# Notes to the Consolidated Financial Statements

# 2 Summary of Significant Accounting Policies (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.

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.

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.


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.

• 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.


	2018	2017

HK$’000	HK$’000

	(Restated)

INVESTING ACTIVITIES

Purchases of property, plant and equipment	(8,274)	(36,561)

Proceeds from disposal of property, plant and equipment	3,461	2,040

Placement of pledged bank deposits	(127,622)	(319,075)

Withdrawal of pledged bank deposits	174,310	327,771

Advance to associates	(5,000)	–

Interest received	261	169

Acquisition of investment in an associate	–	(3,000)

NET CASH GENERATED FROM (USED IN) INVESTING
ACTIVITIES	37,136	(28,656)

FINANCING ACTIVITIES

New bank loans raised	194,544	364,300

Repayment of bank borrowings	(247,311)	(362,839)

Advances from a director	–	95,000

Repayment to a director	(50,000)	–

Repayment to an ex-director (included in other payable)	(20,000)	–

Repayment of finance lease payables	–	(115)

Interest paid	(2,707)	(2,630)

Distribution paid to non-controlling interests	(3,930)	(1,400)

Expenses on issue of shares	(725)	–

Proceeds from issue of shares	182,000	–

NET CASH FROM FINANCING ACTIVITIES	51,871	92,316

NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS	(23,913)	87,218

CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE YEAR	194,368	107,150

CASH AND CASH EQUIVALENTS AT END OF THE YEAR,

represented by bank balances and cash	170,455	194,368

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.

Amendments to HKFRSs	Annual Improvements to HKFRS 2014–2016 Cycle:
Amendments to HKFRS 12

Amendments to HKAS 7	Disclosure Initiative

Amendments to HKAS 12	Recognition of Deferred Tax Assets for Unrealised
Losses

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.


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:

Oilfield Services:	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

Oilfield Equipment:	Houston and Humble, Texas - located in the United States; Montrose, Scotland;
Nailsea, England; Niteroi, Brazil; Suzhou, China; Dammam, Saudi Arabia

Turbomachinery & Process
Solutions:	Deer Park, Texas and Jacksonville, Florida - located in the United States;
Florence and Massa, Italy; Le Creusot, France; Coimbatore, India

Digital Solutions:	Billerica, Massachusetts and Minden, Nevada - located in the United States;
Groby, England; Shannon, Ireland; Hurth, Germany

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.

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.

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.

# 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.

Period	Total Number
of Shares
(1)Purchased 	Average
Price Paid
(2)Per Share 	Total Number of
Shares Purchased as
Part of a Publicly
Announced Plan or
(3)Programs 	Maximum Dollar Value
of Shares that May Yet Be
Purchased Under the Plan
(3)or Programs

October 1-31, 2018	15,371	 $    31.49	—	$          563,438,373

November 1-30, 2018	—	—	—	$           18,690,655

December 1-31, 2018	—	—	—	$           18,690,655

Total	15,371	 $    31.49	—

(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.


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.

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).

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).


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.

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).

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.


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.

This report was approved by the Board of Directors on May 27, 2022, following confirmation by management.

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:

Address:	Unit 7602B-7604A, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong

Tel:	+852 2868 2828

E-mail:	ESGTeam@wh-group.com

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.

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.


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.

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.

• 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.

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 asset classes and the principal investments in which we invest are as follows:

Asset Class	Principal Investments

Agency RMBS	•   RMBS for which Ginnie Mae, Fannie Mae or Freddie Mac
guarantees payments of principal and interest on the securities
they issue.

Non-Agency RMBS	•   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.

Other real estate-related assets and financial assets	 •   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.


# 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:

HKFRS 17	Insurance Contracts and the related A1mendments

Amendment to HKFRS 16	Covid-19-R4elated Rent Concessions

Amendments to HKFRS 3	Reference to the Conceptual Framework2

Amendments to HKFRS 9,
HKAS 39, HKFRS 7, HKFRS 4
and HKFRS 16	Interest Rate Benchmark Reform — Phase 25

Amendments to HKFRS 10
and HKAS 28	Sale or Contribution of Assets between an Investor and its
A3ssociate or Joint Venture

Amendments to HKAS 1	Classification of Liabilities as Current or Non-current and
related amendments to Hong Kong Interpretation 5
(2020)1

Amendments to HKAS 16	Property, Plant and Equipment — Proceeds before Intended
U2se

Amendments to HKAS 37	Onerous Contracts — Cost of Fulfilling a Contract2

Amendments to HKFRSs	Annual Improvements to HKFRSs 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 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.

# 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.


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.

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:

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:

Elderly residential care home	Overall average	Average for non-EBPS
residential care lpaces
(individual customers
and non-governmental
organisations)	Average for residential
care lpaces under
the EBPS

For the year ended
31 December	For the year ended
31 December	For the year ended
31 December

2015	2016	2015	2016	2015	2016

	%	%	%	%	%	%

Shui On (Shun On) .............	95.8	94.9	94.9	91.5	98.3	98.3

(N3)Shuit Hi oe  ng...............	96.7	96.7	96.7	96.7	 –	 –

(N3)Shui Otn (Hin Whoe  ga)........	98.6	98.6	98.6	98.6	 –	 –

(N2dShuit3) O n(S   e  n unTinWos ai)a. .	 N/A	98.9	 N/A	98.9	 N/A	 –

(NShuioe2 Ot)n (Kwai Shing E.)   . . . .	 N/A	93.2	 N/A	84.9	 N/A	98.5

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.

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


# 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.

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.

