We align our community investment strategy with our business purpose, taking into consideration our stakeholders’ areas of interests.

Our strategy remains focused on health issues relevant to communities where we operate, education (specifically financial education) and building community resilience through safety. In living our purpose, we contribute to improving lives and leaving a lasting impact on society through our employee engagement and volunteer programmes. We continue to build on the long-term relationships we have with our community partners, ofering both financial and skills-based support.

Our Group-wide Community Investment Policy and the Group’s ESG strategy guide our approach to community investment and engagement. Within this framework, our businesses have the autonomy to manage their own community investment programmes. In Asia and Africa, Prudence Foundation, a unified charitable organisation governed by a statutory Board of Directors, regularly reviews our strategy and funding for community investment programmes with the aim of maximising positive outcomes in the regions where we operate. The Responsibility and Sustainability Working Group (RSWG) oversees our community engagement and investment activities on behalf of the Board.

Our Group-wide Community Investment Policy sets out minimum standards, including not permitting any investment or contributions that are prohibited by law or regulation, those under the Political Donations Policy, and those to any religious organisation whose principal aim is to propagate a particular faith. It is the Group’s policy neither to make donations to political parties nor to incur political expenditure, within the meaning of those expressions as defined in the UK Political Parties, Elections and Referendums Act 2000. The Group did not make any such donations or incur any such expenditure in 2021.

Monitoring and measuring community investment

Our community investment performance metrics are aligned to the Business for Societal Impact (B4SI) Framework, which is used to monitor progress and guide the valuation of cash contributions.

In 2021, direct cash donations to charitable organisations totalled \$5.9 million (2020: \$9.7 million), reflecting donations made during the reporting year by continuing operations, excluding JVs. 2020 figures have been restated on this basis. For a breakdown, please refer to the charts.

# Community engagement and investment / continued

Due to the broad nature of our community work, some of our projects span diferent focus areas, in which case classification is made according to the activity’s primary purpose. For instance, our community resilience projects may sit within social/welfare, education or health. The reduction in our overall spend was largely attributed to having more one-of donations in response to the immediate impact of the Covid-19 pandemic in 2020. Exceptional activities undertaken in 2020 included our donations to The China Research Development Foundation and a number of Covid-19 relief projects.

Prudential colleagues and agents also contributed around 26,000 hours of volunteer service in their local communities in 2021.

In 2020, the Group created a US\$2.5 million Covid-19 Relief Fund, which was administered by Prudence Foundation, Prudential’s community investment arm in Asia and Africa. The fund was distributed to Prudential’s businesses globally, supporting approved charitable and community projects that addressed the immediate social and economic impacts of the pandemic.

In 2021, a new US\$2 million fund was launched to continue to support communities still struggling with the pandemic. Local businesses’ programmes have focused on supporting vulnerable communities on eforts that include Covid-19 messaging, hygiene and sanitation, nutrition and educational programmes. These include:

> Prudential Laos’ support for the Laos Red Cross in providing schools with appropriate Personal Protective Equipment as children return to school.

> Two projects in Uganda, with one providing food to teachers in vulnerable communities whose livelihoods have been afected by prolonged school closures due to the pandemic. The second project focuses on providing mental health services to those sufering from the impacts of Covid-19, as well as raising awareness on the issue.

In addition to the Covid-19 Relief Fund, Prudence Foundation also launched a SAFE STEPS Kids ‘Be Cool Be Clean’ campaign with Cartoon Network. This campaign includes video and activity materials that teach children the importance of good hygiene. The content is distributed across all Cartoon Network platforms as well as our key SAFE STEPS Kids partnerships, such as the International Federation of Red Cross and Red Crescent Societies (IFRC) and various National Red Cross Societies.

In the area of health inclusion, Prudence Foundation has been supporting early childhood care and development since 2013. In 2020, we established a new partnership with UNICEF to implement a regional early childhood development (ECD) programme that advances ECD as part of the Nurturing Care Framework. The goal is to raise awareness and provide essential knowledge and skills to parents and caregivers around holistic nurturing care for children aged from up to three years old. In 2021, the programme saw a successful pilot in Indonesia, where it reached 30,000 parents and 60,000 children aged under five. In addition, with funding support from Prudence Foundation, UNICEF has completed country rapid assessment on Nurturing Care ECD services in four countries: Cambodia, Indonesia, Thailand and the Philippines. The findings will help inform a larger initiative for developing country-specific ECD strategy and programming approach in the near future.

Each year, disasters around the world kill nearly 100,000 people and afect as many as 200 million people, and millions more die of preventable diseases. Many of the places where these incidents occur are ‘missing’ from open and accessible maps, resulting in a lack of reach for humanitarian organisations.

Since 2014, Médecins Sans Frontières (MSF), also known as Doctors Without Borders, has been supporting the Ministry of Health in Nigeria to fight Noma, a low-profile disease that mostly afects children under five living in poverty.

In October 2021, Prudence Foundation, in partnership with MSF, organised two Missing Map Mapathon sessions, where PRU Volunteers helped to put the missing places and populations in Sabon Birni and Illela of Nigeria on the digital map. The efort will help MSF get to the patients more quickly, track diseases more efectively and better understand where the needs of the people are the greatest during an emergency.

A total of 174 PRU Volunteers from 20 locations across Asia, Africa and the UK participated in the Mapathon events, mapping out over 7,000 buildings in Sabon Birni and Illela. With physical volunteering becoming more challenging, this virtual volunteering event provided a meaningful opportunity for our employees to connect with one another in a good cause. We are hopeful that our contribution will make a significant impact in enabling timely prevention and treatment of the disease. We will consider holding the activity again in 2022, given the positive response received.

In conjunction with the Mapathon, Prudence Foundation has also made a donation of US\$45,000 (HKD 350,000) to fund MSF activities in providing healthcare to the people in need.

\* Within the scope of EY assurance – see page 12.


(c) The Company may seek separate approval by the Shareholders in general meeting for granting options beyond the 10% limit under sub-paragraph (a) and (b) above provided the options in excess of the 10% limit are granted only to participants specifically identified by the Company before such approval is sought. In such event, the Company must send a circular to the Shareholders containing a generic description of such grantees, the number and terms of such options to be granted and the purpose of granting options to them with an explanation as to how the terms of the options will serve such purpose and all other information required under the GEM Listing Rules.

(d) The aggregate number of shares 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 shares in issue from time to time. No options may be granted under the Share Option Scheme or any other share option schemes of the Company, if this will result in the limit being exceeded.

# (F) Maximum entitlement of each participant

The total number of shares issued and to be issued upon exercise of options granted to each participant (including both exercised and outstanding options) under the Share Option Scheme of the Company, in any 12-month period up to the date of grant shall not exceed 1% of the shares in issue. Where any further grant of options to a participant would result in the shares issued and to be issued upon exercise of all options granted and to be granted to such participant (including exercised, cancelled and outstanding options) in the 12 months period up to and including the date of such further grant representing in aggregate over 1% of the shares in issue, must be separately approved by Shareholders in general meeting with such participant and his close associates abstaining from voting, and the number and terms (including the subscription price) of the options to be granted to such participant must be fixed before the Shareholder’s approval. In such event, the Company must send a circular to the Shareholders containing the identity of the participant, the number and terms of the options to be granted (and options previously granted to such participant), and all other information required under the GEM Listing Rules. The date of the Board meeting proposing such further grant should be taken as the date of grant for the purpose of calculating the subscription price.

# (G) Grant of options to certain connected persons

(a) Any grant of options to a Director, chief executive or substantial shareholder of the Company or any of their respective associates must be approved by the independent non-executive Directors (excluding any independent non-executive Director who is the grantee of the option).

(b) Where any grant of options to a substantial Shareholder or an independent non-executive Director or any of their respective associates will result in the total number of shares issued and to be issued upon exercise of all options already granted and to be granted to such person under the Share Option Scheme (including options exercised, cancelled and outstanding) and any other share option schemes of the Company to such person in any 12-month period up to and including the date of grant:

(i) representing in aggregate over 0.1% of the shares in issue; and

(ii) having an aggregate value, based on the closing price of the shares at the date of each grant, in excess of HK\$5.0 million,

such further grant of options is required to be approved by Shareholders at a general meeting of the Company, with voting to be taken by way of poll. The Company shall send a circular to the Shareholders containing all information as required under the GEM Listing Rules in this regard. The grantee, his associate and all core connected persons of the Company shall abstain from voting (except where any of such person intends to vote against the proposed grant and his/her intention to do so has been stated in the aforesaid circular). Any change in the terms of an option granted to a substantial shareholder or an independent non-executive Director or any of their respective associates is also required to be approved by Shareholders in the aforesaid manner.

# (H) Restrictions on the times of grant of options

(a) No offer for the grant of options may be made after any inside information has come to the knowledge of the Group until such inside information has been announced pursuant to the requirements of the GEM Listing Rules and the Securities and Futures Ordinance (the “SFO”) (Chapter 571 of the Laws of Hong Kong). No option may be granted during the period commencing one month immediately preceding the earlier of:

(i) the date of the Board meeting (such date to first be notified to the Stock Exchange in accordance with the GEM Listing Rules) for the approval of the Company’s results for any year, half-year, quarterly or other interim period (whether or not required under the GEM Listing Rules); and

(ii) the deadline for the Company to publish an announcement of the results for any year or half-year under the GEM Listing Rules, or quarterly or any other interim period (whether or not required under the GEM Listing Rules).

