><tr><td>Mr. Zeng Shiquan</td><td>1/1</td></tr><tr><td>Mr. Gong Jinjun</td><td>1/1</td></tr><tr><td>Mr. Yang Yoong An (resigned as chairmen of the
Nomination Committee on 17 March 2017)</td><td>0/0</td></tr></table>
There had been no disagreement between the Board and the Nomination Committee during the year ended 31 December 2017. During the year ended 31 December 2017, the Nomination Committee mainly performed works including:
— identified suitable candidates for directorships and made recommendations to the Board;
— assessed the independence of independent non-executive Directors;
— made recommendations to the Board on the appointment or re-appointment of Directors; and
— reviewed and assessed the implementation of the diversity policy of the Company.
# Board Diversity Policy
The Company recognises and embraces the benefits of having a diverse Board to enhance the quality of its performance and hence the purpose of the Board Diversity Policy aims to build and maintain a Board with a diversity of directors, in terms of skills, experience, knowledge, expertise, culture, independence, age and gender. These differences will be taken into account in determining the optimum composition of the Board. The Nomination Committee will discuss the measurable objectives for implementing diversity on the Board from time to time and recommend them to the Board for adoption. The Nomination Committee will report annually on the composition of the Board under diversified perspectives, and monitor the implementation of this policy to ensure the effectiveness of this policy. It will also discuss any revisions that may be required, and recommend any such revisions to the Board for consideration and approval. |
11690788_156.pdf | en | <table><tr><td>Name of Shareholder</td><td> Class of Share</td><td>Number of
Shares</td><td>Approximate
Shareholding
Percentage in Our
Company after the
Allotment</td></tr><tr><td>Zhong Hang Investment
Management Limited
(Note 11)</td><td>Series A Preferred
Shares</td><td>2,313,800</td><td>2.0199%</td></tr><tr><td>BAI (Note 12)</td><td>Series B Preferred
Shares</td><td>3,055,000</td><td>2.6669%</td></tr><tr><td>China Merchants Venture
CailFpta und, L.P. (招商
局創新投資基金有限合夥
企業) (Note 13)</td><td>Series B Preferred
Shares</td><td>4,582,600</td><td>4.0005%</td></tr><tr><td>Total</td><td></td><td>114,551,513</td><td>100.00%</td></tr></table>
Notes:
1. Each of Cabnetvic, Cabnetwa and Cabnetsa is a business company incorporated in the BVI and wholly-owned by Mr. Song.
2. Let It Bee Company Limited (“Let it Bee”) is a business company incorporated in the BVI and wholly-owned by Ms. Chau.
3. Xylo Yonder Company Limited (“Xylo Yonder”) is a business company incorporated in the BVI and wholly-owned by Mr. Jiang, a director of certain Consolidated Affiliated Entities of our Group.
4. Shirazvic is a business company incorporated in the BVI and a shareholding platform beneficially owned by Mr. Song, Mr. Ji and Ms. Chau, our executive Directors and Co-founders, Mr. Zhong Songran (鍾松然), our Chief Technology Officer and other 10 employees who have made contributions to the establishment and development of our Group. Except Mr. Song, Mr. Ji, Ms. Chau and Mr. Zhong, all the other ultimate beneficial owners of Shirazvic are not Directors or senior management of our Company. As of the Latest Practicable Date, Shirazvic was owned as to (i) approximately 35.29% by Ms. Chau through Let It Bee; (ii) approximately 15.19% by Mr. Zhong through Soley Raven Company Limited, a business company incorporated in the BVI which is wholly-owned by Mr. Zhong; (iii) approximately 10.40% by Mr. Song; (iv) approximately 0.91% by Mr. Ji through Joy Kalton; and (v) approximately 38.21% by 10 employees of our Group who are not Directors or senior management of our Company.
5. Equity Incentive Holdco is a business company incorporated in the BVI and a special purpose vehicle wholly-owned by Trident Trust Company (HK) Limited, which is the trustee of LLS Trust, established for the purpose of holding Class B Shares pursuant to the Equity Incentive Plan.
6. Tencent Mobility Limited (“Tencent Mobility”) is a limited liability company incorporated under the laws of Hong Kong and a wholly-owned subsidiary of Tencent.
7. CCRE Investment Holdings Ltd. (“CCRE Investment”) is an exempted company with limited liability incorporated in the Cayman Islands and a wholly-owned subsidiary of CITIC Capital.
8. Qian Linklogis Limited (“LVC Qian”) is a business company incorporated in the BVI and wholly-owned by Shanghai Rongmian Information Technology Partnership (Limited Partnership) (上海融勉信息技術合夥企業(有限合夥) (“Shanghai Rongmian”), a limited partnership established in the PRC whose general partner is Shanghai LVC. |
11690788_157.pdf | en | 9. Le Linklogis Limited (“LVC Le”) is a business company incorporated in the BVI and wholly-owned by Shanghai Rongmian.
10. Tan Linklogis Limited (“LVC Tan”) is a business company incorporated in the BVI and wholly-owned by Shanghai Rongmian.
11. Zhong Hang Investment Management Limited (“Zhong Hang Investment”) is a business company incorporated in the BVI and ultimately beneficially owned by Mr. Wang Jianhua (王建華), an Independent Third Party.
12. BAI is a company incorporated under the laws of Germany, whose beneficial owner is Bertelsmann SE & Co. KGaA (貝塔斯曼) (“Bertelsmann”).
13. China Merchants Venture is a limited partnership established in the Cayman Islands, which is ultimately controlled by China Merchants Group Co., Ltd. (招商局集團有限公司).
# Contractual Arrangements
On October 9, 2018, Linklogis Supply Chain Services entered into the Contractual Arrangements with Linklogis Digital, the Relevant Shareholders and the Other Parties (as defined in the section headed “Contractual Arrangements” of this prospectus), which were subsequently restated and amended on November 9, 2020. Through the Contractual Arrangements, Linklogis Supply Chain Services is able to exercise control over the operations of, and enjoy 100% of the economic benefits of Linklogis Digital and its subsidiaries. See the sections headed “Contractual Arrangements” and “Connected Transactions” of this prospectus for details of the Contractual Arrangements.
# Reclassification, redesignation and Share Subdivision
On March 22, 2021, our shareholders resolved, among other things, that subject to the Global Offering becoming unconditional, (i) all the ordinary shares with a par value of US\$0.0001 each and the Preferred Shares (save and except for 22,764,297 ordinary shares with a par value of US\$0.0001 each held by Cabnetvic, Cabnetwa and Cabnetsa), whether issued and unissued, be re-classified and re-designated as Class B Shares with a par value of US\$0.0001 each on a one-for-one basis, (ii) 22,764,297 ordinary shares with a par value of US\$0.0001 each held by Cabnetvic, Cabnetwa and Cabnetsa be re-classified and re-designated as Class A Shares with a par value of US\$0.0001 each on a one-for-one basis, and (iii) each share in the then authorized share capital of the Company with a par value of US\$0.0001 each (whether issued or unissued) be subdivided into 12 Shares of the corresponding class with a par value of US\$0.00000833 each immediately prior to the completion of the Global Offering.
As a consequence of this, immediately prior to the completion of the Global Offering, the authorized share capital of the Company will be US\$50,000 divided into 273,171,564 Class A Shares with a par value of US\$0.00000833 each and 5,726,828,436 Class B Shares with a par value of US\$0.00000833 each, and the issued share capital of the Company will be US\$15,095.9579 divided into 273,171,564 Class A Shares with a par value of US\$0.00000833 each and 1,538,343,384 Class B Shares with a par value of US\$0.00000833 each. |
20791588_648.pdf | en | Members of the liquidation committee are required to discharge their duties honestly and in compliance with relevant laws. A member of the liquidation committee is liable to indemnify the company and its creditors with respect to any loss arising from his willful or material default.
# (xix) Overseas Listing
The shares of a company shall only be listed overseas after obtaining approval from the securities regulatory authority of the State Council and the listing must be arranged in accordance with procedures specified by the State Council.
According to the Special Regulations, a company’s plan to issue overseas listed foreign shares and domestic shares which has been approved by the Securities Commission may be implemented by the board of directors of a company by way of respective issues, within 15 months after approval is obtained from Securities Commission.
# (xx) Loss of H share certificates
A shareholder may apply, in accordance with the relevant provision set out in the PRC Civil Procedure Law, to a people’s court in the event that H share certificates in registered form are either stolen or lost, for a declaration that such certificates will no longer be valid. After such a declaration has been obtained, the shareholder may apply to the company for the issue of replacement certificates.
The Mandatory Provisions provide for a separate procedure regarding loss of H share certificates (which has been incorporated in the Articles of Association, a summary of which is set out in “Appendix VII – Summary of Articles of Association”).
# (xxi) Suspension and Termination of Listing
The new and amended Company Law has deleted provisions governing suspension and termination of listing. The new Securities Law has been amended as follows:
The trading of shares of a company on a stock exchange may be suspended if so decided by the Securities Exchange under one of the following circumstances:
(1) the total amount of shares or the shareholding distribution no longer complies with the necessary requirements for a listed company;
(2) the company failed to make public its financial position in accordance with the requirements or there is false information in the company’s financial report with the possibility of misleading investors;
(3) the company has committed a major breach of the law;
(4) the company has incurred losses for latest three (3) consecutive years; or |
20791588_649.pdf | en | (5) other circumstances as required by the listing rules of the relevant stock exchange(s).
Under the Securities Law, in the event that the conditions for listing are not satisfied within the period stipulated by the relevant stock exchange in the case described in (1) above, or the company has refused to rectify the situation in the case described in (2) above, or the company fails to become profitable in the next subsequent year in the case described in (4) above, the relevant stock exchange shall have the right to terminate the listing of the shares of the company.
# (xxii) Merger and demerger
Companies may merge through merger by absorption or through the establishment of a newly merged entity. If it merges by absorption, the company which is absorbed shall be dissolved. If it merges by forming a new corporation, both companies will be dissolved.
# Securities law and other relevant regulations
The PRC has promulgated a number of regulations that relate to the issue and trading of Shares and disclosure of information by the Company. In October 1992, the State Council established the Securities Committee and CSRC. The Securities Committee is responsible for co-coordinating the drafting of securities regulations, formulating securities-related policies, planning the development of securities markets, directing, coordinating and supervising all securities-related institutions in the PRC and administering CSRC. CSRC is the regulatory body of the Securities Committee and is responsible for the drafting of regulatory provisions of securities markets, supervising securities companies, regulating public offers of securities by PRC companies in the PRC or overseas, regulating the trading of securities, compiling securities-related statistics and undertaking research and analysis. In 1998, the State Council dissolved the Securities Committee and assigned its function to CSRC. CSRC is also responsible for the regulation and supervision of the national stocks and futures market according to laws, regulations and authorizations.
The Securities Law took effect on July 1, 1999 and was latest revised on August 31, 2014. This is the first national securities law in the PRC, and it is divided into 12 chapters and 240 articles regulating, among other things, the issue and trading of securities, takeovers by listed companies, securities exchanges, securities companies and the duties and responsibilities of the State Council’s securities regulatory authorities. The Securities Law comprehensively regulates activities in the PRC securities market. Article 238 of the Securities Law provides that a company must obtain prior approval from the State Council’s regulatory authorities to list shares outside the PRC. Article 239 of the Securities Law provides that specific measures with respect to shares of companies in the PRC that are to be subscribed and traded in foreign currencies shall be separately formulated by the State Council. Currently, the issue and trading of foreign issued shares (including H Shares) are still mainly governed by the rules and regulations promulgated by the State Council and CSRC. |
2151761_107.pdf | en | # 30. RETIREMENT BENEFITS
As stipulated by the regulations of the PRC, the Group’s subsidiaries in the PRC participate in basic defined contribution retirement schemes organised by the respective municipal governments under which they are governed. Details of the schemes of the subsidiaries are as follows:
<table><tr><td>Administrator</td><td>Beneficiary</td><td>Contribution rate</td></tr><tr><td>Beijing Municipal Government</td><td>Employees of Beijing OLM</td><td>19%</td></tr><tr><td>Shanghai Municipal Government</td><td>Employees of Shanghai OLM</td><td>20%</td></tr><tr><td>Chengdu Municipal Government,
Sichuan Province</td><td>Employees of Chengdu OLM</td><td>20.5%</td></tr><tr><td>Hangzhou Municipal Government,
Zhejiang Province</td><td>Employees of Beijing OLM
Hangzhou Branch</td><td>14%</td></tr><tr><td>Guangzhou Municipal Government,
Guangdong Province</td><td>Employees of Beijing OLM
Guangzhou Branch</td><td>14%</td></tr></table>
All employees are entitled to retirement benefits equal to a fixed proportion of their salaries and benefits in kind prevailing at their normal retirement ages.
The Group also operates a Mandatory Provident Fund Scheme (the “MPF scheme”) under the Hong Kong Mandatory Provident Fund Scheme Ordinance for employees employed under the jurisdiction of the Hong Kong Employment Ordinance. The MPF scheme is a defined contribution retirement plan administered by independent trustees. Under the MPF scheme, the employer and its employees are each required to make contributions to the plan at 5% of the employees’ relevant income, subject to a cap of monthly relevant income of HK\$30,000. Contributions to the plan vest immediately.
The Group has no other material obligation for the payment of retirement benefits associated with this scheme beyond the contributions described above. |
2151761_108.pdf | en | # 31. RELATED PARTY TRANSACTIONS
# (a) Save as disclosed elsewhere in the consolidated financial statements, details of transactions between the Group and its related parties are disclosed below:
<table><tr><td rowspan="2"></td><td>2016</td><td>2015</td></tr><tr><td>RMB’000</td><td>RMB’000</td></tr><tr><td>Non-controlling interests</td><td></td><td></td></tr><tr><td>— Provision for software maintenance and other services</td><td>344</td><td>767</td></tr></table>
# (b) Remuneration to key management personnel
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, including directors and supervisors of the Group. The compensation of key management personnel is as follows:
<table><tr><td rowspan="2"></td><td>2016</td><td>2015</td></tr><tr><td>RMB’000</td><td>RMB’000</td></tr><tr><td>Short-term employee benefits</td><td>6,897</td><td>8,175</td></tr><tr><td>Post-employment benefits</td><td>279</td><td>204</td></tr><tr><td></td><td>7,176</td><td>8,379</td></tr></table>
# (c) Contribution to defined contribution retirement plans
The Group participates in defined contribution retirement plans organised by municipal government for its employees. The details of the Group’s employee benefits plan are disclosed in note 30. As at 31 December 2016, there was no material outstanding contribution to post-employment benefit plans (2015: Nil). |
20792909_65.pdf | en | # 6.2 Commerce and Logistics Finance
In 2018, the Bank adhered to the unique positioning as a “commerce and logistics bank” and constructed a “Five-Clouds” platform to strengthen product and service innovation. Specifically, the Bank built a professional value-added “Cloud Service” platform by establishing the “Cloud Logistics” and “Cloud Business” product systems and improving the “Cloud Financing” and “Cloud Trading” functions to provide full-process transaction services for enterprises and enhance customer experience, so as to accrue settlement deposits and broaden income sources of intermediary business.
# “Cloud Trading“
The Bank’s “Cloud Trading” platform uses advanced financial technology and scientific and agile iterative development methods to develop a complete set of solutions for treasury management of enterprises. The Bank introduced products such as corporate online banking, cash management, bank-enterprise direct link, interbank treasury management cloud platform, corporate settlement card and e-government to provide enterprises with a series of innovative payment and settlement services. By embedding financial services in transaction links to satisfy the needs of enterprises in various application scenarios, the platform can help enterprises achieve a range of treasury management goals such as pooling resources, reducing costs, accelerating fund flow, controlling risks and enhancing asset allocation. As at the end of the Reporting Period, the Bank had signed 28,025 corporate online banking customers with a transaction amount of RMB656.5 billion; the cash management platform had provided treasury management solutions for 839 large and medium-sized enterprises and public institutions; the bank-enterprise direct link had successfully connected with a number of medium and large group customers; the Bank had issued 2,316 corporate settlement cards in total; and the Bank had provided cash management solutions for many institutional customers including the public resources trading centre, courts, housing provident fund centre, land and resources trading centre, etc.
# “Cloud Financing“
The Bank established an online supply chain financing platform based on the credit of core enterprises to develop financing services for upstream and downstream customers nationwide. With system connection and information exchange among the Bank’s online supply chain financing platform, fund supervision system, core enterprises’ ERP (Enterprise Resource Planning) systems and order systems, the Bank employs electronic signature law and electronic signature technology and draws on the credit of core enterprises to provide full-process online financing services for upstream and downstream partners of the core enterprises. Currently, the online 1+N prepayment financing, online 1+N factoring pool financing, online factoring and online 1+N re-factoring, financing functions have been up and running. During the Reporting Period, the “Cloud Financing” platform achieved the direct connection among multiple B2B (Business-to-Business) e-commerce platforms, supply chain finance platforms and core enterprises, and commenced business operations in June 2018, thus expanding the Bank’s channels to secure customers in large quantities for its “Cloud Financing” business. As at the end of the Reporting Period, more than 100 customers received financing online via the “Cloud Financing“ platform, and online financing business exceeded RMB400 million. |
20792909_66.pdf | en | # “Cloud Logistics“
The “Cloud Logistics” platform is an open comprehensive service platform for the logistics industry. It is a professional “Internet + Logistics + Finance” platform created by the Bank to provide consignors with online registration, online ordering, online freight payment and other related functions. The platform provides logistics companies with such functions as entry application, online receipt of orders, logistics tracking, online entrusted collection of payments and branch fund management to improve their automated financial reconciliation and sub-account management capabilities and help them achieve automated fund management. For orders on the platform paid through the Bank’s acquiring channel, the Bank will supervise the funds from entrusted collection of payments for goods and ensure that the collected payments are safely and timely distributed to the consignors. Currently, the Bank has signed business cooperation agreements with a number of logistics companies.
# “Cloud Service“
The “Cloud Service” platform, based on the WeChat public account named “Zhengzhou Bank Trade Finance” (鄭州銀行商貿金融), promoted the Bank’s latest products for corporate banking according to customers’ industry focus so as to accurately push industry insight reports and forward-looking industry analysis for corporate customers. The platform also linked the corporate online banking, providing customers with financial value-added services such as the online appointment to open corporate banking account, account alerts, electronic invoicing, easy payment and bank-enterprise reconciliation. In the future , the “Cloud Service” platform will integrate the application scenarios of “Cloud Financing”, “Cloud Trading”, “Cloud Logistics” and “Cloud Service”, in an effort to incorporate the functions of the “Five-Cloud” platform to form an organic ecosystem.
# “Cloud Business“
The “Cloud Business” platform mainly serves the “Commerce and Logistics Alliance” initiated by the Bank and is expected to be an online e-commerce asset trading platform. The platform integrates the resources of the alliance to achieve win-win results by having qualified investors such as banks and quasi-financial institutions provide financial support as to the assets and financing needs of customers in the nine major commerce and logistics industries posted on the platform. |
11768281_5.pdf | en | <table><tr><td>Figarch Model</td><td>Embedding delay</td></tr><tr><td>Figarch d=0.05</td><td>2</td></tr><tr><td>Figarch d=0.15</td><td>1</td></tr><tr><td>Figarch d=0.25</td><td>2</td></tr><tr><td>Figarch d=0.35</td><td>4</td></tr><tr><td>Figarch d=0.45</td><td>6</td></tr><tr><td>Figarch d=0.55</td><td>7</td></tr><tr><td>Figarch d=0.65</td><td>8</td></tr><tr><td>Figarch d=0.75</td><td>8</td></tr><tr><td>Figarch d=0.80</td><td>6</td></tr><tr><td>Figarch d=0.90</td><td>8</td></tr></table>
Table 1: Mutual Information for each Figarch Model.
The nearest neighbor in phase space will be a vector;
\[ y ^ { N N } ( i ) = ( x _ { i } ^ { N N } , x _ { i + T } ^ { N N } , x _ { i + 2 T } ^ { N N } , . . . , x _ { i + ( d - 1 ) T } ^ { N N } ) \eqno ( 1 1 ) \]
If the vector \( y ^ { N N } ( i ) \) is a false neighbor of y(i) having arrived its neighborhood by projection from a higher dimension because the present dimension d doesn’t unfold the attractor, then by going to next dimension \( d + \) 1 this false neighbor may be removed out of the neighborhood of y(i).
By looking at every data point y(i) and asking at what dimension all false neighbors are removed, we will sequentially intersections of orbits of lower and lower dimension are removed until at last point intersections are removed. At thatj uncture d will have been identified where the attractor is unfolded.
Comparing the distance between the vectors y(i) and \( y ^ { N N } ( i ) \) in dimension d with the dis-tance between the same vectors in dimension \( d + \) 1, it can easily be established which are true neighbors and which false. It only needs to be compared \( x _ { ( i + d T ) } - x _ { ( i + d T ) } ^ { N N } \) with the Euclidian distance \|yi − yNNi\| between nearest neighbors in dimension d.
If the additional distance is large compared to the distance in dimension d between nearest neighbors, then we have a false neighbor.