# 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:

Name of Shareholders	No. of shares
held by the
shareholders
in First
Consortium
before
acquisition	No. of Shares
issued by our
Company as
consideration
for the
acquisition	Total No. of
Shares held by
the
Shareholders
after the
acquisition	Approximate
percentage of
shareholding
after the
acquisition

Best Year Enterprises Limited
(Note 1)	1,538,469	1,538,468	1,538,469	8.00%

Tse Young Lai	2,994,872	2,994,872	2,994,872	15.57%

Power Profit Far East Limited	2,346,152	2,346,152	2,346,152	12.20%

Win Action Limited	1,923,076	1,923,076	1,923,076	10.00%

Nation Field Limited	1,615,385	1,615,385	1,615,385	8.40%

Tam Yuk Ching Jenny	1,333,332	1,333,332	1,333,332	6.93%

Top Stanton Holdings Limited	1,230,768	1,230,768	1,230,768	6.40%

Easy Finance Management
Limited	846,153	846,153	846,153	4.40%

Tsang Kai Kin Clinton	782,051	782,051	782,051	4.07%

Rise Day Investments Limited
(Note 2)	769,231	769,231	769,231	4.00%

Choy Sze Chung Jojo	769,230	769,230	769,230	4.00%

Yearman Limited	769,230	769,230	769,230	4.00%

Enhance Pacific Limited
(Note 1)	589,743	589,743	589,743	3.07%

CailTpta oiip Lmted	512,820	512,820	512,820	2.67%

Gainyear Holdings Limited	461,538	461,538	461,538	2.40%

Union Nation Investments
Limited	312,820	312,820	312,820	1.62%

Firstcorp Group Limited	307,692	307,692	307,692	1.60%

Jade Wing Investments
Limited (Note 2)	128,205	128,205	128,205	0.67%

Total:	19,230,767	19,230,766	19,230,767	100.00%


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# MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)

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.

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 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 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 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 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.

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.

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.

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.

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.


Business review of the Company is set out in “Management Discussion and Analyasis” on page 4 of this annual report.

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.

Details of events occuring after the reporting period are set out in note 43 to the consolidated financial statements.

The consolidated financial statements have been audited by RSM Hong Kong who retire and, being eligible, offer themselves for re-appointment.

TO THE SHAREHOLDERS OF CHINA FIRE SAFETY ENTERPRISE GROUP LIMITED

(Incorporated in the Cayman Islands with limited liability)

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.

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.


# 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)

Item	Forwarding and
related business	Logistics	E-commerce

Operating income	——	——	——

Including: Recognition at a
certain point in
time	54,832,554,258.05	19,839,396,911.93	2,798,645,856.41

Recognition
within a certain
time period	–	–	–

Lease income	–	–	184,507,950.59

Total	54,832,554,258.05	19,839,396,911.93	2,983,153,807.00

# (3) The income adjusted in the current year for the performance obligations already fulfilled (or partially fulfilled) in the prior year was RMB0.00.


Details of specific categories of options granted under 2002 Share Option Scheme are as follows:

The following table discloses movements in the Company’s share options granted under the 2002 Share Option Scheme during the year:

	Option type	Outstanding
at
1.1.2017	Adjustment
for the
Rights Issue	Exercised
during
the year	Transferred
during
the year	Adjustment
for the
Share
Consolidation	Lapsed
during
the year	Outstanding
at
31.12.2017

			(Note 3)			(Note 4)

Category 1: Directors

Chen Wei	2007 Option	41,910,000	20,955,000	–	(62,865,000)	–	–	–

Tang Yui Man Francis	2007 Option	13,970,000	6,985,000	–	(20,955,000)	–	–	–

Total for Directors		55,880,000	27,940,000	–	(83,820,000)	–	–	–

Category 2: Other Participants

Other Participants	2007 Option	37,719,000	18,859,500	–	83,820,000	(112,318,800)	(28,079,700)	–

Total for Other Participants		37,719,000	18,859,500	–	83,820,000	(112,318,800)	(28,079,700)	–

All categories		93,599,000	46,799,500	–	–	(112,318,800)	(28,079,700)	–

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:

Directors/Employees	Number of
share options
before the
Rihgts Issue	Exercise price
per share
before the
Rihgts Issue	Adjusted
number of
share options
after the
Rihgts Issue	Adjusted
exercise price
per share
after the
Rihgts Issue

		HK$		HK$

Chen Wei	41,910,000	0.322	62,865,000	0.215

Tang Yui Man Francis	13,970,000	0.322	20,955,000	0.215

Other Participants	37,719,000	0.322	56,578,500	0.215

Total	93,599,000		140,398,500

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:

Directors/Employees	Number of
share options
before the
Share
Consolidation	Exercise
price per
share before
the Share
Consolidation	Adjusted
number of
share options
after the
Share
Consolidation	Adjusted
exercise price
per share
after
Rihgts Issue

		HK$		HK$

Other Participants	140,398,500	0.215	28,079,700	1.075

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.


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.

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.

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.

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.

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


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.

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.

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.

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.

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 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 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 comprised net sales of scrapped materials which was HK\$11 million for the Year Under Review.

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 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 amounted to approximately HK\$47 million for Year Under Review compared to HK\$29 million for the period ended December 31, 2016.

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

	Year ended
December 31,
 2017	Fifteen
 months ended
 December 31,
 2016

HK$ million	HK$ million

Loss before income tax	(150)	(196)

Adjusted by:

Depreciation	100	99

Amortisation	6	6

Interest expenses	47	29

Adjusted by:

Other non-recurring items:

Legal and professional fee	10	4

Provision for impairment on other prepayment and deposits	–	7

Relocation cost	4	–

Write off of trade receivables	–	3

OPLV operating losses (Note)	52	108

Total	69	60

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.


# 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.

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.