(b) Further to the restrictions in paragraph (a) above, no option may be granted to a Director on any day on which financial results of the Company are published and:

(i) during the period of 60 days immediately preceding the publication date of the annual results or, if shorter, the period from the end of the relevant financial year up to the publication date of the results; and

(ii) during the period of 30 days immediately preceding the publication date of the quarterly results and half-year results or, if shorter, the period from the end of the relevant quarterly or half-year period up to the publication date of the results.


# 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

All financial liabilities are subsequently measured at amortised cost using the effective interest method.

# Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

# (f) Impairment on plant and equipment and right-of-use assets

At the end of the reporting period, the Group reviews the carrying amounts of its plant and equipment and right-of-use assets to determine whether there is any indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the relevant asset is estimated in order to determine the extent of the impairment loss (if any).

The recoverable amount of plant and equipment and right-of-use assets are estimated individually. When it is not possible to estimate the recoverable amount individually, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

In addition, the Group assesses whether there is indication that corporate assets may be impaired. If such indication exists, corporate assets are also allocated to individual cash-generating units, when a reasonable and consistent basis of allocation can be identified, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs of disposal and value in use. 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 (or a cash-generating unit) for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or a cash-generating unit) is reduced to its recoverable amount. For corporate assets or portion of corporate assets which cannot be allocated on a reasonable and consistent basis to a cash-generating unit, the Group compares the carrying amount of a group of cash-generating units, including the carrying amounts of the corporate assets or portion of corporate assets allocated to that group of cash-generating units, with the recoverable amount of the group of cash-generating units. In allocating the impairment loss, the impairment loss is allocated first to reduce the carrying amount of any goodwill (if applicable) and then to the other assets on a pro-rata basis based on the carrying amount of each asset in the unit or the group of cash-generating units. The carrying amount of an asset is not reduced below the highest of its fair value less costs of disposal (if measurable), its value in use (if determinable) and zero. The amount of the impairment loss that would otherwise have been allocated to the asset is allocated pro rata to the other assets of the unit or the group of cash-generating units. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit or a group of cash-generating units) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or a cash-generating unit or a group of cash-generating units) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.


No material contingent liability had come to the attention of the Directors in 2016 and up to the date of results announcement and annual report issuance of the Company.

Up to the date of this report, the Group conducted and completed a placing of its new 18,000,000 shares after the year ended 31 December 2016. For details please refer to relevant announcements.

Pursuant to Rule 18.44 of the GEM Listing Rules, the Board is pleased to present this corporate governance report for the year ended 31 December 2016. This report highlights the key corporate governance practices of the Company.

The Group is committed to promoting high standards of corporate governance. The Directors of the Company believe that sound and reasonable corporate governance practices are essential for the growth of the Group and for safeguarding the shareholders’ interests and the Group’s assets.

The Company’s corporate governance practices are based on the principles and code provisions as set out in the Corporate Governance Code (the “CG Code”) in Appendix 15 of the GEM Listing Rules. Throughout the year ended 31 December 2016 and up to the date of this report, to the best knowledge of the Board, the Company has complied with all the code provisions set out in the CG Code, save for the deviations from code provision A.6.7 as explained below and as mentioned in the following section headed “Chairman and Chief Executive Officer” in this report.

Pursuant to A.6.7 of CG Code, the independent non-executive Directors, as equal board members, should attend general meetings and develop a balanced understanding of the views of shareholders of the Company. Due to other unavoidable engagements, two independent non-executive Directors were unable to attend annual general meeting of the Company held on 18 May 2016.

The Company has adopted Rules 5.48 to 5.67 of the GEM Listing Rules as the code of conduct for dealing in securities of the Company by the Directors (the “Required standard of Dealing”). Having made specific enquiries of all the Directors, each of them have confirmed that they have complied with the Required Standard of Dealings throughout the year ended 31 December 2016. No incident of non-compliance was noted by the Company during the year.

Up to the date of this annual report, the Board comprises six directors, including two executive Directors, one non-executive Director and three independent non-executive Directors. Details of their composition by category are as follows:


\[ \frac { \partial \mathcal { Q } ( \mathcal { M } ) } { \partial \mathbf { W } } = \frac { N } { 2 } \left( 2 \mathbf { W } ^ { - 1 } - \mathrm { d i a g } ( \mathbf { W } ^ { - 1 } ) \right) - \frac { 1 } { 2 } \left( \mathbf { K } + \mathbf { K } ^ { T } - \mathrm { d i a g } ( \mathbf { K } ) \right) = \mathbf { 0 } \eqno ( 6 1 ) \]

where \( \mathbf { K } = \mathbf { S } - 2 \mathbf { C } \tilde { \mathbf { V } } ^ { T } + \tilde { \mathbf { V } } \mathbf { R } _ { \tilde { \mathbf { y } } } \tilde { \mathbf { V } } ^ { T } \), so

\[ \begin{array} { r l r } { \mathbf { W } ^ { - 1 } = \displaystyle \frac { 1 } { N } \frac { \mathbf { K } + \mathbf { K } ^ { T } } { 2 } \qquad \qquad \qquad \qquad \qquad } & { ( 6 2 ) } \\ & { \displaystyle \qquad = \displaystyle \frac { 1 } { N } \left( \mathbf { S } _ { \phi } - \tilde { \mathbf { V } } \mathbf { C } ^ { T } - \mathbf { C } \tilde { \mathbf { V } } ^ { T } + \tilde { \mathbf { V } } \mathbf { R } _ { \tilde { \mathbf { y } } } \tilde { \mathbf { V } } ^ { T } \right) \qquad \qquad \qquad } & { ( 6 3 ) } \\ & { \displaystyle \qquad = \displaystyle \frac { 1 } { N } \left( \mathbf { S } - \tilde { \mathbf { V } } \mathbf { C } ^ { T } \right) \qquad \qquad \qquad \qquad \qquad } & { ( 6 4 ) } \end{array} \]

Finally, we need to evaluate the expectations \( \operatorname { E } _ { \mathbf { Y } } \left[ \tilde { \mathbf { y } } _ { i j } \right] \) and \( \operatorname { E } _ { \mathbf { Y } } \left[ \Tilde { \mathbf { y } } _ { i j } \Tilde { \mathbf { y } } _ { i j } ^ { T } \right] \) and compute \( \mathbf { R } _ { \tilde { \mathbf { y } } } \) and C.

\[ \mathbf { C } = \sum _ { i = 1 } ^ { M } \sum _ { j = 1 } ^ { H _ { i } } \mathbf { F } _ { i j } \mathbf { E } _ { \mathbf { Y } , \mathbf { X } } \left[ \tilde { \mathbf { y } } _ { i j } \right] ^ { T } = \sum _ { i = 1 } ^ { M } \sum _ { j = 1 } ^ { H _ { i } } \mathbf { F } _ { i j } \left[ \begin{array} { l } { \mathbf { E } _ { \mathbf { Y } } \left[ \mathbf { y } _ { i } \right] } \\ { \mathbf { E } _ { \mathbf { Y } , \mathbf { X } } \left[ \mathbf { x } _ { i j } \right] } \\ { 1 } \end{array} \right] ^ { T } = \left[ \mathbf { C } _ { \mathbf { y } } \quad \mathbf { C } _ { \mathbf { x } } \quad \mathbf { F } \right] \mathbf { \Psi } \left( \mathbf { \tilde { y } } _ { i } \right) \mathbf { G } _ { i } = \mathbf { 0 } . \]

\[ \begin{array} { r } { \mathrm { E } _ { \mathbf { Y } } \left[ \mathbf { y } _ { i } \right] = \overline { { \mathbf { y } } } _ { i } \eqno ( 6 6 ) } \end{array} \]

\[ \operatorname { E } _ { \mathbf { Y } , \mathbf { X } } \left[ \mathbf { x } _ { i j } \right] = \operatorname { E } _ { \mathbf { Y } } \left[ \overline { { \mathbf { x } } } _ { i j } \right] = \mathbf { L } _ { \mathbf { x } _ { i j } } ^ { - 1 } \left( \widetilde { \zeta } _ { i j } - L _ { i j } \mathbf { J } \overline { { \mathbf { y } } } _ { i } \right) \eqno ( 6 7 ) \]

\[ \mathbf { C } _ { \mathbf { x } } = \sum _ { i = 1 } ^ { M } \sum _ { j = 1 } ^ { H _ { i } } \mathbf { F } _ { i j } \left( \boldsymbol { \tilde { \zeta } } _ { i j } - L _ { i j } \mathbf { J } \mathbf { \overline { { y } } } _ { i } \right) ^ { T } \mathbf { L } _ { \mathbf { x } _ { i j } } ^ { - 1 } \eqno { ( 6 9 ) } \]

\[ \mathbf { R } _ { \mathbf { \widetilde { y } } } = { \left[ \begin{array} { l l l l l l l l } { \mathbf { R } _ { \mathbf { y } } } & { \mathbf { R } _ { \mathbf { y x } } } & { \mathbf { R } _ { \mathbf { y 1 } } } & { } & { } & { } & { } & { } \\ { \mathbf { R } _ { \mathbf { x y } } } & { \mathbf { R } _ { \mathbf { x } } } & { \mathbf { R } _ { \mathbf { x 1 } } } & { } & { } & { } & { } & { } & { } \\ { \mathbf { R } _ { \mathbf { y 1 } } ^ { T } } & { \mathbf { R } _ { \mathbf { x 1 } } ^ { T } } & { } & { } & { } & { } & { } & { } & { } \end{array} \right] } \qquad \qquad \qquad \qquad \qquad \qquad ( 7 0 ) \]