The square of the Euclidian distance between the nearest neighbor points as seen in di-mension d is
\[ R _ { d } ( i ) ^ { 2 } = \sum _ { m = 1 } ^ { d } [ x _ { i + ( m - 1 ) T } - x _ { i + ( m - 1 ) T } ^ { N N } ] ^ { 2 } \eqno ( 1 2 ) \]
while dimension d+1 it is;
\[ R _ { d + 1 } ( i ) ^ { 2 } = \sum _ { m = 1 } ^ { d + 1 } [ x _ { i + ( m - 1 ) T } - x _ { i + ( m - 1 ) T } ^ { N N } ] ^ { 2 } \eqno ( 1 3 ) \]
\[ R _ { d + 1 } ( i ) ^ { 2 } = R _ { d } ( i ) ^ { 2 } + | x _ { i + d T } - x _ { i + d T } ^ { N N } | ^ { 2 } \eqno ( 1 4 ) \] |
11768281_6.pdf | en | The distance between points when seen in dimension \( d + \) 1 relative to the distance in dimension d is;
\[ \sqrt { \frac { R _ { d + 1 } ( i ) ^ { 2 } - R _ { d } ( i ) ^ { 2 } } { R _ { d } ( i ) ^ { 2 } } } = \frac { x _ { i + d T } - x _ { i + d t } ^ { N N } } { R _ { d } ( i ) } > r _ { t o l } \eqno ( 1 5 ) \]
When this quantity is larger than some threshold, we have a false neighbor (Kennel M B, Brown R and Abarbanel H D 1992).
Plot of percentage of false neighbors show the unfolded geometry and where there is no unfolding any more. With the correct choice of d dimension, modelling the data in d number of dynamical degrees of freedom will be adequate to capture the properties of the source.
Figure 2: FNN embedding dimension result for FIGARCH d=0.90.
The figure 2 shows minimum embedding dimension where percentage of nearest neighbors goes to zero taken into account some threshold \( r _ { t o l } \). Disappearance of false neighbors indicates minimum embedding dimension \( r _ { t o l } \) is false neighbor Euclidian distance tolerance and \( a _ { t o l } \) is neighbor tolerance based on attractor size. The neighbors are declared false neighbors, when the ratio of the Euclidian distances between neighbor candidates in successive embedding dimensions exceeds \( r _ { t o l } \). |
9296432_105.pdf | en | # 33. EQUITY SETTLED SHARE-BASED PAYMENTS
The Company adopted a share option scheme pursuant to a resolution in writing passed by the Shareholders on 3 January 2013 (the “Share Option Scheme”) for the purpose to grant share options to selected participants as incentives or rewards for their contribution to the Group. Eligible participants of the Share Option Scheme include directors of the Company or any of its subsidiaries, including non-executive directors and independent non-executive directors, other employees of the Group and consultants.
Pursuant to the Share Option Scheme, shares which may be issued upon exercise of all options to be granted under the Share Option Scheme or any other share option scheme adopted by the Company must not in aggregate exceed 10% of the shares of the Company in issue at the time dealings in the shares of the Company first commence on the Stock Exchange. The Company may renew this 10% limit with shareholders' approval provided that each such renewal may not exceed 10% of the shares of the Company in issue as at the date of the shareholders' meeting.
The maximum number of shares of the Company which may be issued upon exercise of all outstanding options granted and yet to be exercised under the Share Option Scheme and any other share option schemes of the Company must not in aggregate exceed 30% of the issued share capital of the Company in issue from time to time.
Unless approved by the Shareholders of the Company, the total number of shares of the Company issued and to be issued upon the exercise of options granted to each eligible participant (including exercised and unexercised options) under the Share Option Scheme or any other share option schemes adopted by the Company in any 12-month period must not exceed 1% of the shares of the Company in issue.
On 17 March 2014, the Company granted 10,800,000 share options (the “first share option”) to certain eligible participants of the Group under the Share Option Scheme. Set out below were details of the outstanding share options granted under the Share Option Scheme:
(1) All share options granted were at an exercise price of HK\$1 per share;
(2) All holders of share options might only exercise their options in the following manner:
The share options will be vested in 3 tranches, i.e. the first 30% from the date immediately after the first anniversary of the offer date until the last day of the option period, the second 30% from the date immediately after the second anniversary of the offer date until the last day of the option period, the balance 40% from the date immediately after the third anniversary of the offer date until the last day of the option period; and
(3) All outstanding or unexercised share options granted to the grantees shall lapse on 16 March 2019 or 16 March 2024. |
9296432_106.pdf | en | # 33. EQUITY SETTLED SHARE-BASED PAYMENTS (continued)
The estimated fair values of share options vested on 17 March 2014 were HK\$3,911,000. These fair values were calculated using the Binomial model. The inputs into the model are as follows:
<table><tr><td>Share price</td><td>HK$0.95</td></tr><tr><td>Exercise price</td><td>HK$1.00</td></tr><tr><td>Expected volatility</td><td>50.554%</td></tr><tr><td>Expected life</td><td>5 years/10 years</td></tr><tr><td>Risk-free interest rate</td><td>1.2010%/2.1656%</td></tr><tr><td>Dividend yield</td><td>4.274%</td></tr><tr><td>Suboptimal factor</td><td>2.2</td></tr></table>
The risk-free rate was based on market yield rate from Hong Kong Monetary Authority Exchange Fund Bills Yield Curve as at the valuation date on 17 March 2014. Expected volatility was estimated by the average of historical daily volatilities of the comparable companies with similar business operation as at valuation date. Dividend yield was estimated by the trailing 12-month dividend payout of the Company divided by Company’s closing share price as at the dividend declaration date.
On 3 July 2015, the Company granted 13,400,000 share options (the “second share option”) to certain eligible participants of the Group under the Share Option Scheme. Set out below were details of the outstanding share options granted under the Share Option Scheme.
(1) All share options granted were at a subscription price of HK\$4.07 per Share;
(2) All holders of share options might only exercise their options in the following manner:
The share options will be vested in 3 tranches, i.e. the first 30% from the date immediately after the first anniversary of the Offer Date until the last day of the option period, the second 30% from the date immediately after the second anniversary of the Offer Date until the last day of the option period, the balance 40% from the date immediately after the third anniversary of the Offer Date until the last day of the option period; and
# (3) All outstanding or unexercised share options granted to the grantees shall lapse on 2 July 2025.
The estimated fair values of share options granted on 3 July 2015 were HK\$25,864,188. These fair values were calculated using the Binomial Model. The inputs into the model are as follows:
<table><tr><td>Share price</td><td>HK$3.70</td></tr><tr><td>Exercise price</td><td>HK$4.07</td></tr><tr><td>Expected volatility</td><td>61.8%</td></tr><tr><td>Expected life</td><td>10 years</td></tr><tr><td>Risk-free interest rate</td><td>1.87%</td></tr><tr><td>Expected dividend yield</td><td>2.04%</td></tr></table> |
2555794_124.pdf | en | # 9. Interest in a Joint Venture (continued)
Bozhou Botong Information Technology Co., Ltd is the only joint venture in which the Group participates and it is not considered material to the Group. Financial information (the Group’s share) of this joint venture is as follows:
9. 於合營企業的權益（續）
亳州市博通信息科技有限公司為本集團參與業務的唯一一間合營企業，並不被視為對本集團屬重大。本集團分佔該合營企業之財務資料如下：
<table><tr><td rowspan="2"></td><td>2016
二零一六年</td><td>2015
二零一五年</td></tr><tr><td>HK$’000
千港元</td><td>HK$’000
千港元</td></tr><tr><td>Loss from continuing operations 持續經營虧損</td><td>(5,927)</td><td>(13,676)</td></tr><tr><td>Gain on deemed disposal 視作出售的收益</td><td>–</td><td>3,657</td></tr><tr><td>Other comprehensive income 其他全面收入</td><td>(815)</td><td>(2,155)</td></tr><tr><td>Total comprehensive income 全面收入總額</td><td>(6,742)</td><td>(12,174)</td></tr></table>
# 10. Trade and Other Receivables
10. 貿易及其他應收款項
<table><tr><td rowspan="2"></td><td>2016
二零一六年</td><td>2015
二零一五年</td></tr><tr><td>HK$’000
千港元</td><td>HK$’000
千港元</td></tr><tr><td>Trade receivables, net 貿易應收款項淨額</td><td>8,237,903</td><td>7,702,999</td></tr><tr><td>Other receivables and prepayments 其他應收款項及預付款項</td><td>1,123,639</td><td>855,104</td></tr><tr><td>Deferred expenses (Note 16 (d)) 遞延開支（附註16(d)）</td><td>10,875</td><td>9,795</td></tr><tr><td></td><td>9,372,417</td><td>8,567,898</td></tr><tr><td>Less: Non-current deferred expenses 減：非即期遞延開支
(Note 16 (d)) （附註16(d)）</td><td>(4,792)</td><td>(3,884)</td></tr><tr><td></td><td>9,367,625</td><td>8,564,014</td></tr></table> |
2555794_125.pdf | en | # 10. Trade and Other Receivables (continued)
The Group grants credit periods to third party customers ranging from 7 to 150 days, which may be extended for selected customers depending on their trade volume and settlement history with the Group. The ageing analysis of net trade receivables by invoice date is as follows:
10. 貿易及其他應收款項（續）
本集團給予第三方客戶之信貸期介乎7至150日，而選定客戶之信貸期可予延長，視乎彼等與本集團之交易量及付款記錄而定。貿易應收款項淨額按發票日期劃分的賬齡分析如下：
<table><tr><td rowspan="2"></td><td>2016
二零一六年</td><td>2015
二零一五年</td></tr><tr><td>HK$’000
千港元</td><td>HK$’000
千港元</td></tr><tr><td>0 – 30 days 0至30日</td><td>4,206,581</td><td>4,075,671</td></tr><tr><td>31 – 60 days 31至60日</td><td>2,530,711</td><td>2,098,333</td></tr><tr><td>61 – 90 days 61至90日</td><td>731,820</td><td>675,494</td></tr><tr><td>Over 90 days 超過90日</td><td>768,791</td><td>853,501</td></tr><tr><td></td><td>8,237,903</td><td>7,702,999</td></tr></table>
As at 31 December 2016, trade receivables of HK\$1,607,675,000 (2015: HK\$1,765,791,000), which were fully performing, were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables by due date is as follows:
於二零一六年十二月三十一日，已全部履行的貿易應收款項1,607,675,000港元（二零一五年：1,765,791,000港元）已逾期但未減值。該等款項與多名獨立客戶有關，彼等並無近期違約記錄。該等貿易應收款項按到期日劃分的賬齡分析如下：
<table><tr><td rowspan="2"></td><td>2016
二零一六年</td><td>2015
二零一五年</td></tr><tr><td>HK$’000
千港元</td><td>HK$’000
千港元</td></tr><tr><td>0 – 30 days 0至30日</td><td>1,220,506</td><td>1,090,855</td></tr><tr><td>31 – 60 days 31至60日</td><td>184,977</td><td>265,787</td></tr><tr><td>61 – 90 days 61至90日</td><td>61,976</td><td>121,090</td></tr><tr><td>Over 90 days 超過90日</td><td>140,216</td><td>288,059</td></tr><tr><td></td><td>1,607,675</td><td>1,765,791</td></tr></table> |
2540518_84.pdf | en | # 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
# Fair value measurement (continued)
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly
Level 3 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
# Impairment of non-financial assets
Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than inventories, construction contract assets, financial assets, investment properties and non-current assets/a disposal group classified as held for sale), the asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs of disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.
An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the statement of profit or loss in the period in which it arises in those expense categories consistent with the function of the impaired asset.
An assessment is made at the end of each reporting period as to whether there is an indication that previously recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation) had no impairment loss been recognised for the asset in prior years. A reversal of such an impairment loss is credited to the statement of profit or loss in the period in which it arises, unless the asset is carried at a revalued amount, in which case the reversal of the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset. |
2540518_85.pdf | en | # 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
# Related parties
A party is considered to be related to the Group if:
# (a) the party is a person or a close member of that person’s family and that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or of a parent of the Group;or
# (b) the party is an entity where any of the following conditions applies:
(i) the entity and the Group are members of the same group;
(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);
(iii) the entity and the Group are joint ventures of the same third party;
(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;
(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group; and the sponsoring employers of the post-employment benefit plan;
(vi) the entity is controlled or jointly controlled by a person identified in (a);
(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); and
(viii) the entity, or any member of a group of which it is a part, provides key management personnel services to the Group or the parent of the Group. |
20795977_72.pdf | en | The final dividend distribution shall be calculated based on the total number of Shares in issue as of the Record Date and the final cash dividend distribution shall be based on RMB3.0 per 10 shares (inclusive of applicable tax). In order to qualify for the final dividend, the holders of H Shares must lodge all share certificates accompanied by the transfer documents with the Company’s H Share Registrar, Computershare Hong Kong Investor Services Limited (address: Shops 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong) before 4:30 p.m. on Wednesday, June 2, 2021. For the purpose of ascertaining the holders of H Shares who qualify for the final dividend, the register of members for H Shares will be closed from Thursday, June 3, 2021 to Tuesday, June 8, 2021, both days inclusive, during which period no transfer of H Shares will be effected.
The final dividend will be denominated and declared in RMB. The holders of Domestic Shares will be paid in RMB and the holders of H Shares will be paid in Hong Kong dollars. The actual amount declared in HK dollars is converted based on the average benchmark exchange rate of Renminbi against HK dollars as promulgated by the People’s Bank of China for the five business days preceding the date of the AGM.
To the best of the Company’s knowledge, no shareholder has waived or agreed to waive any dividends.
In accordance with the Enterprise Income Tax Law of the People’s Republic of China (中華人民共和國企業所得稅法) and its implementation regulations which came into effect on January 1, 2008, the Company is required to withhold and pay enterprise income tax at the rate of 10% on behalf of the non-resident enterprise Shareholders whose names appear on the register of members for H Shares when distributing the cash dividends. Any H Shares not registered under the name of an individual Shareholder, including HKSCC Nominees Limited, other nominees, agents or trustees, or other organizations or groups, shall be deemed as Shares held by non-resident enterprise Shareholders. Therefore, on this basis, enterprise income tax shall be withheld from dividends payable to such Shareholders. If holders of H Shares intend to change its Shareholder status, please enquire about the relevant procedures with your agents or trustees. The Company will strictly comply with the law or the requirements of the relevant government authority and withhold and pay enterprise income tax on behalf of the relevant Shareholders based on the register of members for H Shares as of the Record Date.
If the individual holders of H Shares are Hong Kong or Macau residents or residents of the countries which had an agreed tax rate on 10% for the cash dividends to them with the PRC under the relevant tax agreement, the Company should withhold and pay individual income tax on behalf of the relevant Shareholders at a rate of 10%. Should the individual holders of H Shares be residents of the countries which had an agreed tax rate of less than 10% with the PRC under the relevant tax agreement, the Company shall withhold and pay individual income tax on behalf of the relevant Shareholders at a rate of 10%. In that case, if the relevant individual holders of H Shares wish to reclaim the extra amount withheld due to the application of 10% tax rate, the Company can apply for the relevant agreed preferential tax treatment provided that the relevant Shareholders submit the evidence required by the notice of the tax agreement to Computershare Hong Kong Investor Services Limited. The Company will assist with the tax refund after the approval of the competent tax authority. Should the individual holders of H Shares be residents of the countries which had an agreed tax rate of over 10% but less than 20% with the PRC under the tax agreement, the Company shall withhold and pay the individual income tax at the agreed actual rate in accordance with the relevant tax agreement. In the case that the individual holders of H Shares are residents of the countries which had an agreed tax rate of 20% with the PRC, or which has not entered into any tax agreement with the PRC, or otherwise, the Company shall withhold and pay the individual income tax at a rate of 20%.
# TAX RELIEF AND EXEMPTION
The Company is not aware of any tax relief or exemption available to the Shareholders of the Company by reason of their holding of the Company’s securities.
# SHARE CAPITAL
Details of the movements in the share capital of the Company during the year are set out in note 38 to the consolidated financial statements. |
20795977_73.pdf | en | # RESERVES
Details of movements in the reserves of the Group and the Company during the year are set out in the consolidated statement of changes in equity and note 40 and note 50 to the consolidated financial statements, respectively.
# DISTRIBUTABLE RESERVES
As at December 31, 2020, the Company ’s distributable reserves, calculated in accordance with PRC rules and regulations, were RMB1,630.9 million.
# DIRECTORS AND SUPERVISORS
The Directors and Supervisors during the year and as of the date of this annual report are as follows:
# Executive Directors
Dr. LOU Boliang (樓柏良) (Chairman)
Mr. LOU Xiaoqiang (樓小強)
Ms. ZHENG Bei (鄭北)
# Non-executive Directors
Mr. CHEN Pingjin (陳平進)
Mr. HU Baifeng (胡柏風)
Mr. LI Jiaqing (李家慶)
Mr. ZHOU Hongbin (周宏斌)
# Independent Non-executive Directors
Mr. DAI Lixin (戴立信)
Ms. LI Lihua (李麗華) (ceased on July 23, 2020)
Ms. CHEN Guoqin (陳國琴)
Ms. SHEN Rong (沈蓉) (ceased on July 23, 2020)
Mr. TSANG Kwan Hung Benson (曾坤鴻)
Mr. Yu Jian (余堅) (appointed on July 23, 2020)
# Supervisors
Dr. YANG Kexin (楊珂新) (Chairperson)
Mr. LIU Jun (劉駿) (ceased on December 11, 2020)
Ms. Feng Shu (馮書) (appointed on December 11, 2020)
Ms. ZHANG Lan (張嵐)
Biographical details of the Directors, the Supervisors and the senior management of the Group as of the date of this annual report are set out on pages 40 to 48 in the section headed “Profiles of Directors, Supervisors and Senior Management” of this annual report.
# DIRECTORS’ AND SUPERVISORS’ INTERESTS IN TRANSACTION, ARRANGEMENT OR CONTRACTS OF SIGNIFICANCE
The Group has not entered into any transaction agreement or contract of significant in which the Group’s Directors and Supervisors have direct or indirect material interests during the Reporting Period.
# CONTROLLING SHAREHOLDERS’ INTERESTS IN CONTRACTS OF SIGNIFICANCE
None of the Controlling Shareholders has or had a material interest, either directly or indirectly, in any contract of significance, whether for the provision of services or otherwise, to the business of the Group to which the Company or any of its subsidiaries was a party during the Reporting Period.
# DIRECTORS’ INTERESTS IN COMPETING BUSINESS
During the Reporting Period, none of the Directors or their respective associates (as defined under the Listing Rules) had engaged in or had any interest in any business which competes or may compete, either directly or indirectly, with the business of the Group.
# EMOLUMENTS OF THE DIRECTORS AND THE FIVE HIGHEST PAID INDIVIDUALS
The remuneration committee determines or makes recommendation to the Board (as case may be) on the remuneration and other benefits payable to the Directors and Supervisors by the Group. The committee regularly oversees the remuneration of all Directors and Supervisors to ensure that their remuneration and compensation are at an appropriate level. The Group maintains competitive remuneration packages with reference to the industry standard and according to the business development of the Group, and determines remuneration of the Directors and Supervisors based on their qualifications, experience and contributions, to attract and retain its Directors and Supervisors as well as to control costs. |
11772985_340.pdf | en | # 49. SHARE OPTION SCHEME (Continued)
# (b) Share Option Scheme (Continued)
The fair values of share options granted were calculated using the Black-Scholes option pricing model for the years ended 31 December 2016 and 2015. The inputs into the model were as follows:
49. 購股權計劃（續）
(b) 購股權計劃（續）
於截至二零一六年及二零一五年十二月三十一日止年度內，已授出購股權之公平值乃使用伯力克－舒爾茲期權定價模式計算。輸入該模式之數據如下：
<table><tr><td></td><td>11 December
2014
二零一四年
十二月十一日</td><td>8 June 2015
二零一五年
六月八日</td><td>11 December
2015
二零一五年
十二月十一日</td><td>5 July
2016
二零一六年
七月五日</td><td>8 November
2016
二零一六年
十一月八日</td><td>12 December
2016
二零一六年
十二月十二日</td></tr><tr><td>Exercise price 行使價</td><td>HK$1.814港元</td><td>HK$2.13港元</td><td>HK$3.37港元</td><td>HK$3.49港元</td><td>HK$0.98港元</td><td>HK$0.786港元</td></tr><tr><td>Adjusted exercise price 經調整行使價</td><td>HK$0.3628港元</td><td>HK$0.426港元</td><td>HK$0.674港元</td><td>HK$0.698港元</td><td>N/A不適用</td><td>N/A不適用</td></tr><tr><td>Expected volatility 預期波幅</td><td>41.71%-42.35%</td><td>44.45%-49.47%</td><td>48.48%-50.96%</td><td>30.23%-50.51%</td><td>38.61%-52.79%</td><td>44.32%-53.52%</td></tr><tr><td>Expected life 預期年期</td><td>2-5 years年</td><td>2-5 years年</td><td>2-4 years年</td><td>2.5-10 years年</td><td>10 years年</td><td>10 years年</td></tr><tr><td>Expected dividend yield 預期股息收益</td><td>0.676%</td><td>0.219%</td><td>0.287%</td><td>0.264%</td><td>0.164%</td><td>0.215%</td></tr><tr><td>Risk-free rate 無風險利率</td><td>0.43%-1.237%</td><td>0.48%-1.31%</td><td>0.404%-0.895%</td><td>0.42%-0.93%</td><td>1.12%</td><td>1.57%</td></tr></table>
Expected volatility of the options granted under the Pre-IPO Share Option Scheme and Share Option Scheme was determined by using the historical volatility of the share price of comparable companies and the Company respectively. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioral considerations.
The Group recognised the total expenses of approximately RMB109,986,000 for the year ended 31 December 2016 (2015: RMB43,999,000) in relation to share options granted by the Company.
In the opinion of directors, regarding the share option granted to Company’s consultants, the fair value of the service rendered by consultants cannot reliably measured because the nature of services rendered by them includes but not limit to build up investors relationships, enhance corporate strategy and branding etc., which may not have a quantifiable and measurable effect for assessment. Thus, the fair value of the service rendered is by reference to the fair value of share option granted to them and recognised in profit or loss for the years ended 31 December 2016 and 2015 accordingly.
根據首次公開發售前購股權計劃及購股權計劃授出之購股權之預期波幅乃分別採用可資比較公司及本公司之股價之過往波幅而釐定。該模式所採用之預期年期已根據管理層之最佳估計就不可轉讓性、行使限制及行為因素作出調整。
本集團於截至二零一六年十二月三十一日止年度就本公司授出之購股權確認開支總額約人民幣109,986,000元（二零一五年：人民幣43,999,000元）。
董事認為，就本公司顧問獲授之購股權而言，顧問提供服務之公平值無法可靠計量，原因為其提供服務之性質包括但不限於建立投資者關係，提升企業策略及品牌等，其可能並無可量化及可計量之效果以供評估。因此，所提供服務之公平值乃參考彼等獲授購股權之公平值釐定，並相應於截至二零一六年及二零一五年十二月三十一日止年度之損益表確認。 |
11772985_341.pdf | en | # 50. INFORMATION ABOUT THE STATEMENT OF FINANCIAL POSITION OF THE COMPANY
Statement of financial position of the Company at the end of the reporting period is as follows:
50. 有關本公司之財務狀況表之資料
於報告期末本公司之財務狀況表如下：
<table><tr><td></td><td></td><td colspan="2">As at 31 December
於十二月三十一日</td></tr><tr><td></td><td></td><td>2016
二零一六年</td><td>2015
二零一五年</td></tr><tr><td></td><td>Notes
附註</td><td>RMB’000
人民幣千元</td><td>RMB’000
人民幣千元</td></tr><tr><td rowspan="2">Non-current asset 非流動資產
Investments in subsidiaries 於附屬公司之投資</td><td rowspan="2">a</td><td rowspan="2">–</td><td rowspan="2">–</td></tr><tr><td>Current assets 流動資產</td><td></td><td></td><td></td></tr><tr><td>Prepayments and other receivables 預付賬款及
其他應收款項</td><td></td><td>1,246</td><td>521</td></tr><tr><td>Amounts due from subsidiaries 應收附屬公司款項</td><td>c</td><td>5,716,177</td><td>2,384,963</td></tr><tr><td>Amounts due from joint ventures 應收合營企業款項</td><td>c</td><td>9,981</td><td>8,629</td></tr><tr><td>Held-for trading securities 持作買賣證券</td><td></td><td>20,902</td><td>–</td></tr><tr><td>Bank balances and cash 銀行結餘及現金</td><td></td><td>171,721</td><td>83,396</td></tr><tr><td></td><td></td><td>5,920,027</td><td>2,477,509</td></tr><tr><td>Current liabilities 流動負債</td><td></td><td></td><td></td></tr><tr><td>Accruals 應計費用</td><td></td><td>8,266</td><td>6,313</td></tr><tr><td>Amounts due to subsidiaries 應付附屬公司款項</td><td>c</td><td>230,654</td><td>105,306</td></tr><tr><td>Amount due to a related company 應付一間</td><td></td><td></td><td></td></tr><tr><td>關連公司款項</td><td>d</td><td>–</td><td>395</td></tr><tr><td>Corporate bonds 公司債券</td><td></td><td>–</td><td>173,719</td></tr><tr><td></td><td></td><td>238,920</td><td>285,733</td></tr><tr><td>Net current assets 流動資產淨值</td><td></td><td>5,681,107</td><td>2,191,776</td></tr><tr><td>Total assets less current liabilities 總資產減流動負債</td><td></td><td>5,681,107</td><td>2,191,776</td></tr><tr><td>Non-current liabilities 非流動負債</td><td></td><td></td><td></td></tr><tr><td>Borrowings 借貸</td><td></td><td>542,576</td><td>–</td></tr><tr><td>Corporate bonds 公司債券</td><td></td><td>65,265</td><td>60,044</td></tr><tr><td>Convertible bonds 可換股債券</td><td></td><td>1,393,172</td><td>234,098</td></tr><tr><td></td><td></td><td>2,001,013</td><td>294,142</td></tr><tr><td>Net assets 資產淨值</td><td></td><td>3,680,094</td><td>1,897,634</td></tr><tr><td>Capital and reserves 資本及儲備</td><td></td><td></td><td></td></tr><tr><td>Share Capital 股本</td><td></td><td>358,259</td><td>321,642</td></tr><tr><td>Reserves 儲備</td><td>b</td><td>3,321,835</td><td>1,575,992</td></tr><tr><td>Total equity 權益總額</td><td></td><td>3,680,094</td><td>1,897,634</td></tr></table> |
20746715_135.pdf | en | <table><tr><td rowspan="6">Property Valuers</td><td> Beijing Colliers International Real Estate Valuation
Co., Ltd.</td></tr><tr><td>Suite 501, Tower W3
Oriental Plaza
No.1 East Chan’gan Avenue
Dongcheng District
Beijing, China, 100738</td></tr><tr><td>Cushman & Wakefield K.K.</td></tr><tr><td>Sanno Park Tower 13F 2-11-1N agatacho
2-11-1N agatacho
Chiyoda-ku, Tokyo, 100-6113
Japan</td></tr><tr><td>CBRE Limited</td></tr><tr><td>3/F, 4/F & 12/F 1204-06 (Reception)
Three Exchange Square
8 Connauhgt Place
Central, Hong Kong</td></tr><tr><td rowspan="2">Industry Consultant</td><td> Jones Lang LaSalle Limited</td></tr><tr><td>7/F, One Taikoo Place
979 Kin’gs Road, QuarrBy ay
Hong Kong</td></tr><tr><td rowspan="2">Receiving Bank</td><td> Standard Chartered Bank (Hong Kong) Limited</td></tr><tr><td>15th Floor, Standard Chartered Tower
388 Kwun Tong Road
Kwun Tong, Kowloon
Hong Kong</td></tr><tr><td rowspan="2">Compliance Advisor</td><td> Octal Caidptal Limite</td></tr><tr><td>Room 801-805N an Fung Tower
173 Des Voeux Road, Central
Hong Kong</td></tr></table> |
20746715_136.pdf | en | <table><tr><td rowspan="2">Reigstered office</td><td>c/o Walkers Corporate Limited</td></tr><tr><td>Cayman Corporate Centre
27 Hosiptal Road, George Town
Grand Cayman, KY1-9008
Cayman Islands</td></tr><tr><td>Headquarters and principal
place of business in Hong Kong</td><td>2406-07 Man Yee Building
68 Des Voeux Road, Central
Hong Kong</td></tr><tr><td rowspan="2">Com’paniys webste</td><td>www.esr.com</td></tr><tr><td>(The contents on this website do not formp art of this
Prospectus)</td></tr><tr><td rowspan="2">Company Secretary</td><td>Mr. Richard Kin-sing Lee (李建成) (HonKg ongs olicitor)</td></tr><tr><td>2406-07, Man Yee Building
68 Des Voeux Road Central
Hong Kong</td></tr><tr><td rowspan="4">Authorized Representatives</td><td>Mr. Jinchu Shen (沈晉初)</td></tr><tr><td>Room B, 62/F., Block 1
Harbourfront Landmark
No. 11 Wan Hoi Street, Hung Hom
Hong Kong</td></tr><tr><td>Mr. Richard Kin-sing Lee (李建成)</td></tr><tr><td>2406-07, Man Yee Building
68 Des Voeux Road Central
Hong Kong</td></tr><tr><td rowspan="3">Audit Committee</td><td>Mr. Simon James McDonald (Chairman)</td></tr><tr><td>Mr. JosehGp Radymon agnon</td></tr><tr><td>Mr. Brett Harold Krause</td></tr><tr><td rowspan="3">Nomination Committee</td><td>The Rihgt Honorable Sir HuGgo eorge William Swire,
KCMG, MP (Chairman)</td></tr><tr><td>Mr. Brett Harold Krause</td></tr><tr><td>Ms. Liu Jingsheng (劉京生)</td></tr><tr><td rowspan="3">Remuneration Committee</td><td>Mr. Brett Harold Krause (Chairman)</td></tr><tr><td>Mr. Jeffrey David Perlman</td></tr><tr><td>Mr. Simon James McDonald</td></tr><tr><td rowspan="2">Principal share reigstrar and
transfer office</td><td>Walkers Corporate Limited</td></tr><tr><td>27 Hosidptal Roa, GeorTge own
Grand Cayman, KY1-9008
Cayman Islands</td></tr></table> |
9261370_5.pdf | en | # Long position in the shares and underlying shares of the Company
<table><tr><td>Name of Director</td><td>Number of issued
ordinary shares/
underliyng shares
of the Company
Personal interests</td><td>Total</td><td>Percentage
of the issue
shares caiptal
of the Company</td></tr><tr><td>Ms. Tsui Tsz Fa Mabel</td><td></td><td></td><td></td></tr><tr><td>– Unlisted share options</td><td>8,000,000</td><td>8,000,000</td><td>1%</td></tr><tr><td>Ms. Liu Taniyng</td><td></td><td></td><td></td></tr><tr><td>– Unlisted share options</td><td>8,000,000</td><td>8,000,000</td><td>1%</td></tr></table>
Save as disclosed above, none of the Directors nor chief executive of the Company has registered an interest or short positions in the Shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which were taken or deemed to have under such provisions of the SFO); or (ii) which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules.
# INTERESTS AND SHORT POSITIONS OF SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY
As at 31 January 2020, the Company had not been notified by any persons who had interests or short positions in the shares or underlying shares of the Company which were recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO or which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO.
# COMPETING INTEREST
Our Directors and their respective close associates confirm that each of them does not have any interest in a business apart from our Group’s business which competes or is likely to compete, directly or indirectly, with our Group’s business, and is required to be disclosed pursuant to Rule 11.04 of the GEM Listing Rules during the nine months ended 31 January 2020.
# PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES
During the nine months ended 31 January 2020 and up to the date of this announcement, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company’s listed securities. |
9261370_6.pdf | en | # CODE OF CONDUCT REGARDING SECURITIES TRANSACTIONS BY DIRECTORS
The Group has adopted a code of conduct regarding securities transactions by the Directors (the “Code of Conduct”) on terms no less exacting than the required standards of dealings set out in Rules 5.48 to 5.67 of the GEM Listing Rules. Having made specific enquiries with the Directors, all Directors have confirmed that they have complied with the required standards set out in the Code of Conduct during the nine months ended 31 January 2020 and up to the date of this announcement.
# DIVIDENDS
The Board does not recommend a payment of an interim dividend for the nine months ended 31 January 2020 (2019: nil).
# EVENTS AFTER REPORTING PERIOD
Save as disclosed, up to the date of this announcement, there was no significant event after the Reporting Period of the Group.
# SHARE OPTION SCHEME
The Company has conditionally adopted a share option scheme on 26 September 2016 (the “Scheme”). The terms of the Scheme are in accordance with the provisions of Chapter 23 of the GEM Listing Rules.
Details of the options outstanding for the nine months ended 31 January 2020 are as follows:
<table><tr><td rowspan="2">Grantees</td><td rowspan="2">Date of grant</td><td colspan="5">No. of shares comprised in options</td><td rowspan="2">Exercise
price
per share</td></tr><tr><td>As at
1 May 2019</td><td>Granted
during
the period</td><td>Exercised
during
the period</td><td>Lapsed
during
the period</td><td>As at
31 January
2020</td></tr><tr><td>Executive director</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Ms. Tsui Tsz Fa Mabel</td><td>30 May 2019</td><td>–</td><td>8,000,000</td><td>–</td><td>–</td><td>8,000,000</td><td>HK$0.066</td></tr><tr><td>Ms. Liu Taniyng</td><td>30 May 2019</td><td>–</td><td>8,000,000</td><td>–</td><td>–</td><td>8,000,000</td><td>HK$0.066</td></tr><tr><td>Other Grantees</td><td>30 May 2019</td><td>–</td><td>16,000,000</td><td>–</td><td>–</td><td>16,000,000</td><td>HK$0.066</td></tr><tr><td></td><td>Total</td><td>–</td><td>32,000,000</td><td>–</td><td>–</td><td>32,000,000</td><td></td></tr></table> |
9324296_420.pdf | en | The forecast combined profit attributable to equity holders of the Company for the year ending 31 December 2010 is set out in the section headed ‘‘Financial Information’’ in this prospectus.
# A. BASES
The Directors have prepared the forecast of combined profit attributable to equity holders of the Company for the year ending 31 December 2010 on the basis of the audited combined results of the Group for the six months ended 30 June 2010, the unaudited combined results of the Group for the three months ended 30 September 2010 and a forecast of the combined results of the Group for the remaining three months ending 31 December 2010. The forecast has been prepared on a basis consistent in all material respects with the accounting policies currently adopted by the Group as summarised in Appendix I to the prospectus.
# B. PRINCIPAL ASSUMPTIONS
The forecast has been prepared based on the following principal assumptions:
• there will be no material change in existing political, legal, fiscal, market or economic conditions in the PRC or any other country or territory in which the Group currently operates or which are otherwise material to the Group’s business;
• there will be no changes in legislation, regulations or rules in the PRC or any other country or territory in which the Group operates or with which the Group has arrangements or agreements, which materially adversely affect its business;
• there will be no material change in the bases or rates of taxation in the PRC or any other country or territory in which the Group operates;
• there will be no material changes in inflation rates, interest rates or foreign currency exchange rates from those currently prevailing;
• our operations will not be materially affected or interrupted by any force majeure events or unforeseeable factors or any unforeseeable reasons that are beyond the control of the Directors, including but not limited to the occurrence of natural disasters, epidemics or serious accidents; and
• the Group’s operations, results, and financial position will not be adversely affected by the risk factors described under the ‘‘Risk Factors’’ section of the Prospectus. |
9324296_421.pdf | en | # C. LETTER FROM THE REPORTING ACCOUNTANTS
The following is the text of the letter received by the directors from our reporting accountants, KPMG, Certified Public Accountants, Hong Kong, prepared for the purpose of incorporation in this prospectus in connection with the profit forecast for the year ending 31 December 2010.
8th Floor
Prince’s Building
10 Chater Road
Central
Hong Kong
29 November 2010
The Directors
China ZhengTong Auto Services Holdings Limited
J.P. Morgan Securities (Asia Pacific) Limited
CCB International Capital Limited
Dear Sirs,
We have reviewed, in accordance with the Auditing Guideline 3.341 “Accountants’ report on profit forecasts” issued by the Hong Kong Institute of Certified Public Accountants, the accounting policies adopted and calculations made in arriving at the forecast of the combined profit attributable to equity holders of China ZhengTong Auto Services Holdings Limited (“the Company”) for the year ending 31 December 2010 (“the Profit Forecast”), for which the directors of the Company are solely responsible, as set forth in the section headed “Financial Information” in the prospectus of the Company dated 29 November 2010 (“the Prospectus”).
The Profit Forecast has been prepared by the directors of the Company based on the audited combined financial statements of the Company and its subsidiaries (collectively referred to as “the Group”) for the six months ended 30 June 2010, the unaudited combined management accounts of the Group for the three months ended 30 September 2010 and a forecast of the combined results of the Group for the remaining three months ending 31 December 2010.
In our opinion, so far as the accounting policies and calculations are concerned, the Profit Forecast has been properly compiled in accordance with the assumptions made by the directors as set out in Appendix III of the Prospectus and is presented on a basis consistent in all material respects with the accounting policies normally adopted by the Group as set out in our Accountants’ Report dated 29 November 2010, the text of which is set out in Appendix I to the Prospectus.
Yours faithfully,
KPMG
Certified Public Accountants
Hong Kong |
7489348_155.pdf | en | # 30 Impact of the COVID-19 pandemic
The Covid-19 pandemic since early 2020 has brought about additional uncertainties in the Group’s operating environment and has impacted the Group’s operation and financial position.
The Group has been closely monitoring the impact of the developments on the Group’s business and has put in place contingency measures. These contingency measures include: reassessing changes to the customers’ preferences on the types of drama series to be broadcasted, assessing the readiness of the production units and revisiting the progress of self-produced drama series, negotiating with customers on possible delay in delivery timetables, increase monitoring of the business environment of the Group’s customers, and improving the Group’s cash management by expediting debtor settlements and negotiating with suppliers on payment extensions.
The Covid-19 pandemic did have a significant impact on the Group’s operation and capital position, but did not change the fundamentals of the Group’s ability to continue as a going concern. The Group now has strengthened the recovery of receivables, increased the issuance of drama series and films, and adjusted the drama and films reserves. The Group will keep the contingency measures under review as the situation evolves.
# 31 Non-adjusting events after the reporting period
On 5 January 2021, the Company and Jinbi Market (Hong Kong) Limited (the “Subscriber”) entered into a subscription agreement (the “Subscription Agreement”), pursuant to which the Company has conditionally agreed to allot and issue, and the Subscriber has conditionally agreed to subscribe, for an aggregate of 101,137,134 new shares at the Subscription price of HKD0.156 per subscription share, which in aggregate amount to a total of approximately HKD15,777,000. All the conditions have been fulfilled and the completion took place on 19 January 2021 in accordance with the terms and conditions of the Subscription Agreement. The net proceeds of the Subscription are approximately HKD15,730,000. Further to completion of the Subscription, the adjusted conversion price of the outstanding convertible bonds was further adjusted to HKD0.156 per conversion share.
On 26 February 2021, convertible bonds with entire principal amount of HKD20,000,000 held by BeiTai were converted into 128,205,128 shares at the adjusted conversion price of HKD0.156 per conversion share.
On 26 February 2021, the Company announced to redeem the convertible bonds in the aggregate principal amount of HKD50,000,000 held by the Original Bondholder, leaving the convertible bonds in the aggregate principal amount of HKD50,000,000 remain outstanding after the partial redemption. On 24 March 2021, the Company further announced that the Company received a notice from Original Bondholder confirming potential extension and potential transfer of the outstanding convertible bonds, with terms subject to the entering into of a legally binding agreement between the relevant parties.
# 32 Comparative Figures
Certain comparative figures have been adjusted to conform with the current year’s presentation. |
7489348_156.pdf | en | # 33 Possible impact of amendments, new standards and interpretations issued but not yet effective for the year ended 31 December 2020
Up to the date of issue of these financial statements, the IASB has issued a number of amendments, and a new standard, IFRS 17, Insurance contracts, which are not yet effective for the year ended 31 December 2020 and which have not been adopted in these financial statements. These developments include the following which may be relevant to the Group.
<table><tr><td></td><td>Effective for
accounting
periods beginning
on or after</td></tr><tr><td>Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16,
Interest Rate Benchmark Reform-Phase 2</td><td>1 January 2021</td></tr><tr><td>Amendments to IFRS 3, Reference to the Conceptual Framework</td><td>1 January 2022</td></tr><tr><td>Amendments to IAS 16, Property, Plant and Equipment: Proceeds before Intended Use</td><td>1 January 2022</td></tr><tr><td>Amendments to IAS 37, Onerous Contracts – Cost of Fulfilling a Contract</td><td>1 January 2022</td></tr><tr><td>Annual Improvements to IFRSs 2018-2020 Cycle</td><td>1 January 2022</td></tr><tr><td>Amendments to IAS 1, Classification of Liabilities as Current or Non-current</td><td>1 January 2023</td></tr><tr><td>IFRS 17, Insurance contracts</td><td>1 January 2023</td></tr><tr><td>Amendments to IFRS 10 and IAS 28, Sale or contribution of assets between
an investor and its associate or joint venture</td><td>To be determined</td></tr></table>
The Group is in the process of making an assessment of what the impact of these developments is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the consolidated financial statements. |
11780998_121.pdf | en | # V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
# 33. Employee benefits
Employee compensation includes short-term compensation, and after-service benefits, termination benefits and other long-term employee benefits provided in various forms of consideration other than share-based payment given by the Group in exchange for service rendered by employees or compensations for the termination of employment relationship. The benefits that the Group provides to the spouse, children and dependents of the employees, the late employees’ family and other beneficiaries also shall be deemed as employee benefits.
# (1). Accounting methods for short-term remuneration
# √ Applicable □ Not applicable
During an accounting period when employees render services, short-term remuneration actually incurred are recognised as a liability, and charged to profit or loss or in related costs of assets for the current period.
# (2). Accounting methods for post-employment benefits
# √ Applicable □ Not applicable
# Post-employment benefits (defined contribution plan)
If employees of the Group participate in the basic pension insurance and unemployment insurance plans managed by local governments, the relevant expenditures are recorded in the relevant asset costs or profit or loss for the current period when incurred. In addition, the Group provides an annuity plan for its eligible employees in accordance with the Labour Law. The Group’ s withdrawals and deposits for its employees are calculated based on a certain percentage of the total salary of the employees and the length of service.
# Post-employment benefits (defined benefit plans)
In addition to the above-mentioned benefit plans, the Group provides supplementary retirement benefits to its retired employees. These plans include monthly pension benefits, medical reimbursement benefits, annual medical insurance premiums and funeral benefits for employees after their retirement. The amount of the subsidies is determined based on the period during which the employee serves the Group and the relevant subsidy benefit policy.