\[ \mathbf { R } _ { \mathbf { y } 1 } = \sum _ { i = 1 } ^ { M } N _ { i } \mathrm { E } _ { \mathbf { Y } } \left[ \mathbf { y } _ { i } \right] = \sum _ { i = 1 } ^ { M } N _ { i } \overline { { \mathbf { y } } } _ { i } \eqno ( 7 1 ) \]

\[ \mathbf { R } _ { \mathbf { x } 1 } = \sum _ { i = 1 } ^ { M } \sum _ { j = 1 } ^ { H _ { i } } L _ { i j } \mathbf { E } _ { \mathbf { Y } , \mathbf { X } } \left[ \mathbf { x } _ { i j } \right] = \sum _ { i = 1 } ^ { M } \sum _ { j = 1 } ^ { H _ { i } } L _ { i j } \mathbf { L } _ { \mathbf { x } _ { i j } } ^ { - 1 } \left( \mathbf { U } ^ { T } \mathbf { W } \mathbf { \overline { { F } } } _ { i j } - L _ { i j } \mathbf { J } \mathbf { \overline { { y } } } _ { i } \right) \eqno ( 7 2 ) \]

\[ \mathbf { R _ { y } } = \sum _ { i = 1 } ^ { M } N _ { i } \mathrm { E } _ { \mathbf { Y } } \left[ \mathbf { y _ { i } } \mathbf { y } _ { i } ^ { T } \right] = \sum _ { i = 1 } ^ { M } N _ { i } \left( \mathbf { L _ { y _ { i } } ^ { - 1 } } + \mathbf { \overline { { y } } _ { i } \overline { { y } } _ { i } ^ { T } } \right) \eqno ( 7 3 ) \]

\[ \begin{array} { r l r } { \mathbf { R } _ { \mathbf { x } } = \displaystyle \sum _ { i = 1 } ^ { M } \displaystyle \sum _ { j = 1 } ^ { H _ { i } } L _ { i j } \mathbf { E } _ { \mathbf { Y } , \mathbf { X } } \left[ \mathbf { x } _ { i j } \mathbf { x } _ { i j } ^ { T } \right] } & { } & { { } ( 7 6 ) } \\ { \quad } & { = \displaystyle \sum _ { i = 1 } ^ { M } \sum _ { j = 1 } ^ { H _ { i } } L _ { i j } \left( \mathbf { L } _ { \mathbf { x } _ { i j } ^ { - 1 } } ^ { - 1 } + \mathbf { L } _ { \mathbf { x } _ { i j } ^ { - 1 } } ^ { - 1 } \mathbf { E } _ { \mathbf { Y } } \left[ \left( \mathbf { U } ^ { T } \mathbf { W } \mathbf { \overline { { F } } } _ { i j } - L _ { i j } \mathbf { J } \mathbf { y } _ { i } \right) \left( \mathbf { U } ^ { T } \mathbf { W } \mathbf { \overline { { F } } } _ { i j } - L _ { i j } \mathbf { J } \mathbf { y } _ { i } \right) ^ { T } \right] \mathbf { L } _ { \mathbf { x } _ { i j } } ^ { - 1 } \right) } & { } & { { } ( 7 7 ) } \\ { \quad } & { = \displaystyle \sum _ { i = 1 } ^ { M } \displaystyle \sum _ { j = 1 } ^ { H _ { i } } L _ { i j } \left( \mathbf { L } _ { \mathbf { x } _ { i j } ^ { - 1 } } ^ { - 1 } + \mathbf { L } _ { \mathbf { x } _ { i j } ^ { - 1 } } ^ { - 1 } \left( \mathbf { U } ^ { T } \mathbf { W } \mathbf { \overline { { F } } } _ { i j } \mathbf { \overline { { F } } } _ { i j } ^ { T } \mathbf { W } \mathbf { U } \right. \right. } & { } \\ { \quad } & { \quad \left. \left. - L _ { i j } \mathbf { U } ^ { T } \mathbf { W } \mathbf { \overline { { F } } } _ { i j } \mathbf { \overline { { F } } } _ { i j } ^ { T } \mathbf { J } ^ { T } - L _ { i j } \mathbf { J } \mathbf { \overline { { y } } } _ { i } \mathbf { \overline { { F } } } _ { i j } ^ { T } \mathbf { W } \mathbf { U } \right. \right. } & { } \\ { \quad } & { \quad \left. \left. - L _ { i j } ^ { 2 } \mathbf { J } \mathbf { K } \mathbf { \overline { { F } } } _ { i j } \mathbf { \overline { { F } } } _ { i j } ^ { T } \mathbf { J } \right) \mathbf { L } _ { \mathbf { x } _ { i j } } ^ { - 1 } \right) } & { } & { { } ( 7 8 ) } \end{array} \]

We assume a more general prior for the hidden variables:

\[ P \left( \mathbf { y } _ { i } \right) = \mathcal { N } \left( \mathbf { y } _ { i } | \mu _ { \mathbf { y } } , \Lambda _ { \mathbf { y } } ^ { - 1 } \right) \eqno ( 7 9 ) \]

\[ P \left( \mathbf { x } _ { i j } | \mathbf { y } _ { i } \right) = \! \mathcal { N } \left( \mathbf { x } _ { i j } | \mathbf { H } \mathbf { y } _ { i } + \mu _ { \mathbf { x } } , \mathbf { \Lambda } _ { \mathbf { x } } ^ { - 1 } \right) \eqno ( 8 0 ) \]

\[ \begin{array} { l l } { { \displaystyle Q ( \mu _ { \mathbf { y } } , \mathbf { A } _ { \mathbf { y } } , \mathbf { H } , \mu _ { \mathbf { x } } , \mathbf { A } _ { \mathbf { x } } ) = \sum _ { i = 1 } ^ { M } \mathbf { E } _ { \mathbf { Y } } \left[ \ln \mathcal { N } \left( \mathbf { y } _ { i } | \mu _ { \mathbf { y } } , \mathbf { A } _ { \mathbf { y } } ^ { - 1 } \right) \right] + \sum _ { j = 1 } ^ { H _ { i } } \mathbf { E } _ { \mathbf { Y } , \mathbf { X } } \left[ \ln \mathcal { N } \left( \mathbf { x } _ { i j } | \mathbf { H } \mathbf { y } _ { i } + \mu _ { \mathbf { x } } , \mathbf { A } _ { \mathbf { x } } ^ { - 1 } \right) \right] } } & { { \displaystyle ( 8 1 ) } } \\ { { \displaystyle } } & { { \displaystyle = \frac { M } { 2 } \ln | \mathbf { A } _ { \mathbf { y } } | - \frac { 1 } { 2 } \mathrm { t r } \left( \mathbf { A } _ { \mathbf { y } } \sum _ { i = 1 } ^ { M } \mathbf { E } _ { \mathbf { Y } } \left[ \left( \mathbf { y } _ { i } - \mu _ { \mathbf { y } } \right) \left( \mathbf { y } _ { i } - \mu _ { \mathbf { y } } \right) ^ { T } \right] \right) } } \\ { { \displaystyle } } & { { \displaystyle ~ ~ ~ + \frac { H } { 2 } \ln | \mathbf { A } _ { \mathbf { x } } | - \frac { 1 } { 2 } \mathrm { t r } \left( \mathbf { A } _ { \mathbf { x } } \sum _ { i = 1 } ^ { M } \sum _ { j = 1 } ^ { H _ { i } } \mathbf { E } _ { \mathbf { Y } , \mathbf { X } } \left[ \left( \mathbf { x } _ { i j } - \mathbf { H } \mathbf { y } _ { i } - \mu _ { \mathbf { x } } \right) \left( \mathbf { x } _ { i j } - \mathbf { H } \mathbf { y } _ { i } - \mu _ { \mathbf { x } } \right) ^ { T } \right] \right) } } \\ { { \displaystyle } } & { { \displaystyle + \, \mathrm { c o n s t } } } \end{array} \]

\[ \frac { \partial Q ( \mu _ { \mathbf { y } } , \mathbf { A } _ { \mathbf { y } } , \mathbf { H } , \mu _ { \mathbf { x } } , \mathbf { \Lambda } _ { \mathbf { x } } ) } { \partial \mu _ { \mathbf { y } } } = \frac { 1 } { 2 } \sum _ { i = 1 } ^ { M } \mathbf { \Lambda } _ { \mathbf { y } } \mathbf { E } _ { \mathbf { Y } } \left[ \mathbf { y } _ { i } - \mu _ { \mathbf { y } } \right] = \mathbf { 0 } \quad \implies \qquad \qquad \qquad ( 8 3 ) \]

\[ \mu _ { \mathbf { y } } = { \frac { 1 } { M } } \sum _ { i = 1 } ^ { M } \operatorname { E } _ { \mathbf { Y } } \left[ \mathbf { y } _ { i } \right] \qquad \qquad \qquad \qquad \qquad \qquad ( 8 4 ) \]


According to the Interim Provisions on Labor Dispatch (勞務派遣暫行規定) promulgated by the MOHRSS on 24 January 2014, and came into effect on 1 March 2014, employers may only employ dispatched workers in temporary, auxiliary or substitutable positions, and shall strictly control the number of dispatched workers which shall not exceed 10% of the total number of the employees.

According to the Social Security Law of the PRC (中華人民共和國社會保險法), which was promulgated by the SCNPC on 28 October 2010, and came into effect on 1 July 2011 and revised on 29 December 2018, and the Interim Regulation on the Collection and Payment of Social Insurance Premiums (社會保險費徵繳暫行條例), which came into effect on 22 January 1999 and revised on 24 March 2019, the Regulation on Work-Related Injury Insurance (\( \mathbb { T } \)傷保險條例) implemented on 1 January 2004, and amended on 20 December 2010, and the Regulations on Unemployment Insurance (失業保險條例), which was promulgated on 22 January 1999, and the Trial Measures on Employee Maternity Insurance of Enterprises (企業職工生育保險試行辦法) implemented on 1 January 1995, the employer shall contribute to social insurance plans covering basic pensions insurance, basic medical insurance, maternity insurance, work injury insurance and unemployment insurance. Basic pension, medical and unemployment insurance contributions shall be paid by both employers and employees, while work-related injury insurance and maternity insurance contributions shall only be paid by employers, and employers who failed to promptly contribute social security premiums in full amount shall be ordered by the social security premium collection agency to make or supplement contributions within a prescribed time limit, and shall be subject to a late payment fine computed from the due date at the rate of 0.05% per day; where payment is not made within prescribed time limit, the relevant administrative authorities shall impose a fine ranging from 1 to 3 times the outstanding amount.

According to the Regulation on the Administration of Housing Provident Fund (住房公積金管理條例) (the “Regulation on Housing Provident Fund”), which was promulgated by the State Council and became effective on 3 April 1999, and was amended on 24 March 2002, and 24 March 2019, enterprises in the PRC must register with the competent managing center for housing provident funds and upon the examination by such center, these enterprises shall complete procedures for opening an account at the bank for the deposit of employees’ housing provident funds. Enterprises are also required to pay and deposit housing funds on behalf of their employees in full and in a timely manner. Employers that violate Regulation on Housing Provident Fund and fail to process housing provident fund payments or deposit registrations with the housing fund administration center within a designated period are subject to a fine ranging from RMB10,000 to RMB50,000.

According to the Reform Plan of the State Tax and Local Tax Collection Administration System (國稅地稅徵管體制改革方案), which was promulgated by the General Office of the Communist Party of China and the General Office of the State Council of the PRC on 20 July 2018, from 1 January 2019, all the social insurance premiums, including the premiums of the basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and basic medical insurance, will be collected by the tax authorities. According to the Notice by the General Office of the State Administration of Taxation on Conducing the Relevant Work Concerning the Administration of Collection of Social Insurance Premiums in a Steady, Orderly, and Effective Manner (國家稅務總局辦公廳關於穩妥有序做好社會保險費徵管有關工作的通知), which was promulgated on 13 September 2018, and the Urgent Notice of the General Office of the Ministry of Human Resources and Social Security on Implementing the Spirit of the Executive Meeting of the State Council in Stabilizing the Collection of Social Insurance Premiums (人力資源和社會保障部關於貫徹落實國務院常務會議精神切實做好穩定社保費徵收工作的緊急通知), which was promulgated on 21 September 2018, all the local authorities responsible for the collection of social insurance premiums are strictly forbidden to conduct self-collection of historical unpaid social insurance contributions from enterprises. In addition, the Notice of the State Administration of Taxation on Implementing Measures on Further Support and Serve the Development of Private Economy (國家稅務總局關於實施進一步支援和服務民營經濟發展若干措施的通知), which was promulgated on 16 November 2018, repeats that tax authorities at all levels shall not organize self-collection of arrears of taxpayers including private enterprises in the previous years.


# CORPORATE GOVERNANCE PRACTICE OF THE COMPANY

The Board believes that effective and reasonable corporate governance practices are essential to the development of the Group and can safeguard and enhance the interests of the shareholders. The Company has adopted the principles as set out in the Corporate Governance Code and Corporate Governance Report (the “CG Code”) contained in Appendix 14 to the Listing Rules. The Company regularly reviews its corporate governance practice to ensure the compliance with the CG Code.

The Board is of the view that the Company has complied with the code provisions set out in the CG Code during the year ended 31 December 2017 (the “Reporting Period”). The major corporate governance principles and practices of the Company are summarised as below.

The Board of the Company is responsible to all shareholders for leading and overseeing the operations of the Group so as to ensure the achievement of the objective of value adding to shareholders. The Board is responsible for the overall development of the Group, approving and monitoring the overall development strategies of the Group, assessing, monitoring and controlling the operation and financial performance, ensuring the directors of the Company perform their duties properly and act in the best interests of the Group and hold discussions on various important and proper businesses of the Company in a timely manner. All directors are entitled to include any matter that needs to be submitted to the Board for discussion in the agenda of the Board meeting. The management shall provide members of the Board and specialised committees under the Board with appropriate and sufficient information in a timely manner so as to update them with the latest developments of the Company to facilitate discharge of their duties and make informed assessment and decision.

The executive directors and the senior management are delegated the authority and responsibilities by the Board for the day-to-day management and operation of the Group. The delegated functions and work tasks are periodically reviewed by the Board. Approval has to be obtained from the Board prior to any significant transactions entered into by the abovementioned officers. The Board fully supports the senior management to discharge their responsibilities.

The Board as a whole is responsible for performing the corporate governance functions set out in the Code Provision D.3.1 of the CG Code. The Board has reviewed and monitored the Company’s corporate governance policies and practices, the training and continuous professional development of directors and senior management, the Company’s policies and practices on compliance with legal and regulatory requirements, the compliance of the Model Code and the Employees Written Guidelines, and the Company’s compliance with the CG Code and disclosures in this Corporate Governance Report.

The current board composition of the Company are as follows:

Mr. Wu Tak Lam (Chairman of the Board, Chairman of the Nomination Committee and Chairman of the Finance and Investment Committee)

Ms. Chiu Man (Chief Executive Officer and member of the Finance and Investment Committee)

Mr. Liu Jie (Chairman of the Audit Committee, member of each of the Nomination Committee, the Remuneration Committee and the Finance and Investment Committee)

Mr. Song Tao (Chairman of the Remuneration Committee, member of each of the Audit Committee and the Nomination Committee)

Dr. Liu Xiaofeng (Member of each of the Audit Committee, the Nomination Committee and the Remuneration Committee)

The biographical details of the current directors and the relationship among them, if any, are set out on pages 25 to 29 of this annual report.

The appointment of independent non-executive directors strictly adheres to the guidelines for assessing independence set out in Rule 3.13 of the Listing Rules. The Company has received an annual confirmation letter of independence from each of the independent non-executive directors and considers them to be independent of the management and free of any relationship that could materially interfere with the exercise of their independent judgment. The Board considers that each of the independent non-executive directors brings his own relevant expertise to the Board and brings a wide range of business and financial expertise, experiences and independent judgement to the Board, and are also invited to join the Board committees of the Company. Through active participation in Board meetings and taking the lead in managing issues involving potential conflict of interests, all independent non-executive directors have made various contributions to the effective direction of the Company and provided adequate checks and balances to safeguard the interests of both the Group and the shareholders.


Item	31 March 2021	31 December 2020

Owners’ equity (or shareholders’
equity):

Paid-in cailpta (or share caiptal)	548,540,432.00	548,540,432.00

Cailpta reserve	1,961,847,553.30	1,961,847,553.30

Surlpus reserve	51,365,509.04	51,365,509.04

Undistributed profit	-1,375,290,421.40	-1,362,217,861.88

Total owners’ equity (or
shareholders’ equity)	1,186,463,072.94	1,199,535,632.46

Total liabilities and owners’ equity
(or shareholders’ equity)	2,932,369,922.97	2,774,964,317.00

Person-in-charge of the
Company:	Person-in-charge of
accounting:	Person-in-charge of
accounting institution:

Zhang Chong	Ma Yan	Chen Jing

Prepared by: Luoyang Glass Company Limited\*

Unit: yuan Currency: RMB Type of audit: unaudited

Item	First quarter of 2021	First quarter of 2020

I.   Total operating revenue	794337982.90,,	403,689,173.77

Including: Operating revenue	794337982.90,,	403,689,173.77

II. Total operating costs	609227817.96,,	386,956,237.69

Including: Operating costs	459395380.14,,	294,868,490.39

Taxes and surcharges	11264693.39,,	6,016,610.28

Selling expenses	20596189.80,,	14,916,634.56

Administrative expenses	36585066.15,,	27,320,974.10

R&D expenses	54911438.15,,	15,134,144.68

Finance expenses	26475050.33,,	28,699,383.68

Including: Interest expenses	27147204.13,,	26,203,153.54

Interest income	713052.48,	605,212.06

Add:    Other income	6862954.49,,	3,097,753.62

Investment income (losses
are represented by “-”)	-5605564.38,,	-716,518.73

Impairment losses on credit
(losses are represented by
“-”)	1909067.89,,	182,448.13

Impairment losses on assets
(losses are represented by
“-”)		127,887.48

Gains on disposal of assets
(losses are represented by
“-”)	38275.82,	12,438.78

III. Op erating profit (loss is represented
by “-”)	188314898.76,,	19,436,945.36

Add: Non-operating income	500.00

Less: Non-operating expense	186103.48,	5,000.00

IV. To tal profit (total loss is represented
by “-”)	188129295.28,,	19,431,945.36

Less: Income tax expenses	31576425.79,,	6,492,071.94


# 9.4.5Attendance of directors at relevant meetings

The following table sets forth the records of attendance of each director at the meetings convened by the Board of Directors and by special committees under the Board of Directors and at the shareholders’ general meetings held in 2016.