These benefit plans beyond the scope of overall planning are considered to be based on a defined benefit plan. The defined benefit plan is calculated annually by an independent actuary using the projected unit credit method. The present value of the defined benefit obligations determined at the market yield of the government bonds during the defined benefit obligation period, and discounted over estimated future cash outflow. If there is an asset in the defined benefit plan, the present value of the defined benefit obligation minus the fair value of the asset of the defined benefit plan will be recognised as the net liability or net asset of the defined benefit plan. The change in the net liability or net asset of the defined benefit plan is divided into three parts: service cost, net interest on the net liability or net asset of the defined benefit plan, and changes due to re-measurement of net liability or net asset of the defined benefit plan included in other comprehensive income. |
11780998_122.pdf | en | # V. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
# 33. Employee benefits (Continued)
# (2). Accounting methods for post-employment benefits (Continued)
# Post-employment benefits (defined benefit plans) (Continued)
Any remeasurement caused by the defined benefit plans, including actuarial gains or losses, changes in the impact of the asset cap (net of the amounts included in the net interest on the net liability of the defined benefit plan) and return on the asset in the plan (net of the amounts included in the net interest on the net liability of the defined benefit plan) are recognised in the balance sheet immediately and recorded in shareholders’ equity through other comprehensive income in the accounting period the re-measurement occurred, and shall not be reversed to profit or loss in the subsequent accounting periods.
The previous service costs should be recognised as current expenses at the earlier of the following dates: when the Group modifies the defined benefit plans; and when the Group recognises relevant restructuring costs or termination benefits.
Net interest equals to the net liability or net asset in defined benefit plan multiply by the discount rate. The Group recognised changes in the net defined benefit plan obligation as management expenses in the statement of profit. Those changes include service costs, including current service costs, previous service costs and gains and losses on settlement, and net interest, including the interest income of the asset in the plan, interest expenses of the obligation under the plan and interest of the impact of the asset cap. |
20754268_75.pdf | en | # Aluminum Extrusion Consumption in the PRC Transportation Industry
Transportation is one of the fastest growing market segments for aluminum extrusion products in China.
Driven by the rapid development of the transportation industry and the continuous technological advances in means of transportation, aluminum extrusion products are expected to enjoy increasingly wide applications in railway and metropolitan railway, automotive, shipbuilding, aviation and other transportation sectors.
Aluminum extrusion consumption in the PRC transportation industry, 2001-2010E(1)
Source: Sunlight Metal
(1) The estimated figures for 2008 to 2010 do not takei nto consideration thel arge fiscal stimulus packages announced by the PRC government.
However, aluminum extrusion consumption in the transportation industry in 2007 was still relatively low at approximately 8.6% of total China’s aluminum extrusion consumption compared to those of North America, Europe and Japan at approximately 27%, 18% and 15%, respectively.
In 2007, the transportation industry consumed approximately 510,000 tons, representing a CAGR of approximately 26.4% as compared to approximately 125,000 tons in 2001. It is estimated that demand for aluminum extrusion products in the PRC transportation industry will increase to approximately 747,000 tons in 2010, representing a CAGR of approximately 13.6% compared to approximately 510,000 tons in 2007.
# Railways and Metropolitan Railways
According to the MOR, China’s total railway network operating length was approximately 78,000 kilometers as of the end of 2007, making it the longest in Asia and the third longest in the world. However, this network is still not sufficient to meet the demands placed on it given the size of the population, the scale and growth of the economy of the PRC and the popularity of railway transportation as a medium of transport. |
20754268_76.pdf | en | To address the lagging investment in the railway industry in recent years, the PRC government announced the Eleventh Five-year Plan in 2006, which included an aggressive investment and expansion plan for railways in the PRC. The plan calls for a total investment of approximately RMB1.25 trillion to develop the PRC railway network and to purchase railway-related equipment in the period between 2006 and 2010, which is almost four times the corresponding amount budgeted under the Tenth Five-year Plan. According to a spokesman of the MOR, by October 2008, the total amount of investment in the PRC railway network approved by the State Council of the PRC has reached RMB2.0 trillion, of which over RMB1.2 trillion is related to investment in projects under construction. The MOR estimates that the total amount of investment in the PRC railway network will reach RMB5.0 trillion by 2020.
The following charts set forth certain historical data relating to the PRC railway industry and certain estimates based on the Eleventh Five-year Plan and the Mid- to Long-term Railway Network Development Plan.
Operating Length of Railways in PRC
Operating Length of Electrified Railways in PRC
Operating Length of Double Tracked Railways in PRC
Source: China Statistics Bureau, MOR |
20748846_115.pdf | en | # Notes to the Consolidated Financial Statements
# 2 Summary of Significant Accounting Policies (Continued)
# 2.3 Subsidiaries (Continued)
# 2.3.1 Consolidation (Continued)
# Business combination (Continued)
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognized in profit or loss.
Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in accordance with HKFRS 9 in profit or loss. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognized and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the statement of profit or loss.
Intra-group transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to confirm with the Group’s accounting policies.
# 2.3.2 Separate financial statements
Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable costs of investment. The results of subsidiaries are accounted for by the Company on the basis of dividend received and receivable.
Impairment testing of the investments in subsidiaries is required upon receiving dividends from these investments if the dividends exceed the total comprehensive income of the subsidiaries in the period the dividends are declared or if the carrying amount of the investments in the separate financial statements exceeds the carrying amount in the consolidated financial statements of the investee’s net assets including goodwill. |
20748846_116.pdf | en | # 2 Summary of Significant Accounting Policies (Continued)
# 2.4 Associates
An associate is an entity over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using equity method of accounting. Under the equity method, the investment is initially recognized at cost, and the carrying amount is increased or decreased to recognize the investor’s share of the profit or loss of the investee after the date of acquisition. The Group’s investments in associates include goodwill identified on acquisition. Upon the acquisition of the ownership interest in an associate, any difference between the cost of the associate and the Group’s share of the net fair value of the associate’s identifiable assets and liabilities is accounted for as goodwill.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is reclassified to profit or loss where appropriate.
The Group’s share of post-acquisition profit or loss is recognized in the statement of profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount adjacent to ‘share of profit of investments accounted for using equity method’ in the statement of profit or loss.
Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognized in the Group’s financial statements only to the extent of unrelated investor’s interests in the associates. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.
Gain or losses on dilution of equity interest in associates are recognized in the statement of profit or loss. |
9270872_98.pdf | en | <table><tr><td>权益的金额</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>4．其他</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>（三）利润分配</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>3,566,045.00</td><td></td><td>-3,566,045.00</td><td></td><td></td><td></td><td></td></tr><tr><td>1．提取盈余公积</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>3,566,045.00</td><td></td><td>-3,566,045.00</td><td></td><td></td><td></td><td></td></tr><tr><td>2．提取一般风险准备</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>3．对所有者（或股东）
的分配</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>4．其他</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>（四）所有者权益内部结
转</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>1．资本公积转增资本（或
股本）</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>2．盈余公积转增资本（或
股本）</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>3．盈余公积弥补亏损</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>4．设定受益计划变动额
结转留存收益</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>5．其他综合收益结转留
存收益</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>6．其他</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>（五）专项储备</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>-45,508.32</td><td></td><td></td><td></td><td></td><td>-45,508.32</td><td></td><td>-45,508.32</td></tr><tr><td>1．本期提取</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>1,975,770.96</td><td></td><td></td><td></td><td></td><td>1,975,770.96</td><td></td><td>1,975,770.96</td></tr><tr><td>2．本期使用</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>-2,021,279.28</td><td></td><td></td><td></td><td></td><td>-2,021,279.28</td><td></td><td>-2,021,279.28</td></tr><tr><td>（六）其他</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>四、本期期末余额</td><td>51,000,000.00</td><td></td><td></td><td></td><td>154,637,328.55</td><td></td><td>124,776.64</td><td>1,437,982.63</td><td>25,500,000.00</td><td></td><td>211,162,982.98</td><td></td><td>443,863,070.80</td><td></td><td>443,863,070.80</td></tr></table> |
9270872_99.pdf | en | 上期金额
单位：元
<table><tr><td rowspan="4">项目</td><td colspan="15">2020 年年度</td></tr><tr><td colspan="13">归属于母公司所有者权益</td><td rowspan="3">少数
股东
权益</td><td rowspan="3">所有者权益合
计</td></tr><tr><td rowspan="2">股本</td><td colspan="3">其他权益
工具</td><td rowspan="2">资本公积</td><td rowspan="2">减：
库存
股</td><td rowspan="2">其他综合
收益</td><td rowspan="2">专项储备</td><td rowspan="2">盈余公积</td><td rowspan="2">一般
风险
准备</td><td rowspan="2">未分配利润</td><td rowspan="2">其他</td><td rowspan="2">小计</td></tr><tr><td>优
先
股</td><td>永
续
债</td><td>其
他</td></tr><tr><td>一、上年期末余额</td><td>51,000,000.00</td><td></td><td></td><td></td><td>154,637,328.55</td><td></td><td>-51,444.13</td><td>1,248,355.84</td><td>15,999,504.74</td><td></td><td>123,562,297.04</td><td></td><td>346,396,042.04</td><td></td><td>346,396,042.04</td></tr><tr><td>加：会计政策变更</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>前期差错更正</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>同一控制下企业合并</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>其他</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>二、本年期初余额</td><td>51,000,000.00</td><td></td><td></td><td></td><td>154,637,328.55</td><td></td><td>-51,444.13</td><td>1,248,355.84</td><td>15,999,504.74</td><td></td><td>123,562,297.04</td><td></td><td>346,396,042.04</td><td></td><td>346,396,042.04</td></tr><tr><td>三、本期增减变动金额（减
少以“－”号填列）</td><td></td><td></td><td></td><td></td><td></td><td></td><td>174,631.7
2</td><td>235,135.11</td><td>5,934,450.26</td><td></td><td>28,711,686.97</td><td></td><td>35,055,904.06</td><td></td><td>35,055,904.06</td></tr><tr><td>（一）综合收益总额</td><td></td><td></td><td></td><td></td><td></td><td></td><td>174,631.7
2</td><td></td><td></td><td></td><td>59,646,137.23</td><td></td><td>59,820,768.95</td><td></td><td>59,820,768.95</td></tr><tr><td>（二）所有者投入和减少资
本</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>1．所有者投入的普通股</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>2．其他权益工具持有者投
入资本</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>3．股份支付计入所有者权</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr></table> |
20739279_7.pdf | en | Figure 3: “Life-changing” and “social-impact” Elements of Value have a particularly strong effect on a brand’s performance
Notes: Repurchase rate measures the percentage of households that buy two or more times per year; revenue growth rate figures based on weighted averages, penetration and repurchase rate growth figures based on straight averages; revenue data represents IRI MULO tracked in-store sales only; excludes brands for which data is missing or zero for 2015 and/or 2018
Sources: Bain CP Elements of Value Survey, June 2019 (US only, n=13,124); IRI
# Putting the Elements of Value to work in consumer products
Companies can use this deeper understanding of value and consumer needs as the basis for defi ning their innovation agenda along multiple dimensions:
• Brand acceleration. Understanding how a brand performs on various Elements of Value and how well relative to its competitors can inform where and how a brand should invest to accelerate its growth.
• Category reinvention. In many categories, growth will come from identifying and delivering new sources of value for consumers. By reformulating products or introducing new business models, brands can expand their value propositions and redefi ne what consumers can expect from a category.
• Continuous improvement. The strongest brands are constantly looking for ways to offer better and greater value to consumers. They measure the value they deliver to consumers today and track performance to adjust their strategy accordingly. |
20739279_8.pdf | en | • Portfolio choices. Consumer goods companies can arm themselves to make better-informed port-folio choices in investments, resource allocation, M&A and divestitures by clearly understanding the opportunities for new sources of value and determining if their existing portfolio can meet those needs.
• Innovation and experimentation. Clarifying the value their brands offer today—and the opportu-nities that exist to offer greater or different value—provides companies with useful input for new product development.
• Value chain expansion. Finally, as consumer products companies seek to deliver new and greater sources of value, their insights into consumer value can help them acquire or change their busi-ness models to enter new parts of the value chain.
Consider how Dove accelerated brand growth and continuously improved its value proposition by tapping into new, higher elements of value. The brand originated as a mild, moisturizing cleansing bar aimed at women, but in the mid-1990s, began expanding into adjacent categories such as body wash, deodorant and skin care—leveraging its strength in such functional elements as “quality” and “sensory appeal” to grow from a single product to an entire personal care brand. As competition in-creased in the early 2000s, Dove shifted away from communicating purely functional benefi ts, and toward higher-order messages of real beauty, personal empowerment and sustainability. This enabled Dove to remain distinctive and relevant as it expanded into new geographies and broader consumer segments such as male grooming and baby care. As a result, Dove has grown nearly twice as fast as the overall global beauty and personal care market over the last 10 years and has become Unilever’s top-selling global brand.
Procter & Gamble has added seemingly countless innovations to Tide since it fi rst appeared on store shelves in 1946, each tapping into new sources of value for consumers. Tide Pods provide specifi c functional benefi ts through three-in-one laundry capsules. They reduce effort, save time and prevent inconveniences associated with washing and treating laundry. Tide Purclean, made with 75% plant-derived ingredients, taps into higher-order elements linked to social impact. The Tide Eco-Box’s ship-to-consumer packaging uses 60% less plastic and 30% less water, reducing hassles while helping the environment.
The strongest brands are constantly looking for ways to offer better and greater value to consumers. They measure the value they deliver to con-sumers today and track performance to adjust their strategy accordingly. |
2613503_61.pdf | en | <table><tr><td rowspan="3"></td><td>2018</td><td>2017</td></tr><tr><td>HK$’000</td><td>HK$’000</td></tr><tr><td></td><td>(Restated)</td></tr><tr><td>INVESTING ACTIVITIES</td><td></td><td></td></tr><tr><td>Purchases of property, plant and equipment</td><td>(8,274)</td><td>(36,561)</td></tr><tr><td>Proceeds from disposal of property, plant and equipment</td><td>3,461</td><td>2,040</td></tr><tr><td>Placement of pledged bank deposits</td><td>(127,622)</td><td>(319,075)</td></tr><tr><td>Withdrawal of pledged bank deposits</td><td>174,310</td><td>327,771</td></tr><tr><td>Advance to associates</td><td>(5,000)</td><td>–</td></tr><tr><td>Interest received</td><td>261</td><td>169</td></tr><tr><td>Acquisition of investment in an associate</td><td>–</td><td>(3,000)</td></tr><tr><td>NET CASH GENERATED FROM (USED IN) INVESTING
ACTIVITIES</td><td>37,136</td><td>(28,656)</td></tr><tr><td>FINANCING ACTIVITIES</td><td></td><td></td></tr><tr><td>New bank loans raised</td><td>194,544</td><td>364,300</td></tr><tr><td>Repayment of bank borrowings</td><td>(247,311)</td><td>(362,839)</td></tr><tr><td>Advances from a director</td><td>–</td><td>95,000</td></tr><tr><td>Repayment to a director</td><td>(50,000)</td><td>–</td></tr><tr><td>Repayment to an ex-director (included in other payable)</td><td>(20,000)</td><td>–</td></tr><tr><td>Repayment of finance lease payables</td><td>–</td><td>(115)</td></tr><tr><td>Interest paid</td><td>(2,707)</td><td>(2,630)</td></tr><tr><td>Distribution paid to non-controlling interests</td><td>(3,930)</td><td>(1,400)</td></tr><tr><td>Expenses on issue of shares</td><td>(725)</td><td>–</td></tr><tr><td>Proceeds from issue of shares</td><td>182,000</td><td>–</td></tr><tr><td>NET CASH FROM FINANCING ACTIVITIES</td><td>51,871</td><td>92,316</td></tr><tr><td>NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS</td><td>(23,913)</td><td>87,218</td></tr><tr><td>CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE YEAR</td><td>194,368</td><td>107,150</td></tr><tr><td>CASH AND CASH EQUIVALENTS AT END OF THE YEAR,</td><td></td><td></td></tr><tr><td>represented by bank balances and cash</td><td>170,455</td><td>194,368</td></tr></table> |
2613503_62.pdf | en | # 1. GENERAL INFORMATION
Kwan On Holdings Limited (the “Company”) was incorporated in the Cayman Islands on 6 December 2012 as an exempted company with limited liability under the Companies Law (2004 revision) Chapter 22 of the Cayman Islands and its shares are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).
The registered office of the Company is located at the offices of Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, the Cayman Islands. The principal place of business is Unit 2801, 118 Connaught Road West, Hong Kong.
The consolidated financial statements are presented in Hong Kong dollars (“HK\$”), which is also the functional currency of the Company, and all values are rounded to the nearest thousands, except when otherwise indicated.
The Company is an investment holding company and its subsidiaries (together referred to as the “Group”) are principally engaged in the provision of construction and maintenance works on civil engineering contracts in respect of buildings, waterworks, site formation, road works and drainage and slope upgrading in Hong Kong.
# 2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)
In the current year, the Group has adopted the following new and revised HKFRSs, which include HKFRSs, Hong Kong Accounting Standards (“HKAS(s)”), amendments and Interpretations (“Int(s)”) issued by the HKICPA.
<table><tr><td>Amendments to HKFRSs</td><td>Annual Improvements to HKFRS 2014–2016 Cycle:
Amendments to HKFRS 12</td></tr><tr><td>Amendments to HKAS 7</td><td>Disclosure Initiative</td></tr><tr><td>Amendments to HKAS 12</td><td>Recognition of Deferred Tax Assets for Unrealised
Losses</td></tr></table>
Except as described below, the application of the new and revised HKFRSs in the current year has had no material impact on the Group’s financial performance and positions for the current and prior years and/or on the disclosures set out in these consolidated financial statements. |
20786816_42.pdf | en | # ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
# ITEM 2. PROPERTIES
We own or lease numerous properties throughout the world. We consider our manufacturing plants, equipment assembly, maintenance and overhaul facilities, grinding plants, drilling fluids and chemical processing centers, and primary research and technology centers to be our principal properties. The following sets forth the location of our principal owned or leased facilities for our business segments as of December 31, 2018:
<table><tr><td>Oilfield Services:</td><td>Houston, Pasadena, and The Woodlands, Texas; Broken Arrow and Claremore,
Oklahoma - all located in the United States; Leduc, Canada; Celle, Germany;
Tananger, Norway; Aberdeen, Scotland; Liverpool, England; Macae, Brazil;
Singapore, Singapore; Kakinada, India; Nimr, Oman; Abu Dhabi and Dubai,
United Arab Emirates; Dhahran, Saudi Arabia; Luanda, Angola; Port Harcourt,
Nigeria</td></tr><tr><td>Oilfield Equipment:</td><td>Houston and Humble, Texas - located in the United States; Montrose, Scotland;
Nailsea, England; Niteroi, Brazil; Suzhou, China; Dammam, Saudi Arabia</td></tr><tr><td>Turbomachinery & Process
Solutions:</td><td>Deer Park, Texas and Jacksonville, Florida - located in the United States;
Florence and Massa, Italy; Le Creusot, France; Coimbatore, India</td></tr><tr><td>Digital Solutions:</td><td>Billerica, Massachusetts and Minden, Nevada - located in the United States;
Groby, England; Shannon, Ireland; Hurth, Germany</td></tr></table>
We own or lease numerous other facilities such as service centers, blend plants, workshops and sales and administrative offices throughout the geographic regions in which we operate. We also have a significant investment in service vehicles, tools and manufacturing and other equipment. All of our owned properties are unencumbered. We believe that our facilities are well maintained and suitable for their intended purposes.
# ITEM 3. LEGAL PROCEEDINGS
The information with respect to Item 3. Legal Proceedings is contained in "Note 19. Commitment and Contingencies" of the Notes to Consolidated Financial Statements in Item 8 herein.
# ITEM 4. MINE SAFETY DISCLOSURES
Our barite mining operations, in support of our drilling fluids products and services business, are subject to regulation by the federal Mine Safety and Health Administration under the Federal Mine Safety and Health Act of 1977. Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this annual report. |
20786816_43.pdf | en | # PART II
# ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our Class A common stock, \$0.0001 par value per share, is traded on the New York Stock Exchange under the ticker symbol 'BHGE'. As of February 8, 2019, there were approximately 6,901 stockholders of record. All of our issued and outstanding Class B common stock, \$0.0001 par value per share, is owned by GE and its affiliates.
The following table contains information about our purchases of Class A common stock equity securities during the fourth quarter of 2018.
# Issuer Purchases of Equity Securities
<table><tr><td>Period</td><td>Total Number
of Shares
(1)Purchased </td><td>Average
Price Paid
(2)Per Share </td><td>Total Number of
Shares Purchased as
Part of a Publicly
Announced Plan or
(3)Programs </td><td>Maximum Dollar Value
of Shares that May Yet Be
Purchased Under the Plan
(3)or Programs </td></tr><tr><td>October 1-31, 2018</td><td>15,371</td><td> $ 31.49</td><td>—</td><td>$ 563,438,373</td></tr><tr><td>November 1-30, 2018</td><td>—</td><td>—</td><td>—</td><td>$ 18,690,655</td></tr><tr><td>December 1-31, 2018</td><td>—</td><td>—</td><td>—</td><td>$ 18,690,655</td></tr><tr><td>Total</td><td>15,371</td><td> $ 31.49</td><td>—</td><td></td></tr></table>
(1) Represents Class A common stock purchased from employees to satisfy the tax withholding obligations in connection with the vesting of restricted stock units.
(2) Average price paid for Class A common stock purchased from employees to satisfy the tax withholding obligations in connection with the vesting of restricted stock units.
(3) In November 2017, our board of directors authorized BHGE LLC to repurchase up to \$3 billion of its common units from the Company and GE. The proceeds of any repurchase received by BHGE are to be used to repurchase Class A common stock of the Company on the open market. Any repurchase of Class B common stock of the Company, which is paired with repurchased common units owned by GE and its affiliates, would be repurchased by the Company at par value. We did not repurchase any shares of Class A common stock in the fourth quarter of 2018. However, on November 16, 2018, we repurchased and canceled 65 million shares of Class B common stock from GE and its affiliates that is paired with common units of BHGE LLC for \$1,461 million. As of December 31, 2018, the stock repurchase program has been substantially completed. |
7626592_142.pdf | en | In another legal proceeding involving this subsidiary, Fuxin Enclosed Busbar, held 74.4% of the equity in New Northeast Electric (Shenyang) High-voltage Insulated Switchgears Co., Ltd. (formerly known as Shenyang Suntime High Voltage Electric Co., Ltd.) (the “Underlying Equity”) prior to 22 September 2008. Due to the enforcement of the final judgment ((2008) Min Er Zhong Zi No. 23) made by the Supreme People’s Court on 5 September 2008 for the case of China Development Bank and under the coordination, Fuxin Enclosed Busbar returned the Underlying Equity to Shenyang High-volt for free of charge, and completed the change of equity registration on 22 September 2008 as required by the local industrial and commercial administration. Therefore, the Underlying Equity held by Fuxin Enclosed Busbar was returned to Shenyang High-volt free of charge. However, according to the enforcement ruling issued by the Supreme People’s Court on 31 August 2017 ((2017) Zui Gao Fa Zhi Fu No. 27), the fact that the return of the Underlying Equity for free of charge under the coordination of the Company cannot be ascertained. Given the failure of Shenyang High-volt to pay the outstanding consideration of USD16,000,000 for equity transfer constituted a breach of contract, the plaintiff, Fuxin Enclosed Busbar, in order to protect its interests, raised litigation against the above two defendants, namely, Shenyang High-volt and the Company (collectively referred to “Defendants”), claiming for the return of the consideration for the transfer of the Underlying Equity.
The Higher People’s Court of Hainan Province accepted the case in November 2018 with Civil Ruling (2018) Qiong Min Chu No. 69, and delivered the documents such as pleadings to Shenyang High-volt in January 2019. The case was tried in March 2019 and the written judgment of the first instance was received in May 2019. As the Defendants did not appeal within the announcement period, the judgment of the first instance has come into effect since August 2019 and the Company will not bear joint and several liability.
With reference to the announcements on litigation progress of the Company dated 10 September 2020, pursuant to the Civil Ruling (2018) Qiong Min Chu No.69 issued by the Hainan Provincial Higher People’s Court, as of 7 September 2020, the Group is legally entitled to claim Shenyang High-volt’s matured debt totalling RMB178,550,000, including equity transfer payment and interest on debt during the period of delayed performance. In accordance with Article 99 of the Contract Law of the People’s Republic of China and other relevant laws, the Company has notified Shenyang High-volt by post on 7 September 2020 that the aforesaid matured debt due from Shenyang High-volt of RMB178,550,000 would be offset against the Company’s matured debt due to Shenyang High-volt of the same amount arising from the Civil Ruling (2004) Gao Min Chu Zi No.802 issued by the Beijing Municipal Higher People’s Court and the Civil Ruling (2008) Min Er Zhong Zi No.23 issued by the Supreme People’s Court, namely, the offset amount was RMB178,550,000. Upon the Company has published an announcement in an influential newspaper in Liaoning Province on 11 September 2020, the debt offset has become effective on 11 September 2020. |
7626592_143.pdf | en | Consequently, the obligation due to Shenyang High-volt was amounted to RMB94,078,000 as at 31 December 2020, and the claim to Shenyang High-volt of RMB178,550,000 (2019: RMBnil) was recognised as other income in profit or loss during the year.
(b) Included in other payables as at 31 December 2020 and 2019 was the amount due to a former subsidiary of the Group, New Northeast Electric (Jinzhou) Power Capacitor Company Limited (“NNE (Jinzhou)”) which was arising from the receipt of RMB22,900,000 in 2018 (2019: RMB22,900,000) from NNE (Jinzhou).
Included in other payables as at 31 December 2020 and 2019 was the amount due to another former subsidiary of RMB26,696,000. The amount was unsecured, interest-free and no fixed repayment terms.
(c) The amounts are unsecured, interest-free and no fixed repayment terms.
(d) The amounts are unsecured, interest-bearing at interest rate ranged from 4.35% per annum and repayable in December 2021 (2019: interest-bearing at 4.35% per annum and repayable in December 2020).
# 14. LEASE LIABILITIES
<table><tr><td rowspan="2"></td><td>2020</td><td>2019</td></tr><tr><td>RMB’000</td><td>RMB’000</td></tr><tr><td>Current portion</td><td>10,954</td><td>9,813</td></tr><tr><td>Non-current portion</td><td>11,583</td><td>17,487</td></tr><tr><td></td><td>22,537</td><td>27,300</td></tr></table>
As the end of the reporting period, lease liabilities are carried at weighted average incremental borrowing rate ranging from 6.18% to 6.37% (2019: ranging from 6.18% to 6.37%) per annum and repayable in one to five years (2019: two to six years). |
2152049_6.pdf | en | During the period under review, the “Modern Logistics Sensing System Based on RFID and Sensor Network and Key Equipment Industrialization Project”, the special fund for technical results transformation project in Jiangsu Province undertaken by the Group, successfully passed the acceptance. The project established a general data service platform based on the PAAS design with cloud computing technologies. It made breakthroughs in the design technology for EEPROM storage and chips with extra low power consumption and achieved the miniaturization of safe and intelligent locks and the effi cient and safe operation of logistics containers; completed the research and development of cloud test platforms and established a cloud platform and software system for coordinated and automatic testing; established a safety mechanism for RFID electronic labels and chips with the integration of RSA and AES and solved the anti-collision technology for RFID based on code division multiple access, which is used on intelligent locks and reading and writing devices; expanded the depth and width of information sensed by the sensor network and better achieved the real-time monitoring and positioning of changes in the quality of products.
During the period under review, the Group tried to explore businesses related to the big data industry based on its advantages in its own core IOT technologies. Jiangsu Intellitrans Co., Ltd (江蘇智運科技發展有限公司), the wholly-owned subsidiary of the Company, won the bidding for the system integration project of the cloud computing big data industry pilot demonstration base in Sichuan Province, with contract sum of approximately RMB185,000,000. The successful bid for the project realises the fi rst cooperation in the cloud computing big data industry between Sample Technology and China Huawei. Both parties will jointly contribute to the construction of intelligent city in Luzhou City.
# Promoting external exchange and cooperation and further strengthening brand infl uence
During the period under review, the “joint research on the planning design, optimization and application demonstration of city public delivery network”, an international technology cooperation program jointly undertaken by the Group and Massachusetts Institute of Technology (hereafter referred to as the “MIT”), was successfully initiated and will offi cially conduct detailed implementation. The program is based on the existing demands in the express logistics industry in Nanjing. Through the intelligent and optimized logistics delivery simulation platform, it proposes planning and optimization methods on the distributed city logistics delivery network based on the national conditions of China. It also designs the planning of branches at all levels, the equipping of carrying resources, the guidance on driving routes and other strategic advices for logistics operators to achieve the best allocation of overall resources and effi ciency at the municipal level, solve the logistic problems in the last kilometer and provide theoretical and demonstration reference in the effective decision-making in city planning. In the future, the Group will apply the advanced logistic models of the MIT into demonstration projects to achieve the transfer and implementation of advanced technologies of the top university in the world, improve the technical levels in the industrial planning of the logistics industry in China and achieve demonstration application. |
2152049_7.pdf | en | During the period under review, the Group introduced new logo and brand claims based on the establishment and integration of its own industrial ecosystem. The logo will better refl ect the business development status and future development direction of the Company, it is also matched with the Company’s new “transformation and innovative” corporate image. The new logo inspired the whole company for the exploration of intelligent innovation and the pursuit of a better life which is in line with the Company’s new brand proposition – the intelligence makes quality life. During the period under review, the words and image of the “SAMPLE” and “raifu” trademarks of the Group were recognized as China Well-known Trademark by the State Administration for Industry & Commerce of the PRC. As the highest honour in the brand and trademark industry in China, China Well-known Trademark is the only trademark and logo of China under the protection of international laws across the world. The recognition as China Well-known Trademark means that the brand recognition of Sample Technology is recognized by clients and consumers in the industry across the country. It is also a symbol of mature and steady products and reputation and a business card of Sample Technology to develop in China and advance to the world.
During the period under review, the Group was rewarded 2016 Annual Golden Ant Award – Outstanding Achievement Award for State Gold Card Project, 2016 China Smart City Solution Innovation Award, 2016-2017 Key Software Enterprise under Provincial Planning Layout (With Scale), Intelligent Logistics Demonstration Enterprise of Jiangsu Province, 2016 World Internet of Things Expo New Technology and New Products Prize (Golden Prize), 2016 Science and Technology Prize (Second Prize) of China Institute of Communications, 2016 Jiangsu Province Five-star Honest Enterprise, 2016 Jiangsu Province Science and Technology (Third Prize) and 2016 Nanjing City Science and Technology Prize (Third Prize).
# Prospects
In the future, the Company will further develop other intelligent city businesses on the basis of city intelligent transportation. The IOT is a basic element and modular unit in the structure of an intelligent city and has become a key infrastructure and an important support to achieve automatic sensing, quick response and scientifi c decision-making for intelligent cities. The “13th Five-year” Plan of China also explicitly proposes to “strengthen the construction of modern information infrastructure, promote the development of big data and IOT and build intelligent cities”. For the application of the IOT, it will increase the use of IOT technologies in urban transportation, urban power consumption balance management, fi re-fi ghting facilities management, underground pipeline network monitoring, dangerous items management, energy-saving, environmental protection and other key industries to achieve automatic sensing and elaborate management. For city management, the installment of sensing facilities will signifi cantly improve the ability in urban operation surveillance. On the one hand, it will help form a unifi ed sensing equipment management platform and the data collection and information sharing at the municipal level. On the other hand, it will meet the inherent demands for quick response in city management and become an intelligence source for scientifi c decision-making. By vigorously promoting the application of IOT technologies in intelligent city industries, it will promote the deep construction and development of intelligent cities in China. |
11711841_5.pdf | en | # Report Data
Unless otherwise indicated, all financial data in this report is in US\$ and based on the RMB central parity rate against the US\$ on December 31, 2021 at 6.3757. In addition, unless otherwise indicated, production data in metric tons only refers to packaged meats, pork and poultry meat, and does not include hogs produced.
# Report Confirmation and Approval
This report was approved by the Board of Directors on May 27, 2022, following confirmation by management.
# Data Reliability Assurance
The data sources used in this report include publicly available government data sources, relevant statistical reports of WH Group, stakeholder communication materials, administrative documents and reports, third-party evaluations and interviews, etc. The data calculations are marked in the corresponding chapters with the calculation method.
The Board of Directors of the Company confirms that the contents of this report contain no false records, misleading statements, or material omissions. The Board assumes responsibility for the truthfulness, accuracy, and completeness of the contents of this report.
If you have any questions about the report content, please contact us at:
WH Group Limited
<table><tr><td>Address:</td><td>Unit 7602B-7604A, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong</td></tr><tr><td>Tel:</td><td>+852 2868 2828</td></tr><tr><td>E-mail:</td><td>[email protected]</td></tr></table> |
11711841_6.pdf | en | # ABOUT WH GROUP
# Company Overview
WH Group is the world’s largest pork company, with leading positions in China, the United States, and key markets in Europe. Our global platform integrates consolidated pork business chain including hog production, hog slaughtering and processing, packaged meats, as well as distribution of packaged meats and fresh pork, with a leading position in the pork industry. WH Group has been listed on the Main Board of the Stock Exchange of Hong Kong Limited since August 5, 2014 under the stock code 0288.HK and was formally included in the Hang Seng Index as a constituent on September 4, 2017. WH Group ranked 474th on the “Fortune Global 500” list in 2021.
WH Group owns subsidiary companies of Shuanghui, Asia’s largest meat processing company, and Smithfield, the largest producer of packaged meat products in the U.S.. With our globally renowned brands, WH Group has a rich portfolio of products and a sizable market network. The Company also has built unrivalled advantage thanks to a globally integrated platform that enables resource allocation across regions with efficiency and synergy; at the same time, we pay close attention to the quality, safety, and nutritional health of food, striving to provide high-quality products and services to consumers. In 2021, with support from various sectors and efforts of our employees, the Company recorded steady growth in both revenue and profit.
# Business Segments
The Company’s principal business covers packaged meats, pork, and hog production, with packaged meats being the core segment. The Company is also engaged in other supporting business activities, including the harvest and sale of poultry, the manufacturing and sale of packaging materials, provision of logistics services, operation of retail chains, production of seasonings and natural sausage casings, and biopharmaceuticals.
WH Group pursues global development by allocating assets and integrating resources around the world and has held a leading position in the global pork industry. As of the end of 2021, WH Group has established more than 100 meat production and processing facilities in regions including China, the United States, and Europe. Together with tens of thousands of partners such as suppliers and distributors around the world, the Group is building a “farm-to-fork” service chain that reaches consumers and households directly. |
3441316_49.pdf | en | # Our financing and hedging strategy
We generate income principally from the yields earned on our investment portfolio and, to the extent that leverage is deployed, on the difference between (i) the yields earned on our investments and (ii) the sum of our borrowing costs and hedging costs. We use leverage to increase potential returns to our stockholders and to fund the acquisition of our assets.
As of December 31, 2016 our non-GAAP “at-risk” and GAAP debt-to-equity leverage ratios were 2.9 to 1 and 2.9 to 1, respectively. As of December 31, 2015 our non-GAAP “at-risk” and GAAP debt-to-equity leverage ratios were 3.5 to 1 and 3.4 to 1, respectively. To calculate our leverage ratios, we divide our non-GAAP “at-risk” leverage and our GAAP leverage by our GAAP stockholders equity. We define non-GAAP “at-risk” leverage as the sum of: (i) our GAAP repurchase agreements, (ii) advances from the Federal Home Loan Bank of Cincinnati (“FHLBC Advances”), if any, (iii) repurchase agreements held through affiliated entities but exclusive of any financing utilized through AG Arc (iv) the amount payable on purchases that have not yet settled less the financing remaining on sales that have not yet settled, (v) the consolidated tranche issued by the Consolidated VIE, (vi) the Participation Interest and (vii) our net TBA position (at cost). Our calculations of each type of leverage exclude repurchase agreements and net receivables/payables on unsettled trades pertaining to U.S. Treasury securities due to the highly liquid and temporary nature of these investments. For a tabular representation of our leverage, refer to the “Financing activities” section of Item 7.
Subject to maintaining our qualification as a REIT for U.S. federal income tax purposes and our Investment Company Act exemption, to the extent leverage is deployed, we may use a number of sources to finance our investments. We currently finance the acquisition of certain assets within our portfolio with repurchase agreements. Prior to March 31, 2016, we also financed our Agency RMBS portfolio with FHLBC Advances. As of December 31, 2016, we, either directly or through our equity method investments in affiliates, had master repurchase agreements, (“MRAs”) or loan agreements with 37 counterparties, under which we had borrowed an aggregate \$1.9 billion, on a non-GAAP basis from 23 counterparties. As of December 31, 2016, the borrowings under our repurchase agreements had maturities between January 3, 2017 and September 17, 2019.
In July 2015, our captive insurance subsidiary, MITT Insurance, was granted membership in the Federal Home Loan Bank of Cincinnati (the “FHLBC”) and commenced obtaining advances from the FHLBC. However, in January 2016, the Federal Housing Finance Agency, the FHFA, issued RIN 2590-AA39, Members of Federal Home Loan Banks (“the Final Rule”), which expressly excludes captive insurance companies, such as MITT Insurance (“Excluded Captives”), from being eligible for membership in the FHLBC. Refer to the “Recent government activity” section in Item 7 for more information. As of December 31, 2016, we had no outstanding advances with the FHLBC.
Subject to maintaining our qualification as a REIT and our Investment Company Act exemption, to the extent leverage is deployed, we utilize derivative financial instruments, including interest rate swap agreements, TBAs, interest rate swaptions, credit derivatives and other instruments including Eurodollar futures and U.S. Treasury futures (collectively, “Futures”) and long or short positions in U.S. Treasury securities in an effort to manage and mitigate the interest rate risk associated with the financing of our portfolio. Specifically, we may seek to hedge our exposure to potential interest rate mismatches between the interest we earn on our investments and our borrowing costs caused by fluctuations in short-term interest rates. In utilizing leverage and interest rate hedges, our objectives are to improve risk-adjusted returns and, where possible, to lock in, on a long-term basis, a spread between the yield on our assets and the cost of our financing. As of December 31, 2016, we had entered into \$644.0 million notional amount of interest rate swaps that have variable maturities between October 30, 2017 and December 7, 2026, \$24.0 million notional amount of short positions in U.S. Treasury securities that mature on May 15, 2026 and \$141.5 million notional amount of short positions in U.S. Treasury Futures that have variable maturities between January 27, 2022 and January 27, 2027.
# Risk management strategy
Our overall portfolio strategy is designed to generate attractive returns through various phases of the economic cycle. We believe that our broad approach within the real estate market, which considers all major categories of real estate assets, allows us to invest in a variety of attractive investment opportunities and helps insulate our portfolio from some of the risks that arise from investing in a single collateral type.
The components of our risk management strategy are:
• Disciplined adherence to risk-adjusted return. Our Manager deploys capital only when it believes that risk-adjusted returns are attractive. In this analysis, our Manager considers the initial net interest spread of the investment, the cost of hedging and our ability to optimize returns over time through rebalancing activities. Our Manager’s management team has extensive experience implementing this approach. |
3441316_50.pdf | en | • Focus on multiple sectors. Our Manager looks for attractive investment opportunities in all major sectors of the U.S. mortgage market. Our management team evaluates investment opportunities in residential mortgage loans and securities and across a wide spectrum of commercial property types. We believe this approach enables our Manager to identify attractive investments when it believes certain portions of the market are attractively priced or when investment opportunities in one or more sectors are scarce. By pursuing a broad investment strategy within the mortgage market, we believe our investment mortgage portfolio is less exposed to dislocations in specific sectors of the market. We believe a diversified investment portfolio outperforms the traditional single strategy portfolios in the REIT market, with returns that are more resistant to changes in the interest rate and consumer credit environment.
• Concurrent evaluation of interest rate and credit risk. Our Manager seeks to balance our portfolio with both credit risk-intensive assets and interest rate risk-intensive assets. Both of these primary risk types are evaluated against a common risk-adjusted return framework.
• Active hedging and rebalancing of portfolio. Our Manager periodically evaluates our portfolio against pre-established risk tolerances and will take corrective action through asset sales, asset acquisitions, and dynamic hedging activities to bring the portfolio back within these risk tolerances. We believe this approach generates more attractive long-term returns than an approach that either attempts to hedge away a majority of the interest rate or credit risk in the portfolio at the time of acquisition, on the one end of the risk spectrum, or a highly speculative approach that does not attempt to hedge any of the interest rate or credit risk in the portfolio, on the other end of the risk spectrum.
• Opportunistic approach to increased risk. Our Manager’s investment strategy is to preserve our ability to extend our risk taking capacity during periods of changing market fundamentals.
# Investment policies
We comply with investment policies and procedures and investment guidelines (our “Investment Policies”) that are approved by our board of directors and implemented by our Manager. Our Manager reports on our investment portfolio at each regularly scheduled meeting of our board of directors. Our independent directors do not review or approve individual investment, leverage or hedging decisions made by our Manager made in accordance with our Investment Policies.
Our Investment Policies include the following guidelines, among others:
• no investment shall be made that would cause us to fail to qualify as a REIT for federal income tax purposes;
• no investment shall be made that would cause us to be regulated as an investment company under the Investment Company Act;and
• our investments will be in our target assets.
Our Investment Policies may be changed by our board of directors without the approval of our stockholders.
# Our target assets
Our target asset classes and the principal investments in which we invest are as follows:
<table><tr><td>Asset Class</td><td>Principal Investments</td></tr><tr><td>Agency RMBS</td><td>• RMBS for which Ginnie Mae, Fannie Mae or Freddie Mac
guarantees payments of principal and interest on the securities
they issue.</td></tr><tr><td>Non-Agency RMBS</td><td>• Fixed and floating-rate residential Non-Agency RMBS, including
investment grade and non-investment grade classes. The
mortgage loan collateral for residential Non-Agency RMBS
consists of residential mortgage loans that do not generally
conform to underwriting guidelines issued by U.S. government
agencies or U.S. government-sponsored entities.</td></tr><tr><td>Other real estate-related assets and financial assets</td><td> • Fixed and floating-rate CMBS, including investment grade and
non-investment grade classes. CMBS are secured by, or evidence
ownership interest in, a sinlge commercial mortgage loan or a
pool of commercial mortgage loans.</td></tr></table> |
7467906_68.pdf | en | # 2. APPLICATION OF AMENDMENTS TO HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”) (continued)
# Amendments to HKFRSs that are mandatorily effective for the current year (continued)
# Application of Amendments to HKAS 1 and HKAS 8 Definition of Material
The Group has applied the Amendments to HKAS 1 and HKAS 8 for the first time in the current year. The amendments provide a new definition of material that states “information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.” The amendments also clarify that materiality depends on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements taken as a whole.
The application of the Amendments to References to the Conceptual Framework in HKFRS Standards and the amendments to HKFRSs in the current year had no material impact on the Group’s financial positions and performance for the current and prior years and/or on the disclosures set out in these consolidated financial statements.