	Special committees under the Board of Directors

Directors	Board of
Di(1)rectors	Strategy
Committee	Nomination
Committee	Remuneration
and Appraisal
Committee	Risk and
Capital
Management
Committee	Audit
Committee	Related Party
Transaction
Control
Committee	Shareholders’
General
Meeting

	Actual times of attend2ance/Requi)red ti(mes of attendance

Non-executive directors

Li Jianhong	12/12	4/4	2/2	/	/	/	/	2/2

Ma Zehua (resigned)	6/6	3/3	/	/	/	/	/	0/1

Li Xiaopeng	11/12	4/4	/	/	/	/	/	1/2

Li Yinquan (resigned)	6/6	/	/	/	/	/	/	0/1

Sun Yueying	12/12	/	/	1/1	9/9	5/5	/	2/2

Fu Gangfeng	11/12	/	/	/	/	8/8	2/2	2/2

Hong Xiaoyuan	12/12	/	/	1/1	9/9	/	/	2/2

Su Min	12/12	3/3	/	/	9/9	/	3/3	2/2

Zhang Jian	2/2	/	/	/	1/1	/	/	/

Wang Daxiong	2/2	/	/	/	/	1/1	/	/

Executive directors

Tian Huiyu	11/12	4/4	2/2	/	/	/	/	2/2

Li Hao	12/12	/	/	/	9/9	/	5/5	1/2

Independent
non-executive directors

Leung Kam Chung, Antony	10/12	/	2/2	1/1	9/9	/	/	2/2

Wong Kwai Lam	12/12	/	/	1/1	/	8/8	/	1/2

Pan Chengwei	12/12	/	2/2	/	/	8/8	5/5	2/2

Pan Yingli	12/12	/	2/2	1/1	/	/	/	2/2

Guo Xuemeng (resigned)	12/12	/	/	/	/	8/8	5/5	2/2

Zhao Jun	11/12	/	/	/	5/5	/	5/5	2/2

Notes: 1. During the reporting period, the Board of Directors held a total of 12 meetings, of which three were on-site and telephone meetings and nine were meetings convened and voted by correspondence.

2. Actual number of attendance does not include attendance by proxy. The above directors who did not attend the meetings in person had appointed other directors to attend such meetings on their behalf.

# 9.4.6Securities transactions of directors, supervisors and relevant employees

The Company has adopted the Model Code set out in Appendix 10 to the Hong Kong Listing Rules as the code of conduct for directors and supervisors of the Company in respect of their dealings in the Company’s securities. Having made enquiry of all the directors and supervisors, the Company confirmed that they had complied with the aforesaid Model Code throughout the year ended 31 December 2016.

The Company has also established guidelines for relevant employees in respect of their dealings in securities of the Company, which are no less exacting than the Model Code. The Company is not aware of any violation against the mentioned guidelines by relevant employees.

# 9.4.7Performance of duties by independent non-executive directors

The Board of Directors of the Company currently has six independent non-executive directors, which meets the requirement that at least one third of the total directors of the Company shall be independent directors. The qualification, number and proportion of independent non-executive directors are in compliance with relevant requirements of the CBRC, the CSRC, Shanghai Stock Exchange and the Hong Kong Listing Rules. All six independent non-executive directors of the Company are not involved in the circumstances set out in Rule 3.13 of Hong Kong Listing Rules which would cause doubt on their independence. The Company has received from the independent non-executive directors their respective annual confirmation of independence which was made in accordance with Rule 3.13 of Hong Kong Listing Rules. Therefore, the Company is of the opinion that all independent non-executive directors have complied with the requirement of independence set out in Hong Kong Listing Rules. The majority of the members of the Nomination Committee, the Remuneration and Appraisal Committee, the Audit Committee and the Related Party Transaction Control Committee under the Board of Directors of the Company are Independent Non-executive directors, and all of such committees are chaired by an independent non-executive director. During the reporting period, the six independent non-executive directors maintained communication with the Company through personal attendance at the meetings, on-site visits, research and investigations and conferences. They effectively performed their roles as independent non-executive directors by diligently attending meetings held by the Board of Directors and the special committees, actively expressing their opinions and suggestions and attending to the interests and requests of small and medium shareholders. For details of the attendance of independent non-executive directors at the meetings convened by the Board of Directors and the special committees, please refer to “9.4.5 Attendance of directors at relevant meetings” in this report.

During the reporting period, the independent non-executive directors expressed their independent opinions on material issues including change of directors, remuneration of the senior management, engagement of accounting firm, profit appropriation, related party transactions and external guarantees of the Company. They made no objection to the resolutions of the Board of Directors and others.

According to the “Rules Governing Independent Directors’ Work on Annual Reports” of the Company, the independent non-executive directors of the Company performed the following duties in preparing and reviewing this report:

1. The independent non-executive directors listened to reports on the performance of the Company in 2016 made by the management and Chief Financial Officer. The independent non-executive directors believed that the reports made by the management of the Company had fully and objectively reflected the operations of the Company in 2016 as well as the progress of significant matters. They recognised and were satisfied with the work performed by the management team and the results achieved in 2016.


The aging analysis of our trade receivables, net of allowance for doubtful debts, as at the dates indicated is as follows:

Our average trade receivables turnover days were four days, five days, three days and one day for the years ended 31 December 2009, 2010 and 2011 and the six months ended 30 June 2012, respectively, which were within the credit period granted by us. The average trade receivables turnover days are calculated by dividing the average of opening and ending balance of trade receivables for the year/period by the corresponding revenue in the year/period and then multiplying by the number of days in that year/period. The increase in our average trade receivables turnover days from four days for the year ended 31 December 2009 to five days for the year ended 31 December 2010 was primarily due to a decrease in revenue from RMB493.8 million in 2009 to RMB483.5 million in 2010. The decrease in our average trade receivables turnover days from five days for the year ended 31 December 2010 to three days for the year ended 31 December 2011 was primarily due to an increase in revenue from RMB483.5 million in 2010 to RMB524.5 million in 2011. The decrease in our average trade receivables turnover days from three days for the year ended 31 December 2011 to one day for the six months ended 30 June 2012 was primarily due to an increase in revenue from RMB524.5 million in 2011 to RMB662.4 million in the six months ended 30 June 2012.

In assessing the recoverability of trade receivable from property tenants for property leasing and operational management business, we consider any change in the credit quality of the property tenants. We recognize allowance for doubtful receivables based on estimated irrecoverable amounts determined by reference to past default experience of the property tenants and their current financial position.

Our impairment losses recognized on trade receivable of RMB1.1 million as of 31 December 2010 and 2011 and the six months ended 30 June 2012, were related to irrecoverable amounts relating to our property leasing and operational management business.

As of 31 October 2012, RMB4.5 million, or 82.3%, of our trade receivables as of 30 June 2012 had been settled.

# Prepayment for leasehold land held for development for sale

Our prepayment for leasehold land use right was RMB80.4 million as of 31 December 2009, which was made to secure the land for our Nanjing Jade Garden project. We did not have prepayment for leasehold land held for development for sale as of 31 December 2010 and 2011. Our prepayment for leasehold land held for development for sale was RMB60.0 million, which was made to secure a parcel of land in Zhuzhou.

The following table sets forth a breakdown of our trade and other payables as of the dates indicated below:

Our trade and other payable decreased from RMB150.0 million as of 31 December 2009 to RMB141.3 million as of 31 December 2010. The decrease was primarily due to a decrease in trade payables, partially offset by an increase in deposits received. Our trade and other payables increased from RMB141.3 million as of 31 December 2010 to RMB177.4 million as of 31 December 2011. The increase was primarily due to an increase in trade payables and deposits received. Our trade and other payables increased from RMB177.4 million as of 31 December 2011 to RMB228.4 million as of 30 June 2012, primarily due to an increase in trade payables, which was in line with the continued growth of our property development business. Among our trade payables of RMB199.4 million as of 30 June 2012, trade payable of RMB35.7 million to Nanjing Metro as a part of the total consideration will be settled through the delivery to Nanjing Metro of a portion of our completed property units at Golden Wheel New Metro, according to our agreed settlement terms in relation to the payment of consideration for the land for Golden Wheel New Metro that we acquired from Nanjing Metro. Our Directors believe that Nanjing Metro has accepted such arrangement for the potential benefit of property appreciation taking into account the land cost and economic growth trend in Nanjing.