# New and amendments to HKFRSs in issue but not yet effective
The Group has not early applied the following new and amendments to HKFRSs that have been issued but are not yet effective:
<table><tr><td>HKFRS 17</td><td>Insurance Contracts and the related A1mendments</td></tr><tr><td>Amendment to HKFRS 16</td><td>Covid-19-R4elated Rent Concessions</td></tr><tr><td>Amendments to HKFRS 3</td><td>Reference to the Conceptual Framework2</td></tr><tr><td>Amendments to HKFRS 9,
HKAS 39, HKFRS 7, HKFRS 4
and HKFRS 16</td><td>Interest Rate Benchmark Reform — Phase 25</td></tr><tr><td>Amendments to HKFRS 10
and HKAS 28</td><td>Sale or Contribution of Assets between an Investor and its
A3ssociate or Joint Venture</td></tr><tr><td>Amendments to HKAS 1</td><td>Classification of Liabilities as Current or Non-current and
related amendments to Hong Kong Interpretation 5
(2020)1</td></tr><tr><td>Amendments to HKAS 16</td><td>Property, Plant and Equipment — Proceeds before Intended
U2se</td></tr><tr><td>Amendments to HKAS 37</td><td>Onerous Contracts — Cost of Fulfilling a Contract2</td></tr><tr><td>Amendments to HKFRSs</td><td>Annual Improvements to HKFRSs 2018–20202</td></tr></table>
1 Effective for annual periods beginning on or after 1 January 2023.
2 Effective for annual periods beginning on or after 1 January 2022.
3 Effective for annual periods beginning on or after a date to be determined.
4 Effective for annual periods beginning on or after 1 June 2020.
5 Effective for annual periods beginning on or after 1 January 2021.
Except for the amendments in HKFRSs mentioned below, the directors of the Company anticipate that the application of all other new and amendments to HKFRSs will have no material impact on the consolidated financial statements in the foreseeable future. |
7467906_69.pdf | en | # 2. APPLICATION OF AMENDMENTS TO HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”) (continued)
# Amendments to HKAS 1 Classification of Liabilities as Current or Non-current and related amendments to Hong Kong Interpretation 5 (2020)
The amendments provide clarification and additional guidance on the assessment of right to defer settlement for at least twelve months from reporting date for classification of liabilities as current or non-current, which:
• specify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period. Specifically, the amendments clarify that:
(i) the classification should not be affected by management intentions or expectations to settle the liability within 12 months; and
(ii) if the right is conditional on the compliance with covenants, the right exists if the conditions are met at the end of the reporting period, even if the lender does not test compliance until a later date; and
• clarify that if a liability has terms that could, at the option of the counterparty, result in its settlement by the transfer of the entity’s own equity instruments, these terms do not affect its classification as current or non-current only if the entity recognises the option separately as an equity instrument applying HKAS 32 Financial Instruments: Presentation.
In addition, Hong Kong Interpretation 5 was revised as a consequence of the Amendments to HKAS 1 to align the corresponding wordings with no change in conclusion.
Based on the Group’s outstanding liabilities as at 31 December 2020, the application of the amendments will not result in reclassification of the Group’s liabilities.
# 3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES
# 3.1 Basic of preparation of consolidated financial statements
The consolidated financial statements have been prepared in accordance with the HKFRSs issued by the HKICPA. For the purpose of preparation of the consolidated financial statements, information is considered material if such information is reasonably expected to influence decisions made by primary users. In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange and the Hong Kong Companies Ordinance.
The consolidated financial statements have been prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange of goods and services. |
8405609_8.pdf | en | This summary aims to give you an overview of the information contained in this prospectus. Since this is a summary, it does not contain all the information that may be important to you and is qualified in its entirety by, and should be read in conjunction with, the full text of this prospectus. You should read the whole document including the appendices hereto, which constitute an integral part of this prospectus, before you decide to invest in our Offer Shares. There are risks associated with any investment. Some of the particular risks in investing in our Offer Shares are set out in the section headed “Risk factors” in this prospectus. You should read that section carefully before you decide to invest in our Offer Shares.
# OVERVIEW
We are an established operator of elderly residential care homes in Hong Kong providing comprehensive residential care home services to our elderly residents through our network of “Shui On瑞安” and “Shui Hing 瑞興” branded elderly residential care homes across four districts in Hong Kong. Our revenue is primarily derived from:
(i) rendering of elderly home care services: including the provision of accommodation with dietician-managed meal plans, 24-hour nursing and caretaking assistance and professional services such as regular medical consultation, physiotherapy, occupational therapy, psychological and social care services; and
(ii) sales of elderly related goods and provision of healthcare services: elderly related goods include adult nappies, nutritional milk, other medical consumable products and daily supplies;whereas healthcare services include customisable add-on healthcare services such as medical and physiotherapy services that may be provided by external providers on an as-needed basis to suit their needs.
During the Track Record Period and up to the Latest Practicable Date, we expanded our network of elderly residential care homes from four to five elderly residential care homes located in Kwun Tong, Shatin, Eastern and Kwai Tsing districts and were strategically situated in the vicinity of public housing estates and residential areas with a high density of potential customers nearby as well as shopping malls and public transport and other public facilities.
During the Track Record Period, our Group primarily generated revenue from three types of customers: (i) the Social Welfare Department (the “SWD”) that leased a fixed number of residential care places at elderly residential care homes that participate in the Enhanced Bought Place Scheme (the “EBPS”) under the EBPS Agreements, where the EBPS is a publicly funded welfare programme of the SWD that offers leased residential care places at a subsidised rate to eligible elderly citizens in Hong Kong; (ii) the individual customers that include both EBPS-subsidised and non-subsidised customers;and (iii) non-governmental organisations which leased a few residential care places at our elderly residential care homes. As at the Latest Practicable Date, we had a total of 573 elderly residents, of which 1.4% were between 50 and 59 years old, 4.7% were between 60 and 69 years old, 16.9% were between 70 and 79 years old, 48.0% were between 80 and 89 years old, 26.2% were between 90 and 99 years old and 2.8% were 100 years old or above.
As at the Latest Practicable Date, the SWD leased a total of 193 residential care places from our two EBPS participating elderly residential care homes which are classified as class EA1, the highest classification rated by the SWD under the EBPS.
The following table sets forth our revenue from (i) rendering of elderly home care services; and (ii) sales of elderly related goods and provision of healthcare services for the periods indicated: |
8405609_9.pdf | en | <table><tr><td rowspan="3"></td><td colspan="4">For the year ended 31 December</td></tr><tr><td colspan="2">2015</td><td colspan="2">2016</td></tr><tr><td>HK$(’000)</td><td>%</td><td> HK$(’000)</td><td>%</td></tr><tr><td>(N)Renderioeng of elderly htome care services .....</td><td>33,582</td><td>84.1</td><td>48,874</td><td>82.9</td></tr><tr><td>Sales of elderly related goods and provision of
\( ( N o t e ) \))healthcare services .................</td><td>6,355</td><td>15.9</td><td>10,101</td><td>17.1</td></tr><tr><td>Total ................................</td><td>39,937</td><td>100.0</td><td>58,975</td><td>100.0</td></tr></table>
Note: The revenue generated by Wan Tsui was not included as part of our Group’s revenue generated during the Track Record Period as Wan Tsui was considered as our associate prior to the disposal of our entire interest in Wan Tsui on 28 June 2016. For details of its accounting treatment, please see the paragraphs headed “Financial information — Share of profits and losses/gain on disposal of associates” in this prospectus and note 15 to the Accountants’ Report as set out in Appendix I to this prospectus. The completion of the acquisition of approximately 66.7% interest in Shui On (Kwai Shing E.) and the entire interest in Shui On (Sun Tin Wai) by our Group took place by the end of August 2016 and September 2016, respectively. As such, our revenue generated from the rendering of elderly home care services for the year ended 31 December 2016 took into account our revenue generated from each of Shui On (Kwai Shing E.) and Shui On (Sun Tin Wai) elderly residential care homes during the period between the dates when they became our subsidiaries and 31 December 2016.
The table below sets forth details of the average monthly occupancy rate of each of our elderly residential care homes during the Track Record Period:
<table><tr><td rowspan="3">Elderly residential care home</td><td colspan="2">Overall average</td><td colspan="2">Average for non-EBPS
residential care lpaces
(individual customers
and non-governmental
organisations)</td><td colspan="2">Average for residential
care lpaces under
the EBPS</td></tr><tr><td colspan="2">For the year ended
31 December</td><td colspan="2">For the year ended
31 December</td><td colspan="2">For the year ended
31 December</td></tr><tr><td>2015</td><td>2016</td><td>2015</td><td>2016</td><td>2015</td><td>2016</td></tr><tr><td></td><td>%</td><td>%</td><td>%</td><td>%</td><td>%</td><td>%</td></tr><tr><td>Shui On (Shun On) .............</td><td>95.8</td><td>94.9</td><td>94.9</td><td>91.5</td><td>98.3</td><td>98.3</td></tr><tr><td>(N3)Shuit Hi oe ng...............</td><td>96.7</td><td>96.7</td><td>96.7</td><td>96.7</td><td> –</td><td> –</td></tr><tr><td>(N3)Shui Otn (Hin Whoe ga)........</td><td>98.6</td><td>98.6</td><td>98.6</td><td>98.6</td><td> –</td><td> –</td></tr><tr><td>(N2dShuit3) O n(S e n unTinWos ai)a. .</td><td> N/A</td><td>98.9</td><td> N/A</td><td>98.9</td><td> N/A</td><td> –</td></tr><tr><td>(NShuioe2 Ot)n (Kwai Shing E.) . . . .</td><td> N/A</td><td>93.2</td><td> N/A</td><td>84.9</td><td> N/A</td><td>98.5</td></tr></table>
Notes:
1. The monthly occupancy rate is calculated by dividing the number of elderly residents as at the month end of each elderly residential care home by the number of residential care places available at that elderly residential care home. The average monthly occupancy rate is the average of all the monthly occupancy rates over the financial year.
2. The relevant periods for calculating the average monthly occupancy rates of Shui On (Kwai Shing E.) and Shui On (Sun Tin Wai) only cover the periods since the dates when they became our subsidiaries and up to 31 December 2016. The completion of the acquisition of approximately 66.7% interest in Shui On (Kwai Shing E.) and the entire interest in Shui On (Sun Tin Wai) by our Group took place by the end of August 2016 and September 2017, respectively.
3. The Shui Hing, Shui On (Hing Wah) and Shui On (Sun Tin Wai) elderly residential care homes do not participate in the EBPS. As such, the average monthly occupancy rate for residential care places under the EBPS is not applicable to them.
# OUR ELDERLY RESIDENTIAL CARE HOMES
Through our principal Hong Kong subsidiaries including Shui On (Shun On), Shui Hing, Shui On (Hing Wah), Shui On (Sun Tin Wai) and Shui On (Kwai Shing E.), we owned and operated four “Shui On瑞安” and one “Shui Hing 瑞興” branded elderly residential care homes across the Kwun Tong, Shatin, Eastern and Kwai Tsing districts in Hong Kong with a total of 589 residential care places as at the Latest Practicable Date.
Our elderly residential care homes are strategically situated in the vicinity of public housing estates and residential areas with a high density of potential customers nearby as well as shopping malls and |
8352502_100.pdf | en | # CORPORATE REORGANISATION AND GROUP STRUCTURE
share capital for cash at par. On 26 May 2008, Honour Event disposed its entire shareholding in Expand Pacific Limited to Mr. Tsang, our executive Director at a consideration of HK\$1.00.
First Credit had advanced an aggregate sum of HK\$114,350 by way of loan to Expand Pacific Limited. The said loan of HK\$114,350 was unsecured, interest-free and with no fixed term of repayment but repayable on demand. The said loan was repaid in full on 24 March 2009.
On 15 January 2008, First Consortium acquired from Best Year Enterprises Limited (a company wholly-owned by Mr. Sin) one ordinary share of HK\$1.00 in the capital of Head Return Limited (formerly known as FC Mortgage Referral Limited), being its entire issued share capital, for cash at par. On 14 May 2008, First Consortium disposed its entire shareholding in Head Return Limited to Mr. Sin at a consideration of HK\$1.00.
First Credit had advanced an aggregate sum of HK\$111,914 by way of loan to Head Return Limited. The said loan of HK\$111,914 was unsecured, interest-free and with no fixed term of repayment but repayable on demand. The said loan was repaid in full on 24 March 2009.
Expand Pacific Limited and Head Return Limited are limited liability companies incorporated in Hong Kong on 29 August 2007 and 18 October 2007 respectively. Our Group did not conduct any business operation in these companies before the aforesaid disposals.
# THE REORGANISATION
# Incorporation of our Company
Our Company was incorporated under the Companies Law in the Cayman Islands as an exempted company with limited liability on 9 March 2009. Our Company has established a place of business in Hong Kong at Units 909–911, 9th Floor, Far East Consortium Building, 121 Des Voeux Road Central, Hong Kong and was registered as a non-Hong Kong company in Hong Kong under Part XI of the Companies Ordinance on 2 April 2009. As at the date of incorporation, the authorised share capital of our Company was HK\$380,000 divided into 38,000,000 Shares of HK\$0.01 each and one nil-paid Share was issued and allotted to the initial subscriber, Codan Trust Company (Cayman) Limited. The said one Share was transferred to Best Year Enterprises Limited (a shareholder of First Consortium and a wholly-owned company of Mr. Sin) on the same date. |
8352502_101.pdf | en | # CORPORATE REORGANISATION AND GROUP STRUCTURE
# Acquisition of First Consortium by our Company
On 25 April 2009, pursuant to a sale and purchase agreement entered into between (i) the then shareholders of First Consortium as vendors, namely Best Year Enterprises Limited, Power Profit Far East Limited, Win Action Limited, Choy Sze Chung Jojo, Easy Finance Management Limited, Tam Yuk Ching Jenny, Top Stanton Holdings Limited, Tsang Kai Kin Clinton, Yearman Limited, Capital Top Limited, Gainyear Holdings Limited, Firstcorp Group Limited, Union Nation Investments Limited, Tse Young Lai, Rise Day Investments Limited, Jade Wing Investments Limited, Enhance Pacific Limited and Nation Field Limited and (ii) our Company as purchaser, our Company acquired the entire issued share capital of First Consortium. In consideration of the acquisition, (i) the one nil-paid Share held by Best Year Enterprises Limited was credited as fully paid; and (ii) our Company issued and allotted 19,230,766 Shares to the then shareholders of the First Consortium, details of the allotment are as follows:
<table><tr><td>Name of Shareholders</td><td>No. of shares
held by the
shareholders
in First
Consortium
before
acquisition</td><td>No. of Shares
issued by our
Company as
consideration
for the
acquisition</td><td>Total No. of
Shares held by
the
Shareholders
after the
acquisition</td><td>Approximate
percentage of
shareholding
after the
acquisition</td></tr><tr><td>Best Year Enterprises Limited
(Note 1)</td><td>1,538,469</td><td>1,538,468</td><td>1,538,469</td><td>8.00%</td></tr><tr><td>Tse Young Lai</td><td>2,994,872</td><td>2,994,872</td><td>2,994,872</td><td>15.57%</td></tr><tr><td>Power Profit Far East Limited</td><td>2,346,152</td><td>2,346,152</td><td>2,346,152</td><td>12.20%</td></tr><tr><td>Win Action Limited</td><td>1,923,076</td><td>1,923,076</td><td>1,923,076</td><td>10.00%</td></tr><tr><td>Nation Field Limited</td><td>1,615,385</td><td>1,615,385</td><td>1,615,385</td><td>8.40%</td></tr><tr><td>Tam Yuk Ching Jenny</td><td>1,333,332</td><td>1,333,332</td><td>1,333,332</td><td>6.93%</td></tr><tr><td>Top Stanton Holdings Limited</td><td>1,230,768</td><td>1,230,768</td><td>1,230,768</td><td>6.40%</td></tr><tr><td>Easy Finance Management
Limited</td><td>846,153</td><td>846,153</td><td>846,153</td><td>4.40%</td></tr><tr><td>Tsang Kai Kin Clinton</td><td>782,051</td><td>782,051</td><td>782,051</td><td>4.07%</td></tr><tr><td>Rise Day Investments Limited
(Note 2)</td><td>769,231</td><td>769,231</td><td>769,231</td><td>4.00%</td></tr><tr><td>Choy Sze Chung Jojo</td><td>769,230</td><td>769,230</td><td>769,230</td><td>4.00%</td></tr><tr><td>Yearman Limited</td><td>769,230</td><td>769,230</td><td>769,230</td><td>4.00%</td></tr><tr><td>Enhance Pacific Limited
(Note 1)</td><td>589,743</td><td>589,743</td><td>589,743</td><td>3.07%</td></tr><tr><td>CailTpta oiip Lmted</td><td>512,820</td><td>512,820</td><td>512,820</td><td>2.67%</td></tr><tr><td>Gainyear Holdings Limited</td><td>461,538</td><td>461,538</td><td>461,538</td><td>2.40%</td></tr><tr><td>Union Nation Investments
Limited</td><td>312,820</td><td>312,820</td><td>312,820</td><td>1.62%</td></tr><tr><td>Firstcorp Group Limited</td><td>307,692</td><td>307,692</td><td>307,692</td><td>1.60%</td></tr><tr><td>Jade Wing Investments
Limited (Note 2)</td><td>128,205</td><td>128,205</td><td>128,205</td><td>0.67%</td></tr><tr><td>Total:</td><td>19,230,767</td><td>19,230,766</td><td>19,230,767</td><td>100.00%</td></tr></table> |
9869351_9.pdf | en | # References
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7472601_23.pdf | en | # MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)
# FINANCIAL REVIEW
# Revenue
Revenue in 2020 was approximately HK\$329.9 million, representing a decline of approximately 18.9% from the previous year (2019: approximately HK\$406.7 million). The reduction in revenue was mainly driven by the net effects of a number of the Group’s customers have reduced their printing orders as a result of the depressed government spending and the effect as COVID-19 related government restrictions came into force in Australia. On top of COVID-19 impact, one of the Group’s top five customers has decided not to renew its contract with the Group with effective from 2020. Such negative impact was partly offset by increasing trend of publishers to print their books locally for quicker turnaround time.
# Gross profit and gross profit margin
Our gross profit decreased by approximately HK\$45.3 million, or approximately 48.2%, from approximately HK\$93.8 million in 2019 to approximately HK\$48.5 million in 2020. Gross profit margin dropped by approximately 8.4% in comparison of the prior year. Such drop was mainly due to reduction of revenue as well as the fixed direct and indirect costs are difficult to alter in the short term.
# Other income
Other income significantly increased from approximately HK\$13.5 million in 2019 to approximately HK\$45.9 million in 2020. It was attributable to approximately HK\$40.9 million government subsidy from the JobKeeper Payment Scheme offered by the Australian Government which is a temporary subsidy for businesses significantly affected by COVID-19.
# Selling and distribution costs
Selling and distribution costs decreased by approximately HK\$5.1 million or 17.9% from approximately HK\$28.6 million in 2019 to approximately HK\$23.5 million in 2020. The decrease was greatly in line with the reduction in revenue during the year as freight costs dropped and reduction of sales staff headcount due to the implementation of cost control measures.
# Administrative expenses
Administrative expenses decreased by approximately HK\$2.5 million from approximately HK\$31.3 million in 2019 to approximately HK\$28.8 million in 2020, representing a year-on-year drop of approximately 8.1%. Various administrative expenses were reduced in the light of the implementation of cost control measures and reduction in the number of administrative staff headcount but partially offset by the industrial trend of increasing in insurance premium charges.
# Income tax expense
Income tax expense decreased from approximately HK\$13.8 million (effective income tax rate: 30.1%) in 2019 to approximately HK\$12.6 million (effective income tax rate: 31.0%) in 2020. Such decrease was consistent with the reduction in taxable income during the current year.
# Net profit
The Group reported a net profit of approximately HK\$28.1 million in 2020 compared to HK\$32.1 million in the prior year, which represented a decrease of approximately HK\$ 4.0 million or 12.7%. The profitability of the Group was impacted by COVID-19 when the government agencies and publishers have reduced their printing orders. The Group’s management has taken proactive measures to mitigate the Group’s operational risk, enhance operational efficiency and reduce costs. The Group received considerable financial support from the Australian government’s JobKeeper Payment Scheme, which has cushioned the impact of COVID-19 on the business. |
7472601_24.pdf | en | # MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)
# FINANCIAL REVIEW (Continued)
# Liquidity and financial resources
As at 31 December 2020, the Group had net current assets of approximately HK\$236.8 million (2019: approximately HK\$209.9 million), among which, cash and bank balances were approximately HK\$174.8 million (2019: cash and bank balance together with the pledged deposit: HK\$169.0 million) which were denominated in Australian Dollars (“AUD”), US Dollars (“USD”) and HK\$.
The Group’s current ratio was approximately 4.5 times (2019: approximately 4.2 times), which is calculated by the Group’s current assets over current liabilities. The only interest bearing liabilities were lease liabilities of approximately HK\$34.2 million (2019: approximately HK\$28.7 million) which were denominated in AUD. The Group’s gearing ratio as at 31 December 2020 was approximately 11.6% (2019: approximately 10.5%), which is calculated on the basis of the Group’s total interest-bearing debts over total equity. The increase of the Group’s interest-bearing liabilities, hence the gearing ratio, was mainly due to the renewal of various property and equipment leases during the year. Save as the aforesaid, the Group maintained net cash position and healthy current and gearing ratios, reflecting its healthy financial position.
The Group adopts centralised financing and treasury policies in order to ensure that Group funding is utilised efficiently. The Group also regularly monitors its liquidity requirements and its relationship with bankers to ensure that it maintains sufficient reserves of cash and adequate committed lines of funding from major financial institutions to meet its liquidity requirements in the short and long term.
# Working capital management
The Group’s capital employed includes share capital, reserves and lease liabilities. The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The impact of the level of capital on shareholders’ return is also recognised and the Group acknowledges the need to maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position. The Group is not subject to any externally imposed capital requirements.
The allocation of capital between its specific business segments’ operations and activities is, to a large extent, driven by optimisation of the return achieved on the capital allocated. The process of allocating capital to specific business segment operations and activities is undertaken independently of those responsible for the operation.
# Foreign currency management
The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the functional currencies. The currencies in which transactions primarily denominated are AUD, NZD, USD, European Union Euros, Great British Pound and HK\$. As at 31 December 2020 and 2019, foreign exchange risks on financial assets and liabilities denominated in other currencies were insignificant to the Group.
Management evaluates the Group’s foreign currency risk using cash flow forecasts with the objective of keeping its exposure to a minimum. The Group may in certain circumstances use forward exchange contracts to hedge its foreign currency risk. When used, the contracts would normally have maturities of less than one year at reporting date. The Group does not hold or issue financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments. |
2180975_33.pdf | en | # 21. BUSINESS REVIEW
Business review of the Company is set out in “Management Discussion and Analyasis” on page 4 of this annual report.
# 22. PERMITTED INDEMNITY PROVISION
A permitted indemnity provision for the benefit of the directors of the Company is currently in force and was in force throughout the financial year.
The Company has taken out and maintained directors’ liability insurance throughout the year, which provides appropriate cover for the directors of the Group.
# 23. EVENT AFTER THE REPORTING PERIOD
Details of events occuring after the reporting period are set out in note 43 to the consolidated financial statements.
# 24. AUDITOR
The consolidated financial statements have been audited by RSM Hong Kong who retire and, being eligible, offer themselves for re-appointment.
On behalf of the Board
Li Yin Hui
Chairman
27 March 2017 |
2180975_34.pdf | en | TO THE SHAREHOLDERS OF CHINA FIRE SAFETY ENTERPRISE GROUP LIMITED
(Incorporated in the Cayman Islands with limited liability)
# Opinion
We have audited the consolidated financial statements of China Fire Safety Enterprise Group Limited and its subsidiaries (the “Group”) set out on pages 39 to 115, which comprise the consolidated statement of financial position as at 31 December 2016, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2016, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.
# Basis for Opinion
We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the HKICPA’s Code of Ethics for Professional Accountants (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. |
2590948_124.pdf | en | highest known oil elevation and the potential exists for an associated natural gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering or performance data and reliable technology establish the higher contact with reasonable certainty. Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: (i) successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (ii) the project has been approved for development by all necessary parties and entities, including governmental entities.
Developed oil, natural gas and NGL reserves are reserves of any category that can be expected to be recovered through existing wells with existing equipment and operating methods where production can be initiated or restored with relatively low expenditure compared to the cost of drilling a new well.
The information provided below on our oil, natural gas and NGL reserves is presented in accordance with regulations prescribed by the SEC. Our reserve estimates are generally based upon extrapolation of historical production trends, analogy to similar properties and volumetric calculations. Accordingly, these estimates will change as future information becomes available and as commodity prices change. These changes could be material and could occur in the near term.
Presented below is a summary of changes in estimated reserves for 2017, 2016 and 2015:
<table><tr><td rowspan="2"></td><td>Oil</td><td>Gas</td><td>NGL</td><td>Total</td></tr><tr><td>(mmbbl)</td><td>(bcf)</td><td>(mmbbl)</td><td>(mmboe)</td></tr><tr><td>December 31, 2017</td><td></td><td></td><td></td><td></td></tr><tr><td>Proved reserves, beginning of period</td><td>399.1</td><td>6,496</td><td>226.4</td><td>1,708</td></tr><tr><td>Extensions, discoveries and other additions</td><td>62.7</td><td>3,694</td><td>44.9</td><td>723</td></tr><tr><td>Revisions of previous estimates</td><td>(168.1)</td><td>(315)</td><td>(31.0)</td><td>(252)</td></tr><tr><td>Production</td><td>(32.7)</td><td>(878)</td><td>(20.9)</td><td>(200)</td></tr><tr><td>Sale of reservesinplace</td><td>(0.9)</td><td>(418)</td><td>(0.8)</td><td>(71)</td></tr><tr><td>Purchase of reservesinplace</td><td>0.1</td><td>21</td><td>—</td><td>4</td></tr><tr><td>Proved reserves, end of period(a)</td><td>260.2</td><td>8,600</td><td>218.6</td><td>1,912</td></tr><tr><td>Proved developed reserves:</td><td></td><td></td><td></td><td></td></tr><tr><td>Beginning of period</td><td>200.4</td><td>5,126</td><td>134.1</td><td>1,189</td></tr><tr><td>End of period</td><td>150.9</td><td>4,980</td><td>134.9</td><td>1,116</td></tr><tr><td>Proved undeveloped reserves:</td><td></td><td></td><td></td><td></td></tr><tr><td>Beginning of period</td><td>198.7</td><td>1,370</td><td>92.2</td><td>519</td></tr><tr><td>End of period(b)</td><td>109.3</td><td>3,620</td><td>83.6</td><td>796</td></tr></table> |
2590948_125.pdf | en | <table><tr><td rowspan="2"></td><td>Oil</td><td>Gas</td><td>NGL</td><td>Total</td></tr><tr><td>(mmbbl)</td><td>(bcf)</td><td>(mmbbl)</td><td>(mmboe)</td></tr><tr><td>December 31, 2016</td><td></td><td></td><td></td><td></td></tr><tr><td>Proved reserves, beginning of period</td><td>313.7</td><td>6,041</td><td>183.5</td><td>1,504</td></tr><tr><td>Extensions, discoveries and other additions</td><td>191.2</td><td>1,798</td><td>89.0</td><td>580</td></tr><tr><td>Revisions of previous estimates</td><td>(58.9)</td><td>598</td><td>2.8</td><td>43</td></tr><tr><td>Production</td><td>(33.2)</td><td>(1,050)</td><td>(24.4)</td><td>(233)</td></tr><tr><td>Sale of reservesinplace</td><td>(14.7)</td><td>(1,190)</td><td>(28.1)</td><td>(241)</td></tr><tr><td>Purchase of reservesinplace</td><td>1.0</td><td>299</td><td>3.6</td><td>55</td></tr><tr><td>Proved reserves, end of period(c)</td><td>399.1</td><td>6,496</td><td>226.4</td><td>1,708</td></tr><tr><td>Proved developed reserves:</td><td></td><td></td><td></td><td></td></tr><tr><td>Beginning of period</td><td>215.6</td><td>5,329</td><td>158.0</td><td>1,262</td></tr><tr><td>End of period</td><td>200.4</td><td>5,126</td><td>134.1</td><td>1,189</td></tr><tr><td>Proved undeveloped reserves:</td><td></td><td></td><td></td><td></td></tr><tr><td>Beginning of period</td><td>98.1</td><td>712</td><td>25.5</td><td>242</td></tr><tr><td>End of period(b)</td><td>198.7</td><td>1,370</td><td>92.2</td><td>519</td></tr><tr><td>December 31, 2015</td><td></td><td></td><td></td><td></td></tr><tr><td>Proved reserves, beginning of period</td><td>420.8</td><td>10,692</td><td>266.3</td><td>2,469</td></tr><tr><td>Extensions, discoveries and other additions</td><td>61.1</td><td>805</td><td>35.3</td><td>231</td></tr><tr><td>Revisions of previous estimates</td><td>(110.0)</td><td>(4,191)</td><td>(75.8)</td><td>(885)</td></tr><tr><td>Production</td><td>(41.6)</td><td>(1,070)</td><td>(28.0)</td><td>(248)</td></tr><tr><td>Sale of reservesinplace</td><td>(16.6)</td><td>(195)</td><td>(14.3)</td><td>(63)</td></tr><tr><td>Purchase of reservesinplace</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Proved reserves, end of period(d)</td><td>313.7</td><td>6,041</td><td>183.5</td><td>1,504</td></tr><tr><td>Proved developed reserves:</td><td></td><td></td><td></td><td></td></tr><tr><td>Beginning of period</td><td>229.3</td><td>8,615</td><td>198.5</td><td>1,864</td></tr><tr><td>End of period</td><td>215.6</td><td>5,329</td><td>158.0</td><td>1,262</td></tr><tr><td>Proved undeveloped reserves:</td><td></td><td></td><td></td><td></td></tr><tr><td>Beginning of period</td><td>191.5</td><td>2,077</td><td>67.8</td><td>605</td></tr><tr><td>End of period(b)</td><td>98.1</td><td>712</td><td>25.5</td><td>242</td></tr></table>
(a) Includes 1 mmbbl of oil, 20 bcf of natural gas and 2 mmbbls of NGL reserves owned by the Chesapeake Granite Wash Trust, of which 1 mmbbl of oil, 10 bcf of natural gas and 1 mmbbl of NGL are attributable to noncontrolling interest holders
(b) As of December 31, 2017, 2016 and 2015, there were no PUDs that had remained undeveloped for five years or more.
(c) Includes 1 mmbbl of oil, 23 bcf of natural gas and 2 mmbbls of NGL reserves owned by the Chesapeake Granite Wash Trust, 1 mmbbl of oil, 12 bcf of natural gas and 1 mmbbl of NGL of which are attributable to the noncontrolling interest holders.
(d) Includes 1 mmbbl of oil, 32 bcf of natural gas and 3 mmbbls of NGL reserves owned by the Chesapeake Granite Wash Trust, 1 mmbbl of oil, 16 bcf of natural gas and 2 mmbbls of NGL of which are attributable to the noncontrolling interest holders. |
9322810_370.pdf | en | # IX. NOTES TO THE ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
# 49. OPERATING INCOME, COSTS (CONTINUED)
# (2) Operating income classified by recognition time point (Continued)
# 2019
<table><tr><td>Item</td><td>Forwarding and
related business</td><td>Logistics</td><td>E-commerce</td></tr><tr><td>Operating income</td><td>——</td><td>——</td><td>——</td></tr><tr><td>Including: Recognition at a
certain point in
time</td><td>54,832,554,258.05</td><td>19,839,396,911.93</td><td>2,798,645,856.41</td></tr><tr><td>Recognition
within a certain
time period</td><td>–</td><td>–</td><td>–</td></tr><tr><td>Lease income</td><td>–</td><td>–</td><td>184,507,950.59</td></tr><tr><td>Total</td><td>54,832,554,258.05</td><td>19,839,396,911.93</td><td>2,983,153,807.00</td></tr></table>
# (3) The income adjusted in the current year for the performance obligations already fulfilled (or partially fulfilled) in the prior year was RMB0.00. |
9322810_371.pdf | en | # IX. NOTES TO THE ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
# 50. TAXES AND SURCHARGES
<table><tr><td>Item</td><td>Current year</td><td>Prior year</td></tr><tr><td>Property tax</td><td>81,494,136.22</td><td>89,439,423.17</td></tr><tr><td>Land use tax</td><td>37,239,612.42</td><td>38,845,280.69</td></tr><tr><td>Stamp duties</td><td>19,872,747.80</td><td>27,586,169.98</td></tr><tr><td>Urban maintenance & construction tax</td><td>18,537,678.51</td><td>23,350,421.21</td></tr><tr><td>Education surcharge</td><td>14,534,378.34</td><td>13,456,328.39</td></tr><tr><td>Others</td><td>5,945,722.05</td><td>5,839,842.14</td></tr><tr><td>Total</td><td>177,624,275.34</td><td>198,517,465.58</td></tr></table>
# 51. SELLING EXPENSES
<table><tr><td>Item</td><td>Current year</td><td>Prior year</td></tr><tr><td>Employee benefits</td><td>630,343,946.91</td><td>641,544,865.73</td></tr><tr><td>Business entertainment expenses</td><td>31,405,608.88</td><td>38,642,115.67</td></tr><tr><td>Depreciation and amortisation charges on other assets</td><td>25,951,678.90</td><td>19,728,872.05</td></tr><tr><td>Travel expenses</td><td>16,716,781.49</td><td>27,383,501.26</td></tr><tr><td>Depreciation of right-of-use assets</td><td>14,320,092.31</td><td>11,338,692.76</td></tr><tr><td>Office expenses</td><td>13,124,014.10</td><td>11,214,201.43</td></tr><tr><td>Technical service fee for communication network</td><td>12,312,010.49</td><td>14,438,986.29</td></tr><tr><td>Intermediary service fee</td><td>11,897,848.68</td><td>23,666,524.86</td></tr><tr><td>Vehicle expenses</td><td>9,343,461.49</td><td>11,906,102.19</td></tr><tr><td>Property and utilities fees</td><td>9,194,002.79</td><td>9,210,111.90</td></tr><tr><td>Rental</td><td>8,565,734.15</td><td>15,226,785.39</td></tr><tr><td>Others</td><td>23,164,417.66</td><td>27,438,433.09</td></tr><tr><td>Total</td><td>806,339,597.85</td><td>851,739,192.62</td></tr></table> |
3040547_21.pdf | en | Details of specific categories of options granted under 2002 Share Option Scheme are as follows:
<table><tr><td>Option type</td><td>Date of grant</td><td>Exercise period</td><td>Adjusted
Exercise price</td></tr><tr><td></td><td></td><td></td><td>HK$</td></tr><tr><td></td><td></td><td></td><td>(Notes 3, 4)</td></tr><tr><td>2007 Option</td><td>13.11.2007</td><td>01.01.2010–12.11.2017</td><td>1.075</td></tr><tr><td></td><td>13.11.2007</td><td>01.01.2011–12.11.2017</td><td>1.075</td></tr></table>
The following table discloses movements in the Company’s share options granted under the 2002 Share Option Scheme during the year:
<table><tr><td></td><td>Option type</td><td>Outstanding
at
1.1.2017</td><td>Adjustment
for the
Rights Issue</td><td>Exercised
during
the year</td><td>Transferred
during
the year</td><td>Adjustment
for the
Share
Consolidation</td><td>Lapsed
during
the year</td><td>Outstanding
at
31.12.2017</td></tr><tr><td></td><td></td><td></td><td>(Note 3)</td><td></td><td></td><td>(Note 4)</td><td></td><td></td></tr><tr><td>Category 1: Directors</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Chen Wei</td><td>2007 Option</td><td>41,910,000</td><td>20,955,000</td><td>–</td><td>(62,865,000)</td><td>–</td><td>–</td><td>–</td></tr><tr><td>Tang Yui Man Francis</td><td>2007 Option</td><td>13,970,000</td><td>6,985,000</td><td>–</td><td>(20,955,000)</td><td>–</td><td>–</td><td>–</td></tr><tr><td>Total for Directors</td><td></td><td>55,880,000</td><td>27,940,000</td><td>–</td><td>(83,820,000)</td><td>–</td><td>–</td><td>–</td></tr><tr><td>Category 2: Other Participants</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Other Participants</td><td>2007 Option</td><td>37,719,000</td><td>18,859,500</td><td>–</td><td>83,820,000</td><td>(112,318,800)</td><td>(28,079,700)</td><td>–</td></tr><tr><td>Total for Other Participants</td><td></td><td>37,719,000</td><td>18,859,500</td><td>–</td><td>83,820,000</td><td>(112,318,800)</td><td>(28,079,700)</td><td>–</td></tr><tr><td>All categories</td><td></td><td>93,599,000</td><td>46,799,500</td><td>–</td><td>–</td><td>(112,318,800)</td><td>(28,079,700)</td><td>–</td></tr></table>
Notes:
1. The vesting period of the share options is from the date of grant until the commencement date of the exercise period.
2. Mr. Chen Wei and Mr. Tang Yui Man Francis resigned as the executive director of the Company during the year and the options were transferred to under the category of other participants.
3. On 14 March 2017, the exercise price of and the number of shares entitled to be subscribed for under the outstanding share options have been adjusted in the following manner following the completion of Rights Issue:
<table><tr><td>Directors/Employees</td><td>Number of
share options
before the
Rihgts Issue</td><td>Exercise price
per share
before the
Rihgts Issue</td><td>Adjusted
number of
share options
after the
Rihgts Issue</td><td>Adjusted
exercise price
per share
after the
Rihgts Issue</td></tr><tr><td></td><td></td><td>HK$</td><td></td><td>HK$</td></tr><tr><td>Chen Wei</td><td>41,910,000</td><td>0.322</td><td>62,865,000</td><td>0.215</td></tr><tr><td>Tang Yui Man Francis</td><td>13,970,000</td><td>0.322</td><td>20,955,000</td><td>0.215</td></tr><tr><td>Other Participants</td><td>37,719,000</td><td>0.322</td><td>56,578,500</td><td>0.215</td></tr><tr><td>Total</td><td>93,599,000</td><td></td><td>140,398,500</td><td></td></tr></table> |
3040547_22.pdf | en | 4. On 7 November 2017, the exercise price of and the number of shares entitled to be subscribed for under the outstanding share options have been adjusted in the following manner following the completion of Share Consolidation:
<table><tr><td>Directors/Employees</td><td>Number of
share options
before the
Share
Consolidation</td><td>Exercise
price per
share before
the Share
Consolidation</td><td>Adjusted
number of
share options
after the
Share
Consolidation</td><td>Adjusted
exercise price
per share
after
Rihgts Issue</td></tr><tr><td></td><td></td><td>HK$</td><td></td><td>HK$</td></tr><tr><td>Other Participants</td><td>140,398,500</td><td>0.215</td><td>28,079,700</td><td>1.075</td></tr></table>
5. During the year, no options were exercised or cancelled but 28,079,700 options were lapsed under the 2002 Share Option Scheme.
As at 31 December 2017 and the date of this report, the Company had no underlying shares comprised in options outstanding under the 2002 Share Option Scheme.
# (B) A new share option scheme was adopted by shareholders of the Company on 17 May 2012 (“Date of Adoption”) (the “2012 Share Option Scheme”), under which the Board may, at its discretion, offer any Eligible Persons (as hereinafter mentioned) options to subscribe for shares in the Company subject to the terms and conditions stipulated therein. The 2012 Share Option Scheme has a life of 10 years from the Date of Adoption.
The 2012 Share Option Scheme is a share incentive scheme and is established to enable the Group to, (i) recognise and acknowledge the contributions that Eligible Persons have (or may have) made or may make to the Group (whether directly or indirectly); (ii) attract and retain and appropriately remunerate the best possible quality of employees and other Eligible Persons; (iii) motivate the Eligible Persons to optimize their performance and efficiency for the benefit of the Group; (iv) enhance its business, employee and other relations; and/or (v) retain maximum flexibility as to the range and nature of rewards and incentives which the Company can offer to Eligible Persons. The Eligible Persons include (a) any full time or part time employees of the Group or any Directors of the Company or any of its subsidiaries; (b) any customer, supplier or provider of services, landlord or tenant, agent, partner, consultant, or adviser of or a contractor to or person doing business with any member of the Group; (c) trustee of any trust the principal beneficiary of which is, or discretionary trust the discretionary objects of which include, any person referred to (a) or (b) above; (d) a company wholly beneficially owned by any person referred to in (a) or (b) above, and (e) such other persons (or classes of persons) as the Board may in its absolute discretion determine.
The exercisable period of share options would be determined by the Board of Directors at its absolute discretion and notified by the Board of Directors to each Eligible Person as being the period during which the share options may be exercised, such period to expire not later than 10 years after the date of grant of the share options. The minimum period for which a share option must be held before it can be exercised would be determined by the Board. The share options granted must be taken up within 28 days from the date of grant. |
9223076_282.pdf | en | The following is the text of a report received from the reporting accountants of the Company, Ernst & Young, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this prospectus.
22nd Floor
CITIC Tower
1 Tim Mei Avenue, Central
Hong Kong
12 September 2014
The Directors
ELL Environmental Holdings Limited
Quam Capital Limited
Dear Sirs,
We set out below our report on the financial information of ELL Environmental Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) comprising the consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows of the Group for each of the years ended 31 December 2011, 2012 and 2013, and the five months ended 31 May 2014 (the “Track Record Period”), and the consolidated statements of financial position of the Group as at 31 December 2011, 2012 and 2013 and 31 May 2014, and the statement of financial position of the Company as at 31 May 2014, together with the notes thereto (the “Financial Information”), and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows of the Group for the five months ended 31 May 2013 (the “Interim Comparative Information”), prepared on the basis of presentation set out in note 2.1 of Section II below, for inclusion in the prospectus of the Company dated 12 September 2014 (the “Prospectus”) in connection with the listing of the shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).
The Company was incorporated as an exempted company with limited liability in the Cayman Islands on 25 February 2014. Pursuant to a group reorganisation (the “Reorganisation”) as described in the paragraph headed “Reorganisation” in the section headed “History, Reorganisation and Corporate Structure” to the Prospectus, the Company became the holding company of the subsidiaries comprising the Group. Apart from the Reorganisation, the Company has not commenced any business or operation since its incorporation.
As at the date of this report, no statutory financial statements have been prepared for the Company, as it is not subject to statutory audit requirements under the relevant rules and regulations in itsj urisdiction of incorporation. |
9223076_283.pdf | en | As at the date of this report, the Company has direct and indirect interests in the subsidiaries as set out in note 1 of Section II below. All companies now comprising the Group have adopted 31 December as their financial year end date. The statutory financial statements of the companies now comprising the Group were prepared in accordance with the relevant accounting principles applicable to these companies in the countries in which they were incorporated and/or established. Details of their statutory auditors during the Track Record Period are set out in note 1 of Section II below.