	As at 31 December

	2016	2015

	RMB’000	RMB’000

Non-current

Long-term bank borrowings

– guaranteed (a)	700	1,430

– secured (b)	6,505	77,204

– unsecured	830,488	11,542

Debentures (c)	1,998,591	–

Other borrowings	–	3,233

	2,836,284	93,409

Current

Short-term bank borrowings

– guaranteed (a)	182,550	249,390

– secured (b)	513,356	1,253,740

– unsecured	8,914,583	8,885,127

Other borrowings	17,310	1,000

	9,627,799	10,389,257

Current portion of long-term bank borrowings

– guaranteed (a)	730	730

– secured (b)	9,000	9,000

Other borrowings	3,233	–

	9,640,762	10,398,987

Total borrowings	12,477,046	10,492,396

(a) As at 31 December 2016, the bank borrowings as guaranteed by the non-controlling interests of the Group’s subsidiaries amounted to approximately RMB57,550,000 (2015: RMB139,000,000).

As at 31 December 2016, the bank borrowings as jointly guaranteed by the Group’s subsidiary and one of the Group’s non-controlling interests amounted to approximately RMB125,000,000. (2015: RMB110,390,000).

As at 31 December 2016, the bank borrowings as guaranteed by a related party amounted to approximately RMB1,430,000 (2015: RMB2,160,000) (Note 44 (d)).

# (b) Analysis of the secured borrowings are as follows:

	As at 31 December

2016	2015

RMB’000	RMB’000

Secured by:

– PP&E and land use rights (Notes 7, 9)	343,905	451,554

– Trade receivables (Note 18)	184,956	868,490

– Bank deposits (Note19)	–	19,900

	528,861	1,339,944

On 28 January 2016, the Company received RMB1,980,000,000 from the issuance of 3-year-maturity-debentures, with an aggregate amount of RMB2,000,000,000 at a rate of 2.98% per annum.

# (d) The carrying amounts of the Group’s borrowings are denominated in the following currencies:

# (e) The weighted average effective interest rates of borrowings are set out as follows:

	As at 31 December

2016	2015

RMB’000	RMB’000

Borrowings

– RMB	3.77%	4.52%

– NZD	2.92%	–

Interest rates of borrowings denominated in RMB are reset periodically according to the benchmark rates announced by the People’s Bank of China.


Our quality control team inspects our incoming raw materials at our warehouse. For hot rolled steel coils, we inspect the raw materials by checking the quality certificate provided by the suppliers which sets out the respective specifications of the hot rolled steel coils. Other raw materials are inspected by our quality control personnel on a sampling basis to ensure their quality meets their respective specifications and parameters. Laboratory tests are being carried out by our quality assurance staff to assess zinc and other raw materials.

# Quality control throughout the production process

Our production process control consists of a multi-point checking system from the beginning to the end of our production process. Our quality control team conducts random check on the major steps of our production process. At the end of the production process, we conduct physical check on our Cold Rolled Steel Products on a sampling basis to verify that their mechanical and dimensional properties meet our customers’ requirements.

# Selection of subcontractors and quality control on products processed by subcontractors

Our procurement team selects our subcontractors by carrying out evaluation and assessment and we maintain a list of approved subcontractors. Our quality control team inspects and keeps track with our products before sending to our subcontractors for their further process.

During the Track Record Period and up to the Latest Practicable Date, we did not receive any material claims or complaints by our customers in respect of the quality of our products and there was no incident of failure of our quality control systems which had a material and adverse impact on our business operations.

Our product development activities are carried out by six members from our technical department as at the Latest Practicable Date, and is led by Mr. Guo Zhongyi, who has over 22 years of experience in the manufacturing industry in the PRC. For further information about the qualification and experience of Mr. Guo, please refer to the section headed “Directors And Senior Management — Senior management” in the prospectus.

We had two invention patents and 16 utility model patents in the PRC as at the Latest Practicable Date. The following table sets out further information of our two invention patents and three material utility model patents:

Material patents we owned	How the processing techniques of the patents
improve our production process

Invention patents

Zinc pot and its machining
process (鋅鍋及其加工工藝)	A process that solves the technical problem of the
dross stain on the steel coil due to oxidization
of the traditional zinc pot surface, which
enhances the surface quality of the steel
product

A kind of continuous
galvanizing, polishing and
embossing process (一種連
續鍍鋅平整壓花工藝)	A process that prevents the occurance of the id
yellfpatorm (屈服平台), improves the flatness and
rouhbgness of the oard surface and controls the
depth of the pattern, which reduces the
thickness and increases the length of the steel
product

Utility model patents

A kind of reciprocating
liquid zinc pumipng and
deslaid往ggng evice (一種
復式抽鋅液除渣裝置)	A reciprocating pump that eliminates the scum
defects of unpainted galvanized steel products
causedb y dross and zinc dust in the zinc pot,
which enhances the surface quality of the
unpainted galvanized steel product

The zinc dust treatment
deviceb ased on the
humidification treatment
in the nose of the
galvanization furnace (基於
加濕處理的鍍鋅爐爐鼻內鋅
灰處理裝置)	A device that imhproves the atmospere in the
nose of the galvanization furnace and cleans the
zinc dust content inside the galvanization
furnace, such that the overall processing
accuracy of the galvanization furnace and the
quality of the lpating of the metal sheet canb e
improved

Hihg pressure cleaning
device for polishing
machine (平整機用高壓清潔
裝置)	A cleaning device that removes the residual oily
substances and impurities of the polishing
rollers from the surface of the unpainted
galvanized steel products, and eliminates the
surface defects causedb y the crumbs of zinc on
the polishing rollers during the polishing
process, which enhances the surface quality of
the unpainted galvanized steel product


with the variety and complexity of the various tax laws, creates a level of uncertainty, and requires judgment when addressing the impact of complex tax issues. Our effective tax rate and the amount of tax expense are dependent upon various factors, including the following: the tax laws of the jurisdictions in which income is earned; the ability to realize deferred tax assets at certain international subsidiaries;negotiation and dispute resolution with taxing authorities in the U.S. and international jurisdictions; and changes in tax laws.

The provision for income taxes is computed using the asset and liability method under this method, deferred tax assets and liabilities are recognized currently based on the anticipated future tax consequences of changes in the temporary differences between the book and tax bases of assets and liabilities. This method includes an estimate of the future realization of tax benefits associated with tax losses. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those assets are expected to be realized or settled.

Income tax expense for 2018 was \$73.3 million on \$299.8 million of pretax income and for 2017 was \$67.2 million on \$200.3 million of pretax income. For 2018, the reduction of the statutory federal corporate income tax rate due to the enactment of the Tax Cuts and Jobs Act of 2017 (the “Tax Reform Act”), as well as the mix of income and losses among various jurisdictions, resulted in a net tax increase of\$18.7 million on pretax income of \$99.5 million. Additionally, there was an \$11.0 million yearoveryear increase in tax expense related to changes in the measurement of uncertain tax positions, offset by decreases related to audit settlements and the expiration of the statute of limitations. Further, there was a yearoveryear \$1.9 million increase in withholding tax expense. These yearoveryear tax increases were offset by yearoveryear decreases of \$5.1 million related to unremitted foreign earnings and \$1.2 million for other small tax expense items, along with, most significantly, a \$19.2 million decrease in the 2018 tax expense related to the net provisional tax benefit related to the Tax Reform Act. The net provisional tax benefit included tax benefits of \$72.0 million resulting from the revaluation of deferred tax assets and liabilities, which were partially offset by \$52.8 million of transition tax expense.

During 2018, there was a \$24.8 million net increase in valuation allowances. This increase was a result of a \$30.2 million increase to valuation allowances related to net operating losses and other deferred tax assets, as well as an increase of \$0.6 million in new valuation allowances. These increases were partially offset by a \$6.0 million decrease in valuation allowances due to currency translation.

The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. SAB 118 also provides for a measurement period that should not extend beyond one year from the Tax Reform Act enactment date. As of October 31, 2018, our accounting for the Tax Reform Act was provisional. However, in accordance with SAB 118, we have recorded a reasonable estimate for the following items: a tax benefit related to the revaluation of deferred tax assets and liabilities of \$72.0 million; and a provisional tax expense as a result of the accrual for the transition tax liability of \$52.8 million. As a result, the net provisional tax benefit recorded in our consolidated financial statements for the year ended October 31, 2018 was \$19.2 million. Adjustments to the provisional estimates will be recorded and disclosed prospectively during the measurement period and may differ from these provisional amounts, due to, among other matters, additional analyses, changes in interpretations and assumptions we have made, additional regulatory guidance that may be issued, and actions we may take as a result of the Tax Reform Act.

We analyze potential income tax liabilities related to uncertain tax positions in the United States and international jurisdictions. The analysis of potential income tax liabilities results in estimates of income tax liabilities recognized for uncertain tax positions following the guidance of ASC 740, “Income Taxes.” The estimation of potential tax liabilities related to uncertain tax positions involves significant judgment in evaluating the impact of uncertainties in the application of ASC 740 and complex tax laws. We periodically analyze both potential income tax liabilities and existing liabilities for uncertain tax positions resulting in both new reserves and adjustments to existing reserves in light of changing facts and circumstances. This includes the release of existing liabilities for uncertain tax positions based on the expiration of statutes of limitation. During 2018, recognition of uncertain tax positions increased primarily due to increases in unrecognized tax benefits related to prior years and the current year, offset by decreases related to lapse in statute of limitations; whereas in 2017, the uncertain tax positions decreased primarily due to audit and statute of limitations releases attributable to nonUS jurisdictions.

The ultimate resolution of potential income tax liabilities may result in a payment that is materially different from our current estimates. If our estimates recognized under ASC 740 prove to be different than what is ultimately resolved, such resolution could have a material impact on our financial condition and results of operations. While predicting the final outcome or the timing of the resolution of any particular tax matter is subject to various risks and uncertainties, we believe that our tax accounts related to uncertain tax positions are appropriately stated.