For the purpose of this report, the directors of the Company (the “Directors”) have prepared the consolidated financial statements of the Group (the “Underlying Financial Statements”) in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”), which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). The Underlying Financial Statements for each of the years ended 31 December 2011, 2012 and 2013, and the five months ended 31 May 2014 were audited by us in accordance with Hong Kong Standards on Auditing issued by the HKICPA.
The Financial Information set out in this report has been prepared from the Underlying Financial Statements with no adjustments made thereon.
# Directors’ responsibility
The Directors are responsible for the preparation of the Underlying Financial Statements, the Financial Information and the Interim Comparative Information that give a true and fair view in accordance with HKFRSs, and for such internal control as the Directors determine is necessary to enable the preparation of the Underlying Financial Statements and the Financial Information and the Interim Comparative Information that are free from material misstatement, whether due to fraud or error.
# Reporting accountants’ responsibility
It is our responsibility to form an independent opinion and a review conclusion on the Financial Information and the Interim Comparative Information respectively, and to report our opinion and review conclusion thereon to you.
For the purpose of this report, we have carried out procedures on the Financial Information in accordance with Auditing Guideline 3.340 Prospectuses and the Reporting Accountant issued by the HKICPA.
We have also performed a review of the Interim Comparative Information in accordance with Hong Kong Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the HKICPA. A review consists principally of making enquires of management and applying analytical procedures to the financial information and, bases thereon, assessing whether the accounting policies and presentation have been |
2122103_6.pdf | en | # Electronics Parts
The Electronics Parts segment contributed approximately HK\$903 million to the total revenue of the Group for the 12-month period, representing a decrease of 21% as compared with HK\$1,141 million for 15-month period ended December 31, 2016. Gross profit margin increased to 19% for the Year Under Review as compared with 16% for period ended December 31, 2016.
# Construction and Industrial Products
The revenue and gross profit margin of the Construction and Industrial Products segment were HK\$698 million (period ended December 31, 2016: HK\$805 million) and 7% (period ended December 31, 2016: 14%) respectively for the Year Under Review. There was a 2% increase in sales in Australia but a drop of 23% in sales to the other regions (exclude the PRC). The increasing prices of aluminium and other raw materials, have hindered the export sales to overseas customers.
# Branded OPLV Products
The Group had continued the Branded OPLV Products market in Mainland China by engaging distributors for selling Branded OPLV Products. Sales decreased from HK\$290 million for the period ended December 31, 2016 to HK\$178 million for the Year Under Review. Gross profit margin of Branded OPLV Products increased from 3% for the period ended December 31, 2016 to 7% for the Year Under Review. Facing the fierce competition in the door and windows market, along with the low gross profit margin and high marketing costs, the Branded OPLV Products segment continued to be a loss-making operation in the Year Under Review.
In order to prevent further loss to the Group, the management of the Company has decided to dispose this loss-making operation for better allocation of the Group’s resources.
On December 28, 2017, the Group entered into a conditional sales and purchase agreement to dispose of its entire equity interest in OPLV (Nanyang) Doors and Windows Systems Co., Ltd and OPLV Architectural Design Pty Ltd. Details of the disposal of the Branded OPLV products segment are set out under the paragraph headed “Significant Investment, Material Acquisition and Disposal” of this annual report.
# Cost of sales
With the significant decline in sales, cost of sales decreased by 20% from HK\$1,935 million for the period ended December 31, 2016 to HK\$1,547 million for the Year Under Review. This was in line with the decrease in sales from HK\$2,236 million for the period ended December 31, 2016 to HK\$1,779 million for the Year Under Review.
# Gross profit
Despite the decrease of gross profit from HK\$301 million for the period ended December 31, 2016 to HK\$232 million for the Year Under Review, our gross profit margin has dropped from 14% for the period ended December 31, 2016 to 13% for the Year Under Review. The Group has been actively seeking ways to reduce sales of lower gross profit margin products to achieve a higher overall gross profit margin for this fiscal year. Yet, the persisting unfavorable macro factors, including the volatility in each of the market the Group operates and the uncertainty over the economic condition in China, had dampened consumer sentiment and reduced the demand of the Group’s products.
# Distribution and selling expenses
Distribution and selling expenses decreased by 27% from HK\$142 million for the period ended December 31, 2016 to HK\$104 million for the Year Under Review. The decrease was in line with the decline in sales, which led to a significant decrease in staff costs and travelling expenses.
# Administrative expenses
Administrative expenses dropped by 25% from HK\$340 million for the period ended December 31, 2016 to HK\$255 million for the Year Under Review. The decrease was due to absence of provision for impairment of intangible assets, decrease in staff costs due to decrease in number of employees, and absence of the write-off of trade receivables from former Australian Customers of the Group for the Year Under Review.
# Other income
Other income comprised net sales of scrapped materials which was HK\$11 million for the Year Under Review. |
2122103_7.pdf | en | # Other gains/(losses) – net
Other gains/(losses) changed from HK\$17 million loss for the period ended December 31, 2016 to HK\$12 million gain for the Year Under Review. The change was mainly due to the appreciation of AUD against HKD during the Year Under Review which the Group had enjoyed significant exchange gains and absence of losses from certain derivative financial instruments.
# Finance income
Finance income mainly comprised interest income which amounted to approximately HK\$1 million for the Year Under Review compared to HK\$3 million for the period ended December 31, 2016.
# Finance costs
Finance costs amounted to approximately HK\$47 million for Year Under Review compared to HK\$29 million for the period ended December 31, 2016.
# Income tax expense
Our income tax changed from income tax expense of HK\$38 million for the period ended December 31, 2016 to HK\$8 million for the Year Under Review.
# Currency translation differences in other comprehensive income
Currency translation differences amounted to approximately HK\$47 million for the Year Under Review, which was mainly attributable to the currency translation differences of RMB against the HKD.
# Adjusted EBITDA results, excluding non-recurring items
<table><tr><td rowspan="2"></td><td>Year ended
December 31,
2017</td><td>Fifteen
months ended
December 31,
2016</td></tr><tr><td>HK$ million</td><td>HK$ million</td></tr><tr><td>Loss before income tax</td><td>(150)</td><td>(196)</td></tr><tr><td>Adjusted by:</td><td></td><td></td></tr><tr><td>Depreciation</td><td>100</td><td>99</td></tr><tr><td>Amortisation</td><td>6</td><td>6</td></tr><tr><td>Interest expenses</td><td>47</td><td>29</td></tr><tr><td>Adjusted by:</td><td></td><td></td></tr><tr><td>Other non-recurring items:</td><td></td><td></td></tr><tr><td>Legal and professional fee</td><td>10</td><td>4</td></tr><tr><td>Provision for impairment on other prepayment and deposits</td><td>–</td><td>7</td></tr><tr><td>Relocation cost</td><td>4</td><td>–</td></tr><tr><td>Write off of trade receivables</td><td>–</td><td>3</td></tr><tr><td>OPLV operating losses (Note)</td><td>52</td><td>108</td></tr><tr><td>Total</td><td>69</td><td>60</td></tr></table>
Note: Details of the proposed disposal of the OPLV are set out in the Note 16 to the consolidated financial statements of this annual report and the announcement of the Company dated December 28, 2017. |
20791588_131.pdf | en | # Regulations in Relation to the Cement Industry
According to the Notice of the General Office of the State Council on Transmitting Several Opinions of State Development and Reform Commission and Other Departments concerning Preventing the Haphazard Investment in Steel, Electrolytic Aluminum and Cement Industries (《國務院辦公廳轉發發展改革委等部門關於制止鋼鐵電解鋁水泥行業盲目投資若干意見的通知》), Notice of the General Office of the State Council on Transmitting Several Opinions of State Development and Reform Commission, the Ministry of Finance, the Ministry of Land and Resources, People’s Bank of China and State Environmental Protection Administration concerning Curbing Overcapacity in Some Industries and Guiding Healthy Development of the Industry through Repeat Construction (《國務院批轉發展改革委等部門關於抑制部分行業產能過剩和重複建設引導產業健康發展若干意見的通知》), Guiding Opinions of the People’s Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission on Further Doing a Good Job in Supporting the Restructuring and Revitalization of Key Industries and Curbing Overcapacity in Some Industries through Financial Services (《中國人民銀行、銀監會、證監會、保監會關於進一步做好金融服務支持重點產業調整振興和抑制部分行業產能過剩的指導意見》), and Guiding Opinions of the General Office of the State Council on Supporting Economic Structural Adjustment and Transformation and Upgrading through Finance (《國務院辦公廳關於金融支持經濟結構調整和轉型升級的指導意見》), Guiding Opinions of the State Council on Resolving Serious Production Overcapacity Conflicts (《國務院關於化解產能嚴重過剩矛盾的指導意見》), cement industry belongs to overcapacity industry, shall be subject to stringent control.
According to the Regulations of Cement Industry (2015) (《水泥行業規範條件(2015年本)》), cement construction projects (including cement clinker and cement grinding) should meet the requirements laid down in the Plan for Major Function Division, national industrial plan and policies and local structural adjustment plan for cement industry. Construction land shall should also comply with urban and rural planning, a general land development plan and land use standards. New cement projects are not forbidden in famous scenic places, natural reserves, designated zones for preserving the sources of drinking water, the areas under the prevention and cure measures against atmospheric pollution and susceptible to air pollution, non-industrial development zones and other places that need protection from environmental pollution. As for cement clinker projects, the principles of replacement with equal or less capacity should always be followed, so the overcapacity from these out-of-date projects could be curbed. At the same time, developing special types of cement (including cement for specific purposes) should also be encouraged among active cement manufacturers so that production quality and efficiency will be improved. When commencing new cement projects, a recycling industrial chain shall be taken into consideration. Meanwhile, newly-built cement clinker projects shall consider how to deal with residential and industrial solid wastes from the cities and its industries. New cement grinding projects shall be able to consume local solid wastes that are suitable to be converted into mixed raw materials. Cement construction projects shall meet these requirements. Investment and financing, land supply, evaluation of environmental protection, energy-efficiency assessment, safety supervision, production permit and shutting down of old plants relating to cement projects shall be handled according to these requirements. |
20791588_132.pdf | en | Local authorities under the Ministry of Industry and Information Technology of the People’s Republic of China should urge the cement production companies in their administrativej urisdiction to comply with these requirements. The Ministry of Industry and Information Technology shall announce the names of enterprises and production lines that satisfy these requirements based on an enterprise’s application, and implements dynamic administration, encouraging enterprises to declare that their production and operations satisfy these requirements. Relevant associations and intermediaries shall promote and supervise the implementation of these requirements in a cooperative manner.
According to the Notice of the Ministry of Industry and Information Technology on Issuing the Measures for Capacity Replacement in Certain Industries with Severe Overcapacity, capacity replacement indicators used for transaction in cement (clinker) industry shall be confirmed and publicized by the provincial People’s Government after reporting to it by the provincial competent department of Industry and Information Technology of the transferor of such indicators, and shall be reported to the Ministry of Industry and Information Technology for registration and be released on the supply and demand information platform of national capacity replacement indicators. The provincial competent departments of Industry and Information Technology shall report the capacity replacement scheme and verification and confirmation opinions of cement (clinker) industry to the their respective provincial People’s Government for confirmation and publication, and concurrently to report it to the Ministry of Industry and Information Technology for release on the supply and demand information platform of national capacity replacement indicators. The provincial competent departments of Industry and Information Technology shall list all eliminated projects for replacement in annual backward production capacity enterprise list, and organize the demolition of main equipments (production line) to disable them to resume production, pursuant to the capacity replacement scheme reported to the public by the provincial People’s Government as well as the Notice on Issuing the Work Assessment and Implementation Scheme on Elimination of Backward Production Capacities. The Ministry of Industry and Information Technology shall organize the coordination member units between the work departments of elimination of backward production capacities to conduct supervision and examination on elimination of backward production and excessive capacities for capacity replacement and publicize the examination results.
# Regulation in Relation to Equipment Manufacturing Industry
Primary regulation on equipment manufacturing include Regulation of the People’s Republic of China on Production License for Industrial Products (《中華人民共和國工業產品生產許可證管理條例》), Measures for the Implementation of the Regulation of the People’s Republic of China on Production License for Industrial Products (《中華人民共和國工業產品生產許可證管理條例實施辦法》), Regulation on Supervision of the Safety of Special Equipment (《特種設備安全監察條例》), Regulation on Supervision of the Quality and Safety of Special Equipment (《特種設備質量監督與安全監察規定》), Measures for the Supervision and Management of Personnel Operating Special Equipment (《特種設備作業人員監督管理辦法》) and Technical Guidance on Steel Structure Residence Construction Industrialization(《鋼結構住宅建築產業化技術導則》). Such laws and regulations have provisions on qualification, quality and safety management of equipment manufacturing and the design, construction and development of steel structured residential properties with no more than 12 storeys. |
9242015_575.pdf | en | (c) in the redemption and repurchase of shares (subject to the provisions of section 37 of the Companies Law);
(d) writing-off the preliminary expenses of the company;
(e) writing-off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company; and
(f) providing for the premium payable on redemption or purchase of any shares or debentures of the company.
No distribution or dividend may be paid to members out of the share premium account unless immediately following the date on which the distribution or dividend is proposed to be paid the company will be able to pay its debts as they fall due in the ordinary course of business.
The Companies Law provides that, subject to confirmation by the Grand Court of the Cayman Islands, a company limited by shares or a company limited by guarantee and having a share capital may, if so authorised by its articles of association, by special resolution reduce its share capital in any way.
Subject to the detailed provisions of the Companies Law, a company limited by shares or a company limited by guarantee and having a share capital may, if so authorised by its articles of association, issue shares which are to be redeemed or are liable to be redeemed at the option of the company or a shareholder. In addition, such a company may, if authorised to do so by its articles of association, purchase its own shares, including any redeemable shares. The manner of such a purchase must be authorised either by the articles of association or by an ordinary resolution of the company. The articles of association may provide that the manner of purchase may be determined by the directors of the company. At no time may a company redeem or purchase its shares unless they are fully paid. A company may not redeem or purchase any of its shares if, as a result of the redemption or purchase, there would no longer be any member of the company holding shares. A payment out of capital by a company for the redemption or purchase of its own shares is not lawful unless immediately following the date on which the payment is proposed to be made, the company shall be able to pay its debts as they fall due in the ordinary course of business.
There is no statutory restriction in the Cayman Islands on the provision of financial assistance by a company for the purchase of, or subscription for, its own or its holding company’s shares. Accordingly, a company may provide financial assistance if the directors of the company consider, in discharging their duties of care and to act in good faith, for a proper purpose and in the interests of the company, that such assistance can properly be given. Such assistance should be on an arm’s-length basis. |
9242015_576.pdf | en | # 4 Dividends and Distributions
With the exception of section 34 of the Companies Law, there are no statutory provisions relating to the payment of dividends. Based upon English case law which is likely to be persuasive in the Cayman Islands in this area, dividends may be paid only out of profits. In addition, section 34 of the Companies Law permits, subject to a solvency test and the provisions, if any, of the company’s memorandum and articles of association, the payment of dividends and distributions out of the share premium account (see paragraph 3 above for details).
# 5 Shareholders’ Suits
The Cayman Islands courts can be expected to follow English case law precedents. The rule in Foss v. Harbottle (and the exceptions thereto which permit a minority shareholder to commence a class action against or derivative actions in the name of the company to challenge (a) an act which is ultra vires the company or illegal, (b) an act which constitutes a fraud against the minority where the wrongdoers are themselves in control of the company, and (c) an action which requires a resolution with a qualified (or special) majority which has not been obtained) has been applied and followed by the courts in the Cayman Islands.
# 6 Protection of Minorities
In the case of a company (not being a bank) having a share capital divided into shares, the Grand Court of the Cayman Islands may, on the application of members holding not less than one-fifth of the shares of the company in issue, appoint an inspector to examine into the affairs of the company and to report thereon in such manner as the Grand Court shall direct.
Any shareholder of a company may petition the Grand Court of the Cayman Islands which may make a winding up order if the court is of the opinion that it isj ust and equitable that the company should be wound up.
Claims against a company by its shareholders must, as a general rule, be based on the general laws of contract or tort applicable in the Cayman Islands or their individual rights as shareholders as established by the company’s memorandum and articles of association.
The English common law rule that the majority will not be permitted to commit a fraud on the minority has been applied and followed by the courts of the Cayman Islands.
# 7 Disposal of Assets
The Companies Law contains no specific restrictions on the powers of directors to dispose of assets of a company. As a matter of general law, in the exercise of those powers, the directors must discharge their duties of care and to act in good faith, for a proper purpose and in the interests of the company. |
20782777_162.pdf | en | 163
# 22 FINANCIAL INSTRUMENTS BY CATEGORY
The Group holds the following financial instruments:
22 按類別劃分之金融工具
本集團持有以下金融工具：
<table><tr><td rowspan="2"></td><td>2020
二零二零年</td><td>2019
二零一九年</td></tr><tr><td>HK$’000
港幣千元</td><td>HK$’000
港幣千元</td></tr><tr><td>Financial assets 金融資產</td><td></td><td></td></tr><tr><td>Financial assets at amortised cost: 按攤銷成本列賬之金融資產：
Trade, bills and other receivables (Note 25)
貿易應收賬款、應收票據及其他應收賬款（附註25）</td><td>1,303,528</td><td>1,362,782</td></tr><tr><td>Bank balances and cash (Note 28)
銀行結餘及現金（附註28）</td><td>637,753</td><td>490,241</td></tr><tr><td>Financial assets at fair value throuhg
other comhpreensive income (Note 23(a))
按公平值入賬及列入其他綜合收益之金融資產（附註23(a)）</td><td>13,034</td><td>31,855</td></tr><tr><td>Financial assets at fair value throuhfig prot or loss (Note 23(b))
按公平值入賬及列入損益之金融資產（附註23(b)）</td><td>4,362</td><td>5,895</td></tr><tr><td>Derivative financial instruments (Note 27)
衍生金融工具（附註27）</td><td>227</td><td>2</td></tr><tr><td></td><td>1,958,904</td><td>1,890,775</td></tr></table>
<table><tr><td rowspan="2"></td><td>2020
二零二零年</td><td>2019
二零一九年</td></tr><tr><td>HK$’000
港幣千元</td><td>HK$’000
港幣千元</td></tr><tr><td>Financial liabilities 金融負債</td><td></td><td></td></tr><tr><td>Financial liabilities at amortised cost: 按攤銷成本列賬之金融負債：
Trade, bills and other payables (Note 34)</td><td></td><td></td></tr><tr><td>貿易應付賬款、應付票據及其他應付賬款（附註34）</td><td>936,438</td><td>923,742</td></tr><tr><td>Bank borrowings (Note 32) 銀行借貸（附註32）</td><td>377,008</td><td>657,612</td></tr><tr><td>Lease liabilities (Note 16) 租賃負債（附註16）</td><td>29,195</td><td>35,667</td></tr><tr><td>Derivative financial instruments (Note 27)
衍生金融工具（附註27）</td><td>12</td><td>141</td></tr><tr><td></td><td>1,342,653</td><td>1,617,162</td></tr></table>
The Group’s exposure to various risks associated with the financial instruments is discussed in Note 3. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets mentioned above.
本集團承受與金融工具有關之各種風險於附註3討論。於報告期末之最高信貸風險為上述各類金融資產之賬面值。 |
20782777_163.pdf | en | 164
# 23 FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME AND THROUGH PROFIT OR LOSS
# (a) Financial assets at fair value through other comprehensive income include the following:
23 按公平值入賬及列入其他綜合收益及列入損益之金融資產
(a) 按公平值入賬及列入其他綜合收益之金融資產包括以下各項：
<table><tr><td rowspan="2"></td><td>2020
二零二零年</td><td>2019
二零一九年</td></tr><tr><td>HK$’000
港幣千元</td><td>HK$’000
港幣千元</td></tr><tr><td>Financial instruments level 3: 第3層金融工具：</td><td></td><td></td></tr><tr><td>Equity investments in unlisted entity securities
於非上市實體證券之股本投資</td><td>13,034</td><td>31,855</td></tr></table>
The unlisted equity securities represent investments in private entities incorporated in Taiwan, the British Virgin Islands and Hong Kong and are denominated in the following currencies:
非上市股本證券指於台灣、英屬維爾京群島及香港註冊成立之私人公司之投資，乃按以下貨幣列值：
<table><tr><td rowspan="2"></td><td>2020
二零二零年</td><td>2019
二零一九年</td></tr><tr><td>HK$’000
港幣千元</td><td>HK$’000
港幣千元</td></tr><tr><td>HK$ 港幣</td><td>6,000</td><td>24,000</td></tr><tr><td>NTD 新台幣</td><td>7,034</td><td>7,855</td></tr><tr><td></td><td>13,034</td><td>31,855</td></tr></table>
Movement of financial assets at fair value through other comprehensive income is analysed as follows:
按公平值入賬及列入其他綜合收益之金融資產之變動分析如下：
<table><tr><td rowspan="2"></td><td>2020
二零二零年</td></tr><tr><td>HK$’000
港幣千元</td></tr><tr><td>At beignninfg o the 年year 於初</td><td>31,855</td></tr><tr><td>Fair value losses on financial assets at fair
value throuhg other comprehensive income
按公平值入賬及列入其他綜合收益之金融資產之公平值虧損</td><td>(19,156)</td></tr><tr><td>Exchange gain 匯兌虧損</td><td>335</td></tr><tr><td>At end of the year 於年末</td><td>13,034</td></tr></table> |
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