Refer to Note 11 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10K for further information.

# Equity Earnings of Unconsolidated Af iliates, net of Tax

We recorded \$3.0 million and \$2.0 million of equity earnings of unconsolidated affiliates, net of tax, for 2018 and 2017, respectively.

# Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests represents the portion of earnings from the operations of our nonwholly owned, consolidated subsidiaries that belongs to the noncontrolling interests in those subsidiaries. Net income attributable to noncontrolling interests was \$20.1 million and \$16.5 million for 2018 and 2017, respectively. The increase in net income attributable to noncontrolling interests was due primarily to increased earnings of the Flexible Packaging JV.

# Net Income Attributable to Greif, Inc.

Based on the factors noted above, net income attributable to Greif, Inc. increased \$90.8 million to \$209.4 million in 2018 from\$118.6 million in 2017.

Net sales were \$3,638.2 million for 2017 compared with \$3,323.6 million for 2016. The 9.5 percent increase in net sales was primarily due to strategic pricing decisions and increases in index prices in our Rigid Industrial Packaging & Services segment and an increase in volumes in our mills and corrugator facilities in our Paper Packaging & Services segment, partially offset by the impact of our 2016 divestitures in our Rigid Industrial Packaging & Services segment.

Gross profit was \$714.7 million for 2017 compared with \$684.9 million for 2016. The respective reasons for the improvement or decline in gross profit for each segment are described below in the "Segment Review." Gross profit margin was 19.6 percent for 2017 compared to 20.6 percent for 2016.

# Selling, General and Administrative Expenses

SG&A expenses increased 0.9 percent to \$380.4 million for 2017 from \$376.8 million for 2016. This increase was primarily due to increases in incentive compensation due to improved business performance and increases in professional fees partially offset by decreased nonincome tax expense and the impact of foreign currency translation of \$2.9 million. SG&A expenses were 10.5 percent of net sales for 2017 compared with 11.3 percent of net sales for 2016.

Restructuring charges were \$12.7 million for 2017 compared with \$26.9 million for 2016. Charges for both periods were primarily related to employee separation costs, relocation fees and professional fees incurred for services specifically associated with employee separation and relocation. Restructuring activities and associated costs during 2017 are anticipated to deliver annual runrate savings of approximately\$9.9 million with payback periods ranging from one to three years among the plans. We anticipate completion of the current restructuring programs by early 2018. Refer to Note 6 to Consolidated Financial Statements included in Item 8 of this Form 10K for additional information.

Goodwill impairment charges were \$13.0 million for 2017. These charges were related to the impairment of goodwill within the Rigid Industrial Packaging & Services segment. There were no goodwill impairment charges for 2016.

Noncash asset impairment charges were \$7.8 million for 2017 compared with \$51.4 million for 2016. In 2017, these charges were primarily related to plant closures and impairments of goodwill allocated to assets held for sale. Refer to Note 9 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10K for additional information.

# Gain on Disposal of Properties, Plants and Equipment, net

The gain on disposal of properties, plants, and equipment, net was \$0.4 million and \$10.3 million for 2017 and 2016, respectively. See Note 4 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10K for additional information.


# DIRECTOR’S RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS

This prospectus, for which our Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Companies (Winding Up and Miscellaneous Provisions) Ordinance, the Securities and Futures (Stock Market Listing) Rules (Chapter 571V of the Laws of Hong Kong) and the GEM Listing Rules for the purpose of giving information to the public with regard to our Group. Our Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this prospectus is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this prospectus misleading.

This prospectus is published solely in connection with the Placing which is sponsored by the Sponsor and is managed by the Joint Lead Managers. The Placing Shares are fully underwritten by the Underwriters (subject to the terms and conditions of the Underwriting Agreement and also subject to the Placing Price being fixed pursuant to the Price Determination Agreement). Further information relating to the Underwriters and the Placing and the underwriting arrangements is set out in the section headed “Underwriting” in this prospectus.

The Placing Shares are being offered at the Placing Price which will be determined by the Joint Bookrunners (for themselves or on behalf of the Underwriters) and us on or around Thursday, 31 December 2015, or such other date as agreed between the parties.

If we and the Joint Bookrunners (for themselves or on behalf of the Underwriters) are unable to reach an agreement on the Placing Price on or before Thursday, 31 December 2015, or such later date or time as may be agreed between the Joint Bookrunners (for themselves or on behalf of the Underwriters) and us, the Placing will not become unconditional and will lapse. For full information relating to the determination of the Placing Price, please refer to the section headed “Structure and Conditions of the Placing” in this prospectus.

# RESTRICTIONS ON OFFER AND SALE OF PLACING SHARES

This prospectus is published in connection with the Placing.

No action has been taken to permit any offering of the Placing Shares or the distribution of this prospectus in anyj urisdiction other than Hong Kong. Accordingly, this prospectus may not be used for the purpose of, and does not constitute, an offer or invitation nor is it circulated to invite or solicit offers in anyj urisdiction or in any circumstances in which such an offer or invitation is not authorised or to any person to whom it is unlawful to make such an offer or invitation. The distribution of this prospectus and the offering of the Placing Shares in otherj urisdictions are subject to restrictions and may not be made except as permitted under the applicable securities laws of suchj urisdictions pursuant to registration with or an authorisation from the relevant regulatory authorities or an exemption therefrom.

Subscribers for the Placing Shares should consult their financial advisers and seek legal advice, as appropriate, to inform themselves of, and to observe, all applicable laws, rules and regulations of any relevant jurisdiction. Subscribers for the Placing Shares should also inform themselves as to the relevant requirements and any applicable exchange control regulations and applicable taxes in the countries of their respective citizenship, residence or domicile.

Each person subscribing for the Placing Shares under the Placing will be required to, or be deemed by his/her/its subscription for the Placing Shares to, confirm that he/she/it is aware of the restrictions on offers of the Placing Shares described in this prospectus and he/she/it is not subscribing, and has not been offered, any Placing Shares in circumstances that contravene any such restrictions.

# APPLICATION FOR LISTING OF OUR SHARES ON GEM

Application has been made to the Stock Exchange for granting the listing of, and permission to deal in, on GEM, our Shares in issue as at the Distribution Record Date and our Shares to be issued pursuant to the Distribution and the Placing (including the additional Placing Shares which may be issued pursuant to the exercise of the Offer Size Adjustment Option, and upon exercise of any option granted or which may be granted under the Share Option Schemes). Dealings in our Shares on GEM are expected to commence on Thursday, 7 January 2016. Pursuant to Rule 11.23(7) of the GEM Listing Rules, at least 25% of the total issued share capital of the Company must at all times be held by the public. A total of 150,000,000 Placing Shares representing 25% of our issued share capital will be in the hands of the public immediately following completion of the Placing, and upon Listing (assuming the Offer Size Adjustment Option is not exercised and without taking into any new Shares which may be allotted and issued pursuant to the exercise of options granted or which may be granted under the Share Option Schemes).

Save as disclosed herein, none of our Shares are listed on or dealt in on any other stock exchange and no such listing or permission to list is being or is proposed to be sought in the near future.

Under section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, any allotment made in respect of any application for the Placing Shares will be invalid if the listing of, and permission to deal in, the Placing Shares on GEM is refused before the expiration of three weeks from the date of the closing of the Placing, or such longer period (not exceeding six weeks) as may, within the said three weeks, be notified to us by the Stock Exchange.

We have not authorised anyone to provide any information or to make any representation not contained in this prospectus. You should not rely on any information or representation not contained in this prospectus as having been authorised by us, the Sponsor, the Joint Bookrunners, the Joint Lead Managers, the Underwriters or any of our or their respective directors, officers or representatives or any other persons involved in the Placing.


c. For the portions of the property of which the Pre-sale Permits have been obtained, Zhangzhou He’ai has the rights to legally pre-sell such portions according to the obtained Pre-sale Permits.

12. A summary of major certificates/approvals is shown as follows:

a. State-owned Land Use RihGCgts rant ontract	 Yes

b. State-owned Land Use RihCigts ertifcate / Real Estate Title Certificate (for land)	 Yes

c. Construction Land Planning Permit	 Yes

d. Construction Work Planning Permit	 Yes

e. Construction Work Commencement Permit	 Yes

f. Pre-sale Permit	 Portion

g. Construction Work Comlidpeton an Inspection Certificate/Table/Report	 No

13. For the purpose of this report, the property is classified into the group as “Group IV—held under development by the Group in the PRC” according to the purpose for which it is held.

No.	Property	Description and tenure	Particulars of occupancy	Market value
in existing state
as at
the valuation date

				RMB

18.	 Dynasty Chunfenli
glocated at the
southern side of
Shenlig West Road
and the western side
of Jinfeng South
Road
Xiangcheng District
Zhangzhou City
Fujian Province
The PRC
(漳州·大唐春風里)	Dynasty Chunfenliig (the “Project”) s
located at the southern side of Shenli
gWest Road and the western side of
Jinfeng South Road. The locality is a
residential and commercial area with
mature and sohipsticated infrastructural
facilities.	As at the valuation
date, thep roperty
was under
construction.	287,100,000
(51.00% interest
attributable to the
Group:
RMB146,400,000)

The Project occuipes ap arcel of land with
a site area of approximately 41,072.87
sq.m., which isb eing developed into a
residential and commercial development.
The Project was under construction as at
the valuation date and is scheduled tob e
comleted ipn January 2022. As advisedb y
the Group, upon comlpetion, the Project
will have a totalp lanned gross floor area
of approximately 140,192.68 sq.m.

As at the valuation date, thep roperty
comprised the wholep roject. The
classification, usage and gross floor area
details of thep roperty are set out in
note 7.

As advisedb y the Group, the construction
cost of thep roperty is estimated tob e
approximately RMB364,900,000, of
which approximately RMB700,000 had
been incurred as at the valuation date.

The land use rihfgts o thep roperthy ave
been granted for terms exipring on
December 18, 2089 for residential use and
December 18, 2059 for commercial use.

1. Pursuant to a State-owned Land Use Rights Grant Contract—No. 35060020190925P010 dated October 12, 2019 and a Supplementary Contract, the land use rights of the Project with a site area of approximately 41,072.87 sq.m. were contracted to be granted to Zhangzhou Tangfeng Real Estate Development Co., Ltd.(漳州唐峰房地產開發有限公司, “Zhangzhou Tangfeng”, a 51.00%-owned subsidiary of the Company) for terms of 70 years for residential use and 40 years for commercial use commencing from the land delivery date. The land premium was RMB240,000,000.

2. Pursuant to a Construction Land Planning Permit—Di Zi Di No. 350600201900049, permission towards the land planning of the Project with a site area of approximately 41,072.87 sq.m. has been granted to Zhangzhou Tangfeng.

3. Pursuant to a Real Estate Title Certificate (for land)—Min (2019) Xiang Cheng Qu Bu Dong Chan Quan Di No. 0006347, the land use rights of the Project with a site area of approximately 41,072.87 sq.m. have been granted to Zhangzhou Tangfeng for terms expiring on December 18, 2089 for residential use and December 18, 2059 for commercial use.


HLB Hodgson Impey Cheng Limited, the auditor of the Company, will retire and a resolution for their reappointment as auditor of the Company will be proposed at the forthcoming Annual General Meeting.

# Proposed Right Issue, Placing of New Shares under Specific Mandate, Connected Transaction in relation to the set-off, Application for Whitewash Wavier and Proposed Increase in Authorised Share Capital

On 16 February 2021, the Board proposed to conduct the rights issue on the basis of two (2) rights shares for every one (1) existing share held on the relevant record date at the subscription price of HK\$0.10 per Rights Share, to raise up to approximately HK\$220.75 million before expenses by way of issuing up to 2,207,541,466 rights shares (assuming there is no change in the total number of issued shares from 16 February 2021 up to and including the record date other than the full exercise of conversion rights under the outstanding New Option 1 Bonds on or before the record date).

On 16 February 2021, the Company and a placing agent entered into a placing agreement, pursuant to which the Company conditionally appointed the placing agent and the placing agent conditionally agreed to act as the placing agent for the Company to procure, on a best effort basis, placees to subscribe for the placing shares (i.e. the untaken shares during the rights issue) at the placing price of HK\$0.10 per placing share on the terms and subject to the conditions set out in the placing agreement.

On 20 January 2021, a subsidiary of the Company as a borrower and Ms. Lau Ting as a lender entered into a supplemental loan agreement to extend the maturity date of the shareholder’s loan in the principal amount of HK\$50,000,000 to 20 January 2022.

On 29 January 2021, the Company, a subsidiary of the Company and Ms. Lau Ting entered into a set-off deed, pursuant to which the parties have agreed to restructure the shareholder’s loan in the principal amount of HK\$50,000,000 by offsetting the outstanding balance of the shareholder’s loan as at the rights issue completion date on a dollar-to-dollar basis against an equivalent amount of the aggregated subscription price of (i) all entitlement shares; and (ii) the relevant excess shares allocated to Ms. Lau. The set-off will be conditional upon the rights issue becoming unconditional pursuant to the terms and conditions as set out in the Prospectus.

If the acceptance in full by Ms. Lau of the entitlement shares allotted to her pursuant to the irrevocable undertaking and/or the allotment of excess rights shares to her upon successful excess application when there is an undersubscription of the rights issue would trigger an obligation on Ms. Lau to make a mandatory general offer under The Code on Takeovers and Mergers for all shares not already owned or agreed to be acquired by Ms. Lau and parties acting in concert with her, unless a waiver is granted by the Executive. Ms. Lau would make an application to the Executive for the whitewash waiver pursuant to The Code on Takeovers and Mergers.

On 16 February 2021, the Board proposed that the authorised share capital of the Company be increased from HK\$40,000,000 to HK\$125,000,000 by the creation of 3,400,000,000 additional Shares, all of which will, upon issue and being fully paid, rank pari passu in all respects with the Shares in issue.

The other details of the captioned issues (including the respective conditions) have been listed out in the announcement dated 16 February 2021 of the Company.

# Change of Company Name and Company Logo

Subsequent to the passing of the special resolution regarding the proposed change of company name at the special general meeting of the Company held on 10 February 2021, the Company has received the relevant certificates’ copy on 26 March 2021 which were issued by the Registrar of Companies in Bermuda on 24 March 2021 regarding the change of company name of the Company, and the Company has adopted a new company logo with effect from 26 March 2021.


# 3. APPLICATION OF AMENDMENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRSs”)

# Amendments to IFRSs that are mandatorily effective for the current year

In the current year, the Group has applied the Amendments to References to the Conceptual Framework in IFRS Standards and the following amendments to IFRSs issued by the International Accounting Standards Board (“IASB”) for the first time, which are mandatorily effective for the annual period beginning on or after 1 January 2020 for the preparation of the consolidated financial statements:

Amendments to IAS 1 and IAS 8	Definition of Material

Amendments to IFRS 3	Definition of a Business

Amendments to IFRS 9, IAS 39 and IFRS 7	Interest Rate Benchmark Reform

Except as described below, the application of the Amendments to References to the Conceptual Framework in IFRS Standards and the amendments to IFRSs 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.

# 3.1 Impacts on application of Amendments to IAS 1 and IAS 8 “Definition of Material”

The Group has applied the Amendments to IAS1 and IAS 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 in the current year had no impact on the consolidated financial statements.

# 3.2 Impacts on application of Amendments to IFRS 3 “Definition of Business”

The Group has applied the amendments for the first time in the current year. The amendments clarify that while businesses usually have outputs. Outputs are not required for an integrated set of activities and assets to qualify as a business. To be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significant contribute to the ability to create outputs.

The amendments remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs. The amendments also introduce additional guidance that helps to determine whether a substantive process has be acquired.

In addition, the amendments introduce an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is no a business. Under the optional concentration test, the acquired set of activities and assets is not a business if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar assets. The gross assets under assessment exclude cash and cash equivalents, deferred tax assets, and goodwill resulting from the effects of deferred tax liabilities. The election on whether to apply the optional concentration test is available on transaction-by-transaction basis.

The application of the amendments had no impact on the consolidated financial statements in the current year as similar conclusion would have been reached without applying the optional concentration test.

# New and amendments to IFRSs in issue but not yet effective

The Group has not early applied the following new and amendments to IFRSs that have been issued but are not yet effective:

IFRS 17	 Insurance Contracts and the related Amend1ment

Amendment to IFRS 16	 Covid-19-R4elated Rent Concessions

Amendments to IFRS 3	 Reference to the Conceptual Framework2

Amendments to IFRS 9, IAS 39,
IFRS 7, IFRS 4 and IFRS 16	Interest Rate Benchmark Reform – Phase 25

Amendments to IFRS 10 and IAS 28	 Sale or Contribution of Assets between an Investor and
i3ts Associate or Joint Venture

Amendments to IAS 1	 Classifi1cation of Liabilities as Current or Non-current

Amendments to IAS 16	 Property, Plant and Equipment – Proceeds before
Intended U2se

Amendments to IAS 1 and
IFRS Practice Statement 2	Discl1osure of Accounting Policies

Amendments to IAS 8	 Definition of A1ccounting Estimates

Amendments to IAS 37	 O2nerous Contracts – Cost of Fulfilling a Contract

Amendments to IFRSs	 Annual Improvements to IFRSs 2018-20202

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 new and amendments to IFRSs mentioned below, the directors of the Company anticipate that the application of all other new and amendments to IFRSs will have no material impact on the consolidated financial statements in the foreseeable future.

# Amendments to IFRS 3 “Reference to the Conceptual Framework”

• Update a reference in IFRS 3 “Business Combinations” so that it refers to the Conceptual Framework for Financial Reporting issued by IASB in March 2019 (“the “Conceptual Framework”) instead of the International Accounting Standards Committee’s Framework for the Preparation and Presentation of Financial Statements (replaced for the Conceptual Framework for Financial Reporting issued in September 2010);

• Add a requirement that, for transactions and other events within the scope of IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” or IFRIC 21 “Levies”, an acquirer applies IAS 37 or IFRIC 21 instead of Conceptual Framework to identify the liabilities it has assumed in a business combination; and

• Add an explicit statement that an acquirer does not recognise contingent assets acquired in a business combination.

The Group will apply the amendments prospectively to business combinations for which the date of acquisition is on or after the beginning of the first annual period beginning on or after 1 January 2022. The application of the amendments is not expected to have significant impact on the financial position and performance of the Group.